Bloomberg Surveillance TV: November 5th, 2026

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1:43Manish Kabra: This is the Bloomberg Surveillance Podcast. I'm Jonathan Farrow, along with Lisa Abramowitz and Anne-Marie Haudern. 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.

2:08George Pollack: We begin this hour with stocks holding steady following a post-midterm rally. Manish Kabra of Sokja maintaining a year-end S &P 500 target of 8 ,000, writing, midterms have historically been bullish with one scenario standing out. Under a Republican president and divided government, the S &P 500 was positive six months later in all nine cases. Manish joins us in studio today. Great to see you. Thank you for being here.

2:32Manish Kabra: Pleasure.

2:32George Pollack: So let's start with that. How much can you lean into history given how historic this moment really is?

2:38Manish Kabra: Yeah, I think you can lean on the history a bit too much this time. And you try to see what really releases pressure for markets is nine out of nine times equities up three months, six months, 12 months post this kind of gridlock backdrop. It's only because bond yields come down. As an eight out of ten times historically have seen post-elections bond yields coming down. And that I think has marked a literally end of derating phase of S &P 500. As we all know S &P has gone from 24 times to 18 times. The moment we get the bond market defining the pace of the speed of the bull market, that takes a breather and that really gives a lot of ammunition for equity guys to get into it.

3:22George Pollack: Let's unpack this. And before we get to equities and the rotation that we're seeing underneath, are you saying that the yield surge that we saw in the lead up to the election had more to do with a question around credibility and policy certainty in the United States more than economic data coming in hot, the war in Iran or other inflationary pressures?

3:41Manish Kabra: Alan, the one sole driver is the oil price. And you watch the sensitivity of two-year bonds, 10-year bonds to oil prices, all-time high, record highs. And the pressure yesterday for equity bulls like me who have really enjoyed it yesterday has been because we saw in total 15 % drop in oil prices. We have seen 35 % drop in crack spreads. This is what market discussed for last three months. Here's the product price, here's the oil price. And now we have the product prices coming down. the refining margins coming down. So all of that, I think, in total gives me conviction. We have seen cyclical peak in bond yields.

4:16Manish Kabra: And if we have seen cyclical peak in bond yield, I can comfortably say we have seen end of the derating phase of the S &P.

4:23George Pollack: Well, if you're saying that so much of this has to do with the drop in oil prices, potentially then this means that inflation could come down. Is the election in that sense helping the Fed? Is it doing some of the work for Kevin Warsh?

4:36Manish Kabra: I believe so. And we try to see a lot of points. Where's the second order impact of inflation? Is it there in wages? Is it different parts of the economy? And different way you try to switch to the inflation, you find peak inflation signals would happen in Q1. And that's where I would say peak hawkishness signal for the markets happens in Q1. So I think getting oil prices down has been a big relief, not for the U.S., but I would say broadly global stocks.

5:03George Pollack: How do you position, though, if oil prices drop some 9 % in one day? At the same time, we actually don't know the president's plans, and he might be doubling down, and we could see a lot more volatility.

5:13Manish Kabra: Yeah. As in, this is where I would bring everything around the world is K-shaped. You know, you watch, it's K-consumer, K-capex, K-China, you know, Chinese exports versus Chinese imports. And when you have everything K-shaped, Fed policies are never K-shaped. You know, central bank policy is one rate for the whole economy. And that, I think, when I watch the lower end of the K-shape, the weakest balance sheets today is with sovereigns. And I think it's the sovereign that's giving me conviction. And the break-even point for bond yields has to be much lower for the lower part of the K.

5:46George Pollack: There's a K-shape tech trade right now. And that K seems to be really benefiting hyperscalers at the pain of what we see in semis. Semis really took it on the chin yesterday, continuing today. Do you think this has legs or do you think this is overdone?

6:00Manish Kabra: and then one strong conviction i had for two years now is by snp excluding hyperscalers and it has worked out really well and the whole idea behind this is earnings or for markets eps has not been a strong signal versus where the cds threads are so what cds not eps and watching cds of every hyperscaler they have accelerated so if you have that kind of backdrop the mindset these companies still have to borrow and we have seen a couple of hyperscalers seeing negative you know changes on the credit rating outlook, I think that keeps pressure on the valuations for hyperscalers. So I'm not, I think it's still too early to get into hyperscalers trade.

6:37George Pollack: Would you get into semis? Because maybe the fear of regulating data centers into obsolescence is a bit overblown.

6:46Manish Kabra: I think data centers have become, for every company, a bottom-up approach. And for every company watching which state, which area, where do we want to go out and invest, you know, that itself makes it the whole, you know, the build-out phase of the AI very micro, very bottom up at this stage. So, as in, when would I go out and say we should absolutely buy every semis? I would say that would be your last Fed hike signal, which for us is in March. So, I think that's the timing. It's more about timing than saying this is end of, you know, the AI trade.

7:17George Pollack: The broadening out we've seen, not just in the U.S. and non-tech stocks, but also around the world. The DAX yesterday had its best day going back to April, the stock 600, the best day since June. Do you think that this has legs, that this broadening out outside of the United States is something that you can lean into?

7:34Manish Kabra: And then what I like is still equal weight S &P. It's one of the places where you try to see how much consumer got depressed in performance in U.S. stocks. You watch how many industrials that did not have major participation this year. You watch where the utility sector is, you know, fully derated last six months. And then I find if I have equal weight S &P to invest in, I'm still excited about that. And that's an outperforming majority of the global markets.

8:00George Pollack: Do you think that international investors are more willing to invest in the United States right now after the election?

8:06Manish Kabra: Hit and miss. So this is a very subjective view around the world. And I find absolute place where the more experienced someone has in this market, they're trying to stay away from U.S. stocks. And that's the idea of, and that's not just now, but ever since we got the idea of NVIDIA creating circular financing, that created various investors to pull back from U.S. So international is a place where I find the conviction is very split.

8:40George Pollack: But why do you say people with a lot of experience are pulling back from the United States?

8:44Manish Kabra: It's the fear, the financing need. And when I try to see the whole AI ecosystem, so there are three big buckets. There's a build AI phase, there's a sell AI phase, and then there's the use AI phase. So at the moment, we have not seen the escape velocity where all three buckets perform together. Market is only choosing either I'm buying build AI or I'm buying sell AI monetizers, or I'm looking for productivity, the use AI cases. we haven't reached to a point where we find escape velocity. I think, you know, as in what's going to drive that, and that was my statement at the start, the bond market is defining the speed of the bull market.

9:20Manish Kabra: And the moment you give me 4 % yield today on 10-year bonds, I think we reach that escape velocity. That's your bull case of S &P 10 ,000, but we need 4 % yield to go there. Stay with us. More Bloomberg Surveillance coming up after this.

9:38Dr. Stephen Miran: lead a business, or allocate capital, one-sided views aren't enough.

9:43George Pollack: 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. With ChatGPT, you can do more than get answers. You can get things done. When you're running a business and looking to expand, you need a clear view of the landscape before making any decisions. ChatGPT can help you prepare.

10:20George Pollack: Connect your Google Drive, point to relevant files and reports, and ask Chat to research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team. Growing a business is ambitious, and ChatGPT can help you do it with confidence. Get started at ChatGPT.com.

10:49George Pollack: George Pollack of Signum writing, while some Republicans will begin plotting a post-Trump future, we do not expect him to willingly relinquish his grip on the party. George joins us now. Now, George, before we get into President Trump's actions, what did you make of J.D. Vance's comment yesterday?

11:06Manish Kabra: So I made up J.D. Vance's comment of him trying to be both a commentator and a politician. I don't know how you square that circle. You can make comments as a commentator and say, share your thoughts, much like I'm doing now. But when you're involved in making policy, you can't do both. And I think for Vice President J.D. Vance, while I understand he is between a rock and a hard place, this solution is most definitely not the best.

11:28George Pollack: Former Senator Pat Toomey coming out and saying the bigger question is, does the Republican Party now agree with the left that we need a large, powerful central government to run the economy, allocate capital and control prices? Going through some of the things we've seen from the Trump-Vance administration, he's talking about let's have an honest conversation. Is there a chance that J.D. Vance comes back from all of this within his party to be the nominee in 2028?

11:52Manish Kabra: Look, he is still the vice president. He still will likely have the backing of some of those within the administration. and he still has the credibility of being vice president. So there was always a chance. But I would say after the midterm performance and moreover, Vice President Vance's approach to campaigning, policy and politics, I would imagine the next nominee for Republicans will likely be someone not affiliated with the administration.

12:14George Pollack: Who do you think it could be? We saw a lot of people come out. I saw a lot of speeches yesterday. I listened to Ted Cruz podcast. I looked at what Ron DeSantis had to say and then he went on Twitter and said, the truth will set you free. Do you think we're going to see a lot more honesty within this Republican Party?

12:31Manish Kabra: So I think we'll see more honesty from those who are not stuck with the administration. For example, Governor DeSantis will feel free to share his mind. But Senator Ted Cruz, as much as he's going to try to run, I would say, more as a quote-unquote old-school Republican, he is still a Republican senator in Congress, and he still needs positive relationships with the White House. But I would expect someone like Governor DeSantis to be able to say, look, I love the president. I appreciate much of what he's done, but he's gotten distracted by foreign wars. He's kind of betrayed the idea of MAGA. elect me, let me do MAGA 2.0, let me make the United States into Florida, and I will carry out the positive parts of Trump's legacy.

13:04George Pollack: Let's talk about what this all means, this election for the composition of Congress. And by the way, kudos to you. Weeks ago, when I was still really scratching my head about some of these polls coming out of Texas, you said Texas will turn blue, and your entire election book was predicated on this, and you were exactly right. And it wasn't just the Senate race. It was the governor. It was the attorney general. How hard is it going to be for data centers to operate in this now very new blue state?

13:33Manish Kabra: I mean, if you look at Texas in particular, I don't think if Gina Hinojosa would dream that she would win, I don't think she ever thought she would also carry with her the Texas Statehouse. The fact is now that Democrats have the lieutenant governor who is controlling of the state Senate, they have the Texas Statehouse and they have the governor's mansion, means they're going to be able to potentially move serious anti-data center legislation. And then in the Texas State Senate, they only need six Republican votes to move legislation to the floor and only four of those to pass this legislation.

14:01Manish Kabra: And as you guys have talked about repeatedly, data centers is a unique issue that has bipartisan support. And taking them on, I think, will find six in four Republicans who could join the governor. And I think, considering she focused her campaign, among other things, on anti-data center legislation and regulation, I have to imagine she's going to follow through.

14:19George Pollack: George, are there any states that are opening their doors to data centers and saying, you can pay us lots of money, just come here?

14:25Manish Kabra: I really haven't seen that develop yet. Look, there's a great website, I apologize, I can't remember the name, that does show we still have tons of projects throughout the country, but most states from Utah, Minnesota, Florida, New York, Pennsylvania, Maine, as soon as the voters hear about the very idea of a data center, they mobilize. And even if it's just a rumor, they still go after it. And you could keep on promising all the money in the world, all the tax benefits in the world. It's not going to do anything to move the voters. I think we're in for a rough couple of years on data centers.

14:52George Pollack: George, aside from the data center moves, from what we've seen in Chipmageddon over in Korea and also in the United States, there's a real question about what this means for the war in Iran. We were talking about that earlier. Oil prices down significantly. A lot of questions are around whether Pete Hexeth will remain at the helm of the Defense Department. What's your sense of how much pressure there is to oust him?

15:15Manish Kabra: I mean, look, if we look at history in 2006, when President Bush had performed very poorly in his last midterm election, one of his first actions was removing Secretary of Defense Rumsfeld. I imagine there are many in the administration who want Secretary of Defense or Secretary of War Hegseth to follow the same precedent. And as we saw the rumblings about him talking to Senator Marsha Blackburn, who is now governor-elect of Tennessee, about the potential appointment in the Senate, I think we know that he seems to be reading the tea leaves. And I don't know if you saw yesterday, there was a report about his wife being involved or being paid by certain lobbyists connected to some defense industry.

15:49Manish Kabra: You imagine some of those stories are coming out now to put pressure on the president to remove him to show that it's time to move on. Stay with us. More Bloomberg surveillance coming up after this.

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17:38George Pollack: If you are just joining us, we've got 189 ,000 jobless claims, or 194 ,000 jobless claims. The expectation had been 189 ,000, so maybe not quite that low. But at the same time, we're tied with one of the lowest levels going back to the 1960s, following a string of other employment data that's come out stronger than expected, whether it's ADP, whether it's ISM services, whether it's JOLTS data coming in with quits rising to the highest pace going back to spring. It just raises a question about what Mark Cabana was talking about AMH, which is, are we seeing a reacceleration of the U.S. economy? Former Fed Governor Stephen Myron joining us now for more.

18:15George Pollack: Thank you so much for being with us. Great to see you.

18:17Dr. Stephen Miran: Good morning. Thanks for having me.

18:18George Pollack: So what do you make of this? I know you've been saying that the Fed should hold off in hiking rates and that they perhaps are overly tight. The labor market's been coming in hotter than expected with the data we've gotten this week. How do you sort of understand that?

18:31Dr. Stephen Miran: Yeah, so the data we've gotten this week have been a little bit better. I think there's no question about that. I don't really draw a lot of signal from the lack of layoffs because you never really see large-scale layoffs until it's too late, right, until you're actually in a recessionary dynamic. For me, the primary characteristic of this labor market still remains the relatively low hiring rate. And so if we've got a relatively low hiring rate that's sort of still where it was in the aftermath of the financial crisis, to me that's still not a a super strong labor market that merits rate hikes.

18:59Dr. Stephen Miran: I think if you look at the labor market, and you mentioned immigration and demographic effects, I think if you segment the labor market by citizens versus non-citizens or people born in the U.S. versus people not born in the U.S., all the improvement that we've seen, or a lot of the improvement that we've seen, has actually been in the foreign-born component dropping from the labor force because of changes to immigration policy. So I don't think the labor market has actually gotten as good as it appears that would merit rate hikes. I think that this is still a labor market that's in a very precarious balance and needs support.

19:33George Pollack: It's clear, though, that it isn't exactly weak, at least not based on some of these metrics. It doesn't show a sense of about being on the brink of rolling over in some kind of massive way. And yet here we are entering the sixth year of inflation being above 2 percent with real concern that multiple supply-side shocks will only exacerbate any further price instability when that is a mandate of the Federal Reserve. How do you sort of understand that as being the primary driver of Fed policy at this point, given how long it's been?

20:02Dr. Stephen Miran: Yeah, so, I mean, I agree with you. The labor market is not weak. The economy is actually quite strong. But one strange and interesting hallmark of what we've experienced in recent months has been the real profound strength in the economy. I mean, you've got underlying demand growth, private, domestic, final demand, growing near 5 % for two quarters in a row. I mean, that's really, really strong. And yet it hasn't translated into a labor market that's the type of labor market that's on fire that you would have aggressive rate hikes into, right? And I think part of the breakdown in that relationship or part of the changing of that relationship may be related to the technological story, right?

20:34Dr. Stephen Miran: It may be related to the very idiosyncratic nature of AI and new technologies that are being brought to bear.

20:40George Pollack: Stephen, can we talk about the midterms in terms of what the politics might mean for the policy? You not only worked at the Federal Reserve, you also worked under this administration. Do you see the president reversing any of these policies, given what happened, not just in terms of the blue wave, but also in terms of some of the rhetoric we're hearing from the likes of the vice president?

21:00Dr. Stephen Miran: So, look, you know, the president has already said that he, you know, wants to work with Democrats on some issues. And, I mean, he loves to negotiate. He loves to make a deal. I mean, that's sort of core to who he is and what his career has been. I think there's been a variety of theories to explain what's happened. One that I think is really, really silly is people sort of thinking that maybe this is going to roll back tariffs or something like that. Look, I'm still of the view that tariffs didn't have a meaningful impact on inflation because you would have expected goods inflation in the U.S.

21:33Dr. Stephen Miran: to somehow stand out from goods inflation internationally. And that just wasn't the case.

21:37George Pollack: It did come up in a lot of exit polls, though, in states where it mattered, like Maine, Ohio, et cetera.

21:42Dr. Stephen Miran: It did. But even the economists who think that tariffs did feed directly through into inflation, I mean, their numbers are like 80 basis points, maybe at a peak 1 % type of thing. And after the price level went up about 25 % since the pandemic, the idea that this last 80 basis points is really what drove some sort of massive changes is, to me, far-fetched. The price effects of these things are just too small to sort of draw that type of conclusion. Now, of course, in the narrative, in the media, in the political fights, you know, things get thrown around. But to me, it doesn't seem like a likely, like the magnitude can plausibly explain things.

22:19Dr. Stephen Miran: And of course, the important thing is if you take tariffs away, that's a$400 billion revenue hole that you've got to fill somehow else, right? And the thing about tariffs is that they allowed you to prevent the expiration of the income tax cuts from the Tax Cuts and Job Act. And if you don't have that revenue there, you've got to make it up elsewhere. And I don't think anybody really wants their taxes to go up.

22:37George Pollack: So if you think the president is going to work with Democrats, what kind of deals do you think gets done?

22:42Dr. Stephen Miran: Well, you know, we'll have to, you know, I think that the Democrats ultimately will have to decide, you know, their coalition, what their asks are. And I think you've got a lot of people...

22:50George Pollack: Trump once campaigned on capping interest rate caps, capping the interest rates on credit cards, something that Bernie Sanders and Elizabeth Warren actually like. Could you see him working with those individuals?

23:00Dr. Stephen Miran: So, you know, I think we've got to see a coherent ask from the Democrats that have swept into power now, right? And so the Democrats, you know, look, politics in a two-party system, politics is a game of coalitions. And each of these parties is a coalition of smaller parts. And what we've seen is a new coalition come in, right? The Democrats who sort of swept into power with, you know, a lot of support from purple and red states. And so we've got to see what their ask is and what they actually want is. And so it's too early to say exactly what the contours of the deal would be, because we don't know we don't know who one of the parties is yet.

23:33Dr. Stephen Miran: They've got to figure out who they are.

23:34George Pollack: Stephen, what would be the economic consequences if we rolled back some of the tariffs that have been put on?

23:39Dr. Stephen Miran: So my view is the economic consequences of the tariffs were not huge, because at the end of the day, these things are, you know, imports are 11, 12 percent of GDP, right? It's very difficult to get very significant macroeconomic consequences of that in the macroeconomy. Of course, on a microeconomic basis, you have significant effects because this or that product relative prices change. But macroeconomically, it's difficult to get very significant changes. And that's why I was always skeptical of the idea that there would be a huge spike in inflation as a result of tariffs. I don't think anybody thinks there was a huge spike in inflation.

24:08Dr. Stephen Miran: Any economist thinks there was a huge spike in inflation as a result of tariffs. As I said, even the economists who blame tariffs for inflation think it's like 80 basis points. It's relative to the 25 % that we actually had the increase. So what you've got, if you take back tariffs, is a$400 billion hole in the deficit every year. And the only way to make that up is to borrow more, which of course would have very negative effects on the bond market, or to raise income taxes, which, of course, Americans don't want.

24:33George Pollack: Do you think that the Treasury Secretary should have scrapped the 20-year bond and that they should have sort of more aggressively altered the issuance plans yesterday in the refunding announcement?

24:43Dr. Stephen Miran: So I don't think there was necessarily an argument for aggressively altering the issuance plans in yesterday's refunding argument. I don't think that that's sort of something that needed to be done yesterday. day. As to the 20-year bond and sort of substituting it for other parts of the yield curve, I mean, it is true the 20-year bond has always been a difficult one to fund because there's difficulty finding a natural clientele for it. And as a result, it's always been cheap and cost treasury more money to finance than maybe it should. So I do think there's an argument for phasing it out eventually.

25:21Dr. Stephen Miran: Is it an urgent problem that needs to be addressed now, or is it a problem that's sort of like so salient that, you know, on the list of 10 ,000 things you'd like to get done, right? Like, yes, if you have time to do everything, great, do it all. But you've all got to prioritize.

25:33George Pollack: Do you think that it was a mistake for the Federal Reserve to hike rates in September?

25:37Dr. Stephen Miran: I do. I still don't think I would have hiked rates in September. Look, inflation, you know, core CPI is in a totally normal place. Core PCE, relative to its history and relative to where it's been when the Fed's been doing a good job. Core PCE has been elevated. There's no question about it. However, that elevation in core PCE, Goldman had this great report a few weeks ago in which they calculated that over a percent of that elevation of core PCE is a combination of temporary effects like Iran and energy and measurement error in things like information and software that I've, you know, in portfolio management that I've talked about for a really long time, right?

26:13Dr. Stephen Miran: And of course, I think the measurement error is actually even much bigger than they do. But even if you take that Goldman report of a one-point noise in it from those things, that's not expected to repeat. And monetary policy has lags. And so if you change interest rates now, it doesn't hit the economy for a year to two years. So if you're going to adjust policy based on that number, you need to forecast that those temporary effects like Iran and energy or the measurement error are going to be repeating a year to two years from now, or else you're basically doing something very backward looking based on noise that's not going to repeat.

26:44Dr. Stephen Miran: So that's why you forecast inflation to return back to 2 % and why I don't think that hiking was necessary.

26:50George Pollack: Steve, a lot of people liked you on the Fed, even if they didn't agree with you, because you were fresh in the sense that you're willing to speak your mind. We have a Fed chair who does not speak his mind, does not offer forward guidance. And then we're left listening to people like Williams and Jefferson. What do you make of the composition right now of the Federal Reserve? Where is the center? Does the Troika still exist? Do you think the Fed chair should actually honestly answer questions in press conferences?

27:15Dr. Stephen Miran: So, look, I think the Troika does still exist. I think that, you know...

27:20George Pollack: So he's basically outsourced the guidance to Williams and Jefferson?

27:23Dr. Stephen Miran: No, I wouldn't say outsourced. I would say the vice chairman of the board and of the FOMC, you know, sort of vice chairman Jefferson and vice chairman Williams, you know, those roles are traditionally viewed as supporting the chairman, right? And so I would interpret a lot of their remarks as being supportive of the chairman's views for where he wants things to be. I just doubt that the chairman is trying to work through them in terms of trying to message through them. I think that he's probably, there's probably some benign neglect, right? But I think that they probably view their roles as traditionally supportive.

28:05George Pollack: Should the chair just stop talking completely?

28:08Dr. Stephen Miran: Well, you know, that's, you know, look, you know, I'm enthusiastic about cutting back forward guidance, right? And I think that's a good policy. I think, you know, if you're going to do that, I think there's a good argument for less communications. Now, I think that less communications has really interesting effects on the term premium, too. So one thing that keeps term premium low is that the Fed tells you exactly what they're going to do, in forward guidance, tell you what they're going to do in the next one, two, three, four meetings. And so there's little uncertainty and so little need for term premium.

28:41Dr. Stephen Miran: If you start injecting that uncertainty and you start introducing people aren't sure, are they going to hike? Are they not going to hike? Are they going to hike 25, 50, zero? What are they going to do? What about one, two, three, four meetings out? You're introducing a lot more uncertainty. And that uncertainty has to get reflected in increased risk premium over time. Now, I'm supportive of withdrawing forward guidance, even if it increases risk premium. But the flip side of that is it's a tightening of financial conditions that might get you off of where you need to be to hit your mandates. And so that, in effect, lowers the neutral rate to offset it.

29:09Dr. Stephen Miran: So you're left with a steeper curve, right? So I think there are, and I don't think the yield curve has fully grappled with this yet. You have seen term premium seep in in the front end, which is really interesting. It's been a while since that's been the case. But I think that the market will start to grapple with this over time.

29:27Manish Kabra: 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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