Bloomberg Surveillance 9/29/2026

The market is taking into consideration the scale of capital spending. The drivers of growth are in particular the AI spending boom. This market has a correlation breakdown under the surface. The market's bracing for the same sort of episodic indigestion. Sometimes when there is volatility that can actually be an opportunity.

This is Bloomberg Surveillance with Jonathan Ferro, Lisa Abramowitz, and Annmarie Hordern, live from New York City this morning. Good morning. Good morning for our audience worldwide. Bloomberg Surveillance starts right now.

Coming into Tuesday on shaky ground, the AI trade helping to insulate equities from bond yields at multi-decade highs as the president is convening tech leaders with regulation top of mind. And Anthropic's IPO prospectus is leaking. Reuters reporting some big risks and some major costs. So this prospectus, as leaked to Reuters, poses the risk of catastrophic or existential risks to humanity. Okay, so there's that side of things. At the same time, they plan to spend $518 billion in cloud computing and infrastructure applications over the next few years. So yay for the spending, maybe in terms of supporting the AI trade. On the other hand, the idea that any kind of AI system could resist shutdown and conceal or manipulate information doesn't exactly leave people feeling good.

What struck me about this prospectus, as well in Reuters, is that they devoted roughly 80 pages of the 261-page main body of its prospectus laying out risk factors. That's nearly twice the 48 pages it actually used to describe its business. So they're coming out basically saying here are all the risks. And then guess what? They're gonna go over to the White House and have lunch with the president. Yeah. And if you can't stop the prospectus from leaking, how can you sound frankly like can we trust them to regulate themselves? Surely that's got to be part of the conversation this morning.

OpenAI or much looking good after this from Anthropic. Well, yes, this is going to be a really interesting lunch because you have the likes of OpenAI and Anthropic leaders meeting off of Tencent Wong, who says this isn't an issue of you guys self-regulating. This is an issue of you guys not having responsible business models. Given the fact that OpenAI did delay some of their more advanced models for security concerns, gives a sense that they are now prioritizing the business concern of having rogue AI agents over potentially being first with the most frontier models.

The OpenAI IPO delayed into next year, maybe even longer. This IPO is already delayed. It's leaking into November, perhaps even longer. Oura Ring just moments ago postponing their IPO due to uncertainty in the market. This is not the IPO window the bankers were hoping for coming into fall. This was supposed to be an incredibly active season. Remember, every single conversation that we had with bankers of major Wall Street firms said the pipeline is as full as they have ever seen it. This may be what the Federal Reserve is trying to accomplish. The uncertainty in markets, the turmoil in the implied volatility in bond yields, all leading to this window shutting at least for opportune financing and giving a little bit of, I don't know, a less frothy edge to this otherwise pretty ebullient market.

Speaking of the Federal Reserve, have you seen the list of speakers today? There are six of them. Six Fed officials speaking later today on a range of things, including payments, the economy, and monetary policy. It kicks off later on this morning with Governor Bowman. You'll hear from Governor Barr. You'll hear from Austin Goolsbee once again. Remember his speech last week getting a lot of attention. That line about this not being painless. Look out for Williams later on, 2 p.m. Eastern time. That was a guy heading into this decision that some people thought on the margin might be one of those who dissented to the decision to hike interest rates. Where does he stand on underlying inflation, underlying inflation in America? When he said that it was promising, and then he voted for a rate hike, and then he came out and said, ultimately, we need to make more progress. And it's clear that inflation is moving in the wrong direction.

Bob Michael of J.P. Morgan yesterday highlighted that John Williams was arguably the most important speaker to hear from. Given the fact where are the doves? There is no dovish moderating voice on the FOMC. At 3 p.m., so 2 p.m. is Fed speak, then John Williams, and then at 3 p.m. Chris Waller also speaks. Interesting to hear both of them back to back later today. Get some data as well later on this morning. Looking for JOLTS, job openings, the appetizer for a whole long list of data points throughout this week on the labor market. We'll get claims later this week, ADP as well. Payrolls on Friday in the mix, PCE on Wednesday. PCE in focus, inflation in America just weeks away from the midterms.

This is a huge problem still. I mean front page of Axios this morning is talking about how GOP strategists are basically saying that heartland of America's farm country is struggling right now. And that might mean what you would think a Republican stronghold could flip. What's going on? And this administration is still debating whether or not to have a diesel export ban. It's not so much the issue of oil. The issue is underneath the surface when it comes to gasoline and diesel, it's in the product. We've said it a million times on this program, that debate, that policy proposal just one night.

Coming up on the program, we'll catch up with Dan Ives of Wedbush, the Anthropic IPO prospectus leaks, and Anders Persson of Nuveen projecting peak inflation. We begin this hour with elevated yields keeping the pressure on equity markets worldwide. At Wedbush, if you have any research rising, we suspect that the bond market has been hacked by bond vigilantes. Algorithms. They respond to news headlines with huge trades that exacerbate volatility. Ed joins us now for more.

And welcome to the program, sir. It's good to see you. Do you believe we might be entering a little bit of a negative feedback loop in this bond market where high yields fuel deficit worries and that fuels high yields? So we're on the brink of that.

And I think we're on the brink of it. We're sort of in the midst of it. We've actually seen, I think, since the beginning of the year, a synchronized increase in bond yields. Might actually have started last year. I think a lot of that has to do with what we've previously discussed. The Bank of Japan is raising interest rates, and that is causing an unwind of the global carry trade, which I think is affecting global bonds. And so a lot of that is kind of a knee-jerk mechanical event. But at the same time, I think we also have these algorithms that'll take any news whatsoever that's out there and some of that's been bearish and kind of blow it up. So we get these rapid increases in bond yields.

And at what point do you think it becomes self-limiting that the bank steps in? Because people start to worry about the damage.

I think there's already a lot of worry about the damage. People are already kind of wondering what's going to break here. So I think we're already at that point. I think the best way to monitor that is to just keep watching where the bond yield is relative to short-term rates. Usually you start to get bond yields going up less than short-term rates when bond investors become increasingly convinced that if short-term rates continue to go up, that something will break. And of course, the two-year Treasury here and around the world has been a very good leading indicator of what central banks are going to be doing. And right now, the two-year Treasuries in all the major countries in the world are pointing towards more tightening by central banks. So on September 15th, they've kind of concluded that we want to proceed with caution here. When it comes to the equity market, will it turn out to be actually a good call? More of a good call for the bond market, though. I was focusing on the equity market, so.

And you said it's a good time to proceed with caution. This morning, we were just talking. John mentioned that Oura has postponed its IPO due to what it called uncertainty in the market, even as it reports a 90% revenue growth over the year of 2026. Right. Is this potentially the sign of something breaking when it comes to the pipeline of deals that are trying to get done?

Well, I kind of am watching Oracle more closely because of the Stargate deal, where Oracle is in a partnership with OpenAI and SoftBank to build the data centers. And I think the total commitment is $500 billion. And just recently, one of those data centers was postponed rather significantly because of a 19-mile gas pipeline in New Mexico was rejected by the state. So yeah, there's starting to be some stresses in the AI trade as well. And of course, that's what has continued to hold the market up quite well near a record high for both the Nasdaq and the S&P 500.

Does this mean that at this point, if something might break or there are signs that at least the broader risk appetite is waning or at a pretty accelerating clip, does that make you bullish bonds? We heard from Jim Bianco yesterday that he is getting bullish for the first time in years, just based on this technical retracement.

I would say that bonds yielding 5.25% are very attractive. You know, certainly on a ten-year basis. And the good thing about bonds is if you just hold them, you'll get your money back and you get the yield. And I think again, five and a quarter is a pretty good yield, but it doesn't feel like this is necessarily the peak. And bond yields will think even Bianco said that we might find that we can get even better yields if we just kind of wait here. So I'm not convinced that 5.25% is necessarily the top in yields. I was thinking that that was the case, but I think I'm increasingly wondering whether the unwind of the yield curve trade is a big problem here. This kind of, I just recently wrote actually last night that this might be the revenge of the bond vigilantes. The bond vigilantes were suppressed from the great financial crisis to the great virus crisis with quantitative easing and zero interest rates. And now that they've been sort of liberated and free to express an opinion, they're saying, well, you know, you accumulated all that debt near zero interest rates back then, and now you're going to have to refinance that at these yields. And that's concerning.

I looked at it this morning. You called it invasion of the bond vigilante algorithm. So how high do you think yields can actually go?

Well, I think more and more people are thinking about the possibility of getting closer to 6%. I would say 5.5%. I'm not getting into the alarm stage here. I think we are going to find lots of buyers at these kind of levels. The same thing happened in 2023 when the bond yield got to 5% very quickly. We saw that the auctions actually started to go very well. And then bond yields actually declined because inflation moderated. This is not exactly the same scenario right now. One of the reasons I turned more cautious in mid-September is because of what's going on in the Middle East. Higher for longer oil prices means stickier inflation means that central banks are not in a one-and-done mode, but are in a tightening mode. And that in turn is pushing up bond yields. So I think the good and the bad news is that the repricing in the bond markets are occurring pretty rapidly, and that hurts in the short term. But to the extent that we get to where the terminal rate is for the bond yield, that will be helpful.

We saw another hike overnight down under in Australia. And thank you, sir. Ed Yardeni of Yardeni Research. Central bank after central bank responding to this high yields worldwide. We often hear that, don't we? High yields all around the world with the exception of one notable very large economy and that's China. Chinese yields actually year-to-date on government bonds have been lower. And this economy is different. This government is looking to subsidize things and get the economy moving again. The latest from the PRC, China to subsidize interest payments for first-time homebuyers. First home purchases. This is an important move from the Chinese. They're looking to stimulate growth. They have a very different problem over in China compared to the problem we talk about every single morning on this show. They have essentially a disinflationary spiral, and they have consumers that are unwilling to spend, and they are unwilling or unable to meet their 5% bogey when it comes to GDP growth that's required for them to maintain equilibrium. And people were expecting, based on some policy statements yesterday from the Chinese, from the PBoC, that they were going to inject stimulus. Here it is. Is there more to come? Is this going to be enough? The latest push from Chinese authorities this morning. Equity futures just about unchanged on the S&P 500. We're in the bond market still and the commodity storm as well. Let's get you an update on news worldwide with your Bloomberg brief. Vonnie Quinn has more. Hey, Vonnie.

Hey, John. Good morning. President Donald Trump is criticizing the release of five men in the U.K. who were arrested over an alleged terror plot against a Royal Air Force base used by the US for strikes against Iran. The men were released on bail after an investigation found no viable explosives at the scene. British police are continuing to investigate the incident. Goldman Sachs is working on a plan for CEO John Waldron to succeed David Solomon as CEO as soon as next year, the Wall Street Journal reporting. Waldron could take over towards the end of 2027 or in 2028, with Solomon's move into an executive chairman role. Oura Ring postponing its market debut due to what it's calling uncertainty in the IPO markets. The smart ring maker is saying the company is profitable and has further strengthened since the beginning of the IPO process, adding, quote, we aim to deliver an extraordinary IPO for our employees and investors. We have the luxury of choosing our moments. And that is your Bloomberg brief, John.

Thank you. Thanks for the update. I'm next on the program predicting victory over Iran. We're going to win that. We're very soon to get a win. As far as I'm concerned, it's going to be one way or the other. It's going to be, it's going to go pretty quickly. Up next, we'll catch up with Tobin Marcus of Wolfe Research live from New York City this morning. Good morning.

This week starts picking up later on this morning. You get some economic data, consumer confidence, job openings, looking for job openings later on at 10 a.m. Eastern time. Then I get together with the president of the United States and the tech titans. The AI, I was looking at the headlines that comes from that and the Fed speak. Later on, you'll hear from Governor Waller, Governor Bowman, Governor Barr, you'll also hear from the New York Fed President John Williams on what to do about this economy and what to do with interest rates in the equity market right now. The S&P 500 weaker through yesterday's session. No real sign of big negative follow-through. Just about as stable on the S&P 500 this morning. Likewise on the Nasdaq. But we hold on to these levels in the bond market. Yields up some. Another basis point. We said this yesterday. The curve, three years are now 5% and higher on a two-year. Getting closer to 5% for 4.94 this morning. Am I just inching higher? Going into this data, you know, I'm still thinking about what Ed said, which is on one hand it seems attractive. On the other, this is suddenly a sea change where people are able to express a view and they are not happy with the fiscal deficits. They're not happy with the inflation, they're not happy with having to lend their money out unless they're getting paid pretty significantly. So at this point, does it have a self-fulfilling nature? If you have deficits that only get worse or as yields climb? Are we entering a doom loop kind of spiral that leaves these yields potentially much higher? That's the negative feedback loop that we were talking about off of the program. Are we on the brink of that? And with that, already we'll have that debate throughout this hour. The commodity story looks like this. Brent pulling back by a quarter of 1%. Brent at 105. WTI at 92. Let's talk about the latest on the Savannah this morning predicting victory over Iran. Iran will never have a nuclear weapon. We're going to win that war very soon. It'll be over and the gas and gas prices will come tumbling down. Look at the win. As far as I'm concerned, it's going to be one way or the other. It's going to be, it's going to go pretty quickly. As soon as that war ends, inflation is going to be eradicated. Totally.

So here's the latest. This morning, Iranian officials announcing a peace deal can't be reached before the midterms. Sources telling us here at Bloomberg that Tehran sees a risk of the conflict escalating after November 3rd, with the latest from Washington, Tyler Kendall has more. Hey, Tyler.

Hey, John. Good morning. Well, people familiar with the matter tell us that Iranian officials have privately conveyed pessimism about a deal, adding that little progress was made last week on the sidelines of the UN General Assembly. U.S. officials say the White House has made it clear that it is looking for firm commitments from Iran on reopening the Strait of Hormuz, as well as concessions related to its nuclear program. Now, Iran's foreign minister has remained in New York since last week and did meet with Qatari mediators overnight. But Iranian state media is reporting that he has said that they, quote, strongly deny that there's any flexibility regarding nuclear. We also know that Iran is looking for the U.S. to lift its military blockade when it comes to its port, something considered to be a non-starter as well as is seeking financial relief. But we heard from President Trump yesterday denying a report by Axios that he would be willing to ease sanctions in exchange for getting a deal done. In fact, U.S. officials are saying just the opposite, that they want to ramp up the economic pressure on Iran, with the U.S. Treasury Secretary, Scott Bessent, adding that right now, the U.S. estimates that Iran has only about 15 million barrels of oil that remain out for delivery, and soon those exports will dry up. Now, John, Iran's foreign minister did say that the country is awaiting a final response from the U.S. to the latest proposal as soon as today. But at this point, it's unclear if any progress has been made on any of these issues. The town of Kendall, with the latest in Washington. Tyler, thank you.

To build on this conversation, Tobin Marcus of Wolfe Research writes the following. Despite the growing political pressure on Trump from rising yields and diesel prices, our base case is no deal before the midterms. Tobin joins us now from our studio. Tobin, welcome. What's informing your base case?

Thanks for having me. The challenges in bridging the gap between the two sides' positions is the core reason for our pessimism about the speed with which we can realistically get a deal. And fundamentally, it's not that different than the reasons that we were cautioning, you know, it's going to take a long time to get a deal back in April and May. You know, both sides want a deal. I think ultimately there is a recognition on both sides that the war can't last forever, and that the only way to durably get out of this crisis is some kind of a deal. But they are in very different places, both about their specific red lines and, apparently after the last few days of headlines about the U.S. side's nuclear demands, I think there's a big disparity just in terms of the concept and overall structure of a deal, which is deterioration relative to where we were in May and June.

Tobin, how do you read the reporting that the president might actually want to reinstate the bombing campaign after the elections?

That strikes me as a fairly empty threat based on where we stand with weapons stockpiles. We've had many rounds now of President Trump either publicly threatening major escalation of the bombing campaign or reports coming out that he is discussing that internally with aides, which is what the most recent round mostly looks like. Ultimately, I think that the concerns about U.S. base survivability, our ability to protect regional energy assets based on how depleted U.S. air defense interceptor stockpiles are, those are fairly binding constraints. Not that we literally cannot resume the bombing campaign, but that there's a lot of good reasons not to. And Trump's hearing that from his military advisors. So I think that's an attempt to apply pressure, but not something I'm expecting to happen after the midterms to happen.

Can we talk about the political implications at home in Axios this morning of a GOP campaign consultant saying in Iowa, we should brace for losing everything? That's quite harsh in a state where no one would expect that to flip to Democrat. Do you think this is going to push the president into the diesel export ban?

I don't. I think that publicly toying with it the way that he did last week and then not actually having done anything a full week later, you know, despite indicating that action would come within days. All these reports about the continued pushback he's continued to get from industry insiders and from folks with energy experience within the administration, the indications that Senator Cruz, you know, told people he had been firmly assured by the White House that this was not happening. I think they've heard that it's a bad idea from people in the energy industry. And this is the reason for our skepticism about that idea in the first place. Not even that, you know, that they'd look at the pros and cons and make a decision. But what the, you know, people with energy in the administration, like Secretary Rice, are saying is it wouldn't even help, you know, even if you wanted to bite a bullet to do this. It's just not productive in the first place.

Clearly, affordability is very much in the forefront of this election season. And I just wonder how much bond yields are as well as we see some of the highest yields going back to 2007 on benchmark rates. And that's also affecting affordability.

Yeah, they're certainly in the forefront of our minds. I think that the mortgage interest rates facing consumers are in some ways the single most salient element of the affordability crisis. You know, gas prices are bigger on a day-to-day basis. But, you know, buying a home is this very core aspirational idea for a lot of voters. And it looks really far out of reach based on where interest rates are. So that certainly is something that the White House has been responsive to in the past. You know, the climb down from Liberation Day seemed triggered by bond yields. I think even the push towards the final stage of negotiations towards the June MOU with Iran seemed to have been triggered by the mid-May spike to 4.66% on the ten-year, practically point level at this point. So that definitely is a consideration. I think it's one of the things that's pushed the White House back towards diplomacy. But again, a long way to go to actually get a deal.

I like how you sum up why yields are higher: worse deficits and data. It seems like one of them has to give in order to durably and materially reduce yields. Where it seems to be a quagmire, at least for the time being. Worse is going to possibly be the next Volcker based on his rhetoric. That could change, obviously. Deficits, is there any chance at all that we could actually reduce the U.S. deficit?

I don't see much of it. And that's precisely the upshot of that framing that we've been using is that all those policy levers are really intractable. And so then you're going to need to see some data slow down in order to get yields down. I mean, look, the deficit projections are stuck in the 6% of GDP range for the foreseeable future. And then I think you have mostly risks to the upside of that. You know, anything that Congress does next year is probably going to be deficit increasing, whether that's higher defense funding than we expect because we're at the low end on defense funding, whether it's a health care deal, you know, most of the things that could happen next year increase the deficit. And then, of course, we have the potential of worsening negative feedback loops with interest rates, where the CBO assumptions about interest expense, you know, they have the terminal average interest expense for U.S. debt at 3.9%. The entire yield curve is well above that at this point. So upside risks there as well.

Tobin Marcus of Wolfe Research. Tobin, thank you. On the bond market and the politics, the president voted in on three things: get inflation down, address immigration, and it was a fight against what a certain congresswoman likes to call woke one, which apparently was crazy. I've no idea what two is going to look like, but that was work. One on immigration on a southern border. Done exactly what he said he would. Take on inflation. This war has already not helped. Affordability is very much front and center for a lot of people, because right now a lot of people are feeling pretty raw and you can see that in the polls. Question is, will that reflect what happens in ballots just weeks away for the midterms? Up next on the program, we'll talk about technology. Dan Ives of Wedbush on the Anthropic ambitions meet some surging chaos. Live from New York City. You're watching Bloomberg TV.

The data kicking off later on this morning. Consumer confidence out a little bit later on together with job openings. Looking after all of that. Plus then later in the week we'll get payrolls on Friday. Lisa pointed this out earlier this week. And she's right. ISM manufacturing just gets a little bit more attention after that very powerful red-hot U.S. PMI we got just last week. And it was S&P data. And I'm not knocking S&P data. But S&P data usually isn't considered the gold standard in the same kind of way the ISM was. And it's still got as much traction as it did because of the surprise to the upside. Fastest pace of ISM S&P composite growth going back five years. If we get the same kind of read-through, how much does that unleash a further sell-off in the bond market? Or if we already got into freak-out stage for the bond vigilantes, are you suggesting the S&P PMI is to the extent what ADP is to payrolls? Are you okay? You just said it. I mean I didn't say that, but that's what I was thinking. We're talking well maybe they should put that on the SATs because it seems like a good analogy. ADP and payrolls a little bit later on this week. Look out for that. Equity futures right now the S&P 500 slightly firmer by about a tenth of 1% on the Nasdaq. Just about unchanged on the S&P 500. Likewise on the Russell. We've seen two-year yields higher by more than 50 basis points so far this month. This equity market has been flat over the last month within 2% of all-time highs on the S&P, even with the two-year up to 4.92%. What's going on? Mike Wilson and Morgan Stanley says that equity markets aren't made from Teflon. They are readjusting. The equity market is not complacent around the risk. More than 50% of Russell 3000 stocks have seen drawdowns of at least 20% since June, and the S&P multiple is back in 19 times. That is close to the March lows. If you take a look at the Russell 2000, is down more than 4.5% so far in September. You can see a lot of sectors that have gotten really beaten up: utilities, real estate, industrials, all of the more cyclical areas. It also has been an area where you've seen stocks of companies with incredible earnings not do anything. And that in a way is re-rating just based on the price-to-earnings ratio that a lot of people look at. Earnings season just a few weeks away looking for it kicks off with the banks. The banks heading into earnings season not doing so well at the moment. That could be a story in the commodity market pulling back just a bit. 92 on WTI, Brent around 105. The good news. The east-west pipeline up to 50% capacity out of Saudi Arabia. The bad news. No date in sight heading into the midterms. That's right. This is why potentially you see a little bit of pullback when it comes to Brent crude and WTI because oil is flowing. Wall Street Journal also has a couple of reports that actually a lot more oil is getting through the Strait of Hormuz. Although the blockade has been able to shield Iranian exports from coming through. At the same time, you read all the reports, no matter where it is. Looks pretty downbeat in terms of getting a deal done within the next few months. So potentially this is going to, the question begs what happens after the midterm elections? Because the other reporting is that the president is going to reinstate a bombing campaign on the regime. The Iranians clearly worried about that as well. Based on initial reports, one of five on Brent went down by two-tenths of 1%, three hours away from the up and up. Now let's get some single names for morning move as Mihir has more. Mihir.

Hi John, we start with the top gainer in the pre-market and that is Summit Therapeutics. Shares are soaring more than 20% after AstraZeneca said it is investing $2 billion in the biotech, with hopes to work together on some its experimental cancer drug. This, of course, comes at a time in the industry when these drug makers are looking for their next source of growth, ahead of a wave of patent expirations. Meanwhile, we move on to Fair Isaac. This is the company behind FICO. Credit score shares are plunging more than 13% after housing regulator Bill Pulte said rival VantageScore will join FICO on Fannie Mae and Freddie Mac's mortgage pricing grid. That puts FICO's long-held dominance in the mortgage market under pressure, and could change fees on some new home loans. At a time when we know mortgage rates are sky high. And we end on Navitas. This is, of course, a chip maker. Shares soaring nearly 12% in the pre-market after the chip maker said that it won an Army contract to develop next-generation power chips for defense made here in the U.S. It's a massive pot for a deal we know very little about, and Navitas hasn't said what the contract is worth or how long it runs, but investors are getting excited about it.

John, Mihir, thank you. Thanks for the update from Mihir. And our next hour on our radar this morning, one of our top stories, Anthropic with a serious warning out of its historic IPO filing with the company there $2 trillion. Reuters reporting Anthropic's prospectus warns this technology poses, quote, catastrophic or existential risks to humanity. Elsewhere, OpenAI scrapping the rollout of the latest version of its Astra model as it works to establish stronger safeguards. The company also pausing training of its most powerful version after rogue agents breached government websites in the U.S. and Australia. And finally, President Donald Trump hosting tech giants at the White House today. Politico reporting Jensen Huang, Mark Zuckerberg, Dario Amodei will be in attendance. The administration facing intense pressure to adopt new guardrails for the use of AI. So do you think that President Trump and Jensen Huang sit at one end of the table and everybody else, maybe Alex Karp on the side, then all the others at the end? And it's just sort of like, stop it already. It's not an existential risk. It's not going to end humanity. We got to keep trotting forward. And you have the likes of Dario Amodei saying, but, but, but the real issue here and what everyone is looking at is self-recursive technology, or the idea that AI systems can improve upon themselves, and the fear is that they could potentially create something that cannot be unplugged, that cannot be stopped with basic human intelligence, and that is the ultimate fear. This is what Bernie Sanders and Ro Khanna have talked about, possibly preventing in terms of the development, until there are safeguards. I'm curious what they come up with and what the readout will look like. Speaker Johnson says basically, they have to strike the right balance. They don't want a moratorium. They want to make sure that they win this race against China. At the same time, everyone in Washington is feeling this pushback. And politically, that's probably why the president is having this lunch, bringing them all together and showing that besides the fact that some of them are doomers and he's a bit more optimistic about AI and the future of it, the entire stock market might rely upon it right now. The fact of the matter is, he needs to show that he cares what these individuals are saying and that Washington is attuned to the risks. Although I'm not quite sure. If you look at his schedule, it says it's a superintelligence meeting in London. I'm not quite sure superintelligence is catching on with these. I know that's the key phrase, and I'm only half joking. I imagine the communication teams who spend a lot of time on this. If you want to come out of this meeting unscathed, you can have a difference of opinion, but make sure you stay on message. This is superintelligence. And didn't we get a taste of that from Meta's Mark Zuckerberg last week? Yes, I believe it was yesterday with that tweet. He's talking about superintelligence that's powering Meta. I still maintain that this is a free one for branding. Just call it American intelligence. Have you sent that to the president? No, I'm saying it right. You should send a message. So if he takes it up, kicks it off a little bit later on today, as sent back to Anthropic, the company steamrolling ahead with huge AI spending plans going into its blockbuster IPO. Dan Ives of Wedbush writing, Anthropic's filing will focus on its massive growth profile. This will be a watershed event for the tech sector and the market. Dan joins us now for more. Dan, welcome to the program. It doesn't come without controversy. Let's talk about the details. The customer concentration. Dan, how much of this company is built on just a handful of names?

Dan, how unusual is it to see a company in a prospectus warn about existential risk to humanity?

Dan, is that really true that this is going to just give China an upper hand? If you put limits or guardrails around recursive AI, self-improving AI, that's something that the PBoC isn't particularly interested in engaging with, and that ultimately potentially leaves a sort of authoritarian regime at the hands of a technology that could potentially go rogue.

Meanwhile, people are talking about just the scope of money that's being raised. I mean, the latest in this prospectus, reported by Reuters of Anthropic, talks about $518 billion of additional spending in the future on data centers, cloud computing. At what point are we promising the financing of something that's bigger than any other industrial revolution in the United States, with kind of an unproven returning proposition? I mean, yes, we're seeing some returns on this, but the spending is incredibly robust and only accelerating from here.

Hey Dan, I have a question regarding this meeting this afternoon, the superintelligence luncheon with the president. Do you think he's trying to get the industry on board to some of the communication he has been using when it comes to AI, or is it the other way around where potentially you have the industry trying to get the president to sign up on maybe some regulation?

Dan, thanks for catching up with us. Dan Ives of Wedbush on the latest in the leaked prospectus from Anthropic from Reuters overnight. It's a big story. What's the risk? This doesn't happen. You don't get the IPO in two-year rent. Well, and ultimately, how much does the turmoil in markets increase that proposition? I mean, I think that's one reason why Oura is so interesting delaying their IPO. Is this a sign of a suboptimal time to come to market for companies that have the option of pushing it into 2027? The window not as big or as wide as we thought it might be going into fall. Equity futures right now in the S&P just about unchanged. A rocky ride over the last 24 hours in both stocks and bonds. Let's get you up to speed with your Bloomberg brief. Vonnie Quinn has more. Hey, Vonnie.

Hey, John. Thank you. China is expanding its overseas travel restrictions for top AI professionals to private firms to include the families of key personnel. Sources telling us here at Bloomberg, the spouses and children of AI and chip executives now need approval from Beijing before going abroad. President Donald Trump denying an Axios report that he offered sanctions relief and frozen funds to Iran. Trump commenting on the report in a post on Truth Social, saying, quote, this is untrue, I offered them nothing. The president added that Axios should withdraw the article. Shein shares tumbling in Hong Kong, trading in its first earnings report since going public. The company reporting a 53% drop in operating profit and net revenue growth that was nearly flat. The fast fashion retailer also warning of second-half uncertainty. And that is your Bloomberg brief, John.

Anthony, thank you. More from Vonnie in our next hour. Up next on the program tamping down the demons. The entire yield curve is oversold. The demons have set in. And once we get TCE this week, once we see the labor market, things will start to settle down again. Up next we'll catch up with Anders Persson of Nuveen live from New York City. You're watching Bloomberg Surveillance.

For base losses to start the trading week, equity futures just about unchanged following Monday's losses. Equity futures this morning going nowhere on the S&P, somewhere on the Nasdaq positive. 5.15 yesterday, quite struggling once again, adding to six consecutive weeks of losses for the equal-weight S&P 500. Protectant, escape the pain item. Sammy's chip struggled just a little bit as well. In the bond market 2/10 and 30 levels, we held them elevated multi-decade highs, pulling back by only a basis point on tens and not even on 30s. 54 on a 30, 22 on tens heading into a week full of economic data. Yeah, a key question about the labor market and how much a robust labor market report in the United States could propel yields even higher. Interesting that we don't have any significant bond auctions. I imagine it's a breath of relief for the Treasury Department that we don't have a, say, a seven-year, 20-year, one of the like, you know, lost children of the bond market getting sold either way. A real question. Also the ISM manufacturing, whether that confirms the strength that we saw in the S&P Composite Index that we got last week, a big repricing of this bond market so far this month. Around 50 basis points here on twos and on tens. On the savannahs this morning citing the bond market two months. The entire yield curve is oversold. The demons have set in. Everyone has PTSD going back to 2022. Does the Fed have to do 200 basis points or more? I think once we get ECB this week, once we see the labor market, things will start to settle down again. So here's the latest this morning. Treasury yields at multi-decade highs as traders brace for a flurry of data and Fed speak too. And as Anders Persson of Nuveen writing, CPI is peaking and should moderate to around 3% by year-end with only a modest drag on consumers. And Anders joins us now for more. Anders, good morning. Good to see you.

Thanks for having me.

I think repricing so far this month and another leg higher after a hot PMI just last week. Do you expect this week's data to validate the strength we saw last week?

Yeah, I mean certainly with some key data, CPI being one of them. But we have the jobs number on Friday as well. I would say probably the jobs is where we're a little bit more focused on at this point. We have a fairly good feel for why the core PCE could and should come out. We have a revision as well as, you know, on the PCE side. So that's going to be a little bit more interesting perhaps in more respects. But I think the jobs number on Friday is really kind of key here to really get a better feel for how strong is the U.S. economy after that PMI number that surprised everyone. That's certainly what we were really focused on. And more so on that side and then inflation side. As we know at this point, the Fed and most market participants are, you know, focused on the inflation side. It's really kind of the strength of the jobs market that I think we're much more focused on at this point.

So much of this year, you can make a pretty strong case that yields are up for good reasons, that nominal GDP has continued and maybe accelerated based on what we saw with the PMI. I've got no idea. We'll look out for the data later this week. Are we starting to see some demons set into this bond market action too?

Yeah. I mean I would say it feels like a bit of a perfect storm. I think that's a term we've been using on the desk here for the past few days. You know, of course you had the Fed hike and then of course, a lot of Fed chatter after that. You have this PMI number that I mentioned. You have the ongoing concerns in the Middle East. I actually think that's a big, big driver here is this there's just no resolution in sight. And that, you know, now that the first derivative effect of the oil's been oil price being high is now filtering more to the second derivative effects, diesel being a key one, very big focused. Add to some of the auction concerns. Some of the AI hyperscalers issuance you just pulled out altogether. And you have a sort of a toxic kind of tub mix here that's pushing yields higher and higher. So it's really tricky to kind of point to one thing that's going on, you know, rival this. It just feels like the trend is higher at this point.

So what do you do? Just sort of like sit back, hope for the best, not do anything to and snooze, as John was saying yesterday.

Yeah. I mean, we, I would say we have been short duration for quite some time. We haven't had a lot of conviction on the duration side. We are, you know, moving more neutral at this point. We're not quite comfortable going long duration yet just because all these moving pieces are still hard to quantify and putting, particularly on the Middle East kind of conflict, like how long is that going to continue? So instead of what we're doing, we're really diversifying the rest of the fixed income space. We continue to find opportunities in the spread sectors, particularly on the credit side. But even in securitized in the CLO space, for our more tax-focused investors, we find opportunities on the Muni side, a preferred side. So we're coming back to like really using the full investable kind of universe and fixed income and taking our bad stuff away.

It's fascinating that people have more confidence in corporate America, the corporate creditworthiness of U.S. companies than the U.S. government. That's what it seems like right now. How concerned are you about the sort of doom loop that we were just talking about earlier, this idea that as yields go up, it only makes the fiscal backdrop that much worse for a lot of developed market economies?

Yeah. I mean, that's part of the reason why we're probably even more comfortable playing these spread sectors, the corporate credit kind of world, because that part we can analyze, we can kind of look at the economy being strong. Credit fundamentals continue to hold up. Default rates may move up a little bit but are still under control. Whereas some of the doom loop kind of trap aspects of us are really, really hard to pin down. And I think it's important to keep in mind that this is not just a U.S. phenomenon, right? This is a global phenomenon. We're seeing yield pressures everywhere. And some of those fiscal deficits kind of concerns are spreading everywhere. So that's why we're having a tougher time getting really comfortable going after the duration side of things and more comfortable playing a bit of a carry trade on other parts of fixed income.

Does a pickup in rates all upset some of that for you because we have seen that pick up, right fall.

Yeah. I mean, certainly it makes it even more difficult to make that assessment. I think, as you both alluding to, there's a point where yields become so high that even corporate credit starts getting, you know, under pressure. Certainly if you're, you know, private credit or you kind of basically so for based on the floating rate aspect of it, start really kind of having an impact on the balance sheets. I don't feel like we're right there just yet. In fact, leverage loans on senior loans is probably one of preferred asset classes. Now you can getting 9%, 9.5%. So I don't think we're really quite there yet. But if anything, I think the credit markets have been behaving incredibly stable. If you look at even equities as well. Right. So risk markets more broadly, it's really that MOVE index that's moving around a lot. But you know VIX, everything from credit spreads have been moving a bit wider in the past few trading days. But we're not seeing cracking just yet.

We caught up with Goldman's Amanda Lynam in the last couple of days. And she made the case that if you go up in quality, you actually just confront negative technicals because that's where the is further up the quality ladder. Do you sign on to that as well? Is it difficult to go to the default safety play in front of these days?

I mean, I would say I would maybe take a slightly different tack to that. I think when we look at, you know, some of the benchmark and index levels, it's easy to say nothing is happening when you go below that. Under the surface, there's quite a lot of movements and industries getting pressure. There are new issues kind of bringing, you know, opportunities up to us from that perspective. So yeah, are we probably a little bit in that camp too, a little bit more up in quality? Yes. But we're comfortable going into the more spread earlier sector. So single B, Double B's continues to offer in our view a pretty attractive risk reward at this point. But, you know, we fortunate to have a very large research platform. We can dig a bit deeper. So I think that's the approach that we're taking. Do your work, do your security selection and kind of take advantage of that.

Anders, good to see you. Thanks for being here.

Thank you.

Anders Persson of Nuveen on this fixed income market. As we're having this conversation a couple of headlines just jumping across the Bloomberg terminal on the latest in the Middle East and the diplomatic effort, crude at the moment down by about six-tenths of 1%. Around 105 for the latest. Just moments ago. Yeah. The Qatari foreign minister saying they're exchanging messages possible solutions with the U.S. and Iran. But of course that is their job as mediators. And they've been doing that since February and thus far, no real major breakthrough. Seven months and counting, this ball market, this commodity market just not been getting quite the same white bread still around 105, WTI around 92. Up next we'll catch up with Eric Johnson of Citi, Joyce Chang of JPMorgan Chase, Carey Kratzer of Bank of America, Karamana of Federated. Live from New York City. You're watching Bloomberg TV.

The U.S. economy is still on relatively positive footing. There is a lot of money still sloshing around. This economy is less sensitive than we've seen in the past, and I think it's going to be hard to get inflation under that two and a half sort of percent for long. If there's a need to continue hiking, then that's when things break. This is Bloomberg Surveillance with Jonathan Ferro, Lisa Abramowitz, and Annmarie Hordern. You live from New York City this morning. Good morning. Good morning. From an audience worldwide. The second day of Bloomberg Surveillance starts right now. And your score as the price action looks like this. Equity futures turn it around. Just about positive on the S&P 500. Likewise on the Nasdaq. As you trade across the yield curve, twos out to 30s, tens down a couple of basis points, down about one this morning to 5.22%. The commodity market turning around as well. Crude on the back foot. Brent and WTI pulling lower on Brent crude to about 105 this morning. Down by six-tenths of 1%. Just a little bit of relief on stocks, bonds, and commodities. No relief from this. The data and the Fed speak. You will hear from six Fed officials later on today. It kicks off a little bit later this morning and the economic data begins. JOLTS job openings at 10 a.m. Eastern time.

Consumer confidence as well. And that data just keeps picking up. Heading into the weekend, we're going to get some manufacturing. And of course, the key event, the payrolls report that comes out for the month of September on Friday. Ultimately, I like how Tobin Marcus put this, said the four concerns that really have been fueling bond yields are war, worst deficits in data. And right now, if you don't get a resolution on the war front and you have data that continues to accelerate, well, you have to hope for Washington to reduce deficits. And considering that that's probably not going to happen anytime soon, it's a reason why bond vigilantes are having a meltdown and yields are continuing to go higher.

Question is, at what point does that start to threaten cracks in the underlying economy and frankly, the risk on trade? To be honest, I have that entire list. The deficit is one that is not going to be something that there's any solution for us. Recently reading a Wall Street Journal report where someone close to the White House and close to the president said the deficit bringing it down doesn't even enter his mind. He doesn't care about it. And guess what? Next year, if we have a divided government and they need to raise the debt limit deficit, it's just going to explode. The budget is going to explode because everyone needs to walk away with a win.

We've had a meltdown in this one market. We haven't had much of one on the equity market at the index level. We'll spend some time talking about what's happening beneath the index, but not at the index level. Are you starting to see some disruption? Not some signs of Anthropic earlier on this morning delaying its IPO? The grand scheme of things, not a massive deal, but maybe there's only enough space now for Anthropic and not much room for anybody else.

Yeah, and Anthropic is a company that has the choice. This is important, the idea of taking advantage of conditions that are favorable. A lot of bankers have been hoping that conditions would be favorable in the fall, considering how big their pipelines are. Anthropic also reported that they've got 90% revenue growth so far this year. And yet the market conditions aren't conducive to the most successful IPO. If you have the likes potentially of Anthropic delaying their IPO, akin to OpenAI, what kind of disruption would that make on the AI that's been the ballast of this equity market? And what kind of IPO is this going to be if the roadshow literally sounds like a horror show?

Our development of highly advanced models, platforms and application expansion of use cases could further increase the risk that our models cause harm. They're talking about potentially harm of, quote, human extinction in this prospectus. So that is going to be, I think, a very difficult rollout as they go around the country.

I don't normally get excited about earnings from the big banks, you know that. But on this occasion, the banks trading a lot softer heading into this earnings report in about two weeks time, down about 10% on the S&P 500 listed banks. That guide on capital markets activity and year end. It's going to be pretty interesting. Some of those banks set the bar a little bit lower. The likes of Bank of America, for instance, heading into this earnings story, that might be one to watch in a few weeks time. Let's find out what the pipeline looks like now. Viable deals that are willing to come given the markets currently.

What are consumer balance sheets looking like in the face of higher yields? And potentially, how much risk do they see of people moving out of deposits that aren't paying a little bit more? In other words, are the times of free deposits coming to an end as people take a look at where two year treasuries are, close to 5%, say 5.5%, does that really make sense?

Someone needs to quote Torsten Slok on an earnings call. I think that in two weeks, I think that is suggesting, I think it may be injected into a risk prospectus. Prepare Jamie Dimon for that question.

All right. I'll work on it, Jamie. Earnings season starting October 13th. To think about this as the date circled on the calendar right now. Coming up this time we'll catch up with Eric Johnson of Cantor. On why he's looking for the bond market to stabilize. Joyce Shack of JPMorgan. As President Donald Trump prepares to host tech leaders for high stakes talks. And Karyn Mannion of Federated Hermes on the opportunities being created by rising yields.

We begin this hour with stocks flat as higher borrowing costs continue to weigh on Wall Street. Eric Johnson of Cantor, seeing a light at the end of the tunnel, writing almost the entire move has been an increase in term premium real yields. So we would expect these high yields to create some demand. Eric joins us now for more. Eric, good morning. Good to see you. It's been a big question for us. We've talked about twos and tens just by the two year. And then take the rest of the year, if I can get 5% at the front end, why chase equities into year end?

So certainly the competition is a big deal. And you know, to the point on a real yield, the real yield on the 30 year right now is 3.3%. On the 10 year it's about 2.9%. So, you know, translation, you can get inflation plus 2.9% for 10 years. I think that's going to start to become attractive to many, you know, pension funds. But from a funding perspective for the equity markets and for the economy, it's just not as big of a driver as it once was. So even with the hyperscalers that are raising significant amounts of debt, the reality is looking at their balance sheets, there are no net debt position or in some cases net cash position is very small. Right. So although yes they're raising debt, the ROI that they are expecting is just not going to be that impacted by the higher cost of the debt. And so it's something that the equity market can absolutely absorb. Though the competition right is certainly there and is going to have some impact.

To your point, you said it, the index has absorbed that story. How much disruption is taking place beneath the index level?

So beneath it, it's a very different story. Right. So if you look at tech, it's had this massive outperformance over the last few weeks. The rest of the market has become a source of funds. Personal agents has been part of that story. Right. Stocks getting hit that have subscriptions. Or you mentioned, you know, banks there on the opening, right, is your personal agent going to figure out how to most efficiently lend there?

What do you think the banks pain was about? Do you think it's a tech disruption story or a cycle play?

Tech disruption, directly. Yes.

Yeah. Just elaborate.

So, you know, when you look at a bank and you look at their funding, right, a lot of their cheap funding is coming from deposits, right? In many cases that is the best, that is the cheapest. And if you think about someone keeping money in a checking account, right, they're always keeping that buffer, right, to be able to operate their lives. So to the extent that they have a personal agent to most efficiently keep that balance as low as possible in order to operate with the rest of the money going into higher yielding money market funds, which right now are a good example because they're rising, and they're up to 3.75% and going higher. So I think that is one risk. And the other risk, of course, is just around the management of one's money. Right. And so you saw a lot of, you know, from the Schwab and so forth getting hit on that type of concern.

And I think it's probably not something that's going to be in the near term, but you can see it on the horizon with a fair amount of confidence that it's coming. You know, at some point, what's the concern here? Is it the sudden concern of a run on a bank, where all of a sudden Muse is downloaded by everybody and it's managing everybody's money, and money just floods away from the banks that are paying 0.5% to banks that are paying 5%? Or is this potentially a slow bleed where you have to pay out more in order to attract customers, and it really reduces your ROI?

Yeah, I think it's more of the latter. Because I think there'll be protections that will be put in place by the banks in order to protect against your first point. But I think just in terms of the operations and the costs that a bank will need to fund that, those costs are probably going to be going higher to the benefit of the consumer. But as we know, banks have the ability to figure things out, right? If you think about the cost to trade, whether it used to be $20, and then $5, and now it's free, right? But they figured out how to make money. So there will be a lot of adapting.

To be clear, they're not just going to sit there and let themselves become victims. How much are we looking at a scenario that, you know, in my mind, I'm reading this as the areas that could potentially get more vulnerable to higher yields? Am I looking at it wrong? Is it more the areas that potentially are more disruptive all by AI? That is the stalwart of this economy. I mean, is that the better way to look at some of the dispersion under the hood?

Yes, I think that's the biggest driver. Because, you know, when you look at what is going on in the economy right now? Yes, there certainly are higher yields. We're obviously seeing also higher oil prices. But oil as an example is a very small percent relative to what it was 10, 20, 30 years ago of one's wallet. And then from a higher interest rate perspective, if you look at the breakdown of consumer spending, that is a negative for the lower income consumer, right? But for the higher income consumer who's really driving consumption, those higher yields in many cases can be a positive. If you're running with a net cash position that you're investing and taking advantage of the higher yields. And you're just less leveraging your portfolio. So I think from the overall consumption perspective, the economy can absolutely handle that. Of course, there is a level where it becomes much more problematic, but I don't think we're there yet.

Even with diesel prices at a record that's bleeding into the entire manufacturing agricultural economy. I mean, that's going to be an issue for core inflation that yes, it's going to filter in over the coming months.

But the starting point for core inflation is lower. So if you look at the last four months, core CPI month over month annualized has been 2.1%. Super core has been 1.7%. I do expect that because of diesel prices to migrate higher. But there are some offsets. One of them is the lapping of the tariffs. So just the mechanics of the year over year perspective and then some impact from demand in some cases could also be some sort of an offset.

Eric, enjoyed this. It's good to see you. Thank you.

Senator Johnson there, a really interesting take on the banks in the financials. The banks trading much softer from the mid-August high, down almost 10% for the S&P 500 listed banks. It is not just about existential risk. It's more about profit risk driven by tech disruption. I mentioned we have joked about the questions that might be asked on the earnings calls in a few weeks time. I think that that question will be asked a few times to a few bank executives. Why not? I mean, how much more do you have to pay to attract money or keep money? I mean, how much do they see some of these free deposits moving into different accounts that they have that really crimps their ability to capitalize on that delta? I mean, to me, this is a fundamental question, and maybe less so for some of the biggest banks that have a certain capture of all assets. And it just is a lot more difficult to move all your money. But absolutely, I want to know who's going to be first, who comes out with their own agent and says, we can help you do this internally, because at the end of the day, isn't that where potentially new customers are going to flock to?

Legacy capital might get a whole lot more active. Equity futures this morning, positive by close to a tenth of 1%. With an update on news worldwide, let's get to your Bloomberg Daybreak. Vonnie Quinn has more.

Thank you. A U.S. import ban on certain Canadian motorcycles, alcoholic beverages and whey products taking effect today. President Trump expressing confidence a trade deal will be reached, saying he expects Canada to cut tariffs on U.S. imports and apologize in the next 3 to 4 weeks. The president and House Speaker Mike Johnson are having lunch with the CEOs of leading AI companies. Reuters reporting the heads of Nvidia, Anthropic, OpenAI and Meta will participate in the meeting, which follows a surge in concern about AI's risks. President Trump dismissing warnings, saying the U.S. must beat China in the AI race. The Pentagon awarding RTX a $20.7 billion contract to nearly double the production of air to air missiles. The five-year deal with its Raytheon unit comes as the Trump administration pushes to boost production of key munitions and replace thousands of missiles and interceptors used during the war with Iran. And that is your Bloomberg brief. Jump, Jonathan.

Vonnie, thank you. Thank you very much for the update. More from Vonnie in about 30 minutes time. Up next, AI pacing pushback. We could put guardrails, we could do this and that. But I think you have a lot of negative forces in bringing it up that shouldn't be bringing it up. We'll get more from Washington in just a moment. Plus, the latest from Joyce Shack of JPMorgan.

Live from New York City this morning. Good morning.

Economic data coming up later this morning, 10 a.m. Eastern time for job openings. Look out for that. Look out for the Fed speak later on this morning and later this afternoon as well. You'll hear from the New York Fed President John Williams, and you'll hear from Governor Waller too, a little bit later this afternoon. Equities into that pretty much unchanged on the S&P. The S&P 500 is still within striking distance of all-time highs, within 2% of those all-time highs. That record on the S&P 500 is from Kevin Gordon, just months ago. The last time the percentage of the S&P 500 members above their 200-day moving average was this low, the S&P was down in correction territory. Today, the index is barely off its high. This is what he calls a competitive duck market. The idea of a paddling duck. But evidently this duck has something other than just paddles on its feet as it frantically tries to churn under the surface and look smooth on the top. Ultimately, what are we actually seeing, though? Is this really a rates-driven transformation under the hood, or is this an AI-driven transformation under the hood? That was the question Eric Johnson was raising. It was interesting. We've seen banks decline down by close to 10% from the mid-August high. Tech disruption or the cyclical risk? He's gone for the former, not the latter. And I've had a lot of people say it's the latter, not the former. But the tech has got to be a part of the conversation into earnings season. It has been all year. I mean, talk about SaaS, CapEx, apps. I think I got that right. This question of whether software be rendered irrelevant. Now there's a question of whether banks will be rendered irrelevant given some of, or not irrelevant, but disruptive, based on how quickly people can move their money with these new genetic helpers.

You know, we shall see. There's also a question in the Slok note. Just raised this, and I think it's a really important one. All the tech analysts out there are expecting this absolute ballooning in demand for all of their products, and all the people who are covering the companies that are going to pay for that are expecting really modest demand and ability to pay. So something's got to give there.

NASDAQ futures this morning, not giving, positive by about two-tenths of 1%. And this event this morning, pushing back against pacing the frontier. We're leading China and I will keep the most sophisticated country in the world. And frankly I want to keep it that way because whoever wins AI wins. And we can put guardrails. We can do this and that. But I think you have a lot of negative forces in bringing it up that shouldn't be bringing it up. So here's the latest this morning, tech leaders heading to the White House today to discuss AI risks with President Donald Trump. As more industry executives push to slow development. Bloomberg's Tyler Kendall has the latest from Washington. Hey, Tyler.

Hey, John. Good morning. President Trump is expected to shortly embrace and highlight his advancement of AI at this event before he heads into that lunch with top tech leaders. This event is going to be about unveiling a new government-enabled AI tool designed to make it easier for the American public to interface with the administration and other government agencies. It's called America.gov. We'll get more information about that shortly. But it's going to highlight this push by the admin when it comes to the technology, but also how the administration is working with the private sector. We're expecting a range of tech leaders to be here today, including Elon Musk, Nvidia's Jensen Huang, and Anthropic co-founder Dario Amodei. They will then move into this private luncheon later today at the White House. Other executives expected to join, including Mark Zuckerberg, as well as House Speaker Mike Johnson, as Washington really grapples with what to do next here. And we saw this flurry of legislation in the last few weeks related to testing and also disclosure of risks, though we should say at this point, there is really no expectation here in Washington that lawmakers are going to get anything done, at least anytime soon, highlighted by the fact that President Trump has embraced this technology, with many administration officials saying that these companies should be individually held responsible when it comes to what happens next with their tech. We'll have to see where it comes from. Here, we know that President Trump has been hearing opposing points of view on this. Over the weekend, he held a dinner with Anthropic CEO Dario Amodei amid mounting pressure when it comes to these new reports about some AI breaches in models but also growing voter discontent as we get closer to the midterm elections.

I appreciate the update and looking forward to your coverage throughout today, Tyler Kendall, down in the nation's capital. Let's build on this. As you all know, it's well documented voter frustration building over artificial intelligence heading into the November midterms. Deutsche Bank or JP Morgan writing populist pressure will rise regardless of the outcome, with visible backlash to AI and neither party holding a clear economic trust advantage. Joyce joins us now for more. Joyce, good morning.

It's great to be here.

What's the runway for policy? What does it look like heading into next year?

Well, I think the midterm elections are underestimated as a risk right now. So there are three things we're really looking at. And, you know, affordability is a big issue. AI is a big issue. But there's also a possibility of higher tariffs here, a greater re-escalation with Iran as well. But AI and affordability politics, I think those two things are here to stay irrespective of what the midterm election outcomes are.

We were talking yesterday how some Democratic candidates are a little bit too extreme for the mainstream, but at the same time we have higher energy prices. Is that potentially going to shift some voters maybe into the red camp? The blue camp, sorry.

I really don't think that it does that. Because when you look at the one big beautiful bill, I mean, if you've got gas at the pump at $4.50 and it stays there, you wipe away all the benefits of the one big beautiful bill. And this is why I really see that neither party is really earning the economic trust right now. So, you know, the populist pressures are here to stay. But I wouldn't necessarily just say that it is going to be red versus blue. It is just the affordability issues in the last month because of gas at the pump have really seemed to me to have shifted a lot of the sentiment in the polls.

I think that's going to push the president towards this populist policy of maybe an export ban.

Well, the export ban is something that I think is very much on the table, and that could work for 30 days over the very short term. And then you're going to hit the refinery compressions, all of these other issues, which will just be another distortion that's not going to solve this issue. So I don't think it is policy that really makes much sense here, but it's certainly on the table now.

You know, arguably one driver of some of the resilience that we're seeing in earnings was the one big beautiful bill. And some of the tax cuts. And a lot of people have pointed to that as something that have really fueled the gains in corporate balance sheets. Do you see a chance that that could be revoked, or that some of those taxes could go up?

Well, I think for the personal income taxes, you had that benefit already. So that's passed. So right now they're focused on gas at the pump. But inflation is still very sticky here. So the corporate benefits, many of those are phased in to stay as far as the business interests that benefit from that. But what I would look at more is that you're going to have more regulation that will have to be forthcoming on AI at some point, that some of these benefits will have some offsets going forward.

Just when you look at the issues that are going to be debated on technology and non-tech sovereignty, where would that actually show up in the tech sphere? Because right now, in the tech stack, when you look at data center build-out, they really haven't been affected. If you look at any kind of empirical data, it doesn't show any kind of restraint whatsoever on the build-out. A lot of lip service, but not actual restraint. Is there anywhere that you see real practical regulation that could crimp some of the AI trade?

I don't think that it's going to happen in this administration. I think it's going to be a big issue in 2028. And I think you're going to see other countries also try to figure out the way in which they can engage with this. But these public-private partnerships, I mean, I don't know, just from all of my background looking at emerging markets, they rarely end up lasting over a long duration of time. But I think you're absolutely right. I mean, right now, there's been a lot of lip service on this, and there's been a lot of concern and anxiety. And it's interesting, in other parts of the world, this is not the same political issue, but I think this is much more of a 2028 issue as far as what actually could be done.

How dependent is your growth outlook for the next year on what happens here with CapEx?

Well, I mean with the tech CapEx, next year looks very good. I think your question becomes when do you hit a crunch point on this? You will have the Treasury funding, I think, by next August. They have to increase that. And then you will be looking at CapEx for the next year for 2028 and a presidential year. But for the next couple of quarters, the CapEx actually looks quite strong just given where the demand is at. So I think this is much more, you know, you have that midterm mark. You have the fiscal deficit taking, I think, more space than even some of the tech numbers right now, given the Federal Reserve's pursuit of 2%.

Are they in a fight with those forces? Well, the 2% has not been met for a long time.

And I think what the markets feel is that the inflation here is sticky, but it hasn't been destabilizing. I mean, we're actually looking at one of the broadest-base growth recoveries we've seen in a long time. You have the above potential growth in Japan and Europe. I mean, it's still only 1.5%, but also in the United States. And you've got China doing stimulus. So I think the higher rates are going to stay here, but the higher fiscal is also going to stay here. So it's not just the tech story. You know, everybody's going to keep an eye on treasuries here.

Joyce, smart, always good to catch up. It's been too long. Joyce Shack of JPMorgan, the chair of global research over there, breaking down the outlook for growth and of course is influencing growth right now.

Yeah. And right now it is broad based. And that's actually what we're seeing across the board. We were talking earlier about CarMax coming out with better than expected earnings. And on one hand we were saying are they the new Walmart? You pointed out typically used car sales are not necessarily a sign of strength. Nonetheless they also are seeing a lot of people buying stuff. So at least there are people who are able to keep going out and buying stuff. We'll talk about that name in just a moment. Up next, we'll catch up with Joe Kary Hall of Bank of America. As rising yields are putting pressure on small caps. Plus we'll talk about shares of CarMax rising on a strong earnings beat. Ishihara has the breakdown. The stock is up in the pre-market by 6%.

Live from New York City. Welcome to the program. Here's the state of things. And it has been quite a state over the last 24 hours in this bond market. We'll start with stocks. Equity futures on the S&P up by a tenth. On the Nasdaq up by two-tenths, call it a quarter of a percent higher. Told lots about how close we are to all-time highs. So the index level on the S&P within 2% of a record on the S&P 500. But since mid-August, you've seen some pain, down by close to 10% for the banks. The small caps have suffered, too, after outperforming through much of the year. The small caps are now down by 8% since the middle of last month. We'll get to that story in just a moment. In the bond market, twos, tens and 30s yields have been bleeding higher all through this month, up by around 50 basis points on twos and on tens. This morning down by three on a 10-year to about 5.20, 4.90 on a 2-year. The big story last week, believe it or not, it was a hot PMI story. This week, the question heading into this data is whether this data this week validates the strength we saw in that data point a week ago.

Yeah. And ultimately, this is what Citigroup's Andrew Hollenhorst said. So long as equity prices hold up, there is little to prevent Treasury yields from moving higher with energy prices. But ultimately it will be up to the economic data to determine if these yield levels are sustainable. In other words, if the data rolls over, then all of a sudden you could get a bond rally, but perhaps for the wrong reasons. How sustainable are those moves? How sustainable is this crude? A triple-digit Brent around 102.40 this morning. WTI around 91. We're down about 1%. We talked about the fundamentals. The east-west pipeline up to 50% capacity over in Saudi Arabia. That's the good news. And then we've talked about the rhetoric, the lack of diplomacy. The diplomatic effort has stalled big time heading into the midterms. And not so long ago people said repeatedly, particularly Kissinger at Davos, this had to stop by September. It had to be over by the end of summer because you had to prepare for the midterms. And that's not happening right now.

It's not happening. And I mean, the president's very blunt about it. He says he doesn't care or doesn't think about the midterms when he's thinking about what could be an acceptable deal for the United States when it comes to Iran. Today marks 35 days, we're exactly five weeks away from the midterm election, and you are really seeing pushback in states like Iowa that are pressuring this president to do something when it comes to the agricultural sector, because yes, we look at WTI and Brent every single day, but it's under the hood. It's diesel. It's gasoline. That's what's going to bite potentially why this administration is weighing this bad policy. It's good politics.

Brent crude right now down by 1%. Let's get you an update on news elsewhere. Some morning movers, some single name. Ishihara has more. You, get higher. Hi.

John, CarMax shares were already up over 45% heading into earnings. They're up now another 7.5% after the surprisingly good results. Sales at stores open at least a year jumped 13%. That's more than double what analysts expected and ends four straight quarters of declines. So it's a significant, a good report at a time when car loans are expensive, gas prices are high. So it's a good sign that we're seeing consumer spending. I will say, however, the company did say it had to rely on price cuts to bring buyers in. Meanwhile, after Nvidia's $50 billion buyback boost yesterday, we are back on Earth with Wyndham Hotel. Shares are rising 2.3% after the company said it is adding $400 million to its buyback program. And we end on Summit Therapeutics. This is the top gainer in the pre-market, up nearly 18% after AstraZeneca said it's investing $2 billion in the biotech. Both companies will work together on Summit's experimental cancer drug. It comes at a time when drug makers are looking for their next source of growth ahead of what's expected to be a wave of patent cliffs.

John Uehara, thank you. With the latest movers. Some of the single names to look for in the pre-market heading into the open. We're about two hours away. Let's get you to some stories elsewhere on our radar this morning. Anthropic with a serious warning ahead of its historic IPO, valuing the company near $2 trillion. Reuters reporting Anthropic's prospectus warns its technology poses, quote, catastrophic or existential risk to humanity. Elsewhere, President Donald Trump denies reporting from Axios, suggesting he's willing to offer Iran sanctions relief. Trump posting on Truth Social, this is untrue. I offered them nothing. CNN reporting similar claims, citing unidentified U.S. officials. And finally, Goldman Sachs apparently discussing succession plans for its top leadership. The Wall Street Journal reporting the firm's board has held talks to replace CEO David Solomon with the current CEO John Waldron as soon as next year. This is fascinating because it goes with this ongoing question of succession at some of the biggest banks. We saw with Morgan Stanley. There already had been the overturning at the top of Citigroup. Jane Fraser is well into that turnaround. And there are questions about Bank of America, JP Morgan and now Goldman Sachs. What's interesting here is that David Solomon's been on the job for eight years, and that John Waldron has long been seen as that likely successor. He's 57 years old versus a 64-year-old David Solomon. A question about retaining top talent if they don't get the job quickly enough. And I wonder how much that's behind the driving force here, at a time when clearly they've tried to express their commitment and money to John Waldron. Now, perhaps it's potentially to expedite that process. Morgan Stanley, James Gorman wasn't plagued by stories all the time about disgruntled employees and senior leadership in quite the same way that David Solomon has been. What's interesting about Solomon, and what makes him rather a unique case for corporate America, is the stock price has quadrupled over this period. And yet, we've seen story after story over this period of people that, to be quite frank, don't like him being the CEO of Goldman Sachs.