Bloomberg Surveillance TV: November 13th, 2025

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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amerie Hordernt. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg

I'm ready to be here.

Great to see you.

One.

Are the toawl winds that you're so confident about right now?

Well, I think the main thing, Rob Front, I think this board market deserves the benefit of the data, and we have all these of concerns. As one concern receives, we have another one to talk about, which makes it interesting. But the north storrow of this bull market has been simple. It's been profits, in our view, and those profit trends are still moving higher. Forward twelve month estimates for the S and P are moving higher, but they're also moving

And then even as we get.

Some kind of uncomfortable or some headlines around the tech trade, money's not leaving.

It's rotating.

And then lastly, this morning, look at the AAII sentiment this morning, it's up to forty nine percent barishness.

That's the highest since May.

And we're still as we're talking this morning, the downs at an all time high.

I've asked this question fifty different ways. Earning it's a great job States for is not? When does the job States is stunt to matter to this market?

It's a good question. I mean, you know, we.

All talk about people talking about the y shaped.

Economy we're talking talking about.

We talk about the two speed economy and the two speed stock markets. So you know, at some point, you know, when you think about it, profit margins can benefit from wage growth slowing, but at some point you need that consumer spending to help the economy move forward. So I don't know the exact date, but I think that's part of the reason why you've seen moral weakness in some

Well, and frankly, I mean, we've got Kevin Gordon coming on later, and I love his comment in a note where he said we're transitioning from a vibe session to a vibe pression and how there seems to be this increasingly negative view of the economy, but it has not translated into what people actually do.

Retail therapy seems to be the solution to everything.

So at what point do you just ignore this and take a look at what companies are saying, whether it's the airlines, whether it's the retailers, especially on the high end, consumers are still spending.

And that's right, and we're seeing it still leaving the credit data that we follow also, so you're right. I mean, if you look at the headline, so the consumer's sentiment, we just had sentiment really just at really low levels. But when you test that out from a stock market perspective a year later, the market tends to be up

We're going to.

See maybe hopefully more clarity on the terriff side, and maybe some more incentives on the business side. So I do think we'll see a little bit of an uptake, maybe on the marginal people feel a little bit better.

Is it going to be inflationary?

And this is really what FED officials are grappling with, and honestly, I don't envy them, given the fact that they are grappling between potentially allowing inflation to become unmoored or causing permanent scarring to the labor market. How much can they really cut if you do get that boost to consumption in the early part of next year.

Yeah, it's a good question.

It's a tricky situation for them as a lot of these different cross currents. But I will say there are maybe you know, a little bit of an uptick because of the AI spending because of the terrorists. But on the other side, we do have wages cooling somewhere. We have oil prices in the sixties, and what we led the program with was housing. Housing prices are softening as well, So that doesn't seem to me like a runaway inflation

Do tax rebates change your outlook? Two thousand dollars checks?

You know?

I think what it does on the margin is it lifts up maybe a slight uptick on GDP?

Is it a game change?

And know?

But I mean that's one of our main thesis as we move into next year, is getting a little bit more clarity and having a slight uptick in the overall economy. And you know, those tax stimulus checks do help out on the margins.

The focus of the White House, you can fill the shift. It's all about a fullibility right now. The President said it almost directly yesterday following the rear of putting into the government shutdown. So when you look out to twenty twenty six and you've got a very narrow concentrated equity market and a consumer that's been struggling, and a president determined to do something about it going into the midterms next year, it's not going to be the trend for next year.

Well, you know, a lot of the question right now is do we move out of tech?

And we're still sticking with tech.

I'm waiting for confirmation on some of the things we look at, relative price trends, relative earning trends, to go into this broading trade. We have to remember we came into this year and what was the big theme? It was the broading theme hasn't worked out. In fact, part of the even the movement over the last couple days of rotation back there is because they've underperformed so much

If you believe you're in a bull market, I think.

Ultimately tech has to participate and likely lead, even if there's some bounts of underperformance.

How much is this for tech heads?

I win tails you lose in the sense that either they do really well and they continue to boom and the fedce cutting rates because the rest of the world's not doing so well, and so then they continue to boom even more because there's more cash looking to go to work, or you know, the whole world gets better and adapts to some sort of AI paradigm and they also benefit. So how much is that the reason why it's sort of in some ways the riskier free bet for a lot of people and their portfolios.

Well, I think what happens with all these macro cross currents the news headlines from day to day. You see these kind of short term rotations in other areas, and then they when people feel uncomfortable where they go, they go right back to tech. So, but you raise a good point too. One of the main questions I'm getting today is are we in a tech bubble? And the other thing that keep in mind, going back with the FED, is the FED was raising rates in the late nineties two thousand.

We're not doing that.

We're still on a trajectory of actually moving lower. So I think I'd like to see a boarding I like to see, not a tree speed economy. I think most of us would like to see that as well. But I think you're right. I think if if things slowed down, money moves back to tech, and if things if the FED cuts rates, people still stick with tech because of the finance inside in the secular growth.

If the FED is cutting in the face of inflation that has remained above the two percent target for more than five years, does that mean you should invest in the rest of the world and not necessarily the US.

We're still team in USA. We've been Team USA for a long time. I think you know we did last fall. We increased our exposure to em we increase exposure to national develop and I think a lot of times people just think about, hey, it has to be either or, and I say this both with a bias, and our bias is still with the US. We still think that's

We have seen better price action, valuations are cheap.

Sentiment is has been negative coming into this year, but we still haven't seen the earnings. Now em emerging markets is more of a tech play relative to say the EFI, which is more of the kind of sickle financials, industrials and things of that nature.

Okaith, can we just go through the tight set? What were you expecting to see and how quickly were you expecting to see it?

I don't know that I had expectations when it was going to come through. It's listen, it's a cloudy period from our head of economics. So I feel bad for him every day, even though he had a little bit of a vacation, and for me and for what we do.

I mean, I just go back to the profits.

I'm focused on what the companies are saying, which tends to be more forward looking anyway. So and we also have to remember, I'd rather have data. But we also had jobs numbers earlier this year that were revised down by nine hundred thousand, so we all want the data.

It's still the goal standard.

It makes it cloudy, but I think we still have enough information from these private sources, along with what companies are telling us today, to say that the economy is still kind of muddling along. And then we also know some of the factors that we talked about next year why this should be potentially a little bit of of an uptake in our review. And then you know, we've talked a lot about the FED. Maybe this clouds their decision as well. I don't think the FED is the

On the tech side, it's not the main driver.

So you know, all in all, we'll get through this, and you know, three or four months will be talking about something else. Maybe well, we're talking about the midterm elections by then, which will be coming as the main headline in twenty twenty six.

Well, midterm elections are going to be determined by the economy, and the economy has seemed increasingly divorced from corporate earnings, which you've talked about at what point is that unsustainable?

Yeah, it's I mean, it's going back to what we talked about earlier, you know, the you know, I think something else we have to think about, too, is we focused.

A lot about job growth, but we still have.

Almost you know, somewhere around one hundred and sixty million people work. And so I think what's also important, not just the monthly jobs numbers, is wage growth staying above inflation. And right now it is so as long as we can continue that happening, and we have those folks, you know that one hundred and sixty million people work in the consumer can still move forward, maybe not at the pace, but we still have this kind of you know, it's

Just real quick here going forward, what's more important to hatch against inflation or a slowdown?

I think a slowdown. I think a slow down.

I know our base case is for those reasons that we is a little bit of an uptick, but the labor market has been somewhat soft, and I mentioned already we are seeing some of those other factors like housing, oil prices are somewhere down, and even though wage growth is above inflation, wage growth is slowing, so you know, and that can change quickly. So I would say that the hedge against would be the slower economy. And that's why maybe you also, I mean you've seen a little

You know.

What I'd be looking forward to to say that the market's actually concerned about a slow down would be things like consumer staple starting to do better. We're not seeing that as of yet, but that's what we'll be watching early into the new year.

Stay with US Multilomberg surveillance coming up after this. So stock rally on pause following the end of the longest government shutdown in history, Kevin Swab Kevin Gordon I was Swap likely saying it's likely we'll have to wait until the beginning at twenty six to get a clear read on the health of the labor market, raising the risk of a shocked to markets, especially if the Delight Jobs report are released all at once. Kevin Gordon joins us.

Well, I think the prospect of the checks, I mean, we'll see what the you know, how that actually nets out if we learned anything from the past five years of issuing out checks to Americans and directly giving them money in several rounds. Yes, you could argue it contributes to an inflation problem, but it also doesn't solve anything on the sentiment or the confidence front. As you pointed out earlier in the show, you know, alluding to this

More importantly, I certainly don't.

Think it'll do anything to help bring inflation a little bit lower, because even if you take out what was a really strong disinflationary force in the September CPI, which was shelter. I know there's a lot of controversy around excluding certain components, but the core parts of inflation are still relatively sticky. If you do core services X, housing and CPI, you're still running above three percent on a year over year basis.

That hasn't really bunched. You look at a year of a.

Chart of just general year over year change in CPI that's hovering closer to three percent on average, not too so. There is a little bit of a difference in the inflation backdrop post pandemic, and we're sort of living in and experiencing at real time every day.

The pass is this becomes a dated conversation because we don't have updated data. Yeah, I might not get another CPI report for quite a while. What's been the biggest problem for you the absence of data or the data we have seen.

I think it's been the absence, and I think it will be the absence for a while.

You know, as you alluded to in the quote.

I'm getting sort of more convinced that it's going to take until probably the end of January, maybe well into to the end of the first quarter of twenty six until we get a clear read at least on something like the labor market, because we're looking at this data hole in October hol e not whol e, where you're likely going to miss. Even if you get some reports like the non farm payrolls report, it's probably not going

Employment situation was like.

I think the likelihood you get the household survey is pretty low, which that's not going to mean that the payroll number is meaningless, but I think it will take down a lot of the sort of you know, the scale of it, or at least the importance of it, because if you have the payroll number but you don't have the unemployment rate, we don't really understand what the supply situation is looking like. So because of that, and because you're going to then be missing revisions, and you're

So let's talk about the vibe session turning into a vibe pression. The idea of how much you have seen sentiment data fall off a cliff. It has recently been gut checked by the hard data coming from the government that actually things are okay, and you're seeing that gut check if there is one right now coming from the earnings. Is this something that's sustainable, the sort of breakdown between the vibes and how people feel and what actually is going on in economic activity.

Well, it's sustainable in the sense and I'll give it, you know, I'll give a hat tip for a vibe session coin by my pelk Kyla Scanlon. So we're sort of building on the framework that she established. But you know, I think that it's sustainable in the sense that it's become the norm, whether you like it or not. I mean, just look at the math, look at the data. Post pandemic. In the past five years, you've only continued to see sentiment get worse.

I know you missed gets a ton of.

Flack because of maybe a little bit of a political bias and how much is driven by that.

But the current conditions component of.

The you miss sentiment and nexis at an all time low, meaning you have a base of consumers saying this is the current environment is worse than the financial crisis. That's worse than the nineteen eighties, it's worse than the late nineteen seventies.

So I think it's sustainable.

In the sense that sentiment in this cycle, and I think for at least the near to medium term is not going to be an indicator and a forward looking indicator for the trajectory of the economy. And I think that's somewhat consistent with how the base of growth has been shaped this year, where it's become narrower, it's become increasingly driven by business investment. Clearly, as we've all talked about every single day, you know, the AI capex portion of that on the tech and the software side, the

It's a leading indicator though, for politics, and there is a feeling right now that that is going to come with some proposals. And you were talking earlier about the two thousand dollars checks that could come out, And I just wonder whether the bond market is starting to price in or when it will start to price in a series of potential proposals. The jobstling could potentially be quite stimulative.

Yeah, well, I think from the bond market's perspective, you know, when we came I sort of rewind back to a year ago when we were all putting our outlooks together for twenty twenty five, and collectively we were assessing, you know, what is the policy risk well from Washington but also on the monetary policy side, and you do have almost an equal set of head winds the tailwinds for the equity market but also the bond market. You think about

So I don't see a whole.

Lot of that changing, especially because the business investment environment is still so fertile and it's so strong right now, and you're expected to get a little bit of a bounce back in consumption with you know.

When we get third quarter GDP.

Of course, fourth quarter and then into first quarter of twenty six is going to be distorted by the shutdown. But there's still no indication because of the stock of the labor is still so high right now, there's still no indication that you're seeing this massive draw down in spending. And we've had some alternative data that have under underpinned that and emphasized that that have shown that, you know,

Can we just finish on the setup for twenty six in market? So twelve months ago a lot of people bowled up on by America. When we went to Damos, Switzerland last year, it was ridiculous, Yeah, how long everyone was one thing and that was the United States. What happened an out of consensus rally in Europe lasted for the first half of the year at least, but it was massive. How do you think it was set up with that in mind for twenty six.

I think that, you know, to the extent you get a little bit of a reversal in some of the forces, like the falling dollar in the first half of this year. That was almost to the date a one half twenty twenty five story. The dollar is stabilized and it's actually last I checked, I think, the best performing out of the G ten so far in the second half.

Of the year.

So even if that stays relatively stable, or you get a bit of a pickup because you have price or you have rate cuts that are priced out.

From the market.

In terms of the FED, I think that can maybe work against some of the you know, the x US trade, particularly in Europe, but you know, the setup for the US. What I think has become really important to watch and this is this has sort of manifested over the past couple of weeks and importantly this week so far, where the breadth picture under the surface for the S and

You a relatively solid set of for twenty.

Six Stay with us more Bloomberg surveillance coming up after this. Bonio's inching car This morning. As trying to look ahead to the Central Banks December meeting, Lisa holmb of stroudis writing, we continue to believe that persistent labor market selfness and mounting pressure on lower income households will keep the FMC on track for December. Raika and Lisa John just now for more Lisa and more. Is that becoming a close to cool?

It is?

And I actually think the Fed is doing a pretty good job of keeping that optionality right. Powell came back out after the press conference saying it's not a done deal. Don't think it is. But at the end of the day, our view is that the data we have seen, particularly some of the layoff data, has deteriorated, and so they probably will prioritize, at least for this meeting the labor market over the inflation side of the equator.

We taken this meeting by meting just twenty five at a time and work out where we land.

I think we are and I think we should be. That's fair, right.

The economy is, it's not bad, I mean growth wise. I actually think next year is going to be a kind of a weird year where growth can actually be okay, but the labor market probably continues to soften a little bit, possibly because of the reasons that growth is okay, the AI spend some of these numbers that are coming out capex.

Next year becomes a little bit more of a question.

Let's say the FED does cut an additional twenty five basis points next month, and let's say they signal they are open to doing more next year.

What are your clients.

Going to do with some of their money market funds. Is that enough to kind of push them out into say, longer duration or even into fifty year alphabet bonds.

Well, let's hold on the alphabet a second. But I think that I think that's the right call. Right, There's been a tremendous amount of money parked in money market. This has been a great call. I think some of that is going to find its way into longer duration as we continue to see yields fall or you know, we have seen it, and I think we're already starting to see some of that money shift.

I think there's probably more to come.

I mean, unfortunately, generally retail tends to be a little bit late to that, so that we may get the money in as we're reaching the bottom of the FED cutting cycle. But I do think that probably will be happening.

So let's talk about the fifty year alphabet debt.

Not necessarily whether or not you bought it or anything like that, but I am curious how much you are seeing fund managers pushed into greater risk in a way, they're looking for the same kind of income they're looking for outperformance.

AI is the hot trade?

How much do people almost feel forced to absorb this incredible glut of debt issue in so okay?

So there's a lot of questions in that question. I think one of them is the market is shifting quite dramatically in terms of tech and what that means to.

The bond markets.

Right, some of these issuers are now going are forecasted to become the largest issuers in the corporate index in the next few years, kind of surpassing you know that some of the potentially surpassing some of the verizons and the AT and ts, the larger non.

Bank issuers, and so that's a really.

Structural and fundamental shift that I think investors need to get their heads around.

What does it mean.

You know, Meta's issued massive amounts of debt just in the last six weeks. Their balance sheet and the structure of the company in terms of how they fund is changing dramatically. So I think there's a big question as to what does tech look like in the corporate index in a year's time versus.

What it was maybe six months ago.

I think investors are looking at that, but you know, there are other opportunities out there that aren't I wouldn't say aren't as crazy risky.

You know, look at.

Taxi that municipal bonds. I think maybe last time I was on the show, we might have talked about them. They underperformed treasuries at one point this year six and a half percentage points.

This is not a crazy risk trade. Are you saying that the other is crazy risky.

I'm saying that you can buy local government debt at pretty reasonable yields compared to treasuries and actually have some alpha generation potential there because they have underperformed this year.

You know, Alphabet Google.

Didn't exist fifty years ago, so I'm just putting that out there. I'm not saying it's not going to exist in fifty years time, but there are questions about that and their funding mechan.

You keep aluting to it slowly, and we'll keep coming back to it. Are you worried about code for credit?

Spreads are tight, and I think that there is probably a repricing that's going on in the tech sector, and I think those curves need to steep in. There are some interesting issuers that are coming today. Like possibly today actually, but I don't think we can paint them all with the same broad brush.

As they issue more, does it make it a higher quality indexterraal level quality index.

So we were just doing some work on this yesterday and I'll credit Morgan Stanley. They're the ones who came up with the stat They said they think that the top the big four hyperscalars can probably issue seven hundred billion without impacting their readings. So you know, I have I don't have better insight than them. These guys have been looking at this very closely. I have of what period, I don't know what that if that was a year's a couple of seven with they don't think that is

Were Ultimately, that's a green light for them to issue to.

Borrow and by the way, the cost of equity versus cost of debt, they might as well be funding in the debt markets. So I think there's a lot of issuance to come. There's a lot of a lot of data centers that we built.

Guys stay with us. More Bloomberg surveillance coming up after this Bloomberg Economics estimating the shutdown was subtract one point three percentage points from fourth quarter GDP. The feder Reserve now how going to shake off the data fog ahead of their December meeting. Christina camp Many of Invesco writing, we expect clarcy on the calendar the US data flow within the few days coming out of a shutdown, but expect data to be noisy at best, with the potential

Look, I don't know if we get the data or not, but I think either way, we know that the data is going to be really noisy, so we finally will start getting data flow. But I think we have more murky water coming probably into your end, and there's a lot of questions of do you get both payroll reports on the same day. And I think the extremes exactly

He rise upon it at in the summer, the start of August at Your Life, Job's report changed the conversation. Coming out of the summer, we caught up with you, and consensus start to develop into the idea that the Federal Reserve was going to start an easy cycle. They went twenty five, they went twenty five. Is that now developing into a prolonged pause at the Federal Reserve?

So Powell clearly came back and pushed back aggressively on the markets pricing at the October press conference, and I appreciate wanting to have some kind of flexibility and not be priced over one hundred percent for December, like that's reasonable from the FED.

For me, I have a harder.

Time with is even the pushbacks at the October meeting, and you've started to hear more noise and grumbling around the FED, and I think probably a noisier FED is here to stay, and you're gonna hear like a wider range of voices.

But for me, it's hard to say you supported.

One ease in September and you're going to dissent in October. We're talking about monetary policy that has long legs and is a blunt instrument, So easing twenty five being okay with twenty five but not fifty feels like a challenging.

One for me.

So we've always kind of been in the camp of you deliver seventy five to one hundred similar to last year, and then you can sit on your hands and say, let's see how this actually feeds through the economy. So I still our base case is still that they can go in December.

Even when the kind of city Fed.

We we did not, But there's so many moving parts, and I think the realities they'll probably still be flying blind data wise. And when you're flying blind, I don't think that means Cowell talked about on the brakes or pausing. I don't think that means you like avert course and change change the direction.

I think a lot of people agree with you.

I mean, right now the pricing and FED Fund's futures is more than fifty percent for that December rate. Could I just wonder why we're not seeing any kind of steepening in the yield curve given the fact that probably early next year we are going to get some stimulus checks, We probably are going to get some fiscal efforts coming from Washington.

So look, I think.

We've been in the camp to have a seper yeald curve for much of the year, and I think the frustrating part we've gone in bits and bounts of like we've steep in, we've flattened it back.

Has been the.

Long end for US, and you think about all of the fiscal dynamics in the US, and obviously the US is the US, so it has that benefit in markets and it is the most robust deepest market, so it has that benefit. But we're at the low end of yields, intens and bonds, and I don't know that we're discounting or like fairly pricing in the tax policy risks. You're going to have stimulus next year, So do we need to like even if the FED eases, do long end rates need to be lower?

I don't think so.

Because of where we are, are we pricing and inflation risk. Inflation's kind of been sticky.

There's one argument that if you have a FED that's cutting rates, people have gotten accustomed to getting income on their cash are going to look for other places to get their income, and they're not necessarily going to go straight into equities. They're going to go its duration, and so they're going to lock in those yields, which will keep a lid on how high yields can go regardless of the backdrop of the deficit and inflation and all of these other concerns.

What's your take on that argument.

I think I think the argument about all in yields, certainly for credit and front end high quality paper, I think that's a real argument and it exists out there. Even though as a rates person It's a frustrating argument because you say, like why not Barbell and be in the front end and you in treasuries or in rate product and then afturf. But I think that it's a different dynamic for thirty years, and I think that that thirty year point globally, that's steepening in all of the pressures.

So Tanya Bonio, it has been a bit of a pain tride this year. Tries this morning at four point zero nine percent ended last year, last training day of the year, four fifty seven. That Bonio's lower, not high on the year so far.

You know what we haven't mentioned yet today twenty five billion dollars of thirty or notes coming out at one pm an auction today. If thirty year notes six months ago that would have been exciting.

Right now people are like, yeah, there's.

Plenty of suggesting it's not exciting. Gety, Well, I think.

It's still exciting, but I think the other people are less excited about it. So I'm not going to beat the drum as much because you know, I don't feel like getting hateail this show.

We care, we should care?

Okay, Well, I think people should care because ultimately this is a testament to how much people are actually looking at the global dynamic as well as the sort of potential buyers versus the inflation picture, which could potentially surprise them.

A lot of supply coming into credit as well, the same look.

At the corporate supply, and a lot of it has been all this AI related very long dated issuance which has been absorbed with ease. And like we talk about the credit market, I mean, credit spreads are very tight, so you have to sit there and say, like, what are the risks out there?

This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, an gio politics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple Spotify or anywhere else you listen, and as always, on the Bloomberg terminal and the Bloomberg Business app.