♪ >> the cobit experience for many businesses has revealed weaknesses in investment decisions. >> delta is plateauing. it will not be a reopening. >> inflation is down the list. >> when you see inflation expectations pickup, they are at levels that are overall consistent. >> they have to at least tell the market that the inflation today is supply-side and.

oriented. tom: good morning, we are on radio and television. china week is the theme today but there are many other themes on this market. real movement in the bond market with lower yields. jonathan: that's the story the last couple of days. the 10 year is $127.18. tom: the dollar mystery out there, the deepest ring within the system is the way you find your way in the global economy. which way does it go? jonathan: no idea. tell me how the market will respond to the data but no idea right now. tom: i failed this morning because i haven't look forward to retail sales in america as we saw retail sales in china big

disappointment. what do we anticipate tomorrow? lisa: many people expect weakness because of the covid resurgence the delta variant. how much of the big savings let's that people have on their balance sheet are they starting to put into the market and how much is the supply chain disruption keeping the prices where people don't want. tom: there is the traffic test for manhattan, 96 backed up across central park. what are you observing in the redo of the city? lisa: people are going back to school and that is adding a lot of traffic. we have heard from a number of banks that they are prolonging when people get back to the office. the longer this drags on, how do we get back to a new normal of five days a week in a new normal or is that debt? -- is that dead? tom: are the bulls in retreat?

jonathan: jp morgan leading the way there. i just heard from credit suisse and they are pointing at you have to look at what happens with growth but look at what happens with profits. that story has been good and continues to be so. tom: they are really emphasizing wrong on the earnings call. what i see is the vicks at 1943. -- 19.43. jonathan: it's a small balance of not even a 10th of 1% and the nasdaq is up slightly but the bond market has caught our attention. down one basis point. tom: i am going to go to brent crude.

global crude is $74 $.55 per barrel. in minneapolis, they have a perspective away from the -- the three zip codes that dominate financial media. jim polson, what do you observe in minnesota and the greater midwest? >> i certainly see more traffic out here. schools are adding to that but even before school started, people were out and about. downtown is still a long way from being fully populated again. it's very sparse and starting to a couple little bit but companies are backing off and requiring people to go back downtown. i think we are a ways from that. the delta variant has to pique but i agree with lisa, it will

be interesting to see how long before we have five days per week in the office. jonathan: what do you think of this line? we expect revisions to top and bottom line forecasts even if economic data slows further? >> i totally agree with that. i think that's been the case ever since the pandemic started. people have been racing to try to catch up with where profits are. we took the economy after the pandemic to force companies to get the most efficient ever in order to survive and then we gave them a postwar boom and when you have corporate america in the most efficient position to get rapid growth, profits soar and expectations are still catching up stuff i think we will have a fourth quarter trail number by the end of this year. it may be something like 240 may year. growth is slowing because of delta and other factors but we

are growing at a pretty good rate, five or 6% and maybe 4% next year. jonathan: people are still judging the market on spx when the internals peaked and it has been in indigestion since may. are you seeing the same thing? >> yes, i think there are some concerning things. the market has narrowed out, the advance decline line has rolled over and that's concerning from a tech perspective. the broader market is mostly underperformed. that's certainly concerning. i can see the concern about september and october. it's almost playing out to the playbook. we will get a correction at some

point but i just don't know if i see the pressures right now. we don't have normal things. bond yields of going down, we don't have full on inflation fears at the moment step we have some but nothing ago. we don't have fed tightening or fiscal tightening. tom: then what your target? i have never heard you more optimistic. >> what's going on is the delta variant has put us in a position that i think we will set up a second reopening. it won't be as big as the first one but i think it's the same thing, bond yields have bottomed out and we are disappointed with growth and starts to pick up the yen. we have all these new employees that might come back in the labor force. i think we will have another

good field maybe through year end. we are supposed to have a correction but i think it might get pushed out. lisa: what if we don't see a full on correction with a sudden spike in yields? what if there is a slope lead where the margin pressures start to increase like many are expecting? how realistic is that scenario? >> i think it's possible. if you look at some of the price surveys relative to wage surveys, prices can go up faster than wages. if anything, if you increase nominal gdp growth which is not really slowing down, that is so highly correlated with profitability. if nominal gdp keeps rising, profits are like glee -- are likely as well. there is a lot of productivity

underneath this. tom:tom: that's an interesting comment, thank you so much. jonathan ferro mispronounced on the edge of tom keene, he's not focused. focused on three this afternoon, would you explain how liverpool plays? how does that happen? jonathan: the best of europe is getting it together. we haven't been in the championship for seven or eight years. my last call is scheduled for 2 p.m. eastern and then i'm clear from then on. 3:00 p.m., liverpool and milan. they did it a couple of decades ago. i think liverpool is too much for malan. we have good statistics and malan's back line has been pretty tight over the last 12 months and likewise liverpool.

i would be comfortable if we had played this before? tom: will they get a big turnout? jonathan: anfield is a special place. that atmosphere is pretty awesome. some of the big ones in england are like live. that's a special atmosphere. jonathan: i prefer upton back in the day. lisa: i was looking at yields. jonathan: i don't think we have

touched it. tom: i know you are focused on 3:00 p.m. lisa: did that satisfied the itch? tom: this guy is in london and they are saying what's the problem with ferro today? jonathan: this is what people come for is the basis points. that's the market action. tom: rick springfield and inxs. jonathan: what a special program. i apologize being so distracted. good morning, this is bloomberg ♪

ritika: voters have overwhelmingly rejected recalling governor gavin newsom. they said no to the question of whether he should be removed from office. it's a major win for democrats. it was possibly a power grab by trump supporters. in north korea, the regime fired up to ballistic missiles off the eastern coast. it's their second test in a week of weapons designed to hit south korea and japan. the british prime minister will announce a cabinet appointment later today. it's to ensure he has a strong and united cabinet. this could be the biggest stock buyback ever. mark zuckerberg will get involved at a $60 billion stock buyback plan. the market value is the second most valuable penny.

the ranking of the best mba schools was highest when it comes to network and entrepreneurship. this is bloomberg. ♪

>> this crackdown on information gathering but also trying to

restore the improvement of the author of the common folk and doing it at the expense of people who were at the very top. that kind of disincentive for investment is something that china will have to deal with because behind that investment has been a lot of municipal government debt and a lot of innovation that have gone to waste. jonathan: fantastic to catch up with bill lee. from new york city this morning, good morning alongside tom keene and lisa abramowicz. six days out of seven down on the s&p. equity futures are up a little bit, advancing by almost 1/10 of 1%. cpi gets your attention will yields lower. the euro is stronger.

crude 71.50. a lift there and i think it's still the call of the week to hear from bank of america on this. talk about the risk, the potential that could come six months sooner if we get a cold winter in the united states. tom: i think it's important. 30 people guessing on whatever the topic is, there is a tendency and when people who are typically in a center tendency moved to an outlier, that gets our attention. jonathan: everyone is woolwich. the next year, q2, the south. is pretty bullish tom: what is the terminal function? jonathan: dpsc.

when you look at the south side, they are pretty bullish. when you look at the median forecast, they are still below where we are now so we haven't seen the capitulation on that call. out of china, two point 5% retail sales in china, a huge downside to price and we were looking for seven. the median estimate was seven for retail sales for china and we got to .5. tom: we heard that earlier but joining us now to brief us on nfl football, damien joins us from bloomberg intelligence. here is how it works. indonesia, 6.5% yield over 10

years. it sounds like a free lunch. dovetail that into what we are observing in china. >> that has gone up significantly because you have positive real yields there. i talked about in division -- indonesian yields last time and i got in trouble. talk about gaming the system and we have to talk about the gaming industry in the crackdown overnight that is news. the sector lost 18.5 percent overnight after china said we are going to put supervisory people on your boards and monitor your concessions and share your profits and dividends so this is big news. it's bad for them so we are seeing that overnight. . tom: it's a gloomy damien this morning. jonathan: he sounds pretty diplomatic. >> ever grand is another story. they were downgraded overnight.

they will miss interest payments probably next week. the asians confirmed that, interest payments to bank which will put them into the fold. ever grant is huge and chinese has -- households have to invest their saving somewhere and the investment to property and ever grant, their working capital is effectively being used to finish unfinished projects and that's the problem, they cannot generate revenue to pay back their debtors. lisa: if china doesn't rescue them, what is the follow-up in terms of market response? >> beijing has been excellent as far as containing that fallout to the broader market. we saw that with h&a and i think we will see the same thing. it beijing wanted to step in, they could protect the property market but the effect of the off balance sheet financing really

resonates because we don't know how extensive and pervasive it is. i think it's a big risk to the economy. tom: we joke with you but you are legendary for watching people lose a lot of money and it comes along and everybody's got their horror story. you've done better. our week at that point again? >> em always over shoots and in chinese credit, we are seeing value there. tom: is it contagious? >> that's a tricky question. i think it has the potential to be contagious within china, particularly the property sector and it has the potential for southeast asia. i am all about following the money and when you see bonds trading at $.50 on the dollar,

tom: the green bay packers, done? >> i think they will come back. jonathan: i want to wrap up there. you said follow the money, how do you follow it when you don't know what they are doing? >> the s&p is trying to correct emily comes to china because we don't know who holds the equity. it is a black hole and that will kind of improve. one thing we are seeing is they will be launching the program out of china to invest in hong kong bonds. i think it's a step in the right direction. jonathan: thank you and it's good to catch up with you. equity futures are fading a little bit unphased on the s&p. tom: we are going nowhere and you see that vicks at 19.5.

we are apple free today. we are talking about bonds. i love how you framed it, down to 112 but we are not there. jonathan: that was the intraday low over the summer. we are down about two basis points right now. tom: 10 year tips are unchanged and nominal yields are coming in. lisa: here is the interest -- interesting thing about the bond market, it's not getting confirmed by spreads. it is not necessarily widening out. it's normally a flight to safety . inflation is going up and what was the response yesterday in markets? why did the yields go up? it's not a cohesive narrative step jonathan: it's a beautiful story with the downside surprise on inflation.

lisa: quantitative easing is overwhelmed net issuance for months. that's interesting. tom: i was looking at yields. jonathan: down to basis points.

jonathan: moments away from some economic data. good morning alongside tom keene and lisa abramowicz. we have been venturing into negative territory, down two points. we have been fading a little bit over the last couple of hours. yields are down by one basis or two. your economic data is out. michael: some good news for a change, those who thought the economy was tanking because of the covid variant, the empire index for new york which is a tertiary index but it set the pattern for last month. it jumped again, 16 points. 46% of respondents said the

business conditions had improved over the month. the new orders index is up and the shipment index is up and the unfilled orders index is up stop all good news out of new york and we will have to watch for philadelphia and the rest of those regional indexes and see if we are going to continue to get some good news. import prices are also what we've been watching and they declined. maybe some of the snow inflation story or transitory inflation story continues to hold. tom: that's two days in a row. michael: it was an increase of four/10 in july so it's rolling over a little bit step is the first decline since october of 2020. tom: folded into the yield space where we had a spike down under 126 and we have come back. is it your sense that the bond

market is seeing this data and shifting to a softer economy? michael: is it a softer economy view or a flattening out? lisa is the bond market expert. jonathan: we've been told. tom: did you just get into the lisa timeout chair? michael: it could be a slow down but also could be cyclical especially within work prices because energy prices are back up again. we also had storms that may have interrupted a committee so it's hard to tell for sure. jonathan: here is a data check for you. yields are lower via basis point. equity futures are doing a k. we are basically unchanged in the s&p 500 step we are positive on the nasdaq stock.

tom: i was looking at the yield. it's stunning. jonathan: your top this morning, lisa. tom: ruskin is talking not about the g7 but the g2 and that can only be the united states and china. he says this needs to be washed. in what way you watch this relationship? >> i think this relationship is fraught for many different reasons, not least of which is political. the economic divergence which doesn't have to happen in tandem

with politics but the divergence he you see an economic policies, particular monetary policy is important to keep in mind in no small part because you are seeing no sign that china will take up any slack in slowing growth in the united states or any tightening of monetary policy in the united states. if anything, you are seeing a further slowing in chinese growth. that's problematic from global growth. it's a signal that pmi is topping out. we've got to see how this plays out. tom: we have a framework of when london is overcome by events and berlin and washington. what is the experience you see when beijing is overcome by events? >> i'm not saying they are

overcome necessarily at this point. there's a fairly relaxed way in which they have approached market policy so they have not reach that tipping point but you have the confluence of many factors. very tight credit and money conditions, the covid situation and china's ability to live with the virus i think will be crucial in the months ahead. eventually, you will get a monetary response. if you have some issues of social unrest and there was a trader as it relates to ever grand, that pushes the authority to perform just to respond more acutely. jonathan: how do you push this through the fx market when you see dollar china so stable for much of this year? >> we've been talking about that five minutes before we were on the air and it doesn't feel like

it is a currency play. the chinese currency has a lot going for it. they have a lot of capital that needs to be recycled. it's acting as a tailwind so for the moment, one has to be very cautious especially on the currency side. there is a reduction in the minimum lending facilities in the bond market should probably be the haven of choice because equities at this moment in time are subject to regulatory changes that are right unpredictable. you are almost push toward one asset class. lisa: when you say the haven of choice, i imagine you're talking about chinese bonds that you rally on the weaker than expected information overnight. is this a haven for investors

getting exposure to china or is it a broader haven with the likelihood of additional easing by the people's bank of china? >> i think it's mostly a haven for chinese investors, for people who are already in china. i don't think it's an international haven, if anything, international investors are still scratching their heads in terms of thinking about some of the longer term issues as it relates to deregulation. the anticipation really is that the chinese equity market might well be a drag on global equities going forward. those ongoing concerns will not change very ugly. i'm struggling with the compass lisa: to use the tools. what is the driving force behind strength or weakness?

if you look at euro-dollar, it's not going very far very fast. if i was focusing on anything, it would still be on u.s. monetary policy stop it's the timing of the taper. we still things like euro-dollar and the dxy currency tracking fed fund futures. looking to the first rate hike has been the key signal. there is that angle and lurking in the shadows is the potential for a risk off move. is the s&p rate below the data? if we break through their in a convincing way, the risk off

will start to take hold on the yen which is done well. we conceive it really follows through. on balance, i inc. the aussie is the right way around. we spoke about china and having to live with covid. australia is going through machinations as well and that will not look good as far as economic data is concerned over the near term. if you look at the chinese affect, ironwork -- iron ore has really crashed of late. that's important so i think the pressure is on the downside. jonathan: just taking a look at aussie-yen. none of us are safe. thank you for being with us. euro-dollar is one dollar 18. we will catch up with credit

suisse in about 21 minutes. we will talk about slowing global growth and maybe profits hang out. this market is still one you want to buy. tom: i think that's an important conversation because he has been leading the way on a bullish charge. jonathan: just a headline i want to get to from pfizer. there is waning vaccine efficacy, the company detailing data in a presentation for the fda booster meeting. widely reported and widely thought about for the last couple of months. lisa: the idea is that a number of fda and medical officials resigned and disagreed about whether boosters had to be recommended. pfizer presented data saying it should be. at one point -- at what point does this become policy? jonathan: that seems to be the direction. equity futures this morning are fading a little on the s&p 500.

equity futures are positive at three, 1/10 of 1%. police is watching yields on the bond market. -- lisa is watching yields on the bond market. lisa: that's the most interesting thing out there. jonathan: we have a flatter curve. i was looking at yields. tom: a bar conversation with lisa? jonathan: that would be awesome. lisa: and bears. jonathan: beers bonds and bears. there is a podcast for you and that step from new york this morning, good morning, this is bloomberg.

♪ ritika: democratic governor gavin newsom has turned back and ouster to get him out of office. democratic leaders have characterized the recall attempt as a power grab by supporters of former president trump. energy crunch in the u.k. got worse. they have shut down a major cable that brings power from france. electric supplies are already short in the u.k. and prices are at record highs. a driverless delivery service will be launched. it will be tried out in miami and austin. in macau, the top gaming company

is worth $10 million in value. china wants to increase local shadowing of casino companies. chinese authorities have told lenders that struggling developers will not make interest payments next week. this is bloomberg. ♪

>> this year is going to the point where we will have

recovered to pre-covid-19 levels before the end of the year. we had anticipated in early 2022 at best but it will be this year. tom: christine lagarde in a different one than we know from the international monetary fund . an important and different interview. she does not nitpick each moment of financial change. david is speaking to a different christine lagarde? david: i have known her for quite a while since she was the head of the imf and she had an impact on the imf and people were disappointed at the imf that she chose to leave because after two terms she could've had a third term but angela merkel

thought a more important job or her was to come back to europe and run the european central bank where she is the first woman to do that. she has had a gigantic impact on the european central bank in the two years she's been there. tom: a lot of criticisms, a lot of comp air in contrast to the previous leader, marriott draghi. did you speak to her about the interior politics of frankfurt and where she is now? >> david: i think she feels she's got a good grip on the european central bank stuff she has articulated policies which the bank is pursuing. they have a clear policy of getting to 2% inflation which is the real target. it's not easy to do but that's what she wants to do. the economic package they put together to deal with covid has worked and maybe better than they thought. she now thinks they will recover to gdp levels before covid.

lisa: perhaps one of the bigger challenges she has is that she has a harder job which remains cohesive. did she talk about trying to keep a consistent message at such a tenuous moment? david: the european central bank is not like the federal reserve. the federal reserve is in charge of monetary policy but we have one country that does fiscal policy. we have a fiscal policy for the united states and eight monetary policy but in europe, one monetary policy that the ecb does but each company -- each country has its own fiscal policy. it's like herding cats. i said with her background as a national synchronized swimmer, was that helpful? she was a great synchronized swimmer and she now has an interesting situation where she has 23 central bankers in each

of the countries and she has to preside over that. she said in many of these meetings, there were 22 men and one woman. she said there is still an amount of discrimination europe even though she has this lofty position. lisa: do you think she likes her job? david: yes, she is a very smart person who actually came from france to the u.s. for haeckel for a year and became the head of a major law firm and was the first woman to do that. we didn't talk about this much but she now has grandchildren and they live in europe. she has a chance to be back in europe so after living in the united states for about 10 years, she was ready to move back to europe. tom: i would be honored to have your perspective on these headlines of the final agreement of the canadian pacific company with kansas city southern. this has involved to canadian giants, canadian pacific and canadian national in a u.s.

company, strategic and railroads. is this what is to come in this odd economy we are in? more mergers and combinations? david: i think you will see more mergers because people have high value stocks. when you have high value stocks, you can use that as currency to make acquisitions. the antitrust authorities in the united states try to deal with some of these problems but very few major acquisitions are being blocked right now. there is no antitrust official in charge of justice department because no one has been confirmed yet step it will take a while before you have the antitrust authorities catching up to the acquisitions being done. maybe they are good acquisitions but i don't know if we have the authority focused on these. tom: these private capital, private day, how has that

changed combinations? it seems like a new player adds more money and more capital to the fire? it's not only private equity firms but you have sovereign wealth funds and you also have a new phenomenon, family offices. they are doing deals directly as well. it seems there is not a lack of capital. deal doing is going on in until the fed raises interest rates and until the economy slows down i don't want -- i don't think you will see a change in terms of deals being done and investments at high valuations. lisa: you did ask christine lagarde about working from home and when they start together as a group. what is the new september we have been talking about when people get back to the office for the companies you speak with? when is the new time to return? david: at carlisle, we have reopened our offices after labor

day but we are not saying that everybody has to come in because everybody has to deal with their own situation. we think people won't be coming back to work but i don't think you will see people coming back to work five days per week at the pace they did before. some firms will do four days a week or three days a week. the carlisle policy is to have people come in a number of days a week but we are not telling them what days they have to come in. each company has to feel its own way. i don't think we are going back to the way we used to work which is five days per week, 9-5 and i don't think that will happen. tom: congratulations on your new book. mr. rubenstein, the carlisle group. peer-to-peer conversations with christine lagarde. i love how david rubenstein was channeling lisa abramowicz and he said i'm looking at yields.

lisa: i missed that part of the interview. tom: lisa's looking at yields and the answer is rubenstein went to the inflation-adjusted yield, nominal yield, inflation up, ever greater, lower yields. this is not in the textbooks. lisa: it's not. why do you want to get negative real yields, it doesn't make any sense? yet, here we are. even as we see inflation with a sub -1% real yield on the 10 year, can this dynamic change when you have the bond purchases outstripping the entirety of what the u.s. government is selling? think of that for a second. tom: your kids can do it, negative german yields, minus growing inflation is a giant norm is yield. christine lagarde has the real

german tenure well over standard deviation. that is a normal. what is normal? stay with us through the day. this is bloomberg. ♪

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jonathan: from new york city, good morning. equity futures as follows on the s&p 500.

fading as the session grows over. positive six points. the countdown to the open starts right now. ♪ announcer: everything you need to get set for the start of u.s. trading, this is "bloomberg the open" with jonathan ferro. ♪ jonathan: we begin with a big issue, decelerating global growth. >> markets are all about expectation. we have seen things pick up in uncertainty. >> we are in this decelerating growth environment globally. >> supply chains remain disrupted. >> peak growth, peak earnings. >> pile on top of that valuation concerns. >> we will start to see a wave of earnings downgrade. >>