>> companies are navigating these once in 500 year events extraordinarily well. >> the consumer is very healthy. we are unburdened by debt. we have the demand. >> there isn't any pent-up demand. it's not an economy new into sustained growth. nothing structural has changed. >> one central bank is tightening further, you should expect currency appreciation. >> this is bloomberg surveillance. jonathan: it is a payroll friday. good morning matt, good morning. this is bluebird surveillance live on tv and radio. i am jonathan ferro. your equity market record highs, futures up 8. payrolls report is 90 minutes away.

tom: we are going to focus on the many dynamics. lisa mentioned labor process patient. that is the number i'm going to watch. do we get an improvement in labor participation. we've got somebody coming up who is more than cautious. jonathan: looking for 400 k. that is the low end. one million although it down to 400. 725 is the median. tom: is there a dartboard the does a three-month moving average? i am going to go to a three much moving average. there is job formation. for jerome powell, it's simple. they've got to see more to get that 10 million jobs employed. jonathan: we will have him on wall street. you take the jobs print and you have a conversation about what it means. let's talk about it what it

means for fiscal support. in the wall street journal. lisa: they want to take a strategic pause to assess the inflation data. that's going to be the new transitory as we partially what they are looking for. to that point, underneath the headline number and looking at the wage inflation that is going to be important, if you see significant wage inflation, that may tie the fed's hands more. it bleeds into the tight labor market. jonathan: you wanted to make the point on the participation rate. for many people, that is the view that separates. that is their outlook of the participation rate. tom: the initial force of a series, james lewis claims is gorgeous. it has a massive persistency and improvement every week. you can't say that about labor participation.

it went down and came back. it has flatlined. it has got to improve. jonathan: reminiscent of what we saw several decades ago? tom: i think the demographics are different. the service sector is different. i think those are important comments we had it. jonathan: record highs into friday. equity futures are up 8. thank you. i think that's 0.15% on your. tom: nailed it. jonathan: i am warming up a little bit. the yields are up by about one basis point. i'm not your hammy people would call me sensitive. the fx market is unchanged on the euro. lisa: there has been a surge out of cash funds into risk out markets. people had of this payrolls report are expecting something that will be good news.

it's unclear if that is a good reporter a bad report. we do get that jobless report at 8:30 a.m. you were both talking about the participation rate and how important this is to the federal reserve and market participant expectations or how they will respond. it has declined and stayed down from that 63.4 pre-pandemic. they keep talking about 8 million people who are out of the labor force. why are they out? will they come back? you get the services index for the month of august. how much has the delta variant weighed on the resurgence of the sector. this has flatlined. this is a concern for many people. without the services sector, we are reliant on a manufacturing sector that hinges on supply chain disruptions. president biden will speak on the jobs report.

we are curious to hear how he response to joe manchin from west virginia. taking a look at one graph in particular, a pause is warranted because it will provide more clarity on the trajectory of the pandemic and allow us to determine whether inflation is transitory or not. jonathan: how long does that need to be? i think you asked the right question. later this morning when we catch up with our correspondent, let's check -- catch up with priya. let's start right there. why 400 k? >> we knew the opening was never going to be a straight line. it's hard to extrapolate from the last two. the high-frequency data suggest a sharp deceleration in the leisure and hospitality sector. it's not a horrible report. relative to the last couple of

months and what the fed would want to see, it's a weaker number. tom: we are guilty of this. we like to look at equity guesstimates. we like to make a parlor game of the standard & poor's 500. what is your adjustment on the yield called out 12 months pasta mark -- months? . priya: we do expect the economy to recover. this household stacked or strong. we expect more stimulus. that should mean higher rates. my endpoint of that hiking cycle and how high on term rates would go, that is lower than consensus. tom: give me a number. no one is listening. you've me a number. priya: 2% by the end of next year. it is higher from here.

i don't know if you're getting 4%. we just need changes to happen. lisa: you are on the low end of the spectrum. does that include wages? a lot of people are looking for clues as to whether this is a tight labor market or one that has a lot of slack based on how quickly wages are going up. how closely are you watching that? priya: i don't know if you would get much in today's number. we are in the midst of a surge. we still have this unemployment insurance out there for many states. the next couple of months assuming the delta surge, schools reopen and as the supplemental insurance goes away, we expect people to come back to the labor force. there of and structural changes in the labor market. that is going to keep wage inflation low. jonathan: we won't see that

until next month. let's talk about the bond market. can you help us understand why this market response to a weaker number? how do you push that through the yield curve? priya: the market has been hoping for higher rates. we are near the lower end of the range. the curve has flattened significantly. the fed is exiting no matter what. the economy is growing. the fed tried to tell us they are going to start to taper. we actually think the hiking probability can be pushed further. i think the first hike, we are not looking for the end of this year. jonathan: interesting. tom: that's a huge statement.

jonathan: that's going to be a big communication effort for the fed chair. you think you can get the others on board? . : it's going to come down to the data. i think the fed is going to try hard to separate the two. it feeds into service inflation. that is the key component. if wage inflation picks up, it will be hard for them to push out. service inflation will stay low. there is a lot of slack in the labor market. the fed is tapering but inflation is decelerating, that is well into 23. tom: maybe spend more time with us. what -- i can't do anything with my collar. it came out when i was coming down the stairs. priya goes to the heart of it.

she's talking about a 10 year yield. at some point, we bring that over to what does it do to the dow jones industrial average if you go to a 2% yield. jonathan: you tell me what it does to goldman sachs and i will tell you what it does to the index. tom: let's go to the s&p 500. jonathan: let's go there. do you want a market cap? tom: igo value on geometric. jonathan: let's go. we will have a look at tech. tech is a major component. if you move toward 2%, would that disrupt? without help the financials, the small caps? tom: that's not enough to push against the gige tech. i thought it was very good. do you want to jump in here? lisa: i think the problem is

it's very hard to talk about any of these without talking about how we get there. there are different scenarios to get to a steeper yield curve. how we get there really matters. if you do see there is less slack in the market, a lot of economists think you get wage pressure. that could be negative for a lot of the s&p. that is something people are looking at. honestly, the uncertainty about that feature, the dynamics under the hood, interesting. jonathan: if it's inflation driving 3% and the fed is overwhelmed, that could be toxic for everyone involved. tom: nice quote. the apple correction is at 135. jonathan: would you like to tell the audience about your walked out 50 flights of stairs? i like it.

tom: the 20th floor, they had a cardboard chain. jonathan: that is a high-end building. from new york, it's payrolls friday. this is bloomberg. ♪ >> a supplies -- surprise announcement, he will resign after failing to control the coronavirus. that leaves the democratic party's grandma defined a new leader before a general election. never becomes party leader is assured of becoming the prime minister because the parties majority in parliament. in new zealand, a man described as a known extremist and terrorist attack people with a knife in a supermarket befalling -- before being shot by police. the man was a sri lankan national.

three people were wounded seriously. investors will watch as the jobs report looks at the health of the labor market. according to a survey, the economy added 725 thousand jobs. the delta variant could be a worse number than expected. a flashback from the 70's, the swedish group, has reunited and came out with its first album in almost 40 years. they gave hits like waterloo and dancing queen. the musical miami mia became a hit movie. this is bloomberg. ♪

>> with the extreme weather

events, the higher elevations are experiencing flash flooding. we are going to attack that even more. the big problem is when the street drainage in the sewer infrastructure gets overwhelmed. gravity takes water into the subway system. jonathan: for new york city, that was the mta ceo. from york city, good morning. i am jonathan ferro. it is payrolls friday. your equity market looks like this, up 0.2% on the s&p. yields are higher by about a basis point. crude is a 70 and the. in the fx market, the euro-dollar is unchanged. tom: i've been really focused on the close elections around the country. the character of the moderate from west virginia, henry has spent quality time looking at the progressives as well.

there are conservatives. from the people's republic of seattle, 83% of vote the last time around. she went after a bloomberg story yesterday. basically, a leader of the liberal voice of the house, what is she upset about? >> she quoted our story about joe manchin and said absently not. this is his opinion piece in the wall street journal, talking about taking a strategic pause on the reconciliation discussion. he will not vote for anything close to $3.5 trillion. tom: let's look at the tweet from the gentlelady of the bronx. the senator from -- the senator

from west virginia had weekly huddles with exxon and is one of the bipartisan fossil fuel bills. it is killing people. at least 12 last night. i had to walk down my building today because of exxon. it was their fault. how quickly are they making speaker pelosi the minority leader? >> it's a very good question. historically, first-term presidents, that first election after that there is a referendum. the talk is they will lose the house or the senate. it's hard to see what voters will care about next year. depending on what this slim majority can deliver, i will say to the congresswoman and her

tweet, we must remember who joe manchin is and what he represents. this is an individual from coal country. it is a state that donald trump carried very strongly, it was the second-best state only to wyoming. he has a fine line to walk. he did vote for the process. it doesn't mean they will get $3.5 trillion. he wanted to see those markups. he wanted to see that by september 15. what does he want to take a pause now? does this mean that hard infrastructure that has wide support, is that on hold as well. lisa: where are the bend points for both factions? progressives are taking a hard line insane it's a no go if you don't consider the plan. senator manchin says we need infrastructure. why do we put that on hold until we have a better sense?

who is going to bend? >> it's going to be eight to four tap for weeks on end. we will be sifting through the tweets, opinion pieces, interviews every day. the one thing i come back to is the democrats know they have a hard midterm election. this is their moment to get the economic agenda through. will they squander it or not? the progressives are using that as leverage to make sure joe manchin does not back down on that $3.5 trillion. potentially, this is senator manchin just making it clear in the wall street journal that is something he will not support. the other question is he's worried about inflation. he penned a letter to the fed this month. the democrats come back and say raising taxes for this.

this is not going to be using the financial tools to do this. there are questions that remain. this is him making out his point that they need to come down lower on the reconciliation package. jonathan: let's continue that conversation. what would hurt them? would it be the progressives or the moderates? is it what the government will do or what it won't do that will hurt the most? >> i liked the answer. what he said was what would hurt them in both ways, if they do child tax credits and don't extend it, that could hurt them. you have to take the mood of the nation next year. right now, the presidents holes --

tom: jack got up earlier than we did. jonathan: i'm drinking in the u.s. open tomorrow. i'm going to find the drinks. it's going to happen. lisa: he's got courtside tickets. jonathan: you are paying for them. my producer just pushed quickly. let me bring it up now. apple 28 $3 trillion market cap in the next 12 months. the stock is done nicely more recently. no surprise to many this morning that the equity markets are still bullish. tom: i am speechless. i just set a record. i've got an apple thing in every room of the house. that's where he did his

research. lisa: the current market cap is just north of $2.5 trillion. tom: we make jokes about extrapolation. he's just killed it for years. jonathan: big tech hasn't done a lot for many people this year. amazon still hasn't done a lot here today. tom: they've got a new ceo. people are sweating. jonathan: you think that's what it is? tom: they did the same thing with tim cook. tim cook is not going to work. jeff bezos is out, it's going to fail. lisa: honestly, is amazon still a tech company, even how much personnel they get in? they don't have to employee that many people and count on their software. tom: they are a different kind of tech company. they've got an air fleet like british air. jonathan: at least they will.

your equity market futures are at 1% on the s&p. your bond market is 12937. we are one hour and five minutes away from payrolls. on radio and tv, this is bloomberg. ♪

and there you have it— -woah. wireless on the most reliable network nationwide. wow! -big deal! ...we get unlimited for just $30 bucks. sweet, but mine has 5g included. relax people, my wireless is crushing it. that's because you all have xfinity mobile

with your internet. it's wireless so good, it keeps one upping itself. switch to xfinity mobile and save hundreds on your wireless bill. plus, save up to $400 when you purchase a new samsung phone or upgrade your existing phone. learn more at your local xfinity store today. it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. jonathan: live from the city,

this is bloomberg surveillance. it's of the like herding cats on a daily basis. equity futures are up 0.2%. nasdaq is up 26. tom: annmarie is going to the u.s. open. lisa and i are twiddling our thumbs. jonathan: do you want to come with me? tom: could you see me at the u.s. open? let's get to the bond market. we are going to talk about the 77 basis points. earlier this morning, you've got to make two guesses on payrolls

friday. you've got to guess the jobs number and how the market responds. you've got to think about a bigger reaction to this. they are looking for 400 k. this is an asymmetric risk. they see a bigger move off a bigger number. they see it being pushed to the yield curve. let's get to the yield curve. take your pick. just south of 110 basis points. over the last year, up 58. over the last six month, we started to close that gap. the reason they see this asymmetric risk, a weaker number will enable the fed to more aggressively deal the message around tapering. if they can push out that hike, you get a steeper curve driven by rate hikes being pushed out

the front end. that is the view from td. what is the number? how does the market respond to it? tom: it's about data dependency as well. i want to link it in to oil. rounded up, we've got $74 brent crude. this has been an oomph in commodities. with oil up, that feeds into the interest story that will be key here in about 58 and its. an individual securities? romain: keep an eye and some of the software companies, the ceo making a bullish common about visibility going forward. morgan stanley and piper sandler raising their shares.

also in the software space, that is the i.t. software company guiding slightly higher here. that recurring revenue growth is back to pre-endemic levels. the company had been reliant on smaller ceos. she will switch to larger corporate clients. that appears to pay off. keep an eye on broad. revenue came in at the growth rate. qualcomm is posting 70% rates. this is actually deliberate. they are trying to restrain sales now to avoid a glut in the future. they would rather sacrifice now and smooth things going forward. shares are up about 0.8% in the premarket. chinese adr is under pressure. vip, those are down. tom: what we see with dnd up,

what's the institutional ownership in america with all of these names? romain it, it's much smaller. we are talking about 30%. obviously, a lot of this has to do with the state control. the miscible government in beijing is going to take a sizable chunk. some people seem to think this would become part of the regulatory issues. tom: thank you so much. it is always important on jobs day to speak to the chief economist with morgan stanley. it is ever more important on the american labor economy and our gdp call. ellen joins us now. let's do the labor economy first. we just had a very cautious call from td securities. what is your statistic?

ellen: it's not that exciting. it is 725, which seems to be in line with consensus on bloomberg terminal. we put exciting". in the midst of the upside or downside is what has us excited. tom: i want you to fold them into the uncertainty you have of an august slowdown. this labor report, the labor report for september we will see in the first week of october, how do you adjust those. >> basically, you have to disconnect the two. we have made a very sharp markdown to growth in the third quarter. it solidified when the motor vehicle sales came in. it was the fourth consecutive declined. it was pulling demand forward when we got the stimulus checks in march.

basically, this is not a jobs story. it's a payback for demand that was pulled forward due to the stimulus. we are moving forward that in the rearview mirror. the bulk of the jobs coming back are in the service sector. over the summer, we hit a slow point or low point for growth in the economy. today will be a good number to watch. this is what chairman pal is most focused on. we are looking for labor force participation rates to rise. jonathan: the number which you lead was unchanged. i'm trying to understand, do you have confidence about for q? ellen: we focus on tracking. what we expect does set the basis back or the month.

our motor vehicle analyst believe that august sales was a low point. other data it we think was also the low point as well. the big payback in consumer consultants because of rising inflation will on a month over month basis slowing. delta has peaked. probably we will get back in confidence. they are expecting motor vehicle sales to pick up again going into the fourth quarter. that will be a critical factor to watch. if there is one sector to watch, it will be those motor vehicle sales. jonathan: how would you characterize it? cover eat delayed or derailed? ellen: payback came front loaded. we've been forecasting a sharp slowdown in growth in the second half of the year.

we expected it to be more broad-based across the second half, more spread out. it looks like the payback has been fast and furious. that is why the fourth quarter remains intact. the fed is going to have to bow to this. it's not so surprising that momentum has. it is surprising that it has been lumped into this quarter. lisa: one way that you do agree with a more bearish call than others, you did look at wages and expect them to comment softer than expected. i am wondering, how this plays into your view of the market. are we delaying the recovery? are we derailing it? if you are seeing the slack

become a scar, that will be a difficult thing to overcome. which is it? ellen: it's a great way to put it. if you look at wages, this monthly wage number that people focus on most, it is fraught with a lot of volatility and it is difficult to measure. we are bringing back a lot of service sector jobs that put a heavier weight on this measure. we had an upside in the last month. that comes out in this month. we have to take a broader look at the wage picture. wage pressures are there and they are rising. that's why we've got a strong increase in labor income. it's important to offset the stimulus. the labor force partition ration rate, that is the most important thing. it's got to improve or you do

start to wonder about how many jobs have been lost permit lee. we think two thirds can it come back. that means one third are permanently lost. it's not all warm and fuzzy on the labor market. we are continuing to see gains. jonathan: we are lucky to catch up with you. we appreciate it. thank you. we talked so much about the forward look and how your view on the federal reserve separates from the doves in the super doves. it is your forward look at the participation rate. tom: i learned this from robert goodman at putnam investments. there are other ratios. away from the media fixation on payrolls and the unemployment rate, the denominator like labor participation or percent

employed in america, these are important ratios. jonathan: one third of jobs permanently lost. lisa: two thirds will come back, one third won't. were those people go? is it bowing out of the labor force? how is fed policy going to address that. that is the whole slack in the economy. jonathan: you think one third arconic? lisa: here's the thing. if one third are gone, does that mean higher wages? it could be. tom: did you hear the tone she had it? let me translate that. anne-marie is going to the open. lisa is not. we can discuss this. jonathan: you can come with me if you would like. i can get an extra seat.

we are up 0.2%. yields are higher by a basis point. estimates shifting a little bit higher into payroll. from new york, this is bloomberg. ♪ >> the race to succeed the prime minster in japan is seen as wide open. he said he would resign after failing to control the coronavirus surge. it was weeks before the general election. whoever becomes the next leader is assured of becoming prime minister because of the dominance and parliament. it's a tax settlement that is one of the biggest in history. the billionaire founder and his colleagues will pay billions in back taxes to resolve the case. the amount is a minimum of $6.8

billion. it deals with the way they converted short-term gains. new york and new jersey said the remnants of a hurricane that first hit new orleans killed more people in the northeast than it did on the gulf coast. 40 people in the region died from floodwaters caused by torrential rain. commuter trains struggled to resume service. this is bloomberg. ♪

>> we are on a long transformation program in china. the creation of wealth is not

super wealth. it is wealth to the middle class and wealth for the organizations . that's why i think everyone is interested in china as an opportunity. jonathan: when he was asked to answer questions about china, from new york city, good morning. i am jonathan ferro. catch that interview through the weekend. your equity market futures are positive 0.2%. your bond market yields are a basis point. payroll is just around the corner. the report is 32 minutes away. tom keene, we need a guest to translate this headline. a ton of confusion around that story over the last couple of

months. tom: there's no question about it, including bloomberg reporting today. we are thrilled that he can take time to join us. her chief asia correspondent. john has five questions. you and i know the sound of the hong kong trolley right by the aldean in hong kong. it is charming. the tourists love it. francine and -- interviews the man from hsbc. how is hs bc and western banking , how they changed given this new information out of beijing? >> i think they are having to adjust quickly. we are in the middle of a serious policy blitz. we are getting announcements almost every day about more control and more oversight and regulation coming out of

beijing, whether it's personal data, tackling the big technology sector or online education. they are pushing through this agenda that is about driving equality and prosperity. foreign businesses are getting caught up on that. the view is they have to take this at face value that beijing means business. jonathan: the news that is coming out, i'm trying to make this simple. if alibaba one to go public today, could they? in america. >> it's complicated. after putting on these listings overseas, they have to get special permission because it's all about data control. china doesn't want that overseas. the thinking is these chinese companies will raise capital at home. hong kong becomes an option.

again, it fits this idea of control, more oversight and regulation. chinese companies will be able to go overseas and get foreign capital, that's an idea that is now gone. jonathan: when we ask these questions, it's a tough one for them. i think it's a tough seat for anyone to answer these tough questions. i have a ton of respect for your reporting. it's a difficult one to answer. what do we see right now? is there something bigger than that? a cultural revolution? >> there is no doubt we are in an era of the government pushing through these strict changes to oversight and control of the economy. on the one hand, there is a policy agenda that is about pushing through and making life cheaper for families. that is a key priority.

there is oversight of technology. again, on the other side of the ledger, there is a political control in the center and more in the party. the government is in charge of everything. they say what goes and what the economy could do. that's the way we need to take it at the moment. the party is in charge and that is not going to change. lisa: there are these economic situations. this commentary in the state newspaper says the cultural market will no longer be a paradise for sissy stars and news in public opinion will not worship western culture. how much do you feel on the ground? how much is this perceived as a shot across the bow and a more fundamental way? >> there's no doubt about it.

there is a crackdown in hong kong when it comes to expression or the right to gather or push pro-democracy. that is been crushed by the authorities. you are seeing that spillover into the mainland. there has always been warnings against vulgarity in the press. this idea of cracking down on celebrities goes to the broader crackdown on the education and gaming. china wants a more productive and effective workforce. there is no doubt this language is very confronting. this is how china wants to do its business. jonathan: we appreciate your time. the chief asia economic correspondent. what a difficult moment. lisa: this crackdown goes so far beyond just a commonest for and demand the idea of trying to get

more equality. there is something else in the tone. jonathan: it is something to stay on top of. germany is declaring japan a high-risk area. tom: maybe with labor day and the shut down, everybody is rushing out. you've got germany looking at japan and singapore is constraining things, wrapping up their booster program. the crisis in new york city, i want to emphasize people even though it is sunny out, there still a crisis. the mayor says we will have to use travel bans during weather events. jonathan: assuming we will see a lot more this week. tom: i think -- first of all, it was an unusual august. ellen highlighted that with auto sales and the rest. what is september going to be like? the uncertainty here is tangible. jonathan: your jobs report is

coming up in roundabout 35 minutes. your equity market is up seven points. yields are higher by one basis point. heard on radio and seen on tv, it is payrolls friday. this is bloomberg. ♪ >> novak djokovic is one step closer to making history at flushing metals after reaching the third round. the world number one took out his opponent in straight sex, is five wins away from completing the calendar slam. he is looking to become the first man since rod laver to win all four majors in the same year. he can overtake roger fetter and the doll as the all-time list if he winces 21st title in the big apple.

he moves on to face canis a cori for a spot in the round of 16. you can watch all the action from flushing meadows every night on tennis chapel -- tennis channel.

(announcer) looking for a better way to lose weight and feel good?

how about the one with the 98% success rate and the more affordable weight loss solution? that's golo. there are no monthly fees and it's guaranteed to work or you don't pay. how can golo offer all of that? because it's not like any of those diets you've already tried. it's the new way to lose weight. no stimulants, no starving, just results. results you'll keep for life. no more sacrificing to lose weight only to put it back on. no more sacrificing, period. it improves your lifestyle and delivers incredible results. with over 2 million satisfied customers, golo is the new way to lose weight. this is the only program i have ever done that i have never deprived myself of anything. (announcer) if what you're currently doing to lose weight isn't working, or you feel like diets don't work, you're right. don't give up. get golo. go to golo.com and get your life back, with golo. (chorus) golo! >> companies are navigating

these once in a 500 year events, i think they will continue to do so. >> the consumer is healthy. we are saving. we have the demand. >> there isn't any pent-up demand. the reality is it's not moving to it new higher level of growth. nothing structural has changed. >> one central bank is tightening further. you should expect currency appreciation. >> this is bloomberg surveillance tomee