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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. 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 Terminal and the Bloomberg Business app. So here's the latest
the dollar weeker. As investors' reprice bets on a second Trump presidency. Kitchooks assault writing a Trump clean sweep and a Harris win without a clean sweep remains the two most likely outcomes in our view, and equally likely, these are the most bullish and most bearerush outcomes to the dollar, respectively. Kit joined us now for more so, Kit, I've known you long enough to say unhelpful.
What are you telling people to do?
You know?
I was thinking about it. It's a bit like the sort of the Brexit story in terms of whether we're going to have a hard Brexit or not back in twenty twenty, when you know, you really have to be careful about where to go. I think, look, I think we have to be sort of conscious of the fact that at the moment what we're doing is seeing bets get taken off. The market got excited about the possibility of Trump victory, and the treasury market sold off, the
dollar rallied. We're giving up back some of that, I think in terms of the places where the market has skew in its pricing, I think, if Trump doesn't win, or if by some chance he didn't get a clean sweep, because that's very important as well, then currencies like the Australian dollar where they decided not to cut rates this morning and where are they don't look like cutting rates
this year? You know, that looks like an undervalued currency on any scenario other than kind of you know, the most aggressive Trumpian Trumpian one in terms of fiscal expansion in the United States, tariffs on China, and maybe even only a modest Chinese policy response to that. So the Australian dollar might be the outlier. But if you said that the yen is going to follow where bond yields
are going to go almost regardless. Then frankly, Trump wins with a clean sweep, dolly En might be at one hundred and sixty and Trump a dozen Harris wins without a clean sweep, dolly En might be breaking towards one hundred and forty. So it's just a massive gamble that's very hard for people to cope with, and they have to hold tight until we see if we're going to get a result tomorrow morning, but.
Kit long term, if it isn't Trump win or potentially this clean sweep scenario where Congress going red as well. Trump has talked about the fact that he wants a week or dollar.
How do you.
Be able to measure.
Both of these basically conflicting results.
No, you know, the dollars strong because the United States has had exceptional fiscal policy because the US can as it's a lot of bonds, and bondy oards have been higher. And of the strength of the fiscal stance in the US compared to everything we've done in Europe is that it has helped the economy outgrow the rest of the world spectacularly. Trump wants more growth. He wants to put taris in place to get more people into manufacturing jobs
in the United States. Okay, at a starting point of pretty low unemployment already, he can't have that much cake and eat it in terms of an economy that's going to be even stronger with fiscal policy continuing to be accommodative and have a weak currency because in the end, his biggest the biggest threat Trump is going to be inflation on what we've heard so far, so we'd have to change some of his policies if he wanted a week a dollar you We'll see how it plays out.
But you get the currency your policies give you, not the currencies you want.
It.
Kid, when you.
Look at why the financial markets changed, was it because of the pulling out of Iowa? Or is because they're basically a little bit nervous that they got two over their skis. When it comes to the Trump trade.
I think that if you looked at the dollar index and you plotted it against the betting odds from real clear politics and how they were going in favor of Trump, they moved very closely together. So the betting odds have moved back in line with the opinion polls in the last week less than a week really, and Iowa played a part of that, and I think that's certainly seen people taking not his beds off, perhaps in the betting space,
but taking some of those trades off. And so when we look today as if we're closer to a market that genuinely doesn't know what's going to happen, and maybe that's the right place for it to be.
Which raises this question kit how violent could the reaction be in markets after we get some sort of results, given that everyone's going to be racing to it, no one really had an edge. Yesterday Mike Wilson of Morgan Stanley was talking about how he sees a clearing event coming after we get the results from this, and the clearing.
Event could last a month.
How violent of a clearing event could it be if we get a decisive response results one way or another in the base cases that you laid out, No.
You know, just if you just tracked from the poles, so from Harris entering the poles and then Trump sort of coming back, and then where we are now we're sort of one o seven one oh one in the dollar index. I imagine that a sudden sort of you know, when you're not sure you get through those levels that seems to me most likely outcome. So it's pretty fun again if I look at dolly En in terms of that, you know, the violence of a dolly In move depends on how much treasury yields can move.
But we've had a big.
Sell off at the long end of the treasury market on concerns about more accommodative fiscal policy, increased bond supply, and some inflation worries. If you if you had a scenario where those melt away, you know, the treasury market's pretty bearish at the moment in terms of sentiments. So a snap back rally there, what that could do, what that could do to the end is very striking. So right the way across the piece, we're not you know, I don't think we can avoid having a pretty violent reaction.
And history says, you know, we sometimes overshoot and then come back and settle down and decide that we'll have
a look because there'll be so many more questions. I mean, we have to sort of put in sort of minor adjustments in the sense of, you know, whether someone has a clean sweep or not is very important how it looks, and then we're going to work out whether either president can get what they want through Congress, irrespective of what that looks like, so that there'll be lots more questions. But I think the initial reaction is likely to be pretty big really, just because we're caught where we are.
Kid, Are you watching the election from Mexico City?
I am not watching the election from Mexico City. No, that would be that would be too exciting. But yes, you know, you look at the impact on the end, on the Australian dollar, on the Mexican play, so on all of Latin America really, you know, in fact, for once, Europe is likely to be less affected I think than the rest of the world. That doesn't mean it doesn't have an impact yet. But the big story is Asia and Latin America.
Interesting kit afreciateitsor kit chooks of such chin. We begin this out with stocks on hold and the last they're voting in America. Cameron Dawson of New Edge right to the following. Given how tight poles and odds are, we see the election as a source of near term volatility.
Regardless of the result.
Each side has boogeyman that could spook markets. Cameron joins us now to talk about those men. Cameron, who are those men?
All those men certainly are things like hired deficits, higher corporate taxes, tariffs and immigration. And I think Amory's point was really important is that if we think of the tariffs line of things, it doesn't necessarily matter about the makeup of Congress that we could see them if Trump is elected, which is certainly some of the questions that you've seen raised by the bond market and considering potentially
stickier inflation. So we think regardless of who wins tonight or whenever we get those results, it effectively is going to be a surprise because those polls are so very tight, which means that it could be a.
Volatility inducing event.
I think it's important to note though, that markets aren't necessarily primed for volatility to continue. You've seen a huge buying of put options for the vicks, effectively people betting on volatility collapsing post the election. So again, this could simply be a surprise, and it could cause that higher volatility given the fact that people aren't necessarily positioned for it.
I want to pick up on that point because you see this across a range of different volatility metrics. Basically people expect volatility, price swings to really peak tomorrow and then appsolutely fade off as we get results and go back to some sort of status quo. From your advantage point, how much are you looking to actually take advantage of something that could be more significant? How off sides would this market be, and what would you do with that?
We always try to see volatility as opportunity, and i'd raise the question of if we would be seeing this volatility even if this wasn't election day. If you look at things like S and P five hundred, momentum and breadth, they've all been deteriorating over the last month.
You've also seen a deterioration in forward earnings estimates.
You've seen estimates for four Q as well as twenty twenty five get cut and trimmed.
So I would raise the question of if we could have this.
Volatility even if this was not election day, simply because you have a lot of digestion of the strong gains that we've had here to date and kind of putting some of the seasonality aside. Given that deterioration and breadth and momentum, that just sets you up for a little bit more churn.
At this point, Cameron, you have to understand. I have to understand and I don't understand exactly how much we've already priced in some of these trades, what these trades actually are, and thinking in particular in the bond market, people have been wondering, you strip out the political influence, what does a ten year yield look like?
Do you have a sense of that.
Well, we do know that there has been a relationship, whether it's correlation causation is up for debate between Trump's ogs of winning and the tenure treasury yield over the last three months or so. That certainly broke down at the end of last week, where Trump's betting ods started to fall and you still saw the tenure treasury yield
moving higher. We think the source of that ten yere treasury yield moving higher really comes down to the bond market digesting the fact that you have a relatively resilient economy that is supported by higher deficit spending at the same time as you have a FED that's talking about potentially hundreds of basis points of cuts to get to their idea of neutral, which could have the potential of effectively throwing lighter fluid on some of this tightness within
the economy, the fact that you still have overall easy financial conditions as well, and that seems to be the reason why you're seeing these bond yields move higher.
Not necessarily the election or just the election.
The wise important, Cameron.
The wy is important because I think it dictates how to trid equity to some extent at least. Would you say yields have been rising then for good reasons and not bad, and is a reason to stay long equity markets.
I think the answer to that is in high yield spreads.
If yields were rising for bad reasons, that the FED was tightening policy and it would eventually result in much weaker growth, you would see high yield spreads widening out. But they continue to remain very contained and actually making new year to date lows, which says to us, this is not a market that is necessarily in fear of growth.
It's not priced for a growth slowdown.
Now you could see that as a risk going into twenty twenty five if you start to see a deterioration.
In economic fundamentals.
But effectively, the credit market is telling you that yields are rising because growth is resilient, So watch those hygyield spreads very closely.
Would you expect you to remain that way even if we got a sweep from the GOP in the next twenty four hours.
I don't necessarily know if any of the of the policies that would be enacted by a GEOP sweep would necessarily affect growth in twenty twenty five. Let's put tariffs and potentially emigration to a side, because that is certainly something we could see without.
A GEOP sweep.
But the question and the risk for a GOP sweep really is something that's contemplated later in twenty five and into twenty six, where we will be negotiating those four trillion dollars of tax cuts, potentially adding a lot to the deficit, which is certainly something that the bond markets might push back on. But that's not necessarily something that we deal with in the next couple of months.
Cameron.
A couple of months ago, people came on this show talked a lot about how this could be a transformative event, how this could mark the difference in an economic cycle with respect to inflation, with respect to growth. As we've gotten closer to the event, we'll advise, have you suddenly people are saying, actually, we just need to get past it and whatever the results, things will keep on going on the way they were before.
Where do you fall on that?
The best news that we always try to bring clients back to is that if you look historically that the S and P. Five hundred, regardless of the power balance within DC, has been able to do what it does despite of or in spite of what goes on in DC. And that's really good news, which just means that overall corporate earnings have been able to operate in times regardless of uncertainty and pressures of what's going on within policy.
And it's something that we always try to remind clients of just so that the way that they don't respond too emotionally to what is for many people a very emotional election day.
Kener, We know the markets like certainty, what if it is a contested election, what's going to be the impact?
Certainly that would be potentially a source of volatility. It's not necessarily volatility that would last for a long time. So it gets back to Jonathan's first question. If you do see volatility, is it biable? We think the answer is yes, that as you start to digest some of this, these deteriorations and breadth and momentum that could be happening regardless of the election. You get the narrative of uncertainty
behind it. Then you set up for effectively a great buying opportunity into year end with that potential Santa Claus rally and year in chase. So a source of volatility, not necessarily a source of investment decision.
A good framework for thinking about this market into your end and beyond. Cameron, Thank you, Cameron Dawson of New Edge Wealth. Among big donors at the final stages of the campaign, one wealthy individual supporting cameras is Mark Cuban, the minority owner of the Dallas Mavericks. And I'm pleased to say that Mark joined us now. Mark, welcome to
the program. We spoke to a Trump campaign advisor a little bit earlier this morning, and I want to start with you in a similar way that I started with him, which is basically, I'm waking up this morning, I'm a Swings state votes, I'm in Pennsylvania State, and i still haven't decided who I'm going to vote for. And I'm thinking back to how Harris talked about in twenty nineteen
that she wanted to Ben Franking. I understand she's changed her mind, but I'm worried that she's a bit of a shape shift, that she gets back into power and she'll change her mind again.
How do you settle those concerns?
The world has changed since twenty nineteen. She's open minded, she's talked openly about the fact that she wants to give dessending opinions a place at the table with her. She's not dogmatic, that's how you explain it. And she's looking to put together the best policy. She's said in twenty twenty that she supported fracking, So I think that's a non issue. And in terms of you know, is she just an extension of Biden? Just look at Biden's
budget proposal versus what Kamala Harris has actually proposed. Biden wanted much higher taxes. Kamala Harris came in twenty eight percent for tax rate for cap gains in twenty eight percent for corporation and did not say a word and will not say a word about unrealized capital gains. And so I think she's completely different. She's not a shape shift in the least bit.
Well, that individual we were speaking to Scott Bessant, this key economic policy advisor to the Trump campaign, says that Harris what he hears from a lot of Wall Street journals, that she would be moderated by a Republican Senate, and that's why Wallstreet would be willing to vote for her, because of that moderating effect that she would get from a red Senate.
Is there any truth to that, Yeah, of course.
I mean balance is not a bad thing necessarily. I'm not opposed to a divide in Congress, you know. But the bottom line is what will Kamala Harris do? And I think she's better for the economy in so many ways. You know, there's three hundred and thirty five million people in this country. Four million make four hundred thousand dollars or more. The other three hundred and thirty million make less.
Is she has been very specific that if you make four hundred thousand dollars or less, your taxes aren't going up. In fact, for one hundred million people, they're going down. The other big expense that every household is fearful of is healthcare expenses. Donald Trump said he has a concept of a plan. Kamala Harris has been very specific on the pharmaceutical side, saying she's going after the pharmacy benefit managers,
the middlemen, and she'll introduce transparency. I know from my own personal experiences with costplus drugs that'll lead to a twenty thirty percent or more deduction in the cost of medications for households and businesses. And then you've got terriffs. As Michael I think it was said earlier, tariffs are a bad idea. I mean, it's so bad.
Then why did Biden and Kamala Harris keep them?
They keep the trouble.
Let's talk about that, right, because that's not completely that's not completely accurate. First look at the EU. They Biden sided the deal saying that there would be no terriffs between the two EU and the United States for the next five years. So those tariffs are gone. And then you look at what Trump tried to introduce. He had four years to try to implement teriffs that work, and
he got his butt kicked by China. The retaliatory terriffs almost destroyed the soybean in the farming industry, and he had to pay out twenty million dollars. But as it applies to households. Right, he's talking about a sixty percent
across the board terras for Chinese imports. China makes just about every Christmas present that we buy for a kid, So families would be looking at a sixty percent or more increase and what they'd spend on Christmas, and the downstream impact of that would be significant to small and large businesses.
Mark, Let's talk about something you've been very vocal on.
This is regulation.
You've said that you don't think Harry should keep Lena Khan at the head of the FTC. On and Alexandro Cassio Cortez, the congresswoman from New York, went to Twitter and she said, billionaires like you, Mark are trying to play foot seat with the ticket. If anyone goes near Lena Kahn, there will be quote an out and out brawl. Where is Harris when it comes to things like the FTC.
I don't know. I haven't talked about personnel with her or her team. I have no intention about talking about personnel.
You know.
I was asking a question about what I thought about the FTC, and I thought that, you know, the possibility of breaking up the big technology companies would be a negative because I think, you know, winning the AI battle for the United States is paramount from military in and economic perspective. So I voiced my opinion, but I'm not involved in those conversations at all.
But it really raises this ultimate question, which is what policies will she follow. She's been engaging with AOC quite a bit in terms of the campaign trail, and there's a real question of how much there will be an effort to cater to the further left sides of the Democratic wing versus the sort of centrist appeal that she's
been trying to have. How much are you actually getting confidence that she's going to have business executives in cabinet positions in top areas where she really is listening to what they have to say.
I talked to her campaign almost every day. I'm one hundred percent certain. I'm much as confident. I'm certain that that's what they're going to do. I've been on the trail with Doug Amhoff, who, as part of his presentation, talks about what a capitalist she is. She's talked about, you know, wanting to create twenty five million new businesses.
That's not a reflection of anything far left. One of the first things she did was introduced a tax deduction or increase the tax deduction for startup cost of fifty thousand dollars. That's very important. She recognizes that if the thirty three million companies in this country, ninety nine percent are passed through, ninety nine percent are run by people making four hundred k or less. Those small businesses are what drive the economy. They create most of the new
jobs every single year. So she's focused on an opportunity economy. I don't think she can be any more clear.
Mark, do you think that this campaign for Kamala Harris could have done more to reach out to the mail voter. This seems to be an election that is unique in just how bifurcated the mail and the female vote really has been. There were some questions around Joe Rogan and how to appeal to the mail vote and how to really bring the genders together. What's your take on this campaign's approach to that.
I think it was very data driven. I mean, women have a high propensity of voting, and you know, with all with reproductive rights and other issues that were gear towards women, I think she did a great job of connecting to them. You know, maybe she didn't. She didn't do everything she could have with men, but that's okay because she went to the people who are going to
vote more. You go, you know, as a business person, you go to the people you have the best opportunity to sell to, who's going to buy your product, who's going to vote for you. In this particular case, and the fact that she's only been in the race fourteen weeks and she's caught up completely and now I believe Pastor and will win today, I think she's done the exact right thing.
Speaking of business and product, there's a famous quo from Michael Jordan, which I'm sure you know well, Republicans by sneakers too, and raise the question about you. And I wanted to ask you about this from Mann, who's got a line of businesses, why was this important to you to put your name and reputation on the line and really get deep into politics when ultimately Republicans by sneakers too.
So I'm not going to get deep into politics, but I think this, You know, this is a close election for a reason, and I think Kamala Harris will be the best president and is a better choice than Donald Trump. It's that simple. I mean, I love this country. I'm in this position because of everything this country has given me. I'm blasted and I thought, you know, I truly believe that she will be the better president for the United States of America. And that's the only reason I'm doing this.
Well.
Thanks for sharing your time with us this morning. We appreciate it, Mark, and hopefully we can share it again soon. Mark Cuban there on the latest campaign effort from the Harris campaign. 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
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