Open Interest 10/2/2026

DANI A SOFTER JOBS PRINT FEELS EQUITY GAINS. MICHAEL: HAPPY JOB DAY. "BLOOMBERG OPEN INTEREST" STARTS RIGHT NOW. DANI: U.S. EMPLOYERS ADDED FAR LESS JOBS THAN WHAT WAS EXPECTED. CAUTION CREEPS INTO CREDIT MARKETS AS INVESTORS RECONSIDER THE SAFE HAVEN TRADE. BLACKSTONE JOINS BROADCOM'S MASSIVE AI FINANCING PUSH AS ANTHROPIC RACES TOWARDS AN IPO. SOME STOCKS WE ARE WATCHING. NIKE DOWN EIGHT AND 131%. -- AND ONE THIRD OF A PERCENT. STRUGGLING TO GAIN TRACTION. CHINA STILL A MAJOR DRAG. MANAGEMENT WARNING SALES COULD STAY UNDER PRESSURE. SHARES HAVE FALLEN BY MORE THAN 50% SINCE ELLIOTT HILL TOOK OVER AS CEO IN 2024. LET'S GET MORE ON THE TOP STORY, FUTURES JUMPING ON THAT DISAPPOINTING JOBS DATA. THE U.S. ADDING JUST 29,000 JOBS LAST MONTH. THAT WAS FAR SHORT OF THE 90,000 ESTIMATE. MICHAEL: ALSO ON THE LEVEL WHICH THE UNAPPOINTED RATE STARTS TO MOVE. WE SAW THE UNEMPLOYMENT RATE GO UP 2%. IT WAS REALLY A ROUNDING THING. AUGUST, 4.1%. IT ROUNDS UP. AVERAGE HOURLY EARNINGS NOT AS STRONG. NO REAL ISSUES THERE WITH INFLATION. THE LABOR FORCE STILL GROWING. PEOPLE LOOKING FOR JOBS. IT IS NOT ALL THAT BAD BUT IT DOES GIVE THE DOVES A REASON TO BE A LITTLE HAPPIER. DANI: WHAT DIFFERENCE IT MAKES FOR THE FED. WE ARE NOT GETTING INFLATION FROM WAGES BUT THE FED'S CONTENTION HAS BEEN WE ARE NOT GETTING INFLATION FROM THE JOBS MARKET ANYWAY. MICHAEL: THIS DOES NOT SUGGEST SIGNIFICANT WEAKNESS. IT TAKES US BACK TO LOW FIRE, LOW HIRE. IT GIVES THEM A REASON THEY DON'T HAVE TO DO SOMETHING IN OCTOBER UNLESS WE GET THE CPI REPORT AS A MAJOR SURPRISE. RIGHT NOW ONLY 18.5% CHANCE OF A HIKE AT THE END OF OCTOBER. STILL PRICING AND 70 PERCENT FOR DECEMBER. DANI: I WILL TELL YOU WHO IS HAPPY, EVERY OTHER INTERNATIONAL BOND MARKET THAT'S BEEN FEELING PRESSURE FROM FRANCE AND BEYOND. THOSE YIELDS NOW LITTLE CHANGED FOR FRANCE 10-YEAR YIELD. THAT UNLOCKS LOWER YIELDS ACROSS THE BOND CURVE. WE ARE ON DOING THE WORK OF THE PAST TWO WEEKS. WE ARE AROUND WHERE WE WERE FINISHED ON FED DAY. WE ARE ERASING THE CONCERNS FOLLOWING THE HARD PMI PRINT. MICHAEL: I THINK THE IMPORTANT THING WE WILL SEE THIS VOLATILITY IN THE MARKETS AS THE DATA COMES IN AND OUT AND PEOPLE BET ON WHAT THE FED MIGHT DO. YOU HAVE SO MANY OTHER THINGS GOING ON NOW, INCLUDING THE U.S. DEFICIT, WHAT'S GOING ON OVERSEAS. YOU CAN'T REALLY BET ON ANY ONE PARTICULAR BOND YIELDS AT THIS POINT BECAUSE IT WILL CHANGE. DANI: ARE YOU BUYING THE DEBT OR JUMPING INTO A MEATGRINDER IS THE METAPHOR. MICHAEL: WE WERE WORRIED ABOUT THE JAPANESE BOND MARKET AND NOW WE ARE WORRIED ABOUT THE FRENCH. DANI: WE HAVE A GREAT CONVERSATION COMING UP LATER IN THE HOUR. WE WILL SPEAK WITH NATIONAL ECONOMIC DIRECTOR KEVIN HASSETT JOINING US AT 9:45 A.M. MICHAEL: A STRING THE PRICE TARGET CUTS FROM NIKE. THE COMPANY POSTED DISAPPOINTING RESULTS, WARNING THE SALES SLUMP IS SAID TO GET WORSE. IT IS ALSO CUTTING JOBS AND LAUNCHING AN OVERHAUL OF ITS BUSINESS. JOINING US NOW IS ROMAINE BOSTICK. THEY CALLED YOU TO -- ROMAINE: THEY UNVEILED THE NEW SNEAKER LINE UP WITH CAITLIN CLARK. AN APPAREL LINE UP BUT THAT'S NOT ENOUGH TO HELP THE COMPANY OVERALL. IT ADDS A LITTLE BIT OF JUICE AND A LITTLE EXCITEMENT. THERE ARE BIGGER STRUCTURAL PROBLEMS WITH THIS COMPANY. THEY HAVE NOT POSTED ANY MEANINGFUL YEAR REVENUE GROWTH BASICALLY GOING BACK TO 2022 NOW. SIMILAR ON THE PROFITABILITY SIDE AND THE GUIDANCE THEY GAVE SAYS DON'T EXPECT ANYTHING TO CHANGE ANYTIME SOON. THEY ARE GUIDING FOR THE FULL FISCAL YEAR OVER REVENUE DECLINE IN THE HIGH SINGLE-DIGIT PERCENTAGES. THEY WERE SCANNED ON DETAILS OR WHEN THE REAL TURNAROUND IS GOING TO COME -- SCANT ON DETAILS. MICHAEL: COULD THERE BE PRESSURE ON ELLIOTT HILL? ROMAINE: HE'S COMING UP ON THE TWO-YEAR ANNIVERSARY OF TAKING OVER. YOU SAW IT. FOUR OR FIVE PRICE DOWNGRADES. THAT WAS ONLY HALF OF THEM TODAY. MOST ANALYSTS HAVE SOURED ON THE STOCK NOW. THEY UNVEILED A NEW PROGRAM CALLED PACE, A COST-CUTTING PROGRAM THAT WILL REJIGGER SOME OF THE GEOGRAPHIC LINEUP WITH REGARD TO HOW THEY MANAGE THINGS. THAT MIGHT HELP THE BOTTOM LINE BUT IT STILL DOES NOT ADDRESS THE SALES ISSUE DIRECTLY. THIS IS A COMPANY IN NORTH AMERICA GROWING AT ABOUT 2%. CHINA SELLS DOWN MORE THAN 20%. SALES AND EMEA DOWN 10%. MICHAEL: USED TO BE WE SIGN A BIG NAMES TO ENDORSE OUR SNEAKERS AND EVERYBODY BUYS THEM. WHAT ARE THEY DOING GOING FORWARD? ROMAINE: IT IS NOT JUST A NIKE PROBLEM. THAT'S A PROBLEM FOR EVERYONE. THERE WAS A LOT OF HANDWRINGING. YOU NEED A SIGNATURE ATHLETE BUT INCREDIBLY HIGH PRICE? THEY LOOK AT SOMEONE LIKE CAITLIN CLARK WHO IS YOUNGER, HAS A VERY BROAD DEMOGRAPHIC. WOMEN'S BASKETBALL BUT SHE HAS A LOT OF APPEAL TO MEN AND BOYS AS WELL. THEY FEEL LIKE THEY CAN MAYBE BUILD A SIGNATURE LINE UP OF APPAREL AND CLOTHING AND SHOES AROUND HER AND THAT MIGHT PROVIDE A LITTLE JUICE. ELLIOTT HILL MADE IT CLEAR THAT HE WANTS TO FOCUS ON "PERFORMANCE." GET TISSUES ON THE WINNERS CIRCLE AT THE NEW YORK CITY MARATHON OR ON THE NFL STAGE IN SOME WAY. THAT WILL TRANSLATE LONGER TERM INTO AN INCREASE IN SALES. DANI: WASN'T THERE A DISCOURSE OVER NIKE SHOES BANDED MARATHONS BECAUSE THEY WERE MAKING PEOPLE TOO FAST? ROMAINE: NOW IT IS ALL JUST -- MICHAEL: GETTING STINKERS INTO THE WINNERS CIRCLE IS GETTING CHEAPER THAN FORMULA ONE CARS INTO THE WINNERS CIRCLE. DANI: THAT IS AN UNDERSTATEMENT. ROMAINE, LOOKING FORWARD TO "THE CLOSE" TODAY. A NEW ROUND OF FINANCING TO BUY CHIPS OR ANTHROPIC. UP TO $60 BILLION TO MEET CHIP DEMAND. IT WILL HELP FUND DEMAND BY ANTHROPIC WHICH PLANS TO GO PUBLIC BY THANKSGIVING. LET'S DISCUSS WITH CARMEN REINICKE. ANOTHER CAR STRUCTURE. BLACKSTONE LEADING THIS ALONGSIDE OTHER BANKS. THIS IS JUST CIRCULAR FINANCING? CARMEN: IT REALLY IS THE MAIN QUESTION. WE HAVE KNOWN ABOUT THIS FOR A FEW WEEKS AND WE ARE STARTING TO GET MORE DETAILS. IT WILL BE INTERESTING TO SEE WHEN IT LAUNCHES. WALL STREET IS WATCHING TO SEE WHAT IS ACTUALLY THE INVESTOR APPETITE TO CONTINUE TO SPEND SO MUCH MONEY ON THIS AI BUILDOUT AND EXACTLY HOW MUCH OF IT IS CIRCULAR. IS IT ACTUALLY CHOOSING ITS OWN REVENUE FOR THESE COMPANIES? SUPER INTERESTING TO GET MORE DETAILS. I'M ALWAYS LOOKING AT HOW BROADCOM STOCK IS DONE THROUGH ALL THIS. IT'S REALLY UNDERPERFORMED. IT'S DOWN ON WAS 30% FROM THE JUNE HIGH. IT WILL BE INTERESTING TO SEE UPCOMING EARNINGS IF THAT COMPANY IS ABLE TO BETTER COMMUNICATE SOME OF THE GROWTH THEY ARE SEEING, ESPECIALLY WHEN YOU HAVE ALL THIS MONEY GOING TO FINANCE THE BUILDOUT. MICHAEL: ARE INVESTORS ASKING THAT QUESTION? IS THERE CONCERN OVER THAT AT THIS POINT? CARMEN: I WOULD SAY THE DEBATE IS THERE BUT I HAVE NOT HEARD MANY INVESTORS WORRIED ABOUT IT. THEY SEE THE REASONS THERE ARE CONCERNS. EVERYONE HAS SEEN AN AMAZING CHART OF ALL THE DIFFERENT LINES GOING AROUND WERE ALL THIS MONEY IS FLOWING INTO CIRCLE -- IN A CIRCLE. I HAVE NOT SPOKEN TO A LOT OF INVESTORS WHO ARE SAYING I'M NOT BUYING THE STOCKS BECAUSE I SEE THEY ARE FINANCING THEIR OWN REVENUE YET. THAT COULD HAPPEN AT SOME POINT AND THAT WILL BE A DIFFERENT STORY. MICHAEL: THIS DEAL TO BUY SYNAPTICS YESTERDAY, WHAT IS GOING ON? THEY ARE PAYING LESS THAN THEY INITIALLY AGREED? CARMEN: THEY SWITCHED TO AN ALL CASH DEAL. IT IS STILL GIVING OF PREMIUM TO SYNAPTICS' INVESTORS. YES, IT LOWERS THE OVERALL DEAL SIZE FROM $7 BILLION TO LESS THAN $6 BILLION. BOTH HAVE GOTTEN REALLY BEATEN DOWN OVER THE LAST FEW MONTHS, AS WE HAVE SEEN A ROTATION BACK INTO THE BIGGER LARGE CAPS. DEALS ARE STILL GOING AHEAD AND IT'S INTERESTING TO SEE CONSOLIDATION IN THE SPACE. DANI: THANK YOU SO MUCH FOR JOINING US. LET'S GET A CHECK ON MARKETS. WE ARE LOOKING AT A RALLY THANKS TO LOWER YIELDS. WE ARE DOWN BY NEARLY SIX BASIS POINT FOR THE 10-YEAR YIELD. A FEW DAYS AGO WE WERE AT 5.33%. WE HAVE COME DOWN A FAIR PERCENT. BRENT CRUDE, IS THE OIL MOVE WORTH KEEPING AN EYE ON THIS MORNING? IT WAS APPARENT EVEN BEFORE A SOFTER JOB SPRINT. WE ARE DOWN BY NEARLY 3%. BACK UNDER $100 A BARREL. NORAH: FIRST UP, TESLA JUST RELEASED THE THIRD QUARTER AND THEY DELIVERED 486,000 CARS, WHILE ABOVE EXPECTATIONS FOR 463,000. SHARES HIGHER BY MORE THAN 2% IN THE PREMARKET TRADE. RIVIAN DELIVERING 19,000 CARS IN THE THIRD QUARTER, ROUGHLY IN LINE WITH EXPECTATIONS. THEY DID REAFFIRM ITS 2026 DELIVERY GUIDE OF 65,000 TO 70,000 DELIVERIES. SHARES HIGHER BY ABOUT 3.7%. A COUPLE OF CHANGES COMING TO THE MAJOR INDEXES. TRILIO AND MODERNA ARE HIGHER AS THEY ARE SAID TO JOHN THE S&P 500 AND NASDAQ 100 RESPECTIVELY. BOTH OF WARNER BROS. DISCOVERY AND THOSE INDEXES. THOSE ARE YOUR MORNING MOVERS. DANI: COMING UP, CREDIT MARKET SIGNALING TROUBLE AS SPREADS ON GLOBAL CORPORATE BONDS WHITEN THE MOST SINCE MARCH. THIS IS BLOOMBERG. DANI: LET'S GET SOME HIGH INTEREST STORIES AND LOOK AT WHAT'S MAKING HEADLINES. THE U.S. IS SENDING AN AIRCRAFT CARRIER AND 10,000 SOLDIERS AND MARINES TO THE MIDDLE EAST, GIVING COMMANDERS OPTIONS AS TENSIONS WITH IRAN REMAIN HIGH. IT COULD PUT THREE U.S. CARRIER GROUPS IN THE REGION. EXTRA MISSILE DEFENSES ARE BEING SENT TO HELP TECH OIL AND GAS SITES IN QATAR AND SAUDI ARABIA. 10-YEAR YIELD IS NEAR 4.9% WHILE ITS PREMIUM OVER GERMAN DEBT HAS REACHED THE WIDEST SINCE 2011. INVESTORS ARE QUESTIONING FRANCE'S ABILITY TO REIGN IN DEFICITS. THAT PRESSURE IS NOT LIMITED TO JUST GOVERNMENTS. IT IS FILLING IN THE CORPORATE CREDIT HAS MARKETS FACED BORROWING COSTS THAT ARE RISING AND INVESTORS BECOMING MORE CAUTIOUS. GLOBAL CORPORATE BOND SPREADS WIDENED THE MOST SINCE MARCH. BARCLAYS SAYS IT MAY BE TIME TO HEDGE WITH COMPANIES FACING SHARPLY HIGHER COSTS OVER DEBT. JOINING US NOW IS JAMES CROMBIE. THEY MIGHT BE TIME TO HEDGE. THAT'S MAYBE AN EVERGREEN STATEMENT, THAT IT'S ALWAYS GOOD TO BE HEDGED TO SOME DEGREE. WE HAVE SEEN THESE JUMBO OFFERINGS FROM PARAMOUNT SKY DANCE. IS THE MARKET GETTING INDIGESTION? JAMES: THERE ARE SPECIFIC ISSUES WITH PARAMOUNT. THEY RUSTED, THEY PRESSED IT, NOT WELL. TRADERS WERE YELLING AT THE UNDERWRITERS, SAYING WE DON'T WANT TO BUY BONDS THAT IMMEDIATELY SELL OFF. IT SENDS A MESSAGE THAT INVESTORS ARE NOT BUYING EVERYTHING AT ANY PRICE. MICHAEL: YOU HAVE CORPORATE SPREADS HIGHER BUT NOT COMPARED TO WHERE WE WERE A COUPLE OF YEARS AGO. IT IS NOT TREMENDOUS PROBLEMS EXCEPT THERE IS ONE CATEGORY, CCC'S, THAT I GUESS YOU ARE WRITING WE SHOULD WORRY ABOUT. JAMES: THEY FLIPPED TO A 1000 BASIS POINT SPREAD THIS WEEK WHICH IMPLIES DISTRESS ACROSS THE BOARD. THAT'S AROUND $250 BILLION WORTH OF DEBT. MOST PEOPLE SAY IT'S 5% OF THE MARKET SO WHO CARES. THERE'S A HALF A TRILLION IN DEBT SITTING RIGHT ABOVE THAT WHICH IS JUST AS BAD. SMALL CAPITAL STRUCTURES ARE EXPOSED TO INFLATION AND WOBBLY IN THIS KIND OF ENVIRONMENT. HAVING TO PAY THREE TIMES THE COST TO REFINANCE THE DEBT IS COMING DUE. MICHAEL: IS THAT THE INDIGESTION YOU WERE TALKING ABOUT? BUSINESS CONDITIONS SEEM TO BE WORSENING TERRIBLY. JAMES: THEY ARE AMENDING AND EXTENDING IT AND NOW THEY HAVE TO PAY IT. THEY HAVE TO THINK ABOUT THAT NOW. THE COST OF THE DEBT IS SIGNIFICANTLY HIGHER. CAN THEY AFFORD IT? WE DON'T KNOW AND PRIVATE CREDIT IS NOT SAYING WE HAVE A SOLUTION. DANI: WHAT ABOUT DEFAULT RATES? ARE THEY HAS ELEVATED AND CERTAIN POCKETS TO THE DEGREE WE CAN SEE THEM? JAMES: THEY ARE DEFINITELY GOING UP. PAYMENT IN KIND AND NONACCRUAL IS GOING UP. EVERYONE IS TRYING TO KEEP THESE THINGS ALIVE AS LONG AS POSSIBLE. WE HAVE ZOMBIE COMPANIES LIMPING ALONG THAT WILL EVENTUALLY BLOW UP. MICHAEL: YOU MENTIONED THE ANGELS ON THE EDGE OF THE CLIFF. IS THERE ANY SECTOR YOU ARE WATCHING FOR THE FIRST LEMMING OVER THE CLIFF? JAMES: SOFTWARE TECH IS DICEY BUT THERE IS A LAYER OF CONSUMER COMPANIES OUT THERE THAT ARE EXPOSED TO CONSUMERS GETTING SQUEEZED. CAN THEY PASSED THE HIGHER COSTS ON? PROFITS GET SQUEEZED. CAN THEY REPAY THE DEBT? MAYBE NOT. THERE'S A BIG CHUNK IN JUNK MARKETS. DANI: WHEN ARGUMENT ABOUT CONTAGION IS THE CONSTRUCTION OF THE INDICES. THE HIGHER RATED BONDS LOOK SO STRONG AND SOME OF THE WEAKER THINGS HAVE BEEN FILTERED OUT AND ARE NOW SHOWING UP IN THE CCC'S. BY THE NATURE OF HOW THE INDEX IS LOW, THEY CAN BE INSULATED. JAMES: IF EVERYTHING IS BETTER, THERE'S ALWAYS A BOTTOM ROUND THAT IS NOT GOOD -- BOTTOM RUNG THAT IS NOT GOOD. THE DIFFERENCE IS THE HIGHEST SINCE THE PANDEMIC. IT IS REALLY OUT OF LINE. THE CORRELATION IS OFF. THINGS HAVE GONE WRONG IN TERMS OF PRICING. EVERYTHING HAS TO REPRICE. THE LOWEST WEI RATED JUNK HAS THE PRICE RELATIVES SPREAD. MICHAEL: WE ARE TALKING ABOUT A WORLDWIDE PROBLEM WITH SOVEREIGNS. JAPAN, FRANCE, ALL THAT GOING BACK ON THE U.S. IS THERE AN INTERNATIONAL ASPECT TO ALL OF THIS? JAMES: THERE IS. EVERYONE IS VERY LONG THE U.S. THAT IS THE FIRST THING AND EASIEST THING TO SELL. THAT IS WHERE CONTAGION COMES IN. YOU WILL SELL U.S. SINGLE B'S AND DOUBLE BB'S. MAYBE THAT GETS SOLD NEXT. ASIA IS A MUCH SMALLER CREDIT MARKET SO WE TEND NOT TO LOOK SO MUCH OF THAT. DANI: JAMES, THANK YOU FOR JOINING US. THAT IS SENIOR EDITOR JAMES CROMBIE. COMING UP, WE DISCUSSED MORE ON THE JOBS REPORT AFTER A COMES IN SOFTER THAN EXPECTED. WE WILL BE SPEAKING WITH REBECCA PATTERSON FROM THE COUNCIL ON FOREIGN RELATIONS SENIOR FELLOW. THIS IS BLOOMBERG. DANI: LET'S GET A CHECK ON YOUR MARKETS AHEAD OF THE OPENING BELL. PUSHING HIGHER WITH TECH OUTPERFORMING, UP ONE AND A THIRD OF A PERCENT. SOFTER PAYROLLS FAR BELOW THE EXPECTED 90,000. 10-YEAR YIELDS MOVING DOWN FIVE BASIS POINTS. 5.19%. THE FRONT END COMING IN AS WE RETHINK WHERE THE FED IS GOING. BRENT CRUDE ALSO LOWERED BY 2.5%. LET'S BRING ON SENIOR FELLOW REBECCA PATTERSON. GREAT TO SEE YOU. I SAW YOU SITTING WITH TOM KEENE AS THE JOBS NUMBERS DROPPED. THE MARKET IS DOING SOME REPRICING THIS MORNING. REBECCA: IT MAKES SENSE. YOU WILL GET A LITTLE MARKET REACTION IS EVERYTHING RE-PRICES. WHEN I TAKE A STEP BACK AND PUT A BIGGER PICTURE TOGETHER ON THE LABOR MARKET, NOTHING HAS CHANGED. THE BREAKEVEN RATE IS AROUND ZERO. EVEN IF WE ARE 29,000 INSTEAD OF 88,000 OR 90,000, IT IS STILL POSITIVE GROWTH. JOBLESS CLAIMS OR NEAR A CYCLE LOW. IT IS LOW HIRE, LOW FIRE BUT IT'S STILL A GOING JOB MARKET. MICHAEL: THE THREE-MONTH AVERAGE WAS 51,000 IN AUGUST AND SEPTEMBER 51,000. IF YOU ARE AT THE FED, THE ECONOMY IS JUST FINE. REBECCA: I THINK THERE IS A CHANCE THE NEXT FED MEETING WE WILL SEE SOME DISSENTS. IT DOES APPEAR FROM THE DIFFERENT POLICYMAKERS THAT SOME THINK WE CAN TAKE A PAUSE IN OCTOBER BUT SOME THINK INFLATION IS STILL STICKY DESPITE THE LATEST PCE NUMBER, THE FED'S TARGET INFLATION THAT WAS BETTER THAN EXPECTED. WE HAVE A STRONG ECONOMY IN LARGE PART BUT NOT ONLY BECAUSE OF AI. IF YOU WANT TO HAVE CREDIBILITY ON THE INFLATION AND LABOR MARKET STILL RESILIENT, DO YOU PAUSE? MICHAEL: HOW MUCH OF THIS IS DUE TO THE COMING ELECTION? DOES THIS GIVE THEM A GOOD EXCUSE IF THEY DON'T WANT TO MOVE AHEAD OF THE ELECTION? REBECCA: I WOULD SAY ZERO. I TRULY BELIEVE WITHIN THE FED THEY ARE LOOKING AT THE DATA SAYING WHAT DO WE NEED TO DO TO GET TO OUR TARGET OVER A 12 TO 18 MONTH HORIZON. IT IS CONVENIENT TO TALK AND I'M NOT SAYING YOU ARE DOING THIS BUT I HEAR ABOUT THIS ALL THE TIME. YEAH, WE HAVE AN ELECTION BUT THE FED IS INDEPENDENT. IT IS MAKING DECISIONS BASED ON THE DATA. ELECTIONS HAVE NOTHING TO DO WITH IT. IF IT WAS EVER PERCEIVED IT DID, THEIR CREDIBILITY WOULD BE DONE AND 10-YEAR YIELDS WOULD BE AT 6% OR 7%. DANI: EVEN MAYBE IMMEDIATELY AFTERWARDS. THIS IS A PRESIDENT WHO SAID COULD BOMB IRAN POST MIDTERM. HOW DO YOU GET AROUND THIS RISK EVENT? REBECCA: IF I WAS THINKING ABOUT THE TAIL RISK, WE DON'T HAVE A CLEAR AND OUTCOME OF THE ELECTION. IT LOOKS FROM THE OPINION POLLS TODAY THAT THE DEMOCRATS ARE GOING TO GET THE HOUSE. THE SENATE IS CLOSER. IF WE HAVE CONTESTED SEATS ARE A CONTESTED HOUSE -- NOW THE HOUSE, THE SENATE, AND IT BECOMES LEGAL, WE HAVE POTENTIAL SOCIAL UNREST. THINK ABOUT IN THE YEAR 2000 WITH BUSH-GORE. THE S&P FELL 8% DURING THAT PERIOD WAITING FOR THE SUPREME COURT TO RULE. WHAT HAPPENS IF WE GO THROUGH THAT AGAIN TODAY WHAT WE HAVE A CONTESTED ELECTION? DOES THE STOCK MARKET DOWN ONLY 8%? WHEN WE GET A HYPOTHETICAL SUPREME COURT RULING, DO PEOPLE BELIEVE IT OR PREJUDICED? THE MARKET RALLIES, GO ON? THAT'S A VERY LOW PROBABILITY RISK BUT IN THE CURRENT ENVIRONMENT I THINK WE HAVE TO TAKE IT SERIOUSLY. MICHAEL: I WANT TO KNOW -- DANI: I WANT TO KNOW OF BOND YIELDS ARE KEEPING YOU UP AT NIGHT. REBECCA PATTERSON IS STICKING WITH US. FOUR MINUTES UNTIL WE START OUR CASH EQUITY TRADING. WE ARE MOVING HIGHER. 29,000 COMING IN FOR PAYROLLS. THE ESTIMATE WAS 90,000. DOES THAT MAKE THIS A MORE PATIENT FED OR PERHAPS THIS CHANGES NOTHING. THE OPENING BELL AFTER THE BREAK. ♪ DANI: LET'S GET THE TRADING DAY STARTED. WE ARE SECONDS AWAY. TWO BILLS UNTIL YOU GET TO CELEBRATE YOUR WEEKEND. I'M DANI BURGER. A SOFTER THAN EXPECTED PAYROLLS REPORT LEADS TO HIGHER EQUITIES AND LOWER YIELDS. NASDAQ OUTPERFORMING, UP ABOUT 1.25%. A FUN ONE AT THE NEW YORK STOCK EXCHANGE. THE NEW YORK GIANTS, LEGENDS AMONG MEN CELEBRATING THEIR 40TH ANNIVERSARY OF THEIR FIRST SUPER BOWL WIN IN 1986. GARY CARSON -- HARRY CARSON, PHIL SIMS AND THE REST OF THEM. CARL BANKS. SORRY, GUYS. MY GIANTS KNOWLEDGE IS QUITE LACKING. I'M NOT A BIG FOOTBALL PERSON. WE HAVE A BLUE ROCK ACQUISITION RINGING THE BELL AT THE NASDAQ, AND ASSET MANAGER WITH A NAME THAT SOUNDS A LOT LIKE IT'S -- TESLA SHARES ARE HIGHER BY 2.4%. THEY JUST RELEASED DATA FOR THE THIRD QUARTER. THE COMPANY DELIVERED 486 THOUSAND CARS, WELL ABOVE THE ESTIMATE WHICH WAS 463,000. THEN THERE IS NIKE SLIDING AFTER A WEAK QUARTER AND AN OUTLOOK THAT SHOWS THE TURNAROUND IS STILL STRUGGLING TO GAIN TRACTION. CHINA IS STILL A MAJOR DRAG. SALES COULD STAY UNDER PRESSURE. SHARES HAVE FALLEN BY 50% SINCE ELLIOT HILL TOOK OVER AS CEO IN 2024. MICHAEL: WE ARE BACK WITH REBECCA PATTERSON WHO ALSO HAS A VERY LONG TRACK RECORD IN THE MARKETS. I WILL PICK UP WHERE DANI LEFT OFF. WHAT ABOUT THE BOND MARKETS? IT IS THE STORY ON WALL STREET RIGHT NOW WITH WHAT IS HAPPENING OVERSEAS. I COULD USE THE WORD BLOWING OUT AND FRANCE. AND THE UNITED STATES WITH YIELDS BEING QUITE VOLATILE AT THE MOMENT. REBECCA: SOME OF IT IS GOOD NEWS. SOME OF IT IN THE U.S. IS STRONG GROWTH. THAT LEADS TO SHIFTS FOR A HIGHER FED FUNDS RATES AND THROUGH THE CURVE. IT IS NOT ALL BAD NEWS STORY. THAT'S PART OF THE REASON EQUITIES HAVE BEEN ABLE TO HOLD UP. THE UNDERLYING GROWTH IS DRIVING EARNINGS AND YIELDS. THERE IS SOME BAD NEWS AND THE BIGGEST ONES ARE CONCERNS ABOUT INFLATION. IT IS NOT DRIVING TREASURIES MUCH. THE MAIN ONE IS SUPPLY AND DEMAND. YOU HAVE A BIG DEFICIT GROWING. WE HAVE MORE BOND SUPPLY. WHAT WE HAVE ENOUGH DEMAND TO OFFSET THAT AND KEEP YIELDS STEADY? THE MARKET IS TELLING US KNOW. YOU HAVE COMPETITION -- THE MARKET IS TELLING US NO. YOU HAVE COMPETITION FROM THE AI MARKET AND PEOPLE ARE NERVOUS ABOUT WHO IS BUYING THE DEBT. IF WE LOOK 20 YEARS AGO, IT WAS THE STICKY BUYERS THAT WOULD BUY CENTRAL BANKS. TODAY IT IS MORE SHORT-TERM LEVERAGED BUYERS LIKE HEDGE FUNDS. THAT CAN CREATE MORE VOLATILITY. THE LAST THING ON THIS IS IT IS NOT THE YIELD LEVEL I CARE ABOUT. IT IS WHY IT IS RISING AND THE SPEED OF THE MOVE. THE MORE WE SEE THE BOND VOLATILITY INDEX, THE VIX, THE GREATER YOUR RISK YOU GET CONTAGION FROM STOCKS TO BONDS AND OTHER ASSETS AND WE ARE SEEING THAT IN PLACES LIKE THE U.S. AND FRANCE. DANI: THERE'S A QUESTION OF WHAT BREAKS AND CAUSES THE FRANCO-GERMAN SPREAD THE WIDEST SINCE 2022. YOU DON'T REALLY HAVE A CATALYST TO THAT DEGREE. IT IS JUST A SLOW BLEED. IS THAT THE NEW REALITY OF HEDGE FUNDS DOMINATE SO MUCH OF THE SOVEREIGN BOND TRADE? REBECCA: I THINK WE WILL HAVE MORE TACTICAL VOLATILITY BECAUSE OF WHO THESE BIG PLAYERS ARE. I THINK IN THE CASE OF FRANCE WHAT WE ARE SEEING -- I'M VERY PROUD I COINED A PHRASE BACK IN FEBRUARY -- THE FRAGILE FOUR. U.S., U.K., JAPAN, AND FRANCE. LARGE AND GROWING DEBT AND DEFICITS, POPULATIONS WHO IF YOU DON'T GIVE THEM FISCAL STIMULUS THEY VOTE YOU OUT OF OFFICE, AND POLITICIANS MAKING THE VOTERS HAPPY. FRANCE HAS HAD FIVE PRIME MINISTERS IN THE LAST I THINK FIVE YEARS. THEY HAVE A BUDGET GOING ON RIGHT NOW. THIS IS ONE OF THE CATALYSTS. ANY TIME THEY TRY TO PUT UP IN AUSTERITY BUDGET, VOTERS LITERALLY RIOT AND PRIME MINISTER DISAPPEAR. YOU HAVE AN ELECTION NEXT YEAR IN APRIL OF 2027. YOU WILL PROBABLY GET SOMEONE THAT'S NOT CENTRIST OR IN FAVOR OF FISCAL AUSTERITY. THIS DOES NOT END WELL AND FRANCE CANNOT PRINT ITS OWN CURRENCY AND CAN'T GET OUT OF THE PROBLEM JAPAN OF THE U.S. COULD. FRANCE IS THE MOST VULNERABLE ONE. ALL THE MARKETS ARE IMPORTANT AND I WILL THROW ONE MORNING, BRAZIL. WE HAVE AN ELECTION THIS SUNDAY AND IT'S SO INTERESTING. IT IS LARGELY ABOUT FISCAL POLICY. VOTERS ARE VOTING ON FISCAL POLICY. MICHAEL: THE FRAGILE FOUR IS BETTER THAN PINKS IF YOU WANT TO GO BACK TO THE DEBT CRISIS. WHEN YOU LOOK AT FRANCE AND BRAZIL, HOW MUCH CONTAGION RISK IS THERE FROM THEM AND HOW MUCH ARE THEY JUST THEIR OWN UNIQUE SITUATION? REBECCA: THERE IS BOTH. THERE ARE UNIQUE SITUATIONS IN EACH COUNTRY. WHAT IS DIFFERENT FROM 10 TO 20 YEARS AGO IS TODAY MOST INVESTORS OWN GLOBAL BOND PORTFOLIOS. WHEN WE WERE GROWING UP IN THIS INDUSTRY THERE WAS A LOT OF HOME BIAS AND THE BONDS YOU OWNED. TODAY YOU OWN A BASKET OF BONDS THAT ARE GLOBAL AND YOU TEND TO SEE MORE CONTAGION IN THAT SENSE AND THE MARKETS AND THE ECONOMIES ARE SO INTERLINKED VERSUS 10 OR 20 YEARS AGO. THAT ALSO CAN CREATE THE CONTAGION. THE PROBLEM IS LET'S SAY I'M NERVOUS ABOUT FRANCE. IN 2012, I WOULD BY GERMANY -- BUY GERMANY. DO I GOING TO TREASURIES AS MY SAFE HAVEN WHEN OUR DEBT AND DEFICITS ARE ALSO RISING AND ISSUING MORE SUPPLY? WHERE IS THE REAL SAFE HAVEN IN A WORLD WERE ALL THE DEVELOPED MARKETS ARE SEEING SIMILAR DYNAMICS? THAT'S A HARD QUESTION FOR INVESTORS. YOU WILL NOT PUT IT ALL IN GOLD OR BITCOIN OR PREDICTION MARKETS. WHERE DO YOU GO? MAYBE SINGAPORE LOOKS ATTRACTIVE BUT THERE BOND MARKET IS TINY. WE ARE AT A DIFFICULT JUNCTURE. REAL ASSETS, INFRASTRUCTURE, THINGS WITH INFLATION PROTECTION HAVE LOWER VOLATILITY THAN STOCKS AND PROBABLY MAKE SOME SENSE. I THINK YIELDS ARE GOING HIGHER. WE ARE NOT DONE WITH THIS. DANI: WE HAD THIS BOND OFFERING FROM PARAMOUNT AND IT IS SO MUCH MORE EXPENSIVE FOR THEM TO TAP THESE MARKETS AND BORROW THAN THEY HAD DONE IT A YEAR AGO. SOME MANAGERS ARE MAD BECAUSE THE BONDS SOLD OFF BUT THEY STILL PUSHED THE DEAL THROUGH. I WONDER IF YOU GET TO A POINT WHERE CAPITAL ACTIVITY WHERE THE MARKETS DO START TO FACE MORE PUSHBACK BECAUSE OF HIGHER ALL IN YIELDS THAT MAY BE DISAPPOINTMENTS AND HOW SOME OF THE CORPORATE BONDS PERFORM. REBECCA: THAT IS THE TIPPING POINT WE ARE WATCHING FOR. THE BORROWING COSTS GET HIGH ENOUGH THAT THE UNDERLYING GROWTH SUPPORTING EARNINGS IS NOT ENOUGH OF AN OFFSET IN THE WHOLE TOWER FALLS DOWN. WE ARE NOT THERE YET BUT THE EARNINGS SEASON WILL BE IMPORTANT TO GET GUIDANCE FROM THE CEOS. IF WE SEE THIS CONTINUING WE WILL HAVE MORE DEBT NEXT YEAR AND TREASURY WILL NEED TO ISSUE MORE LONGER DATED PAPER. THEY CAN'T DO IT ON THE FRONT END OF THE CURVE WHICH IS THE FOCUS THIS YEAR. WE ARE GOING TO GET TO THE TIPPING POINT. I DON'T KNOW WHAT THE NUMBER IS AND WHEN IT HAPPENS WILL STOP WHEN YOU THINK ABOUT THE CONTAGION RISK ALL THE CENTRAL BANKS ARE RAISING RATES. ALL THESE COUNTRIES ARE ISSUING MORE DEBT. THERE IS COMPETITION FROM CORPORATE BONDS. WE NO DIRECT LINK THAT IS WHERE WE ARE HEADED. IT IS A QUESTION OF WHAT DATED WE WAKE UP AND WE ARE THERE. MICHAEL: YOU WERE TALKING ABOUT THE OLDEN DAYS. YOU HAD THE NEW NORMAL GOING INTO EFFECT. I WAY BACK TO THE NEW OLD NORMAL? IS THIS THE RANGE WE ARE GOING TO BE IN FOR THE FORESEEABLE FUTURE? REBECCA: BOND YIELDS HAVE RESET AT A STRUCTURALLY HIGHER LEVEL. A LOT OF THE FORCES THAT HOLD THEM LOWER FROM 2006 TO 2019 WE HAD A SAVINGS GLUT. WE HAD A FLOOD OF CAPITAL LOOKING FOR SAFE PLACES TO GO. A TON OF DEMAND FOR TREASURIES THAT HELPED PULL THE YIELDS DOWN. WE HAD RECOVERY FROM THE 2008-2 THOUSAND NINE CRISIS THAT LIFTED GROWTH BUT NOT INFLATION BECAUSE OF AUTOMATION AND BECAUSE OF IMMIGRATION. LOTS OF FACTORS THAT LEAD TO THAT. THE LOW YIELDS IN MY VIEW WERE AN ANOMALY. TODAY WE HAVE MORE SUPPLY PRESSURES. WE HAVE DEMOGRAPHIC PRESSURES. WE HAVE NATIONAL RESILIENCY AND DEFENSE PRESSURES. WE HAVE MORE SPENDING AND INFLATION. IT IS NOT BLACK-AND-WHITE. IT IS INCREMENTAL. IT DOES KEEP THE YIELD AT A HIGHER LEVEL. WE WILL GO UP AND DOWN WITH THE CYCLE BUT NOT GOING BACK TO YOUR NEW NORMAL WHICH IS NOW THE NORMAL WE WILL MISS MAYBE. DANI: WHAT ASSUMPTIONS ABOUT PORTFOLIO ALLEGATIONS NEED TO BE THROWN OUT THE WINDOW IF WE ARE BACK TO OLD NEW NORMAL HIGHER RATES? REBECCA: IF YIELDS ARE STRUCTURALLY HIGHER, BORROWING COSTS ARE STRUCTURALLY HIGHER AND THAT WILL BE A WEIGHT ON GROWTH. WE ALL HAVE TO PRAY TO THE AI GODS THAT WE GET THIS WONDERFUL PRODUCTIVITY BOOST AND HOPEFULLY IT IS GLOBAL THAT LIFTS THE ECONOMY. YIELDS ARE GOING TO BE AN OFFSETTING DRAG. WE ARE HOPING AI IS MORE THAN ENOUGH TO OFFSET THAT. WE DON'T KNOW YET. IT IS TOO SOON. DANI: THIS HAS BEEN A MASTER CLASS. REBECCA PATTERSON ON HER MARATHON DAY. AFTER COMPLETING MANY HOURS OF RADIO. LET'S CHECK THE STOCK MARKET AND WHERE WE ARE MOVING IN SOME OF THE BIG TECH STOCKS THAT ARE OUTPERFORMING THANKS TO LOWER YIELDS THAT ARE MAYBE A LITTLE LONGER DURATION ASSETS. NVIDIA, AMAZON, TESLA, BROADCOM DOING WELL. TESLA IN PARTICULAR UP MORE THAN 4.4%. THEIR DELIVERIES OF ELECTRIC VEHICLES COMING IN STRONGER THAN EXPECTED. ON THE DOWNSIDE, SOME SEMI'S HIT HARD. SEAGATE AND WESTERN DIGITAL DOWN 13% AND 10%. IT'S A JAPANESE FIRM TOSHIBA THAT'S INCREASING THEIR OUTPUT AND PRODUCTION OF HARD DRIVES, CHALLENGING THEM AND THEIR BUSINESS. YOU CAN SEE THE SEMI HAVING A BAD DAY. NIKE ALSO IN THE LOSER COLUMN, DOWN AS WELL AFTER THE EARNINGS OF ABOUT 6%. A DISAPPOINTMENT IN THEIR ABILITY TO DRUM UP SALES. MOST SECTORS PUSHING INTO THE GREEN. CONSUMER DISCRETIONARY UP 1.6%. THE WORST PERFORMER'S ENERGY AS THE PRICE OF OIL PLUNGES. OPTIMISM ABOUT RELEASES FROM EUROPE OF VARIOUS STOCKPILES. ENERGY STOCKS DOWN HALF OF 1%. COMING UP ON THE OTHER SIDE OF THE BREAK, WHITE HOUSE DIRECTOR OF NATIONAL ECONOMIC COUNCIL KEVIN HASSETT FOLLOWING A JOB SUPPORT COMING IN SOFTER THAN EXPECTED. 29,000. THAT CONVERSATION TO COME. THIS IS "BLOOMBERG OPEN INTEREST ". STOCKS AT THE HIGHS OF THE MORNING FOLLOWING A SOFTER THAN EXPECTED JOBS REPORT AND LOWER OIL PRICES. ALL THAT PUSHES DOWN BOND YIELDS. NVIDIA HITS A NEW RECORD HIGH IN THE S&P TRAITS, UP 1%. THE NASDAQ UP 1.3%. MICHAEL: WE WELCOME OUR BLOOMBERG TV AND RADIO AUDIENCE WORLDWIDE. JOINING US NOW IS WHITE HOUSE NATIONAL ECONOMIC COUNCIL DIRECTOR KEVIN HASSETT. GREAT TO SEE YOU. LOOKS LIKE THE WEATHER IS STILL GOOD DOWN THERE. THE JOB REPORT LOOKS LIKE A CLASSIC CASE FOR THE WHITE HOUSE OF BAD NEWS BEING GOOD NEWS. NOT MANY JOBS CREATED. AVERAGE HOURLY EARNINGS ARE WEAK, AND YET THAT MAKES IT THAT MUCH LESS LIKELY THE FED RAISES INTEREST RATES THIS MONTH. KEVIN: I THINK THERE'S BEEN A LOT OF NEWS THAT'S BEEN VERY POSITIVE. THE LAST JOBS REPORT WAS THROUGH THE ROOF AND IT'S NATURAL TO BE A LITTLE BIT NEGATIVE WITH A SMALLER NUMBER. THE BOTTOM LINE IS IF YOU GO BACK TO THE LAST COUPLE OF DAYS WE HAD MASSIVE UPWARD REVISIONS TO GDP GROWTH. A LOT OF IT CAPITAL SPENDING WHICH MEANS SUPPLY-SIDE GROWTH WHICH IS DISINFLATIONARY. WE GOT PCE NUMBERS WHERE YOU LOOK AT THE THREE MONTH MOVING AVERAGE, CORE PCE IS RUNNING AT 2%, THE FED TARGET. TOPLINE PC IS RUNNING AT 1%. FOOD AND ENERGY PRICES ARE HELPING NOW RATHER THAN HURTING. AGAINST THAT BACKDROP THE JOB SUPPORT WAS JUST ABOUT AS EXPECTED BECAUSE ONE THING MAYBE FOLKS HAVE NOT BEEN FACTORING IN HIS WE HAVE REDUCED FEDERAL GOVERNMENT EMPLOYMENT BY MORE THAN 300,000 WORKERS. PRIVATE SECTOR JOBS WERE UP A LOT. WE HAVE TALKED ABOUT THIS FOR YEARS. THE CONSTRUCTION OF FACTORIES -- IT WAS UP ABOUT 12,000 THIS MONTH. IT'S UP 112,000 SINCE PRESIDENT TRUMP TOOK OFFICE. 112,000 PEOPLE, THAT'S ABOUT THE MICHIGAN FOOTBALL STADIUM. THEY ARE BUILDING FACTORIES TO CREATE FUTURE JOBS IN THE U.S. THAT IS AS BULLISH SIGN I HAVE SEEN SINCE I HAVE WATCHING IT SINCE THE 1990'S. MICHAEL: CONTEXT CHANGES EVERYTHING. WHILE WE HAVE THE BIG HOUSE IN TERMS OF CONSTRUCTION, THERE ARE STILL 160 MILLION JOBS OUT THERE. 46,000 PRIVATE SECTOR JOBS. WE ARE HEARING STORIES THAT COMPANIES ARE PLANNING TO HIRE FEWER PEOPLE FOR THE HOLIDAY SEASON. YEAH, THE ECONOMY IS GROWING FASTER THAN PERHAPS EXPECTED AND MAYBE PICKING UP SOME MOMENTUM. COMPANIES DON'T SEEM ANXIOUS TO ADD A LOT OF PEOPLE. KEVIN: RIGHT NOW INITIAL CLAIMS FOR UNEMPLOYMENT INSURANCE ARE THE LOWEST THEY HAVE BEEN BACK TO WORLD WAR II. COMPANIES ARE HOLDING ON TO THEIR PEOPLE AND HOLDING ON DEARLY BECAUSE THE LABOR MARKET IS SO TIGHT. IF THEY HAVE A VACANCY, IT CAN COST A LOT TO REPLACE IT. THE GROSS FLOW IS DOWN A LITTLE BECAUSE EVERYONE IS KEEPING THEIR EMPLOYEES RIGHT NOW. IF YOU'RE GOING TO BET AGAINST THE RETAIL SECTOR GOING INTO THE HOLIDAY SEASON, YOU WILL PROBABLY LOSE YOUR MONEY. I HAVE BEEN TALKING TO THE BIG BANKS AND WHAT'S BEEN GOING ON WITH CONSUMERS AND LOOKING BACK AT THE LITERATURE. WHEN THEY FEEL LIKE THEY ARE NOT GOING TO LOSE THEIR JOBS OR THE ECONOMY IS BOOMING, THEY ARE SECURE, THEY ARE WILLING TO SPEND AND BORROW TO BUY A NEW CAR AND SO ON. WE ARE SEEING THAT CLEARLY IN THE DATA. THE CONSUMER IS STRONG. CREDIT IS THAT A GOOD PLACE. ALL THAT STUFF SAYS IT WILL BE A STRONG HOLIDAY SEASON. DANI: SOME PEOPLE MIGHT DISAGREE WITH YOU CONSIDERING THE RIDE THEY HAVE BEEN THROUGH. THAT HAPPENS EVERY NOW AND THEN. THE TERMINAL GROSS AS YOUR COLLEAGUE LIKES TO PUT IT. THIS HAS BEEN A PUNISHING BOND MARKET GLOBALLY. IN THE U.S., WE JUST WITNESSED THE HIGHEST LEVEL IN 10-YEAR AND LONG 30-YEAR BOND YIELD SINCE 2002. HOW WORRIED HE IS THE GOVERNMENT ABOUT YIELDS AND DO YOU PLAN TO DO ANYTHING ABOUT IT? KEVIN: IN THE NEAR TERM THE BOND YIELDS ARE MORE OR LESS A FUNCTION OF FED POLICY AND WE RESPECT THEIR INDEPENDENCE. THE PRESIDENT THINKS AND I THINK WE COULD BE LOWER AND WE CAN TALK ABOUT THAT. LOOKING AT 20-EURO AND 30-YEAR, WHEN ECONOMIC GROWTH IS REALLY STRONG, THE REAL RETURN ON CAPITAL GOES UP. IF YOU LOOK AT THE 30-YEAR TIP, USED TO GET INFLATION. NOW YOU ARE GETTING 3% BECAUSE THE REAL RETURN ON CAPITAL GOES UP WHEN THE ECONOMY IS BOOMING WHEN THE GOLDEN AGE HAPPENS. LONGER RATES PERHAPS OF UPSIDE BECAUSE OF REAL RETURNS BEING SO HIGH. IN THE END THAT IS VERY GOOD FOR THE ECONOMY. YOU HAVE TO LOOK AT THE WHOLE THING. THE ONLY REASON THEY WOULD GO UP IS BECAUSE THE ECONOMY IS STILL STRONG. MICHAEL: IT IS MY JOB TO FIND THE BLACK CLOUD CIRCLING YOUR SILVER LINING. THAT MAY BE THE CASE THAT WE ARE SEEING REAL RATES RISE BECAUSE THE ECONOMY IS DOING BETTER BUT IT INCREASES THE COST TO THE GOVERNMENT IN TERMS OF PAYING ITS INTEREST PAYMENTS. THAT IS ONE OF THE BIG REASONS BOND MARKET PEOPLE TELL US THAT WE ARE SEEING RATES WHERE THEY ARE. THE TREASURY SECRETARY SAID SOME TIME AGO THAT HE WAS GOING TO WITH A PLAN TO START CUTTING BACK ON U.S. DEFICITS. WHEN DID WE GET THAT AT HOW YOU DO IT? KEVIN: YOUR CHARACTERIZATION OF WHAT BOND MARKETS THINK I DISAGREE WITH. IF YOU THINK ABOUT CORE INFLATION AT PC IT IS 2%. TOP LINE, 1%. 30-YEAR SAYS EXPECTED INFLATION IS TO PERCENT. -- 2%. MICHAEL: WHAT WE ARE SAYING IS THAT PEOPLE ARE WORRIED ABOUT THE U.S. HAVING TO PAY SO MUCH MONEY IN INTEREST PAYMENTS. KEVIN: THE POINT IS YOU ARE RIGHT THAT THE INTEREST PAYMENT ON DEBT IS UNACCEPTABLY HIGH SHARE OF GOVERNMENT SPENDING RIGHT NOW. IF YOU LOOK AT THE PRESIDENT'S BUDGET WE HAVE LOTS OF PLANS TO ADDRESS THAT. BECAUSE WE REDUCED FEDERAL EMPLOYMENT, THAT SAVES US HALF A TRILLION DOLLARS OVER 10 YEARS. THE PRESIDENT IS SERIOUS ABOUT DEFICIT REDUCTION AND WE ARE TAKING ACTIVE STEPS TO MAKE SURE IT HAPPENS. WE LOOK FORWARD TO WORKING WITH CONGRESS TO MAKE EVEN MORE PROGRESS. DANI: THE ECONOMIST CONSENSUS FOR FULL YEAR CORE CPI IS 3.3%, WHICH IS ABOVE THE TARGET. I KNOW YOU DISAGREE ON THAT POINT SO MAYBE WE SET THAT ASIDE. WE HEARD THE PRESIDENT SAYING CERTAIN LEVELS OF INFLATION WILL ALSO PAY OFF THAT DEBT VERY RAPIDLY. DOES THE WHITE HOUSE PLAN TO INFLATE ITS WAY OUT OF THE DEBT? KEVIN: ABSOLUTELY NOT. THE BOTTOM LINE IS THAT WHEN YOU TALK ABOUT THE TYPICAL ECONOMISTS, AS YOU HAVE HEARD ME SAY ON YOUR SHOW THAT IT SEEMS LIKE EVERY TIME I COME ON AND TALK ABOUT ECONOMIC NUMBERS WE SAY EVERY SINGLE ONE SURVEYED BY BLOOMBERG WAS WRONG. YOU HAVE TO THINK ABOUT WHY WAS IT THERE WAS NOT A SINGLE ECONOMIST WHO SAW ANYTHING CLOSE TO WITHIN TWO STANDARD DEVIATIONS. DANI: I WONDER WHAT YOU MAKE OF THE PRESIDENT'S COMMENTS ON CERTAIN LEVELS OF INFLATION HELPING TO PAY OFF THE DEFICIT. KEVIN: IT'S A MECHANICAL THING. THE PEOPLE WHO ARE EXPECTING INFLATION TO BE REALLY HIGH RIGHT NOW ARE NOT LOOKING AT THE RIGHT MODELS. THEY DON'T UNDERSTAND THAT THE SUPPLY SIDE ECONOMY CAN BE GREAT. IF YOU LOOK AT THE MONTHLY TREASURY STATEMENT, WE ARE DOING A GREAT JOB AND HAVE A LOT MORE REVENUE BECAUSE OF LAFFER CURVE AFFECTS AND REDUCING GOVERNMENT EMPLOYMENT. WE ARE SERIOUS ABOUT THE DEFICIT AND THAT IS POSITIVE FOR INFLATION IN THE LONG RUN. MICHAEL: AS LONG AS WE ARE PICKING ON YOUR BOSS. HE SAID IT IS NOT KEVIN WARSH'S FAULT INTEREST RATES ARE GOING UP. HE HAS A FED BOARD THAT IS AGAINST DONALD TRUMP. DO YOU AGREE WITH THAT? HAS HE GIVEN UP ON THE IDEA OR HIS DEMAND FOR LOWER RATES? KEVIN: I KNOW THAT KEVIN WARSH HAS AN UNUSUAL CIRCUMSTANCE TO MANAGE, WHICH IS JAY POWELL AND WHAT I VIEW AS A HIGHLY PARTISAN MOVE. HE HAS REFUSED TO RESIGN AND IS STAYING THERE SO THERE'S A MAJORITY OF DEMOCRAT APPOINTEES WHO HAVE IN THE PAST VOTED TO INCREASE INTEREST RATES OR REDUCE INTEREST RATES AND A PARTISAN PATTERN. CABIN WILL MANAGE THAT AND FIX THE PROBLEM THAT WE HAVE REALLY HIGH CONFIDENCE HE WILL DO THAT. IF YOU LOOK AT FEDERAL FUNDS FUTURES AND SAYING THAT WE DON'T THINK THE FED IS GOING TO MOVE IN THE FUTURE. THAT'S A POSITIVE SIGN OF KEVIN WARSH MAKING PROGRESS. A JAY POWELL FED WOULD HAVE HIKED INTO THE ELECTION LIKE THEY HAVE DONE BEFORE. DANI: DO YOU BELIEVE POWELL SHOULD BE ON THE BOARD? WHAT IS YOUR VIEW ON THAT? KEVIN: THE HISTORY IS THAT A CHAIRMAN LEAVES WENT TO HELP THE NEW CHAIRMAN BE SUCCESS. YOU SEE THAT IN CORPORATE AMERICA. THE OLD CEO DOES NOT SIT IN THE ROOM NEXT TO HIM. IS THE DECISION FOR JAY POWELL RIGHT NOW. DANI: KEVIN HASSETT, THANK YOU FOR JOINING US. WE APPRECIATE YOUR TIME. THAT IS THE NEC DIRECTOR KEVIN HASSETT ON EVERYTHING FROM WHERE INFLATION AND JOBS MARKETS ARE THE POWELL SAYING THAT THE JOB FOR KEVIN WARSH TO DO SOMETHING ABOUT. THE MARKET IS SEEING UP PROBLEM WHEN IT COMES TO THIS ENERGY MARKET. MICHAEL: WE GOT ISM MANUFACTURING INDEX AND IT JUMPED. PRICES ARE STILL GOING UP FOR INTERMEDIATE GOODS AND RAW MATERIALS AND THAT IS GOING TO FEED THROUGH TO INFLATION. I DON'T THINK ANYBODY ON THE FED THINKS THERE JOB FIGHTING INFLATION IS DONE AND THEY CAN DECLARE VICTORY AS KEVIN SOUNDED LIKE HE WANTED THEM TO DO. I WILL PUT WORDS IN HIS MOUTH. --I WON'T PUT WORDS IN HIS MOUTH. DANI: NEIL DUTTA MAKES THE POINT THAT OF ALL THE FED MEMBERS PERHAPS THE LEAST DOVISH AND MOST HAWKISH OF ALL OF THEM IS KEVIN WARSH. EVEN THOUGH THE WHITE HOUSE HAS BEEN THINK HE HAS TO DEAL WITH ALL THESE HAWKISH DEMOCRATS. WARSH HAS SOUNDED MORE HAWKISH THAN WILLIAMS OR JEFFERSON YESTERDAY. MICHAEL: WILLIAMS AND JEFFERSON ARE EXPECTED TO REPRESENT WITH THE CHAIRMAN IS THINKING BECAUSE THEY DON'T BY TRADITION DISSENT. THEY HAD NO REASON TO RAISE RATES A COUPLE OF WEEKS AGO. NOW THEY ARE SAYING AT LEAST ONE COMING FORWARD. THERE IS A LITTLE BIT OF A CHANGE THEIR. WE HAVE NOT HEARD ANYMORE FROM KEVIN WARSH. WE WILL IN TWO WEEKS -- HE'S GOING TO THE IMF CONFERENCE AND HE WILL BE INTERVIEWED BY KRISTALINA GEORGIEVA, THE IMF MANAGING DIRECTOR OR MAYBE SHE WILL ASK ABOUT THIS. DANI: I HAVE TO SAY IT DOES SEEM LIKE WE HAD A QUORUM OF FED SPEAKERS BASICALLY SAYING WE NEED TO DO SOMETHING ABOUT INFLATION AND TO GET WILLIAMS AND JEFFERSON SANG MAYBE WE HAVE MORE PATIENCE. THEN YOU HAD LOGAN SAYING WE NEED TO HIKE SOMETHING LIKE 50 BASIS POINTS TO GET US WHERE WE NEED TO BE. MICHAEL: WHICH IS WHAT REBECCA PATTERSON SAYS WE MIGHT GET SOME DISSENTS COMING UP HERE. DANI: COMING UP IN THE NEXT HOUR, WE WILL GET MORE FROM THE JOBS REACTION. WE WILL SPEAK WITH JULIA CORONADO AND SPEAK WITH NICK PINCHUK AND PENNY PENNINGTON. THIS IS BLOOMBERG. DANI: 30 MINUTES INTO THE TRADING DAY AND WELCOME TO "BLOOMBERG OPEN INTEREST." I'M DANI BURGER ALONGSIDE MICHAEL MCKEE. U.S. EMPLOYERS ADDED JUST 29,000 JOBS IN SEPTEMBER, FAR LESS THAN EXPECTED. BLACKSTONE JOINS BROADCOM'S MASSIVE AI FINANCING PUSH AS ANTHROPIC RACES TOWARDS AN IPO. NIKE SALES SLUMP. THAT FORCES ARE RE-THINK AROUND CEO ELLIOTT HILL AS THE COMPANY TRIES TO MAKE HIS COME BACK. WE HAVE HAD DATA. WE HAD THE JOBS DATA. 29,000 IS WHERE IT CAME IN. 29,000 VERSUS 90,000. WE ARE LOOKING FOR FACTORY ORDERS AND DURABLE GOODS. MICHAEL: WE NEED TO BRING KEVIN HASSETT BACK WHO WAS TALKING ABOUT THE GREAT GROWTH NUMBERS. FACTORY ORDERS UP A 10TH OF A PERCENT. THAT CHANGED FROM THE JULY NUMBER OF .9% GAIN. DURABLE GOODS ORDERS, THE REVISION FOR AUGUST IS DOWN 1/10. IT HAD BEEN FLAT FOR THE MONTH. NOT PARTICULARLY GREAT NEWS. CAPITAL GOODS SHIPMENTS UP HALF A PERCENT. THEY WERE OF .6% IN JULY. A LITTLE LESS IN TERMS OF GROWTH FOR THE THIRD QUARTER. DANI: WE SEE BOND YIELDS MOVING LOWER. WE ARE OFF THE MOST DRAMATIC OF THE DROP THIS MORNING. TWO-YEAR YIELD DOWN BY THREE BASIS POINTS. THE INITIAL DROP OFF AFTER THE JOBS REPORT AND IT'S BEEN SLOWLY CLIMBING WITH THE IDEA THAT THIS MATTERS LESS. IS THAT IT? IT ESSENTIALLY SHOWED WHAT WE ALREADY KNOW. IT'S NOT CONTRIBUTING TO INFLATION. MICHAEL: CONFIRMATION FROM THE MARKETS THAT THE FED IS PROBABLY NOT GOING TO RAISE RATES IN OCTOBER. WHETHER PEOPLE THINK THEY CARE ABOUT THE ELECTION OR NOT, MIGHT AS WELL ERR ON THE CAUTIOUS SIDE. WHAT'S INTERESTING IS THE HEADLINE IS CROSSING NOW. MACRON SAYS THE G7 WILL RELEASE UP TO 100 MILLION BARRELS OF DISTILLATE. THAT WOULD BE DIESEL AND PERHAPS SOME OIL, CRUDE OIL AS WELL. THAT'S OVER THE NEXT FOUR MONTHS. NOT SEEING A HUGE MOVE IN THE OIL MARKETS. DANI: WE KNEW THE EUROPEANS ARE MEETING ON THIS. THIS IS SOMETHING TO EAT THE U.S. HAD BEEN PUSHING EUROPE TO DO. THE IDEAL OF THE DIESEL BAN WAS FLOATED IN THE UNITED STATES. EUROPE, IT IS PROBLEMS -- IT IS YOUR PROBLEM TO DEAL WITH. MICHAEL: IT SHOULD PUSH DOWN DIESEL PRICES SOME. SINCE IT IS IN EUROPE, IT WILL NOT HAVE AS MUCH OF AN IMPACT AS A DIESEL EXPORT BAN. LONG-TERM THERE ARE ISSUES WITH THIS. IT CHANGES THE INCENTIVE FOR REFINERS. IT IS NOT JUST THE RAW PRODUCT OUT THERE. IT IS WHAT THE REFINERIES DO. DANI: AT LEAST IT IS RELIEF FOR EUROPE SINCE IT WILL NOT FACE A DIESEL EXPORT BAN. THE MARKET CONCENTRATING ON THE SEPTEMBER'S JOBS MISS, BUT IT WAS EXPECTED ACCORDING TO KEVIN HASSETT. HERE IS HOW HE LOOKED AT THE REPORT WHICH CAME IN BELOW ESTIMATES. >> THE JOBS REPORT WAS JUST ABOUT AS EXPECTED BECAUSE ONE THING MAYBE FOLKS HAVE NOT BEEN FACTORING IN IS THAT WE REDUCE FEDERAL GOVERNMENT EMPLOYMENT BY MORE THAN 300,000 WORKERS. PRIVATE SECTOR JOBS WERE UP A LOT. YOU AND I HAVE TALKED ABOUT IT FOR YEARS. THE CONSTRUCTION OF FACTORIES WAS UP ABOUT 12,000 THIS MONTH. IT'S UP 112,000 SINCE PRESIDENT TRUMP TOOK OFFICE. 112,000 PEOPLE. THAT'S ABOUT THE MICHIGAN FOOTBALL STADIUM. THAT MANY PEOPLE BUILDING FACTORIES TO CREATE FUTURE JOBS AND THAT'S ABOUT AS BULLISH SIGN AS I HAVE SEEN SINCE I HAVE BEEN WATCHING IT. DANI: JOINING US NOW IS JULIA CORONADO. CAN WE GET YOUR INITIAL REACTION TO THE JOBS REPORT? JULIA: I DON'T THINK IT IS TERRIBLE NEWS. IT WAS DEFINITELY SOFT RELATIVE TO EXPECTATIONS. IF WE STEP BACK, THERE WAS A SWING FACTOR IN STATE AND LOCAL GOVERNMENTS. THIS IS THE TIME OF YEAR OF HIRING TEACHERS AND THE VOLATILITY FROM AUGUST TO SEPTEMBER SHOULD BE DISCOUNTED. THREE-MONTH AVERAGE ABOUT 50,000. THAT'S A PRETTY SOLID REPORT. THE UNEMPLOYMENT RATE TICKED UP. IF I LOOK AT THE TRENDS, THEY LOOK STABLE. THERE IS SECTORAL ROTATION AWAY FROM PRIVATE EDUCATION AND HEALTH CARE, AWAY FROM STATE AND LOCAL GOVERNMENTS TOWARDS CONSTRUCTION AND MANUFACTURING AND ANYTHING TOUCHING THE DATA CENTER BUILDOUT. IT LOOKS LIKE A PRETTY STABLE, HEALTHY LABOR MARKET. WE ARE AT A MUCH LOWER HIRING TREND REFLECTING THAT THERE IS NO LABOR FORCE GROWTH. WE HAVE AN OLDER WORKFORCE. WE HAVE NO IMMIGRATION. THAT MEANS WE WILL SEE LOW NUMBERS ON AVERAGE. MICHAEL: ONE OF THE QUESTIONS THAT COMES UP IS ABOUT THE FED. WE HAVE HEARD FROM 13 OF THE 19 MEMBERS OF THE OPEN MARKET COMMITTEE THIS WEEK. WHAT IS YOUR TAKE AWAY FROM ALL THAT? WHAT DO YOU THINK THEY WANT TO DO? JULIA: I THINK THE COMMITTEE -- THERE'S A STRONG CONSENSUS THAT PROBABLY ANOTHER RATE HIKE OR TWO IS GOING TO BE NEEDED. WE DO HAVE VERY STICKY INFLATION. IT IS NOT RUNNING THROUGH THE TRADITIONAL CHANNEL OF THE LABOR MARKET. IT IS RUNNING THROUGH THIS CAPEX BOOM AND PRESSURING MATERIALS PRICES AND ALL OF THE RIPPLE THROUGH THAT IS BRINGING. IT IS INFLATION NONETHELESS. THE FED IS MISSING ON ITS MANDATE. HAS BEEN FOR FIVE YEARS RUNNING AND NO END IN SIGHT. THEY NEED TO SHOW THEY ARE WILLING TO RESPOND. WE HAVE GOTTEN VERY CLEAR SIGNALS FROM PRESIDENT WILLIAMS AND FROM VICE CHAIR JEFFERSON THAT THEY WANT TO GATHER MORE DATA. THE ONLY GET ONE MONTH OF DATA BETWEEN THE SEPTEMBER AND OCTOBER MEETINGS. IT IS FAIR TO SAY WE ARE TRYING TO ASSESS TRENDS. WE ARE LOOKING FOR ANY INDICATION OF COOLING AND INFLATION. LET'S GATHER MORE DATA BEFORE YOU MAKE THE NEXT MOVE. IT MAY OR MAY NOT BE RELATED TO THE MIDTERM ELECTIONS. IN ANY CASE, IT DOESN'T MAKE THAT MUCH DIFFERENCE. WE ARE GOING TO SEE A RATE HIKE OR TWO. WE HAVE TWO IN HER OWN BASELINE. THAT IS A FAIR RESPONSE TO IT IS NOT A WAGE PRICE SPIRAL BUT IT IS A CAPEX PRICE SPIRAL AND THEY HAVE TO ADDRESS IT. DANI: HOW DO YOU ADDRESS A SPIRAL? WHAT YOU RATES LOOK LIKE THAT ARE RESTRICTIVE THAT REIN IN SOME OF THE MASSIVE AMOUNTS OF SPENDING WE HAVE SEEN TO FIND THE AI INFRASTRUCTURE BUILDOUT? JULIA: A COMMON THEME THAT IS LEGITIMATE IS THAT THE ANNOUNCED CAPEX PLANS ARE NOT INTEREST RATE SENSITIVE. MONETARY POLICY DOES TEND TO GET INTO THE CRACKS. WE ECONOMISTS LIKE TO BE ABOUT THAT PHRASE. THE WAY WE SEE THAT SINCE THE FED HAS TURNED TOWARDS TIGHTENING IS A LITTLE MORE CAUTION IN RISK APPETITE. HIGHER FUNDING COSTS. A LITTLE MORE CAUTION. IT EBBS AND FLOWS BUT THAT IS ONE CHANNEL YOU CAN SEE. I THINK WE SEE EVALUATIONS OF THESE COMPANIES THAT ARE EXTREMELY BULLISH AND HIGHER COSTS CAN AFFECT THAT BY TAKING A LITTLE STEAM OUT OF THAT. THAT WILL RESULT IN LESS WEALTH EFFECTS ON SPENDING AND LESS DEMAND AND A COOLER ECONOMY AND LOWER INFLATION PRESSURES. HOW MUCH IS NEEDED WE JUST DON'T KNOW. WE WILL HAVE TO SEE IF THE FED WILL CALIBRATE THAT OVER TIME WITH THE DATA. DANI: I'M AFRAID THAT IS ALL WE HAVE TIME FOR. JULIA CORONADO FROM MACROPOLICY PERSPECTIVES. A CHECK ON THE MARKETS. THE RALLY CONTINUES AS LOWER YIELDS ALSO IMPACTED BY NOT JUST THE JOBS FIGURE BUT BRENT CRUDE DOWN BELOW $99 A BARREL. EUROPE WILL BE RELEASING CRUDE AND DIESEL STOCKPILES. THE PRESIDENT ALSO POSTING ABOUT IT ON TRUE SOCIAL. THE AMERICANS PUSHING FOR THIS ARE PLEASED TO SEE THE DIFFERENCE. MACRON TAKING THAT ANNOUNCEMENT MOMENTS AGO. LET'S LOOK AT SOME OF THE MOVERS. WITH THAT IS NORAH MULINDA. NORAH: NIKE GETTING HIT AFTER YET ANOTHER DISAPPOINTING QUARTER. SALES FALLING SHORT AND THE COMPANY WARNING THE TURNAROUND HAS A LONG WAY TO GO. CHINA REMAINS A WEAK SPOT AND NIKE NOW EXPECTS SALES TO KEEP FALLING. YOU WILL SEE SHARES DOWN BY WHERE THAN 5% THIS MORNING. GETTING SYNAPTIC'S FOR A LOT LESS. THE COMPANY PAYING $6 BILLION IN CASH INSTEAD OF THE $7 BILLION DEAL ANNOUNCED EARLIER. THIS TAKEOVER SHOULD BOOST EARNINGS RIGHT AWAY. SHARES OF BOTH COMPANIES HIGHER THIS MORNING. SOME GOOD NEWS FOR A TESLA. THE COMPANY BEATING ON SALES FOR THE THIRD QUARTER. THIS IS A WELCOME SIGN AFTER TWO BACK-TO-BACK YEARS OF DECLINING ANNUAL SALES. TESLA HAS BEEN DEALING WITH SLUGGISH DEMAND IN THE U.S. AND FIERCE COMPETITION IN CHINA. SHARES CURRENTLY HIRED BY MORE THAN 5% THIS MORNING. THOSE ARE YOUR MORNING MOVERS. DANI: LET'S CONTINUE ON TESLA. WE ARE JOINED BY CRAIG TRUDELL. THEY RALLY AFTER BETTER-THAN-EXPECTED DELIVERIES BUT I THOUGHT THIS WAS NOT A CAR COMPANY AND WE DID NOT CARE. CRAIG: DO WE OR DON'T WE? IT IS HARD TO TELL. THIS IS A MUCH BETTER NUMBER THAN EXPECTED. SECOND QUARTER IN A ROW AFTER A CRUMMY START FOR THEM. IT IS STILL A COMPANY IN A BIT OF A HOLDING PATTERN IN TERMS OF ITS CORE BUSINESS WITH CAR SALES. FOR A FEW YEARS NOW WE HAVE HAD WHEN THEY HAD THEIR BEST QUARTERS THEY ARE JUST SHY OF 500,000 UNITS. THIS IS STILL A COMPANY THAT HAS GONE FROM KNOWN FOR GROWTH TO BEING A BIT OF A STASIS WITH A STALE LINEUP. THE MODEL 3 AND MODEL Y ARE THE ONLY GAME IN TOWN. THE CYBER TRUCK HAS BEEN A BIG DISAPPOINTMENT. THERE'S NOT A LOT OF CHANGING TO THAT NARRATIVE PUTS HIM RELIEF AFTER WHAT HAS BEEN A DISAPPOINTING YEAR FOR THE SHARES COMING INTO TODAY. DANI: I YEAR AGO THERE WAS A BACKLASH AGAINST TESLA BECAUSE OF ELON MUSK'S ROLE IN CUTTING THE GOVERNMENT JOBS. HAVE CUSTOMERS MOVE TO BEYOND THAT? CRAIG: IT PROBABLY HELD HE HAS REMOVED HIMSELF FROM WASHINGTON, AT LEAST TO A DEGREE. WE SEE HIM WITH PRESIDENT TRUMP QUITE A BIT BUT HE'S NOT BURNING HIS WAY THROUGH D.C. HE ALSO I THINK HAS BENEFITED FROM SOME PULLBACK BY SOME OF HIS COMPETITORS IN THE ELECTRIC VEHICLE SEGMENT IN THE U.S. WHERE A YEAR AGO WE HAD A QUITE STRONG, QUARTER FOR EV DEMAND BECAUSE EVERYONE WAS TRYING TO TAKE ADVANTAGE OF THE TAX CREDITS FOR THEY WENT AWAY. WE HAVE SEEN IN DETROIT FORD AND GM AND STELLANTIS REALLY RETHINK SOME OF THEIR EV PROGRAMS AND THAT'S MAY BE LEFT MORE OF AN OPENING FOR TESLA EVEN AS WE HAVE SEEN THE OVERALL EV MARKET IN THE U.S. CONTRACT AS A RESULT OF THAT PULLBACK OF SUPPORT. DANI: GIVEN WHERE OIL PRICES ARE HEADING IN HAVE BEEN FOR SOME TIME, DO YOU THINK THERE'S ANY AMOUNT OF REGRET THEY DID NOT HOLD ON TO SLIGHTLY MORE OF THEIR EV PROGRAMS? IS THERE MORE DEMAND COMING FOR CONSUMERS CONSIDERING WHERE THE PRICE OF OIL IS? CRAIG: I DON'T THINK WE ARE SEEING A SUBSTANTIAL CHANGE. IN TERMS OF ELECTRIFIED AND IN TERMS OF HYBRID WE ARE SEEING TOYOTA AND HYUNDAI TAKING ADVANTAGE OF PEOPLE NOT FULLY READY TO GO ALL ELECTRIC BUT AT LEAST BUY A MORE EFFICIENT VEHICLE CONSIDERING HOW PRICEY THINGS ARE THE PUMP. MICHAEL: THANK YOU VERY MUCH FOR JOINING US AND BRINGING US UP-TO-DATE ON TESLA'S LATEST ANNOUNCEMENTS. ANTHROPIC TARGETS OF MID-NOVEMBER IPO, DEFYING A STRING OF DELAYS FOR NEW LISTINGS. THIS IS "BLOOMBERG OPEN INTEREST ." ♪ DANI: LET'S GET SOME HIGH INTEREST STORIES AND WHAT IS MAKING HEADLINES AROUND THE WORLD. THE G7 WILL RELEASE UP TO 100 MILLION BARRELS OF EMERGENCY OIL AND DIESEL STOCKS FOLLOWING PRESSURE FROM THE TRUMP ADMINISTRATION TO CURB RISING FUEL PRICES. THE FRENCH PRESIDENT SAYS THE IEA COORDINATED RELEASE WOULD TAKE PLACE OVER FOUR MONTHS WITH A GOAL OF PUSHING FUEL PRICES LOWER. LOCKHEED MARTIN IS BETTING BIG ON ITS NEW STEALTH DRONE CALLED VEKTIS. IT COULD HELP RESHAPE THE DEFENSE GIANT AS THE PENTAGON PRIORITIZES SPEED, AI, AND LOWER COST OF UNMANNED SYSTEMS. ED LUDLOW GOT AN EXCLUSIVE LOOK. >> IF WE CAN GET VECTIS RIGHT -- IS THE SAME WING SIZE OF AN F 35. IT IS LARGE BUT IT HAS THAT SKUNKS WORKS MAGIC SAUCE OF SURVIVABILITY AND STEALTH. IT'S A BIG BET FOR US. AS A COMPANY WE THINK, TO YOUR POINT, IT'S PROBABLY THE MOST VALUABLE THING WE CAN DO INDEPENDENTLY FOR THE U.S. AND OUR ALLIES. DANI: IT SOUNDS LIKE THE VILLAIN FROM "STRANGER THINGS." 11:00 A.M. EASTERN TIME ON BLOOMBERG TECH. ANTHROPIC COULD BE BRINGING SOME SERIOUS FIREWORKS TO THE IPO MARKET. THEY ARE AIMING FOR A MID-NOVEMBER DEBUT, POTENTIALLY BEFORE THANKSGIVING WITH INVESTORS DISCUSSING A VALUATION AS HIGH AS $2 TRILLION. ANTHROPIC IS SET TO MEET PROSPECTIVE INVESTORS ON OCTOBER 14 AS THEY GEAR UP FOR ONE OF THE BIGGEST IPO'S EVER. ANTHONY HUGHES, FINALLY WE HAVE SOME CONTOURS AROUND THE TIMING THAT WE MIGHT SEE ANTHROPIC. ANTHONY: THE IPO WAS EXPECTED TO BE EARLIER THAN THIS. THERE'S BEEN A LOT HAPPENING IN THE AI COMPLEX. I THINK IT HAS BEEN WISE TO DELAY A LITTLE BIT AND CLARIFY SOME OF THESE ISSUES. WHETHER IT IS THE SAFETY AND REGULATIONS ISSUES, THE COMPETITION FROM OPEN SOURCE AND OPENAI. THESE WILL MAKE FOR A PRETTY FASCINATING MONTH AS PEOPLE DEBATE WHETHER THEY THINK ANTHROPIC IS A GOOD INVESTMENT OR NOT. MICHAEL: THERE BEEN TALK OF WHETHER OPENAI OR ANTHROPIC WOULD GO PUBLIC FIRST. IS THERE A FIRST MOVER ADVANTAGE FOR ANTHROPIC IN THIS? ANTHONY: THEY HAVE DISAGREED ON THIS POINT. ANTHROPIC HAS BEEN INDICATING THERE ARE BENEFITS TO GOING FIRST AROUND SETTING THE METRICS, THE WAY PEOPLE LOOK AT AND VALUE THESE COMPANIES AND THE FIRST MOVER ADVANTAGE HAS ITS IMPLIED STATUS THAT THEY ARE LEADING THE INDUSTRY AND THERE'S BEEN A LOT OF BACK AND FORTH IN THE LAST -- IT HAS INTENSIFIED IN THE LAST FEW WEEKS THAT WHO IS REALLY LEADING THE RACE. OPENAI TAKES THE POSITION THERE IS UNCERTAINTY AROUND THE REGULATORY ISSUES AND THERE IS A DELAY. IF A FLAKES A BIT OF UNCERTAINTY ABOUT WHO'S REALLY LEADING THE RACE. SOME OF THE -- THERE WILL BE SOME INTENSE DEBATES ABOUT THE LONG-TERM PROFITABILITY OF THE INDUSTRY. IS IT GOING TO WORK OUT. DANI: FOR A WHILE THESE COMPANIES HAD BEEN IN A RACE FOR THE WHO HAD THE BEST MODEL AND THAT WILL TELL US WHAT THE MOST DESIRABLE COMPANY IS. AS THEY PREPARE TO BE PUBLIC AND BECOME MORE MATURE, ARE THERE DIFFERENT METRICS THAT ARE MORE IMPORTANT FOR THEM AS WE ANALYZE HOW ATTRACTIVE THE COMPANY WILL BE? ANTHONY: IF WE GO BACK TO THE IPO BOOM OF 2021, WE WERE TALKING ABOUT SOFTWARE COMPANIES FOCUS ON REVENUE GROWTH AND GROSS MARGIN AND THINGS LIKE THAT. THOSE METRICS ARE STILL IMPORTANT BUT THE DIFFERENCE IS THE COMPANIES HAVE MASSIVE COMMITMENTS WHICH WE DID NOT SEE WITH THE SOFTWARE IPO BOOM. THE TOUGH BIT IS WORKING OUT WHETHER THEY HAVE BIGGER BALANCE SHEETS. THEY HAVE DEBT AND OTHER SOURCES OF FINANCING TO BACK UP THESE COMMITMENTS THEY HAVE MADE. IS THAT A GOOD INVESTMENT AND WILL THAT BE REFLECTED IN WHETHER ANTHROPIC WILL BE A GOOD INVEST MENT FOR THE BROADER MARKET. MICHAEL: HANGING OVER THE IPO IS THE FACT THIS IS NOT A STOCK -- THIS IS A STOCK THAT COULD KILL PEOPLE ACCORDING TO ITS OWN EXECUTIVES. IS THERE ANYTHING BUILT INTO THE PROSPECTUS OR THE GOVERNANCE OF IT? WHEN YOU ARE A PRIVATE COMPANY YOU CAN MAKE COMMITMENTS TO THE PRESIDENT THAT YOU WILL BE SAFE AND CAREFUL, ETC. WHEN SHAREHOLDERS GET INVOLVED THEY WILL DEMAND WITH ALL THAT THEY SPENT A QUICK RETURN. HOW DO YOU BALANCE THE SAFETY PART WITH WHAT HAPPENS WHEN YOU BECOME A PUBLIC COMPANY? ANTHONY: THERE IS TALK ABOUT WHETHER THAT SHOULD INCLUDE THINGS LIKE A RESERVE TO COVER THE LIABILITY RISKS THAT ANTHROPIC AND OTHER AI LABS ARE GOING TO FACE OF THE ROGUE AGENTS CAUSE LOSSES TO THINGS LIKE FINANCIAL TRANSACTIONS OR DELETE DATA OR HACK INTO SENSITIVE INFORMATION AND STUFF LIKE THAT. PEOPLE ARE LOOKING FOR THE COMPANY TO ADDRESS THIS ISSUE HEAD-ON IN THE ROADSHOW. THE QUESTION IS WHETHER IT ACTUALLY AFFECTS THE VALUATION AND DEMAND FOR THE STOCK. I THINK IT'S AN IMPORTANT ISSUE THAT IS IMPORTANT AROUND DATA SAFETY ISSUES. IT IS NOT CLEAR IF IT WILL COME TO THE DETRIMENT OF THE HUGE VALUATION WE ARE TALKING ABOUT. THERE WILL BE A MASSIVE PART OF THE PERSPECTIVE THAT WILL TALK ABOUT RISKS. ANTHROPIC HAS TALKED ABOUT HOW SAFETY IS AN INTEGRAL PART OF THE COMPANY SINCE THEY STARTED. THE SAFETY DEBATE HAS INTENSIFIED IN THE LAST FEW WEEKS AND THAT IS INTENSIFYING NOW. IT HAS BEEN SIMMERING FOR A LONG TIME. DANI: I FIND IT AMUSING THAT SAM ROWE POINTS OUT THAT SEAWORLD ALSO HAD ORCAS MAY KILL AGAIN IN THEIR S-1. WHICH WILL BE A JOY TO SORT THROUGH. THANK YOU FOR JOINING US. ANTHONY HUGHES FROM OUR IPO TEAM. NIKE RESULTS FALL SHORT AS HIS TURNAROUND STRUGGLES TO GAIN TRACTION. DETAILS FOR YOU NEXT. THIS IS "BLOOMBERG OPEN INTEREST ." ♪ NIKE IS CUTTING JOBS AND OVERHAULING ITS BUSINESS AS TROUBLE DEEPENS. JOINING IS NOW A SENIOR RETAIL ANALYST AT BLOOMBERG INTELLIGENCE. LET'S START WITH THE RESULTS. WHAT WENT WRONG? >> CHINA SALES WERE DOWN 26% IN THE SPORTSWEAR BUSINESS CONTINUES TO PLUMMET. THOSE ARE THE BIGGEST FIXES WE NEED TO SEE AND THEY ARE NOT GOING TO HAPPEN OVERNIGHT. IT WILL TAKE MORE THAN 12 MONTHS TO RIGHT SIZE THIS BUSINESS WITH PROOF POINTS NEEDED ALONG THE WAY. MICHAEL: YOU LOOK AT WHAT THEY ARE SAYING AND I'M WONDERING HOW THEY START TO GROW THE BUSINESS AGAIN WHEN YOU ARE CUTTING JOBS AND CUTTING EXPENSES THAT CAN INCREASE MARGINS BUT IT DOES NOT BRING IN MORE BUSINESS NECESSARILY. WHAT IS THEIR STRATEGY GOING FORWARD? POONAM: THEY ARE RESTRUCTURING HOW THEY CLASSIFY THEIR DIVISIONS. THERE WILL BE JOB LOSSES. IN TERMS OF GROWING THE BUSINESS, I LOOK AT IT IN TWO PARTS. THE FIRST IS PERFORMANCE. THAT'S AN AREA NIKE HAS MADE STRIDES ON. THE PERFORMANCE BUSINESS IS UP. WE SAW STRENGTH THERE. NORTH AMERICA OF 2%. THE STRUGGLE IS AN ALMOST 50% OF THE BUSINESS WHICH IS SPORTSWEAR SOMETHING -- THINK OF THE JORDAN, CONVERSE, THE AIR FORCE, THOSE LINES ARE STRUGGLING. TO FIX THEM IS GOING TO TAKE A LOT OF NEW PRODUCT INNOVATION. IT REQUIRES THE CUSTOMER TO COME BACK TO THE FRANCHISES AND SEE SOME NEWNESS WITH THE RIGHT PRICE POINTS. THAT WORK IS GOING TO TAKE A LOT OF TIME. DANI: THANK YOU FOR JOINING US. NIKE SHARES CONTINUE TO FALL. 30 MINUTES INTO THE TRADING DAY. SEPTEMBER JOBS COMING IN WELL BELOW ESTIMATES. WE GET A READ ON THE LABOR AND MANUFACTURING MARKET WITH THE CEO OF SNAP-ON, NICK PINCHUK. ♪ >> COMPANIES ARE HOLDING ON TO THEIR PEOPLE AND THEY ARE HOLDING ON DEARLY BECAUSE IT IS SO TIGHT. IF THEY HAVE A VACANCY, IT CAN COST THEM A LOT TO REPLACE IT. THE GROSS IS DOWN A LITTLE BIT BECAUSE EVERYONE IS KEEPING THEIR EMPLOYEES RIGHT NOW. IF YOU ARE GOING TO BET AGAINST THE RETAIL SECTOR GOING INTO THE HOLIDAY SEASON, YOU ARE PROBABLY GOING TO LOSE YOUR MONEY. MIKE: THAT WAS KEVIN HASSETT SPEAKING IN THE LAST HOUR WITH US. LET'S GET A BOOTS ON THE GROUND READ ON THE STATE OF THE U.S. LABOR MARKET. JOINING US NOW IS NICK PINCHUK, CHAIRMAN AND CEO OF SNAP-ON. ALWAYS GREAT TO GET YOUR VIEW ON WHERE WE ARE. NICK: HOW'S IT GOING? MIKE: IT DEPENDS ON WHETHER YOU ARE HERE OR AT THE WHITE HOUSE. NICK: I GUESS SO. MIKE: OR ON WALL STREET. WHEN I LOOK AT THE EMPLOYMENT NUMBERS, THEY ARE PRETTY GOOD FOR MANUFACTURING THE LAST COUPLE OF MONTHS, BUT FOR MANUFACTURERS, WE DID THE ISM ANY REPORT YESTERDAY AND WE NOTICED IN THE CATEGORY OF COMMODITIES WHERE PRICES ARE UP, IT WAS LITERALLY EVERYTHING. COMMODITIES WHERE PRICES WERE DOWN, NONE. HOW ARE MANUFACTURERS DEALING WITH THIS? IT SEEMS LIKE INFLATION, DESPITE WHAT KEVIN HASSETT WAS TRYING TO TELL US, IS STILL OUT THERE FOR THE MANUFACTURING INDUSTRY. NICK: HE THINKS THERE IS INFLATION IN THE MANUFACTURING SECTOR, HE IS SMOKING SOMETHING. ONE THING THAT YOU DON'T NECESSARILY ASSOCIATE WITH MANUFACTURERS, DIESEL PRICES ARE UP 70%, STEEL PRICES, A NUMBER OF DIFFERENT RISES. BUT LET ME OFFSET THAT. DIESEL PRICES BEING UP 70% IS SOMETHING THAT IS VERY UNUSUAL, BUT RISES IN STEEL AND SO ON, 10, 12%, WE SEE THAT ALL THE TIME. MANUFACTURERS WHO HAVE BEEN GOOD AT THEIR JOBS WORK VERY HARD TO FIND OFFSETS TO THAT. FIGURE OUT HOW TO BE MORE EFFECTIVE IN USING THIS DEAL OR REDUCING OTHER COSTS. THIS IS JUST PART OF THE BUSINESS, IT'S ALWAYS SOMETHING IN TERMS OF MATERIAL. DANI: HOW ARE THEY DOING DOWN WITH HIS MOST RECENT LEG UP, SPECIFICALLY WITH DIESEL. WE SAW EUROPE ANNOUNCING THEY ARE GOING TO RELEASE ABOUT 100 BARRELS. DO MANUFACTURERS NEED TO SEE SOME SORT OF RELIEF OR IS THIS ANOTHER PAGE OF DISRUPTION IN THIS VERY LONG BOOK THAT THEY CAN GET THROUGH? NICK: IT DEPENDS ON WHO YOU ARE TALKING ABOUT. THAT IS THE ANSWER, IT DEPENDS. IF YOU ARE TALKING ABOUT MANUFACTURERS LIKE SNAP-ON, YOU HAVE TO MANAGE THE DIESEL PRICES, AND WE DON'T GIVE GUIDANCE, BUT IT IS NOT GOING TO THREATEN OUR EXISTENCE OR INTERRUPT OUR OPERATIONS OR ANYTHING LIKE THAT. IF YOU HAVE A SMALLER MANUFACTURER -- 93% OF MANUFACTURERS ARE UNDER 100 PEOPLE. THEIR MARGINS TEND TO BE LOWER, AND THEREFORE, IT EATS INTO IT. IT'S MORE OF A CHALLENGE FOR THEM. THEY NEED SOME RELIEF IN THIS SITUATION. IF YOU ARE TALKING ABOUT LARGER COMPANIES, THIS IS JUST ANOTHER PAGE IN THE LONG BOOK OF CHALLENGES. MIKE: HOW WOULD YOU DESCRIBE THE LABOR MARKET IN MANUFACTURING NOW? WE ARE GETTING 9000, 10,000 JOBS A MONTH CREATED THEIR. IS THAT NORMAL, ARE WE SEEING AN ACCELERATION? NICK: I DON'T THINK THERE IS ANYTHING OF THESE TIMES THAT I WOULD CALL NORMAL. ALTHOUGH I JUST SAID NORMAL ABOUT THE MATERIAL ACTIVITIES. THE FIRST THING IS, IT IS NOT THE ECONOMY THAT DRIVES THAT NUMBER. ECONOMICS, THE ECONOMY HAS SOMETHING TO DO WITH IT. BUT THERE ARE A NUMBER OF DIFFERENT THINGS WHICH ARE GENERATING THAT NUMBER FOR MANUFACTURERS. OVER THE LAST THREE MONTHS, ANOTHER MONTH THAT THIS HAS BEEN UP, EACH OF THOSE FOUR MONTHS, A GENERAL TREND, NICE TREND FOR THEM. THE BIG EFFECTS ARE, WHAT ARE YOUR PLANS FOR RESHORING? MOST MANUFACTURERS HAVE SEEN THE SITUATION AND WANT TO SEIZE ON IT IN AMERICA AND SAY, CAN WE GET PLANTS? THOSE PLANTS TAKE A LONG TIME TO COME TO FRUITION. IT IS NOT LIKE SELLING A STOP. YOU HAVE TO FIGURE OUT, WHAT PRODUCTS AM I GOING TO MOVE, I HAVE TO HAVE A PLAN, AND THAT I HAVE TO EXECUTE IT. TWO, YOU HAVE TO FIGURE OUT HOW TO GET THE WORKERS. THE WORKERS ARE NOT THAT EASY TO FIND. THERE ARE 522 THOUSAND MANUFACTURING JOBS RIGHT NOW THAT GO UNFILLED. THAT VARIES FROM COMPANY TO COMPANY, SO I HAVE TO MANAGE THAT TO SEE IF YOU CAN GET THEM. THE OTHER THING HANGING OVER EVERYONE'S HEAD IS STABILITY IN THE TARIFF REGIME. ALL LAST YEAR, IF YOU WANT TO RECITE THE TARIFFS WITH CHINA, FOR EXAMPLE, 150 5%, 55%, 45%, 35 PERCENT, 37.5%. WHAT AM I GOING TO DO? HOW CAN A PLAN IN THAT SITUATION? NOW WE HAVE STARTED TO SEE SOME STABILITY. YOU SEE THOSE THINGS COME TOGETHER IN DIFFERING WAYS. THE ONE THING ABOUT TARIFFS IS, CHINA AND MEXICO AND CANADA STILL DON'T HAVE A TREE DEAL, SO THEY COULD FURTHER CHANGE. SOME PEOPLE ARE STILL HOLDING BACK. WHEN YOU ARE SEEING IS NOT DRIVEN BY THE BUSINESSES, IT IS DRIVEN BY THE AMALGAMATION OF THOSE DIFFERENT CONSIDERATIONS. DANI: WHAT HAVE WE LEARNED ABOUT CHINESE MARKETED ALL OF THIS PROCESS WITH TARIFFS ON AND OFF, SOME STABILITY, IS THERE ANYTHING THAT HAS SURPRISED YOU SPECIFICALLY ABOUT THE COMPETITION WITH CHINA THAT MANUFACTURERS FACE? NICK: WOW. LOOK, I BELIEVE THIS -- JUST A MACRO STATEMENT. I THINK WE DIDN'T NEED TARIFFS EXCEPT FOR CHINA. THE REASON, AS ALEXANDER HAMILTON SAID IN 1751, THE FREE MARKETS ARE THE BEST WAY TO GO, UNFETTERED, UNLESS YOU HAVE INDIVIDUAL COUNTRIES THAT DON'T FOLLOW FREE MARKET TRENDS OR FREE-MARKET PRINCIPLES, AND THEREFORE TRY TO ADVANTAGE THEIR PEOPLE TO YOUR DISADVANTAGE. THAT IS WHAT IS HAPPENING IN CHINA. WE HAVE A FACTORY IN CHINA THAT MAKES LIFTS. WE CANNOT BUY THE STEEL IN CHINA FOR AS CHEAPLY AS SOME OF OUR CHINESE COMPETITORS CAN SELL. WHAT YOU HAVE IN CHINA IS A GOVERNMENT THAT SUBSIDIZES BOTH THE LAND AND THE BUILDINGS AND MATERIAL. CHINA ALSO HAS A GREAT FLUIDITY AROUND INTELLECTUAL PROPERTY, NOT JUST BETWEEN AMERICAN AND CHINESE COMPANIES, BUT BETWEEN CHINESE COMPANIES, SO THE BARRIERS TO ENTRY ARE PRETTY SMALL. ANYONE CAN GET INTO BUSINESS IN CHINA. THUS, 140 AUTOMOBILE MANUFACTURERS. YOU HAVE THAT HUGE COMPETITION, AND ON TOP OF IT, THEY ARE ALL SEEKING TO INCREASE THE VALUE OF THEIR COMPANIES. A LOT OF THEM ARE PRIVATE COMPANIES. THE WAY TO DO THAT IS TO DRIVE SALES, SO THEY ARE DROPPING THEIR PRICES IN THE CHINESE MARKET BELOW EVEN THE SUBSIDIZED COST. THAT HAPPENS IN A HUGE NUMBER OF INDUSTRIES. XI JINPING ACTUALLY TALKED ABOUT THIS, HOW DIFFICULT IT IS FOR THE CHINESE MARKETS. ONE THING OVERHANGING THE CHINESE MARKETS IS THE DIMINISHMENT OF THE PROFITABILITY OF THE COMPANIES BECAUSE OF THIS EFFECT THEY CALL INVOLUTION. IF YOU DON'T HAVE TARIFFS, YOU ARE UNLEASHING THAT SITUATION OF LOW SUBSIDIZED PRICES ON OTHER MARKETS. IT CANNOT BE UNFETTERED FOR ANY COUNTRY WHO THINKS MANUFACTURING IS IMPORTANT TO THEIR ONGOING PROSPERITY. AND MANUFACTURING IS IMPORTANT TO THE ONGOING PROSPERITY OF AMERICA. DANI: WE ARE OUT OF TIME. IT'S BEEN TOO LONG. DON'T BE A STRANGER. COME BACK AND SEE US SOON. NICK PINCHUK, THANK YOU FOR YOUR TIME. LET'S GET A CHECK ON MARKETS OVER ONE HOUR INTO THE TRADING DAY. WE STILL PUSH HIGHER FOR THE MARKET, NEAR THE HIGHS OF THE DAY AS THE NASDAQ IS UP 1.5% ONLY SLIGHTLY SOFTER THAN EXPECTED JOBS REPORT AND NEW BARRELS OF DIESEL AND OIL UNLEASHED ONTO THESE EUROPEAN MARKETS. MACRON ANNOUNCING THEY WOULD PUSH 100 BILLION -- MILLION BARRELS ONTO THE MARKET I'M HELPING SOME OF THE DIESEL SITUATION THAT THE WHITE HOUSE HAS BEEN PRESSING FOR. BRENT CRUDE BELOW $100 A BARREL. LET'S TAKE A LOOK AT THE OTHER MOVERS WITH NORAH MULINDA. NORAH: A NEW DEAL GIVING ONSEMI INVESTORS TO LIGHT. THE COMPANY REWORKING ITS SYNAPTICS TAKEOVER, PAYING $6 BILLION IN CASH, DOWN FROM A $7 BILLION AGREEMENT. ONSEMI SAYS THE DEAL SHOULD BOOST EARNINGS RIGHT AWAY. SHARES OF BOTH COMPANIES HIRE INTO THE GREEN THIS MORNING. WATCHING SHARES ABROAD, -- SHARES OF BROADCOM. THIS IS ALL TIED TO A I CHIPPED DEMAND. THE MONEY WOULD HELP ANTHROPIC AND OTHERS BY MORE BROADCOM HARDWARE. SHARES ARE CURRENTLY HIGHER BY 3.9%. FINALLY, FICO AND OTHER CREDIT NAMES UNDER PRESSURE THIS MORNING. WASHINGTON PUSHING FOR MORE COMPETITION IN MORTGAGES. WE ARE SEEING SHARES HIGHER BUT WE GOT REPORTING SHOWING THAT FANNIE MAE AND FREDDIE MAC COULD SOON REQUIRE LENDERS TO PULL DATA FROM JUST TWO CREDIT BUREAUS INSTEAD OF THREE. SHARES OF LICO, EQUIFAX, TRANS UNION ALL HIGHER THIS MORNING. THOSE ARE YOUR MORNING MOVERS. MIKE: THANK YOU. EDWARD JONES CEO PENNY PENNINGTON ON MANAGING A $2.5 TRILLION THROUGH A CHALLENGING MARKET. THOSE OTHER QUESTIONS WILL BE ASKING, COMING UP. THIS IS BLOOMBERG OPEN INTEREST. ♪ >> THE BOTTOM LINE IS, IF YOU GO BACK TO LAST COUPLE OF DAYS, WE HAD MASSIVE UPWARD REVISIONS TO GDP GROWTH. A LOT OF IT CAPITAL SPENDING WHICH MEANS SUPPLY-SIDE GROWTH WHICH IS DISINFLATIONARY. THEN WE GOT PC NUMBERS, IF YOU LOOK AT THE THREE MONTH MOVING AVERAGE, CORE PCE IS RUNNING AT 2%, AND TOPLINE PC IS RUNNING AT 1%, SO FOOD AND ENERGY PRICES ARE ACTUALLY HELPING NOW RATHER THAN HURTING. AGAINST THAT BACKDROP, THIS JOBS REPORT WAS JUST ABOUT AS EXPECTED. DANI: THAT WAS THE VIEW FROM THE WHITE HOUSE ON THE ECONOMY WITH KEVIN HASSETT. NOW LET'S GET THE VIEW FROM MAIN STREET. JOINING US IS PENNY PENNINGTON, CEO OF EDWARD JONES. THE FIRM SERVES OVER 9 MILLION CLIENTS AND OVERSEAS $2.5 TRILLION IN ASSETS. A LOT OF MONEY AND CLIENTS. I AM SURE THERE IS A WIDE DIVERGENCE ON HOW PEOPLE ARE FEELING. GIVEN THIS MOMENT WE ARE LIVING IN, CONCERNS ABOUT AI VOLATILITY, BOND MARKET YIELDS REACHING MULTI-DECADE HIGHS, BUT AT THE SAME TIME, STOCKS TRENDING TOWARD ALL-TIME HIGHS. ARE YOU HEARING FROM CLIENTS MORE CONFIDENT OR ANXIETY AT THIS POINT? PENNY: WE HAVE A HUNDRED THOUSAND CONVERSATIONS A DAY WITH 9 MILLION CLIENTS ACROSS THE UNITED STATES AND CANADA. THE NEWS REPORTS ARE ALWAYS THE FIRST THING THAT OUR CLIENTS WANT TO TALK TO US ABOUT BUT THEIR IMMEDIATE QUESTION IS HOW DOES THIS NEWS AFFECT ME AND MY LIFE? THEY SHARE WITH THEIR FINANCIAL ADVISOR, THEIR PRACTICE TEAM, LET ME TELL YOU WHAT IS GOING ON IN MY LIFE, LET'S TALK ABOUT OUR GOALS, THE SHORT-TERM, MEDIUM-TERM, AND LONG-TERM GOALS, AND LET'S FIGURE OUT HOW ALL OF THIS AFFECTS OUR CLIENTS. A HAPPY PATH FOR A FINANCIAL PLAN IS NOTHING GETS DISRUPTED. THE HAPPIER PATH IS WE HAVE ALL KINDS OF POSSIBILITIES FOR THE FUTURE IN A MULTI-GENERAL -- GENERATIONAL FAMILIES LIFE. BUT NOTHING EVER UNFOLD EXACTLY LIKE THAT. WHEN WE WORK HARD TO DO WITH OUR CLIENTS IS TO ENABLE THEM TO SURVIVE THE CURVEBALLS, TO DEAL WITH THE JOB LOSS. SOMETHING THAT HAPPENS WITH THEIR FAMILY THAT IS UNEXPECTED. CAREGIVING NEEDS, OR THE NEED TO CARE FOR A CHILD OR GRANDCHILD. WITH A GOOD FINANCIAL PLAN, THAT CAN BE PUT TOGETHER IN A WAY THAT RAISES THE CONFIDENCE AND THE PROBABILITY OF SUCCESS IN MEETINGS ONE'S GOALS. MIKE: YOU ARE LOOKING LONG TERM, AND THERE IS LOTS OF CONCERNED VALUATIONS ESPECIALLY IN THE TECH SECTOR. SOME THINK THAT MAYBE WE ARE GETTING CLOSE TO THE EDGE. HOW DO YOU SET UP SOMEBODY FOR LONG-TERM, NOT WORRYING ABOUT IT, WHEN YOU HAVE THAT KIND OF ENVIRONMENT? PENNY: RULES OF THE ROAD SAYS DIVERSIFY YOUR INVESTMENT PORTFOLIO WISELY. WHAT THAT MEANS IS THERE IS ALWAYS SOMETHING IN YOUR PORTFOLIO THAT YOU HATE BECAUSE IT IS NOT PERFORMING AS WELL AS SOMETHING ELSE, BUT FOMO HAS NEVER BEEN THE RIGHT INVESTMENT STRATEGY. WHAT WE DO IS WORK WITH OUR CLIENTS TO UNDERSTAND THEIR TOLERANCE FOR RISK, THEIR MEDIUM AND LONG-TERM GOALS, AND ADVISE AN INVESTMENT AND FINANCIAL PLAN THAT MATCHES THAT. THAT DOESN'T MEAN SET IT AND FORGET IT. THAT'S ANOTHER RULE OF THE ROAD. IT MEANS TAKE A LOOK AT THE PORTFOLIO ON A DYNAMIC BASIS, QUARTERLY, SEMIANNUALLY, ANNUALLY DEPENDING ON YOUR GOALS. DANI: IS A I OVEREXPOSURE A PROBLEM RIGHT NOW? THERE IS A LOT OF WEALTH BEING CREATED, STOCK CONCENTRATIONS ARE IN AI. IS THIS A MOMENT THAT MANY PEOPLE NEED TO RETHINK JUST HOW MUCH OF THAT THEME THEY HOLD REVOLUTIONARY OR NOT? PENNY: IN ANY MOMENT, THERE IS THE FEAR OF MISSING OUT FROM THOSE HIGHFLYING INVESTMENTS AND THE JOY OF MISSING OUT WHEN THOSE INVESTMENTS OR SECTORS CHANGE THEIR SITUATION. WE BELIEVE THAT INVESTMENT IN THIS SECTOR IS VERY IMPORTANT. IN FACT, THE RIPPLE EFFECT INTO ALL SECTORS OF AI AND AI PRODUCTIVITY IS A REAL THING. BUT WE DON'T WANT OUR CLIENTS TO BE OVER INVESTED IN SECTORS SUCH THAT WHEN THEY TURN THEY'LL BE DISAPPOINTED. MIKE: YOU MENTIONED YOU WANT TO MEET THEIR RISK TOLERANCE. HAS RISK TOLERANCE CHANGED OVER THE LAST FEW YEARS WITH ALL THE HEADLINES, SOCIAL MEDIA TWEETS WE GET? PENNY: SUCH A GREAT POINT. WE KNOW THAT GENERALLY SHOULD ONLY RISK TOLERANCE IS AFFECTED BY THE SYSTEMIC OCCURRENCES OF THAT GENERATION. COVID AFFECTED RISK TOLERANCE, THE GREAT FINANCIAL CRISIS AFFECTED RISK TOLERANCE. ENABLE DEVICE INVESTMENT PORTFOLIO, HAVING CASH ON HAND TO TAKE CARE OF SIX MONTHS OF BILLS OR A EURO BILLS, WHATEVER YOUR RISK TOLERANCE IS FOR THAT, WHILE ENABLING USE OF DRY POWDER TO INVEST IN THINGS WHEN THEY ARE AT THEIR LOWS. REMEMBER THAT ON RULE OF THE ROAD,BUY LOW, SELL HIGH. THAT'S A GOOD INVESTMENT STRATEGY. ANOTHER THING THAT WE ARE SEEING THAT'S INTERESTING IS PEOPLE ARE SPENDING MORE TODAY THAN THEY WERE SYSTEMICALLY AND ON AVERAGE 10 YEARS AGO. PEOPLE ARE SPENDING OUT OF THEIR PORTFOLIOS BECAUSE THEIR PORTFOLIO VALUES HAVE GONE UP. AN INTERESTING PHENOMENON THAT WE SEE RIGHT NOW, THOSE THAT HAVE THE MONEY ARE GIVING WHILE LIVING. THEY WANT THE JOY OF SEEING THEIR KIDS AND GRANDKIDS ENJOY THE FRUITS OF THEIR LABOR AND MOVE THAT WILL TRANSITION WHILE THEY ARE ALIVE TO THE NEXT GENERATION. DANI: YOUR INDUSTRY ALSO FEELS LIKE IT IS GOING TO TRANSITION, A LOT OF CONSOLIDATION, LPL BUYS , PRIVATE EQUITY FUNDS ARE SNIFFING AROUND WITH WEALTH ENHANCEMENT. ARE YOU SHOPPING AROUND, WOULD YOU LOOK TO GROW THE ACQUISITION? PENNY: THE WAY THAT WE ARE GROWING IS BY INVESTMENT INTO NEW CAPABILITIES. WE HAVE A VERY DYNAMIC ORGANIZATION CALLED EDWARD JONES VENTURES. IT IS AN IN-HOUSE VENTURE CAPITAL COMPANY, BUT IT IS DIFFERENT FROM OTHERS. WE ARE NOT INVESTING SIMPLY FOR A RETURN FOR OUR COMPANY. WHAT WE DO IS SOURCE THE PROBLEMS THAT OUR CLIENTS ARE HAVING, THAT OUR PRACTICE TEAMS ARE SEEING, AND WE WORK WITH FOUNDERS AND INVENTORS TO DEVELOP THOSE OFTEN AI DRIVEN PLATFORMS. DANI: IS THAT, WE ONLY WANT ORGANIC GROWTH, WE DON'T WANT M&A? IF THAT IS THE CASE, WHY ARE YOU DIFFERENT FROM YOUR COMPETITORS? PENNY: I'M A ORGANIC GROWTH HAS HISTORICALLY COME THROUGH ENSURING THAT OUR FINANCIAL ADVISORS ARE WHERE OUR CLIENTS ARE. WE WILL CONTINUE TO GROW THE NUMBER OF FINANCIAL ADVISORS THAT PROVIDE HUMAN CENTERED FINANCIAL ADVICE. OUR LAST ACQUISITION WAS A PART OF A COMPANY CALLED THE TEXAS. WHAT WE DID IS BRING IN-HOUSE THE ABILITY TO DYNAMICALLY REBALANCE PORTFOLIOS IN A TAX ON WHERE WAY FOR MORE PEOPLE, NOT JUST FOR HIGH NET WORTH AT ULTRA HIGH NET WORTH PEOPLE, BUT FOR MORE MAINSTREAM INVESTORS, AS WELL, TO MAKE SURE THOSE FOLDERS ARE TAX AWARE. DANI: THANK YOU FOR JOINING. PENNY PENNINGTON, CEO OF EDWARD JONES. COMING UP, BRAZIL HAS TWO THE POLLS WITH THE CANDIDATES IN A RAZOR TIGHT RACE. THIS IS "BLOOMBERG OPEN INTEREST ." ♪ MIKE: BRAZIL'S PRESIDENTIAL RACE REMAINS EXTREMELY CLOSE AND JUST DO IT BEFORE SUNDAY'S FIRST ROUND VOTE. PRESIDENT LULA DA SILVA AND CLAUDIA BOLSONARO ARE LOCKED IN A TIGHT CONTEST FOR THE RUNOFF THIS MONTH LIKELY IF NO CANDIDATE WINS A MAJORITY. JOINING US FROM SAO PAULO IS BLOOMBERG EDITOR TRAVIS MULLIGAN. THE BOLSONARO FAMILY COMES INTO THIS ELECTION WITH SHALL WE SAY SOME HISTORY, AND YET, FOR LOVE YOU KNOW, THE SON OF THE FORMER PRESIDENT, IS MAKING IT VERY CLOSE. >> THAT'S RIGHT. AS YOU MENTION, THE HISTORY OF THE BOLSONARO FAMILY, HIS FATHER WAS PRESIDENT FROM 2018 TO 2022 AND LEFT A VERY NARROW ELECTION TO PRESIDENT LULA DA SILVA IN THE 2022 RACE. AFTER THAT HE WAS CONVICTED OF PLOTTING A COUP AND BANNED FROM RUNNING FOR REELECTION. DANI: I THINK WE HAVE LOST YOUR SOUND. WE WILL TRY TO GET YOU BACK UP TO SPEED. WE ARE LOOKING FOR BRAZIL ELECTIONS. THIS IS SOMETHING REBECCA PATTERSON HAD MENTIONED. BRAZIL'S ELECTION IS INTERESTING BECAUSE IT IS AN ELECTION THAT ALSO HAS TO DO WITH THEIR FISCAL SITUATION, AND WE SEE THROUGHOUT THE WORLD, BRAZIL, YOU HAVE BEEN MENTIONING, FRANCE FEELS THE PRESSURE AND THEY HAVE AN INABILITY OF THE GOVERNMENT WHENEVER THEY PUT AUSTERE MEASURES INCOME YOU GET A PUBLIC PUSHBACK. SO WHAT IS THE SOLUTION? MIKE: THAT IS ONE OF THE REASONS WHY THIS RACE IS SO CLOSE. LAST FALL I SAW IS THAT PRESIDENT GUATEMALA IS AHEAD BUT THEY ARE SOMETHING LIKE EIGHT CANDIDATES, SO THERE WILL BE A RUNOFF. THERE COULD BE EVEN MORE SHARP ISSUES. DANI: LET'S GET BACK TO TRAVIS WALDRON. PLEASE FINISH OUR THOUGHTS. TRAVIS: I WAS SAYING AFTER HIS FATHER WAS CONVICTED OF PLOTTING A COUP FOLLOWING THE 2022 ELECTION, JAIR BOLSONARO CHOSE HIS SON AS HIS POLITICAL SUCCESS. NOW HE IS A POSITION TO HAVE A CHANCE TO WIN THE ELECTION ALTHOUGH IT IS VERY TIGHT, AS THE POLLS SHOW. DANI: HOW DO INVESTORS, MARKETS SEE THIS RACE AND THE POTENTIAL OUTCOME FOR THE FISCAL SITUATION IN BRAZIL? TRAVIS: THERE'S A LOT OF ATTENTION ON BRAZIL'S FISCAL SITUATION BECAUSE IT HAS A MIX OF MOUNTING FISCAL DEFICITS, RISING DEBT, HIGH INTEREST RATES , AS THE CENTRAL BANK TRIES TO TAMP DOWN INFLATION. NEITHER CANDIDATE HAS OFFERED DETAILED PLAN FOR HOW THEY WOULD APPROACH A PROBLEM, BUT INVESTORS HAVE LARGELY LINED UP BEHIND BOLSONARO. WHAT THEY WILL LOOK FOR IN SUNDAY'S VOTE, BECAUSE WE DON'T EXPECT AN OUTRIGHT WINNER, IS THE MARGIN BETWEEN LULA AND BOLSONARO. RIGHT NOW THE POLLS SUGGEST THAT LULA IS RUNNING AHEAD IN THE FIRST ROUND. WE ARE LOOKING FOR THE NEIGHBORHOOD OF FOUR POINTS. A LOT OF INVESTORS ARE SIGNALING THAT WOULD BE A GOOD SIGN. IF IT IS TWO OR THREE, THE RUNOFF RACE COULD BE VERY TIGHT. IF IT IS TIED, SMALLER THAN THAT, THEY WERE VIEWED AS A GOOD SIGN FOR BOLSONARO GOING INTO THE RUNOFF. DANI: THANK YOU FOR YOUR TIME, TRAVIS WALDRON. I JUST WANT TO POINT OUT, FRONT AND YIELDS ARE BACK UP. THAT JOBS DUE TO NOT DOING ENOUGH TO DRAG US BACK DOWN. MIKE: OIL PRICES BACK ABOVE 104 BRENT EVEN THOUGH THEY ARE PUTTING ALL OF THE OIL INTO THE MARKET IN EUROPE. DANI: THANK YOU SO MUCH FOR JOINING THIS WEEK. IT'S BEEN A PLEASURE TO HAVE YOU. COMING UP NEXT, THE ACTIVATE CO ON THE PARAMOUNT WARNER BROS. DEAL AND COMMODITY BROKER CARLY GARNER JOINS THE SHOW. .