♪ >> we are already in that decelerating upward revision base. >> a slowdown of some degree is not necessarily a terrible thing for the economy as a whole. >> if there's not as much slack in the labor market, inflation could still potentially be stubbornly high. >> inflation is likely to run ahead of expectations, but i think it will settle out at around 3%. >> we just got to keep pushing on this recovery long enough to get back to where we should be. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: here come the earnings. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market just a little bit lower ahead of a huge amount of results still to come in america. tom: they are coming in right now. industrial america is reporting. we will have more of that

through the morning. jetblue just out with some aviation stress, as we have seen from southwest and the rest. we will go to julian emanuel. i think he's going to tell us to calm down. how about we calm down and look at the vix, 18.51. which of these matters to you? jonathan: record highs on the s&p 500, despite the conversations we seem to be having about record low real yields. this equity market on a five-day winning streak. tom: i was talking to martin schenker about this. china is a huge deal. i get that china is a huge deal. i get that the fed meeting tomorrow with our coverage is a huge deal. but i've said this for weeks, it is about earnings. they are better. jonathan: the earnings from 3m, as our team at bloomberg says, the beat goes on. out later, the juggernauts, the

tech tightens. pick a name. i don't care what you call them. tom: that's the -- lisa: that's the issue, that numbers are expected to be stellar, and how much of a concern is the china crackdown on tech? how much are we seeing an increase in digital ad spending? how much do we see an increase in cloud use because people have played into this story of the new cyber world? how much do we get confirmation in acceleration going forward, and what does that say for the other sectors? jonathan: there we go. nice to get the counterpoint, lisa. lisa: looking around corners. [laughter] jonathan: down a little more than 0.1%. and bonds, yields lower by two or three basis point on tens. in foreign-exchange come euro-dollar -0.1 poor percent -- in foreign-exchange, euro-dollar -0.1%. lisa: what is this telling us?

can we get any single, or is this any signal, or is -- any signal, or is this just the fed sticking its them on the market? we get durable goods orders for the month of june. there could be weakness in other sectors. to the degree that there is, it is due to supply shortages, labor shortages -- supply disruptions, labor shortages, and other things. pointing out the positive that could potentially be in that data. 10:00 a.m., we get july consumer data. this is going to be a compelling read of people's confidence getting jobs. there continues to be friction here with respect to the participation rate. highly suppressed relished to where we were pre-pandemic -- suppressed relative to where we were pre-pandemic. there were thoughts that it was due to unemployment benefits,

due to childcare. what is it, and is it giving consumers pause? we are getting apple, alphabet, microsoft all coming out. the key issue is the forward projection, but also what their view is on salaries, on supply chain disruptions, labor shortages, things that are endemic to the entire market. if they give commentary, they could be the leaders because others have to compete. jonathan: after the bell, looking forward to the coverage a little later this afternoon. most of the people in this building would call me a humble guy, and always listen to -- always willing to listen to really smart people. here's the first line in the note from julian emanuel. "jon is right." let's start there. why is jon right? julian: because you have been saying for quite some time now, just asking the question, why can't you just be a passive s&p 500 index investor in a world

where, if you look at 2021, active management has been giving you headaches for the most part, at least the last several months? the answer is to us because if you are simply a passive investor, you sort of are open to this range of emotions that frankly, if you look at the course of investing over the last 12 or 13 years, certainly since the bottom of the financial crisis, you have to be in the psychological mode where you are buying the dips. it is very difficult to say i am going to commit cash in march of last year. very difficult to say i am going to commit cash in march of 2009, the times when you really want to do it. so either having something that causes you to outperform to the upside or outperformed the downside gives you that psychological edge to do what we think you are going to need to do and want to do for a number of years to come. jonathan: i should be very careful here.

i am not making a trade recommendation. julian, work through it now with me. we've got all these issues on the horizon at the moment. how covid cases play out, do they translate into higher deaths, hospitalizations. then you've got the china factor as well. it is worry after worry. in this market that keeps climbing this wall of worry to navigate new highs, -- to new highs, how do you never gate? -- how do you navigate? julian: it is telling a somewhat contradictory message. at the headline, the s&p 500 continues to rise, very much propelled by the nasdaq. within the nasdaq, propelled by a number of stocks, all of whom we are going to hear about earnings over the next few days. but there is starting to be a to munition -- a dim you knew should -- a to munition -- a

dimunition. when you see the kind of economic strength we have seen build over the course of the year, whether this is the peak of growth or not, the implication is stocks are likely moving higher over a multiyear period from here. tom: you look at the dynamics that are out there, the derivatives and all that. let's look at the one derivative , which is cash on the balance sheet. this afternoon, microsoft, apple, google. 135 gazillion dollars. these guys could top $500 billion this afternoon. what is the good of all that money should they return to shareholders? julian: they are, for the most part, slowly through buybacks.

the signaling of a special dividend or something like that through companies that are poised for continuous secular drawers -- secular growers has tended not to be good. frankly, i think what you are going to hear from them is ways of getting stakeholders more included in the debate rather than just shareholders. so talking about wages, talking about employment programs in an economy that confounds people because of the lack of return of the participation rate in a market where there are jobs incredibly plentiful. lisa: what signaling power does the bond market have for equities at this point? julian: that is the $20 trillion question, the size of the u.s. economy. from our point of view, it is really rather limited.

obviously we know that the fed has put their thumb on the bond market, but also, when you think about it, all of the extraordinary monetary and fiscal stimulus has come together to chase asset prices higher across the entire range, whether it is commodities earlier in the year, stocks, goods prices, or the bond market. to us it is all the wall of money, and he question is is policy or perception likely to change. our view is that you could get to a point where if the labor market does remove the logjam we have come the fall, which is the fed expectation, in an environment where the fed is not likely to advance the taper conversation materially this week, you could see yields start to rise in the long end. jonathan: are you still let $4000 year-end -- are you still at 4000 year end on the s&p?

julian: we are. this kind of economic strength, while it bodes very well on a multiyear period, doesn't necessarily mean that corrections don't happen. we have gone some time without a correction, and we are concerned about some of those internals, the lack of breadth, and we think if you look at it, this could be a week where there's a potential for surprise in terms of reaction from the large cap tech stocks which have been doing all of the heavy lifting. jonathan: they start reporting after the close. thank you very much. love catching up with you, as always. for thousand year end the s&p. lisa, we will get there. don't worry. 4300 is the median estimate on the s&p 500. this is called the filibuster. david kostin of goldman sachs going into last weekend, i think we are at 180 days now without a 5% drawdown. so drumroll, could this be it,

the tech earnings coming up a little bit later? put it on a plate for you. go on. . lisa: thank you. the filibuster is if anyone wants to get on the show, just send us an email that says jon is right, and you will come on this show. so you can keep filibustering now. [laughter] jonathan: if i had to call this market the way julian had to call this market, i would be absolutely terrible at it. better off asking the questions. the s&p down five, -0.1%. from new york city, what a lineup we've got for you. big tech reporting after the close a little bit later. we have apple, or soft, we have alphabet -- apple, microsoft, we have alphabet. this is bloomberg. ♪

laura: the two koreas have agreed to rebuild ties. that could lead to a possible opening for president biden to push for a breakthrough in nuclear talks. north korea's kim jong-un and south korea's moon jae-in have reopened hotlines had been silent for a year when kim's regime symbolically blew up a liaison office funded by south korea. in tokyo, the number of coronavirus cases in the japanese capital hit a record today. more than 2800. the surge comes as tens of thousands of visitors are in tokyo for the summer olympics. only about 1/4 of japan's population is vaccinated. in the u.k., scientists are welcoming a sustained falling coronavirus cases. they just don't know what is behind it. one day last week, there were almost 40,000 new cases. yesterday there were fewer than 25,000. that is a boost for prime minister boris johnson. he's been criticized for lifting restrictions early last week. president biden says the

american combat mission in iraq will be over by the end of the year. still, the u.s. is expected to give a military presence on the ground. the president met with iraq's prime minister yesterday. american troops in iraq have been gradually transitioning into an advisory and training role. second-quarter earnings at ups beat expectations. the package shipper is sticking with its i location plans for 2021. that is likely to be a relief for investors who were spooked by fedex's plans to spend heavily on beefing up capacity. 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 laura wright. this is bloomberg. ♪

♪ >> we will not flinch when our interests are threatened, yet we do not seek confrontation.

so let me be clear, i secretary i am committed to pursuing -- as sec. i am committed to pursuing a constructive, stable relationship with china. jonathan: that was the u.s. secretary of defense lloyd austin speaking in singapore. good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. as we count you down to the opening bell two hours and 12 minute the way, your equity market on a five-day winning streak on the s&p 500, down five points now. equities off the lows, just 0.1%. the earnings beats are piling up . ubs, gm, take your pick -- ubs, 3m, ge, take your pick. tom: the conference calls will

be fascinating. right now, let's tie in lisa abramowicz's observation on labor participation, julian emanuel's enthusiasm for the market waiting for a jobs recovery, with our check fitzpatrick -- our jack fitzpatrick of bloomberg politics. for those of you on radio, there is a nirvana of 2006. things changed. it finally got better. and the pandemic absolutely crushed labor participation. there's been a somewhat recovery so far. jack fitzpatrick, politics is all about jobs. fold in this infrastructure ballet with the need for jobs. jack: the infrastructure bill is being cast broadly by both parties as an attempt to create jobs. there are going to be a number of provisions.

there are talks on how they set the wages, the focus on american jobs, american steel, etc. a lot of the conversation about labor force participation in washington has come down to the debate over the unemployment insurance boost that the president lately has essentially sidestepped and said that is going to end in september either way, regardless of the criticisms from republicans. so really, the biden administration and democrats are very much all in on a jobs message in their biggest legislation they are pushing, but obviously there's a real partisan battle as it pertains to the labor force participation rather than the creation of jobs. tom: what is so important here, it is the bloomberg focus, apple is going to come out with earnings today. there's going to be a huge uproar about cash flow. no one in your world cares about cash flow, do they? jack: no, that is not the topic

of conversation. we've got a few things on our plate in washington. one is infrastructure. the next is essentially human resources, everything the democrats have talked about, including taxes for the next big bill. when you look at that chart, really i think the number one debate in washington has been the unemployment insurance, but that has essentially fizzled out. tom: lisa, you nailed this earlier. there's a huge discussion here about the lack of a labor economy within a boom cash flow driven market. lisa: which raises the question about the dominance within the largest companies. yesterday, the fact that aion canceled its takeover of willis tower, this idea that the antitrust department torpedoed it was significant. do you get the sense that there is going to be more of a

crackdown on some of the big tech juggernauts? tom rightly mentions that the cash flow we are seeing doesn't necessarily affect those other metrics that are key for the overall economy. jack: there is a broad concern about big tech companies. there have been markups of antitrust bills. sometimes it is a crosscutting political issue with support in both parties. really, if you are watching for some significant action by congress, the question is how do something become law. there's not exactly a glide path in congress for significant changes in the area of big tech regulation. it is something that is building in washington, and you could probably argue there is some more bipartisan interest in it than there has been in previous years, but it is not exactly the top of the ledger for legislation in washington right

now. lisa: this is a delicate question, but i am wondering whether china's crackdown on the big tech companies have any effect on the u.s.'s willingness or not to take similar actions in their country. lisa: -- jack: that would be a tough one to answer. a lot of the conversation in washington really is just driven by what members see in polls, really when it comes to congress. if there are things they already have the authority to do, that is a different conversation. i am not exactly sure how to answer that one. i think the big tech conversation right now in washington is politically driven by a frustration and a

skepticism with big companies and on the tech side. i'm not sure if it is necessarily driven by china's approach or our reaction to china's approach. jonathan: jack, thank you, sir. good to hear from you. let's take the politics and bring you a market called from morgan stanley from over the weekend. improving prospects for the passage of infrastructure package by the u.s. congress would put pressure on yields, upward pressure. they are looking for 180 -- for 1.80% on the 10-year still. tom: a lot of people are going to put out a whole set of calls, and i would suggest after today, beginning at five a, you may see a reason. how many people are going to lift the spx if they deliver? jonathan: do you remember the numbers at this time last year, and they just knocked it out of the park? that was one of the most

phenomenal earnings seasons i've ever seen. tom: i like this idea that people are gauging percentage moves of two years ago. i sort of like that convention. jonathan: the 2019 comps? i think that mick's a lot of sense, doesn't it? detect players have proven they can make money if we are shut down, if we are reopening. we had earnings from snap and twitter last week. that really set the stage for better ad revenue for some of these companies. alphabet has been part of that play. google has been part of that play. we talk about the secular growers. there's a real cyclical story at play here for some of the big tech heavyweights. lisa: the story makes perfect sense. the question is what is priced in because you talk to anyone, they say that is priced in. earnings moment them for the next three years, priced in. it is hard to gauge what we are measuring against when a number of the conventional metrics have been thrown out. jonathan: alphabet up 0.6%. we are down six on the s&p 500, negative a little more than 0.1%.

tom: that's my entry point. jonathan: the nasdaq 100 just turned positive. there you go, tom. up six, we are positive 0.04%. the mood music improves as the session grows older. from new york, this is bloomberg.

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♪ jonathan: live from new york city, for our audience worldwide on tv and radio, good tuesday morning. here's the price action. the mood music improving at the session grows older. your equity market turning positive on the nasdaq, up six, positive 0.04%. all-time highs into tuesday. we could add some weight to it. on the s&p 500, down just six points now. the earnings part of the story now. the likes of 3m, ge, caterpillar still to come. beats across the board. that's giving us a lift elsewhere as well. we've got to work through a range of issues. after the close, we will hear from microsoft, apple, alphabet. those three names alone, almost 1/4 of the nasdaq 100.

just one of the issues after the bell a little bit later. twos, tens, and 30's. the view from morgan stanley, if we get passage of an infrastructure package, we could get to 1.80% by year end. yields in by two or three basis points. it feels like a lifetime away, tom. we've got four or five months to get it done. tom: exactly. jonathan: on 30's, yields in by two or three basis points. here's the final one, china. this is where i want to sit for a moment. let's work through it together. dollar china, dollar-yuan, just a little bit of weakness this morning on the chinese currency side of things. if you are going to start to worry about a regulatory issue becoming an economic growth one and a transmission meccas and -- transmission mechanism to bleed out, you've got to start looking

at what happens with the chinese currency. it is such a small move so far after a monster move of chinese currency strength over the last year. but if that broader de-risking starts to emerge, you would expect to see it in the fx channel little bit more. tom: i'm in the camp that it is really away from the equity markets and much more about the financial relationships of private enterprise, the essay we, -- the essay we -- the soe's, and the banks in china. that is way more important than equities. jonathan: and we are not there yet in foreign-exchange. that's the story more broadly cross asset. with more, here's the man himself, romaine. romaine: we did get those ups earnings. we saw a bumper higher than what the street was looking for. they were looking for about

13.2%. the turnaround appears to be going as planned, but investors want to see may be more momentum. you have seen the shares down about 2.5%. ge it is a totally different story. investors seem to be all in on larry culp and the turnaround there. he's approaching his three year anniversary here, and he has refocused this company as an industrial business. i should point out that cash flow from that industrial business is going to come in a lot higher than what the street was expecting, about 20% higher. going to be around the top of the range, a lot of that because of the commercial aerospace business. of course, we also got 3m results, as well as tesla last night. that also impressed. the big milestone for that company, it surpassed $1 billion in net income on a quarterly basis. first time it has done that. we look after the bell tonight. it is going to be the biggest companies in the world out there. apple and microsoft going to be

reporting. it is going to be all about that product pipeline, specifically what happens for its fiscal q4 and whether that new iphone 13 comes in that quarter or they push it back to fiscal 2022 q1. the street is looking for about 90 million phones produced in that quarter. whether that slides to q1 or q4, that would be a big determinant and how shares react. microsoft come of this company has not bit out of the park with her guards to its cloud computing business. there was a huge accounting change in the previous quarters that allowed for gross margin expansion. that is not going to be there this quarter. it will be interesting to see how the street reacts to that. keep an eye on starbucks here. this is also going to report after the bell. this company did well with regards to keeping its customers tethered to the business, despite the fact that most of its stores were closed. the digitization, the off premises sales, they did well. but now labor costs are going up, and we saw the price of coffee beans go up about 25% in

the quarter alone, and about 39% since the quarter ended, so keep an eye on their forecasts. tom: thank you. we will look for that on "the close" this afternoon with all of the information from those conference calls as well. right now, ian lyngen joins us, bmo capital markets head of equity strategies. i am going to go to a single sentence you have which segments -- which suggests the demand for bills, notes and bonds, and that is the backstop of demand you see out there. to find that backstop. ian: -- define that backstop. ian: i think if we look at the primary takedown of treasury supply via the auction, we continue to see a willingness to underwrite treasuries, whether it is from domestic accounts, primarily banks and investment firms, or overseas, central banks in particular. these options continue to see strong sponsorship, and that at

a minimum suggests there will continue to be a backstop of demand that isn't really going away anytime soon. it is less about whether or not there's a willingness to absorb supply and more a function of what levels will we see these takedowns. with 10 year yields at 1.25%, it is very difficult to argue it is not a strong market for u.s. debt. jonathan: what needs to go right or wrong to get 10-year gilts to 1.80 percent? what would need to happen for that to happen in your mind? ian: in my mind, i don't think it is as simple as passing, for example, the infrastructure built because that will be staged in overtime, and not actually lead to the type of wage inflation that the market would need to see for inflation in an of itself to become self fulfilling. the one key aspect of this recovery that has been missing thus far has been wage inflation. if we see the labor market

participation rate continue to be low and there are pockets of labor scarcity over the course of the next few months, we might see spikes in wages which would then get the market excited about the idea that inflation could be self-fulfilling, but even that would fall into the fed's characterization as transitory. we really are coming out of a massive shift in the real economy, and there's a lot of different moving pieces yet to be resettled where they will be going forward. jonathan: tom and lisa were discussing it a little bit earlier, the failure to see real continued improvement in things like the employment to population ratio, the participation rate in america. if we don't get back to where we were, how much with that company could the outlook for this federal reserve, which to be fair, is pitting its forecast on the idea that we do fully recover and those aspects? ian: i think it will very much complicate the fed's path for

rates going forward. on the one hand, they have acknowledged that inflation is coming stronger than they were expecting. on the other hand, under their new framework, the fed needs to remain accommodative for the foreseeable future, until the unemployment rate gets to the lows we have already seen, and within that, we are assuming, and so is the fed, that the labor market participation rate slowly starts to increase. if you don't see labor market participation increase, you will continue to have this surplus supply of workers that, if there isn't enough incentive for them to slowly come back to the market, will really leave the fed at a loss in their new framework. lisa: at this point, given the fed's intervention, is the bond market accurately reflecting the fundamentals? ian: i think at this moment, the bond market is reflecting the realities of the delta variant, not so much that it is going to lead to increased lockdowns or a

revival of restrictions in the u.s., but rather it is a reminder that these variants are going to be rid the real economy -- going to be with the real economy for a while. while we brought into the beginning of this year that after labor day, we would be in the new normal, we are going to continue as an economy globally and domestically to deal with the pandemic, so it extended the timeline out from dependent. that is why rates are where they are. lisa: do you expect negative real yields to go even more negative as inflation expectations continue to pick up? ian: as long as nominal's are contained, inflation is keeping its direction, there's no reason to expect we couldn't see real yields continued to drift lower. i think 10 year tips yields at

-1.25%, which would be another 15 plus basis points from here, is something that the market needs to have on the radar. jonathan: ian, thank you. good to get your view on the market. ian lyngen, bmo capital markets head of u.s. rates strategy. four-time gold medal winner from the real olympics simone biles -- the rio olympics simone biles out of the team finals due to an injury. this is out just minutes ago. tom: "the new york times" with a wonderful feed minute by minute of this close competition of china and russia and the united states, and what they discern is that she was working on some of her weaker things when she really failed in one of the warm-ups. there's no other way to put it. jonathan: one of the few, in fact maybe the only athlete i can actually name at these olympic games this year. lisa: i'm right there with you. she has won the most gold medals. she's a spit fire, four foot

eight. her story is just tremendous. i've watched biopics about her because her story is just so interesting, and the people fostering her just saw her flipping off of things and saying, ok, this girl needs to be in gymnastics, she's got a lot of skill and a lot of energy, and fortunately she did. jonathan: simone biles is out of the team final in tokyo. some reports suggesting that to be true in the last five or 10 minutes. coming up, congressman ken brady , the chair of the house ways and means committee. that conversation up a little bit later this morning. your s&p 500 down four, call it five. yields in a couple of basis points to 1.26% on tens and a ton of earnings after the close today. full coverage on tv and radio. apple, alphabet, and microsoft on deck after the close. from new york, this is bloomberg. ♪ laura: with the first word news,

i'm laura wright. breaking news from the summer olympics in tokyo. according to the associated press, u.s. gymnastics star simone biles has withdrawn from the team event because of an injury. no word on what the injury is. "the new york times" says biles withdrew. on capitol hill, talks to come up with a bipartisan info structure bill have come up on an -- have it a number of obstacles, including how much unspent covert money can be used to pay for infra structure. lawmakers insist agreement is still possible. new back to the office mandates in california and new york city. california will require all state employees to prove they are vaccinated or wear a mask in the office and get tested for the coronavirus at least once a week. new york city is doing the same for its municipal workers. shares of general electric are

rising. growth in ge's jet engine division punted the company to raise its cash outlook. that has led to optimism that improving air travel will give a boost to ceo larry culp's turnaround efforts. the petrochemical division at exxon mobil is supercharging its financial turnaround. the often overlooked segment of the oil giant's business will probably post record high earnings this week because of the surging prices. demand for cracks such as packaging held up during the pandemic, and they have risen during the reopening. 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 laura wright. this is bloomberg. ♪

>> you need to be thinking about what is that trend rate of growth after the deceleration,

and the deceleration we are seeing, while we may have expected it, it is coming a little more quickly because of the rise of this delta variant. we will see ultimately summary acceleration in growth -- ultimately some re-acceleration in growth. jonathan: good to catch up with gene tannuzzo of columbia threadneedle. alongside tom keene and lisa abramowicz, i'm jonathan ferro. all-time highs going into tuesday on the s&p. a record on the nasdaq. we are down just six on the s&p. the nasdaq 100 just about positive now on the session. the mood music improving at this session grows just a little bit older. yields come off the lows, 1.2594%. crude unchanged at $71.92. tom: waiting for the vix to come in as well, at 18.36. you've got to believe that is going to grind in as we get towards the market open.

david wilson is good enough to know that a sample size is 30. anything under 30 data points, you go maybe. he goes this morning where few are read. dave: i've got a sample size of five, but there was a twitter post yesterday looking at weeks when the big five of technology all reporting, as is the case this week. we got facebook tomorrow, amazon on thursday. that has happened five times since 2015, and every time, you have seen the s&p 500 either fall or not rise. the last time was in april, and it was up 0.02%, and that is about as little as you can get.

so it is not like the fact that we've got all these numbers coming out is necessarily a plus for stocks. tom: folks, the profanity from our headline team when they are putting this stuff out, they are lightening speed. david wilson has actually led all this coverage. the come out with earnings. we all see that. then there's top live, and then there's the conference calls. or the conference calls important to you? dave: they are because they fill in some blanks in a lot of cases in terms of how companies are looking at their business, what they are anticipating going forward. that is really the key because you can look at the basic numbers and draw conclusions come about of the same time, seven out of eight companies in the s&p 500 are beating average analyst earnings estimates. that doesn't necessarily tell you all that much anymore, so you really have to get a sense of how does the business look going forward, and what do

companies focus on. what do they talk about. how are they dealing with higher costs, for example. that's the case for a lot of businesses at this point. the lesion situation and how they are dealing with it. lisa: we've gotten used to this same story over and over again. these same companies blowout earnings, the shares barely move, and people say it was already priced in. how do we know what we are pricing in ahead of these earnings? dave: that is the challenge as much as anything. you have to bear in mind the s&p 500 has been setting records lately, and we have seen earnings estimates for the second quarter going up even before companies come out with their results. it is like, ok, this is what we are into speeding. you look at the average s&p 500 companies that beat earnings estimates, it's been up about 0.3%.

look back at the last three or four quarters. you don't even get that. so there is sort of a positive spin coming out of these results. lisa: i'm not wearing a tan suit, but i have been hanging out with tom keene a lot, so i do want to rip up the script a bit and ask you about the contagion factor from the selloff in chinese equities. what are you hearing from the analysts i know you speak you all day long in terms of what that transmission mechanism could be, whether there could be contagion or whether this is truly an isolated event that is really providing perhaps an excuse for on the margin cashing in on positions? dave: more the latter because so much of it is tied into the regulatory situation in china. you can draw parallels, i suppose, to some extent to what is going on in the u.s. with a look at the big tech companies and whether they should be as big as they are in terms of antitrust situations. that said, talk is one thing,

action is another. we are certainly seeing action in china, whether it is dd global -- it is didi global, the education companies, or food deliveries being affected by changes in regulation. so talk is one thing, action is another. we are seeing a whole lot more action in china. tom: david wilson, thank you so much. we've got a set up of three economic datas, durable goods into housing into the conference board as well. you wonder how that folds over into the real yield analysis. jonathan: let's frame the world now according to goldman sachs and then get over to jp morgan. he talked so much about the goldman call yesterday. here was the quote. "in the near term, a complete service sector recovery will likely involve return to office work patterns. both look -- both look

to take longer than we anticipated." the peak appears to be behind us, which could be a signal for the rotation back into value, reflation and reopening themes. for many people looking to the u.k., it is the u.k. case study that gives them a forward look at what may develop here in america, and what that means for your market call. tom: it is just a stew. i don't know what else to say. i have no conviction either way other than look at the data each day. frankly, that is what chairman powell is doing. i mentioned this i believe yesterday. they are ex-post like i have never seen. jonathan: so they've got to wait until when? well after september. tom: they've got to wait three meetings for the identification of the data point. i don't together ever said that. jonathan: you've got to wait for the supply side of the economy to respond for you make a move on anything.

most economists are suggesting september is just the beginning of may be the time when we will experience that. lisa: what is interesting to me is that market participants are trying to look at the fed and figure out what the pressures will be in terms of getting them to move more quickly than they are currently forecasting. if you take a look at the citigroup economic surprise index for the united states, you can see it is nearly the most negative since last june. if you look at the idea that perhaps people have been overly optimistic more frequently than they have over the past few months, it shows caution, and if it is caution, perhaps the fed is right to be hesitant. i think this is what people are looking let -- are looking at, what they will be forced to do down the line based on where the economy is going. jonathan: yields coming in three basis points. just to give you a bigger picture of what is happening with the markets right now, equity futures in eight, down 0.2%. tom: major to filament at jackson hole, huckleberry pancakes are playing. jonathan: nothing is modest to

you. why am i surprised? in fact, i am surprised. is there a drink involved? tom: well, they serve tang. you can get a tang mimosa. jonathan: on radio, on tv, this is bloomberg. ♪

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>> under the surface, this has been a much more frustrating market. >> about half of the sectors or contribute into that right now. >> you have to do anything you can to try to get money out, and that is the point. >> we have to keep pushing on this recovery long enough to get back to where we should be. >> this kind of economic strength, while it bodes very well, doesn't necessarily mean that corrections don't happen. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good mornin