Bloomberg Surveillance 10/7/2026

There is nothing for me yet to suggest I should not still be bullish.

The earnings picture is so strong it might be concentrated.

This is probably the most narrow market in my career.

We think the massive outperformance of tech can continue.

This is Bloomberg Surveillance with Jonathan Ferro, Lisa Abramowicz, and Annmarie Hordern. Jonathan: Live from New York City this morning, good morning, good morning.

Bloomberg Surveillance starts now.

SpaceX looking to raise $40 billion to buy chips from Nvidia as the Treasury Department is gearing up to option long-term debt. The squeeze back on France. Yields up double digits. Lisa: How much is France a canary in the coal mine in terms of what happens when buyers step away?

Oil prices are marginally higher, but more importantly, the head of the France central bank came out, a member of the ECB, and said ultimately it does not warrant intervention. He said the ECB is not there to deal with the fiscal problems of countries and it is there to fight inflation. If you're waiting for the ECB put, it is not coming. Annmarie: Yields are going up no matter what. Rates are going up no matter what.

A lot of demand for capital is on the AI side. When you look at the Financial Times, Elon Musk, SpaceX seeking to raise $40 billion. At the same time the government is also going to be spending and borrowing $2 trillion again. This is happening all around the world. Jonathan: You look at the auction we might get later and compared to everything else. The amount of capital and the lack of predictability. I have a decent idea of how much they will auction.

You're facing the prospect of $30 billion coming to high-grade debt to someplace near you. Could be any currency any day of the week and it could be any number across any maturity. We talked about this repeatedly. This is the change for this year. You could wake up and see 30 or $40 billion coming to market. Lisa: How do you reserve enough cash to buy the $39 billion in 10-year notes being sold today and the $22 billion of 30-year notes being sold tomorrow if SpaceX will be selling bonds, a $10 billion loan book to finance those Nvidia chips? How do you get your head around that if you do get an Anthropic IPO, they will do what SpaceX did, which is follow on with another debt offering, and ultimately even though yields are the highest level since 2002, none of these companies are slowing down. Jonathan: If you have limited fiscal space, you are in trouble. You have to pay the high yield to clear the supply. France is in trouble. Look at the spread of France over Germany. We are getting wider again.

Yields up on a 10-year French bond. Yields in Germany up only 3%. The year so far, yields on French debt on the 10-year maturity higher 130 basis points. That is double what German 10-year yields are up. Lisa: Ultimately people are penalizing countries that not only have a bad debt-to-GDP ratio, but also with policy uncertainty, facing off an election where different candidates to become the next prime minister have talked about jailing the central bank, forcing the central banker to lower interest rates, eradicating debt altogether. Ultimately not giving a lot of bond investors confidence. Jonathan: We have the all-time high the S&P 500. Equity futures unchanged. Back to where we were in the middle of August. The market has done a bit of a U-turn, a round trip. Everything else has deteriorated. The two-year yield is much higher, bank stocks are much lower, then you have the S&P 500 back to all-time highs. We have not seen a record on the S&P 500 in data going back to 1990 with a percentage of stocks above the 200-day moving average this low. That is how negative the breadth has been. Lisa: It is 30% versus previous iterations that are also very low. The idea participation is incredibly narrow. Is this a feature or a bug? We've been talking about that all year. A lot of people are leaning in and saying AI will remain immune from these other concerns, whether it be because of warning signs from certain segments of the consumer economy or whether they are affected by geopolitics. Annmarie: What was exciting about the summer for some of the market is we had an MOU and some people thought that would lead to a peace negotiation. Oil today for Brent back over $100. Once again you are seeing some tankers being targeted in the Strait of Hormuz. The Saudis are still trying to make sure the Red Sea stays open and we have skirmishes in the Black Sea. Jonathan: Crude a little higher than 1%. Equities hovered near all-time highs. Mitchell Green as massive computer demand fuels the AI binge, plus Claudia Sahm as investors look for clues in the Fed minutes. We begin with stocks holding on to record highs as the 30-year climbs to the highest level since 2002. Aaron Camp writing, 'Interest rates are raising the bar and stocks must compete with meaningful risk-free income. Revenue growth alone is insufficient.' Are we starting to feel the squeeze from these higher rates? Aaron: Absolutely. It is also the pace at which rates have risen and the volatility of the rate market and the pace of the rise that is bringing pause to some investors. You see this SpaceX Nvidia news that has clearly not brought any pause to the AI buildout as it pertains to higher cost of capital. Jonathan: We have taken down a lot of supply through this year and investment-grade spreads have not moved in the face of it after record issuance through the summer. How much more can we tolerate of that? How much higher can rates go on borrowing costs before they start to reconsider capital allocation decisions at some of these companies? Aaron: It will take time for companies to assess the spend, the investment in capital, the return on investment capital. You make the investment today, is the return tomorrow or next month or next quarter or next year? This will take time to assess. We have seen mega-cap companies across the S&P 500 make investments, articulate those investments to the marketplace. Amazon, it was a year or two ago when they flipped the switch and reduced their spend and we started to see free cash flow that was applauded by investors. There is a lot of patience among investors, a lot of enthusiasm on the equity side. I do think we should keep our eye on the volatility index for the fixed income. The higher that moves, perhaps you have speculators there. The long-term investors in the fixed income market remain on the sidelines. Lisa: When do bond yields get to a level where the big tech players lean more on the equity market than the debt market through all of this financing? Aaron: We are certainly moving into a phase where we have gone through the equity phase but we are seeing an increasing amount of the AI buildout, which we still think is in the middle innings, not the later innings, of leveraging debt. That was on full display overnight with the FT article and SpaceX this morning. At the end of the day, higher rates at the moment are reflective of multiple factors. One is nominal growth has been very strong in the United States. Yes we have deficit challenges but nominal growth has been very strong. If you look at the real rate of the 10-year Treasury right now with 10-year breakeven inflation at 2.35% from the expectation of where inflation will be in 10 years at 2.35% and the 10-year at 5.30. If you look at the last 25 years the real rate has been 100 basis points on average through a bunch of cycles. 290 basis points of real return is quite attractive and it suggests to me that you have the dual push and pull. One is the strength of nominal growth and two the concern we have a public debt challenge globally. Lisa: This is the argument for why you want to buy bonds, the idea real yields have been higher than they have been traditionally. Several different auctions the performance has not been great. At yesterday's three-year it was not great, the cover ratio was not fantastic, the highest yield for an auction back to 2006. How do you square the sense that investors are not raising in even though this looks good on a relative value? Aaron: If you look at the Fed, while they may not be raising rates in October, the odds are now 20%, they are most likely going to continue raising rates in December, and the first quarter of next year. The front end of the curve is very focused on that reality. If you look at the expectations around Fed funds futures for October versus the two-year Treasury rate, which is well above the upper bound of Fed funds, so the markets are saying we think the Fed will continue to raise rates. We are not sure when the next rate hike will occur. Those are two things going on leading to a lot of caution in the front end of the curve to get in there and buy these current rate levels. Annmarie: When you look at the SpaceX deal, the Financial Times talked about how financing some of this saying they only received a short note and an arrow pointing the companies would build data centers somewhere in the universe. Is that more attractive than some government debt? Aaron: It is interesting. SpaceX is investment grade at BBB. I think this particular deal is about leasing out the AI computer power so if you have the Anthropics of the world and the Alphabets of the world and they need it and SpaceX can provide it by acquiring the Nvidia chip and the overall architecture that is Nvidia, I think there is an opportunity for SpaceX to generate decent cash flow just thinking about the nature and the finance and the cost structure around the steel and the massive demand for AI compute going forward. Annmarie: There were election debates last night and it comes up about data centers being opened up around the country. City councils are meeting to talk about AI and the push in regulation. You see any politics pushing back on this trade? Aaron: It is challenging. We are all trying to figure this out. I think the AI data center growth concern as it relates to the political election is real. It is the same as if there was an infrastructure buildout of some other sort that needed to be built as well. Not in my backyard. We see that all around the country. The challenge is the data center buildout is happening in such a contracted timeframe. It is happening in multiple states around the country. It is becoming a national concern of not in my backyard. Clearly you are seeing Republicans in states like Connecticut where I live running for statewide office, pushing against the Democratic governor's desire to continue to build out data centers. This is an interesting political dynamic. You would not have anticipated that six months ago. Jonathan: The outcome of the midterms could set the tone for the debate for the next two years. That is the risk to this market depending on which way it goes. Annmarie: If you're interested in throwing your name in the ring for 2028 you're interested to see which is stuck in the midterms. Jonathan: Equity futures on the Nasdaq down just a bit, -0.4%. With an update on your news worldwide, Vonnah Quinn has more. Vonnah: ECB Governing Council member says the situation in France's bond market does not warrant CB intervention. He says the ECB's job is to fight inflation, not address countries' fiscal problems. France's facing a bond selloff over concerns of its deficit. Donald Trump says he will speak to Vladimir Putin soon about a suspected case of plague. Concerns are growing since the death of a worker at an infectious diseases research institute in Siberia. The 28-year-old died after developing severe pneumonia. Almost 200 contacts are under observation. HSBC is reportedly planning to eliminate half of its management and specialist positions across its UK wealth division. The Financial Times reporting the division will cut financial advisors by 70%, part of a push to use AI to serve clients more efficiently. Jonathan: Big numbers. Up next, keeping oil flowing through Hormuz. Pres. Trump: Doing very well. Iran is doing very poorly. Their economy is gone. The Strait of Hormuz, millions of barrels of oil delivered over the last few days. Jonathan: Live from New York City this morning, good morning.

A big focus on the competition for capital. Later this afternoon a 10-year note auction from the Treasury, $39 billion worth, ahead of tomorrow's $22 billion auction. All of that still and a sneak peek of the Fed speak. A reading of the Fed minutes from the Fed's last meeting. A decision to hike interest rates. On the equity side of things, shaping up as follows: five-day winning streak, the longest we've seen in about two months, reclaiming all-time highs. This morning pulling back by 1/10 on the S&P, by 0.4 on the Nasdaq. In the bond market, twos, tens, and 30s shaping up as follows. Yields higher across the curve, up by a basis point on twos, up by four on tens and 30s. The highest levels going back to 2002 and getting closer and closer to a six-handle on 30s. Lisa: The threshold we've been talking about now where they've been saying it's really unlikely, almost an inevitability this year. Interesting seeing the pain focused on the long end of the curve. That goes to your point about competition for capital. If you are in an environment where you have rate-sensitive borrowers that are borrowing billions and billions of dollars, creating a real problem for developed markets that have a less robust and potentially bigger need for funding. Jonathan: 30s almost 50 basis points higher than when the Treasury Secretary offered some verbal intervention. He said himself recently he can control the bond market and it seems no one can. WTI and Brent shaping up as follows. Slightly elevated, just short of 102 on Brent crude. Keeping oil flowing through Hormuz.

Doing very well. Iran is doing very poorly. Their economy is gone, their inflation almost 300%. The Hormuz Strait, tremendous amounts, millions of barrels of oil delivered over the last couple of days at levels even sometimes exceeding prior to the war.

Crude pushing higher as Iran escalates attacks on ships in the Strait of Hormuz. The strikes intensifying as energy flows approach pre-war levels. Tyler Kendall joins us for more. Tyler: The new wave of attacks appears to be the latest bid by Iran to tighten its grip over the strait as diplomacy remains stalled and oil flows steadily picked up in recent weeks. In large part due to US protection, but also we've seen Gulf countries figure out how to do these so-called shuttle runs. Now we have the UK Maritime Trade Organization confirming at least nine ships have been attacked so far this month and we are in the first week of October. That is half the total amount of attacks we saw on ships in the entire month of September. Shipping executives tell Bloomberg News at this point it is too uncertain to tell if this latest escalation will cause shipments to fall as data from research shows US crude exports through the strait in September were approaching those pre-war levels. The levels for refined products like diesel continue to lag. As disruptions continue, President Trump told reporters he is considering a temporary suspension of the federal gas tax. John, at this point he would need Congress in order to pass that and lawmakers are out of town and unlikely to return before the midterm elections. Jonathan: Tyler Kendall with the latest from the nation's capital. Tobin Marcus writes the following: either a bona fide blue tsunami is coming or the polls are off and extraordinary claims require extraordinary evidence. Is flipping Texas an extraordinary claim? Tobin: I think it is. For Democrats to win a Senate majority this cycle they need to win at least two or more seats that went for President Trump by 11 points or more, which the polls suggest they are on track to do. About 52 seats in the Senate. But that path runs through some very red territory. We are seeing a pattern of polling around the country where the shift from 24 to 26 has been bigger, the blue shift has been bigger in redder places. A similar pattern to what we've seen in the past. It looks to me like some of the Senate polling, even in a very good year for Democrats as it surely will be, I think people are getting a little over in terms of their expectations. Annmarie: We had a guest basically talking about the flip of the Senate to blue but obviously it hinges on Texas turning blue. Do you see any chance of that happening and especially at a week where the Texas governor Greg Abbott has decided to not go campaign with the president when he goes to San Antonio. Tobin: There is certainly a chance. I think it is totally reasonable to look at the setup. Texas, Ohio, Iowa, Alaska as in play. But I think you need to believe that they lean clearly towards Democrats and I think Democrats are favored for the overall Senate majority the way consensus expectations have shifted. I would not be shocked if Democrats wake up having won Texas. It is a shock to be in that position compared to where we would have been six or nine months ago. I still don't think they are on in a clear way the way the polls are indicating. About Texas, a lot on track to win the Texas Senate seat in the gubernatorial election which looks at a much bigger race to me. Polls pointing in both directions with the Senate polling. Annmarie: How much does candidate quality versus a referendum on Trump shape the map? Tobin: Candidate quality is a dimension. In many of the states where Democrats are surprisingly competitive, including Kansas, is the real dark horse into this cycle. There is a very good kind of Democratic-aligned candidate there and the Republican candidate taking some personal liabilities. So that's a dimension. In Texas, Ken Paxton's a very weak candidate. We are seeing the polling move pretty heavily across candidates, even ones who don't have those liabilities. If you're seeing shifts in both places it makes me think it is not just picking up a candidate quality issue but also a massive national shift or some overstatement. Annmarie: What are the signs you're seeing the polls are slightly off? Tobin: We are seeing much bigger blue shift in redder places so you have the surprisingly competitive states like Democrats being ahead in Kansas, one point behind in South Carolina which would be a seismic shift from two years ago. At the same time Minnesota looks close, New Hampshire looks close, New York is not that differentiated. So it would be very surprising to see all of those results at the same time. We have seen that in the past. The errors have been bigger in redder places. We also just geographically, Iowa, Michigan, Ohio, these upper Midwestern states which are some of the places where Democrats are doing well and will need to do well to take the Senate with Ohio in particular being one of the keys. That's been ground zero for polling errors. A lot harder to poll voters in those states than it has been to get good numbers in the Sun Belt. Jonathan: Tobin Marcus there of Wolfe Research. Texas is an example you asked the question of the either-or. With candidate quality or referendum on the president. Texas is both. A weak candidate like Paxton. It's not a referendum on the president. Annmarie: We could have had Cornyn and most people would agree that individual would have won the Senate seat but then you have to think there has to be some sort of personal referendum on the president when you have the sitting governor refusing to go to his San Antonio rally and reporters asking them why, saying I have a fixed schedule, I am busy. The president is coming to your state, usually you free up the schedule, you cancel something else to make room. So clearly this is about making sure they have some distance because they know it is a referendum. Lisa: Ultimately it doesn't set them up for 28. What it does is really up to a patchwork of individual candidates in each state. Jonathan: Stocks negative by around 2/10 of 1%. We will catch up with Mitchell on AI's insatiable quest for capital. Live from New York City, you are watching Bloomberg TV.

Back at all-time highs on the S&P for the first time since August, adding some weight to the rally. The longest winning run going back two months. Futures pulling back 2/10 of 1%, down by 0.4, and on the Russell small caps off there. In the face of this, a repricing in the bond market. What a repricing it's been for the year so far. Higher by something like 115 basis points and yet still we've seen a double-digit return in equities thanks to a massive run-up in tech, thanks to a massive run-up in earnings. Yields by 45 basis points. More supply later. More supply coming tomorrow for the 30-year bond. Higher by four or five basis points. On 30s, pretty yields we haven't seen in 24 years. Putting the pressure back on France. The spotlight very much in the European debt market right now. The French 10-year yields higher on the session by 15 basis points, approaching 4.90 all over again. The squeeze continues to build. Lisa: Competition for capital exposing some of the least capitalized countries out there. France among them has not had a budget surplus since 1974, currently engaged in a huge campaign between candidates with neither of which proposing something that people thought was a feasible way to reduce the deficit. They have heard from Marine Le Pen, the primary leader, a frontrunner spot talking about reducing the debt considerably. People say how are you going to do that, you're asking for cooperation from the ECB while the Bank of France is saying we are not playing this. Jonathan: It's funny how things have changed. She used to be known as Frexit and her proposal was seen as almost sensible compared to the left-wing rioting we've seen. The debt market this morning, I'd be more concerned about what's coming from the far left and the far right over the last week. Lisa: Talking about deficit reduction for the far left, talking about canceling 14 to 16% of the debt being held in the ECB and Bank of France. Either player here is not offering something this market can get their head around and that uncertainty offers an additional premium on top of a deficit that's continuing to climb. Ultimately this is what people keep talking about. Is this a canary in the coal mine or an idiosyncratic Liz Truss moment. Annmarie: The election is not for more than six months away and that might be the catalyst for a clearing of that when it comes to the debt market. To your point Jonathan, it is no longer just Paris. You see these protests which have turned very violent in clashes with police. More than 40 French cities seeing protests around the entire country. Jonathan: Euro-dollar weaker on the euro side of things. The intraday low that was only a few days ago, not too far off those this morning. Three hours away from the cash open, let's get you some signal names. Yahaira: The tables have turned for these chipmakers this morning. Intel is rising while TSMC shares are falling after Elon Musk clarified TSMC's role in its project over in Texas. Earlier this week he said he was in talks with TSMC, raising questions about Intel's role in this project. Now he says his companies will build and operate the facility with Intel just helping to develop the technology. As for TSMC, he said they could potentially lease parts of the sites but says nothing more than that. Meanwhile we were seeing JetBlue shares also down about a quarter of a percent. The company got the green light from the FAA to take over 22 of Spirit Airlines' takeoff and landing slots at LaGuardia Airport. JetBlue can add flights at a time when it is trying to project profitability. The irony is JetBlue at one point tried to buy Spirit with the government's backing that merger. We end on Constellation Brands, those shares falling four and three-quarters percent with investors disappointed they did not raise its profit outlook even after better-than-expected earnings. It got a boost from the World Cup with activity at bars and restaurants but they say consumers are still cutting back on liquor. Grocery stores and liquor stores, and for that reason Constellation says it is not considering price increases on its peers.

More in our next hour. SpaceX seeking to raise $40 billion to buy chips from Nvidia, could be one of the biggest debt financings of the AI buildout. The Financial Times reporting Apollo is expected to lead the deal. The latest from the JP Morgan boss delivering a warning.

There will be a point where the market will ask for more and more and at one point that will feed into corporate debt and credit spreads. Deal with that before it becomes a crisis. If it comes to a crisis we will deal with it.

Distressed loans have risen to the highest level since the pandemic, expect in high-yield bonds and leveraged loan defaults rise. With the latest in Europe, the EU preparing to impose safeguard measures to limit imports of Chinese vehicles. Similar tools could be used on other sectors to ease trade imbalances. Lisa: So auto manufacturer shares rallying in response. Chinese brands account for one in four hybrid sales in the region. One in three plug-in hybrid sales in Europe. Something that's been on people's minds as you see that ratio increase. The EU trade chief is going over to Beijing to figure out how they can avoid some sort of serious pushback or penalty from China given that it is still a big trade partner. It's going to be this stance, you will hear some more on this in the next couple of days. Annmarie: China saying they will retaliate if Europe adopts 'discriminatory' measures. Do they try to fend off the Europeans doing it for any other product. The issue is they are basically just taking a playbook from Trump to put up the walls because their industrial base is being hollowed out by China. Jonathan: You had a series of German businesses that have had to cut jobs. We can see more of those headlines in a couple of months and coming years. When you start to impact the population through job cuts people ask the question why is it happening, an easy country to blame for the crisis happening in the autos market. That market in China we've said repeatedly is probably the most competitive market on the planet right now. The German manufacturers are struggling to compete in China and domestically in Europe. Lisa: Increasingly it will be a political issue. How much people have the willingness to put teeth into this if there is retaliation, that is what people are looking to try and understand. Jonathan: Let's turn back to tech. Companies flooding with more than $400 billion betting big on the future of the technology. A tech equity investment firm staying constructive, writing a tool that makes someone more productive almost immediately but changing how the business works takes longer. The gap is shaping where we see investment opportunity. Joining us is Mitchell Green. Good to see you. Operating on two different timelines. Consumer and individual adopts this tech and how a business might transform. Can you build that more for the investor perspective. Mitchell: You're going to see things like the consumer now. Businesses for the last couple of years have been focused on adopting AI and trying to create new products around it whether it's the software companies which we said aren't going anywhere. But now they're starting to see over the last companies like releasing Muse and OpenAI releasing these. These consumer agents are exploding right now. Lisa: Do you think that will be a path to monetization that justifies the rapid pace of buildout and the huge bills tied to data centers and everything else. Mitchell: They are sure going to try. What you will see is Instinct exploding along the consumer base. But now you will see it I think if you try to use Amazon or Walmart. The question is now are these deals so that they can work. Everybody wants a piece of the action. In figuring out how to monetize it. I think there are a lot of consumers that will spend $50 a month or $100 a month. I don't know how they will be different though. How is Instinct different from Use and Dots, why do you have to stay in one app versus you can use all three of them and bounce back and forth. Lisa: How pressing is the need to monetize. Talking to a number of CEOs who say the bills they pay for cybersecurity are going through the roof as a result of AI. And the productivity gains are just meeting that to offset if not at all. It's been the sort of race to figure out how productivity can match the increasing security risks that are occurring. How do you see that balance? Mitchell: The challenge the frontier companies have is those are getting gigantic debt deals that are coming up. Enough money is being spent to build this stuff is incredible. Prices are falling and things like that. The thing nobody else can answer is when are they going to be able to truly monetize. I'm as excited as we should have been there on OpenAI. But I'm very fascinated to see Anthropic's F1 drops and understanding the financials of the businesses. I think there will be probably positive surprises and some things that are probably pretty shocking as well. Jonathan: Last time we caught up with you it was capex underpinning this buildout. You see more evidence of that? Mitchell: There is a massive, whether you want to call it bubble or buildout, the amount of money being spent is unprecedented. The amount of money right now for instance people argue is the 10-year yield moving affecting mortgage rates and everything, is it a function of inflation from the war in Iran. If you look at the amount of oil flowing through it's most back to pre-war levels in a lot of areas. Is it the amount of corporate debt being impacted because of all this AI debt, it's probably a combination of all three. Somewhere between rates where they are today and rates at seven, a lot of stuff starts to break and yields start to see. Jonathan: Some people might think capacity will become offside but it's the demand that's required. Are we overestimating capital or the amount of efficiency we will see from technological progress? Mitchell: Demand is clearly there. If you talk to the hyperscalers like an infinite amount of demand the people want. The question is can you deliver the capacity and can you deliver it whether it is power or a thing like China has a huge advantage over the US right now whether it's data center capacity or chips. It's all this stuff combined. History tends and so they're in every other major buildout of technology in the last 100 years. There's been some sort of bubble. Will supply and demand match perfectly? No. This time there's a massive amount of debt involved. Lisa: Which part of the capex bubble are you willing to invest in and which will you not touch with a 10-foot pole. Mitchell: We don't invest in data center stuff. We don't truly understand them and we're not semiconductor investors as well. What we are trying to invest in are software companies and AI companies that are, we think there's a huge opportunity around legacy software business. It's not even that old but companies that have very strong customer relationships, companies that have, you know, great product teams. They can use these technologies to innovate and make themselves more efficient. You are seeing that companies like Snowflake or Datadog which are all observability data companies that are accelerating the revenue growth. Jonathan: Are we separating things out. Mitchell: You're starting to see that cybersecurity I think probably the biggest global risks right now. We are not cybersecurity experts but what tends to happen with markets is what everybody's not talking about. It's amazing OpenAI Hugging Face thing happened and it's just the tip of the iceberg. All these tools I think AI safety is something that, you know, people need to focus more on and I think it is a truly global risk and cybersecurity companies are only to become more powerful and important. Jonathan: I promise to try to squeeze in BYD. Mitchell: Incredible product. Have you ever been in a car but make sure you drive or ride in one of the back of these cars. They are incredibly built. All I will say is I'm sure a lot of viewers are watching this, I've been in them. If you've never been in one of these just go for a ride. Jonathan: Delays about Chinese manufacturing to the build quality is not as good but that they're ripping off Europe. With this industry I think that's just totally wrong. Mitchell: Incredible product. I think they built an incredible product. Clearly that's 95% as good as a Tesla and 90% cheaper prices. I think being protectionist against these like this company I understand why. The fact that they let them in Europe, I think you have big German auto manufacturers, these cars are incredible. I would argue they should figure out how to innovate that and compete with the actual products. Jonathan: They're really struggling. Mitchell: It's kinda like the Apple iPhone. Revolutionized. Jonathan: When you're being driven. Lisa: I will say though, increasing the talk about this and you're right. Just also the cost of though. How much do they pay people to manufacture these cars in China versus Europe. Annmarie: The cheapest version is 10K. Jonathan: Incredible. Annmarie: It's what Europe is realizing that what they put up some walls. Jonathan: I'm surprised more manufacturers haven't just exited China because they can't compete there. Why are they still there trying to compete. Lisa: Maybe trying to innovate and learn from them. Jonathan: A big 180 over the last 20 years. Mitchell, it is good to see you. A lot to think about. Let's get you an update on news worldwide with your Bloomberg Brief. Funding: President Trump says he's considering suspending the federal gas tax as his administration looks for ways to lower energy prices ahead of the midterms. Gas prices are up 46% since the Iran war began. The national average for a gallon of regular gasoline was at $4.37 yesterday. Billionaire investor Ray Dalio warning AI is 'a classic bubble, it's going to burst soon.' Dalio pointed to rising interest rates and the amount of debt tech giants want to turn into cash. Argentina bids farewell to Lionel Messi. After 21 years, 126 goals, two Copa America titles and the World Cup championship. Scoring a penalty and setting up Argentina's other two goals for a 3-0 victory. That is your Bloomberg Brief. Jonathan: Up next, the Fed on uncertain policy path. >> Within the Fed can be patient even what happened. >> I have never had more confusion or uncertainty about what the Fed will do. Jonathan: We attempt to get some clarity. Claudia joins us live from New York City, you are watching Bloomberg TV.

Stocks down, pulling back from all-time highs. Negative by one quarter of 1%. Down by 0.6 on the Nasdaq 100. The Fed on uncertain policy path. >> It can be patient, they've done one hike. >> December squarely in the mix. It doesn't feel it moves in consecutive meetings. >> I've never had more confusion or uncertainty on what the Fed will do. Jonathan: Investors counting down to the Fed meeting minutes. Scheduling more rate hikes may need needed to tame inflation. Claudia Sahm writing the September hike was risk management, not the start of an aggressive hiking cycle. They are hedging their bets, the committee is centered around one more hike this year. Build on that a little bit more. Many believe because we are moving accommodation there are two more doses to go. Do you see more?

When the bond market speaks, everyone listens. >> Things are going to start to moderate. >> Global growth has been incredibly resilient. >> It is a growing economy. >> This is Bloomberg Surveillance with Jonathan Ferro.

Good morning, good morning for our audience worldwide. The second hour of Bloomberg Surveillance. Your scores look like this: declining, pulling back, negative one third of 1%.

In the bond market, yields are higher, particularly on tens and 30s. A 10-year at 5.32, 30 basis points away from a six-handle on 30s, already there in the U.K.

The 30-year at a six percent yield over in the United Kingdom this morning. Higher by double digits in the U.K., higher by double digits in France.

Some long-end supply moving to 30s tomorrow. The competition for capital has been a theme of the year across corporations. Lisa:

You have the likes of SpaceX selling $30 million of bonds to finance some NVIDIA chips they can provide services to others. You have the U.S. selling $39 billion of U.S. Treasuries in 10-year denominations, and they are ultimately in direct competition with each other.

One of the reasons you can point to that people are saying yields going up isn't a terrible thing. It doesn't mean the end of the world. There is a positive story on the other side. At what point does that stop working? At what point does that start affecting the fiscal backdrop of the countries that have not faced a reckoning? Jonathan:

It stops working the moment you want to buy a home and don't have all cash. 30-year up.

This is not the number you want to see across your Bloomberg Terminal if you are the President of the United States who vowed to get interest rates down and had affordability at the center of his presidency, and for individuals being able to go out and afford a home. No one is going to be able to get a mortgage at these rates. And if you can right now, you probably have the cash to do so.

The French feeling the political pressure. If you look at the spread, last week 150, we are not quite at that, but we are getting there. We have seen the pressure and the rise across France, and raise the questions: have you seen this now outside of recession times? 5% deficits aren't enough for social cohesion. How much do you need to spend? And this market starting to ask for cuts. Lisa:

The protests, hundreds of thousands of people, many places, over funding and resources at a time you have this deficit and the economy is growing.

One of the reasons people don't have faith whichever candidate wins the prime minister role in France will be able to reduce some of the deficit. It's why people look to the ECB and say, when will you step in? Ultimately, what will the ECB governors, also in the Bank of France, came out overnight saying the ECB is out there to deal with the fiscal problems in the country. So the conditions are not there today for an intervention of the ECB, but tomorrow will be different. Ultimately, that's the order. Annmarie:

If you look at the pictures out of France in this domestic backdrop, this plastered across a lot of newspapers and television screens. If you're an investor, clearly you want more compensation, especially when the election is more than six months out. Jonathan:

Investors who approached SpaceX are now financing, as you did earlier, with a multibillion-dollar chip purchase. With an arrow pointing down, the company was going to build data centers somewhere. So maybe more confidence about that. French 10-year debt this morning. Annmarie:

Thinking about this when it comes to capital, rates going higher, and people like to bet on him, and they made it simple: we will build data centers, not in your backyards. Jonathan:

Coming up, we catch up with stocks looking for a fifth straight day of gains. SpaceX said to raise to buy NVIDIA chips. Bond auctions continue to build. Stocks at record highs and yields still elevated. Writing higher rates not a thesis breaker. The rate cycle, the leadership will narrow and volatility will rise. Alicia, good morning. Are you seeing that since October? Is that the story we are starting to see?

We've been seeing that since Jackson Hole, when Warsh became unapologetically hawkish. Starting to see the small caps underperform, the Mag 7 got their foot in with a floor under those charts. And the stocks that have carried this market really for 15 years continue to get their mojo back after being moribund. If that's what we've seen, we see the much narrower leadership. If you own the index, you're fine. This has been the thesis: buy growth because it can get you through all kinds of rumblings in other parts of the market and asset classes. But you've seen the small caps are about 8% below the high. You see what's happening in the spreads. You are seeing the bank stocks not because they aren't resilient, but because on the margin, if you're having the yield curve expectations for higher Fed funds rate, that is what's going to put pressure on that area as well. You see it with cyclicals because ultimately they borrow, so the marginal cost is higher.

The doubt is out there. People will speak to the deterioration and say this can't continue. You see it differently? Alicia:

It continued for years. If you think about the market coming out of the crisis in Silicon Valley, what led this spring? Essentially 10 stocks led this, and there was handwringing this can't continue, but it did. It continued as long as we had a manufacturing recovery in the U.S. And then we had a broadening out of what's happening in equities. Let's talk of the broadening out trade we talked about for the last year or so. Yes, we had a broadening out. On the other hand, the index didn't really rocket higher because the capital came from the top of the market. So it depends on where you are invested whether you think this is a great thing or a tragic thing. We happen to think it's a great thing because ultimately you're keeping the technical spine on the S&P, and ultimately that does matter for traders. Lisa:

Have the bond yields broken down the correlation? Have they torpedoed some of the returns in stocks? Alicia:

The correlation has been broken since 2023 when we came from a zero-rate world. The rate-rising environment, which is what we were in, first for bonds to be the offset to stock volatility. So you could have it on the margin, essentially, if you're looking for capital return and you're looking to go out longer in duration. We are having this conversation everywhere. You have to bet that the Fed is going to stop the hiking cycle and have to cut at some point. That's what you are betting on. A more negative story to go out for the duration here. Short-term to intermediate for our clients, it's been a great place to be and a safer place to be. Ultimately, the competition for capital, the boom we are in, nominal growth at 6.3%, it's not a place where you want to experiment going all the way on duration. There is pressure on the long end. Lisa:

At what point do bonds present competition to stocks? Alicia:

We could see yields going to 5.5% here. As part of the normalization cycle in an economy growing 2.5% to 3% with inflation at 3%, that feels about right. And at that point it becomes competition. On the other hand, the conversation we've had, the ease with which these larger companies can borrow suggests that investors really feel more comfortable giving capital to some of these hyperscalers and cash-flow machines with visions of where the business is going, perhaps then to the sovereigns out there. That is the competition for capital. Annmarie:

You see risk with the midterm elections. Explain.

It's the rapidity of the AI buildout, of the capex spend. That is funding the S&P, so it's like a good circle, it's a glorious circle. How do you break that? You break that in a couple of ways. No ROI on the spending, but it looks like they are starting to be our ally, which we have a leg higher in the tech stocks starting in August with the quarterly earnings season. That looks to be OK. With stocks, it's the slowdown in the data center buildout. And that's political across the spectrum. I think it is less whether Congress flips and more with the governor's races where you see Kennedy, Texas, of the states you wouldn't expect to flip. If those flip, then running on slowing down the data center buildout will be an issue in 2028, and that's really where you can have a rumbling in the markets. The markets not pricing it in yet. It is a concern, that's really the issue. Annmarie:

Do you think that could potentially be healthy for the trade? Alicia:

We just had a conversation yesterday about this. The weird thing is that if you slow it down a little bit, you prevent the consumers in a bubble. It becomes a little bit harder to raise the capital, there's more concern over it. So if you slow it down a little bit, then it helps the longevity of the trade and you don't get this bubblicious feeling in markets where the bond market... That's not necessarily a bad thing. It will affect the earnings growth, and that we have to focus on. What does that look like? To us, it would look like a correction, which would be eminently viable because we don't see a recession. Jonathan:

Good to see you. Equities at all-time highs. I can't say it's a loved bull market. A lot of people have missed out on this, worried about what was happening elsewhere.

Ultimately, it's understandable when you look at some of the dispersion. What's interesting is people are behind at how many asset allocators with the benchmarks are racing out to catch up, looking at every pocket to try and get something bigger. Jonathan:

One of the biggest bank failures. Pop quiz. There's a good one. Ask people at the Fed the month after, just ask what they did, and they will be like, interesting questions. You can get things really wrong in markets sometimes. Bad things can happen in the stock market, can be OK. Lisa:

Ultimately, this sort of difficult backdrop in juxtaposition. Jonathan:

Equity futures declined by one third of 1%. Let's give an update on news worldwide. Vonnie:

Iran says it will soon open legal routes and reiterates the strait will stay closed until its demands are met. Maritime trade operations, 49 ships have been attacked so far this month. That's half the total for all of September with the strait and the Persian Gulf combined. U.S. mortgage rates jumping for a seventh straight week to their highest in nearly three years. The contract on 30-year fixed mortgage is 7.49%. That's up about half a percentage point across three weeks, marking the fastest increase since early 2023. Porsche explaining it increased prices for its top-end sports cars by an average of 20%. The company outlining a fresh strategy to sell fewer, higher-end cars with special features to try and drive returns. Porsche is adding a new model that would sit above its flagship 911 lineup. That is your Bloomberg Brief.

Give people what they want. A friend of mine sent me a picture, it was a video of Lewis Hamilton looking at a Ferrari F40 he's renovating right now. And the hunger that people have to go back to that era of automobile manufacturing, that's what people want. I don't know about the mass market, but the sports car market, it's so obvious. Longtime viewers hate what F1 has become and they want to go back to V10s, spread the role of the car without the battery pack and the electricity involved in all of this. The Chinese manufacturers right now, get away from the tech and the batteries and away from the screens. Go back to the buttons, go back to the manual gear shift, weight a few on the car. The sound of a roaring engine. Europeans can change the brakes, they can make this happen quickly, and you can have these legacy manufacturers, the Ferraris, the Porsches, pick your name or company, have a very good shelf life, making tons of money. The Chinese won't be able to touch it when they get anywhere near to where they are. Lisa:

Can you imagine if they just focused on panels, especially in juxtaposition? What if they just had the most beautiful and satisfying handle that actually worked? Annmarie:

If you're going to be spending the money on a Porsche, just buy a Ferrari. Jonathan:

Why sacrifice the heritage of European automobile manufacturing to compete with the Chinese on making batteries? Why are Europeans doing this? It's suicide. Annmarie:

They love their car, but they did not understand the Ferrari rebrand. Jonathan:

That's the latest this morning. Up next on the program, AI safety.

It's almost like the Constitution in a way. We want to give the American people and our customers confidence that the technology works in the way we intend it. Whoever wins, AI wins. I think the technology has very real risks. Jonathan:

We catch up with Henrietta Treyz from Veda Partners. Good morning.

Coming up later, Fed minutes, and a little bit later as well, 1:00 p.m. Eastern time, bond auctions and supply, 10-year Treasuries coming to market. Futures declining by one third on the S&P and yields rising in the long end. Tens up by five, a up by six. 6% in the U.K. on a 30-year, and the pressure continues to build in France. The debt situation and squeeze getting worse. Lisa:

And the lack of an understanding of how the political class will remedy it, also adding to the sell-off we are seeing in the long end. What will the backstop be? Because right now we are hearing from the ECB. As of now, they are not part of that solution. Whether that changes remains to be seen. Jonathan:

Up 16 on the session. A French 10-year this morning about 140. Got a little bit better for a heartbeat, now we're back to where we were before. ECB is not stepping in. Can the French government step in? Lisa:

Marine Le Pen has talked about reducing the budget deficit, but also talked about the Bank of France and ECB lowering benchmark rates, which is very difficult. Her opponent has talked about simply eradicating 14% to 16% of France's debt with respect to forgiveness plans from the ECB and the Bank of France. All of these not necessarily landing with any kind of heft in markets. Jonathan:

Mortgage rates in America, when two people have doubts, the competition for capital in AI is helping them push yields higher and ultimately lead to mortgage rates hitting 7.5%. You thought opposition to data centers would be bad, it could get a whole lot worse. Promoting AI safety.

It's almost like the Constitution in a way. In the biggest people in the world signed that, and I signed it as President. We want to give the American people and our customers confidence that the technology works in the way we intend it. Whoever wins, AI wins. I think the technology has very real risks. Jonathan:

The AI data center buildout and concerns over tech weighing on concerns. 79% of voters say prioritizing safety is more important than maintaining an edge. Tyler Kendall has more. Tyler:

This is the tension candidates are grappling with, as both sides seem to balance the need to sustain the U.S. competitive edge but also address safeguards voters are demanding. Especially as within the last week we saw the White House, the idea that AI names will be at the center of policing their technology and not the U.S. government. Lawmakers left Washington without advancing any such legislation on the issue. That's why I pointed to another new poll out this morning from Reuters and Ipsos, which finds most U.S. voters feel that Congress and the White House is not taking this seriously enough. Voters in many states will be able to vote on some tangible policy, maybe not related to the future of the technology itself, but definitely related to the background to sustain it. 35 data center referendums on full bans. I do have to say I caught up with the deputy chief of staff at the EPA who runs a large part of the data center policies, telling me the buildout is happening whether it happens in one community or another, it will occur. Jonathan:

Here in New York, Henrietta Treyz of Veda Partners has this to say: it's only a matter of time before Washington starts to consider the more important question around AI. Henrietta joins us for more. That doesn't appear to be on the radar in the midterms. Do you see it? Henrietta:

We are going to be more concerned with the federal gas tax, but I'm trying to look ahead for clients, and there are some obvious questions about regulating AI. But I would encourage you to focus on the committees that will get the job done, which is Senate Finance and House Ways and Means. Ron Wyden would be the chairman of the committee if Democrats win. He already has a plan that effectively is rolling back the One Big Beautiful Bill on research and experimentation, on bonus depreciation, all of these components we saw there giving tax preferences to these industries that American voters do not like, and they don't know why they are getting basically federal tax dollars to build these data centers that they do not want in their backyards. If you are looking at AI regulation, it is such an unwieldy litany of things we need to address. I find comfort in the tax code, so I go to Senate Finance and Ways and Means. Annmarie:

Why tax it when you can take an equity stake? Henrietta:

How much are you comfortable the federal government taking in AI in your company if you are Meta or any of the other companies? It is interesting if they are going to say at Bridgewater it's 18% displacement of the human workforce, we need $785 billion. Do we want to find some money for that in the tax code to offset those, or take an equity stake? It's really about how the industry will be with this in an administration or whatever administration is next, whether it's JD Vance or a Democrat or what. Annmarie:

JD Vance has some interesting views on AI that sometimes matches up with individuals on the left as well. Do you see this push for whether you're taxing or taking equity stake, basically how the U.S. government can get a piece of this? Henrietta:

I think they are unclear about what they choose to do. The bill I mentioned does not include an equity stake component, but Bernie Sanders, to your point, has a 50% equity stake that he wants. And there are some really excellent white papers about what a 10% stake might look like. So we are going through a lot of changes politically in terms of populism being on the rise. What is it we are going after? This is not laissez-faire capitalism. Lisa:

Potentially taxing some of these companies lead to a better deficit reduction policy, or will it ultimately just fuel additional spending plans? Henrietta:

One thing I concentrate on is how big is the problem and can AI fix it. We talk about AI from the Secretary Bessent perspective and say we'll fix GDP, but I need money they can pay down the deficit, I need Congress that can spend money if we need it. I need Congress to be writing this legislation. That's more than just equity and growth. Jonathan:

Capital gains, corporate taxes. If it hits the employment market through NAFTA, cut taxes on employment. The few people that will have jobs, you need to cut taxes on that or do something with capital gains. Your income. Isn't that the ultimate shift here? Isn't that the solution we will see on the horizon? Henrietta:

There's a reasonable argument. A billionaires tax polls very well. 70-something percent of the population, cap gains, carried interest, corporate tax rates. But really you are talking about displacing a huge portion of the workforce. We'll have to find a solution or Treasuries will be out potentially trillions of dollars annually. So there is a lot to develop, and it really depends on what you think AI will do. Is it going to explode and we get to sit on an island somewhere and not work anymore, or is there going to be a mix? Jonathan:

Henrietta Treyz there of Veda Partners. Doubts about whether that is the case. Turn Manhattan into a large data center. We'll all go sit on the beach. Lisa:

That is quite a prospect. Jonathan:

Coming up next, SpaceX looks to raise $40 billion to buy NVIDIA chips, plus your morning movers. Micron falling as workers in Taiwan vote to strike.

Record high on the S&P 500 for the first time in months. A bit of a pullback this morning. Negative by about one third on the S&P. The losses building a little bit the last hour or so off the back of some of this action in the bond market. Tens up five basis points. 30s at levels we have not seen since March of 2002. A 30-year Treasury over 6% in the U.K., 6%, the highest level since March of 1998. Up this morning by double digits in the U.K., same story in France. Spreads wider. 140. Last week, 150. Up 17 basis points now. 4.92% on French 10s. Lisa:

Earlier this summer, you could have talked about how rising oil prices were helping to fuel those gains. Right now, you are not seeing that. It really is the competition for capital. Would you rather lend money to the French government or lend money to Elon Musk saying to the moon? Ultimately, people are saying to the moon works for me as the AI buildout, the visionaries are looking to raise money. Jonathan:

You are lending money to the French government and the French people with the promise that they will pay it back. There are riots that suggest they want to spend more and borrow more. If you are the French government, how do you find a solution? What will be the popular solution? Lisa:

People are looking for what the backstop will be. Ultimately, the ECB is coming out as of now and saying it is not us. You are seeing politicians come out and say we will reduce the deficit. Where will the political will be given that there are protests that have turned violent as a result of budget cuts to the system? Jonathan:

They want to burn schools at the same time. Annmarie:

It started out peaceful and ended up as riots. Jonathan:

Can we call them what they are? Annmarie:

They are riots. It has moved beyond Paris. Jonathan:

Deeply uncomfortable situation, but you have to call them what they are. They are not protests anymore. They are riots. Does it scream protest to you? That is not a protest. It is a riot. Lisa:

The way it has been reported is there are riots going on at the same time that there are peaceful protests. Any question is how much this is driven by inside sources versus outside agitators. Jonathan:

Two hours away from the cash open. Opening bell just around the corner. Let's get you some single names, some morning movers. Yahaira:

Chip stocks are weaker across the board, but Micron shares falling on reports of a potential strike at one of the chip plants in Taiwan. Nearly 90% of the union members voted in favor of walking off the job, demanding a bigger cut of their AI-driven profits. No strike date has been set just yet, but as you can imagine, with memory supplies so short, this can exacerbate a bigger issue in the markets.

Meanwhile, we are seeing Intel shares trying to hold onto gains. TSMC shares are lower by nearly 2% after Elon Musk clarified their role in its Terafab Texas chipmaking project. Earlier this week, Musk said he was in talks with TSMC, raising questions about the role Intel will play. Now he is saying his own companies will build and operate the facility with Intel helping to develop the technology. As for TSMC, they can license parts of the facility but no more than that. We end on Apple. They are bucking the broader weakness we are seeing among the Mag 7. We report that Apple is teaming up with a company on home devices, on things like smart doorbells, locks, thermostats. It is part of a bigger push into the smart connected home market, but this is Apple trying to play catch-up because Amazon and Google have spent years building out their smart home businesses. Jonathan:

Thank you. More in our next hour. The latest from HSBC, planning sweeping job cuts across the U.K. wealth business. The bank plans to eliminate nearly half of its management and specialist positions while reducing the financial advisor headcount in a broad AI push. Elsewhere, Jamie Dimon weighing in on the data center debate. Jamie:

Data centers, build them where they are wanted. Half of the new ones are in Texas and Virginia. People don't want them there. There are a lot of states that have access to power and would take it. Any big company has to be a good community citizen. Jonathan:

Political opposition to the buildout delaying projects so far this year. Another, SpaceX seeking to buy NVIDIA chips, setting the stage for what could be one of the biggest debt financing deals of the AI buildout. It is expected to close in the next year. Lisa:

$3 billion of investment-grade debt and $40 billion of bank loan debt, and shares falling in the premarket. Nonetheless, people are saying they will be able to raise it and it will fuel some monetization because SpaceX will have the capacity to lend some services out to the myriad of players, frontier models among them. Jonathan:

We mentioned Apollo funding the AI buildout, deploying $20 billion in the third quarter alone. Overview writing, we are in an all-the-above investment cycle across energy, infrastructure, and broader industrial economy. Past investment cycles tell us that underinvestment is an underappreciated risk. Olivia joins us for more. Olivia:

Thanks for having me back. Jonathan:

I am sure you don't want to confirm or deny the news around a certain SpaceX company, but the amount of money the companies are raising. Olivia:

Look at what we have done the last quarter. You put in our $20 billion number. That is partnering with companies. It has been investing in businesses like a gas processing platform in Western Canada. It has become a large part of our business. There is the AI story and the behind-AI story. There is the power, the grid, the gas demand. Jonathan:

We can bring up the quote again. Past investment cycles. Can you flesh that out for us more? Olivia:

You look at past investment cycles, and I think about what happened 2003 to 2008 where we were coming out of the 1990s and underinvestment in oil and gas infrastructure and drilling. All of a sudden we had this demand shock and did not know what to do with it. You are seeing some real parallels to that today. It is something we are focused on now. Lisa:

At the same time, there is worry that capacity may not be the right capacity or in the right places as it will be needed in 10 years. How difficult is it to ascertain where to put some of these, how to generate the energy, how to create something that is going to be fit for a world that will change a lot the next 10 years? Olivia:

Absolutely. We have been focusing on a few things. One around the reshoring theme, making sure there is domestic capacity to build out what we need to build out. And we focus on the grid. The grid is one of the underappreciated risks we look at in the AI power buildout today. Natural gas, making sure we have the right natural gas infrastructure. We will be using natural gas for a long time. This is not just a transition, it's about something more. Making sure we have the infrastructure around it. There are other components. There is resiliency within the grid. There is resiliency within the power supply. Also, making sure we have the investment sleeves covered as well. Lisa:

Does it concern you financing has gotten increasingly creative and the different counterparty risk is obscure in some cases? Olivia:

No. I think creativity is part of what we do at Apollo, making sure we have bespoke solutions for investment-grade companies. I think you are seeing a flight to quality, looking at better names, better opportunities, particularly in an environment like this. Annmarie:

When you look around the world at energy security, the Middle East, you are seeing more and more deals come online for companies, for countries to make sure that in the future they have something like Saudi Arabia had, an east-west pipeline? Olivia:

Yes, that is something we are thinking through right now. I think what we are seeing now is there is a premium for energy security and being able to invest in and around that theme. The other thing we are seeing is the cost of moving these molecules has gone up. If you think about insurance, security, and the fact that vessels are having to take longer routes to get to market, we see a change in how we think of prices. Annmarie:

Is there a pushback to the work you are doing? Most of America does not think this administration is doing enough to take on AI concerns. You are funding everything that builds that out. Olivia:

We are investing in the industrial renaissance and reshoring and the grid and power. These are all things we need not just for data and AI but for broader work in the U.S. While I do think we have seen pushback in some communities, we listen and respond to that. We want to make sure we are putting data centers where folks want data centers to be put, and making sure it is part of a broader theme around how we really grow the economy. Jonathan:

Is the risk of getting caught offside with a change of the wind? You talk about the risk of underinvesting. I look back to a certain period, pulling down fiber, the other capacity was a consequence of underappreciated technological breakthroughs and the efficiency gains we might see. How do you make sure you are not caught offside with regards to technological breakthroughs we might see in the next several years? Olivia:

We are being certain on our assumptions and we continue to underwrite technologies and bring on the work like solar and batteries. These are proven, quick to market, efficiently priced, and becoming increasingly reliable with more battery demand. So focusing on things we want to know. We think that will continue to pay off. Lisa:

As an investor, do you see this race for capital and insensitivity to rates as a positive, the ability to say, while you pay us 10% yields, 11%, 12% yields, we are good, and you will not get a better yield in the premarket, so hey? Olivia:

Infrastructure is a great place to invest. As we think about the types of assets, if you think about inflation protection, as you think about the ability to pass through some of these costs, this is a fantastic time for infrastructure more broadly. Jonathan:

6% on the U.K. 30-year this morning. Six. Olivia:

People would rather invest, an 8% yield for investment-grade debt is shorter-term, 9% yields. All of a sudden, people get excited about the offset to the potential risks. Jonathan:

The deal Apollo may or may not be working on. Lisa:

If these companies are truly right, what is to stop investors from testing the limits? Jonathan:

Is there a moment where this market puts the brakes on things? Is it 100 basis points? These are juvenile questions about things people are thinking about. How far away is it? Olivia:

We take this into account and are looking at deals and thinking about what is the right pricing on them. How do we think about a deal in June and have spent incremental time on, and what is the right pricing for today? It is something every single day we are thinking about. Jonathan:

Changing every 24 hours. Equity futures declining on the S&P. On the Nasdaq, down by 0.8%. Vonnie Quinn has more. Vonnie:

Thank you. Vice President JD Vance says Iran must make a meaningful reduction in its nuclear enrichment capacity to meet U.S. demands and end the war. Vance says the U.S. was in talks with the Iranian president, foreign minister, adding it is not clear how their country makes decisions. Jaguar presenting the first model of the new fully electric lineup in its effort to bring new life to the British brand. It will set drivers back 72,000 and opens early next year and will target younger customers particularly in the U.S. Apple pushing into the smart home market. Sources telling us that we break the tech giant developed a doorbell, thermostat, and other accessories in an unusual partnership with LG. The device is set to be introduced October 13. Jonathan:

Thank you. Up next on the program, global rates climbing higher.

I don't think the market is complacent with respect to the move up in rates. I don't see a way for higher interest rates to lower inflation. At some point, the solution to higher rates is higher rates. Jonathan:

Up next, a guest from Morgan Stanley. You are watching Bloomberg TV.

Stocks down this morning. We are down by 0.5% on the S&P. Down 0.8% on the Nasdaq. Fixed income worldwide. Treasuries, yields higher. Up 0.06 on the 10s. Highest 30s since 1998 and countless morning, on the French 10. That are problems in this debt market. Global rates pushing higher.

I don't think the market is complacent with respect to the move up in rates. I don't see a way for higher interest rates to lower inflation. At some point, the solution to higher rates is higher rates. You get a little stability and we can end the increase in rates. Jonathan:

U.S. Treasury yields climbing. Investors looking ahead to more supply. 10-year auction today. 30-year bond sale tomorrow. The shape of the curve is increasingly being influenced by Treasury funding decisions alongside Fed policy. The November refunding may prove more important than the October Fed meeting. Our guest has more. Break it down. What do you expect to see in the QRA? Vishal:

Base case would be supply and demand imbalance. I think we saw a very brash statement from the secretary. Taking out 30% of the net float of the 20 and 30-year, the market is very clearly vocalizing you need to do more not just from the debt balance standpoint but from the supply and demand. Jonathan:

I read some work on this yesterday from BNP. To fund that, you have to issue in T-bills and introduce a new problem. Almost immediately instead of overtime. Vishal:

Right away. Jonathan:

Guess what I do with the long end. I sell it again. Solve anything? Vishal:

This is exactly what a developed market does when it does not pay attention to the deficit situation and tries to get the average maturity of the debt slowly shrinking on you because investors will push back and will not give you 30, 40, 50-year debt anymore at these levels. So we will keep demanding that unless you start shrinking the maturity level. Lisa:

Right now, is there any sense things are becoming untethered, that the selloff is becoming a doom loop? Vishal:

I think I would look at that cuts through the entire economy. What happens in the economy is what the articles say today where the top end price track issue the debt and they will be issuing the debt and the other side of the economy's mortgage rates, financing, sovereign spreads widening, triple-B to double-B spreads widening. Starting to show the bifurcation. Lisa:

Just thinking about what Olivia from Apollo was saying. It is a new price discovery and they don't have a sense of where things are. We will have an exercise in price discovery at 1:00 p.m. Eastern today with 10-year bonds being auctioned. How big of a risk event is it for this market to say the ratio is not as good as people thought, where the indirects fall out of the equation? Vishal:

Significant. I think we are in the red zone. We point to France but we are in the red zone here in terms of the market is screaming. You are talking five at this point on the 10-year. 100 basis points in a developed market country with $40 trillion to go. It is significant. Lisa:

What does reprice mean? Vishal:

We are doing price discovery every time a scheduled auction comes to the market. That is literally what it is. Developed markets should not be succumbing to this where you look at the price of that every time. Now your average maturity is seven months. Let's take the tech out right now. A significant portion of that coming due for refinancing on maturity in the next one and a half years. So your 7% to 8% coupons will seep into the economy. Mortgages are pushing back. Jonathan:

5% on 30s. Vishal:

Exactly, but there is a mechanism so it is not seeping into the economy because these are fixed-rate mortgages. On the double-B, single-B part of the economy that is not as price insensitive. Jonathan: