>> this move in the market has a lot more to do with physician ng overleveraged and volatility. than it does the economic fundamentals. >> when the sentiments shipped and the trends change that causes turbulence. >> you had a level shift in the volatility environment. >> momentum has been one of the best actors and we will exposed as the passive has become a strategy. >> when we put into context there is warranted. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york city good morning and for our audience worldwide this is bloomberg surveillance and after snapping a three-day losing streak equity futures looking to add weight. for all the talk of the federal reserve it is a boj -- boj that blinks first. the deputy governor said "i believe that the bank needs to maintain monetary easing with the current policy interest the time being. the bank will not raise its policy interest rate when financial aid and capital markets are unstable." the dollar-yen a move of more than 2% against the japanese yen. and then once you have seen that you know what is happening on the equities. rallying for the s&p 500 up another 1%. on the nasdaq 100 up 1.3. other small caps up 1.8%.

have we put a cork in the story? annmarie: paul donovan says hawk to dove under a week and the bank of japan governor indicated that they would be positive hikes and central banks are not supposed to create disorderly markets and this is not necessarily surprising. the last rate hike will not be reversed. the political pressure for the boj to raise rates and there is a lesson there for all central banks. he means the fed. jonathan: mohammed is joining us about an hour from now and he has views on central banks placating markets. talk about placating markets the boj blinked quickly. dani: are we reading too much into it because of course i do not want to hike but he said that he believed that the markets will calm down and there is no caps on policy thinking a.k.a. tightening and normalizing policy which got us into this mass. people are reloading on the

shorts and carry trades and are they doing it too soon? jonathan: is at the message they want to send, reload and as you work? dani: surely not and if there was political pressure that made them make the decision. they do not want all of the carry trades. they wanted to wash out the short positions and maybe they did not like the speed in which it happened but they do not want all the speculative traders to begin with. annmarie: citi was talking about china's you on -- yan being -- yuan as the position in the yen is not extreme. the issue and you said this yesterday, when will we know that the carry trade is done. do not know. jonathan: that currency pair positive by 2.2%. equity futures doing well on the s&p. let us get the lineup. coming up deutsche bank as the

s&p 500 snaps three days of losses. john of eurasia as the paris world ticket makes its pitch and nouriel on his view that the u.s. treasury is manipulating debt issuance and that conversation coming up a little bit later. equities finding a firmer footing as the boj offers verbal intervention. we do not think the volatility is over and "we think are more cautious assessment has been confirmed. we believe further volatility is possible but we see no fundamental reasons for a bear market." christian joins us for more. christian, welcome. what tells you this is not the beginning of something of much worse or the beginning of a bear market? christian: from my point of view and good morning from my side. from my point of view if you look at the fundamentals and macro data it has been weakening in the u.s. but honestly

unemployment rate of 4.3 is not bad, and i percent is not a disaster. if you look at the earnings season, it is not a bad one, just a surprise that momentum has calm -- has come down. i do not think it is healthy if you see the nikkei coming off of the carry trade. it is healthier for the market as well. i do not think we need to change our macro outlook and to be positioned for a partner strategy and moving also small caps a little bit more makes sense. and this was the more cautious positioning that we had. i think i do not see a massive recession in the u.s.. jonathan: the rotation trade will continue and should we be picking up the pace and small caps this morning? christian: if you look at performance, both in the u.s. and europe and if you look at

the russell 2000, worse performance than the s&p but if you go one month it has been slightly outperforming which is good news. so for the downside, same in europe. if you look at germany at large caps and the index on mid caps and the slight outperformance. if you look at earnings momentum that is more positive. we want to change this and we want to do that strategy and the market is obviously doing dust going -- going in a similar direction. dani: on the more risky side people loaded up on monday. goldman sachs adding that hedge funds dove into tech and they were net purchases of single stocks in five months. it was hard to argue if if it was capitulation if people were gorging on stocks. how healthy doesn't mean that this market really is? christian: what has really

changed and we have talked about it many times. bad news is not bad news and i think that is why we will continue to see the trade. just put everything back into technology i would be a little careful. i would balance out if it makes more sense than the first seven months of the year. that is why we want to balance and from that perspective it makes more sense to look at diversification and that is the trade we are doing. dani: it does not work when correlation goes to one. how do you protect yourself? she that should you use monday as a playbook? christian: we manage multi-asked for -- multi-aspect portfolio. the discussion has been long-term in markets where it is a positive. so, that is what we want as i diversifier. that is working and that is good news. that is i think, back to reality

what we are seeing. and i really welcome this to be honest. annmarie: the top of your note says that when wall street coughs. you think is -- this is a time to get in and it is a moment in the markets. what signals are you looking for to see potentially if a cough could turn into a big cold? christian: that is what we always say. it might already have a cold because of the downsides the euro which has not changed from their perspective. there is a bit more downside capture and that is what we have in markets which is not changing from our point of view. that is what you have to take into account. monday a change in markets and we have seen a change in markets since mid july where we see the start of the rotation trade. and as we enter a weaker situation on the u.s. economy i think this trade will continue. however i do not see a base case

of a recession. i still think this will continue. to bring everything monday into market it is a bit early. annmarie: when you have this barbell approach, would you fund it with the yen and do you like the idea of getting back into age carry trade. christian: i am not too sure. the central bank issue and still the bank of japan does not want to have a quick move in the yen and it does not want to have a too weak yen. their stance will be to slightly and slowly appreciate this a little bit. that is not positive for the carry trade so i would not load up on carry trade from their perspective. the rotation trade is not over. jonathan: christian, we appreciate the update. i love the question do we need to think risk mitigation strategies. that is what goldman is thinking

about him the massive rally of bonds have we pulled forward some of the buffer that you can receive from having bonds in a portfolio. dani: part of the problem is that bonds had a big rally that they undid it once we got any strong data. equities kept going. you get this idea that equities are vulnerable to positioning and when that is the case and when economic data is rising to the upside maybe bonds are not working as they should. jonathan: bond yields are a little bit higher. the 10-year yield up by four to 3.93. let us give you an update on the stories elsewhere. >> bloomberg learned that u.s. officials plan to propose a limit on sales of chinese vehicle software as soon as this month. sources say it will include curbs on the use and testing of chinese technology for autonomous vehicles. they are meant to keep chinese companies from collecting data on u.s. drivers as well as

preventing china from having a bigger hold on the u.s. market. shares of novo nordisk are following. they reported sales of its blockbuster weight loss drug fell short of estimates. it says operating profit over 2228% down slightly from its earlier forecast. it also with druid mission to u.s. and you are paying regulators for approval of wegovy for heart disease but will resubmit your with additional data. disney shares are trading higher. and announced that it is raising the prices of its streaming services. the price rates cheapest offering with advertising will climb 25% to almost $10 a month. disney plus without ads cost nearly six dollars a month marketing a 14% in use. the changes take effect october 17. they are due at 6:30 a.m. eastern and we will have an

interview with you johnston at 7:30. jonathan: thank you. that interview is one hour 20 minutes away as we look at the disney earnings. everything we have heard from corporate america go something like this, a loss of pricing power and declining sales. interesting to see what the streamers are saying, what tells him they have this rising power that will not lead to a big turn in the business. dani: what i have to assume that if you look at the cost rises they are not doing it for the big bundle, espn plus, hulu and disney so they might be trying to get people to go to the bundle so we make everything more expensive except for that. jonathan: must watch conversation, do not miss that. the harris-walt's -- walz campaign making a pitch to middle america. >> donald trump is not fighting for your family. he never said table like i grew up at wondering how you will pay

the bills. he sat at his country car -- country club wondering how to touch -- how to cut taxes. jonathan: we will pick up on that in a moment. good morning. ♪

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♪♪ relax into a caribbean state of mind. visit sandals.com or call 1-800-sandals. jonathan: julian emanuel l of evercore publishing the wall of warning -- worry as stocks climb has been fully rebuilt and is ready to be climb. the labor market data exit will likely the ascent of mount everest. we get more later -- labor market data. that is the last big data point and cpi in about a weeks time. the harris-walz campaign making its campaign pitch to middle america. >> donald trump is not fighting for you or your family.

he never sat at the kitchen table like that when i grew up that wondering how we will pay the bills. he sat at his country club wondering how he contact -- cut taxes for his rich friends. donald trump sees the world a little bit differently than us. he does not know the first thing about service. he does not have time for because he is too busy serving himself. jonathan: vice president about -- kamala harris and tim walz heading to michigan in a bid to court to the union the. a new national poll shows harris holding a three-point advantage. john lever joins us now. let us talk about the choice and then some of the campaigning. what was the deciding factor between going with walz and not schapiro? john: they seem to get along. he has a good guy and has a very progressive record in minnesota

endorsed by all parts of the democratic coalition. i suspect that they had concerns that schapiro would divide parts of the democrats because of his record on israel and palestine. annmarie: when it comes to the campaign both are going after their base. who is vying for the center? john: i think the democrats are making a very strong play for the center by not really talking about their record and policy and being very guarded with kamala harris by not letting her do live interviews and she is not going on the podcast circuit. she is going out and giving set piece rallies with a running maze -- running mate that excites the democratic base. that is an effort to present her as the moderate choice. meanwhile trump is on truths away so -- social saying wild things and i do not think he has the ability to speak to the center. there will be undecided voters who like bold flavors and it will still be a close election.

annmarie: when it comes to policy, owner walz when he was in the house was definitely an individual that was in the center. but after those 12 years as a governor, can anyone say this individual is a moderate? john: that is spot on. thing is that when he got into office in minnesota he had the trifecta, they controlled the state house and legislature and you got a policy record that most broke my kratz would have cheered, expanding access to approach -- to abortion and he is union friendly. republicans will hammer on over the next several weeks and the question is can they define this guy who is a supernormal and likable individual as somebody from the far left. i think that is going to be part of the messaging strategy and they have not been good at that so far in the two or three weeks since the bottom dropped out.

annmarie: he is viewed positively by 70% of u.s. residents, and only 12% with an unfavorable view and 71% have never heard of him. so, is this going to be a race for the vp or do you think he takes a backseat and it comes down to harris and trump and he needs -- and she needs to go out and answer policy questions. jon: nobody knows who these guys are and they will say this is the most progressive ticket ever and that is what it is about. they say it is extremely progressive and these are two liberals one from the coast and the middle of the country aligned with the democratic-socialist. and they will continue attacking. walz has an upside, the rally had a ton of energy and raise nearly half $1 billion in an extremely short amount of time. and they will be able to run a competitive race. defining walz and harris on the

policy agenda will be trouble for the trump campaign. because his personality is so strong he makes about personality and not policy and they need to talk more about their record if they wanted to succeed. dani: it is remarkable to think about where we came from before biden set down there was talks of fracturing even after kamala harris became the nominee we still talked about that when we were talking about the vp pick and you had the big unions coming out in favor of walz and manchin, and a cosco cortez say that this is an excellent. does this mean coming together in a no longer fractured democratic party or are there still splits under the surface? jon: that unites everybody and that makes a good pig. you look at biden before he dropped out and there is a significant number of democrats not excited about voting for biden who showed up in many of the primary states and it showed

up in the enthusiasm numbers where he was lagging behind by 20 or 30 points. harris has nearly closed the enthusiasm gap in two weeks. democrats are fired up and not about the one thing that unifies them which is defeating donald trump. they think they have a ticket that can do that and they like the policy mix that they are saying. dani: what is the policy mix, and what can you nail down that gives you a clear indication. jon: it is the same stuff that biden has been offering and the same stuff that the democrats have been offering. increasing the corporate tax rate and higher taxes on high income americans, expanding access to things like health care and enshrining abortion rights in federal law. they will do more to make it easier for people to join federal label you -- labor unions which democrats have been doing for decades because a mixture of moderate and

conservative democrats. a lot of those moderate and can live democrats that were able to block the progressive parts of the biden agenda are not going to be in congress next year. if they come in with a trifecta will see much bigger spending on green energy and a lot of the things that biden could not get done suddenly achievable. jonathan: energy. what is the energy policy? jon: more green energy and fewer fossil fuels it was great. the biden administration banned lng exports and they have not been able to do much in stopping getting oil and gas out of the ground but they have had a large climate spending program and that is the thing i expect exit -- i expect to see the harris administration doubling down more subsidies on green energy and industrial policy to get production out of china and into the united states and more self-reliant when it comes to american green energy but very

hostile to fossil fuels. jonathan: do they dance around the fracking issue? jon: on the campaign. it is hard to do a national fracking ban, and you have a lot of democrats favor. it is possibly something they could achieve in a second administration through rulemaking. that stuff takes time and a four year term is typically not long enough to do aggressive regulations. an eight year term is possible. annmarie: you mentioned taxes and i want to get your sense of where the governor stands on taxes. when he was in the house he went both ways. at one point he was one of 19 democrats back in the day to vote for an extension of the george w. bush tax cuts. you think potentially when it comes to things like taxes he can moderate harris? jon: i do not think. you look at the biden tax plan and they want to roll back the

trump tax cuts for high income people and raised the corporate tax rate. you know, i do not see any democrat deviating from that. the question is how high? biden has proposed 28 on the corporate tax and a lot of democrats are more comfortable with 25. the high income tax rates above 400,000 like taxing unrealized gains for people who have a net worth of over $100 million. all of these ideas will be live only in a situation where democrats get the house, senate and white house. jonathan: we appreciate your input. on the new matchup and finally complete, you know who the vp is. china is an issue that needs more detail. this is a governor who offers a lot on china. annmarie: he is talking a lot about his experience in china. he was a teacher dealing with the chinese people and he will offer up some tax to republicans. at the same time he said he

wants to be strong when it comes to competition. there are a number of policy issues but i go back to the pole done before -- poll done before he was elected, 77% of americans do not know who he is. people will be voting in september if they do early ballots. jonathan: this gives the opposition an opportunity to define man for the people. dani: he will offer a lot of ammunition when it comes to social issues given that minnesota is a place for agenda reaffirming care and second, when it was the 2020 riots following the killing of george floyd and the upheaval you saw in minnesota he got a lot of criticism for not calling in the national guard sooner. these are two key issues that you see republicans want to hammer him on. jonathan: the city was quite literally burning and i do not inc. we have forgotten that.

much more to come. equity futures positive by a little bit more than one full percentage point. we will catch up with nouriel, arguing that the treasury is manipulating that issuance. janet yellen had some things to say and this conversation is just around the corner. treasuries are softer and yields are higher up by five basis points. 4.02. on the 10 year up four basis points to 3.93. good morning and welcome to the program, you are watching bloomberg. ♪ wealth-changing question -- are you keeping as much of your investment gains as possible? high taxes can erode returns quickly, so you need a tax-optimized portfolio. at creative planning, our money managers and specialists work together to make sure your portfolio and wealth

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annmarie: let's get to equity futures -- jonathan: let's get to equity futures. on the s&p 500, we almost followed the worst day of 2022 with the best day since 2022. the gains failed and closed positive by one percentage point yesterday. treasuries are softer. yields up by five basis points on a two-year. we talked about this repeatedly

through the week, light on data and fed speak. next up is jobless claims tomorrow. katie: equities are rambling -- dani: light on data. whether or not we should judge one jobs at the number is another question and then comes next week, ppi, cpi and retail sales. jonathan: let's see if jobless claims confirmed tomorrow. she talked about equities and bonds and what we are taking cues from and we are taking it from this in foreign exchange. the dollar-yen positive by two full percentage point spear that is a much weaker japanese. if you look at the chart, let's look at it. the bank of japan sending a dovish signal and markets are on

stable -- unstable. they blamed recent volatility on concerns over u.s. growth. the quote from the deputy governor set i believe the bank needs to maintain the current policy interest rate for the time being. the bank will not raise policy interest rate when markets are unstable. the message loud and clear in the fx market. dani: i can't wrap my head around the biggest drop in that since 1987 and is unchanged on the week. part of the volatility that i think people are overlooking that the deputy followed up with the comments once he saw that market start to rally is saying that, i believe the markets will become and i am closely aligned and he wants to tighten policy which got us in this to the first place. maybe we are overlooking things and getting excited about his

comments. annmarie: he also said that the markets will have to be done carefully. he said we don't want to be involved when markets are unstable and we will take a pause. jonathan: markets have been unstable. the latest in the middle east, hamas may be the mastermind as the new political leader getting a blow to ongoing efforts to reach a cease-fire. the previous leader was killed in iran last week. if you were hoping for de-escalation, no signs whatsoever based on this. annmarie: an individual who has been elevated is the one calling the shots, so we cannot make any bones about that. this individual is number one on the target list for benjamin netanyahu and would have been the one to call the shots and whether or not the cease-fire went through. optically to put him as the face of the deal now creates more

tension and makes it a lot harder publicly and optically for this administration. whether or not ideal goes through has to be up to netanyahu. jonathan: are we still waiting for the retaliation to the retaliation to the retaliation. annmarie: there was a militia attack on a u.s. base west of baghdad and we are waiting for a response. we are not sure what the response will be. iran will take their time and might actually see potentially how they can respond without escalating into a war. i would take note of what was said today, 10 countries have called on them and wanted to make sure they are in place to help potentially evacuate citizens. jonathan: over to europe, check out what is happening with the biggest company in the european market, following after the weight loss drug treatment

disappointed investors. revenue was hit by highly expected price concessions to u.s. managers of pharmacy benefits, something they call a one-off factor. it recovered overnight. this was the big story, it is like your's ai story. dani: it shows you the danger of putting all your eggs in one basket and what happens when you have competitors come in. they had to take price concessions and this has been one of the biggest questions around them. you have eli lilly out with a product and another trying to come in with a pill that would presumably easier to take than a jab when you want to lose weight. pricing needs to change. annmarie: i have the smallest violin for this company given the fact they sorted 230% since -- sword -- soared.

jonathan: they say the treasury is manipulating debt issuance to boost the u.s. economy. the treasury secretary said it suggests a strategy that is intended to ease financial conditions, and i can assure you 100% that there is no such a strategy. wonderful to hear from you. let's take it from the top. for the people that missed that and have not read that paper that you co-authored and put out in the last couple of weeks, take the opportunity to explain to the audience what you are talking about. nouriel: well, the treasury debt management has issuance how many short-term as opposed to coupon bonds they will issue.

in the past the rule has been that not more than 50% to 20% of the stock that should be short-term and less being medium and long-term. since last year, the issuance of short-term bills has been at the margin something like 60% to 70% of issuance. and have been issuing less long-term and more short-term. the quantitative easing goes to the supply of long-term and boosts long-term interest rate on 10 year treasuries. we estimate that the amount is equivalent to 25 basis points 10 year treasuries or 100 basis points on the fed funds rate. the fed is trying to tighten financial conditions to slow down inflation to achieve a soft landing while treasury has been trying to ease conditions by

trying to boost the economy. jonathan: there is a suggestion in the piece that this is a deliberate project. what tells you that is ultimately what they have been doing and something they do not? nouriel: first of all, they do admit that what they are doing has an impact on the financial conditions. they cannot deny that. the question is about the motivation. treasury issues more short-term bills when there is a crisis in liquidity shock like covert or even like a severe recession. when there is no financial crisis, inflation is above target and financial conditions are normal. but recently the stock market at an all-time high. the question is why they are doing it at this time. my explanation was last number

when 10 year treasury went to 5% because suddenly globally it woke up and said the debt isn't sustainable, treasury got nervous and decided to effectively change qfii by issuing more bills and less long-term bonds and that eased financial condition significantly. annmarie: the treasury official that oversees debt issuance said the autumn slow down and added issuance of 10, 20, 30 year securities amounted to roughly a 1% change. how is that basically the treasury knowingly try to do, what it feels like, manipulate the markets are up make financial conditions easier if it is only 1% change? nouriel: what has happened is the range of the stock of the bills was between 15% and 20 and

now it is significantly above 20 and the flow the last few months has been -- the treasury started and says for the next few quarters you can expect the issuance of t-bills will be significant like in the last few quarters. that is a signal this has gone in a different direction from regular and predictable and different from the norms they choose themselves of 15% to 20% and going in the same direction. dani: new kind of hinted at this that at every turning point, this is what the treasury does. not that it is a crisis but the contention is that interest rates are coming down and that is why they issue more at the turning point because essentially interest rates come down. putting politics aside, if he thought interest rates were

coming down, isn't this the right policy? nouriel: first of all, the treasury is never training rates. the yield curve has significantly inverted and so they are borrowing at much more expensive rates than would otherwise and are subject to refinance and we are seeing there is episodes of market turmoil and we know that bond yields are not going to go back to zero or 1%. why they have the nominal rate for long-term treasury is closer to 5% if not higher. the right thing to do would be to issue long-term debt rather than borrowing at higher short-term debts. i don't believe there is the episode of the risk off being temporary and yields slower but looking at medium term given what is going to happen to the

deficit if trump is elected, he will have tariffs and weaken the dollar and have tax cuts. this policy doesn't make sense and the treasury is not supposed to be speculators. jonathan: we are exploring the consequences and outcomes and the others motivation. it is much more difficult to decipher motivation. give the economic data of the last week or so. it is or if he evident -- any evidence this is working? nouriel: what is happening the last week is rockets are getting nervous about a recession. the stock market has predicted 10 out of the last three recessions and the same thing with the bond market and inverted yield curve. the beginning of the year we expected six cuts and the fed three and then went to one and expected three and now expected

to do four. there is some significant evidence of some slowdown of the economy but i don't think the data suggests we will have a hard landing. there is some evidence of strength. jonathan: let's talk about the market. you think it is a time perhaps with the economy is stronger than people think which may come as a surprise to people watching given how everyone has become bearish the last few days. so there were applications for a new etf. with everything you said in mind, what will go into the fund and what are you offering that perhaps we are missing? nouriel: the dollarization,

climate change, cyber warfare, and so on and so on. when those risks occur like the recent past, inflation is higher and growth is lower and the traditional defensive asset that is long-duration treasury is terrible. look what happened in 2022 and treasury did worse on the s&p and yields went to 5% last summer and treasury lost 10%. bond yields will be at like 7% over the medium term and today they are less than four. another 40% loss in what is supposed to be the defensive assets, the $23 trillion standing on long-term treasury. you need something that does well in bad times and also helps you to rebuild america. we need to have climate resistant real estate, new communities, infrastructure, feuds -- food security and rare

earths and so on. what is going on in the new fund is several things hedging against those risks. climate resistant rates and we have looked at them all in north america that will be blessed -- less subject climate change. 15% of liquid assets, new communities and even trump is talking about creating new infrastructure. we want to have food security and ensure critical things. we need gold in this etf to hedge against geopolitical and financial risk. with higher, staying away from long-term treasury. to optimize the combination of all these assets and provide a new much more resilient defensive asset and one that

invests in rebuilding america at a time when we need to do so. jonathan: fascinating stuff. when you are back in new york, we are going to sit down and have a longer conversation about this. i appreciate your time. nouriel roubini there. dr. doom didn't sound bearish on the economy. dani: i think that is where some of the argument where the rubber hits the road because the assumption at least from the advisory committee is that rates will come down and it makes sense to bar on the short and in which case he is saying rates will be higher than borrowing on the short and doesn't make sense so it must be politically motivated. jonathan: let's get an update with your bloomberg briefs. >> a ridesharing at posted lower than expected outlook for the current coder -- quarter but had

a record number of rides and drivers. lyft does not expect to be profitable on an annual basis for several years. uber reached at last year after a decade in business. it cvs trading lower and slashed $2 billion in cost-cutting measures. also the president of the at night insurance unit is leaving. the company ceo and cfo will take over the duties during a search for the successor. cvs is telling investors that more savings will come from the use of ai and streamlining and automating operations. former president donald trump sitting down for an interview with elon musk and his social media platforms x. he said untruths social the conversation would take place monday night and more details would follow. he endorsed trump half an hour

after the assassination attempt on trump's life. jonathan: up next, bye-bye soft landing. >> the fact that the unemployment rate is up to 4.3%, 30 basis points higher than with a think it will be by year end. it is not about just the data that has come in but also about the economic outlook. he is joining the program next. this is bloomberg. ♪

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>> equities bouncing back. futures up by 1.2%. it bye-bye soft landing. >> the data already justify a 50% move. the fact that the unemployment rate is up to four point 3%, 30 basis points higher than where

they think it will be by year end. it is not about just the data as it has come in although they want to make it but the economic outlook. i think it is skewed to the downside and it is important for the fed to neutralize by easing monetary policy. jonathan: weaker than expected payrolls print, putting athersys -- emphasis on jobless claims. michael darden said bye-bye soft landing. double digit earnings for the next 12 months looking increasingly out of sync with the evolution of the macroeconomy. michael darda joins us for more. i want to explain something from the audience, the quote in the timestamp is really important. that was not on friday or monday or in the last 24 hours, that was last tuesday on july 30 and

predates what we heard from the fed and what we saw in payrolls. i can see you smiling and you feel good and you should be. what did you see that was guiding that before we saw it for ourselves on friday? michael: thanks. i appreciate that. we saw the board data for july, survey based data that essentially asks people about their labor market perceptions and current circumstances. what we saw from the data in both june and july was that the present situations index had tumbled 20 index points from where it was one year earlier. since the data goes back to 1980 or so, we have not seen anything like that, a move down like that come outside of actual recessions. equally important, there is a spread between those saying jobs are hard to get an jobs are plentiful that correlates very

strongly with the unemployment rate and that pushed to a new high for the year in july and we got another pop the unemployment rate. those trends were underway even before the july jobs data. i think we need to consider that given that there is a debate about whether the data last friday could be a fluke. the trends are underway and are persisting and our fears are that the soft landing could be slipping away. dani: does that imply that the fed is too far behind and the data has started to slip and didn't go and july and therefore going in september there is only so much they can do? michael: i think that is exactly right. if we listen to chair fed powell said this idea of the totality of the data. if you look at the totality of the data it is mixed. gdp and jobs look ok and some of

the other data, survey-based measures and move in the unemployment rate look more recessionary. this is why business cycles come to an end. when you're at an inflection point it is messy and not clear-cut. if policymakers are waiting for a completely obvious recession to slap them upside the head and they will be behind the curve. jonathan: you had long-duration and focused on defenses. we have had a reset of markets since that call. where are you now on where we should be at markets? michael: i think probably investors should still stick with the defensive categories for now. we have been an advocate of the utilities sector since last fall and really got smashed hard last year with long-term interest rates rising so violently. 5% on the 10 year and a substantial chunk has been reversed. i think we will have to be more patient for some of the encyclicals, even small caps

evaluate -- valuations have come down. i think there are some increasingly attractive areas that are cyclical but the business cycle matters a lot and so you don't want to be too early. typically, those are bottoming out as you move into the middle part of the downturn. for the encyclicals, i would not be chasing large cap growth concerns here. the valuations going into this correction were superhigh and we have been using the phrase rarely seen and never sustained. the forward pe on the s&p infotech's was about 30 and above where we were in late 2020 one and early 2022 before a big downdraft and the equity market led by infotech stocks. my concern is expectations are way too high. overall earnings expectations

growth for the s&p 500 now is 13% over the next year. that looks totally out of kilter with all of the other indicators we look at and certainly a slowing economy if not recession. i think we are probably in a volatility storm here for a while so defensive categories makes sense to stick with for now. jonathan: great call. it is great to catch up. disney numbers dropped, earnings come in better than expected in combined streaming businesses achieved profitability and see full-year adjusted growth target of 30%. the stock is up by 3.3% in the premarket. we will catch up with mohamed el-erian with us for the hour here in new york and will speak to josh wingrove and the disney cfo and the former new york fed presidents liam dudley.

quite an hour in the second hour on bloomberg surveillance -- william dudley. quite an hour and the second hour on bloomberg surveillance. this is bloomberg. ♪ waterproof leather. breathable fabrics. spikeless traction. the most comfortable golf shoe in the game. grab your pair today at olukai.com.

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>> we are really on the cusp of real economic weakness. >> the economy is cooling, not collapsing, but i think the jobs market is going to maintain. >> there's nothing structurally wrong the u.s. economy. everything that ails the economy is a function of tight monetary policy. >> policy is restrictive, and inflation risks are coming down, and employment risks rising. >> for all the talk about growth

concerns, i talked to very few investors who have genuine recession fears. >> this is "bloomberg surveillance." jonathan: i'm not sure if they thought this was going to be the center of global finances, but there were. they were entertained by comments. let's get to the quote. i believe that the bank needs to maintain monetary easing with the current policy interest rate for the time being. the bank will not raise its policy interest rate when financial and capital markets are unstable. that quote enough to ignite some japanese yen weakness. maybe that was the intention. i'm sure you all assume it was. 147.20 on dollar yen. that gap up by two percentage points. the nasdaq 100 up by 1.5. the small caps up by 1.8. annmarie, it actually worked,

according to b.o.j. annmarie: it is, but they're not going reverse the last rate hike. they're also pretty much saying that on top of the fact what you were saying is they're going to pause interest rate hikes, but they're not changing policy per se at the moment. lisa: that's the point. maybe they're just moving slower, but the deputy governor saying i'm aligned, nothing has changed, and markets will go back to calm. once they do, the implication is they will tighten and they will have the hawkish forward guidance, relative to what the b.o.j. usually does. so yeah, good luck to you. jonathan: dollar yen very much the center of our world. i want to bring up one stock in the premarket, disney. initially we had a spike higher. now we dropped lower. dissnow down by 2.5%. they're saying all the right things about profitability, the streaming business, about earnings, about guidance, about the third quarter. and all the wrong things about the park. and they're the two stories going on right now with this

company. dani: that was the one spot of weakness. the confusing nature of what we are in, where you can have one company like disney having a bifurcated consumer within it. you can have an airbnb saying we are seeing weak innocents consumer and people don't to want travel. then you have an uber saying people are still happy to pay up to get themselves a ride. it is confusing. again, within even the same company, it's not even clear. annmarie: at the same time disney is going to boost prices for their streaming services. i imagine they'll say people should have access to cheaper streaming. will this bite them in the bite basically? they're now profitable. will people pay up, given the fact that, what did we hear? what he's seeing in the conference board, underneath the surface, people are trading down. jonathan: how much churn are we going to see in the coming quarters? do you still get usualer? i've stopped so much. i've pulled back a little bit. i flag yellow cabs now. they're too expensive. dani: i get a ride to the

mornings here, and that's about it. i'm a public transportation gal through and through. annmarie: so am i. jonathan is not. jonathan: yellow cab is not public transportation? dani: are you with other people you don't know? jonathan: do i have to be? annmarie: that's the only way it's considered public transportation. jonathan: i'll consider that after work today. coming up, why the fed should resist placating markets. and former new york fed president bill dudley on why he sees voluntarily at this time ahead. fantastic lineup the next year. there's a bloomberg opinion piece, "rather than allow itself to be bullied by markets, as occurred in the fourth quarter of 2018, the fed should stand on the sidelines and let the market overreaction play out." mohammed is back with us.

good morning. good to see you. do you think the b.o.j. is doing the wrong thing this morning? >> i do. i think what they meant to do is press the pause button. instead they pressed the rewind button. so rather than provide the market the opportunity to exit the trade in an orderly fashion, they've given a signal to the market to put on more of a trade. and that ultimately is going to conflict with the requirements. jonathan: do you think central banks prefer to lead in this moment, and if so, why? >> i think no one wants to meet the moment. what they'd rather do is see someone else fight to do it. if you need to reverse course, let them reverse course. i suspect there was enormous pressure on the bank of japan last night. you probably went too bed too early, but japan stocks were indicated down hard. that was putting pressure on u.s. futures. and next thing you think bank of japan comes up. jonathan: what external pressure are you talking about? >> the narrative has evolved.

this actually speaks to a fundamental issue that there are no anchors to this market. there's no growth anchor. thursday and friday, the narrative was the market disruption was due to economic developments in the u.s. then comes monday. and suddenly everybody is pointing the finger to japan. and by today, if you noticed, people have talked all about positioning. positioning has become the main culprit for what had a happened. people forgot thursday and friday. the minute they say positioning, you look at your pen. the narrative has evolved to put the emphasis on japan as being the cause. now all those people who rushed to predict intrameeting cuts and everything else have to scramble to get back on. it's fascinating to watch a really well paid industry whip saw the way it has been whip sawed. dani: to that point, not even

forgetting japan, it happened in the u.s. too. note after note said this was about positioning. this is actually extremely normal. you see 5% drawdowns three times in a year usually. you see a 10% drawdown once in a year. business is normal. do you think people have flipped back to complacency given that? >> well, they have. if they stopped at normal, it would be good. it's healthy, right? so i.e., put on positions again. i think it's just the incentive structure in the marketplace, that's what you see play out. now, it's important. we're going to have a series of data points. we will see the probability of recession is 35% or some people are saying we are already in recession, i don't get that call, but some people are saying that. this is going to play out over time, but it will be a mistake to dismiss this simply as positioning. dani: are you describing a environment not just in terms of how catastrophic and worrisome it was, but trying to find a trend, and it's volatile in the meantime. is that where we are, a turning point and don't know which way to go? >> that's a great comparison.

what happened in 2020 had such a major shock that you lost all your anchors, and i think this is where we are today. i'm really glad we have that. because the question to ask bill dudley is should the fed regain control of the narrative? you have jackson hole coming up. this is a golden opportunity for them. forget about september. jackson hole is much more important to this marketplace, to the world economy, because the fed needs to regain control of the economy. unless we establish anchors, the volatility itself of the marketplace will undermine economic well-being. annmarie: if we're anchorless right now, is jackson hole too far away? >> i don't think it's too far away. i'd rather have it earlier, but it's not too far away. it's pretty soon. and you can have all sorts of steps by bank of japan. you have have global intervention. you can buy enough time until then. but you need a credible and hopefully effective attempt by the fed to restore its area tough in this marketplace. annmarie: and what do you think that's going to be?

>> i don't know, because they haven't shared with us some basic information about longer term trends. we don't know where they see the short term or the long-term mutual rate. but they better tell us quickly. jonathan: you've drawn a clear distinction between what you think the market thinks is going to go on, and i mean well paid people who are employed to tell us where all of these things are going on and why they're going on, and what you think is happening. what do you think is the ultimate issue at play, if it's not the carry trade and not the b.o.j.? what do you think is the issue at play? >> i think the market has recognized that a very high probability of a soft landing was too good or too complacent a view. i think the market has slightly overreacted in its assessment of the recession. i've put it before 35%. it's still at 35%. the risk is about to go higher, but it's not a dominant scenario. so i think that fundamentally

what you're getting is reassessment of the left pick. that is what's going on. now, as that shock went through the world, it exposed vulnerabilities in different places. so you get the classic spillover and then spill back, and fundamentally, it is a question of what is the distribution of outcomes look like? jonathan: it was amazing to see on friday, to witness your commentary in the way you were versus the market. you thought the market was over here, and you sounded offside versus the consensus, and all the sudden this happened, sort of overshot you. can you just walk us through what you thought about that initially as that was happening? >> start going into wednesday, where i was saying the fed should cut. and the majority of people were saying they shouldn't. so i was here, and the market was here. then you get two weak prints, and next thing i know the market goes all the way over here. all the way over here means they should cut 50 in december, 75 in

december. oh, no, they should do an intrameeting cut. what we saw was a total collapse in yields. i said on x this is an overreaction. and now what we're getting is the markets coming back to where i think it should. the two-year back over 4%, that makes sense. it didn't make sense when it went down. jonathan: this is not the first time we've seen this. last spring, last year, we went from no landing, soft landing, landing in the space of 30 days. what do you think underpins that? what's behind that? >> first of all, this narrative is going all over the place is not a good thing. the people outsource their savings to us. we are viewed as having the most sophisticated, deepest financial markets. we're supposed to be less volatile. for our standing in the world, and i gets of phone calls from people outside, what is going on? the volatility is supposed to be in the periphery, not the core.

so why? i think a couple of issues. one is forward policy guidance has become ineffective. i did a simple search on google. all i put in is fed policy pivot. and the amount of times that forward guidance has piston means that it has lost. why? because it's based on excessive data dependence. so you've lost that, and when you lose that, then you rely on the economy for being your anchor. and if anything shocks the economy, then you are anchorless. and there's so much going on in the world that you don't want to be anchorless right now. dani: do you think the market is at risk? it forces them to do something, that it pushes them into doing 50 basis points worth of cuts. >> that's the risk, and that's why i put out a piece yesterday saying the fed shouldn't be bullied into doing what the marketplace wants it to be. yes, absolutely.

there will be a huge mistake if it were to follow what the market wanted it to do yesterday morning. jonathan: who do you think is getting this right, which central bank? been highly critical of a lot of central banks over the last week, but who's getting this right? >> i think the bank of england. they're being the most honest. last week when they published a decision, they said five people voted for, four people voted against. none of this fourth consensus where everybody votes for and then the next day they're not even sure what they voted for. the bank of england is signaling there are judgment calls here, we may get it wrong, but we will adjust as we go along. and i think the bank of england benefits from something that the fed desperately needs, cognitive diversity. having ex-terrible members serve on the equivalent of the fomc is absolutely critical for better decision making. >> why don't they want to do that? based on experience, they seem reluctant to do so. you called it a false consensus. it certainly feels like a fabricated consensus when you hear all the individual policy

speeches, and then they get together and say we're on the same page here. why are they so reluctant to go forward? >> i think it's a mechanics tour of insecurity, that's what i ultimately think it is. a much better approach would be for us to know what's the range of views being expressed and how confident with people in the decision that they're taking. and i think the bank of england conveys this really well. and then it's supported by what the governor says afterwards. jonathan: this was great. you're going to stick with us through the hour. equity futures right now on the s&p, positive here by about 1.2% on the s&p 500. with an update on stories elsewhere this morning, let's get to a blood vessel brief. >> disney shares turning lower despite the company beating estimates and posting its first ever profit in streaming. disney also raised its guidance for earnings growth up to 30% from 25%. the film studios snapped a string of losses thanks to the release of "inside out 2".

they posted $47 million in profit, which includes disney+, hulu, and espn+. disney now saying it will raise prices for disney+ by as much as 25%. after the massive crowdstrike outage last month, two corporate giants are playing the blame did you see. delta airlines turned down repeated offers for assistance, echos claims made by crowdstrike a. cording to a letter from microsoft's attorneys to delta, the tech giant reached out to the airline to offer technical support every day since the outage happened on july 19 through july 23. and each time it says delta turned down the offers to help. the letter also says microsoft's c.e.o. also emailed delta's c.e.o. and never heard back. taylor swift is the top nominee for mtv's 2024 video music awards. swift has 10 nods, largely

thanks to the "fortnight" video. the only artists were eminem and aryan an grande. swift will have more history to make at the ceremony which they goes for a three-peat in video of the year. jonathan: thank you. you're so popular right now, look at you, the leading of what's popular in america and worldwide. how does that feel? >> lots of people discovered i had gone to the concert, and people would say we need to tailor our response swiftly. dani: because you're a taylor swiftie now. jonathan: you're trying to go camouflage in a pink t-shirt. did you think people would miss you, wouldn't identify who that was in the stand? >> i do what my wife tells me to do. jonathan: that's the right thing to do, well done. up next, battling for swing state votes. >> tim walz's record is a joke. he's been one of the most far-left radicals in the entire united states government at any level.

>> j.d. vance literally, literally wrote the forward for the architect of the project 2025 agenda. i can't wait to debate the guy. jonathan: we can't wait to see a debate, if we actually get a debate. that conversation up next, live from new york city, good morning. ♪

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jonathan: yellow cabs were public transport. t.k. told me this when i first moved to new york city. t.k. said yellow cabs were public transport. must be a man of the people to hail yellow cabs. annmarie: would you call him a man of people? jonathan: absolutely. that's who i look up to. equities up by 1.2%. under surveillance this morning, battling for swing state votes. >> tim walz's record is a joke. he's been one of the most far left radicals in the entire

united states government at any level. but i think that what tim walz's selection says is that kamala harris has bent the neat to the far left of her party, which is what she always does. >> j.d. vance literally, literally wrote the forward for the architect of the project 2025 agenda. i can't wait to debate the guy. that is, if he's willing to get off the couch and show up. jonathan: that joke there. vice president harris and governor walz holding rallies in wisconsin and michigan today as part of their swing state tour. senators j.d. vance said to make stops in the same string of battleground states, with trump's next rally scheduled friday in montana. josh wingrove joins us for more. the race is set. walk us through the next month, the key dates for you and the team. >> thank you for leaving the couch stuff where it is, i appreciate that. this next week is going to be just a blitz of all the seven battleground that kamala harris wants to visit with, tim walz. one thing to understand here is her map is a lot different.

biden had a pretty clear path through the northern battleground. it's not so clear. either this is a rising tide lifts all boats, where suddenly she'll find herself competitive in all seven, or needs to find different paths. last night was the first one in philadelphia. i was there. governor shapiro, of course, was the finalist, but was passed over for governor walz to be the running mate. gave a pretty rousing speech to introduce, no sour grapes factor. found the need to say he's proud of his faith. and that gives you a hint of some of the wrangling that happened in the democratic party leading up to her selection yesterday with questions whether shapiro being jewish would make him vulnerable attacks he was too israel or whatnot. this has been a fraught one, but the reaction we saw yesterday from across the democratic coalition from ocasio-cortez to joe manchin supporting tim walz made him the do no harm pick. we'll get that one-week tire.

whether joe biden hits the campaign trail remains an open question. there's some reporting they're kicking tires on all that. but this is all heading to the convention later this month in chicago, which will really be a coronation. this momentum, you'd expect, will continue to carry harris in the polls. right now it's looking like a coin flip race. dani: what we have right now is big moments for her, rallies, she's going to be at the d.n.c. every, this corps station you speak about. she's going to be on teleprompter. when is she sitting down for an interview to see how she differentiates herself from biden? and will there be a debate? >> those are great questions. she's not set down for a wide-ranging enemies. she bats around a couple of questions under the wing of the airplane. they haven't said. they haven't got there. and they're not going to be able to keep her lidden away as part of it or foreign speeches that don't have any question and

answer, or at least i don't think they'll be able to do that. we'll see where it goes. certainly j.d. vance is getting out there doing more press stuff. i think we'll see that with tim walz as well. as for the debate, right now they're in the standoff. trump is doing that trump, early fox debate that he unilaterally sort of ginned up and said harris has to meet me there or nothing, and harris said forget about it, i'm going to the september 10 abc debate, the one that biden and trump and potentially r.f.k. had agreed to ages ago. trump says he now won't do that, this fig leaf saying agreed with biden, which isn't really true, but was during the era of biden. these are silly games. it looks like trump doesn't want to debate harris, and harris doesn't want to go to fox. so trump is digging in saying fox or dog, doesn't look like there's going to be a debate for now. the vice presidents are another story. both vance and walz are chomping at the bit to debate each other,

i suspect, unless one of their top of the ticket colleagues says no, that those two will be unleashed against each other at least once. they seem to be happy for it. republicans are almost as delighted with the pick of governor walz as democrats. they think that they can go after him on certain issues. it's not just because they thought that governor shapiro would almost take pennsylvania out of play. they definitely were worried about shapiro being the pick. but governor walz, they see some paths to sort of drive a wedge between democrats and swing voters. dani: how do you see that shaping up? 70% of the electorate don't know who he is or what he's about. how does that look like, the race to define walz? >> i think the compressed timeline for harris is probably helping her a little bit. harris is not someone who's played error-free ball for 3 1/2 years. she gives wonky speeches sometimes. but she's played pretty error-free ball in the last couple of weeks.

so this could help. the same with walz, if they can get him out there, as they're going to do the next seven days, they will try to define him before republicans can define him. in congress, he had a very down the middle voting record. as governor, he's been more progressive. progressives backed him in part because he was sort of the most progressive option of the list of folks that weren't all that progressive. to say he's a far left radical, i don't think that will necessarily hold all that much water, but he is admired by progressives, so we'll see where that goes. last night, i was there in philadelphia, with all due respect to president biden, the energy leveled, they're just not comparable. democrats are just in a much different place where they are. there are thousands of people there. they were jazzed. you know, this is just totally different than three weeks ago. jonathan: appreciate the update. thank you, sir. this pick provides a lot of ammunition to the republicans, and there's an opportunity to

define harris' running mate, if they take it. let's see if they're disciplined enough to do. dani: there's a huge opportunity. more than 70% of americans don't know who he is. i mean, to most democrats, did they know who he was until he was all the sudden appearing on cable news and on a shortlist? there's a lot of ammunition, because to josh's point, when he was 12 years in congress, he was a moderate. he voted for tax cuts under george w. bush. he's not so as a govern another. he is definitely to the left. jonathan: coming up, we'll catch up with the disney c.f.o. as the company turns a profit in streaming, but faces head winds in the theme park. we'll continue that conversation up next. ♪

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jonathan: the s&p 500 positive by 1.2%. the nasdaq up by 1.4% and the russell up by 1.8%. unwinding the moves the last couple of days. the bond market, think about where we were on monday morning, the two-year was at 3.65. 8:30 eastern on monday, all the way back to north of 4%. in the dollar-yen, a big move higher off of boj intervention.

mohamed el-erian is with us. do you think this is over? or is this a one-off freak out that we move on from? mohamed: i think what is over is the overreaction but there is sin on where markets settle long-term -- but there is still question on where markets settle long-term. jonathan: the fed said they will forgo an emergency rate cut. on the peer-to-peer conversations with david rubenstein, he expects more volatility but does not see a recession. you can catch the poor interview on august 14. the emergency rate cut stuff seemed pretty wound on monday. have we backed off now? dani: it feels like we have a remarkable amount. not only the dialogue but the market, too. solomon comes down the side of

there will not be recession, but it is just slowing. are we slowing to normalization? it feels like children's's economy where you do not know if it is alive or dead and you have to look inside the box to find out. with every piece of data that comes in, we are assuming how quick it is. annmarie: the market is so data-dependent because the fed told them to be. solomon said the job report was not horrible but softer than expected. jonathan: data dependent or datapoint dependent, you have me that point that there is a difference. mohamed: there is, and you have to combined with forward-looking. it is incredible that we are going of some jobless claims. one of the noisiest series out there, but depending on whether we get above or below 250, the market will react. jonathan: citi said the danger zone for jobless claims was to 60. we are not too far away from

there. i knew paul from pbs news finding harris leading trump 51% to 40%, so in the last week or so, a previous call from july showing trump leading harris 46% to 45%, so this race gets a lot closer. annmarie: you saw the enthusiasm at the jobless point. biden was not drawing the crowds for that it is he hasn't, so harris has tightened the race. i find the numbers about him were interesting. more than 30% of americans do not know this person is in they will be a race to define him because she has not come out and sector policy interviews so how does she differentiate herself from hiding and who did she pick to expand or bring out the base? there is a lot of concern or excitement about governor walz. jonathan: it has been amazing

how few policy interviews we have seen, which is like none at all. absolutely zero. which is not. annmarie: and i don't consider a gaggle under the wing of an airplane an interview. you can walk out, say what you like, and the way. jonathan: and it is inappropriate to ask about policy given the nature of the situation anyway. on the tarmac of the hostage swap, so what are you going to do, ask questions about the economy? annmarie: and then you look incredibly tone deaf as a journalist. jonathan: precisely. we would like questions and answers. disney delivered better-than-expected earnings. the company posting a first-ever profit alongside a sluggish performance. the stock is down by .3%. we are catching up with the disney cfo. wonderful to catch up with you, as always. we will start with price

increases. it is on the minds of a lot of companies that have talked about loss of rising power and sliding sales. what have you seen on the streaming business back gives you confidence that you can hike prices without delivering increased share customer hugh: good morning -- increased share? hugh: good morning. you mentioned the numbers a few times. the entertainment business is doing exceptionally well. we had the top of the day, june or july in "planet of the apes," "inside-out 2," and "deadpool." as we look at what is appearing on the streaming service, those three great motion pictures, the ip reproduced, will be on the service, as well as any nominated tv shows, including "abbott elementary" and quote only murders in the building" --

"only murders in the building." and consumers are willing to pay more because they are getting so much back in some entertainment i said "shogun"" was also made one of my favorites the past 12 months. the streaming is this is doing well but you cannot say the same about the theme parks. what is going on? hugh: one thing to keep in mind, then theme parks business we have actually grew in the quarter with revenue up 2%. we are not talking about a business going negative. earnings were down a little bit because we had inflation and we are making investments back in the business. what we see happening more than anything is the lower consumers are stressed and shaving a little bit off of their time at the park, and then higher income consumers are traveling overseas a little bit right now. given the strength of the ip we have in the park and the quality of the experience, when the

consumer is soft, it hits us late, a little less, and we recover early, so we see this as a few quarters of slight perturbation in numbers. frankly, i think we will be back as we get to the middle of next year. dani: another complaint to here is about bundles. not that they are not good that there are too many and it is giving people fatigue. does there need to be consolidation and are there too many options? hugh: consumers do seem to appreciate having a limited number of bundles. what we have tried to do with our own offering is off the individual pieces or if people would like a discount by bundling more, we are happy to do that. that said, you do see a trend where there is probably going to be a few big competitors in the marketplace, as we see now between netflix, amazon and ourselves, and then smaller competitors had to run their businesses. dani: another draw is sports.

nba has had this odd eating war where you have come out on stage but warner bros. loses out, you have amazon.com, all of these streamers are trying to get their hands on five sports. is this healthy or unhealthy for the industry? hugh: generally speaking, what you see is the leaves are choosing to go with the big winners, so they have been with us, espn in the third quarter had 49% market share of sports viewing which is a terrific number. we had the package with the nba and we will have their finals the next 12 years. beyond that, i would speculate into their decision-making process, but in general they are quite pleased with what we have been able to do for them and we are happy with what they've done for us, and if you combine our nba rights with college football and nfl, we have locked up the

most important sports to us in terms of being popular for an extended time, so we feel good about where we sit. annmarie: i know there is a different price point, whether or not you would like to be an individual who sits through advertisements, are you seeing an uptick of political ads given the season we are in? hugh: no, we really have not seen much in that regard, so i cannot say that. annmarie: do you expect that to happen? everybody says after labor day is when the campaign going to be in high gear until november, do you expect an uptick on political ads for any streaming services? hugh: that's a great question but i could not tell you the answer. what i can tell you more broadly is the advertising market right now is incredibly healthy. we advertised 8% in the quarter and our upfronts for next year were successful, up 5%, and in addition, the streaming service saw a tiny percent increase in

advertising and espn some 17% increase. the biggest places that it is healthier, consumer and technology. annmarie: are you concerned that consumers right potentially are going to shrug off price increases because what we hear from companies is we do see consumers trading down. why are they willing to pay for a higher price point? hugh: it is always important to focus on the consumer receives value and what they pay his price and because we deliver an enormous amount of value in terms of the hits i mentioned, but in addition, the combination of disney plus, and then we will have an espn flagship on nursing service, that is a huge amount of value for consumers, and as they allocate entertainment dollars, they will be u.s. as a great place to put them. jonathan: how close are we to an

agreement with comcast? hugh: we are in the middle of arbitration, and i will not comment on arbitration outcomes and all of that. my guess is it will take a little while but we will get to a good place ultimately. jonathan: you have a timeframe on what a little wireless? -- a little while is? hugh: a few quarters, but that is a guess. jonathan: i just against on the theme park's, you talked about the middle of next year for the theme parks to bounce back to where it was. what is the firm guidance coming from the company now because it was going close to year end get the bounce but what happened? hugh: the consumer came in softer and it was the consumers i mentioned earlier, the lower income consumer is choosing to spend a little bit less and the higher income consumer is doing more overseas and outside the u.s., but we are still growing in that business, so it is not

the question that the business has gotten off track, but it is softer than before because toward the end of the quarter we saw a few consumer trends. jonathan: i used to talk to you when you were at pepsi during the pandemic, and you have a unique view of where the consumer is. what gives you the confidence that it comes back? where does that come from? hugh: more than anything, i believe there is resilience in the u.s. economy. markets are sensitive right now and fragile, as you all have talked about, but i think the u.s. economy is stronger than people are giving them credit for, and it will come back as it continues to strengthen. jonathan: hugh johnston, the disney cfo on where the consumer is now. let's listen to the company, hugh johnston at disney thanks the consumer is going to bounce

back and it is ok that perhaps the economy is better than some say it is. where are you at? mohamed: i heard him say that the weakness right now is because low income consumers are spending less and high income consumers are doing something different. and then i heard him say, "but don't worry, disney plus will be right back." what i did not hear is will they be back has the high-end can consumers are coming back or because low income consumers will recover? that for me is ambiguous. jonathan: what would you have more confidence in? mohamed: if he is right, it is because the high income consumer has decided to spend less on experiences and rather than fly overseas, they are staying at home. jonathan: more trips to florida? i'm talking about the general public. mohamed: we already established -- jonathan: i don't know if i'm a disneyland kind of guy. mohamed: you are not.

annmarie: maybe disney in paris? jonathan: no, the family went there a long time ago. it would be unfair for disney for me to share that on air. it did not go that well. but that is just about us, not that. let's get you an update on stories with your bloomberg brief. yahaira: vice president harris and her running mate governor walz held their first rally in philadelphia last night. harris introduced him, hailing him as a fighter for the middle class. the campaign saying they raised more than $20 million since the announcement, which they hail is one of their biggest fundraising dates. harris entered august with a larger war chest than trump. shares of airbnb are plunging, nearly 15%. the company gave a disappointing outlook for a third consecutive order, setting it up for the

slowest pace of growth since 2020 and warned of slowing demand from u.s. vacationers. one area that saw positive results was bookings for larger parties after the company retold marketing to choose advertising multi-bedroom home over hotel rooms. boeing is redesigning their plane that flew out of a plane in mid-january as part of an overhaul after the accident through them into crisis. they revealed the plan during a daylong hearing with the ntsb, which grilled executives from going and supply aerosystems about their safe the and manufacturing culture. jonathan: more from yahaira in 30 minutes. next, the fed remaining patient. >> there is a little more room for confidence, confidence that we are slowly but not going off a cliff. >> the longer we are

restrictive, we are going to have to think about the employment side. jonathan: that conversation next with the former new york fed president bill dudley. ♪

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jonathan: stop on the s&p positive by a little more than one full percentage points. yields drifting high by four basis points. this morning, the fed remaining patient. >> we are headed back down toward normal. the question is, are we normalizing or are we weakening? those are two different things. >> underneath the labor market report, there is little more room for confidence, confidence for slowing but not falling off the cliff. >> you know that i believe that the longer we were restrictive, the longer we will have to think

about the one side. jonathan: fed officials refusing to overreact to last week payroll data. the former new york fed president suggested the patients might you misplaced, saying "the fed's wild ride has only just begun. deteriorating labor market tends to be self enforcing. the longer the fed waits, the greater the potential for damage. an immediate rate cut is in order, but that's unlikely. prepare for more volatility in stock and bond markets." what suggest to you that this is self reinforcing in the beginning of something much worse? william: a couple of things, we have seen a drop in the quick rate, and it looks to me like the market is going up significantly. we have also triggered where if the unemployment rate raises by more than 7%, every time that

has happened, we have ended up in recession, so there is risk in terms of labor market, and inflation has been very good recently, so it seems to me that the fed needs to hold both sides of the mandate with equal weights, and that implies for it to be neutral, not restrictive, and we are a long way from neutral, and nobody thinks that 5.5% is consistent with neutral. 3% to 4% is where the fed should be. mohamed: you've had an enormous influence on how people are thinking on wall street on what is ahead, so everything an immediate rate cut is not on the table but they will not move at the next meeting, what is your recommendation for the next few weeks? william: i think they should change the messaging and make it clear that they are focused on the labor side of the mandate and get the market in tuned to

the notion that a forget week data over the next six weeks, 50 basis points is highly likely at the september meeting. mohamed: this has been a very backward working fed. now they need to regain control of the narrative. with that be enough to regain control of the narrative? william: it would help a lot because of people feel like the fed has got added, they can recover and provide the support. the problem is when the labor market starts to deteriorate, confidence declines. a big change in market sentiment, and when it deteriorates, that can be self reinforcing and people hold back on spending, and then it has gone up a full percentage point, and then you are in recession. the good news is if we have

economic weakness, the fed has plenty of firepower. so the fed can respond aggressively if needed. they will need to respond aggressively and that has a raised significant the recent weeks. dani: you did write about two weeks ago before the fed decision and before the jobs data that not going in july would increase the risk of recession and that happened so how acute is the risk at this moment? william: i think what has happened is there is stress and a couple of areas of the economy. households have tapped out the savings generated during the pandemic and they are the ones who would pay the higher short-term interest rates and terms of auto loan debt, and we are seeing softness in the housing sector, especially multifamily construction, so you see areas of weakness that lead

to a softer labor market and that is the key thing. dani: i think the confusing thing is for every weak point, there seems to be a strong point and for every issue at air being, there is a disney that can raise prices -- at airbnb, there is a doozy that can raise prices. how do you address the consumer who has gotten with where they spend money? william: it is difficult. high income consumers have locked-in lower mortgage rates, they have been the beneficiaries of a stable stockmarket, up over 10% this year, so the high-end consumer feels great about things but the low-end is not. the other thing is what happens on the investment side. the biden administration had investments to spending like climate and investment acts, but

has that peaked or not? that is another source. jonathan: great to catch up with you. bill dudley, the former new york fed president. how off-site do you think we are on rates when we spent the last two years debating whether we are sufficiently restrictive? mohamed: if you just listened to what will said about the labor market, if he is right, we are way too restrictive. jonathan: like 100 basis points off-site? mohamed: yes. the more interesting debate is where is the destination? there are major differences and views. is it in the four's are below three? jonathan: the market is focused on the path. you are focused on this, at peace you just published, waiting in vain for of over moment -- a volker moment.

what is that moment? mohamed: every time central banks blank, the bank of japan did this morning, the markets take it further, so it makes the next episode more difficult. i think it is having the courage like volker had to break the mindset once and for all, but nobody would like to be the source of that moment. dani: do we need to see something worse? something like monday but even work to get the fed to do what you are talking about? mohamed: i do, but you also need someone confident enough to be able to say i will see it through, and we have not had that. dani: you don't sound like you think they will change to get word should be. mohamed: no, i think we will keep playing the repeated again until something bad happens but it can be played for a while. jonathan: doesn't need to be communicated? what does that sound like?

mohamed: he will say we have looked at this, these are our instincts now for where we are going. but we will course correct as we get more information, but you desperately need to anchor the market. jonathan: just fantastic. you have mailed the turn on the economy twice. brilliant, mohamed el-erian on the latest on the u.s. economy and the fed. the lineup looks like this on "surveillance," alicia levine, pierre ferragu, and blonde market is higher, up dr. basis points on a 10-year. and if you would like to know what dollar-yen is, it is a whole lot week, up by 2%. ♪

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>> this move in the market has a

lot more to do with positioning over leverage and in cases volatility, and it is the economic fundamentals. >> when sentiment shifts and trend changes, that causes turbulence. >> we have had a level should and the volatility environment across markets. >> momentum had in the best factor all year. we will get exposed as it has become momentum strategy. >> when we put into context where we are, there is more panic in the market than warranted. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: every morning starts with the dollar-yen, right now at a move of 1.9%, so that move was engineered by comments from the doj. -- boj. a bit of a blinking contest. they lost quite quickly. dani: they have, but it is a mark that potentially have it

out of its hands. it is insane to see comments from a deputy governor and then dedicate erase losses. -- and then the nikkei erase losses. it is kind of insane. is it just positioning? jonathan: it has been ridiculous, in one word, so see the weakest one-day loss followed by the biggest one-day rally since 2008? and then stability at the close today, by 1.2%. how we just encouraged a group of investors to pile on again? dani: i don't understand if you are in the market and you seem pained to that extent but then you are like, it came back, i can keep buying it. the deputy governor said some, so i can get back in it. all of your returns are going to look out of whack. it is not performing as it should. annmarie: what is the bank of japan putting out the red carpet

for people to come back into the market? where they bullied into this? mohamed el-erian managed to get out this piece and says that the signal, which he expects was in part to the nervousness of global stock losses was seen as pro-risk, but the markets are saying, i'm ready to go for more. jonathan: the dollar-yen at about 147.98. there is a need to talk about, and i have said it repeatedly, and we get jobless claims tomorrow morning, and we have heard from berkeley, area daily, -- mary daly, but disney in the premarket is just about unchanged. we have seen that the stream business is doing well, and the theme park business is doing less well, and lower income consumer spending, is pulling back at the parks, and the higher income, they are traveling abroad but not going to disney, so we have to work out where it comes from, does it

come from lower income spenders coming bouncing back, which one? dani: take your pick on what every company has said to figure it out. uber's ceo says we are not seen any softness or trading down across any cohort, so we have to wrap our heads around this, is this a lower end consumer struggling or is it a lower end consumer that is be more picky? that there is price fatigue and they are not willing to pay for the parks or mcdonald's, but they are spending a lot at taco bell? we had earnings yesterday that were extremely strong. annmarie: but the higher end consumer, according to the cfo, saying that these people are going off to europe versus one end. i went the cfo said is maybe next year we will see the demand, back, but i think this is more of an understanding, the bifurcation that we see within the consumer. jonathan: we have seen it

repeatedly this morning. disney about unchanged and the broader market positive on the s&p 500, equities with a little bounce and treasuries lower, yields higher and softness coming in to the treasury market, up by three basis points. coming up, we will catch up with alicia levine from bny, pierre ferragu, from new straight, and we begin with the big issue, u.s. futures adding to tuesday gains into the opening bell. dovish comments from the boj lifting sentiment this morning. alicia levine is not expecting a recession. we believe it is pointing to a soft landing at the areas of concern are growing to include softness in the labor market. alicia, good morning. what does that were constructive you come from on the economy? alicia: the data are quite so good and even the forward-looking data.

let's look at what is going on in the credit markets. the spreads are holding in and not blowing out. that is the first view of what is happening with corporate, so spreads are fine, and the data, the macro, the ism services data really came to save the market when it came in better than expected, and that employment data for services came in better than expected, so i think you will get revisions on non-foreign payrolls in the next month, and it just does not seem that we are moving towards recession. having said that, i think the fed is too tight for where inflation is going and real rates are quite high, so it is time, and it is time to start the cutting cycle, but we do not see evidence of a recession yet and the soft landing is in play here. jonathan: how off-site is the federal reserve?

alicia: i think they could cut 100 basis points here and they would still be tight. jonathan: still tied after 100? alicia: will we are 2.5% on pce, so that makes sense. dani: if they are still too tight even if they cut 100 basis points the economy looks ok, when does that sees to be the case that they continue to be too far behind i do not catch up? alicia: -- too far behind and do not catch up? alicia: as an institution, the fed tends to be a little late because statements are written two weeks before the meeting, and even if they come in at the two weeks, the statements are not revised and the press conferences the press conference, even if you get different cpi data, and we see that the last few fed meetings. i think they know they have to cut. the messaging last wednesday was they are starting to cutting cycle in september but the conversation today is a 25 or 50

basis points? and is the macro data coming in less on cpi, cpe, and more unemployment? so there's this claim data really spoke to the market last week. those are the numbers that are going to tell us whether it is a 25 or 50 in september. dani: one confusing thing about the delay of the fed's they say they do not want to react on one data point. but when inflation is on the way up, michigan survey scared them, and they said over the weekend that we will hike but why are they not doing that this time? they have some flexibility in the past off of data. alicia: because the data are still good and the economy is still good. we came often earnings season where earning our 2.8% in the second quarter, and atlanta fed has revised up to 2.9%, so the data coming in are not that week. it is located in certain parts

of the income scale in the labor force. you have to go with the park is going, so we have to -- puck is going and so we have to project. annmarie: get ready within unemployment rate higher than the year-end target -- they are running within on climate rates higher than the year-end target. alicia: some noises there that it could be driven new work is in the labor force. we have had labors the last four years were coming in, and it is more people in the labor force and that can drive up the unemployment rate, and i think economists know that there is noise because of the extra 5 million people in the labor force who may be not be picked up another metrics. so what drives them is not so much unemployment rate but the new jobs creation and the claims data that is as coincident as you get on what is going on with the labor force.

annmarie: out of all the data we have had, the cpi data, cpe, jobs data, what would give you the path to know what the fed is going to do? alicia: thursday's new claim and continuing claims data. the trend does not look good. there is some seasonality. education workers sometimes take employment during the summer. if that is the case, we should see that rolofs soon, and if that is the case, that should come up fairly soon, but any number over 250 will get the fed's attention and we almost got there last week. jonathan: for weeks people said to buy small caps. alicia: not i. jonathan: avoiding it still? i know not you, not alicia, just to be very clear. we have reset the, particularly with a friday and monday price action.

what is the trend at the moment? alicia: we are allocated to all asset classes and not overweight small caps. we thought the trade was only because if you think there is a soft landing in the fed is cutting, it seems like a great set up for companies underperforming, and that is the definition of small cap but if you think the fed is not cutting that much and they still have floating rate debt due in the next 12 to 18 months, it has to be refinanced. you saw an index play. everybody was over there skis on large cap and tech, and the market cap of the top 10 stocks is five five times that of russell, so it is like taking the capital out of the top 10 stocks and throwing it on the index, and you would get these huge moves on the way up and then you see it on the way now, as well. it is idiosyncratic and you have to choose your company's carefully, so we are allocated,

they will do well in a rate cutting cycle, but if there is any question about the real economy, small-cap is not where you would like to be. jonathan: and there is a question at the moment, particularly after friday, looking ahead to jobless claims at thursday. alicia living bny wealth. let's get an update with your higher who has your -- with yahaira who has your bloomberg brief. yahaira: oil was recovery, investors homage about the possibility of the strengthening of iran and israel with the middle east accounting for one third of bulk production. and crude is trading around $78 a barrel as slowly demand and china and the u.s. with that additional supply of opec-plus. hong kong's airline is buying as many as 60 airbus jets and 11 billion-dollar deal. bloomberg reports that it placed

them in play with the european playmaker and the u.s. rival for the 787 dreamliner jets. it is the deal with airbus in 12 months, and capex's biggest claim spending spree than a decade, and they reported a 50% slide of net income with flight numbers at around 80% of pre-pandemic levels. and the paris olympics are winding down with five or days of competition. today, the newly crowned fastest man alive, american noah lyles, returns to the semifinal after taking gold in the 108 or, and the women's basketball team -- gold, and the women's basketball team has not lost an olympic a since 1992. team usa leads in total metals won. jonathan: gabby thomas made a solid terrible yesterday.

a gold-medal at the olympics. dani: how old is she, twentysomething? jonathan: beauty, brains, athleticism, ridiculous. dani: it is like noah lyles saying you are not a world champion if you are in the nba because you don't eat against the world. jonathan: ridiculous. canada. dani: that is the world according to north america. jonathan: next, a conversation on the the upgrade. up 1% on the s&p. ♪ ♪♪ ♪♪ more smiles per hour at the ultimate caribbean playground. visit beaches.com or call 1-800-beaches are still calling each other rock stars.

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susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management jonathan: this from barclays, overweight tech, overweight

financials, a lot of people buying that dip the last few days. equity futures up by more than one full percentage point in the end is at 3.9316, i we will keep revisiting the dollar-yen. positive 1.8% on the session. let's get you morning calls. wells fargo raising the price target on uber to 97 from 91, saying they remain a topic for the second half of the year, up by .40%. airbnb is now at 125 from 170. they pointed to tough comps and headwinds from regulators, down by 14%. new street upgraded nvidia to buy with a 120 price target, pierre ferragu saying that it is a buying opportunity and joins us more. great to catch up with you. an upgrade on the stock after

the big correction into the weekend. some wild swings we have seen over the last week or so. particularly. why do you think this is a good entry point or opportunity? pierre: it is a good opportunity because we had a bit of an overheating in ai related stocks. we grew three or four weeks on the back of that, and specifically on nvidia, our concern was that we are basically getting a slack to be ahead of where supply chain was in terms of capacity and well ahead of production and so what happened the last couple of days is you have had to look at the news flow as the next generation, be it being delayed,

and that creates a counterintuitive situation, where if it is delayed, it creates a bit more leeway and a bit more room to do more so we actually think it makes meeting expectations for an end-of-the-year safer than it was a few weeks ago and valuation is trading on 29 times will be expected for next year and is likely to be a consensus, and this is kind of the stock getting to its lowest point, so we don't see a downside based on earnings, and it is good place

to get into the leader. jonathan: let's talk about the potential downside risk turnings , just a little further down the road. we have heard from the biggest customers and we have noticed a loss of patients with investors toward the customers on how much they are spending on the ai ventures and how little the reward is. do you sense the loss of patients from the investor base with biggest customers and what could that mean further down the road? pierre: this loss of patients we have seen already in the past when customers moved into the cloud business, and at the time, i remember investors being scared about it because they went into additional capex. i think it is being shortsighted are investors. these investments are going to

assets that will generate additional revenues and depreciate. the cfo of microsoft said that they are spending $19 million on that money, but how that goes into building, how is that going to be generating revenues? so it is scary to see a large. now, look at the balance sheets and the statement. when you do that, especially on my soft, what you see is a transition to ai that is very, very safe. microsoft has all the means to finance it, and there will be a couple of points of post margin pressure, and you see that

microsoft is already stabilizing, so this transition -- these very large players are going to continue to spend as much money as they spent today, causing them to keep growing them out they are spending. we feel relatively safe about the situation. dani: a scary thing for some people is the layers, it is kind of what nvidia has got, some 20% of the revenue comes from microsoft. does it have a concentration problem? pierre: yes and no. you are right, four players make aftermarket but only one supplier makes it, so it is still a good place to be, and you clearly see that on the return on assets.

from that perspective, i would tell you, no, they are not concentrated. on the others, there's only a permanent strategy of clients working out away to supply suppliers, and they are now ramping millions into it, and you see that all of the players are looking at making similar moves. you see softbank trying to invest, and you look at others trying to do so, as well. so they need to remain very, very good at what they do in order to maintain this position, so far we have seen that they understand that and they are

concerned about quality to their clients, and we have to say that the question is very good. for instance, you could see this as a rarity that really the new product every two years, they have done it more in the past, so they maybe have just a wonderfully -- a delay. annmarie: what about heightened scrutiny? they are going to look at nvidia when it comes to violating antitrust laws. any concerns about this? pierre: a lot of concern in terms of a lot of scrutiny. look at microsoft the last 20

years and how they have been in terms of regulation. does that mean it is going to hurt the business? they have to be careful about pricing fairness, and they have to be very careful to behave very well, but if everyone would like their chips, and there's not much a regulator can do about that it is going to be high on the list of discussions. does it mean nvidia could suffer? not really. jonathan: it was the market, not regulator. pierre ferragu was alluding to the experience of my soft the last 20 years, that is what did

it. if you make the best product, people are going to buy it. dani: how much patients will investors get it? -- how much patience will investors give it? it is getting punished this morning. in the meantime, investors do not really care if it is the best product, they would just like it's growing at 300%. jonathan: nvidia is up 2% in the premarket, and the new price target is 120. we traded at 106 this morning. coming up, we will catch up on the odds of a 50 basis point cut from the federal reserve in september. that conversation up next. ♪

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jonathan: we have said a few times we are light on economic data. the next is jobless claims tomorrow morning at 8:30 eastern. citi said initial jobless remaining at this level in august will confirm a slowdown in the rise to 260 or above would signal weakness. that is the danger zone for jobless claims, their words. equity futures on the s&p 500, drifting higher, better than 1%. the nasdaq by 1.25% treasuries

taking shape with yields higher by two basis points, approaching 4%. 3.9373 on the 10 year, up four basis points. the one to watch, really should have started with this because it set the tone, dollar-yen 147, positive by 1.9% with the weaker japanese yen and here is why. the boj sent the other signals after days of historic all activity. the deputy governors saying that the bank needs to maintain monetary easing for the time being. the bank will not raise its policy interest rate when financial and capital markets are unstable. i think some are skeptical. dani: i'm skeptical because he saw the big reaction in the, it

shot up, and then 30 minutes later, he says i think the markets will calm down, which gives him the room to continue tightening, and we know what is policy is, he would like to type, normalize, and continue to hike. he talked that it was coming, 25 basis points is what he saw, so if you are comfortable loading back into the carry trade, you have to realize that. jonathan: mohamed el-erian made the point that if they are capitulating and placating markets, he thinks they are making a mistake. annmarie: they are allowing the markets to load back out. paul donovan said japanese equities are now entirely where they were before the plunge on a . economic fundamentals have not changed much. draw your own conclusions about market relationships economic reality. jonathan: the market has been ridiculous the last few days, the politics, too.

republican presidential nominee donald trump announced elon musk will interview him on x on monday, the news coming after vice president harris named tim walz as a running mate. elon musk quickly endorsed trump just last month, i that assassination attempt feels like a year ago. annmarie: i'm looking forward to seeing the interview but two's. one, elon musk is a firm believer in donald trump at the moment, so this feels like it will be softballs. i would love to see harris and trump sit down with journalists who are more in front the tenant. it is also interesting for elon musk. this is potentially a space for him to have a redo. remember when ron desantis launched his presidential campaign, it was on x and don j. called it a disaster.

it is like reid hoffman sitting down with kamala harris on linkedin. jonathan: when have u.s. politicians ever sat down with people they have not like them? when was the last time? dani: trump just did it. jonathan: when did democratic politicians sit down with people who do not like them? dani: when do they sit down with anyone? we need to ask that at the moment because we have not heard one, friendly or a friendly. annmarie: i would also note that trump was speaking on a panel event, but many would say that potentially it was not the best idea to go into that. jonathan: let's see if we get an interview later this month. let's turn to the earnings, does the results painting a mixed picture with weakness in their hearts, offsetting their first ever profit and streaming. disney say they suffered from a reduction in summer travel due to the unfixed -- travel due to the olympics.

different core hordes of consumers, upper income consumers not going to parks because they're going elsewhere. lower income consumers pulling back more broadly. disney still has faith it bounces back the next 12 months. dani: i find this confusing because we've heard from airlines, airbnb and hotels same people are not traveling as much or going abroad as much. it is interesting to get different slices depending on the company and you try to wrap your head around what this means for the consumer. maybe it is an excuse and that they need to recalibrate strategy so they go to florida instead of to italy. maybe they are blaming it on normalization or a slowdown in consumers. annmarie: but the cfo was alluding to, i think, was bifurcation of the consumer. the high-end consumer really that they would like to come back and spent locally, but they are not doing that now. he says they are off abroad. interesting preparest, you think

it would have an take. if people go to the olympics, why not stop at disneyland paris? jonathan: waiting to see shows up in the jobless claims. 24 hours away from the data tomorrow morning at 8:30. the first time since the soft july payrolls report, we get another since of the labor market. investors hope it will offer clues on how much the fed will cut september. base case remains at 25 basis point cut, with the caveat that this outcome is based on a plus 2% core cpi's and stabilization in the nfp turned. everything of the re-think with the 10 year yield back for payrolls. whatever he doing? ian: we are in a classic moment in financial kits were prices have changed more than facts. we learned unemployment rate was higher than they were looking

for but that is about it. we have seen what has gone on with the bank of japan, the yen, the carry trade, the big unwind. we saw there yields as low as 366 -- 3.66. we have an option this afternoon. we will be in a different environment by the end of the week compared to the angst. jonathan: for people obsessed with asymmetries, given the upset in the bond market, are we more vulnerable? what are things set up for? ian: at this point, we have gone through the peak angst of being more vulnerable to stronger data than week data. i think we are in the sweet spot where we can respond with a degree of intellectual honesty to whatever tomorrow via claims. dani: that sounds like a more volatile bond market and it could go either way. what does that mean for my

ability to feel comfortable with the fed? ian: at this point, it is an ideal environment to hold treasury bonds because the fed has told us they are following every major bank with the exception of the bank of japan, and moving toward a rate cutting bias for the foreseeable future, and while that might not be a 50 basis point september move that starts the process, we will get into a series of rate cuts. so there will be moments, as we have seen, with yields backup as we re-think the re-think, as it were, but at the end of the day, the structural change and lower rates. dani: where on the curve? a front-end afraid of the fed, and a long and afraid of the deficit. ian: i would point to a breakevens that the clear indication that the market has renewed faith in monetary policy

and the fed's commitment to get us back to the 2% inflation target. and as breakevens compressed, we will see nominal rates move lower and lower. i like the 10 year sector with a nod to the fact that two years will be closely linked to the near term policy expectations. annmarie: you are still expecting 25 basis point cut for september but the data could move you to 50. how much do you think they need to cut the rest of the year? how much to think the fed by the end of december should have the mark? -- should have in the market? ian: if the fed starts at 25 basis point say quarter, they can continue the cadence, only if we remain in a soft low landing environment, and we are going to know that over the course of the next data releases, two cpi's and then on foreign payrolls. that will set the tone for september. ideal warnings, 25 in september

and december. i'm worried that doesn't play out and that we will see a more dramatic deceleration on the inflation front and another concerning payrolls print, and they we are 25 with the caveat that that could begin with the departure point of 50. annmarie: how do you define a concerning payrolls report? ian: anything sub 75 in terms of headline or another .2% increase in the unemployment rate that is not coupled with higher labor force discretion. jonathan: i would love your thoughts on price action. how orderly was the bond market on monday, did you make of it? ian: i would not put it in the category of being disorderly. everything functioned as it was supposed to. we have not seen any trauma unfold and things seem to be calm for the time being. as we know, when paradigms and

narrative shift's this quickly, the price action can be choppy. we reprice. jonathan: things have gone back and forth the last year. we see it time and time again. ian lyngen of bmo. to continue the conversation, ashok, you have been talking about invest for the destination, not the path. can you frame why that is important and why some are determining the path has become more interesting? ashok: a lot of our thesis for this year was five to seven year points. those points were pricing for the fed to get to a terminal rate at 4.25. our view was it would end up somewhere lower than that. the terminal rate pricing with the lows on friday or monday, we got to a rate of 2.90, and that

seems extremely reasonable. the main thing, and it will be a harder western for the bond market. because the endpoint is priced, pretty fairly, it will now be debates about how clear they get to the 3% level that will really drop the performance. you talked with en about how much -- with ian about how much was priced in, the challenge for bonds is there are over 100 basis points priced and the rest of the year, and if you don't get that total return performance on the short surety fixed income securities will be challenging, so the structural change that is happening in the bond market is we are going to have to talk or about 25, 50, this pacing and path, and the destination pricing of 3%. i would be surprised if that changes. dani: you can have a clear view

of where the destination is going, but you can be smacked around in the meantime. do you think there is any merit to being a more short-term trader and that you have to be tactical in a market like this? ashok: i do. you would like to keep any are on this, but we saw this november and december last year, which is when bonds rally, they often rally we and in this case we have repriced hundreds of basis points over the course of the week. i base case is the next few months, we will see continued week inflation prints. i think we are more concerned about the labor market. what that adds up to his the next few months, we probably will not see a big repricing higher in yields, and can that data drive faster expectations?

face cases, we have repriced yields and they will probably just sit around lower. dani: you saw huge moves in credit, 73 basis points in five days. are you now fairly getting compensated for the risk in the market? ashok: great point. credit spreads, high yield spreads were 300 coming into this. intraday we probably keep around 390 if we retrace that, but this has created opportunities in high-quality and longer duration tripled these, where it is 25 to 50 wider. credit spreads are pretty low in the grand scheme of things but there is more opportunity, and we do think that if one of the big things that comes out of

this is the fed would like to get to its neutral rates faster and this will all be an excuse for the dead to do so, that should be a bit more supportive for credit and take out tail risks, so the opportunities are there. annmarie: when it comes to the question of 50 basis points at the intermarket meeting, what are you viewing for the rest of the year at the basis point where the fed will cut? ashok: that's the million-dollar question. the way we are investing is do not bet against an aggressive bet. the fed knows it has got a restrictive policy rate. the fed has been trying to get into this. where they can be -- the fed is trying to get into this point where they can be more forward-looking and this is there to get there, so you would

not rule out the chances like -- i know you are asking ian about the payroll print and if it is less than 75. if you get downside outcomes the next few months, i would not discount that they can deliver the basis points or even a little more if you get that week data. i think the fed would like to get the first 100 basis points out of the way, so it is not a great answer to your question, i know, but i think 75 is the minimum and the upside and easing will be data-dependent but i don't think we will back off the price an awful lot. jonathan: we have been exploring the same for months, is it a welcome calling or unwelcome deterioration? morgan stanley said it was a welcome calling. cii is -- citi is saying it is deterioration.

are you in the latter camp? ashok: we think this is still a soft landing. it is hard to get the u.s. into negative type gdp's, but we have spoken about the labor market and the games we are seeing are more narrow, 60% or so if the job gains come in two sectors, education and health care. it is continuing to get more narrow. once the goal sectors -- once the cyclical sectors are weaker, and you have this introduced more downside to payrolls, this is a soft landing and that is our view base case, but it is tilting towards the lower end soft landing but this is not interviewer recession outcome. jonathan: thank you. on the labor market and the bond market, and the equity market, going into the opening bell

about one hour and 30 minutes away. we have an update on stories ulcer with bloomberg brief. yahaira: vice president harris and her newly named running eight governor walz -- running mate governor walz kicked off their campaigning yesterday. harris hailed him as a fighter for the middle class, saying they have raised more than $20 million since the announcement. yesterday morning, they hailed it as one of their best fundraising bases. it will be in michigan today as they continue their battleground toward. shares of airbnb are plunging, down more than 12%. looking's came in lower-than-expected, and the company gave a disappointing outlook, setting it up for the lowest pace of growth since 2020. it also warned u.s. vacationers despite it being peak summer travel vacation. one area that saw positive results was multi homes.

elizabeth warren and bernie sanders sent a letter to the department of justice asking them to investigate the newly formed sports streaming platform . it is a joint venture by disease espn, fox and tnt's sports to provide a direct to consumer service. senators have asked the doj to investigate whether it violates antitrust laws. that is your bloomberg brief. jonathan: next, setting you up for the day ahead with the trading diary for the next couple of days. you are watching bloomberg tv. ♪

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jonathan: a guiding light for the market right now is dollar-yen. first we will look at dollar-yen and then look at everything else. just short of 147. given a nudge by the bank of japan deputy governor. up by more than one point -- 1% on the s&p 500. 3.9278 on the u.s. 10 year. as we count you down, one hour and nine minutes away from the opening bell. vice president harris and tim walz hitting the campaign trail, holding rallies in wisconsin and michigan, j.d. vance planning for this week. we will get results from warner bros. and discovery. and then we will hear from tom . joining us to talk about this is mike mckee.good morning

. light on data that speak. what you make of what you have heard this week? michael: it is the classic market overreaction to things and the misunderstanding of where the that is from some people on wall street who calls for the emergency rate cut or this 50 basis point announcement or something like that. tomorrow we get jobless claims's, the one number everybody cares about. and i have a chart that gives you pause. when you consider what is happening with jobless claims, we are looking for a slight drop but it is possible they go up again. when you look at the nonseasonally and seasonally adjusted rates of jobless claims , the blue line is seasonally adjusted. the white line is nonseasonally adjusted. look what happens every july, claims go way up. and look what has happened this

year, not only is the same pattern followed but there is a divergence between the two and that may be in part because of additional people coming into the labor force and new seasonal adjustment factors post-pandemic. the fed will only act if they see a serious real problem with the labor market and maybe this is not telling us there is one. jonathan: there is so much blame going around. the bank of japan blaming the federal reserve, and some people are blaming kamala harris, which i find ridiculous, kind of bonkers. i thought it was ridiculous how many people thought it was trump at times i now it is harris. the whole thing is nuts. and some people are blaming the weather. michael: a lot of people are blaming the weather. yes, the bls said it was not the hurricane and we have no reason to doubt their reasoning, but there were 436,000 people who

could not work because of the weather, so there was something going on. it may not have been in texas but maybe around the country. so there is the chance of a snap back. we do not know, but there is that out there. dani: when you look at ism services where employment is quite strong, how much do you want to read into that? michael: it is a big segments of the economy, a small survey but also a sentiment survey. it is what purchasing managers think is happening in their company, and they are telling us that they are not letting people go at this point, and it does not suggest that they will hire a huge amount of people but as long as they retain the people who were on their payrolls, that squares with what we are seeing with jobless claims and services for the biggest part of the economy and that is an important number. it would have been interesting to have that before the payrolls

report, one that matched up. jonathan: we are waiting for jobless claims tomorrow morning at eight it lock a.m. eastern -- at 8:00 a.m. eastern time. it would be a drawback from the previous reading of 249, so we are looking for 240 tomorrow. there is going to be a lot of weights put on this number following a south job on payrolls friday, and we will see where the market responds to it. we will catch up with sarah wolf of morgan stanley, tony rodriguez, all of that still to come as we count you down to the opening bell about 35 minutes away. equity futures positive on the s&p 500 by a little more than 1%. from new york city, this was open quote bloomberg surveillance." -- "bloomberg surveillance." ♪

>> japan doveishness drives futures higher in the u.s. po minutes until the start of trading i'm matt miller. >> kay is off today and bloom perfecting open interest starts right now. >> coming up doveish signals for the bank of japan gives fresh legs to recovery in stocks globally. disappointing earnings reports pile up with disney and air