Lula Wins Brazil Runoff; US Stocks Waver Ahead of Tech Earnings

[00:00:00] Speaker ?: IT'S 5:00 A.M. IN NEW YORK CITY, 9:00 A.M. [00:00:11] Speaker 1: IN LONDON, GOOD MORNING, I'M BONNIE QUINN WITH YOUR BLOOMBERG BRIEF. BRAZIL'S PRESIDENT LULA WINS A RECORD FOURTH TERM IN A RUNOFF ELECTION. BRAZILIANS MARKETS BRACING FOR A ROUTE THIS MORNING. ELON MUSK SAYS SPACEX HAS CLINCHED A $40 BILLION DEATH DEAL TO PAY FOR A.I. CHIPS AND ALL OF THIS AHEAD OF A BUSY WEEK OF CENTRAL BANK DECISIONS AND MAJOR TECH EARNINGS. LET'S KICK IT OFF IN ASIA. LET'S GET A LOOK AT MARKETS AROUND THE WORLD. WINNIE SUH IS IN HONG KONG FOR US. WINNIE. [00:00:45] Speaker 2: GOOD MORNING, BONNIE. WE'RE SEEING ASIAN STOCKS EDGING LOWER TODAY AT THE START OF WHAT'S GOING TO BE A VERY BUSY WEEK IN ASIA. YOU JUST MENTIONED WE HAVE CENTRAL BANK DECISIONS FROM AROUND THE WORLD PLUS MEGA CAP EARNINGS AS WELL AS EARNINGS FROM ASIA COMPANIES. AND IN FACT THIS IS GOING TO BE THE BUSIEST EARNINGS WEEK FOR ASIA BECAUSE WE HAVE ABOUT 45% OF THE COMPANIES LISTED IN THE MSCI ASIA REPORTING THIS WEEK. NOW YOU'RE LOOKING AT A BIT OF A ROTATION TODAY WITH INVESTORS ROTATING AWAY FROM TECH COMPANIES. SO THAT'S WHY WE'RE SEEING COSPI HERE DOWN ABOUT 1.5% WHILE ROTATING INTO SOME OF THESE VALUE NAMES WHETHER IT'S THE BANKS OR TRADING HOUSES OR ENERGY STOCKS. AND THAT IS SUPPORTING THE BROADER TOPICS INDEX IN JAPAN. NOW FLIP A BOARD, WE ALSO TAKE A LOOK AT SOME OF THE TECH NAMES BECAUSE WE ARE LOOKING AT SAMSUNG ELECTRONICS AS WELL AS SK HYNICS AHEAD OF THEIR EARNINGS LATER THIS WEEK. FOR SK HYNICS SPECIFICALLY, YOU'RE SEEING IT DOING SLIGHTLY BETTER THAN SAMSUNG GIVEN THAT IT HAS JUST ANNOUNCED THIS SPECIAL DIVIDENT PLAN. MINGWAH, WE'RE ALSO LOOKING AT SOME OF THE WEAKNESSES IN THE AI DEVELOPERS IN CHINA AFTER THEIR PEER MOONSHOT AI RELEASED A MAJOR UPGRADE TO ITS KIMI-K 3.1 PRO SAYING THAT IT IS BETTER FOR FINANCIAL ANALYSIS AS WELL AS [00:02:01] Speaker 1: CODING. A LITTLE BIT OF A MIXED PICTURE THEN ACROSS ASIA. LET'S GET TO LONDON TO SEE WHAT'S HAPPENING IN EUROPE. [00:02:10] Speaker ?: HERE IS JUSTINA LEE. [00:02:11] Speaker 3: GOOD MORNING, VONNIE. NOW WE'RE SEEING THE STOCKS EUROPE 600 TICK A LITTLE BIT HIGHER THIS MORNING, BUT BENEATH THE HOOD, WE'RE SEEING MAJOR DECLINES FOR A LOT OF NAMES EXPOSED TO THE SHOCK IN THE BRAZILIAN PRESIDENTIAL ELECTION. MOVING ON TO CURRENCIES, IT'S A PRETTY QUIET DAY. THE EURO IS BROADLY FLAT. WE'RE SEEING A BIT OF WEAKNESS IN THE POUND STERLING. NOW, OF COURSE, THE ATTENTION IS STILL ON FRANCE HERE. WHAT'S INTERESTING TODAY IS THAT WE'RE SEEING A THREE BASIS POINT DECLINE IN THE 10-YEAR FRENCH BOND YIELD, EVEN THOUGH ACTUALLY WE'RE SEEING THE OPPOSITE MOVES IN THE REST OF THE EUROPEAN BOND MARKET. I THINK WHAT THIS REALLY REFLECTS IS THAT WE'VE HAD SOME PROTESTS IN FRANCE OVER THE WEEKEND, BUT NONE OF THE VIOLENCE THAT WE SAW EARLIER, AND ALSO MODIES HAS ALSO CHOSEN NOT TO DOWNGRADE FRANCE'S SOVEREIGN RATING. AND SO THERE DOES SEEM TO BE A BIT OF CALM RETURNING TO FRENCH MARKETS. [00:03:01] Speaker 1: JUST A LITTLE BELOW 5%, I GUESS IT'S AN IMPROVEMENT. THAT IS JUSTINA LEE IN LONDON. HERE IN THE UNITED STATES, WE ALSO SEEM TO BE KICKING THINGS OFF ON A BIT OF AN OPTIMISTIC NOTE. ALL EYES WILL BE ON THE SOCKS THIS WEEK AFTER THREE DOWN WEEKS FOR THE PHILLY SEMICONDUCTOR INDEX. THREE UP WEEKS FOR THE EQUAL WEIGHT S&P 500 INDEX. THAT MAY CONTINUE THIS WEEK OR YOU MAY SEE A CHANGE. OBVIOUSLY STAPLES HIT A RECORD BUT THEY PULL BACK FRIDAY. COKE KICKS THINGS OFF FOR STAPLES AGAIN TOMORROW. OF COURSE WE GET ALL OF THOSE TECH EARNINGS THIS WEEK. THE NASDAQ 100 LOOKS TO BE KICKING THINGS OFF AS WELL ON A POSITIVE NOTE. LET'S TAKE A LOOK AT YIELDS. A BIT OF A MIXED FIXTURE THERE, TOO. AT THE FRONT END, WE ARE UP A BASIS POINT, 469. AND THEN FLAT TO SLIGHTLY LOWER IN THE MIDDLE OF THE CURVE AND ALSO THE LONG END. STILL BELOW 5% HERE ON THE 10 YEAR YIELD. OF COURSE, BASICALLY ANY MOVE PRICED OUT FOR THE FED THIS WEEK, BUT WE ARE STILL LOOKING AT DECEMBER FOR A MOVE THERE. AND THEN OIL, OF COURSE, ANOTHER BIG STORY THIS WEEK. WE ARE NOT THAT MUCH OFF OUR CLOSING HIGHS. AROUND ABOUT 114 ON BRENT. AND, OF COURSE, WE HAVE SOME REGIONAL TALKS BETWEEN IRAN, SAUDI ARABIA WITH MEDIATION BY PAKISTAN AND TURKEY. SO THAT MAY BE CALMING THINGS FOR THE MOMENT IN OIL MARKETS. THAT SAID, WTI IS STILL ABOVE $100 A BARREL. ALL RIGHT, LET'S GET A LOOK AT SOME PRE-MARKET MOVERS THIS MONDAY MORNING. AND FOR THAT, WE HAVE ISABELLE LEE. [00:04:19] Speaker 4: ISABELLE. HI, BONNIE. NICE TO BE HERE WITH YOU IN THE STUDIO. ON THIS MONDAY MORNING, LET'S TAKE A LOOK AT SOME OF THE U.S.-LICITED CHAIRS OF BRAZILIAN COMPANIES AND THOSE EXPOSED TO THE COUNTRY. THEY ARE DOWN IN PRE-MARKET RATE. AND THIS COMES AFTER THE SURPRISE WIN OF LULA IN THE ELECTIONS. IT WAS REALLY A TIGHT RACE. AND, OBVIOUSLY, WE SAW VOTING HOURS EXTENDED. THIS IS A MOVE THAT BOLSONARO IS CONTESTING IN A MOVE THAT HE SAID HE'S CALLING FOR AN ANNOUNCEMENT. UP NEXT, LET'S TAKE A LOOK AT SOME OF THE HYPERSCALERS THIS MORNING. WE'RE SEEING A LOT OF THEM REPORT EARNINGS THIS WEEK. WE HAVE THE LIKES OF ALPHABET, MICROSOFT AND AMAZON REPORTING. ALL OF THEM ARE EXPECTED TO GAIN DOUBLE-DIGIT PERCENTAGE IN TERMS OF REVENUE FOR THE QUARTER. INVESTORS WILL BE ONLY ASKING TWO QUESTIONS. HOW MUCH MORE CAPEX WILL THEY SEE INCREASE AND WHEN THEY WILL SEE A DURABLE PAYOUT WHEN IT COMES TO THIS AI TRADE. YOU SEE THE STOCK THERE ALL IN THE GREEN, ALPHABET HIGHER BY 0.5%. MICROSOFT ALSO IN AMAZON HIGHER BY 0.5%. AND, FINALLY, LET'S TAKE A LOOK AT TESLA. YOU SEE THE STOCK HERE RISING IN PRE-MARKET TRADE HIGHER BY NEARLY 2% THIS COMES AFTER BARCLAYS UPGRADED THE STOCK TO OVERWEIGHT. THE PRICE TARGET IS NOW AT AROUND $450 PER SHARE. THIS IS A ROUGHLY 20% UPSIDE FROM ITS LAST POST. THE ANALYST THERE, DAN LEVY, SAID THAT HE IS UPGRADING THE STOCK BECAUSE OF IMPROVEMENT IN CORE BUSINESS AND, OF COURSE, THE POTENTIAL MERGER WHEN IT COMES TO SPACEX AND TESLA. AND WE KNOW THAT, ACCORDING TO HIM, THIS WILL HAVE A SIGNIFICANT UPSIDE FOR THE STOCK. BONNIE? [00:05:42] Speaker 1: THANK YOU SO MUCH. THAT IS ISABEL LEE. SHE WILL BE BACK LATER IN THE HOUR. ALSO COMING UP THIS HOUR, JOINING AHEAD OF ISRAEL'S ELECTIONS TOMORROW. RBC CAPITAL MARKETS. WE START IN BRAZIL, THOUGH. PRESIDENT LULA WINNING A RECORD FOURTH TERM. OPPONENT FLAVIO BOLSONARO CALLING FOR THE ANNULLMENT OF THE RUNOFF OVER ACCUSATIONS THE SUPREME COURT CHANGED THE RULES OF THE GAME WHEN THEY EXTENDED VOTING HOURS LAST MINUTE. BRAZILIAN MARKETS BRACING FOR A SELL-OFF THIS MORNING. BLUMBERG'S RODRIGO ORIUELA JOINS US NOW FOR MORE. HOW DID LULA PULL AWAY FROM BOLSONARO SO MUCH BETWEEN THE TWO ROUNDS, RODRIGO? [00:06:29] Speaker 5: THE FIRST ROUND WAS CLEARLY A SURPRISE FOR EVERYBODY, ESPECIALLY FOR THE P.T., THE LULA'S PARTY. WHAT THEY DID GOING INTO THE SECOND ROUND WAS DO A VERY BIG PUSH TO MOBILIZE PEOPLE WHO MAYBE HAD NOT BEEN VOTING OR SUPPORTING OR OUT THERE CONVINCED ABOUT SUPPORTING HIM. IT WAS REALLY A FACTOR OF SAYING THIS IS WHEN WE REALLY NEED YOU. I WANT TO TALK ABOUT THIS. THEY GOT REALLY ONTO THAT. THEY ALSO GOT REALLY AGGRESSIVE AROUND THE SOCIAL MEDIA ISSUE WHICH IN BRAZIL HAS BEEN A MAJOR, MAJOR CAMPAIGN ISSUE. NOT ONLY SOCIAL MEDIA BUT ALSO THE USE OF A.I. FOR A LOT OF FACTORS. AND WHEN I SAY IT WAS A MAJOR ISSUE, THERE WAS A LOT OF INFORMATION CIRCLING OUT OF HUGE WHATSAPP GROUPS, OUT OF FACEBOOK GROUPS, AND THERE WAS ALSO A LOT OF DEEP FAKES. AND THE WHOLE PROCESS AROUND THE USE OF THIS, THE WHOLE FIGHT, THE ARGUMENT WAS ABOUT BEING ON THE PLATFORMS, BEING THERE, BUT ALSO GOING TO COURT TO BLOCK CERTAIN CAMPAIGNS AND CERTAIN MOVES. SO IN THAT SENSE THEY DID BOTH THINGS. YOU KNOW, THEY GOT PEOPLE OUT ONTO THE STREETS. HUGE DEMONSTRATIONS. LUDO WAS REALLY FIRED UP. AND ALSO BY REALLY FIGHTING AGAINST THE TECHNOLOGICAL ASPECT OF THE ELECTION AND TAKING IT TO COURT AND MAKING IT A LEGAL ISSUE AS WELL. SO I WOULD SAY THOSE WERE TWO FACTORS THAT WERE BEHIND HIS HUGE PUSH. AND OBVIOUSLY THERE'S ALSO THE FACTOR OF A LEFT-WING LEADER PRESENTING THE RIGHT OR THE FAR RIGHT, IF YOU WANT, AS, YOU KNOW, SOMETHING DANGEROUS THAT'S COMING AND NOW IT'S THE TIME TO STEP UP. AND A FINAL ELEMENT IS THAT THERE WERE A FEW SITUATIONS, SUCH AS THE TV DEBATES, IN WHICH LULA, YOU COULD ARGUE WHETHER HE PERFORMED WELL OR NOT. BUT IT DID UNDERLINE CERTAIN ASPECTS OF FLAVIO BOLSONARO THAT DIDN'T MAKE HIM LOOK AS WELL OR TO HIS VOTERS OR AS STRONG AS SOME PEOPLE WOULD HAVE EXPECTED. SO THAT MAY HAVE ALSO EATEN AGAINST HIS SUPPORT. [00:08:20] Speaker 1: RODRIGO, THERE'S OBVIOUSLY A MASSIVE MARKET KNEEJERK REACTION AT THE VERY LEAST. BUT AT LEAST WHEN IT COMES TO EQUITIES, WE'RE REALLY ONLY ERASING THIS YEAR'S GAINS IF THAT, IF THESE DECLINES HOLD THROUGHOUT THE WHOLE SESSION. MARKETS HADN'T BEEN DOING TOO BADLY UNDER LULA. SO WHAT CHANGES? [00:08:36] Speaker 5: SO YEAH, I THINK THERE WAS A GOING TOWARDS THE ELECTION. THERE ARE CERTAIN JITTERS AND CERTAIN CONCERNS AROUND LULA'S ECONOMIC POLICY. AS YOU SAY, MARKETS HAVE NOT BEEN DOING BADLY. THE ECONOMY, I MEAN, IT'S NOT IN CRITICAL STATE BY ANY MEASURE. BUT THERE WERE CONCERNS, ESPECIALLY ON THE FISCAL SPENDING ASPECTS. THERE'S A GROWING CONCERN THAT MAYBE THE LULA ADMINISTRATION HAD NOT BEEN DOING ENOUGH. NOW, AS WE WENT INTO THE ELECTION, ESPECIALLY WHEN PEOPLE SAW THAT FLAVIO HAD A CHANCE OF WINNING IT AFTER THE FIRST ROUND, THERE WAS A BIG PLAY TO BE ON THE WINNING SIDE. SO PEOPLE STARTED COMING IN BECAUSE THEY THOUGHT FLAVIO WOULD BE A PRESIDENT WHO WOULD THROW THE ECONOMY OPEN AND WOULD ALSO RAIN IN FISCAL SPENDING. SO THERE WAS A LOT OF OPTIMISM AMONG INVESTORS THAT THIS WOULD MARK A CHANGE TOWARDS A MORE PRO-MARKET ECONOMY BUT ALSO MORE ALIGNED WITH THE U.S. NOW, WITH THE LULA SURPRISE COMEBACK, WHAT IS HAPPENING IS THERE'S PROBABLY A LOT OF PEOPLE PULLING OUT OF THAT PLAY, OF THE BOLSONARO PLAY. [00:09:49] Speaker 1: RODRIGO WILL MONITOR THROUGHOUT THE SESSION AND THE WEEK. HERE IN THE U.S., ELON MUSK CLAIMING SPACEX CLOSED A $40 BILLION DEATH DEAL TO PAY FOR AI CHIPS. HOWEVER, SOURCES TELL BLOOMBERG TALKS OVER PRICING ARE STILL ONGOING. JOINING US NOW IS MATT BLOXAM OF BLOOMBERG INTELLIGENCE. WHAT HAS ELON BEEN SAYING? MATT, IS HE BENDING THE TRUTH SLIGHTLY? IS THIS DEAL BASICALLY DONE? [00:10:15] Speaker 6: I WOULD THINK IT IS FOR HIM TO COME OUT ON X AND SAY THAT. BUT, YOU KNOW, AS OUR REPORTING SUGGESTED, PERHAPS THE KIND OF THE FINE DETAILS ARE STILL YET TO BE HAMMERED OUT. BUT MAYBE AT THE KIND OF TOP LEVEL, ALL PARTIES HAVE AGREED ON THE STRUCTURE. SO I IMAGINE IN THE NEXT DAY OR TWO, WE'LL KIND OF GET THE FULL DETAILS OF PRICING. AND I THINK PRICING IS GOING TO BE AN IMPORTANT DETAIL FOR PEOPLE TO LOOK AT BECAUSE AS MUCH AS IT IS IMPORTANT THEY HAVE GOT THIS DEAL DONE, WHERE THE SPREADS HAVE LANDED OVER BENCHMARKS IS GOING TO BE INTERESTING. WE'VE SEEN THE LIKES OF COURSE. WE'VE SEEN YIELDS ON THE BONDS INCREASE MASSIVELY IN RECENT WEEKS. AND I THINK GOING INTO THIS, THE PRICING WAS LOOKING AT SOMEWHERE BETWEEN 250 AND 300 BASIS POINTS OVER BENCHMARKS. SO I THINK THAT IS GOING TO BE AN IMPORTANT ISSUE TO KIND OF REALLY SEE WHERE THAT LANDS BECAUSE THAT WILL GIVE US A REAL UPDATE ON INVESTOR SENTIMENT TOWARDS FUNDING THESE KIND OF DEALS. [00:11:08] Speaker 1: HE HAD A LOT TO SAY ABOUT NEO CLOUDS ON X AS WELL. I DO WANT TO LOOK AHEAD TO THIS WEEK'S EARNINGS, A MASSIVE ARRAY OF THEM. WILL INVESTORS BE MORE LASER FOCUSED ON FREE CASH FLOW, LIKE THEY WERE WITH META, FOR EXAMPLE, OR CAPEX SPENDING, LIKE THEY SEEM TO HAVE BEEN WITH TESLA? [00:11:25] Speaker 6: I THINK IT IS GOING TO BE A MIXTURE OF THINGS. I THINK THE MARKET IS EXPECTING A BIG INCREASE IN CAPEX. IF YOU LOOK FORWARD TO 2027, THAT WILL INCREASE ACCORDING TO CONSENSUS BY AROUND 200 BILLION. SO I THINK THE MARKET IS EXPECTING A BIG INCREASE IN CAPEX. IF IT GOES UP MUCH BEYOND THAT, THERE WILL NEED TO BE A REALLY CONVINCING STORY ABOUT THE INCREMENTAL REVENUE, THE INCREMENTAL PROFIT, THE INCREMENTAL CASH FLOW THAT THEY ARE GOING TO GET FROM THESE AI INVESTMENTS. THE MARKET IS VERY MUCH OUT ABOUT WHETHER THAT INCREMENTAL OPPORTUNITY AND INCREMENTAL BENEFIT IS REALLY COMING THROUGH. [00:12:09] Speaker 1: MATT BLOCKSOM OF BLOOMBERG INTELLIGENCE GETTING US READY FOR THE WEEK. THE EUROPEAN UNION IS SAID TO BE PLANNING NEW MEASURES TO CURVE IMPORTS FROM CHINA, TARGETING SECTORS THAT INCLUDE CHEMICALS, FURNITURE AND MACHINERY. ACCORDING TO SOURCES, MEASURES COULD COME IN THE FORM OF IMPORTANT CAPS OR TARRIFTS AND COULD BE PRESENTED AS SOON AS THE FIRST QUARTER OF 2027. THE MOVE IS PART OF A BROAD EU PUSH TO REDUCE ITS DEFICIT WITH CHINA, WHICH REACHED $404 BILLION LAST YEAR. PRESIDENT TRUMP SAYS IT'S NEARLY DECISION TIME ON WHETHER TO ATTACK IRAN OR MAKE A DEAL. HE HAS SUGGESTED U.S. STRIKES COULD RESUME AFTER THE NOVEMBER 3 MIDTERMS AND HAS SENT ADDITIONAL FORCES TOWARDS THE PERSIAN GULF. OIL RETREATED SIGHTLY AS THE U.S. AND IRAN STUCK TO FAMILIAR RHETORIC IN THEIR CONFLICT. MEANTIME, TOP SECURITY AND DEFENSE OFFICIALS FROM SAUDI ARABIA, PAKISTAN AND TURKEY ARE SET TO MEET IRAN'S LEADERS TODAY. IT'S PART OF AN EFFORT TO DEFUSE TENSIONS AND RENEW TALKS AIMED AT PREVENTING A BROADER WAR IN THE MIDDLE EAST. THE TALKS BRING TOGETHER MEMBERS OF THE MEKA DEFENSE ALLIANCE IN TEHRAN FOR THE FIRST TIME SINCE THE GROUP'S ESTABLISHMENT IN AUGUST. COMING UP ISRAEL HEADED TO THE POLLS TUESDAY. A HEATED ELECTION. YOHANNAM PLESNER, PRESIDENT OF THE ISRAEL DEMOCRACY INSTITUTE, JOINS NEXT. THANK YOU. THIS IS BLOOMBERG BRIEF. I'M VONNIE QUINN IN NEW YORK. ISRAELIS SET TO VOTE FOR THEIR LEADER TUESDAY IN THE FIRST ELECTION SINCE THE HAMAS ATTACKS IN 2023 THAT SPARKED PRIME MINISTER NETANYAHU'S WARS IN GAZA AND LEBANON. JOINING US NOW IS YOHANNAM PLESNER, PRESIDENT OF THE ISRAEL DEMOCRACY INSTITUTE. THANK YOU SO MUCH FOR JOINING. THANK YOU FOR HAVING ME. IT'S BEING LABELED ONE OF THE MOST CONSEQUENTIAL ELECTIONS IN ISRAEL'S HISTORY. WHAT ARE PEOPLE LEANING TOWARDS? WHAT CANDIDATES AND PARTIES AND BLOCKS ARE PEOPLE LEANING TOWARDS WHEN IT COMES TO STABILIZING THE COUNTRY IN TERMS OF DEFENSE? [00:14:15] Speaker 7: WELL, MR. NETANYAHU IS RUNNING FOR RE-ELECTION WITH HIS EXISTING COALITION MEMBERS AND THEY WANT TO GET RE-ELECTED. IN THE CURRENT KNESSET, THEY HAVE ABOUT 68 SEATS, A MAJORITY OUT OF 120. IN THE LAST POLLS OF FRIDAY, THE LAST DAY THAT THE POST COULD HAVE BEEN PUBLISHED, IN THE MAJORITY OF POLLS, THEY WERE AROUND 50. SO WE ARE SEEING THAT THERE IS A SIGNIFICANT SHIFT IN PUBLIC OPINION IN ISRAEL AFTER THREE YEARS OF WAR AND, OF COURSE, THE FIRST YEAR OF MR. NETANYAHU'S TERM WHEN HE LED THE JUDICIAL OVERHAUL. SO IN MANY WAYS IT'S A REFERENDUM ON HOW MR. NETANYAHU BOTH MANAGED THE WAR BUT ALSO THE FACT THAT HE WAS RESPONSIBLE FOR THE WORST SECURITY FAILURE IN THE COUNTRY'S HISTORY. THE FACT THAT THE OPPOSITION BLOCK HAS A MAJORITY DOES NOT NECESSARILY MEAN THAT IT WILL BE EASY FOR EITHER SIDE TO FORM A NEW GOVERNMENT COALITION. [00:15:21] Speaker 1: EXACTLY. WILL ISRAEL BE ABLE TO FORM A GOVERNMENT AFTER ALL OF THIS IS SAID AND DONE? WILL THERE BE BLOCKS THAT WILL BE ABLE TO GET ALONG AND STILL THAT THE ELECTORATE? WILL THERE BE ABLE TO GET ALONG THE CALLS THAT THEY MADE TO THE [00:15:36] Speaker 7: ELECTORATE? THE CHANGED BLOCK THAT IS LED BY FORMER CHIEF OF STAFF GADI EISENKOT HAS, I THINK, A CLEAR, DIFFERENT AGENDA THAN THE NETANYAHU BLOCK ON THREE MAIN POINTS. NUMBER ONE, ON DEFENSE AND FOREIGN AFFAIRS. HE PROMISES TO HANDLE THE WAR DIFFERENTLY AND IN CLOSER PARTNERSHIPS WITH THE REGIONAL AND GLOBAL ISRAELI ALLIES. DOMESTICALLY, WHILE MR. NETANYAHU PROMISES TO DOUBLE DOWN ON THE JUDICIAL OVERHAUL, MR. EISENKOT PROMISES TO UNDO IT AND BASICALLY STABILIZE THE DEMOCRATIC SYSTEM OF CHECKS AND BALANCES. SO THERE'S A STARK DIFFERENCE ON THAT MATTER. AND OF COURSE, AND THERE'S ALSO A DOMESTIC MATTER THAT OVERSEAS VIEWERS ARE LESS AWARE OF, BUT IS A STRONG DRIVER WITHIN ISRAELI SOCIETY. AND THIS IS THE FATE OF THE RELATIONSHIP BETWEEN THE ISRAELI STATE, AND IT'S VERY LARGE AND RAPIDLY GROWING ULTRA ORTHODOX COMMUNITY. MR. NETANYAHU SHOWERED THIS CONSTITUENCY WITH THE SUBSIDIES AND BLANKET EXEMPTIONS FROM SERVICE, AND A VAST MAJORITY OF ISRAELIES ARE VERY UPSET ABOUT IT. SO THERE'S POSSIBLY, IF THERE WILL BE A CHANGE OF COALITION, THERE WILL BE A CHANGE OF POLICY IN THIS REGARD AS WELL. [00:16:52] Speaker 1: I MEAN, THAT COHORT MAKES UP SOMETHING LIKE 30% OF THOSE WHO WOULD PERHAPS BE CONSCRIPTED INTO THE ARMY OR JOIN FOR MANDATORY SERVICE IF THAT BECOMES THE SITUATION. BUT WILL THAT HAPPEN? WILL THE ULTRA ORTHODOX ALLOW THAT TO HAPPEN? [00:17:08] Speaker 7: WELL, YOU KNOW, THE ULTRA ORTHODOX ARE PROBABLY MR. NETANYAHU'S CLOSEST POLITICAL ALLIES. IN MANY WAYS HIS DECADES LONG PREMIERSHIP IN ISRAELI PUBLIC LIFE DEPENDED ON THIS ALLIANCE WHERE HE BASICALLY GOT THEIR LOYALTY IN RETURN FOR STATE SUBSIDIES THAT SUSTAINED THIS SOMEHOW AN INTERNAL AUTONOMY WITHIN THE ISRAELI STATE. IT'S 14% OF THE POPULATION. BUT AS YOU MENTIONED, ABOUT 25% OF OUR 18-YEAR-OLDS THAT ARE ELIGIBLE FOR SERVICE. SO IT'S BECOMING A GROWING AND BIG ISSUE BOTH SECURITY-WISE AND ECONOMICALLY. IF THE CHANGE BLOCK THAT WANTS TO REPLACE MR. NETANYAHU INDEED GETS A MAJORITY, THEY HAVE PLANS FOR BASICALLY CUTTING OFF ECONOMICALLY THIS AUTONOMY FROM STATE FUNDING AND SENDING MANY OF THE MEMBERS OF THE COMMUNITY TO THE WORKFORCE. [00:18:11] Speaker 1: GADY ISENCOTT IS THE PERSON WHO MAY BE THE MOST OBVIOUS OPPOSITION LEADER, LEADING AN ARAB BLOCK OF PARTIES. IF HE INDEED DOES REPLACE NETANYAHU IN SOME WAY, WHAT WILL THE RELATIONSHIP BETWEEN ISRAEL AND THE U.S. BE LIKE AT THAT POINT? [00:18:29] Speaker 7: WELL, YOU KNOW, THE RELATIONSHIP BETWEEN ISRAEL AND THE UNITED STATES IS IN MANY DECADES VERY STRONG, DOES NOT DEPEND ON ONE PERSONALITY NEITHER IN ISRAEL AND NOR THE AMERICAN SIDE. THERE IS A STRONG ECONOMIC RELATIONSHIP, SOCIAL RELATIONSHIP, BUSINESS RELATIONSHIP. GADY ISENCOTT FOR SURE WILL CONTINUE TO WORK WITH PRESIDENT TRUMP ON IMPLEMENTING THE 20-POINT PLAN IN GAZA, HE ACTUALLY SAID SO, AND ALONGSIDE WITH THE AMERICANS ON THE OTHER OPEN FRONTS IN THE REGION, IN LEBANON, SYRIA, AND IRAN. I THINK WHAT MIGHT BE A DIFFERENCE IS A DIFFERENCE IN TONE, A DIFFERENT KIND OF APPEAL TO BROADER PARTS OF THE AMERICAN POPULATION, PERHAPS EVEN TO MEMBERS OF THE DEMOCRATIC PARTY, WHERE GADY ISENCOTT MIGHT COME WITH A DIFFERENT KIND OF MUSIC AND OPENNESS FOR A NEW DIALOGUE THAT PERHAPS WILL IMPROVE THE STANDING OF THE RELATIONSHIP IN PUBLIC OPINION. [00:19:36] Speaker 1: IS THERE ANY CONCERN THAT AFTER PRESIDENT TRUMP'S TERM IS OVER, THAT NO MATTER WHO IS ELECTED PRESIDENT OF THE U.S., WHETHER IT'S, YOU KNOW, OF REPUBLICAN STATURE OR DEMOCRATIC STATURE, THAT MAYBE THERE WILL BE LESS SUPPORT FOR ISRAEL? [00:19:50] Speaker 7: YES, OF COURSE THERE'S CONCERN, BUT AT THE SAME TIME, THE INTEREST IN THE REGION, AND IN MANY WAYS, IF AMERICA WANTS TO TURN TO THE FAR EAST AND DEAL WITH THE CHALLENGES THERE, IT CAN ONLY DO SO IF IT LEAVES THE MIDDLE EAST WITH A STRONG ALLIANCE OF ISRAEL AND THE MODERATE GULF STATES THAT ARE ALLIED WITH THE UNITED STATES. SO THERE'S A VERY, VERY STRONG INTEREST AND, OF COURSE, JOINT VALUES TO DEMOCRACIES THAT HAVE A VERY LONG RELATIONSHIP. SO WHILE THERE ARE CHALLENGES, AND PERHAPS THERE WILL BE SOME BUMPS IN THE ROAD, I THINK ALL DECISIONMAKERS, ONCE THEY'LL HAVE TO MAKE THE ACTUAL DECISIONS, THEY WILL REALIZE THAT THERE ARE MANY BENEFITS FOR THOSE RELATIONSHIPS, BOTH GLOBALLY, REGIONALLY, AND FOR THE TWO PEOPLES. [00:20:48] Speaker 1: JOHANNAN PLASNER OF THE ISRAEL DEMOCRACY INSTITUTE, THANK YOU SO MUCH FOR JOINING. THIS IS BLOOMBERG. TIME NOW FOR YOUR FRONT PAGE NEWS AND MANY FRONT PAGE FEATURING LULA'S SURPRISING RE-ELECTION IN BRAZIL. DFT SAYS NO FIRST ROUND RUNNER HAD PREVIOUSLY WON THE PRESIDENCY SINCE BRAZIL RESTORED ELECTIONS IN 89. THE JOURNAL REPORTING SUNDAY'S 19% ABSTENTION RATE WAS ONE OF THE LOWEST ON RECORD AND ESSENTIAL. IT'S 5:30 AM IN NEW YORK CITY, 9:30 AM IN LONDON. GOOD MORNING, I'M BONNIE QUINN WITH YOUR BLOOMBERG BRIEF. LET'S GET YOU SET UP FOR THE DAY. THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE DAY, THE BEST OF THE ELECTION. BRASILIAN MARKETS BRACING FOR A ROUTE THIS MORNING. ELON MUSK SAYS SPACEX HAS CLINCHED A $40 BILLION DEATH DEAL TO PAY FOR AI CHIPS. THE BEST OF THE DAY. FUTURES DIPPING THEIR TOE INTO GAINS WITH FUTURES POINTING HIGHER ACROSS THE BOARD, IN FACT. NASDAQ 100 FUTURES POINTED TO GAINS EVEN IF THE PHILLY SOX INDEX HAS BEEN DOWN FOR THREE STRAIGHT WEEKS. WE'LL SEE IF THAT CONTINUES THIS WEEK, OR IF THE ROTATION COMES TO AN END, OR AT LEAST A PAUSE. OIL PULLING BACK FROM ITS HIGHEST CLOSE IN A MONTH. THAT COULD BE GOOD FOR EQUITIES, BUT WE ARE STILL AT 114 ON BRENT AND ABOVE 100 ON WTI. IRAN HOSTING TOP SECURITY AND DEFENSE OFFICIALS FROM SAUDI ARABIA, AND PAKISTAN AND TURKEY WILL ALSO BE THERE IN A MEDIATION CAPACITY. IF WE LOOK AT TREASURY, A LITTLE BIT OF A MIXED PICTURE, WE ARE UP A BASIS POINT AT THE FRONT END, DOWN ALMOST A BASIS POINT AT THE LONG END, SO NOT TOO MUCH MOVEMENT. MARKETS HAVE PRICED OUT ANY MOVE FROM THE FED THIS WEEK, SO ANYTHING WOULD BE A MASSIVE SURPRISE IF WE DID GET SOMETHING. DECEMBER VERY MUCH STILL IN PLAY. SITUATIONS AROUND THE WORLD TO CONTEND WITH AS WELL, NOT LEAST FRANCE, AND OBVIOUSLY ELECTIONS TAKING PLACE THIS WEEK AS WELL. [00:23:04] Speaker 4: LET'S GET TO SOME INDIVIDUAL MARKET MOVERS NOW WITH ISABELLE LEE. LET'S TAKE A LOOK AT US-LISTED BRASILIAN STOCKS AND THOSE EXPOSED TO THE COUNTRY. AS YOU SEE BEHIND ME, IT'S RED ON THE SCREEN. THEY ARE DOWN, PLUNGING IN PRE-MARKET TRADE. ITAO SPECIFICALLY, THIS IS THE LARGEST BANK IN BRAZIL AND IN THE ENTIRE LATIN AMERICA REGION, AND THEY ARE DOWN BY NEARLY 30%. WE SAW OVERNIGHT THAT IT WAS REALLY TIGHT ELECTIONS, BONNIE, AND WE SAW ALSO THAT IN THE LAST MINUTE THAT THEY EXTENDED THEIR VOTING HOURS. THIS IS A MOVE THAT BOLSONARO IS CONTESTING. WE HAVE BLOOMBERG STORY OUT THERE SAYING THAT HE IS CALLING FOR AN ANNULMENT. YOU SEE SHARES LOWER IN PRE-MARKET TRADE. UP NEXT, WE'LL TAKE A LOOK AT SURGERY PARTNERS. THE STOCK IS IN THE GREEN, POPPING BY MORE THAN 20%. WE HAVE A FINANCIAL TIMES STORY SAYING THAT MANTICUROS MERCY HEALTH IS IN LATEST TALKS TO ACQUIRE SURGERY PARTNERS. THIS IS A SURGERY CARE PROVIDER BACKED BY BAYNE CAPITAL. AND IF THIS PUSHES THROUGH, THIS WOULD VALUE THE DEAL AT $6 BILLION, INCLUDING A $3.5 BILLION IN DEBT. AND FINALLY, LET'S TAKE A LOOK AT TESLA. YOU SEE THE STOCK HERE ALSO HIGHER IN PRE-MARKET TRADE. UP BY MORE THAN 2%. THIS COMES AFTER BARCLAYS UPGRADED THE STOCK TO OVERWEIGHT WITH A PRICE TARGET OF $450 A SHARE. THAT IS AROUND 20% UPSIDE FROM THE LAST CLOSE. THE ANALYST, DAN LEVY, CITED THE IMPROVED CORE BUSINESS OF THE COMPANY AND ALSO THE POTENTIAL MERGER OF SPACEX AND TESLA, WHICH HE SAID WOULD PUT THE STOCK AT A PREMIUM. BACK TO YOU, BONNIE. [00:24:26] Speaker 1: LOTS OF ACTION ALREADY THIS MORNING. THANK YOU SO MUCH. THAT IS ISABELLE LEE IN STUDIO WITH US THIS MORNING. AS ISABELLE SAID, A BUSY WEEK FOR TECH EARNINGS WITH DERIVATIVE STRATEGY. WE ARE INTO EARNINGS SEASON, JUST BARELY. IT WILL BE A MASSIVE WEEK. WOULD NOW BE A GOOD TIME, AN OPPORTUNE TIME TO OWN SOME [00:24:52] Speaker 8: VOLATILITY. HAVE YOU BEEN SEEING MORE BUYERS? I WOULD SAY THAT PROBABLY RANG TRUE FOR LAST WEEK AS WELL. ONE THING THAT WE HAVE KNOWN HISTORICALLY IS THE FIRST FEW WEEKS OF EARNINGS, EVEN ABSENT ALL THE MACRO NEWS, TENDS TO BE A GOOD TIME FOR VOLATILITY BUYING. IT IS THE FIRST TIME YOU ARE STARTING TO SEE THE IDEOSYNCRATIC INFORMATION LEAK INTO THE MARKET. THIS PAST FEW WEEK HAS CERTAINLY KIND OF ECHOED THAT. I WOULD SAY THIS WEEK IS LIKELY GOING TO CONTINUE. YOU ARE GOING TO GET THREE MASSIVE HYPERSCALERS, OBVIOUSLY WITH THEIR IMPLIED MOVES, TELLING YOU THAT PROBABLY SOMETHING IMPORTANT IS GOING TO HAPPEN AS WELL. [00:25:28] Speaker 1: YEAH, HYPERSCALER RISK IS SOMETHING THAT I'M CURIOUS ABOUT IN TERMS OF WHAT YOU ARE SEEING FOR PROTECTION ON IT. WE OBVIOUSLY SAW META TALKING ABOUT NEGATIVE FREE CASH FOLLOW LAST WEEK, AND THEN WE HAD TESLA RAMP BACK ON ITS CAPEX SPENDING. I'M CURIOUS, WHAT EXACTLY IS THAT CAUSES PEOPLE TO BUY PROTECTION WHEN THEY HEAR SOMETHING LIKE THAT? [00:25:50] Speaker 8: YOU KNOW, LOOK, I THINK A REALLY SIMPLE REASON IS JUST TOP OF THE HOUSE VOLATILITY. SO IF YOU GO BACK, YOU KNOW, FLASH TO THE PAST OF LAST QUARTER, WE HAD TWO OF THE LARGEST HISTORIC MOVES ON RECORD. THAT WAS FROM MICROSOFT AND THAT WAS FOR AMAZON. SO THEIR SINGLE ONE-DAY REALIZED EARNINGS MOVE ON E LAST QUARTER WAS THE LARGEST OF ALL QUARTERS. I JUST THINK THAT'S STUNNING TO KIND OF SIT BACK AND THINK ABOUT. NOW, AS WE HEAD INTO THIS QUARTER, IT'S IMPORTANT TO REALIZE THAT, YOU KNOW, THESE AREN'T THE HYPERSCALERS YOU MARRIED. AND I JOKE ABOUT THAT. BUT I SIMPLY MEAN THAT AS THEY BECOME MORE FREE CASH FLOW NEGATIVE, AS THERE IS MORE DEBT ISSUANCE, THE TOP OF THE HOUSE IS FAR MORE RATE SENSITIVE THAN IT HAS BEEN IN THE PAST. AND EVEN THOUGH WE HAVE HIGH IMPLIED MOVES INTO EARNINGS, I ACTUALLY THINK WHEN YOU LOOK AT THE REALIZED MOVES ON EARNINGS, THEY COULD BE EVEN HIGHER. SO FOR PEOPLE WHO WANT TO BUY PROTECTION OR SIMPLY JUST WANT TO OWN VOLATILITY, IT DOES LIKELY MAKE SENSE BECAUSE YOU'RE AGAIN, GETTING MORE INFORMATION ON THAT ALL-IMPORTANT CAPEX NUMBER FROM A LOT OF THESE HYPERSCALERS. [00:26:51] Speaker 1: WE SAW THE VIX RISE LAST WEEK. WE'RE STILL BELOW 20. WE DID POP ABOVE 20 FOR A MINUTE THERE, BUT WE'RE BACK BELOW IT AGAIN. CURIOUS ABOUT SINGLE STOCK VOLATILITY AND WHAT YOU'RE SEEING THERE, WHERE YOU'RE SEEING A LITTLE BIT MORE PRESSURE, MAYBE A LITTLE BIT MORE OF AN EXPRESSION OF UNEASE? [00:27:10] Speaker 8: YEAH, I THINK THAT'S A REALLY GOOD QUESTION. AND THAT OBSERVATION IS IMPORTANT BECAUSE ONE THING THAT WE'VE DISCUSSED ABOUT IS THERE TENDS TO BE THE SUPPRESSION ON THE INDEX LEVEL. IT'S OUR FAMOUS PADDLING DUCK AT THIS POINT, BUT IT'S JUST THE POINT THAT YOU GET A LOT OF ZIGGING AND YOU GOT A LOT OF ZAGGING. AND, SURE, THAT'S GOING TO TO SOME DEGREE CANCEL OUT YOUR INDEX VOLATILITY, BUT AVERAGE SINGLE STOCK VOLATILITY IS QUITE HIGH. AND ACTUALLY THAT SPREAD IS SOMETHING THAT WE WATCH EVEN MORE THAN PROBABLY JUST THE VIX ON A STAND-ALONE BASIS. AND WHEN YOU LOOK AT THAT, ESPECIALLY THROUGH EARNINGS SEASON, IT'S TELLING YOU THAT WE'RE ACTUALLY GETTING THESE MULTI-STANDARD DEVIATION MOVES. YOU REALLY ONLY NEED TO LOOK AT THE CHIP SECTOR TO SEE WHAT I MEAN ABOUT THERE ARE MASSIVE MOVES. THE DISPERSION IN THE MARKET IS MAYBE MASKING THAT TO SOME DEGREE, BUT THERE CERTAINLY IS EQUITY VOLATILITY. IT'S JUST SLIGHTLY BELOW THE SURFACE, VONNIE. [00:28:00] Speaker 1: THE PROTECTION ON THOSE CHIPMAKERS, IS IT STILL PRETTY INEXPENSIVE, EVEN THOUGH WE'VE SEEN THREE WEEKS OF DECLINES NOW FOR THE SOCKS? [00:28:10] Speaker 8: UNFORTUNATELY, NO. THE MARKET IS SOMEWHAT EFFICIENT IN REPRICING THINGS. THERE WAS A POINT WHERE GETTING THAT PROTECTION WAS QUITE ATTRACTIVE. ONE THING I THINK IS INTERESTING IS WE SORT OF DUG INTO -- WE'LL JUST USE SMH AS A PROXY -- WE DUG INTO THE CONSTITUENTS OF SMH. SO WE SAID WITHIN THESE CONSTITUENTS, OBVIOUSLY THE ETF ITSELF, YOU'VE SEEN THESE MULTI-STANDARD DEVIATION MOVES, BUT WHEN YOU LOOK AT NORMALIZED SKU ON AN INDIVIDUAL BASIS, IT'S NOT AS IF CART BLANCH, IT'S 99th PERCENTILE NORMALIZED SKU ACROSS THE BOARD. SO IT'S NOT AS IF THE PROTECTION IS HIGH ACROSS EVERY SINGLE NAME. SO I THINK YOU CAN BE SORT OF MORE COGNIZANT AND STRATEGIC ON A NAME-BY-NAME BASIS WHERE YOU CAN STILL GET PROTECTION WITH RELATIVELY HIGH PAYOUTS ON PUT SPREADS OR SOME SORT OF HEDGING MECHANISM. [00:28:57] Speaker 1: YOU MADE THE POINT RECENTLY THAT WE COULD HAVE A VOLATILITY SHOCK BECAUSE OF GOOD NEWS AS WELL, RIGHT? IT DOESN'T HAVE TO BE ALL BAD NEWS. YOU'VE MADE THE POINT PREVIOUSLY AS WELL THAT INVESTORS ARE STILL MORE CONCERNED ABOUT MISSING OUT ON THE RIGHT TAIL THAN THEY ARE ABOUT SOMETHING HAPPENING ON THE LEFT TAIL. WHAT ARE YOU SEEING RIGHT NOW, SEVERAL WEEKS LATER? [00:29:20] Speaker 8: YEAH, YOU KNOW, I THINK THIS IS SOMETHING THAT WE HAVE TO KIND OF KEEP IN MIND POST-COVID. YOU'VE JUST HAD THIS FOMO AND MOMO. THERE HAVE BEEN TIMES IN THE OPTION MARKETS WHERE THE RIGHT TAIL IS ACTUALLY FAR MORE EXPENSIVE THAN THE LEFT TAIL. EITHER CAN CAUSE A VOLATILITY SHOCK BECAUSE THE VIX IS SIMPLY A WAITING OF S&P CALLS AND PUTS. THE ONE THING I WOULD REALLY, REALLY BE CAREFUL OF IS IF WE CAN CLIMB THIS WALL OF WORRY OR IF WE CAN GET RELATIVELY GOOD EARNINGS, YOU HAVE JUST AS MUCH OF A RISK OF THAT RIP AND THAT BID TO THE UPSIDE CALL AS YOU DO TO KIND OF THIS CONTINUED SELL-OFF [00:29:52] Speaker 1: ON THE DOWNSIDE. AMY, CROSS ASSET VOLATILITY, WHAT IS THAT LIKE RIGHT NOW? WE SAW THAT MASSIVE REPRICING IN TREASURY. SINCE THEN, WE'VE HAD A LITTLE BIT OF MOVEMENT, BUT MORE SO GLOBALLY THAN THE UNITED STATES IN THE LAST WEEK OR TWO. ARE YOU NOTICING ANYTHING INTERESTING CROSS ASSET-WISE? [00:30:15] Speaker 8: ARE THERE CREATIVE WAYS TO TAKE ADVANTAGE OF ANY MOVEMENTS? I THINK ONE THING THAT INVESTORS HAVE GOTTEN PRETTY HANDY AT IS USING THE ETFS THAT ARE RELATED TO FIXED INCOME, BUT TRADE IN THE EQUITY MARKET. TO GIVE YOU AN EXAMPLE, LIKE A TLT, HYG, LQD, JNK, THESE ARE ALL ACTUALLY FIXED INCOME PROXIES, BUT QUITE LIQUID. WE SEE A LOT OF OPTIONS TRADING ON THEM, AND WE SEE INVESTORS UTILIZE THEM. TO ANSWER THE FIRST PART OF YOUR QUESTION, THREE WEEKS AGO, I THINK, WHEN WE WERE SPEAKING, I WAS SORT OF SAYING, WHEN YOU FIXED INVESTORS, THAT WAS IN THE 99th PERCENTILE. IT WAS SCREAMING. IT WAS TELLING YOU THAT RATES VOLITILITY WAS EXTREMELY ANGSTY. HOWEVER, YOU WERE SEEING ALMOST NOTHING ON THE EQUITY SIDE. A LOT OF THAT, TO ME, IS NOT SUSTAINABLE. I'M AN OLD FIXED INCOME PERSON, AND I DO THINK YOU GET THAT BLEED. AT THIS POINT, WE'VE SEEN THAT BLEED. A LOT OF FIXED INCOME VOLITILITY WAS THAT HIGH. [00:31:13] Speaker 1: AMY, IT IS ALWAYS SUCH A PLEASURE SPEAKING WITH YOU. IT IS ALWAYS FOOD FOR THOUGHT. THAT IS AMY WU SILVERMAN OF RBC CAPITAL MARKETS. NOW TO ALL THE TOP STORIES TRENDING ON THE TERMINAL THIS MORNING. TOP SECURITY AND DEFENSE OFFICIALS FROM SAUDI ARABIA, PAKISTAN, AND TURKEY SET TO MEET IRAN'S LEADERS TODAY. IT IS ALL PART OF AN EFFORT TO DEFUSE TENSIONS AND RENEW TALKS AIMED AT PREVENTING A BROADER WAR IN THE MIDDLE EAST. THE EUROPEAN UNION IS SAID TO BE PLANNING NEW MEASURES TO CURB IMPORTS FROM CHINA, TARGETING SECTORS THAT INCLUDE CHEMICALS, FURNITURE AND MACHINERY. ACCORDING TO SOURCES, THE MEASURES COULD COME IN THE FORM OF IMPORT CAPS OR TARIFFS AND COULD BE PRESENTED AS SOON AS THE FIRST QUARTER OF 2027. THE MOVE IS PART OF A BROAD EU PUSH TO REDUCE ITS DEFICIT WITH CHINA, WHICH REACHED $404 BILLION LAST YEAR. VOX AGEN PLANS TO BUILD A NEW $4 BILLION AUDI FACTORY IN GEORGIA AS IT SEEKS POTENTIAL RELIEF FROM U.S. TARIFS. AUDI SAYS THE PROJECT WILL CREATE 4,500 JOBS. THE FACTORY WILL MAKE LARGE SUVS. PRESIDENT TRUMP CALLED THE PLAN INCREDIBLE, SAYING IT WAS A TESTAMENT TO THE IMPACT TARIFFS HAD ON THE AUTO INDUSTRY. COMING UP, ENDING ONE WAY OR ANOTHER. PRESIDENT TRUMP SAYS A DECISION ON IRAN IS CLOSE. MORE NEXT. THIS IS BLOOMBERG. THIS IS BLOOMBERG BRIEF. YOU ARE LOOKING LIVE AT THE PRINCIPAL ROOM. COMING UP ON OPEN INTEREST, AN INTERVIEW WITH MARATHON ASSET MANAGEMENT CEO BRUCE RICHARDS. THAT IS AT 10:30 NEW YORK TIME. THIS IS BLOOMBERG. [00:32:55] Speaker 9: WE ARE ENSURING THAT IRAN WILL NEVER HAVE, EVER, EVER, EVER A NUCLEAR WEAPON. YOU WILL SEE THAT ENDING QUITE [00:33:02] Speaker 1: ENDING QUITE SOON, ONE WAY OR THE OTHER. PRESIDENT TRUMP CALLING DECISION TIME ON WHETHER HE WILL MAKE A DEAL WITH TEHRAN OR RESUME ATTACKS. JOINING US FROM WASHINGTON IS BLOOMBERG'S TYLER KENDALL. TYLER, WITH THE MIDTERMS COMING UP, HE MAY BE A LITTLE BIT BUSY, RIGHT? SO WHEN IS THE CONSENSUS FOR WHEN HE MIGHT GETTING KICKED DOWN THE ROAD? [00:33:24] Speaker 10: WELL, VANI, AT THIS POINT THERE IS NO CONSENSUS ON WHAT A POTENTIAL TIMELINE WOULD LOOK LIKE, THOUGH PRESIDENT TRUMP HIMSELF HAS TELEGRAPHED THAT HE COULD RESTART KINETIC ACTION AFTER THE MIDTERM ELECTIONS. AND IT DOES APPEAR THAT THE U.S. IS MAKING PREPARATIONS FOR SUCH OF A MILITARY CAMPAIGN RESUMING, THOUGH WE SHOULD SAY THAT U.S. OFFICIALS OFTEN SAY THAT THEY WANT ALL OPTIONS ON THE TABLE. BUT WE HAVE SEEN ADDITIONAL U.S. FORCES SENT TO THE REGION, AS WELL AS A REDUCTION IN BOTH DIPLOMATIC AND MILITARY STAFFING ACROSS THE MIDDLE EAST. NOW, PRESIDENT TRUMP HAS PREVIOUSLY OUTLINED SOME POTENTIAL TARGETS THAT WE COULD SEE IN ANY RESUMED BOMBING CAMPAIGN, INCLUDING WHAT'S KNOWN AS PICKAX MOUNTAIN, A HEAVILY FORTIFIED SITE NEAR ONE OF IRAN'S NUCLEAR ENRICHMENT FACILITIES. AND YOU ACTUALLY HEARD THE PRESIDENT BRING UP THAT POTENTIAL OVER THE WEEKEND WHEN ASKED DIRECTLY BY REPORTERS WHAT HE MAY BE EYEING. NOW, PEOPLE FAMILIAR WITH THE MATTER DO TELL THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. [00:35:03] Speaker 1: WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. [00:35:15] Speaker 10: WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. [00:35:53] Speaker 1: WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. [00:36:02] Speaker 10: WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. WE ARE TALKING ABOUT THE BORDER. THAT WOULD MARK A PRETTY BIG MOVEMENT VERY CLOSE TO THE MIDTERM ELECTIONS AS MANY STATES CONTINUE TO GET HIT. [00:36:48] Speaker 1: TYLER, THANK YOU SO MUCH. THAT IS BLOOMBERG'S TYLER KENDALL IN WASHINGTON ON A BIG WEEK. OVER IN BRAZIL, PRESIDENT LULA CLINCHING A REELECTION VICTORY IN A RUNOFF AGAINST THE RIGHT WING OF FLAVIO BOLSENARO. BRAZIL MARKETS BRACING FOR A ROUTE THIS MORNING. FOR MORE, LET'S BRING IN BLOOMBERG'S RODRIGO OREUELA. RODRIGO, EXPLAIN TO US HOW THE PULL AWAY HAPPENED. THEY WERE NECK AND NECK, IT LOOKED LIKE IN THE FIRST ROUND. WE EVEN HAVE A CHALLENGE TO THIS RESULT AS WELL. [00:37:16] Speaker 5: YES, SO THE FIRST ROUND WAS A BIT OF A SURPRISE. NOBODY EXPECTED THAT CLEAR BOLSENARO EDGE. AND DEFINITELY THERE WAS NOBODY WHO WAS CALLING ON. THERE MAY HAVE BEEN PEOPLE, BUT THE GENERAL OPINION WAS THAT THIS WAS NOT GOING TO HAPPEN, WHAT WE SAW LAST NIGHT. BUT LULA PULLED IT OFF. ONE THING THAT WAS CRUCIAL WAS HE WAS ABLE TO MOBILIZE A LOT OF VOTERS. WE HAVE A LOT OF VOTERS. OUR COLLEAGUES IN BLOOMBERG ECONOMICS HAVE A NICE CHART ON THIS. AND THEY SHOW THAT ENGAGEMENT BY VOTERS WAS THE HIGHEST SINCE 1989. WHAT THIS MEANS IS THAT THERE WAS VERY LOW, ON A RELATIVE TERM, THERE WAS VERY LOW ABSTENTION AND THERE WAS VERY LOW NUMBER OF BLANK VOTES. PEOPLE WERE REALLY OUT THERE VOTING. AND THAT WAS THE KEY TO HIS VICTORY, BEING ABLE TO GET VOTERS OUT THERE TO SUPPORT HIM, WHICH BOLSONARO FAILED. OVER THE -- AS DAYS PASSED BETWEEN THE TWO ROUNDS, THERE WERE OBVIOUSLY MISTAKES ON THE BOLSONARO SIDE THAT WAS UNABLE TO KIND OF COUNTER THAT MOBILIZATION LULA WAS GETTING, BUT IT WAS REALLY DOWN TO LULA'S ABILITY AND HIS PEOPLE'S ABILITY TO GET PEOPLE OUT THERE TO BACK HIM AND TURN AROUND THIS RESULT. [00:38:25] Speaker 1: RODRIGO, IF THESE DECLINES IN BRAZIL EQUITIES HOLD THROUGHOUT THE SESSION THAT WE'RE SEEING PRE-MARKET HERE IN THE U.S., THAT WOULD REALLY ERASE THIS YEAR'S GAINS, RIGHT? SO, YES, A ROUTE, BUT AT THE SAME TIME, THE MARKETS HADN'T BEEN DOING TOO BADLY UNDER LULA, AND CERTAINLY THE ECONOMY HAD BEEN IMPROVING, PARTICULARLY IN AREAS LIKE YOUTH UNEMPLOYMENT. WHAT IS THE OUTLOOK FOR MARKETS AND THE ECONOMY NOW? [00:38:46] Speaker 5: YEAH, SO THERE ARE TWO THINGS. ON THE ECONOMY, AS YOU SAY, THERE'S CLEARLY GOING TO -- WE'RE CLEARLY HEADED INTO AN OUT. THERE ARE A FEW EQUITIES, EUROPEAN EQUITIES THAT CAN SERVE AS PROXY AS TO WHAT WE'LL EXPECT. WE SEE TELEFONICA SANTANDER, FOR WHOM BRAZIL IS THE SECOND LARGEST MARKET, BOTH DECLINING STRONGLY. CARFOUR, WHICH IS ALSO VERY BIG IN BRAZIL, YOU KNOW, HAS A BIG RELIANCE ON BRAZIL, ALSO FELT SIGNIFICANTLY THERE'S A BIG BRAZILIAN ETF THAT HAD A BIG DECLINE. SO CLEARLY THIS WILL HAPPEN. THE MAIN REASON FOR THIS, AS YOU SAY, YOU KNOW, THIS WILL BASICALLY ERASE THE GAINS OF THE YEAR. BUT TO UNDERSTAND THAT, WHAT WE HAVE TO SEE IS THAT WHEN BOLSONARO PULLED HIS SURPRISE FIRST PLACE IN THE FIRST ROUND, INVESTORS THOUGHT THIS WAS A LOCK-IN, THOUGHT HE WAS DEFINITELY GOING TO BE THE NEXT PRESIDENT, AND SO THERE'S A LOT OF PEOPLE WHO TRIED TO GET INTO THAT MARKET'S PLAY. WHAT WE'RE SEEING TODAY IS PROBABLY A BIG UNWINDING OF THOSE POSITIONS. THIS WAS NOT EXPECTED, NOW PEOPLE ARE TRYING TO CUT THEIR LOSSES AS QUICK AS POSSIBLE. THIS DOESN'T SPEAK AS MUCH TO LULA AS THE NEXT GOVERNMENT, AS IT DOES TO WHAT PEOPLE WERE EXPECTING. NOW, AS FAR AS THE ECONOMY GO, ONE THING -- I MEAN, BOTH -- THE BIG QUESTION MARK HERE AROUND LULA'S ADMINISTRATION IS FISCAL POLICY. THAT HAS BEEN THE CONCERN. BUT BOLSONARO HAD NOT CLEARLY SENT OUT MESSAGES THAT HE WAS GOING TO DO THINGS VERY DIFFERENTLY. AGAIN, GOING BACK TO OUR BLOOMBERG ECONOMICS COLLEAGUES IN THEIR NOTE TODAY, THEY SAY BOTH HAD MADE SIMILAR PROMISES. [00:40:11] Speaker 1: ALL RIGHT, RODRIGO, THANK YOU. WE'LL KEEP AN EYE OUT FOR ALL OF THE STORIES BASED ON THIS RESULT, THAT IS BLOOMBERG'S RODRIGO. ELON MUSK POSTING ON X THAT SPACEX CLOSED A $40 BILLION DEAL TO PAY FOR AI CHIPS. MATT BOXEN OF BLOOMBERG INTELLIGENCE IS BACK. SO HE SAYS IT'S CLOSED. WE'RE REPORTING THAT THERE MIGHT BE A LITTLE BIT MORE TALKING GOING ON, BUT ESSENTIALLY, MATT, IT LOOKS LIKE HE DID MANAGE TO GET THIS ACROSS THE LINE IN A LITTLE BIT MORE DIFFICULT OF [00:40:38] Speaker 6: AN ENVIRONMENT. YEAH, THAT'S RIGHT. IT DOES LOOK THAT WAY. AND I GUESS AN IMPORTANT DETAIL GOING TO BE THE SPREAD OVER BENCHMARK DEBT THAT THEY'VE BEEN ABLE TO SECURE FOR THIS BECAUSE IT'S OFF BALANCE SHEET DEBT AS A SPECIAL PURPOSE VEHICLE. SO, YOU KNOW, IT'S KIND OF NOT SO SECURE. AND I THINK, YOU KNOW, THE KIND OF THE BACKERS OF THIS DEAL WILL BE MAKING A JUDGMENT CALL ABOUT IN THE PERHAPS UNLIKELY EVENT OF A DEFAULT THAT THEY'LL HAVE A GOOD ABILITY TO SELL ON THOSE INVIDIA CHIPS TO OTHER PARTIES. BUT, YEAH, IT DOES SEEM LIKE WE SHOULD GET CONFIRMATION IN THE NEXT DAY OR TWO THAT THIS DEAL IS DONE AND THAT IMPORTANT DETAIL ABOUT THE SPREADS. [00:41:13] Speaker 1: MATT, THIS WEEK WE'RE GOING TO HEAR FROM ALPHABET, MICROSOFT, AMAZON AND INTEL. IT COULD BE A BIG WEEK FOR THE CHIPMAKERS AND THE HYPERSCALERS AND THE MIC7, THEY'RE ALL UP FOR GRABS. IT FEELS LIKE INVESTORS ARE INTERESTED IN BEING OPTIMISTIC, AT LEAST THIS MONDAY. WHAT WILL THEY WANT TO HEAR? [00:41:30] Speaker 6: THEY WILL, I THINK, MORE THAN ANYTHING, WANT TO HEAR THAT THERE IS INCREMENTAL REVENUE MOMENTUM COMING FROM THE BIG INVESTMENTS THAT HAVE BEEN HAPPENING IN AI ALREADY. SO THEY CAN FEEL CONFIDENT THAT THE ANTICIPATED STEEP INCREASE IN CAPITAL SPENDING NEXT YEAR -- WE ALREADY THINK THEY'RE SPENDING A LOT OF MONEY, BUT NEXT YEAR IT'S EVEN MORE, MAYBE A THIRD MORE FOR THESE REPORTERS THIS WEEK. THE REVENUE IS GOING TO COME THROUGH TO JUSTIFY THOSE INVESTMENTS. I THINK THAT'S GOING TO BE WHERE THE VAST MAJORITY OF THE FOCUS IS. [00:42:01] Speaker 1: ALL RIGHT, WELL, NASDAQ 100 FUTURES ARE CERTAINLY POINTED HIGHER. MATT, THANK YOU SO MUCH. THAT IS MATT BLOXAM OF BLOOMBERG INTELLIGENCE. COMING UP, A BUSY WEEK FOR THOSE EARNINGS, BUT ALSO RATE DECISIONS. WE HAVE YOUR WEEK AHEAD NEXT. THIS IS BLOOMBERG. I'M BONNIE QUINN IN NEW YORK. NOW, A LOOK AT WHAT'S AHEAD TODAY AND FOR THE WEEK. THE FED KICKING THINGS OFF WITH THE FIRST MAJOR CENTRAL BANK RATE DECISION ON WEDNESDAY. AND THE BANK OF JAPAN ON FRIDAY. IT IS THE TRIFECTA WEEK. PLUS, PCE DATA, PERSONAL INCOME AND SPENDING, GDP DATA ALL OUT ON THURSDAY. AND ON THE EARNINGS FRONT, WE HAVE MICROSOFT AND ALPHABET REPORTING ON WEDNESDAY, AMAZON AND INTEL ON THURSDAY. SO PRESERVE SOME ENERGY. LET'S TAKE A LOOK AT SOME PRE-MARKET MOVERS. OBVIOUSLY, WE'RE KEEPING AN EYE ON BRAZIL-RELATED COMPANIES, US-LISTED SHARES OF BRAZILIAN COMPANIES AND THOSE EXPOSED TO BRAZIL SLUMPING AS PRESIDENT LULA WINS RE-ELECTION. THEN WE HAVE SURGERY PARTNERS UP 23%. FINANCIAL TIMES REPORTING MERCY HEALTH IS IN LATE STAGE TALKS TO BUY A MAJORITY STAKE IN THE SURGICAL CARE PROVIDER, ROUGHLY $6 BILLION OF EVALUATION THERE. AND THEN TESTA IS SEEING A LITTLE POP OF 2-PLUS PERCENT. BARKLEY IS OVERWEIGHTED THE STOCK ON THE SPACEX MERGER POTENTIAL WITH A PRICE TARGET OF 450. THIS IS YOUR MACRO PICTURE GOING INTO MONDAY. BRENT CRUDE IS SLIGHTLY OFF ITS HIGHS, AND THE 10-YEAR YIELD HOLDING BELOW 5%.