Bloomberg Surveillance TV: November 9th, 2026

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From our global headquarters in New York City, we alive on Bloomberg Television weekday mornings from 6 to 9 a.m. Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app. But conditions should stabilize over time. Don't panic or try to time the market based on one particularly bad day. Liz joins us now for more and it was a particularly bad day on Thursday. How do you view something like this new left field kind of issue we're dealing with this morning, which is an affair with the CEO at the top of the second biggest company in the world? Yeah, I mean, you said it just a few minutes ago. You can't believe that we're having to talk about this and you don't want to. I don't want to either. We're melding personal lives with business, but here we are. And unfortunately, it's happening with one of the most important companies in this field out. And unfortunately, happening at a time when things were already under pressure. And I also think it's important for investors to remember that even coming into the midterm elections, semiconductors had been under pressure. And investors were getting a lot more choosy about which companies they wanted to pay up for what their true expectations for 2027 were. So we're in this period of time now where there are a lot of different things going on and as an investor, your focus has to be on where is the most attractive risk reward? And I think one of the things that has come into the forefront is the bond market. And it's been a really much more attractive risk reward than it has been through this entire cycle. So we're getting this choice too as investors of okay, if we're going to take money out of equities because we're concerned about the build out, because we're concerned about earnings and capex, which I think are all valid concerns into 2027 and 2028, then where does the money go? And reality says it's going into treasuries. So does it go into treasuries because there is a belief that the build out won't happen as quickly, won't create as much competition for capital as would otherwise might have happened? Or is it simply that you can forget about the fiscal risks? You can forget about this because this looks worse right now. We're not sure where this is going. Is it just that the market can only focus on one thing at once? Now I think it's more complicated than that and I don't think that this completely puts the build out under threat. I think there's a re-rating going on and I think there's maybe a coming back down to earth going on where for a long time we were just sort of hand over fist piling money into a lot of the stocks that were levered up to the AI infrastructure build out. And I don't think that that's necessarily a bad thing still. I still think that that theme lives on, AI absolutely lives on. But there's a difference between the theme itself of innovation and what happens in the market and where we are in that market cycle. So I think right now that market cycle, especially for the AI build out, is looking like it's under threat and maybe we got a little ahead of our skis. Now there have been some things that happened obviously last week, the huge down day on Thursday, brought valuations down again. Their yes was a recovery on Friday. It's looking like things are going to be a little bit green today. But those recoveries were not all that impressive. Right, we still had an advanced decline on the S&P that was negative on Friday. Today, yes, up, but nothing to really write home about. So I don't think that there's a bounce back up to all time highs. I think that we have to level out somewhere and we will. But this adds another layer of complexity. And the capex numbers in 2027 are perhaps some of the ones that are now in question the most. The Jensen Wong crisis, do you think it's idiosyncratic to Nvidia or do you think this is broader for the AI trade given how much of a champion he's been? I mean, he's been lobbying this White House for policies that help the entire ecosystem. I mean, I certainly hope that we don't hear about more similar types of personal crises that come out of it. I think what will likely start to heat up and it already has today, the chatter around regulations, the fact that we had a blue sweep in Congress last week and the likelihood of regulations picking up in 2027. I think this probably only fuels that fire further. So idiosyncratic to Nvidia today, this story, obviously. I hope it stays that way, but the entire complex is going to deal with the idea of possibly more regulations and this investigation being what I'll call a wet sock on the whole thing. A pill battle, there's going to be a ton of noise coming out of Washington DC regarding him and other tech executives. Is this a moment where investors think we'll want to step in and buy the dip or potentially is this just a falling knife that's going to keep falling? I think we're already seeing some buy the dip behavior. And as I mentioned earlier, I think the AI theme is still well intact and in the innovation cycle, we're probably still pretty early in the innovation cycle. So the buy the dip mentality, I don't think is quite there without discernment. And I don't think that it comes in and takes us back up to where we were. But I do think that investors are going to use this as somewhat of an opportunity. But this is really only the first trading day after this news came out over the weekend. Usually it takes a few days for the market to really figure out what it thinks about the entire thing. So I would be waiting a few days to let some of the dust settle and see how semis shake out for the rest of this week. You said bonds are starting to look good again. And yet we got hotter than expected labor market report on Friday. CPI is expected to come in below where we got it in September at the same time, still above, running above the 2% target. What's the argument here? Is it that the economy is going to slow or just that people are seeing another alternative in a way that they hadn't before? I think it's more the latter. And when I started thinking about this, the first time the treasury, the 10-year treasury hit 5% is when I started to really think about it as, you know what? That looks like an attractive opportunity. And if our job in markets is to help people make money, generate income perhaps, depending on what your goals are, it started to look like an opportunity. And I was honestly having trouble finding a reason not to buy it. So there's this long-term thread about the deficit and the debt. And everybody is concerned about that, which I totally understand. That remains a large problem without an easy solution. But in the near-term, a 10-year treasury above 5% was going to give you pretty good yield. And I couldn't imagine a world where the Fed or the Treasury was going to let it stay at 525 or even get up to 6 for a very long time, right? It could still crawl back in that direction. But I couldn't imagine a world where the market left it there for a long time. So that alone, it was a good trade-off, as we talked about before. The other thing is, if you want hedging against some sort of outside shock that could happen and really take stocks down, take market sentiment down pretty far if we had some cracks that started to show up in the economy, getting a 10-year and even a 2-year treasury at those high yields when if the Fed, if there's a risk that the Fed actually has to turn dovish at some point in the next 6 months, those were good entry points. So that was my thesis. And again, I was having trouble finding a reason not to buy them at the time. And that's turned out to be a good decision. Stay with us, Moltblumberg-Savanna's coming up after this. This is the Blumberg Tech Minute brought to you by Chatchee PT. I'm Carol Maser. Chinese automakers have become famous for turning cars into rolling smartphones decked out with large touch screens and flashy software. Now they're going back to design basics, touting the return of buttons and knobs. Three introduction of physical controls coincides with a broader push by Chinese regulators to overhaul the EV industry's potentially harmful design choices. China's Ministry of Industry and Information Technology proposed updated national vehicle standards that specify certain functions, like those that control headlights or change gears, should be physical rather than digital. While door handles have been the most high-profile change resulting in millions of cars being recalled, screens have also drawn scrutiny because they can pose a safety risk, should they lose power or break. The trend of adding physical controls is not limited to China, with Mercedes-Benz Group also introducing buttons in its new models. That's the Blumberg Tech Minute brought to you by Chatchee PT. Get started at ChatcheePT.com. important ones wrong. The client's name, the acronym, Whisper Flow Notetaker is built to get the hard words right. It takes notes on any meeting platform, Zoom, Google Meet, Teams, even WhatsApp calls, keeps every meeting searchable, and connects to clot or chat GPT's so you can ask, "What did we agree to last Tuesday?" free to try on Mac and Windows at Whisper Flow dot AI. That's W-I-S-P-R flow dot AI. Off of that considering its first Hong Kong and Singapore dollar bond sales as the race to race capital intensifies, potentially adding to the billions of dollars Big Tech has already raised in the pursuit of AI. Former New York Fed president Bill Dudley warning, "If a bust might lie ahead, we should worry that the current boom may be sowing the seeds for a future financial crisis." Bill joins us now for more Bill. "Great to see you. Thank you for being with us. I'm sure when you wrote that, you were not thinking about an affair at the second biggest company in the world. I'm sure that wasn't on your necessarily your big o-card, but how much should the Fed be paying attention to turmoil right now in the tech trade? Well, I think they need to be paying attention for a couple of reasons. Number one, obviously that the AI trajectory has a big implications for the economic look, turns how strong the economy is, and then also upward pressure on interest rates as AI demand is taking down a lot of credit. But the bigger question I think longer term is, is AI going to go from boom to bust? And if it goes to bust, are we going to have a repeat of the grieve financial crisis where the stress on the financial system costs things to fall apart? I think there I'm a little bit more optimistic because number one, people are talking about the risk of AI being up a bust. They really weren't talking about the grieve financial crisis occurring as we were going up to it. Housing would never decline on a national basis. So Prime lending wasn't risky. There were a lot of beliefs out there that sort of ruled out a grieve financial crisis. This time, people aren't talking about the AI boom turning into a bust. So what do you think should be done by regulators, by the Fedors, or have to prevent it from getting to a level that could threaten the financial system? Well, I think there's a couple of things. Number one, we need better insight to what's happening in the non-bank financial sector, because a lot of the activity and AI financing is moving from the equity market and from cash flow now to off-balance sheet borrowing. And we really don't really have a good sense of who owns, who owns what to whom and under what conditions. So I think greater transparency would be very important. I also think it's important that we have someone responsible for financial stability in the non-bank financial sector, the Securities and Exchange Commission really doesn't have a financial stability mandate. So I think either need to give one explicitly to the Fed or to the financial stability oversight council and say, we need to look into the sector a little bit more to understand where the counterparty risks are. I think one of the good things here is that the financing is mostly from big companies, big established companies. So it's not quite spread out through a lot of mom and pop organizations that you saw during the great financial crisis in terms of subprime lending. But I do think this is a big enough boom that it could definitely lead to a bus, especially because in fact, everyone is trying to get to the finish line first. It's a winner, take all kind of game. You have about seven or eight different hyperskillers that all want to win. There's not going to be room for seven or eight winners. Do you think there's anyone at the Fed right now who concurrently address some of these issues you're just laid out? Well, the Fed does look at financial stability issues semi-angually. That's one of the things that they use for their federal market committee meetings to discuss. But I'm not really sure that they have the inflammation to actually understand all the counterparty risks that it's going on. And some of the risks is a little scary because it's wrong way risk. So the video is guaranteeing the value of their chips. So what ends up the value of their chips goes down. Not only do they have to come up with the money to make good those guarantees, but their earnings are going to suffer because they're going to have lower chip prices. So I think we need to look a little bit more deeply into where the risks are in the sector. If US growth is so tight to AI, where does this leave the Federal Reserve if this starts to slow down in terms of the rate hiking cycle? Well, I think if the AI investment boom turns over is definitely negative for growth and definitely going to put down pressure and interest rates. The question is when is that going to happen? You know, there's been a lot of speculation that the election outcome is going to lead to a dramatic slowing in AI data set or construction. And I think that's probably correct mostly in the medium to longer term. But I'm not sure how fast it's going to happen. A lot of data centers are already been improved. They're already under construction. So 2027, I still expect investments being be higher than in 2026. And so that's continued to add upward pressure to the economy. Bill, do you think that the Fed should refrain from hiking rates because of the turmoil that we've seen in the AI trade, because of the threat to growth that could come on the heels of it? Well, I think that it's important not to overreact to a relatively small correction. Obviously, if, you know, financing to AI just evaporated and an investment spending next year was going to be weaker than this year, then that has big effects both for economic activity in terms of investment, but also in terms of the stock market. It goes far enough. And of course, the Fed has to take that into consideration. But so far, look, the stock market is still up this year. The stock market's up a lot over the last five years. Financial conditions are still quite accommodative. So people are talking about, oh, the tightening of financial conditions means that the Fed doesn't have to tighten anymore. I don't think that's really borne up by the economic news. I mean, the payroll and plumber report we saw on Friday suggested that the economy is still growing pretty strongly. And there's really a very little sense that the level of interest rates is exerting a lot of restraint on economic activity currently. Well, this is exactly where I was going with it. And it's ahead of CPI tomorrow that no one's focusing on because since Ketset, they're focusing on an affair of Jensen Huangs. I mean, to me, I just wonder how much the Fed could get sidetracked by watching the volatility and not necessarily target inflation to the degree that some people are seeing and feeling every day. Well, there's always a risk that you say, well, I want to wait to see more information. Therefore, I don't do the tightening that I actually need to do in a timely way. But I think the Fed is less inclined to look at every little wobble on the equity market and think that that has meaningful implications for monetary policy. I remember 1987. We had the stock market crash in 1987. Everyone thought that was going to generate a really weak economy. It did not. And one of the reasons it did not was all that stock market crash did in 1987 was unwind the advance earlier in the year. So by the end of the year, we're just back at the stock starting point for the beginning of 1987. So I think it's important to take stock market, a stock market decline of large magnitude. Obviously, we'd have consequences for the economy. But it's got to be large relative to what's already happened. And the stock market's gone up a lot in the last few years. What about the fact that we have oil prices seriously declining? Brent under 100 WTI under $90 a barrel? Well, that's good for the inflation outlooks, clearly. But it's also going to actually be positive for growth because people's real income is going to be boosted as energy prices decline. So again, we don't really know what the outcome is going to be in terms of the Iran war. And so I think from the Fed's perspective, you can't make bets on what could happen. You have to sort of be looking out the window and saying what actually is happening. And I think none of these things are very definitive as of yet. Stay with us, Mulplumberg Savannah's coming up off to this. This is the Bloomberg Tech Minute brought to you by Chachi Pt. I'm Carol Maser. China's Ministry of Industry and Information Technology proposed updated national vehicle standards that specify certain functions like those that control headlights or change gears should be physical rather than digital. While door handles have been the most high-profile change resulting in millions of cars being recalled, screens have also drawn scrutiny because they can pose a safety risk should they lose power or break. The trend of adding physical controls is not limited to China with Mercedes-Benz Group also introducing buttons in its new models. That's the Bloomberg Tech Minute brought to you by Chachi Pt. Get started at ChachiPt.com. Most meeting note takers get the easy words right and the important ones wrong. The client's name, the acronym, Whisperflow note taker is built to get the hard words right. It takes notes on any meeting platform. Zoom, Google Meet, Teams, even WhatsApp calls, keeps every meeting searchable and connects to clot or chat GPT so you can ask, "What did we agree to last Tuesday?" Free to try on Mac and Windows at whisperflow.ai. Running a small business takes everything you've got, but with Chase for Business, you're not alone. 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Under surveillance this morning failing to meet great expectations. You have to hold yourself responsible. You have agency. You're the CEO of the company for God's sakes. You have to have high standards and expectations. Just as I can be fired, the next CEO has to be hired. I like that we can't be overly complacent about our position inside the company. You're always vulnerable. You're always earning it. Here's the latest in video shares following as the company orders an investigation. As it's CEO Jensen Huang admits to an extramarital affair with a suspected Chinese spy, Huang issuing an apology to his wife and family, adding he supports the investigation and plans to cooperate. China-Bajibok CEO Leland Miller now joins us for more Leland. Thank you so much for being with us. I just want to start on what this means about U.S. sales to China in terms of advanced chips and what potentially already have made it into China maybe through backdoor measures during this entire episode. I actually think that's exactly what the focus should be in terms of breaking down what's turning into a soap opera because there's all the components right now of a huge drama. There's an affair, there's Chinese spies. But I think what people are missing is in the background as one of the most consequential conflicts in U.S. China policy. It's over export controls and whether we're doing enough in order to ring-fed advanced technology from China. Mostly based on the assurances of companies like Nvidia for years, there has been very little plugging of loopholes. Even as you've seen diversion, you've seen smuggling, and you've seen very active attempts to get hold of this advanced technology. What we really need to be doing right now is saying why are we taking the word of a company or two or three, we should be worried about better enforcement, better compliance and actually get some of these CEOs under subpoena to tell us what the real story is. How much is going to be in terms of the commerce department looking even more into mega speed, given the fact that they've already been accused of breaking some of these export controls? Well, mega speed was still connected to Nvidia days after the scandal broke. So I don't know what the mandate is from the top going down to the commerce department. I think there should be an enormous scrutiny of this right now, because if you just look back at some of the assurances that we've gotten over the past several years, Nvidia told us no evidence of AI chip diversion, false. The Chinese military won't seek American chips, so no need to worry, false. Customers police themselves, because they want continued access to Nvidia technology, false. Advanced chips set to China will have no impact on US customers. That one's particularly false, because what we know is when you're producing these advanced sending conductors, you have limited production capacity to do so. So if you are using fab lines to produce chips that are being set to China, they'd be done at the expense of American firms. So we've got all these assurances. We know for certain now, because there's documented evidence that so many of these claims are false. So why were they false? Why were we being told this? I think that Congress needs to look very closely, and I think the administration needs to look at this issue as well and say which of our priors should we be questioning right now, considering this has blown up into a scandal. >> Leland, when it comes to the upcoming NDAA, do you think some of these export controls, especially regarding China that they are debating are going to get passed? >> Well, it's been a dog fight. It's always a dog fight when it comes to Congress battling over export controls. But I think what this is doing is putting a spotlight on the problems with just trusting the system as it stood. You have three major export control bills that are being pushed. They're doing different things. But I think that the idea here is we have not been paying enough attention. And this has been a system of trust, and when we get assurances from the bigger companies and nothing bad is happening, that there isn't smuggling, that there isn't evasion, that there isn't an effort by the People's Liberation Army to get a hold of these chips. We now know that all of those are false. So I think this will put the spotlight for a lot of congressional members that otherwise weren't tuned into this issue. I think it's going to make it very difficult to simply walk away or close their eyes on this. >> Leland, there's also this issue that on Friday, Treasury Secretary Scott Bessett and Ambassador Greer, James and Greer came out and talked to the key counterpart over in China and said that China was not complying with the Busan agreement that they reached last year. How fraught is this meeting that's going to be in Shenzhen between Xi Jinping and Donald Trump? >> I'm not sure the November meeting is going to be the fraught one. I think the January 10th is setting up to be a showdown. And the reason I say this is there was a two-month truce from the last meeting. That is a very small amount of time and it was a very small amount of time specifically because as Secretary Bessett said, as Ambassador Greer said, the Chinese are not adhering to the agreements in Busan. They're not providing the critical minerals and rare earth magnets that they promised and they're not doing the purchases on the agriculture side. Most of the purchases that they promised there. So there is a breakdown of this agreement. I think that the view from Beijing is that they have enough leverage that they can simply just turn a cold shoulder to this and not worry about it. I think what we're saying is there's a lot of angst in the U.S. side and there's a lot more friction here. I think what the Chinese are doing is very provocative right now. >> 30 seconds. How many Congress members have contacted you about this? >> Well, you know, the other hat I wear is as a commissioner on the U.S. China Economic and Security Review Commission. So my job in that role is to brief Congress on this. The public is the democrats and we're doing that right now. We've got chip security as part of our recommendations coming up next week. We're going to be announcing and this issue, obviously, as it hit, has has meant that just about every member wants to get spar on it. So it's keeping me busy. >> This is the Bloomberg surveillance podcast "Bringing You." The best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV with day mornings from 6 a.m. to 9 a.m. Eastern. Subscribe to the podcast on Apple. Spotify or anywhere else you listen. 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