>> the fed cares about inflation. > at the right thing to do is address thoughts. >> i don't think>> it is as and as people realize. i can't see how >> that happens. >>this is bloomberg surveillance. >> it is gdp day.

good morning, good morning. this is bloomberg "surveillance." >> you are asking and i said no, maybe. jonathon: why are you buttering us up? gdp coming out a little bit later. tom: to me, it's really, really important. it's always underplayed by the media. we looked get one statistic hundreds of data points, first, second, third what you put out on twitter the huge dispersion is really remarkable. jonathon: the updated ones -- tom: after cover the surveillance pivot right now. it is far more important than the fed pitted.

we promise to try to get six hours of sleep your. jonathon: what do you make of the fed pivot? if you can even call it that. tom: this is really important, ending with michael mckee's non-answer. she moved the market with his answer. what was it about? it's about forward guidance. it is gone. even for the sophisticates, it's a bad idea. jonathon: data-dependent stats, what did the market do? lisa:lisa: a devilish interpretation. i was searching for some sort of! what's going on. i don't see where they are going -- where they are getting their enthusiasm. it is believed fed chair jay

powell has a controversial belief we are getting closer to neutral. but there is a risk that we are going too far or maybe not far enough. these are some of the reasons people are giving. i don't know if i buy it. how could you get a knee-jerk rally that was the biggest with the nasdaq going back to november 2020. jonathon: chair powell, we had a list of stock market indices in front of us here, do you think that is the outcome he wanted to see? lisa: market rally is 5% to 10%. i assume he was talking about the s&p, not the nasdaq. that would go against what the fed is trying to do. others would push back and say there has already been so much bad news and the rally is actually a sign of optimism. tom: john is looking at the ac milan futures.

i've actually doing technical analysis. unequivocally looking at what's called a point and figure chart, we really haven't had a bear market breakout. it was a big top yesterday. today, and is a big now what echo jonathon: futures on the s&p negative. we declined on the nasdaq hundred. to the point of little later, which has big announcements from apple and amazon. we are earnings in the day ahead. lisa: here is what we are looking at. it might be gdp thursday, because we are getting that initial raid on the second quarter gdp for the u.s. people are wondering if this is a technical recession. that comes out at 8:30. i am actually more interested in the initial jobless claims the

jobless claims are a more real-time version of the labor market that seems to be the data point fed chair jay powell was pointing to yesterday. yes, weakening data, however jobs remain very strong and full supply. at what point does that become more in conflict, in terms with fighting inflation? we can have a really important call between joe biden and xi jinping from china. we don't know when that will be, but they will reportedly be speaking about a number of policies. one of them is tariffs. some of the data we got earlier today, as well as the fed's reaction to it. after the bell, just a giphy some perspective, about half of companies have reported second quarter earnings so far. after the bell, apple and amazon are among slew of companies that

account for nearly 20% of the s&p. how do we see what consumer appetite is like for tech? there is resilience in google and microsoft. jonathon: those two names, their part of the nasdaq 100. just those two names. some big earnings coming up later. tom: there are. and it is about china. i agree with what i've seen across the bloomberg terminal, that apple is a huge mystery. they are really going to focus on the conference call with apple and guidance forward. it is an unknown unknown. jonathon: let's talk to eric friedman. you have the more conservative, somewhat bearish outlook on global equities.

did that change? >> i think getting back to the technical comment, we get a little bit itchy around 4200 with s&p. i think where they pivot, it was that meeting to meeting guidance from chair powell. i think what that means for us as professional investors and our peers is, how does your conviction remain sticky. and how convinced are we that these things will rise up? it has more of a bearish tilt, but our models need to be that much sharper. tom: is your team noting that corporations are adapting? we certainly noticed that with chairman powell. our corporations adapting and adjusting to this new post-covid

landscape? >> i think that's an important thing. this comes from homeostasis, the adjustments where the companies, consumers, and government made. i think at the center stage for that, it ties into your earlier comments about gdp. you have heard from big-box retailers and eat retailers -- de-retailers, these are the things they should be stocking their shelves with. we think stocking goods, as well as experiential travel barriers right now, that is going to take a couple of quarters to sort out. a consumer is a moving target. it speaks to the notion of homeostasis that readjustment is happening in real time. lisa: so you think there is some

pessimism that hasn't been baked in. but what do you do? bonds could also rally at a time when the fed is saying they will do it takes to get inflation down. at some point, do you just hide and wait for clarity? >> we have been of the mindset that there will not be that moment where equities fall, but we do think there is going to be probably a drip lower in earnings especially. i think this next quarter earnings seasons is more important. we have to look at real assets and pay more attention to the reopening trade that is helping -- that is happening. from a duration perspective, we have been leaning more toward shorter duration, just from the viewpoint that we have to see how this guidance shakes out. we are more interested in buying

duration here. our viewpoint is that the rotation back into lower quality equities, europe is part of the waste for another quarter. we're looking at shorter duration and less equity. jonathon: a wait and see stance. lisa, this is what they have been waiting for. they think this is evidence potentially peak fed hawkish in us. lisa: one was last time we said that? jonathon: the last meeting. lisa: exactly. they said we are now going meeting to meeting. does that mean consumer inflation will go down pretty dramatically echo is it a weakening economic outlook at a time when statistics have been beat. businesses are doing better than

many expected. they are trying to get to a place where the fed gets us down to 2% and not raise rates more than necessary. jonathon: we will be so sensitive to the incoming data over the next few months, going into that september meeting. tom: i am a sensitive guy. i would note that adjusted deal. are you ready for a negative real yield and for halloween, a new negative yield? jonathon: how are you asking me to take that seriously, that you are a sensitive guy? lisa: he is very sensitive to louis boynton. tom: they are bustling over 57. i did not go to 56.

they are forcing me to take off tomorrow. it is un-american. jonathon: for how long? tom: one day. jonathon: a long weekend lisa: lisa:. how american of [laughter] jonathon:. from new york, this is bloomberg. . >> keeping up-to-date with news from around the world. there is a deal that breaks a lock on president biden's economic agenda. democratic senators joe manchin and check simmer have agreed on this energy and climate bill. it calls for a corporate minimum tax, but mentioned blocked expanding the state and local tax deductions. chair powell is signaling that more rate are coming. this comes after policymakers

raised by 75 basis points. at the same time, powell steps away from the exact guidance he gave. antony blinken plans to speak with his russian counterpart to free imprisoned basketball star brittney griner. bloomberg has learned the u.s. as a russian arms dealer. according to a russian media report, moscow says there is no agreement yet. the e-commerce giant that mark cofounded and was forced to recognize under pressure from the chinese government.

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>> as it relates to september, i

said an unusually increase is appropriate. it is not one we will make now, but based on the data that we see, meeting by meeting. jonathon: it is such a long road to september. we have so much data to get repaired i think it will change about 50,000 times in the next two months or so. from new york city, good morning. your market looks like this. yesterday, up by more than 4%, the biggest one-day path going back to november 2020. today, down by about three quarters of 1%. the euro is showing some weakness. tom: 21.31 after the festivities of yesterday. right now, under legislation in washington, we welcome jack fitzpatrick.

my math is 400 x x billion off. i get 20% of a $2 trillion bill to better. was that a big cut? >> yes. they shrunk down the list of democratic priorities really significantly. even if you look at the race, compared to what they originally talked about, they have a deal now for a 15% corporate minimum rate. they are not changing the corporate tax rate, not touching income tax. overall, it is much, much smaller. there is no child tax credit extension. they tried that, and didn't get what they wanted. burn -- bernie sanders and others are going to be really let down this. this is what they can really get through the senate and reconciliation process, what they can get the moderates on board with. tom: i want to get past the sunday programs and pass the first tuesday of november.

if i read what has happened in the last one for hours, is there a left left in the democratic party? it sounds like a colossal defeat for progressives. >> i think the defeat was already there. if not for this bill, there was going to be essentially nothing. they were talking about just doing a prescription drug price measure. they had already whittled away at the big priorities. again, something like the child tax credit was something that progressives pushed for, for years. they got through the stimulus, made at law briefly. it expired and they just didn't have the political wherewithal to extend that kind of thing. it was clear, like when you heard bernie sanders talking about his priority list of $6 trillion, that was not going to happen. it wouldn't be anything close to

the original proposal. they hide their chance -- they had their chance and president biden worked with them, but they couldn't get people like mansion on board. the wake of the democratic party have -- the weight of the democratic party has shifted toward people like joe manchin. lisa: now, instead of being energy, climate tax plan, it is called the inflation reduction act of 2022. there has been legislation with this and also the chip and semiconductor bill that was passed this week as well. how much of this is a game changer heading into the midterms? >> i think you are right to touch on the branding of this and the fact that they needed to emphasize that this bill, there's nothing in there that really kicks inflation. it has stuff that has a disinflationary effect. it would reduce the deficit a bit.

that speaks to the fact that democrats felt the need to make a point that they were trying to do something. it is not as if this bill or the chips bill, in the short-term, can have an economic effect that would change the way people are feeling in time for the midterms, but they clearly did need to move away from what they were talking about publicly before. even in the statement announcing the deal, joe manchin made a point to say that bill back better is dead. it's going refocus the deficit. that doesn't solve their problems with inflation, but it shows where there priorities have shifted. jonathon: the beat word is the right word, isn't it? and i am thinking of branding. this interest months ago. house democrats plan announced a proposal next month to ban lawmakers from trading stocks, according to many.

double close to the issue. how may times have you seen that story over the last few months? is that going anywhere echo --? >> it has come up over the last be months. it is more of a major talking point recently. for kind of bill, to enact it, you need 60 votes in the senate to change the law. could they do something with the rules in the house to increase transparency? maybe. it is difficult to predict exactly where this is going. but it has been more and more of a discussion point recently. obviously, with some scrutiny on nancy pelosi's husband, it has become a much more high-profile issue lately. jonathon: particularly around stocks lately. the framework which the house democrat leadership will release later will ban house legislators

and their spouses from adding these thinks their portfolios. tom: what i really take issue with is the single word "trading." the vast majority of americans don't want politicians trading like lisa's kids do off their couch. we don't want them doing robinhood out of their office. the solution is simple. put a minimum timeline on ownership of a given equity. jonathon: that's one issue. the other is spouses. some sources have suggested that the inclusion of spouses is unnecessarily onerous. what happens if a congressman's spouse is a stockbroker? does he or she have to quit their job? lisa: this is all theatrics. it won't get past.

this is basically good messaging ahead of the midterm elections. how much should they be following the same rules that any insider trader would have to follow? they are aware of certain decisions coming down the pipe that would move markets and they have to trade -- and they can trade off of it. to me, it makes sense that if their spouses are hearing what they are talking about, to not be included. jonathon: futures are down. i am with you. come on. tom: no. jonathon: decisions to move equities. tom: put a timeline on a trade, the problem goes away. jonathon: i'm not sure it does. from new york city, this is bloomberg. ♪

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jonathon: the nasdaq 100, a massive day of gains yesterday. the biggest turn going back to november 2020. then, we pull back just a little bit. futures down 0.6%.

the first ever quarterly sales decline. down 5.5%. they are today, we hear from amazon and apple. they make up close to 20% of the nasdaq 100. two big names reporting after the bell. tom: i'm going to look at the drawdown. i used fb as the symbol. but that's not correct, is it? jonathon: it's meta-now. tom: i need to do a drawdown analysis. jonathon: let's talk about the bond market. a: 30 eastern. -- 8:30 eastern. i will say this, some of the more recent forecast for gdp to come out this morning, the ones updated yesterday, they had a big lift based on the data yesterday morning. we will touch on that in a moment. this idea that the that has moved away from peak hawkish in us, we will have a couple basis

points. 278.31. we are close to 350. tom: do we agree the bond market yesterday was really twisted as fed powell -- as chair powell was speaking? what did you see across the curve? jonathon: the front end dropping and moving way. the body believes we have much left for the federal reserve to do. i'm not sure of that. i mentioned at the top of the program and i will say it again. the fed is trying to shift away from forward guidance, becoming completely data-dependent meeting by meeting. when they shift toward that, the market is filling in the spaces. they are coming to the conclusion that this is a dovish move. tom: we are going to go back to what chairman powell had for lunch. you up-to-date, meta drawdown. jonathon: facebook drawdown.

tom: meta-. however you want to say. jonathon: i am pleased you did the work. tom: currency is flat. we are watching the euro and it can't get any love. frances donald is with us now. very good at the workings of our gdp. what are we not analyzing in today's gdp first look? what is the big mystery? >> the big mystery is not today's gdp at all. today's gdp will tell us what we already know, which is that this economy has materially slowed down. we are not in the roaring 20's, we are not in the re-inflation trade. if you told people that last year, they would not have believed you. to big mystery is, what does the next quarter look like?

this is what concerns me. it is not recession or no recession this year, even 2023, it is, what do we do if we are stuck with 1% growth for four to six quarters? it is much harder to trade and percent are banks to respond to. tom: what is important to me, and justin fox of bloomberg opinion has done great work on it, how early housing plug-in to gdp, which is if we get yields up, mortgages are slammed, house ownership is slammed. that means rents go higher. how does the work into the gdp of the nation? >> they like to say housing leads the market. one of my favorite charts is one that shows retail sales. really focusing on the housing side of this story is going to be critical. it is good to bring down inflation in certain respects. it is also very, very bad. read data point we have on

housing is trending downward. every data point we have across the gambit of major primary data points is pointing downward right now. not a lot of places you could look for, for optimism. unless you listen to chair powell yesterday. jonathon: we might have a fourth week of it later. tell me why the market has been rallying over the last month. what do you make of that easing of financial conditions that we see? >> bear market rallies. they get bigger the deeper you get into the bear market. i cannot believe what we saw yesterday from chair powell, what a pivotal market focused on derivatives. he said they are data-dependent. i don't think inflation is going to come down fast enough in the next two to three months. with this market is going to do, in my opinion, is price and more

cuts for 2023. that makes the fed's job harder, just like we saw yesterday. the weaker the outlook, the more we see financial conditions fall, the more offsets the fed are really trying to do, which is tightening. the rally, that shouldn't be happening when the fed is tightening 75 basis point. they are probably not happy. lisa: it's funny mentioned that. either watching those. what do you expect, in terms of pushing back against this? how does the fed react to a market that is not cooperating and adding ahead of itself? >> i wouldn't be surprised if, in the next four days or weeks, we see fed officials and really try to walk back some of that, take some of the hawkish risks that exist in this market. that is why i think it's dangerous to make too big of a fed change in a single meeting. we had these big rallies on fed day, then reverse course the next day. chairman powell told us they

wanted to be nimble. i think now is the time for strategists to be nimble as well. lisa: some people are probably saying they are sick about talking about these companies. we are hearing around the margin signs that the rally we are seeing is that we have priced in so much bad news, people are beginning to find value. what is your argument against that? >> it has effectively been the right way to do this. if you look at the economy, it is still turning downward. historically, what we would see is that when the economy is about two thirds of the way through the downturn, you can start to look for opportunities. i'm not saying that macros rule all. there will be pockets of advantage here. we will watch the curve flattened, but watch in the next few months. the coordination on macro, it does change over time. the macro does not look good.

it will go bullish again. tom: what do our listeners and viewers do as they jump from forward guidance and the comedy that it was, to actually looking at data? how do you actually get through a week, month, quarter, where you are data-dependent? >> a great question, tom. we don't know what data the fed is looking at. we ask and he said they are looking at inflation and they want to see compelling evidence. what is that? probably month over month improvement in inflation heading downward. they are looking at labor supply and demand, but not all data, apparently. there's plenty that says jobless claims and unemployment is moving in the wrong direction. we do not know the fed's reaction function as much today as even 48 hours ago. that is going to make a lot more market volatility, a lot more two-sided conversation. we will have a lot of ted

officials speaking to both sides of the argument. the clarity that happens next will be very significant. if you are wondering what to look at, i am in the same boat. jonathon: i can sense the frustration, so let's address it. what do they need to do better? >> i don't think it so much frustration, but you are making harder the job of what to do next. the fed's job is not to make my job easier, it is to come pain -- it is to contain inflation and provide an outlook. but it would help to know what they are looking at. we heard from chair powell that he is very focused on headline inflation, but yesterday, he said that is a leading indicator. i would like to know, what are you really targeting? inflation expectations for consumers are driven much more by gasoline prices than they are by fed policy. what elements of this are you really trying to control and do you fundamentally believe it is your job, only your job, to

contain inflation? it came from a lot of places. jonathon: i would love if he could make our job easier. i have been incredibly frustrated by the last few news conferences. frances donald there. which data point ma'am -- which data point matters and which doesn't echo -- doesn't? >> sometimes it's jobless claims, sometimes it's not. sometimes it is cpe, sometimes it's not. this could cause the data to be possibly more volatile. that's why we say today is gdp thursday. it's not friday. jonathon: [laughter] lisa can't wait for eci friday. we are still having the same problem, tom. we do not know which data point. we don't have a complete understanding of the fed's reaction function. tom: any of them would tell you it is going to be a compendium

say it of data points that matter. to lease is important -- or francis, i should say, point, even in the press conference, a single-family home over multifamily, the dynamics over rent, rent, rent. it is not a pretty picture. jonathon: i don't think it is that complicated. i don't think you need a phd for this. the problem is, he keeps flipping from one data point to the other from meeting to meeting. first it was headline inflation, then core, then tillie since point -- then to lisa's point, it was eci. we don't know if the incoming data is important for september. tom: i'm sorry, they are going to look at a mosaic of data and have to come to some tough decisions. what is so critical now is that

now is when the going gets tough. jonathon: the former new york fed president right after that. tom: i'm sorry, i just think now is where it gets tough. jonathon: i agree. tom: lisa, take a know, we agree. we will talk about it later. jonathon: let's bring that up again in a minute. this is bloomberg. ♪ >> keeping up-to-date with news from around the world. a surprise agreement on capitol hill. democrat senators joe manchin and majority leader chuck schumer came together on a climate and energy bill. it will have a minimum corporate tax, allowing many to negotiate drug price cuts.

holding gasoline and oil sales in alaska and the gulf of mexico, which could cut the clean energy focus. now, the u.s. carrier of a navy vessel has rising tensions between washington and beijing. the navy because at a scheduled operation. china is unhappy that house speaker nancy pelosi might visit taiwan. president joe biden and china's leader xi jinping are expected to speak later today. the airways have called for profit. the dubai-based airline added routes. >> we are seeing inflation everywhere. it is not really impacting us with the cabin crew, in terms of direct labor, in this part of the world. but we are seeing super

inflation through the aircraft component supply chain. that is something that is challenging all airlines at the moment. >> meanwhile, up almost 60% from the previous year. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

>> it hasn't fully recovered yet. supply is definitely tight. there's a lot of talk about limited specificity in opec-plus. we subscribed to that theory of what. the amount of crude oil coming out of russia has not really diminished. i think where we are today, there is more upside and downside when it comes to the oil price. jonathon: that is from the shell ceo. futures negative one third of 1%. later, amazon and ample -- and

apple reporting earnings after the close. yesterday, euro-dollar negative. we are negative there, .7%. tom: a busy day here. going to the earnings we will see later, stay with bloomberg television and radio. jonathon: it is two names make almost 1%. amazon and apple. tom: this is a lot of fun, because she comes with bulletproof academics. berkley was known for decades for chemistry. part of that of course is chemical engineering. jeanine wai joins us now. jeanine, i'm going to cut to the chase. that airlines needed three crises before they got capital discipline, before they got the religion of operations. how is oil doing in this boom

and capital discipline? are they going to go off to the new siberia and wasted all away? >> good morning. thanks for having us. let's get right at it. i think you are hitting at the crux of the issue. whether it is going to hold as the number one impression from investors. there is a ton of skepticism on that in the market. it has kept people away. we just checked in with all of our companies ahead of the quarter. every single conversation, the companies are still on the right narrative, which is low loads. tom: let's cut to the chase, just because of time. chevron has always been the wild-card, the argot of the modern world. explain their capital discipline. he was keeping them in line? >> investors are keeping chevron in line, just like how they keep every other company in line. energy was the worst performing sector for a number of years.

that's because they were destroying value, no returns, nothing getting returned to shareholders. the shareholders have spoken. what chevron did was reduce their budget by $5 billion per year. this is huge. they have embarked on a big buyback program. right now, it is $5 billion to $10 billion. we are already at $10 million for the year. our investors are also. lisa: earlier this morning, shall posted a record profit for the second straight quarter. they also accelerated buybacks. tomorrow, we get exxon reporting in the u.s. what is the political risk if they were to report these blockbuster bonanza earnings on the heels of this point. >> we have midterms coming up in november. oil companies definitely making

a lot of decisions. if you are a company, you want to make a lot of money. but they did not make a lot of money these other years. what they have been doing with the cash is enhancing the balance sheet and giving the money back. we already saw that companies are delivering on the "show me the money" mentality that investors have right now. we think exxon could potentially talk about their $30 billion buyback program. they just tripled it last quarter. it is unlikely to see if this quarter, that we think there could be some shifting and frontloading of that. we just talked about chevron, how they will raise the bottom and of their buyback guidance. companies have a couple of options. you can either reinvest with growth, which is pretty much a no-no right now, or they can hoard the cash. lisa: that's the point.

it is a no-no right now to invest, when a lot of politicians say that is exactly what is required of these companies. howdy price out the chance of perhaps some excess tax put on these companies if they don't invest in production or other policy, a kind of check, to try to be a talking point while heading into the midterms? >> that's a good point. we think the political risk in the headlines is very high. can see it in midterm elections. in terms of actually getting through, we think the risk is low. we have seen a windfall pass through the u.k.. we think that is highly unlikely in the u.s. right now. oil companies, they need a more consistent, friendly, fiscal regime. they need a regulatory environment in order for them to really commit to plans and increase growth. they don't have certainty if fracking is going to be allowed,

permits will go through. that is when they are not able to plan and you will see more crash and burn. jonathon: janine, thank you. reporter: --jeanine wai there, from barclays. we will hear from the president, delivering remarks on the economy. the gdp is out a little bit later. if the administration didn't make as much noise as they have about this whole idea that the recession is not a recession, i wouldn't have been paying attention i would expect to move on. it kind of speaks you a little bit. tom: even more importantly, you have to realize there is a second and third look as well. the real adults only wake -- only wait for the third look. it is political football into election season. i'm not surprised he is trumpeting this bill. this is a bombshell piece of

legislation. the president is going to take a massive victory lap on it. lee yates says that by no means does this look to be passable, mentioning even the irs. it is fascinating. it's very sophisticated. jonathon: if a change in the last one for hours or so. it has become so political in the last week. lisa: partly because it reflects the pain that people are feeling. if they can put a number on it, with numbers behind it, it starts to get a little stickier in terms of the narrative. it will be more difficult to dispel heading into the midterms. perhaps it is easier to say to look at oil prices, energy prices, gas prices coming down. that is a simpler story to tell then where the pressures are and labor inflation picking up. jonathon: tom, gas prices down every's ago they since the middle of june. it continues to be the trend.

i see some about it. gas prices are down everything odaesan's june. tom: people were wondering where they were before. their framework is two or three years ago. this is distressing. i did not know harry cain is the only one on the planet who can hold at 29 years old. it's his birthday today. jonathon: how do you know this stuff? what does holding mean? tom: he will never turn 30 years old. jonathon: he is permanently 29 years old. he gets a better contract? tom: i hope so. happy birthday, harry. ♪

>> i think it has the

potentially game changing. but it is still a wild ride. it has potential. announcer: bloomberg markets with the european close. real-time numbers, real-time analysis, weekdays. >> the fed either cares about inflation were -- or on employment. >> for now, definitely growing toward higher inflation. >> it has been stronger than people realize. >> we do think the market is over expecting a fed pipit in the near term. i can't see how that happens. >> i don't think the pivot will