>> we are in a fairly sweet spot price decently into the market. >> this is an environment where you have to look at the fundamentals. >> this market is driven by fundamentals and it is not a gimmick. >> we are still having the mother of all debates between the bulls and the bears. >> this is bloomberg surveillance with jonathan ferro , lisa abramowicz, and annmarie hordern. jonathan: let's get you to a long weekend. bloomberg surveillance starts

now. coming into friday looking to close out the last week of august on a four-month winning streak on the s&p 500. equity futures look like this. up .4% on the s&p, 7% on the nasdaq, the russell small caps up by .5. kicking off at 8:30 eastern, a lot of data. personal income and core pce. later, 10:00 a.m. eastern, umich consumer sentiment. lisa: this week was fascinating from one perspective, a lot of perspectives. you saw the magnificent seven holding back this s and p from reaching new all-time highs. that is the most interesting. people leaning into the soft landing story that much more even with some hiccups marginally from some of the biggest contributors to the gains so far this year. this screams to me of soft landing nirvana.

we have been talking about this and full faith in fed chair jay powell being able to cut rates without the weakness that happens in tandem oftentimes. jonathan: jobless claims contained, equal weight and another all-time high, the russell small caps outperform, cannot continue. the quote over the last 24 hours, the dollar general ceo on low income shoppers. "inflation has continued to negatively impact these households with more than 60% claiming dave had to sacrifice on purchasing basic necessities." the labor market says that things are ok. some commentary from consumer-facing customers is dire. lisa: that was my take away from yesterday. the flight in the ointment. dollar general shares down 30%, a record decline after they reduce their outlook saying that lower income american households are running out of money at the end of every month. this is the area that is hit

hardest and they are feeling the pain. are we missing it? that is the anxiety people have. the reason there was a relief rally on jobless claims that came in online, there is a feeling that maybe we are missing something to have had this many rate hikes, that we are seeing signs of discretion on the margins. is this truly a painless disinflation? jonathan: the word for these earnings is contradictory. if you listen to dollar general, things are not great. home depot, not great. walmart, things are all right. there is fuel for the bulls and the bears but not much clarity on what is happening. lisa: there is a question about videos and chronic. -- about idiosyncratic. they talk about theft. they talk about how their customers are the first to be affected by deteriorating economic conditions.

other store similarly positions are doing fine. it is a question of the consolidation of the strongest players or if it is true signs of weakness. jonathan: i love how you tried to describe this week is fascinating. nice try. lisa: there was some fascinating moments. i think the fact that you are seeing the s&p 1% away from all-time highs even though the magnificent seven is almost 12% from their record highs is interesting. it's interesting that we have seen such a long streak of wins for bonds. it's interesting that there has been an embrace of soft landing even with the dollar general's of the world raising issues for us. jonathan: from new york city, welcome to the program. if you're just tuning in, you haven't missed much over the last few days. futures on the s&p 500 up by 0.4% heading towards four months of gains on the s&p 500. four months of declines on two-year yields. equities and bonds speaking to each other on that front.

lisa: the longest streak of bond gains going back to 2021. this comes with disinflation without a sign of deteriorating more generally in the economy. in europe, we are seeing inflation come in below expectations, dropping to the lowest level since the beginning of the pandemic. at what point is this the global immaculate disinflation or is it in tandem that we can see risk assets rally in tandem with the idea of lower rates? i'm struggling with that. jonathan: dial 1-800-frankfurt or berlin and you'll get a different answer. pretty dire stuff. lisa: why don't you cut rates more? there is an interesting dichotomy between the u.s. and europe. jonathan: coming up this hour, why we might get another bubble in the making. and following kamala harris' first campaign interview. and another read on inflation.

we begin with our top story, stocks edging higher into this morning's economic data. jonathan a berenberg has a warning for the bulls. u.s. price sales multiples are back to 2000 peak levels. on this measure, it looks like we have another bubble in the making. jonathan stubbs binds us for more. we have another bubble in the making? what are you advocating for? jonathan s.: we have seen many bubbles over hundreds of years. we have seen bubbles clearly. the point that we are making in our recent note is that you take a reasonable measure like price to sales and a market level where s&p is not back to the peak 2000 levels, six times price to sales against seven and change into thousand. if you take the largest 10 stocks we are back above 10 times price the sales basis. four times at the recent 2022

lows. we have gone from four to 10 in the blink of an eye. we are just above the 2000 levels. valuation is giving investors a bit of a sign of caution. this is to not chase this up blindly at this stage. jonathan: what you think of the set up now compared to the set of going into august 2, going into september, going into the jobs report of august 2 we were around 5500 on the s&p 500. we are above where we were going into that number. i wonder if we are just as vulnerable this time around as we were a month ago? jonathan s.: a couple of things. if you go back to the highs in july and run the market through to today we have seen big changes, like you're talking about at the top of the program. leadership away from the u.s.. europe is plus five, u.s. is 5% off of its highs. tech has given up a short 10%. financials plus 10 from the july

highs. we have seen the rotation. the dollar weakness has supported that rotation. when you look at some of the metrics, some of the cyclicals we look at where we are how aggressively markets have bounced back from those august lows, almost like it didn't happen. some signals we look at show that we should not be chasing this market too hard at this point. one of the key ones is the relationship between liquidity and equity.we put out a note in july saying that was stretched and suggested caution, but we are back to the same point now. we're looking at markets hopefully rationally, but the signals are telling us not to be aggressive at this point. to exercise balance and caution. lisa: there's a pretty big difference between exercising caution and a bubble warning that will mean basson decline going forward. -- massive the decline going forward. where are you in terms of being generally cautious and invest with more of a sense of defensive's versus wholesale go

to cash? jonathan s.: the last time we rang a bell was early 2022, january. we wrote two reports called crash protections talking about pins that may burst. it is a case of wen yu's evaluations in this territory -- it is very u.s. centric. the rest of the world equities look much more reasonable in terms of valuation. from a u.s. perspective, where are the potential pins? they are around the debt burden. it is hard to know where that pain is now, in a years time, in five years time. it is around geopolitical dynamics. trying to pinpoint the exact date of when you make it risk activated is very challenging. the whole challenge for investors is not running away because of valuation data points, but exercising more

caution in portfolio construction. the u.s. block of defensives are trading close to the valuation lows going back 50 years against the rest of the market and trading valuation where tech has historically performed strongly. if you have done well in tech, maybe it is taking a little bit of weight out of that and putting it into more protection for a time when markets are pretty fully valued. lisa: can you elaborate when you talk about don't chase this? is this the general index going up? the rotation into riskier assets? is this the increase in valuations for big tech? jonathan s.: there are various levels. we call this active hedging.it is a cornerstone of how we think investors should approach all allocation right now. if we take the u.s. market, if the u.s. equity market deliver double-digit returns over 12 months, we need 50% earnings growth and a bull market

multiple. in doesn't mean that we cannot get that reasonable return from u.s. shares over 12 months, but the hurdles are reasonably high. we go into the market and we say, we quite like looking at growth at a reasonable price, we like buyback momentum strategies, we like looking at cheaper parts of the market which might to be unfairly valued and may benefit from lower rates or a weaker dollar. it is about rebalancing portfolios at this point. it is not about wholesale sailing the market -- selling the market but we do have caution signals. it is about repositioning your term. also the u.s. election, geopolitical risks alive in various parts of the world, we don't think that this is a point to chase risk per se, chase tech per se. broadening out with more protections as we run into year end. jonathan: you mentioned

elections. we will have a deeper conversation about the interview with the vice president conducted yesterday. to have the corporate tax rate come back up to close to 30%, 28%. to have a policy where we tax unrealized gains in this country. for very wealthy individuals, granted. how much of an impact could that have on this equity market? jonathan s.: corporates the world over have benefited for 40 years from lower funding rates, lower tax rates, increased global trade.all of these have changed in recent years. corporate taxation is may be the last issue to drop -- last shoe to drop. these have been significant tailwinds for corporate margins. in the u.k. or the u.s., there is a two-way pool between the different candidates. it seems u.s. corporate taxes are headed higher. one interesting thing is the countries with the lowest corporate tax rates have been big tech companies.

if we are seeing in the u.s. that return to higher taxation rates, which has been a big boost over the last six to seven years, it has a negative headwind into play for the u.s. if at the same time it is into a softer dollar, historically that is moving away from what we've had the last five to 15 years which is u.s. only leadership. i think that is a likely path, broadening out from a regional perspective. jonathan: i think we had an all-time high in germany. thank you, jonathan stubbs of berenberg. difficulties maybe stateside the next few months. lisa: especially with potential tax changes. the next guest will tell us why it doesn't really matter because nothing will get done given the makeup of congress. this is may be one reason why people are ok with the vibe-type campaign. jonathan: that is the assumption

if we get divided government. we've had a few guests who said that the market negative things that the former president trump would like he doesn't need congress for. the market negative things the current vice president will like, does need congress. if we get a divided congress we can ignore it, but who says we will get that based on the momentum the last few weeks? lisa: at a certain point, you expect that this momentum is partly to help the down ballot races. at what point do you put a higher premium on the unified congress with the party of the president? jonathan: that conversation is around the corner. elsewhere this morning, here is your bloomberg brief. ecb board member isabel saying that the central bank should avoid cutting interest rates too quickly pointing to lingering services inflation that could hold back progress towards the central bank's 2% target. trade pricing in two to three more ecb rate cuts this year.

china considering allowing homeowners to refinance as much as 5.4 trillion dollars in mortgages. the plan is designed to level borrowing costs for millions of families and boost consumer spending. homeowners could renegotiate terms before january, when banks typically reprice mortgages. nvidia is set to be joining a funding rep for openai that could value the startup at over 100 billion dollars. microsoft has also been in talks about participating. that story later in the next half-hour. plenty of talk, few specifics. v.p. harris: day one it will be about implementing my plan for what i call an opportunity economy. i've already laid out proposals in that regard, which include what we will do to bring down the cost of everyday goods. mr. trump: your own economic nightmare will soon be over. jonathan: live from new york, good morning. ♪

your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire [introspective music] recipes. recipes that are more than their ingredients. ♪ [smoke alarm] recipes written by hand and lost to time...

can now be analyzed and restored using the power of dell ai. preserving memories and helping to write new ones. ♪ ♪♪ ♪♪ ♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals why do couples choose a sleep number smart bed? i need help with her snoring. visit sandals.com sleep number does that. thank you. during our biggest sale of the year, save 50% on the sleep number® limited edition smart bed and free delivery when you add any base.

jonathan: live from new york city, equity futures on the s&p 500 are posited by .4%. the data was decent, the equity market rallied, we are ignoring what was happening with nvidia, and then it faded going into the close. lisa: as scintillating as this week was we know who was around to do that. maybe the algorithms ran out of energy. how much can you sustain the ongoing rally, the broadening out without lifting all boats? at the same time you are seeing ongoing questions about the strength of the economy. jonathan: it is different person-to-person. bramo said this week was fascinating and now you sound incredibly cynical over the past 12 hours. lisa: leave me alone.

it has been a long week. jonathan: let's get lisa to the weekend. plenty of talk, few specifics. v.p. harris:, day one it will be about implementing my plan for what i call an opportunity economy. i've laid out proposals in that regard which include what we will do to bring down the cost of everyday goods, what we will do to invest in america's small businesses, what we will do to invest in families. mr. trump: i am here with a simple message for the american auto worker and for the american worker. your long economic nightmare will soon be over. jonathan: vice president harris pledging to address economic woes and bolster the middle-class but offering few specifics in her first interview since becoming the democratic nominee. "we did not expect meaningful policy news out of this interview, and sure enough we did not see anything that should concretely shift investor expectations of the policy outlook if harris wins."

take a step back. what stood out for you? >> i think basically what she needed to do in this interview, on one hand some elements of the performance are a reminder that she has vulnerabilities as a candidate despite the fact that things have been going fairly well for her so far. the most challenging part afoot we saw yesterday was her attempt to account for the shifts in her policy positions from a very liberal stance that she was taking in the democratic primary in 2019 to the aggressive move to the center that she has had at the top of the ticket over the past five weeks. it wasn't surprising we didn't see compelling shifts of where those came from. ultimately, this is motivated by political considerations. trying to get to where she thought the democratic primary electorate was at the time and now trying to appeal to moderates. from a political and policy

perspective, leaving aside the explanation for what changed, which is the politics, she adhered clearly to the new moderate positions she has staked out. that is the task from a political perspective to say that no matter what i said then right now i am here in the center, where moderates are, on issues like emigration and energy. from an investor perspective, the totality of the signals we are seeing from her and the democratic national convention point towards an intention to govern from the center of the democratic party, notwithstanding some of the more liberal positions she has taken in the past. jonathan: what other blind spots do you have regarding harris policy? tobin: i think we have a reasonably complete picture of what she is proposing. as always, we don't have a perfect sense of the prioritization. there is only room for so much

in the fiscal policy bill next year. the exact decisions about how she will prioritize the child tax credit against new proposals on housing against some of the economy issues like paid leave. realistically, even in the possible scenario that the democrats have a very narrow unified control of congress, i don't think that is what is going to happen but it is possible, they will have no more than 50 votes in the senate. what gets done will depend on what jon tester wants to do more than what harris wants to do. i think we know enough about the big elements of the harris agenda. there are questions about regulatory issues and where she will land on antitrust, but this is not someone who will come in with a big set of majorities and mandates. it is someone who will have to govern through a challenging period given that d.c. is starting $4 trillion in the hole.

she will have to do her best to manage the trade-offs of the agenda she has presented based on the majority she does or doesn't happen congress. lisa: you said it was her main job to show she was going to govern from the center, be inclusive. she talked about including a republican in her candidate to try to get more perspectives around the table. we saw this say bi -- we saw this a bit with president biden, his approach to woo some of the centrists. in practice, he was swayed by the left-leaning parts of the party. what is to say it will not be the same for kamala harris? tobin: it's possible. if you are an investor worried about the effects of the harris presidency, it makes more sense to worry about maybe she will end up putting very aggressive regulatory in, despite that is not what she has been signaling. it makes more sense to worry about that than the untapped

gains proposal which has never come close to happening. she has never said anything about what she has done. going through line by line the taxes biden previously proposed and saying what she does and does not agree with. it is not surprising that she does not want to open that can of worms. i think that has gotten more attention that it frankly deserves. there is the possibility that she ends up left of where she is indicating on issues like antitrust, but the most encouraging thing we've seen so far is she doesn't seem to be experiencing pressure from the left. part of biden's move to the left was an intentional effort to bring him into the tent. we had the biden-sanders unity task forces to try to heal the wounds of these bitter primary debates between sanders and the establishment in 2020. harris has not been experiencing pressure from the left. she has not felt -- no one is

complaining that she has not talked about medicare for all of the climate folks are not trying to rake her over the coals. at the dnc that jumped out. the parties unified, particularly in the sense that she is not bowing to pressure from the left-wing policy in the party. everyone is excited to have a potentially winning horse to cheer for and a shot at beating trump that they are keeping their disagreements quiet for now. jonathan: she is not bowing to pressure from the left because right now there isn't much pressure at all. the progressives are not forcing her into unpopular policy choices at all. nothing like the way we saw things transpire four to five years ago. lisa: they are so excited about having a candidate that may win they don't want to destroy it. you wonder how long that will continue if she wins the election. jonathan: how much daylight will

there be between how she campaigns and how she will govern? a lot of that will come down to what the rest of congress will look like. that is the question, isn't it? lisa: it is in terms of her trying to explain her policy shifts. if she leans into i make a million trying to represent the views of the people. i try to get a sense of where people are and represent it because we are of the people and by the people, that could work. we will see. jonathan: the interview is a good step forward. more steps and more conversations in the weeks to come. we need them. the s&p 500 firm or by one third of one. cheaper prices but more travelers. a labor day travel preview from new york. this is bloomberg. ♪

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

jonathan: your scores this friday morning. good morning. on the nasdaq 100, up 5.60%. the russell was ok yesterday, up another .40% this morning. s&p looking for a fourth consecutive the gains on the s&p 500. if you switch things up against the bond market, a fourth consecutive month of falling yields on the two year, 3.90. lisa: even with a gdp change penciled in this quarter, even though we are seeing ongoing

stability in the labor market, the federal reserve will have every ammunition to cut rates and the wise are today at -- and the white's are today at 8:30. jonathan: it was not called again. i missed the survey again. still getting to make that happen one day. let's turn to foreign-exchange. euro-dollar looks like this this morning, 1.1083, heading in the right direction for the ecb. some encouraging signs at the national level with germany just yesterday at the regional level. when you break it down, the ecb is set to cut interest rates again. whether they cut again and again, i don't know. i think they would still like to give an impression they are serious about keeping inflation down to 2% and at the same time,

the federal reserve is focusing on the other side of the mandate. lisa: i keep going back to the discussions with the ecb governing council, both talking about how we will see. they were big from the opposite direction, saying their concern was weakness in the economy, not reignition of inflation. i don't know how much signal there is, she may be trying to be cast out in there. that said, why should the ecb cut rates less than the federal reserve given the fact they have a 2% rating for german inflation now, the lowest to 2021, and the weakness they are trying to prevent. jonathan: really good conversation this week about unlocking dollar week is that what we need to see. rebalancing growth differentials, it is difficult to see that evolving when the numbers out of germany are as bad as they are, struggles out of china continue. which is why we are around 1.10

on the euro-dollar. the strength and whether it can extend from here has a big question around it. lisa: all of it lives and dies around the pboc would like to deploy is a full stimulus. there was a surge of cash into chinese equities from foreign investors. i find that fascinating. officials are really beginning to desire to step in to see the adjustment around possibly refinancing mortgages. jonathan: some of those close starting to reverse a little bit. kamala harris is leading or tied with donald trump in each of the seven swing states, particularly notable in north carolina, where she has a two point advantage. no democrat has won that state since barack obama in 2008. harris has the momentum. lisa: that is why you see former president trump really trying to be more aggressive.

did you see this whole thing about possibly backing a repeal of this law in florida that trump was talking about for having abortions by six weeks, he is coming out and he talks about how the government should pay for ivf treatments for people, trying to figure out how to cater to a cohort of voters living away from him. i wonder what else was he on the front as we see the momentum with harris. jonathan: harris is doing a better job at converting double haters. we have a guest in the last 24 hours or so we talked about the ceiling of the former president 's audience to attract more people. you have to change the tomb when it comes to moderates. i guess that's the first attempt and maybe we will see more. lisa: or will it just be get out to vote? if you have a ceiling to your

supporters, they are diehard supporters and their coming to the polls, leaning into them, and just a real question here at a time when you're trying to lure in a lot of people who felt disenfranchised from the political machine. jonathan: we will come back to politics later. intel is working with investment bankers to navigate the most difficult time in its 56 year history. they are set to discuss a range of scenarios, including a split of its product design and manufacturing businesses. that stock up 2.6% premarket. lisa: pat gelsinger has been trying to lean into a host of different efforts, including this foundry. part of the problem is it mostly makes chips or it will only make chips for intel. it will not necessarily be the foundry to the world the way you would like it to be. this is sort of the existential question, can you turn it around at a time when there are

technological advancements and the big are getting bigger and more entrenched in the business? to see how they offset the weakness they have seen will be interesting. jonathan: two points, one, spoke all day yesterday about nvidia and i don't think intel came out of my mouth once, that's the problem for intel. two, the word specialization is really big right now. nvidia specializes in design, tsmc, fabrication. what intel specializes in is not what we are trying to address. lisa: essentially, how did they get into the ai world with that high-tech specificity? how do you get a lot of the talent to do it? there is a whole machine in place in taiwan to train people how to work at tsmc and produce the chips that have fueled the ai revolution dan ives talked about yesterday. how does intel do that in the u.s. and at a place where you don't have the same infrastructure?

jonathan: that stock is up by 2.6%. let's turn to the story, you might be traveling today, record crowds and lower prices are set to be the theme this labor day travel weekend. the aaa expects domestic travel to jump up 9% while scenic 2% drop in the cost of travel. helane becker joins us now. walk us through how busy this weekend will be. helane: good morning. in terms of air, i think we will see 17 million-ish people, a 9% increase of where we were a year ago, and a lot of that is in the domestic market where we are seeing low fares because you still have capacity and they are removing seats of the late summer here and we still have quite a lot of seats available for sale, so good demand

anchored prices. jonathan: when we look at the data, what is the overall that they still seem ok but underneath the surface, they feel less confident they are starting to find work. who is actually traveling in the country at the moment? helane: we are starting to see a slight uptick in corporate travel and also much business travelers, it is just managed corporate travel that we are starting to see come back, and that came back, it stalled a little bit and we are below where we were five years ago, but we are seeing that cohort come back, especially after labor day, as you see more people return to office more days in the week and as we see more confidence to the beginning of november, so we just see that cohort travel. the second cohort we are seeing

travel is people who are still doing trips on the road and also seeing people who are comfortable spending money on travel and on experiences and continuing to do so versus goods, so we have seen that. the cohort that we are not really seeing travel is the heavy leisure travel, people with young families. those folks generally do 1, 2 vacations a year. as they go into the holidays, they will travel. also much in the fall to the travel as much as the other two or three cohorts mentioned. lisa: can you square the circle, we are seeing a record volume likely of travelers this weekend, yet, there are still open seats and prices are down. does this mean a lot of airlines have increased their capacity more generally? does it mean there is some

disconnect in terms of where everybody is going and it is very consolidated? helane: we are seeing this interesting mix of travel because we did see too many domestic seats, but then airlines complain that they are not able to get the capacity of their new aircraft from boeing or airbus, so you have the complaints and laments that they don't have enough aircraft. on the other hand, they have too many seats. we saw a lot of capacity going to the domestic market the last two summers, but we saw the travel demand really be internationally focused, especially europe and asia travel, so those two mark were very strong for demand versus the domestic market where people kind of did that in 2021 and

early 2023, and then it shifted to more international. lisa: why don't they take their plans going domestic and make them international and should the composition of planes? that is what it sounds like the issue is. am iran? -- am i wrong question mark yes -- wrong here? helane: yes and no. jonathan: you are too polite. helane: not every aircraft can do every mission and not every domestic aircraft can fly internationally. you have to have approval in the range capability, so, yeah, they cannot necessarily mix it up that way. some aircraft don't have the range to do transatlantic or transpacific, so they would need to have a wide-body aircraft versus a neat 320 and ceo versus

in nel, so you are not going to be able to do that, but it is a great.. jonathan: before you go, i would love your thought on white alaska and hawaii can get together but jetblue in spirit cannot. why? helane: trick question. for jetblue and spirit, you are seeing a different merger. you are seeing jetblue is going to absorb spirit into its network and reconfigured aircraft. the spirit aircraft had more seats than a jetblue aircraft had, so you are looking at some aircraft at 180 seats to 162 or 220 two 180 depending on the air raft type, so you are taking seats out, and the concern among justice and transport was that there were going to raise fares

and remove a low cost competitive from the market that appeals to a certain cohort of traveler, and that is the one looking for deeply discounted tickets. the look for alaska and hawaii is completely different. you don't have a lot of roots. there are only three people from two competitors to one. alaska has said they were going to keep the hawaiian brand and the alaska aircraft is on the tail, so they are not going to absorb it and will continue to operate two separate brands. there balance sheet is a little stretched and in this market, it is very high, so you have to think about what that is going to do to their balance sheet and also in terms of interest expense, you're going from 2% to

3% debt, so you have a huge job which prints pressure on margins and nobody would like to lose that brand. it is iconic and offers a great product, it is great management team, so that merger is looked at differently than the jetblue-spirit one. jonathan: travel safely, helane becker of td, great customer service on alaska. lisa: i just loved being in the alaska airport and watching all the cargo ships because all the cargo planes come in to alaska as a refueling spot and they come to get all the salmon and then they flight out frozen. jonathan: vacations? lisa: it is fun. jonathan: equity futures on the s&p up around .30%. let's get you an update on stories, nothing wrong with that.

here is your bloomberg brief. u.k. home prices dipping unexpectedly in august. 0.2% decline, calling for a 0.2% increase. the average customer home was up 2.4% from a year earlier, 3% below the all-time high. chinese automakers are feeling a pinch in europe as a terroristic effect, saic and byd seeing a 0.3% drop, and raising it to as highest 84%. lululemon changing expectations. comparable u.s. stock sales falling 30% the second quarter, missing analyst expectations with shares rising after the initial drop, by 3.9%. baggy pants are the issue, apparently.

lisa: the fact that people are done with the tight and lulu is all tight, and they would like that loose, aloe yoga, beyond yoga types of things. jonathan: the top line is all-inclusive pants, so they make them but i just assume people do not want them. lisa: i think they are trying to revive their impressions and there are issues with the fabrics. that is a long-standing issues. jonathan: what is the issue? lisa: that it was not as high quality. and they are saying that they're going to turn that around. that is the reason why. jonathan: we will talk later about fabric, baggy fit, and all of that. next, 25 or 50? >> the current conditions we are looking at, i think the federal reserve will err on the side of caution and go to 25 basis points the next few meetings. the fed showing willingness.

jonathan: took me a while to go with pants and not trousers. u.k., we do not call the pants. pants are underwear. lisa: why did you switch? jonathan: lived in america a long time. people will not understand me. i just. i adjusted. lisa: when you go back, do you say pants? jonathan: reintegrate into society the best you can and that is what i do. i integrate. all right. lisa: good to know. jonathan: more on the federal reserve. up next from new york, this is bloomberg. ♪

♪♪ ♪♪

♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals why do couples choose a sleep number smart bed? i need it a little cool and i need it a lot of cool. we're both cool like that. visit sandals.com sleep number does that. actively cools and warms on each side. the queen sleep number c2 smart bed is only $999. plus get free delivery when you add any base. jonathan: taking abuse in the commercial break for the word "blooming." it was an accident, forgive me. under surveillance this morning, 25 or 50.

>> i think the federal reserve is going air on the side of caution and go with -- err on the side of caution go with 25 area the fed has been lucky enough to have that organization of resilient economic activity and bring it closer to the 2% target without it bleeding too much into the labor market. the fed essentially showing willingness to use against labor market risk. jonathan: a little under two hours away from a fresh read on the u.s. economy with core pce and increment spending data. sentry advisors writing that " nothing points to a growth scare and then argue against a fed rate cut. with the expansion, recent growth has not show signs of an overheating economy. the soft landing remains the base case." claudia joins us for more. welcome back to the program. we started this hour with this

quote that came from the dollar general ceo on low income shoppers. "inflations continue to negatively impact households with more than 60% claiming they have to sacrifice basic necessities." it's difficult to get a read of what is happening with the consumer right now. how would you characterize the situation for consumption of the consumer in america? claudia: i think this is what is always difficult with u.s. consumers we have a population that has a very different income, wealth, needs, and it makes sense that right now there years into inflation that has been higher than normal, and it is going to hit people at the bottom hardest. that is why it is so important, in particular, to keep the expansion going. to keep the labor market with hiring rates. these consumers are the ones that depend on their paychecks to make things work. overall, the picture is good but

that does not mean good enough and it doesn't mean it stays that way, particularly for certain groups under stress like that. jonathan: i know that was one of the reasons why you happy with the shift from chairman powell last week. now we explore how much daylight there may be between him and the committee. do you see the committee moving in the same direction or are you seeing some cracks? claudia: there is importance for differences of opinion and robust debate. we should all be concerned when they are singing the same song. i removing in the direction that chair powell laid out? absolutely. you can see in the minutes from the last meeting, before we got the july unemployment data that was disconcerting, i think that is where we are headed. we will continue to get good news on inflation. that is what interest rates are high, to help get inflation down.

we are making a lot of progress, which means to pay attention to the slowing in the labor market. with maximum employment, what you would like is the most employment possible without creating inflation, if we are making progress, they can ease out some of the interest rates and they should so the labor market can get its footing back and bring more of the workers back online. lisa: you say get its footing back. gregory have a sense that labor market is losing its footing? claudia: when you see job gains have slowed, most worrisome is the fact that the hiring rate, surf -- so for people coming out of the labor force, whether it is their first job or have a larger immigrant workforce at this point, it's harder for them to find jobs. there is a disconnect between what the hiring rates look like, which are much lower than a couple of years ago, and go back

to 2014, 2015, that was not a great labor market, so we need people coming in, to bring their talents, and, yes, layoff rates are at all-time lows, that's excellent. let's get hiring rates back to all-time highs again. when you have disconnect in terms of who is getting hit and just kind of even it out. we are still coming out of adjustment and there is no reason for further cooling in the labor market, and it is a real loss in terms of what we can do is an economy if we have people on the sidelines. lisa: you created the rule that so many have recited the last few months from the fed and beyond, which talks about 0.5 percentage point increase in the unemployment rate over a six month timeframe. what would give you much more pause in this upcoming report we get next friday that maybe this

is really truly a much more quickly deteriorating labor market than we otherwise have thought? claudia: one has to take a big picture view. the outside look of the labor market looks solid, so there is no one report that it will be game changing in terms of how we think. clearly, we are looking for the unemployment rate to come back a little bit. some of that was a temporary layoff. and the things that look worse is going to give pause, but it is really watching this, we are looking at trends and contours. there is no magic number. to try and get a sense, it really is about the direction, and we should expect to see over the next several months probably more softening in the labor market. just because chair powell or the

fed gets going is not mean everything changes on a dine. we really do have to see policy change and then understand better how things are evolving in the confidence of businesses to hire, that's an important piece of it, as well. jonathan: always lucky to catch up with you, claudia sahm of new sentry advisors on the labor market and consumer. september 6, the payrolls report , 24 is the survey at the moment. the meeting right now, 160,000, the previous number, 140. lisa: what do the numbers mean to the market? some say it matters more what the unemployment rate over the headline number because of what claudia was talking about, the adjustments in how do they fit in? jonathan: a preview of the jobs report coming up in the next hour. we will talk about the response of a federal budget, which makes

me laugh because we don't have one, all of that and more, still to come. ♪

>> there has been a deterioration of the labor market in the u.s. >> should receive further weakening, the fed will be likely to step in. >> the fed essentially showing willingness against labor market risk. >> the fomc will have to do is wait to see what happens. >> indicators point to slow down but the markets are less concerned about that in the market is focusing on rate cuts. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz,

and annmarie hordern. jonathan: this is bloomberg "surveillance" and the second hour begins now, live from new york city, good morning, good morning. getting you to the weekend with a positive equity market. equity futures on the s&p 500 up .50%. nasdaq 100, up by .80%. yesterday, small caps performed on the back of better-than-expected economic data. jobless claims largely in line, gdp better-than-expected. on the russell, 0.50% on the session. the s&p 500 poised for a fourth munley advance -- monthly advance. in the bond market, we get to a two year, 10-year and 30 year. the 10 year, 3.8576. as equities go towards a fourth month of gains, two year yields

go towards a fourth consecutive month of declines. we said earlier this morning, bonds and stocks speaking to each other, the prospects of lower rates. lisa: and ahead of the downturn rather than in response to a downturn. this is what jay powell heralded during the call he had in jackson hole, a question around whether he was trying to say mission accomplished at a time when we have not seen the full ramifications of how far a potential weakening in the labor market could actually be. jonathan: he came closest to saint mission accomplished, he said my confidence. there appears to be a little daylight between the fed chair and the rest of the committee. we still have more data to come. september 6, we have the payrolls report. september 11, cpi, which we have discussed. maybe there's something to be seen. september 18 is the federal reserve meeting, so we have a few weeks of economic data. lisa: the data has been so

confusing. i wonder what you think about this. i'm less interested to hear from that officials right now and more interested to hear from ceos about what they see on the ground because that is just as contradictory as data we are getting elsewhere. i'm having a hard time reconciling the enthusiasm that the fed can cut rates as aggressively as they can and we are betting on the recovery that that will engender before the downturn that never happens which is essentially the rotation we are getting in equity markets. i wonder how consistent the two ideas are, and there is contradictory data, from headline numbers and companies. jonathan: there are certain words that one sent to often makes me nervous and that is idiosyncratic. when i hear that too many times, i associate that with ai. if you say too much about different things, you have a broader problem. when you think of consumer facing companies the last quarter, let's go with home depot and lowe's, the housing

market being held back. you can make the same argument when it comes to lululemon and you can pick out consumer company after consumer company to make the argument it is not idiosyncratic but if enough companies are advising their growth, and we have a problem when it comes to hybrid for the months and quarters ahead. lisa: i agree. we talked earlier about it, and we also saw big lots considering filing for bankruptcy yesterday with the downturn that they are seen in consumers. my issue is when you take a look at some of the motley numbers from companies, are we looking at something overall or is the confusion we have seen from the post-pandemic economic cycles that are specific to different companies and is that muddy the waters more? it is hard to reconcile. jonathan: same is true the economic data and aggregate.

it has been misleading. the bifurcation has been extreme through a number of years, and the dollar general over the last 24 hours speaks to that. we are talking about catering to low income shoppers, and words like this are pretty concerning for the government and central bank alike. when you hear from the dollar general ceo and he says that inflation continues to negatively impact households, more than 60% claim they have had to sacrifice basic necessities. tk is good about this, you talk about half of the country being flat on its back, loose with the numbers, but that's what he is speaking to. really struggling to get by day today and month to month. lisa: and the specificity talking about how consumers are running out of money and the question about credit and the availability of it to lower income consumers, and also the question of the overall expenses

are going up, which is why housing has become a big issue, considering the effect of customers of the likes of dollar general. jonathan: we still have some work to do before we get to the weekend. the day ahead looks like this, 8:30 eastern, we get personal income and spending data, mike mckee will break that down. a read on core pce at 8:30, as well. and consumer sentiment data. consumer confidence is interesting because earlier this week, we had consumer confidence seen things were ok, and then you have new components. when do consumers start to say we are not as confident about finding a job? cracks start to appear, and for payrolls next friday, the estimate nursery is 160, up from 114. the expectation is an employment

dropped from 4.3 to 4.2. that sets the stage for debate on whether the federal reserve has to go 25 or 50 or will go 25 or 50 next month. lisa: this is especially important because we have seen the universe and sentiment survey sway in the past. when expectation expectations -- expectations were not, that was the catalyst for the federal reserve, and fed chair jay powell talked about victory not over inflation but over inflation expectations and they talked about how that has not become untoward. he sees that and expectations. this is our direct point to the university of michigan sentiment survey which includes estimates he wanted to call on the. jonathan: i would love to call. lisa: i'm sure you would skew the statistics. which is a reason they will never call jonathan ferro. to me, this highlights the

intersection right now between what the fed is trying to do what they can do. they can affect market conditions, consumer expectations for inflation but how much can they change the economy on a dime right now and the market has priced and a lot of these cuts. jonathan: i remember something you said 12 months ago, when data starts to contradict, it could mean turning point. that was building on a data point with the conversation you had with mary daly. that may give you a snapshot of the decision on wall street, a difference of opinion based on a 60,000 spread on payrolls, 60000 and it the views are polarized. citi looking for 125 on payrolls next month, looking for a 50 basis point cut off the back of this. the multi-month -- the multi-month rise is a consequence of supply, which will likely worsen into outright

layoffs. morgan stanley is looking for 185 on next month's payrolls report. and they have got a completely different view on the weather. in the weakness of the jobs report, it was a slowing trend and we expected bathroom reversal from 195 of the unemployment rate to drop back to 4.2%, all looking at the same data with similar views. when 85 to meet is similar to 125, that they have different opinions on what the fed will deliver next month, 25 versus 50. lisa: and the trajectory of where these numbers are going, we heard from citigroup who believes this is an economy that is declining considerably. morgan stanley very much in the soft landing camp. this comes at a time when you are hearing from dollar general but also getting annualized gdp that was revised to around 3% from the previous 2.8%, hearing

from companies same profit margins are expanding, not typically a time while they will start cutting jobs in a more significant way. it is that data that every deal he about that always happens on turning points, but this is the reason why i think people are kind of feeling frustrated. give us a signal on where it is headed. jonathan: welcome to the program. let's get a snapshot of price action, negative futures positive by 4%. on the 10-year, 3.8557, on the two year, 3.90. the dollar index having one of its worst months of the year so far, but over the last week, actually, the first week of strength since mid july, we have had a string of dollar weakness, weekly dollar weakness. that has got a weaker strength. lisa: after weaker than expected

jobs data that really triggered expectations for 100 basis points, and it was just added to buy jay powell, where reaction will be to cut rates for any reason next month and then to continue it with a rate cutting path, but it has been a reality check by the rest of the world, in particular, europe. today's inflation rates were interesting. german inflation came in at 2%, below estimates, down from 2.6%, the lowest since 2021. what is the argument for the ecb not to cut rates more significantly than the federal reserve heading into europe and the weakness there? jonathan: stephen jenner with the quote of the week on the fx market, believing a lot of money comes from china into the u.s. to grab income, build up yield where you cannot get some

elsewhere, and it will eventually go back to china or japan, and we could see some strength as much as 10%. there are some really punchy calls. i think we have to park the conversation and make it simple. over the last year, america has been destination to pick up risk-free yield like you cannot anywhere else on the planet. that is where a lot of money has been going. lisa: that was stephen bend talking about this dollar hoarding. goldman sachs pushed back this morning and said our gauge suggests smaller dollar hoarding from may 2022 to 2024, talking about external factors driving the yuan appreciation against the dollar, saying that we don't see the dollar weakness you are calling for. this will be an ongoing debate. jonathan: let's get you set up, here's the lineup, coming up, maia macguineas, following

kamala harris' first interview, we speak to samuel miller on her plans for the housing market, and very catch up with jeremy stretch to build on the conversation on the fx market. an update on stories elsewhere, here is your bloomberg brief. inflation in france using to the lowest level in years. consumer prices rose 2.2% from the earlier in august, just about estimates, coming less than two weeks before policymakers gathered for the september meeting. elsewhere, shares of ulta falling, reporting earnings that missed analyst expectations and cutting its revenue guidance. the ceo saying that the category of beauty remains resilient but growth is normalizing after three years of gains, down by more than 8%, and your third and final story, the world's third busiest airport is in line for an upgrade.

the owner of amsterdam's ashville airport is set to invest over $6 billion the next five years, those funds coming to infrastructure upgrades including escalators and taxiways. lisa: what we have seen, i will say something controversial right now, laguardia is better than that airport. jonathan: very controversial. lisa: have you been to the amsterdam airport? jonathan: not for years. i have a connection that amsterdam airport. let's say i had to run for it as fast as i could. lisa: so you did not have time to look around, which is better. jonathan: would you like to do european airport complaints? i have money. frankfurt -- i have many. my european airport complain, frankfurt. i was there for hours. there's literally nothing to do. so i treated the frankfurt

airport, and they tweeted back, hope you enjoyed it. lisa: the delay? jonathan: the airport. i hope you enjoy the airport. i was literally being trolled by the airport. [laughter] lisa: we can talk about that off air. jonathan: next, more specifics. >> my agenda includes what we need to do to bring down the price of groceries. it would be to the benefit of the american public to have a member of my cabinet who was a republican. lisa: more on that suggestion in a moment. for new york city this morning, good morning. ♪

♪♪

♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals jonathan: stocks on the s&p 500, by 0.4% in the bond market,

10-year, 3.8538, euro-dollar, 1.1080. heavy on talk, light on specifics this morning. >> my agenda includes what we need to do to bring down the price of groceries what we need to do next and the child tax credit to help young families, what we need to do to bring down the cost of housing. i did not ban fracking as vice president and i will not as president. it will be to the benefit of the american public to have a member of my cabinet who was republican. the warmest end and we must get a deal that is about getting the hostages out. jonathan: the vice president sitting down for her first substantial interview since accepting the democratic residential nomination. this new consult poll shows harris maintaining her momentum post-dnc, including an critical swing states. maia amcguines joins us now -- maya macguines joins us for

more. we know that they will get into power and do nothing about it. what's the best outcome, a divided government, or are we hopeful that we get a commitment in washington grants immunity and they do something about it? maya: overall school situation demands action but no matter who is president, 2025 is going to be a challenging year because we have huge expiring tax cuts which both candidates talked about extending, and a debt ceiling possible showdown again. on one hand, divided government often is the best thing for fiscal issues. you cannot put in place lots of me promises. on the other hand right now, we really need to have a debt deal and put in place changes that would make a difference. the single best thing that could happen is we start talking about it in the campaign. the candidates felt like they

did back in the days when they had to talk about the issue and what they would do to improve it and started competing on that front, that would create more of the mandate for whoever is on power but we are off to a rocky start were so many crosses have to be addressed, and that could make it worse rather than better. lisa: the only thing that would cause this to be front and center for campaigns would be of the bond market actually pushed back and created a market problem that forced the hands of candidates. are you frustrated that that is not happening? maya: what i like there to be any kind of a crisis that causes action? no. i'm frustrated that our government only does anything when there is a crisis. i would like to have a functioning government that got ahead of problems, but it does concern me that i think financial markets will be the only things that really push action and there is a different time rise where it is a very

short-term time horizon and somewhat of a different mentality where we have been worried about this for too long and nothing happens, you made mistakes in terms of how you invested. we don't of the timing of when rates go back up, but we know you cannot go on the fiscal trajectory that we have indefinitely without upward pressure on inflation likely sell recently or pressure on interest rates in this type that load that we have means that the cost of when the rates to go up will be incredibly expensive, right now just one percentage higher interest rate than as anticipated and leads to roughly $300 billion a year and higher interest payments. so we are dependent on those rates and any change their would push politicians to act, and i'm not sure they would act in the right direction, and they might just still do the wrong thing because are policy solutions are off the mark.

lisa: before we get to candidates and their proposals, and curious on your view on how the treasury department has issued debt to fund the deficit. there are criticisms that they disproportionately did that to avoid volatility. do you see that is keeping a lid on how much cost could go up, and that is how much i market challenges the fiscal policy? maya: there is a risk that that has been the situation. for some time, people have questioned the way treasuries have been auctioned. a number of years ago, people talked about issuing hundred year bonds and there was no demand for that. treasury has always had an in-depth process of looking at liquidity and the different trade-offs in the market, but there is always a risk it becomes more political, the choices that are made.

that said, i have not seen specific signs there are motivations, and my biggest worry is that there. i biggest worry is we have two teams in congress, and the president of both parties who really thinks the best way to win the hearts and minds of people is giving them things, tax cuts, spending increases, the keep doing that and that puts pressure on those who are managing the stability of the markets in fiscal and monetary policy. lisa: it's candidate right now has a higher debt load that they are basically implying through what they are promising to perspective voters? maya: i should be clear that it is premature to talk about how much both of them would add to the debt in any comprehensive way. in a month or two, we will issue a detailed, comprehensive score

of candidate plans as far as the budget watch project, we are at the point where both candidates have flirted with some ideas but not committed, so you cannot put out a real score yet. if you are looking, former president trump would add trillions, probably three to four trillion from his promises so far, and harris would put closer to one trillion, so the promises of trump are larger. a big question when it comes to his plans is how much money the tariffs would raise. you have to look at the tariffs. a lot of revenue would come in there, but it would have huge effects on the economy. a big question and it comes to vice president harris, she promised to extend the tax cuts but we do not know what that would look like. she has promised to adopt tax increases, but we don't know what that would look like. trillions of dollars have not been laid out.

the budding price tag, roughly 4 million for trump, one million for harris is not all of them having get to the finish line. if i was betting, we would be worried the numbers would get larger, not smaller. jonathan: i wanted your thoughts on realized gains. we have heard from the campaign about this but not direct from the candidate with real clarity. what is your read on the policy and whether you can actually follow through with it? maya: i think we will get the details because it is incredibly complex, and the closer you move to enacting it, the more problems surface, so these things will be talked about in terms of generalities and what groups of people would like to tax at higher levels. they will stay away from specifics because they will talk about realizing taxing schemes for sure. jonathan: when you put out the report, come here first. maya macguineas on a responsible

federal budget. the keyword, as possible missing from the conversation. lisa: the way people win elections is by promising everyone more. that is what we've seen in these elections, as well. the question is whether they will be forced by a market that has been becalmed by past history and the fact that the u.s. is in a unique position. jonathan: the privilege of acting recklessly. lisa: some people say that. jonathan: some people around the table. coming up, jonathan miller. that is next. you are watching "bloomberg surveillance." ♪ you founded your kayak company because you the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

why do couples choose a sleep number smart bed? i sleep great now that my side is as firm as my heart desires. my heart desires soft. matching your job description. sleep number does that. your ideal firmness and effortless comfort, all night. during our biggest sale of the year, save 50% on the sleep number® limited edition smart bed and free delivery when you add any base.

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

jonathan: we are 120 minutes away from the opening bell. trading for the month of august going into a busy september, equity futures positive right .40%, the nasdaq up by 0.70%, the s&p 500 poised for a week of losses, and so on because for, the gains. lisa: the magnificent seven stocks are almost 12% below the all-time peak. you can see right now that is what is holding the s&p 500 from another all-time high because

everything else is participating. i wonder how far it can go, lifting the overall index for the overall dissipation of nvidia. jonathan: justices malec smelly july going into the august report for the month of july -- does this smelly july going into august report for the month of july? we talked about the one side, new leadership for the rest of the markets, does it feel like that moment all over again? lisa: how far away is the market from bad news being back? that is another way of saying in terms of the forget the labor market weaker than expected, does that torpedoing the optimism? jonathan: three or four weeks ago, we had a time of three or two days of weak economic data as manufacturing component was unnerving, and then jobless claims broke out, payrolls

almost reinforcing the view. ever since then, economic data in america has been decent. in the bond market, two year, report 90. 10-year, 3.8519. i would like to spend a bit more time talking about the commodity market. this came from bank of america this morning, the cycle has shifted to potentially 5%, and that means the commodity role is still starting -- is just starting. commodities are better, from bank of america. lisa: the idea of what is an inflation hedge? inflation potentially being a bigger problem and this to me is one of the most fascinating moments for inflation discussions. they have fallen off the map, which may or may not be valid, but when you have to worry about the reignition where this is a fed that has got out ahead of weak is, you don't see much

slowdown, while other companies see profit, when do we worry about inflation again? jonathan: to have conversations about ocean accomplished, we are a long way away, and not quite mission accomplished at, is it? lisa: it is not mission accomplished and there are notes of inflation people dismiss. housing inflation in particular. i'm curious to see that it rates to drop precipitously, does not become housing -- -- does that mean housing becomes more affordable or less affordable? again, idiosyncratic or a key component of the overall market? jonathan: does it have a greater effect on supply or figure -- or bigger effect on demand? we will find out potentially in the next couple of months. under surveillance this morning, openai could get another financial backup.

nvidia has discussed joining an underground that would invest in the start of that half $1 billion. i was a unicorn, a private company with a valuation of $2 billion? that conversation feels archaic. lisa: it is interesting that they are all participating, so four major companies would be users. this is a contrarian take, what is the antitrust pressure, and i'm interested to see, are they going to form a commission to oversee the application of ai to be sure it is done in a way that is responsible going forward i do time we don't have an understanding of how this generative learning and machine learning comes together with all ideas. there is a black box component to artificial intelligence that has created concerns. do these companies create a reason to be responsible because

it is not set any of them back more than the other, or does it cause the to go as far as they can because it will benefit everyone of them and roll it out faster? this is what i'm watching more closely. jonathan: we've had conversations already this year based on the gold rush that is ai and not nearly enough about near use cases. surely that has to be the dominant conversation. what is the return on investment for nvidia's biggest customers? lisa: i could not agree more. we have seen this with research and respect to certain efficiencies scouring through earnings calls with documents people get, transcripts in terms of keywords. we don't see it in terms of how can you create the idea of intelligence, analyzing intelligence that can be biased and what that means in society that does not have bias? jonathan: nvidia up right now,

0.9%. lululemon faces pressure as consumers go for bag your pants. they lowered their sales and profit outlook, decreasing -- with increased competition but shares are up in the premarket. the stock is by 4.5%. i've gone through the commentary, guidance coming from morgan stanley, and still overweight. you can see a repeat from the south side. lisa: we will talk about this later. the key question is how low was the barrier to entry? we have seen those with disruptors, and we see this with respect to beyond yoga and aloe, which we have talked about excessively on the program, and there is a question of how are the trends changing, what are the barriers given to social media & advertising? the key question to me is how do

you respond to that? is it social media placement? is it the fabrics or style? how do you get ahead of that at a time when this is a company that has become associated with height fits. jonathan: fashion comes in waves. you see it with bankruptcy and then 20 years later, you have a big turnaround and i'm thinking of the ark of gucci the last several decades. it just feels like it has a massive problem and burberry may be a better example of that. in the 1990's, it was associated with something different, and then 10 or 20 years later, things turnaround, and then they have a soft moment again. lululemon ip on the wrong end of away right now. lisa: it is a liability when something becomes too cool, too quick because then people don't look at what the brand is and they do not want to be branded

by the clothing they wear, they would just like something comfortable that looks good and they go for something that does not have a clear association is a family. jonathan: great example, and i know you are talking about yourself. let's talk about you a little bit more. athletes are ambitious, driven, all of that, i get that, workout physically, fantastic shape. at any point after experiencing that last month, have you gone tonight and did you think about new sneakers or did you think about going to buy workout gear? lisa: no. jonathan: that is a huge problem. lisa: jonathan: how do you associate a clothing brand with an athlete? jonathan: that's the biggest compliment i've ever given a view. lisa: let's be really honest, that is actually true. jonathan: vice president kamala harris tells cnn economic issues will be top of mind from day one if she wins the presidency, including housing affordability.

he $25,000 tax credit for first-time homebuyers for downpayments. jonathan miller joins us for more. we look forward to this conversation, and before we get to the policy from the harris campaign, let's start with the policy from the federal reserve, a key question that we would love your opinion on, whether you think it will be better on supply or stimulating demand, how are you thinking about reduction in interest rates? jonathan: i'm thinking about it as a wash. the idea that we are going to have more inventory come in with lower rates will be offset by the increase of demand. i don't think the picture changes that much from where we are sitting right now, and it is interesting because so much of the economic commentary surrounding housing is amazingly out of date just because of the yen carry trade situation in early august.

it seems like years ago, but it is exciting, and all the data like pending home sales is showing sort of a prior moment in economic history, i think. jonathan: can you tell me your view on rents? a new york, things are punchy. when it comes to unlocking demand for purchasing, do you think we could unlock supply prevent because people trapped at renting properties in new york, i'm getting personal now, do you think the properties will be left unavailable for people? jonathan: i do think that as rates come down that rents, the pressure most often in the way to think about the purchase market is competitors, and we have seen rents really pushed higher over the last 2.5 years, mortgage rates have jumped, and that has tipped the balance in pushed people in.

i don't see this as a correction in rent, i see this as a slowdown in growth or stability to some decline, but certainly the tenants are not going to be sorted realizing a tremendous influx of new affordability. i think this is a long grind. lisa: yesterday, u.s. pending home sales dropped the lowest ever to the gauge that tracks them, how broken is the market now is to mark -- now? jonathan: it is extremely challenging. i think the pending home sale data that came out does not reflect by your minds or attitudes -- buyer minds or attitudes changed in early august with a reflection on what recession risk is and what the fed is going to do. after all, we are seeing in new

york, for example, an uptick in contract activity disproportionate to the season. you have to remember that consumers have been waiting for 2.5 years to make a decision, and it appears that what we are going to see, not just in new york but nationwide, as rent softens more because of lower mortgage rates as more people going to the purchase market from the rental market, that we are also probably going to see rising housing prices as a result. lisa: this is what we have asked, this question of will lower rates cause prices to go up or affordability to go up, as well? will it get cheaper for people to buy homes but it will become more expensive because even if rates are lower, the overall asking and achieving price is going to be higher? you alluded to you think the

price will be significantly higher. jonathan: i don't know about significantly, but i think the trend, we will see price growth continue. we are seeing more inventory, in, some parts of the country seen more than others, but it is in a good part of the country, inventory levels are still well below pandemic, and in those markets, you are going to see more price growth than you will in markets where inventory is the parity no. lisa: there is a question about the pace of declines in benchmark rates and two it unleashes first, supply demand? how low do benchmark rates have to go to unleash the supply of people who would like to leave their homes, whether it is people who are retired with no kids, big houses and they would like to downsize, or people who have kids with, like to move but are locked-in by mortgages, from your perspective, what is that

rate? does that unleash supply or demand or vice versa? jonathan: it is like a dancer trying to orchestrate here. the way i think of it is, i think it is incremental change, but the rates on a 30-year fixed drops below 6%, if that is the case, i think visually that will have a jumpstart affect to demand. i do not think -- the thing i'm conveying trying to convey his i do see it as an offset for all the new inventory that comes in, i think we see an increase in demand because buyers and sellers are aware and looking at the rates. a seller that has been reluctant to list is going to become a buyer, and the law can affect

that was holding them back, they have had 2.5 years to sort of ink about it, and at some point, you know, personal situations require action. jonathan: appreciate your time, jonathan miller on the housing market of miller samuel. let's talk about the long grind. when we talk about the effect, also be know what we are talking about. people with low interest rate mortgages, locked into their home, are not going to sell soon because why would they take on a mortgage with an interest rate of around 7%? that effective mortgage rate right now, the average rate of standing mortgages, is 3.92. 2022, when the federal reserve said they were going to raise rates aggressively, the rate was 3.31, so the average rate, the effective org its rate has moved 70 basis points in the last two years, the slow grind that jonathan is talking about.

lisa: as evidenced by the fact that home sales have fallen off a cliff. sure, we saw a little uptick in mortgage applications, because why would anyone move or sell if they knew they would get a lower price and then a higher mortgage rate to go anywhere else? how do we unlock that process? it is a mystery as people understand that dance. jonathan: we are starting to close that spread. we will see how quickly we can collected. s&p positive by .30%. opening the 45 minutes away. here is your bloomberg brief. bloomberg reporting that intel is working with investment bankers to navigate the most difficult time in its 56 years. the chipmaker said to be discussing a range of scenarios, including a split at its manufacturing as this is the potential scrapping of factories. they are out to percent. in the premarket, computer

hardware company reporting second results that beat expectations with a strength for ai service, dow casting forecast for third quarter, up i than 4%. and a big upset at the u.s. open, carlos alcaraz fell to the world number 74. he made his earliest exit from a grand slam since 2021. vivek shankar the last day -- a big shocker the last day. lisa: nobody would like to see his workout routine. they would way rather see carlos alcaraz's routine. jonathan: quite a specimen. lisa: indeed. jonathan: he is jacked. he got out much earlier than we thought he would. next, pressure building on the u.s. dollar. >> the dollar is clearly weaker the last five weeks. as long as we see better growth overall, we will see a stronger

bid for the dollar. that is next. this is bloombergtv. ♪

♪♪ ♪♪ ♪♪

♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals jonathan: stocks are firmer to close out the week, up by .40% on the s&p, the euro, 1.1086. under surveillance, pressure building on the dollar. >> the dollar has clearly weaken the last five weeks. one of the reasons is because the fed has moved in a much more dovish, towards a more dovish narrative. culminating with powell's speech, but the european central bank and the boe -- is the dollar going to continue to weaken against those majors? no,

despite the fact you are seeing a lot of douglas this from the fed. as long as we -- dovish this from the fed. jonathan: the dollar on track for its biggest monthly track of the year, pricing for a rate cut next month. with the easing cycle approaching, we think we are near the end of a multiyear period of dollar strength. we do like dollar upside because of our view that 50 basis point cuts are not needed at this point in the cycle, jeremy stretch says. welcome to the program. to give you the opportunity to build on that, the dollar bull market might be over but ultimately you think there is a little juice left. explain. jeremy: i think there is a place to squeeze. we have 25 basis points or more for september, so i think that is where there is residual risk, so it is clear that we have seen a selloff to the course of the month of august, i think we can and should seek correction back

towards 102 in the dxy a nearer term because the data does not warrant any concern regarding a 50 basis point adjustment from the fed. we are looking at purely standardized for the five basis point moves in the next three meetings. i think that will eventually provide some dollar cheapening. i think we moved a little too far, and we are seeing a correction that has a little more to go. and i think it is a case of looking for better levels to trade, so i think it will be the case that we see a little dollar recovery first and the receipt a generalized bid towards those higher currencies, which will benefit from stronger growth trajectory that we expect in 2025. jonathan: august 2, august 5 is best described as a positioning shock. i know it sounds cliche, but how clean is positioning out and how long is that dollar still?

jeremy: we have seen a volatile period, and a repricing on the examination of the again, for example -- of the yen, for example, a deviation in terms of moves. we have fairly large structural positions, but we have seen a generalized pairing in terms of dollar holdings. i would not say we are clean, but we are rescued in terms of aggressive positioning biases that we were in the end of the month, as we are now coming into the end, but we have this long weekend in north america, and we are waiting on next week's result. lisa: i could think it is because we are ahead of a long weekend, but it is never going to be this cheap for u.s. residents to travel overseas again. you can play around the edges, but you are saying that it will become more normal in the future, even at a time when you

could see strength on the margins as we head into a volatile time in a couple of months. jeremy: yes, that is right. i think it is the case that on a longer-term basis, the dollar has done well. we have seen prolonged time of economic exceptionalism, amplifying dollar valuations. for those u.s. tourists, the dollar has gone a long way across the world in recent years. i think it will be the case over the next couple of years that we will see graduated moderation in terms of dollar valuations. i think it will be the case that the exceptional dollar performance, which has been supported by that status, although, it will be the case that there will be a gradual and continuing long-term diversification, and a gradual

process which will list valuations. lisa: the only fly in the ointment is where else people will put their reserves, whether it is central bank or investor, considering the fact that there are not a lot of great alternatives. it doesn't look like they are poised for significant growth, and where will the strength come from? jeremy: you are right that that is the problem central bank reserve managers have, that they wish to gradually manage the domicile and the reserves, but the alternatives are not widespread, so the sense has been one of the reasons why the dollar has held on longer than otherwise would have been the case when you consider the shortfalls. i think it will be a slow and graduated process. we have seen a modest pickup in terms of holdings from the lows we saw during the euro zone crises we are a long way away of 2008 and 2009, so there is a

moderate pickup, but the ecb argued of the easing, and i don't expect that it will be easy as quite as fast, so that is something to keep in mind that we are expecting another 50 basis points from the ecb but it will be a small and slow quarterly process as far as using policies, so not as impressive as anticipated. jonathan: jeremy stretch of cibc, thank you. you asked the question i was going to, which will be lower, the ecb or the fed? jeremy said the fed. lisa: that is why you see the potential of weakness, but look at the data out of the euro region, what incentive does ecb have not to lower rates more than the fed? i don't see it. jonathan: i feel you, but, single mandate central bank.they have to talk with certainly about inflation. lisa: talk, but act is a different story. jonathan: next, u.s. bank, eric

friedman, and td. from new york, this is bloomberg. ♪ ♪ food isn't just fuel to live.

it's fuel to grow. my family relied on public assistance to help provide meals for us. these meals fueled my involvement in theater and the arts as a child, which fostered my love for acting. the feeding america network of food banks helps millions of people put food on the table. when people are fed, futures are nourished. join the movement to end hunger and together we can open endless possibilities for people to thrive. visit feedingamerica.org/actnow

>> the ai cycle is absolutely happening. this trend is still very much

ongoing. >> we need to see a major shift in earnings leadership to see a big tech stepping back. >> we are starting to see more stocks in the s&p 500 post positive year-over-year earnings growth. >> the need to rely on a single stock powering the market is diminishing. jonathan: things getting a little busy over the next 90 minutes or so. 30 minutes away from economic data in america, 90 minutes away from the open. equity features on the s&p 500 from her by 0.4%, up by .75 percent. the small caps, another all-time high, up by 0.5%.

your day ahead, 8:30 eastern time, personal income and spending data, core pce. later on, 10:00, the consumer sentiment. lisa: yesterday, the field rotation was that you had the second read of the gdp came in stronger than expected. and you saw initial jobless claims did not go up. it was the perfect recipe of the disinflation. if we see inflation come back, suddenly people care about the inflation rates that otherwise have been written off as a second side a story to what we are seeing in the labor market. jonathan: yesterday was an odd session. we had the nvidia news. then it all faded into the close. if you are joining us, down by 6% in the session.

lisa: which is remarkable that we didn't see a bigger decline and the fact of the nvidia selloff, several of the other tech stocks fell out of bed. use all resilience. that was the biggest story yesterday, even with into close the idea that people still believe in the story. what would it take to shatter that. how much of a decline in the headline labor market data or what if we see a revival in the inflation rates? jonathan: we have to see that and it just reinforces the economy is in an ok place. equities doing ok come up 0.4 percent. in the bond market, poised for a fourth consecutive month of following yields at the front and back end of the yield curve. around 3.90. the ground continues. lisa: jay powell just said it,

i'm going to cut rates. he didn't say that. but he basically did. time has come which is we are going to cut rates and adjusting policy and talking about how it no further weakening in the labor market would be welcome. they would like to see the labor market remain where it is given that it makes complete sense there is a rush into u.s. bonds and we saw a 36 weekly inflow into bonds led by u.s. government. the question is, at what point do we see the long end start to perk up other issues? yesterday, the seven year option as we expected, more pushback when it comes to longer-term expected rates in understanding what the discount rate should be and with the idea of the fiscal overhang and other pressures should be for longer-term u.s. rates. jonathan: we set up for the jobs report next week. estimates are 163 is the estimate in the survey.

the numbers coming together. the employment rate, 4.3% which left people looking for that to come down to 4.2%. this is the lineup, coming up, eric freedman from u.s. bank. in under 30 minutes, dana telsey , as lululemon contends with consumer pressures. and roberts talking and when he is still expecting a soft landing -- robert sockin. continuing bolstering economic growth in corporate earnings but if both decelerated somewhat, slightly constructive market signals and neutral macro signals continue to warrant a cautiously optimistic by toward equities. welcome back to the show. good to see you. you managed client and

institutional money, 500 billion. can you share how much has been in cash getting rewarded in money market funds and how much as starting to be deployed. eric: it is a nostalgic push from both institutional and wealth clients and i can get something from the shorter end of the curve and i will stay there. we saw balances go up as high as 10% or 10.5 percent and work its way down to 4.5% or 5%. that says to us, investors are getting this idea of a repricing across the curve and that effective pivots in jackson hole was the consensus view that we are not just going to have the nostalgic view in perpetuity. we are seeing more of a gradual filtering in other parts of the marketplace. i thought he said that regarding

flows into bond funds. we are seeing extension in other parts of the broader global macro trade and that has been positive and continues for the next couple of months. jonathan: when the cast position comes down, how sticky is the 4.5% peshmerga people are lining up on the program saying the money will be deployed in the fed will cut rates in you see the curve normalize. how sticky is the four point 5% from your perspective? eric: we think it is sticky. the thing that would shift views out of that and get into the broader macro ecosphere would probably be the idea of the back end of the curve were being hired. that is something that what are the factors that will cause interest rates to go higher on the back end? we don't think there is necessary an immediate catalyst. there is focus on when does the

fed cut and how deep would it be. we do think what is on the horizon as we get more specifics on policy is the risk that inflation picks back up. that is not something that is being discounted in commodities. it has been something we think is worth talking about deeper into the third quarter and early fourth quarter, probably september 10. we have the first and only presidential debate. there will hopefully be more specificity about cash planning and spending and that could be the catalyst that sets up some of the noise away from the fed and the immediacy of rate cuts and into more of let's call it the inflationary consideration of policy that we think is an undiscounted risk. lisa: i think these are interesting points that challenges that there are $69 and asset funds win for the fed cut rates and it will all be unleashed into longer duration bonds as well as into stocks. it sounds like you are

challenging that in saying a lot of this is sticky it was on the biggest month of inflows of the past week going back throughout the entirety of the year. unless long and yields go higher, that will probably stay in any optimism has to come from elsewhere. is that a correct view? eric: it is very seeing that much more eloquent than i put it. we think the 10 year is probably 4%. in a way, it is almost that duration is too expensive to buy more of an not too expensive to sell. we are in the middle ground where tens, 20's, 30's, probably not a lot of issuance. if you look at the net participation of buyers across most auctions, it has not been foreign buyers. who will be the marginal buyer of longer term paper, probably not the usual suspects, if you

will. with the 10 year at 3.85, we think it is closer to four. without a lot of definite policies from either party, we are in a bit of a no man's land with that trade. duration we think is pricey. we think the unwind of cash probably goes elsewhere and that will probably be more of a trickling phenomena over the next weeks and months. lisa: michael at bank of america was talking about swapping out commodities in place of bonds in the 60-40 portfolio because of the concerns you are talking about. i know you will say 60 should be all commodities arete have you but there is a question of whether you start to on the margins shift more into inflation hedges like commodities in lieu of some of the bond holdings. eric: it is a great point. if you look at the considerations of commodities, when you're in an environment at

this and run relative performance money and you are giving up 35 or 40 basis points in commodities versus bonds. that is a big hurdle for an investor like us to think about. one of the things that has not worked in one of the few dislocations in markets right now is the petrochemical cycle. if you look at what is happening with natural gas which has effectively known as the widow maker for investors because it is so hard to trade and also things like oil and other components of petrochemicals, you are in an environment where the cost of being wrong is extremely high. we don't think now is the time to necessarily be bold and take a huge amount of capital into commodities but you can piece into it. gold and silver have worked what industrial metals, petrochemicals have not work so well. that could be interesting. we could be very incremental when you look for optionality on policy risk later this year.

you have to be mindful that the curing cost is high. lisa: that is the reason why some of the 40% in fixed income would go toward that but not the whole thing. for the 60% or higher if you are bullish on stocks, i wonder how you are cautious at a time where the risks are bifurcated in nature. what does that mean in terms of how you are approaching allocations right now? eric: this is a space where we are modestly overweight domestic equities and overweight equities over all. we have expressed that since late april and equal weight in s&p. we were early means we were wrong but the last couple of months we haven't right which has been a benefit. we think this is an environment where there is not that much dislocation, again since the low s&p on august 5 which spoke to how aggressive the position squaring had to be, there has been such a quick reflection move upward across all assets.

this is about relative value. we like stocks or bonds, equal weight over ag, but you have to pair off as opposed to looking at large deep dislocations that aren't in the marketplace. we are cautious about taking really bold moves. we think income is interesting like a high-yield, nonagency morgan says, reinsurance is a good way to pick up and wait for more specificity without taking directional risks because there isn't a lot out there for market dislocation to pick through besides commodities which haven't done well. jonathan: we have been asking this question all week to set us up for payrolls friday next week . are we just as vulnerable going into september 6 as we were into august 2 or have things change? eric: i think things have

changed, the taps on the shoulders with the trade position have already happened. investors have short memories and so we are not naive enough to think there isn't some potential for being all sides. if we saw something beyond consensus, you would have to see something like sub 110 or 100 we think with also a not sharp rise but headline unemployment rate north of 4.4% or 4.5% and that would signal weakness is priced in. we don't think that is the base case. the economic team is more bullish on what the print might look like. but squaring it tighter than where it was back in the august print, we are not as vulnerable but it would take a significant downside surprised to drive markets lower. jonathan: that would be bad news and that would be bad news. have a good, long weekend.

sub 100 and unemployment of 4.5%. that is bad news. lisa: it would price in more weakness at a time where these of the most leveraged companies to a cyclical cycle. annmarie: equity futures up by .5% on the s&p. let's get an update. your is your bloomberg brief. the latest poll showing harris tied with trump in the swing states. the vice president narrowing or reversing trump's lead on key issues. the labor market is seeing 0.4% every year through 2020 -- 203.2 the main driver being slower population growth. mclaren will look to close the

gap on red bull in the formula one standings when the italian grand prix is on this weekend. he needs to make up a 70 point gap to the championship leader with nine races remaining. lisa: i know there is bias in the stories towards specific teams in sports. jonathan: i didn't even mention for our rate. -- ferrari. lisa: there you just mentioned it. jonathan: up next, the morning calls. dana telsey, as lululemon grapples with the consumer. that is up next.

it's time to grow your business. time to get customers. time to make your future, now. create a website in minutes. how? godaddy. coding... nah. but all that writing? nope. ai, done, built, up and running. you have what it takes. now take it to the next level. create a beautiful website in minutes with godaddy. let's get to work start for free at godaddy.com

♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals

jonathan: arrays trapped in the parking lot in miami. lisa: right in with your thoughts on that. jonathan: equity futures are marked by 0.5%. luke capital lowering the price target on dollar general to 90 from 130. they say the company results were worse than expected. management guidance cut and cratered yesterday. ubs lowering the price target on gas keeping the neutral rating after a tough quarter. more headwinds from the horizon. morgan stanley lowering the price target on lulu.

lululemon, dana telsey maintaining and outperformance noting solid results and sing a reduced outlook comes as no surprise against expectations. she joins us now for more. how many companies have you covered? dana: 22 companies reported. don't tell me about a slow week. we now have the pulse of the consumer. jonathan: how are things? dana: things have slowed down, you want to call it discerning or cautious. the -- july was weak and august was better but the plan for the back of the year is ticking down. you look at the fourth quarter where you have five fewer days between thanksgiving and christmas, retailers have to play it cautiously. some have called out a 3% hit to sales in the fourth quarter because of the fewer days and it easily could be. lisa: you have personal consumption revised up in the second quarter, certain companies doing just fine,

travel going strong, where are we seeing the bulk of the weakness? dana: look at what you have seen with luxury spending which has slowed. you are not getting the international tourists coming over. discretionary spending in department stores, look at macy's in dillards numbers, weaker than expected. look at urban outfitters, consumers intentionally spending and innovation is driving demand . look at birkenstock, very good results, take a look at abercrombie, strong double-digit gains. look at footwear, deckers, you had innovation driving the demand but you have also had the off-price is outperforming, 4% comps at one in 5% at burlington. look at walmart and target, consumers are searching for value because they don't have the stimulus dollars they had a couple years ago.

lisa: is this a lot of people who are higher income searching for more value but the lower income families still actually really struggling? are we getting a signal from the fact that off-price places are doing well with the dollar generals of the world are flat on their backs? dana: you look at dollar general's but walmart, ross, tj, burlington all did well. some of the dollar stores are cutting back new store openings, five below being one of them. it is more competitive. it will get old and 80 yesterday and the search for value, it definitely -- old navy yesterday and searching for value. jonathan: why is lulu running? dana: we look at the guidance, it has been week and has taken into account and the guidance they gave wasn't worse than some of the numbers out there. jonathan: so it is beatable

which is what we have heard from other analysts. where are they having problems? dana: it is the women's business and a little bit of the execution of it. the newness in the product that has come out and you can call it in terms of colors, prints and patterns, they need more of that. it will come in slowly. they redid the merchandising structure and sounds like they will be able to react faster and drive more newness into the assortment. lisa: howler has -- how low has the barrier to entry been? you have brands that have more of the air of cool. lululemon doesn't have that anymore. is this getting easier in terms of disruptions we are seeing more broadly? dana: there's always been

competition and everyone has their own personality so to speak. i think of lulu as technical functionality. i think of sweaty betty as affordable. each has their own posts and you have to cater to staying in your lane. the fact that they didn't have the newness in women's impacted the ability to drive conversion. lisa: there is also a question is how much of the weakness is just beginning at a time when we just got a note talking about how they expect the savings rate to fall at an all-time low and essentially people are spending with the have left and have already spent of the pandemic savings. how much do you expect this to be the last gasp whether than weakest spot? dana: i think the customer has money but it is where they are going to spend it. look at the experience versus goods element out there. the other thing is changing, look at other categories that have underperformed, jewelry has

been week. they have to see something they don't have in the closet already. jonathan: when i think a little i think of midtown uniform. i feel like it died in the pandemic, didn't it? dana: people are still wearing technical and functional and that some of their merchandise, particularly for men. the abc pant is showing up for work every day. lisa: that was my point. you picked the midtown uniform during the pandemic and you don't picture incredibly. jonathan: i sent you disagree but i feel like there has been a brand hit over the past few years. dana: there's been more competition. they have gotten to a bigger base so it requires more to be the bigger base. jonathan: got it. good to see you. coming up next, we will speak

robert sockin to -- speak to robert sockin. the s&p firm or by .5%. it yields of a single basis point. twos and tends just about unchanged. as the dollar heads to one of the worst months of the year so far, the dollar against the euro just a little deeper. you are watching bloomberg tv. ♪ why do couples choose a sleepher snoring.t bed?p wh sleep number does that. thank you. during our biggest sale of the year, save 50% on the sleep number® limited edition smart bed and free delivery when you add any base.

jonathan: stocks on the s&p 60 minutes away from the opening bell and seconds away from economic data in america. up on the s&p, .8 on the nasdaq, the small caps doing ok and the bond market at the front-end end of the curve, the two-year 3.90. the 10 year, 3.85. personal spending, pce and jobless claims, we get more jobs data yesterday. mike mckee are they late again? mike: personal income

stronger-than-expected up 3/10. spending comes in as forecast up half of a percent. pce price index as forecast up to tenths up from 1/10 gain in june. year-over-year basis headline at 2.5%. core pce up to tenths for the month and up 2.6% for the year-over-year which is interesting because the forecast had been a 2/10 rise but it 2.7% increase for year-over-year so that comes in better. these numbers come in in line. the news about personal spending we will dig into that in a second is good news in the sense it suggests a soft landing in place. the question we will have is how do people pay for this? everyone says their personal savings are gone from the pandemic.

i have to look at the overall wage and salary numbers are pretty >> is it fair to say with exceptions, of the data in america has been in line. >> it has been in line and i don't know whether, i'm sure our guests will say economists are getting better, but we had a lot of problems coming out of the pandemic and now it seems to be easier forecast we are seeing much more in line with what the forecasts are pretty. -- forecasts are. jonathan: in the bond market just to touch base with things in fixed income, the two-year up a single basis point. lisa: we knew this would be in line with expectations since economist have been doing this. my main question was something that was pointed out earlier in a note where he talked about how this ongoing spending which we

saw means savings rates will be coming down quite considerably. how much are people basically spending and using what they have not necessarily extra income or savings left over from the pandemic. jonathan: we will come back to mike with more those details. your thoughts on all of this? where we are and where we are going? >> interesting set of data. as michael was saying. it feels pretty soft landing for most of the data we got in august outside of the early august where we had that ugly ism manufacturing and jobless claims and payrolls report. since then you've had strong retail sales, revised consumption gdp that showed a more resilient consumer and good numbers on the consumer side alongside pretty good numbers inside inflation. to me this is a good mix of data. there downside risks of course. rates much higher in that last

report so we have to wash these closely particularly the labor market. overall a pretty good tone of data. jonathan: by definition this is just a moment in time, what gives you encouragement or confidence we've stabilized around this new equilibrium. robert: i think that's the challenge is growth was always going to matter -- moderate from where was running in the second half of last year into this year. running well above trend and we are at an inflection point and it becomes difficult to know are you moderating to a soft landing or slowing down much more sharply? i am watching a lot of higher frequency indicators to tell me where that trend is going right now jobless claims is a good example. they are staying pretty low so we can see deterioration. to me that says more of a moderation in the sharp slowdown. history tells you these can turn quickly so you do not want to get overconfident. right now it's a difficult point to judge the data. lisa: we do get conflicting

signals, corporate earnings reports and some of the earnings calls or some of this economic data out of the u.s.? robert: i found in the past the two usually line up well over time in the sense that if you look at what you're getting overall from corporate earnings than what you are seeing in the macro data they tend to tally similar. they have had a divergence where a lot of the consumer-based companies are pointing to more concerns about the consumer then we are seeing in the macro data but the macro data is much broader. so to me i look at the overall spending numbers and those seem to be holding up well so i take that is the biggest signal. >> more the idiosyncratic leg what were talking about with dollar general versus systemic or sort of the tea leaves, is that correct. robert: it's valuable to look at some of those corporate earnings reports. we heard for a while there were

strains in the lower income consumers in the u.s. and you see that in macro data. we don't have that much great macro data to tell you what's happening. there you have to rely more on what companies are saying. they not worsened dramatically but are definitely there so it gives you a better picture of the idiosyncratic but for the overall macro picture the economic data is the best. jonathan: he changed his mind and in that pc talked about the self reinforcing mechanism of seeing higher unemployment starting to feed on itself paid we saw in the confidence number people are less confident at finding work. any signed of that starting to emerge? that self reinforcing process of people started to worry because of that are we in that moment. >> it is a great point and we've written in the past about the sort of stall speed framework where it slows a lot, it tends

to keep going in most cases in one argument you can make is it is self reinforcing but consumers and businesses see the economy slowing and they pulled back even more. right now you are seeing moderation as you mentioned. they are higher -- finding it harder to find jobs. but i think a lot of those indicators are still at relatively healthy levels historically and so far we are not seeing it really in the spending figures in the consumer. jonathan: are they more interested in levels or change? robert: change. if you look at consumer spending figures are moderating your seeing service conception moderating grade may be some consumption pick up relative to that flat trend the last few years. you deftly should be focused on the change but right now most of these data tells me the consumer is not rolling over and the labor market looks mostly to be moderating. that could change quickly

especially with the reinforcing dynamics. interesting to see where that comes in even for example the unemployment rate moves again. even if it is for better reasons that labor supply is increasing i think the sticker shock can really influence consumer expectations. lisa: we have been talking about the weakness in the consumer and you been telling us why you don't see it accelerating in a significant way. when do we have to worry about inflation again, considering the fact it might not go down to 2% and stay there if you have an economy doing just fine. >> i think what were seeing in the u.s. we are also seeing this globally. the upside risk to inflation if you look at bicomponent, food and energy inflation are running at or below pre-covid levels. goods inflation running at or below pre-covid levels print it's about that services inflation tied to that tight labor market. as we've been talking about a

lot of labor market factors, you can have more confidence that services inflation will continue to grind lower. if the labor market were to somehow read titan and you see the unemployment rate falls significantly, wage growth accelerate then i would get more worried you could get a pickup in services inflation the way the dynamics are think the upside risk is really significant. jonathan: we would love your views on what to expect this time next week when we sit in a weeks time and we just had payrolls put the estimate is 163, the unemployment rate we are looking for is 4.2%. robert: our u.s. team is looking for a weaker report than that. a fair amount softer mess the bigger risk is that inflection point could be right the things will slow down more significantly. if you get a number like that i would say it's definitely a sign

that we are going to enter this slow down but it's a worrying number. i would have the focus on what's going on in the household report with the unemployment rate because i think we hit the sahm rule in the last report. more of that suit arising labor supply. but you get a significant rise there especially due to weakening labor demand i think that will be pretty worrying. >> good to see you, have a great weekend. the opening bell is about 50 minutes away paid equity futures positive across the board up 4/10 of 1% on the nasdaq up by three quarters of 1%. the small-cap up by 6/10 of 1%. yields drifting higher at the front-end of the curve on a two-year. economic data out test about nine or 10 minutes ago. just to revisit that economic data, what stands out to you. michael: it's not in the headline numbers it's the savings rate falls.

in 20 we had one month in the twos but you go back to 2008, we did have the savings rate very low and that was when we were getting into the housing bubble. not sure what it means but it raises the question of where are people going to get the money to keep spending at the rate we saw today that half percent increase in spending and the surprise in there is we have a lot of spending on goods, goods up 7/10 of a percent. services were up just 5/10 of a percent. it's been the other way around so people are still buying stuff, but the question is can they keep it up. wages up same as the prior month. lisa: i'm so glad you picked that up. it is fascinating that that is really his takeaway. consumer spending that's holding gdp. how long can that continue as that savings rate goes down what

he calls more normal levels. at what point does it become abnormal? michael: i think we are below abnormal, somewhere in the high threes to 4%. so we are below that now which raises the question of what are people doing, are they starting to raise the amount they spend on credit? we have seen some evidence of that but we haven't seen it get out of normal ranges but it's back in normal ranges and where do we go from here. jonathan: let's talk about it, welcome to the program. payrolls friday this time next week, what are you looking for? >> we have had quite a bit of uncertainty in the last couple of prints. some lower print sprayed we are looking for north of 200 k. looking for not far north i should say. north of 200 k and very

importantly decline in the unemployment rate. obviously lots of question about the psalm rule being triggered, the director of travel still weakening. we are looking for noise in this data through this transition to whatever word you want to put on it. but maybe not quite so strong. >> something a little north of 200 k on payrolls. where does that leave rates? gennadiy: you've seen rates rally dramatically over the last month or so. and if he was gotten a little bit ahead of ourselves. the market is looking for more than 25 basis points for the rest of the year. some of that will get priced out as we get closer and i think rates will nudge higher north of 4% on the 10 year. it's a good buying opportunity for investors who have been late to the game to get involved. lisa: how do we understand whether it's people late to the game who can plow in versus a head fake in the economy, that

we were getting some sort of weakening that was turbocharged by the powell pivot that everybody saw at jackson hole? gennadiy: that is the difficulty. we saw this in the end of 2023 where the fed pivoted sharply. i think it's why they've been so cautious to not overdo it. the discussion of 25 versus 50. why jump into this rally. it's really the direction of travel that matters to the fed. what you are seeing is mission accomplished on inflation or something close to there. and now you are worried about the employment rate. and if that drifts higher you know from a risk management standpoint you have to start pushing rates lower. gradually but you are over titan bring the direction of travel is what matters to the fed not necessarily every single data point. >> it's a friday on a slow week when everyone's trying to understand things that are not understandable from a long-term

trajectory. pairing together what you were talking about with what mike was saying. the heavy dust the savings rate reaching the lowest level since 2022. yet we are looking at a fed cutting rates. the u.s. consumer is not that leveraged. what is the fear here but we could be turbocharging a next cycle if you have already an ok economy and you'll have a low savings rate and the ability to take on credit more easily with lower rates. that has been a bad recipe in the past. gennadiy: that's what's keeping the fed cautious right now they are not keen to cut 50 basis points. there really is no emergency as we can see right now. from risk management standpoint the direction of travel is a weakening economy gradually. you see this in the consumer. there isn't one consumer. there's all sorts of pockets. you saw the earnings from dollar general, lower income consumers under a lot of pressure prehire

income consumers doing ok on average that's what the numbers give us. but there are pockets of weakness year and i think the fed has to be attentive to that because they tend to proceed bigger longer term weakening in the u.s. economy. that's also to the downside for rates as well print jonathan: let's go for the numbers next week. the two-year is about 3.90. 30 year, for point 16. -- 4.16. if we get something north of 200 k is that bond market two minutes later? i want to gauge the kind of reaction, the magnitude of the move this time this week. >> i could see rates moving 10 to 15 basis points higher on that reaction, in the wake of that report. jonathan: that's the potential upside. gennadiy: i do think it gets bought. a lot of them have been very

cautious to the earlier point to jump in to these markets with both feet. they have gotten burned, back in december of 2023 they got burned for the last couple of years, they want to see the whites of the eyes of the downturn to really start getting long. a lot of them have been cautious than they would've been otherwise even though they acknowledge the economy looks like it's starting to soften up. lisa: do you think we will be range bound with these fluctuations back and forth? gennadiy: range bound on a downward trajectory. that's the best way, downward channel of rates. the issue is maybe we have over extended in terms of the downward channel. looking at rates to finish up 3.4%. that might sound lower but it is really not. a couple big data prints and we are there. lisa: eric friedman made the point earlier he was saying people think there is a $6 trillion in money market funds

that will flood into longer duration. he doesn't expect this to happen until there is some sort of material selloff in the long end that leads to higher rates. do you think the money will come from elsewhere and we will see that money stay in money markets in cash. >> i think that's one of the biggest misnomer sprayed if you talk to the funds themselves they will acknowledge that trade on most never happens. there are few people who take money out and invest it into equity. very long-duration fixed income. maybe going out in 90 days instead of 30 days. i think a lot of that money will come from elsewhere. maybe from equities for example or from abroad with foreign investors bring i do not think that money will flood out of the money markets. i think money market funds will see inflows albeit in a more modest pace? jonathan: because of the risk aversion associated with the downturn? gennadiy: mostly because for the

last decade or so we have not seen massive inflows because rates were rock-bottom. even if the fed goes back to a 3% neutral rate, that's still 3%, it's an attractive rate from a long-term perspective. investors will be ok taking that. most investors will be ok buying into that. jonathan: this was deeply thoughtful stuff. we appreciate that. lisa, a lot to chew on. lisa: this really coheres with what we saw yesterday, a money market funds with their biggest monthly inflows this year which capped a 127 billion dollars of cash into those funds in the month of august at a time when people were saying watch that money flood out of their and to everything else it's not really happening. >> at least not in the way people expected. 41 minutes from the equity bell. one third of 1%.

let's get you stories elsewhere. the latest u.s. economic data showing the fed's preferred inflation gauge rising at a mild pace and household spending remaining solid suggesting maintaining price pressures without causing too much pain to consumers. nvidia set to be discussing joining a funding round for openai that could value the startup at over 100 billion u.s. dollars. sources say apple and microsoft of also been involved in talks about participating. golden state warriors star steph curry agreed to a one-year extension to his contract that will pay more than $62 million. the two time m.v.p. will become the fourth nba player to pass $500 million in career earnings. lisa: can you agile they would pay to do a podcast on amazon. >> he should take someone in oasis. [laughter] lisa: i can't even.

let's move on. jonathan: up next, your trading diary. ♪

jonathan: stocks are positive one third of 1%. the opening bell 37 minutes away as we count you down. the calendar for the week ahead per u.s. markets closed for labor day. tuesday we get s&p global pmi plus ism data, plus the feds. thursday adp private payrolls and jobless claims bread payrolls friday, enough economic data for you? >> next week is the beginning of a stretch that will be very different than the past week. chock full all sorts of data and

political events. to me i want to understand where the balance of risk is for this market. is it the idea of a potential selloff in the bond market or retracement of fed expectations built in post jackson hole or is it on the flipside side with weaker economic data. it feels evenly balanced, finely balanced. i cannot even pretend to fed speak. jonathan: mike mckee. michael: it sounds like jay powell. [laughter] michael: i am excited for next week because a week ago i was at the center of the universe with jay powell and all this week all i hear is nvidia. jonathan: we are doing a payrolls party. lisa: do you feel left out or forgotten? michael: it will all be about the payroll indicators, the labor market indicators, jobless claims, jolts, adp and of course non-fun payrolls per the fed has said we are looking at the labor market to make our decision on

the 18th of what we do from here and we have pretty good news today on the inflation side so unless something happens it won't be a big cpi move before they meet. the labor market will get a lot of clues this week jonathan: -- this week. jonathan: pretty unsettling for a lot of people, manufacturing ism, the employment component of that. jobless claims, the payroll support. have we put that to bed? anything outstanding for you? michael: the surprise might be in the manufacturing side. we saw in the numbers today that manufacturing wages went down which suggests some real weakness. we will see that in the ism numbers coming up. we will see that and on friday the manufacturing hiring. those are higher way paid -- higher wage paid jobs. that could be an issue. lisa: adp getting some attention

as being more telling than other indicators in the past. even when it comes to provisions. what do you make of that? michael: probably coincidence. but they are all friends of mine over there and i respect their work. but it is not supposed to be an indicator of what the payroll numbers are going to be so if it is close, that is good. if not, do you want to bet your salary on them being close again? lisa: i saw some examples of how it's been more accurate than previous. i was just wondering if there was credence to that. jonathan: mike mckee, thank you sir pride coming up on tuesday, anna rosenberg, brett of northwestern mutual. all of you out there thank you very much for choosing bloomberg tv.

have a brilliant long weekend, this was bloomberg surveillance. ♪ why do couples choose a sleep number smart bed? i need it a little cool and i need it a lot of cool. we're both cool like that. sleep number does that. actively cools and warms on each side. the queen sleep number c2 smart bed is only $999. plus get free delivery when you add any base. ♪♪ ♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals

katie: futures higher after tepid pce data locks in a rate cut print 30 minutes into the start of trading. sonali: matt miller is off today. bloomberg open interest starts right now. katie: marching on, stocks closing on a fourth month of gains as the latest inflation data reinforces the fed will start cutting in september. intel explores its options. t