Dow 30,000. 2009,were you march 10 of while you were up 16 per year on the dow . Spx i believe better as well. There have been reasons along the way to go to cash, and yet here we are with solid doubledigit returns across 13 years. Jonathan and some houses got it right. One of those houses, Morgan Stanley. It was really uncomfortable to make the call coming out of march 2 remain committed to the recovery in the u. S. Economy. It took some real confidence, and one thing that has frustrated me over the last couple of months is every time someone says the easy money has been made. There was nothing easy about going long in early april during lockdown. Lets be clear about that. We are going to keep this short with mr. Wilkinson keep wilsonort to get mr. Of Morgan Stanley, but we are not even seeing the version of those trends, are we . Jonathan not yet. Bank of america proposes holding the bonus pool flat for traders, this on a year where in the first of nine months, revenues or bank of america are up 20 . I think some people were hopeful that may be they would get a boost around that, but of america proposing holding the bonus pool flat for traders. That headline just crossing the bloomberg. Tom weve got to get to mike wilson because hes going to be on the phone to bank of america. This is what happens here. This goes back to what ubs wants to do in switzerland, where they are trying to rejigger away from bonus compensation. My experience is that works until it doesnt work. Lisa the key tension here is how much will it be difficult to recruit people as a result of it, or how much will the entire wall street Employee Base shrink next year, making it possible for bank of america and others to move to a leaner model, especially if they expect loan losses ahead . This goes to the underlying tension in markets with an economy that isnt going gangbusters, and this is why it has been so difficult to get this call right. Tom this goes to compensation and resetting, whether it is hedge funds, alternative investment, institutional managers that are behind. Imagine the panic out there right now to get to a shape up of your portfolio. Jonathan i think some policymakers are panicking, too. From chancellor sunak, the u. K. Budget. To overseas aid the budget pulled last year for International Aid was about 15 billion sterling, so that is getting cut, which will be somewhat controversial when it comes to the ukase to thats when it comes to the u. K. when it comes to the u. K. s standing. That is controversial within the United Kingdom and within the conservative party as well. We can talk about the headlines from chancellor sunak. Tom this is from the yearend into the holiday season, and you are going to get the mother of all annual data dumps. Mike mckee will join us on the economy. Of course, Ellen Zentner at Morgan Stanley looking at, i believe her phrase was a winter of discontent. Her colleague mike wilson joins , chief u. S. Equity strategist at Morgan Stanley. Do you share the discontent about equity markets . Mike good morning, tom. The discontent in the economy may not necessarily mean discontent in the markets. Markets trade differently from the economy. We are looking at a slowdown for sure as case counts rise, potential lockdowns and all of that good stuff. While the s p 500 is basically flat since early september, theres a raging bull market going on under the surface. This is the point we have really been trying to emphasize. As we look forward to next year, there is still a lot of undervalued assets within the equity market that had not participated yet. That is the big story really going on in the equity market. Tom do you unload your tactical over to materials, cyclicals, and the rest, or do they participate as well . Mike that was the strategy. You guys are talking about stepping into the fray back in march being difficult. A thicket was even more difficult to kind of move away from the former leaders to the laggards. That is a real risk for a lot of people. I think folks have thought that itlong as they can, and now is becoming about that move. That is what it is really about, the election result bus the vaccine news forcing people to consider the possibility that this leadership change is not temporary, that it is more sustainable, and positions are not rate for that. Jonathan weve got two time frames here, the near term in the mediumterm. Youve had this trading range that you have developed, and it has evolved slightly as the year has progressed. Can you walk through that range right now and why you think we may be in for a test of the lower end of that range . Trying to call corrections in a bull market is sometimes a fools game. We were bullish for march through august, and we thought the market would then go through some consolidation. That wast this range technically driven, it worked really well from basically august through the end of october. We made a trading by call at the lower end of that range right before the election, and it worked out really well. Now we are at the upper end of that banding and actually through he 635 it, at 3635. At the end of the day, at 3635, you have baked in pretty much as ach upside as you can come legitimately confirmed with fundamentals. On a fundamental basis, it is hard for us to stretch it much beyond that. Liquidity may be surging in the market, but our job is to tell our clients when the risk reward is attractive. Right now it is much less attractive than it was three weeks ago. It doesnt change our view about the bull market extending into next year, and once again, the main message we want to leave with clients is dont focus so much on the index. Up 20 this2000 is month, and just starting to have relative outperformance. Those are the types of things we want to focus on for clients. Somehan some Lisa Research notes after janet yellen was nominated to be treasury of the secretary saying that the idea of a treasury working more closely with the Federal Reserve willing to run the economy hot is good for inflation, and is only going to fuel the trades you are talking about, russell 2000, financials. Do you agree that janet yellen at the treasury is, if not a game changer, really adds momentum to what we are seeing in the market . Mike absolutely. One of our themes this year is that we are moving out of what i would call Monetary Policy dominant regime to a fiscal policy dominant regime. In fact, janet yellen and ben bernanke have been writing up beds for the last six months eds for the last six months imploring congress to do fiscal. The fed has been imploring the government to say we need your help this time. We need to get more fiscal cooperation to use the cheap money to finally pull us out of the slow growth environment. Putting janet yellen as u. S. Treasury secretary can only help that effort in my view because it does come down to a negotiation with congress, and obviously janet yellen has tremendous street credibility, and we know who she is rich he also has a penchant for some of these programs that are more favorable to the lower income cohort, which is exact a what has been working this year, getting money to the folks who need it and will spend. Tom mike wilson, International Investment now. Which inning are we in . Is it just beginning, or has it just been a nice pop and thats it . Mike its another one that has been a bit of a widow maker for the last six or seven years, in the sense that every time it tries to make a move, it is like the value versus growth phenomenon. It is the same trade. I think we are at an Inflection Point right now for the more cyclical parts of the market to work better because theres Economic Growth acceleration not just here, but globally. Some of that is inflationary. Theres no doubt that those markets, if we are worrying about our fundament to i can view, those markets should have better outperformance over the next 12 months. Jonathan best month ever on the stoxx 600 in europe this month, up around 15 . Tremendous work for the team this year. Fantastic to follow some of the research. Have a wonderful thanksgiving, sir. Heres the range, 3150 to 3550. Ofclosed yesterday north 3600, and then looking for a test to the downside. That has been the story over the last couple of weeks, the tugofwar between the near term in the forward outlook. The forward outlook overwhelmingly is dominating the trade environment. How much bad news do we need to test the tolerance, the patients of that argument . Lookon the bloomberg, you at standard deviation analysis. Grimm is 3259. Weve got what is called room to 3735, so that is the pullback they are talking about. Jonathan data 20 minutes away. Last week, claims were softer. Retail surprise. I just heard about pmis for much of this week from the united states. Typically we dont talk about market pmis in the united states, but it has come up again and again. The data this week has been good. Lisa what i am looking for is the personal income and personal spending. What i think could really shift the market conversation is of Holiday Spending comes in much weaker than people expect. That challenges the entire narrative of a resilient consumer and that confidence, and that to me could potentially be a nearterm game changer, at least for the markets. Jonathan on this thanksgiving eve, alongside tom keene and lisa abramowicz, im Jonathan Ferro. The Economic Data about 20 minutes away. The Economic Data comes first, then the opening bell comes 60 minutes later. Record highs, tuesday of the close. The real yield comes this friday. I am sure you will be watching it with your turkey. Bloomberg surveillance with your turkey. [laughter] tom watching the lions, the Detroit Lions. Jonathan i watch the Detroit Lions on thanksgiving. I always do. Tom my deepest sympathies. Jonathan this is bloomberg. Ritika with the first word news, im ritika gupta. The number is stunning. In the u. K. , chancellor of the exchequer rishi sunak says the british economy will shrink the most in 300 years. Sunak told parliament gdp will shrink by more than 11 in 2020. The Government Budget Office projects 5. 5 percent growth next year. President trump heads today to pennsylvania in his campaign to overturn Election Results there. He will meet with state lawmakers there, examining allegations of voter impropriety. Complained that observers were not allowed to be close to workers counting votes. U. S. Health officials are working on guidance to shorten the 14 day quarantine period. If they are exposed to coronavirus officials are starting to see more evidence that they would spend less time and pouring team as long as it has negative for the virus. Mean more people complying. Ibm is about to cut 10,000 jobs in europe, and attempt to lower cost added slow Growth Services voltaire, the business for a spinoff. Cuts are also planned in poland, slovakia, italy, and belgium. Global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Mr. Biden we are already meeting with the covid team in the white house on how to not only distribute, but get from a vaccine being distributed to what should be a person able to get vaccinated. So i think we are not so far behind the curve as we thought we might be in the past. Jonathan that is the good news, getting our heads around the idea that we have a vaccine that is about to roll out a vaccination. President elect joe biden speaking to nbc nightly news. Bit, takeck a little about six points off the s p 500, down zero point 2 . In the fx market come up needed ce action down 0. 02 in down 0. 2 . Market, some needed price action. Move in the last 10 days. Right now, and this comes up on the Economic Data we are going to see and what jon has talked about happening in the house of commons right now, with britain in recession. It is a compare and contrast to years ago. 300 Tobias Adrian is one with skill on this, of the International Monetary fund, the director of monetary and capital markets. Tobias, i love your essay which links the path forward one to 2023, andr, out you link it directly to the Financial Stability that the chancel your of the exchequer that the chancellor of the exchequer desires. Can we have our turkey and eat it, too . Tobias good morning. Thank sir have me thank you for having me. Yes, Central Banks have deployed extraordinary measures this year in order to fight this terrible pandemic. That has been tremendously helpful in easing financial conditions, getting Financial Markets to work, allowing firms and governments to borrow from markets. That is a very good outcome. An unintended consequence of this is for risktaking to return in Financial Markets, and indeed we there is high risk for loans, but you have to make sure there is not excessive risktaking. Tom this goes to the blue book, the brown book, and the green book of the International Monetary fund. Have you calculated the percent of gdp we will have to spend, . Progressive to spend on this . Progressive and liberal economists would say it is a higher percentage of gdp. Do you have a perspective on this . Tobias we have looked at the fiscal expenditures this year, and there were about 12 trillion globally. , innding on the economy advanced economies it is up to 15 of gdp that has been spent in 2020 alone on fiscal expenditures in order to cushion the economy from this terrible pandemic. Lisa and yet, people still say Monetary Policy is doing the heavy lifting. Even though we have that incredible fiscal expansion, it is the idea of incredibly low interest rates, bond purchases and beyond by Central Banks. What are the stability risks of this disconnect we keep talking about, with markets flying at records even as we look at a pretty bleak winter . Tobias for the moment, things are in pretty good shape. Banks have entered this crisis with much more capital then they entered the 2008 crisis. Have come markets back, and that has been very helpful in terms of sustaining the recovery and sustaining the economy. We worry about the next three to if monetary conditions tell me that ifgiving remains easy monetary conditions tell me that lending remains easy, and there could be excessive risktaking in some corners. Jonathan you pointed out this was the objective of policy, to divorce financial conditions from underlying fundamentals. He used the word excessive. Who gets to decide whether it is excessive . Tobias it is a balance. You do want lending. You do want to a support the sick you do want to support the economy, but you want it to be measured. , support of Monetary Policy is going to be appropriate for some time in many countries for many years, but that has to be combined with regulatory measures that make sure there isnt excessive risktaking in terms of risky lending or the buildup of leverage. Thinking ofe you the market tools, those kind of things at the moment . Tobias it would cover the banks, the nonbanks as well as the household sector and the corporate sector. So you really have to look at the Economic System as a whole. Jonathan tobias, come back soon. Love to continue the conversation. , imf director of monetary and capital markets. What point do you decide that we need to recalibrate things once again, that maybe things are to excessive . And if you do and there is an adverse reaction in markets, you get a tightening of financial conditions. What do you think a policy maker does, get back in again . Tom you see it in europe in the battle between hungary and poland. A philosophical debate about income replacement. There a huge part, including bank of america traders, that arent doing well. We can joke about it, but theres a huge body of people this thanksgiving who are not getting by. That is an indisputable fact. Jonathan and i believe youre not talking about the bank of america traders. This situation right now is kind of just utterly bizarre. We saw chairman powell try to do this in the back end of 2018. Financial conditions tightened. The primary market seized up in higher yield. Chair powell stepped back in. We saw president lagarde try saying the ecb in march, we are not here to close spreads. Get what the ecb is doing now . Closing spreads. We should be making an effort to deemphasize Financial Markets away from policymaking, but how we already gone too far. I think maybe we have. Lisa he was talking about how joe biden has an opportunity to try to change the narrative because as President Trump displayed yesterday at that press conference, he has been very connected to the market, using it as a gauge of Economic Health, which tends to be problematic if you see this divorce continuing between the Economic Health as measured by unemployment rates and other highs. S to record but how are they going to do that . Jonathan lisa is such a beast on twitter. As we are having this conversation, tweets already out of the column. I just cant keep up with that. Just ridiculous. Hot it is the cholula sauce. Jonathan minutes away from the data in america, the coverage continues. This is bloomberg. Jonathan sparrow thought for Michael Mckee thanksgiving eve. Spare a thought for Michael Mckee this thanksgiving eve. In 10 seconds about 14 data points across the terminal. Alongside tom keene and lisa abramowicz, im Jonathan Ferro. Economic data slowly pouring out. Lets say hel