♪ >> i don't expect the fed to cut rates into the second half of next year. >> the rally we've seen inequities in the last three or four weeks, there's been a spectacular but very short rally. >> we think the s&p 500 can have 5000 by the end >> of the year. >>the holiday rally is very much enforced. announcer: announcer: this is "bloomberg surveillance." jonathan: get your week started. good morning, good morning. for the audience worldwide, this is bloomberg surveillance. your equity market on the s&p pulling back by 0.1%. a four-week winning streak.

we've got a new target, deutsche bank, 5100 year end year. tom: if the 5000 club. we are only interviewing people to believe in spx 5000. i thought it was a sobering weekend where those cautious had to recalibrate and it will be fascinating -- i have no idea what to expect here as we launch into december. jonathan: we've seen a lot of this, haven't we? just sort of getting around this idea that maybe the s&p 500 has something like 10% upside. lisa: and how much is it going to be driven by bond rally because of this soft landing narrative vs. some sort of recession that spurs a stock market rally? tom: with a 4.95 to year yield,

are yields coming in? i noticed quietly the two year yield is revisiting five-ish. jonathan: jobless claims wednesday. jobless claims starting to climb, weathering if we are at that inflation point where you have to be worried about the weakness of the labor market. things look pretty decent. lisa: when you start to look at some of the consumption numbers, are we looking at a situation where everything moderates just enough, or are we going to see recession delayed? deutsche bank actually projecting that they weren't wrong, they were just early, and that we are going to still get the same kind of downturn. i've heard so much of that of the weekend. >> way, way, way out, despite the above trend growth, core inflation has fallen.

a pre-pandemic range without requiring slower growth. that is widely anticipated and expected to be mild. he said it would be out there, not soon. i guess that is still re-are. jonathan: at the lisa thanksgiving dinner they were screaming recession on tuesday. lisa: 100%. jonathan: they don't whisper it. lisa: the best was for me, one person said maybe if robots are smarter than us, maybe it is for the best. jonathan: this is where this comes from. lisa: it goes deep. tom: i saw unsocial that lisa overcook the brussels sprouts. that is enough of a scandal right there. lisa: i did. jonathan: how you do that? lisa: i put them in for too long, it wasn't that complicated. jonathan: so you burned them. you chart them -- charred them.

lisa: no, that would have been better. tom: olive oil, stir them around. lisa: i did that. shallots, garlic. jonathan: more on bramo's thanksgiving dinner later in the program. let's turn to the scores to kick off your monday morning. shaping up as follows. -50.1% on the s&p. never mind the jets, the patriots are just awful. thankful for dolly parton. just fantastic, what a performance. tom: yeah. jonathan: just fantastic. lisa: the giants did well. jonathan: you a giants fan? lisa: there are giants fans in the family. this week ahead is not going to be with particular sports data from me. eco-data is going to be wednesday, anecdotes are important. thursday we have personal income and spending data.

the core deflator is what i am watching. do we enough disinflation to change the narrative of people who have seen food prices climb about 30% since 2020? treasury auctions, they return. today, $54 billion of two-year treasuries. tuesday, $30 billion of seven-year notes. this has been a massive move over of the equity market. fed speak is returning. tuesday we hear from the chicago fed president. wednesday we hear from cleveland fed. wednesday, jay powell in a fireside chat. jonathan: can't wait. proceed carefully 50 different ways. a couple of programming notes for you. fantastic exclusive conversation with rishi sunak and francine lacqua. some highlights about a little

bit later. and catching up with steve schwarzman. that conversation about 25 minutes away. tom: really timely. the real issue with him is his support of the former president. things heating up politically, we will do a lot on that this week as well. and also what is going on at blackstone. i mean, it's really interesting to me to see what the private markets are doing at the end of the year. jonathan: all of that just around the corner. we begin the program with capital markets. we hope you all had a wonderful thanksgiving. i want to kick off with your call, 5100. 5000, rather, year-end on the s&p 500 for next year. deutsche bank going one further. talk to us about the path the 5k. >> thanks for having yes always. we purposefully did not put out -- we see a near-term pullback in the neurosurgeons. i think a lot of people got caught in that trap in 2023.

i do think we will be watching our sentiment indicator very closely to navigate the equity market this year but it is also round-trip a couple times. started out because of deep pessimism. a return to that gave a sell signal in august and a buy signal in november. i've been telling people november is very consistently a strong month but december is more hit or miss. we will see if we end up getting a santa or grinch in december. i think the path for equities is higher and if we have a bit of a short-term pullback, i expected to be temporary. tom: goldman sachs had a note on sales growth looking up two years. and the difference between the magnificent seven with 11% sales growth vs. the spx 493 up 3% sales growth. why would anybody sell the

magnificent seven right now? >> it's a great question, tom. when we look at our indicators and the group trade broadly, it looks crowded. if you look at the weekly data, we are basically close to peak valuation in growth relative to value that is going to be very heavily influenced by that magnificent seven. if you look at earnings momentum, we are still seeing better earnings revision trends in growth and value, but value is starting to catch up a little bit. we are seeing that earning fade a bit. that tells me there should be a pause in growth or at some point. but one of the reasons people can permanently quit these growth stocks is hitting on exactly what you said. the idea that they will be superior growth over the intermediate term. if you look at gdp forecast, 1% in real terms anticipated by the street. 1.8% in 2025. when we are in sub 2% gdp

environment, growth stocks normally do outperform. so i do think there is real tension. we still like the tech sector even though we have these shorter-term concerns on growth. they have yet to really materialize in a big way and i do feel like we may need to see ariel ratcheting up of expectations before you can really see growth lose some of that leadership dominance. lisa: when you talk about sentiment, it is figuring out where his investor sentiment and betting against it, am i correct? >> basically. when everybody is really, really pessimistic that is usually a fantastic time to buy. when you look at when the net bullishness indicator is one or two standard deviations below the long-term average, i forget the exact stat, but you are out 12 month later and you see similar stats if you look on the flipside when people are overly enthusiastic. if you're above one standard deviation on extreme optimism,

you still tend to see a 5% gain, so it's not necessarily a washout, but it does tell you that you tend to see consolidation, you do tend to season choppy markets. that is why it is so important to really prioritize data over narratives. i know a lot of strategists like to tell a great story to fit whatever narrative they are pushing out there, but i really think that you have to stick to the data and things like that sentiment indicator will keep you into falling into consensus traps. one thing, everybody grabs onto the same narrative and things get too extreme. lisa: the narrative we've been hearing is 5000 on the s&p going into next year. there has been a boom in optimism that we seen. does that mean it is time to start taking some chips off the table and to be a little bit less optimistic, what is that mean finally you might see some of that cash at record levels going into the equity market? >> it's interesting, everybody

wants to talk about this idea, and this is maybe on the more bearish side of the table, that bonds look a lot more attractive than stocks. and all that is true but if you actually go back there have been periods of history where investors in general have taken up equity allocations and bond allocations at the same time. i don't think it's unheard of for both to do well. 5000 is starting to be number we are hearing a lot. we were going to be the second person that we had -- had it, 10% is usually a reasonable place that i love strategists start -- that a lot of strategists start. i will tell you, lisa, as i was putting the report together, you always think about where did you go wrong in the past you? i was more optimistic than most but not optimistic in the end. that was the one thing that was telling me to look for 4700, 4800 on the s&p.

i do think you have to have every bit of humility when you look at these forecast. that is really what works this year. tom: does that mean a banner says 5300? i think we go there. jonathan: when you are putting this together, surely 5k with something like 20% upside at the time. >> i started back in october pricing models and we actually published a report in october where we said we are not going to do our target yet, but here's what all models are showing. back then we were getting a more subdued number because we had a lower starting point. we did price everything as of mid-november. a lot of the models november 15, november 16. we really kind of are getting a true 10% from current conditions as of mid-november. when i do this, i go into a black hole for a few days, don't

talk to anybody and update all at once. jonathan: we are happy to see you. looking for 5k year-end next year. they mystery for us, the state of the u.s. consumer. want to go back to jobless claims in america coming back down toward 200 k. last week we had some retailers like best buy saying things looking to the end of the year, not great. then we got this from adobe analytics. sales up by five point 5% compared with last year online on black friday. what is it right now, just the raw hard data that you see in jobless claims? lisa: this is the tricky thing. is it specific items, specific jobs that conflict with other data that came out that showed a much more modest increase of about 2.5%? that was tied more to the brick-and-mortar, the on the ground retail stores than the nonelectronic goods.

are we just continuing to see the divergence of the leadership of everyone spending everything they have? tom: i watched too much college football which is helpful if you want to get away from new york city and i'm going to overlay a prosperous america with rising real incomes. the real issue here is even across all of our societal structure we got a lower inflation making for a better income. jonathan: true. it's good to be back. nice to be around family. coming up in the next hour, futures pulling back. from new york, good morning.

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come out and serve more committed carrying relief -- humanitarian relief. jonathan: allowing for the release of hostages from gaza. more on that story and just a moment. if you are about -- back with us, welcome back. the scores look like this. negative by 0.1% on the s&p. on the tenure in the treasury market, here is the call from deutsche bank. we mentioned looking for 5100 on the s&p next year. here's the call. looking ahead to next year. lisa, a mild u.s. recession in the first half of 2024. so there is binky saying 5100 on the s&p which is more than 10% upside from where we are right now on the benchmark in america, and here's the economics steam same recession in early 24. lisa: and binky kind of bend this around by saying it is going to be a softer session to get us to new highs.

it is going to help fuel even more gains. but there is this question of whether people are just pushing back the calls that they have last year to next year. it didn't happen in 2023. is it going to happen in 2024? i do wonder about that, including 100 basis points of cuts over at the ecb. jonathan: are you saying they just edit last year's outlook for next year? lisa: no, i have an incredible amount of respect for them, i don't think it is quite that simple but there is still this idea that we have the same pathway. it's just the timeframe that shifted. tom: what they are redoing's revenue growth and earnings and corporations adapting. i would take it away from all the macro battle. he looks for fiscal stimulus, but the answer here is i would look at the micro which is people earning money, corporations adapting and that leads me to where there is a cumulative 2024 with "the

magnificent seven" continuing. jonathan: there is a pole and what americans need to be happy in this country. what do you think they need on average? lisa: tom: we tom: were looking for 38,000. jonathan: let's go by age group. millenials. do you know what millenials think they need? $525,000. a number that isn't too far south from the number that you would need to get into the top 1% of income earners in this country. you want to know why people are unhappy? because a lot of people are earning the money they think they need to be happy in this country because things are so expensive. try to buy a house, raise a family. tom: racing the family is a key here. -- raising. the idea of children or no children because what has really metered off the pandemic is having children and particularly, young, ill

mannered children. i don't want to get personal. jonathan: i found those numbers absolutely staggering. tom: it's always been there but i do admit it is worse now. we are going to continue here on a monday. joining us now with some great visibility in recent days with uber television and radio is bobby ghosh, with time magazine. earned experience in baghdad and of course, and the greater middle east as well. thrilled to get an update this morning. what is the western media getting wrong right now? all weekend i saw hostage, update, hostage, update. >> the people who haven't forgotten are israel's military commanders. they've still got their eyes on the goal that benjamin netanyahu, the prime minister set immediately after the terrorist attacks of october 7 which is destroyed hamas completely. cannot actually be done?

that's a question for a longer debate, but that is still the goal. for them, this truce of four days is an interruption of military operations they are keen to resume the military operations with that goal in mind. whereat there's a lot of international discussion about extending the troop. we just saw the clip of president biden saying he would like the truce to be extended. israel military commanders want to get back to the fighting because they know they have to sooner or later. tom: i've been dying to talk to you about one question i have. you've lived this like no one with an extended tenure in baghdad. you didn't have tiktok, you didn't have social media, you didn't have the immediate visibility of this horror that we've seen. could we have done any of the past stuff with the social media we have now? how does it change the present discussion as well? >> it changes the optics for the politicians. they become much more keenly aware of public opinion and the

way that they work. 23 years ago one of my first exposure to middle eastern war was during the west bank in janine. at that time, politicians could sort of blocked out the noise, if you like, of public opinion and make decisions based on political priorities, but also military and strategic considerations. what social media does is it prevents you from blocking off information and particularly, politicians like benjamin netanyahu who are populists, who have always been, care very much for public opinion. that combination of someone who cares that much and the public opinion being so visible muddies the water. it makes decision-making much murkier man it might have been before. jonathan: help us build on that. who was under more pressure to extend the cease-fire now, the

president of the u.s. for the israeli prime minister? >> the israeli prime minister. he is saying extend the truce. if you are the prime minister of israel, you can't really ignore the president of the united states. he is your most important backer. as opinion grows more and more against israel in this conflict, having the president of the united states behind you becomes more and more important. netanyahu is going to really struggle with this decision. on the one hand, no less a person then joe biden speaking directly to him and speaking directly to the world is saying i want this truce extended. on the others you have these military commanders saying you extend the truce, you are giving hamas more time to regroup. it becomes difficult for us even optically and politically to get back into the fight. jonathan: there's a lot in the statement from the president over the weekend when he says things like that. can you conclude that he is losing the will to support the military activities of israel?

>> well, there have been lots of little bits, hints and suggestions of that. jonathan: what if the right interpretation of what he said over the weekend? >> it is not just one soundbite. for a couple of weeks now the white house has been quietly breathing journalists on background to say that they are really anxious about a few things. the fact that israel seems to be going in too hard, too much collateral damage among civilians in gaza. they've been really concerned that israel 50 days into this conflict now has not yet communicated what is going to happen the day after. there is no day after plan. with every passing day it becomes harder and harder to excuse that. the white house is really anxious that netanyahu has not told them what comes after the fighting stops.

>> israel has said they will continue the truce for every day that hamas produces 10 or more hostages and transfers them over. we have a sense of how much pressure they are under from qatar which has been negotiated at a time where perhaps the dial is shifting into the bid against them as well? >> israel said it might extend. it has not that for certain that it will. it says this offer is on the table and we have netanyahu saying it is a blessing to have that option. but he has not committed himself. he's been very careful about that. hamas benefits from everyday of extension it can get. it's fighters have taken a real battering. the infrastructure that it has, arms supplies, capacity to build more arms has taken a severe battering. so everyday that it can get it will very happily take. if there pressure from qatar and also egypt and others? yes, there is.

it is hard to know because it is impossible to conduct polling in a place like gaza and the best of times and certainly not in the middle of the war, but there is some anecdotal evidence that ordinary palestinians are pushing back against hamas. not simply to blame the israelis, but also saying hamas is partly responsible for our predicament. jonathan: appreciate the take, thank you, sir. more on this development out of the middle east through this morning. steve schwarzman sitting down with bloomberg's francine lacqua. from new york city this morning, good morning.

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it's everything. ♪ jonathan: four weeks of gains on the s&p 500. believe it or not, the longest weekly winning streak going back to june on the s&p 500. equity futures look like this. negative by 0.1% on the s&p 500. on the nasdaq, down about 1/10 of 1% as well. negative by 0.46%, getting a ton of outlooks from wall street. deutsche bank, 5100 on the s&p. tom, consensus. is it starting to coalesce around this few that we got up side of high single digits, low double digits next year?

tom: there's no question about that, but the bias is to study those that happened in 2023. he has been bullish throughout the year. john stouffer's, another one. it is a nice group of people that nailed this, but they nailed it right at the end so i've got to pay more attention to why he continues bullish vs. others that are catching up. lisa: goldman sachs seems to agree. everyone seems to be bullish. the reasons for why are what is so different. is it because we have an economy that keeps chugging along and stocks can keep eking out the returns of corporations led by "the magnificent seven" or the magnificent one are just looking at nvidia? or if the something that is on the heels of a shallow downturn? that is what is interesting to me, the daylight between the rationale getting to the same place. jonathan: he told us at the start of the year that rates would be through 5% but jobless claims would still be close to 200 k. the unemployment would be south

of four and we would have the disinflationary trends going into year-end. i think a lot of people would say keep dreaming. but that has been the story so far. this can be a moment in time and not the ultimate destination, i understand all of that. but that is what has evolved in 2023. tom: the great underestimation of 70% of the economy. i've got a pe on walmart, rounded up 29. even with earnings growth, walmart 25. i don't think anyone including the bulls estimated we would see multiple like that in something growing a single-digit level. jonathan: give me a price target on the s&p for next year. follow-up question, how many cuts are you the conference next 12 months? jobless claims last week helping keep this tend close to 5%.

way off the cycle highs of the last couple of months or so. the two-year at about 500 25, 526. this rate cut call, 175 basis points of fed cuts in 2024. 175. that is pretty big. lisa: we've heard something similar from ubs where they set pretty impressive rate cutting next year. is this because of severe recession? no, it is cosmetic cuts which is essentially that if you end up with slower growth than just defective, you have a more restrictive rate so you can cut rates even without some sort of severe downturn. this is really the key question. is there -- between the expectation that the fed will be able to cut rates? this is going to be the reason why i'm watching. tom: you look at the fed game,

going back to data dependency, second look gdp looking for an increase on survey to 5.0%. third quarter gdp. the continued disinflation, go to it you love, a more optimistic survey statistic, pretty gloomy, but more optimistic, and then you go to the jobs report which is coming up on december 8. jonathan: not this friday, next friday. tom: you go to the jobs report and i have to wait for all that data to reassess. jonathan: 170 five basis points of fed cuts and zero point 6% gdp expected in 2024. the euro is shaping up as follows against the dollar. positive by about 0.1%. we talked about fed cuts. looking for some ecb cuts as well next year over at deutsche bank. 100 basis points from june to year-end 2024. lisa: to me it makes sense if you're talking about stagflation. although the problem is, we

haven't been talking about inflation. if you look at longer-term expectation they've actually come in close to where the fed is expecting. the recent rate volatility has been something else and just pure inflation. tom: i would suggest the data dependency in europe is even more key than here, overlaid by the political bombshells including the vote in the netherlands which i think has clearly been underplayed in the american media. jonathan: do you think with caulk the bond market volatility with some smaller moves last week? i don't know what to say about it. tom: i come in and a look at the screen because i had eight days off, it is like a mini sabbatical. on the global let this paper, i'm looking at what did michigan do? i thought ohio state was actually pretty good. i watched some of it. i like to the punter from michigan. jonathan: didn't take you at the college football kind of guy.

tom: i'm not. i watch formula one in dubai. it was like all tv this weekend. you sum it up, the giannis we getting back out which is a global tendency toward disinflation. jonathan: i don't know how you got back toward that, but ok. pressure growing for israel to extend the cease-fire in its war with hamas. the cointreau day pause has allowed for the release of 58 hostages. president biden says he supports prolonging the pause which is due to end tomorrow morning. benjamin netanyahu said an extension was possible. lisa, we thin through the numbers this morning. how much daylight is there between the president of the united states and what he would like to see, what he supports and what his own party supports right now in this country? lisa: seems like quite a bit. it is a very difficult needle to thread for him at a time when he has pledged support. he backed away from saying that he wanted conditions placed on

aid to israel, even though members of his own party have come out with specific prescriptions for what kinds of conditions they want placed on that money. this too may is going to be devolving tension which just heightens the reason to possibly prolong the cease-fire politically, for his own sake. tom: it reminds me of 1979, jimmy carter and the rest, just staggered day by day with hostage news. there's the israeli military forces. what are they doing, twiddling their thumbs? i don't get how you juxtapose the two. jonathan: 79, 56. we are down again by more than 1%. lisa: even if at the meeting they end up affecting more cuts, you're still going to see a decline in oil prices. that is going to be key especially at a time when people are talking about a soft landing. jonathan: let's turn to the online shopping and black friday records.

according to adobe analytics, 9.8 billion u.s. dollars spent on line america with consumers leaning on by now, pay later options. demand for electronic, tv, audio equipment particularly popular boosting sales by 7.5% from a year ago. these numbers contrast big time with what best buy was guiding us toward going into year-end. it does make you in the bit nervous as to how much people are extending themselves going into the holiday shopping season. lisa: you called that a long time ago. you said is this going to be the end of some of the luxury boom? turns out we haven't gotten the end of it which maybe muddies the waters a little bit. how long can people keep doing this if interest rates are going up to such a degree? you start to see defaults picking up, total outstanding debt picking up. we are coming from a low base, this is what people say. you don't have the overly

leveraged consumer, things look ok. but at what point don't they? jonathan: prime minister rishi sunak denied his economic plans will put a squeeze on public spending. but the plan for tax cuts are funded largely by a 19 billion pounds reduction in the real value of government spending. speaking to francine lacqua over the recap -- weekend, denying you ks 30 is on the cards. >> any accusation that that is what is happening to simple the unfounded. what we need to see going forward is more productivity out of the public sector. it needs to match will be seen in the private sector, and i'd rather focus on efficiency and the public sector and prioritize cutting taxes rather than the government spending evermore of their money. jonathan: difficult to make the case for austerity given the amount of spending we've seen. it's a relative game, of course. anything looks like austerity relative to the spending boom we

had through the pandemic and out the other side. call it what you want but if you're coming off that base, surely anything less, are we going to call that austerity, really? lisa: there seems to be a clear movement toward continuing the spending of the pandemic. to me, that is notable whether it is germany. tom: francine absolutely nailed it. this is the question going into next year and it does frame out to all the enthusiasm. the tone by governments in europe, are they going to be austere? we've see how that failed. the perception is irresponsible, like u.s. stimulus. that is the question in the election in november. jonathan: is it austerity, though, taft pare -- to pare back? jonathan: tom: i would take it on a nominal basis.

are you actually going to cut inflation-adjusted spending? that goes back to the history of the united kingdom. this is a good place to pick up with carl weinberg. carl, what have we learned about austerity? did it work last time around? >> are fiscal deficits are as big as they've ever been. so austerity is not really a long sip of governments, especially government headed into elections. the u.k. plan was a mixed bag of things for the economy. a very public and visible cut in the national health insurance contributions is going to make people happier, even though it will only put a few pounds per week in the pockets of people. that's hard to say early in the morning. but it is like the consumer spending in the united states right now. it is by now, pay later.

and in the meantime, there are elections. the u.k. budget style is to buy now and pay later. tom: i look at your research and i believe you are not going to give us a point estimate of standard and poor's 500 out one year, but you can certainly look at the global rate structure. if we have disinflation, do we have a lower regime of interest rate yield and do we get back to where we were in 119? --2019? >> when i think about the prospects for 2024i think i see inflation coming down to or even below target and most of the country that i'm covering right now. certainly by the end of the year below target in most places. and by the first quarter of the year, very close to target in most places. that decline of inflation should not be what prompts central banks to take their foot off the brakes and to even cut interest

rate a few times. i don't think they are worried about recession. they wanted to cause a recession. but they are worried about causing a really, really big recession and that could happen if they would real interest rates rise. so falling inflation leads to a lower nominal interest rate regime, but not necessarily a lower real interest rate regime. lisa: there is this concern that what has been driving the volatility and treasuries has not been inflation expectations, which actually when you look at fed fund futures and you take a look at the five year forward breakeven rates, they are pretty much in line with where the fed wants it to be over the next five to 10 years. this is driven by something else including the fiscal backdrop. at what point can the fed ease longer-term rates? if the idea of austerity is anything less than the spending, to john's point that we saw during the pandemic. >> lots of good questions. the market is volatile right now because nobody really knows what to do or what to expect.

are we going into a recession or not? there are good arguments on either side. inevitably, we will have a recession. what will the policy response would be? is your and the u.k. with the monetary course getting tighter every month, are they going to have a worse or a better recession? there's a lot of uncertainty in the markets. but let's separate the markets from the economy which is what the fed is primarily focused on along all the other central banks. when we look at the economy, the central banks are looking to achieve their inflation objectives, and when they are achieved, yes, they can start backing down. that's not to say that they are insensitive to the business cycle, but remember that all of the mandates are inflation first and i think that is what we should look to to drive policy and the new year. lisa: will cuts be stimulative for risk assets? >> i don't know. risk assets involve assessing risk, and that is half the equation. it is not all just about what

the interest rate is. i think that rate cuts will make an easier environment for investors, that will put a lot of people in the market on more familiar territory. they will build confidence that the fed and the other central banks are not out there to kill the markets, to kill the economy. yeah, i think it will help. tom:tom: i saw a chart of the gross outperformance of u.s. equities vs. international stocks over the last decade, whatever it has been. you own the high ground on this with your experience in international finance. do you have any way to change from american exceptionalism over to international equity performance over to international finance performance, or is it still u.s. first? >> what i'm going to say is so incredibly wrong that i can't believe i'm going to say it, but i'm going to say it anyhow. the u.s. economy is outperforming the rest of the world by a country mile and therefore we shouldn't be surprised to see that equities

are outperforming equities of other countries by that same country mile. that's not to say that gdp growth and economic performance are not the only thing striving stocks, but the contribution of the economy to equity markets has been so much stronger in the united states than anywhere else that it has got to be making a different. our forecast is going to continue into the new year. we have a deep recession on our outlook for europe, for the united kingdom. we have the muddling along for japan or probably continue contraction. canada is at least stalled and possibly worse depending on what happens to commodity prices and integration. we have population and labor force size constraining growth everywhere in the world, including here where we are in a stronger place because of higher productivity. so yeah, it is not surprising that the u.s. is doing better right now and we are expecting that to continue at least until the first half of next year. but i will add that it all hinges on productivity and that is something that is impossible

to forecast. jonathan: you're great at this. a lot of people might say that the outperformance over the last 12 to 18, 24 months was driven by one-off factors. what would you say to those people? >> the u.s. economy is going to fizzle. the early part of next year is going to look worse. fiscal drag, if you want to call it that, the withdrawal from the pandemic, that is still going on. the reduction of cash balances in a real and nominal terms that they built up during the pandemic, that is going to be gone. higher interest rates, they are going to take a toll inevitably. so yeah, a lot of things that we saw in this past year are not going to be around in the next year. we are convinced we are going to see a slowdown of the u.s. economy. we are not convinced that has to be a recession and we are certainly not convinced it has

to be a recession like the last two that we saw in the u.s. which were exceptional because they were also crises. in normal slowdown and a recession would be, as the name implies, normal right now. lisa: do you buy into this idea of a job-full recession? essentially that companies will be courting labor to avoid what they experienced during the downturn in the pandemic and that that will actually help buffer some of the slowdown you're talking about? >> lisa, that's a great way to describe one aspect of the most important aspect of our situation right now which is that we are at full employment, give or take a little bit. pretty much everybody in this economy who wants a job has a job, and what that means is people should be happier than they are. i don't know why they are not, but secondly it means that we can't grow that fast as we don't have idle workers to put to work to make the economy grow. so barring a surge of

integration which seems unlikely, barring the sudden arrival of babies from outer space which seems impossible, we are constrained by our growth of productivity as to how fast we can grow. sure, companies are going to be courting labor because labor is scarce. it is not clear to me that that is a bad thing but that certainly is one way of getting into the subject of why can we grow 5%, and that is because we don't have the workers to do it. tom: over the weekend, and i lose track over four days like everybody else, the black market peso in argentina went through 1000. it is 1000-1. folks, that is a horrendous devaluation of the argentinian experience. carl, you lived this life cointreau disasters ago. what do we do about argentinia -- like four disasters ago. what do we do about argentinian? >> i am still in a turkey stupor

and i haven't read about argentina this morning so they get for giving me an update on the situation. this cycle is something we've seen before. inflation, devaluation, devaluation feeds inflation. it is going to take extreme fiscal and monetary policy that would certainly be the advice that the imf is giving them right now and of course, one of the reason that argentina is in this situation is that historically, over decades, they have resisted this kind of advice and maintained that for a short period of time. i'm not an expert on the argentine situation but it sounds like things are regressing into another dark spiral. jonathan: what do you mean they don't want to help themselves? tom: it is a cultural thing and a sensitive issue. they are experts at imf as well. these are big, big numbers. they are talking about helping argentina and other nations as well. but they've got to want to help

themselves. they've got to want to change the almost psychological calculus after experiment after experiment. the devaluation here of the black market from the beginning of the pandemic is from 100 to 1000. they are like steve hankey down at johns hopkins. jonathan: given everything you've just said, haven't they just voted for a guy who wants to make those massive cuts to the government? tom: the guy in the netherlands is already amending from his stridency of election. if this guy going to change the dollarization debate? jonathan: some people think maybe start on that. there's one individual lined up to be the head of the central bank. i believe that individual has stepped back because there are questions about how quickly this is progressing. tom: a turkey stupor. jonathan: we've got to say thank you. he had no idea that argentinian question was coming. why would he? lisa: i think the question in

argentina, yeah, to me, it is more fascinating. what does the imf do with $30 billion plus of loans that they need to get paid back? jonathan: we are shaping of us follow this monday morning. good morning to you all. equity futures on the s&p 500 negative here by 0.16%. pulling back just a touch. we can get a 5k. 5100 by year end next year. a lot to look forward to over the next 18 months. our special guest is francine lacqua. >> thank you so much. we are delighted to be joined by steve schwarzman of blackstone. thank you, you were just on stage with the prime minister rishi sunak. how much are you putting in the u.k.? what are you most excited about? >> we've been putting a lot of money into the u.k. we are doing our headquarters

building here which is very significant-sized building, the largest in the mayfair area the last several decades. we bought two companies in the last two weeks in the u.k., and we have a total of 70 billion pounds, that is close to $90 million of investments in the u.k. with 37,000 people working in these companies in real estate. >> what stands out at the biggest strength action for the u.k.? we are not sure how they are fund -- going to fund some of the tax cuts and we don't know that the conservatives are in power in 12 months. >> this big advantages are the english language, the rule of law. they have a terrific university system.

they have great life science areas. they are the number one tourist area in europe, which actually i found surprising. and so they have a lot of pockets of strength. they've been through a complex time politically. but if you look longer-term, the rule of law and the u.k. is very strong. the regulatory posture has been quite consistent over time. but we forget that these are good things. not all places in the world have them. i'm not an expert on u.k. laws in the sense of what they are doing politically. i think the autumn statement on balance which was stimulative is

a good and necessary thing for their economy, and we would have a much more open approach to immigration at the top levels of education, which is good for helping to power the economy. so i think there are some interesting things going on here. >> what can you tell us about private market valuations? in general, to you see lps demanding more reporting requirements on valuation? is that something that is shifting? >> i don't see a big set of enormous concerns on that. what always happens at this stage of this cycle when you go to very high interest rates in the world starts slowing down is that deals slow down.

so there biggest concern is they're not getting capital flows back that they normally were depending on because people aren't selling assets. these types of cycles always end and things returned to normal. it's quite interesting that we just did two deals in the u.k. in the last two weeks, one in the affordable social housing area, one in computer software. both are $2 billion deals. we are doing a number of things in the u.s. now, some of which have been announced, some of which haven't. we were just involved with the situation in norway which is $12 billion.

so it is not totally in mothballs. i think we are more on that side of the cycle, although it has been somewhat dreary for a year. >> in terms of real estate, i think you're raising an opportunistic fund. $10 billion, how is that going? >> we are raising money for a european fund. actually, we are always raising money for a lot of funds. we go through a big fundraising cycle, so we have over $200 million. it is one of the biggest pools of on invested capital in the world, and that will be deployed. interestingly in real estate which you just asked about, we are seeing a good deal of volume , buying things in europe because european real estate is

under pressure, in large part because interest rates were so low here for so long, sometimes in countries they were negative. so the borrowing cost to own real estate was next to nothing. and now it is closer to 6%. so if you have to carry the whole portfolio, it used to cost you next to nothing. they need to sell things. it's necessary to just hold the other properties. in so we are seeing some very, very good buys in that kind of environment because unlike most people, we have enormous capital and can buy the types of real estate that we like, whether they are data centers, whether they are warehouses, whether they are student housing. those sectors have done very well. >> what can you tell us about rates? have you seen any redemptions in

that? >> rates? >> breits? how do you say it? >> those redemptions have gone down. i think they are 40% or something like that of what they were a year ago. and so that pool of capital is actually doing quite well compared to almost all of the real estate. we look forward to that sort of ultimately going back to a very normal kind of world. >> overall comment does u.k. politics seem be nine compared to the u.s., but also what we saw in the netherlands? >> the politics -- commenting on the politics of other countries, let alone our own which has a sense of drama and incredulity is outside of my remit. >> fair.

thank you so much as always. steve also has to get tomeeting. people are coming and going. jonathan: thank you. a wonderful destination location. francine lacqua alongside steve schwarzman. coming up highlights of our exclusive conversation with british prime minister rishi sunak. good morning. welcome back stateside following a long weekend. hope you enjoyed your time with your families. if not, welcome back big time. s&p futures -.1%. yields going absolutely nowhere. 4.4626. another call in the mix. 5100, deutsche bank. we are talking about 10% upside and they are still calling for a recession and they are calling

for big rate cuts from this federal reserve. tom: i am going nominal gdp. jim bianco out with smart math. the basic line is why do we have multiple 5000 come in the answer is we are overlaying this on top of 4% or 5% nominal gdp. there is a crew that goes against that, there is a crew looking for shockingly slow growth but how do you get to a 5000 level? a lift in the american economy. jonathan: i am wondering what stuart kaiser of citibank is thinking this morning. his view that when the labor data is starting to turn -- if you are at deutsche bank and you are looking for 170 five basis points of fed cuts and .6% gdp expected in 2024, what takes 5100? lisa: visit enthusiasm for the idea we will have such a shallow recession?

what is causing people to get to 5000. what did they get wrong heading into 2023? they were not bullish enough. what will it hurt? tom: lori mentioned that and it is an important point that people feel behind so they will lift up. i think it is the wall of money that will take part of that money. i saw over the weekend, i usually do not pay attention to getting above or below the 200 day moving average stuff, but we are at that cost -- we are at that cusp are people are going is that the second leg of a bull market, but if we get the second leg up things will change. jonathan: the fed wants to be patient and i think jobless claims are an endorsement of their stance. we've been asking if it is a reason to be bearish and jobless claims drop. this is what the fed is concerned about.

they want to make sure they have done enough to get inflation down to 2%. tom: andrew hollenhorst -- lisa: andrew hollenhorst has been clear there are real inflationary pressures that will come into play. no one has been talking about that. if that is the case than they see you will get jobless loss and you will end up with the immaculate disinflation. tom: december 8, nonfarm payrolls from 150 actual past to a lift to 188,000 jobs. 180,000 is what carl weinberg says indicates a fully employed america. jonathan: i do not want to know when you think the fed will cut rates. i want to know the conditions that will lead to the fed cutting rates. the federal reserve will try to communicate that. eric robertson saying this, their view come unemployment at

4.5%, core pce at 3%. he thinks that raise the groundwork for foundations for cuts in our future. lisa: i wonder what someone calling for 175 basis points of cuts would say to this. are they really going to cut rates before the presidential election? at a certain point will this be a political concern, especially given their has been accusation of political interference. tom: this is echoes of my childhood is what i'm hearing from bramo. five mother -- my mother butchered the brussels sprouts as bad as you did. i have a fed meeting november 7. what day is the election? the fifth? i would suggest the november 7 meeting they will adjust.

september 18. lisa: that is my birthday. jonathan: let's start with the price action. futures down .1% on the s&p. yields basically unchanged on the 10 year. lisa: it will be an interesting week. the economic data will be key. maybe we will focus more on inflation. i am focused on core pce inflator, the key indicator the fed looks at. how much do you need to see it disinflation before people feel better about the prices they are paying? friday we get ism manufacturing. treasury option, $54 billion of two your notes. i am watching these all very closely, particular the five-year option. when do the auctions start to take center stage? i find this one of the most interesting aspects. fed speak, let's go through it.

tuesday chicago fed president austin goolsby warms up for his performance. cleveland fed loretta mester friday. jay powell is giving a fireside stte -- a fireside chat. jonathan: your excitement was almost convincing. lisa: i am curious some anyways you can say nothing. jonathan: five different ways based on that apparently. the president of our danny research joins us. you have been right to be constructive into 2024. can you give us reasons to maintain that stance? ed: i think the data of late has confirmed the scenario we have been promoting which is we can see inflation moderate without going into a recession. we think a lot of the inflation we have had is related to an important event that does not occur too often and that is the pandemic. it led to a huge surge in buying

of goods and that stopped and then a huge surge of buying of services and that is starting to slow down. if that is the case the stock market has reason to be very happy about that. one of the reasons we do not have to have a recession to bring inflation down is because china is doing it for us. they are in a very precarious situation economically. their prices are falling and we import a lot from china and that is turning out to be what i call immaculate disinflation. tom: the dow jones industrial average in 2000 was 10,000. your call is for 41,700 on the dow. how do you not invest? if you have a long-term move, whatever inflation does, from 10,000 to 41,700, how do you

handle the bloom so you can have the confidence to be in the market? ed: i think you have to be aware of the bloom and what could go wrong. -- aware of the gloom and what could go wrong but that side of the argument has been so overplayed with no balance. so far things are going right. what the past couple of years have demonstrated is trading stocks is for traders. you have to invest in stocks. wall street is encouraging people to trade. there was a lot of pessimism out of wall street last year, the idea of being the market is not a bear market and a lot of them got credit. they forgot to call the bottoms. i do not know that they have conceded yet. tom: is there an analog to 1977?

other worthies in october said this is the bottom. do you identify a second leg of able market? ed: i think we had a correction that started july 31 and ended october 27 and it was a classic correction of roughly 10%. this year has been classic. it is the third term of the presidential cycle which tends to be a strong year. we had a strong january at the beginning of the year. people forget the market was up 6%. i do not know if is a second leg. it is a continuation of able market that started october last year. that being the case i think we are in a crucial point. if we look at the all-time high in january of 2022 and connect that point with the high we had on july 31, i think we will break out above it and i think

we will be a new record highs for the s&p next year. lisa: this whole year is classic. after starting with china and china is doing the disinflation for us, how much is that the surprising fact underpinning this year, which is essentially the near shoring narrative is a fiction and we still are very much in this global trade world and any slow down in china will add to the disinflation we are feeling now, particularly in goods? ed: this morning i set out a note showing a chart that shows year-over-year percent change in u.s. import prices of goods from china, and that is down 2%, two point 5% on a year-over-year basis. it is very highly correlated, not surprisingly, particularly if you recognize we still do a lot of business with china importing their goods. it correlates closely with goods

inflation in the u.s., excluding food and energy. china still matters a great deal to the global economy. they are exporting deflation. their ppi is negative. jonathan: on the labor market, is that no longer a reason to worry about price pressure, even with claims towards 209,000 last week? ed: my mantra is growth is good, especially if it is based on productivity. i believe productivity is making a comeback. you asked me analogies to the 1970's. for a while it was even stephen between whether this would be the 1970's grade inflation all over again with the twin peaks inflation outlook, or my scenario, which is the roaring 2020 scenario where technology boosts productivity because we need to boost productivity

because of labor shortages and that is a whole different scenario than the 1970's. put me in the roaring 20 20's camp at this point. jonathan: thank you. carl weinberg talked about the same thing in the previous hour. look at equities. jake caffrey of jp morgan said what a year this month has been. still a few days left. november come the nasdaq 100 is up close to 11%. 10% higher this month alone. tom: there is enthusiasm. i think of doug kass in florida. the answer is they are looking at the effervescence, which schiller would call the exuberance. i do not since the exuberance. i am not in an uber someone is

talking about the nvidia trade they just made. i am not getting the effervescence that is out there. tom: give a few months. best month on the nasdaq since july 2022. the s&p this morning -.1%. yields going nowhere. we like to tease you about auctions, but i am with you. it is important, showing signs of smaller moves, getting excited about a lack of volatility. have we conquered it? lisa: the bid is coming in. the idea people are liking the idea of longer-term bonds if they feel like there is not necessarily going to be a tremendous swinging yield going forward. at a certain point if we see successful auctions, and we signal we have seen the end of the volatility? i don't want to say that but there might be people whispering it. tom: partial score.

jonathan: you are not doing well on this story, are you? tom: lisa nailed it a couple weeks ago with whatever the auction is. people show up. they buy american paper. jonathan: at what price? tom: i am lonely year. -- i am lonely here. i feel left out. jonathan: we are a family here. tom: i've the countdown clock at home. when do i go back to work? jonathan: from beautiful new york city, good morning. ♪ (sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf

that inspired the world to invest differently. it still does. what can you do with spy? ♪

>> he is going to continue to focus on what will generate results, and as he said in the press conference and as you can see from the fact that for the last two days we've seen hostages released, the approach he has taken, direct

presidential diplomacy behind closed doors with the israelis and our arab partners, that is what is generating the kind of results we are seeing. jonathan: that was jake sullivan speaking on nbc over the weekend discussing president biden's impact over the course of the war between israel and hamas, the president seemingly putting more pressure on the israeli prime minister to extend the truce. tom: it was without question the number one thing i saw across transatlantic newspapers. the focus on hostages and on the immediate now. jonathan: it is the lack of will to support the israeli prime minister to restart the aggressive acts against hamas. tom: i think the answer is clearly we are unsure on that. maybe i will get knowledge on that. what i notice is the celebration of successful hostage negotiations to a than what? jonathan: biden taking it from

all sides. we mentioned this in the previous hour. how much daylight is there between what president biden would like to see happen, what he is willing to support, and what his own party and maybe his own state department is willing to support? lisa: clearly the daylight is wide. there is been dissidents in views and people inside his own party and his cabinet. the question is has that evolved? today is last day of this truce. tomorrow, what happens? what are some of the holdups that occur as they try to negotiate further? who is trying to influence who? president biden is on the hot seat to try to push back any resumption of the conflict. you also have qatar doing the same thing with hamas. tom: you read this is today's debate, monday afternoon into

tuesday morning in the eastern mediterranean is the debate to extend the truce. is that the key point for the president this morning? lisa: to extend the truce under what conditions and how long and what happens next? it is not necessarily people twiddling their thumbs. they are trying to gather intelligence. tom: we have seen far too much of him. he is an expert on war and terrorism. aaron david miller. let me cut to the chase. if we get to a point in negotiation, is there hamas to negotiate with now? aaron: there is. the qataris and americans are evaluating hamas effectiveness. you have identified the core questions. there is growing daylight.

the world is bad joe biden. 25 years in the department of state i have never seen the degree of dissension and vocal opposition to administration policy from inside the foreign policy and national security space. one resignation, but an extraordinary amount of noise. i think the president has handled this pretty effectively. fears of escalation into a regional war which could produce plunging financial markets and rising prices, that has been avoided. your right to focus on the hostages. the deal is clear. i would be stunned if this you military and pause collapsed. hamas is trading hostages for time, they are hoping hostage families inside israel will continue to pressure the government in order to redeem all of the hostages that have not been returned.

the arabs are angry. the israelis will face in the next week, if the 10 hostages for a day of quiet, which is the offer on the table, if hamas accepts that, you could get in there week out of this. at some point the israelis will want to resume their ground campaign. at that point you will see growing awkwardness and maybe even tension in u.s.-israeli relationship. lisa: there is daylight between president biden and some of his own memories within his team he has surrounding him. he has also expressed concern about the civilians that have gotten killed, the incredible number, more than people had expected. how much is that going to lead to pressure in a new way that benjamin netanyahu, who is not exactly popular at home, we'll

have to listen to? aaron: that is the core question. he considers himself part of the israeli story and his emotional support for israel is impressed on his dna. the politics, he has to be concerned about the rising tide of opposition in the democratic party. the republicans who have emerged as the israel right a wrong party are waiting for him to pressure the israelis so they can pressure joe biden. there is the president's realization he does not have many good answers to the two or three critical questions the israelis are facing. how do you prosecute a war to eradicate hamas without a net financial rise in palestinian deaths? how do you search you military and assistance into a war zone? what do you do about the proverbial day after?

i suspect weeks and months after. one of the reason he is reluctant to press the israelis is because he does not have better answers to these questions. tom: you are a student of this in your books throughout 30 years. go five years or 10 years forward. is our relationship with israel irrevocably changed? aaron: fascinating question. the headline would suggest generational change in's in voter constituency, in congress, the growing divergence between the united states and the values proposition that israel is a liberal democracy seeking the same things we do, and growing policy differences suggests that there is a lot of tension in this relationship. whether it is a headline or a trend line is the key issue.

i suspect the operating system that is cap the u.s. israeli relationship close together is going to continue for quite some time. we support israel because it is in american interest to do so and because it reflects american values to do so. when those things change in the face of a right-wing israeli government pursuing opposite policies at home and with respect to diplomacy on the israeli-palestinian issue, i think the u.s. israeli relationship will begin to change. jonathan: that tension is continuing to build. aaron david miller there. i want to turn to economics from citigroup's andrew hollenhorst. "the run of goldilocks data may continue but the inflation risk means the ultimate macro economic outcome may not be risk positive but perhaps that is summer on the horizon in our future." here's the call for jobs next

friday. payrolls friday two fridays away. 200,000 plus new jobs for november is the call from citigroup. tom: 188,000 is the survey. this is a fully employed america. i do not know where the numbers are now. under 120,000, maybe the market says things have changed? lisa: in isolation it seems like people are filing for jobless benefits but people are still getting hired. that is what people are talking about with a fully employed america speaking to this risk andrew hollenhorst and the team are talking about. tom: -- jonathan: the conversation coming up next with sonja martin. if you're just joining us, your equity market -.1%. coming into monday, decent

couple of days of gains on the s&p. four weeks of gains, the longest weekly winning streak back to june on the s&p. tom: will equip unemployment rates for football teams that win. university of indiana wilmington, indiana. unemployment rate 3.1%. do not tell me that is not fully employed. i did not check the unemployment rate in west lafayette, they lost. that would be purdue. jonathan: from new york city, good morning. ♪

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jonathan: equities softer on the s&p 500. pulling back .1%, almost .2% lower on the s&p. small caps, russell down .5%. bond market looks like this. your 10 year yield unchanged. the two year still around 5%. 4.94%. jobless claims a wake-up call for us all. looking ahead to payrolls friday. citi looking for 200,000 plus. lisa: and saying the big risk next year is re-inflation even with slow down inactivity in the

united states. this goes against what we have heard is that you're getting a slow down but the ongoing inflation will create an obama for equities and credit. jonathan: options coming up. -- auctions coming up. 39 billion in notes. we have some big ones. tom: is the two year a big deal that is comeback near 5%. to meet his actual news. jonathan: it speaks to the federal reserve and the amount they will be hanging in there. tom: the real yield 2.21%. noodling. jonathan: let's focus on the euro. the euro against the dollar, 1.0 950. talked tons about deutsche bank's outlook. 100 basis points of cuts from june to year end.

looking at next year with the ecb. tom: there a lot of people fired up but i did not see big figures. jonathan: we want that snoozy price action, don't we? tom: said a note. jonathan: i mentioned sometimes they are snoozy. they did not think that this morning. israel under pressure to extend apposite its war with the mosque. the current deal set to expire today. one of those released hostages includes a four-year-old whose parents were killed in the attacks on october 7 reminding you of the tragedy that unfolded in early october. lisa: the fact that a number of these kids will be coming home without knowing that one or both

of their parents have been killed on october 7, the treasury has been widespread. the key question is have we reached the what's next point given the fact we have ended this four day cease fire and are starting to negotiate day by day or something else. tom: for something else. aaron david miller with us. this is 2008, a much too promised land, america's elusive search for arab-israeli peace. it is still elusive. lisa: right now we are trying to figure out what is going on behind the scenes. you cannot. the conversations are widespread. it is clear something has shifted. sentiment for president biden but also sentiment in israel. jonathan: deflationary pressures continuing in the world's second-largest economy. the latest data out of china showing industrial profit slowed to just under 3% in october.

officials in china also mulling which developers will garner state support in the midst of a shortfall in the property market. the situation with the property market unfolding in the way the china bears forecast years and years ago barely gets a mention these days on wall street, barely gets a mention. lisa: people say the contagion is contained. it will not percolate into other assets people are invested in. there is also the expectation the chinese government will back the property market. there is no way they can allow the main investment for the rank-and-file in the country to completely implode. that is what you are hearing in terms of bold calls. people are saying china is on investable. -- is univestable. tom: i want to parse what you are saying on properties. jonathan: invest a little bit in

yourself. your week listening to motivations. tom: she served the overcooked brussels sprouts. jonathan: it is brewing in bramo's voice. she is about to unload. i wondered whether tom had watched college football. clearly you had not. they won against indiana. got a message from a bloomberg subscriber. "good morning, i think purdue won." no more college football. president biden skipping this year's u.n. climate summit despite calling climate change the ultimate threat to humanity. the white house confirming the news to the new york times. special envoy for climate change john kerry expected to attend the cop 28 in divide. , harris not expected to attend

either. glascow, disaster. an unmitigated disaster for this administration. to go there and say we need to end fossil fuel and at the same time asking for the release two more crude, they are trying to make this a big priority of their agenda. you used that phrase overtaken by events. without a doubt they have been overtaken by events. november 21, move away from fossil fuels, whisper pump more. you cannot maintain that. a couple of years later a war in ukraine, a war in gaza, and a president unable to make that a priority this week. tom: to me it is the domestic politics and this goes back to the up talk receipt. what we have seen in the netherlands elections like in eastern europe, these are election winners who care less about cop 29 and beyond.

lisa: right now it seems like a no-win situation for president biden and the fact that he -- given this was one of his main agenda points. that said i do not have a good sense of why he is not going. is it because nothing will come of it? is it because he is consumed with israel and hamas? jonathan: did you say tired and confused? on the edge of saying tired and confused. tom: there are a lot of -- lisa: there a lot of mixed stories. jonathan: i am confused by the energy story. production america 13.2 million barrels a day in the administration does not want to talk about. is not what they want but it kind of is what they want to talk about. gasoline prices down, crude production up, but we do not want to talk about it. tom: it is confusing and

completely overrun by do mr. politics and that is true of every country, including canada. right now on foreign-exchange, sonya martin joins. thank you so much for joining. as simple as this. is it so quiet you cannot perceive big figure foreign-exchange moves in the next year? is it simply flat out? sonja: it has been fairly quiet on the fx front but there a lot of stories that have yet to show their full potential. we look at euro-dollar, we saw the move higher. it is stalling around 1.0 950. that will change next year at the latest. december tends to be a very good month for the euro. statistically speaking it should be rising until christmas and then fall again in january.

tom: tom: jon ferro mentioned property economics investment in china, which is below 3%. our deborah aiken talked about chinese consumption could be a surprise. can there be a surprise and speculation on the chinese yuan? sonja: as far as china is concerned, at this point things are looking bleak. the property market is still under scrutiny. the pboc announced this morning it wants supportive measures but there is a limit to what they can do. we know the chinese government is deeply in debt. the usual reaction of just printing more money does not work anyway. i think china will not be a positive story next year. this is not exactly what you would call -- i think the

authorities -- we have seen this will happen in the recent weeks and months. lisa: is the weakness in china good for the euro zone it comes to inflation? our guest earlier was saying the u.s. was importing disinflation from china. is it the same in europe? sonja: i do not know how big that impact is. it has two sides. maybe it will translate the lesser inflation to europe but it also means less demand for our exports. i'm not sure if that is a good thing for us. when you look at european growth, it is really anemic and we are in a recession. it will be better next year. what we really need is growth in china. jonathan: what we have in america is tons of growth and elsewhere not much.

sonja martin. folk up this morning at about 3:00 something. apple battery 50%. over the last couple of weeks something changed. tom: they wear out. jonathan: all of the sudden it has given up. lisa: you suspect? jonathan: what happens now. i have to buy a new one. tom: it is a scam. it wears out. jonathan: 50%. tom: do have an iphone three? kylie minogue was number one when you bought that phone. lisa: it starts to fade. jonathan: after two years? tom: -- lisa: our family -- we were trying to calculate the thousands of dollars we spent.

jonathan: are you speaking for yourself? tom: i'm not speaking for myself. jonathan: i have to upgrade. tom: let's get dan ives in here. lisa: what a just get the battery redone? jonathan:? to the store, deal with people, talk to them. i was in soho on friday evening. you cannot walk. let's keep it simple. equity market -.1%. yields unchanged on the 10 year. options later this week -- auctions later this week. bramo locked in. lisa: i think this is important.

will we get a sense of what they get sold at, who is buying them, whether people are pushing back at current levels, it gives you a sense of the buyer base. tom: what does it say about the buyer base? are the japanese in the chinese showing up to buy our paper? lisa: there's actually been more corporate buying from japanese investors. they have not shown up in as big of numbers. these are some of the mysteries people are trying to decode. everyone is saying this guy is falling we are issuing too much debt. jonathan: front of the line talking about it. it is a major theme. i wonder is a maturity more important to follow than another one. this is the belly of the five-year and the seven-year. where should i be focused? lisa: the five-year is interesting for rate cuts and expectations being baked into the market when the fed will cut

rates and into one place. in the longer end it is a question of the debt issuances of the united states and questions around credit rating agencies. that is a reason it is more compelling from that vantage point. jonathan: i am totally on board. i think this stuff is really important. coming up in the next hour, torsten slok of apollo global management in a special announcement on a show we are doing with apollo. from new york city, good morning. ♪ 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

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any commentary or accusation that is what happening is unfounded and we are at a point now, given how people are feeling, given the amount being spent, where i think the priority will be lowering the tax burden. jonathan: that was rishi sunak speaking with francine lacqua in an exclusive conversation addressing concerns of austerity in the u.k.. mohamed el-erian touching base with us. writing in apple phone, happen with me after i agreed to the ios upgrade. batteries getting drained worldwide. lisa: battery gate. jonathan: it is battery gate all over again. anecdotal evidence. tom: apple iphone battery gate settlement. the settlement payment should be going out soon. you will get a payout from apple. jonathan: i will put that toward my next iphone.

equities pulling back just a touch. down .2% on the s&p 500. in the fx market, the g10 is a snooze. em getting a lot more interesting. javier miller in argentina touching down here. we will get a briefing from damian sassower. really paying attention to college football. massive surveillance correction. i watch the game come indiana was killing purdue. boiler up is what happened. can you make money in sports on college football? damian: only if your funding in the peso. i think college football is a crapshoot. michigan and osu, i watch that game with parties from both sides. it was back-and-forth.

osu won the battle on offense. tom: the strategy has to be clearer than the strategy on argentina. how do you bet on argentina? damian: you do not bet against batteries because there is plenty of lithium in argentina. no, he is obviously a firebrand. he stands for dollarization. jonathan: does he still want to do that? damian: he certainly does but not at the pace. the central bank is funding the entire public sector in argentina through the short-term interest rate peso dominated structural instruments. you cannot take one chilean peso denominated debt and wipe it away and hope everything will go your way. you will not be able to pay employees or feed your economy. dollarization is probably down the road. this is an economy running 2.5%

to 3%. the central bank is targeting fiscal deficit -- it will 5% this year. they have their own problems. it makes all the sense in the world to have stopped in brazil on the way up. jonathan: before we get to the international politics, do we know who will run the central bank and does it matter? damian: we are harkening back to the days where they issued the bond you and i have talked about. the central banker, the head who started the bank run in argentina in 2018 succeeded him. he is been around the block, he has dealt with the imf, he is a good choice. there are not many good choices in argentina. jonathan: the imf loves the establishment. this is the antiestablishment candidate but he will do some of

the stuff they would like him to do which is deep cuts to government spending. damian: there are a lot of things he does stand for which we are not covering enough. his view on feminist rights, abortion, on china, not the greatest views if you believe everything he said but he is backtracking on a lot of the things he said. it is getting to the point i do not know what to believe. the markets want to believe argentina is on the way back but investors like myself have been tapped before. lisa: you are listening to his conversations with the imf. what you think the tenor of those conversations are? damian: they made a 2.6 billion dollar payment on their debt to the imf in october. that is a good sign they want to continue doing business. they do not want to be blocked out of global capital markets. what they need to do -- the fund of their agreement is set for

the end of this month. they're not supposed to be talking about this in washington or new york. what structural and economic reforms to the imf need to see to permit the flow of capital, permit the flow of dollars into their economy if they want them. jonathan: argentina -- lisa: argentina is a specific story. they have defaulted five times in the last 100 years. there are a lot of concerns about inflation. there is something they have in common with developed market nations which is a lot of people have gotten used to debt, have gotten used to spending more than you can pay for and will have a hard time weaning themselves of this. how much will this be an issue across a broader swath of the developing world, not to mention the developed world in a way that is not being praised in? damian: we can kick the can down the road as long as we want to. in the case of argentina, if you

want to take the bull case number lithium. epf is up since november 16. it is the national oil producer out of argentina. a big finance conglomerate is up 30% since the selection. investors are taking this business heavy environment seriously and they have sources of future revenue to help offset that debt load. tom: what is the most efficacious way to play china? are you more optimistic? what is the way damian sassower speculates on the china recovery. damian: what is the one item between the u.s. and china the republican and democratic party on into an election year? tariffs and the fact they should go up. what does that mean for dollar you want? probably not a good thing -- for

dollar-yuan? of a blade out a good thing. there trades on either side. if you believe in recession you are long dollar versus g10 fx and em along with it. that is the way you had to yourself. jonathan: good to see you. damian sassower. we are getting so much about your coverage of purdue. you said you watch the game. tom: i turned it off with 10 minutes ago. they scored 17 points in the back half. i may lose my job. jonathan: you missed the back half and you came on aaron said they lost? tom: they were comatose and then what a comeback? leclerc did great in formula one. jonathan: he did do great. the only race red bull did not win was singapore.

they won every other race in world sports i cannot think of many dominant seasons in any sport like the one you've just seen in formula one this year. tom: was the race boring? the last 10 laps of the race, is that the way you run a world-class sports organization? they were just going through the motions. jonathan: it is the difficulty of formula one. they try to change it a million times. we have seen that with red bull, mercedes, for ari, and it is the difficulty conquering the sports market in this country. netflix has gone so far. when you know the output of the game it is not exciting. damian: we were just talking about it. the fact that you have a salary cap in the nfl is what makes it interesting. the packers, the giants, they

all won this week. will not talk about that. it was unwatchable. my son is in from college. jonathan: is rogers coming back? damian: i hope not at this point. jonathan: you think you will sit the rest of the season out? tom: did you have tickets? damian: i saw him there. he would not look at me. jonathan: you know the secret about mohamed el-erian? he sits in the nose room -- he sits in the nosebleeds. tom: he is up in the nosebleeds? jonathan: loves the nosebleeds. tom: i was there and tennis when i was playing. lisa: it is the spirit you get there. jonathan: the spirit of losing? is that right? from new york, this is

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♪ >> until you see some slowing in inflection, prices will stay high. >> the biggest risk is a stagflation scenario. >> there's also a chance that inflation gets stuck at 2.5% or

3%. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, everyone. oil under $75 per barrel. one indication of how you get the spx 5000, that is the feeling this morning. jonathan: tis the season when your economics department comes out to say ok, recession year, 175 basis points. that is the call from deutsche bank and then you are the equity strategist. let's try to make that work. how do you make that work? 175 basis points of cuts. tom: disinflation. boy, does that help the optimism. jonathan: that is the secret sauce, get the disinflation without the economic pain. so far this year, so good. lisa: that is why people are

willing to believe it, it is the one thing they got wrong. that is why perhaps there is a bias to be optimistic if at all possible. jonathan: how much of this is a bias? some people are looking for really fractional, germane, upmarket. then you've got others with the real jump condition optimism and that is the parsing. lisa: it is also which starts talking about. they are not saying that. maybe later next year we can get there. but in the meantime, rate cuts are going to be good for big tech. that is going to keep driving everything, it can keep eating lopsided. then you start to get participation around the edges. jonathan: let's get that board up again and take a quick snapshot. there's two names i want to talk about. one is goldman sachs. the other is deutsche bank. goldman, they think the tail

with for growth continues, that the fed can hold through most of the year because growth is going to be pretty good. deutsche bank, the economics team to saying recession and 175 basis points of cuts, and the equity strategist at the bull is currently on the street for next year. make sense of that for me. you can make the call radically different. lisa: no thanks, i'm not going to try to make sense of that. jonathan: just leave that up and go through the numbers. what we are hearing again, love this, is that bad news is good news. and what you are hearing from goldman, and all this could change, we got a range of use. you are going to see things change. last week alone you start to build this trend in jobless claims, then all the sudden, blow it up again.

tom: the bottom line is the huge misguess on the american consumer. it has been under estimation of consumer power. i would suggest that is still there. bloomberg intelligence was brilliant on wednesday or tuesday last week about the oomph of the american consumer. lisa: and we did see that in terms of black friday numbers, 7.5% more than the year before. and yet, we did hear all these warnings from walmart talking about a real celebration of spending. so i don't know. jonathan: best buy is saying we might have trouble going into year-end. then you look at online sales. lisa: through the roof. i'm having a lot of trouble making sense of this because there are these different economies and from that people are buying. as is a motley picture.

-- it is a motley picture. jonathan: it is a motley crew. equity futures right now coming in just a touch. more than resilient, down 1/10 of 1%. particularly, double-digit gains. double-digit gains on the nasdaq 100. tom: a little bit of experience saying we did a year and one month. jonathan: what a year november has been. tom: the hedge fund losses are going to be some of the losses discussed in the quarter next year. this do this, let's dive then after a brilliant data check. peter, the head of macro strategist, and the basic idea, just fabulous on this. he went back to nifty 50, 1972. polaroid beginning a lawsuit with the eastman kodak company.

all the magic camera stuff is on top. in the multiple off of a polaroid was absolutely stunning. and they said we are buying these seven companies now and this is the way it is. >> i think it's already starting to end. if you looks at the middle of november, you've seen that outperformance. you seem both the equal weight of the nasdaq and the s&p outperform, so i think you are starting to see a shift in that. last week was really encouraging. nvidia had earnings, they seemed ok. stocks drifted a little bit, but the markets did well. i think we see a little bit of a transition in leadership coming into year-end. jonathan: without a recession you get that transition in leadership. >> i think you do in the near term. this is very tricky. headed toward recession but as you mentioned earlier, it has been so resilient. the first few readings are going to indicate soft landing. that is where we get is one last gasp.

maybe it's 4700 so it expands a little bit. then people start realizing we are going to have recession of your going to stay with someone high inflation because of all the rebuilding we are doing. jonathan: cristobal, what is that moment? claims, payroll? >> a little bit on sales. i think we are going to find black friday sales were great, but everything was discounted. people took advantage of all these sales and then we see a drop off a cliff coming into december. by the end of december, first week of january is when we get that uh-oh moment, that we went too far and repriced in this whole bad news is good. that is going the spring. -- going to last for a little bit. you want long treasuries in short equities. lisa: if you get long both, the theory is that the fed is going to cut rates pretty aggressively which will give a boost to the valuations of companies that

have already given a boost to some of the valuations simply because the profits. mainly, the magnificent seven. how do you push back against that if you are not calling for people to massively lose their jobs? >> while i think the fed is done hiking i think they're going to be fairly slow to cut and again, we are going to have stimulus. we are going to try to build out energy infrastructure, do this re-shoring. inflation is not going to allow the fed to cut very much in that is a big part of it. since the last week or so, you've seen that leadership lose. that story is already overplayed. people are like, we have run these up as high as we can. "the magnificent seven" is already in them. they are weakening, everything else is doing better. at some point we are going to need to cai translate to better profits for companies who can justify the cost benefit and say somewhere in the numbers this is actually working. you should see higher multiples across the board. lisa: what is the problematic

figure this immaculate disinflation. >> we get a bit more disinflation, numbers, but then we keep cropping up into that 2.5-four .5% range. 2.5%-three .5%, the fed is going to ignore it. above that, they have to get hawkish. that is why i don't think we see the number of cuts. lisa: i look at the great miscall this year in sales growth featured over the long weekend, goldman sachs with 11%. i go back to dlj years ago and tom gelder who said look, look at the top line as well. do you see the erosion of the top line of 30% of standard that gets it right? >> i don't think so but even as you mentioned about the nifty 50

going back to the 70's, we were at the bankers trust at the time, high-yield conference. michael said there was a prison at merrill lynch in the 72 said by tech and i remember thinking my gosh, they must have had everything right. they got it completely wrong. at the time the leaders in tech were digital equipment. all these things that actually turned out not to keep pace with technology. tom: you think there is an equivalent now? >> i think we got to be careful. we have to look at what is trading at superhigh multiples. who is going to step in, who is going to pick up the slack? tom: google is like wang, does that work? jonathan: we need to dig into it. you think this ai moment is similar to what we saw? >> for me, all the benefits are accruing to the ai producers. web service companies, all those. nothing is accruing to the average company.

if ai really works, we should be able to place higher multiples on all companies because they should start seeing earnings trajectory. we are going to see our companies able to justify the spend on ai or not. lisa: where does the comparison leave off? are we going to see a plunge in valuations akin to what we saw in the 2000, or if this going to be a stagnation of valuation while everyone else plays catch-up? >> this would be much more a leveling off. that is why s&p goes to 46 .50, maybe 4700. under that performance, the russell 2000 maybe doubling that total return. so we go from 45.50 to 4700. the russell can be much better and the equal weight of being better. what have we missed in this whole chase for the magnificent seven and as people get stopped out, this has been a very large hedge fund trade, short everything else.

at that compression starts you get to unwind into a fairly thin market and all that is going to take is a little bit of positive news on china with the administration gives something to china to spur the last bit of this rally and be less dependent on the rate move and more dependent on that. jonathan: you tell brilliant stories. tell me more about the chapter were china starts to get nice things from the u.s. administration. >> everyone is very concerned about where we stand. looking at ships, it is crucial that we do not let china take technology that is going to be very competitive on ai, on the military front, there are some level of chips that companies need to be able to sell to maintain profit to build up a foundry. is going to be balancing acts. on some of the tariffs, both sides kind of like tariffs. remember, the democrats hated tariffs and everyone seems to have been comfortable with that. i would not be surprised to see some sort of path to reducing tariffs. hey china, you do this, we do that. everyone just wants to see a bit of encouraging news on that front.

we just had these for our meetings. something comes out of that is the way politics seems to go. jonathan: ok, good to see you. thank you, sir. if you are just joining us, the equity market set up as follows. we are -0.1%. yields down a little bit lower by a couple of basis points. apollo joining us in about 15 minutes' time. next live at the apollo is actually the tagline of apollo for the special show we do with them next week. fantastic lineup. tom: beyond timely, one of the great, great mystery seer is the state of private investment in america. even more timely than our killer conversation on london a couple months ago. jonathan: so we will be doing that next week. more details on that still later this week. coming up, danna toussie on the holiday shopping season. -- dana telsey.

tk, i'm going to run off and charge my phone so coming up in the next hour, colin martin of schwab, wells fargo. going to be very cool. lisa: just restart it. jonathan: on the call for 4500, that is the call for next year. year-end on the s&p. tom: that is a courageous call. the marketing guys want you to go above. jonathan: i think the marketing guys would like me to shut up. the conversation is ongoing. from new york city good morning. ♪ use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside - and the other goals along the way. wealth plan can help get you there.

♪ j.p. morgan wealth management.

♪ >> we've been able to get new categories and as a result of marketplace which is now online at both bloomingdale's and macy's. i bet on department stores and i made my career doing this. it is still very, very relevant.

we are going to be ready for where the customer is evolving and we've got a very strong assets to do that. tom: after the parade -- watch the parade, did you watch the parade? lisa: i did not. tom: i watched some of the parade. balloons were so low to the ground. years ago when they were hired -- lisa: you liked it better than? then there was an accident. after that, they brought it down. maybe intentionally. tom: it was unlike six networks which shows you have made the macy's parade is. we are going to keep this quick because our guest is so important. markets resilient here. 13.09. oil under 75 and american oil, 4.93%. let's talk you and me a little bit. i was thunderstruck by one headline i saw in the zeitgeist this weekend.

oops, we got it wrong it, retail looks good. i did not expect that. lisa: which retail? 'tis it just of online stores, the idea that you can shop whenever? we were talking before but some people who were saying that stores were not even open the day after thanksgiving, they opened up late. again, how much does this create some tension between who is winning here vs. how much they consumer spending everywhere? tom:tom: there is no one better to speak to on this as we stand four corners at 57th street and fifth avenue. gazing to tiffany's and where louis vuitton is now and some other unpronounceable i can't afford store. chelsea joins us now, chief research officer of for advisory group. you got this right. and a lot of people got this wrong. how do you expect this optimism to come out of the season?

>> thank you very much for having me and i hope you had a great holiday. keep in mind we did have a barrage of earnings report all talking about the cautious consumer. inventory levels were clean. promotions in place, 30%-40%. that is an outstanding, that isn't going off the rails. they were definitely clean. what you saw in terms of traffic, look at the lululemon, two bath and body works. macy's had more traffic than what you had a nordstrom. tjx had a ton of traffic. the reason why, value and innovation. if you have value and innovation, the consumer is coming. look where there was innovation. look at the value on the pricing. but we have a long season coming up now. christmas is on a monday. watch that weekend before christmas because procrastinators, it is their choice of when they want to spend. lisa: let's build on that, are you saying that you suspect when

people brought for their shopping much more than they had in the past, because they are being cautious, the numbers are inflated to represent that more than just excessive spending altogether? >> you look at the savings rate which has come down, you take a look at delinquencies which have gone up and you look at what is happened with the pattern of promotions, it began in october. with amazon prime day in october, the second prime day, you had a pull forward of what the promos were. of course online is going to be strong. stores are no longer open on thanksgiving day, so what did people do? they shop with their phones. mobile matters. lisa: is it the modality of shopping that matters right now, or is it the type of product mix that matters right now? i'm curious, can you parse that up? is it just online shopping with a product that people are getting online?.it is the product that >> people are getting. >>the stores matter, engagement, the social interaction. so many companies in 2023 came

out with new store formats. even outlets are strong in that measure for value. >> where is the best total return of 12 months? the basic idea of which kind of retail and which individual stock is the best possibility. >> off-price i think is going to win over the next 12 months. tom: louis vuitton. >> off-price, not luxury. different world. it is off-price, it is the t.j. maxxes of the world. why? they are getting the benefit of a trade down. look at what you just saw in the result last week. they each delivered same-store sales of 5%. typically these are 3% sales increases. they are getting the benefit of the doubt. >> there has been a heritage of t.j. maxx executing. what is the secret sauce that makes them do that? >> the experience of their

buyers. they have their relationships with brands. brands like being in their stores, and they sell through. and don't forget the locations. lisa: the description your painting of the american consumer is not that positive, it is one that is trading down, one that has caution, that might not show up in forced before that monday christmas. so where are we in the cycle? is this a matter of people running out of money or is it just them saying we've been spending a lot recently, we probably should be a little more prudent? >> they had more money to years ago with the stimulus package during the pandemic. the low to middle income consumer is battered right now i higher interest rate even though inflation is moderating. it is still a higher price than it was in the past. you take a look at the luxury consumer, you need the feel-good factor. with the geopolitical issues going on, the macro headwinds and the volatility of the stock market that makes it more challenging. that is why look at the taylor swift concert over the summer. but people are willing to spend

on, give them something innovative, they will be there. lisa: what does that say about how people are going to be spending? is this the beginning of more pain, or basically the bulk of it? >> this is in the middle of the pain we are seeing. the focus on essentials is right there. you need newness in order to drive demand and even though the labor market continues to remain very good, the watchwords are out there saying what is it going to look like? inventory is cleaner. you don't need to promote as deeply as you had in the past. look at what is happening with department stores were more cautiously. why are they ordering cautiously? if they don't feel demand is going to be there, they would rather sell at full price than markdowns and your most profitable markdown is your lowest mark down, not your greatest. tom:tom: toughest job in retail right now the guy at gucci. toughest job. what is gucci going to be right off the corner of fifth avenue

and 57th? >> i think they are going more basic than they've ever been before. the mismatching of the three years is all about matching now, and it is about safe. they are going back to the archives to seeing what they can reinvent an update. tom: is there proof that we want back, is there proof that will sell to the chinese? >> i think there is some proof but we are not seeing the chinese travel yet. we need them traveling to really drive demand. and don't forget you are seeing the local european slow down also. lisa: what do you make of the by now, pay later? you think that this is a positive sign for the retail world, or is it a negative sign that people are just basically turning to leverage? >> people are turning toward leverage. when it first came out, it was a huge event, a huge development because it got younger people, and frankly, the millenials to spend. now that it has been around for a few years, if they can't pay

on time, they are willing to delay and frankly be able to extend what their payment terms are. tom: is by now pay later changing the charge card business? >> not what we seen. it didn't take off tremendously. it took off with a certain demographic, and those are the millenials. tom: single best buy? >> tjx is going to be the winner for holiday 2024. tom: thank you. we pretty much covered it all, from tjx and dollar general out to gucci and louis vuitton. lisa: people trading down, people leveling up. we are in the middle of the pain which raises this question of ok, does this mean that companies are going to hunker down and lead to less disinflation? they don't want to order more. the inventory story is one of the biggest ones. they don't want to order more that they can't sell. tom: is the pulse of america, is what we do. you get a wage increase offered less inflation and most of

america celebrates that and goes out to end. they buy a refrigerator they don't need. that is what happens. lisa: logic, tom. lisa: so i can repeat them and cook them some more. forget about gucci, futures negative four. pretty much improvement off of a softer take earlier. much more going on. dollar, fractionally weaker. do stay with us on the and television. this is "bloomberg surveillance."

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♪ tom: "bloomberg surveillance." jonathan ferro, lisa abramowicz and tom keene. we've got such an important guest, i want to get through the data quickly here. improving negative four, 13.07 after a stunning sub-13 vix on sunday. not much going on as we await options. what are the options today? lisa: we have options today. they might be movers, we shall see. some of the things that are moving, i've watched the online retailers to figure out just how much people are focused on then being the disproportionate winners during this holiday

shopping season, so i want to take a look at etsy, shopify, amazon. etsy higher by 1.6%. shopify up by 3.9% after they set a black friday record, a 22% increase in merchant sales. again, i think there is a really important focus here. how much is the game here purely online vs. overall in sales? but we saw from adobe was yes, a 7.5% increase in a total of online sales but if you take a look at the mastercard spending pulse, it was up only 2.5%, so it is not necessarily correlated across all the different measures. what if you are looking outside of online? tom: i looked at nordstrom carefully. i think it was wednesday were thursday last week. it is basically a 10 year train wreck. there have got to be winners. dana set her winners t.j. maxx,

tjx i think is the symbol. there are some real nuances here of stock selection among traditional retail winners. lisa: and from a broader macro perspective, how do you put this together to understand just how much more spending the consumer has in them? tom: program note, next week jon ferro, lisa abramowicz and tom keene, massive road trip. i may have to go below 59th street on this. apollo, looking forward to this. lisa, what is your number one question to the leadership? lisa: i'm curious going forward how they see honestly private market for private buyers really taking over for public markets in a new way and how much that is offered some of the rate shock that we otherwise would have experienced. tom: i want to know how deep the shadows are. important set of conversations.

chief economist at apollo global management, he writes a piercing short note each morning and here he harkens back to the skeletons in the closet, the worries that those older have about it this time like 2019? is this like a nifty 50 or the point where polaroid and xerox were one of the five magnificent five that were out there? i love the equal multiples now with 1972. i believe that ended ugly. do you take that over to an analog that this will and ugly? >> we still have to wait and see exactly how ai will be used, and no one really knows how it will be implemented and how much productivity or consumption or welfare overall. but the bottom line really is what we can track valuations. what i did right in the note today is exactly that the evaluation and the trajectory is

beginning to look quite similar including the levels we are at with ai stocks or the magnificent seven now at about 50 on a trailing basis. it does make you wonder a little bit whether this is indeed going to have a different story compared to what we've seen before or whether this is going to be similar in some way. tom: i imagine it was very topline, sale-specific? are we going to have a nominal gdp to support the magnificent seven even if a level out or to blend the breadth of any good market? >> the problem is the s&p 490 three has basically been flat for the last year. the conclusion is that so far all the market gains have been driven by those handful of stocks, so that of course also should bring us to the discussion, ok, is this sustainable? if you really and up just buying into one simple story, namely ai. lisa: which is why a lot of people are focused on the consumer. i want to go back to what we

begin with. are we seeing sustained sales and a sustained strong consumer or are we just seeing these shifts underway regardless of who ends up fitting the most? shifts underway that represents strength in pockets but not in the overall picture. >> absolutely, i do think that is cleared that ship has been toward services. that's why goods have generally been slowing down. another strength point is that we've also seen strength in online. we just heard your previous gas talk about trading down. delinquency rates for auto loans and credit cards seven going up. across-the-board the level of interest rates are beginning despite harder and harder on consumers. the conclusion of course is that the fed is actually achieving exactly what experts would have predicted. the slowdown might not have been as fast as we all thought just a few orders ago but it is still playing out. we still have the worst ahead of us.

it is the case the monetary policy is biting continuously going forward. lisa: what is the difference between goldilocks and a full-blown recession? >> the runway that we are on here from slowing the economy down from a fed perspective certainly is that inflation is coming down. we've got to get a soft landing not only in inflation, but also the labor market. unemployment rate has gone up, and to what degree that is an indicator of a recession or not. the conclusion to your question is i think we should view this in the broader context of what is it the fed is trying to do? the fed is trying to slow economy down. they raised interest rates because they want us to buy fewer cars, fewer washers, fewer refrigerators. because of that, we should overtime continue to see that process play out. lisa: there is real tension right now, calling for 5004 5100 on the s&p by the end of next year.

will they cut rates aggressively just simply because they are tightening the screws at a faster pace as growth slows? do you buy that they will do that even if it keeps, perhaps, the economy afloat and prolonged this disinflation? >> in a language, how much weight to the put on inflation? how much weight to the put on the labor market? all the weight so far has been almost entirely on inflation. will they begin to shift their attention over toward the labor market? are the coefficients changing so that we put more weight on the labor market now that the labor market is beginning to show some signs of weakening? if you look at job openings, they will begin to shift away from focusing purely on inflation to begin to focus also on the labor market.

tom: i'm inventing it right now. the slack rule is a three-month moving average for payroll. what statistic do we need on a three-month moving average of non-fun payrolls where we make the great shift? >> if you look at the latest number, it was 150,000. and if i type on bloomberg, the second quarter of next year on average for april, may and june the 35,000. that is the average, now we start wondering if the s&p going to trade? what if it even goes below zero? the risk is here that we may have a runway and monetary policy begin to be a bigger drag on growth. tom: adobe just out. thank you so much for this. adobe, $12.4 billion cyber monday spend last year was $11.3 billion.

to your distinction, that is cyber. we are parsing out how all of us are glued to amazon. lisa: and it is cyber monday today let alone all the other spending we've seen. honestly, the distortions have been incredibly difficult to pick up on, which is the reason why i'm listening to what you're saying. this idea of the labor market weakening and the fed responding to that. and thinking about people still have money to spend, real wages are actually going up and this is a job-four recession that people are expecting. this is what they say, that people are hoarding labor. this is a new world. do you push back against the? >> there is some debate between the san francisco fed, the new york fed, the board of governors. key issue still is it is very clear we are ultimately running out of savings or excess savings, and some people view that is already happening, others view it as happening in

the next few quarters, but the trend is very clear. the fed is getting what they want. they want a slow down and that is why they will ultimately get excess savings running out. student payments are on the first of october. if we put all these things together i still think the slowdown continues. lisa: deutsche bank put out a forecaster 170 five basis points that rate cuts next year. is that feasible with the recipe you just put out there? >> that does require quite a hard slowdown, a hard landing. if we do get a sharper slowdown, that is what the consensus is extending. both scenarios make sense on their own, but the conclusion still is we still have more downside risk from where we are at the moment. tom: i want to go back to your day job at deutsche bank. rishi sunak the prime minister told our friend adamantly that

he is not prescribing austerity. you lived this at deutsche bank, the confident year end of the united kingdom. is there a risk they slip into an incorrect austere policy? >> both the u.k. and europe have the same list of problems of the u.s., broadly speaking. tom: we did a lot law income new world stimulus. is it that simply? >> in some sense it is much more aggressive, and in that sense, also in the u.k. they have certainly played a very critical role. the fiscal policy will be more expansive than rates are, and that is what we saw from germany and the recent prognostication over there. do you think auctions matter? >> i do think auctions matter a lot. to, three-year, five year seven-year seven year is very

important. a look at the auction sizes over the last several months have gone up. the risk is that short rates may eventually come down but we may have a steepener because long rates may potentially not come down as much. tom: let's revisit a banner from two hours ago. lisa: i think we were at two before, now we three. lisa: they matter. it depends if you care. i care. tom: we've got a wonderful event we are going to be doing. as we visit apollo, there are so many themes to take on here.

i can't say enough event. look for that december 5-ish. lisa: this to me is going to do one of the more interesting aspects. given the fact that you have countries that don't want to go back to austerity but have made their people accustomed to a lot of spending, how do you end up getting benchmark rates back down to anything akin to what we got use to pre-pandemic? i'm not sure how we put these two things together must spending comes down and then you are looking at a much harder landing. tom: it is hugely cultural. the bottom line here to me is a cultural difference, and the major cultural difference is americans spend like drunken sailors. lisa: but germany doesn't. they say we need to balance our books, everything is in the black.

that is changing. that highlights that policy austerity failed. what is the happy medium? tom: i would also look to the united kingdom as well. spx down to tens of 1%. coming up next, francine lacqua in a summit with the united kingdom prime minister rishi sunak. the prime minister does address austerity. please stay with us. an austere lisa abramowicz and tom keene. this is bloomberg. the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪)

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basically trying to get back to the office after the slumber of the weekend. tom: boy, did i live it. i'm glad it is once a year, but i got slammed. i had the turkey salmon thing going and then another. lisa: that is often how it works on thanksgiving. after all of the thanksgiving deluxe, that has steadily li bin the conversation. saying that austerity in the u.k., telling francine lacqua of bloomberg the u.k. economy is showing signs of growth momentum. >> i've been prime minister for just over a year. during that time we've halved inflation as i said we would do. we know now that the u.k. economy has recovered faster from the pandemic and pretty much any other major european economy and over the long-term term we are still forecast to have her for economies.

but crucially, business investment has grown faster than any other g-7 economy over the last few years and ultimately if you want to drive growth and productivity you need businesses to be investing. i feel very positive about the long-term growth outlook for the u.k. >> are you confident that the numbers will come in so that you can continue cutting tax? >> when i became prime minister just over a year ago, that hasn't happened. we put in place a set of policies to ensure that it didn't and i'm delighted the u.k. economy has outperformed all of those and has grown better than anybody thought. a track record of outperforming what people think. the u.k. economy has real momentum now. business investment is growing faster than elsewhere. we've got commitments totaling almost 30 billion pounds for a

summit, significantly more than we had in the past. that shows that there is confidence in the economy and that is what makes me think we are poised for strong growth. >> but if you look at inflation and exclude energy, it is down by like 1/5. i don't know how much credit the government can take on that. >> if you look at core inflation it is pretty much middle of the pack for european economies. forecast next year to be lower than the euro zone and in the u.s. the last numbers i checked. inflation is downwards and coming down faster than our peers over the course of the next 12 months if you look at the forecast. we are making sure that we are disciplined, we are borrowing. to make sure that fiscal policy is sentiment. we are not fueling the inflationary file. actually, you are seeing that feedthrough to the economy and we are also improving labor supply.

we are making sure that our labor market remains flexible, that we are moving people off welfare and into work. all of those things are contributing to downward momentum on inflation. >> if the opr is right in their forecast, what does that mean to where you can find some spending freeze or cuts? >> what we've just delivered are significant tax cut for business, for everybody in work. bigger tax cuts since the 1980's to get people a sense of scale. what we are doing is making full expensing public. we will be the only major g-7 economy certainly an even broader than that where you get a total write-off against her taxes for capital investment. that is an incredibly generous regime to attract business investment and it comes on top of the fact that our corporation tax is lower than any other g-7 economy. we just delivered a very significant personal tax cut that will put 450 pounds extra

in the bank accounts of a typical worker over the next 12 months. >> you have to find money in departments where you know that voters want you to spend more in certain departments. are you comfortable being pregnant deserve austerity? >> that is simply not the case. government spending in the u.k. is a very high level. it has grown at very high levels. i think any commentary or accusations that that is what is happening is simply unfounded. we are at a point now given the amount that is being spent where i think the priority has got to be lowering the tax burden. needs to match what we have seen post-covid and i would rather focus on efficiency and prioritize cutting taxes rather than the government spending ever more than money. that is the point and i'm very

clear that the choice we are making. tom: the prime minister of the united kingdom, a piercing discussion on austerity. obviously his optimism forward of his united kingdom. antin core palace for a soiree of business and optimism in good feeling. francine, let me cut to the domestic politics. how alone is the prime minister now within the fractious debate of the future of the united kingdom? >> i have to say really crystallized. ahead of the global investment summit, kind of crystallized in my eyes how alone he fully was because no matter what you ask him, he was trying to think quickly to see who he would not upset with his answers. he has a very fractious party that he is trying to get together.

some asking for even more tax cuts any has already delivered. has to keep investors on site to make sure they are here. he is also very far below in the polls, about 20 points behind the labour party, and he needs to call an election by january 2025. i felt he was quite alone. lisa: do you think he is convincing businesses that he can both cut taxes but not voiced an air of austerity with a nation that has gotten used to significant and more spending? >> for the most part, he has been telling a very fine line and the chancellor, jeremy hunt did it with a lot of ability last week. what they announced in the autumn statement was the fact that they were cutting taxes, but they weren't changing the

tax bands, which means you can cut taxes but because of inflation, you actually earn a little bit more. so you pay the same amount of tax or the margin of a little bit more tax, although he says he is cutting taxes. because of that, the ob are found a lot more money that he could play with. this money says look, even if you continue cutting taxes at some point you will cut down on government spending in certain departments. what i tried to get from him is that they don't want some of these cuts. he certainly pushed back against the austerity word because it is very loaded. tom: very quickly, you are an expert on this. the autocracy of eastern europe, we now see over the weekend the shock of the netherlands.

his conservative tilt coming to the united kingdom? >> tom, this is a very delicate question because it was only two weeks ago the prime minister also changed his cabinet can have someone who is much more moderate in charge of domestic affairs. we are not talking anything like what happened in the netherlands, but this is again a country that voted for brexit so it has to deliver on cutting down illegal immigration, hence the question on the small boats. at the same time they need to make sure that people still want to come work here. they need to tread very carefully. jonathan: look for her early, early, early, early, early in the american morning is how i would put that. way early.

lisa: you asked a great question about the more extreme factions, the autocratic tendencies you are talking about. netherlands, you've got argentina. in the u.s., if you didn't have the primary system that we did, would you have a very different pool of potential candidates? tom: i wonder if they would have a parliamentarian vote where 30% wins. that really speaks to what we are going to see here and certainly into the election year for many elections of 2024. spx, negative seven. stay with that -- with us for complete team coverage of the options. this is "bloomberg surveillance."

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jonathan: live from new york city, good morning. the market is down .1%. countdown to the open starts right now. annmarie: 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, counting down. black friday setting an online record. pressure growing to extend the cease-fire. from new york, we begin with the big issue. the u.s. consumer holding on. >> the consumer has been