>> i think in the next 3-4 months and the rest of this year, it will be a volatile time. >> you have to be opportunistic and patient because this will go on for a bit. >> the fed will face increasingly more difficult challenges this time around. >> you want to be very weary about the relief rally. >> you are fighting the fed if you were lush. it's hard to find anybody who is bullish. >> this is bloomberg surveillance. jonathan: what a difficult couple of days, live from new york city for our audience world wide, this is bloosurveillance .

futures are down 1/10 of 1%. tom: it's fragile and some of it is the distribution of the different sectors. the one shining light for the

last bears is the vix hasn't moved. the august sweat that's out there says vix 30 but it's at 26. jonathan: good news/bad news, consumer confidence. the fed has to do more. tom: we will wait for the data and we start to see that today with adp. i don't trust it but there is a lot of data i do trust. in america, it's where are we and september i believe is tomorrow. jonathan: bad news in europe. lisa: 9.1% consumer place -- price inflation. it's fueling the fears and expectations of a 75 point basis right hike -- rate hike for the ecb. it's an expectation of what that

magnitude means for your, that joint effort. jonathan: can you look at how the german two-year has moved, up to 1.2%? lisa: and it's not just their and it's not just nominal yield. to look at real yield in europe and the united states, it's at the highest level since the highest level of the pandemic. how much are we seeing a resetting that's been priced in versus maybe not so much. jonathan: this is why the equity market is just struggling. note drama on the nasdaq -- no drama on the nasdaq. yields are up a little higher on the 10 year. euro-dollar is negative 4/10 of

1% stop it's all about the bond market. lisa: if the ecb does raise rates 75 basis points, is that positive or negative for the euro. it's negative right now because of the backdrop of the energy crisis. gas exports are halted to your but will come back online but natural gas prices are climbing a little from the declines yesterday and the day before. there was evidence that stock piles were building faster than people had expected. this could shape what happens in europe and globally. 8:15 a.m., you are talking about adp and they have rejiggered the expectations. i think it takes up more import

because of the jolt yesterday which was rather shocking. it was expected to go down but it went up. there were two openings for every unemployed american and this is not what the fed wants to see. tom: it was a weak morning for research but the key is alan ruskin saying the u.s. is different and it falls right into the jolt survey where you have the idea and maybe we won't see a higher unemployment rate. the new dallas fed president will speak today. tom: didn't they just speak?

the three of them, maybe lori didn't. jonathan: we met her friday or thursday. the message is pretty clear. they have stayed on the same script. tom: the yen is right up against new yen weakness, the attention screams august. jonathan: very close to $3.50. the global chief investment officer at deutsche bank joins us. we have taken out the june high on the two-year yield in everybody's asking whether the equity market has to test the june totals? >> from a gross perspective, we think there is a good sit -- a

recession coming into the u.s. and it's unavoidable in the euro zone. i wouldn't be surprised if equity markets drop further from here. the june-july uptick is probably not where we end. i wouldn't be surprised if we look at the markets, it's another 5%. tom: what do you do with bonds? the chart i put earlier of price flat yields, global bonds and aggregate basis are a back 11 years. what do you do with that institutionally? >> it's been short duration and we kept it. many investors have to be we

also need to look a little bit ahead as we don't expect a sustained long recession. there is an opportunity if you look into investment grade but i would be careful on the high end aside. these levels seem attractive but that's not where we want to go. lisa: is this a toxic place to invest based on energy or do you see opportunities even the in the u.s.? >> i wouldn't call it toxic but it's tough to be very optimistic at this point in time. there are opportunities if you think the ecb is doing a lot, we can imagine moving from zero to 2.

there are opportunities in european financials but for the overall market, it depends on the energy crisis and from that perspective, it's not owing to be easy for europe in the next month. lisa: did you say you are investing in european banks? >> i think european financials have an upside. if the ecb is moving, they can profit from a high interest rate step i would expect the ecb not to look so much at growth. i think that would be positive for them. jonathan: what's more important here, the rate hikes? >> yes but also yen-europe is not a deep recession from that perspective.

you haven't seen a mess of movement upwards. there could be some positives, looking at rate hikes. jonathan: thank you so much. lisa: there is an upside argument but hiking into weakness, is it though weakness that matters or the hiking and the currency market is saying it's the weakness that matters because that's what the euro is responding to. jonathan: this is what the european banks have wanted for a long time. they are getting it tom: you're being way too kind.

their performance has been absolutely irresponsible. look at the chart for my good friends at bnp paribas. they have gone nowhere in 13 years. jonathan: 75 basis point hike is the expectation for the ecb. if you look at the banks now, you are questioning the exit duchenne and you are questioning the economic back drop. our rates enough to be supportive of stock prices for european banks? lisa: take a look at the capital market activity. you are not getting the revenues from that because there is a massive slowdown. otherwise, whether it's debt issuances or stock offerings on ipo's, it is all stock so what will be the marginal driver? trading? that's sketchy compared to where it has been traditionally because of how unpredictable it is.

tom: wasn't it not too long ago that european banks were moving 250 people into asia and now they are moving them out? jonathan: lisa picked up on the right team, you mentioned asia and some of the banks pulling back on deals. this is what the banks have to do is pull back. is it any surprise that goldman and morgan stanley are saying let's go? lisa: it's not a coincidence that it's in tandem with school starting. they have no excuse anymore, let's go. jonathan: is it real this time? tom: see you in september ♪ jonathan: you saying that? lisa: tom did. jonathan: futures are unchanged,

from new york city, this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world inflation in the eurozone zone has set another all-time high with consumer prices at 9.1% in august from a year ago. it indicates the european central bank will it indicate a jumbo rate hike next week. the justice department says the documents at mar-a-lago may have been moved before. in a filing, there was of photo files labeled top-secret found in the former president's office. they want to appoint a special master to review the documents. it's the biggest two-year decline in life expectancy and's almost a century on the covid

pandemic. the pandemic has been directly responsible for more than one million american deaths. shares are falling at snap chat and they plan to lay off 20% of its employees today. the stock has fallen almost 80% this year. they are struggling with the slow in spending. micheal gorbachev is being remembered as the leader who ended the cold war. he died tuesday in a moscow hospital. he attempts to shake the soviet union system that led to the collapse of the superpower. he was 91. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

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>> we are committed to getting inflation under control and there is a path to get there. recession is a possibility in the process. nobody ever canceled the business cycle. it doesn't have to be like a 2008 recession. jonathan: the richmond fed president and we are live from new york this morning, futures

are just about positive on the s&p 500 after three days of losses. it's pretty clear that fed officials are saying we are happy with the market reaction and we will not back away from tightening. lisa: if you want to fight recession and see gains, sorry. the question i have is what have we priced in? some say small-cap surprised and for recession but what about some of the drivers? what has been priced and and what hasn't and how much will people conserve between the two. jonathan: we heard from deutsche bank there. tom: i have been wrong so many

times but let's start with 1980 and 1981 and the double recession wrapped around paul volcker. it's hard to define recession and it's harder to get the magnitude right. jonathan: i'm not here to say it will be short and shallow but we must be open-minded about it. tom: we've got three dollars 48 cents on the two-year. this is a global issue right now. jonathan: we can close to 350 four the two-year. tuition in the united states is a breeze. this is the week when the tuition checks get written. there is also agony in the political space.

they want to reshape september and the election. what is the best research on this? it is stunning when they looked at the clinical temperature of america, how small the middle is. they surveyed republicans and democrats, between 23-28% is the middle. are they worth going after for these politicians? >> in recent years, i think you can find evidence that there is less focus on going after anybody who described themselves as persuadable. a lot of this is about motivation of the days. at the same time, looking at president biden's speech last night, i think there is a bit of a persuasion attempt when you hear him talking about funding for the police and funding in

support of the fbi going on a two track example. there are some seemingly winning political messages that still go for persuasion rather than motivation but the big picture, the last day kate or so has been more of a shift toward getting your base out and focusing on turnout and that's a national trend. tom: i have the clearest memory of sitting on the couch on a sunday evening i believe when lyndon baines johnson said he would not run for a second term. will we hear that tomorrow night? >> that's still a big question washington. i don't know about tomorrow night. if that were the case, there's still the question about the strength of someone like, let harris and who would be the front-runner for the democratic position. i haven't heard from anybody who feels confident that tomorrow is the night but you have heard

some hints from democrats who don't think the president will run again and that came up in the new york race for carolyn maloney. it's something they are not supposed to say but there is a bit of an expect tatian that the president wouldn't run again. i don't know if that's baked in are not at this point. there could be legal challenges but a lot of the pushback has been republicans talking about how the president should not have this power and what should be done in the future to take that away but it's hard to do how this will play out in the courts if there is a legal challenge now. a lot of the focus has been the political pushback and may be the future legislative pushback depending how much republicans take back in the midterms. jonathan: where is janet yellen?

>> still a little bit more low-price -- low-profile than what you would expect. a lot of focus on the fed and talk from the president on the economy. i wish i could come in here with an answer and the whole story about joe biden and janet yellen in their relationship but she is rather quiet. jonathan: thank you so much from washington. how did you manage to recruit one of the best labor market analysts in the market? tom: i was standing looking across the white house lawn when i was younger and i realized that everything was run out of the white house and there's been a modern disease. i don't know if the same in london but there's a modern disease hear that everything gets run out of the white house

and mr. blinken has been been maybe less visible than kissinger was. we've got a major issue on twitter. they are talking about the derby. darby. jonathan: typically we talk about a north london darby. tottenham is a north london darby. tom: west ham have sucked since they got new members. jonathan: i think they will have a problem with that. when is the new season? tom: i have no idea. it's a documentary. jonathan: you are ridiculous.

futures positive 2/10 of 1% on the s&p 500. you want to do a road trip to london? tom: absolutely. jonathan: lisa is count me out. i'm new york city this morning, good morning, for our audience worldwide, this is bloomberg surveillance. ♪

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jonathan: live from new york city this morning, good morning most we are up about one/10 of 1% on the s&p 500 5/10 of 1% on the nasdaq. what happened on june 14? yields topped out for the year. we took out the june 14 high on the two year. yields are higher again by four bases points.

this fed communicates pretty strongly and is ready to go again stop we had better than expected data yesterday in the new york fed president found this fascinating that everyone is on the same page at the moment and staying there. tom: i'm baffled i the fed speak. -- by the fed speak. we get more on the heels of jackson hole last week. jonathan: the hawks are in charge of the ecb right now. the bundesbank yesterday was talking about going big again. they are communicating again that we need to act decisively. on the german two-year, it went from 27 basis points at the

beginning of this month to 1.2%. that's a huge move and yet the euro is weaker on the month. tom: is germany and france on the same page in terms of a hawkish front loaded tone? jonathan: at the moment they are in the difference between this ecb and what we saw in the previous 10 years is that this time, the hawks are in china -- are in charge in a big way. tom: i am watching the yen which hasn't moved but still front and center. mohamed el-erian had a two-year chart that shows the emotion of the moment. if you are worried about inflation like italy at 9% inflation, this is flat out the interview of the day and recapitulates what we heard from david rosenberg yesterday.

the chief economist at wilmington trust is with us. i thought your note was uncommonly cogent about the disinflation to come. when does the disinflation show up? >> last month. we had an encouraging rating of cbi and still -- and also pce barely pulled down by energy but we are seeing the weakening of inflation slower. a lot of consumer goods and airfares have been affected over the past year or so but it's bimodal with a lot of pressure on shelter and rent and food. those are my running much higher than usual. tom: i like the idea of a by motl theory. we will always take the part of the by motl that shows up later.

is this a fed that reacts to a bimodal disinflation at the september meeting? >> i think it's the september meeting this year. we will likely see a 50 point hike. it won't be as weak as july but what the fed is ready for his 50 basis points and j powell is talking about the curve. he wasn't talking about the magnitude of price going forward. they are all on the same page and there pushing back on the futures which is showing rate cuts so in september i think we get that 50 basis point cut but they said in july that the rate hikes they have done, we haven't felt the full impact yet. he says we will see those come

through later this year. lisa: you say you are already starting to see disinflation but are you positioning around that and being more bullish on risk assets because the fed won't go as far or are you suggesting the fed because they are exposed, make a policy error and tighten into recession even if it's not necessary? >> we've never gotten so testament to -- and it we've never gotten so pessimistic. even though there baseline is for inflation to slow down, there is clearly a lot of upside risks and we are watching wages and labor. if the wages keep pushing higher, they are likely to keep tightening. if inflation weren't swelling, you would get closer to a policy error and closer to a recession. lisa: you are neutral on risk

which is unusual and you been overweight cash but now you're looking to deploy the cash. are you getting more bullish or do you have more conviction going forward? >> we are not expecting a recession we are getting a little more blissful step we are likely to see data on labor later this week. it's an opportunity to deploy the cash. valuations have come down to but it remains to be seen how much market pressure remains. lisa: where are you seeing opportunity most clearly? >> if our baseline plays out, we would expect -- we haven't seen long term rates move cup very much on the short and but we

would expect that to come down a little -- a little bit. that would point toward a recovery in the economy and figures would benefit from that. tom: cpi not act in 1947 but back to world war i. when inflation surges up, it's wildly stochastic and comes down quickly. given the pandemic on the supply side and the dynamics, are we going to see another bout of stochastic surging inflation as opposed to disinflation? >> there is a good chance that things come down pretty quickly and this gets back to transitory which is a dirty word now. we are looking at a lot of inflation caused by supply chain challenges from last year. it's rolling off now so when you

see walmart cutting prices and retailers saying we order to much stuff, you could have it come down pretty quickly. the risk is labor but also put energy in there. tom: if you get out in front of this, should i load the boat by september 1? >> i don't think there is any reason to expect anything other than a fit -- a recession. tom: what do your managers think about cash? is it in asset? >> it's certainly more of an asset now than it was a few months of go. we are looking for stronger returns of the inflation story plays out step there are opportunities in fixed income but right now, it's more on the

equity side. jonathan: morgan stanley sent out a memo to get back to work. >> we been back here several months. not quite this early and there is a few people around that you can't see them now but they will be in pretty soon. jonathan: we appreciate it stop tom: i wandered out to a tennis match last night stop i was sitting up so high and there was no other topic in the chat then work from home. jonathan: the idea that you were sitting in the seats of love. those were great seats.

tom: the young lady from france, some of my people found them. jonathan: lisa and i couldn't find tickets. tom: they said they had one ticket. jonathan: cable is $1.16. i can't afford a tennis match. look at this. you go all the way back to 2020. there was a bifurcation in the fx market. this is not a pretty picture for the u.k.. lisa: are you saying it's because of the pound weakening you didn't go to the u.s. open? there are projections coming about the inflationary backdrop. it's beyond shocking as beyond

what we are seeing in europe and you wonder how they will deal with it. to me, this is one of the biggest stories of how they deal with it is the leadership as far as countering high gas prices with lower demand and and that -- and inevitable recession. jonathan: we are seeing bigger and bigger expectations from the central banks in europe but the currency is weaker. tom: lisa seems stressed today. it's the voice of a parent wondering if their children have the right calculator to go back to school. are the kids properly calculated? lisa: they are asleep and i'm going on vacation. jonathan: 856 a.m. lisa: this is the last straw.

jonathan: are you coming back from vacation afterwards? lisa: that is the plan. tom: she has taken more vacations this summer than you and i combine. jonathan: futures up 2/10 percent, this is bloomberg. ritika: keeping you up-to-date with news from around the world, this is the first word step more revelations on the classified documents founded donald trump florida home. the justice department suggests that he wanted to affect the investigation by moving some of the papers. they were found in the former president office. they are appointing a special master to review the documents. there could be a recession in russia. there will be a halt in gas on the nord stream 1 pipeline.

there is a concern they will find another excuse to clamp down on supplies. the rates have moved retail in england moved more than they have in years. two of wall street's best known investment banks are coming back to the office. morgan stanley and jp morgan are removing restrictions. they can enter offices with no vaccine or face covering. they had -- they have been pushing for return to the office. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

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>> i think the fed is wrong. i think jay powell has already told us what's happening without focusing on the supply side of the economy. jonathan: live from new york city this morning, futures are positive just about a few tenths with a few days of losses on the equity market. we take out the highs of the year in the euro is weak as well as sterling. tom: what's the emotion of 115. is that why dow 10,000? jonathan: it's certainly troublesome for the bank of england. tom: what does that mean to the

people of the united kingdom? jonathan: if you are importing inflation, you are in -- importing a whole lot more. tom: it's a great honor to have julie norman with this, the codirector on the ecl center of u.s. politics. we digressed today to mr. gorbachev. what is mr. putin hate him so much? is he the guy they gave up the soviet union? >> that's certainly a lot of it. what we see with russia and ukraine today, you can draw a direct line back to gorbachev at a time when putin was coming into his own in the kgb and saw that revolution as a complete tragedy. the changes that gorbachev made

before that as well, the opening of the multiparty election. tom: the idea of gorbachev and yeltsin which i've been wrong on. we come to vladimir putin. who is after him? when you look at transfer of power, how can you choose who is after vladimir putin? >> gets a tough question. vladimir putin has consolidated howard so much around the inner circle of the party that it's not like looking at another country where we can say who is competitive in election or whose popular. vladimir putin will try to hold onto power as possible. lisa: corbis jobs death raises a question as to whether russia

could be a democracy and whether democracy has failed in russia. will whoever follows him also be an autocratic leader because of democracy that did not take off in the way many people hoped? >> gorbachev is hailed from the west as a hero. he was unpopular because even in the early 1990's, he could not deliver on his promises internally for what we are hoping for on the economic or political side. curvature was opening the growing pains would be temporary. that doesn't mean a country is doomed on one trajectory forever but it probably into the -- indicates it will be on that route for the coming years. lisa: heading into the fall, the

focus will be on europe and the national gas situation. nord stream 1 goes into maintenance and will it come out as the big question. what is the advantage for russia to just cut off supplies? isn't that cannibalizing certain rep -- future revenues? >> it's the main area that russia has had leverage and putting the squeeze on europe and the u.k., just showing where they have this economic and political muscle and we see them leveraging that. a lot of this is tied up with relations with china and iran. they are hoping the -- this will bring them closer to their allies. tom: away from the generalization that the russian military effort is in slow

motion and the ukrainians are making it up as they go, that's a stereotype. what's the nuance in the south between those two forces? >> there is a lot we don't know a lot of the coverage we are seeing is telling the story that many viewers in the west want to hear. in reality, they are trying to recruit more people into the army. it's not clear how much ukrainians have been able to push back or not. there is the u.n. moving into stabilize but there are a lot of areas especially in the eastern part of the country that ukraine is trying to chip away at that it will be a slow slog through

the winter. you see some of those victories and some of them are there but i think it will be a long conflict. jonathan: thank you as always. the consequences of this war will be felt for a long time and sanctions off the back of it. in the u.k., how long will this coalition last? the leading candidate for the next prime minister in the u.k. is talking about plans to cut taxes and raise spending. the former deputy governor of the bank of england was with their team in london earlier this morning and talked about the risk of the deficit longer-term and how investors may think the u.k. is not a great place to invest. what is the central bank's role

in all of this? lisa: the question that you ask about where is the resolve and how much push back you start to get, that goes to the jennifer granholm way. she raised issues with the exports of natural gas from the united states to europe because it raises the price domestically in the united states. at what point does things splinter? jonathan: that was the first question the tom asked yesterday. is energy on the same page as the state department and this white house? tom: to your point about currencies, why do we follow sterling? it's a litmus paper for the system. february 24, sterling was 14%

depreciation. jonathan: that's one heck of a move. futures are up about a third of 1% and the nasdaq bouncing back slightly and we will break this down with evercore in about four minutes time. from new york city on tv and radio, this is bloomberg surveillance. ♪

>> i think in the next three-four months and the rest of this year, it will be a volatile time. >> you have to be patient and realized we are in it for the long-term. >> the fed will face increasingly more difficult challenges this time around. >> you want to be very wary about the relief rally. >> you are fighting the fed if you are bullish and it's hard to find anybody who is bullish now. >> this is bloomberg surveillance. jonathan: where did all the balls go? from new york city this morning, for our audience worldwide, this bloomberg surveillance live on tv and radio. futures are up a quarter, 7/10

of 1% on the nasdaq. tom: not too much agony but the two year yield this morning is a big deal in the japanese yen will be coordinated to september. jonathan: if we get bad news this friday, is that just bad news? lisa: if you get a disappointing jobs number, does that give relief to the rate hike in september? what are we really looking at. longer-term inflation expectations are tumbling since jay powell's speech. people think they will get inflation under control and that perhaps is white you are seeing a lift in tech stocks. it may be good for those in a

slow growth environment. jonathan: they all have been saying the same thing. maybe rates will hold for one year? maybe longer. tom: it's a parlor game and data matters step into jobs day, this is the beginning of the study of friday jobs, does adp matter for jerome powell? i don't think so. jonathan: sometimes we end up trading on it. lisa: because we've been saying that adp doesn't matter, they took a break and said we would not put out data and now they are coming back and saying it matters. this might be a pivotal moment.

you will reassess. tom: what about sterling? jonathan: let's do that. the euro-dollar is 89 and we talked about pound sterling. lisa: its hiking into weakness and that's the more prevalent story as we look at the potential projections for in elation in the region, 18% but it might be a marketing ploy. nord stream 1 goes off-line for today's days today for maintenance. the question whether russia will stop importing natural gas to europe. we aced -- we are seeing a

natural lift two guesses but a huge decline last couple of days and this is underpinning some of the attempts of the bullish feeling most there is a concerted met -- effort by eu members to structure the electricity markets. 8:15 a.m., do we care? adp will put out their numbers after taking a break for apple of months. how much is this more relevant to give a sense of the jobs reports? the data was more important yesterday than people thought. we saw those openings climb and now nearly two job openings for every american. that signals that there still is a lot of momentum. that is the concern that this is going in the opposite direction of what the fed wants to see.

this is a big concern for some people even though it's good news. fed speak continues. will they give us any new insight? the three fed president lined up to give a sense of what they are looking for but i'm looking for insight on the balance sheet. jonathan: so am i. are we calling this adp wednesday? lisa: yes. jonathan: thank you. the chief equity strategist at evercore is with us. you call this the gray zone, why is it? >> we had a reasonably epic bear market from january-june that was not only the epitome of don't fight the fed but market took the hawkish narrative and ran with it in an unprecedented way causing the biggest losses

in the combined portfolio we've seen in years and then it all turns. it was june and a few weeks ago. now we are at a point whether we go back to the don't fight the fed mantra or do we think about the unfolding of the fed easing off which is not at all in the script now even though people are discounting that. tom: david rosenberg and lou tilly were talking about the disinflation story. we are going to 4% they say. what happens to your world if we get a disinflation? >> stocks do well. tom: double digit well? >> not in this environment, not yet. the likelihood is if that

happens, 1% gdp is probably where we are next year and that's still a constrained environment. you've got three fed speakers today. if you think about it, going back to the first hike in march, every time there was an extreme market response to anything that jay powell said either hawkish or dovish, the fed speakers come out and have moderated the tone. it will be informative what they say tom: can we have him on every day to lighten things up? lisa: so far, the other fed officials have absolutely doubled down and have not watered down jay powell's message but it's gone the other way. you are repudiating the idea that big tech is rallying in the face of economic weakness after the fed is determined to hike

rates. >> it's surprising to the extent in the last couple of days have much the other fed officials have doubled down. when you look at yields, you know they are going up on the short end but when you think about the fact that tomorrow, we will start $95 per month in qt, it's hard not to make the case that yields in the long and are going up as well. as we've seen in this positively correlated stock/armed, that's a good message for growth stocks. lisa: what message are you seeing? >> does the consumer hold in september? one of the anomalies of this year is that consumer sentiment has been abysmal the entire year and spending has been fine. that's one of the strange things about a new inflationary environment but if you think

about it, could you get into this idea that we are back to the office back to school, september is challenging. that is the kind of environment if the consumer holds, we could be ok but if not, there is the potential retest of the lows in store. jonathan: it's not whether inflation comes down to 4%, it's what price you are willing to pay to get inflation down to 4%. what happens to gdp when that happens? it's not so easy to say we just come down to 4%. >> not at all but we learned anything the last 2.5 years is the tail outcome when people talk about black swans, they happen more frequently than we would have ever imagined. that's really what you've seen to a large extent this year.

there is a lot of different potential out comes as we head into the fall. jonathan: how are you and the team thinking about recession? >> we continue to think you are not likely to have a recession but the view of 1% gdp next year and if that's correct, we see asymmetrical risk around that number, it will still deal for asset markets as if there is a recession. that argues for higher volatility and it argues for humility in the forecast. jonathan: they sent out a message for everyone to get back to the office? >> the day after labor day, we are guns blazing.

jonathan: did you notice that message? julian, it's good to see you. tom: they had to take a break in the middle of the u.s. open. jonathan: there is something going on in the secondary market at the u.s. open. tom: i agree, i got lucky. jonathan: if you have any theories, send them along.

something really going on in the secondary market. futures up 2/10, from new york, this is bloomberg. ritika: keeping you up-to-date with news from around the world, this is first word. another all-time high as consumer prices in 19 country currencies went up 9.1% which beat economist and indicates the european central banks are considering a jumbo interest rate hike next week. the justice department's is white house records held in a storage room at donald trump florida home may have been moved before an fbi search engine. the justice department says that could have been an attempt to obstruct the investigation. there was a photo of files labeled top-secret said to have been found in his office.

they will appoint a special master to review the documents. the struggling home goods retailer said it may sell an unspecified number of shares from time to time. bed, bath and beyond is holding a conference call today. the parent of snapchat plans to lay off 20% of employees starting today and the stock has fallen 80% this year. it's been struggling with slow down in app spending. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> the decline in the gas price closing in on $1.20 in mid june is a trend. that's been well over two months of that's been having some momentum and we expected to have more. jonathan: a big move, $3.80 the average price per gallon of gas in the u.s. it was more than five dollars per gallon. futures right now are positive. yields are up three or four basis points on the 10 year.

the epicenter of the price action is foreign-exchange. there was hawkish speak from the bundesbank this morning. we are talking 75 basis points possible next week. sterling is breaking down as well. cable is negative one third of 1%. tom: i just looked at a fancy chart on sterling. we've got to get out front of the real yield which is quietly moving up. the 10 year real yield america is an unspoken story. jonathan: lisa's chart was the last -- cover the last 24 hours. what a move that's been. lisa: it's been dramatic and underpinning the move we have

seen in equities and how far the fed will go and how much pain they are willing to inflict to get inflation under control. tom: the s&p 500 at 4000 exact week, let's go down to washington. in the old days, politicians kiss babies. how do they reach out to voters now? give us an up date on the crazy messages we will see towards november? >> in terms of crazy messages especially that speak to the modern era of campaigning, the pennsylvania senate race has been interesting and a bit surprising. you've seen the republican men met oz, dr. oz go after john fetterman the democrat a couple of times, talking about his health will step federman had a

stroke and there is a twitter add that was put out using the word crazy. it's the kind of thing that previously you would have thought a super pac independently would do. i don't know how that will play out. it's a surprise that dr. oz has taken that line but social media especially pandemic and post-pandemic, there is a huge focus on social media and what you can do on that and how that has undermined traditional dots about fundraising. the pennsylvania senate races probably my favorite right now. tom: the stereotype is that the republicans have money in the democrats don't. is that true this time around? >> for a while now, democrats

were the first to use social media in the modern internet as a means of big-time fundraising. first obama campaign was out earlier than republicans on that and a lot of this has been shaken up again with social media. in the 2016 race, trump relied on social media more than tv advertising. jeb bush's people were talking about shock and all and hoping they could raise so much money that even marco rubio wouldn't dare to run but that was not the case so the presence of social media and the digital strategy in the dominance of that has made it totally different than the traditional fundraising focus. lisa: we have to mark a moment that we missed which is that the

pandemic is officially over. it's the case with goldman sachs and morgan stanley saying get back to work, you don't have to test and you don't have to wear a face covering. it's your responsibility, not a public health concern anymore. is this a watershed moment? >> i don't know about that but we have been inching toward a dish toward a time and which medically, the pandemic would not be over and it's not, it's not gone and it still has been a more significant issue than the seasonal flu. medical professionals and politicians have the sense there would not be a hard and then there wouldn't be a mysterious disappearance of the virus like

the spanish flu and they were going to have to make some decisions about when to ignore it and that raises our questions about funding for vaccines and what the u.s. role is internationally and how seriously they take that. the last six months or so is been a series of examples of lawmakers pushing for vaccine test funding less seriously until it fell off the table. we've gotten to the point where there is a significant delta between the medical reality that is still there and the political and cultural willpower to take significant steps that people have gotten tired of jonathan: thank you. goldman and morgan stanley are hoping to get back to work in a big way. lisa: they say there is enough remedies and collective immunity

that you will be fine and if you're not fine, we will deal with it. it's reflecting the zeitgeist of the nation. want to get back to some sense of normalcy. you are seeing that around the country. you can come in or go out to eat and go to the show than you can go back to the office. jonathan: sort out the office. make it more comfortable if you want to come back. lisa: maybe that would be on the architectural channel. tom: yesterday, 473 people died. it seems to be a number that's trending up ever so slightly of the over one million deaths

we've had. the science on the politics are miles apart. lisa: a lot of companies are doing that. jonathan: just make it nicer and more exciting. tom: we are going against the trend. jonathan: futures are up one third on the s&p 500, from new york, this is bloomberg. ♪

jonathan: if the pandemic is over, are we allowed in the same room? tom: i have been lobbying for it. we will share our tang. jonathan: allowed to sit together for the first time in two and a half years. the nasdaq 100 up .6%. i have talked about the losses the last three days. down 5% on the s&p 500. more on the nasdaq. a bit of a bounce back after suffering the last week on the

back of this market. the two year yield taking out the high of the year yesterday at the close. this morning up four basis points. 3.4807. that movie supporting the u.s. dollar, even though we are seeing moves across the atlantic higher. dollar index off of levels that we have not seen since. 2002 euro-dollar just holding onto parity. sterling came close to a 1.15 handle. if you look at the month to date chart of yields in the u.k., germany, massive moves. what have you seen in the currency? weaker. the central banks looking to bring in big time inflation prints. tom: italy, 8.2 survey, 9%

inflation. jonathan: look at the headline in europe. nine handle for the whole of the euro zone. that is why the bundesbank is pushing for this decisive move. we are assuming they will have a recession and will hike aggressively into it. bear in mind where cpi is in the euro zone. rates are still at 0%. that is why many of the hawks are looking for a big move next week. tom: i go with that, but, sorry, europe is unique. and it is underplayed, there is a war going on. jonathan: we will be feeling the consequences of that for a long time. if you have supply-side problems and you are guessing that with interest rate hikes, they could be chasing their tail for a long time trying to get that down. tom: the combination of those dynamic parts, when does the fed see enough data, or another

central bank, that we have to ease up and get to a point where we are comfortable with? some are saying this will be the surprise of september. jonathan: what is the price they are willing to pay to get inflation down? how much pain are they willing to tolerate? tom: do they get inflation down or does it decline itself? jonathan: if that is the case, risk is off to the races. i don't think that is the base case. tom: i am not in a predictive mood. jonathan: i think you are in a better position to protect the game. let's to cross as a price action. lisa, very tolerant, patient. lisa: watching and listening to

you guys discuss your theoretical road trip to a fantasy show that has to do with football. illuminating. one of the reasons behind this conviction is the strength of the consumer, strength of the balance sheet of companies and individuals in the u.s. hp reported earnings after the bell, downgrading their forecast as a result of less demand for personal computers and printers. also seeing less demand from companies. we have seen this in semiconductors, and the hardware companies. how much does this portend the something bigger versus everyone buying their computers in the pandemic and don't need them now? shares tumbling after the company filed to share more shares -- sell more shares. snap down 7% after announcing

they will be cutting 20% of its workforce. how much does this portend ongoing job cuts? we have seen this in some of the social media companies getting hit by a lack of advertising. how much of this is an anecdotal story versus something more mainstream? i'm also watching the energy sector. we are seeing the third monthly decline of losses, the longest streak going back

of the runoff and balance sheet, what that will do with respect to the removal of liquidity in the markets, how much of that will inject volatility into banking in particular. what is your view of what you are seeing on the ground with liquidity exiting certain aspects of the market that have been fueling some of the frothy areas? deborah: it has been going on since june, will start to double tomorrow. it has been masked by other issues in the economy. what we have seen from a rollup of treasury and mortgage-backed securities has already been overshadowed by the increasing rate environment we have experienced, selloff in those securities in response to that.

the expectation would be as they double it, you are looking at something that has an impact of another 25 or 50 basis point-like tightening by the fomc. as such, where are the buyers, who are the buyers? we have from a treasury perspective, have been in a supply-demand in balance where there has not been enough supply in the marketplace, so it will be welcomed to some degree for the highest quality treasury securities in the marketplace. from an mbs standpoint there may be more resistance but smaller volume. jonathan: we have to leave it there. we have some news from bed, bath & beyond. headline after headline. they will close 150 doors, jobs getting cut, reduction in the workforce.

what do you see, bramo? lisa: discontinuing three of nine of their labels. this comes after weeks of speculation about them being able to raise financing. they just filed a document earlier this morning saying they would raise an unspecified amount of money in an unspecified amount of share sales, no details to that. this highlights a problem especially as some suppliers cut off deliveries because they were worried about late payments. these are the issues facing a company that's been struggling for a while. how much can they rise about it, since they were a meme stop darling? jonathan: they see full year comp sales down in the 20% range. on the share side, summing up to 12 million shares in an offering. the offering proceeds used two buyback debt. tom: is this a zombie company?

i say that out of respect for the hard-working people working at the company. total return per year, -4% per year. think about what they missed versus other retailers, home depot is the icon. -14 percent per year. if this does not define zombie company, why doesn't it restructure? jonathan: this feels like a kitchen sink morning for the company. lisa: especially because they are trying to raise money in the equity market to buy back shares. that will be terrible for the equity, which is why you are seeing such a response. is anyone going to buy it? jonathan: down 26% in the market and falling. from new york, this is bloomberg.

♪ ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. more revelations in the probe of those classified documents found in donald trump's home. the justice department suggest there may have been attempts to obstruct the justice department i moving some papers. top secret files were found in the president's office. europe faces the risk of blackouts, rationing, and severe recession if russia slashes gas deliveries further. starting today, there will be a halt in gas sent through the nord stream pipeline. there is a concern moscow will find another excuse to clampdown on those supplies. prices and brutus shops rose at the highest rate since 2005,

increasing to 5.1% in august. the price of food rose even more, 9.3%. shoppers are doing everything they can to save money at the checkout including buying less food. credit suisse is divided on the fate of its troubled investment bank just before crucial meetings. one camp is pushing back against an aggressive downsizing, others are in favor of more cuts. the investment bank has been at the heart of some of its biggest troubles. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg.

>> we have agreed all member states to jointly face 15% of energy between august now and march 23. good news. we have not reached an average in the european union a feeling of 80%. jonathan: that was from ursula von der leyen, the european commission president. the original target was 80% by november 1. some good news out there in europe. good morning. futures bouncing back, kind of, on the s&p. the nasdaq up half a percent. crude, 88 handle it. breaking down by 2.9%. there were some concerns about

supply out of iraq. they have calmed those concerns. this idea that maybe there is a deal from iran. i feel like we've been talking about this forever. lisa: this to me is a recession call. higher prices are cannibalizing demand. as the world slows down, the less demand there will be, leading to lower prices. jonathan: i am with you. demand destruction. tom: i think the jury is out. i link it to the covid policy in asia. some have written about that on the pacific rim. will kennedy joins us in london. there is a tone out there from a select few of a potential global

disinflation. for all the other matters out there, is oil linked to the possibility of a global disinflation, or is oil separate? will: i don't think it is separate at all. i think it is being put under pressure by a lot of things, geopolitical things, but the thing that is putting it really under pressure is the prospect of higher rates and the stronger dollar. that is a huge headwind for oil, one of the things that stops it from getting traction. the other thing about the market, it remains hugely volatile. the saudi minister intervened last week to say we are willing to cut production if we need to. that sent oil up to 106. we are below that now.

these moves do not reflect a lack of liquidity in the markets, according to some. it is hard to read oil from a fundamental perspective right now because a lot of people are not sure about the price. tom: who is the marginal player, opec-plus, the u.s., the rest of it, who is the country that is the decider of oil dynamics in september? will: i think there are four things to watch. china, huge source of demand. russia, more sanctions coming to oil before the end of the year. will they sell more oil to asia and less to europe? how does saudi arabia respond, do they follow through on the threat of cuts? and the usa . we are about to stop withdrawals from the spr, which has been a source of comfort for the market. shale is not growing as fast as

people expected. an interesting, about high expensive pipe is getting in the shale patch which is dampening growth. we have to keep an i on those four countries as we look to the end of the year. jonathan: we often probe this particular topic, but can you frame how difficult this winter will be, the decision that these governments will need to make in the next three weeks? will: to give you an example from the u.k., people are starting to realize just how catastrophic their bills will be. businesses are particular, who are more exposed to free market prices, we are seeing all of these stories of people running cafes and pubs and their bills going up five times. people are saying how can i operate my business on that basis? they are saying without some form of government help, i will

fold. you are starting to get a picture of how this will impact the larger economy, and if these energy prices are left unchanged, small businesses in the u.k. and other places will have a catastrophic impact. what we are watching is how governments respond in the u.k., how the new prime minister will respond. it will need a big policy intervention. lisa: there has been some plan to bring down the price of electricity, and emergency combating the very high prices. that is what we learned from ursula von der leyen when she spoke about what the european union is doing to collectively address the issue. do you understand what the plan is? will: there are two parts to the plan. i don't think anyone fully understands it yet, they have not fully sketched out the details, but there are two components. one will have an impact on the shorter term, another on the longer-term. in the short term there is discussion of a price cap, cap the price of electricity which

got completely out of hand this week. that cap would still require someone to pay the market price. it is a way of sharing the burden with the different government balance sheets, industry consumers, the state somehow. those details are yet to be worked out. it would be an intervention for a period of time, shares the burden differently. then there is a different thing. at the moment, the price of electricity in europe is set by the marginal cost of supply, the most expensive power of unit to balance the market. that is natural gas right now which is hugely expensive. there is a lot of power which is nuclear, which costs less to produce, so is their way of delinking power prices from natural gas by having some sort

of average across the productions. this is complicated, technical stuff, the market would still need signals, but it is something that people are taking a look at. to be honest, that would take a year or two to happen. it is not a short-term thing. jonathan: we are no expert on this and we need your expertise to break down what will happen. will kennedy in london. policy intervention to tackle this stuff. we are talking about fiscal intervention. in a world of low rates, qe, inflation, that may make sense. in a world of high rates, qt, i wonder in certain countries how wide-open the bond market will be for that? i wonder if what we are seeing now is reflecting that? lisa: one of the most important conversations we have had in the past few weeks, the paper

presented at jackson hole about the idea that fiscal stimulus gives the expectation for more inflation, for a rescue to come in. that combats a lot of what central banks are trying to do. jonathan: that is a topic we will continue to discuss with people like daniel morris from bnp paribas. this is bloomberg. ♪

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>> i do think it is optimistic that the justice that we can navigate positive activity soon. >> in the near term expect some choppy sessions. >> any good news gets taken away by the feds need to tighten. >> the is finally taking hold and creating the disinflation. >> it is hard to see that we avoid some sort of global

recession. >> this is bloomberg surveillance with tom keene jonathan ferro, lisa abramowicz. tom: the last day of august, the beginning of september. turmoil in the equity markets. greater turmoil in the foreign exchange markets. jon, lisa and i want you to understand, -- nothing gold can stay. we quote robert frost. lisa: i was hoping that you would throw to jonathan, not me. we had a debate over the break, but am excited for winter. tom: are the markets excited for winter? this is a term all time for the fed. jonathan: we have wiped out the

gains from august. down 5% on the s&p. don't fight the fed seems to be the message right now. yesterday we found out good news is bad news. consumer confidence, decent. that means the fed has more work to do. tom: the gentlelady from cleveland with more guidance, data dependency, and the rest. it is a certitude among fed officials that inflation will not pull back. jonathan: the race to what? they are talking about a four handle. lisa: she sees unemployment above 4% by years end. this is the dual mandate that becomes more difficult. the market is still not pricing that in. they are getting up to 3.9% if

you look at the fed funds future market. then there is still the expectation for rate cuts. this is what is striking to me. people are saying we do not buy it. we still think there will be rate cuts later in 2023, early 2024, as you recapitulate. tom: we make a joke about it, but lisa is right, the toxic brew that is out there right now is a desperation into september. jonathan: the economists will focus on what is bad, good. markets have to think about what is better and what is worse. i want to know how markets will respond to this incoming information. yesterday was an example where we got good economic news, consumer confidence, job openings, but it was bad news for the market because the fed has to do more. on friday, is the bad news bad

news or is the bad news good news? that means unemployment is lower, payrolls are higher, wage growth starts to fade. that is the objective of the fed. tom: the objective will be the news flow. i will do a data point. adp in 12 minutes. jonathan: what is bramo, it, adp wednesday? yields higher by three basis points. a lot of attention being paid to what is happening in the fx market with euro-dollar parity. it is very much about what is happening with pound sterling at the moment. 1.1626. tom: sterling is quite interesting. maybe also looking at some stability in the turkish lira. now a brief into september. daniel morris joins us from bnp

paribas. what is the nuance launching from august into september? daniel: at this point, what will not change, we will have some hikes. the payrolls data will inform that. but we should be focusing on the objective of the fed, to get growth down, inflation down, and the interest rate hikes are just a means to an end. whenever it takes, if you will, to get growth down. not only growth, per se, but to get the job market back in line. with the recent openings growing over the recent month, still 11 million jobs down between what employers are looking for and what employees find are available. that means continued higher wage gains. that is not sustainable from the fed's point of view. jonathan: not the environment

that you want to be boxed in. daniel: we all anticipate this session next year, that is what it will take to get inflation down. but that doesn't mean that you should be allocating for that at this time. we are still neutral on equities. at some point, you will want to pivot, but we think it is premature right now to do that. jonathan: why do you think it is premature? daniel: typically if you look at how markets react to recessions, it is mostly prior to one, free months out, you see a change in equities. what is different this time is how much we anticipate this recession, where they often catch investors by surprise. whether that timeframe is different this time, will that pivot happen sooner? more likely than not.

i think we will need to see more meaningful deceleration in the economy before that is likely to happen. lisa: is this all about the economy or is this about the fed? the fed wants to influence the economy lower. neel kashkari said he would be happy to see the market selloff, was disappointed to see the rally in previous meetings because this is not the goal. they want to see a tightening of financial conditions. how much can you push against that with his backward look of historical performance of equities in the face of recession? daniel: absolutely. on the one hand, we have rates going up, decreasing the discount rate, having a negative impact on valuations. we talk about earnings expectations. still quite rosy for next year, 10% earnings growth into next year. that is not compatible with the slowdown in growth that we think we have to see. what will be the catalyst to bring those back in line?

that is the big question. at some point it has to. lisa: what are you doing with energy right now? daniel: broadly speaking we are overweight commodities. in anticipation of a recession, that is typically an environment for lower oil prices. lower demand will still happen but we are in a different world when it come to the supply side. we are not seeing that supply-side response. tom: i looked at the bloomberg total return all in a global aggregate index today. price decline, yield up, we are back to where we were in 2011. state the case for ownership in fixed income instruments. i don't get it. daniel: you want to look at it from a portfolio perspective. a big disruption in the first half of the year was the positive correlation between equities and bonds, in a bad way , prices going down for both.

we are going through this transition of a bull market to a bear market for a while. at 3% treasuries, we should be getting to the point where we have a stabilization of rates. right now, timing, we still anticipate higher rates, short duration. but we don't think we have as far to go. jonathan: how would you respond to a bad print on friday? is bad news good news? daniel: it is good news relative to the 75 but it is still 50. that is what will matter. tom: this is what we have come down to, trying to figure out what good news means. jonathan: once you get a decent reaction of the -- idea of the reaction function by the fed, try to work on what it means for the market.

yesterday, good news was bad news. i hate it, you hate it, too. i wonder if bad news is just bad news. tom: i am watching foreign-exchange, all the different dynamics. this is really important. you don't just follow three pairs. they look at all sorts of dynamics. jonathan: if i could follow one thing right now, it is the u.k. this will be an interesting case study. you have the energy crisis on one hand, i think it is fair to characterize it as that. the expectation that the government need to offset that with fiscal policy. and a big question mark whether the bond market will be available for them to do so. if not, you'll see a weaker currency, higher yields. at the moment you are seeing a weaker currency and higher yields. it is easy to make this offset if rates are low, inflation is

low, and you are doing qe. right now they are set to do qt, inflation is high, rising interest rates. lisa: in the prior era, there was support for fiscal spending because rates were so low, the window was so wide open for governments to borrow. that is being flipped on its head. what do you get if you have fiscal policy moving in the opposite direction of monetary policy? if these areas are in direct conflict, who wins out, what happens with inflation? jonathan: sterling around 1.16. tom: i love september. length and night, shorten day. jonathan: we have to take a break. tom: the poetry of september, it brings tears to my eyes. jonathan: for goodness sake. this is bloomberg.

♪ ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. the justice department says white house records held in a storage room at donald trump's florida home may have been moved before an fbi search in june. the justice department say they may have been -- that may have been an attempt to obstruct the investigation. top-secret document were found in the former president's office. inflation in the eurozone zone has sent another all-time high. consumer prices rose 9.1% in august from a year ago. that beat the median estimate in a survey of economists. that strengthens the case for a european central bank to consider a jumbo interest rate hike when it meets next week. shares of bed bath & beyond are plunging. they have secured new financing and will close stores and slash

its workforce. they face a shrinking cash pile and is falling behind on payments to vendors. that prompted some suppliers to halt or restrict shipments. shares of snap are falling today. they plan to lay off 20% of its employees starting today. stock has already fallen 18% this year. snap has been struggling with a slow in advertiser spending. mikael gorbachev is being remembered as the last leader of the soviet union who ended the cold war. he died tuesday in a moscow hospital. his career disintegrated in the process. he was 91. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg.

jonathan: live from new york city, good morning. do not shoot the messenger. downside surprise on the adp. bad news is good news? equities up .4% on the s&p. yields fade a little bit on the two-year. almost unchanged on the session. 3.4561. this out on twitter. adp unveils a new dartboard. michael mckee is with us. mike: i am the messenger but i don't know what the message is. adp says it's a brand-new survey that's been retooled, does not depend on models. it is a snapshot of the labor market during the month based on the payrolls they process.

132,000 jobs. 22,000 in the goods producing sector, although there was no change in manufacturing jobs. service providing jobs rose 110,000. what does this mean for friday? the adp people say this is a standalone indicator, unique snapshot of the economy. i bet everyone on wall street will be plucking these numbers into friday's number. the consensus number is 300,000. also a new report on pay. according to this, and you will pay at a 12-month rate was at 7.6% rate of increase in the month of august, which is high but stabilized. hard to know what stabilized is because we don't have the numbers. in theory they are releasing those today. we will try to put it all together for you. tom: nasdaq up eight points.

mike mckee, i will not mince words, this has been a busted data point for so many years. they brought in so many people, writing about so many things. what is this professor going to do for the second adp age? mike: they are looking at large sources of data that can be trimmed down to a smaller point that is useful to people. they say it is not model-based, only based on the adp data. tom: they are looking at the paychecks of america to get their data. mike: yes, in terms of small, medium, large industries, even breaking down the pay stubs whether or not you are a job

lever or stayer. it sounds a lot like the atlanta fed job tracker. tom: this is the heart of the matter. maybe now they are going to the actual data. a diary of data points, research points. how many of these tertiary numbers are there? lisa: empire this, dallas manufacturing that. these numbers are important for people who are data dependent. is this adp report powerful enough to move the dial and be relevant moving forward? it is a new methodology to make sure that people do not shrug it off. mike: the retooled this because their previous surveys were designed to sort of preview what was going to happen in nonfarm payrolls. now they say it is not a preview, you cannot extrapolate,

but people will probably try to do that. then it will depend on how close they come to the overall private sector jobs in the nonfarm payroll numbers. we will have to see how all of this works out in the longer run. jonathan: i think mike is being kind. thank you for your leadership at jackson hole. fantastic to see with all of the fed presidents. what is the takeaway for you? it is not september, 50, 75, there is something bigger happening. mike: it is the terminal rate and how long they take to hold it. everyone agrees that they will get to a place above neutral, hold rights there, but there are disagreements on where that point of neutral is. 3.5, 4% or higher? and then disagreements on how long they will have to keep it there. but they are determined to bring down inflation.

that is the message that jay powell was trying to send on friday. jonathan: do you think they have sent a message in a convincing way that higher unemployment is a prize worth paying for lower inflation? i have returned to the chairman powell speech a few times, and the word "pain." higher interest rates, soccer log bear market conditions will bring down inflation. they will also bring pain to households and businesses, but a failure to restore price stability would mean far greater pain. how convinced do you think are the general public of that? mike: i don't know how much attention the general public pays to the fed, but the markets seem to be buying into it but slowly. through the markets, people will see the impact. maybe it starts to register. powell did not say we are going into recession, unemployment will rise.

you have to read between the lines, which everyone on wall street can do. i don't know how much of the general public is paying attention, especially in august, when their focus is on that last vacation before school starts. tom: let me cut to the chase. and hyman is talking about 4% inflation where we are heading. when is the pain at a 4% inflation? mike: we have heard the fed to we go to a 4.1% unemployment rate which would mean a minimum amount of pain. the fed believes the natural rate of unemployment is 4.5%. hard to say. you get to 4% inflation, and maybe people start to feel better. look at what happened with the consumer confidence numbers yesterday because gas prices have fallen. they are still high but they have fallen, so people are feeling better. jonathan: mike mckee, thank you.

looking for something around 300 k on friday. pretty controversial when the public hears this message, higher unemployment is a price worth paying. tom: i feel the public does not buy it for a second. they are looking at the people and saying, are you nuts? jonathan: that is why it is more controversial when we see these numbers. i go back to the comments from senator warren. she will not be alone. tom: help me with united kingdom. sorry, i am making jokes about autumnal bliss. it is getting colder for a homeless population. jonathan: energy is top of mind for everybody in europe right now. lisa: going back to the labor market and this idea of pain.

a soft landing scenario. if you take away some openings, you will not get layoffs, you'll just get this there on a soft landing. we all hope that is the case. jonathan: futures up one third of 1% on the s&p. yields up a couple of basis points.

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jonathan: five minutes ago, lisa was almost bullish, like a fairytale. tone matters. lisa: you cannot discount something that was bullish. jonathan: if you make it sound like a fairytale -- growth stabilized, everyone was happy, and it was a big bull market. lisa: so you are quoting fairytales, tom is quoting robert frost. happy august. tom: we are moving from bramo

bloom time to bramo standard time. jonathan: euro-dollar at 99.91. currency pairs are down .1%. earlier this morning i mentioned the comments to our team in london. he talked about a risk premium that may need to return to the gilt market because of the ongoing deficit we are seeing in the u.k., and the fact that it could get bigger because they need to offset the pain in the energy market. stephen gallo at bmo is saying we think it is showing up in the currency. you either need to attract investors with high yield or a weaker currency to get those international flows. arguably we are getting both right now. a difficult moment for the policymakers. tom: always a three-legged

stool. i am in the camp that foreign-exchange really matters right now. we are biased at bloomberg because it is on the terminal, but it is speaking volumes. what is interesting, swissie has not strengthened. u.k. historically, even as we do this section with elise, we may get a 1.15 handle on sterling. jonathan: a lot of areas are in conflict with each other, fiscal, monetary. tom: to the labor economy of a beleaguered united kingdom, moved to jobs day on friday. we thought we would do something different, not with nonfarm payroll, but the social aspects of our labor economy. the economic policy institute,

they have provided exquisite research for conservatives on the social structure of the american labor economy. elise gould joins us this morning. i will channel the good danny blanchflower, and he is heated that we got it wrong. what percentage of america is flat on its back? elise: very just a question. i think you are right, that there are different stories of what is happening to people. we think about the economy, the labor market, over all the unemployment rate at 3.5%, still quite low, still adding jobs every month that are pulling more people back into the labor market. but as you say, there are huge disparity still out there.

young workers have higher on appointment rates than other workers. black workers still have about two times the unemployment of white workers. we have seen wage growth in some areas that were strong last year coming down. there are different stories. wages and some of those industries, they are still quite low. tom: we are spending a lot of time looking at the duration of these events. there is a negative wage growth. real wage growth is decidedly negative. the duration of that wage growth is substantial. what is that tipping point where the negative wage growth really affects society in america? elise: i think it is hitting people right now. they are noticing it going to the grocery store, when they buy gas. we are seeing those energy prices come down, and that will

filter into lower prices overall. transportation costs are a major factor in many of the costs. i think it will become more affordable. i am optimistic, as you were talking about before, there is the ability to see that kind of optimism, even though nominal wage growth is starting to slow. even though that rate is starting to slow, we will see gains in the future as far as living standards as inflation comes down. lisa: i want to go to the point we were discussing earlier, how much fiscal policymakers hands are tied when it comes to the market when the economy declines. there is a feeling it will have to slow materially, possibly go into recession, but fiscal policy makers cannot spend to the same degree they have in the past, for fear of fueling this bigger downturn. do you think that is the appropriate way to look at this? that there cannot be the same

spending for years to come? elise: i think we need to make the kinds of investments that are necessary to pull down inflation, energy prices in the long run. i think that is what we are seeing in the inflation reduction act. i also think about the investments we need to make to increase the supply of workers. make sure we have as many workers out there as possible, and that would also help with the economic growth of the future. making investments in care work. that will allow more women to enter the labor force. if you have more workers entering the labor force, that will put less pressure on wages. i can see there being different parts of this, but i don't think we need to have a substantial slow down, as we are already seeing inflation begin to fall. lisa: i am just questioning certain aspects, in the u.s. and internationally, when you talk about spending to support lower

income individuals who are really struggling. how much world there still be an open market for raising cash for those things? the u.s. perhaps not as a serious condition as the u.k. in this capacity, but measures like student loan capacity, do you think that could add to inflationary pressure? elise: all the evidence suggests that is a tiny impact on any kind of inflation. i don't think that is a major factor in thinking about whether something is good policy. we can look at who will be affected by the policy, how well it will be targeted, how well it will impact people's ability to make ends meet. the impact on inflation is pretty negligible. tom: one final question, if i could. there is an assumption that businesses and corporations out of the great financial crisis took the high ground and power over labor.

there is now an assumption perhaps that labor has gained strength coming out of this pandemic. do you buy it? elise: i do, actually. we are seeing it in terms of increased interest in unionization. we saw that recently in a gallup survey, growing numbers of people interested in collective bargaining. i think that will have some staying power. people see that may translate into more leverage. tom: elise gould -- jonathan: elise gould, thank you. adp report out 20 minutes ago. downside surprise, 132. the estimate was for 300k. tom: 285, a couple days ago, 300. it has not really moved.

i have so much trouble with the gloom of a 300 or 285 number compared to the normal. jonathan: as soon as you get concerned about that, the horses bolt. tom: stay with me. september 1, when the leaves begin to change, unit labor cost is just as powerful as jobs data. it will show us the wage dynamic, inflation dynamic. jonathan: the most important data point will be unemployment. i keep saying this because i think it will be one of the most important stories in the next 12 months. the fed is telling us that unemployment will climb. i am not sure we have our hands around what that will look like when it happens. lisa: loretta mester expecting unemployment to climb to 4%. the argument that others make is that there is still so much room

for people to come back to the labor market, participation rate, productivity could go up, that it could create a soft landing that elise gould was talking about. but what happens if it doesn't happen? some are saying it is more likely that we do not get this goldilocks should area. jonathan: you sound bullish. lisa: i am trying to be balanced. these are the arguments that people are making. jonathan: i am not sure what tom is up to. are you balanced? lisa: that is a loaded question. tom: i just did a survey for you to get you up to vermont for the leaves of october. they are sold out. completely. everything is off. no place to stay, jon. jonathan: they sold out of hotels. tom: seriously. woodstock, vermont was redone by

john rockefeller decades ago. he was the first want to put the power lines below the street. you drive into the town and it looks like a dickens novel. lisa: i am just imagining us going on an apple picking trip, tom reading robert frost. jonathan: wikipedia can tell us everything about that particular plot of land. lisa: you'll be evaluating the apples. jonathan: drinking cider and reading wikipedia. i am not going. tom: we can go up to stowe, vermont. jonathan: i am not going. the yankees owner has bought a minority stake in my football club, ac milan. we would like to win something, though. futures up one third. from new york, this is bloomberg. ♪

ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. more revelations in those documents found at donald trump's home. the justice department says there may have been attempts to obstruct the investigation by moving some of the papers. the filing included a photo of files that relabeled top-secret that were said to be found in mr. trump's desk. europe faces the risk of blackouts, rationing, and a severe recession if russia slashes gas supply further. starting today, there will be a halt in the gas sent through the nord stream pipeline. it's a key source of energy for the eu. it is expected that russia will find another excuse to clamp down on supply. west texas intermediate has lost more than 6% this month. economists see slower global

growth which would further hurt demand for oil. credit suisse is divided on the fate of its troubled investment bank test before some crucial meetings. one camp is pushing against aggressive downsizing, others in favor of more extensive cuts, after racking up billions of dollars in losses. they are taking aim at the investment bank. the u.s. army has granted its entire fleet shouldn't transport helicopters after engine fires broke out on a few of them. the helicopters have been in service for six decades. it is built by boeing, the enders are made by honeywell. the army says they are working on finding a fix. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg.

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>> i think it is coming back. part of this is the macroenvironment. if we see markets crash again, we will see this crash alongside with it. i think it flushed out a lot of things that needed to be flushed out from the crypto space anyway. tom: not bed, bath & beyond -- sandbank been freed with david rubenstein, an extremely important conversation. we are all wired up to crypto. mr. rubenstein joins us this morning. look for that at 9:00 tonight. this guy is controversial to say the least. what is the thing that he has that makes people in crypto listen to him? david: he is smart and has made a lot of money. tom: as also lost a lot of money.

david: at the age of 22, he was worth $22 billion. he is committed to giving away all of his money. he spends nothing on himself. he lives in the bahamas, wears nothing of consequence, t-shirt and shorts all the time. he only cares about certain public issues, public policy. he is very unusual. tom: what does he believe the price of bitcoin will do? how does it discover a bid at whatever level? elise: i didn't ask -- david: i didn't ask him that, but he operates ftx. he doesn't know what the right price should be. he recently bailed out a lot of companies that had trouble. he may lose money on that but feels it is good for the industry. lisa: why is this important from a social benefit way if he is looking for the betterment of social order?

david: his view is that people with money should give away that money, do good things for social purposes. that is what he believes in. he has a fair amount of money and is also giving away money. he also gives money to politicians. he thinks it is good to give to the public servants in government. he backs the ones that he things are good. he has an unusual lifestyle. he is not buying the normal things that you get when you have a fortune. lisa: i caught an article written about you a couple days ago, about your potential bid for the nationals possibly. is this a moment of passion? is this actually an investment at a time when a lot of people are looking for alternative assets? david: i realized when i was young i was not going to be a professional baseball player. i thought i was great at six or

seven, but when i got to eight or nine, i figured i would not make it to the major leagues. i thought if i ever could it would be as an investor or owner. i am from baltimore, have looked at whether making a baseball team makes sense, but it is too early right now. tom: lisa, that was a very dangerous question. lisa: is that a dangerous question? tom: i don't know if david will come back again. in terms of baseball, this day retype is big teams can buy the big hitters and never goes down. david: it is hard to lose money on a sports team generally. nfl teams make money hand over fist. baseball, basketball, other teams, they make money when you tend to sell the team. people really lose money selling 18. in the end, if you can support the team without current income from the team, you can do quite well just holding it for some

time. if you look at most people who have made money in baseball, it is by selling the team, not operating it. on the other hand, some are very positive on a cash flow basis. tom: where are you on public investment? you don't need to do that in baltimore because camden yards is one of our jewels. but should public funds be spent -- i'm trying to think of the city where this is a reading debate. should we be buying new baseball stadiums? david: every government official is presumably elected by people, and hopefully they make decisions based on what population wants. people like sports teams. tom: you have such an enduring place in philanthropy. if sam bankman-fried enjoys going down in wealth, bitcoin goes down, does he change? david: i don't think so.

he is not spending this on his personal needs. he is not buying homes, planes. whether he is worth $8 billion, $22 billion, he will not change much. he is young, only 30 years old. tom: i want you to come back and talk about the national archives, which have been dragged through the mud right now. i know this is been a third rail for you. i would love to do a half hour nonstop. david: the national archives is a great duchenne in washington. it has all the records from the federal government, has been around since the 1920's. they don't have a current head. there is someone who is likely to be confirmed soon. the first woman to be the chief archivist of the united states. tom: what if the right wing part of america goes after your national archives, with your philanthropy and all the rest? david: i think there will be

people in congress that prevent that from happening. tom: the systems in place. tonight with sam bankman-fried. the orioles three games behind in the wildcard race. lisa: you just keep throwing me under the bus. tom: futures up 17. lisa, what are you looking at? lisa: i am watching to see if we get more of the gains particularly in the nasdaq. i find it interesting that people are going and buying big tech on the expectations of rates coming down, piling back into tech. it is nudgy because people don't have conviction ahead of the labor market report. tom: it is going to be really interesting. we go to jobs day, but also a

whisper of the effect of disinflation that is not really in the published literature. i think we will see that with a vengeance in september. today on bloomberg television, balance of power, my book of the year, angela stent on putin. this is bloomberg. ♪ >> welcome back to another special u.s. open update from bloomberg tv. rafa moves on and raducanu loses on her opening day. after losing the opening set, the spaniard put his foot to the floor before securing the win. nadal can extend his lead as he tries to claim his fifth crown

in new york. next up is italy's fognini. defending champion emma raducanu was sent packing by cornet in the biggest upset of the tournament so far. 31 unforced errors hold the story for the brit. don't forget, dennis china life has all the news you need. see you daily at 9:00 eastern.

jonathan: live from new york, good morning. the s&p 500 is down about 3%, the countdown to the open starts now. >> 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, would begin with the fed. >> we don't know for the life of this why people believe in the fed. >> i think you are fighting the fed of your bullish. >> i don't