>> you know, we think that eventually these interest rate hikes are going to have to -- aligned >> i don't expect the fed to cut rates until the second half of next year. >> may be fed is done. the notion of higher for longer is being lost on investors. >> economy moves slowly and inflation has come down. personally, the fed had very little to do with it. >> there is a chance inflation gets stuck at 2.5% or 3%. >> this is "bloomberg surveillance." jon: live from new york city

this morning, good morning, good morning. this is "bloomberg surveillance" on tv and radio. your equity market, positive again on the s&p, this line from julian emanuel of evercore, who nailed it on nvidia. tk, grade is not always good enough. tom: grade is not good enough and citigroup came out with something. it is a range-bound by, which you rarely see. worries about china. notice after 4:00 p.m. yesterday. the world stopped at 4:20. it is worse than apple. jon: this is the darling of the stock market rally this year. tom: some of these people are saying it works. maintained buy, but how much richer can rich get? jon: justin -- just another run-of-the-mill blowout quarter for nvidia. lisa, i think this is amazing to

see. nvidia's third-straight double digit percentage beat. lisa: this is exactly what i was looking at, the actual numbers. revenue will be about $20 billion. the expectation sensibly was $17.9 billion. some people had expected as much as 21 billion dollars. this was punished in the aftermath, but this came even with the declines they saw in china, which means there is enough demand to suck up what would have been purchased by china, and raises these longer-term questions about the ability to produce enough chips. at a certain point this is really bullish. but we just priced it all in. jon: can we call this a validation of the rally so far this year? tom: i like what dan ives said. nvidia is the focal point, but it -- but there is the first, second, and third derivative of this ai stuff. mandeep singh's talking in my eyes glaze over.

there is a follow here that redounds on microsoft, but 20 other companies as well. jon: can tech companies go to sleep now? the openai saga coming to a close, and we are sort of back to where we started but with a different board. sam altman returning to openai. lisa: but that close of a relationship with microsoft, that is the takeaway. not only was microsoft a 49% stakeholder to begin with, but now they are the ones saying joke is over, you can't do this again where you take the ceo out and there is no rationale. things are going to change. jon: we are going to punish you so much larry summers is coming on the board. [laughter] tom: is it like liz truss, where sam altman gets in microsoft pension because he was there so long? jon: isn't this just an interim board? isn't this about a board putting together some better governance structure? lisa: larry already has another board ship.

i'm looking at what we are looking at in terms of bringing adults into the room, trying to create the right structure. maybe this is a placeholder. i'm not an expert because i have not really had any clarity. tom: wall street week this friday, larry summers and sam altman will be with david westin. i'm making that up, folks. larry summers brings a lot of academic firepower. he is not just another economist putting out a shingle. jon: the end of the soap opera, i think we all hope. this one right here, hamas agreeing to free 50 hostages in return for a four-day cease-fire with israel. the release of 150 palestinian prisoners. it could be the first phase of maybe a few phases of seeing the same kind of thing. lisa: does it happen? which everyone is hoping it does to try to prevent some of the carnage we have seen and bring hostages home. the second thing is, where does that leave the conflict? it is not over, so is this the

beginning of some kind of resolution? i think it's interesting markets have not responded to this news or the war as it has grind it on. is this not anymore a market-moving event? jon: to your point, the war continues. prime minister benjamin netanyahu has been clear about that, and the objective has been the same, to wipe out hamas. ultimately we are going back to the same issues. tom: this is from the telegraph on netanyahu. we are at war, and the war will continue until all of our goals are achieved. jon: more on that story later. let's turn to the price action. on the s&p 500 this morning we are positive by .1%. yields are up. the break of four point 40 in the last two hours. lisa: things have been stable. it is a grind, it is not a whipsaw. 8:30 am to me is the news of the

day. u.s. job claims. we also get durable sales as well. we take a look at the unemployment rate creeping higher. it has been a steady creep higher throughout the year, increasing about .5% over the past 68 months. do we end up seeing an initial jobless claims confirm that trend and is been market reaction significant? we get the michigan sentiment survey. might be interesting to you. i'm interested in the expectation. it is 10:00 a.m. jon: 9:5 6:30. lisa: and you are out the door by 9:57? jon: i am picking up pies. lisa: honestly i'm looking at just inflation expectations that jon will not be looking at, and following on the story about the potential for hostages to be released. we are looking for that to happen as early as thursday in the morning.

to me, i just really want to see how this happens, and then what comes next. tom: what comes next is continued war, and it will be a ballet of hostages as they slowly come out. i believe aaron david miller is scheduled to be with us today. serious expertise. jon: need to talk about some of these market calls as well. 5000 seems to be the popular number. yesterday bank of america, rbc, 5000 year end next year. tom: i read every word of it. she is saying this is the post-covid market and it is just starting. i think the spx, on radio right now a great chart showing the divide from 4400 up to 5000. to put this in scale, 5400 is a yardeni 41,700 on the dow.

i have never framed that, which means i've never framed spx 5100. the pilgrims looked at the dow. they didn't have a bloomberg on the mayflower. they did not have a bloomberg on the mayflower. jon: last night i started on speakerphone overnight last night. give it up. jonathan stubbs joins us now, the equity strategist at berenberg. let's start with this tech dominance. nvidia, out with stellar numbers. not getting much love in the premarket, but getting love your today. you expect they will be the winners of 2023? -- do you expect they will be the winners of 2023? jonathan s.: i think investors are in a hard place here, because you follow momentum and you are still running some of these mega tech winners. clearly there are some winners in the market right now.

they have been incredible performers your today. you go back to signals from valuation and the broader u.s. tech sector is treading back to an 80% premium against global equities, which is the tnt pick. you are getting valuation signals, which some are going to be happy to ignore, which are telling you to do one thing, minton signals are telling you to do another thing. it also overshadows what has happened in broader tech this year. one of the worst-performing industries around the world has been the nasdaq composite index. obviously that is the 4000 stock index. that is because half of the companies in their entered this year as lost makers. if you are losing money into some sharply higher interest rate environments, it is a tough gig. tech is a two-speed street right now. the very big ones have been stunning performers, and into next year investors have a big call to make. at the very least they have to

hedge exposure to ai and technics to. tom: it is percolating right now. ratios and accounting statements , and technical analysis, i love the acuity of your note. that they should put more weight on technical analysis. discuss that. how do you actually affect putting more weight on technicals? jonathan s.: most of the market is fundamentally driven, increasing over the 20, 30 years. increasingly investment horizons have gotten shorter and shorter term. over the past three years one of the biggest bull markets has been in uncertainty. when i go around all parts of the world right now it is that lack of conviction into next year which is the dominant focus for most investors. financial uncertainty which is geopolitical, macro, etc., really sort of shines a much brighter light on technicals, because technicals are a pure

way of an -- of reflecting investor crowding. we look at a range of technical indicators. but the core ones like rsi, investor sentiment, these are consistently and have consistently given a pretty good signal for investors to turn up or turn down exposure to equities over the last two to three years. and we keep using them. if you are using them today obviously we have gone from one end of the rsi range, oversold, to now we are very close to overbought. it is another signal where we are probably not chasing this incredible rally we have seen. lisa: dupont's matter for equity valuations from here? david: usually -- jonathan s.: usually. rather we have seen in equities the last three to four weeks, which in small and mid-cap lands has given all of the returns that small mid-caps will deliver this year, in global equities the rally has given more than

50% of the year-to-date return. it has been a spectacular, very short rally. and it happens as 10 year treasuries have backed off. as the market has gotten into a more comfortable place with inflation. bond yields matter and duration impact is very important. the higher for longer narrative is still very much in play. we are in a more normal interest-rate environment, and that suggests challenges for different business models. bond yields matter in this market. they are also a competitor for capital, so if i've got a dollar to put into the market today i can get 6% investment grade in the u.s.. i can get 9% on high-yield. it is a genuine competitor to equities. that also changes the capital allocation makes for investors. jon: it is great to get your perspective. jonathan stubbs of berenberg. we have to frame this.

how long does it take to write one of these outlooks? it starts about a month ago? maybe longer? tom: they are thinking about it from july 4. jon: let's say you get to november, you have written down your thoughts about 2024, and all of a sudden in a single month the s&p 500 is up another percent. these are big moves already this month, and from here we are looking for a double-digit return in 2024. could you imagine if this was published in early november? tom: it would have been very different. jon: how controversial? tom: you have to remember that all of the strategists, the good people we have on here, they have to report to revenue-producers. in the revenue-producers have to speak to the troops, institutional and retail. and in real time -- i cannot emphasize this enough, getting from monday to friday right now is tough. lisa: the most important question to ask is, how do you

feel? at least it seems to be. tom: how do you feel? lisa: i'm in the holiday spirit. you mentioned lori calvo see no, and she said we have been telling investors we believe the sentiment survey has been the best star in the sky to navigate the u.s. equity market in 2023. basically what we just heard there from jonathan stubbs. how do you feel? tom: is lisa doing stuffing in the 9:00 a.m. hour? [laughter] jon: i'm just saying these would have been cool for something like 20% upside at the end of november. there is some big turnaround in the last month or so. tom: and december is happy month. lisa: feel good? [laughter] jon: from new york city this morning, good morning. ♪

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and we are very happy if we can get any of these hostages back to their families, no one should really believe that this is the beginning of the end of the war. we are not close to that right now. jon: i was the president and founder of eurasia group on this morning's announcement that israel and hamas agree to a temporary cease-fire and the release of hostages. the latest in this market, equity futures pulling back just a touch on the s&p 500. now positive by .16%. in the equity market we pulled back yesterday. nvidia a little bit lower, even with fantastic numbers. just kind of the story of the last year, validating massive returns, but not good enough. lisa: how high is the shadow bar? you wonder how much the gains of the year have gotten baked into similarly-catastrophically-amazi ng of returns going forward.

that is the question we have to ask for all of the moon shots we have seen in big tech. tom: far more importantly are the non-moon shots, things that were modeled to go up a percent are going up 12%. things that are modeled to go up 50% are going up 21%. that is much more interesting than the given moonshot, because jon bought nvidia and i didn't. jon: this is more than just a story. these are real numbers. we are talking about three x revenue year-over-year. it is kind of phenomenal. tom: i looked at the breakdown and this is not the gaming area. this is the ai, sam altman area. somebody said yesterday different nations are literally buying block purchases of nvidia products because there is nothing else out there. jon: that someone was brammo. that was lisa. tom: my brain fails. i'm looking at flight delays at laguardia. leave me alone. it is a 40% delay right now. jon: is that because it rained

this morning? tom: it rained this morning. jon: that will change things. tom: the gulfstream is not delayed, but you will get what getting on the plane. jon: where are you going? tom: south. lisa: brooklyn. jon: south brooklyn? tom: my dad used to say we are going south, pittsburgh. [laughter] jon: are you tortured by that? tom: it was a deprived childhood. joining us now with his expertise, his experience and service for the united states, he is a former senior u.s. intelligence official, and of course the center for strategic and international studies. norman roule has been very good for us in briefing on this terrible war in the eastern mediterranean. what is the level of intelligence we have on gaza? how blind are the israelis as they work north to south in gaza? norman: good morning. israel, although it was surprised by the october 7

attack, has traditionally had exceptional intelligence on this area. we need to keep in mind it has captured hundreds of prisoners. it his use tactical sigint. it has used drones to gather intelligence. this hostage exchange will provide four days for them to ingest what mr. b -- what must be a massive amount of intelligence to shape future attacks. tom: this war is not over. on a percentage basis, how much of this war is over? norman: that is difficult to say, because the war itself being over would require the eradication of hamas as a threat to israel. that requires the attic -- the eradication of hamas' seniormost leadership and their weapons caches. israel has destroyed about 400 tunnels. it has taken out several dozen

palestinian commanders. but they have a ways to go. this operation right now requires that they remove more civilians who are under significant threat. and then they have to move south , which will probably begin in about four or five days. this war has weeks, if not months to go forward. lisa: is this winnable? or any of these goals achievable at a time where they are fighting a certain degree of hatred and ideology that has grown up out of circumstances? that hate is going to be continued. norman: there is no question that israel can eradicate most of hamas and palestinian islamic jihad's weapons capability and tunnels. as you correctly stated, there is going to be a foundation of indoctrination and hate that really must be addressed. that is going to be the job of the day after, the two state solution. it's going to be difficult.

most challenging aspect of the day after is not going to be identifying the leaders at the diplomatic table, who provides basic security to prevent new militants from emerging with a hamas 2.0 or isis 2.0 in the ruins of gaza? lisa: arab nations have come out and said they do not want to send troops into gaza. israel has talked about it and then pulled back after people said no, you are not occupying gaza once again. who could possibly take on this role and who could possibly lead a nation -- or, territory -- that needs to be rebuilt in a massive way? norman: this is an important and unaddressed question. my contacts say there really is not yet a plan. one could imagine a situation where a you in mandate, perhaps put forward by the marathas -- the emeratis could put forward a

force that could be supported by western actors. but we are a long way from getting there, and until we are able to do the nuts and bolts of putting gaza's basic security infrastructure together we are not going to be able to achieve the peace everyone wants. tom: our framework of your world and a service to the nation is what we see out of hollywood i mean this seriously now. we go to the movies and there is 40, 50, $60 million productions of intelligence under risk, intelligence and danger and all of that. what is the danger to intelligence gathering? is it sending drones out or is there real risk here to americans as we gather intelligence in this war? norman: the most significant risk is going to be for is really operatives in gaza, who perhaps might be meeting human sources but are acquiring

prisoners from which they can produce the intelligence. where are the tunnels? who is in the tunnels? where do you store weapons? how do you communicate with your leadership? all of these questions are being put forward, and this is being acquired in a battle environment. you not only have the traditional threat of working against a terrorist organization, but let's are flying. jon: norman, always learn something listening to you. norman roule of csis. i think we all learn something. a four-day cease-fire, perhaps be able to be in a position to do this again sometime soon. but this is not the end. tom: you get the methodology down to do it again. there has to be a first time. if you have a second time after further conflict and war, may be it will be easier than a time. lisa: there is also a question of, is peace achievable? what does a two state solution look like? who were the leaders going to be

of both nations? there is a lot of conflict in both israeli politics, as well as in gaza, the respective leadership there. tom: mr. roule took it more granular. it is about who is going to run gaza afterwards. who is going to provide the most basic security, let alone the massive rebuild of gaza, if that is assumed. jon: politico's line this morning, a brief triumph for diplomacy. the president has really leaned into this as well, and he is in a delicate position with regard to supporting israel's efforts, giving the recent polling we have seen over the last week or so. tom: the polling is tangible and i'm sorry, i go back to alexion 10 one, which is foreign and october doesn't matter. you get into labor day, first tuesday in november, nobody is talking about israel. they are talking about emotional stuff. jon: in about two hours times we will talking -- we will be

talking. i think this is the data point of the week so far. that minutes, total snooze. they are going to proceed carefully. i saw some great takes on that yesterday. as opposed to what, proceeding recklessly? lisa: it means they are saying nothing, which is what we expected. the market is like, ok, great. jon: they are going to proceed carefully, tk. tom: everybody is making it up as they go, that's all there is to it. jon: no fed speak for a whole week, and we are thankful. tom: i didn't read the minutes. the delays at new work -- jon. the delays at new work -- newark are not as bad as they were minutes ago. ♪

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jon: live from new york city, here is the price action. equity futures on the s&p 500, a lift positive after snapping a five-day winning streak in yesterday's session. up by .2% on the s&p. on the nasdaq up by .3%. we'll talk about nvidia and some blowout numbers that are not being rewarded in just a moment. a snapshot of treasuries and the curve right now. 10-year, 4.37%. yields have been grinding lower for five consecutive sessions. we are down about two basis points.

here's the good news, yesterday down about two or three basis points. lisa, low single-digit moves in the treasury market. lisa: i think exactly that, to quote tom, it is how it has moved down. it has been a gradual decline. if you see that, is this stable? jon: we have some stability here. tk, maybe? tom: look at the market this morning. we are going into the season where it doesn't go down. people are windowdressing. people are looking at the news flow. lisa: people like turkey dressing. jon: some people might be distracted. tom: i'm distracted right now. we have to start with this. martha stewart stuffing. italian bread only. that's it. you have to dry the italian breadcrumbs the day in advance. i've never done that. jon: are you going to be doing this today? tom: i don't know. i have wonder bread.

lisa: he's not taking a flight, he's watching the flight patterns, and he is cooking. tom: do you know what wonder bread is? jon: no. tom: wonder bread is a white, spongy -- help me here, lisa. lisa: it's basically inflated plastic you can eat. tom: that is accurate. lisa: it is presliced, it is packaged, you can wish it into different shaped if you want to eat it that way. tom: i'm making my stuffing with wonder bread and martha has italian bread. jon: so it is like plato? tom: that would be accurate. jon: no idea what that was going. the euro pulling back just a touch yesterday. small moves there, though. we are backing away from august highs. tom: i have not talked about enough the ascent of sterling. over the last x number of weeks, what was it 1.16? we were getting down there.

it has been an actual constructive pound sterling around the underestimation to all 2023, the resiliency of the united kingdom. jon: might be getting tax cuts later as well. just for our audience, you will have full coverage of that led by our team in london. i believe that starts in about 45 minutes time. that is the story of the fx market. we need to talk about jobless claims in about two hours time. there is a difference between a welcome loosening of the labor market and an unwelcome deterioration in the labor market. tom claims it is going to be part of that story further weeks to come. tom: what is that four-week moving average on weekly claims? the answer is i don't know where it is, but we are at, is it to 20? a worse, higher number? or is the trip ticket to that? lisa: what is that trip point

point? tom: we are nowhere on nonfarm payrolls. jon: two fridays away, i think. tom: but as a survey number we are nowhere near an equivalent claims number. jon: on the calendar nowhere near it. that's what it is, in case you are interested. under surveillance this morning. a cease-fire in the israel-hamas war. hamas agreed to release 50 hostages in -- it will be the first pause since the war began in early october, with israel saying the pause will be extended by a day for every additional 10 hostages released. lisa: we have to start by saying if this happens, what wonderful news. to get the hostages home, children, babies, and get them back with their families. how great to have the bombing

stopped for the children and families in gaza. where does this leave the conflict? it during those days? how fragile is it that a potentially gets broken down, and then how do we end up as? tom: the video we just saw, for those on radio, house to house searching by israeli forces. i would go to where general chemical was yesterday with bloomberg. it is just about every house, step-by-step, and that is an ugly war. jon: it is a rare positive development in the war. going to turn to the most tedious story of the year so far. five friday, -- fired friday, back on wednesday. sam altman back at the company after all of the employees threatened to quit if he was not reinstated. openai also vowing to reform its board with new directors. is that the final chapter of

this saga or is there more to come? lisa: my favorite was the graphic could not catch up to what you are saying because there were so many different moments. jon: this happened so quickly. lisa: that speaks to where we are at. is this the final chapter? no, because what is openai? have you looked at its corporate structure? it is difficult to understand. is there a concern about the safety of our crucial -- of artificial intelligence? tom: this is about a new clarity of microsoft developing, i believe it is two chips to catch up and beat nvidia. that is all this is about. it was laid out 10 days ago before all of this sam altman soap opera. they are out there, amazon, google, all of them. marc benioff at salesforce. i don't even know what he wants to do. jon: he's trying to recruit. tom: this is about catching up to nvidia on what satya nadella

told emily chang is business. jon: after another strong quarter we saw the chipmaker's revenue beat estimates. the company also announcing new chips designed for china, saying u.s. restrictions could negatively affect income into next year. the stock now positive by 1.3%. lisa, it is amazing, these numbers that out of this company. lisa: it's like a kid who gets a plus and then they get an a and people are disappointed. why didn't you get the 100? jon: i keep going back to that julian line from evercore. in the near term grade is not always good enough. that is what it felt like after the close yesterday. i want to finish on europe. the ecb's warning that sluggish growth is threatening to amplify risks to financial stability posed by higher interest rates. the ecb vice president speaking to bloomberg after the release of the bank's eye annual financial stability review,

saying markets are too optimistic. >> this is one of the main risk, because now the outlook that markets are taking with respect to the evolution of the economy, no, i would say that it is a little bit sanguine. there is a little bit of wishful thinking. jon: the message coming out of a central bank, tk, wishful thinking over at the ecb? tom: i don't hear any navelgazing about to pitch -- 2% or 3%. they can do this because supposedly they have a lower nominal gdp set than the u.s., but there is a distinction here on where we are heading. jon: these guys are not celebrating. that is the takeaway. catherine man yesterday, at the bank of england, this week treasury select committee talking about more interest rates. she would like to hike even more. that is the hawk in central banks right now. tom: what is so important with

goebel gdp is dr. man has invented the codependency thinking between china and the u.s. she is hugely qualified on a global basis. also qualified is neil shearing, chief economist at capital economics group. are we going to see global recession? neil: it depends on how you define global recession. if you look at most definitions it is global economy growing by less than 2.5%. other town we get to the first quarter of 2024 think we probably will meet that definition. yes, but it is all in the definition. it depends on which countries you are talking about. a key point about recessions is this element of reflexivity. higher unemployment creates another feedback loop into weakening demand. it is only then broken by central banks or governments loosening policy. that is a very real prospect in

europe and the u.k.. that is less of a threat in the u.s. but certainly i think we're going to be entering 2024 on substantially weaker footing. lisa: let's talk about the way central banks could end up getting involved. the ecb was talking about the elevated chances of a financial accident with high rates and a slowing economy. will there be a trigger that will force deeper cuts to rates both in europe, but also the u.s., or do you think we are going to be able to have this glide path that people are currently mapping out? neil: i think it is possible in the case of the u.s.. i think the situation today is far more analogous with the situation after the second world war, where you have this enormous supply disruption and then high inflation. that is the case in the comparison with the 1970's people have made. if you take comfort in that,

inflation was high for a few years but came down quite sharply in the late 1940's. that would mean the central banks would have some scope to loosen policy. i think that is far more plausible set of circumstances, particularly in the u.s. it is possible that some kind of financial crisis event might occur. but if you look at svb in the u.s., if you look 12 months ago, ldi crisis in the u.k., that did not deter banks from hiking interest rates. they did not loosen policy. it needs to be a pretty catastrophic crisis to force them into loosening policy. more likely i think is that we get cyclical downturns, particularly in europe. probably the u.s. too. and that leads to loosening of policy for probably the second quarter of next year. lisa: one of the key aspects

behind this is why we have seen disinflation typically we have so far. is it because of year-over-year comparative data points, or is this because of some of the tightening that has come to pass? in other words, is that downturn going to be disinflation area enough for central banks? neil: this is the great counterfactual. it is the thing we are always up against. what would have happened had central banks not tightened? my guess is inflation would have come down anyway. that's not to say monetary tightening has had no effect. i just think it explains a relatively small part of disinflation we have seen so far. most we have seen so far is about the unwinding of those pandemic-related distortions, particularly on the supply-side side of economies. and demand-supply coming closer to previous results. jon: just to extend what neil is talking about, if the disinflation we have seen so far

is just about of rebalancing led by the supply side, and what is in store for 2024? it is why some people think the damage that is going to be done by higher interest rates is still in our future and we have not recognized it yet. tom: it is the phrase i hate come along and variable lack. fourth of july of next year. supply versus demand side of the economy is fascinating, and i don't really know what to make about it. we have two issues here. i have bruce castor him and his team at jp morgan really thinking about this. he has a first-half global gdp shockingly under 3%. really stunning, 2.1%. does not get it done. or do you take an imf stance, is out to 2028? pick your gloom, but you have short-term modeling and long-term modeling that is challenging. nvidia doesn't care. jon: up next, we will be talking about openai with mandeep singh

of bloomberg intelligence. we will also throw in some nvidia earnings, so hopefully we can avoid soap opera of the last few days. tom: cara swisher, a long tweet. a demented goat rodeo. jon: i think we are all on board with that. what a mess. tom: it is what it is. jon: tech journalists pulling all nighters trying to figure it out. they can sleep easy now. lisa: have we figured it out? jon: still trying to work out what it was in the first place. mandeep singh coming up next. equity futures right now just about positive. live from new york city, this is bloomberg. ♪ ♪ whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most.

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history against binance. it deliberately undermined its own sanctions monitoring controls and failed to report suspicious transactions. >> the justice department is requiring binance to pay $4.3 billion in penalties and forfeitures. jon: that was janet yellen and merrick garland announcing a record fine on cryptocurrency exchange finance for violations, including ignoring sanctions and a failure to report suspicious activities. tk, one of the biggest players in this space and another one bites the dust. tom: did you see this coming? i've been talking about this is going to happen, but i did not see this coming on a thanksgiving wednesday. professor rogoff got legitimate death threats off that book, and it is about what raffaella at bank of international settlements talked about.

it is about criminal activity. lisa: which raises this question. if the first two biggest exchanges for cryptocurrency have both been implicated in fraud, what else is going on? i wonder, especially given some of the payments for certain terrorist organizations were facilitated on these exchanges? tom: we have been skeptical about this ballet from day one. i was shocked. i did not see this coming and i was shocked yesterday. they must have evidence on this guy i can't -- it is inappropriate to comment on it, but i was stunned at a $4 billion fee. merrick garland standing there with secretary yellen. ken rogan off looks like a genius this morning. jon: what is next? tom: i hope there is some sobriety amongst institutions. but what is the institutional value of crypto? it is not for me to say what it is, but everyone has to study

that with the new humility. jon: i don't think it goes away. i think it goes toward traditional players. isn't that what it is next? tom: aren't we going to have ats? jon: you start -- you stop talking about binance and start talking about black rossmoor. -- blackrock. lisa: despite some of this news, points to a stickier, more institutional, blessed day trader-type of audience. which means it has a different use in investment case. jon: it could well go toward stronger hands. hate to use the phrase the adults in the room, but that is a phrase that will be used. tom: i can't disagree with you, but we have a looking at the research and seeing what smart people think about this. let's move on from that. look to crypto on bloomberg television for that. what are we going to talk to mandeep singh about? not stuffing.

jon: ai or nvidia. tom: which would you like to go with? jon: our prefer to talk about nvidia. tom: let's do that right now. mandeep singh joins us. what is the legs on this? we all get the moonshot and the fervor, and i saw the 240%, blah blah. can it be a 30-year thing? mandeep: we are witnessing the biggest data center expansion right now, and data center market was about 8% to 10% grower historically. when you look at the numbers nvidia is printing, clearly there is insatiable demand. yes, they will be affected by china restrictions, but they are still shipping demand. this is a near-monopoly this point in time. question you have to ask, is

will it remain a monopoly? or will there be more players that can develop chips? and right now, you know, the customers buying these chips are very concentrated. will they continue to do that for the foreseeable future? tom: you were an expert on this, and i guess altman is back at openai. how long does it take to make a competitive chip? mandeep: that is what nvidia has shown, that they can pivot much quicker, they can ship products much quicker than anyone else. amd and intel have the capability to make a gpu, but it is not as productive and efficient as an nvidia gpu is. that is what we are seeing. until you see proof that companies can train as effectively their models on alternative chips, i think nvidia will continue to have

this kind of growth which we saw. lisa: one aspect of the earnings report i thought was most interesting was the drop off a signal in chinese demand for their gpu's for some of their products. this comes at a time where they are still able to beat expectations on revenue. they can still ship those chips elsewhere. what does that tell us about both what is going on in china, but also more broadly what is going on with the glut of demand? mandeep: there was certain -- there was certainly some pull forward in china because they anticipated these restrictions. you could argue nvidia was over-earning in that region. but there is that demand. they can ship their chips elsewhere, and that is what gives the confidence that this company is really ahead in terms of not only developing a gpu, but on billing it. networking is a $10 billion run rate business. software is a $10 billion run rate business. they have the perfect mouse trap

in terms of bundling the chips to build models. that is huge. lisa: we were talking about openai and the relevance of that to this story. how much is there a relationship in terms of microsoft's desire to create some sort of rival chip with respect to the ai development more broadly and what the future is for openai as an independent agency? mandeep: look, openai and nvidia are the face of generative ai. if you think about the trend that has played out this year. i think openai going to this turmoil, microsoft driving those changes, has steadied the ship. i would be surprised if they can ship out the next chatgpt as quickly as they intended, because there will be some talent loss as a result of this. i think sam coming back to openai may drive some people out , and i can't imagine things

will go back the way they were last week. tom: but to those people actually do? i'm serious. do they sit at a desk, with a mac? what computer is in front of them, and are they doing the coating like the coders do at bloomberg? is it as romantic as that? mandeep: generative ai is built on a transformer model, and that is built on, you know, ingesting large amounts of data. there is a human feedback element to train these algorithms and with those guardrails. and training is a constant process. that is what we learn from nvidia last night. you are not one and done. you're constantly training your model. it is why you need the gpu's and data center buildout. there is a lot going on in terms of understanding algorithms, and obviously putting the guardrails to make sure the results are correct. jon: a final question for me, and certainly i would never criticize satya nadella.

one of the best ceos in corporate america. but clearly some missteps. what do you think the lessons of the last week will be for him and for microsoft? mandeep: i mean, when you make a $13 billion investment, take a 49% stake in a company, you take a board seat as well so you know what is going on. in this case they were blindsided by the developments, and he mentioned that, and clearly i think that was the lesson for microsoft here. jon: thank you, sir. mandeep singh of bloomberg intelligence. we have said this is not someone like satya nadella does business, but it clear missteps on microsoft's side. tom: they are saying this is a microsoft victory. i will let you explain how. but i do agree, the shock of this within the niceties of the foreignness of seattle and silicon valley, i mean, -- lisa: it is a victory because

they are going to win no matter what. they have a 49% investment. in this case they preserve their investment, and there ai capabilities have just been highlighted. tom: but there is different ai 's. there is chatgpt and microsoft has copilot. does marc benioff's ai need the same? jon: we still don't know why he was fired to begin with and we are still trying to find out. tom: i still don't know what a large language model is. jon: you've got some reading to do this week. that will be good. tom: watching paint dry. jon: that bad? coming, jack caffrey of j.p. morgan asset management. futures on the s&p 500 positive by .15%. we will have some important economic data, jobless claims in america. about 94 minutes away.

from new york city, this is bloomberg. ♪

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from >> you know, we think that eventually these interest rate hikes are going to have to bite more. >> i don't expect the fed to cut rates until the second half of next year. >> may be fed is done. the notion of higher for longer is being lost on investors. >> economy moves slowly and inflation has come down. the fed had very little to do with it. >> there is also a chance inflation does not fall back to

1.5%. >> this is "bloomberg surveillance." jon: we are thankful for equity market returns. live from new york city this morning, good morning, good morning. this is bloomberg surveillance on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. the bulls out in force in the last 24 hours. bank of america, the target next year. i will be seeing lori, see no next year. year-to-date the nasdaq 100 up close to 11% in november alone. tom: the acceleration is there this morning. i'm looking at luxury stocks doing well. wonder if it is a china pickup or the excitement over nvidia. people are reassessing, and i would say there is this numbness not to november and december,

the fed meeting there as well, there is a numbness about the complete total mystery of january and february. what it is going to be like. jon: i'm numb to the returns of nvidia. we are talking another -- about another double-digit percentage beat. and they still ski -- they still keep skipping lisa: over that bar. lisa:and people are not impressed because they are not skipping higher over the bar. which raises this concrete question and existential question for the rally we have gotten. how much growth have we baked in that is or is not achievable? what are we pricing in at this point? tom: the fancy existential question is simple. we going to see brett -- br eadth? we have paused here, but how do we get to a 1977 left? -- lift?

you need breadth. jon: we have called nvidia the magnificent one. up more than 240%. it is important to this market. it makes up about 4.6% of the nasdaq 100. tom: i did not know that. jon: also i think number four waiting on the naz -- on the s&p 500. lisa: how quickly the labor market is going to roll over, that is the key question. what is the distinction between a goldilocks slow down and a more protracted kind of downturn? i will also add to that, is disinflation good for corporate profits? is that good for the employees if they are not seeing commensurate wage gains? we are seeing earnings that gets to be a complicated picture. jon: the labor market no longer a reason for this fed to be hawkish. is now becoming a reason for this market to be bearish?

are we at that inflection point? how close are we to that with jobless claims? lisa: michael collins was saying he hopes we are closer to that inflection points than markets are pricing in. most people on this show have pushed back, saying we still see grinding to 5000. that seems to be where we arrive. jon: very soothing. you have been away for 3, 4, five years and you look at where claims are, they are still low. lisa: but it is the trajectory. you have seen unemployment rates go up. it has never happened that way where there is not another more nonlinear jump up. keep using that word. is this time different? that is what people are grappling with. tom: we have to have some brammo gloom the day before thanksgiving. jon: that was soothing, though. the delivery has changed. lisa: that is my brand, you know? jon: equity futures just about positive on the s&p 500. the bond market, muted moves.

in one direction, but they have been small moves. we are down by a couple of basis points on a 10 year. lisa: which is an important point. is this the new normal. u.s. jobless claims very important to see whether they inflect up further. 10:00 a.m. we get the final read on the university of michigan sentiment survey. i'm watching the inflation expectations, which surged in the previous survey. we have been talking about all morning the conflict, the war between israel and hamas. we have received news, which we all welcome, of the idea of hostages being released by hamas, being returned to israel as soon as thursday, tomorrow morning. yes, this might lead to a cease-fire for five days, but after that then what? jon: it is a rare positive development that i think we are all happy to see. with us around the table, jack caffrey, equity portfolio manager at jp morgan. what do we need to see to get

this rally to broaden out into next year? jack: let's break this down into three steps, if you will. the holiday rally is certainly very much in force. november has been a really good year. i think against a context of what most people would have been putting forth as an idea of what to expect. with the end of tax selling with the return of the corporate bid, earnings being positive urine year, you have the ingredients of the next month, 2, 3 of things being able to move a bit higher. turning to what gets you a broader market rather than an extraordinarily narrow market is -- i hate to say it, he stopped kicking the can down the road in terms of what a continuing resolution turns into. how do we get some clarity on what federal spending might look like for a long enough time that we can just worry about the election rather than how we are going to finance the election and our government? then i do think you are going to have a continued tug-of-war between the earnings outlook and

the multiple, where what happens in bond markets becomes really important. jon: it is interesting that the first thing you pointed to was the political calendar in 2024. is it that important for you? jack: equity markets want to find something to worry about, and to the extent that most economic students chose to stay away from political science for reason, we wanted to pretend we understood the math rather than understanding the psychology. and what we come back to and where i actually have a degree in political economy, i think our government writes the rules under which our economy operates. it would help me to understand who is writing those roles and what they are going to set them up to be. paying for all of it kind of matters. tom: what do people do that has single-digit returns this year? you have been doing this for ages, and there are certain years where we are all behind. how do you catch up? jack: i'm trying to figure that

out, because i'm behind this year. tom: you have three minutes. we want an answer now. jack: well, i should have bought a lot more nvidia. it doesn't really fit into a dividend growth mandate. ultimately it comes back to that question of broadening. and i think if you look at a strategy, earnings were supposed to be down this year, they ended up being up. you can find portfolios with stocks that have dividends that are upload double digits. tom: do you follow big tech because they do not pay dividends or establish double-digit dividend growth? jack: i don't think you can fault big tech for behaving in a way they are rewarded. you have openings valued on a price to sales cases. when everyone is telling you is, we are not asking you to have earnings. to the extent you can have an entire, almost 30% of the market that does not have to manage itself from an earnings perspective, from a consistent

cash return to its investors, those management teams are going to do what they have done and continue to do that. i think dividends offer a real check on earnings and a real return of investors and let them decide to invest. tom: lisa, drowning in debt, 1.1%. lisa: this is a cash flow bonanza. at what point are we pricing in a potential continuation of the pace of acceleration of that cash bonanza into the future? how do you game out what we are pricing in, given some of the moon shots we've seen? jack: nvidia today reminds me a lot of cisco in the late 1990's, as having been that defining stock that somehow sat in the middle. what cisco was to the internet and networked world, everyone hung on what john chambers would say, where he would shockingly manage to be earnings time after time. and ultimately it came down to when his customers run out of money to keep buying his servers. nvidia now sits in that particular position, where they can sit there and look at the

capital spending of microsoft, of amazon, of alphabet, of some reworked chips of what china intends to do in ai, what some countries in the middle east seem to be doing, and come back to, at what point does the investments that other people are making start actually becoming more challenged? and what is different now than the 1990's example, cisco's customers were all debt-financed. what the fed ended up doing, draining liquidity, taking down the concerns for y2k, for people who remember ancient history, is very different than the extraordinarily powerful base, casual-generating companies which for the most part are not being asked to return cash to their investors. some, thanks to dual stock. lisa: in other words, it is how long do customers have open pocketbooks and plenty of cash? their customers have open

pocketbooks and massive quantities of cash. how much can you see the moon shot continuing in some of these names we did not appreciate perhaps at the beginning of the year? jack: i think, you know, wall street loves an easy story to understand. ai is conceptually hard to understand, what if everyone wants to do it everyone is going to keep spending. and certainly right now the cost of capital is higher, that it is still not all that burdensome against a longer-term history of what money should cost, to the extent that the companies which are really driving that spending either have access to a blank check, if you are in china from state financing, or personal financing, and ultimately coming through. when you look at why are some people disappointed in the video, it is, what have you done for me? what is effectively a tear in her percent gain your on your? -- effectively a 200% gain year on year?

that comes back to, what have you done for me lately? jon: this morning i think investors also gravitate toward stories they believe are divorced from the cycle, because they don't want to talk about the cycle anymore. this is one of those trends you can see out beyond a recession five years down the road. lisa: it does not have a cyclical field. we are looking right now at something that is a moonshot in a specific slice of history. tom: quickly, jack, i'm calling the bull market, two fossils from the past like you. is this a legit bull market, and we are at a 1977 analog? you have a lot of scared people over at jp morgan, don't you? jack: you got some brilliant enthusiasm people, you've got some scary people. that is the beauty. tom: is it the second leg of a bull market? jack: we have had a great month.

if we go back, we are still down 2%. we have not entered that bull market because we are not back to highs. to make sustainable highs you need more people playing along than what i call the sacred seven -- not the magnificent seven, because i'm trying to avoid the illogical belief in terms of growth rate. -- avoid theological belief in terms of growth rate. the inventory supply chain finally got fixed. tom: did you see this percent change on standard & poor's? jon: we are big time up today, something like a percent. on the session we are positive by .2%. jack, you and i have had the privilege of talking for a long time. i wanted to squeeze in your call on housing. what is the call now? jack: it is certainly the last

several months my bias has been we are living in the innovation nation. the idea that with an 8% mortgage rate people are trapped in your 30 year mortgage. the shame, the shame. but you are certainly going to see, i think, some freeing up of the housing activity. i think that comes back to, you know, will the bond traders be right and we start getting rate cuts next year? rather than this permanently-high plateau the fed is talking about, which reminds me of 1929. except now it is bonds, not stocks. jon: this was a clinic. jack caffrey of jp morgan asset management. happy thanksgiving. from new york city this morning, good morning. ♪ (sfx: stone wheel crafting) ♪

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this operation right now requires that they remove more civilians who are under significant threat. so, this war has weeks if not months to go forward. jon: that was no monroe the former senior u.s. intelligence official. from new york city this morning, good morning. equities pushing higher on the s&p. i do want to lock our attention on crew. we have wti down by 1.8%. we go into opec-plus weekend, or at least we thought we were, talks scheduled for the weekend may be delayed according to delicates. have you got any idea as to why? lisa: there was some talk about saudi arabia being dissatisfied with other members and oil production goals. i don't have any intelligence beyond that. that is what we are reporting at bloomberg in light of the potential delays. here is the question -- do they need to cut more? the idea that we are going to be talking about that really highlights how much oil has been a missed call.

tom: i'm going to overlay on that. bruce castor mcauliffe the next months being at 2.1 percent global gdp. i don't have the model in my head or on a spreadsheet, but i'm suggesting that is oil sell, or at least not up? jon: credit to the saudi's for cutting production when they did. seriously. we were criticized at the time but looking at your we are all talking about decelerating growth. it was kind of the right move, wasn't it? lisa: it was, and they are feeling pretty justified. much of this is decelerating growth and demand? and how much is u.s. production? that is going to be a key question a lot of people are trying to understand also. jon: you could say they shape the events they anticipated by pershing crude prices into the 90's. the latest so far from reporting suggesting talks scheduled for the weekend may be delayed.

crude at session blows off the back of that. wti, negative by 1.8%. tom: do we get a lift in the markets here? is this the signal for the end of the year? we are in the holiday season. i think we could all agree with all of the distractions we have of december 13, but i have money, what do i do? jon: what does jack caffrey say? tom: i listen to every word. jon: huge gains this month. tom: you can see jack caffrey on digital. this is a joy and away from the horror of the eastern mediterranean, to have aaron david miller with us. he wrote a book in 2014 which ought to be re-this morning. he is a senior fellow at carnegie endowment for international peace. with respect to our president, and to take your wonderful book here on the end of greatness, i want you to describe how you

perceive any given president, but in this case president biden, with mr. netanyahu. how should we interact, how should our president lead, dare i say, israel to a better future? aaron: that is a very good question, and the president has been criticized by just about everybody, with the -- with the exception of the republican party. for not restraining israel for cracking down on the exponential rise in palestinian deaths and humanitarian catastrophe in gaza. a pit the oracle at delphi cannot tell you how this conflict is going to end. but one thing is predictable, and that is joe biden's response. for three reasons. his persona, the fact that the president's model here is bill clinton. both of these men have this preternatural love, i would say, use the word intentionally, for

israel. the president reacted to october 7 in a powerful speech on october 10. second, his politics. you have a deeply divided democratic party. progressives and even mainstream democrats are calling for more restraint. but, again, 2024, i don't think the president wants to leave himself vulnerable to republican charges that he is weak on israel. third, policy constraints. the fact is biden does not have any better answers to the cruel dilemmas the israelis face. number one, prosecutor war against hamas and eradicate it in a densely populated urban area, without endangering large numbers of palestinians. and then what do you do the day after? i don't have a better sense than the israelis. tom: i look at the collective memory loss, and it may be back as far beyond 1948.

we have a youth of america that seems removed from our collective memories of the eastern mediterranean. how do either political party corral the youth of america toward an understanding of america's effort in diplomacy in the eastern mediterranean? aaron: i think it is virtually, given the generational provides, identity politics, sort of a -- sort of asymmetry of power or the stronger party, regardless of context, is perceived to be the goliath, and the smaller party perceived to be the day -- david, i don't see that as possible. i am old and probably out of touch with this generation. when it comes to foreign i think george will was right. for most americans, even for young americans, they want as little of it as possible. the fight, the struggle, the focus is here at home.

i worry about that young generation. i have 240-year-old kids who i think are committed to trying to leave the world in a better place. they are interested in foreign policy. my bias has become theirs to a degree. i think it is hard. tom: lisa, i'm depressed when somebody young is 40. [laughter] lisa: i'm curious how you see this evolving in terms of, we have all been talking about what some sort of humanitarian pause or cease-fire, whatever you want to call it, a cessation of fighting to allow the hostages to go home to their families, to allow for humanitarian aid to enter gaza, what does that lead to? do we have a sense of what different camps one after that? aaron: i think he broke the code. i think that is the key question. is what we are witnessing within the next 24 hours when 50 israeli women and children will be released, hopefully three americans, including a three-year-old that is about to celebrate a birthday, is this a

headline or a trendline? hamas took prisoners for two reasons. number one, to trade them for a symmetrical number of palestinians released from israeli jails. 150 in this trait. because this resonates deeply in the palestinian street. hamas also took hostages in order to constrain and delay an israeli ground campaign. the hope is that pressure will mount, a plausible turn into a ten-day pause, pressure will mount for what hamas really wants. just an extended cease fire. -- which is an extended cease fire. that is going to be problematic for the israeli government. it seems to have no intention of stopping its military campaign. pressure is going to rise and we have two clocks ticking. the israeli operational clock, which is taking much slower -- weeks, perhaps months. biden and the international

community's political clock, which is taking much faster under the pressure of the humanitarian catastrophe in gaza and the exponential rise in palestinian deaths. it seems to me the situation is going to get worse before it gets much worse, i'm afraid. jon: back-to-back clinics on this program in the last 30 minutes. aaron david miller of the carnegie endowment for international peace. some of these conversations, lisa, just need to get back home and go back over. hamas has agreed to free 50 hostages. what you just heard there, though, is that could be the starting point for a bigger push to get a much longer cease fire has the pressure begins to build, continues to build. lisa: what aaron david miller said about two different timetables, the israeli government having weeks and months, and what we hear from president biden in a different political calculus, a shorter

calendar, highlights the tension underpinning some of these discussions. tom: i would go to robert yesterday. we have to look in the mirror at the state at home. he has written about this for at least three decades. it is about the state of the federal budget. the debt and deficit here. how do you prosecute diplomacy and defense if you are distracted by debt and deficit? jon: just to understand the analogy, it is not just that the clock is ticking. for the president the alarm went off over the weekend, given up all thought of nbc news. tom: a stunning pole. jon: equities on the s&p positive by .2%. up next, earl davis on fixed income. so far it is a bit of a snooze in the bond market. ♪

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jonathan: jp morgan with the line of the morning. good morning. what a you november has been for this equity market. the nasdaq 100 up 10.6%. the s&p 500 month to date is up 8%. best since july 2022. the nasdaq up 0.4%. tom: moments ago the vix pricing in 12.99.

that is a bull market vix. rarely do we get to a 10 level. jonathan: we joked all year that equity investors are trying to make bond market calls. they just do not want to look at the bond market. over the last five days, they kind of ignore it. let's sit on the 10-year. monday down a basis point, tuesday down two basis points, today down two. have a got stability in treasuries? lisa: seems like it. can you bank on it? the greater appeal of bonds because of the higher yields may end up being a dampener but not a derailer. it seems like bonds might be a dampener of the appetite for

risk assets but not a deal killer, and that seems to be the case. unless things get out of control. tom: are we out of control with west texas or brent? jonathan: we will get to crude in a second. i want to round up treasuries. a month ago -- it is november 22 and the 10-year is 4.37. it has been a big turnaround in the last month. something like 70 basis points. tom once to talk about hydrocarbons. session lows on wti and brent by almost 3%. this after the headline talks scheduled for the weekend might be delayed. tom: we will be able to go to vienna. jonathan: i think madison is going. tom: really? jonathan: madison is doing team coverage out of vienna.

i have no idea how to read this book crude is down something like 3%. lisa: maybe the idea is there are delegates that do not want to cut production. i am not sure what the rationale is but how much do we not understand the move in terms of is this demand going down or production in the u.s. offsetting the cuts we saw? tom: the memory of 1986 where opec was overcome by events. i do not know what to do with the jp morgan global economy up to 0.1%. that is an original statistic. jonathan: we will return to that. under surveillance this morning, hamas agreed to free 50 hostages in return for a four-day cease fire. israel will release 50 women and children under the age of 18.

sam altman returning as ceo of openai days after his surprise firing. that is the story we have seen dominate the news flow over the last week. they also named a new board of directors which will often have representation from microsoft. they rehired altman after the entire staff threatened to resign. microsoft up 1%. more than unimpressed. lisa: in his interview with emily chang he was very controlled and seeming to be displeased with the fact they were not informed before this move was made. but they were reviewing the situation. i wonder if he has gotten on the phone and said, can you tell me what in god's name happened? tom: the summer into

thanksgiving is all in all a win for microsoft. jonathan: mandeep singh has pushed back against that. tom: i don't know. i am asking. jonathan: i want to go back to something mandeep said. to take an investment in a company this large, to have 40% and not know what is going on, is a misstep from microsoft. we can talk about the brilliant things they have done and how he has managed this with grace that there was a misstep for microsoft. tom: is it over? can we move on? jonathan: i have no idea. tom: openai. more openai. jonathan: i hope we can talk about nvidia more. turning positive in premarket trading. we have talked about that many times this year. we can do it all over again this

morning. the world's most valuable chipmaker forecasting revenue of $20 billion in the upcoming quarter the average estimate just under $18 billion. the stock turning positive. i turn to that quote from evercore. i watched this drop yesterday and saw the stock price reaction and thought julia nailed it. lisa: this is an overachieving child. what more can you do for me? they came out and said, this is really good. everyone is thinking, eh, you can do better. jonathan: this feels personal. is that what happened to bra mo? [laughter] lisa: no. jonathan: what do you have? postgrad? lisa: lower the bar. it is on the floor.

[laughter] tom: restaurant is the way to go. jonathan:jonathan: you have said that a few times. why not? tom:tom: i have huge respect for both of you. this is a really important conversation right now. it was important 30 days ago but it is important into 2025. earl davis his head of fixed income at bmo. his call that jerome powell will stay the moment and keep rates higher for longer. do you stick with that call? earl: 100%. that is one of the things we are looking at in the market now and how many eases are being counted for next year. i always believe the market but in regards to pricing at the moment the fed will be firmly on hold. tom: you are out of western

ontario, the land of perfect statistics. what is a correlation of your fed call, your hire for longer call to the equity markets? earl: great question. the higher for longer does not matter so much. what happens overnight will not impact equities unless they ease and then it is a euphoric buying of equities. but from a quantitative perspective it is the 10-year to 30-year rate that matters. lisa: pgim said they could see a further decline in real yields based on the fact people are expecting this growth to continue and we are seeing the signs of more material slowdown. do you agree? earl: i agree eventually. as long as the economy remains resilient -- i know we are

getting mixed numbers -- but there are less calls for recession. as long as we have that real rates will stay find. that is the counterbalance to the economy doing well. to fight inflation, which seems like people have forgotten, part of that is keeping the real rate high. lisa: you are saying you do not think the slow down are seeing on the margins is enough to bring inflation lower, and currently, the 0.9% decline in benchmark rates that people are pricing into the market next year are overstated. earl: not necessarily the slowdown that we are seeing but the pace. is growth declining fast enough? there is still a lot of excess demand and i see it when i go to the stores and restaurants. it may be savings and credit but people are still buying. that is a big driver of the growth in our economy and that leads to inflation. i do not see it on that part.

on the inflation front we are getting constructive numbers but we are still worried about wage inflation. tom: right where we wanted to go. wage inflation. how 1960's are we? forget about cost, push, demand, pull. is it plain and simple wage inflation that we remember from 40, 50 years ago? earl: i think we are getting there. the difference between now and 40 or 50 years ago is the amount of unionized employees. significantly lower than it was but that trend is increasing. we are seeing the wage increases uaw, ups, and abroad in canada as well. the people who are non-unionized have to get wage increases and we saw that with honda and toyota. we are not quite 1960's and 1970's with that trend is increasing and the wages will

remain a pressure on inflation. i think it leads to secular higher inflation. lisa: what is your highest conviction heading into next year at a time when people seem to be moving the opposite direction, celebrating return to the old normal? where is your conviction line? earl: there is no eases until q4. just by shorting two-year bonds or any part of the curve you make money if nothing happens because the overnight rate is still 5.25%. that is negative carry trades. highest conviction trade is no eases, fed on hold until after the election. jonathan: wow, until after the election. that runs counter to a lot of people. what to clients say when you tell them that? earl: following the winners is a loser's game. we are always coming in second. we base our views on tailwinds,

fundamentals, quantitative numbers and that is what gives us -- that has proven to be successful in the past. we show our results and say what is our marker? for example, where would we advance? the key number to look at his unemployment rate above 4%. as soon as it gets above that, i think the safety is off, so to speak. [laughter] we are at 3.7% still and i think the fed would like to see it closer to 4%, 5% before they start easing. that is what will help us change and they know our results. they know that this is the most volatile year. jonathan: we appreciate it. earl davis of bmo asset management. welcome to the program. equities on the s&p 500 shaping up as follows. positive 0.2%.

yields coming in at three basis points. no rate cuts until after the election? lisa: that is so counter to the expectations. people are pricing in almost a full percentage point of cuts by the end of next year. he said they will not do it because they do not have the conviction. the political aspect is one of the most unspoken aspects. how do they justify a cut that could be perceived as something that could help the incumbent versus not? tom: does it save the banks? i find that fascinating. if you get an earl davis call -- [crosstalk] -- i am not sure what the banks want. they want 2023 to end. jonathan: may be the fed wants 4%, 5%. i think we are 3.9% right now. this goes back to the labor market. tom: yes, yes, yes. lisa: this is why everyone should be watching the day before thanksgiving. claims that will give us a sense

of the trajectory going forward. jonathan: i am going to take it so seriously i am going to go back to my desk and watch claims. tom: you are going back to start cooking. jonathan: i need to start cooking later. tom: somebody emailed me and there are creamed onions. 16 leaves of sage. jonathan: the only reason i am here is the next segment. we are going to catch up on madison muller with the impact of ozempic. tom: it is a shot? jonathan: get some shots. people are micro-dosing ozempic. lisa: really? wow. jonathan: little shots. [laughter] ♪ (sfx: stone wheel crafting) ♪

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>> i think some of the reasons around how it impacts the food industry and the drinks industry is exaggerated.

it underlines that for the first time we really have to address weight. many patients have not succeeded. jonathan: the blockbuster drug of 2023. that was the ceo of novo nordisk about the increasing popularity of appetite suppressing drugs. skyrocketing 300%. food manufacturers and retailers preparing for the potential impact as we enter the holiday season. this stock up in europe 30%. tom: in europe. it has gotten fda approval. some but he must have approved it. it is a shot. where are the competitors? if that is the successful and nvidia is a six plan to make a chip, they all copy the

chemical. jonathan: lily's in the mix. lisa: and to the point of how much an impact this will have on the broader food and drueke industry is how are people taking this? are they taking this medically in order to reduce the obesity epidemic or are they trying to achieve a look? i am serious. jonathan: i think it is both. lisa: at what point is it sustainable given some of the side effects? at what point is it medical and are we conflating the two in a way that exaggerates the effort? or are we underestimating the desire? tom: i have been unhappy with the coverage because i do not think we are looking at it like a medical story. we are looking at it as a money story. shits and giggles story, if you will. the answer is are we talking

about this as a medical story? jonathan: it is a money story because it is a medical story. it is such a large slice of gdp in this country, health care. it is pushing 40% obese. i do not think that is a money conversation. tom: ok. jonathan: of course, it is a money conversation. tom: i get the obesity story of america what are the side effects? jonathan: that we need to get into. what i think is interesting is we are talking about ozempic. we do not know the names of the other drugs. it is like search engines. you do not talk about bing and yahoo!. tom: thank god. jonathan: they have already won by the nature of the conversation. we are just calling it ozempic. tom: after 3000 calories tomorrow she is cut and chiseled out of the ryan fieldhouse. madison muller joins us now

where everybody -- nobody is taking ozempic at northwestern. there are jokes, including from clowns like me. get serious. what is the downside to ozempic? madison: as you were just discussing it is really important medically speaking that this country does have a huge problem with obesity. obesity affects over 200 other chronic conditions so the impact on health and health care and prevention of disease is enormous. but there are downsides. people have side effects like nausea, vomiting, different stomach problems, varying degrees of severity and that is something the drugmakers are really focused on working out in this next generation of drugs. figuring out how to make weight loss drugs with fewer side effects. for some people it is a deterrent. jonathan: some of these drugs are aimed at diabetes, some

aimed at weight loss, that contain the same active ingredient. is that just marketing or different amounts of that ingredient? what is that? madison: in novo nordisk's case, ozempic is the drug for diabetes . they are different drug strengths. for eli lilly's drugs, that were just approved earlier this month, those are the exact same dose, exact some ingredient, virtually no difference as besides the marketing. it is for the commercial purposes. lisa: do we have a sense of how many people are taking the drug? how widely spread is this expected to be and whether people are taking it more for medical reasons or just pure weight reasons.

madison: good question. i think that is something we are trying to figure out in all label usage and what is happening. these people are seeing incredible benefits. it is undeniable these drugs are life-changing for people. we need that. there are also people that are using that off label but the drugs are expensive. the costs prohibit widespread usage unless you are able to get the drugs covered by insurance, which is spotty. there is not widespread insurance coverage, medicare does not cover weight loss drugs, so it is an interesting scenario. but we are seeing projections that this market is expected to grow to $100 billion by 2030. it is growing rapidly and there is huge market here. lisa: how much of a push is

there to get insurance to cover this and how does that factor into the pricing? we are trying to parse a difference between obesity and medical issues like diabetes, but there is a lot of associated side effects to being overweight. there is a question about what the distinction really is and whether some of the other costs are to go down that would prompt insurance to be forced to take this up. madison: that is the conversation that is playing out right now. insurance companies are still unwilling to cover these drugs because those real cost estimates have not come out yet. that is something the congressional budget office is looking at right now. they are asking for more research, more data on the prevention and how much money the country will save in using these drugs, and prevent future disease. like you said, there are so many other related conditions and just a couple of weeks ago we saw at the american heart

association conference in philadelphia we go ovi, cut the risk of heart attacks and stroke by 30%. there are other studies coming out that chronic conditions -- to see what the real impact is and what other conditions we might be able to award off by using these drugs -- ward off by using these drugs. jonathan: every time i see those headlines i sit down and i'm like, duh. didn't we know that already? what is revealing about that? madison: some of it is to be expected. when you reduce weight, when you control blood sugar better, it will have these health benefits. but there is also something going on that we have talked about. there might be this added extra

benefit. there might be something going on with the drugs themselves that they are having a positive impact on the heart. in these studies we saw from day one there was improvement in heart benefits with people taking the drugs. these benefits were seen from the get. there is something else going on and that remains to be seen what exactly that is. but there are these incredible benefits we are seeing beyond weight loss. it is also showing obesity is a real disease. it is not a lifestyle condition which is what -- that can be controlled by what someone is eating. it is a real medical issue. jonathan: thank you. fantastic contribution. madison muller of bloomberg and what has happened with these blockbuster drugs. lily is up something like 62%. novo nordisk up close to 50%.

heart disease, the number one killer in this country. tom: no question about that. i am also looking at the literature out of the web. $900 a month and what happens when you stop taking it? is it a $900 a month -- what is that? $9,000 a year? math. $9,000 a year and you are in it for life? lisa: there are a lot of questions around the long-term and short-term side effects and this is something people are going to be studying. the bottom line is the fact that weight loss drugs are currently being thought of and experienced in such a concrete weight has changed the conversation the same white artificial intelligence did the tech world. and that is a game changer. jonathan: well said. lisa: thank you. tom: she is on her game today. jonathan: the pillar of this economy is obesity. so much of this economy is leveraged to that tragic issue in america.

alberto gallo of andromeda capital joining a shortly. this is bloomberg. ♪ what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

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>> the question of whether we are seeing or consumer weakness, we could be. >> the economy will likely slow

down. >> we are holding onto that slow down but we have been surprised to the upside throughout this year. >> we are making progress in terms of taming inflation, bringing inflation off of peak levels. >> i think we are looking at modest growth next year. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. "bloomberg surveillance", jonathan ferro, lisa abramowicz and tom keene. lots going on this morning. many different narratives as we prepare for the holiday season. the interview of the day, helene becker, on how bad it will be. jonathan: that is what you are focused on. tom: what is the travel going to look like? you wonder trains, planes, cars. helene becker on the airline industry. jonathan: tom obsessed with the airports he will not be going to. [laughter] tom: somebody said it is going to be the worst and 50 we years

-- in 50 years. every plane has an nvidia chip. jonathan: move on. fantastic to see. one of the worst performing stocks of the year -- and this is just a commentary on the broader stock -- moderna. tom: we are moving on and it is a concern. preparing for thanksgiving is getting the abramowitz turkiye in the new refrigerator. it is going to be a welcome kitchen this year. lisa: it is bigger so i can really stuff more things in th ere. tom: when you plug it in did the lights dim and the rest of the house? lisa: yes. i bought something big and a lot of other people are buying things that are big. tom: it is the consumption which is the surprise of the year. jonathan: i thought we got enough of a warning about big ticket items. lisa: true. jonathan: trying to contribute. lisa: exactly.

but there are other things going off the shelves. tom: that folds into our narrative this morning. alberto gallo, coming up. i have equities up, bonds in, oil on the edge of a crater and i'm sorry, it is world, u.s., everybody at bramo's house demand. jonathan: you said helene becker was the interview of the hour. the data point is jobless claims it about 28 minutes. we're looking for claims to come down to 227,000. tom: it has got to break. jonathan: started to climb a little bit. tom: it has got to break to get to the soft landing. jonathan: we heard from bmo hearing no rate cuts whatsoever until you get 4% on on the climate. i wonder what that would do to this equity market. i will go back to what i said this morning. if this labor market is no longer a reason for this fed to be hawkish, when does it become

a reason for this equity market to be bearish? how close are we to that moment? tom: i don't know but we are breaking down again. i am waiting for the 30-day intraday chart. the two-year yield breaking down. we are not there yet, but we are moving in a direction which gets you away from the gloom of high rates. jonathan: we broke 4.40 on the 10-year. single-digit moves, low single-digit moves, through this week. we have had five days of yields moving lower. what a year november has been. the s&p 500 up more than 8% this month. the nasdaq up 10.6% in november. tom: we had a vix of 9.8%.

we got a lot for you in this hour. in the 9:00 hour, turkey leftovers. [laughter] jonathan: my show is now turkey leftovers? tom: you stand there with a little chef hat. jonathan: i am leaving. [laughter] tom: alberto gallo joins us now with his work with andromeda capital management. what a raging debate on where yields go the first half of next year. what is the andromeda bet? alberto: good morning. as you were saying, there is a lot of happiness, a lot of complacency in the market. we are in a situation where we are pricing a lot of cuts from the fed and european central bank. but we found a hit to growth.

we are pricing goldilocks. low-inflation, central banks cutting, but without recession priced into the stock market. this is also because this year we had a lot of shorts in the market. there are people that are short and it can continue, but we think rates can go up again. we think inflation is persistent and governments will have to issue debt because fiscal spending continues. you have seen the u.k. tax cuts, for example. spending continues in the u.s. in the u.k. and the eurozone. we are not done. we think we are going back towards where we were previously this year. maybe not 5% but we are going back up. jonathan: we are done at opec+. there was a suggestion that maybe opec+ would be delayed,

the meeting would be delayed. we are hearing from delegates the meeting scheduled for the weekend has been delayed until next week. tom: that is because they cannot agree. jonathan: it looks that way. tom: there is the why. jonathan: it has been delayed since next week. [crosstalk] alberto, you have got to put money to work. given what you said about the federal reserve what have you been doing in the last month as this equity market has continued to rip? alberto: moments of fear in markets, like what we had in march earlier this year or in october, there can be more opportunities for tactical investors. we put a lot of money toward the whole year but particularly in these moments you have locations that can be pretty useful.

the markets are rallying. there is more room for credit. it is an environment where equities are expensive and wages and profits are ok. but it is surprises to the upside in terms of earnings but stocks can surprise more than they already have. credit is offering today. for companies that are relatively large and sometimes they have shareholder support. we are looking at new issues in corporates and banks, defensive sectors, sectors that are not resilient of high interest rates to pay us that kind of yield, double-digit yield, which is a pretty juicy premium over treasuries. that is pretty attractive to us today. lisa: today. that was an interesting note

that it was today. there is a question and attention underpinning this complacency you talk about with pricing in goldilocks and leaning into what has been working. when do you push back against the sentiment that has been the driver, and the winning driver, year to date of returns? alberto: great question because we do think stockmarket are a little expensive and rates markets are pricing too many cuts, but going into the holidays and with a short positioning in the market, it is sometimes hard to wean off the other side. we think in q2 next year governments will need to issue. this year there was a lot of retail components that helped governments to fund up to 10% of the issuance as investors went into treasuries or eurozone government bonds. next year what is happening is banks are more competitive.

banks are increasing the rates so governments will have to compete with banks for retail funding. i think bond yields in the five to 10 year part of the curve -- we do not think there is recession coming next year which means the fed does not need to cut. the ecb will not need to cut for the first part of next year. we will see volatility again. lisa: what is the bigger pain trade heading into q1? economic resilience or is it economic pain? alberto: the pain trade is there is a lot of shorts in the market. there is underweights in equities. the pain is for risk assets to grind into january. we are seeing it playing out. there is investors that were

very hedged and these hedges are coming off into the year end. but next year we probably will start with a more lean positioning with less shorts. the market will have a higher hurdle in going up. we face a higher hurdle. we are seeing a giant shorts week, but there is a lot of positive expectations priced in. we have to be tactical here. jonathan: the bar gets higher going into 2024. happy thanksgiving to you and the team. great to catch up with alberto gallo of andromeda capital. the opec-plus meeting scheduled for this weekend has been delayed. talks running into trouble amid saudi dissatisfaction with other members on oil production levels. the meeting will now take place next week, according to delegates. saudi arabia, which has been

making these additional cuts going back to july, in difficult talks with other members about production levels. lisa: i don't really know exactly which way to take this. the market is clearly taking bets as may be are reluctant to cut as much as saudi arabia would like, which is maybe the reason why prices are falling. i do not know what to make of it except this highlights that there is a lack of consensus of what is required. also, whether to cash in on what you can get out of the ground now or whether to try and work together with the collaboration of opec+. tom: i find it fascinating brent crude down 35%. exxon mobil down 13%, something like that, and even aramco directly related to opec down only 10%. is it just oil has not dropped that much and oil stocks have not dropped? the mispricing between oil equities and oil itself is a

study alone. jonathan: we are down something like 20% from september which is kind of nuts given what has developed in the middle east. if you're just joining the program, we will start with equities and shift to the commodity market. equities down 0.2%. crude -4%, $74.67. break of 80 to the downside. tom: i don't know how much academic visibility or market economics visibility there is beneath that. i cannot believe i am saying this but i don't know where we are. there was such a skew toward greater global demand, $90, dare i say $110. lisa: i want to understand better why. is this demand? we are talking how everyone is going to be traveling. it is expected to be a new record in terms of traveling

post 2019. where is the lack of demand coming from? is this just an issue of china? or is this simply supply but the u.s. is suddenly producing? tom: publishing from deutsche bank in the last hour and a wonderful summary note into the end of the year. the u.s., i am not sure there is a collapse in demand yet. the rest of the world there is challenges. jonathan: shall we get to my tease? tom: squeeze it in. jonathan: coming up, turkey leftovers, otherwise known as "the open." larry adam, torsten slok, and amy wu silverman. i am leaving. [laughter] ♪

>> the question of whether we are seeing more consumer weakness, we could be and we should expect to see some

weakening go on after this period with a drawdown of savings. tom: joanne feeney giving us a view on the equity market. lots going on. we welcome all of you on the edge of travel. lisa abramowicz and tom keene. without question jobless claims is clearly front and center. about an hour and 30 minutes, turkey with jon ferro. [laughter] lisa: i am sure he is going to enjoy that. he is going to take a break but i do think this thanksgiving, the fact people are traveling back to their families, is good. especially after the pandemic. tom: we will have to see what the parade is tomorrow. lisa: have you ever gone? tom: many times. they used to come by the window. the bottom line is it rained here today. the airplane delays tangible.

maybe tomorrow it will be clearer and better for the parade. that would be the idea. let's do a data check. an equity left. good morning. futures up 10, the vix had a 12 handle. bull market 13.05. help me with bonds. two-year yield 4.85%. it is not a drama on a wednesday but you have got to give me new low yields. lisa: to me the level has taken less interest, in my opinion, than the fact we have not moved that much. the fact it has been gentle moves every single day, and yes, they have been lower, but to me, this goes against the volatility we had seen that was so extreme that a lot of people were saying we cannot invest even if we have conviction longer-term. tom: opec news down 4.2%. $74.47 out of west texas intermediate.

wonderful tradition for us to size the airline industry. joining us is helane becker, senior research analyst at cowen. when does it get better? when does american aviation harken back to what we remember but gets to a new model? helane: thanks, tom. i think we are in this period of time where we do not have enough air traffic controllers. any time there is a rain cloud in the area -- and a lot of the controllers we have are less experienced -- they slow things down and they do it for safety but it is frustrating. you have seen in the new york area especially but it will occur in other markets. the faa asking the airlines that

serve the market to cut capacity. we have seen this trend to fewer departures per day to smooth things out. just in terms of people traveling i think people are tired of not being able to go away. you have seen that. you sought in 2022 -- saw it in 2022 and we expect it to continue. tom: with this weather what are you focused on with the team? helane: we are looking at the traffic numbers and we are looking at where people are going. what we are seeing is an increasingly -- increasing number of people going outside the country for the holidays with her family. i don't think -- people may be tired of cooking at home. they do not want to go to a restaurant so they change their mind and they go traveling. we are seeing an awful lot of

that. i think that is a good thing. lisa: i am looking at prices to a couple of places and they have come down. i am surprised by how much lower they are this time of the year than last time. there was a story on the bloomberg talking about how airplanes have been increasing capacity in response to what you are talking about, the demand from consumers, but they are having trouble filling seats. are we seeing the shift that could change the picture in a more material way for next year? helane: i think we are. what we are seeing for next year is that domestic is going to be normal, whatever that is, but it will be normal seasonal travel patterns. your boss wants you back in the office three or four days a week instead of two or three. it makes it hard to take that long weekend. kids are back in school five days a week so it makes it hard to pull them out and go somewhere.

we are seeing that more normalized travel pattern in the domestic market. i think what you are going to see internationally is increased capacity because that is where the demand was. especially in the north atlantic, the caribbean, and mexico. those are three of the biggest markets we see declines. and we think there will be a shift to asia-pacific. tom: you and i have been following flights and i am looking at one from new york to paris. the answer is one third. you could fly three people business class for what one business class ticket cost months ago. lisa: i look at denver because the snow has started and it is nice. [laughter] tom: well, it is paris. lisa: you talk about the potential for prices to go lower. we talked about the contracts with pilots and other staff. all the prices are going up dramatically of the work staff.

the base costs are going up as well. put oil aside for one second, how difficult is it to make that breakpoint for some of these airlines as prices start to come in? helane: we are going to see margins get squeezed. no choice but to raise your revenue and it is hard to raise revenue, especially in the domestic market, because people will opt out. i have done this for a long time. you can never lower fares to upset volume declines. we will see margin pressure and we do not think airlines will make as much money in 2024 as they earned in 2023. as we revert to a more seasonal pattern, i liken it to the cargo industry. look what happened with fedex and ups. volumes are down and revenues are not up as much. revenues are up, costs are down, and margins are under

pressure. tom: i am trying to get my airline stocks back to where they were pre-covid. good luck with that dream. do you walk away from the sector? helane: it is really hard because the stocks are at 2020 lows or below. our best idea for 2023 was united. we had good success with that most of the year until we didn't. we really like cpa which is panama based. there is actually a lot of good things. it is a $3 billion market cap company. panama is a sealable airport so you do not have weather delays. there are a lot of u.s. ex-pats that rely on the u.s. dollar, so they can only spend what they earn. the canal would be the largest employer followed by the airport. it is a really well-run,

well-positioned airline with a dividend around 3% or 4%. that dividend goes up almost every year. the shareholders -- the company, rather -- pays out 50% of adjusted net income. that is a good one to look at. lisa: thank you. we are so grateful you are here on thanksgiving. are you traveling on thanksgiving? do you ever travel on thanksgiving? helane: that is so funny. normally we do but i could not take it this year. [laughter] i have been on the road every single week since august 1. when i looked at -- all of our kids were traveling. they are all gone. my son and daughter are together with my son's baby and his wife. my step kids are visiting their in-laws. i looked at my husband and said,

we are staying home and i am not eating turkey. [laughter] lisa: helane becker, thank you so much for being with us. i am staying home and not eating turkey. spoken like a veteran. tom: i get the idea -- and others have said this is a wonderful experience -- 10-year track record negative. it is a tough business. lisa: and it is only getting tougher. coming up, we are going to talk jobless claims. that is going to be the data point we are expecting. tom: veronica clark and ira jersey with us. bloomberg on the wednesday before thanksgiving. good morning. ♪

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tom: "bloomberg surveillance" with the lisa abramowicz and tom keene. jon ferro prepping for the 9:00 hour. look for his important segment, turkey: the day after. [laughter] mike mckee is making a five step cranberry sauce. jobless claims. it has become a big statistic in terms of getting the narrative forward. lisa: the high-frequency data highlighting what might be happening under the hood when it comes to the labor market. we do get a read and it comes out 209,000 jobless claims.

that is down from 231,000 the previous month and down from the expectation of 227,000. this was a better-than-expected initial jobless rate and fewer jobs -- read and fewer jobs. small revision upward -- is this good news or bad news? you are going to kill me for the saying that boat at what point does this point toward resilience that might challenge the rate cut decisions? tom: futures are up 12%. the bond market -- we have got the claims and continuing claims clearly indicating. veronica clark will be with us in a moment. durable goods a little soggy.

take a three month moving average on durable goods which is too much math for wednesday for thanksgiving. i agree with you. lisa: i have to say the response we've gotten in the bond market is surprising. you see yields lower on the day even though you are getting better labor market which calls into question how much demand can go down and how much we are going to see a potential risk of a research of prices next year. these are the questions that i know people are being -- are asking. especially when you have a sweep of better-than-expected employment data. tom: so much coming up. amrita sen will be with us in about 15 minutes on the shock of opec and west texas. down 4.2%. brent crude under $80. veronica clark will join us on the american economy, but first, a snapshot on his outlook for

next year. ira jersey has really helped "surveillance" this year. give us a capsule of your outlook. ira: my view is the fed is done hiking and eventually it will cut interest rates. i think the market perhaps is a little ahead of itself in terms of what it is pricing for cuts. as the minutes showed yesterday, i suspect that the fed is probably going to be reluctant to cut interest rates unless we have a deep recession. in an environment like that you can wind up seeing the yield curve remaining pretty inverted, or a little inverted, throughout all of next year with the front end pinned where it is and the long end potentially seeing a rally. treasuries could have a good year even if the federal reserve is on hold, because the expectation is going to be for the fed to cut in 2025 or start earlier in 2024. lisa: i got to say, i am really

surprised at today's market move. the response in markets to an initial jobless claims report that came in below expectations. in a normal world this should be a positive downside surprise given this means fewer people are losing their jobs. continuing claims showing the same trend. why is this not being viewed as a challenge to the idea the fed can cut a full percentage point year and we are going to see some sort of downturn? ira: with jobless claims at 209,000, that is a good job market. you have seen -- it is not a very big move. there is not a lot of liquidity in the market the day before a holiday, but you did see two-year yields back up in anticipation of the market saying, well, the fed is not going to hike necessarily, but maybe the pricing for make and june cut -- may and june cuts might be pessimistic on the economy.

the four-week moving average is what i look at for claims. it is very noisy and seasonal. 209,000 is suggestive the job market is relatively robust. lisa: do you think the slowdown we have seen so far given the robust labor market is sufficient to curtail inflation enough to get cosmetic cuts that people are talking about from the federal reserve? ira: i don't think there is going to be cosmetic cuts. the idea the fed is going to cut 25 basis points and trying caliber is not something that is in their standard operating procedure. i think it is much more likely that the federal reserve is on hold and then cuts more aggressively when it feels it needs to because the economy is falling out of bed. 209,000 jobs being created is probably not good for things like service sector inflation which is still the sticky part of inflation that is maintaining inflation above 3% in aggregate.

as long as you have a good job market, it is going to be a sign that the federal reserve is going to be on hold. tom: help the business people watching, including the laggard real estate, the trajectory of the 10-year real yield. they are really looking for a plunge in the real yield under 2%. do you buy it? ira: i do. that is our forecast for next year. by the end of next year we will see real yields in the low one handle. 1.25% to 1.5%. tom: wow. ira: i think it is going to be difficult for inflation breakevens, basically the tips gauge versus where nominal treasury yields are, to come down much lower than where they are today around 2.2% on the 10-year. if we are going to have the rally in the treasury market we think we are going to have next

year, almost all of that will come from the real yield. tom: away from trying to make money, ira jersey, what does that low real yield mean for the american economy, for business, the incentive to invest? ira: it should actually increase -- it should make financial conditions somewhat better. one of the drags on the economy right now -- which is what the fed wants, to be fair -- is to have real yields be an impediment to very fast economic activity. that should help arrest inflation. but even at 1.25%, 1.5%, compared to the last 10 years, that is not particularly high. it is also not particularly low. not long ago we had -2% real yields. positive real yields, i think, is still a sign the economy is healthy but maybe not growing at the same pace it was before. tom: got to leave it there.

thank you so much on this wednesday for joining us. take that over to the american economy, veronica clark joins us. from a high interest rate regime down to something lower at citigroup. if we get that low really rate, i would suggest many are not prepared for the incentives that means for the american economy. veronica: i think if we get that lower real rate that is because we have seen a weakening in activity data. because we have had tight financial conditions because inflation has been high. at some point that should weigh on activity and we get some type of broader downturn in the economy and that is what gets real yields lower. lisa: this jobs report really speaks to the narrative you guys have been talking about which is that this economy has more momentum than people are giving it credit for. how much do you think that story is being ignored in current pricing? veronica: we have seen an incredibly resilient labor market and i think for the last

year people have been trying to poke holes and explain why the labor market is secretly weaker than we expect. but the data have been incredibly strong and i think we have to trust that. i would worry that these things can have some non-linearity to them. we have seen the unemployment rate rise and that could be an early sign things are slowing down and it could be quick when things slow down. so far, the data have been incredibly resilient. lisa: what is the connection between a resilient labor market and inflation? is there any correlation between a labor market that hangs in there and inflation that remains sticky? veronica: absolutely. it is the fundamental driver and why people are still spending. it is the fundamental driver of wage growth that seems to be running for percent, 5% and stuck conveyor -- 4%, 5% and stuck there. tom: is there evidence that a

monetary authority can lower wage growth inflation? veronica: yeah, sure, by really weakening the labor market. you still have an imbalance of supply and demand in the labor market. the fed has been trying to get job openings lower but they are stuck around 9 million. tom: come on. you are asking for gloom recession and everyone is modeling out this baloney soft landing. a soft landing does not bring wage inflation down, does it? veronica: definitely not. i do not think this ends in a soft landing. it is either a harder landing, something we call recession, or you are stuck at too high inflation. tom: this is the heart of the matter. beautiful summary by veronica. you know what? you want wage inflation down as earl davis said,, soft landing does not get it done. lisa: which raises this question. is the market overly -- is the fed done raising rates or that

rate cuts are a positive for risk assets? veronica, which do you think is the way we are going to end up seeing the market evolve? are we going to see the fed be prompted to at least talk about raising rates again or hold rates at 5% for the remainder of the year? or do you expect there to be that non-linearity that we see all of a sudden? veronica: i think what will happen is the latter. we saw this in the minutes yesterday. talking up the idea they need to tighten but i think they are done. i think everyone agrees on that. but until you see some slowing in inflation -- which i do not think you get without the weaker activity -- the rates will stay high. there is not the reason to be cutting. tom: thank you so much. veronica clark with citigroup. we look forward to their outlook and their view into december. futures up 12%.

nasdaq up 0.4%. the russell 2000 takes off half a percent. 12.99% on the vix. that is a bull market. you cannot do intermediate bear market with a vix of 13%. lisa: i look at the move index and you are seeing a 10-year that has come down dramatically from recent highs. you see that represented in the lack of extreme motion in full faith and credit. that is underpinning. tom: full faith in opec. down three dollars on american oil. brent crude sliding below $80 and amrita sen, coming up. spx down 0.2%. lisa: we talk about oil and how it has been the big missed call of the year. it is the big miss call of every year. tom: which is ok. lisa: the idea of not understanding the changes in supply and demand.

but in this case there is a big question about how much china has already stockpiled and are not necessarily buying, even if their economy is recovering. but then there is also the fact the u.s. is producing record amounts of oil. how much has that offset the cuts we have seen from opec+? tom: i think it is part of the commodities story. when i got global demand -- we are getting all sorts of outlooks. there is not even enough time today to go through them all. the jp morgan global economic outlook is a zillion pages. 15 pages put together. the answer is i do not believe i have ever seen 2.1% global gdp for six months. that goes to the china statement that we heard from nvidia. maybe i am underplaying the slowdown in china. i may be wrong on that. lisa: i think a lot of people

would agree with you. how much is the extraordinary outperformance of the u.s. economy offsetting that? there are all of these crosscurrents that are so hard to pin down which is the reason oil has been the biggest to fire of all market narratives -- defier of all market narratives. tom: ferro is doing turkey leftovers. 11 different ways to do leftovers. lisa: what do you? tom: i.e. as fast as i can. -- i eat as fast as i can. correction, 12 turkey recipes in the 9:00 hour. amrita sen, next. ♪

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have extended voluntary cuts through the end of the year. but now we have seen oil prices unlike the product prices. we have seen it collapse at the front end of the curve. lisa: that was principal of the sure group -- shore group about what is most confounding people. we had a slow down did not happen and then we had a war that would boost the price of oil and it did not. we are looking at a quiescent market. like that word. tom: greenspan. lisa: yields just nudging lower every day for a number of sessions in a row. 4.39% on the 10-year. oil we are going to get you in a moment but prices lower more than 4% on the nymex. i want to bring up deere.

they came out earlier with earnings that were disappointing. you are seeing a significant response in the shares with shares lower by 5%. what we are looking at is a company that is seeing less demand from a lot of farmers in part because they already had equipment that they frontloaded, in part because prices of crops have gone down, and they do not have the conviction they are going to need to plant as much as they were in the past. tom: it does go back to the price of corn, the price of wheat, and the rest. deere with the pandemic moonshot and they have been range bound here. what is interesting for global wall street today is the arch accounting textbook of caterpillar and john deere.

you can fold right in and i take the point here -- glad you brought this up -- because it is a bellwether for the american economy. it is essentially boeing equipment without the romance. lisa: if you take it to a point you have made before, prices are going down and this is weighing on the company. tom: goods. lisa: and the ability to invest in a significant way. we are seeing the flipside of that in a disinflationary environment. tom: listen to you. you have taken the kool-aid -- lisa: i listen to you. [laughter] tom: listen to ferro at least. not me. corn from the peak eight dollars a bushel and amrita send is going, why am i going on? they are quoting corn. down 42%. lisa: and less of a need for

tractors. we will park that conversation. we want to speak with amrita sen at energy aspects as we try and understand what is going on at opec+. amrita: we were already starting to hear rumors this morning. we have been told the meeting could be virtual. the timing of cop should not be underestimated because it does overlap. the ministers have pre-meetings but opec+ has been trying to push for additional cuts in q1. a bit of background. they already have cuts in place all the way through to the end of next year for the entire group. this would be on top of if saudi arabia and russia were to decide

to extend. but for that they have certain issues where there are new baselines for several countries next year. the uae gets a higher baseline. the african countries were saying you are already giving us a lower baseline and now you want us to cut even more. that needs to be ironed out. tom: i have to cut to the amrita sen wheelhouse which is the price theory of oil. there is a thing called oil demand elasticity which is the how much do you move when you move? amrita sen, can you look at oil demand elasticity and begin to praise in $60 framework for oil? amrita: demand is going to be fantastic at those prices. even at $100 oil prices versus 2014 levels, that is equivalent to $70. inflation-adjusted oil prices

are not even high if they were to be $100 let alone $60. the economy is slowing but it is still growing, especially in the non-oecd countries. we do have a mild recession in the u.s., japan, europe. we have already accounted for the slow down. $60 oil should help with more demand, not less. tom: what is the view out 12 months? are you loading the proverbial tanker on brent crude, or for that matter, a stock like exxon mobil? is there enough tension for you to climb on board or do you have to wait and see through december and through this opec meeting? amrita: i mean, for a prudent risk management you wait and see through the meeting. you are going to get a lot of noise ahead of the meeting for sure, like you are getting now. ultimately, we believe opec+

will try and maintain balance in this market. they always have, in particular with the prince at the helm. demand is still growing even if it is slowing. we can see that in products prices. gasoline and diesel prices have gone up even when crude has gone down. we remain constructive for next year but in the short term, like you say, you never catch a falling knife. you have to wait it out. lisa: can you help us understand the price response to what we talked about with the meeting? why are prices so much lower on the news they have delayed because they are asking certain countries to make additional cuts? shouldn't that not be the case? shouldn't it be higher if they are going to be making more cuts? amrita: i think people are just very worried about what happened in 2020 one saudi arabia and russia just turned on all the taps and the opec+ deal fell apart and we had negative

prices. that is the fear that, oh, is the deal falling apart? the markets and traders tend to be black-and-white that way. there is very little room for gray. part of my job is always around, no, it is not falling apart. they just need time because it is to convince certain countries, and everybody is asking me, is the deal going to fall apart? are they going to flood the market? those fears are unfounded. lisa: i love the therapist role you play as you talk to clients. the world is not falling apart. amrita: i feel like that every day. [laughter] lisa: i can feel that. you mentioned this opec+ meeting might be taking place virtually. do you have any sense why? amrita: it was to do with logistics around cop. it was before cop. if they had already agreed on a deal -- like i said, a deal is

already in place. when i think the market must understand is even if they cannot get an additional cut, there is a deal already in place through the end of the year. there is nothing to be worried about. if that was the case, there was not a need to come to vienna, especially if they had to go straight back to cop. that is one of the reasons we heard the virtual rumors. tom: thank you for the brief. amrita sen of energy aspects here with oil. west texas now down 4.1%. you talk about over the waiver and through the woods -- river and through the woods and you wonder what a gallon of gas is going to do. do we get everything in the country below three dollars -- excuse me, for dollars per gallon? how much of the country will see $2.99 gasoline? lisa: oil prices have come down dramatically and you can really tell when you fill up your tank. $3.28 is the average in the

united states right now. that is down from a high in september of almost four dollars a gallon. tom: i wonder what rents will do as well. we have not talked about it today but the rental dynamic, the housing dynamic that we are completely jaded in new york city. the rest of the country there is real rent disinflation. lisa: how many different stories are there in each state? each location has its own story right now with slightly different microeconomics that really feed into how people feel, which seems at odds with the global overview of economics. somebody in a different state with a higher on a claimant rate and higher inflation might feel something different than someone in a different state. tom: certainly, us jaded new yorkers that do not travel or cook at home. lisa: what are you talking about? tom: on behalf of jonathan ferro -- he has the whole thing. i'm be have a jonathan ferro,

lisa abramowicz, and all of our team have a safe thanksgiving. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

jonathan: we spent the last couple of weeks talking about a weakening picture. big downside surprise on claims. equity futures pushing higher by a third of 1%. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg the open," with jonathan ferro. ♪ jonathan: live from new york, great earnings isn'