>> the market has been enjoying son signed -- sunshine, and i don't think it will last. >> we are reeling from the reopening, watching disruptions, and the economy is beyond the pandemic. >> the market does not move higher from here. 4300 will likely continue to be resistant. >> we will see growth pricing on the downside. >> were going to come out of this crisis with a recovery. >> this is tom keene, jonathan

ferro, and lisa abramowicz. jonathan: the week begins now. we're live. good morning. this is bloomberg surveillance on tv and radio. i'm alongside tom keene. this is jonathan ferro. and kaylee is here. lisa is taking the week off. sm p later this week, and retail sales are targeting early sales. >> we will have that interesting, but i will not mix words. their retail sales with inflation and the job report. for the distant past, my answer is we have a spirit of 70% of the american economy. >> is a nominal read. we have to strip out gas spending as well. just a couple of things to think about when the number drops. >> it's nominal. it's important. nominal in the united states with a certain tinge to it. nominal in the united kingdom has a certain tinge to it.

>> double-digit inflation. it's here. >> wow. we have work to do. >> part of it is spending the whole morning on conversions. and how we have loss and how we are looking at the stuff in english. the answer is the biggest fear for all, including the minister. the idea of the duration and participation and persistency of inflation for the idea that it will go up and come down. i'm not so sure. >> we have more work to do, including the federal reserve. in the face of this, this equity market has rallied aggressively. we have ups saying don't chase this. i have city saying cell. there is a wall of doubt as the market climbs over. >> this market is betting on a pivot from the federal reserve and the officials have said it is not coming, so i wonder when we get minutes, even though they are backward looking. so much as happened since july in terms of inflation cooling down other data points.

including a jobs report. is this a fed that is really that much more hawkish, despite the message. it was conveyed by jerome powell. does it have the power to shift the tone. >> the s&p is up by 70% from the lows of the year. good morning. here's the price action. we are down .6%. data is coming down. we will run through the numbers, and have what to look for in just a moment. nasdaq futures are down. yields are higher. i 10 year in america. i can tell you, yields are much higher in the gold market. they are flying. >> especially at the short and it the guilt curve is at its most inverted since the year 2000. message moves -- massive moves. maybe we'll get more with the

economic data, but before we get there, we have earnings. the target will be crossing a wire around 630. remember, like walmart, target has lowered its own arc. it has lowered guidance, talking about margin pressure and consumers pivoting towards oil and gas. walmart was able to jump over the bar. they say it's earnings will not be down as much as stated. to what extent does it read through the target? it is down 22%. one of the things they talked about was gas prices moving lower, and rerouting spending towards discretionary items. to what extent will that be borne out in data at 830? what we are looking for is 1/10 of 1%. it is up .4%. how much do prices at the pump impact the behavior of the american consumer? that is the back bone of the economy. those reserves will look at the data and inform the

conversation. we may get more insight into what the fed was thinking about the move in september. a lot has changed since that july meeting, but when they had 75 basis points, were they thinking they needed to do it again? there was a narrative with a result of white inflation. a pushback against the market. >> take you. were looking ahead to chairman powell. we are looking for real guidance into the september fed. we have seen this movie a few times this week and futures are negative, and then we squeeze out a day of gains. joining us now is a global macro strategist. would you chase this rally? >> no. we were talking about it before the show began. i would have chase at some point, but a lot of good news and a lot has been effective with valuations over the last

six weeks. >> part of that is the idea that corporations adapt, whether it is cash for the dynamics of capital expenditures, particularly the mix of revenue. are you suggesting we pause here? do we pull back because corporations are done with wiggle room? i think a pause is probably a better way of looking at it from my perspective it companies have a lot of flexibility. they have a lot of power with the balance sheet, we have to remember that the companies are not necessarily the same as the general business in the united states. that is relative to the rest of the world. in terms of valuation, from a forward perspective, there is a lot priced in, and there is an expectation that the market knows the path of the fed over the course of the next three to six months. when does it stop and what is a

start to cut. that is potentially a concern for me. it is unclear because we are still evolving. >> a lot of this narrative is shifting towards a dovish it. there is an owner -- turning season that has been a lot better than expected. you are seeing surprises on the top and bottom. how much of this is actually fundamental, and not much optimism being priced in, but too much pessimism. >> we had too much pessimism going into the second quarter. by definition, if he had inflation that was too high, we had pricing power. increased prices, which cap inflation high. it keeps the narrative going. once we get to a much more significant slowing, the company starts to reevaluate what it looks like over the course of

the next 12 months. to me, it is the third quarter that has been historically more volatile because we start thinking about what the next year looks like it x every day i put out research and there are a couple of quotes. with the last 12 hours or so, they are saying don't chase the rally. maybe sell to the strength. here's the pushback. they explain why they missed the trade. we missed the bottom and we joined already it will be a bit lower. see the skepticism. once you get about 18% into the move of the bottom, it feels like the spring of 2020 we retest the lows, and the market is down. why is this the case? >> first off, you clearly have the app -- exact opposite. it is a very supportive market

for finances. the uncertainty that we have now is very different than the uncertainty we had back in 2020. it was not a function of science. it was just an economic cycle. while the central banks have moved in the direction they want, they have not gotten any of the end result they wanted, which is a demonstrably and stable lower environment, and a job market that has some of the froth taken off of it. that's not just in the u.s.. that's global you have a global push moving to a tightening perspective which really will continue as we see with the recent central banks that continue to hike the basis points. >> and some have eating in the face of the. we will keep up. that sums up the debate for a lot of people. >> is a huge debate.

it is nuanced. i suggest we are starting to see a give-and-take and back in worth that over bears raining in things a little bit. that was nice. now what? it's just about uncertainty, and part of that will be solved with retail sales. where all data-dependent. elon musk's data-dependent. he has to look and see if we buy at the bottom, or deceived by later on. >> would it be nice to buy a football club? then the stock market reacts because they are not certain. >> after my third beverage of choice tonight, maybe i will put out each week. i need to buy -- i need a drink. >> i just don't know about you. with the premarket, we are up by more than 3%. i've read the tweets. all of that -- i am by

manchester united. you are welcome. someone replied come are you serious? this is a long running joke it i'm not buying any sports teams. he goes on to say, if there were any team, it would be man chester united. they were my favorite team. there's only one man who can do this. it is ridiculous. >> even if you are joking, he is well aware of his power to move up market in a massive way. he is well aware that there is a cold following in some sense among traders who might taken seriously. my thing is that he has gotten trouble for this before. is anyone checking his tweets? i will say this. it complicates things. >> >> we need to be clear. it's not like the boston red sox. manchester united is a publicly traded company. >> it moved more than 3%. we also need to talk about congresswoman cheney. were headed to d.c. in just a moment.

>> coming up in the next hour, blackrock, and what is happening with the inflation, and what she think she should do in this market. yields are higher by six basis points. futures are down. it -- for our audience worldwide, kaylee is here with jonathan ferro and tom keene. this is bloomberg. >> we are keeping up-to-date with news from around the world with first word news. the president of ukraine has warned civilians to be away from military facilities occupied by russian forces. that followed explosions at an ammo dump. they said the blast marked the beginning of a series of attacks. explosions and a russian airbase and crime area -- crimea destroyed air jets. more inflation and last month of the highest level in 40 years. the consumer price index rose 1%

from a year ago, following a nine 4% gain in june. that will put pressure on the british government and the bank of england to take action. germany will struggle to have national gas -- natural gas. that is according to the any written -- energy regulator that says they have less than three months of supplies before the route completely. they are facing a problem with their winter stockpiles. in wyoming, republicans have called on republicans to prevent donald trump from winning the white house. she suffered a crushing defeat. she had become outcast in her own party for her strong anti-trump starts. >> the world's largest sovereign fund has $74 billion for the first have the a. that is more than a 40% loss for the week -- norwegian fund it this led to market volatility.

global news, 25 hours a day, on air and on bird quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leanne. this is bloomberg.

>> i'm about to sign the inflation reduction act into law. one of the most significant laws in our history. let me say, from the start, with this law, american people have one, and special interest have lost break >> will pick up on that in a moment. the president of the united states from. good morning. i am jonathan ferro. lisa is going to be back with us next week. futures are down, and the nasdaq is down 7/10. a little later, we will have earnings from target. in two hours after that, we will get retail sales number. then will be on to the fed later. you have to talk about wyoming. liz cheney lost her primary, and we anticipated that. she will now front a new organization. what she lost versus what she game. she lost her seat again to something else that she is the undisputed leader of the trump opposition. >> i like the organization. i don't know what that means,

but it is jackson hole. is john going to wear these boots, and if we attend at jackson hole, what exactly is liz cheney's wyoming. we are joined with her washington correspondent. i thought the washington post this morning with tongue planted firmly in cheek, and karen heller, was talking about the fabulously wealthy of wyoming. we all have our stereotypes. what did liz cheney lose last night, in the fabulously wealthy wyoming. it is mind-boggling. >> she lost her seat. the seat or father also held in the 70's one she had. this is the loan how seat she is not going to be coming back to washington in that capacity but as said, she will be there. she has $7 million of campaign finances. >> odu.

>> potentially the money to launch this new party. >> you nailed it. >> her wyoming is not her father's wyoming. what did she lose last night? to me, it is an exceptionally affluent state. in my right on that? >> it is an affluent state. as we talked about yesterday, even though you had some democrats switching party lines with their registration to vote in this primary so they can backer because of her staunch defiance against donald trump and the criticism of the former president, you had people switching over that were actual democrats in the liberal parts, which were a fair few between, to vote for her in this primary. this is a state that voted 70%. that is how much donald trump picked up in the election. 70% of the state. now, you have an backing harriet, and it was very obvious and it was all but set in stone

that she was going to lose this primary. this is a state that is staunch republican. they are staunch supporters. >> wise alaska different? >> this is a repercussion for voting to impeach president trump. so did lisa, but they are releasing it to the general, and i'm wondering why that is different on the art of the voters. >> there are two reasons. it is very obvious that president trump really took aim at liz cheney. that is for all of his firepower was coming towards. that is where he really wanted to make sure that she was ousted. we also talked about the fact that this is heavily trump country. also, liz cheney did something different than we saw from the senator, which is right now, it is the leading public and on the select committee, investigating the insurrection of january 6.

in alaska, you have a different kind of balance. even though the senator is going through, you also are going to have the trump acker also going through because what they have is a ranking system. if your first candidate choices knocked out in the general election, your vote goes to the second or third ranking choice. it is a little bit difference in terms of logistics, but she was more personal. >> this was put on twitter. a pole. the likely voters believe that the 2020 presidential election is legitimate. compared to 94% of supporters. how is that issue going to shape the midterms, and the next election? >> you are seeing it play out. the former president is under investigation for a number of issues. all of the focus will be

tomorrow on the hearing from the judge in florida, but whether this was released in terms of the investigation, all of this goes back to these unfounded claims from the former president saying the 2020 election was not stolen. how will that shape the midterms. it will lean into that, while democrats are going to say in a consistent streets, this is a fight for freedom and democracy of the united states. it is also likely going to be one of the hooks that the president uses if he is making a bid for 2024, which many expect. in his words, it was a sham, he wants to come back it i need to squeeze this in. we played a clip of the president saying this is a win over special interest. i was thing about the cinema, and i was thinking, when i saw him say that, was that really a win? >> it is the first thing i thought. obviously, you have a provision to close this tax, which has a

lower rate. venture capitalists and hedge fund managers are taxed much lower than they would on the income. we all pay normal taxes. there are some good things, but the president is going to town for seniors and climate provisions it there is still the carried interest loophole for the most wealthy and the country. it was a little bit ironic that the president would say this was closing the gap on special interest. >> it was a weird thing to lead with it let's do it that way. thank you. one thing we can all agree on is that in the white house, taking it over, sitting alongside and. >> it's a win in eight traditional politics. you drive that forward with analysis, not sure it works this time. but what is important here is mr. biden needs a series of wins, and maybe he is getting them in a clumsy way as we get to this midterm. i have not seen any writing that

really kills the change. he has tighten things up. >> gas is a part of the story. are we going to talk about the analysis and cowboy boots? two brands i've never heard of. >> you have to -- there are sums nuances. you get custom boots. >> it means nothing to me. >> bezos has 4 billion acres somewhere. >> they don't work. >> thomas to go south of 59th street to soho and go shopping. >> you think i'm joking, but he does. next you want heels like eyewear. >> i've got no idea what that is. quincy don't trip over those guitar heels. >> we set that up. thank you. this is bloomberg.

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>> we have a few things to get through. target earnings are coming up. after that, retail sales we have futures that are negative. s&p 500 and nasdaq 100. we are down 8/10 of 1%.

we have a story for futures and the nasdaq and s&p. here's the target at what a mess. a $.39 estimate. 72. we know these companies have a monster inventory problem. we know that with this stock is down by 4%. make it 9%. they've got a massive inventory problem. clearly, profit has taken it on the chin. >> the ceo says that it has been a significant pressure for the near term profitability. walmart said the same thing. they were able to jump over the bar, and they missed it twice. even larger inventory issues. it is all about the balance of products. the consumers pay more for food and gas, and higher expenses with discretionary spending. clearly, the target has a much greater difficulty navigating. >> 2.6%, and they still see

revenue growth, so we will not have a cut on the outlook, unlike back in may. do remember that? they came out and had to drop that read about 25%. the stock is dropped. on the back of a big miss, we know that they've got a massive inventory problem, and it will take a long time to work with. >> the futures are negative. it went down with this analysis. i give great credit for clarity in this press release. with nine ideas down, operating margins of 1.2%, reflected gross margin pressure. $.98 to be charitable. $.98 on the dollar is vaporizing down to making a penny or two. it's a tough business. >> what are we looking forward to? to see how this stock reaction is, because this is news is not

to anyone. a number of months, with ace dock that has come back, at least for now, it is now positive by 1%, after dropping nine percentage points. we've snapped back. let's see how well priced the story is, given we've been talking about it for a while. >> i will give clarity and credit here. here is a sentence. additionally, this season receipt in the discretionary category was reduced by more than 1.5 billion. i am a target every 10 days. i can see we are in clothing. it is absently pounded, but you wonder how that spread over. they have a digital breakout where it is awful little bit as well. >> i'm bringing this commentary area while they are planning cautiously for the remainder of the year, the transit work that. maybe, there is a confidence.

>> we've been listing globally, and we can write a press release. while the company has planned cautiously for the remainder of the year, it really says it all. >> you have to be nimble. we know that target was basically preparing the company for the backdrop that exists in a year. i different economy. that is why we have all of this inventory, and we have to price it down. we've seen a downside. >> is no question. right now, we are going to digress and moved to norway. a chief executive officer in the norwegian sovereign wealth fund. they are challenged by the uncertainty that is out there, and we are thrilled he will join us today. there will be an update. on the backend of this function, there is a greek letter. epsilon. it means uncertainty. what is the level of uncertainty

as you drift to thousand 23. >> i would say it is a can you ration of and certainty for years. there is inflation, the energy prices, and geopolitics. it is a continuation of what we have seen. >> the situation we are in leads to diversification. you use an american phrase. join norm's. how do you diversify, given the uncertainty? we have a long-term view of what we do. a generation on. we are ownership across world, we have equities and bonds. we have a well diversified portfolio. >> what do you think of the american growth technology.

>> are you overrating them? we have a little bit of apple as well. is there an opportunity there to reaffirm large-cap growth? >> these companies are a very big part, and we have big owner in this company. it is among the holdings, and we continue to think they are well-positioned. >> we have seen a bit of a recovery in the equity markets. there is a bet on the part of the markets that we are going to see a more elvish tilt. how are you positioning for policy. how ultimately do you think they will react? how does that inform your decision-making. >> that is a good one. we came into the year with issues, and less risky

portfolio. we are taking that in the weight, but we remain cautious on this. markets do not go down in a straight line, and we are uncertain in terms of we've seen a bottoming, or whether we will see a continuation of that. ask of course, in addition to the lessee, there are a number of risks you have to wait, including that which approaches six months. have you come to any decisions around strategies for the and came with your russian assets? >> when it comes to the assets, we have been instructed by the government to exit these. they don't really trade, and we can't be certain of where they end up. they are frozen. we have not disowned it. >> i like you to step away from the responsibilities you have.

with your sovereign wealth fund. i'd like you to look at the hedge fund. it has been an absolute battle for hedge funds, and timing the market. they have a much more short-term mandate then you have now, and there is a question of long and short. the formulas of that. is the alternative investment game over? is it over? >> that is a tough one to say. it is over for me, personally. i would say it is difficult to say. the returns from that goes up and down. for the moment, they are having a tough time. they have bounced back from the situation, but i would not say. >> i must ask about the view from oslo. i've been working through the morning, and a natural gas equivalency in dollars. in brent crude barrels that involved norway.

your comments on how norway and your investment fund will withstand what we are seeing in hydro rices. >> energy prices are high, and gas prices are high, but unfortunately, the result is that we have been frozen to the fund, and we have been frozen to the fund at a time where equities are cheap. it is a bit of a silver lining for this fund. >> we always enjoy hearing from you, and what a time to hear it difficult, complex. the ceo of the norwegian wealth fund. we want to get back to the target news. there was a massive miss, and stocks dropped like a rock it i will tell you why. it is a big mess. here's the why. the target cfo is so important.

they have been grappling with an inventory issue, and to get inventory out the door, they had cut prices. aggressively so. the vast majority of our costs felt really good about inventory positions in the back half of the year. i agree with the team of bloomberg, and i put this out. it puts things in pressure, but i will say this. you basically got this inventory. it is essentially over. ask i agree with that. from what we heard from walmart, this is the tra function. the bloomberg terminal. it was targeted after a big pullback from the 2021 p it is clocking in 13% per year for the last decade. that is a pretty good number, but that is not a target number. the difference is that we have managed should -- management trying to fix it now. i would suggest that something we've heard.

we've heard from walmart and target. >> but we've been punished by believing them, taking their word for it. >> if you own the stock, you have been punished. >> we will have to cut the outlook again. it happened in may and june. let's hope this is the case for them and ask especially as they are outlining what is supposed to be a better second half and they meet that market? what is interesting is what the signal is about in the broader economy. they are talking about how they still see a healthy consumer. they are talking about the fact that they are seeing consumers reroute their spending towards discretionary items because of lower prices. how much is the fate of this company tied to staying lower than it was. >> the stock is lowered by one 88%. futures are down 6% on the s -- s&p. the nasdaq 100 is down a 10th of 1%. we'll get into that later. five or six basis points. i mentioned earlier.

if you want to see it move in the bond market, look no further than the u.k.. double-digit inflation. higher on the front end. 19 basis points on a two-year. what a move. >> 9% inflation is different than 11% inflation. it is two percentage points. >> future is down. i'm jonathan ferro. we are here with kailey leinz. this is bloomberg. >> keep you up-to-date with news from around the world, with first word news, i'm we in. china is warning the united states is not sent their warships. the ambassador to beijing views those actions as in escalations by americans. they will send that through the straight. that is after responding to nancy pelosi's trip to taiwan. there was a series of military exercises. goldman sachs says they have a

deal to revive the nuclear agreement between iran, the eu, and the u.s. is unlikely to be reached in the near term. they predicted that even if there is a breakthrough, additional oil from iran will not start of low, until wes year. they are drafting a proposal for that agreement. singapore is looking for a compromise while reviewing a colonial errand. that is according to the deputy prime minister. he spoke to bloomberg's editor-in-chief in his first interview since being endorsed as the next prime minister. >> he cares about society. it is not about the law, but these are the things, and as i mentioned, we are having a conversation. we are engaging different groups and considering how best we might move forward with deeper divisions.

>> taiwan is the only restriction that legally recognizes same-sex marriages. on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries had i am leanne. this is bloomberg.

>> i think we are running on thin ice. i may use that term. capacity has become scarce, and this is an issue like an insurance policy. we don't want the oil markets to run on without the insurance policy. >> that was the secretary general of opec, sitting down with a good friend of mine. it was a fantastic interview. take a look at that. another bloomberg terminal if you have a spare five mitts. from new york city, good morning. i'm jonathan ferro. futures are down 1%.

we are down about 8/10 of 1%. the last three days have been pretty good. we have squeezed out three days of gains in the face of some bad economic news. i think we can say that. it has been bad across europe. europe and china and manufacturing. >> we are back 40 years. a double-digit inflation. you you rationalize it. you cannot rationalize double-digit inflation in the united kingdom. not without giving pause. there's no other -- we did not talk about it, but there's no other story, socially. you have to make a move off the back of that we are looking forward to that >> you saw new zealand overnight. 50 basis points, and we are now looking at a higher peak. we'll see a little sooner. we are not alone. >> one of the great things we do is we do a book of the year. i made in february. i've never done it that early. maybe i work up a chart here in august, and it will stagger with

december. hydrocarbons will have that. probably it will be concept check. we have research in every aspect. it has been lights out and giving us the elasticity of what is now becoming a natural gas crisis. i want you to explain to mortals like myself, the enormity of the search we've seen in natural gas in europe, and in war-torn europe. quite frankly, around the world as well. >> i wouldn't call yourself a mere mortal. i will start with the gas question. like you said, gas prices from yesterday, even as oil is to decline, we've seen gas prices in europe and the united states continue to rally. of course expectations remain with the war still going on. russia could turn off gas. that is not the best case, but

regardless of that, we are in a situation where demand continues to remain high. we have already seen demand rationing in the industrial sector we have already accounted for about loss gas in europe. prices are too high. now we see the industry switching to oil and liquids, or to call. all of that is going on. but this is a huge burden. the gdp is going to decline by 1.4% next year it that is contrary to a lot of consensus out there. we think the burden will actually see steep contraction in the european economy. >> these wraparound governments solving problems. frankly, i've never seen a chart

like that. how do governments solve the problem of a natural gas standard deviation surge. >> europe is already started to talk about this. it is a potential for rationing. the base case is that we will not need that because industry is switching. but, i think ultimately, it boils down to rationing, even at the residential level before the winter. we saw that with winter. ? >> we see that with the last couple days. you have the opec secretary-general sitting down and telling us that we have an issue of spare capacity. if that's the case, what are we doing in the 80's and low 90's on brent? >> i couldn't agree with his excellently -- excellency more.

we've been talking about this, and he has highlighted this, time and time again. we don't have spare capacity. we've seen that for 18 months. we talked about running on thin ice, and i completely agree with that. we have 2 million barrels a day. if that. i would say right here, the number is lower. the reason oil prices are lower are the concerns of our ron. interestingly, it ties back to gas because gas prices are high. they're expecting a recession, which will curtail all demand. there's not a lot of logic in the market, and the reason i say that is because weak economic growth is bearish for oil, but it could be bearish for gas. it is a one citing -- one-sided story. traders are betting on physicians which are long and short. >> you mentioned iran and the question of a nuclear deal. will it be reach.

what you think the likelihood is, and even if one is reached, how long would it take to reach the market. >> i'm not going to give a copout answer, but right now, the chances of a deal are pretty much 50 for the. they have been for a while saying that the chances of a deal are low. or like 20%. we think the chances have risen. the movement has come from the iranian side. they have been struggling economically having said that, by no means is this a done deal. the iranians have gone back to that. there been a lot of if statements in there. what we understand is that it is not as atrocious and throwing it out. this is not ridiculous. there are some tricky demands to meet. this could still not happen. we don't have a rod and our balances. if it does come back,

especially, they have 65 to 70 million barrels. you will see pressure on prices, in the back of the year. when can they come back? it could take a minimum of two to three months because you need to go through approvals before sanctions can be lifted. that is december before irani and oil hits market. >> thank you. nothing sleepy about the commodity market. this morning, it is unchanged. the wti is almost .1%. la scala $86 and $.70 it price action at 7/10 on the s&p and nasdaq. we are down 8%, and you will notice yields are kicking higher on the 10-year. we have seen treasuries up. 286. i've said it a few times this morning. if you need a bigger move, look to the u.k.. the front end is a monster move it a monster upside surprise. >> i don't know if you have an

emergency meeting, or the bank of england. there is an 11 ratio idea. financial conditions, and we need that this morning to consider if that will accommodate a trend in next and move from zero to a positive accommodation. it has been a stunning move from fear and a restrictive structure over the last for five weeks. >> inflation is 10.1% in july. up from 9.4%, and we are looking for a move to 9.8%. that is a double-digit cpi in the u.k.. futures are down. the nasdaq 100, and just a moment, we will catch up with blackrock. that conversation is about performance away. this is bloomberg surveillance.

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>> the market has enjoyed sunshine. i don't think that will last. >> we are reeling from the unevenness of the opening. supply chain disruption the economy is moving beyond the pandemic. >> market does not move higher from here. i think it will likely continue to be resistant.

>> growth will surprise on the downside. >> we are coming out of this crisis with a recovery. >> this is bloomberg surveillance with tom keene, jonathan barrow and lisa abramowicz. >> i can confirm that we are considering a manchester united it. i've heard earlier. >> were talking about numbers. new york city, good morning. for our audience worldwide, with tom keene, i'm jonathan ferro it coming back on monday, the future is good. retail sales are 90 mins away. >> you saw the opening comments, and our head is spinning. it has extended into a weeklong over 10 days. i've never seen strategists with their heads spinning. it comes right back down to what we've heard. tournament's ago, guess what? it is all but the hope and prayer of a rebound it that is what everyone is looking at. they are pushing back. >> yes.

>> we've seen caution in chasing this rally. city said perhaps, you should tactically sell to further strength, and that is justified. that's a wall of doubt in a face of a rally. off the lows of june. >> we have brought this up, but a lot of people were picking up on a bank of america note which said enough. they've been up and up. bear might get -- market rebound. apostate market yesterday. >> were no longer apocalyptic lee apocalyptic. >> i can even say. >> did you get all that? >> apocalyptic lee. it takes some effort. >> the idea is that sentiment has improved it is predicated on the idea that we will get a pivot. we've seen both peak inflation and peak central bank hawkish in his. it will make this data important, and a lot more important coming at 2 p.m..

>> what was great is that it was a bar band, and they played dave matthews. >> is that the name of the band? >> no. >> the really good. >> hawkish. for the opening? >> ok. enough of that. choose are down. the nasdaq 100 is down about three quarters of 1%. we will guide you through the day ahead. we just want to guide you through the bond market big moves and treasuries. double digits. that is the appetizer for the day. >> 10.1% inflation. >> brutal for the bank of england with traders pricing into hundred basis point hikes by may. definitely something we will need to watch, but there's a lot to watch in the day ahead. 8:30 a.m. eastern is the big report. as we been talking about, retail sailors are -- sales are expecting growth.

gases up. how much will this report reflect for the consumers? as a result, we are shifting with a discretionary area. and then at 10:30 a.m., we will see a u.s. crude inventory. we can expect a drawdown, and gasoline inventory. with crude down between 9%, so far, since the peak in june, we have seen prices come lower. the idea was that this demand was a disruption. prices got high, so people were going to the pump less. if we see a drawdown and inventory, doesn't that send a signal about the recovery in demand? fed minutes from the july meeting will be crossing. we know they hiked, but we are looking for insight as to the thinking around if they have to do that again. market pricing is essentially evening the odds of the basis point hike, come september.

as we've seen this build on a more dovish reserve, how does the language pushback on the idea? >> to sub. i think jackson hole is huge. i really do. >> it is going to be so long. easing aggressively into the meeting where a lot of people are expecting them to hike with the basis points. >> jackson hole is an unknown, but i tilt to the idea that this would be a speech of substance. just because of the midterm elections. yes to get out front quicker than usual this year. that is because of the election. >> since june, equities are up 17%. the credit spread is much better. we are joined now with investment strategy from blackrock it do you trust this rally? >> good morning. it's great to be here. trust this rally. it has been a surprising one.

we have been telling investors that they should remain invested. where in the market they should invest. we have been talking about volatility is an area of the market, and health care. certainly, don't expect this rally to have the same type of legs that we've seen with a 17% jump that you noted from the middle of june. that feels like it is may be coming close to an end. same time, i don't think we want to go back the lows we saw. a lot of what we saw of bad news was something the market had to grapple with. and it's already happened. we've seen a massive basis point move and pricing of the fed. >> what is the pressure? we are getting to the point of the year end battle and the institutional money. year, standard and poor 500 is necker -- negative. how do we recover the rent? >> i think there are a couple of

areas in the market that have brought about opportunities, and we were talking about oil. not looking at commodities, and they are going to have a very good earnings ahead. that continues to provide an area of the market to invest in. that is another area, given the recent build -- bill that was passed. i know we talked about this earlier last week, on your show. ask you did. >> we talked about the amazing yield. >> pharaoh was there. >> that's where we wish he was today, but on friday, at 1 p.m.. carry-on. >> we talked about a yield. fixed income is really attractive, once again. you are looking for extra credit in your portfolio, and looking at investment rate credit, especially in the shorter end of

credit. makes a lot of sense. there are ways in which investors can look to make a few basis points, or's -- or percent points. >> there may be places where you can play defense, but what we've seen is a revival of some of the speculative areas of the equity market that i've looked at bed, bath & beyond. it rally to 350% in the last three weeks. stocks are leading again. it's a return to 2021. what kind of signal do you take? >> i think that the signal it gives me is that rates got to area where the market thought it was going to pause for a little bit. we were used to a. of rising rates at the beginning of the year. i don't think this is the point at which you are supposed to go all into stocks. there will be a time, and it's

not yet. we are still going to hear from the fed, especially today in jackson hole. i think they are going to guide us towards higher rates. i don't think this is the moment , and it probably has been a combination of real rates, and also short covering. later this year, we are going into next year, and you really have the opportunity to get back into stocks, where you get that pitted. it did not come in the july meeting, even though the market certainly behaved as if it had. there's going to be a time for the dead pivot to happen, and it is not until later this year earlier in 2020. >> what should we do with it inflation? have you followed this closely? one position you still have is that we do not fight the inflation story.

he walk us through the whys and wherefore's >> what we've seen in the data is the persistent strength, and the stickiness and service inflation. especially in shelter inflation. as we know, it is 40% of core inflation, and that is moving higher. we are also seeing goods coming down, and that is probably going to continue to do so. looking ahead, the story is going to be around shelter inflation and allowing for core inflation to remain around the 5% level. going into the year end of 2022, it will come down to be 3% next year. that is a very long time away. what we think for investors, especially fixed income investors looking to protect themselves against higher inflation, where they can play this, is with shorter data inflation. not the entirety of inflation, because that has a lot of

duration, but often, it doesn't do as well when growth slows down. you will get a carry from them, and you will own bonds, the next few years. >> great to see you in person in new york. i think what she's doing is talking about the next phase of this trade. what are we trading on? year-over-year inflation, and a mechanical peak? it is about base effect. you get -- comfortable with that, and the next phase of discussion is one you've had for months. what is next? where do you settle? >> john. >> how much more does the fed have to do over again? >> i haven't seen the papers, nor has anyone else. there was credit to keeping a quiet, but i think any paper we

see on inflation, it trends actually critical with jp morgan. we will see a rapid move inflation, and others say not so much. >> am looking forward to the coverage next week. mike mckee, alongside of us, making it even better. the yield is up on a 10 year. equity is down 7/10 on the s&p 500. and it will be brilliant. looking forward to that, and injustice moment, we are down in d.c.. in new york, this is bloomberg. >> keeping you up-to-date on news from around the world, the first word news. the ukrainian president has warned civilians to stay away from facilities occupied by russian forces. that followed explosions get an ammo dump, and an advisor said that the blast marked the beginning of a series of attacks last week. it destroyed fighter jets.

in the u.k., inflation jumped more than expected to the highest level in his. the consumer price index rose in july from a year ago. it followed a 9.4% gain in june. that will put pressure on the british government and on the bank of england to take action. germany struggles with natural gas. that is according to the country's energy regulator which says that germany will have enough -- -- gas if they cut off supplies complete. the country is racing to fulfill stockpiles after russia reduced flows on the pipeline. target missed estimates. the discount retailers focused on is dramatic rebound in the second half of its fiscal year. it reflects decisions outlined in june 2/prices on home of clients is in patio furniture, as well as other discretion items.

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>> i have said since january that i will do whatever it takes to ensure donald trump is never again anywhere near the oval office. i mean it. jonathan: liz cheney there from wyoming. after losing her primary. we will talk about that just a moment. from new york city, good morning. futures are down 9/10 on the s&p. on the nasdaq down about 4%. we are rolling over to higher yields with seven basis points. a 10 year. and a bit of news. speaking of the today show, we are thinking about having liz cheney running for president. she will make a decision in the coming months. tom: elon musk is as well. anne-marie can pause, and we can consider the view in washington. it is 811 days from the 2024 election.

can we state that the british do this better? jonathan: you like saying that. 811 days. >> is the primaries. you take so long to select a candidate. tom: that is good place to start. we will enjoy 2020 2, 23, most of 2024. it's all about the primaries. does the cheney party, and i mean vice president cheney's party, are they part of the gop primary? >> not really. there are a number of candidates that were backed that did lose. overwhelmingly, is candidates one. this is a step we have in the morning brief it 270 candidates for local and political positions. 200 16 of trump's candidates have one. a number ran unopposed, but only 17 have lost it he is clearly,

even though he didn't win in the election, he is still the head of the party, and we see a number of candidates showing fealty to him to make sure they can win. in the speech, liz cheney said she could have done that to secure her future in wyoming, but she refused to. tom: do the democrats want trump to run? >> a lot of democrats would think that if you have a rematch from 2020, biden would still win. troy: the president says that they indicated that he was still win, but there is a lot of runway until we get to the presidential elections of 2024. what about the midterm elections in 2022? is the fate of the democratic party changing given the winds that have been notched over the last several weeks, including the inflation reduction act? >> jonathan's been talking about

this for months, say the timeline is on his side with inflation coming down, they have a little bit of wriggle room, and they did have a very productive summer. there was a bipartisan gun legislation. they were able to secure finland and sweden, and of course, you have an agenda. marijuana to get through that in terms of climate provisions, medicare provisions, and raising taxes, although as pointed out, they are not closing special interest loopholes, but this is something they could go home to their constituents and say, look what we actually were able to get done. we got that done because we have these slim majorities it voters back in, and there is a long list of provisions to continue on to get done. >> a lot of people will say put me back in office. i will work for leave it there were another -- number of other things in the bill back better.

also, the other big thing that i think, we worth talking about gas prices. that has evaporated from the news because now you have gas prices that are pretty average for the everyday american consumer. under four dollars a gallon. if that continues, it will certainly help democrats. jonathan: every day since june. quite remarkable. we have talked about this with republican primaries coming up. are we going to have primaries for the democrats? that is a question coming out of the midterms. if the president can put this to bed. the second time, for a second term, when people talk about it, there are 70 people that do not believe it. >> two things. the president cannot, say he's not owning. he would be a lame-duck it he could, closer to 2024, but what we are hearing is that he plans to run. even though you have members of his party saying, thank you for

leading -- beating the former president. now it is time to pass it onto a new generation. >> following this, this will be a important discussion. >> anyone in washington buying manchester united? any talk? >> i'd love to buy a football team. so far, there is not -- i have not heard anyone in washington looking to buy a sports team. at least not european football. jonathan: elon musk at a joke on twitter, just a joke. buying manchester united. through welcome. >> it was just a joke it we put out an opinion column. here's the tweet. manchester united fans are so fed up that even a joke elon musk sounds like an improvement. how do you like that? is up by 4%. tom: help.

we like to play knowledgeable but i am dumb. as simple as we can, it's the second week of the season. don't they turn this around? jonathan: they can if you've made the right transfer and the window, and i think the problem is that they think they've made the right transfer in that window. they still got a few weeks left, which might be a panic buy, and for that, given the performance, a lot of people don't think they can turn around. it looks like weedy ockert he based on what we've seen so far. if they're lucky. tom: anyone know an update on musk and twitter? are you up to speed? mark: there is a question if they will get content from the employees, and what the outcome of the trial will be in october. that is ongoing. it speaks to elon musk saying he is going to do things that he wants to do, and then backing out, and markets along the way. you asked if anyone in washington is looking to buy the team. i wonder if anyone's looking at these tweets and saying, we need to do something to regulate

this. jonathan: it's a publicly listed company and joking about this. no one believes it, and the stock doesn't move, and i don't have money to buy it, but tom has potentially money to buy that, and that's why --. we take it seriously. tom: absolutely. i'm going to get myself in trouble area if he did a twitter, to be tip a medic about it, the family may say -- is the glazer family. jonathan: they on the tampa bay buccaneers. tom: ok. thank you. futures are down 8/10 of 1%. we will catch up in just about an hour. five minutes, we will have retail sales. retail sales. from new what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions

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jonathan: we keep squeezing out a day of games on the s&p 500. we have had three. this morning, we are starting like yesterday in the day before, negative on the s&p 500, negative on the nasdaq, .8 on the brendan: -- on the s&p 500.

close to 17.5% off the lows on the s&p 500, and june those and every single time we get a little burst or little more, we get a little more down. you hear it from ubs this morning, the messages maybe you should not chase this rally. they are saying perhaps selling into strength may be justified. how many times have we heard this market come over that wall of doubt? tom: we heard it on jobs day, cpi day, and today as we tell wednesday. jonathan: retail sales wednesday. that is coming in about one hour. i have said that every single tease and for the rest of the show. equities negative. will the losses stick? we are at the lows of the session at -1% on the nasdaq. what we are seeing in the bond market is interesting. one to look at the treasury curve. in the u.s., up nine basis

points on a two-year. just starting to get back towards that high for 2022 on a two year yield. on the 10 year treasury, nine basis points, so about 289. let's get global and go over the atlantic to the u.k. to germany. look at it. this move off the back of double-digit cpi through 10%. we have yields up on a two-year, not on the week or month, or the year, on the session, by 26 basis points. that is a big move for a big bond market. tom: i will go to the persistency of higher inflation. we are talking about nine point this in 10 point that, whatever, but sustained up, there will be increasing doubt you can come down. that is what has changed today. jonathan: what day is it? retail sales wednesday. there you go. yields up in germany on the two-year, up 16 or 17 basis points across asset price action.

into retail sales, let's talk about retailers. kailey: that is what it is all about, target reporting about one hour ago what was interesting is that they have lowered the bar going into the report and misted by a huge margin, the estimate was 72 cents. the company is saying they have already solved most of their inventory issues but they are still down 3.7% on the miss. lowes higher about 1.58%. optimism for them. and for tjx, they raised their margin outlook for the fiscal year 2023 pretax, yet, the fact that sales are lower and revenue is light, this takes the stock down more than 1%. let's talk about retail traders because these stocks have made a ridiculous come back in recent weeks. bed bath & beyond is the new poster child at 350% in the last

three weeks alone, and that is best buy, so that is why it is down 2% but bath and beyond is up more than 20% right now before the bell. thank you. an gamestop is the initial stock of 1.2%. always go to work the dow in there. on manchester united, elon musk was just kidding. he is not buying the football team. i said soccer earlier and got a little punishment, the stock is up 7.4%, and that is off the premarket session hi. right when premarket trading opened, the stock was up 17%. talk about a man capable of moving a market. jonathan: you can share this with matt miller a little later, kailey leinz. according to our chief, it is football when you are talking about european football, world football, soccer if you are talking about the game being played here in the u.s.

if you are talking about the mls, you could refer to it as soccer. if you talk about anything else, you can talk about football. we are talking about football now in manchester united. just in case you were considering writing a story, tom. and perhaps declaring your interest in another football club. tom: this first play football, and the sox soccer, that is all there is. we are steeped in the mathematics of universities, michael, i love talking about the dynamics of the moment. there is a major core debate on the glide path of disinflation. how does that fold into owning a has-been dean yield right now? michael: one thing we are seeing is a tug-of-war between growth and inflation. growth, globally, actually seems to be holding up pretty well.

we have seen european gdp continue to be stronger than expected, and the u.s., we started with the labor market and will get retail sales in one hour and real retail sales will probably continue to be weak or negative, but, obviously, nominal retail sales are really strong and inflation, as you have pointed out, especially europe and the u.k., and to some extent, the u.s., really sticky. but that disinflationary trend is beginning to reemerge. we are seeing goods inflation. we are seeing leading indicators of goods inflation pointing towards zero, goods inflation, and i would bet in the next six months, 12 months, you see zero goods inflation globally in the u.s. that is a big deal. obviously the patient is sticky, but that will give the fed some offer to slow down the pace. tom: this is like michael pollan's -- michael collins is

writing the speech, but how many people are expecting a disinflation of goods? jonathan: how much more work does this fed need to do? mike, you have been in a camp where we see the height of the year on a 10 year yield, does the same theory apply to the two-year? something is happening quietly with the two year yield. it peaked in june two days before the equity market bottomed. and then equities were off to the races and then we ran it hard as we faded that real yield. we have seen that two year yield just pick up a fair bit. just wonder what you think about that, in america? michael: the weight as bond geeks look at it, as you know, you look at those forward rates and what priced into the market and right now, this jump in the front of the curve, the markets are pricing in a higher terminal funds rate and getting close to 3.75, so the question is, is the

fed going to actually be able to engineer another 100, 125, 150 basis points? even goods inflation goes to zero and services inflation is at five, a 3.5% core cpi. i don't know if the fed stops hiking at 3.5%, unless, growth is probably below two. i think it is a balancing act between growth and inflation. i like to think about it in nominal gdp terms. if you add those two up, if they added up are below four, maybe that is enough for the fed to pause, but if they remain above four, i think the fed keeps going. kailey: john was talking about the work being done at the short end where that leaves the two year yield is 45 basis points above the 10 year yield. how much further can this inversion go? what will the depth ultimately be?

how is your assumption of what the height of the fed fund rate factor into the? michael: that curving version has not been unsurprising in a world where inflation is sticky, central banks over the world are raising rates, and growth is moderating and slowing. you do see these flat and inverted curves create the question is, how deep and that inversion, -40, can go to -80, -100? sure. if the funds rate ends up at -100 -- kailey: morgan stanley said the same thing last week, too. michael: sure, i mean, we are actually thinking over the next -- we are long-term thinkers, and long-term investors -- over the next three years, what is the curve and look -- what is the curve going to look like? i think it will go back to where the fed, by that point, will be cutting rates. in the meantime, it is really unclear which direction that curve shape is going. we are pretty flat right now in

terms of the curve positioning because of the uncertainty. if the fed keeps going, the fed continues to invert. jonathan: given that, what business do hi u.s. spreads have down at 400 basis points? michael: we are in the camp that you were supposed to take chips off the table. credit quality has been sound. we have just started to see the first sign of some downgrades in the high-yield market, and very specific sectors like cruise lines and health care, but by and large, the upgrades continue to outnumber downgrades. credit quality is good, companies are flush with cash, they've done a great job managing liquidity and bottom lines, but the valuation, i don't think right now, maybe you could apply this to the stock market, as well, may not be fully compensating investors for these big kind of tailwinds. we could have a deepening recession globally. that is certainly in the cards.

jonathan: mike collins, let's catch up again soon. mike collins with pgim. potentially down to 100 on the yield curve, that is some big inversion. we have seen the compression over the last couple of months. tom: and to go the other way, we have to remind everyone from -49 basis points to -39, we have come halfway back with two cups of coffee to -45 basis points. how do you like every thing is, jon? the disparity of opinions on "bloomberg surveillance" is extraordinary. jonathan: do you think the yield move this morning is connected to the weakness in equity market? tom: we are at -26 before the target earnings and now -36. i think there is more going on in the last 10 minutes. i'm not quite sure. jonathan: it is a big move. basis points on twos, tens,

eight basis points. and it could get bigger over in the you can germany. kailey: -- and more, the two-year yield of 25 basis points on the back of 10.1% inflation. talk about brutal. jonathan: we've seen a bit of this so far. we have closed out with a day of gains but we'll see if we can repeat that act. from new york, 8:30 eastern. tom, it is retail sales wednesday. this is bloomberg. ♪ leigh-ann: keeping you up-to-date with the first word news, the new head of opec warns that global oil markets face a high risk of surprise squeezes this year. bloomberg had an interview with haitham al-ghais. >> capacity is becoming

sparse, and we don't want markets to run on insurance markets. leigh-ann: pieces increase willing -- the rental increase by 300 barrels today. goldman sachs says a deal to revise the nuclear agreement between iran, eu, and the u.s. is unlikely to be reached in the near term. the firm predicts even if there is a breakthrough, additional oil from iran will not slow until next year. the u.s. is looking at iran's response to a dropped proposal agreement. china is morning the u.s. not to sail ships through the taiwan strait. they said beijing's abusive actions was escalated by america. the biden administration said it would send warships through the straight. china responded to house speaker nancy pelosi's visit to taiwan with a series of military exercises. global news, 24 hours a day, on-air and at quicktake on

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>> the u.s. economy right now is in a stronger and more resilient place than any other major economy globally to actually navigate the global challenges we face, which include potential growth slowdown in china and the impact of the war in ukraine. jonathan: let's throw in the potential of the recession in europe. that was the director of the national economic council. you have to say this white house has historic help over the last weeks. with tom keene and kailey leinz,

i'm jonathan ferro. futures are down on the s&p 500. mastec 100 down by one full percentage point and yields higher by eight basis points on the 10 year in the u.s., 2.88, and the u.k., you are seeing an explosive move higher. i don't think i'm overdoing it, up 23 basis points on the two-year and a 10 year up 16 basis points on double-digit cpi in the u.k. tom: focus on explosive and the y-axis, and i would take it out again to the x-axis and the persistency we could see in continental and united kingdom inflation. they give us perspective and marcus ashworth joins me each ecb day with number intelligence. wonderful to have you with us this morning. how does thex-axis change when you go double-digit? do you, in the area read, believe a more persistent inflation because it is so high? marcus: yes, i think you have to

expect wage negotiations to be harder because people see double-digit inflation. with people putting up restaurant prices to the whole smear, it is going to be much harder for the bank of england to react in the sense that they can have 50 basis points, not 25, for the september 10 meeting. the question is whether or not they tighten more than they would? i think we may get earlier bigger rate hike now, but it does not mean it will be a neutral rate will be much different because we will get a recession at this rate. 7% inflation. tom: the dynamics of sterling cuts two ways higher, resilient sterling and the other is economic slowdown that you mentioned. has externally revisited major

weakness off of the inflation? marcus: yes, it can. i don't think it is much moves for sterling way, and a hike of 50 rather than 25 really does not seem to affect the currency that much. this is about the stunning money market. the u.k. has been a bullish ring this morning. everyone has been lulled into a sense of contentment because the u.s. had a surprise drop, and we got a surprise bigger rise. that is double bad news. you look at something like one year money market futures, they dropped by 100 basis points in price and they were up in yield over the last two weeks or three weeks. everyone has this position badly wrong and got too complacent. jonathan: when you look at the composition of the move higher in u.k. inflation, food, energy, travel, what can the bank of england actually do about this? marcus: as i said, the

double-digit number is going to cause a lot of problems with the stickier supply-side and the services sector, which is coming through. the wage data yesterday is even more worrying. it shows that they are doing really well but there is bigger inflation with a negative situation as far as real incomes, but, nonetheless, the actual driving the economy and labor and wages is strong. we know the balance sheets of corporate's, banks are strong. it is the fact that inflation will be continuing to cause a problem. the next two months we will probably cfo back in the rate, but in october, there will be a big energy lift -- energy pricelist that will push it up to percent or more. jonathan: it sounds like you think we get a two punch combo, the first is a relief that you

believe we have had peak year-over-year inflation, let's move on, and they may relax and get punched in the face. do you think that is the same in the u.s.? tom has been talking about how sticky inflation might be. and then the fed will have a tough decision to make. is that where you are at? marcus: no, i think the u.k. has a special situation. you can read across from the u.s., i don't think it is as simple. we have an odd situation. but with the price cap, we have let the market run wild rather than keep a lid on it like europe and subsidize people's income. long-term, it is the right thing, short-term term, it affects our inflation data. so ignore it i think is the best thing. kailey: we have seen labor say we want to freeze the price cap, hold it where it is. you have some pushing back on that and others morning against going money at a short-term

solution, what is the appropriate fiscal response, not just monetary? marcus: we are stuck with the system created either previous government a few years ago, and it is trying to fix something midway through a crisis never works. you have got to subsidize lower incomes, and the price cap is a system which is -- no system is great here. i don't think what is done in europe is healthy with having a bailout. this -- we are showing what the problems are. we are going to have to subsidize people's income and that is not a great way of going about this. jonathan: quickly before you run, we were already on top of this story, but i'm not, do we need to pay more attention to the prospect of the mandate at the bank of england changing with a new government? how serious is this? marcus: it is a red herring. i would ignore it. the only way this ever works is

we are at a 2% target, and we are six or seven times that. if he is selling out, he should not be in the job. they should be looking out what has gone wrong, but that is any organization. whether they change or not, as long as everyone is in agreement, as well as the treasury government, it should not be an issue. jonathan: marcus ashworth, thank you, a rugby fan, he cannot talk about the manchester united news or lack thereof. tom: always throws a drink at me. jonathan: different education. tom: what is the percentage difference between soccer and rugby in the u.k.? kailey:kailey: football. jonathan: did you call soccer again? kailey: i did. jonathan: if you get to posh school, you play rugby, if you go to a state school, you played football. that is why we had that phrase, were gentlemen's game played by hooligans and

hooligans game played by gentlemen? tom: we need your advice, a good amount of people are coming to jackson hole, jonathan ferro outfitted here. we are looking at boots being made. i look at jon ferro and john wayne, but wayne wore the resistol. jonathan: i'm looking at the price, $495. tom: jon, i think this says you and a more urban kind of way. jonathan: do you know what the kids are wearing out? a prada bucket hat. kailey: just by the knock off on amazon. amazon. tom: if you wake up thinking about the market and want to make the right moves fast... get decision tech from fidelity. [ cellphone vibrates ]

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>> asked inflation is easing, it

is giving the fed more wiggle room. >> i think on the inflation front, the key is the divergence between headline and core inflation. >> even though inflation may have peaked, i think the market is discounting that the shed sticks tell -- fed sticks the landing. >> i think they are going to have more than is priced in. >> i don't think it is the base case. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, lisa abramowicz. tom: good morning. jonathan ferro, lisa abramowicz and tom keene, lisa is on a one-day holiday, off, off, off. kailey leinz in today. it is not double-digit inflation in spain or america, but double-digit inflation in your united kingdom. i was shocked. jonathan: double-digit cpi moving in the front end of the yield curve, yields up by more than 20 basis points.

that's the thing, yields higher in do can germany, stateside equities lower. tom: and you can see how the bank of england is represented at jackson hole when we traveled there that next week. like jobs report and cpi report, i'm sorry, retail sales matter. jonathan: it is a big print, coming up and 29 minutes. a caution, you have to strip out gas. it is a month on month number. gas prices have come down, so that will distort the number a little bit. that is what to look for at 8:30, and then on to jackson hole next week. they said the risk is, given the interpretation of the fed meeting established when he does not think it was, and given the easing of financial conditions over the last months, which they think is unwarranted, the risk is that chairman powell has to be a little hawkish at the jackson hole conference week or so away. tom: we are data dependent. we just featured the resistol hat to make sure jon is

appropriately dressed for that event. kailey leinz, target out. what did we learn? kailey: they do not set the bar low enough, even after two cuts. earnings were well short of expectations, but we learned the reason why profitability was down so much is because they had to discount to work on inventories. they think most of that is done. therefore, the back half of the year looks better. can they actually meet higher expectations through year end? stock is down as a result. tom: jon, let's get to the data check quickly. i'll go to oil where we have brent crude at 92 and american oil at $86 a barrel. jonathan: down about .3%, but the movies and the treasury market, of a basis point set 2.8858. yields higher around the globe and equities lower by .8% on the s&p. some weakness here. you said repeatedly through the week, this is how we started most days this week, monday,

tuesday, wednesday, and then we squeezed out of the gains at the end of it, a three-day winning streak at the moment. tom: futures, -26 when target came out and they are now a bit below that at -33. we need to recalibrate, as you do. we know that they are spinning over different opinions from the fed. it would good to be getting a strategy grounded in mathematics. alicia levine, with bny mellon with serious math jobs. there is an epsilon, a greek letter, what does that mean is how we used to look at it, but now it really mean something. what is the systemic risk right now is to markalicia -- right now? alicia: that we price and the goldilocks scenario with inflation that is coming down on its own, so it doesn't have to go that last mile from the 4% to

2%, and that the consumer more or less stays healthy, even as the fed hits the labor market, job openings, but not actual jobs. that is the goldilocks scenario. it is possible, but that is what we are priced for. we have the s&p trading at 18 times forward earning as the 10 year move slower. the risk is, of course, that the stickiness of inflation that you talked about this morning is going to make things a lot more difficult. jonathan: how do you want to use that strength over the last couple of months? how do you reposition? what do you fade, where do you fade, and what is vulnerable? alicia: i think what is vulnerable here are the stocks that have rallied the most, so when you think about the long-duration tech stocks and the growth names, they have bounced back the most. they have nouns to back because 10 years have moved lower. we think there is going to be a reverse move. that is what we have seen all year. when sectors have become overbought or oversold, they

tend to bounce back. coming into the seasonally difficult times of the year, september and october, with the goldilocks scenario priced in, are investors stay fully invested all the time end trader on the market. they participated in this rally, but we do think the inflation stickiness is not going away anytime soon. so the minutes today, i don't i'm going to add anything necessarily new because you have this panel of fed speakers who have come out the last three weeks essentially trying to talk down expectations of a. . i'll wait -- of a pivot, and all we have is the 10 year moving lower and lower and financial conditions going easier and tech stocks rally. jonathan: bank of america touched on this yesterday. i would like you to put it in english. they talked about us no longer being apocalyptic lee bearish, but we were still too bearish to get an immediate turnaround in the bear market rally. can you translate that? where sentiment? what is a mean for the prospect

to move hi here? alicia: i think the rally cut most strategists off guard because the market is where strategists essentially were pricing in a recession is the best case scenario with earnings going lower. what that means is the riskiest still higher because investors are still defensively positioned, meaning not bond durations and not really going all in on risk trade. with that, you could see a squeeze higher simply because there was a huge structural shift on the defensive side. the real pain in this market, as terrible as the first 5.5 months were, where the accounts that were position starting in mid june because those positions got destroyed. we tend to be very neutral. we tell our clients, stay fully invested because you cannot trade it. when it turns, you are not going to get those upward moves.

kailey: you mentioned earnings. we are at the tail end of the second quarter earnings with 30 companies in the s&p 500 left to report. by and large, it has been decent relative to expectations, average revenue growth of 14%, earnings growth of 8.4%, both surprising to the upside more often than not. looking forward, are we too optimistic about the trajectory of earnings through the back half of the year? alicia: earnings seasons has come in better than feared. i think some of that was definitely the impact of inflation because earnings are nominal. much better. i think some of the retail reports we have gotten over the last couple of days have actually come in better than feared. and then with some optimism looking forward, i think the fall in grass prices is something interesting because while in one sense it is disinflationary, on the other hand, if you are putting lower gas prices on top of an economy where mortgages get 5.5 --

workers get 5.5% wage increases, there is more spending power, and july is better than june because of falling energy prices, you have to wonder which direction english and is really going in. if you look at new orders on the ism, it tends to be predictive of where s&p earnings are going by six months. we have been under 50 for a couple of months. at 48, it tends to be that s&p earnings will move lower than at six months. we are just not there yet. tom: you and i were reminiscing, and when you talked about the joys of turkey touches any -- turkey tetra xinia -- turkey tetrezzini, there is a whole issue of inflation of the dow back when i was eating that in school. this inflation is different than that inflation, right? alicia: it is different because essentially, it has been driven by, one, commodities, and on the

way jen sector side. tom: it is a different economy. alicia: totally different economy. we are not manufacturing based but service based. when inflation is on the services side, it will be harder to get it done. tom: and more heterogenous. back then, it was a more aggregated analysis. you cannot do that now, with factoring analysis is more important. alicia: it is, and the interesting thing to watch, even as we talked about the lower end consumer struggling, it is completely obvious that the higher end consumer is not just doing fine. there supporting the economy in corporate america. i think that is different, that the range in income and what the effective topline inflation means is different. tom: do you know turkey tet rezzini? tom: you have to go to -- alicia: you have to go to brown for that. tom: do you put the soup in

before the parmesan cheese or after? jonathan: let's work out which part of this is winding me up, now. tom: the dow is down now. at 34,000. alicia levine is pushed against it with 2000 dow points away. jonathan: you are killing me. alicia levine, thank you. tom: that turkeytetrazzini will kill you. jonathan: what would elon musk technology bring to manchester united? they've been trying for nine years already. tom williams out on twitter, what a mess that whole story is. we keep joking, but -- tom: it is not funny. why does this guy have a different rulebook? i don't get it. jonathan: i don't get it either.

i don't get why the stock is still up. we will get you some stats and shares in work that out, tom. do you think lovey will sort that out for you -- levy will sort that out for you? futures down on the s&p, yields up eight basis points.retail sales in america 20 minutes away. this is bloomberg. ♪ leigh-ann: keeping you up-to-date with news from around the world with the first word news, i'm leigh-ann gerrans. vladimir zelenskyy has warned civilians to stay away from military facilities occupied by russian forces. that followed explosions at a russian over in crimea. he has said the blast marks the beginning of a series of attacks. last week, explosions at a rua date destroyed fighter jets. in the u.k., inflation jumped

more than expected to the highest level in 40 years. the consumer price index rose 10.1% in july from a year ago, following a 9.4% gain in june. that will put pressure on the british government and by giving take action. in wyoming, republican congresswoman liz cheney has called on americans to prevent donald trump from winning the white house again. she suffered a crushing defeat to her primary challenger backed by the former president. here is the backlash from her very own party. target badly missed estimates but still sticking with its forecast of a dramatic rebound in the second half of the fiscal year. the prophet reflects decisions target outlined in june to slash prices on home appliances and other discretionary items. lowes had missed estimates. the home-improvement chain was hurt by the u.s. housing market

and the highest inflation in decades. earnings were better than expected, lowe's expects sales for the year to be at a low end on the range of the forecast. global news, 24 hours a day, on-air and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

>> i think the market does not

movement to really higher from here. i think 4300 will likely be the resistance but the biggest take away is maybe we don't have to reset the lows we have seen of 3700. jonathan: that was anastasia amoroso, and this morning we are lower. we are down .75% on the nasdaq, yields in the u.k. exploding higher off the back of double-digit cpi. a similar move on the german boomed curve and on treasuries, yields up by nine basis points, on the 10 year, 2.8913. the best feedback i've had for a week has been on the bloomberg unit available on the iphone. download it as an app. i got a ton of engagement also that yesterday. so if you are subscriber, it is available on ios. tom: really revolutionary, the b -unit was revolutionary 10, 12 years ago. it is a security system to log

onto the bloomberg terminal, which is a valuable commodity. we are always working on the technology. jonathan: very cool. people used to take this into a bath. their company invested real money in them. and they have more of these. tom: we say thank you to all and technology driving forward the terminal each and every day. driving for the retail discussion is dana tell sleep -- dana telsey. no in the game besides maybe vanessa friedman of the times, she's invested in the fabric and retail of -- fabric and retail of america. we have to go to luxury goods, icy lbmh, maybe 7% from a record high. it is luxury an old story where

you can invest now or can luxury continue to be a value for viewers and listeners? dana:dana: i think luxury can continue to be of value for viewers and listeners. keep in mind, this luxury step is happening regardless of the fact that the chinese are not traveling. so you have not had travel for the chinese. it has been the local europeans, americans going to europe, where we have seen the strength of luxury. and certainly when we start to see the lockdown decelerate and china, and they start to travel, that is the benefit. let's not forget that for the past two years, with the pandemic, social occasions have not been celebrated, so, yes, we have 2.6 million weddings in the u.s. this year compared to 2.1 billion on average, but even next year, there will be more to celebrate, and the luxury pendulum will be able to gain the benefit. tom: this is an aside, i'm

pleased to report that kailey leinz was part of the two point 5 million weddings this summer. let's bring it it down from luxury. there is a midmarket. how is midmarket retail doing away from big box on the low end? dana: midmarket is right there, but it is slower. every single company is talking about the fact that whether it was from late may till mid-july, there are pressure points. consumers will stop spending, that they will blow $100,000 income, pressured by rising gas prices. all of a sudden you hear them going to the grocery and they are trading down from meat to chicken to pasta, so daily living essentials became more expensive. marry that with the fact that you are lacking child tax

credits and stimulus, and it is a pressure point in terms of spend. we have a lot of inventory, don't forget. disruption of supply chain broaden goods at the wrong time, and we are set up for continuing emotional impacts out there. kailey: on the inventory issue, specifically relief, the company cfo saying the vast majority of our inventory price rising costs have been incurred. do you buy that the worst of the inventory issue is over for retailers? dana: the cost may have been incurred, but the motion is ongoing. what i'm still hearing from retailers as there is still a mismatch, and we are going to have more goods available in september and october for these off pressures to benefit from. jonathan: i want to finish share, to what extent and luxury is a been propped up by some kind of shadow banking effort with buy now, pay later stories? i see so many people wearing brands that i don't understand.

i will rant about that another time. these are $1500 hoodies. $600 t-shirts. we are all told it is a struggle in america, but the line is around the corner downtown in soho. can you tell me how are these things being paid for? dana: i see what you see because i have seen those before. now that might not be buy now, pay later, it may be a credit card where they are paying a certain amount every single month. we have heard lately that even the buy now, pay later, some of those sales have moderated from what they have been. we certainly know that what people are cherishing as they are treasuring those luxury brands. and the sneakers. every designer is making sneakers that are selling. jonathan: thank you, dana telsy, always broke -- dana telsey, i was brilliant. i am not singling out a single

brand, there are so many, but yet, gucci, louis vuitton, you can do buy now, pay later that i remember as a family, my mom would go look, and you were given evil stairs to walk back out because you cannot afford the stuff area. these days, everybody can. tom: i agree, it is part of the merchandise people are leveraging up on desires, but i would say more than that, the oddest thing are the margins are generated in the labor required for these explosive sales. labor models of these luxury companies are original. they are desperate to get craftsmen to make the product. it is a huge issue in europe, particularly italy. jonathan: are you speaking of hermes? or others, as well? tom: i think hermes has their own approach, which they are setting up leather manufacturing facilities, small ones, across france.

they have said, we are going to invest in france, and they're going to do this with hubs in many cities and villages in france. that is one approach. jonathan: it seems to consumer attitudes about these goods has changed. it's not about the price tag but a monthly figure. tom: we see this with kaylee every day -- kailey every day. kailey: i blame instagram culture. you see these people who look like you, about your age, wearing designer goods, and you want to be like them. it is the impact of social media. it is economic. tom: right. jon, pro tip, the balance -- i cannot pronounce it, the balance? sweatshirt -- the balenciaga sweatshirt will shrink in the dryer. kailey: my husband has one. jonathan: from new york, this is bloomberg. ♪

jonathan: it is retail sales wednesday, that is what t.k. is calling it. we will break down numbers in a moment. futures down .8% on the s&p 500. nasdaq 100 down by one full percentage point.

with your economic data, here's mike mckee. michael: good morning. the fed is on the phone for you. you need to go shopping because retail sales came in flat for the month of july. no change in the retail sales figures overall, and the retail sales control group, that one has not come in yet, but autos up .4%, and that is down. and autos and gas up .7%, so i am guessing, and i'll look quickly, that gasoline played a big role. gasoline stations down 1.8%. we did see prices fall during the month and retail sales are calculated in dollar terms. so, overall, that is good news. motor vehicles down 1.6%. we will talk a little bit about that on the open coming up. furniture and home builders up

just .2% after a bigger game last month. it looks like reasonably healthy in some areas. building materials up 1.5%. we saw good results from home depot the other day. grocery stores just .2% higher and clothing and accessory stores, the people who are not buying the balenciaga, down .6%. tom keene helped out, food places up .1% rate tom, you have more work to do. jonathan: food and drinking, the nasdaq 100 down one full percentage point in the bond market seen a response with the up and higher by 10 basis points on the yield. the knee-jerk reaction is to trade on the figure ex-gas. the control group has a decent upside surprise. is that the right way of looking

at this number with the gas figure month over month? michael: yeah, i think that's what the market is doing. you have a retail control figure which takes out gasoline and autos and home improvement stuff, up .8%. that goes into gdp and other areas, and gasoline prices fell significantly, but the retail control group, which is basically all the other stuff people buy, was up reasonably well and had been at .8 and risen iced -- and revised 2.7, but americans were still shopping and that is why i think you are getting the higher yield reaction because people think the economy may be a bit stronger. that means more work for the fed. jonathan: looking forward to your coverage the next hour to break this down on bloomberg tv as we ran towards the opening bell. tom, yield up 11 basis points on the two-year. this is where the streak was focused on, the ex-gas because of what has happened the last

month, and we have a decent upside surprise. tom: great quickly, down to -47 basis points, not to -50, but, nevertheless, that bears watching. the real yield a little higher and dollar strength here, as well. michael darda joins us, at mk, holdings, and he synthesizes the economic you into the equity believe. i'm not going to mince words, in my umpteen years of doing this, i've never seen the raging debate about the stock or get linked to the mysteries of our economy. do you feel the same way? do you see record uncertainty out there? michael: well, tom, one of the last times i was on in the dark days of mid june, one of my messages for your retail investors was not to get too negative, even though the s&p 500 was down almost 24%.

the reason for that was it is notoriously difficult and probably impossible to tie market bottoms in what we were seen with the big declining equity markets in the first six months of the year was mostly a rate shock, the 10 year yield going from 1.5 to almost 3.5%, we are well off the highs in terms of the 10 year treasury yield, even though it was pumped up today, and the stock market is up 17 plus percent from the lows. the first six months of the year, the equity market decline was thought about negative gdp or recession or a big earnings crash but about evaluation of adjustment as the 10 year yield moved up. that adjustment is mostly now and the rearview mirror. tom: i look at the view forward, and it ends with a thud. i believe next friday at jackson hole. what this chairman powell not want to doin his speech at

jackson hole? michael: we have seen a bevy of fed speakers out there with potentially the same message. which is they are going to continue to persist in pushing the front-end of the curve up, meaning policy rates and those rates most closely tied to it. and they are not going to be deterred. they expect some economic slowing, but they want to be certain that inflation comes down and stays down from that inflation expectation that stays anchored at low levels. they will pursue the rate hikes. they will persist at a slower pace though. that is what the market has gotten wind of, and i think that is the main reason we've seen this big equity market move off the lows and the stabilization at the long end of the curve. the fed can do what they want, but it does not mean the curve rates will go along with it. we are seeing yield curves move into inversion now. and that is a cautionary tale about 2023, but i think the mistake some people made with

the yield curve is that it is not an immediate indicator of imminent recession. it tends to be a bond where you have to communicate. the bond market is saying the short rates go above three but not persist for years and years and years because the economy will not take it. jonathan: do you think easing financial conditions have shown an undermining of what the fed is trying to achieve? how do you think the fed chair will address some of that next week at jackson hole? michael: that seems to be some of the perception of the fed speakers trying to push hard against the idea of 22 83 rate hikes, but they have no idea what the 2023 -- 2023 rate hikes, but they have no idea what 2023 will look like. spreads are narrowing and equities are up the lows strongly, does that warrant more fed tightening than otherwise would be the case? i would say only if inflation expectations are also rising, but behind market inflation

expectations are well off the highs and recently stabilized. i don't think the recent financial conditions necessarily means the fed has to be a whole lot more aggressive. if they choose to do so, then, certainly, that amplifies the risk of a downturn in 2023. that is the fomc's willing take care because they went to ensure that inflation comes down, and inflation expectations stay anchored at well levels. kailey: what you have mentioned a few times, we know a lot of that caters on the price of oil, which has come down, reflected in inflation expectations may be lower and retail sales data today with ex-auto and gas control figures. it's too much predicated on pricing at the pump stay low when we have the new secretary general of opec telling bloomberg that he sees the likelihood of the supply squeeze

this year? michael: it is possible. those breakeven spreads to move around based on shocks on energy prices and gasoline, but it is not entirely driven by that, so there is certainly some interplay. i think the best thing the fed could do here is to watch the evolution of nominal spending in the second half of the year. in the first half, nominal gdp was strong, high single digits, but we did not have much real gdp growth. i think that will change because it is not just energy. you have seen metals down sharply from the highs, and you have a whole array of yield curves going into an ocean with slower money supply growth, so the front edge of the re-inflation, inflation and nominal gdp surge has rolled over, so i think in the second half of the year, we are going to see slower and are appropriate nominal gdp growth on the back of tighter monetary policy. jonathan: fast-forward, what a

complex one, michael darda, the headline number disappoints a little bit, but once you strip out gasoline, given what has happened the last month with prices, you have underlined strength for the u.s. consumer and retail sales. futures negative but that move in the yield curve still there about eight basis points on the front end of twos and tens, nine basis points higher. tom: i think it is a constructive adjustment. it takes away from the gloom of recession, but it also shows parts of america that are affected. if gas is a problem, that really affects low income, and that is what we have seen with low income retail. you know we have an international audience, i have a terse email to correct me, balenciaga is from spain, did you know? jonathan: i that we called it spanish. tom: i think we did, but may be

lost in translation? jonathan: where is maria? i have not seen her for weeks. tom: she's on sabbatical. jonathan: on a long european vacation. tom: it is the spanish way. jonathan: is that spanish? on vacation. trying to keep out of trouble the rest of the week. the data is in ahead of jackson hole. that is kind of it. i wonder what kind of job they think they're going to do next week. tom: i think we are going to get five different flavors data dependency. that is all they can do. they have to be data-dependent, not because it is eureka, but because this is an original -- not because it is a theory, but because this is an original recovery because of a medical disaster. this is not normal analysis. jonathan: we are having that conversation yesterday, just a suggestion that this easing of financial conditions is undesirable for them and perhaps there will be a coordinated effort to push back. kailey: it is not what they want to see. they want to see tightening,

especially for chairman powell, who was perceived as devilish in the july press conference. whether or not -- dovish in that july press conference. does he try to correct that narrative next week? jonathan: awesome to have you with this, you back tomorrow? kailey: iam. jonathan: and friday. it will turn into a long weekend. you will be back on monday before we go to jackson hole, wyoming, for the fed's annual symposium. coming up at the open, we catch up with peter tchir police awesome the -- elsye ausenbaugh, and all of that coming up. this is bloomberg. ♪ leigh-ann: keeping you up-to-date with first word news, china is warning the u.s. not to sail warships through the one straight.

the chinese ambassador to the u.s. said beijing uses the action as an escalation by america. the biden administration said they would send warships through the straight after china responded to nancy pelosi's visit to taiwan with a series of military exercises. goldman sachs says the deal to revise the nuclear agreement between iran, the eu and u.s. is not likely to reach a new term. they said original -- additional oil from iran will not start to flow until next year. the hong kong stock exchange is forecasting a pickup in ipo's next year. the ceos spoke to bloomberg tv. >> i'm confident with the number of ipos we have the timeline. we have had 16 ipo's in july, very, very good performance. we had all those ipo's, and it

was replenished. leigh-ann: the hong kong exchange snap profit fell 27% in the first half of the year. global news, 24 hours a day, on-air and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪ 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!

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>> raising taxes to spend money on infrastructure means you have got to trust the people doing the spending, and i think the public model is the way to go, which is an infrastructure bank that the public sector owned that has private sector matching funds. i think that sort of breakthrough has yet to occur in the united states. tom: he is a chemical engineer of queensland, associated with

the olympic effort of 10 years out, andrew liveris. in one of his many affiliations, lucid group chairman. you will see that tonight at 10:00 p.m. with peer-to-peer conversations with esther david rubenstein who joins us this morning to speak of this interesting guy. what's great about him as he is hardwired in the hopes and beliefs and prayers of an american renaissance and manufacturing. is this for real? david: he thinks so. he thinks the manufacturing loss we had in textiles and other things that were dependent on labor costs is not relevant for the future of high-tech manufacturing. he thinks we can be a leader in high-tech manufacturing because that depends on supply chain and other related things, not so much on the cost of labor. andrew is an incredibly diverse person in his interests. he's from australia, a greek immigrant background, he ran dow

chemical as president and ceo for 14 years, and now he is the chairman of lucid motors, which is an electric vehicle upscale car. he is an advisor to the saudi sovereign wealth fund, and on the board of saudi aramco, and he is also the chairman of the olympics for brisbane in 2032. tom: you and i cannot think out that far. kailey, i look at this, and andrew liveris is a process guy in american business. kailey: and he's trying to build something with this company in particular, but what we talk about e.v., the comparison is always to tesla, who in many ways, elon musk was the first mover on this. how does he see them competing, whether or not they realistically can? david: tesla is designed to produce cars, i will not say for the average person, but they are not going after the luxury market. at the moment, lucid is going after the luxury markets.

cars began over $100,000 per vehicle and they go up from there. they will address the lower-cost market later, but right now they are focused on the upscale market. that is why they are not directly competing with tesla. kailey: of course, the u.s. has been looking at making more investments into the ev infrastructure space as part of what we see with the clean energy spending in the inflation reduction act the president just signed yesterday. what were his thoughts on u.s. infrastructure policy and what it ultimately needs to look like? david: andrew liveris has advised several presidents on infrastructure spending. now that we have a bill, hopefully with the appropriations behind the bill, remember, it was to authorize expending that we have to appropriate the money but assuming it is, they can begin to rebuild bridges, roads, airports, and things like that, which should make ev cars more accessible because they will build electric charging stations throughout the country. tom: i have to turn to the issue

at hand, and i know these are delicate discussions. you don't want to talk specifically about the carlyle group, but i want to talk about scale and heritage, dow chemical is 35,000 employees, and i never about the idea that the companies in transition can be as challenging, and carlyle group is roughly 1900 people. one of the great challenges we have seen in smaller projects, hedge funds, alternate investing, private equity, venture capital, is a generational shift. what is your best practice on that? what is the best practice to say, i want to move on and do this, this, this? you exceptional philanthropy to the american people and our history, how do you make a generational shift? david: there is no perfect model. each firm has gone through it in different ways. a good thing to do is to have someone who has been added from a long time who was part of the

culture and they know that you those of the organization, and gradually they take over control and the founder steps back. it is more complicated than a typical situation. let's suppose you are the ceo of ibm and you retire. when you retire, you don't own 20% or 30% still, and you are not still a major investor in the funds. it is a different situation. you are not a founder. all the founders of large private equity firms are still involved largely with some exception in investment committee members and as shareholders. it is a little different than the jack welsh situation where they retire and they don't really control the company through the ownership and large shares of the company. tom: david rubenstein here, of course, continuing the bloomberg coverage of what we have seen in all of these different firms as they make generational moves. david rubenstein with a full interview of andrew liveris tonight at 9:00 p.m. new york.

it is a resilient america with retail sales. kailey: when you factor in the price of gas coming down, that is what is borne out because it was unchanged on the headlines month on month, but when you exiled auto and gas, up more than expected, and, really, energy prices are the theme of the day because it is working in the u.s. with prices at the pub coming down for the american consumer. over in the u.k., factor in higher energy prices and you are looking at a 10.1% print on inflation this morning. 24 basis points on the two-year. tom: i will not mince words, i think the double-digit print in spain was one thing, but a g7 nation with a double print changes the dialogue jackson hole, an international meeting and not just about euro powell. kailey: one who has the easier seat, jerome powell or andrew bailey, considering the market now expects 200 basis points hikes by may, not quite what

we've seen for the federal reserve. that has come down since the july meeting, how much will jerome powell have to push back? we will get some insight into that at 2:00 p.m. today in the fed minutes. tom: over the last 48 hours, -46 basis points, deemed unimaginable two weeks ago, and there we are, making it come down further inversions through that -49 basis points levels. futures at -37, dow at -218 with the vix not showing much yet. 20.48, up a little with angst in the market. the dollar resiliency in which we saw that, better than good. stay with us on bloomberg television and radio. ♪ >> welcome back to another western and southern update.

cincinnati say goodbye to tennis legend as serena williams went down to the reigning u.s. champion. she announced she will retire after the upcoming open. despite the loss, fans gave the 23 time major winner a standing ovation as she left the court. >> to be honest, i was nervous from the first point to the last point because i know what a champion she is. she can come back from many situations. i had to stay focused and i managed to keep my composure. >> she moves on to face victoria as a rancor in round 2 -- victoria azarenca in round two. live coverage starts at 11:00 eastern.

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jonathan: yields are up, stocks are down. s&p down 9/10 of 1%. the count down to the open starts now. announcer: everything you need to get set for the start of u.s. trading. this is "bloomberg: the open." with jonathan ferro. jonathan: live from new york we begin with a big