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

occur as soon some people are hoping for. announcer: this is bloomberg "surveillance." jonathon: it is gdp thursday. live from new york city this morning, good morning. for our audience worldwide, this is bloomberg "surveillance." futures negative on the s&p. the data is 90 minutes away. tom: pivoting to the data here 90 minutes away, and pivoting toward a headline. i'm going to look at the data. i have to admit, i'm going to look at the import export dynamic. can i just say, before we get carried away with pivot, right now, the red sox are pivoting. what does pivot mean? it is like with president obama, when we were pivoting to the pacific rim. what is pivot? jonathon: how does that work out? we go down to 25 points.

maybe we have to go the other way. it is a change. we go to a data-focused federal reserve. you know all these things. the market has found a little gap and decided that is a dovish tilt from the federal reserve. d think the easing of financial conditions are desirable or undesirable? [crosstalking] tom: parsing out the financial system versus the real economy, what can they really do to manipulate the real economy? do they have control of the real economy? the answer is not. jonathon: you keep saying more tightness, more tightening based on what we have already done. he just gave off the impression he was ready to wait and see, look around and see what happens. lisa: really? we're not sure what he is actually intending. don't think he knows what he is intending. i'm talking about fed chair jay powell, in terms of where the

economy is going. they are aware of both risks. the fact that the fed is saying, we understand that if we go too fast, too far, we could cripple the economy, it even as the economy is weakening, at the same time, they have to fight inflation. the fact that they even gave a nod to the other rest, it has made people bullish. jonathon: we read chair powell's announcement is more hawkish than previously. they plan to push higher than markets anticipate with a 75 basis point hike in september. the markets interpretation, as we cleared yesterday, is very different from what's going happen in the next couple of months, potentially. we will be highly data-dependent, very sensitive to it, and there is a lot of data to come before we get to september. from one interpretation to the next, there will be incoming information. tom: i will go back to where we

are, which is where it neutrality is described fairly widely. when we get to rich -- when we get to neutrality, we get back to the first step. do we know where it is? [crosstalking] seriously, janet yellen, off of the bill last night, how is employment deka it went down jonathon: in flames. jonathon:the minimum tax. we will hear from secretary yellen later. we will hear from the president later this afternoon. lisa: he will be on at 2:15, talking about the economy. will he talk about the strength, the need for the fed to be aggressive? how is he going to head into a midterm elections, saying rising unemployment rate is by design? a very difficult political message. jonathon: who wants to say that

out loud? not ephedra now. futures down on the s&p and nasdaq. crude is inching back to $199. just getting some confirmation from the white house, they have confirmed that time for biden and xi jinping to have a talk. a: 30 -- 8:30 eastern time. lisa: yes, then we will hear from president biden at 2:15. how much is that going to shape anything? i actually don't find it is interesting as the initial job claims. right now, how does the labor market dictate whether the fed starts to reconsider how quickly to raise rates heading into the year? that seems to be one of the reasons why powell thinks there is still strength in the market. going to that 8:30 call that president bynum will have with

xi jinping, we have confirm the time. how much are they going to talk about lifting tariffs from the trump era? at 1:30 p.m., we will hear from janet yellen, speaking about the economy. 2:15, we will hear biden reignite some sort of debate about what recession is and how the economy is. after the bell, we get a slew of earnings. 56 companies reporting in the s&p, accounting for about 19% of the total market cap of that index. as you are pointing out, apple and amazon account for about 20% of the nasdaq index. really interesting to see users, especially with apple, considering the cuts in china, the slowdown in demand. jonathon: thank you. looking forward to those earnings after the closing, if we can stay awake. chris harvey joins us now. what did you make of the dovish interpretation of this market?

is it something you endorse or want to fade? >> it is something i endorse. we have been talking about cyclical inflation. prices are coming down -- excuse me, commodity prices are coming down. the 401(k) is coming down. overall, what we are seeing is what you would expect. financial conditions tightening, things slowing down. when the fed toggles things down, and they have done so, that is when the equity markets can start holding gains. i think they will hold gains as we go forward. tom: christopher, factor success over the next 12 months, how important is sector analysis? to me, it is as critical now as it has been in 20 years. >> tom, we spend a lot of time on factors. what we see is typically across all of the capital markets.

it really influences price, sectors, stock. last year, it was duration. that expressed itself across the equity market, u.s. and international markets. what we have seen over the last couple of weeks is risk-on. i think cpi really interpreted the fed to become a little less hawkish. there was demand for structure and, prices came down. breakevens across the board have come down significantly. lisa: what is the risk that the opposite is happening now and will actually prompt the fed to be more aggressive? i was looking at rates, and people will disagree with how noisy they are, they have been rising in the past few days on the heels of this lease in a fed pitted. the more people believed the fed is going to back away from their rate hikes, the more they see longer-term inflation rising well above that 2% goal. at one point -- at one point we

say they are operating away from our goals? >> i don't know if smacking down the market is part of the fed's dual mandate. as far as the breakevens, yeah, there is some noise. one thing we thought is breakevens were going to be in the 250 to 275 range. they are now in the 225 to 250 range. that is much lower than we expected. across the board, across maturities, across breakevens, everything has come down. that is what we expect. we are seeing demand destruction, seeing commodities come down, seeing the economy slowdown. you would expect inflation to come off. there is some geopolitical risk, and that will stay elevated for some period of time. but inflation is coming down. jonathon: i don't think the fed got much sleep last night. chris harvey at work follow --

at wells fargo. [crosstalking] lisa: i just want to let you know, i read this last night, and my heart went out to you. jonathon: the fed rakes 75 -- the fed raises 75 basis points. the fed's objectives are more difficult to achieve. pricing and cuts undoes the efficacy of hikes in the first place. lisa: he even put a number to it. a 5% to 10% market rally would cause the fed to see that was going against what they are trying to do and cause them to give guidance, even though they are not giving guidance, that they don't want to see that. how much does it become just a tourney? i think that is what people are looking at. maybe that's why frances donald called it frustration. tom: it is from two different worlds. we do economics, international

relations, demands, politics as well. what you just saw there was the denny harvey pivot, coming from two different parts of this industry, and giant economist and an incredibly competent -- competent chris harvey said the same thing. there is a point you pitted the risk on, and that may continue what we have seen. jonathon: they are not alone. that has been the market interpretation not just the last 24 hours, but the last month. tom: you never see it. you never see that entry point. jonathon: some difference between a bear market rally and a recovery. tom: the cliche in america is the boat left the dock. the answer is, i have never gotten on the boat, to be honest. where is the boat? where is the dock? [crosstalking] i'm sorry, they said to climb on board. jonathon: we get the gdp.

we will also have a call between president biden and president xi jinping at 8:30. a little later, the president will talk about the economy. lisa: 2:15. jonathon: a promo for the fed this month took a slight challenge to inflation. is it slamming down markets? futures down .25%. from new york, this is bloomberg. ♪ >> keeping you up-to-date with news from around the world, with first word news. there is a surprise agreement on capitol hill. democratic senator struck a deal with senate majority chuck schumer on a tax, energy, and climate bill. it will enact parts of president biden's agenda, such as corporate minimum tax and

negotiating drug price cuts. it also affects gasoline and oil sales in alaska and the gulf of mexico. fed chair jerome powell is saying more rate hikes are coming. policymakers raised benchmark lending rate by 75 basis points for he says the fed will press on to curb inflation. at the same time, he stepped away from the specific guidance he gave after the june meeting. strong words today from north korea's kim jong-un. he marked the 59th anniversary of the korean war, by threatening to, "limit south korea." he also said he is ready for any battle with the u.s. south korea -- new -- was korea is preparing for the first nuclear test since 2017. another deal comes less than one

day after a pending merger of frontier, because of a lack of shareholder support. the deal is likely to be reviewed by antitrust forces in the biden administration. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 how will your business adapt to change? you could hire an office full of peyton mannings. what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

>> the expense of monetary policy tightens further, it will

likely become appropriate to slow the place -- the pace of increases. cumulative policy adjustments are affecting inflation. jonathon: that was chairman powell yesterday and a news conference at from new york city this morn, good morning. futures down 0.2%. you get where i'm going. in the bond market, yields are changed. no one is following anymore anyway. did you have a dovish interpretation of chairman powell yesterday? is that something you endorse? chris harvey said it is something we endorse. what did jeff rosen burke of blackrock say yesterday? lisa: -- tom: that was a ticket from mr. rosenberg yesterday. [crosstalking] thanks to our team for

exceptional conversations yesterday. now, jack fitzpatrick gives us an exceptional view of a busy day. i have to rip up the script and just get to the program for president biden today. i assume on this call with xi jinping, it is not like president trump where no one is involved, he is on his cell phone out in the parking lot. there are a lot of people involved in the call. what is the number one goal of the president and his team as he speaks to a country with covid to worry about. >> the number one goal, the way the white house casts this, is to avoid surprises. they sidestepped some of the major issues we are looking for, a potential pelosi trip to taiwan, tariffs, and keeping the line of communication open with china, so neither side ends up surprised by the other in a negative way. they don't necessarily play this up as something where they have

a major policy goal to get at. it is still very fair to wonder if there will be a conversation about that potential taiwan trip. does biden try to dissuade a really aggressive action in some way by china, which is potentially some sort of military-related response if policy does go to taiwan? we have been wondering ever since we heard about this call if there would be a conversation about the lifting of tariffs. but the white house itself did try to minimize the major headline goals and say we want to keep the line of communication open and have no major surprises. tom: one of the major -- what are the major headline goals at the economic conversation? >> it's a bit easier for the president, in terms of how he communicates this stuff publicly , having the agreement with mansion and schumer. it allows him to talk about what they are planning to do, what

they hope to pass in the senate next week, rather than getting bogged down in a conversation about what a recession is and whether we are in one. i would expect for the response from the president to the joe manchin-schumer deal. here is what we have done on jobs. we have also taken inflation seriously. in the branding of this legislation, as something anti-inflationary. maybe a little bit overboard, but it is the branding they are going with. he has a positive spin to put on this latest talk because of that deal. lisa: is anything working, based on popularity polls? >> you can only brand it so much. right now, things are bad for a lot of people. inflation has hit people really hard and they are feeling negative. the polling for the negative is not -- the polling for the president is not good at all. but you still need to show that

you are doing something. having a list of accomplishments can help in the longer run. it does not fix the inflation problem now, but if he campaigns for reelection, that matters for all people campaigning for reelection in the midterms. that matters for the chance of passing a major climate and tax bill, as well as prescription drugs. that is a lot better than nothing. lisa: do you think it is coincidence that president biden is holding a call with xi jinping and talking about putting tariffs, then holding a press conference on the economy at 2:15? what do you think that dynamic is going to be like, or do you think it is sibley a coincidence with timing? >> when it comes to coincidence, i don't think they have the chance to line them up perfectly so it is convenient for them,

but in the macro sense of the fact that he is having a call around this time, not at 8:30 specifically, but the fact that he is communicating with china, if he does choose to bring up the tariff conversation, that definitely is tied to conflict -- two inflation concerns and biden is trying to do everything he can on it. it is very difficult for them to line up these calls in a politically useful way, in terms of the exact time. but the fact that the call is happening and they have not ruled out this conversation on tariffs is as relevant as you seem to think it is. jonathon: thank you. jack fitzpatrick there, from d.c.. you have to take the wind later, hearing from the president. lisa: that seems to be what they are most likely going to push forward. as far as the gdp data goes, even if we do miss a discussion about a tactical recession or

not, we are still seeing slowing growth in the u.s. inflation is too high. they have to seem cognitive to the pain a lot of american families are feeling, while saying, here's what we are doing about it. jonathon: the last week has become ridiculous for me. if it is a recession, everything is bad. if it is not a recession, everything is good. it is not that binary. it really isn't. tom: it is way more complex. the recession issue is one of timing, but anyone who would look at 6, 7, eight previous recessions, the magnitude of the recession is just as important. soft recession, growth recession, positive number, whatever. i have a question. can i pivot? jonathon: sounds like a hard pivot is coming. tom: i am really looking at housing the last couple of days. why is housing in the united kingdom shockingly [crosstalking] jonathon: the problem is every

time we have a house price correction, what the government often does it start to work on a demand-side solution to get prices back up. every time we have got a house price problem, too high, to solve that, they come up with a downside solution. it is very, very political. for politicians, they don't like to see house prices go down. what we need is a massive supply-side effort in the u.k. that has been a story for a long time. i think of the house buying programs. a few weeks ago, they were talking 50-year mortgages, to try to make buying these houses at these prices more palatable. tom: that happens with cars and americans. that was a good pivot. jonathon: this is bloomberg. ♪

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jonathan: a couple of times for the diary today. it: 30 a.m., gdp -- 8:30 a.m., gdp in america. president biden will have talks with president xi of china. we pull boxes a little bit, down 0.2% on the s&p.

on the nasdaq 100, down 0.6% following the biggest one-day pop on the nasdaq 100 going back all the way to november 2020. a dove us interpretation of chairman powell in the news conference from interview -- for many of you. for many others, the opposite, who believe we can get the fed funds to 4% by the year-end. that is the view at citi. in the bond market yesterday, yields in. 2.97 36%, so the curve just a little steeper, led by the two-year coming a little lower. again, gdp, 8:30 a.m. eastern and the range about this wide. a big range. tom: the formula, all the export and import noise as well.

a consumption making up 70% of the economy. but the adults don't look at consumption. they look at the investment dynamics, 11% of gdp. the major mystery off inventories is the import-export dynamic. i don't think anybody has a clue. they are guessing. jonathan: the trade balance improved. that's the good news. that is why the updates we saw yesterday late in that direction. a little bit of a lift to the forecast. tom: the president will discuss that this afternoon. we will have full coverage as well. futures at negative nine. jonathan: i'm going to hit the euro briefly. euro-dollar, confidence in europe, sentiment, 17 month lows. euro-dollar, 1.0131. even if you think the dollar has peaked, this may be isn't the want to play it against given

how many problems exist in the euro zone right now. tons of earnings. let's get to lisa now. lisa: let's talk about problems. let's talk about meta problems. the drawdown, 55%. they reported their first-ever revenue drop, not good, even after the constructive tone we heard from alphabet and microsoft. how much is the pivot not really working, even though i like its existential feel, even though facebook is the nuts and bolts of the company? qualcomm downgraded expectations for its quarter as a result of less demand for consumer goods for computers, pcs, smartphones. how much does this feed into what we will see after the bell today, and how much is this consistent with what we are hearing from other semiconductor companies? etsy, on the flipside, i know

you want your knit hat for vet bill, they beat on their expectations with a result of more traction on their platform. after the bell is when the big fireworks happen. apple and amazon, as well as intel, although is that -- although that is probably a lesser story. apple, i am very curious to see whether they are seeing the same kind of trend that all, is talking about, less demand, whether the china story with them cutting pricing is much broader. with amazon chairs down so deeply, how much further can they go with consumers pulling back, but more importantly with amazon, how much will they continue to cut warehouse workers and staff they built up during the pandemic? tom: the conference call with amazon is going to be fascinating of the rapidity of solving the box business problems. it is a huge mystery. lisa: especially after ups said they were seeing less

take up. tom: right now, james foley joins us with -- james foley -- jane foley joins us with rabobank. you have a view of weaker euro. if we get below parity nicely, what does it mean for europe? does it mean they have an export boom? what is the actual outcome of a 0.95 week euro? jane: you've got to bear in mind that germany is softening -- is suffering from weaker growth, too. if europe is in recession, it is probably because of really high gas prices. it could be because we have seen certain german industries having to ration energy supply, may be shut down some of those industries. so exports could really be suffering if that is the case. they don't necessarily get that

boom you would perhaps normally associate with a weaker currency. another thing we could see was the weaker exchange rate ramping up imported price pressures. that is exactly what they don't want to see. in this instance, energy prices act like a tax hike into the profit margins of corporate and into the pockets of households, so a very uncomfortable situation i think in the euro zone this winter. jonathan: people are itching to keep that short on the euro. the problem is after the fed, they are wondering if it should be against the u.s. dollar. what is the best short right now? jane: i still think euro-dollar is a fair bet. you might decide we are closer to peeking. a be the fed is not behind the curve anymore. maybe we've got a u.s. recession next year. but i would raise the question, if you are going to sell the

dollar, what are you going to buy? you certainly don't want to buy mostly e.m. in this environment. you've got china slowing, europe and recession, maybe the u.s. and recession, and if we look at the problems throughout many of the developing and emerging-market world, we see even more nasty scenarios potentially developing here with high levels of dollar-denominated debt, very high levels of energy imports. china is the world's biggest consumer of commodities. so many emerging-market commodities are relying on commodity sales forget so it is not a very pretty scenario. i think this is why, despite the domestic issues related to the debate about the u.s. slowdown, the dollar will remain pretty firm. what else do you buy? there's been some movement in the aussie. you might be able to cherry pick a few markets. but i think the dollar could remain firm despite the issues

of the u.s. economy because everywhere else could look worse. lisa: have you heard anyone be bullish on the euro right now? jonathan: i struggle to find them. lisa: i wanted to ask you about that because i have been seeing a lot of 95 prints for the target on the euro-dollar call. are you on board with that? jane: that is our target. we know there's a lot of options below the parity level. it could move quite quickly. part of this is the italian situation, the elections in italy in september. the far right is not in with the centerleft, and if the far right get a lot of power, it could mean that a lot of reforms do not go through, and that leaves question marks about whether they get the eu recovery fund money as well. so there's a lot of uncertainties, and right now i

don't think investors want to take that risk. lisa: it is going to import a lot more inflation for the ecb region. what is the response? jane: i think it will be difficult for the ecb. it is really walking this tightrope. it wants to keep yields down in the periphery because it one's monetary policy spread out evenly in the system, but would investors want peripheral debt if we see recession looming, if we have fears about rationing in italian industry? at the same time, the ecb needs to keep inflation expectations down while hiking interest rates whilst we've got consumer confidence and business confidence now falling off a cliff because of the energy price rises. it is a very difficult situation for the ecb. for now, they are going to keep talking hawkish leak in order to get inflation expectations down,

but it is going to be very difficult and i would not want to be in those shoes. jonathan: let's see what they data looks like when they convene. james foley -- jane foley of rabobank. what a move today in the ends favor -- in the yen's favor. tom: if you look at the bloomberg, you put 20 or 30 currency pairs up, you can see where it is ebbing away, and it is wildly asymmetric. jonathan: week euro, strong yen. is that where we could find some performance in a way we did not through the first half of this year? you look at dollar-yen to confirm that, and yes, i will take your point. to me it is wildly week euro. that's got to come off of hydrocarbon. i think it was javier blas had a coal angle today. coal usage in europe is back to 2013, which is just stunning.

jonathan: germany reconsidering the approach about nuclear as well. how long have we been talking about that? the legacy of chancellor merkel, not cutting up to be great. we've said it a few times, will economic historians judge that tenure favorably? it is looking worse and worse. tom: what is important is into the fall, forget about the winter and the gloom of heating, this is a hugely fungible story. there's all sorts of optionality away from the war. i am still struck by so many of us removed from what is a real war. jonathan: couldn't agree more. less so for the europeans. i think it is still very real considering what the continent is going through, and obviously ukraine much more. the front half of this year is all about inflation. the back half is about weaker

growth. will it be about inflation? lisa: call it what it is, stagflation. how do they combat their worst nightmare? jonathan: do that voice again, tom. just a toxic mix. lisa: toxic mix. tom: pushed up against stagflation this morning. they brought wage growth way down. jonathan: very cool. futures down 0.2 5%. not cool that they've brought wage growth down. people don't get it because then you get hate mail, and obviously i don't mean that at all. anyway, alongside tom keene, who is also sensitive, and lisa, who is just angry, this is bloomberg. [laughter] >> keeping you up-to-date with news from around the world, with the first word news, i'm leigh-ann gerrans. there's a deal that breaks the long dead lock on major parts of president biden's economic agenda. senator joe manchin and joe

schumer have agreed -- and chuck schumer have agreed on a 15% minimum corporate tax and would allow negotiated drug price cuts. a u.s. aircraft carrier and other navy vessels have entered the disputed south china sea at a time of rising tensions between washington and beijing. china is unhappy that house speaker nancy pelosi may visit taiwan, which china considers part of its territory. president biden and china's leader xi jinping are expected to speak on the phone today. u.s. secretary of state antony blinken plans to speak with his russian counterpart about a deal to free imprisoned basketball star brittney griner and another jailed american. the u.s. would swap them for a russian arms dealer it holds. the kremlin says there is no deal yet. shell has reported record

profits for the second quarter in a row. the company also announced it would i back a further $6 million of shares in the third quarter. second-quarter net income was almost $7.5 billion. this is bloomberg. ♪

>> i worry that the story of this year will be the fed lagging. what is the most likely outcome? i would say it is equal between this fed remaining committed to restoring its inflation credentials, and therefore causing undue damage to the economy, and the flip-flopping fed. there is no good outcome in all of this. jonathan: there is no good outcome in all of this. great to catch up with mohamed el-erian, bloomberg opinion columnist. from new york city, this is bloomberg.

on the nasdaq we are down 0.7%. gdp data 42 minutes away. tom: the president speaking with the leader of china, and then speaking to america on the economy this afternoon. right now to earnings, kriti gupta. i will get it out. kriti gupta with a chart that speaks better than i do. [laughter] kriti: let's start with the earnings story, about 10% more over the s&p 500 after the bell today. apple and amazon. let's take a walk back into history. you have a five-year chart of just how much these two names actually make up of the s&p 500. you are looking at two lines, a white line that really signifies apple's share of the s&p 500. it goes up through 2020 then stagnates around 7% since then. amazon, a complete lead different story, going up through 2020 and then making a

complete round trip. they are both big tech, but amazon with their shipping constraints, their consumer and's poser -- consumer exposure, not holding up the way apple is. tom: amazon, ok. this is important. you need to hear the conversations while we are on commercial break. jon ferro and walter piecyk of lightshed on the tensions of liverpool. they are not on the same page. there's some real tension there. his apple on the same page, or is it a metaphor? walter: first of all, for not being on the same page, liverpool almost pulled off four trophies asked year. and i guess apple, being on the same page with earnings this quarter probably, but as you know, with the kind of concern over inflation in the economy, a lot of the focus is going to be on the outlook for next quarter.

tom: i want you to discuss the pricing power apple has to manage down the income statement. i never hear a discussion of if they go, margins are under threat on the income statement, do they have pricing power? walter: they have pricing power for the quality of the product, but apple has been known to reduce the price of their product in certain markets. i think there were reports even last week that in china there was some reduction in the price of iphones. they have done this and other markets throughout the world. why you don't necessarily see it crush their margins as you have had this shift over the years in terms of services, which has been a high market business -- high-margin business for them. currencies are a hard thing to fight, though. this is a global company, so currencies are something that will have an impact also in terms of the guidance. jonathan: they can't do much about that. the top-tier iphone going on sale, that seems pretty rare to

me. are you saying that is not a big a deal -- not as big a deal as some people are making it? walter: i think it is a big deal because it is china and china has been a big part of the growth engine you have seen in other emerging markets in the past, but china has been able to grow without seeing these types of price cuts. i think when we are all looking for tea leaves on what is the impact of economic weakness, you can't ignore that as one of those things to watch. maybe that is going to be indicative of how they look for growth or what their outlook is for growth for next quarter and the following quarter. lisa: we've heard from qualcomm, we've heard from other chip providers that there has been diminishing demand for smartphones, for a number of other personal computing devices. how much is baked in in terms of disappointment versus the unknown unknown of an even bigger slowdown than expected? walter: i think a lot of that is baked in, but the iphone is 50% of the revenue and an even greater percent of the prophet of the company. you have to look at what is

going on is -- going on in telco land. if they want to fight each other to grab customers, their willingness to subsidize i think could increase or sustain, like verizon, which is struggling to generate any type of subscriber growth. it does not seem like they are going to give up and give you $800 or not hundred dollars -- or $900 to get a new iphone. that is the data we are seeing. that's one of the offsets to a weaker customer and their ability to buy a very expensive iphone, the willingness of wireless operators around the world, particularly in these markets that are huge for apple, to subsidize that customer to upgrade their phone. lisa: which raises the question of how much the behemoths have an advantage in this environment. how much are you seeing a distinction factor of the haves and have-nots within big tech is the earnings season grinds on?

walter: that is a good point. in terms of the people in society getting impacted, those that are buying iphones might have a different impact than some of the layoffs urc and getting announced by some of these major companies. again, if you have economic weakness globally and you are trying to sell a $1200 product, you can't just ignore that that will have some impact. there will be some mitigating factors, like an operator will pay you to stay on their network to switch over to your network, but that is still a pretty big headwind depend on how long this lasts. jonathan: at&t, we've got delayed bills in the mix. t-mobile talked about the same thing as well. what do you make of that? what is the connection? walter: i think at&t was a couple of days, so to me that was frankly an excuse because they gave very bad free cash flow guidance earlier in the year. you're right, t-mobile tried to to spin this, but if you read through what the ceo said, their billings, the payments are also

getting delayed. at walmart, you have seen evidence of a weakening consumer. again, if you are weak and someone is willing to pay for your phone, maybe you are more willing to do it. the challenge is, what the operators want to get out of this is if they give you the free phone, they are expecting something back. they want you to upgrade to a higher rate plan. at some point the consumer recognize what is happening in say, i don't want to pay an extra $10, $20 a month on my rate plan. so even if you give me $800 for a phone, it doesn't resonate. i think we saw that with verizon this quarter. they were willing to pay customers for these phones and they still did not get people switching to their network. i don't understand why the company continues to do that, but at the moment, this is what these operators are saying. they are willing to continue to try to subsidize to keep these customers. jonathan: just awesome, as always. that possible connection between

what is going on with verizon, at&t, t-mobile, and what might happen with apple, something worth watching. tom: there's no question about that. i would note the free cash flow buildout of apple is pre-pandemic $59 billion out to a ginormous $113 billion for 2023. maybe that is going to get peaked. it is something to look out for. jonathan: i'm so proud of. when we started this show, you knew nothing about football. it is just beautiful. from new york, this is bloomberg. tom: embarrassing. ♪

>> it looks to me as though the economy is doing fine now, but it is going to slow