>> we are looking for continued improvement in the economy, but the pace will probably slow down at the we had this quick rebound. >> we are looking at the possibility of recession in q4 and q1, and further negatives. >> we are looking at rates near zero for a long time, maybe forever. >> there is a certain logic in the market doing better than the economy here. >> this is "bloomberg surveillance," with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast come on bloomberg radio coast-to-coast.

especial good morning on sirius xm channel 119, and the path of hurricane laura. that will be a long pass of rain over the next number of days. it is a natural disaster, and every expert says, not that it will affect national gdp, but nevertheless a profound storm. lisa: it really raises the question of what resources the united states has to do with a storm of this magnitude, the biggest storm hitting the u.s. in records going back to the 1800s. how much we have to combat this at a time of such economic distress. tom: galveston here, i believe, and the sunrise over to lake charles and onto new orleans. the path really centered right on the louisiana western border and texas eastern border. landfall with 150 miles per hour, a scope back to 1856. we fall back to the jobless claims in 28 minutes. we are numbed by one million a

week. lisa: i don't understand the relationship right now between the economic at and markets. we are at record highs for the s&p and nasdaq, a little off that, and yet we are expecting the 23rd in 24 weeks with new jobless claims at one million or above. tom: it will be interesting to see in jackson hole, and of course, we will spend a huge amount of the hour looking at the economics jerome powell, but what i find fascinating here is if he disappoints, the abruptness in the yield market will be asked ordinary. lisa: what does disappointing mean? tom: i think it does nothing. lisa: the expectation is he will come out and lay the excitation for interest rate to remain at zero for at least five years, that they are ready to step in with additional programs. what else can they say? that they will take rates negative have they are going to buy more junk on's? people -- more junk bonds?

people are assuming that is on the table anyway. you on welcome economics, finance, investment. a lot going on. michael mckee will be with us. . megan greene is scheduled to join. 28,000.ow salesforce.com entering the dow. alicia levine is with us of bny mellon. the last time we spoke, i believe you had more caution to the equity markets. do you sustain that? alicia: good morning. nice to see you guys again. i think the pace at which we are rising is a little bit concerning for future gains from here, but overall, there is so much support in the market not just from the fed, but also the flows year to date, where five to one flows have been going into the bond market and not

equities, and there's also nearly $5 trillion on the sidelines sitting in cash, so all of this is still dry powder, even with the pace we have moved higher. so yes, i am cautious, going into that seasonal sort of andness that september october, where gains tend to be consolidated. there will be some election angst, i am sure. and there will be some cobit angst on -- some covid angst on the vaccine retreat front. but i am still positive the direction of travel is upward. tom: what is your key valuation metric right now? is it price to sales? are we rationalizing like amazon? is it price to cash flow? is it something like total price value to ebitda? alicia: that is a great, great question. i've been talking to people who

have been in the markets for 50 years in the last few days. no one has seen anything like this. it is kind of export -- kind of extraordinary. right now, cash is king, and the ability to plow back into the business, and clearly, i will just give you a metric, every night we calculate the outperformance of the five large cap tech stocks versus the rest of the s&p. we started this in april. the outperformance was 28% in the middle of april. as of the market close yesterday, the outperformance of those five stocks is now 60% over the rest of the s&p, and the reason is the cash generation. the earnings power, the cash generation, they all need debt and they keep on growing, and it is not entirely irrational. they are growing, and they are growing faster. lisa: and if you want to get cautious, what do you sell? [laughter] alicia: that's great.

i think for the most part, given how levered the market is to the tech sector and the communications sector right now, you have to have some exposure here. i think the general idea of trimming some of your winners and rebalancing is a great idea. we do believe that there will be a credible vaccine out there somewhere in the next four to six months, which will blunt some of the macro concerns you've talked about in the previous segment. there will be something available by the first quarter your21, so therefore industrial stocks, housing stocks could look appealing in that scenario. lisa: i'm struggling with the idea of the robinhood narrative, that yes, you've got the stoxx that have some understandability behind the rise. tesla gaining 415%. are there pockets of froth here?

alicia: for sure. there are certain names you can't explain, and i think that is one of them. area is the momentum going -- the momentum going. tesla was at one point the largest sort in the market, not only on the institutional side, but also on the retail side part of that price action was that technical there. but clearly, we joked about this maketime, parabolas do not great technical charts. there will be a day where it can go on longer. tom: what you got to understand his alicia levine is prodigious at math, so we are going to do math here in this long hour. we start at eight a clock a.m. wall street time, and really going to 9:10, which is the speech of chairman powell. we've got special coverage on that we will tell you about in a moment. come on, alicia. you're going to the parabola, and that comes back to the

convexity. is there a market overweight right now? everyone is telling me there's money on the sidelines, but is there room for gamma, for acceleration? alicia: there's room for other sectors to move and not have tech destroyed because you don't have to have tech to buy the other sectors. so much money has gone into the bond market, and let's bring in jay powell. this is the big story for the morning. what are we going to hear today? ratesey going to sit on even as we see inflation moving upward? lisa: you've done a great job answering tom's gratuitous way of getting gamma in there. seriously? she's not even focusing on the technicals. tom: i mentioned shelton a berg yesterday. a huge response to that from geeks on wall street. he came out of chicago years ago with the definitive one volume

on the greek letters. it spread like the old testament . [laughter] lisa: oh lord. tom: where's the greek letters right now? which of those matters to alicia levine? alicia: so what matters to me right now is the positive rate of change. so the second derivative. that is what matters to me right now, and that is what matters to markets, and we forget that at our peril. it is never the absolute level. it is the rate of change, and every time investors forget that, they are on the wrong side of the trade. the reason the market is moving upward is because the rate of change continues to be positive. here in the u.s., the data has been getting at her in the last few weeks. it is coinciding with covid cases, essentially rolling over on that bell curve, very similar to what we saw in april. will they stay there? hard to say. but the data had gotten better, and the positive surprises have been there, and that is why the

market can continue to move higher. it is the rate of change. tom: newtonian mechanics with alicia levine, with bny mellon. it can't get better than that. what did she say? alicia levine with us this morning. [laughter] lisa: more like, what did he say? what was he asking her? tom: that is more math than you had at four years at chicago. [laughter] i'm kidding, of course. i want to tell you about a special moment for us here. jeanne zaino is going to join us from iona college on the festivities in the president's speech tonight. and what we are really going to do is stretch forward with michael mckee into the jobless claims. he will join us with megan greene to prepare for the speech of chairman powell. michael mckee and megan greene with us in a bit. right now, we've got lots coming up. up.ne zaino, coming

ashore with substantial flooding near lake charles this morning. tens of miles in, and of course, we are going to see a lot more as the storm moved through shreveport and up across the mississippi river and east as well. let me do a data check right now. it is important in this busy come along our. it is a 70 minute hour on radio, on television. dow futures, -73. yields off the higher yield yesterday reverse. i really want to focus on that -1.06%, showing the nominal yield lower and inflation expectations still elevated as well. .ollar stronger today i haven't even done the euro today. i've been remiss, as they say. lisa: or the lira. tom: $1.1807. and abramowitz demands the

turkish lira. that is a stronger turkish lira over the last two days. much more in this historic hour. stay with us, the simulcast. this is bloomberg. ritika: with the first word news, i'm ritika gupta. hurricane laura is battering louisiana with high winds today. it also brought the threat of a catastrophic storm surge and flash flooding. the storm came ashore in louisiana with maximum winds of 150 miles an hour. that made it one of the most powerful hurricanes ever to hit the state. winds have now died down some. still, laura may cause $15 billion in losses. there are concerns some areas could be uninhabitable for months. mike pence excepted the republik and party nomination to be present trump's running mate again. pence praise to the president and blasted joe biden. vp pence: where we fought for

free and fair trade and this president stood up to china and ended the era of economics joe biden has been a cheerleader for communist china. he wants to repeal all of the tariffs that are leveling the playing field for american workers, and he actually criticized president trump for suspending all travel to china at the onset of this pandemic. ritika: pence spoke from historic fort mchenry in baltimore. the nba started a boycott over police shootings. now it has spread to baseball, soccer, and women's basketball. that led to a number of games being canceled. the nba protests could lead to the playoffs being scrapped. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

pence: we are on track to have the world's first safe coronavirus vaccine by the

end of this year, and we are not just opening up america again. we are opening up america's schools. in all of the sacrifice of this year, all of the hardship, we are finding our way forward. tom: the vice president last night. i will say that the punditry of the east coast is tearing to shreds at peace -- shreds that piece. john cassidy publishing in "the new yorker," i would suggest not trump friendly. and of course, we saw the "washington post" fact-check as well. right now, to look forward to the president's speech tonight, jeanne zaino joins us tonight with iona college. what will we listen for from the president tonight? jeanne: i am so curious to see how he handles these ultra major crises that are iraq -- that are

erupting right now. certainly, he should have been prepared for the pandemic come of the economic crisis, the racial unrest, but you add to that also the hurricane, and we have four major crises going on. i am curious to see what his tone is, how he handles them, how he addresses them, particularly the pandemic because it is where he suffers the most in the polls, but also, let's not forget the hurricane. some of that money came from the fema money. so when this executive orders were issued in early august, many people said, what happens if we have another hurricane? so it is a lot for him to manage tonight. tom: what is so brutal here is the un-meant rate. we have a number of frontline economists go over 10%, and with a slow recovery as well. we've got claims in 15 minutes. michael mckee will join. is anyone going to talk about the job economy? jeanne: all we've heard the last three nights is if it wasn't for the pandemic, the economy was

humming along. he was doing a great job. this once-in-a-lifetime, once in a century crisis occurs. but to your point, one of the things i found lacking all three nights, and certainly in pence last night, there was a lot of praise for what they've done and not a lot of how we move forward on issues like the unemployment number as it exists now because the pandemic that occur, and unemployment is what it is. lisa: john cassidy writing in "the new yorker," talking about "the washington post." how about outside of that? tom: wait, that is a "surveillance" exclusive. are you telling me that "the new yorker's" audience is not trump's audience? [laughter] lisa: yes, that's what i am saying. but how is the rnc being received by people it is geared toward? jeanne: i love the fact that you raised that because we get so

much in a bubble, we forget, and you are absolutely right. mike pence has long been president trump's conduit to the white even tellico voters, and he -- white if angelical voters -- white evangelical voters, and he remains that. all of the chatter that he might get amped off the ticket, president trump cannot afford to do that because he needs those white evangelicals. he needs an interpreter like mike pence to go out there and make the case, and mike pence does do that. whether you did the not -- did enough to overcome the deficits the president is facing, we don't know that yet, but he is an important conduit, and last night, he made the case the president wants to make. the socialism theme, the law & order theme. he has been hitting on those hard, and he has been trying to make the presidency much more empathetic and let evangelicals

know, you are safe voting for him again. look what he did to save the right to life, the judiciary, with regulation, going right down the litany of issues they care about. lisa: to tom's point about unemployment rates, the idea that it is currently double digits at a time of growing this rest -- growing unrest, how is it that president trump still has the upper hand with voters when it comes to economic issues? jeanne: i think some of that is historic. i also think people do look back before the pandemic. but i do think there has been a tenancy in the modern era to say safer with are republicans handling the economy. of course, president trump did have a good economy and unemployment numbers before the pandemic, but to your point, maybe we will hear tonight, we haven't heard so far that the reality is what it is right now, and what we are going to do to restore it. we keep hearing that if you take

a chance on joe biden, things are going to get a lot worse. we are going to be living in a dystopia, and unemployment is going to be one of the many things skyrocketing under a joe biden presidency. lisa: do you expect any policy announcements tonight? jeanne: i hope we get policy announcements. we haven't gotten a lot of those. i don't know if we are going to get surprise policy announcements. i do think he has a master television production person, so i would suspect we get some surprises. some of us last night were laughing, maybe we would see -- or something out that. but i can't predict. tom: doesn't he drop a bombshell after calling senator mcconnell and saying, look, i am going to get stimulus done tonight on national tv, and he goes halfway to where speaker pelosi is? isn't that a win-win? jeanne: if we could get that, that would be really, really important, and it would be a surprise because of course, we

are hearing from the chief of staff that we are not going to see a deal in the often until september. so if that happened, i think that would be a win for all of us, but particularly the president politically. i am not so sure nancy pelosi would meet him halfway at this point because politically, it is not in her interest. tom: thank you so much. jeanne zaino as we look at the republican national convention again, not a clock p.m. tonight. -- again, 9:00 p.m. tonight. david westin with our coverage. futures improve a little bit. we will look at a little micro move here. lisa: really interesting to see the continuing claims, how much fromhe people on ongoing the government, how much it is going down or not. currently the expectation is for 14.4 million planes. let that sit in. what carnage we have seen in the jobs market this year. tom: i must admit, the disparity

between equity strategists optimistic, including what we heard from alicia levine and economists, they are just miles apart. a nice tweet out moments ago, talking about the separateness of stockmarkets from what we see within small business america as well. what else do you see in the bond market right now, besides the real yield, -1.05%? lisa: it raises the question about how low actual yields can go at a time of rising inflation expectations. we are expecting fed chair jay powell to come out at 9:10 and say we are going to stay low until inflation starts to pick up. what does that mean if yields are coming down and inflation expectations are going up? it means further negative real yields. tom: we will see as well. megan greene scheduled to be with us here to talk forward to the powell speech. we are thrilled she could join us at the kennedy school. right now, this is galveston, west of where laura hit louisiana with 150 mile an hour

winds. of course, the storm has moved on in the vicinity of shreve, moving 15 miles an hour north, down to a category three. stay with us, the simulcast. this is bloomberg. ♪ experience the ultimate sports hub.

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tom: good morning. bloomberg surveillance. a simulcast on bloomberg radio and bloomberg television. jonathan ferro is off this week. we wish him well. acclaimed, arguably more important than the jay powell speech, michael mckee with us with the weekly claim which should be in the vicinity of one million. michael: we are still in that vicinity. we come in with 1,006,000 jobless claims last week. number ofng the same people becoming unemployed each week. no surprise. that was what the consensus was. when you think about it and you had 21 weeks in a row of one million and you go down to more001 week and now two

weeks over a million, you are looking at a labor market still in trouble. you're looking at the number of people that get pandemic claims, that is an increase from last week. the people who get benefits who are filing for claims benefits who are freelancers and gig workers rises as well. the total number of people getting any kind of benefits just over 27 million. it shows you how far we have to go. the other thing we want to mention is the revision of gdp is out. it is a tiny bit better. the economy contracted already 1.7% in the second quarter. .hat is down from 32.9% change in personal consumption. we'll have to look at what it is we see different. i will look into this number a little bit more. tom: this is unfair, but you are

so good at this. i have been dying to ask you this question since i spoke with the congressman from the fourth congressional district of arkansas. our claims in the part of america -- are our claims and the part of america not involved with the pandemic sharply different from what we are seeing from other aggrieved areas? michael: no. that is interesting. there is no area not affected. a lot of the places we did see the pandemic skipped in the beginning of the prizes -- in the beginning of the crisis in the spring have now experienced it at the numbers have gone way up in the south and the midwest. what we are looking at our states that have gone through this, increasing the number of claims. it is something that hits everywhere, and if you are a politician, it is hitting the midwestern key states that the two parties will batter over. definitely something to keep in mind, the fact that this is

still going on is not good news. lisa: we are talking to you after jobless claims came in a little higher than expected, above one million for the 23rd of the past 24 weeks. continuing claims coming with an increase from the week before. i want to talk about the market response. you are seeing yields kill a little bit lower, particularly the 10 year yield, but not markedly so. in stocks you are seeing the s&p futures retrace losses from earlier, almost flat on the day. how do you explain this? it does not seem like a better-than-expected report to me, yet it is being treated by the market is being priced in. michael: you have to look at what the expectations were. the expectations were for one million people filing for jobless claims. we are getting a standard knee-jerk reaction to bad economic news. bad news is good news because it means lower for longer for the fed.

today the dynamics are different because you have jay powell speaking in about 30 minutes and we will see whether he gets anything to the market assessment of the economy and what the fed is going to do. you would have to expect that at this point the market cannot move a lot because rates are so low, but they would see this as a confirmation things are bad and the fed will be keeping interest rates down. lisa: here is what i do not understand. what work in the fed do to improve the jobs market? michael: that is the issue. the question that comes up, certainly they cannot do a lot more stimulus, but they can keep rates low. the question is does jay powell talk about average inflation targeting, that has been the wall street expectation, the idea they tie their policy moves to a rate of inflation that runs above their 2% target in order to let them bring unemployment down, which is what they have been doing.

it is not their formal policy. maybe he will sort of outline that and at the september meeting we will hear more about it. that will be the question for investors. tom: michael mckee will go off and have the man of the mountain breakfast at the pioneer grill and he will join us in a bit to drive forward fed speak. we are thrilled to bring you megan greene, at harvard kennedy school, a senior fellow. brilliant work with market economics and acute analysis into the broader theory of what we are doing in economics and how it links into finance and investment. megan, thank you for joining us. issue,to go to the arch which has been the battle of our textbooks, rules and discretion in this new more surgical idea of targeting. is there any proof a central bank can target anything? megan: there is more and more

proof a central bank cannot target much of anything. they can target the rates they are setting but the fed still mandated full employment and stable inflation of 2%. ter inflation, the fed missed the mark for the entire past recovery. the 2%he fed adopted inflation target, inflation has averaged just under 1.5%. when jay powell does get up, it is widely expected he will provide the broadbrush strokes of the target for average 2% inflation, meaning there's a catch up factor. meeting the fed overshoot that offset undershooting, investors might ask can the fed overshoot on inflation? it has been so far under the target for so long there is a real credibility issue. the fed has promised it will overshoot on inflation in the future, which requires upfront credibility when it has not built any. tom: what is the reaction

process that gets you to overshoot inflation? the fed really wanted to overshoot on inflation, it could provide helicopter money and achieve it. within the political feasibility of what the fed can do these days, i do not think there is a lot the fed can do to hit its target, particulate now when we are facing a huge and persistent drop in demand. i do not think the fed can generate inflation of 2%. there are concerns the supply-side aspect will come through and generate some inflation. the fed might get lucky for a while and have inflation overshoot it's 2% target. we cannot get good inflation unless we get more jobs back. not all job losses are equal. initially people were saying they were temporary job losses, now they are increasingly permanent. i am unclear on what the fed can do to improve this picture. rfid actions at this point

actually hurting or than they are helping because they take pressure off of washington? i think you are right, the fed cannot do much about the job market other than keep rates low and try to run the economy hot to bring in workers, which the fed was already trying to do during the last recovery. i think it is up to fiscal authorities to do something to try to address the labor market. it is not up to the fed, but i think when jay speaks he will probably provide a bearish view on the economy so he can keep the pressure on the congress, and he will mention fiscal policy is the most important thing. lisa: when we talk about inflation, we are getting plenty of inflation in asset prices. i wonder if at a certain point it becomes harmful without some sort of physical backdrop -- fiscal backdrop that can help the economy. do you see the acid inflation being pernicious or does it have

more room to run? megan: to probably has more room to run. it depends what markets you are talking about. we have seen incredible leverage during this crisis. that will be a problem one day but it will not be a problem as long as debt servicing costs are so low because rates are low. the stock market looks frothy. in,ong as the fed is stuck even without an average inflation target, we know the fed will not hike rates anytime soon. that has further to run. tom: i want to play off jared kushner talking about the president's speech tonight. i want to talk about a hopeful america. jared kushner says the president will speak of a "hopeful" america. how does jay powell do that. how does he generate a hopeful message today when i have a number of leading economists looking at double digit unemployment coming down slowly? do andit will be hard to it is probably not in jay's best

interest. he will want to keep the pressure on congress to come up with a fiscal stimulus, which probably will not happen until september at best. you could look to some data points like retail sales, durable goods, which improve. the problem is the high-frequency alternative data sources suggest this recovery is already petering out and it could turn into a downturn if we do not end up re-updating some of the fiscal stimulus. tom: megan greene, thank you so much. bond breaking out under 140. some of the tension indicative of what we will see in 30 minutes. lisa: which is exactly how the fed can respond. how much lower yields will help the labor market and how does the market respond to this economic data that looks terrible, but is in line with terrible expectations. tom: i go to what marc chandler said, which is the real shock will be this is a goner.

it is sos a yawner expected it will speak to the new regime of inflation. we will talk to michael mckee about it in a moment. the papers can be really controversial as well. it comes back to this labor economy we are seeing. the gdp redo for the second quarter was appalling. there is no other way to put it. i get that that is ancient history, but the nominal yield, how far below 1% back 10 year benchmark is. lisa: it is interesting that central bankers goals is to be yawners and shake the boat not at all. the idea that you have jared kushner saying let's go is potentially a problem, it is a liability. tom: that is great. a lot of people have said game over for the fed. their toolkit is fairly limited as they look for stimulus from the legislature like everyone else does. you can debate about what the

stimulus will be, but there it is. seven, downegative futures -44. jay powell in 25 minutes. michael mckee is next. michael darda on radio in a bit. we are live on radio and television. ritika: with the first word news, i am ritika gupta. one of the most powerful storms ever to hit louisiana, hurricane laura made landfall earlier today with storms up to 150 miles per hour. they have now slowed down somewhat but the hurricane brings with it the threat of a 20 foot high storm surge and flash flooding. authorities are concerned it could make some areas uninhabitable for weeks. vice president mike pence says america's economy is on the way back. at last night's republican convention, mike pence praised trump for the way he handled the economic crisis caused by the pandemic.

>> because of the strong foundation president trump port in our first three years, we have gained back 9.3 million jobs in the first three months alone. we are not just opening up america again. we are opening up america's schools. pence alsoe encouraged voters to question whether joe biden is "nothing more than a trojan horse for the radical left." -- is defending controversial guidelines on coronavirus testing. the guidelines say people may not need test. many experts say it is a long turn that could restrict the number of experts -- the number of tests performed. the cdc says the tests was not imposed by the white house and seeks to clarify the limits of testing. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta.

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>> the reason for the run up his things are getting less bad and they continue to get less bad. he still have basically

represent interest rates. you have credit spreads that have tightened dramatically. you have funding widely available and still good reports from many companies. that is what is going on. the belief is something will get done. christopher harvey of wells fargo with some optimism this morning on the equity markets. we welcome all of you to our simulcast on bloomberg television and radio. marks in anticipation of the speech of chairman powell. usually the speech will come out and there'll be a release of a substantial amount of headlines, and we will get to that at about nine: 10:00 a.m. dow futures -30. 9:10 a.m. here is the magic of jackson hole. you land your airplane at this cute airport. 15, 20 milesth 10,

, go down a road and there is a beautiful lodge overlooking a mountain range. michael mckee has been there so many times. he is flying all of the grand teton's right to where the snow is. he has counted the moose, seen the bear, all he knows is what matters is in a room next to the famed stuffed grizzly bear at the jackson hole lodge. it is a virtual meeting. what will go on in that virtual room? michael: we will have the same thing we normally have. this is what people do not understand. this is an academic conference. papers are presented about theories and problems in monetary policymaking and are discussed. they are thick with math and discussed by nerds and for nerds. clear, this is not going to be a nerd speech from mr. powell. he is speaking to an with double-digit unemployment.

michael: that does put more weight on his appearance today. the question is does he see this as the venue to make any kind of announcements, and what kind of announcements can he makethe qus as the since the fed is already at zero and has done so much? there is probably not a lot that would move the markets in the sense they did in march when they were moving monetary policy around. the real focus is does he talk about what the fed policy framework is going to be going forward? that is the announced topic of his speech. is it just a review or does he have something to tell us about how the fed will do monetary policy? lisa: the backdrop is not the grand teton's, not moose and bears hunting down tom keene, it is a dismal jobs market. a confusing report showing increasing dispersion among the haves and the have-nots in terms of income and location. what have we learned if we dig under the hood of the latest jobs report showing yet another

more than one million jobless claims in the past week. michael: you have to look under the hood. the real numbers. the nonseasonally adjusted numbers, the raw data did go down into the 800 range. that is good news. the idea we are still getting one million is a little bit in artifact of a seasonable adjustment of patterns from previous years. even 800,000 means the highest we had in the past was 600 thousand in the great financial crisis. at this point we are still at a very elevated level. we now give unemployment insurance to people who are freelancers, and you have 600,000 of them getting it. this is 1,600,000. that's an awful lot of people to be filing for the first time. this began in march. struck by lisa: i am the lack of response in markets. it is a dismal backdrop but

everything seems to be priced in with expectations you will get another round of fiscal support. if we do not, what is the picture like? should markets be responding more to the figures that appear like they are stabilizing, but perhaps are transforming in nature? michael: i was talking to bond market strategist and the way they put it is probably the way to look at it. we are not responding to the economic data. they know the fact that most of the monthly data is dated by the time it comes out and it is hard to get a clear reading from the alternative high frequency data. what they really seem to be focusing on is vaccine news. every time we get a good headline on that, the markets react. that is probably not a bad way to look at it, because this is not going to be over until people feel confident they can go out and not risk their health. that will probably be dependent on some sort of good cure for

the disease or a vaccine. this idea of pushing inflation higher. is everyone on board with chairman powell on this? understand he may not mention it today, but is there a consensus on this, or is it one of those food fights alan greenspan would never put up with? michael: i have not taken a whip count in washington, but it appears from reading the minutes and talking to these people that bring much everyone is on board with these people. yesterday we talked to esther george, one of the biggest inflation the hawks, and she said she has no problem with the idea of inflation running higher during a period of catch up for the fed. if she is on board, probably everybody is. it becomes a question of how you frame it. how far above the 2% level do you let it go and for how long before you start to worry inflation will get out of control and you have to take some sort of action? they've discovered over the past ,ear inflation will stay down

even as the unemployment rate goes way below what they thought was the natural rate, the rate that would start pushing higher. tom: is this a regime change? is that what we are talking about, a regime change of theory? michael: it is a regime change of theory, it is not a change in the bullard sense because bullard is talking about economic conditions. the regime has changed in the sense that economic conditions are more terrible. it does not changes policymaking. we will talk with him later today and get his thoughts on this. i saved that right into your conversation. thank you. great anticipation of this speech in 16 minutes. this is exciting. it is not the august doldrums. lisa: i will say as a psa for

everyone listening, it is pronounced segway. there are some people who hear your pronunciation and take a nap face value -- and take it at face value. ,o segue into recent news politico is reporting mark meadows and speaker pelosi are scheduled to speak today at 2:30 p.m., presumably about efforts for fiscal support. you are scoffing? tom: i am scheduled to speak with jon ferro at some time. lisa: you are. the hills are alive in the fields of tuscany. tom: tuscany is a long way away. you need to stay with us on bloomberg radio and bloomberg television. the jay powell speech and much much more. the president of the united states speaking tonight at his convention. james bullard at the 1:00 p.m. our. i believe michael mckee is in the building and will be doing that interview. futures improving a little bit.

dow futures -27. the vix 23.32. in 15 minutes, jerome powell. this is bloomberg. a simulcast. ♪

♪ taylor: from new york city for

our viewers worldwide, i am taylor riggs in for jonathan ferro. "the countdown to the open" starts right now. the equity rally stalling ahead of jay powell speech. investors gauging escalating geopolitical tensions and the economic impact of hurricane laura as it roars ashore in louisiana. this is u.s. jobless claims top one million for yet another week. equity bulls hoping the chairman echoes the dovish inflation comments from his colleague, esther george. >> i have never thought of 2% as a ceiling, but to stay focused on what anchors inflation expectations in the economy. from a communication standpoint, i think we will be talking about the kind of things that help us do a better job of achieving our objectives. taylor: joining me is michael mckee, our bloomberg international economics and policy correspondent. give us the key takeaways