Bloomberg Surveillance TV: November 4th, 2026

0:00Julian Emanuel: If you invest, lead a business, or allocate capital, one-sided views aren't enough. Join me, Brad Rogoff, the Global Head of Research at Barclays, on the Flipside podcast. Each month, I go head-to-head with one of our expert analysts on my global team to debate the economic and market issues that matter most. From inflation and AI to equity and credit trends, each debate helps you see what headlines might miss. Find the Flipside wherever you get your podcasts.

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1:29Daleep Singh: Bloomberg Audio Studios. Podcasts. Radio. News.

1:38Julian Emanuel: This is the Bloomberg Surveillance Podcast. I'm Jonathan Farrow, along with Lisa Abramowitz and Anne-Marie 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 6 to 9 a.m. 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.

2:03Daleep Singh: Julian Emanuel of Evercore writing, Divided government increases the odds of both sides moving to the center, which is what the USA is, a centrist democracy. Julian joins us now for more. Julian, before we get to implications for 2028, before we get into sort of the message that it sends to the broader world, I'm curious why you think equities are up this morning, given some of the prognostications about what a blue sweep would actually mean.

2:27Julian Emanuel: This is not a blue sweep. This is a sweep for affordability. OK, that's what the American people voted for. It's accountability for the affordability crisis. And if you knew nothing more than every politician in this country knows that job one is bringing down the cost of living. And if we're going to bring down the cost of living, full stop, that's bullish for equities.

2:54Daleep Singh: So explain that, because some people might say that leads to higher taxes, that leads to restrictions on data centers and things of that nature that have been boosting costs in certain areas and other measures that might not be as business friendly.

3:06Julian Emanuel: Well, and no question those are potential effects. But, you know, frankly, the glass half full interpretation of this idea that data center build out could slow down is, in fact, you will relieve some of the inflation pressures associated with that build out. And we were talking about this earlier, is that the jurisdictions that are likely to put restrictions on capitalism has an incredible way of being uniquely flexible. They'll find new homes and new places to build data centers and to create jobs and will adapt.

3:47Daleep Singh: By the time I went to bed last night and then woke up, futures had turned around. Why? Is it just because we're moving ahead with the clearing event? Or you think actually Wall Street likes the idea of Democrats controlling the House and the Senate?

3:59Julian Emanuel: So I think in a lot of ways, the other message is what we call in the options market sort of decreasing the tail risks. OK, we have been through one of the most brutal, invective-laced campaigns that any of us will ever remember. That voice is silence. But on the other hand, the wave was big enough on the Democratic side that the marginal people who had the microphone on the very far left called them socialists, called them whatever. This is a centrist democracy. And this majority that the Democrats will have in the House and the Senate is going to manifest itself in the concepts of a centrist democracy.

4:47Daleep Singh: Well, what do you think actually can get done? Trump is saying he can veto everything. He also said a number of post-election commentary and interviews that he's willing to even work with Democrats.

4:57Julian Emanuel: So there's no question about the fact that, you know, obviously that first meme we saw was the new red hat that says veto. But I would liken it to this, right? Once upon a time in America, there was a deeply rightward president named Ronald Reagan with the deeply leftward Speaker of the House, Tip O 'Neill, and a Fed chair, Paul Volcker, committed to beating inflation. We have the exact same opportunity this morning with Donald Trump, Hakeem Jeffries, and Kevin Walsh.

5:31Daleep Singh: Do you think that it makes Kevin Walsh more amenable to the idea of being more hawkish and going against the president?

5:37Julian Emanuel: I think he's going to do what he has said he's going to do. Every time he speaks, inflation is job one. The understanding is that the AI revolution will help the inflation in the medium and the long term. But in the short term, you've got to get back towards that 2 % target. And in that respect, yeah, this is more ammunition to get there.

6:01Daleep Singh: So do you think this is more data for you that the Fed is going to be prepared to hike in December?

6:07Julian Emanuel: We thought they would all along. We also think there's likely one in the first quarter. But again, if the data actually moderates, then perhaps it won't be. Those are our base cases. And again, remember, a lot of market pricing is an expectations game. The market expects this, and it's okay. This is less uncertainty.

6:30Daleep Singh: I remember when people used to look for stocks of companies that were run by people who are closely aligned to President Trump. There seems to be, on the margins, a bit of a reversal of that. If you take a look, for example, at Tesla and SpaceX, both getting really beaten up. Tesla shares down 4.3 % this morning. SpaceX down more than 4.4%. Do you think that this has legs? Do you think that this is something that will come to fruition where people who got beneficial treatment under President Trump are now more at risk, potentially, at a time of Democratic leadership?

6:58Julian Emanuel: Well, there's certainly an open question about that. But what I would say is that the margin is the political season has ended. We can worry about 2028. I was going to say, it just started. We can worry about 2028 in six months. But as if you are one of the premier capitalists in the world, you can get back to the business of innovating, creating jobs and creating wealth. Stay with us. More Bloomberg Surveillance coming up after this.

7:43Julian Emanuel: I go head to head with one of our expert analysts on my global team to debate the economic and market issues that matter most. From inflation and AI to equity and credit trends, each debate helps you see what headlines might miss. Find the flip side wherever you get your podcasts.

8:01Daleep Singh: This is the Bloomberg Tech Minute brought to you by Chachi PT. I'm Carol Masser. Millions of Americans are taking peptides, short strings of amino acids that can act as biological signals for cells. Bloomberg's Anika Inampudi reports peptides may be exploring their next frontier, the brain. People are taking peptides for mental clarity and cognitive benefits, and to gain a competitive edge or stave off the effects of aging. Both insulin and semaglutide are approved by the U.S. Food and Drug Administration. Because importing or selling unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them.

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9:05Daleep Singh: Under surveillance this morning, a Texas bluestep.

9:09Julian Emanuel: This is a win the size of Texas. They played dirty because they were desperate. But we never lost hope.

9:18Daleep Singh: This is our one fight. And tonight, we won. Tonight, Texas, we answered. And we did not whisper. Texas will bow down to no one. Here's the latest. Governor-elect Gina Hinojosa becoming the first Democrat to lead Texas in decades. Senate-elect James Tellarico flipping a seat, ending a nearly 40-year drought for Democrats. Joining us now, Libby Cantrell of PIMCO here in studio. Good morning. Good morning. So, what's your reaction to last night? I mean, we were telling clients that sort of an extreme case would be 2006. That was when, of course, Democrats flipped both the House and the Senate, sort of on the heels of an unpopular president, an unpopular war, the war in Iraq at that point.

10:02Daleep Singh: This looks much more like 1974. This is a, obviously, a blowout, a blue NAMI, a plutonium, however you want to, sorry, however you want to describe it. A blueback. Oh, I like that. So this is, I mean, this clearly is just a massive referendum. And it's on all of the issues that we had been talking about, right? Affordability, the two G's, the two H's, gas, groceries, healthcare, housing. I'd also add grift in there, the three G's and the two H's. And then also some real local issues that obviously galvanized some specific electorates, Hispanics, right? This is sort of this idea that in America, you know, we date politicians, we do not marry them.

10:39Daleep Singh: And this was on display, that Hispanic kind of bounce back from 2024, very significant. The sort of the some people are calling the backlash, black Americans very much turning out, voting against the Voting Rights Act decision in the Supreme Court. So this is, you know, again, a massive referendum against the party in power, obviously. If it is like 1974, we should expect that this new class is going to be a more moderate, which is, I think, something people, maybe the markets don't really understand. A bigger Democratic majority means a more moderate majority because they won by definition in places that, of course, that Trump has won.

11:17Daleep Singh: But also, if it is like the 1970s, we could see then Congress at some point pass some constraints on the president. That's what happened after Watergate. It's what happened after Nixon. I think you could see that maybe not in the next two years, but certainly in 2029, depending on obviously what happens to the White House. It's a great point. You can't be super left and win Iowa or super left and win South Carolina. Maine, an absolute repudiation on tariffs when it comes to the fact that Susan Collins lost her seat. So what does the next two months look like for you? What can they try to get done in the lame duck before they have this very big blue blob sitting next to them on the other side of Pennsylvania?

11:55Daleep Singh: Yeah, I mean, I think it's a great question. You know, the one big issue, I think, for the markets, for specific sectors, is permitting reform. This has been a little bit of the unicorn on Capitol Hill. People like to talk about it, but you actually haven't seen it. I think you could actually see permitting reform pass in the lame duck. This is something that has bipartisan support in the House to a degree, but also bipartisan support in the Senate. So I think you're going to see Republicans really trying to lean into that past that. I think Democrats will be fine clearing the decks on that issue as well.

12:28Daleep Singh: There's some talk about a capital formation bill getting some traction, obviously funding, you know, the NDAA. So there's some blocking and tackling that Republicans and Democrats have to do. It will be a busy lame duck, though, most likely. It's hard to predict lame ducks. Well, it will most likely because Republicans obviously want to get as much done as they can when they control both chambers of Congress. On this point, someone said to me yesterday, there's going to be a lot of pressure on someone like Clarence Thomas to step down because they will only have two months to put in a conservative judge.

12:58Daleep Singh: Can you see that happening? Yeah, I mean, it's a great point. I'm not sure I can see that happening. And you know this. Remember that Ohio was a special seat. So Sherrod Brown is coming in not in January. He's coming in in mid-December. So they would have to do this. I mean, this would have to be announced today, basically. And then they would have to start the nominating cycle. So, I mean, it's certainly possible. Honestly, what's I mean, what politics these days difficult exactly to have total clairvoyance. But I still I think it's probably probably unlikely. But one point that you are touching on is what does this mean for Congress come twenty twenty nine?

13:34Daleep Singh: You know, harder for Republicans to take back both chambers with such a huge majority. I mean, if Democrats win 50 seats, I mean, we'll see some of these things haven't been called. But if they win something close to that, that's going to be a very healthy cushion for them, even if they do lose seats in 2028, to keep the house.

13:54Julian Emanuel: The bond market was one area going into this. There was no real consensus on the blue sweep. There would yield sell off because of more fiscal, so on and so forth. So what do you think it means under the current setup now in terms of budget, reconciliation, and then also the debt ceiling as well?

14:11Daleep Singh: Yeah, so I don't think, to Anne-Marie's question about what could happen in the LAMDEC, I don't think that we're going to see a reconciliation bill that raises the debt ceiling. I think there are definitely some Republicans who would like to see that. I just don't think there's unanimity. There's probably not floor time and what have you. I mean, we'll see. So if that doesn't happen, then that obviously gets kicked into a Democratic Congress. And that gives both Democrats in the House and the Senate much more leverage in terms of negotiating with the president. You know, I think what we've been telling clients is that, you know, spending is probably going to go up regardless of who won.

14:44Daleep Singh: You know, Republicans would have just allocated more spending to defense. Democrats are going to want to spend on both defense and on health care. That's going to be, I think, their big talking point. They're going to want to reinstate those Obamacare subsidies, try to reinstate some of those Medicaid cuts. So I think you're going to see just more spending. But I'm not sure from a degree perspective it's going to be all that much more. I also think that some of the action in the yields has been maybe a little bit pricing, a little bit slower growth with this potentially slowdown in the AI. So you think that that's it more than any kind of fiscal constraint?

15:13Daleep Singh: I mean, it's hard. Yeah, of course, you know, the traders, you know, A-list is active sort of, you know, going into a midterm election at PIMCO. You know, I think that it was sort of a combination of those two. Some, you know, kind of worry about a slowdown and then maybe less of a referendum on that kind of on the fiscal.

15:31Julian Emanuel: Stay with us. More Bloomberg Surveillance coming up after this.

16:01Daleep Singh: off the effects of aging. Both insulin and semaglutide are approved by the U.S. Food and Drug Administration. Because importing or selling unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them. Unapproved peptides, which are marketed as research chemicals, have been circulating in what's become a billion-dollar gray market amid the rise of do-it-yourself medicine as people increasingly turn to social media or artificial intelligence for medical help. That's the Bloomberg Tech Minute brought to you by ChachiPT.

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17:13Daleep Singh: PGM Vice Chair Dalib Singh joins us now for more. Dalib, great to see you. I just would love to get your sense from a bond space what your reaction to last night was.

17:24Libby Cantrill: Well, I know we're getting a knee-jerk reaction to markets that's positive. Let's see how the week unfolds. But I mean, if I try to explain what markets are doing right now in reaction to the election, I would say markets aren't just pricing cash flows. Sometimes they price a country's capacity to check itself, to course correct, to pull back from the extremes. And we'll have to parse the election data, but it seems to me that voters did choose moderation. And maybe it's a stretch, but I would say markets right now, at this moment, they're pricing in a reduction of risk premium.

17:58Daleep Singh: If that's the case, Dalif, why is the dollar losing value?

18:03Libby Cantrill: Well, I think that's a function of the yield move. I think it's a reflexive and lagged response to the yield move in the front end and also the back end. And And let's see as the week unfolds. But I do think, contrary to most expectations of what would happen if there was a Democratic sweep, there is, I think, at least some encouragement that the country is proving that the checks and balances in this country are still there.

18:30Julian Emanuel: To the extent that the election was to some extent about affordability, do you think the Democrats will actually be successful in that?

18:36Libby Cantrill: And is that also playing into bond yields going lower? I mean, no, I think we have to be sober about what's possible. This is a break on presidential control. It's not two hands on the policy steering wheel. There'll definitely be a push to try to bring the war in Iran to a conclusion. I think it'll be harder for the president to ratchet up his tariffs. And there may be some effort to rein in fiscal spending. But overall, the cost of living is going to be the Fed's job. And so the question is whether with the president's grip on the country being loosened and voters clearly saying the cost of living was the number one issue in this election.

19:17Libby Cantrill: Does Kevin Warsh and the Fed read that signal and do their job, fulfill the dual mandate? Our view is yes. We're expecting another 100 basis points of rate hikes over the next year to 5 percent.

19:27Daleep Singh: Wow. So you think December they certainly move. At the same time, though, if this is a repudiation on Trump and potentially he reads the rooms in sort of affordability when it comes to gasoline prices, diesel prices, the tariffs, if he starts unwinding some of those policies, doesn't that make the Fed's job easier to not immediately hike interest rates?

19:48Libby Cantrill: Well, the question is, what is the president's reaction function? Is he going to be a more conciliatory president or a more combative one? I mean, look, we've got 50 years of history to make that judgment. I expect he's going to double down in terms of foreign policy aggression. I don't think he can allow his legacy to be an endless war in Iran. Therefore, I think he will escalate. That is going to push Brent prices, refined product prices higher, make the Fed's job harder. And similarly on tariffs, you know, I think if he wants to continue to remake the global trade system in his image, we're probably going to see the average effective tariff rate rise back towards the mid-teens from the low single digits.

20:33Libby Cantrill: And so those are both inflationary pressures that should prompt the Fed to act more aggressively, not less.

20:37Daleep Singh: Dalit, when you say 100 basis points for the Fed in terms of hiking, do you still think December is 25? Or do you think after this that the Fed actually goes maybe 50 basis points?

20:48Libby Cantrill: Well, I think they've decided on a course of gradualism. And so I think what they have in mind is a 25 basis point hike per quarter. Now, that's a judgment that assumes that the costs of waiting are low and that the information value is high. That might be proven right. There's going to be a lot of new information that unfolds between now and December. But I think they're on a course for 25 bps per quarter. And so we end up next year, the end of next year, at a 5 percent policy rate.

21:17Daleep Singh: Dalib, do you think that ultimately the fact that the Democrats swept the House and the Senate gives more freedom to Kevin Warsh to potentially defy the president's wishes to at least slow down the pace of hiking rates?

21:32Libby Cantrill: Well, yeah, I do. I think the election result means the president has less leverage on Congress, on the country, and on the Fed. And I think the message from the election is that voters are angry about the rising cost of living. You put those two thoughts together, and the Fed is uniquely positioned to do something about it. And so I think all else equal, you should raise your expectation of the amount of tightening the Fed will deliver.

21:59Daleep Singh: Are you going hand over fist into long-term bonds, U.S. treasuries? Because ultimately, if the Fed is going to hike rates by 100 basis points and you don't have as much enthusiasm behind AI, we're talking about a slower growth rate in the United States.

22:15Libby Cantrill: Yeah, I actually agree with that logic. I mean, data centers were on the ballot. Data centers lost. There were more than 40 local ballot measures across, I think, 10 states. I don't think we have the results in all of them, but so far it looks like the overwhelming majority of those ballot measures resulted in greater restrictions. And so I think the build-out is still going to happen. It's going to be slower. It's going to be more expensive. Data centers will have to sweeten the deal with communities, pay their own way on water and power, share the upside with towns that host them, make direct payments for schools, roads, broadband, remove the tax breaks.

22:54Libby Cantrill: and so that's going to reduce the amount of ai capex that supports growth next year and that should support the long end of the curve there's a deeper takeaway that we have to grapple with in markets though lisa which is that if data centers are a proxy for ai was this a message from voters that they don't want to concentrate power in the hands of a few tech bros you know they don't want to be the pet of an alien mind that could take away jobs raise prices risk our extinction i'm I'm stretching the critique here, but Americans clearly don't like AI. That has an implication for growth. It has an implication for the long end of the curve.

23:28Libby Cantrill: And how do you see this playing out in credit spreads? Will this actually help credit spreads in the compute space? And what does it do for the rest of the market in credit? Yeah, it could be credit positive for hyperscaler credit. Because if you have a slower but longer AI capex cycle, because the public sector is pacing the frontier, that allows the credit market to absorb the amount of issuance with less difficulty. And while it may not be an equity positive, I can certainly see it benefiting and tightening the credits of those hyperscalers.

23:58Daleep Singh: On the flip side, Dalip, I wonder how much, if we do get a slowdown in growth and a repudiation of the data center trade and the AI trade more generally, how much does that take away some of the exceptionalism that the U.S. was treated with from the rest of the world?

24:13Libby Cantrill: Yeah, so the growth and the productivity story in the U.S. has certainly attracted a lot of capital. It's what's pushed up yields, pushed up the dollar for most of the year. But look, I mean, those positives need to be weighed against the risks of an uncontrolled race to the frontier. You know, this prisoner's dilemma that we've been talking about for months now, in which the frontier labs don't have the incentive to self-regulate in the best interest of humanity and therefore, you know, the risks of a catastrophe at the frontier are larger. I think we're now, this is actually a healthy moderation, a balance between those two risks.

24:50Libby Cantrill: And I think in the end, if it leads to a slower but longer AI capex cycle, that's a positive for dollar assets.

24:56Daleep Singh: I said I wasn't going to mention it, but Dahlib, should they get rid of the 20-year treasury?

25:02Libby Cantrill: You know, I am not a fan of shrinking our duration footprint and raising our rollover risk at the start of a Fed tightening cycle when interest expense already sits at 20 percent of federal revenues. Right. I think it would only increase our term premium if the Treasury becomes a less regular and a less predictable issuer. You know, my bottom line is debt management is not a cure for our fiscal illness. So scrapping the 20 years a gimmick.

25:28Julian Emanuel: This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, and geopolitics. You can watch the show live on Bloomberg TV, weekday mornings from 6am to 9am 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.

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