>> welcome to "bloomberg markets ." i am scarlet fu. we are watching tack roar back. here is how markets are trading. the s&p 500 gaining 1.6%. stocks rebounding led by chipmakers. the nasdaq gaining 2.8%. this is the biggest advance in five months. we are seeing buying and treasuries across a curve and

that is pushing yields lower. the 10 year down three basis points at 4.01%. the yen getting a big lift after the bank of japan raised interest rates for the second time the cycle and announced plans to trim bond purchases. nvidia is the best performer in the nasdaq 100, pulling big tech and the broader market higher. morgan stanley made at the top chip stock. let's also take a look at starbucks. up after the company reaffirmed its full-year guidance. earnings were in line with estimates and the number of transactions or falling what it looks like u.s. consumers are spending more at each visit. the stock is up 5.3% over two days. mastercard gaining after its volume jumped 7% over last year. the company is seeing growth in its global credit card count as

consumers accumulate more debt. today is fed day so that is the focus for everyone as the fed announcement comes out in just under two hours time. let's go to michael mckee. getting ready to head over to the federal reserve building. the headline is no rate cut is expected but it is a matter of how much jay powell will signal something is coming in september. michael: that is exactly right. it is getting harder for him not to make that kind of signal especially the data we got today. it comes in lower than anticipated at .9% overall. wages and salaries just up 4.2%. that is a three-year low. adp payrolls came in low,

122,000. the forecast for the payrolls on friday for private payrolls is 141,000. we are seeing weakening in the labor markets and inflation. the fed also has a big risk factor coming up friday with the payrolls report. if unemployment goes up just put 1%, we trigger a rule that posits once unemployment gets high enough it starts to go higher faster. that would be a real market risk. the fed has a lot to think about. even though they are talking about -- they were not talking about cutting rates today but there is a nonzero chance they could. what you want to look for is changes in the statement because there is no sep today and no dot plot. they have to change the way they talk about inflation and unemployment. they have to change their

forward guidance about not waiting -- about waiting until they get to the 2% target or at least convinced it will be there because right now that looks like it is out of date. scarlet: there is a lot to balance in that announcement and in the press conference. how much consensus is there around the decision? the idea that can afford to wait until september to do something? bill dudley called for a rate cut in july. others have talked about the need for a 50-basis point cut. michael: economists are suggesting the fed is behind the curve. jim bullard said as much on bloomberg television this morning. the fed went into its quiet period without seeing it was considering rate cuts in july. the feeling is they do not want to surprise the markets.

the mother of the rule said the fed might be putting more emphasis on its communications policy that on its monetary policy. scarlet: michael mckee, thank you so much. michael mckee in washington. he will break down the fed decision when it comes at 2:00 p.m. jay powell will take the lectern at 2:30. let's continue the conversation on fed with kim friedricks. a little bit more. are you comfortable with what the market is pricing in in terms of a rate cut in september? some are talking about two cuts for 2024? kim: that seems very reasonable at this point. the fed has set themselves up in a perfect situation. they signal everything today and tell the world we are getting ready to go. they have their entirety retreao do and then in september they

can come out at actually get started. they can make one move in september, another in november and wait to see how the entire election plays out. see how the third quarter numbers role in. see what is actually happening with the economy before they start making decisions about what they are going to do in december and into '25. scarlet: as mike reminded us there is no statement of economic projections this time around, that comes in september. jay powell said they do not provide a lot of forecasting value because it is a snapshot of a moment in time. what do you think might be in their thinking when it comes to the rate trajectory in 2025? kim: again, i think it will depend -- we will see a lot of information come out during the retreat. there are a lot of economic papers that come out that show you what their staff is thinking

and what the information they are getting is looking at. but going into '25, we will have to see who is president. what are they shooting for for their first 100 days? what does the makeup of congress and the senate look like? how much volatility will be see? if we are going to see a gridlocked congress and not a lot of action in the first 100 days, they might be able to project things better than if you will see a lot of relativity -- a lot of volatility coming out of washington. scarlet: the u.s. treasury announced its refunding plan for the quarter. the headline is it left the issuance plan largely unchanged for a second time. these statements used to be a nonstarter. why has this become a potential risk were source of contention or drama at this point? kim: i think we saw it start in october. use our rates really peaking --

you saw race really peaking. we saw a pivot. we saw them move to issuing into the short end and with our rates drop and they have continued to do that going forward. this is a real traditional thing going into an election. i do not know why anyone is surprised. it is what every party does. that is not a political statement. it is what everybody does. it is keeping things where they are. that is another part of what we could see after november. we could see a new treasury secretary. we could not see a new treasury secretary. there are a lot of things that will happen at the end of the year that could give the fed new direction going into '25. scarlet: i have to ask you in your capacity as managing

director, we have seen years of rate hikes that has changed investor expectations. the idea that they should and will get paid well for parking money in the safest assets of the world and they do not want to go out on the risk curve. once we get rate cuts, is it as simple as saying investors will put some of that money to work in hopes of higher returns or will there be resistance after years of being comfortable and earning income? kim: the thing with rate cuts is it will lower the short end of the curve and does not necessarily tell us what the overall shape of the yield curve will be. if we see more issuance on the long and, bond vigilantes getting upset about the direction of the u.s. debt. over the last week we have seen the yield curve steepen as the overall yield curve has gone down. we might see investors simply slide out further on the yield

curve and say "i am happy going out a little further, getting 4%-5% in some investment-grade 10-year kind of peace" and be comfortable with that. scarlet: appreciate you joining us. kim friedricks is the managing director of fixed income at kayne anderson and rudnick. coming up on "bloomberg markets ," we will discuss food inflation with caroline styne. this is bloomberg. ♪ [introspective music] recipes. recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪

>> that is all driven by price. some of that has been in demand.

some of it is the balance of as we are taking in new bookings that we see every day, the willingness for our guest to pay more for the new experiences. they are willing to pay it and they're also willing to book much further ahead. scarlet: that was the ceo of royal caribbean discussing consumers'consumers' willingned ability to pay higher prices. norwegian said it sees higher prices. with that in mind let's turn to another part of the hospitality industry -- dining. caroline styne is the cofounder of the lucques group and cofounder of the independent restaurant coalition. you just heard the ceo of royal caribbean talk about people's willingness to pay for experiences. what have you found someone in the restaurant industry and

people's willingness to pay for premium experiences? caroline: thank you for having me. it is a really interesting dichotomy. we operate the food and wine operations of the hollywood bowl. i see people willing to pay for the ticket. ticket prices have gone up so much. they show up for the show. it is the additional they are not willing to spend so much on. they are paying less for food, buying fewer items and drinks at the theater and having them before they get there. i see this in the restaurant business as a whole. we have been having a hard time, especially with interest rates so high. they really affect people's ability to have the extra income to spend on dining. it is one of the first things they will actually forgo in order to save some money because people's mortgages are higher, debt is higher, they are taking

home less money. we are seeing a split on that. scarlet: how is the restaurant industry adapting to that? caroline: it is really tough. especially here in los angeles. we are still suffering the results of the writers' strike and lower hollywood production. we are seeing a lot of layoffs. in los angeles a lot of restaurants are suffering because the public is not going out as much. they might be dining out two times a week instead of five times a week. a lot of us are tightening our belts. with a price of food going up -- we are forced to be in a position where we need to rise prices but we are battling against it because consumers are only willing to pay some much for food. scarlet: you are in a tough spot. having said that inflation and higher rates have eased a bit. the fed have not raised rates

for one year and inflation has stabilized and start to decline. things should be different at midyear 2024 than they were at the start of 2024. caroline: it is funny. you would think we would feel that on our end but we are not. our cost have not gone down, labor costs have gone up dramatically. minimum wage went up in july. insurance rates are going up. we feel so much pressure from all the other aspects in addition to the raw product that it is still a real challenge for the restaurant industry. scarlet: at the lower end of the restaurant industry like mcdonald's and competitors, they are offering $5 value meals and trying to provide as much value as possible. what kind of value propositions can sit down restaurants under pressure offer consumers? are they able to? caroline: we try everything. we do happy hours where we offer

a lower price on certain items for a portion of the day. we experienced dine l.a. that is a restaurant week and we offer discounted dining experiences. this is sort of like that. a different menu. that got a lot of good response. we enjoy doing those kinds of things to provide something different for guests to draw in new customers. we are trying to do special events and lower-priced -- lower prices. different things to attract people in to spend less and have the same experience. for us, you cannot really maintain a business on that because profits are lower. we are trying. scarlet: you talk about the lower margins and layoffs. there are cost-cutting measures restaurants have to take to get through this environment.

what part of cost cuts are visible to diners and which are invisible? caroline: the visible might be we only have three servers on the floor instead of four. it could be anything. trying to find less expensive candles to use to the things that people might not notice a much. our restaurants, we are dedicated to organic produce and local farmers and products. we try very hard not to skimp on those areas. it is hard to cut on those aspects. wherever we can shave -- labor is a big one. that is our biggest cost aside from food. it is hard because we want to keep people in their jobs and getting health insurance, etc. it is definitely a challenge. scarlet: really appreciate you joining us and giving us a

snapshot what it looks like in your world. caroline styne is cofounder of the lucques group. we will stick with this conversation in the hospitality industry. we will hone in on the job market with alice cheng. this is bloomberg. ♪ hey folks, chris counahan here with leaffilter, america's largest gutter and gutter protection company. leaffilter has over 150 locations and has been installed on over a million homes. we've been protecting homes now for over 20 years. our patented technology offers total protection for your home and comes with a lifetime transferable warranty. the process is simple. give us a call to schedule your free gutter inspection. if you decide to move forward with the project, you put nothing down at all. 833 leaffilter or visit leaffilter.com today. sweat isn't sweet. it's salty. lmnt. more electrolytes. zero sugar. you feel the difference when you get it right.

stay salty.

scarlet: this is "bloomberg markets." i am scarlet fu. a key part of the fed's mandate is to maximize employment and keep inflation stable. . i want to welcome alex chang. she is the cofounder of a platform that helps workers find jobs in the hospitality industry. i think of it as a linkin for the -- a linkedin for the hospitality industry. alice: thank you for having me.

scarlet: they are paying higher wages, costs have gone up her food and overhead has gotten up. what are you seeing on your end when it comes to hiring in the industry? alice: it is also interesting, it depends on the city and the microenvironment. in general we are seeing the cycles come back, ramping up for fall hiring is looking strong. in the past couple years it has been focused on survival and recovery across the board. we are seeing more focus on growth for restaurants. yes, adjustments with potential closures, etc., a lot of the other side, as well, with new concepts opening a new jobs being created. scarlet: it is exciting to see the shift to growth from survival. what is driving that? does it have to do with the fact that rates are likely to fall soon? alice: i think everyone is

hoping rates will fall soon. there are a couple factors. one, they call it the pent-up excitement of opening projects that were delayed in recent years. businesses refocusing and structuring how they operate to prepare for growth. demand. there is demand in different types of cuisines and concepts. business is connecting with consumers differently, as well and expansion into other cities. scarlet: how far along in the process do you think we are? this shift into growth? is it the second inning in a nine-ending baseball game? the fourth inning? alice: this is the beginning of a push. 2024 has focus on growth but still in the planning phase. typically a restaurant will look at the fall hiring season as a big push into the holiday season. everyone enters hopeful and

prepare for the best and then they adjust. scarlet: intrigue by the fall hiring season and how it differs from the summer hiring season. you no longer are hiring high school and college students. companies are hiring people in it for the long-term. committed industry workers. alice: absolutely. it is a different type of worker in some cases. what we have seen over the years with hospitality is it is a profession. the more tools and information available to help businesses and talents look for a better fits and career pathing, the more exciting it is to stay in the profession. well you do have but i will call the flexible worker, folks needing a job for the interim or seasonable, there are four more professionals continuing to seek growth opportunities to work with great companies and stay in the industry. scarlet: i want to bring in

something that is a pop-culture moment, "the bear," the hulu series. it is part of the zeitgeist. it has turned high-end restaurants into a big thing. i hear people saying "yes, chef" to each other all the time. what kind of impact have you seen? is there a lot of demand in chicago restaurants, for instance? alice: it has a couple of fast thats of impact -- facets of impact. chicago specifically it highlighted several specific concepts. chicago is such a vibrant dining scene. i will not do any spoiler alerts. a lot of additional cameos of industry folks which was exciting to see. i think why it has caught on so quickly and aggressively is it really dives into real-world

examples of what people in the industry face. at the same time it connects it to being human. they are facing real-world challenges. anything that brings in consumers and diners into the world in a very real and exciting way is positive. scarlet: one thing that intrigued me is people -- choosing front of house as a profession, how do you see that showing up in your world? do you see people saying i want to be in hospitality to be a host? alice: it continues to show up. front of house, host, server, general manager, those tend to be the highest performing job ads on culinary agents consistently. what we are seeing more and more are examples of how you can progress in front of house.

sometimes it is less structured. scarlet: and you might have to listen to taylor swift along the way. alice cheng, think is much for joining us. michael: thank you, scarlet -- alice: thank you, scarlet. scarlet: the s&p 500 up 1.6% on this fed day.

with so much entertainment out there wouldn't it be great... ...if you could find what you want, all in one place? show me paris. xfinity internet customers can enjoy the ultimate entertainment experience and save on some of the biggest names in streaming, all for just $15 a month. get the fastest connection to paris with xfinity.

>> welcome to bloomberg markets. gains for the s&p 500. broader market driven by big tech. philadelphia semiconductor and does -- philadelphia semiconductor index up.

bitcoin slightly higher. lots of green as the fed gets ready to announce in 90 minutes. jay powell in two hours. amd up after announcing a higher than expected revenue forecast. processors boosting growth. a broader rebound in tech awaiting the fed decision. intel announced plans to reduce jobs and costs to rebound from the earnings slump. they're trying to build semiconductors for other chipmakers.

let's talk about fed days. you went through the data and noticed august and september are seasonably weak for the s&p. jess: october typically has a bad reputation. stock market crash '89. gfc '08. a bear killer, october '22. september is historically the worst month. you can look at the heat map for the s&p on the terminal. the last 30 years, you see it drop. august is the second worst month behind that. we don't always see those

trends. major indices can buck the trends but you have the fed, and it is what powell signals, for the rotational trade, especially since july 11 and the flows that have gone into sectors bit from rate cuts. you cannot forget small caps. scarlet: the idea that the market tends to be seasonably weak, that can influence how people trade. what are the reasons? jess: the last few decades, people point to volume being lower. when you come back post labor day, especially with kids going

back to school, there is different repositioning. we might see something if powell signals cuts are on the way, you might see major indices like the nasdaq 100 almost in correction. you could see rotation into small caps. the russell compared to s&p, strongest monthly gains since february, 2000. the equal weighted on track for its best since '09. they are weighted more heavily toward growth stocks. scarlet: it's an election year as well. jess: usually, the first half in presidential years, it tends to be weak.

then there is more indication of who is elected and if there is a gridlock in congress. there could be major swings in policy changes. it's more tricky going into how this could play out. scarlet: good stuff. thank you. you can read her story on bloomberg.com on what typically tends to happen to the s&p in the summer months. it's a fed day and we have an election coming up. for the economy and the fed, kathy, good to speak with you. comfortable with what the market is pricing? no change today and potential soft signaling toward a cut in

september, maybe two in '24? >> no rate cut today seems likely. no signaling from the fed they are prepared. it's all about signaling, the policy statement and press conference as to how clearly they want to give a heads up september is likely. after that, if they cut 25 in september, then november/december are the live meetings. the fomc meeting is days after the election. i think the market is reasonable. our base case is 50 points. it's reasonable they could go 75 by the end of year. depends on the data. scarlet: big data point friday

when the johnson report for july comes out. a lot of talk about the job market cooling. you don't see that in job growth. 175,000 jobs added july after 206,000 jobs added in june. that doesn't signal a cooling labor market as the unemployment rate is rising does. what kind of an odd do you expect the fed to give to what we see in the labor market which is turning but in the process? kathy: great points. we see a moderation in the labor market. powell recently said that's welcome. you no longer have overheating. it is strong. time will tell whether this pivot toward moderation is a

harbinger of something rocky or in line with a soft landing the fed would desire. you see various measures. the duration of people unemployed has ticked up. all of them are still low, not signaling a collapse in the market. it will take time to see how this moderation plays. scarlet: meantime, consumer spending. curious on what you hear from companies reporting when it comes to consumers willingness to pay? people are willing to pay for experiences but cutting back in other ways. they are not spending at the hollywood bowl for food and drinks because they have already paid what they feel comfortable with and they will hold back in

other ways. kathy: they are becoming more cautious/frugal. do you see that with earnings data overall, corporate earnings have been good but if they are consumer sensitive, we've seen some comments about consumers being cautious. pandemic savings have been run down. labor markets moderating. a lot of lower income and younger people have maxed out on credit cards. those have been the tailwinds for the consumer. for the consumer moderation now, time will tell whether it is a harder landing. the risks are there. pretty good chance we get a soft landing. scarlet: how are you thinking about the election? big headlines in the past month. a sense of excitement about november now has replaced the feeling of déjà vu, as in the

same two guys running four years ago are running again. will that make its way through the economy in terms of spending and confidence? kathy: you may see lift in the sentiment readings. they have been out of sync with overall consumer spending. we don't put a huge weight on that. it's possible. the fundamentals will spell the tune. consumption will be more in line with income now. consumers could rely on pandemic savings or use credit cards. that's more difficult now. on the election, we have to see what the outcome is and what legislation is passed before we judge the impact on the economy. things are interesting. scarlet: they will continue to be.

let's end with the fed. what are you looking to hear this afternoon? kathy: i don't think powell will be explicit. it raises the question -- why not today? i think the door will open wider. examine the policy statement. how do they characterize inflation? then his opening statement, the press conference -- i think that is where we get the most info and forward guidance the markets are eager to see. he will open the door without endorsing a cut. there is more data to evaluate. scarlet: opening the door but not stepping through. thank you for joining. coming up, meta currently up 2%

as wall street gets skeptical of ai spending following disappointing numbers from microsoft and google. this is bloomberg. ♪ every 3 minutes a child is born with a cleft condition. in the u.s., children are healed at birth. but in parts of the world where the right medical care doesn't exist, children like nezifa suffer severe social stigma because of their cleft lip.

children like lexi struggle to speak and babies like cesar face malnutrition or worse. without surgery, some will die. children born with cleft conditions have nine times the risk of dying before their first birthday. those who do survive face extreme challenges. imagine not being able to eat, speak or live life to your fullest. imagine becoming an outcast even in your own family. together, we can change this. with your help. operation smile works to heal children born with cleft conditions. with volunteer medical teams in more than 30 countries worldwide. we provide free cleft surgery and care , including dentistry, speech therapy and more , so that children can breathe, eat and speak better and live life to the fullest.

we need you. there are still millions in dire need of healing. go to operationsmile.org today and become a monthly supporter for just $20.00 a month. any amount makes a difference. help create new smiles and new futures, but act now. children are waiting. let them know you care. go online to operationsmile.org to give monthly or call that' s.

scarlet: meta higher in the session right now, releasing earnings after the bell. let's get to mandeep singh.

the number is $9.5 billion. that is up substantially. >> they will probably raise it by 30% if microsoft is any guide. in the case of meta, revenue has been accelerating. they will run into tougher stuff. the street will want to know the monetization. they don't have that cloud channel. scarlet: microsoft talked about

ai contributing seven points in the first quarter, eight points in the second. how much specificity can we expect zuckerberg to offer when it comes to the payoff from ai spending? mandeep: they have their own large language model. it's a great position to be in. they have open sourced it. they don't charge licensing fees for now. that begs the question, if you are ramping up capex, where's the payout? some of that will get reflected in engagement trends. ad pricing gets better. there are embedded metrics which should look good but street is focused on the exclusive genai contribution.

that's what everyone feels good about. scarlet: show me the money. you mentioned the efficiency. if we think about the last couple years, 2022 doubled down on the metaverse and that did not play out. big cost cuts. 2024, $50 billion buybacks. does he need to continue to wow investors on the financial side to keep the stock elevated? mandeep: i think so. that's where the capital allocation has gotten better. once you initiate a dividend, you are not going to take it away. they will continue on buybacks. top line matters. everyone wants to see if they can continue to grow at 20% or if they moderate to the low teens. i think we get the answer

tonight. scarlet: alphabet, sorry, amazon coming out with earnings. aws will be a big read on ai spending. based on microsoft and alphabet, do you expect anything different? mandeep: in the case of microsoft, we saw substitution with people spending more on ai, taking on spending on the nontraditional cloud revenue. that's where amazon is the biggest player. if that is softer, we will see if there is the substitution effect but i expect positive news on the amazon ad side. that business has been humming, 25% plus growth. that's hurting pinterest and the smaller guys. scarlet: that has less to do

with ai. mandeep: just executing well on the e-commerce side. it is like fees everyone has to pay to treat on amazon. scarlet: apple with its ai enabled phone has not come out yet. it in the forecast. mandeep: they delayed their rollout of apple intelligence. they said the softer side of it will be delayed months. interesting to see how that impacts the refresh cycle. scarlet: always a pleasure. thank you. he will be back on bloomberg markets later on when meta reports. blackrock leading the charge to offer access to private markets through etf's but not without challenges. the details next. this is bloomberg. ♪

the all new godaddy airo helps you get your business online in minutes with the power of ai... ...with a perfect name, a great logo, and a beautiful website. just start with a domain, a few clicks, and you're in business. make now the future at godaddy.com/airo trains. [whoosh] ♪ trains that use the power of dell ai and intel. clearing the way, [rumble] [whoosh] so you arrive exactly where you belong.

dangerous ladders. gutter muck. yuck. no wonder you hate cleaning your gutters. good thing there's leaffilter. our patented filter technology keeps leaves and debris out of your gutters forever. guaranteed. call 833- leaffilter to get started. and get the permanent gutter solution that ends clogs for good. they took the time to answer all of our questions. they really put us at ease. end clogged gutters for good. call 833.leaf.filter, or visit leaffilter.com today.

scarlet: blackrock, invesco and apollo signaling they want to offer access to private markets, equity and credit through etf's. they spoke this week about this possibility. >> we've given thought to what is the extension of our etf and indexing capabilities we built into private markets going back to this constant theme given correlation of traditional risk assets the last couple years -- what are the diversifiers? private markets are going to be seen as one.

how we make private markets accessible through etf's and index is interesting. scarlet: for more on this, they've been talking about this, but actually doing it are separate things. how far away are these firms? >> good question. they say they are working on it and we have some of the biggest names all saying they want to be part of this. the private asset market is $13 trillion. currently the argument goes retail investors do not have access to it. uber grew tremendously before it went public. these firms are trying to work on it. it's really difficult for

regulatory, technical reasons. etf's are super liquid. private assets are very liquid. everyone knows this. they are trying to figure out ways to do it. i don't think a pure play is possible. the sec sets limits on how much a fund, how much of it -- scarlet: interesting. what does it currently allow? that would prohibit the possibility of private assets in the etf wrapper. vildana: we already are tracking the ipo market but nothing that is a pure play yet. scarlet: this would be synthetic exposure. some etf's provide private

market exposure. what demand do they see? are they actively traded? vildana: for the etf's, it varies. they popular invesco product does see enclosed but it depends on the trends. think back to the pandemic. a lot of people were into stacks. you could consider those as being part of this. it depends on what the etf offers. scarlet: we are thinking years? vildana: it's not weeks. all of them are talking about their interest in trying. how far away they are, i don't think any of them would admit to us that they are really far off. we will have to closely watch. scarlet: you will keep us up-to-date. thank you.

private assets in etf's, the big firms are thinking about it. more on the etf industry every monday at noon, new york time. this is bloomberg. ♪ ryan t. writes, "moving is stressful. can you help me take one thing off of my to do list?” ugh, moving's the worst. with xfinity, you can transfer your internet in just a few taps. just a few easy moves. did somebody say “easy moves”? ♪ ♪ oh no. no, i was talking about moving your internet. this will move the internet. ♪ ♪ ooh, ooh. -let's keep it professional. professional dancers! -ok! stay connected during your move with the best in home wifi. easily transfer your services in the xfinity app. bring on the good stuff.

announcer: this is balance of power.

live from washington dc. >> seismic shift in american politics. we can put numbers on it. kamala harris ties up the race statistically. we are going to dig into the numbers including who voters trust on interest rates and the prices of goods. kaylee: it's not expected the fed will cut today although may be the unexpected is to be just as expected.