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scarlet: welcome to “bloomberg markets.” let’s show you what is happening across financial markets because there are signs the government shutdown maybe coming to an end. you are seeing a recovery in equities, a rebound to the s&p 500 from its worst week in almost a month. that index is up 1%, but you can see tech shares leading begin with the nasdaq 100 up by better than 1.5%. we are also seeing yields move higher with supply coming to market this week. also noteworthy because we only have four days of trading for treasuries given tomorrow is veterans day so the bond market is closed, and gold prices moving up almost 2.5% right now, getting a lot of attention because the end of the shutdown would allow investors to refocus on the economy because the data will start coming through.

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a letter of anticipation the federal reserve will see that data and perhaps move towards cutting interest rates again in december and perhaps next year as well. let’s highlight a couple of individual equity movers and bring in our own isabelle lee. isabelle: you see green on the sweet as investors are optimistic we may see the end of the longest government shutdown in history. micron up by 6%. palantir almost 7%. nvidia and tesla up. investors see key economic data and had strategist are seeing robust corporate earnings powering the equity rally but for monday, it is looking like a good day for u.s. equities. up next to pfizer shares edging lower and down by nearly 2% after the company late friday found out a board had voted unanimously to accept pfizer’s takeover offer of as much as $10 billion, so it was a dramatic bidding war against its rival

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that ended in a win for pfizer. this underlines how eager big drug companies are to find the next blockbuster with obesity seen as a key market. lastly, we are looking at airline stocks. this is also kind of mixed. american airlines and delta airlines in the red. southwest up. moving closer to reopening the government after moderate democrats broke with party leaders and voted to support the deal. still not in the all clear. for instance, the number of cancellations from u.s. airports stood at nearly 1500 come around 5%, and imagine more to come so the space is definitely fluctuating. scarlet: good stuff. thank you so much. as isabel was telling us, the government shutdown is front of mind so let’s get a closer look at the development happening in washington today where lawmakers may finally be ready to strike that deal to end the longest government shut down in u.s. history. since last night, house minority

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leader hakeem jeffries has been critical of the deal. he spoke moments ago on the hill. rep. jeffries: the reality is america is too expensive and far too many people are struggling to the paycheck-to-paycheck. they cannot thrive. they can barely survive. that is what democrats have been waging despite. and we will continue to wage despite. no matter what comes over to us from the united states senate to the house of representatives at some point this week. scarlet: for the very latest, that’s go now to mike shepard in washington. we saw eight senate democrats vote with the rest of the republicans to go along with the stopgap spending bill to shut off debate. the white house has expressed support for this deal. how quickly could we see the end

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of the shutdown? >> this will not be overnight. there will still be several steps in the process that need to be completed. first, the senate has to pass a final version of the bill that they agreed to last night with those eight moderate democrats joining republicans in advancing it on a procedural basis, but they still have some to the directions to do today and then take a final vote. things could go awry there, but it seems to be on course to pass the chamber. moderate democrats – senate democratic leader chuck has disavowed their actions.we are not seeing signs they are preparing to peel away from this deal to get house lawmakers have to get back to washington and will not do so until the senate has passed. speaker mike johnson has given his members 36 hours after the senate vote to get back into the nation’s capital for them to do their business and vote on

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whatever the senate hands them. and then it is not a sure thing either. the reason is conservatives are concerned this agreement does not fund the government all the way through the end of next fiscal year, september 30, 2026. we could see some opposition and some griping there. nonetheless, we expect the house to pass this and donald trump to sign it but it will not be an immediate fix. this could go on until late in the week. of course, all the impact we just saw isabelle airlines, food aid, and others will continue. scarlet: what does this include? michael: funding for a handful of key agencies. apartment of federal affairs – department of veterans affairs

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but it only funds the rest of the government through january 30. that could emerge as a sticking point with congressional conservatives who really want to see this thing locked down. it also raises questions about one democrats would be able to get those obamacare subsidies, the tax credits they have been fighting over, back into the legislation. that is something you are hearing hakim jeffries raise in a broader sense when he talks about the affordability crisis. this also puts democrats in a bit of a bind. they had been holding the line for weeks and weeks and weeks on this, but then after last week’s election victories in new york city’s mayoral race and a couple of key gubernatorial races, the alliance began to break. some of the butter democrats who agreed to go along with the republican plan simply said, look, there is no guarantee we would ever get a vote anyway so we need to reopen the government and then move on and then turn

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this into a campaign issue in 2026 for the midterm elections. scarlet: yeah. so any sense that this thing will be over immediately has really been put to rest right there. thank you so much. mike shepard joining us from washington. with lawmakers making progress towards ending the shutdown, president trump is now urging air traffic return to their positions. in an online post on social media today, he said all airline traffic controllers must get back to work now. anyone who does not will be substantially docked. the air traffic controllers union president spoke at a conference responding to that post. >> i will take anything that recognizes these hard-working men and women but will work with the admin on any issues out there. air-traffic controllers will continue to show up during the shutdown. they have endured the longest shutdown in american history. every single day, they absolutely not only deserve their pay.they deserve to be recognized . scarlet: let’s bring in and out

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bloomberg aviation regulation reporter allison for more. the earliest we might get the government shutdown to actually end might be at the end of the week, so that means for now the flight cancellations will continue to ratchet up towards the 10% that the transportation secretary sean duffy was telling us. >> no, it is absolute true. currently the reduction across the board is 4%. we will see that go up to 6% tomorrow, and then thursday we will see an 8% increase, and by friday we will have the 10% number. all while this bill is going through, we will continue to see those disruptions. we have seen a lot of issues with staffing today. we actually saw a lot of it through the weekend. in particular, a lot of disruption in chicago, which imparts is paired with the snowstorm we had there. that is compounding the problems. also the new york area airports are getting hit hard at the moment. scarlet: talk about private jets.

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because my question when the flight restrictions first began was whether private jets and the airports that serve that would be affected and to what extent they would be affected. what do we know right now? allyson: we definitely know they are affected. it is on the list of impacted airports with a have asked for the reductions to occur. we have also had a dozen other major airports now restricting private jets and any other sort of general aviation aircraft. they are currently barring them from flying into those airports. obviously, that has an impact as well. we are definitely starting to see these things ramp up as the shutdown drags on. scarlet: what does this mean for the thanksgiving travel season? we still are a couple weeks out from here, but if there is a resolution to the shutdown by the end of the week, how quickly can air controllers get back to work and for the schedules to resume as normal? allyson: so there was an airline

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executive that was saying they were hoping within 12 hours to 36 hours. i know that secretary duffy has actually said it really depends on what happens with the staffing at this air traffic control towers. can we get all these people back in the towers so we can ramp up these flights again? it will not be an immediate fix when the government reopens and all goes back to normal immediately. there will have to be a look at the data and what the airlines are able to accommodate as well. scarlet: good stuff. appreciate you joining us. bloomberg aviation regular should reporter joining us from washington as well. coming up on “bloomberg markets ,” shares of a guy technologies are surging after the ai-based lender beat expectations. we will speak with the ceo on what powered the quarter and how ai is reshaping consumer credit. this is bloomberg. ♪

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scarlet: this is “bloomberg markets.” it is time now for the stock of the hour. we are looking at pagaya jumping after the third quarter results topped analyst estimates. the ai powered consumer lender reported stronger loan volumes and improve profitability. this comes after the university of michigan data last week showed weaker than expected sentiment across all the measures. joining us now is the ceo and founder to discuss what is behind the growth and how pagaya ’s technology is that getting the tougher credit environment. you are a window into the consumer credit picture right now as we try to figure out how the consumer is feeling. just give us a sense first of all what kind of loans you do extend to which kind of consumers and the average amount they borrow.

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>> so thank you for having me today. high level before we go there, pagaya is generated ai network connected to lenders and basically helping them to approve more customers when coming through the way with the power of ai. when you think about that, if you of our customers could be the sofi and many of the leading financial lenders in the united states. now to your question, the place where we are focusing the most is the fairway of the american people. think about people with an income of $110,000 looking to get a $10,000 to $20,000 loan for education or their credit card. this is where we are focusing and helping these lenders to get more customers that they could actually provide credit and to be able to be effective in their marketing and their spending. scarlet: what are you seeing in

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terms of demand for borrowing right now? gal: so the demand for borrowing is actually strong. if you think about it, we think about it from an application perspective. the pagaya network has actually increased 32% year-over-year in the application volume. we are talking but a petition of over $250 billion, $260 billion we see every quarter. this is a meaningful growth compared to last year. obviously, that led to the result we have seen today. because on the one hand side, we have stayed very prudent on who you are approving and how the credit should perform because this is the most important piece in the lending business, but at the same time, there is a tremendous amount of growth. that led us to increase the guidance for this quarter for the third time already for the year, shooting for much higher than we thought we would be at the start of the year. scarlet: of course when you talk about credit, we have to talk

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about what has been going on the last month, which is the credit market was rocked by some blowups. you had auto related bankruptcies. to paraphrase jamie dimon, if there is one cockroach, there may be other cockroaches as well. given all of that, how much does that match what you are seeing? do you see reason to be worried about more coverages? gal: so i think from that perspective as the ceo, obviously my job is to make sure these issues are not going to come to pagaya. we are very lucky and with the good discipline we have, we did not have exposure to any of the other names you mentioned, which is a great place to be. all of that is thanks to be due diligence and ability to understand what is behind the hood of the different lenders and what they are generating and the people. so there is a lot of knowledge and technology that goes into that, the ability of doing it right. in general, i don’t think it is a wide phenomenon happening

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across. i can react to the asset world, and i think it is rather tight. we hope to see less and less of that in the future. i think it was a good call out for the investor community and everyone to know the difference between the good and the bad. you should actually do your homework to make sure these things will not happen in the future. scarlet: so you’re mind or you have to go back to the basics. we talked about how pagaya is an ai powered consumer letter. are you able to expand access to consumer credit? in turn, do you foresee this technology driving issuance volume in the asset-backed security space in the future? gal: when you think about the power of ai, really think about it as a technology tool behind the hood of the fico. it could tell a limited story. 660, 680, part of them are good and part of them are a little less. with the very strong and vast

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data network we have through the 31 different lenders that exist on our network, we are actually going through the best of the best that might have been not getting the credit they deserve in different places. the power of ai is actually to bring these consumers the ability to have the capacity they need and to live a better life, which is at the end of the day what all of us are trying to duplicate you need to use these ai technologies that are now becoming more and more relevant and a little more softer regulatory regime or more accepting, that these solutions should drive a better quality of life for consumers and a better way for big lenders to sell their customers in the right way they should. scarlet: is the spending on ai a one-time thing, or are you continuously upgrading? i am curious how you’re spending on ai has evolved.

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gal: you need to continue to invest. we have been very prudent on that because we have reached an inflection point where you can think about the operational leverage of pagaya. today we are doing above $10 million of loans in the same capacity and infrastructure we had just doing $6 billion or $7 million. if you ask us, we can reach $20 billion with more or less the same infrastructure, but you need to do it right. and you need to do it where the spending matters. that is the big lesson i think for all of us from the 21 and different yields of height. even in big investment periods, you need to know where are the areas of investment that could bring the outcome at the end. scarlet: that is why you are the person to make those determinations along with your board. thank you so much for joining us. gal: thank you for having me. scarlet: just to update you on some breaking news. the european union is considering banning huawei from

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mobile networks of member countries. the commission is looking into ways to force eu member states to phase out huawei technologies and zte from their telecommunications networks. this is according to people familiar with the matter. we will keep you updated on that as we learn more. meantime, coming up, as the white house especially support for the bipartisan deal to end the shutdown, a burden which of them says the u.s. economy is holding steady – alberto says the u.s. economy is holding steady. that is next. ♪

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scarlet: this is “bloomberg markets.” as the government shutdown drags on, investors grapple with the lack of official data. the st. louis fed president alberto musalem spoke with michael mckee on the labor market. take a listen. alberto: in the past year, the

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real federal funds rate has declined by 250 basis points. of that, 150 basis points have been reductions in the nominal interest rate to provide insurance to the labor market and to get ahead of any deterioration and to keep the labor market around full employment. scarlet: for more on those remarks, let’s bring in janelle martin who covers economics for bloomberg news and joins us from washington. what is his overall outlook given the rate cuts we have had so far? how does he see it playing out over time? >> so he is actually expecting what he told us was a substantial rebound early next year, so he talked about those rate cuts that have already been made, as they work their way through the economy, that could write a bit of a tailwind. of course, fiscal support that is supposed to kick in next year.and some other changes that we could be looking at the end of the government shutdown. there is a number of factors

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that he said could provide a bit of a rebound in the economy. that is giving him more about optimistic outlook of what we could see in the labor market for example, and it is driving home his concern about inflation, which is still above the fed’s 2% target. he is saying we need to be careful with rate cuts because we don’t want to stimulate the economy. we want to keep putting pressure on the economy so we can get inflation back down to our goal. scarlet: he pointed out he sees a what are signs for struggle for the lobar and consumer. that is something he is keeping in mind, especially with the idea inflation has been vanquished. jonnelle: yes, and he framed it as another reason why they need to focus on their inflation goal. so he talked about more people are turning to food pantries. they are asking for financial assistance with paying their utility bills. basically, their paychecks are not keeping up with their expenses, so he was saying that

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is more emphasis to me as why we need to get inflation back down. pull are having a hard time dealing with those costs. again, the bottom line is he is more concerned right now about inflation, even though the labor market is softening. he says the limit rate could come up a little bit because of what is going on with the shutdown. he thinks that could be reversed, and he sees the labor market stabilizing ultimately around full employment. scarlet: good stuff. really appreciate it. of course, the fed has the dual mandate of maximizing employment and controlling inflation. when the government shutdown does end, the official leadership start coming through but it might take a while given that no one is working there at the moment except to compile the most essential numbers, so just wait for that to kind of trickle out over time. i am scarlet fu, and that does it for “bloomberg markets.” “balance of power” is next.

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from new york, this is bloomberg. ♪

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>> live from washington, d.c., this is “balance of power” with joe mathieu and kailey leinz. joe: the government could reopen by the end of this week, but not with hakeem jeffries or chuck schumer. thanks for joining us on the monday edition of “balance of power” with movement here in washington, the senate moving

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forward with a plan to end the stalemate. we will see how quickly house lawmakers can get back to town after eight senate democrats broke ranks. i am joe mathieu alongside tyler kendall in washington. house lawmakers have been told to get back to washington now. tyler: we will see how quickly this can get back. the house will then have 36 hours to look it over and take their vote. importantly you mentioned the democrats that broke and ended up voting for this. the common theme among them all, none of them are up for reelection. joe: remembering that chuck schumer did not vote for this, hakeem jeffries is not going to either as he told reporters. but we are looking at the time line coming together here. we could have a vote tonight in the senate. looks like maybe wednesday will be the sweet spot for the house and then the president would sign a bill and it would end the longest government shut down in history. tyler: the other date we are watching for is when the anticipated vote on extending the afforda

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