>> welcome to the first word news. in western new york, author salman rushdie was stabbed in the neck this morning. his writing many consider offensive to islam. witnesses say a man stormed the stage and attacked him as he was being introduced. his book "the satanic verses" in banned in iran. the country offered $3 million to anyone who killed him. the ayatollah culture his execution in 1989. in mexico, drug gangs turned firepower on civilian targets during street violence. 11 people were killed in ciudad juarez.

the president says a prison right amongst two gangs spill that onto the streets, which borders texas. the newspaper reporter outside of the little caesars was shot and killed. shots were fired at a circle k. it followed clashes in the central state where carter members -- chinese president xi jinping is meeting face-to-face with president biden in november. it marks their first international meeting in three years. the first in-person meeting since he took office. the house is on track to send biden a $437 billion tax plan and drug price package for his signature. the hard-fought victory follows a year of democratic inviting -- inviting. democrats -- infighting. they can afford only four defections.

the bill passed the senate on a 51-50 on sunday. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ jon: welcome to "bloomberg markets." taylor: the equity markets near the highs of the session. lighted and inspected volume. a 1% gain on the s&p 500. bit tech -- big tech is the big outperformer today. -40 basis points. the magnitude of what 40 basis points of the inversion really does mean. of course the breakevens.

i bring this up, the five-year breakevens around 270. off a strong university of michigan sentiment survey. five to 10-years out the expectations look entrenched. that's a key data point i continue to watch. jon: helpful context. let's look under the hood at some of the specifics. stock movers. taylor talking about tech's outperformance. bloomberg doing excellent reporting on community -- continued demand for iphone. the shares climbing right now. oil went against dow component chevron. we got sobering comments from a company who ceo we spoke to on bloomberg markets. big development over the course of the day with peloton. we will have more details on upcoming job changes and strategy shifts on pricing as well. taylor: i want to talk about

other developments. big breaking news in the last few minutes. fbi agents searched former president trump's mar-a-lago home have recovered 11 sets of classified documents. this is according to the wall street journal. bloomberg will work to verify that independently. we are hearing from the journal it does include papers marked as top-secret, and meant to be in special government facilities. we will continue to monitor this developing story and continue to bring you updates as we get them. we want to pivot back to the markets. much of the investor optimism we have seen this week tied to some economic numbers. especially with regards to inflation. bloomberg caught up with san francisco fed president mary daly, and one notable investor who put a bit of a damper on the enthusiasm. >> they are significant and they are saying we are seeing some improvement.

they are not a victory. we have been inflation report and employment report before the next meeting. if you who possessed a stay data-dependent. >> markets are completely ignoring fed speakers right now. >> they are fighting the fed? >> i think you almost need to bring the big guns out. we need powell to come out and speak. until he speaks the market rally can keep going. jon: let's get some more perspective on all of that. jennifer lee joining us now, senior economist at bmo capital markets. we have obviously gotten new views on where we are in the inflation fight. today we are getting signs on the health of the consumer and outlook for the consumer. how would you characterize where you see things going from here? jennifer: good afternoon. i would be very hesitant to put too much on one single number. whether it is the cpi or the ppi.

import prices and the michigan index. the uptick was expected. it was a weird report in my humble opinion. i would think gasoline prices would have helped the uptick sentiment -- in sentiment. it was the current conditions component where expectations client. more important for the market in the fed, the different components for inflation measures. the one-year slipped, but the five and 10 year component picked up a little bit to a two or three month high. not exacting what the fed wants to see. not as big as back in june. not the direction the fed wants. i think that will keep the fed very much on a tightening mode. taylor: that confirmed this is a little bit more of this entrenched inflation than the

fed once. jennifer: definitely. the five-year ticked higher. not a big increase but it is something the fed is trying to fight, trying to manage. it is all about inflation expectations and they wanted to go the other way, not higher. jon: jennifer, looking to september and we had that clip from mary daly who seems to be in the camp of a 50 basis point move likely at the next fed meeting. to your earlier point, data dependency is front and center. what do you see at this point in terms of the next move by the fed? jennifer: we are still comfortable with our call for a 50 basis point rate hike. it will not be another 75, on paper hopefully not. given that we have seen lower economic growth, still elevated inflation and we are expected to stay high for the next few months because the

year-over-year will get tougher. i think a 50 basis point hikes is a best case scenario. mary daly said it is her base case but she has an open mind whether or not there will be a 75 basis point hike. it is like everything is on the table. another fed president has been saying she needs to see compelling evidence of inflation. one month will not cut it. taylor: when you think about global central banks is peak dollar behind us? jennifer: excellent question. it looks like it in the last couple of days. when we start seeing -- i think we will start seeing some elevated numbers in the next few months. with food prices staying high. you have mother nature having

a big say in this. in europe, it is not a perfect scenario at all. food prices. energy prices will stay high because of the russia fiasco is not going away anytime soon. i would not be surprised to see it around the turn of the year. it depends on what the other central banks are doing as well. jon: the bloomberg team has been serving recession expectations as being on the rise, yet we have a market that has been, at least in equity market rising recently. maybe no surprise when history tells us when we get that official call on the recession that typically stocks have already bottomed. are you surprised to see a more positive mood in the markets even at a time when there are growing expectations of a recession? jennifer: not this week. we can all go back to the data.

the cpi, the ppi, import prices and the university of michigan survey. the good news is it would be great if it continues. there's a lot riding on what is going on for that one particular month. we have to wait for a few months to see if these recession stories play out. we have a negative quarter earlier in the new year. we have some slowing in the second half of this year but not an official recession. taylor: really appreciate your time and thoughts. jennifer lee, senior economist at bmo capital markets. you mentioned mother nature playing a role in some of the global markets. that is where we want to go next. you think about big crises in europe due to a stream heat. the rhine river dropped to levels that could disrupt the transport of fuel throughout europe. the effects could ripple through the continent for months.

guy johnson explains. guy: here in europe the rhine river has become impossible in the critical waypoint just to the west of frankfurt. this is something we have been anticipating for quite some time. you can see the water levels as they have been dropping over the last few months. they have no dropped through the critical 40 centimeter point, just under 16 inches. effectively the river is no longer navigable for large barges. this is crucial for europe. not just in germany but for the whole of europe. let me show you the map here. rotterdam appear on the coast. the river runs through germany, just to the west of frankfurt, and then runs through the rest of germany toward switzerland. this is a hugely important waterway. it transports all kinds of things up and down for germany and the whole of europe. think about coal, gas, diesel

going up and down this river. big chemical companies are to the east. they will now be restricted. big power plants that require coal to be floated up the river will now see those supplies restricted. this comes at a time when europe is facing a massive energy crisis. the fact we now have a drought in europe lowering these river levels is only going to exacerbate the problem. it will put further pressure on politicians to do more to deal with the economic crisis looming and getting worse and worse as we head towards winter in europe. the rhine is now closed. it looks like it is not going to rain for a while. taylor: a big thanks to our very own guy johnson in london for that look. coming up, getting back some of these big recent headlines tied to the fbi search for -- former president trump.

that conversation is next. this is bloomberg. ♪

taylor: this is "bloomberg markets." i'm taylor riggs. we have to get back to breaking news. fbi agents searched former president trump's mar-a-lago home recovered 11 sets of classified documents. this is according to the wall street journal. it includes papers marked as top-secret and meant to be in special government facilities. i'm pleased to say joining us now is doug heights, and former rnc communications director. so great to have you here and studio in new york. talk about the big picture. we are getting reports these are big classified documents. how concerning is this to you. doug: is concerning on multiple levels. we did not know what the documents were. if the fbi and the doj are going to do something this unprecedented, clearly they are doing it for reason. they have real concerns and they

are making sure they will. every -- dot every i and cross every t. the rhetoric i heard from republicans was concerning. they merely jumped to donald trump's defense. we always learned with donald trump and you defend him, if you hours are a couple days later you find out more information that you wish you hadn't. whether it is politics or business, a key communications will ignored is wait and see for a little bit. if you rush to someone's defense and they fooled you a few times, they probably fooled you many times. you will regret it and you are seeing republicans pullback or cancel press conferences. jon: let's try to figure out some of the continued conversation that will evolve, possibly on whether or not a president can or attempts to declassify certain information before leaving the white house. then the degree of sensitivity. we are talking about top-secret documents.

we await more details and what specifically is in these documents. is there a pecking order in terms of this information versus some other top-secret information? doug: there is. there are different processes that go through on this. when we first started hearing about nuclear secrets, we did not know what that meant. it was more specific but also very vague. our secrets? see persepolis to adversaries or allies? things we know about our adversaries that they don't know that we know? there are different processes the doj will go through -- the dod and the national security agency will go through in classifying and protecting these documents given what they are and which direction, foreign or domestic, and how serious they are. once we heard the nuclear word we knew we were in for serious stuff. not just a mere violation. a violation of the presidential records act is a big deal on its

own, but this is dangerous territory. taylor: one thing we love is going big picture, same with david westin. this is not a constitutional crisis. in our country that feels like a political crisis. the you see that? doug: absolutely. part of this is because of the political rhetoric surrounding this. a lot of the republicans born of them who merely jumped to trump's defense to defund the fbi, destroy the fbi, marjorie taylor greene posted a picture of an upside down flag. according to the flag code, and she knows this, the only do that in case of distress of extreme danger to life or property. these are not political messages. these are calls to arm. and somebody stormed the fbi. following a series of violent threats on public officials, going back 10 plus years now, up to now it is very concerning. we are sitting potentially on a powder keg. jon: so much for a slow august

as we continue to roll towards the house and senate races into november. good to get your perspective. doug heye from the harvard kennedy school on politics. developing news tied the peloton, a sweeping company overhaul. gutting hundreds of jobs. we will walk you through the latest details next. this is bloomberg. ♪

jon: this is "bloomberg markets ." time for what it's worth. we are focusing on peloton which is embarking on an overhaul that includes cutting nearly 800 jobs, raising prices for machines, and outsourcing functions like equipment deliveries and customer service.

this was one of the big pandemic winners. it's been a roller coaster ride for the business over the last couple of years. taylor: indeed through the booms of covid and the lockdowns to the bust of reopening. that is where we want to go next. ed ludlow has been all over this story. your reaction to this? ed: the idea of strategy but there is reality. strategy under the new ceo was to shift on services, subscriptions, classes and away from reliance on hardware. the reality is they were confronted by fixed costs. the quote is that cash is oxygen and oxygen is life. they are looking how to run the company. the basics are cutting 800 jobs from the 3000 jobs, cut in february. raising prices again on the bike class, you turn from a price cut in april. our real shift to outsourcing third parties.

customer support jobs will get cut. when unique customer support, they will outsource that to a third party. when i had mine delivered, the nice chap turned up and installed it. all that is gone. they will complete the outsource the delivery and installment of the bikes to third parties they were working with. cost-cutting, belt tightening and looking at the operating costs for the company. jon: continuing some things we were seeing signs of. it's been a busy week. we have talked about pricing and disney plus and streaming. on the pricing side what do we know? it we have hard data on the price points where the storyline changes or the consumer friction might lie for a company like peloton? ed: the big picture of earnings season is the question about how the luxury end of the market holds up. apple gave up evidence that the

consumer continues to spend on the higher end. phone headsets for example. below continue with retail earnings to answer that question. peloton is a specific case. they cut prices in april to get to the market. they wanted volume. they wanted to retain the customer base and build on it from there. they are now doing a u-turn. they cut prices and are not raising them by $500. i think the real question is, what is the market actually there, the addressable market people are willing to spend to not return to the gym? that's the pandemic boom and bust. they are experimenting but the long-term is a higher margin revenue from the subscription they will focus on. taylor: we really appreciate out on ed ludlow. shares of almost 13% now near session hi. -- high. take a look at the s&p 500.

lower-than-expected volume on this friday afternoon. jon and i are still here. up about 1.2%. continuing to counting down to the closing bell is next. this is bloomberg. ♪ at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. when people come, they say they've tried desilots of diets,ou keep monothing's workedarn. or they've lost the same 10, 20, 50 pounds over and over again.

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>> philosophy reporting 11 sets of classified documents were removed by fbi agents who searched former president trump's mar-a-lago home. somewhere allegedly marked top-secret, meaning they should only be available in government facilities. agents reportedly seized 20 boxes of items, including photos and information about the -- the job organization and its chief financial officer will go on trial october tony forth for a tax fraud case. a judge rejected their project -- request to drop the case.