>> there's been a step up in concern about the consumer. >> there's been more downside risk than the markets may appreciate. >> the situation you're getting better. >> there is now going on to offset whatever the weakness >> is. >>overall the consumer is hanging in there, that's why the economy will continue to expand. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: let's get your trading day started live from new york city this morning good morning for audience worldwide, bloomberg surveillance starts right now with your equity market shaping up as follows on

the s&p 500. equity futures just about unchanged after snapping the longest winning streak of the year so far on the s&p. once again this morning chipping away at recent gains on the nasdaq 100 lower by 1/10 of 1%. things are quiet at the moment and pick up later. your day ahead looks like this. we get some earnings from the likes of target and t.j. maxx. a sprinkle of politics and fed minutes this afternoon but at 10:00 a.m. eastern time that might be the main event for financial markets. a revision to a years worth of nonfarm payrolls. >> it could be anywhere from a revision downward about therein and 6000 jobs to potentially one million jobs taken off the year ended in march for this year. here's the key question, do we end up with a downward revision that essentially is the biggest in 15 years which is any downward revision that exceeds 500,000. this gives you a sense of could we see another narrative shift

if this really does surprise in the wrong kind of way. jonathan: what strikes me is seriously mental, listen to this from the likes of goldman sachs. a group of fantastic economists a range of any revisions to one million lower anywhere from 50 to 85 k per month, per month. so we are setting the tone for jackson hole and chairman pals address this friday. >> this goes to the perilous missive being so data dependent on data that is proven to be time and again not unreliable but fudged at least when you look at it in the past in the rearview mirror. here's the issue, it's the preliminary revision. we get the final revision at the bidding of next year and what they are doing is taking the quarterly census of payrolls and pairing it with some of the other data they collect, there have been issues of survey responses. the issue is this colors how

much momentum there is in the labor market at a time when we are seeing cooling. does this cast another shade on the nonfarm payrolls report that was disappointing last week. >> i often reflect on some of the words from chairman powell from back at the start of july in portugal at the ecb getting together when he said because the economy is strong and the labor market is strong we can take our time to get this right. how strong is this labor market and how much time do they have? lisa: does it change the conversation in terms of the balance of risks. we saw a quiet day without a aussie -- an obvious catalyst the chance of a basis point rate cut. people looking at the odds that maybe he could come out and talk about the need to get ahead of any downturn. the fed kind of got wrong due to some of the data back a couple of years ago in the post-pandemic fog. will this be a similar kind of

revision although in the opposite direction that really flavors the conversation in a different way. jonathan: as for the earnings, target we will break those numbers for you in about 27 minutes time. equity futures on the s&p 500 just about unchanged in the bond market on various points along the curve on a 10 year right now 38142. yields up by a single basis point. euro-dollar in and around 111. jonathan: this is sort of -- lisa: this is the more tolerant -- dog days of summer. it's important to reflect on where we've come from. i love this quote by bespoke investments but markets take the stairs up and the elevator down. in this case it took the elevator both ways. you saw some of the biggest swings from oversold to overbought going back to world war ii. jonathan: just a little bit of calm.

andrew sheets of morgan stanley on soft landing view. anne-marie with the latest from the dnc in chicago and torsten on the jobs data. stocks holding steady ahead of those revisions at 10:00 a.m. eastern time. and you're writing the following the fed chose to remain on hold in july despite less inflation and rising unemployment policy weeks with a lag. once the fed is behind it often struggles to catch up. solid data not dovish fed speak on what's most important now. andrew joins us now for more. despite those comments from you you say keep the faith in corporate credit and maybe keep the faith in that soft landing. why should we keep the faith? >> good morning, it's great to beer with you. i think this is a market where the growth data is in the driver's seat, where the market is rightfully focused on the importance of growth holding up and if the fed is late, if

policy is too restrictive then rate cuts might arrive too late to do anything about that. but our expectation is if growth data will hold up and we will see a soft landing but the consumer is strong enough to support this expansion continuing and i think that sort of moderate growth moderating inflation, moderating policy rate we expected morgan stanley is a pretty good backdrop for corporate credit. >> how important are those revisions the drop when we talk about how strong the labor market is, we really know how strong the labor market is? >> the lineup is a really great sign of what the markets focused on. we have retail earnings the consumer incredibly important for where the economy is, the labor market revisions where the job market is as important especially to your point you mentioned earlier, the fed is very focused on the labor market

, the labor market tends to be a lagging indicator so you have this environment where if the labor market starts to show weakness history would say that's almost already too late. and then we have the fed minutes and so how is the fed thinking about all of this and is there more insight to how restrictive they really think policy is. i think the growth data is at the center of this discussion, labor market data, of the jobless claims numbers we will be getting the next nonfarm number these are all important. >> what would you have to see in the revisions for payrolls with the initial revisions that would make you rethink the likelihood of a soft landing? >> i think something would be significant different than expected. i do think this is an area where i think the market will look at a variety of data and so it's not just today's number it will be thursdays jobless claims number, it will be the next nonfarm number that's important. and i think it's also about how much we see from some of these

other measures like ism, the index leading economic indicators. a number of things which have been mixed. today's revisions are notable but i think the market will also be focused on a variety of metrics and certainly some of the upcoming or real-time measures as well. >> i wrote a lot of notes last night and was struck by the tone and all of them where the downside risks to the u.s. economy seems to be growing, that is something i saw again and again and the people of increased conviction in growing into risk assets. because the fed will respond but it seems like the two ideas are a bit contradictory. can you explain why they are not? >> i think they are contradictory. i think if you are mindset is that data will weaken significantly but it is ok because the fed is going to cut and potentially cut aggressively, i think you are fighting quite a bit of history with that. i think historically when we've seen weaker data and more rate

cuts, more aggressive rate cuts, that's been bad for risk assets, for credit, the more the fed has been cutting, the worst is because that often represent significantly weaker economic outcomes and benefits from those lower rates don't arrive in time. so i would say our constructive view is kind of the other way around based on the view we think that the data will hold up, the fed will cut modestly, steadily and slowly and that will be a combination that's consistent with a soft landing. in a scenario where the data is weaker than expected and the fed is cutting more i think the market will be weaker than we expected. jonathan: if i were to close this interview now and say thank you, the first thing i would say to lisa is i think he's probably low on consumer cyclicals and credit. >> i think the challenge in credit is we don't necessarily see a great deal of risk premium in the cyclical parts.

that's a cyclical sector we think there are still some risk premium. in the retail sector our sector credit analyst will highlight we see a bit of dispersion there. we've seen some quite good earnings reports from some retailers in the second quarter. i think it's a sector where we are more focused on the relative value overall the risk premiums don't seem particularly notable. >> is a larger issue which is whether the u.s. is generally overpriced at this point looking at some sort of recovery or fed that could intervene in a correct time. not go too far off the beaten path but i was looking at your notes and seeing you like chinese credit which sort of highlights the search for yield of the moment when you see u.s. companies moving out of china and in increasing aversion to geopolitical risk. how do you justify this idea that this is a fraud moment or was a real question mark around the fed's response function and yet it's a good time to go risk off two areas that are some of the lease loved. >> i think china investment

grade is an interesting dynamic where we think weaker growth, weaker inflation is working in the favor of the bondholder. i think where the focus and a lot of other regions has been inflation might be too high or too sticky i think china is the economy with is the greatest risk inflation is too low not just this year but in future years paid there's a higher risk of a deflationary sort of risk scenario. and that sort of scenario can be quite good for returns for bonds especially long-term bonds. companies in that scenario are not real leveraging. the economy's deleveraging. yields are falling, policy rates are staying low. we think in that environment you see both return benefits from a low yield environment and lower yields boosting the returns for china investment grade bonds and an environment where those lower on shore borrowing rates from banks as rates stay low or even go lower incentivize companies

to borrow domestically rather than financing in the dollar bond market and that can be good for keeping supply low and supporting the bond market. >> you are one of the best sir, appreciate that. out of london this morning on corporate credit. determine the story, the price of the story. a good story to tell when you start to ask of the price of the story it's part of consumer credit that is still pretty rich out there. >> when you look at spreads and yields on high-yield bonds which of the lowest going back several years start to wonder are we priced to perfection at a time when there are those downside risks and a lag a stent simply a fed policy to work. it sounds good but the question of whether you get in is fuzzier. it's the reason i say there is this dissonance where the downside risks are there growing. but people are banking on the fed rate cuts in a way they have never before and are hoping the fed can do it in time. jonathan: again target earnings dropping at about 18 minutes

time so look out for that. equity futures no drama here whatsoever. let's take the opportunity to get you stories elsewhere. >> a third day of search and rescue efforts is underway around a sunken yacht near sicily, italy. passengers mike lynch and jonathan blumer are feared dead. they are still missing after the yacht was hit by a type of overwater tornado on sunday. crew aided by ships and helicopters have been looking since monday. six guests have been rescued, one person has been confirmed dead. sephora is cutting hundreds of staff in china attempting to turn around a lossmaking operation in the world's second-largest economy. the cosmetics giant has fired office and store staff and has persuaded others to resign. sources told us an estimated 10%

of more than 4000 employees in china will be let go. a spokesperson saying the brand is streamlining and its structure in order to bolster long-term growth capability. barack and michelle obama fired up democrats in addresses that cap the night of the second night -- that capped the second night of the dnc. >> we do not need four more years of bluster and bumbling and chaos, we have seen that movie before and we all know that the sequel is usually worse. [applause] >> america is ready for a new chapter. america is ready for a better story. we are ready for president kamala harris. dani: the former president drew parallels between his historic run and harris's rise to the top but warned of a tough race

ahead. >> more from danny at about 30 minutes time. contrasting visions for the united states. >> i like to say the unit -- were public and party is now the party of -- republican party is now the party of common sense. >> this is not just about us versus donald trump. this is about two different visions for the nation. >> the latest from the dnc in chicago. live from new york city this morning, good morning. ♪

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i need it a little cool and i need it a lot of cool. put your business online in minutes we're both cool like that. sleep number does that. actively cools and warms on each side. during our biggest sale of the year, save 50% on the sleep number limited edition smart bed shop now at a sleep number store near you. jonathan: live from new york city, welcome to the program. very small mild losses in yesterday's session. small mild gains in this morning session. the s&p up by not even 1/10 of 1%. under surveillance, contrasting visions for the united states.

>> i'd like to say the republican party is now the party of common sense. conservative, i guess conservative it doesn't matter. it's the party of common sense. >> this campaign is not just about us versus donald trump, this is not just about us versus donald trump. this is about two very different visions for our nation. >> the dnc continuing today with vice presidential picks set to speak tonight as donald trump continues his counter programming campaign. a rally on national security in north carolina. and rejoins us from the dnc in chicago. annmarie: good morning john. you can see the swing states are really in play right now as we were a few months out from november 5. last night after the rollcall at the dnc which was filled with a tremendous amount of energy and also saw cameos like littlejohn showing up for georgia. kamala harris was about 90 miles

north from where we are seeing now in wisconsin, in milwaukee a state that is a must win for the democrats. part of the blue wall. and milwaukee so interesting at fiserv center were donald trump was a month ago giving his acceptance speech. and then today you have donald trump on the campaign trail notably in north carolina just yesterday center for politics put north carolina in the lean republican camp to now a tossup. this is so important because we heard from president obama last night here in chicago. he was the last democrat to win that state in 2008 prior to that it hadn't gone for a democratic candidate since 1976 and now it's considered a tossup so you can see how tight this race is. it really stood out to me yesterday was whether harris was saying this in milwaukee or barack obama at the end of this speech, they said do not give up this moment, the torch has been passed but now it's up to all of

us to fight for america we believe in and make no mistake it will be a fight. they are trying to say despite this energy he talked about despite all this excitement and the means coming out this is a tossup election that's very clear today and last night depending on where you see these candidates. jonathan: something about kid rock versus littlejohn. you're knocking to see that anywhere else. lisa: that we have this sort of comparison of celebrity music stars at all these events. jonathan: i really don't like it either. thanks for the update, we catch up later this morning. terry haines has the following to say, trumpets trying to move issues and get more disciplined this week. trump is still not coordinated and focused. he is still speaking to the already converted when they should be trying to broaden his appeal. terry joins us for more. i think were all focused on september 10 on the calendar. the face-off between the

candidates. what is that debate to be like from your perspective. >> i think what you will see is a battle of message focus. trump will be counseled again and again to focus the message on harris's record, the biden harris administration's record and frankly i think you will see and hear a lot about what's going on in san francisco and other cities, you will also hear about tim walz and minnesota and minneapolis and 2020. they will make an economic pitch. harris will be all about the future, all about what's next and you hear that one great word comes out of democratic conventions. hope and change. she is good to be the hope and change candidate. that's what we hear from this convention. but she will stick to the message. so trump cannot wander.

lisa: you talk about how its hope and dreams in the future pretty also call it spaghetti politics. your things being thrown at the wall in terms of policies that won't be made into law. and you start thinking about what do we know about her framework going forward, or economic policies. if there's anything we have learned about these policies are knocking to see the light of day? anything we've learned about the difference between kamala harris in 2024 versus kamala harris in 2020? terry: i will say this again, harris is a shape shifter and i don't think that's a bad thing. i think it's a good thing and a politician generally because you are adapting to circumstances. her at the top of the ticket this timeout leading a party is not about personal preference it's about leading that party and moving it forward and attracting that a simple that it to your ideas. that's what she's trying to do

right now. that's very different than trying to attract primary voters in 2019 and 2020, i don't expect it she will be the same. i don't expect consistency in her view. jonathan: i expect her to be consistent over a week and policy seems to be shifting from day-to-day. it was price gouging last week and then kind of but not really. what are the key policy initiatives out of the campaign? terry: i think by and large what they will do is judging by what harris says and what's in the democratic platform it's not hugely important but it matters in terms of how the rank-and-file thinking about these things. you'll will see a continuation of biden policies by and large. which include greater government investment and they hope greater government taxation, but what that means in large part is you will not see any attention to

getting fiscal under control or getting deficit under control. that seems to be the primary preoccupation of markets when you look at what comes out of washington. lisa: talking about vibes and good feelings with the rnc and now this is the dnc. what strikes me is this ultimately is a party being unified by the anti-trump rhetoric. basically running against trump, not trump again. how far do you see that getting this election given the fact that people may look beyond that. terry: unifying your party is job one and harris is doing that. one of my critiques of the trump campaign's he is not doing that. he is unified his base, not the party. and not making effective outreach to consolidate that party support and not reaching

out to independents effectively. so harris is doing what she needs to do this week. but going forward what's very clear what they will lean on is a concern toward social issues plus fear of trump as a motivating principles. jonathan: the latest on the campaign trail for the democrats and republicans pride can we pull up the price of gold print pulling back from all-time highs but around 2500 stat of the week here at bloomberg, the milestone we reached on friday when we crossed 2500, and all-time high, gold dust typically well about 400 ounces per have you ever held a gold bar? super heavy. million dollars a gold bar. lisa: i must confess i have been to one of the bolts at the bottom of a bank -- i've not been to the bottom of a vault

but in -- apparently people where steel tipped shoes because if they drop those bars they will break their toes now they are heavy in a monetary sense as well. is it because the deficit is going into gold or is because central bank buying or something else question mark -- something else? jonathan: if you can never go to the austrian central bank there's a game you can play were you try to lift the gold bar and pull it out which of course you cannot do. i have no idea if it is still there now that it's worth $1 million. it just doesn't fit. lisa: what if you are just amazing? jonathan: like a magician? lisa: good luck. ♪

jonathan: in just a moment we will get numbers from target. lisa: it wants to be target now. they don't want to be high-end. jonathan: that is smart. the numbers drop in just a moment. let's start with the price action elsewhere. the s&p 500 just about positive by almost .1%. the nasdaq dust about unchanged. russell positive but .3%. some yields in the bond market. two-year, 10-year, 30-year.

two-year higher by almost a basis point. what have we got? lisa: target is following eight the same -- the same type of story is walmart. comp sales double the estimated. earnings-per-share forecast is for $9.70. previously, $8.60. you can see the shares popping. what i find interesting is essentially people who said walmart's gain was everyone else's pain is not seeing that trickle through a target which has always been number two when it comes to the company. looking at revenue rising, comparable sales rising. you are seeing margins that are continuing to expand. we will dig through these numbers. one of the highlights is that it is not an anomaly that walmart did well. the consumer can still spend.

they are still using their hordes of cash. jonathan: the stock is up in the premarket by close to 10%. that is the knee-jerk reaction to these results. higher traffic in stores, rising online sales. remitted commitment to get back to growth. our team delivered. we are staying on offense. we heard this from morgan stanley 30 minutes ago. what is happening with consumer cyclicals, staples, and within retail? some companies seem to be a doing a better job. lisa: i think we see an incredibly resilient consumer in the face of high inflation. the other challenges they are facing to manage the household budget. these are executives that want to seem sensitive to the average plight but they are seeing consumers that are not willing to spend. it does raise a question to your specific point about consumer cyclicals.

are we seeing the beginning of some sort of recovery cycle fueled by a federal reserve dropping rates? or, something priced and fully quinn potentially we have not seen the light? jonathan: we will mark target good based on the price action this morning. let's move onto home depot and lowe's, both cutting their outlooks. home improvement is a real struggle. let's go a fast casual restaurants. fast food, lisa. there is a promotion every single day everywhere you look when it comes to those businesses. different companies experiencing a different consumer at the same time. lisa: when people are looking for value and trying to get it in a lot of different ways. some people will read into that that the consumer is strapped and they don't have money to spend. other look at it like the first time we are seeing consumer pushback to inflation that had been running at the fastest pace in decades. this speaks to disinflation with

the consumer that's willing to pushback and do what people wanted them to do a year ago. if the labor market does not fallout, this is a healthy recipe for ongoing growth. jonathan: we are up by 10% and the premarket on target as the company and earnings swing to growth. more on that later. we get numbers this morning from t.j. maxx and macy's. that is coming up throughout the morning. target up by more than 10%. day three of the d&c underway in chicago. -- dnc in chicago. tim walz will speak tonight. donald trump in north carolina. we are laser focused on what is and is not happening with economic policy. last week it sounded like an aggressive push to clamp down on price gouging, whatever that is and wherever that might be. the campaign seemed to back away from that big-time. if you mr. interview yesterday,

have a -- if you missed our interview yesterday, the conversation did not sound like the conversations we heard last week. lisa: building on existing legislation to deal with emergency situations where they could be specific companies that are bad actors is different than saying we will go after companies for raising prices too much on a broader sense. a lot of people say this is not really going to stick. that is what we heard from terry haines, spaghetti politics. understanding the plight of people who are grappling with faster inflation. that said, it does leave a blank slate as far as what policies will be put in effect, whether it is kamala harris or donald trump. donald trump 2.0 may be different from donald trump 1.0. jonathan: it is confusing when it comes to the candidates, the policies they want to introduce. the harris campaign, a big push to clamp down on price gouging. maybe even price controls. a big fear about the outcomes of

those kind of policies. they backed away in the last 48 hours. when it comes to homebuilding there is something concrete there. they want to incentivize homebuilding at the same time they want to address the inability to buy by helping people with down payments. we talked about what would happen to prices. i think all roads lead to the federal reserve and a lack of inventory when it comes to affordability. we talked about this -- we will talk about this with an analyst at 8:15 this morning. you have to think about effective mortgage rate and the market rate. the effective mortgage rate in mecca, the average rate is running at about 4%. 4%. the market rate a little south of 7%. that is a big spread. that is what we have this massive lock in effect. they will not put their house in the market because it want to leave the mortgages behind. you are not alone. when we talk about affordability, a lack of inventory, the federal reserve?

lisa: that is how we heard from the old debtor yesterday. -- neil dutta yesterday. getting the volume into the market. you talked about this yesterday. it's an important point. this is a supply issue, not a demand issue, not an inability of people to spend that much more. that is not alone going to bring down prices. if you give them more money, it will make things less affordable because of a lack of supply. if you take a step back, solid demand for luxury housing. this is a key question with the divide of who can buy homes in which homes are available. jonathan: a lot of people are cash buyers. lisa: it's a different clientele but it highlights -- i don't know. it's an interesting moment in a has to do with policy for the builders. if you juice the other side of things you could have a distorted effect. jonathan: i'm still looking at shares of target.

the stock still climbing. up by 12% now in early trading. lisa: shopper spent more on nonfood items, including apparel. we saw this with walmart. this is not just people going to buy staples. to enter sheets's point -- andrew sheet's, discretionary items. target shares finally turning around after a lot of bleak quarters. up 13%. this does not scream of an economy rolling over and increasingly on the brink of recession. jonathan: a big bounce this morning. a little later. up by 12.2% in early trading. hamas keen to reach a cease-fire agreement with israel. blinken saying israel had accepted a proposal for a pause in fighting. the next step is for hamas to say yes. julie norman joins us now for more.

what is your sense of things? who is holding up this deal? >> i would say it doesn't look promising at the moment. the best news is that the actors are not fully walking away from the deal. hamas said they are still in this. they are not trying to hold it up. the likelihood of a deal coming through soon is unlikely. the hold up this week is some new conditions really being pushed by netanyahu that hamas claims shifted the deal to a point where he knows they can't accept it. this is not to say the talks are over. i don't see anything coming about this week. lisa: you have been watching this for a long time. would you say netanyahu is the biggest holdup? torsten: -- julie: right now some conditions he has imposed since we were

close in july kicked it further down the road and we hearing that from some of netanyahu's colleagues, the israeli negotiators. it is difficult for them to negotiate because of the hard lines that netanyahu imposed on them. if you are hearing it from those individuals themselves that is certainly quite telling. there has been a lot of back throughout the negotiations. events have been continuing throughout as well. there have been strikes in gaza. a suicide bombing in tel aviv this week. bodies were recovered from some hostages. conditions are shifting very quickly for both communities. lisa: a larger question we have not gotten a clear answer on and might not be possible to get one. how much could some sort of cease-fire agreement stave off this specter of an iranian retaliation? is this something that can be de-escalated with agreement even if it is tentative? what is your take on that? julie: one reason a cease-fire

is so important -- obviously, we focus on gazan civilians, israeli hostages and their families. it means so much more for the region. it is the key linchpin for preventing further escalation on the northern border with lebanon and hezbollah, which has been escalating rapidly. it's a very important -- is very important for staving off retaliation from iran which seem slightly delayed and from continuing operations from ho uthis in yemen against shipping, which has cost $1.2 trillion to the world. there are things going on in the world that mean so much to the cease-fire. all these elements include the u.s. a broader regional escalation will draw in the u.s., whether any future president wants it or not. jonathan: we caught up with the advisor to the president. he gave us the oppression there was a big opportunity to strike

a deal here that may be did not exist in previous rounds of talks. we are trying to figure that if that is shaped by fax on the ground or informed by the political calendar. something they were wishing for given the election coming up in november. is that informed by the facts of the grout or shaped by the political calendar? julie: it's a bit of both. there has been wishful thinking from washington with the clock ticking down and knowing this is the last moment for them to lean in their shoulder. everyone knows at this moment it's extremely tense. the risk of an iranian or hezbollah retaliation did seem to put the pressure on for some kind of cease-fire deal. at the same time, the operations in gaza have put the pressure on hamas. in terms of there being a need for this right now, that is quite ripe. we see it difficult getting it over the line. the best we can hope for is another pause, a first phase of this wider deal.

a broader deal seems quite a ways off. jonathan: we appreciate your perspective. julie norman on the latest in the middle east. the latest on target. the stock is still climbing. an update on that with dani burger. dani: target is surging come up 14.4% in the premarket trade. it ended a string of sales declines in the second quarter and the retailer said comparable sales roast 2% in the quarter. that is higher than the average estimate of analysts, while breaking four straight quarters of contraction. earnings-per-share beat expectations. it is the first sign of a turn right after interest rates probably consumers to pull back from big personages and spend less on discretionary products. china has launched an anti-subsidy investigation into dairy imports from the eu, the latest in a tit-for-tat trade dispute. this targets several dairy products including fresh and processed cheese.

it will review 20 subsidy programs. europe expanded tariffs on chinese ev's, planning to introduce 9% tariff on tesla's reported from china. the beijing company has seen initial success with his first electric vehicles, putting it in direct competition with tesla and byd in china. speculation is growing that shami has its sights set on the european market. they showcase one of the electric sedans during the paris olympics despite tariffs. they reported a recovery on the smartphone business. that is your bloomberg green. jonathan: more from dani and 30 minutes. up next, running the risk of falling behind the curve. >> for the fed if all you're going to do is string out a bunch of 25 basis point rate cuts, it could take a long time to get to neutral. the further the fed is away from

neutral the more the risks to the economy. jonathan: of review of big revisions to u.s. jobs data up next. you are watching bloomberg tv. ♪

jonathan: check out shares of target up in the premarket by close to 15%. 14 45%. debt 14.5%. it is not flat anymore. lisa: it is basically up about 1% on the euro versus a 17% gain on the s&p 500. we brought it up to speed with the rest of the s&p based on premarket trading. they did cut prices on some grocery goods which is part of what they are saying lured people into stores. what i find interesting is what people spent money on. the nonfood items. apparel. things they were not spending on

when they were supposedly more concerned about some of the inflationary risks. walmart in this together not speaking of a consumer running out of steam. jonathan: deleted from target. the latest from t.j. maxx and macy's coming up. under surveillance this morning, running the risk of falling behind the curve. >> if all you're going to do is string out a bunch of 25 basis point rate cuts they could take a long time to get to neutral. the further the fed is away from neutral, they are very restricted by their own admission, the more the rest of the economy given the fact that they are far from neutral and the fact that the data has been somewhat weaker than expected. i think that supports larger moves at the outset. jonathan: payrolls revisions from the bureau of labor statistics due at 10:00 a.m. eastern time. it's expected to show u.s. job growth through march was weaker than estimated. torsten slok shaking of the

weakness and focusing on the strength. daily and weekly data shows retail sales are strong, jobless claims or falling, restaurant bookings are strong and air travel is strong. there are no signs of a recession and the incoming data. he joins us now for more. good morning to you, sir. let's start with revisions that are coming in a few hours time. revisions from goldman. anything from 300,000, 600,000 or one million. anywhere from 50 to 85,000 month. what do you make of these numbers? torsten: i think this is important for the economy. it's important for the fed but not important for markets. looking back at history and trying to figure out how much the employment group. if it -- grew. if he grew a little less, yes, that does send a different signal about where we are in the business cycle. i don't think this will get much

weight in financial markets. jonathan: what is the normal run right now for job growth? torsten: there was an important paper by tara watson from brookings, the institute. they produced estimates that said we will probably have employment growth around 200,000 in the near-term. because of immigration playing such a big role we should see a boost to nonfarm payrolls. we will probably get down to the long run estimate which is supposed to be around 100,000. jonathan: it begs the question by we took last month so seriously. torsten: that is why jobless claims for the last few weeks have been sick negley everything is -- signaling everything is fine. both travel, restaurant bookings, hotel bookings, and broadly speaking at how many companies will default. we also have a picture of economy is not slowing down.

this whole narrative with target, walmart, t.j. maxx, the narrative that we are slowing down is not evident in the data. that is why we should think about the outlook for the fed with that background. lisa: you said over the past few months you did not think any rate cuts were necessary. this comes at a time we have 100 basis points of rate cuts being baked into the market. it is most likely the fed will go next month. what do you think the consequence will be of a fed that starts cutting next month at a time when you still don't think it's necessary? torsten: there is a whole concept we are way too restrictive. that is only if you have the fed going at a lower level, 2.5% to 220%. then it is true -- 2.8%. then it is true. what if where we are going is closer to 4% or 4.5%? then we are not in a hurry.

the question is what is the incoming data telling us? the fed last hiked rates in july of 2023 and now 13 much later we are waiting for the data to slow down. if it did not arrive in the last 18 to 24 months, why should it arrive in august of 20/20 for? -- 2024? lisa: maybe he is more present than we previously thought. 20 to some of the retail sales or the negative readings into the nonfarm payrolls we got a couple of weeks ago. at what point do you say we do not need rate cuts? you have conviction based on the strength you were talking about that gadot is not coming and this is a different environment for the environment? torsten: we see that reflected in different speeches by fomc members. hold on. i need more evidence we should cut interest rates. others are more convinced.

getting the committee together for jay powell and making sure the committee is moving gradually in the direction of interest rates moving lower, that does take some time. they have agreed they will cut interest rates 25 basis points in september. after that, everything is open. the data is not slowing down. retail reporting earnings. the walmart ceo said we are not seeing broad-based slowdown for the consumer. we need to take that seriously. i understand and markets we "want the economy to slow down." we are so hooked on the narrative that the interest rates need to normalize. we have plenty of time for normalizing interest rates. let's get the rate cut on this september 18. that is what jay powell will say a jackson hole. i think they are open to let's wait and see how the data plays out. jonathan: it seems to me that folks are shifting to the other side of the job mandate. there's a focus on the labor market. if you're confident and constructive about the future

from risk management, you want to reduce interest rates a little bit. maybe 25 and the 25 again. it is the other side of the mandate neglected over the last two months. inflation. you mentioned governor bowman. he talked about upside risk to inflation. went through a long list of things. increasing geopolitical tensions, additional fiscal stimulus and increased demand for housing due to an aggression. should we be more focused on the things we have been ignoring for the last couple of months? torsten: let's be clear that inflation did peak get 9.1%. we are now at 2.9%. we are closer to the 2% target. the last time you looked at 2.9%, it is not 2%. they are bringing up the same points. well, let's wait a little bit and make 100% sure we are still moving towards 2%. the risk is if inflation does start to move sideways or higher, they will need to go back and revise. just like it did in the

beginning of the year. they said we will have three cuts. now it is just one cut. also, during the vix episode and the unwind from japan, they were pricing in the fed cutting six times. that is why there is a roller coaster ride. it's important to anchor your expectations around the incoming data actually showing. lisa: we talked to you a couple of month ago and you said you could see the strength in the market continuing on the heels of data that continued to be more resilient, stronger than people expect. next year it could be a problem. you can see that fall off a cliff. have you changed your view as you see a greater likelihood of the fed rate cut and potential for maybe some pressure to be eased before next year? torsten: the main reason why the economy is holding up so well at the moment is there is a tailwind from a higher stock market, higher credit spreads and easing financial conditions across the board supporting the economy in a broad way.

that does mean now we have some correction in the magnificent seven. the stock market is beginning to show signs of wobbling a little more, the friday after the carriage rate unwind. it would begin to have applications for middle income and high in contempt tumors -- high income consumers. also those who own private credit where the cash flows have been the best levels in decades. anyone who owns fixed income, that continues to be an important tailwind to the economic outlook. jonathan: let's do this again soon. torsten slok of apollo. much more on that debate in the next hour on "bloomberg surveillance" and this moving target. up by more than 14%. up next, seema shah of principal asset management, libby cantrill , and anders persson.

from new york, this is bloomberg. ♪

>> what you expect the federal reserve to cut in september. >> it's about how quickly they get to neutral and were neutral is. >> we cannot sustain the race without being susceptible to a slowdown. >> we don't have a lot of experience with soft landings. >> they guided us to a feathery soft landing. just don't mess it up. >> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz and annmarie hordern.

jonathan: the second hour of "bloomberg surveillance" starts right now. let's start with your scores equity futures positive, bouncing back from yesterday's losses. the nasdaq up by .2%. the russell and small caps up by .6%. your day ahead, some fed minutes at 10:00 a.m. eastern time. revisions to payrolls for the month of march. we are looking for big revisions. we are focused on the earnings. we have heard from target and macy's. this morning we will hear from tjx. let's talk about two very different stories this morning. target and macy's. macy's is down by more than 9%, target up 12%. consumers absolutely fine. explain the difference between these two companies this morning. lisa: there's an issue of execution versus the macro story. we have been trying to decipher how much when people talk about

a weaker consumer that is because of execution. or, whether it is speaking to that. this is what macy's ceo had to say that the company sought a more discriminating consumer this quarter, talking about sales that came in below expectations. falling to 3.8% to -- also ratcheting back the revenue forecast for the full year. still delivering upside beat to earnings because they were able to be more efficient. what is the take away? hard to get a concrete read on the consumer. this is an execution story at a company having issues, o a broaderr macro trend? pick your poison. a lot of people going to the idiosyncratic. jonathan: when you are being confronted by discounts all over the place, macy's not in a great place. when you listen to what they are leaning into, bloomingdale's and blue mercury, hiring consumer. we are seeing that

repeatedly. lisa: the housing sector is the area that's been doing better. i keep going back to execution. companies that cater to lower and consumers, and that is why t.j. maxx will be interesting, have also shown strength. walmart and target showing more sales in apparel. this is not lower income consumers having a difficult time. there's a bigger question. this is fascinating after decades of decrying the fact the rates were creating an even playing field for the companies that were not very good. are we seeing the good weeded out from the bad? are we seeing real delta between the strong and the weaker they cannot function a world where rates -- were money costs something? jonathan: he the word idiosyncratic. how much heavy lifting is that were doing in the retail space to explain away contradictory signals from one company to the next? lisa: i don't know.

when it comes to homebuilding at home goods, that's a little different. the housing market seems to be ticking to its own clock. some people say that is telling, a tea leaf. when you look at macy's, this shows people have a small pool of cash. companies are getting more aggressive to get that small pool of cash for their own. it becomes a more difficult time for those that have any kind of weaker hand to make headway. you can cast the story in different ways which is why you have seen the narrative shift that left everybody with a bit of a crooked neck. jonathan: target swinging to growth. the stock higher by 12% in the premarket. i think we both have that crooked neck. we will talk about the revisions at 10:00 a.m. eastern. we talk about a range of expectations. jp morgan expecting 300,000 something revised below or over the last 12 months. the range from goldman sachs, anywhere from 600,000 to one million. anywhere from 50,000 to 85,000

jobs per month. lisa: which has been one of the key issues with data dependency that will get revised and potentially significantly so to the downward type direction. here is one statistic i find interesting. a downward revision of more than 500-1000 for the year ending in march --501,000 for the year ending in march would be the largest in 15 years. does that reset the color of the discussion around the labor market and how robust it is heading into the fall? jonathan: the federal reserve says it is data dependent. how credible is the data? a little bit of a lift. the equity market is doing ok. yields are higher by a single basis point. a little snoozey in foreign-exchange. negative by almost .1%. coming up, we catch up with torsten slok --catch up with seema shah, libby cantrill and anders persson as anticipation

builds for jackson hole. we begin with the s&p 500 snapping an eight-day winning streak as traders await payrolls revisions and fed minutes. seema shah seeing stocks grinding higher. "this backdrop is constructive for risk, and a $6 trillion amount of cash is ready to fuel risk assets." seema, let's go to the punchline. that $6 trillion mountain of cash. why will it be unlocked anytime soon? seema: there are a couple of reasons. we have seen investors become cautious. we know the reasons why. covid, the regional banking crisis, and able to make some kind of interest on those savings. we are on the verge of cuts likely to move at a faster pace than what people are anticipating. sitting in cash is no longer going to be attractive. i think investors need to take

into account the entire backdrop. what are we expecting for risk assets? there's a lot of opportunity. jonathan: what is the backdrop. people could pile into cash even more as rates come down. they are looking to de-risk away from risk assets. what makes you think they will go on the other direction? what tells you things will remain strong? seema: in the last couple weeks there has been a lot of revisions. i expect increasing uncertainty. we are in the soft landing camp. we spent the last few weeks pouring over the macro data, labor, balance sheets. we are not seeing clear signs of weakness. there is an economic slowdown. it has been underway since the beginning of q2 this year. a slowdown does not necessarily need to transition to recession. we think the fed has a lot

of room to cut rates. the risk of recession is fairly low. it gets the backdrop that equities can still perform fairly well. we are not looking like gains like we saw in 2023 through q1 of this year. those are still positive gains to be made. lisa: i love you go here. tracy mcmillan said she sees the $6 trillion in money market assets heading into equities may be more than longer-term bonds. paul michael of jp morgan saying it will flood into all sorts of bond funds, leading 10-year treasury yields at 3% or potentially bloomberg. do you agree with that type of assessment? seema: there's a lot of opportunities across the equities. look outside the u.s. as well and there are global opportunities. on the bond side, i don't know if we will see 10-years quite that low. there are so many factors that play at the moment in an election year, at least for the

time being the downward pressure is somewhat muted. i think there's a lot to go into these bond funds. there are question marks around the economic slowdown. we think there's an opportunity across not just equities and fixed income across real assets. that is what yes, the backdrop is more uncertain but is important investors look at when fed cuts start. cash is no longer staying attractive. lisa: jon talked about a rate cut in a bad kind of rate cut in terms of what the backdrop is in terms of a good economy or a bad economy. today we get the payrolls revisions, the initial payrolls revisions in the year ending in march. expectation is fuzzy. if we see a revision of one million fewer jobs as reported initially in that period, does that change your view? seema: it does not change the

view but it will add to the impression the fed is behind the curve and the fed will have to accelerate its movements somewhat more. you were saying there were a lot of difficulties in focusing on one data point. payrolls are all over the place. if you think back to april of this year when you had revision down to 116 and then back up to about 200, it's important to look across the consumer space, also focusing on the balance sheet strength of households and companies. that will be important for the overall picture of the underlying strength of the economy. i think it will impact fed pricing. jonathan: let's turn to gold. big moves this year, up by 20%. the move this morning down about .25%. ubs came out with a note and looking for a move to $2700 by

the middle of 2025. they give a long list of reasons. the fed shifts, central bank buying, portfolio hedges. what is the strongest tailwind behind this move? seema: i think the gold movement has been one of the more interesting areas to maintain long-term exposure to the gold. you have the fed cuts, the central bank. you have the risk environment playing in. for us at the moment i think the concerns around the slowdown will probably not go away. they will not be cleared up in the near term. the upward movement for gold is probably here to stay a little longer. jonathan: what substitutes in a portfolio at the moment? what are you telling people? seema: the gold? jonathan: yet. -- yeah, . seema: real assets are important.

it ticks a lot of different boxes. having some kind of downward protection but also focusing on what happens if inflation does turn out to be sticky. we talk a lot about recession risk. one of the key concerns we are thinking about in the next two years is what if inflation starts to take off again. then it becomes more of a worry. having the real asset exposure, anything with inflation mitigation deserves to be in a portfolio. lisa: are you saying on the margins real assets should replace long-duration bonds? seema: i don't think they should replace. there is an area which they are ticking the box. long-duration is important if you want that downward -- that protection against downward economic risk. gold is a slightly different element. across equities and fixed income and alternative space there does need to be exposure across all three. you are ticking all your boxes

in terms of the risk environment. jonathan: seema shah, thank you. the range of outcomes is that wide that you need allocations to all three. lisa: otherwise you will not be hedged. you have a bifurcated risk profile. you have on one hand potential of a real negative economic backdrop that leads to inflation coming way down and rates coming way down. positive may be for long-duration bonds. you have inflation rearing its head, causing a downturn, etc., which would be bad for ponce. gold, you might as well throw a chip that way. jonathan: there is no drama in the market this morning. 10-year equity futures positive by .2%. with your bloomberg brief, here is dani burger. dani: target surging in the premarket after ending a string of sales declines in the second quarter, setting improved discussion area spending up 13.8%. the retailer said comparable

sales rose 2% in the quarter, higher than estimates, while breaking four straight quarters of contraction. macy's, not such great news. down nearly 9%. to cut outlook for sales for the rest of the. revenue fell just shy of estimates. the company said a challenging consumer environment contributed to the weakness. the u.s. federal trade commission's ban on noncompete agreements has been blocked by a federal judge. in a really yesterday, a judge in dallas sided with the u.s. chamber of commerce and a texas-based tax firm who sought to block the measure. they said the ftc lacked the authority to enact the ban. this is one of three lawsuits challenging the rule. uber hired a former tesla executive to oversee the company's transition to ev's. she will start next month as the global head of sustainability as uber aims to use a zero emission

vehicles for all rides and deliveries by 2040. at tesla, she helped open the car charging network to other brands. that is your bloomberg brief. jonathan: appreciate the update. shares of target up in the premarket by more than 13%. macy's suffering. we will get numbers from t.j. maxx this morning. plenty of reaction to those numbers. up next, the dnc and we will catch up with anne-marie and libby cantrill of pimco. this is bloomberg. ♪

jonathan: retail earnings a big focus this morning. numbers from target and macy's and later on today from t.j. maxx. the fates are very different stories today for these two stocks.

look at macy's and target. macy's down by 8%. target up by 13%. lisa: both are cutting prices. if you look at the themes, target was able to broaden out the range of sales. macy's coming in short for revenue and sales forecast for the full year. we will have this conversation on going. i will not use the 'i' word again. jonathan: idiosyncratic. lisa: how much macy's a story about targeting the consumer base? target talked about resilience of the consumer at a time where it's breaking out of a funk. jonathan: tk would be brutal about this. when was the last time you went to a macy's? that is what he would ask. lisa: he's not wrong and that's why they're leaning into their more loved brands like bloomingdale's, blue mercury that cater to a higher end consumer. also have not been through so many cycles.

the macy's of harrelson square has gone through a number of cycles. questions around certain things. jonathan: i do want to go to harold's square either. lisa: the vintage. i used to take my kids there when they were little to look at the escalators and show them with a used look like. we did not actually buy anything. jonathan: trips with bramo when you're a kid. under surveillance this morning, a stark contrast on law and order. >> kamala harris will deliver crime, destruction, death. if she's led to be the president of the united states, you will see levels of crime you have never seen before. i will deliver law, order, safety and peace. >> i do believe bad behavior should result in a consequence. well, we will make sure he does face a consequence. that will be at the ballot box

in november. jonathan: the campaigning continues throughout today. annmarie joins us from the dnc. what is coming up? annmarie: you really have both these camps leaning into different messages. trump will be in north carolina with jd vance talking about national security. are you safer abroad and at home with biden-harris? kamala harris and the dnc picking up on the theme of freedom tonight. we will hear from governor tim walz who she selected as a running mate who was not well known to the american public. he had a moderate voting record when he was a member of congress but then moved starkly to the left as governor. he has come under attacks about his military record and most recently about the fertility journey of his family. people potentially lean in and talk about these issues, may be clear some of that up this evening. who i'm interested in speaking -- hearing from his speaker

nancy pelosi. yesterday at the end of the rollcall when governor newsom introduced california with t upac and dr. dre singing in the background, he said he comes from the great state of nancy pelosi. we are month out from where kamala harris would have been speaking tonight on this ticket. jonathan: what a big change in a small, and a time. annmarie, thank you. libby cantrill is with us around the table. she told us to go to the beach and ignore the politics. libby: two more weeks. just enjoy every ounce of sunshine and what have you. we are telling clients this is still -- it looks like a dead heat as of now. the interesting thing is despite the drama we have seen over the last six weeks or so, and it has been dizzying, the race is effectively where it was in the spring when biden was still at the top of the ticket. it's effectively a dead heat.

the down ballot races, we talked about the composition of congress. very important to the markets in terms of fiscal policy. the house looks like it's also a jump ball. we have taken a round trip over the last few months despite the dizzying nature of the events. jonathan: better clarity on policy over the last two months? anything on that front? libby: nothing to guide our clients about. if this is an election about personality, about vibes, kamala harris could do very well. if this is an election about policy, she's quite vulnerable. you can see trump winning. i don't see you necessarily see her define her policy platform with the specificity that the policy nerds would like around the table. at the same time i don't thing you have seen former president trump really litigate some of those policy issues. we have learned more about her

tax platform. she ran for the democratic nomination and had a very progressive tax platform. she certainly moderated that. some of the things she's advocating are still out of step with the market. the corporate tax rate increased from 21% to 28%, taxation of unrealized gains for those making weather $100 billion. these are not likely to actually get passed given the composition of congress but also not necessarily in line with those swing voters. those of the people we need to get. the dnc is about rallying the base. she also needs to get those swing voters in the crucial states like pennsylvania and wisconsin and michigan. lisa: taxes is where she is most vulnerable. people looking at policy. libby: she's vulnerable. trying to separate from the policy platform she ran on a 2020. immigration, she's incredibly vulnerable.

they are trying to get in front of that in terms of the law and order. generally the vibes on the economy. she is trying to distance herself in some ways from the biden presidency but she is still the sitting vice president. how effectively can she do that? the big will the ability for biden at the top of the ticket's economy, inflation, immigration. those will play her. if it's about personality and vibes, maybe she can overcome some obstacles. lisa: it feels like this entire election has been about vibes. everyone was waiting for it to change but it hasn't. trump was in a better seat because he was not biden and he could form a sentence better than biden. now there is kamala harris who's in a better seat because she's anywhere face than donald trump and there's a lot of animosity toward him. how long can that maintain the momentum? candace emily be the anti-trump platform? libby: it could be. that's the big open question. can trump litigate against

kamala harris on policies where she's vulnerable or not? that remains an open question. the last few weeks he clearly -- the campaign's own admission, they had a difficult time stabilizing that campaign reorienting towards kamala harris. it becomes difficult to handicap this election. we will get more clarity in september and october. just remember that pennsylvania, the most crucial swing state in my view goes to the polls in terms of early voting on september 16. this could simply be a vibes election. harris would benefit from that obviously. the most compressed general election cycle. jonathan: that is not what bramo wants to hear. libby: yes. jonathan: the race is as tight as it is given the biggest

issues is the economy and immigration. this goes back to prosecuting the case issue for the republicans. lisa: the whole idea can trump litigate this. people say you need to go to the policy, it has not panned out the way they wanted so far. that is why september 10 will be so important. jonathan: debate day. circle that on the calendar. libby cantrill. coming up on this program, two very different stories of retail, target and macy's. from new york, this is bloomberg. ♪ why do couples choose a sleep number smart bed?

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jonathan: yesterday snapping an eight-day winning streak. the longest winning streak of the year so far. longest day of the year so far, we came this close to the longest daily winning streak, falling just short of making it day nine. positive on the s&p today, the nasdaq up by .2%. lots to talk about in the bond market, so let's talk about it. 10 year yields are higher by a single basis point. jp morgan asset management joining the program yesterday, leading the newsletter with this 3% yields or lower on the long

end of the curve. at some point that goes into next year. not bad duration, per se, just the money markets flooding into general aggregate bond funds and guess what, a lot of that goes into the 10 year, hitting its lowest level since early this year. numbers -- jonathan: numbers any moment, dollar-yen no longer at the 160 we were talking about, down to 100 4617. i wanted to mention this as an excuse to tell you that japan hosted 3.2 mind -- three point two mind -- three point two 9 million in july, a 10% increase compared to july of 2019 pre-pandemic. lisa: one figure stands out, the peak weakness that we saw in the japanese yen that some people might have nailed with their chips -- trips over to japan. at a certain point you hear about tourism from china to japan to capture the weaker

currency. the u.s., everyone going to japan. how much is that a boon for the economy to allow the bank of japan to hike rates when they are looking to normalize? jonathan: tjx has a better outlook this morning. lisa: macy's is looking more and more like an outlier with a earnings-per-share with full year comp sales compared to sales up 3% versus the estimate of 2.7 5%. to me this highlights just how much you see some of the deals being rewarded and those lagging behind falling further behind. earnings-per-share in the second quarter, 96 cents versus the expected $.85 year over year. going through the metrics, the bottom line is that there is a story consistent with tjx and target, macy's is the outlier. pick your poison in terms of the

narrative. jonathan: you can see that in the price action. target, that stock is flying. macy's moving in the other direction. lisa, putting it simply, it's a better outlook for sales and margins with profits winning. lisa: this goes to what people are talking about, cutting prices without increasing margins. people will say it's not an issue a price gouging, it's the opposite, dropping prices with efficiencies allowing them to eke out a greater profit. how much is it artificial intelligence? how much is it change in the different technology? real questions about why you are seeing productivity increasing as the increased profit margins don't necessarily increase prices. jonathan: as we speak, jennifer is pouring through the numbers and we will catch up with her in about two minutes.

top stories for you, the associated press poll finding that tim walz is better liked than jd vance, 36% have a positive opinion of tim walz, 20 6% with jd vance. independents will be crucial going into november. lisa: but digging in, a lot of people had no view, they didn't know these people. it's hard to get a sense. there was a significant cohort of people who didn't have a favorable view, some 44% versus 42%. these are numbers that highlight the lack of knowledge around two potential running mates. it really is a completely different race. that's the reason why -- is it october 1 with the vice presidential debate? there's a huge discovery process here in this vibes election. jonathan: even donald trump has

played down the importance of vp picks over the last few weeks. lisa: there's a reason for that, a lot of people say it's a mistake. he was trying to double down on his base with jd vance, who is a polarizing figure, which has been borne out in the polls. the key question is, does tim walz play a bigger part in the harris campaign, or is this less important at a time when people are just sort of feeling out the vibes. jonathan: trivia, i'm surprised how few people remember the running mate of hillary clinton 2016. do you remember? lisa: who was it? jonathan: tim kaine. see, everyone has forgot. lisa: but i have a bad memory. jonathan: i have asked so many, they have forgotten. lisa: was it fair that he was brought down by the roar? remember? jonathan: no, but do you remember jeb bush, please clap? we'll -- weird couple of years.

we have forgotten a lot. maybe for good reason. walmart, 3.6 billion dollars by selling their stake in jd.com, winding down their partnership. focusing on expanding their own e-commerce delivery system in china. they were whacked in the premarket, down by 7.6%. lisa, we are seeing a series of companies making interesting moves around this story in china and i wonder how connected even apple producing their certain iphone in india is connected to all of this de-risking, pulling back around the story in china. lisa: you and i basically read the news the same way. wait, is this connected with apple increasing production in india? you can see it going on with what's getting out of some of their stake in walmart and china with lvmh coming out to say they are cutting staff at sephora in china. two issues, is this a weaker

consumer in china? or that u.s. companies are losing less of a competitive edge in china as tensions continue to percolate between u.s. in the world's second-biggest economy. this is what we are watching. how much are we seeing and how much are we not seeing? is it political or business malpractice to say this out loud before you have moved operations out of china, considering retaliation that is potential from government officials? jonathan: everyone is a diplomat, it seems. tjx was out moments ago, target surging in pre-markets with a boost in outlook. macy's, trading lower after cutting their forecast and a challenging consumer environment. i mentioned to bloomberg intelligence, pouring through the numbers. jen, let's go through it. what explains the difference between what you see in macy's and, say, target and elsewhere? jen: what's interesting is that

target has historically kept the consumer at the center of everything they do end macy's has been trying to execute against their strategy. but if you take one area as an example, like private label, target does a good job of turning that over, keeping it fresh, putting it in front of consumers, macy's is in the earlier stages of executing that . when it comes to which audience they are targeting, how well they are executing, that is what you see in today's results. jonathan: target has had some difficulties for sure over the last few years. what have they changed and what tells you that this swing to growth can continue for that company? jen: they had been on quite a tear and then had some missteps. we have since seen a refocusing of their efforts. that is a combination of making sure they have got the right assortment, that it is about lowering prices on essentials, reinforcing the value message

with consumers -- that's the message we have been hearing from walmart and tjx, value is king. price investment targets are making the emphasis on lower price points in discretionary categories. those things are igniting sales and bringing people back into the stores and shopping online. lisa: how do you understand expanding profit margins at a time of lower price value? jen: you touched on it before this segment, increases in productivity. one of the things to remember is that during pandemic, almost all retailers introduced a lot of extra costs into the supply chain because they were desperate to make sure they had items in stock. we are still in the process of unwinding a lot of that redundancy that was introduced with the extra costs. so, this year is especially a bonus year where they can take extra costs out of the supply, enhanced by lower transportation

costs. that is not likely to continue into 2025 because they are reaping the benefits of low hanging fruit. that with other productivity initiatives like ai, it's all starting to make a difference. jonathan: -- lisa: is it expectation or is that the resilient consumer? we heard from the ceo that the consumer continues to be resilient but sensitive to value in bringing inflation down, keeping the price point affordable. macy's talked about more macro economic pressures. which is it? are these specific execution stories? or is there low pressure influencing the pool of cash that consumers have to spend? jen: there is real pressure limiting the overall pool of spending. people are conservative, wage growth is not as strong as it had been. the savings rate for the people are slowing. they have burned through savings. people are spending but being

thoughtful in how. so, when they can achieve something with value, they feel good about their purchasing feel more inclined to make it. execution around the idea of how you get people to appreciate your value, that's not just price. it could be about quality, convenience, a lot of different factors. getting people to appreciate the value of what you offer is helping to drive the results. jonathan: to put a bow on it, i will put you on the spot, but are there parts of retail that you want to see constructive going here compared to other parts? jen: i would say that the players in the middle have been able to service lower to middle income households, as well as drawing in more how your income households with that value and strong execution, those other companies i would be watching. jonathan: got it, jennifer. thank you. we have heard from tjx and the likes of target.

macy's seems to be the outlier so far this morning. lisa: going to that point of will the weaker hand be going out in this time. several people have written into correct me, i want to say thank you. i was talking about tim kaine going roar, but it was actually dean -- howard dean. is it the same thing, because that roaring kind of torpedo a candidacy in a way that lodges itself and i think that he does look like him. jonathan: when i mentioned jeb bush and please clap, he had already been losing. not to go after jeb bush this morning. [laughter] a lot of these things, we think they matter at that time, but it all gets forgotten. lisa: except a lot of people did remember the howard dean scream. keep it coming, i love the feedback, it's helpful to

remember. i actually enjoyed it, it's encouraging and motivational. jonathan: got to find a video in a moment. with your bloomberg breeze, here's dani burger. dani: target is surging in the premarket, ending a string of sales declines in the second quarter, citing improved discretionary spending. t.j. maxx is up in the premarket with second-quarter net sales beating estimates saying growth was driven entirely by customer transactions. as you can see, it's not great for macy's, down in the premarket, cutting their outlook for sales for the rest of the year. revenue falling just shy of estimates saying that a challenging consumer environment contributed to the weakness. mortgage applications for home purchases slid to their lowest levels since february as tracked by the mortgage bankers association with applications falling 12.2%. refinancing tumbling after a

two-year high in the week prior. all of that despite an easing of mortgage rates for a 30 year contract being the lowest since may. housing affordability, preventing the upswing in demand. on the luxury side of things, toll brothers seeing a spike in demand for luxury homes as mortgage rates fall with purchase contracts rising 11% year-over-year. the number missed estimates cap of they said they are seeing solid traffic with momentum expected to continue. their customer base tends to be well here compared to the average home buyer, keeping demand steady as sales lag. that is your brief. jonathan: more on that in about 30 minutes, we will have the view from ubs around the corner. a soft landing in sight. >> they should do nothing. the data has come their way. they have guided us to a feathery soft landing. just don't mess it up.

start cutting rates in september and let's get on with it. jonathan: everybody is going to buy bonds? that's this beautiful bedtime story from bob michele. yields, 3% and lower. we will talk about that, next. from new york, this is bloomberg. ♪

jonathan: stocks on the s&p 500 are shaping up as follows going into the opening bell a few hours away, equity futures are up with bond yields going nowhere. we will get into a call with bob michele from jp morgan in just a moment, he is looking for 3% or maybe even lower over the next 12 to 18 months. under surveillance, a soft landing is in sight. >> if you leave restricted rates at the level they are at currently, it worsens the labor market.

then you have got not a problem with inflation, but the pace of disinflation. they should do nothing. the data has come their way. they have guided us to a feathery soft landing. just don't mess it up. start cutting rates in september, get on with it. jonathan: the message was to keep cutting, keep cutting, introducing this conversation about the 10 year drop going even lower. lisa: that wonderful pool of 6.2 trillion dollars in money markets to be unleashed into income, meaning further up the curb, finding itself to the 10-year yield. then you will see that wonderful combination of lower yields and an economy not falling off a cliff. he says do nothing but that if you were jay powell he would get up and say i'm ready to cut interest rates and this is the last time you will get that yield. jonathan: it's a long list of things he wants him to say with

a long list of things he doesn't expect them to say. they said they expect the fed to cut it -- at each meeting through 25 with larger cuts including a 50 basis point move in september with a possible incoming labor market deteriorating at the same pace as the july jobs report. good morning to you. we talked a lot about the jobs are visions we are getting this morning. basically it caused freezing cold water to be thrown all over the conversation where they said it doesn't matter to markets. do you think it will matter to markets at 10 a.m.? >> i'm more in the camp of it not mattering a whole lot. i think it is a backward looking number, of course. it's year to date through march, likely outdated at this point. it's a number that economists will definitely digest and take a harder look at, but from a market perspective we are really more focused on what's happening

going forward and the most recent data, obviously, more interesting, we are more focused on what's coming. i would say that historically this is not been a number that is all that market driven and i don't anticipate it to be. jonathan: don't you think that it informs where we are going? if goldman is right and it goes from 50 to 85,000 jobs per month , wouldn't we have traded on that data differently? >> to date this year, that's very much a front and center in terms of focus with the market shifting from inflation focus to job market focus. this year, this time around, it's on more interesting data point. but at the same time the numbers, if you look from 300,000 to a million, the estimates are very, very wide. economists cannot even agree on what the numbers should be here. yeah, it's a data point and we have to digest it, but frankly i think the market is going to be looking more forward to the nfp

number coming in september. lisa: part of the problem is talking about the importance of data dependency but that person after person comes out and asks if the data actually matters and we are looking at all that data between macy's and t.j. maxx, t.j. maxx, wondering what matters to anyone. you are talking about the idea of 10-year yield's being at a fair value of 4%. you both see the economy falling off of a cliff. why are you not in the 3% camp? >> bob mentioned 12 to 18 months out and that's much more realistic as we sit here today. from our perspective we are thinking the 10 has run a bit too quickly, it's been a slow, tough month with some investors out there probably using that as a cheap option versus equities. so, if we have a hard landing, we can use that part of the

market to hedge their bets. we are expecting the tenure to start moving lower in 2025 and we are not expecting it to be a slow is that, but 3.25 is possible by year end, but that is a long time out in the volatility has been quite severe, so to say. today as we sit here it feels like we have gone too far, too quickly, so 4% we think is closer to fair value. lisa: if you truly believe the fed was an think -- entering into a rate cutting cycle with a neutral rate that wasn't different than what was historical after pandemic, why would you not hoover up as much of those bonds is you good right now head of 2020 five? why wait, why the cute about it? >> the trend is lower, for sure. that's the backdrop we have seen for some time, stocks moving lower with the two-year being quicker to move. we are expecting it to move lower and we are expecting it to be a flat yield curve by the end

of the year and we are seeing an upwards slope and yield curve going into next year. probably more comfort around the two-year moving lower correlated to fed cuts as we move into next year. again, the tenure backdrop will be lower for next year, but there are a lot of moving pieces here and we have seen a lot of volatility and found more opportunity in the spread markets in general with more bets going onto that side. jonathan: where are you on price spreads that have tightened over the last week, what are you waiting for? >> we think they are fair value to bit rich, waiting for those to get wider as things slow. they had a quick move two weeks ago. very quick move, coming back with lee. at this point, you know, we are expecting it to get wider. high yield of 320 going up to 350 again as the economy starts

to slow down and we are more focused on that. jonathan: walk us through the process a bit, we hear it a lot with stocks, people saying they want to buy the dip, the dip happens and they keep running away. you get scary and you one where the next 5% is coming from. same thing with credit spreads. people freaking out, it's another hemp -- hundred around the corner. what's the process for you and the team? >> we debate that all the time and i will say that the credit widening that we saw a couple of weeks ago was really quite tricky given the jobs data on friday, the carriage rate unwinding with geopolitical uncertainty all happening at the same time, so dissecting what was driving what and how much was technical over fundamental was tricky. i think it was our jobs data. if it was only jobs data we would have said this looks cheap and is a cell.

interestingly, we stepped in for buying credit basically that we particularly liked thanks to that. it's an assessment that gets quite convoluted and you have to basically take it in totality. so, from that perspective we have often seen it pass with big moves like we had two weeks ago that can have more coming behind it. that is the tricky part at this point. we are trying to be dollar costs average to save a bit here with the assumption that spreads will be moving higher over the rest of the year. lisa: the 6.2 trillion in money markets, which asset is going to benefit the most about? >> i'm biased, but i think that fixed income will be the next natural step overall. i think it's a pretty big step for someone who was concerned about what their views are in the economy and for the markets to jump all the way to equities,

real estate, or even private credit. it feels that the natural next step will be fixed income. we are starting to see it more and more and quite frankly, the fed cut would probably be a nice psychological stuff towards that , reinforcing to investors that it is time to shift. jonathan: at least you are honest. good to see you, sir. our lineup for the third hour looks like this, catching up with sarah, john, veronica, and christian. looking forward to that conversation, i have to say, on homebuilders. mortgage applications, terrible this morning. lisa: is this idiosyncratic or emblem -- emblematic of weakness coming from the high rates out of the fed? jonathan: firmer by two tens of 1%, that conversation and more around the corner.

third hour of surveillance, up next. ♪

>> there has been a step up about concerned about the consumer. >> a good situation, things are

indeed getting better. >> there's enough good going on to offset whatever the weaknesses. -- the weakness is. >> the consumer is hanging in there and that is why the economy will continue to expand. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: we will get some top stories in retail for you. equity futures posited by 1/10 of 1% on the s&p 500, snapping the longest daily winning streak , eight days of gains gone with a very small, mild move lower in yesterday session. the opening bell, the day ahead, tur -- a ton of earnings already with t.j. maxx, macy's, target. 10:00 a.m. eastern we get revisions to payrolls. fed minutes at 2:00 p.m. eastern

this afternoon. retailers who have already reported. let's go through the names. three different stories. or two different stories for three different names. macy's is one story, down by 6%. everything else is kind of ok and better than ok for target up by 13%. lisa: increasing expectations for revenue, for comp sales, looking at earnings that came in stronger than expected, margin expansion even as they cut prices across the board. a real question about how much this is a consumer looking for value versus searching outside of simply consumer staples. it was also the apparel areas, the non-basic staples that people were going into for target. this is an easy comp type of story based on the controversy a year ago, but not necessarily screaming of a weakening consumer falling off of the cliff. jonathan: jackson hole, the

address from chairman powell on friday, the retail numbers, revisions to payrolls later this morning, let's wrap that up. this federal reserve thinks the labor market is strong. because they believe that they think they have time to get this right when it comes to inflation. they have reason to be patient. this is why 10:00 a.m. is important. how strong is this labor market? we had two guests who say that these numbers, revisions, are not important financial markets or won't be. economists are taking a different view over at citi. they are expecting downward revisions to payrolls of roughly 500,000 to 700,000. they think a notable downward revision is another confirmation that the rising unemployment rate has been an accurate signal of labor market dynamics. lisa: these are big numbers that are hard to put into

perspective. a revision of more than 1000 jobs taken out of the tally through march would be the biggest going back 15 years. when you step back to 2022, it made a big difference when we saw the revisions change and highlighted this more robust labor market than the initial data we got on a month-to-month basis would suggest. this meant that the fed was behind the curve and that is why they had to hike rates are so aggressively. some may argue, and you can argue the legitimacy of this argument, if things get revised in the other direction the fed is working with a shorter time sprain because the later -- timeframe because the labor market and have as much and it. jonathan: you mention the title of this year's get together in jackson hole, wyoming. reassessing the effectiveness and transmission of monetary policy. wouldn't your reassessment be different based on if jobs were one million or one million lower or not?

lisa: this is waiting for the long and variable lags. if the numbers are revised lower by enough, he was there all along just not seeing. that is the concern for fed officials. the tone has shifted. this will be a jackson hole that will open the door to a 25 basis point cut in september and gradually adjusting. whether this is the good kind or bad kind is what we have to see and how it affects risk assets is the bigger question. jonathan: we are on the same page. that's the critical question when it comes to risk assets. the s&p 500 up by .1%. the equity market and bond market are pretty stable and range bound, particularly the front end of the curve. the whole curve shifted lower but no drama this morning. the 10 year at about 3.81. various points along the curve are among the lowest of the year for yields. lisa: may be talking less about

a neutral rate around 5%. many fewer people are talking about that as inflation does normalize. the key question i have is, when do option start to matter more? we get a 20-your auction today when we have the lows of the year on some of the longer-term bond yields. does that reset it? we talk about the deficit? or does that continue to be on the back burner? jonathan: you'll catch up with sarah hunt as the s&p 500 snaps its eight-day winning streak. a spike in demand for luxury homes. and veronica clark of citi on her call for 100 basis points of cuts before the end of 2024. stocks taking a breather this morning as traders await jobs revision data and chair powell's address this friday. sarah hunt saying, "we now see firmly goldilocks territory based on the labor market and jobs number revisions.

we have more data in early september to either reinforce the start of the rate cutting cycle or throw a curveball." are you expecting a curveball or reinforcement? sarah: the consensus seems to be the labor markets will be revised down. how far down will be the question. that becomes the argument lisa was making, was it never that good to begin with and we were trading off the idea that it was so much better that we had to keep rates higher for longer? the number that came out in early august was part of the swoon that happened that is almost completely forgotten because it was quickly retraced. if that's the case and people were worried about that, or if that was one of the proximate things that happened at the same time, if the numbers are weak that will be a problem. people will go back to we will have a complete turnaround and it will be recession watch, hard landing, from what we experienced two weeks ago and now we are back to feather soft. jonathan: they say that maybe

this number won't matter much to financial markets. you disagree with them? sarah: we don't know what will happen with the geopolitical front, with the election. if you get a big enough revision down the market will pay attention because it has been swinging back and forth on narratives on different data points because that is what the fed has been essentially telling it to do. those numbers matter if they come in like her they won't matter. lisa: what matters is what companies are telling us. they are telling us that they are able to expand profit margins as they reduce prices for consumers. this does not speak of a weak labor market going forward because a company with a bigger profit margin might not be looking to lay off many people. how much do you take more of a message from that than you do data that may get revised significantly? sarah: that has been one of the surprises on the earnings front that margins have not been affected.

there was concern that inflation comes down margins would go down. this goes back to what tom keene says all the time. they managed to keep margins up has been a good sign. it has been helpful for earnings and the stock market, but at some point the margins and wages start argue with one another. the question becomes, as wages haven't grown as fast, if you see revisions down you see real weakness in that part of the market. it's clear that the lower end consumer is already having issues. that may be what target is experiencing, some trade down, as is some of the walmart numbers. there is a question about how different segments of that market will act and react. lisa: i love the phrase "blushing pessimists," because the pessimists have been wrong again and again and are left with egg on their faces. given the potential for downside risk, how much are you positioning for that versus going fully and to risk with the

idea that the fed will be cutting rates and there's plenty of cash to be released for money market funds and that things are ok? sarah: we have brought-based portfolios. we are participating in technology but not 100% and the. other parts equal weight. the s&p has started to pick up this week. if you're comfortable where you are positioned, the risks of the market are just there. you don't know what will happen. you have to become to build enough with your positioning to say, if this is a broader economic shock am i ok versus is this a sector shock and i want to stay away from the sectors? it is a combination of how you put portfolios together. there is risk in the market just from a valuation standpoint, but if we got good information going into 2025 then people will look to that year anyway. but we have a lot of things between now and then. jonathan: you mentioned equal weight record high on monday.

what are the conviction longs for you at the moment? sarah: we participate in the big technology stocks. i don't see how you can't since they have the most cash. if you look at some of the areas, we have talked about energy, and if there is a recession he will see problems. you are coming to the realization that conventional hydrocarbons aren't going away in the next 15 minutes. that has put that back in the investment class where you have good returns on investment, good dividend yields. there places you can feel more comfortable. you look at both sides of those equations. lisa: the downside risk, is it a one million-dollar gold bar that is hard to lift? sarah: i'm not going to lift those weights at the moment, but there's nothing wrong with looking at the different asset classes. the fact that gold has continued to do well in the adverse and non-adverse circumstances over the year says something. it says more about what central bank's are doing, but there is concern that currencies

globally, fiat currencies compared against the gold are going down. there is a reason why people use that in portfolios. mining stocks have picked up too. they were not tracking golden a finally started to. jonathan: they were throwing around gold bars like the are nothing. can you imagine how many could you carry out of the bank if there was a old-fashioned gold heist? how many could you carry? hardly any. i'm not suggesting anyone does this. lisa: is this where your mind goes? how many could you carry? but it's true, they throw the bag over their shoulder. i love heist movies. jonathan: same. they need to bring some back. let's get you up to speed on stories elsewhere with your broom -- your bloomberg brief. dani: fortis pulling back on the

electrification strategy again. ford said that it's canceling plans for a fully electric suv which may cost the carmaker 1.9 billion dollars. ford will postpone a next gen electric pickup and spending on ev's to 30% of the annual capex. it was 40% previously. the ceo told bloomberg that the pullback was impart to make sure that there are affordable vehicles that meet the criteria of profitability when they launch. target is surging in the premarket this morning. it's up 13.8% after ending a string of sales declines in the second quarter. they cited improved discretionary spending. t.j. maxx also up in the premarket 3.6 percent reported second-quarter net sales that beat estimates saying that the growth was driven entirely by customer transaction. macy's is down 6.7%. it cut its outlook for sales for the rest of the year. revenue fell just shy of estimates. the company says "challenging

consumer environment" contributed to the weakness. texas set an unofficial record and electricity used according to the electrical reliability council of texas electrical use pushed the power grid above a record set last august the lone star state experienced dangerous conditions as the heat index sword. jonathan: up next, we will get you some morning calls and catch up with john of ubs as they see continued demand and in 2025. this is bloomberg. ♪

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target absolutely ripping an early trading going into the opening bell. the numbers are much better than expected. it is a return to growth. a great start to retail earnings early this morning. not so great for macy's. that struggle is being explained away throughout this morning so far. lisa: talking about how there is a more constrained consumer at the same time that you hear something different from target. at the same time, this comes from sales coming in lower than people expected even though they were able to eek out a bigger profit. this is getting people in the door when there are questions about macy's competitive edge. jonathan: not happening in the same way. there talking about better store traffic at target. lisa: precisely. including comparative sales which is why shares are increasing so much. fewer sales when you look at the likes of macy's. jonathan: one to watch, a theme to watch into the opening bell.

first up, citi opening a 30-day positive catalyst watch on gap a big second-quarter profit eat and upbeat sales guidance when the retailer reports next week. the stock is up by three percent. bank of america downgrading american express. the analysts pointing out commentary from retailers and travel companies that points to a challenging spending backdrop. the stock is down by 1.2 percent. ubs maintaining the buy rating on toll brothers. there is a lot to like in the homebuilders latest earnings report noting that in up early revised forecast should overshadow a miss on orders as toll brothers continued demand. the stock is up 1%. john, thank you for joining us. i want to dive in and talk about the bigger theme around the homebuilders for the last year or two. how they have done so well. how they have thrived in a high interest-rate environment. the factors behind all of that.

john: jonathan, thank you for having me. it is an interesting dynamic for the homebuilding industry and public homebuilders specifically. a lot of folks are reluctant to sell their homes because they have a 3.5% mortgage, or whatever the case may be. public builders have been able to very effectively buy down mortgage rates and offer incentives that make the affordability work for a broad range of buyers. they have been able to step in and fill the void where there has been no existing home inventory. the underlying demand has to go somewhere and it is going towards new construction and public builders are taking the baton. jonathan: one question we have is what it would take to unlock some of the inventory to boost supply more. you have noted this in your research, but i want to go through the numbers for our audience who may not follow it as closely. the mortgage rate in this country is something like 4%,

the average rate. the market rate if you wanted to get a mortgage right now would be something south of 7%. that is a widespread. as you've noted and everyone in the industry has noted, that is why industry has been so low. how tight does the spread need to be to encourage some of the properties to come back on the market? john: let's put a finer point on it. 80% of mortgages are below 5%. that bar is fairly low. that said, as we know life goes on. i think even at rates at current levels at some point folks are going to adjust and the transactions will pick up. we need that to happen. the existing home market is essentially dysfunctional. it is frozen. under 4 million units that should be closer to 5 million units, five point 5 million units. at the other end of an existing home sale there is a home purchase, that could be a new home purchase. it is not a zero-sum game or a

death knell for the homebuilders to have the inventory come back. the inventory will come back regardless, but as rates trend lower and we get closer to a six handle on the prevailing rate, that will be -- lisa: this is the 30,000 picture view which a lot of people are focusing on in the political season as well as trying to understand when they can buy homes. drilling into the likes of toll brothers, how much is this a story of a company that caters to higher-end consumers that have the capacity to buy a home in a way that the vast majority of people, certainly most of the people who don't own homes, are struggling? john: that's a great question. i don't think it's that case. i think you're right. toll is the premier luxury homebuilder and a build to order builder that has been doing this for a long time. what has been so unique is that the builders have adjusted, including toll.

they are delivering 50% of the units that have been started on spec. production has started before there is a byron place. that is a strategy that has historically been used by lower end entry-level first-time buyers. 45% of their portfolio is geared to what they call affordable luxury. the higher end buyer has been more resilient but told is playing through the entire curve of buyers which has served them well. lisa: how much of this is a broad story versus a toll brothers story? we have seen fewer homebuilders start to expand, and we are seeing more modeled performance from a number of other players. john: toll put up a great quarter, so i don't want to take anything away from them, but this is a story of public homebuilders with balance sheets, size, scale, and the ability to outperform their

smaller peers, which is 50% of the new construction market. and by the way, the existing home market doesn't have the inventory to cater to demand.it is a function of public builders taking advantage of the situation. lisa: listening to the rhetoric on the political sphere, to allow first-time homebuyers to make down payments. do you think that this signals some type of policy shift on the burner? two, do you see this as highlighting some of the vulnerabilities for homebuilders at a time when their industry is very much front and center from a political perspective? john: it's a great question. there is no question at all that affordability, housing affordability, is a huge topic and a huge concern. it is a pinch point for the industry, including for public

homebuilders. if there are some stimulus that can be targeted towards helping people get into homes, that can be helpful. i think public homebuilders would probably prefer the government to stay out of the homebuilding industry as much as possible. that said, if we can get some stimulus to put more money in the pockets of folks, that would be beneficial. jonathan: can i ask a direct question about how many homes are being built in this country right now? if we are running below average and what a government could do about it? when you hear a number like i want 3 million more homes built in my term across four years, how realistic are those numbers? john: our estimates would suggest that we are 2 million to 3 million units under built in the u.s. dating back to the global financial crisis. the challenge here is even if the builders wanted to build more, there is capacity constraints. there isn't enough labor. there are permitting delays at each level.

it frankly would be incredibly impossible to ramp up production to the levels needed to put that kind of supply into the market over the next three years to fill the gap, unless demand were to follow for the cliff and everyone continue to build. i don't know how realistic those numbers are unless there's a step change in the actual process of getting land ready to build upon, if there was an influx of labor to make the process more efficient. jonathan: this was excellent, we have to do it again soon. the homebuilders in america. we talked about this yesterday. supply-side incentives. the supply side is more complex when it comes to the story than when it comes to boosting and incentivizing demand. one is much easier than the other. lisa: talking about getting rid of red tape is not as attractive of a political position as $25,000 in hard cash. that is the messaging we are

hearing. how do you get rid of the red tape when you're dealing with "not in my back yard" and permitting constraints? jonathan: federal, state, local, everyone has to come together all at once. we talked about this yesterday. i don't know how long the near term is, it will lead to higher prices. demand-side solutions, supply-side problems. lisa: yes. that is the large take away that i've gotten from most people. jonathan: including the people around this table. veronica clark of citi. more from new york. this is bloomberg. ♪

♪ >> 60 minutes away from the open, i now. the end future positive bio zero point 2% likewise on the nasdaq, similar move elsewhere. doing better by 0.5%. look at the bounce back on the small losses yesterday. jobless claims coming up tomorrow and some job revisions later on this morning. we will talk a lot more about that in just a moment. the two-year, 10 year and thirty-year shipping of his fellows. two-year, 3.98. thirty-year down to about 4%. i told you about various points

being near the lows of the year. if you're worried about the mortgage market and interested in borrowing sometime soon to buy a home, the conversation we had about 15 minutes ago might be of interest area just a gap between what the effective mortgage rate is right now, which is something close to four, and what you would be borrowing if you took a mortgage out today. bedspread is still very wide, something like 300 basis points. lisa: talking about a 4% effective mortgage rate against this roughly 7% mortgage rate currently if you were to take that out. yesterday we were talking with neil -- neal dunn of of renaissance macro. stop dismissing the housing market as something of an outlier. something that has been uniquely affected by the fed's higher rates. this is emblematic of a situation that is building on itself for people who don't afford homes, can't afford homes and there are distortions that can only get underground of mortgage rates get down to 5.5%. jonathan: that data drop is 7:00

eastern, down 10.1%. home improvement company struggling as well. echoes of this across the sector. lisa: this is the reason i'm excited at jackson hole this year. the theme of assessing the effectiveness of monetary policy at a time where they have control over the front-end, but not necessarily the long end of the yield curve. that is not where they are focusing on what they start some through quantitative easing once more which is politically a hot potato considering having the balance she already is. this comes at a time where you have seen calm in the long end of the yield curve but today we got a 20 year option. later in the year we have the potential politically setting turmoil. how rolling they have over the long end, which is one of the key transmission mechanisms of the policy? jonathan: i'm almost laughing because i'm trying to work out whether you are generally excited for jackson hole or just trying to convince yourself later this afternoon. >> i think it's always interesting.

i'm interested in the philosophical discussion around the efficacy of interest rates. whether that will make a good tv, i will it you decide that i do think it is going to be compelling and at the these are important debates. no one will give an answer but i think it is a beautiful place. i'm looking forward to kayaking. jonathan: lisa: the diner is great. lisa:the diner is wonderful. two-year some of the ideas are very exciting. jonathan: i'm looking forward to the coverage. it kicks off tomorrow and on friday as well as not :00 a.m. eastern time. lisa: i hear you're not going. jonathan: i'm not going. i won't be there. tough stories for you. just a different story some retailers, targeted tjx. macy's cutting its annual forecast, citing a challenging consumer environment. what is idiosyncratic, what is real, and what is evidence for

real consumer slowdown? target says no, other companies say there really is one. lisa: what we heard from target is the resilient consumer and this really becomes the question of do you start to see commentary like it is a tough backdrop as the new argument, as the new currency valuation argument? basically an explanation for an execution issue? this stock market got a lift at the target earnings and you can say is because it is a quiet market with very few catalysts, but nonetheless people are taking more of a signal from the resilient and they are from the weakness from macy's. jonathan: stocks picking up by about 50%. i'd like to turn to this story, a federal judge in texas ruling that the ftc cannot enforce a year total ban on noncompete agreements. the judge citing that the plaintiff and the chamber of commerce saying the ftc lacks the authority to or such a ban. an estimated 30 million american subject to noncompete agreements.

this story is actually really complex. if you work for a company, and you have a certain amount of knowledge, and you just walk away and take it with you and go somewhere else to work, i think you could make the argument you need noncompete's. if you are at a fast food company and being prevented from going across the road to work for another fast food company under suppressing wages, we've got a very different problem. how you tackle this issue is difficult. lisa: how you craft a law to be specific enough to be constitutional is also part of the issue. how do you craft something that is gentle enough to encompass that type of abusive behavior where you're preventing some of the work of a fast food restaurant from going to another place, vs. something that seems rather reasonable as part of the reason why courts are having trouble with this. the head of the ftc is really going to face this challenge, how do you get specific enough to avoid constitutional's questions about whether this is

due process of law, whether they could be an arbitrary enforcement going after practices that are punitive, that a lot of people would agree are not right? >> we should be able to have objective, rational conversations about this. do you need noncompete's and the food and hot tel aviv business? to the degree that they exist, probably not. do you need them for high finance a tech when we are talking about company secrets? likely you do in specific cases. >> up and how do you craft a law around this? that is what they are facing off with. it is the silver bullet of the policy spaghetti that we keep hearing about, that a mother these broad sentiment declarations are better in sentiment than they are in actually getting across simply because it is hard to craft a law narrowly enough to make that distinction. jonathan: that is an ongoing fight and we will bring you the latest when we get it. the jobs market, looking at the 10:00 a.m. eastern whether bls

releases luminary annual payroll. wall street economists expect the u.s. cap remarks slightly weaker than initially estimated, adding concerns that the fed might be behind the curve. when it comes to the revisions it is anything from $300,000 to $1 million based on what i've seen on wall street. we might see a lower provision. lisa: jp morgan within a client about $360,000. goldman sachs anywhere from $600,000 to one million jobs removed from the overall tally through march. the question is have a market will respond. we have some saying the market will care, others think they could color out people view the labor market in terms of where you're coming from. we will see a 10:00 and eastern. jonathan: just around the corner. those job revisions could shake the tone of jay powell's remarks on friday is jack's whole.

we expect 50 basis point rate cuts in both september and november, but chair powell will not want to make any commit exact decision that fed officials will make incoming meetings. he will remind us repeatedly that these are data-dependent. veronica joins us now. we need to talk about how dependable that data actually is and the scale of revisions that you are expecting in 90 minutes time. >> i don't think i've ever gotten so many questions on these pulmonary payrolls before. based on the official payroll data, the qc w data which we do already have for three of the four quarters of this annual revision, it does look like something like 500,000, seven hundred thousand downward revisions. i think that is pretty much expected at this point but that is a pretty substantial downward revision. lisa: how will people take us? we have some people saying it won't actually matter all that much considering the strength you are seeing elsewhere, and others say it will actually make

the labor market with much worse heading into a jackson hole where clearly this is that they chair jay powell who once cut rates. which is it? >> usually these revisions don't matter much, but they do matter more than usual because we had such divergent signals between all the labor market that we have. most importantly, a very strong payroll job growth but much weaker employment and household survey, advise and the unemployment rate. there has been a debate which what is the accurate signal and if you were relying on strong payroll job growth and that now looks a less true, that rising unemployment rate is what is happening in the labor market. jonathan: about an hour ago they were saying there is no slowdown, nothing to worry about here. you are looking for some punchy moves from the stead. 15 september, 50 in november. what does the data need to look like on september 6 for you to sit there and say yes, green light, 50, september 18? >> i actually think the bar for

starting with a 50 basis point cut in september is actually pretty low. i think the issue is it has just been multiple months with the unemployment rate has been rising. certainly if we get these downward revisions to previously strong payroll job growth, one month of data for august on september 6 is not really going to skew the assessment that there are really asymmetrical risks around the labor market. i don't think one penny confidence that the rise anymore. i think it is pretty easy for them to start with 50 in september. lisa: why do you think the bar is so low given the fact that they are not forecasting economic projection fairly low with retailers reporting fairly strong earnings? >> the unemployment rate is low and it has been in it would be fined, but each month we see it not stabilizing. you really are risking getting to that point of nonlinear

weakening in the labor market. when you see things like building job loss, that is when it is too late and that is what the fed wants to avoid. i think most would agree that they are far from neutral here. the cost to starting a bit big and getting quicker back to neutral this pretty low. jonathan: this is the study of economics. can we do a little on sociology as well when they get together for that meeting on the 17th? is unanimity important to chairman powell, does he need everyone on side? >> i think he does debt want to build consensus. maybe even have one dissent. we do have hawks, but i think he wants to build unanimity. but i think most people will probably be coming around to that cut. we've even seen a shift in rhetoric after cpi last week. people say we just need a bit more information, it did more good inflation data and once we got that last wednesday even the rhetoric from some of those hawks has pretty quickly changed. jonathan: this is what i'm

trying to gauge just how high the bar is. what i hear from governor bowman is maybe i will consider it. what i hear from kashkari, maybe i will consider it. consider a cut before we even start to discuss 25 vs. 50. how much of a sticking point do you think that might be on the committee? >> i do think it will probably see some agreement depending on the august employment report that is going to be very important, but i do think even if the unemployment rate stays at 4.3%, even those hawks will see the risks are really asymmetrical around the labor market. we had better inflation data, we only had worse employment data. the cost of starting a bit big is pretty low. they did that in 2072 thousand one, it's really not unheard of. lisa: do you think that would be a concession that they made a mistake when nikki bowman is talking about how it might be appropriate to gradually lower the refund rate? the importance of being gradual, of being slow.

how much is that a negative signal if they go 50? >> i think 50 could even still be considered somewhat gradual. rates are really high here. we do have been slowing to 25. i think they are obviously still focused on the inflation side of things but the risks are the quickly shifting to the labor market. it's not necessarily in the state, just shifting priorities pretty quickly. jonathan: sticking at 50 in both september and november. veronica, thank you as always. next month, the jackson hole address from chairman powell and the revisions to numeral that we get 10:00 a.m. eastern time. in easy one for you, but what happens if veronica is right in the economy falls off a cliff, the fed starts moving 50, 50, 25, 25? >> all of those people who are looking for fed easing to help their risk portfolio would be holding their head and crying. the bottom line is if they actually cut 50 given what they have already said and the

construction of the fomc, that means things have gone really south of the quickly. and if that is the case i think we are in bigger trouble than we think we are. don't think that is the case, and that is why 25 basis points for me base case. powell in his last present basically said we are not different 50. since then, the data has kind of gradually softened, but hasn't softened as catastrophically as people want us to believe especially somebody like tammy siegel looking for a cut, that certainly hasn't been the case. jonathan: it seems even more ridiculous a few weeks later. you said biggest challenge here is valuations, you are not encouraged by the vicious snapback he seen. in fact, you find it unsettling. can you walk us through why? >> if you look at the basic economic data, it has been supportive of the market for quite some time. decent growth inflation slowing

down in the fed on the verge of cutting. all of is extraordinarily subverted. but you look at valuations in the credit markets, and the equity markets, clearly they are very stressed. they are not overly stressed, but they are definitely stressed. and then we had a correction driven more by market tightening rather than weaker data. at least, the reaction is far more disproportional relative to what economic data was. that indicated that the market position is really offside in it we had stayed there for a long time and come back, some liquidation of would have taken place. instead what has happened is we have not only taken back all the positions that we liquidated initially, we probably pylon a bit more. at least, that is my sense. i hope i'm wrong but it would have been much more helpful if they grind out was slow and steady rather than a real quick snapback. lisa: let's put these two ideas together. if the market did get a 50 point

rate cut, the people who are heavily into risk assets will be holding their headed crying. they wouldn't be celebrating. at the same time, the market valuation is the two high. are you saying you are getting less constructive on risk assets ? the goldilocks scenario seems implausible. >> the base case for the market right now, what we are discounting is all in on soft landing. so the likelihood, it is quite likely that we will probably get it. in that scenario it is very plausible that we don't have a significant correction and we grind higher from the dragon below. what i'm talking about is a risk scenario where things slow down much more than what we are anticipating today, there's really no margin in the market valuations today. >> heading into an hour and a half from now, we get those initial revisions. i wonder how quail this market

is to some sort of more significant downward revision that a number of jobs created in the united states in the year through march. are you saying that even a small tape of catalyst could create a disproportionate event in the market akin to what we saw last week? >> i think the risk of that is substantially higher than it has been incitement and, primarily because things are slowing down and if you corroborate that story with these types of visions, there is a potential for that. i think revisions became a political question far more. if this wasn't an election year i don't think we would be talking about visions the same way that we are talking about revision. jonathan: you've got to build on that, why is that? lisa: it's important for the teletext -- politics because that is being used as a ploy for somebody is gerrymandering something to demonstrate something. then get a lot of traction on social media, we see that all over the place. but who applies more about that than it is that revisions are

going to be 300,000, 400,000. it has seven for a very long time and vetting for employment, what is far more important is not the absolute number, it is really more the trend. jonathan: what is the trend? >> the labor market is slowing but not as catastrophically as some of the bears would have us believe. jonathan: we need a decent idea of what normal is supposed to be benchmark that. what do you think normal is? >> 150,000 is probably a good normal number. if we get that, i don't think that is slow enough for the fed. having said that, they are not considering 50. jonathan: we've heard a few times that the fed is offside and maybe as much as 100 basis point already, perhaps even more. you are a little bit more constructed vs. some of those voices. how constructive do you think the fed is currently?

>> if the question is "have they delayed the rate cuts for all sorts of pressures that they have faced over the last years," the answer is absolutely they have. if they hadn't missed the boat of the way they did in '21 we would be further away -- along the rate cutting cycle than we are. that is a historical legacy, that is baggage that we have to accept a deal with. it is never about what the fed should do, it is what the fed is going to do. and what they are telling us is yes, we will cut, but we are being fair enough article. if the data gets us really scared, we will cut more expeditiously that is not the case today. jonathan: there's a lot of people listening to this, just sort of doing this, nodding their head as he speaks. the statement update on stories elsewhere this morning. dani: hamas and israel are still divided over an american proposal to pause if not permanently end the war in gaza.

antony blinken met with egyptian and qatari officials yesterday. he reiterated that israel has agreed to what the top u.s. diplomat called a bridging agreement. that would create space for the two sides to hammer at the details of a cease fire introduced by president biden he said it is hamas' turn now, and time is of the essence. uber has hired a former tesla executive to oversee the transition to electric vehicles. rebecca will start next month at the head of sustainability, as uber aims to use zero emission vehicles for all of its rights by 2040. she hoped -- help to open the car network to other brands. fortis playback on its electorate -- electrification strategy yet again. earlier this hour for announced it is canceling plans for a fully electric suv which may cost about $1.9 billion. ford will also postpone a next-generation electric pickup and reduced spending to 30% of its annual capex.

jim farley told bloomberg interview that ford wants to make sure car launches that the criteria of profitability. a measure bloomberg brief. jonathan: thanks for this morning. up next, setting you up for the day ahead and we will touch base with anne-marie and the dnc in chicago. all of that anymore up next for new york. this is bloomberg.

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♪ jonathan: the opening bell about 37 minutes away. equity features posited by 2/10 of one person on the s&p. your calendar looks like this. 10:00 a.m. eastern this morning we get the annual payroll. my for focus this time around. thursday, another round of jobless claims plus u.s. pmi and jackson hole in the annual fed get together begins. friday, the main address from chairman powell.

the dnc continues in chicago. tonight we will hear from kamala harris' running mate and tomorrow harris will deliver her acceptance speech. anne-marie joins us now from the dnc in chicago. walk us through the next 24 hours. >> we are going to be hearing from governor walz. this is really a moment for him to introduce himself to the american republic. remember, this individual is not known by most of america. he was a congressman, a governor of minnesota, but he didn't have that national appeal the way he does now. we are going to hear a bit from him and he has come under fire for things like potentially insinuating some of the fertility uses his family went through to build their family as well as his military record, so potentially a little bit of that from him today. we will also hear from speaker pelosi, and i'm really interested to hear what she has to say. in many ways this convention is the way it is because of her, because of the pressure she put on president biden the dropout, the concern she had over what

him on the top of the ticket meant for those individuals in the house seeking reelection or the senate. and yesterday when governor newsom was closing out the rollcall on california, he said he came from the great state of nancy pelosi so i want to hear what she has to say. and of course all eyes will be on chicago thursday evening when kamala harris accepts the nomination officially, really a coronation here in chicago and at the same time, donald trump will be at the border, trying to distinguish himself in terms of policies between what his campaign looks for in a trump 2.0. jonathan: anne-marie on the ground in chicago at the dnc. all of that. coverage of jackson hole wyoming at the annual fed get together. lisa: i actually think this is going to be very important and i understand we've been a little tongue-in-cheek because they are not going to say we are going to cut by 50 basis wins. nonetheless, the key questioning

is key, central to this market and frankly expectations of rate cuts have been what has been fueling this incredible rally. jonathan: i will be holding down the four and here is the lineup. we will speak to mohammed for the best part of 90 minutes to work through some of these major issues. it all comes down today, the fate of this market in the hands of the revisions at 10:00 a.m. eastern time. this time, this year seems to be a much bigger deal for a lot more people. >> it is somewhat political in terms of gerrymandering and other situations. there is a lack of credibility and some of the data in terms of surveys not being as well-responded to and that i think is underpinning some of these revisions. jonathan: the fed talks a lot about data dependence. 10:00 a.m. eastern time, the next stop for this market. equity futures positive.

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jonathan: a tale of two retailers today. 30 minutes until the start of cash trading. lisa: "bloomberg open interest" starts right now. sonali: we will talk about that tale of two retailers. target swings to sales growth as macy's cuts its forecast. matt: ford raining and the cv spending, canceling plans