>> it is time to start the cutting cycle, but we don't see evidence of the recession yet. the soft landing is still in play. >> i don't think we will have a hard landing anytime soon. >> these trends have been underway, persisting. our fears that a soft landing could be slipping away. >> i think that bad news is not bad news. >> the fed needs to regain control of the economy, establish anchors. the volatility itself of the marketplace will undermine them. >> this is "bloomberg surveillance" with jonathan

ferro, lisa abramowicz, and annmarie hordern. jonathan: bloomberg surveillance starts now. coming into thursday towards a fourth week of losses on the s&p 500, your scores look like this. more of the same, may be. pulling back by a quarter of 1% on the s&p 500. the russell down a half of 1%. yesterday giving up gains as much as 1.7% in yesterday's session. today's data point of the morning is arguably the data point of the week. jobless claims. estimates look like to 40 is the number we are looking for in our survey. the number last week to 49. this one has become more important. annmarie: they're expecting a 9000 drop in the initial claims. deutsche bank billing it as one of the most important data points of the day and potentially the week. the increase last week, there is some seasonality. auto factories are closing, you

have some school closures, the hurricane in texas, but what did mohamed el-erian say yesterday? this market feels and careless. any data point that comes out they will potentially want to really get there handle on. jonathan: hoping that we pull back a touch. the calendar for the month ahead, let's go through it. i think it is worth revisiting. we have a federal reserve decision, the meeting begins december 17. we have a cpi report on the 14th of august. jackson hole in the speech that traditionally is given by the chairman takes place on august 23. payrolls on september 6. cpi september 11. that is a lineup, the data points between now and september 18. dani: it is frightening because of the bond going into it. we are trying yesterday, saying the positioning is neutral. that means that the child could happen either way. you get the feeling that the

trend stopped before the summer. when trent stops you get a lot of instability as we try to grasp on what the economy is actually going. that is why these data points are so important. jonathan: dollar-yen, 146. is that unwound? dani: jp morgan says that we are three quarters of the way through, but everyone has their own estimate. if you look at the bank of japan meeting minutes, it would suggest that we are not through. it was hawkish and you can see the reaction clearly. jonathan: pulling back by .4%. bramo is back next week, but if bramo were here we would be talking about the soft and-year auction of yesterday. a 30-your auction this afternoon with $25 billion worth. the bond market right now looks like this on treasuries. we will start with a 10-year maturity. yields lower by three basis points. the 10-year, 3.9093. pretty much unchanged for the

euro against the dollar at 1.0925. coming up, stocks drop ahead of key data. harris makes her way through the midwest. and the state of the u.s. labor market. we begin with our top story, stocks sliding going into jobless claims at 8:30 eastern time. unfortunately for markets the negativity of the current narrative implies that it may take a combination of solid economic data, earnings, and reassuring fed speak to settle nerves. we're joined now for more. this go through it point by point. the federal reserve, the fed speak, the earnings, the data. where are we at the moment? >> there is not much fed speak between now and jackson hole. i would expect a couple more speakers to come out to calm the market. as we are reacting to the data

as it comes out, that is also the case for the fed. they can tell us that things don't look so bad and reassure us that the labor market payrolls print of last week is one data point, but if you see a continued deterioration in the data the fed themselves will have to respond in kind. jonathan: what is amazing about the shock of the last week is that for many people they are still trying to diagnose the origins. is this a growth scare born in america or the carry trade out of tokyo, japan? where do you place the emphasis? seema: for the last six weeks to two months, i have seen a number of queries moving towards worrying about a recession. it has been quite surprising. we have moved away from wondering if the economy will continue to accelerate, is there an overheating, to people questioning how weak the economy is. i don't buy into it, but i think a lot of it is born over growth

scare and exacerbated by the liquidity. i think you are the only three left in new york this week. then there is the positioning of the carry trade. it has been a perfect storm of events. i think the growth scare has been building up in people's concerns for a while. dani: what is that data mean, not just this week. are you worried? seema: when we look at the breath of the data we believe that there is a lot of resilience, particularly in household and corporate balance sheets. that should mean if you were to see a deterioration in the labor market it should not retake to a hard landing. we should be aware that job losses can be self enforcing. job losses lead to further job losses.at this point, we are not seeing layoffs. a lot of the surveys we are watching companies and how they are reporting, you're not hearing news of that but the fed has to be aware that if the

labor market deterioration continues, that could create a downward spiral. i think the cpi data for the first time in ages is not front and center. it is the growth data and in particular labor market. dani: are you worried about the market reaction? are you worried that this is a market putting too much weight on the negative data coming in? seema: i don't necessarily think too much weight. i think it is a market on edge exacerbated by the fact that liquidity is so low. i think from here the direction is fairly unclear for the next three to four weeks. it will respond how the data comes out. if jobless claims move further up today, you will see negative market reaction. if it falls back the market will celebrate. i expect that to be the pattern of market moves for the remainder of the month until september, post jackson hole. then you could see some stabilization and a clear direction of the market. dani: we have the d&c next

month. lori calvasina was on with manus. she said that it has been positively correlated with trump's odds.could maybe one of the reasons why we are seeing the markets whip some, selloff on monday? seema: the political picture played out three weeks ago when you had the huge rotation. things are settled at the moment, but your right to say that the election story is coming back. it is not like it has disappeared. come september, i think that will be near the front of the new story along with the fed. we will see that after the volatility and impact the market. annmarie: should dani, jon and i, the last three people left in new york, is all of this just noise? seema: look away from the

headlines it is fairly shocking. the moves are very significant. the most important thing is to have an idea what the fundamental picture is. it is still unfolding because you are at the cusp where you could be pointing to a stable economy, and if job losses really mount and it feeds further weakness, unfortunately is not as clear as it was six month ago. focus on the fundamentals. the technicals can whipsaw you around. the fundamentals will create a clear longer-term trend. jonathan: we have to talk about the price of the story. we have had quite a reset. barclays yesterday were talking about going overweight tech and financials, looking at buying opportunities. where do you see the opportunities at the moment? where do you want to be? seema: the key area is we still think defensive quality. we don't think it will be a recession, but it suggests that

you need to have a slightly safer element to the portfolio. we think fixed income has proved its worth in the last few days with the correlation return between equities and bonds. we maintained an overweight to large-cap tech. we are keeping it at some point a buying opportunity as well. jonathan: you say we are not in a recession but in certain parts of the economy it feels like we are. if you are a low income consumer it looks and sounds like recession. if you are in manufacturing, looks and sounds like recession. are parts of this market firmly in recession? seema: there are pockets of the economy that are struggling, and that makes sense. the fed did hike a significant amount in a short space of time, so there will be pockets struggling. lower income households that don't have savings, that haven't benefited from passive income, they are the ones who are most

leveraged to the interest rate environment and that is where the weaknesses.for the u.s. economy, the medium and higher income households are the ones that carry growth. 60% to 70% of consumer spending. as long as they are ok and a lower income households are not struggling significantly with job layoffs, the u.s. economy is slowing but not heading towards recession, but there is a differentiated environment under the surface for the u.s. economy. dani: given the noise around this earnings season, you would assume that it looks bad. you have these companies from airlines to autos. but earnings are on track to rise the most in eight quarters at 10% quarter over quarter for this one. do you take comfort? are we overlooking what is otherwise a strong earnings season? seema: i was thinking the same thing today. when you think about the narrative you would think the earnings picture has been horrendous. it hasn't.

we came into the earnings season really worried about what is happening with the growth backdrop. looking at valuations with big tech firms, darting to wonder if they would deliver. i think that that has encompassed the narrative and hit in the fact that under the bonnet it doesn't look that bad. there has been a broadening out of the stronger earnings performance, and some other sectors, the opposite of big tech, are the ones that have performed well. that is an encouraging sign for the year. jonathan: it is good to catch up. seema shah talking about what is under the bonnet. it depends on what car you're driving. pepsi, the consumer is more challenged. the airline is losing pricing power. that is both sides of the atlantic. kimberly-clark, slower price increases. disney yesterday, the low income consumers pulling back. then they said something, we will be bouncing back by the

middle of next year. i am thinking, where does that come from? dani: is it people who are middle to upper class not going overseas anymore and instead going to disney? you could assume that that would be bad for the economy because people are not spending as much. there was a decking company yesterday and i thought that their earnings were interesting, because on the earnings call they said that we don't have lower income consumers. people who want to redo their decks in a fancy way don't tend to be low income. we have middle income consumers and they are struggling and don't want to do renovations anymore. we have been talking about the lower end consumer, but there are hints that it might be climbing up. jonathan: is it migrating to high income consumers? that's the question. start to see a little more evidence of that? let's take the opportunity to get an update on stories elsewhere with the bloomberg brief. yahaira: taylor swift's three shows in austria have been canceled after local police

arrested two people on suspicion of planning a terrorist attack. a government spokesperson said the decision was made by the event organizer. chemical substances were found at the home of a 19-year-old austrian citizen and they later detained another person in vienna are chairs of warner bros. are down more than 12% in the premarket. the parent of cnn and tnt posted a second-quarter charge of more than $9 billion after writing down the value of its traditional tv networks. it reflects the continued exodus of viewers from cable networks like cnn to new streaming platforms. on that note, warner bros. added 3.6 million new streaming subscribers, almost double what wall street expected. shares of bumble are plunging nearly 40% in the premarket. the dating company reporting second-quarter revenue that missed estimates and slashing its revenue outlook for the year.in contract contrast, tinder jumped the most

in nearly two years when it delivered better-than-expected quarterly results. jonathan: more in about 30 minutes. next, the battle for swing states. >> i wanted to check out my future plane and say hello to the vice president and ask her why kamala harris, why does she refuse to answer questions from the media? jonathan: that conversation, next. live from new york city, good morning. ♪ ♪♪ ♪♪ relax into a caribbean state of mind. visit sandals.com or call 1-800-sandals. why do couples choose a sleep number smart bed? can it keep me warm when i'm cold? wait, no, i'm always hot. sleep number does that.

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jonathan: equity futures on the s&p 500 are slightly negative. welcome to the program. sloppy 10-year supply yesterday shook up the bond market a little bit. farmer this morning down by two or three basis points. -- firmer this morning, down by two or three basis points. the battle for swing states.

sen. vance: i wanted to check out my future plane but also say hello to the vice president and ask her why kamala harris, why does she refuse to answer questions from the media? i also thought the press gaggle following her might get lonely. i at least have enough respect for you and the american people you report to to talk to you and answer questions. i thought her reporters may benefit from that as well. jonathan: i think that that was met with the sound of silence. the harris-walz ticket is heading to arizona for their next stop of their tour. j.d. vance shadowing the campaign to undercut recent momentum from the harris campaign. "we still think it is premature to consider here an outright favorite. we would still give a slight edge to trump." it is great to catch up with you. seeing a full aircraft tanker. it reminded me of 2016 donald trump. they seem to be taking a leaf out of his playbook from eight

years ago. it looks to be highly effective. it looks like they have real momentum in the harris campaign. j.d. vance is right. we have not heard harris answer any questions at all with the exception of standing on the tarmac following a prisoner exchange. i wonder if that will change anytime soon and if it needs to? tobin: right now, i think that they are trying not to mess up a good thing. it has been a very, very good 2.5 week run for harris since she took over the top of the ticket and they are reveling in the momentum and not feeling the need to take any unprompted questions if they are getting their message across. the point of the campaign is to deliver their message in they feel like they are doing that. they are getting tons of media, most of it positive. there is no lack of attention. they won't feel immediately compelled to change their media strategy. as the campaign goes on, i do think that we will have to see

more unprompted answering's of questions, but harris and tom are not taking a press conference forward approach. you are seeing appearances on alternative media. trump going on a streaming platform the other week, a similar unorthodox media strategy. annmarie: he did sit down with our colleagues at businessweek to talk about a number of policies, something that we have not seen from kamala harris. at what point do you think that they will come up with an agenda for what their policy plans would be if they win the white house? tobin: they have to put out a platform for the democratic national convention, which is in two weeks. we will see something before too long that reports to be the official agenda for the democratic party. those platforms are generally not that conform live about what anyone's plans to. they are interest group management exercises, especially on the democratic side.

trump took a more active role at the rnc and it would be wise for harris to similarly land something that will streamline and reflect what she personally wants to prioritize rather than some incredibly detailed 14 point plan on every policy issue under the sun. before long we should see her put out something. it is a short campaign. the shorter the campaign the less she will have to answer all of these tough questions about exactly what is her agenda on on paid family leave. i think she can probably state a priority for the issue that she wants to focus on and leave details for after the election. annmarie: the short campaign works for her. "the washington post" had a story where donald trump said, i already beat biden, now i have to prove myself against her. how should the trump campaign be dealing with this?

we showed pictures of her rallies. she is getting a lot of people and there's a lot of excitement around her and governor walz. tobin: their strategy i think has always been to portray her as dangerously liberal and out of step with the american people raised on what she took in the 2020 primary. she committed to things that are problematic. one reason why i don't yet consider her a favorite even though the polling has looked strong for her along with the enthusiasm on the ground, is that we haven't had a chance to see if the attacks are sticking. they have not been delivered in the most disciplined way from the trump side. the way that they are intending to tack on walz, tacking on nice minnesota as a socialist hells cape seems challenging. they had ammunition to go after harris and we are seeing that effort come together. dani: i want to ask about how they are saying it. we haven't seen trump at a rally since saturday in georgia. j.d. vance has been out throughout the midwest.

what do you make of that tactic? they are sending him out to appeal to these voters. tobin: j.d. vance is from the midwest. his track record is not particularly impressive in the midwest, so i don't know how he will do. in ohio, he ran behind trump and he ran way, way behind the republican governor who is a potentially more popular figure. he has some affinity for that part of the electoral map. we willsee hello ow effect if as a messenger. trump has not been running the most vigorous campaign. more so than biden when he was on the ticket, but on both sides we have guys who are kind of past the peak of their powers in terms of their ability to run a really aggressive campaign five days a week. so, if they want the attacks to stick they will ultimately have to get trump more out there

rather than just posting about her on truth social. jonathan: it feels like he is still trying to be joe biden. i wonder why he is finding it so difficult to pivot? we talked about pivots in the campaign. the democratic ticket had to pivot and they have done a great job. you can see the enthusiasm in the party reflected in the polls.why do you think the campaign is struggling so hard to pivot? tobin: the campaign organization i think is pivoting reasonably well. you look at trump's campaign leadership, they are not feeling too wrongfooted by the need to go after harris. i feel like they have plenty to say about her, even though that message has not yet come across and time will tell if they succeed in getting the negative attempt to define her across. trump does seem to be struggling. there has been a lot of intrigue in d.c. about what is actually ment by the nickname he is trying to roll out.

it feels like he is personally throwing things at the wall and see what will stick. you have 90 days left in the campaign, so he has time to see if he can make it happen. for now, not the most effective effort from him. jonathan: it is great to hear from you. we are still early august. we have a long way to go. a lot of people say that it is a short campaign and we will see how much can change in a single month in american politics. when you take stock of who has the momentum, it's clear that one ticket has momentum right now and the other ticket has lost a lot. annmarie: it is the harris campaign. they have momentum. they're doing this blitz across the u.s. does that change when she talks about policy? she's very good in these moments. yesterday there was a heckler that she immediately shut down. the crowd supported her doing that. how does trump change? in this "washington post" article this morning he said to

an ally on the phone, it's unfair that i beat him and now i have to beat her too. it is not like they have come to the fact that this is a new race. jonathan: they are struggling to adapt. the former president. you can see that obviously. coming up on this program, we will catch up with win ti on -- win thin on the unwinding of the carry trade. this is bloomberg. ♪ ere ya headed? susan:re? am i just gonna take ere ya headed? 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

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jonathan: live from new york city, welcome to the program. we are down 5.20%. the highs of the session yesterday positive by one .7. back to negative on the s&p 500, adding to the losses a touch, disrupted by developments in the bond market. disappointing bond auction following a ridiculous rally. we are down to 3.9169 on the 10 year. you have to think about where we were monday on the two-year, and now 30 basis points south of where we work.

we are down about a single basis point on the two-year. we get the 30 year later this afternoon. dani: it was not a good auction by any stretch of the imagination. it is tied for the third worst over the past seven years. if we extrapolate this and all of a sudden we are not willing to pay when yields are below 4%, what happens when the economy turns and yields are lower and we have to think of that and deficit concerns? that is when you say we could get real pain at the auctions. jonathan: especially if we have one candidate who succeed, you have a different supply pitch to deal with. the repricing following what was really a moderately weak payrolls report seems way overdone. and we were cut off side. we would like to talk about foreign exchanges and give you a snapshot of where dollar-yen is trading, down at 146.26.

under surveillance this morning, bracing for jobless claims at 8:30 eastern. they expect claims to come in at 240 thousand, coming down from the previous week at 249. this number is like the most important jobless claims number i can think of now for a number of months. dani: i heard people saying it is the most important since pandemic 2020 you have a huge upheaval because it feels we are in a no man's land. we've talked about this pendulum narrative swinging back and forth. now it feels like the pendulum is swinging day by day, and each data point we get, the pendulum swings the other way. and we have seen what that can do. it makes it such an important print. annmarie: it is so important but seasonal issues can impact the

number, which is why i find it almost hard to imagine that the market would like to put all their eggs in the basket when it comes to the one print. mohamed el-erian had this to say on twitter earlier, above 260,000 field renewed concerns about the labor market and we've already seen banks increase the probability and then below 203,000 would point to normalization rather than something worse, so i'm looking at that range. jonathan: this is not just important but it is because this is always got, we've just got jobless claims. earlier this week, we had ism services. next week, we get more data. this week it is basically it. let's talk about the japanese side of the trade. the summary of opinions showed officials did not see their rate hike as policy tightening. commins suggested did not expect the move to be big enough to disrupt global markets after the

boj said it would not raise interest rates when financial markets are unstable. mike mckee was a that you could massage the federal reserve minutes to guide them where you would like them to go and to send the message you would like to send. was the message received loud and clear out of japan today? dani: you do see strengthening in the yen, so you could say yes and one way. but it is stale. the deputy governor did say we are not going to hike when markets are not calm, but when policy members say rates need to go to 1% to reach neutral when they are .25% now, the market might be interpreting hawkish and not just stale commentary. jonathan: you touched on what happened, does this market shakeout what happens in america, triggered by what happened in japan, if it is the latter and not the former but the fed believes it is the former, not the latter, don't you have a bigger problem? dani: i'm having a hard time

keeping track because it is this weird circular thing. the problem is it did not take much. it was 15 basis points of a hike , it was as worried about ai, growth scare, and the market is so vulnerable and can be set off on these various drivers that we cannot pinpoint at this moment, so when you have a summer that people are not trading a lot, gets you worried about jobless claims and get you more worried when you have huge data points this week jonathan: particularly when there are only three people left in new york city. apparently, as. jp morgan said three quarters of the global carry trade has been unwound. the returns in the global carry trade baskets tracked by the bank have fallen 10% since may. win thin joins us for more. how much of this mess have we

unwound and what is left? win: thank you for having me. at this point, it is guesswork. when you look at balance sheets after the fact, to me, it wasn't this huge, amorphous blob to take a stab at. i totally agree that this is almost a perfect storm. this depends on the boj tightening, the fed, but it really hasn't had much impact. along with the positioning that led to an outsized reaction, markets are so one-sided and complacent about loading up on risk. i think it still has quite a bit to go. one thing i'm confident about is it will remain high regardless of where it falls year-end.

jonathan: quite a bit to go where? let's say dollar-yen, when you see quite a bit to go, what do you mean? win: we don't really have a handle of how the u.s. economy is going or how the global economy is going in there is a lot of fear right now. next week we get inflation, but even then, i'm guessing that the markets have really jumped on the bandwagon of u.s. recession, devastated. it will take -- u.s. recession, dovish fed. it will take a little while. i think they are wrong on the easing cycle. we are looking at something like 200 basis points the next 12 months. that is a deep recession. i just don't see it. the u.s. economy is still holding up. so it will remain high as markets wrestled with the data and narrative, but at least for

2024, they will avoid recession. dani: you talk about the idea that we basically overdid ourselves and we were too confident and complacent. how complacent are we at the moment? are we still complacent? win: no, i think markets are overly fearful. aggressive easing cycles suggest the markets are concerned about the growth outlook in the u.s. complacency has morphed into overly fearful. i'm not saying all is good going forward, but the pendulum always swings, and it has not swung too much in the negative recession territory. dani: when the pendulum swings, you can be caught outside. when you can be caught outside in days, with how do you

position and stay in the market when the pendulum is swinging at hyperspeed? win: that's a problem for analysts. my role is do not panic. i will not name names, but calls came out in the middle of the fed market panic. that is the wrong signal to send to clients. we have to look to the noise -- this is my philosophy -- and what is the fundamental story? the u.s. is growing somewhere around 2%, 3% in q3. momentum remain strong. that is why i think there is no recession this year. 2025 is a different story and we can visit that, but the story hasn't changed from two weeks ago. there are pockets of weakness, but the u.s. economy remains in solid shape and that's the story i like to tell. annmarie: when you look at

pockets of weakness, what are you looking at? win: the market. it has been tricky, and everybody hates to say this, but this time is different. again, there are so many moving parts. one last final point about the carry trade. 2008-2009, it was suggested the carry trade was a big factor in the financial crisis. i think that is another reason why we have multi-asset motown -- meltdown. the carry trade goes beyond currencies. annmarie: i would like to get

back to your point that you think the marketers overpricing and how many cuts will the fed to get this year? if it is not 100 basis points, where do you put it at? win: september is clearly a go, it is a debate on if it is 25 or 50. they remain quite loose. we had a little tightening last week with the equity market meltdown, but the market is doing a lot of heavy lifting for the fed. there is some e-zine already. mortgage rates are at two-year lows. my base case is for a soft landing in the u.s. economy, and that does not argue for an easing cycle that the market is pricing in. jonathan: let's finish on the carry trade and park cryptic stories about these spooky mysterious hedge fund managers going around.

let's talk about the japanese investor. how dominant have they been? they have been structured to short their own currency and long assets around the world. i'm wondering if that money is going to start to come home now after with the boj started last week? win: that is always the 800 pound gorilla in the room before the boj started talking. the japanese market has watched markets for decades. we just had data released from japan overnight, and it showed there were large sellers of foreign bonds, especially u.s. treasuries. one month of data is not to hang your hat on but something worth watching. we should see a actual -- the rest of the world is cutting, we

will see something to keep an eye on. i think it is more hot money that is doing well, but definitely worth keeping an eye on. jonathan: great to catch up, win thin on the latest in the fx market. the dollar-yen just about unchanged. 146.26. let's get an update on stories elsewhere with your bloomberg brief. yahaira: delta airlines has been hit by a class-action lawsuit, accused of failing to properly refund flyers or provide passengers meal, hotel and transportation vouchers after the crowdstrike software outage last month, plus widespread delays and cancellations for the airline. crowdstrike is also facing lawsuits.

investor cathie wood is trying to take advantage of the recent stock seller -- stock market selloff. the etf share but shares of amazon, roku, also adding meta-platforms and reddit. people are shifting more to smaller apartments to avoid paying rent. in july, it was 945 square feet. the square footage has declined on an annual basis in each of the past 11 months. jonathan: i just realized when she said under the bonnet, you did not know what she was talking about. does that translate? dani: i love the coke euro

phrase, there is a bee in your bonnet. jonathan: but that is the hat. dani: so bonnet means more than one thing? you learn something new everyday. annmarie: maybe we did not get it. jonathan: we've confused ourselves. i would like to pick up on that story. the lower mortgage rates fall, the more pressure from rental market prices. how many times have we talked about this were the fed starts cutting interest rates? dani: everyone is like, great, the mortgage is down, but we could be in a world where they cut and prices go up. jonathan: next on the program, when colleen tends to cold. >> the problem here is when the labor market starts to deteriorate, and when markets deteriorate, that can be self reinforcing. jonathan: just how self reinforcing is all of this? that conversation from new york,

next. this is bloomberg. ♪ ♪♪ ♪♪ ♪♪ ♪♪ relax into a caribbean state of mind. visit sandals.com or call 1-800-sandals.

jonathan: punchy upgrade, eli lilly had seen 42.4 to 43.6, the latest on eli lilly, up in the pre-markets. up by 9%. compare that to yesterday. two different stories. under surveillance this morning, when colleen turns to cold. >> looks to me that the labor market is cooling up significantly. every time that has happened, we get a recession, so there is a lot of risk out there. the problem here is on the market deteriorates, confidence

declines, and that can be self reinforcing. jonathan: a light week of data has all eyes on jobless claims. estimate calling for 240,000 claims. sara wolf of morgan stanley saying the economy is on us soft landing -- soft landing path, writing that demand for labor is softening. the most recent payroll print showed a meaningful slow down, but the recent trend remains firmer. we expect and employment rate of 4.2% by q4 and 5.4% by the end of next year. sarah joins us for more. that is a constructive outlook when people are worried where this is going. where does that constructive outlook come from? sarah: the unemployment data is noisy. it is not the first time we've gotten a week payroll print around the hundred thousand marker, just to see it reverse out the next month. it is difficult to extrapolate a one-week print without a string

of equal payroll prints. if you look at the trend, the three-month and six-month moving average, payrolls are nowhere near that 100,000 marker. we will get a lot more clarity on how much of the week print was weather-related. we had a hurricane in texas, and then we will get it in dallas, that will give us a better sense of how much of it is true whether -- true weakness. jonathan: the problem is when the labor market starts to deteriorate, confidence starts to decline, and remarket sentiments deteriorate, that can be self reinforcing but then i look at your outlook for unemployment, getting to 4.5% for the end of next year.

what do you think people who think this way at the moment targeting wrong? sarah: i think there is a self reinforcing element, not only to just having a job right now impacting how consumers spend, but if you start to see some people getting laid off, you get worried that your job prospects have held the consumer spend. the unemployment rate is moving higher but a lot of that will be hit by labor supply rather than layoffs. the layoff read is still quite low. the jobless, everything is overstated. we saw a similar pattern last year due to walking -- wonky seasonal factors. it only reverted back down in late august and september, so anything jobless claims this morning will show another increase in line with the seasonal that was last year, so i really do think it is a matter of the unemployment rate is rising but not necessarily due

to layoffs. it is more because of a rebounded labor supply we are getting. dani: the data is so noisy, and people upgrading how much they think the fed will cut, do you think that it is a sentiment in itself, not necessarily the numbers, and is it cannot? even if there is strength under the headline number, is the sentiment bad enough that you get companies laying off people? sarah: this issarah: not the first time we've seen this. we've been in a volatile pricing market the last six months. the end of 2023, market pricing was very aggressive. that almost fully reversed out and we are basically at one cut for the first half of the year. so this is not the first time that market pricing has moved around and businesses have had to adjust expectations. whether data showing is that

consumers are still spending, so businesses are still seeing decent unit sales. i don't think we are at the point yet where things are tipping over the edge and we will see layoffs or with the fed has to cut 50 basis points. i think we just need to be patient while the pricing comes back out. dani: the fed sounds like you, arguing for patience. this idea that the fed does not have a reliable policy framework means we get swung around by each individual data point. is that it their criticism of the third? sarah: it is somewhat fair, the fed is just as good at forecasting data as we are and has the same tools we have to understand what is happening in the economy, and to be fair, it has been a complicated economic environment. the fed was focused on slowing

gdp growth and the inflation, but we discovered they did not need to do that, so they had to readjust their communication around what they consider restrictive policy. i do think it is a little tricky to do fed watching because they are updating their views of the economic outlook in real-time very we are, but the one thing we know about the fed, they are patient and the markets tend not to react that way. that is where we try to look at the sequence of data and what we would need to feel confident, not just recent bias over up and down swings. annmarie: the point jon made earlier is we are so focused on claims today because it is the only point we have. we have a slew of data though, next week. what are you most interested in? sarah: we get jobless claims

today, and we expected to increase, but next week is the jobless claims data and did two weeks from now, that trend comes lower. the other is the state payrolls we get next friday, 10:00 a.m., and as we get into retail sales, we have a week expectation, -6%. one thing to keep into consideration is there is an unfavorable seasonal factor causing a big drag on retail sales. i do think markets will see the negative retail sales growth and another point of soft data that will worry them, but we probably will see that reverse in the next two because of seasonal factors. the last one is cpi print we get

next week. we are looking for .2%, and that is very much in line with the continued trend to get the fed to cut in september. rockets are going to be very sensitive to any upside, may be saying it is stagflation and with the weaker prints, they may say that the fed needs to cut more. jonathan: i'm not sure anybody can handle a conversation about stagflation next week. this is a very bearish story to tell. companies are losing pricing power, you start cutting costs. labor is at risk as we go into jobless claims next i second hour of "surveillance." from new york, you are watching bloombergtv. ♪

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>> if you look at the micro data, yes, it has been weakening a bit in the u.s. >> when the labor market starts to deteriorate, confidence declines. >> we are and one of those classic moments where prices have changed more than the facts. >> i think the market has slightly overreacted in its assessment of a recession. >> the market has been wrong with the economy, the fed is going to be doing.

>> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city, good morning, good morning. the second hour of "surveillance" starts now. we will talk about the data point everyone is talking about, equity futures on the s&p 500 a little bit softer but recovering, down .1% on the s&p 500, the russell down .5%. jobless claims always mess up. jobless claims right now, the estimate, 240,000, down from 249. dani: listening to sarah wolf, i'm worrying how much -- sarah wolfe, maureen how much pressure we are putting on this. she said it will be seasonal, so what happens if the market panics and then next week what if it becomes weekend the next week, we get strong data? jonathan: let's talk about the

data of the last week or so. it confounds the growth scare everyone is talking about. ism services clearly denied, new activity pretty decent. mike new fracturing confirms -- manufacturing confirms. and that is the game we are playing. dani: you get the feeling that the market is putting more of an emphasis on bad data and you have a market more willing to react in a volatile way and that comes back to the positioning conversation we've had. if we have yields back around to where they were before the fridays job number, which is incredible, does that mean we could have the bias as a reaction either way? for the most part, it is the bad data we have to swing around but it is anyone's guess. annmarie: you are seeing bank starting to up their probability

. jp morgan out their probability and talk about hints of a sharper than expected weakening and labor demand and early signs of labor setting. but something sarah wolfe said is everyone talking about claudia and what they say, but look at the increased immigration into the united states. jonathan: payrolls comes up on september 6, cpi data on the 14th of august and september 11, and then you get jackson hole august 23. so we have hybrid of time to see what jay powell will work out. we have graduate for the data next week, as well. dani: this is the criticism that plays in, the fed does not have clear economic policy framework, and if they did, it may be powell would not be swayed by each individual datapoint that comes in. the fact they don't have it

means they have to be so datapoint dependent and the clear trend is developing but they cannot see it because they care so much about individual releases. jonathan: a snapshot of the 10 year following the soft auction yesterday, down three basis points, 3.91 on the tenure at the curve. 30 basis points higher than at the lows on monday, trading in the three-point 90's on the two-year. stocks falling ahead of jobless claims, james lucier of capital also partners, and tony rodriguez nuveen, on whether the treasury sybrand out-of-state. -- treasuries have ran out of steam. economy is clearly slowing, but i don't believe we are already in or immediately at risk of falling into a recession.

dan, why? dan: first, i'm upset because everything you said in your intro was the point i was going to make. jonathan: we can pretend it did not happen. dan: with that said, we are having a growth scare, not breaking news, but i think we are putting a lot on one datapoint. tomorrow a phrase about the totality of the data, it is one singular datapoint that i would argue is probably impacted more by hurricane beryl. there are a number of data points to point to. the most obvious is the number of people not at work to divide whether. that does not necessarily impact the unemployment rate but it indicates there is something going on. jonathan: you look ahead to the next payrolls report on september 6, are we at real risk

of seeing the story flipped the other way again? dan: getting back to your first question about why i don't think we are eminently voluntary recession, when you look back at previous downturns, it takes months and months and months to go from creating 200 plus thousand jobs to losing jobs. you had several months where you have double-digit job growth, 80's, 57,000 jobs, now is the case before 2008 and 2000, and it was the case in the 1990's. we are not there yet. 114,000 jobs, not a great report, but 19 years into an economic expansion, or hundred 14,000 dobbs created would have been good -- jobs created would have been good. dani: a lot of people would have said, the recession is around the corner. if it takes months to happen,

what about the timeframe when we can say it is going to happen? is that too soon? or can he say it will take months and months? what looking down the barrel, it will come at some point. dani: some point in the next year, let's say. dan: the problem you have any free market capitalist economy like the u.s., it's difficult to know when this will happen. if we were in a control center economy, you have a better idea because the state is in control. millions of actors have been acting independently of one another. there are 50,000 economists staring at the same data in the united states for all of human history, and all of us have been able to ask -- begin to navigate the recession. it is an incredibly difficult

endeavor to embark upon. i don't think this time will be different. are you can look at is the totality of the data and try to come up with a framework. and the way that i view things right now, we are obviously slowing down, we are turning to something resembling trend growth, certainly in the labor market, and from an asset allocation, what do you do in that environment to the best of your abilities? dani: what do you do in that environment? dan: i've mentioned multiple times that we find that having stuff to do on the consumer focused space, obviously, that narrative is changing somewhat lately. many more companies, with equity reported yesterday about a slowing consumer, disney had trouble in the parks, although that is not surprising considering how much it costs to go to disney, but there has been more observation of a slowdown

at the end of the consumer space, so you have to pay more attention, but we also like energy, oil has been flat for two plus years, but within that context, a lot of people have done pretty well to refiners, services, etc., i don't know that i need to change that whole cloth right now on the idea that one labor market was not as good as i had hoped. annmarie: you had a note that in contrast, hyatt is seeing strong bookings, so how do you read what is going on? this is the ever dan: the top-down and bottom-up perspective. you can the current company is and say that, yes there is trouble with the low income consumer, but hyatt talked about

the groupings looking strong. the stock prices or will love highs for the biggest things to be doing well. i don't think now is really any different. although, i think how i have looked at markets and the economy over the last two or three years certainly has been tempered. bythe data annmarie: you like energy, is that an election play? dan: no. we talked about this last time. surprisingly, energy did quite well under the supposedly anti-oil policy during biden. the focus on the return relative to traditional markets, it had the exodus of people investing in energy in the wake of what happens when it imploded.

it is the underinvestment and a number of things that we think are supportive of the energy market. the u.s. is pumping 13 million of orioles of day. really, there is a lot of encouraging stuff that still attractive. jonathan: you talked about energy and equity versus credit. when you look to express them, you see more opportunities in credit or equity after the reset of the last few days? dan: we've spent more time than usual on that argument. i think things have gotten more attractive, the s&p is down 8%, tech is down 10% more, spreads widened from very low bubbles -- levels. i don't know that the relative argument change the past couple of days, but we spend a lot of time in the media space.

it is public knowledge, we have spent a lot of time there. you look at things going on disney turning a profit on the stream inside, who but what is going on with warner bros., with "moldering in," one of the highest grossing movies -- "wolverine and deadpool," one of the highest grossing movies of all time, still think there is a lot of opportunity. jonathan: can you talk about high-yield spreads briefly? people come on the program and say that spreads are too tight and that makes sense when you are at 300 and then you get widening towards 400. after the first 100, the same people who said the spreads are too tight and are waiting for an opportunity to get in, the second nervous i just wait for 500 basis points. how do you approach the dilemma that people have to confront in financial markets?

dan: the first thing that does not follow the high-yield space other than people who come on tv, the high-yield market is now roughly -- one 30's is now roughly secured. so it is a higher-quality market and you will have tighter spreads as a result. it is also more highly rated market, whereas the ig market is much more rated and leans toward the lowest yield. high-yield leans more to the higher rated. there are structural reasons why the spreads don't necessarily have to compare. yes, the equity market is or how you valued 2021 relative to history, but you are going to have a by -- jonathan: wasn't it more highly rated to energy? has it become cyclical?

dan: this is a conversation for like high-yield and loans. the other thing about high-yield, energy was a larger part of the space, but everybody went bankrupt. the energy in the one area that constantly has been problem for high-yield is not like it was today because of what we went through. from our standpoint, the recent selloff relatively unjustified from our standpoint as "more opportunities because of how tight spreads were or how positive markets are. but i think we have to be difficulty of for the reasons we talked about. the landscape is not exactly the same as several weeks ago, certainly several months ago. i think you are in one of those moments where the previous is very optimistic but i don't

think you can do that is easily. jonathan: appreciated. thank you, dan greenh aus.let's get you the bloomberg brief . yahaira: a tsunami advisory issued for parts of japan after a 7.1 magnitude earthquake reported off the coast of that southern maine island. it occurred before 5:00 p.m. local time about 18 miles away. local residents were warned to leave immediately. there have been no words of structural damage so far . -- damage so far. the former company boosted its revenue guidance for the full year, well above average estimates. it was driven by strong performances of died cds medications -- diabetes medications.

and nasa is now seen to -- is now seeing the two problems that left astronauts stuck in space may have to hitch a ride built by elon musk' spacexs. nasa representatives announced a plan yesterday, saying that the astronauts will come back to earth on february 2025 on spacex's crew nine mission. originally, they were supposed to stay on the station for roughly a week. they have been in orbit for about two months. jonathan: you thought delays at the airport were bad. can you imagine that? waking up 2025. bunkers. coming up, courting the union vote. >> send me the election is really -- to me, the election is really simple. it is about one question, when we made famous in labor market,

which side are you on? jonathan: that conversation next. we are live from new york this morning. good morning. ♪

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jonathan: equities on the s&p look a little something like this, just about positive erasing this morning's losses. in the bond market a bit of a rally but not much. down two point basis points on the 10 year. after the rally on monday, i don't think you could call anything also rally. 3.92 on the 10 year. under surveillance, courting the union vote. >> to me this election is real simple. it is about one question. it is a question we made famous in the labor movement. which side are you on? on one side you have a

billionaire who serves himself and his billionaire buddies. on the others we have a strong, intelligent, and i'm going to put it plainly, a bad [bleep] woman. jonathan: harris continuing her swing states talk with a stop in arizona next, while former president trump rejoins the campaign trail with a rally in montana tomorrow. i expect terrace will open a lead over trump after the democratic convention but the race will tighten in september, written by james lucier. let's get to it, where is the race timing coming from and what are the forces behind that that you expect in september? james: there is always a bounce when a candidate has a handyman period, there's always a bounce going into a party convention which is a four day infomercial

with the props, the excitement and celebrity endorsements. kamala harris has already done quite well with your initial announcement. she has had a good honeymoon and is benefiting from what i would call a relief rally of democrats who realize there is no way that biden could win after the debate. it was looking clear that he was the lesser candidate, so she has benefited from coming back. once the initial rushes over, people will focus on issues again like immigration, inflation, crime, national security. and those core issues, where even though biden and harris were typed in the national polls, we still see that so far,

there is pulling on issues where trump tends to lead on key issues like immigration and economy and national security, whereas harris does much better on things like abortion rights. annmarie: when it comes to her vp pick, is this someone who could help her on the top two issues trump does better on, immigration and the economy? james: i don't think so. i think he is a safe and good choice who may help in the upper midwest and other key states, like michigan or wisconsin, but just as j.d. vance was the safe choice for trump, i think it is the case that tim walz is a safe and comfortable choice. not that it is a bad choice, but it would have been a problem, and he is the rising superstar

of that party. schapiro is not going to be on the ticket. he probably would have overshadowed harris. going with tim walz is probably better, all things considered. annmarie: there's a consensus that tim walz could speak to those in michigan and wisconsin. do you believe that? it james: depends on speaking to who james:, metro detroit? i possibly. michigan is a state, like other states like minnesota, where you have strong urban populations, which are democratic and then you have conservative rural small-town portions of the states. so i don't know if he is point to be a game changer in michigan. he has a profile similar to gretchen meyer -- gretchen

whitmire, who has a focus on covid, but we will really have to see whether he is someone who can excite the uaw. one of the key concerns with autoworkers is the move to electric vehicles is going to obsolete their jobs. tim walz is someone who is a time opponents of the green energy agenda, that a lot of union workers are uncomfortable with. dani: these concerns seem in the campaign at the moment as they don't really address them, just riding a wave of enthusiasm. when september comes and pulse tighten, are they going to need to change? james: i think certainly for harris, she needs to start doing interviews at some point,

talking about the issues. with the campaign, you do things that simple you can do to win, and we really have not seen the trump campaign respond yet. i expect that they will. i think they will focus on those core issues, and they have been in norma's warchest -- have an in norma's warchest in terms of -- have enormous warchest in terms of media. they would likely come after the democratic convention because otherwise you would be shouting into the wind. it becomes very competitive after labor day, and especially when early balloting starts. jonathan: james lucier, thank you.

i would like to see one of the leading candidates sit down and answer questions. it is remarkable that we have not seen that happen in the last three weeks. annmarie: it is, but any daily could have a photo op, get thousand succumb to your rally. you think that is a good day. she is not forced yet, and that was j.d. vance's point going over to air force two to the media to say, don't you want her to sit down and have an interview? at some point, she will have to. another thing he said, when it comes down to the issues, it is trump. jonathan: coming up, shares of warner bros. discovery tumbling in the premarket. that is next. ♪

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jonathan: for those of you following the political campaign, 2:00 p.m., mar-a-lago, the former president of united states, donald trump, will be doing a news conference. for the rest of the following the economy, financial markets, 60 minutes away from jobless claims, and equity futures just about unchanged on the s&p 500, just about positive on the nasdaq. the s&p 500 heading towards a fourth week of losses. if it sticks, that is the longest weekly stretch of the year so far. in the bond market, just a sloppy soft 10 year option.

we get a 30 year auction later this afternoon. yields coming across the board here, down by two basis points on the 10 year, up at 3.924. 5the move higher yesterday in dollar-yen really traded some of that, down by .5%, at 146. encouraging words, what do they want us to do with the japanese yen because now i'm confused. dani: presumably, not swinging either direction, but they did not get that because if you have a deputy governor coming out say we will not hike rates as long as things are volatile, you get a market that continues to test them, and you get a swing in the other direction because it means they are not going to hike and therefore we can go back into the carry trade and everything is as it was, but bank of japan minutes do not suggest we are. jonathan: the story has

changed in a month. and now it is, no, we do not want that, but what do they want? they just want a smooth path towards 110, 120? dani: presumably, and they do not wantdani: speculative shorts, so monday was painful, but maybe it was a good thing for them. maybe they wash out the extra positioning that allows the currency to bounce like that. it is interesting that they come back out and do some -- undo some of that work. jonathan: the dollar-yen, about 145.99. we are counting you down to jobless claims. the median survey, expecting a print at 240, down from 249. we will get fed speak from tom harkin at 3:00 p.m. i just saved some of my favorite data from bank of america. consumer checkpoint facing hurdles or the high jump. there were some great data.

if you can reach out to be of a comic get a hold of it, but they say the labor market is showing signs of cooling. salaries continue to grow, and it is a small uptick in households receiving unemployment benefits by direct deposits across all income groups. the one that stays with me, media deposit balances remain almost 15% over pandemic levels, and they have yet to decline to the lowest level, so it is still pretty high. if you look at the trend, you have to acknowledge things have come in over the last few months. dani: the level is fine but the trend is worrisome. and bank of america has the same tone as jamie dimon, who said he skeptical and schimmel go down

to 2%. he's been looking at his own internal data and credit card losses have normalized. so he is worrying about inflation, and here we are worried about the labor market. what happens? annmarie: this is why mohamed el-erian says a range should target a rates of 2% to 3%. services strong gaynor -- services were stronger, and consumers are flocking to olympics and the taylor swift conference, but they do concerns of people be more price-sensitive. jonathan: we have jobless claims about one hour from now, but retail sales is just around the corner. the day before that we get cpi. the day before, ppi. next week is quite a week for economic data.

i would like to return to this french counterpart of emmanuel, that the united states of euro must reduce tensions in the region, the calling the latest of the diplomatic activity to try to calm tensions with israel claiming retaliation. we have been bracing for that retaliation over the week. annmarie: you're trying to read the tea leaves on what is coming out of iran and lebanon. before we spoke yesterday, axios picked up that the lebanese newspaper published an article that says hezbollah is likely to target tel aviv. and maybe we will actually see response from lebanese hezbollah. jonathan: how much pressure is coming from the white house? annmarie: i think it is a lot but behind closed doors. i imagine there is pressure from the u.s. to go to the european

counterparts to put some of this pressure on iran. jonathan: one to -- i would like to check out the premarket, -10.5%, shares tumbling as one of burroughs' parent company wrightstown tv networks as it goes from cable to streaming services. charlie wells joins us for more. fantastic to touch base. can you walk us through a bad market and poor execution? where is the company at the market? >> the market is still digesting what they are hearing on yesterday's earnings call, and management was quick to talk about the market. over $9 million, that itself is striking, but you also have to remember that the water posted discovery tire is only two years old, so how is that secular

trend we know about of people will be non-from cable, how is that happening to over $9 billion in over two years. dani: i'm sure this is also about the advertising market. they have a netflix and disney tier, and they have more they can go to besides linear tv. charlie: they have had a lot more real estate. what is frustrating is they are getting advertising on streaming , and we think about streaming at disney, they are performing better than expected, but the issue is the bulk for media companies comes not from streaming but the test real television -- it from the television, where dollars are stronger. dani: they did have a napoli over live -- they did have a monopoly over live sporting events but that changed. where do they stand on competition? charlie: this is a rare bright

spot for the large media companies. we know that with warner bros., it was disappointing for them to go elsewhere. they are in the midst of litigation, and this is a hot topic on the earnings call yesterday. management saying they think they have a strong case but it is working its way through litigation now. annmarie: bank of america put out a note about warner bros. discovery saying they need to consider other options, including a breakup sale of certain assets, and they say everything should be on the table. what is the issue they are naming on the table? charlie: media, there are a lot of emotional connections to the proper they have. and they are historic names, but management yesterday on the earnings calls at all options are on the table with the exception that that is on the table. but other strategies they talked about was the promise of international.

everyone can tough that game and its have distended broad i talked about joint ventures, and less numbers they have, you have credit coming up. you do lose revenue control and you lose that consumer data. jonathan: charlie wells of bloomberg, out of london, on the latest. the difference between what you heard from warner bros. and disney, confidence. the confidence you heard from disney on the streaming business compared to warner bros. discovery, not in doubt. dani: the awkwardness that you get analysts coming out saying you should breakup your company that you only just put together two years ago. who would you rather give your money to, someone like amazon who knows every data point about their audience and can do multiple targeted ads? annmarie: it is the targeted ads

and streaming on that. top of the pile, especially for democrats, $111 million went into streaming yesterday. but investors there yet. they're having to write down to marcus -- they're having to write down on the markets. jonathan: you have seen changes in the lineup, strategy, it seems to be all over the place. annmarie: and changes in the editorial direction. they seem to struggle coming out of the trump administration on to their audiences, as well. jonathan: many news organizations have. let's get an update with your bloomberg brief. yahaira: russia declared a state of emergency in the western region as ukraine's military launched what appeared to be its biggest incursion into russian territory since the war began. president vladimir putin

summoned his defense advisors to brief him on the effort. ukraine has targeted energy assets within russia territory, and the european natural gas is trading around the highest levels of the year. the summary of opinions from the bank of japan's meeting showing officials did not see their rate hike as as policy tightening. they did not expect the move to be big enough to disrupt global markets. this coming after the beer g said it will not raise interest rates on financial markets are unstable. and an investigation has been opened by the department of justice over the decision to reject an application by entity receiving. -- by the grounds that they

cannot be competitive for at least two years, but a u.s. senator cited concerns as one may be acting at the behest of forward automakers to exclude the team because of their partnership with gm. jonathan: i for one do not want extra teams. just my opinion. whatever it is worth. do you want extra teams on the grid? dani: i do not want all of these races because i do nothing with my life except watch f1. i would just like my sundays back. are you complaining about someone else? jonathan: i'm just trying to work out if there is a problem in your household. dani: no. jonathan: 8:30 eastern, we are looking for the number at 240. the previous week was 249. if you would like to understand a good and bad number, anything in the 200s is a phenomenon. but we are looking at that change and get, there was claims

-- change on jobless claims. numbers to look for a little bit later, a playbook from citi, initial claims remaining at these levels in august would confirm a slowdown. a rise to 260 or above would signal deeper weakness. he said this a few times, to 60 is the danger zone -- 260 is the danger zone. that number drops that 8:30 eastern. next on the program, the bond rally losing momentum. >> there are over 100 basis points of recent return performance over the year, but if you don't get that, it will be challenging. jonathan: we will continue that conversation next. from new york city, you are watching "bloomberg surveillance." ♪

jonathan: we are talking about the same thing, jobless claims later this morning at 8:30 eastern. the unemployment rate has climbed to five the last six months and is running 0.3 percentage points higher than the fed's year-end summary of economic projections estimate.we will . slowing and inflation means monetary policy was already too tight. stop making this about the stock market, it isn't. in the view of so many other people, the federal reserve is off-site, they need to correct interest rates, and bill dudley thinks that is like 100 basis points. he thinks we need to see a big move here. dani: one problem is you listen to powell last week and he said this is a stronger jobs market and it was before the pandemic.

you take claims on its own, and it's hard to make that argument. claims running something like 211 on average. claims are higher than before the pandemic, so you look at that and say when it comes to the labor market, the fed is off-site. jonathan: moving in the wrong direction. let's check out the price action, equity futures on the s&p positive by .10%. yields yesterday shifted off the back of a sloping option, about 3.9360 on the 10 year. the bond rally using momentum under surveillance. >> there is no over one hundred basis points of easing priced in for the rest of the year, and if you don't get that total return performance on these short maturity incomes, we probably will not see a big repricing in yields and it probably will be how weak does the data get with faster expectations but best

cases we have repriced yields and will be around this level for a while. jonathan: treasuries holding steady, a sign that the recent bond market rally may be losing momentum. tony rodriguez writing that we expected 10 year to end the year close to 4%. we believe we have seen curve inversion and expected to remain close to flat moving forward until it's deepens more in 2025. tony, good to see you. we have two time frames. let's start near-term. what are the forces going into year-end, which leaves the bond market where it is at the moment? tony: wetony: think the forces that leave the longer bond market at the moment is that the fed has moved from a single mandate to inflation only so more balanced mandate, and it is becoming front and center. we think that will shift to her

that is the primary driver, so when we look at the log and report, we think that has priced in quite a bit in the high force, now the high threes, but it is the funds rate that has not cut up to the market, and we think they will begin the process in september but they are behind the curve. jonathan: on inflation, are you acknowledging that they are going to accept a higher inflation rate above target or do you assume it will come down as the economy decelerates? tony: we think it will come down as it decelerates. it will be slow. the three-month analyzes it at 2.3. we think we will end the year around 2.6, 2.5, but by the time we get to next year, we will be heading to 2.6, so it will be slow and gradual. as that happens, we slow down from a pace of what has been 2.5

to three, down to 1.5%, and that is more susceptible to any shocks, things like what we saw with market volatility over the last week, that is where we think the fed will have to react more aggressively the next couple of quarters to where we see longer-term rates. dani: what is relatively leave us with credit -- what is volatility we must with credit? spreads the past three days blowout to 67, through monday, into today, so where does that leave us? tony: much closer to what we call fair value. you are sitting at 90 over, and investment grade credit priced in quite a bit. solid fundamentals, steady pace with rates coming down a bit. the move was coming off of a

tight level, so it is not as worrisome. it is around 350 in high-yield, basically around and below that. that seems like fair value. we think there is opportunity. if you the fair yield market widening from here another 100 plus basis points, that would be reflecting the hard landing that we think is in the market today. dani: i have to assume a lot of people agree with this mountain of issuance we get from investment grade companies, something like $80 billion. meta has a $10.5 billion offering of people are happy to buy it. is there some degree which companies are not being tested that the supply is which people are happy to absorb it, and some issues with the companies are getting papered over? tony: the investment market has a lot of appetite. we don't expect significant

downgrades. whether you look at our interest coverage or the debt to cash flow, those metrics are weaker than at their best levels the last two years, and solid territory, and you look at the yields available, you are getting 5.5% 10 6.6%, and that is high-quality return, so supply is up 20% year-over-year. easily absorbed. if we saw that 20, 20 5% year-over-year increase in dicier price of the market, in this environment to slowing, that would be more difficult to digest. that is really where the balance sheet is the weakest as we look across consumers, corporations, and governments. annmarie: how much do you think in the investors mind that they

will start thinking about -- i do not want to sound like lisa, but when it comes to the deficit . tony: the reason i think we had a sloppy market is because you had a huge run over the last week, so the actual value available at a sub 4% type of yield is not that attractive and that moves something into the side, but at that fair value level at 4%, you see that they will be relatively digestible. we will have sloppy actions but generally pretty solid. looking at next year because we will not do anything to address fiscal deficits, supplies will continue to be large and that is when we might have a little more possibility of actions -- not failed options, but ones that are not digested easily. jonathan: so you think we get a

repeat of what we saw in 2023 going into the back end of the year through october? supply starts to matter more and yields climb? tony: i do. i don't think it will be a british market replay. jonathan: a liz truss moment. tony: a liz truss moment because there are deeper pockets of demand for u.s. market. as we see the slowing economy, there will be a big plate to quality, and yields at 4%. plus, plus or minusr -- jonathan: was the dominant force behind the 2025 statement? what is that come from? tony: the fed finally catching up to the market. jonathan: you think it will be that late? tony: i do. they have already priced in a lot of the fed cuts, so the flat curve at the end of the year had been our forecast, and we see modest steepening from there. we are talking about a funds

rate on a two-year that could get to 25 basis points. jonathan: that is the shape of the curve. walk me through levels, where are those individual things? tony: we think it is 4% across-the-board and then we get down to 3.5% on the two-year. ultimately we think that is the level, which is why we think the fed right now is pretty far behind. it is very restrictive right now when you look at the real yields of the funds rate. even if you took 100 basis points off of that today, you are still at a restrictive level , not as restrictive, but more in line with the current balance of risks on the inflation end, sides. jonathan: tony, this was awesome. just to programming notes, and the next hour of "bloomberg

surveillance" as we counted out to jobless claims, here's the lineup, sameer samana, david rosenberg, and matt diczok. david rosenberg thinks like bill dudley. that process and the labor market has already started, reinforcing the phase in the cycle right now. dani: the reason that is scary is because once it gets going, it does not move in a linear fashion. if it is just starting, maybe we are already too late. and the unemployment rate shoots up much higher. jonathan: economic data point in 34 minutes time. we are counting you down. equity futures going into it. just about positive on the s&p 500. bond market yields down basis point. the 10 year, 3.9321. dollar-yen, 146.22. negative on the currency by .30%. from new york, this is bloomberg. ♪

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>> we do not see evidence of recession and the soft landing

is in play. >> these trends have been underway. they are persisting. our fear is the soft landing could be slipping away. >> unless you establish anchors the volatility of the marketplace itself would undermine. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: enough of the talk. we want to focus on the data. a little bit more in 30 minutes. positive .1%. on the nasdaq up a little more than that. on the russell a little less. that is the equity market picture. going into this, the economic data, jobless claims. the estimate 240,000. the previous number 249,000.

that is not where we want to be. dani: if we get another high report this time does it break the trend even higher? right now the four week average is 238,000. you're talking about figures from the likes of citi. anything that makes us push above the two hunt 38 number is worrisome, but what happens if it is just seasonality? jonathan: last week we saw ism manufacturing clearly confirm the slow down. we saw the wrong kind of upside surprise confirmed a slowdown. then we had the ism services number. ism services better-than-expected. this is something seema shah was saying. you need data to come out better than expected. you need to see better earnings and more dovish fed speak. we will see more of that later

this morning. annmarie: what is interesting is you need to see this as a trend and it is hard to look at claims as a trend in the summer when there are moving parts when it comes to seasonal adjustments and schools. i am interested about the range dani and he is talking about -- the range dani is talking about. if we go above that the market will freak out. what is the market confirming? when services came it it did not move that much. the market wants to confirm bad news at the moment. jonathan: is not just united states looking at this data, it is the world. let's talk about japan. dollar-yen shaping up as follows , 1.4627. if you turn to the bond market, cross asset treasuries unchanged. yields nowhere. going into this data, the two your unchanged as well.

we are trending at 3.97. coming up, why it is time to buy the dip. david rosenberg on the growing cycle of the labor market and we'll catch up with matthew di czok. rebounding stocks failing to take hold ahead of another look at the u.s. job market. "risk assets will struggle to break out given uncertainty around elections, geopolitics, and the economy. this is a time to be accumulate in the assets you want to know. sameer is with us for more. i know you have been less constructive over the last year or so. what is it about the last week you think has opened opportunities for people with a time horizon of one to two years? sameer: the market finally mocha up to the fact -- the market

finally woke up to the fact that more aggressive rate cuts will not lead to a weaker economy. we've been saying the fed will not run around and cut rates in a solid economy because that unleashes inflation which would undo all the work they have done thus far. the s&p has gone from almost 5700 come at one point we were down to 5100. on the russell 2000 we are now 2000. i think valuations help. the third is the fed is finally there. they will probably cut in september in 50 basis points. it is good they have the confidence they need to cut. when you take all the things together and the fact the economy probably bottoms sometime in the first part of next year and markets tend to run ahead of the economy, we think the next few months there will be good buying opportunities. we wanted to put that marker out there. jonathan: to validate your views on the market do you need the

fed to validate through rate cuts? sameer: i think the fed is little bit behind the curve. i do not need the fed to validate our thinking. they will eventually get to where we are at which is the economy is on solid footing and they need to get rate cuts underway and do need to be open-minded as to where the rate needs to go. our opinion is they will probably do about 100 basis points this year and 75 basis point next year. dani: so you have about seven rate cuts priced in for this year and next. why don't you like fixed income at this moment? sameer: the long end has come down so much that at this point it does not pay you to take duration risk. on the short end, because rates will be coming down there not a lot of places to go. what we wound up doing is we

updated high-yield where we've been unfavorable for a couple years. we took that back from neutral. we think that is pretty attractive, especially if you're starting to see easing financial conditions. dani: july look at a day like monday and state even though it might not of been about the fundamentals and what the fed will actually do, we saw a rally because it provided support that when equities start to fall, bonds to the thing bonds are supposed to do. do not buy it as a sense of a hedge? we are -- sameer: we are neutral on durations. it is not as if we are telling people to avoid it altogether. large-cap u.s. equities have a lot of quality characteristics we like. if you're looking out a year or two that is where the return will be. to your point did you have an

even more extreme overreaction on the long end of the curve? it is possible. as investment looking out over the longer horizon it is hard to see how it outperforms equities. annmarie: you say you see the upcoming ahead of the election as a buying opportunity. why is that? sameer: it has to do with uncertainty. i know it is an old adage. with the elections basically being a tossup we think maximum uncertainty will happen right before the election and might happen after the elections if it is a contested election. what we want investors to do is when they look out we want to take advantage of that. what we realized over time as the market can live with either administration. you may have different stocks to well under one of the other. overall market should do well. if that uncertainty, effect on

it contest does lead to a bigger pullback, we want people to focus on the fact corporate earnings are starting to turn around. higher unemployment rates better -- benefit corporations. those are the things we want investors to focus on heading into the uncertainty. jonathan: that is the path forward, can we talk about the next 30 minutes? i would love your thoughts on jobless claims. what are you in the team looking for from this number? sameer: i would say if the number causes more volatility you have seen 70% to 80% of the drawdown for this leg lower. if there is a retest on the initial jobless claims we would be a buyer. the economy is slowing, we've heard the consumer-oriented companies top not choppy to see a higher than anticipated number and if that leads to a selloff i would be a buyer. jonathan: thank you. a buyer of any weakness off the

back of an upside surprise on jobless claims in 20 minutes. that is his playbook. the estimate 240 on the previous week 249. dani: there is talk that it comes from texas, it comes from the hurricane, that is why people are looking for this data point to confirm or deny some of what we saw. it is a hard argument to make when we just got jobs data and the bls comes out and says it is not impacted by the weather and people are saying it is. are we going to do that again today? maybe we will get something like 240000 and then we get people saying this is just seasonality? jonathan: once you get through this is onto next week, ppi, cpi, retail sales. august 23, jackson hole. a much-anticipated speech from chairman powell. september 11, the cpi report. september 18 and that fed decision, lifetime away.

lifetime away. let's get you in on stories elsewhere. as your bloomberg brief. yahaira: delta airlines has been hit by a class action lawsuit. the company is accused of failing to properly refund flyers or provide them with fuel and transportation vouchers after crowdstrike software outage last month caused widespread delays and cancellations for delta. crowdstrike is also facing lawsuits from consumers and investors over the outage. taylor swift's three shows in austria were canceled after local police arrested two people on suspicion of planning a terrorist attack. a government spokesperson saying the decision was made by the event organizer. officials found chemical substances at the home of a 19-year-old austrian citizen and later to named -- and later dictate another person in vienna. swift was scheduled to play the three shows starting friday. the olympics continue today with

american noah lyles going for the double after winning the 100 meter on sunday. he is looking to become the first u.s. man to win that race and the 200 meter in the same olympics. that has not happened since carl lewis in 1984. lebron james and team usa taking on team serbia in the semifinals. team usa women's water polo team quest for a fourth consecutive gold-medal continues in a semifinal against australia. the u.s. continues to lead in gold and total medals. behind them his china. jonathan: shut up to quincy hall , 400 meters. dani: what was incredible the steeplechase. you have all of these people on attract jumping over hurdles, going into water. what is this? jonathan: quincy hall coming off the final turn and somehow came back to when the 400.

fantastic down the track yesterday for team usa. up next, the morning calls plus bloomberg's shelly banjo on eli lilly and fellow drugmakers up almost 12%. from new york, this is bloomberg. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari?

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jonathan: 15 minutes away from economic data in the united states of america. so much emphasis on the jobless claims because we do not have anything else. the estimate 240,000. the previous week 249,000.

andrew hollenhorst talking about the danger zone at citigroup. changes would confirm the slow down. let's see if we get that 260,000 or above. sweet is a big one. -- next week is a big one. that it is onto jackson hole, wyoming. that it is on payrolls report. let's see if that confirms or denies the weakness we saw just last friday. september 11, another cpi report. that is the month or so ahead of us in this market. everybody starts again with jobless claims. let's look at futures at the

moment. futures on the s&p positive .1%. yields are a little bit lower this morning. i can tell you later this afternoon at 1:00 eastern time we get $25 billion of 30 year bonds. dani: is this why lisa is off because she knew if she was on this is all we would be talking about? jonathan: she chose -- dani: she chose her timing well. it is putting a contrast that with the corporate bond market. people just absorb that thing and that we contrast that with the bond market come as soon as yields go over 4% we decided we do not want to buy duration. jonathan: she texted me, she is having a wonderful time. i will not tell you where she is. she will be back on monday. bank of america lowering its

price target on disney to 120 from 145. pointing to slowing demand for the company's theme parks. that name is down another .9%. i struggle with the explanation we got from the c-suite. the cfo same low income households are pulling back, high income households or elsewhere. the business bounces back by the middle of 2025. dani: i cannot understand if the business bouncing back as a bad thing for the overall economy. if that is the calculation, disney doing better could be bad. jonathan: citigroup downgrading bumble to neutral, citing the company's disappointing outlook. that name is down 40% in early trading. berenberg lowering its price target.

the firm keeping a buy rating on the stock. elsewhere fellow drugmaker getting in the premarket thanks to shares of weight loss therapy. shelly banjo joins us for more. walk us through what is working over at lily? shelly: this is a moment in time to say eli lilly might be pulling ahead to get these drugs out there. novo was first. you can be first but not necessarily best. you could be second and come from behind and that seems to be the case now. eli lilly is starting to see supply issues easily bit. we had a scoop saying we will come up shortage soon.

that will reduce these.gov drugs that are not generic but not brand and get more people onto those branded drugs. dani: this i find so strange. all you have to do is watch commercials and you see people advertising for not eli lilly, not novo nordisk, something that is weird. is there not regulation. our people not in danger of using these drugs. it is regulated by state pharmacy boards and it is perfectly legal at the moment. as long as these branded drugs are in shortage than these compounding pharmacies can make these. compounding pharmacies are not anything new. that is the way things used to be, pharmacists would mix drugs

and put them together. the thing is you do not know as a consumer what you will get in the regulation is not as high. dani: maybe it is a healthy thing for the overall market if eli lilly can pull ahead? how much does it change the game if roche comes out with a pill? shelly: it is not just roche, everybody is trying to get into this game and as we have seen with lily and novo it does not necessarily matter if you are first, especially with the market being so big and as people get accustomed to everyone they know being on these drugs, it becomes more regular in the market keeps growing bigger. annmarie: when you look at the generics market there is a huge push to get these companies to allow generics. when can we see that? shelly: we still have a little bit of time. bernie sanders been going hard on novo. one of the things about eli

lilly's they are cheaper than novo. it is about $1000 a month. things are starting to get cheaper but they are weighing on health plans, not just company health plans, all of these folks are starting to see the bite of what insurance coverage is on these things. what bernie sanders and others have said is why can i get the same drug so much cheaper in europe than the u.s.? annmarie: is it a drug or treatment? i imagine to get the insurance benefits it has to be for a drug. shelly: we had this wonderful story about a town in kentucky that has the highest percentage of people on these drugs. one thing our reporters found was people who said i was taking this medication and then my weight loss worked, wiped -- my weight dropped, my blood

pressure got under control, and that i lost my insurance coverage. then if i want to keep going on these drugs to people of that in check i need to be able to pay for it somehow and that enters the compounding market where people are than shifting to other kinds of drugs. it is a little bit of a mess. jonathan: that is an opportunity to revolutionize the economy given that obesity rates are 40%. dani: it is an addressable market but then you get these side effects like our gym is going to be more popular or less popular. are we all going to start buying lululemon? is krispy kreme going to go bankrupt? it has wide reaching repercussions. jonathan: great story. shelly banjo of bloomberg on the latest. eli lilly up 12.5%. jobless claims right around the corner. mike mckee has dropped by to get you up to speed. walk us through what we need to look for. michael: what is obviously the

level of initial jobless claims and whether it goes up or down. it would be no surprise if it went up because seasonal factors push up jobless claims at this time of year. this may be the last week in which that happens. we also want to look at the nonseasonally adjusted claims because those would have to rise if we get a lot of layoffs. it may be a seasonal adjustment problem, it may be an economy and labor market weakening problem. we also want to see what the jobless claim numbers are from states like texas to see if the hurricanes are starting to wash out of the claims numbers. dani: is that enough to wash out all of the noise or should we approach this tepidly to say it will have seasonality oddities and do not read too much into it? michael: you are right. that is way we should approach it but will wall street approach it that way? you have people looking for

reasons to sell on the idea of economic weakness. if we get any significant rise in jobless claims we will see a negative reaction to what is going on. in lincoln's talking -- ian lingen's talking about how we have not seen rates move since the fed meeting. we had volatility between then and now. we are about where we were. markets have already priced in weakness. the question is to they sell even more and pricing more input shields up? jonathan: looking forward to catching up with mike mckee in just a moment. that number drops about six minutes. michael break it down. then we will catch up with david rosenberg and matt diczok. on the market responds to this data point might be very different from how federal reserve officials respond to the data point. what we saw on friday was a

market very spooked by payrolls and what we've heard so far over the last few days from fed officials, they do not sound spooked at all. dani: that is why i am so looking forward to when barkin speaks. last friday when he spoke after the jobs numbers he said if we had a cut there would probably be people who still would've criticized us. we cannot win either way so we will just u.s.. jonathan: i thought they were blessed with criticism. dani: i think barkin might disagree on that. jonathan: i do not think chairman powell sees it that way either. 240,000 is the estimate. the number is up next. ♪

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jonathan: have we ever talked about jobless claims this much? it feels like in some places in the world of economics jobless claims are being treated like payrolls. a lot of weight they put on this number. the estimate is 240,000, the previous number is 200 49,000. equity futures just about positive on the s&p 500. just about positive on the nasdaq. with economic data here is michael mckee. michael: some good news. i don't know what counts as good news. 233,000 is the number. significantly lower than the

240,000 estimated in the 247,000 that was the whisper number. we are retreating back a little bit. that is not unexpected. we have seasonal adjustment effects in the month of july and that seems to be what is happening will stop continuing claims, 1,875,000. that is down from the previous reported. the previously reported initial jobless claims last week revised up to 250,000. it makes the drop a little bit more. 17,000. it is a drop in that number. i am waiting for my numbers to come up for the nonseasonally adjusted. it takes a while with the internet and i will bring that to you in just a second. jonathan: i will go across to the equity market. this is so much weight the equity market was putting on this number. we are up .6%. gives you 90 of how much weight some market participants were

putting on this number. the russell up 1.4%. we will see if the numbers hold. yesterday they did not. in the bond market treasuries lower, yields higher. up five basis points on the two year. on the 10 year are up 3%. closer to 4%. if you're in tokyo, japan at the ministry of finance, good afternoon, one point 4680 is where the dollar-yen is. there it is in jobless claims. dani: this market was a coiled up spring waiting for that. the biggest is russell 2000. that is a fascinating one because we used to argue cuts would be great for the russell 2000. someone has knocked off the idea that cuts are imminent and yet we are rallying. jonathan: a little bit of a relief rally in the equity market, a selloff in the bond market and a stronger dollar off

the back of this. mike mckee, what you see in the data? michael: nonseasonally adjusted numbers at 203,000 and that was 215,000 a week before. the seasonal had anticipated not much of a decline so much bigger decline than anticipated. if you look at the largest increases in claims they were in michigan and missouri. texas dropped almost 7000. the big violence we had after the hurricane washing out of the data that may be one reason. we look at the nonseasonally adjusted numbers, even compared to the seasonally adjusted numbers, it tells you that while we are a little elevated over where we were it is not layoffs. jonathan: it does feel like we have shifted into a good news is good news and bad news is bad news regime in this market. dani: we have, which i guess is

a good thing. the other side of the coin is bad news has been bad news. i am struck by comparing this moment to the narrative on monday. the narrative on monday is we are heading into a recession, the fed needs to do an emergency cut. mention if the fed started talking like that and we got this number. you can say well done for staying so calm. jonathan: last week the data not great. this week the data little bit better. ism services in jobless claims. to look at the data joining us is david rosenberg of rosenberg research. let's take a step back. totality of the data. what is your assessment of where we are at the moment? david: i still think we are in a recession or about to confront one. i know everyone is on tenterhooks because of weekly

jobless claims numbers, which quite often contain a bit of noise. coming off what could have been hurricane distortion from the previous week. however, i would say what is tried and true is the unemployment rate. the unemployment rate is up .9% over the past 15 months. the data going back to 1948 shows we had 12 recessions and when you are up 90 basis points or more in the unemployment rate you go into recession 100% of the time. i am not one of those people that would say to you is different this time. i do not think it is in today's jobless claims numbers, we will get a fresh batch, it not change my view. dani: i will push you on this and i am sure it is something you've heard multiple times. the argument of you being wrong goes like this.

the uptrend is about immigration. torsten slok out with a note saying more visas are being accepted, there's is been a covid backlog and that adds to evidence there is growth in the labor supply, hence the uptrend in unemployment. why is that argument not right? david: the argument is partially right but the reality is the statistical unemployment rate comes from the household survey, not the payroll survey. the reality is there has been no growth in job creation in the household survey over the last 12 months. what the data show is 96% of those people, and i'm sure a lot of them are immigrants, 96% of the people that enter the labor force in the past year have not found a job. i would pose the question back to you, does that sound like a point labor market as far as you are concerned?

this time last year 96% of labor force entrance were finding a job. only 4% now are finding a job. it is not just about labor supply. it is not just about firings or layoffs, which remain very low. companies are still hoarding labor. they are cutting the workweek and furloughing workers from full-time to part-time. when you go from full-time to part-time is not job loss so you do not collect unemployment. there are decisive shifts taking place in the labor market right now. there has been no growth in household deployment. in fact, if you look at the full-time picture, full-time jobs are down on a year-over-year basis. the number of full-time jobs are negative year on here and that does not happen in an economy that is still expanding. that is my point. annmarie: you heard from mary

daly and she said firms are not laying off people. how can we be in a recession if firms are not laying off individuals? david: because employment is not just one number. it is the product of two numbers. firings and hirings. what is happening, and it is not contained in today's jobless claims number, you do see it in the jolts data and you see it in the challenger data, which is that hiring activity is collapsing. i don't know what i am missing. we just got the jolts data. the jolts data showed the number of new hires in the economy is running negative 9% year-over-year. the level of hirings is back to where it was in april 2020. what is happening is the firing

rate is remaining low for the reasons i said before. companies have this horrible memory lingering about letting people go in 2020 and then not finding them again. they are holding onto their staff, cutting hours, repositioning staff, and that is giving this illusion that firings are very low. what is happening is the hiring rate is collapsing. we got the challenger numbers just ahead of nonfarm last week. in july the number of hiring announcements and the challenger data was the weakest for any july back to when the data started in 2004. the number of hires in the challenger survey is -71% year-over-year. you're just looking at one side of the ledger, which is firings. the reason why employment growth

is decelerating sharply is because hiring activity is collapsing even as the firing rate means very low. that is the story beneath the story. jonathan: where there is consensus, a lot of people believe the fed needs to get less restrictive. i wonder whether you think they need to get accommodative and when we talk less about the path of 25 or 50 and more about the destination. where you think they will end up at the federal reserve? david: i think jay powell gave us a ton of information last week at the press conference when he uttered the word normalization to describe the labor market and the economy no fewer than 11 times. things have normalized. strip out the nonsense around owners equivalent rent and inflation is back to target.

the employment rate is higher than it was before covid when the funds rate was 1.75. the only thing that is not normalized is the fed funds rate. according to their own estimates, the people liberty and rate, the rate we should have in a balanced economy, which he said we are in, is 2.75%. every chiller rule estimates shows today the funds rate maximum should before percent. they are ridiculously behind the curve -- should be 4%. they are ridiculously behind the curve. it was not data, it was are we continuing to get 1000 down point days on the dow? that was all about the stock market. they are ridiculously behind the curve irrespective of what the

capital markets are doing. he said things are normalized and we do not have a funds rate that is consistent with a normalized economy. they have a long road to go. jonathan: david rosenberg, great to catch up to get your thoughts on this economy and where david thinks the fed needs to be. we will talk about capital markets. equity futures near session highs, up .8%. small caps on the rustle up 1.6%. we were basically unchanged on the s&p 500 as of 12 minutes ago before we got this economic data. jobless claims deliver the right kind of downside surprise. 232,000, not a massive move. yields are up six basis points across the front end of the curve. dani: i am struck that this is a market trading this as if it was nonfarm payrolls, as if it was a northstar type of report.

not only historically this is a noisy print, but this specifically is a noisy print because of the weather and the seasonality. we have put so much importance on this report and that is why you got the manufacturing -- that is why you got the reaction you did. to danny's point, are we going to treat every jobless report this way? matt: it will be exciting. jonathan: do you think we should push this but wait on this print? matt: should not. it is a very noisy number. the start of a recession, we want to claims of 350,000 to 450,000 so we are still well off the number where we see companies firing people are really concerned about their financial condition. we are not overly concerned about a recession. certainly the market implied

recession odds were way too low and they are getting to a place that is more normal. there is a higher risk of recession then zero but it is not a face case. jonathan: what you make of the levels in the bond market? matt: the bond market -- we are happy when everyone else's sat. we been listing for all of these reasons why bonds do not work, why diversification will work. last week was close the blue book, put your pencils down, exams are over. bonds did their job because we have counted any long-duration over a year with real rates around the 2% level. back in 2021 it when they were -2%, when they were 50 basis points, now they can do their job. when there is an economic downturn. whether it is real market volatility, treasuries will protect your portfolio. dani: i look at the last week

and say they did their job but in an extremely volatile way. you saw big swings in this bond market. does that dampen their ability to give you protection? matt: march cabana, our head of rate research at bank of america , he does have concerns about liquidity in the treasury market. you flip that on its head. there is no constitutionally guaranteed right to trade a yard of 10 yields in a millisecond. maybe when they cannot take these large positions there'll be an increased risk in the market. we are liquidity providers. higher risk premiums is probably better overall for investors because that should lead to a higher term premium and higher credit spreads on average. they should get compensation for the lack of liquidity. from an investor providing liquidity to the market it can

be a benefit. do you think -- dani: do you think this week would've played out differently if it was not summer? matt: i definitely think that was a factor. a lot of traders on vacation. august is the new september. you start to see things in the market like six or seven fed rate cuts by january seem to overestimate economic weakness. it was more market technical sentiment driven. annmarie: what do you do on a day like today when markets are reacting to claims like it is nonfarm payrolls because it is illiquid. matt: one of the best things to do is have your strategic plan in place to take opportunities like this as they give it to you. we have been saying that we do not expect a recession but as we looked across the credit complex we thought even munis were little expensive. slightly underweight on the credit sectors.

when we see volatility like this we have been advising clients to put money to work. he wants the volatility. you want drawdown stat back to your portfolio. jonathan: you think yields will get bought, do you think last week was a wake-up call for lazy money sitting in money market funds getting rewarded for doing nothing and they have been told repeatedly by individual after individual to lock in the reinvestment risk. that has been the phrase of this year. we have had no rate cuts. do you think this is the week where the money woke up a little bit? matt: i would like to think that is the case but that will not be the case. fixed incomes and longer dated bonds. you do not know how long he will cash yield for. what it seems like is until the fed actually cuts people do not move out of money market bonds. i think this is somewhat of a wake-up call that if you are

concerned bonds could diversify, i think that is taken off the table so that will encourage clients to back their strategic targets. jonathan: did you give us a sneak peek of what client conversations are like? matt: yes. they've been reluctant to do this for some time which is one of the reasons you know it is the right thing to do. jonathan: why do you think this week was not enough for them? what did those conversations sound like? matt: essentially there is always some new concern, whether it is higher deficits, whether it is they could still get 5.25%. it is very difficult to make the conversation. i try to tell folks the yield curve tries to trick you. don't need to be crazy long bonds. kidding clients to a five or six year duration will better for a long-term. jonathan: good to see you. matt diczok on the latest

jobless claims. jobless claims thursday is the latest payrolls friday. michael: at least for the time being because it is august. all of the traders are on vacation. everybody from the fed is on vacation. i do not imagine everybody wants to come back. jonathan: we will all take that break. 233,000 is the jobless claims number. the estimate was 240,000. that is the right kind of downside surprise. let's start with equity futures and rolled through the bond market. equity futures up .8% on the s&p 500, big outperformance on the small caps. outperformance encouraged by the bond market. checkout fixed income, treasury softer, yields higher on the 10 year, up five to just short of 4%.

with an update on stories elsewhere here is your bloomberg brief. yahaira: shares of warner bros. are down in the premarket. the parent of cnn and tnt posted the second quarter charge of more than $9 billion after writing down the value of its traditional tv networks. write down reflects the continuous exodus of viewers from cable networks like cnn to new streaming platforms. warner bros. said it added 3.6 million new streaming subscribers, almost double what wall street had estimated. shares of bumble are plunging 40%. the dating company reported second-quarter revenue that missed estimates and slashing its revenue outlook for the year. the company that owns bumble's biggest rival tinder jumped the most in two years after the company reported better-than-expected quarterly results. eli shares are up nearly 13% after the company boosted its revenue guidance for the full

year. it is now projected to be well above the average analyst estimate. readings were based on their performance of diabetes medications. that is your bloomberg brief. jonathan: appreciate this morning. up next, setting you up for the day ahead. your trading diary just around the corner. from new york, this is bloomberg tv. ♪

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jonathan: getting you down to the opening bell about 37 minutes away. s&p up .8%. on the bond market treasuries weaker.

yields higher by five basis points on the 10 year. jobless claims in better-than-expected. the right kind of downside surprise of 233,000. the estimate was 240,000. your trading diary looks like this. 1:00 p.m. the treasury auctioning 30 year bonds. 2:00 p.m. former president trump holding a news conference. at 3:00 p.m. we will hear from richmond fed president tom barkin. friday kamala harris making a campaign stop in arizona. from holding a rally in montana. hello bit of pressure. we all want to hear from kamala harris. annmarie: we do. we want to hear what their policy proposals will be. how much will she differentiate herself from biden. we know in the polls it was not just bidens age, but the top two issues when it comes to this election is the economy and

immigration. when you ask voters they say it was better under trump. jonathan: the top issue is jobless claims. i are pleased we are on the same page. through the rest of the summer i think going into the federal reserve decision on december 18, it feels like jobless claims every thursday is becoming as important as payrolls on friday. dani: we are treating it to where you can get a rally in small caps after jobless claims. it boggles your mind. maybe you can say it is the summer and there are not a lot of lot of people around. it emphasizes the fact we do not know where we are. there are people have a clear idea and often they are on opposing sides. usually you have periods of on stability -- usually you have periods of instability. the jobless claims it established that trend? it is choppy. jonathan: that conversation last august when he talked about navigating the stars, it feels

like that over the last week or so. jobless claims were back, payrolls was not good. this week i assume services was decent. do your point the market is stuck between the two, whipsawed from one data point to the next. dani: i like what dan green says, this idea that it takes months for recession to happen. along the road you get signs of things changing. you get companies saying different things, individual data points. that is why you can build an argument that something is starting to happen. jonathan: the start of the beginning of that self reinforcing process bill dudley was talking about. more views coming tomorrow. steve major of sh bc. congas been french hill of arkansas. and binky chadha of deutsche bank. good luck with the rest of today's session. from new york city, this was "bloomberg surveillance." ♪

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matt: the labor market goose is futures. 30 minutes into the start of trading. i am matt miller. sonali: i am sonali basak. bloomberg "open interest" starts right now. matt: coming up, u.s. jobless claims declined by the most in nearly a year, helping to ease fears about a more pronounced economic slowdown. jp morgan analyses a 35% chance the economy enters a recession this year. the firm says three quarters of the global carry trade has now been unwound. plenty of news on