>> what we are seeing right now is a dislocation in the labor market. supply and demand. >> this could be a challenging back-to-school season. it could be a challenging christmas. >> this is bloomberg surveillance with tom keene and lisa abramowicz. >> do you remember a week ago, it helped. >> no thank you. >> live from new york city, good morning. for our audience, worldwide,

this is bloomberg surveillance. were alongside tom keene. i'm jonathan ferro. rambo is back after a long weekend. equity is unchanged on the session. we are down on the week, and every day since the chairman spoke, tension is higher at the front end. >> this could be a different job state. we will cover the labor economy and the ministry. we will see what it's like after the last festivities, but markets say it cannot be a normal job state. the end is where it is. truly of record week. >> nothing normal about it. the estimate is 298, but a week of better-than-expected data. better-than-expected claims, and confidences further. that is been the theme of the week, and you hate this, and i hated to come up with the good news is that it's been bad news. next you're going to get right on that. this was maybe the best interview i've had in 35 years. >> j.p. morgan chase.

he was seated that they have it wrong. >> not just the groom group, but getting a feel for the debate later. >> let's see if good news -- if it's good news, it will turn out to be bad as of recently. the gloom crew dominates. of all the conversations we have in equity, it is difficult to find those who are positive. every now and again, we find one. next we establish good news is bad news. but is bad news good news? >> we heard from one of our guest at the bad news is bad news. everything is bad. >> you have to be up to speed on this. bloomberg news wrote a great story yesterday. if i could guarantee you a number, if i could tell you it right now, would you know how to trade it? a minute afterwards? >> you wouldn't. there have been losses taken. let's remember there are winners out there.

steve white will join us. what do we have to fall back on? a data screen from bloomberg. and i have a350 to hear. i have a yen from 40. >> and another bang. from the ecb. maybe, another 75 basis point hike. >> let's do this right now. time is precious, but amber heard laid out a scenario, on the telegraph. this has national consequences. them to go 75 peeps. >> the spread over germany. 236. we'll catch up with her. that could blow out to 300 basis points. >> is so unimaginable that it's unbelievable. >> they're doing it. they're taking stake in it.

you want to talk about that later? >> i can tell you're excited. the 10th of 1%. good morning. the nasdaq 100 is dead flat. it's just the churn in the quiet and this news before the big one. at 831, it's up a long weekend on stateside. 22595. we talked about eight to your breach on 50. were just south of that level. basically unchanged. looking for a move of a strong euro for most of the week read but we get it today? will see it's extensive 1%. unchanged for much of the week. chief investment strategist at city global wealth management bid we are joined now. i'm going to the question we've debated all week, and forgive me for coming here first. we understand that good news is bad news. what would it mean for this market. >> a bad print. doing anything other than delay,

and it might bias a little bit of time. time is what we needed, and if time is not what they are giving us, it could be a. where we see rising employment. we are seeing falling inflation rates. this is a. where we could have some hope of growing. for a single month of data, it is mostly seasonal adjustment. weakness in the summer months, large swings, and to use all of the seasonal adjustment, we are supposed to figure out economic policy. >> a basic textbook white fish or, which i was weaned on. you're the only economists i know from chapter 19 which links the markets to the economic babble. what do you say about corporate

margins, given the stew, the toxic crew that we are in right now? do we have a gloom about corporate margins? >> we do. this is been a strong. 2022 will be another year of corporate profits. everyone says that they haven't seen a weakness. >> is not relevant. it really is, what will we do next year. that's the trouble. if you have a hot labor market, if you have all of this strength contributing to a higher talk, you have a bigger problem next year. i don't think we have any kind of economic boom like on the mid to thousands. the late 1990's and technology. these wounds are very difficult. there is a long way to drop.

where does that put us? that's a fair question. what is the standard and poor target? >> i think we will not make a lot of progress in raw averages. it is a june low, and we have to drop that more. that's not what were thinking about. it's premature. a discount of new economic recovery. we haven't seen the drop yet. we are not expecting it to be some severe systemic collapse, but this is an overeating. it's driven by the federal reserve, and were seeing housing as a very traditional part of the economy weekend. and not from high levels. were not satisfied with man it for housing, the full supply is likely to drop some. we will have a recovery in 2024.

it too early to say this is time where is overturned. let's go back to the races read >> you're talking about a 10% drop in earnings here. what does that do to dividends? that's an important story to keep watching. a drop in earnings, but also in some sectors, political pressures. it is not keeping up with inflation. >> we will see some sectors involved in dividends. you will see again a slowing growth rate, but for most of the companies that pay dividend, there will be a good choice there. we are very focused on global wealth with firms that have the most consistent track record of raising dividends and they have done so for 25 years in the u.s. market. that is for three economic cycles. the biggest single industry is pharma, and it's grown

dividends. a growth rate that is not wonderful but a yield that has been very dependable resource of return and a time when the economy is facing this headwind. >> what would you need to see that would make you bullish again? what could develop? what would you need to see? >> falling inflation, and some recognition from the dead that what the world doesn't need now is higher unemployment. were not going to sit this in a downturn with reinforcing of the neighbor -- labor markets. once we see employment decline, it will keep declining for most of the year. it is possible to avoid that, and it looks like the federal reserve is on its way. one of those cycles where they will lease again when employment is falling, and they may say they're not going to do that right now, but actual

unemployment is falling again. at a sloman pace -- at a slower pace pre->> will be a major test for the central bank. thank you. awesome to catch up. from city global wealth management, and per going to go there a little later. 830 a.m.. were looking for a number closer after a blowout jobs report. just a month ago. >> it will be interesting to see, and we will look at wages off of the adp, which i don't want to link to, but there are dynamic there. they are interesting. in boston, they tweeted out under four dollars a gallon of gas, and three dollars i seven cents. >> asked for the averages. it was a fear of breakthrough. but it hasn't happened. >> hasn't happened, and they were talking up used cars as well. >> the labor market is so far so good.

we mentioned that. to expect the breakdown, in 2023. that will keep the fed busy. >> the whole team is on occasion. we have security out the front door. we have a great set of guests coming up. lisa bromwich took a long we can. >> to do notice that is mark >> i noticed that. ask last time i had a day off, >> wire you so reluctant? >> i just like the mist. you're waiting for the leaves to start. >> i crew -- quote robert frost. >> i tweeted a picture of your shoes out. >> there was some confusion as to who choose they might be. if you were to check them out, go on twitter, and have a little look it is pretty obvious. ex-teammate us lash. they're going to stop traffic later. coming up, a water call for

earlier this year. call them. >> no end of that. >> looking to catch up. were making a comeback. >> is he new? >> he is new. looking forward to that. he mentioned it earlier this morning. just -- jeff rosenberg is appropriate from your city, good morning. this is bloomberg. >> keep you up-to-date from around the world. i'm critical cupid. president biden has given a preview of his campaign message in the run-up to congressional elections. last night, he used donald trump and republicans who backed him of endangering democracy. this represents extremism, and the threat is the very foundation of our republic. >> the house republican leader of slandering republican voters. today, the jobs report could tip

the scales towards a third straight jumbo size interest rate hike. according to the survey, they added 290,000 jobs, and it stayed at 3.5%. that is slowest in five decades. it could be enough to fight inflation. >> a man was arrested in argentina after pointing a gun at the vice president. they pulled the trigger. the gun did not fire, and the man was arrested. he was described as a zillion with a history of caring weapons. this comes at a time in which argentina is interleague polarized after years of economic crisis and clinical inviting. >> bloomberg has learned that japan is plain to cut at least 20% of the stock on its operation. the biggest tech investor will slash a minimum of 100 positions. they posted a $123 billion loss. global news, powered by more

than 100 27 journalists and analysts in more than 120 countries. i'm critical good for. this is bloomberg.

>> donald trump and the mega republicans represent and extremism that threatens the

foundation of our republic. they live not in the light of truth but in the shadow of lies. >> together, we can choose a different path. >> an address to the nation by the president. from new york city, morning. i'm tom keene with jonathan ferro. lisa abramowicz will be back soon. from the s&p 500, it is negative by about 2/10 of 1%. it is down 23 points. two hours and 12 man's way. looking for something close to 300 k. the yield is unchanged. on the tenure, it's been creeping higher, a brief breach of about 350. >> i want to go to the real yield. in one explosion we saw justin yield, and dare i say, a positive 1% figure somewhere out there on the rise in.

this changes the discussion. >> i couldn't -- agree more. those late levels with a credit market. it really seized up in the fed had to back away. most people would agree that this is very different. in the fixed income market, they have to consider what that means for corporate credit. >> have you been to independence hall? wax it is extraordinary. for those who haven't, has been restored 14 times in 1788, and it's really quite moving and what the national park service is done, particularly in piecing back together our belief of what the assembly room look like. they pieced together declaration of independence in the future of america. jack fitzpatrick reached from washington. are we going to see more of this? is the president going to -- to the first tuesday of november? wax it sounds like you. this clearly was an attempt to

establish strong campaign messages, aside from what you've heard on the legislative accomplishments, aside from the economy. the president has made it clear that this is a significant's. he did it almost back to back. his speech on tuesday was pretty similar. it was followed by a higher profile speech. it didn't stand out that he immediately named donald trump, which he had not been doing. he had talked about the issues from january 6, but he made it less trump focus. this was a speech about those issues, but directed much more strongly towards trump. it seems to be something that president biden wants to pay up rated >> completely unfair question. to get us to the talk shows, you'll hear many of those on bloomberg radio. is this a president with a body language of considering a second term, at his age, and is this a

president who is leading the troops to november? wax is hard to predict, because he would not want to give any signs that he might not run again, leading up to the midterms. it wouldn't help his party, but it is going out there with campaign style speeches that are at least quite energetic, looking at the one from last night, so he is in campaign mode it he is not giving off signs he is not owing to run. the concerns are there. they don't think you will run. i would not say that is predictive red >> it is good to speak to you. gas prices have been a big issue. that takes on a context at higher commodity prices in recent months. i noticed a headline that said the g7 is set to introduce a cap on the price of russian oil.

from a european perspective, there is reticence. they could use as leverage. is there anything you can add on the domestic side of this and how it is to play out mystically? wax domestically, on capitol hill, this is the kind of thing that they will nobly have a lot of work for, especially what you just mentioned with the u.s. argument that even if this is not massively widespread, the agreement will limit the price payments on russian oil, and that will still have an effect on what other countries would pay because of how it factors into negotiations. talking to lawmakers, it seems that the action outside of the administration has a lot of pressure to find whatever points they can to increase pressure on russia, and mystically, this could be a fairly popular -- but it will not answer all of the questions of the extent of how

many countries participate in the international question. >> we are all trying to figure out how this works in practice. down in d.c., thank you. look, you mentioned earlier, with low four dollars. gasoline. i think that is a massive improvement from june 13. north of five dollars, and there was a fear from jamie oregon. maybe we could get through six dollars at the start of gasoline, but we didn't get there. we rolled over. it is $3.83 at the moment. average. >> will pick from david rosenberg. he is iconic. in his own shop in toronto, but what is so is that the media focuses on emotional things like used cars, and it is all many pieces. you have to parse that out, and it may parse storage a disinflationary tenancy, but does it get you from eight or nine donda seven? that is on acceptable, no

question. down to five, or where after that. it is a huge debate. >> you press the question. what do we do have we settle at five? what does that leave the fed? i caught up with darrell yesterday, and we have been talking about inflation and hawkish in us. we need to discuss that more, and there is persistence. rates up there that will be held from last week did it does a lot of damage. >> it could. the trend from europe on job day, dear p and dynamic is factors worse. >> the difference between the fed and the ecb, both central banks, it is set that hike this is a debate as to whether the fed will drive the economy into a recession. a europe, known as questioning that. that's how deep it will be. it's pretty messy stuff. >> can i just say, and

independence hall, we are looking at the president with dr. biden, and it reminds me of old white hart lien. >> you imagine if i said that, how offended americans might be? wax they can do something to give the majesty of independence hall. replaying later we can watch mark i haven't looked at and getting over this, but what makes shelley did, it's unbelievable. >> what is the third season of 10 lasso out? >> do you know anna #>> i don't know. no idea. >> futures are down. >> your above parity. a third of 1%. the yield is 326 on the tenure. the market is up next on this economy. this is bloomberg.

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>> live from new york city, good morning. down on the weekend the session. s&p 500 with the nasdaq 100, a third of 1%. just about yesterday, a closed below 4k. bank of america out this morning with a flow showing the weekly number. they take a nibble at 3700. that's the personable nibble.

it's not here. experts are. i will stay out of it. the vix has been constructed. he would think with the agony, we would pop out, but that has not happen. 27 levels, and with a better market, 25.46. they are prepared to call the stepanek had that's for sure. even after the state losses, and the front end of the yield curve. every single day, i agree with you. were trying to find a bowl. >> is out there. jp morgan, and there's been another one. as optimistic. 350 on a two-year. above those levels. 349, and just dancing around 350. before today, every single day, since friday, front end after chairman powell. they've got the message. this is important. people said this over labor day weekend. it's not just about the stock

market, but we can focus on michael wilson, and others, talking about earnings, but week agree. the bond market speaks volumes. >> the tenure as well. a lot of people got comfortable with the idea of the high for the year. they get uncomfortable as well. on the show yesterday, they said that if we get to 350, that's a great ride. let's see how it goes as they push higher. in europe, briefly, we will talk about the dollar strength it there is no parity, and it's unchanged today, former by 1%. euro-dollar. this will be a spread with germany and italy. 230 basis points, and for much of the week, 395 on the three year. let's call it 160. over a soft chair, they said the spread could go as wide as 300 basis points. this is an issue that i think a lot of people have gotten right now. even if we go to higher

unemployment for year-round, they will not turn around and pull a u-turn. even if that spread blows out, even if they get a recession in europe, the ecb is determined to sit this out this morning, and may be 75 at the meeting, perhaps 75 again. were not talking about the bed. were talking about the ecb. were having a conversation that's a major change from where we were. it is telegraph in italy, where they took it from where we stepped in from public service, and how much has deteriorated from a technocrat taking over. >> is easy to keep a lid on these kinds of things when inflation is low, but it is not low. rates are going the other way. they're not the same anymore. the ecb with the bond market. >> sterling with 116, and may be a breather here. you look at the early morning when they took a look at the phone. 114, unimaginable.

14035, and it also gets my attention. were bouncing around between incredible markets, and are watching the politics of the united kingdom, and on job stay in america, we will stay with us, but on friday, in the long weekend, a senior economist at wells fargo. let's start with a stupid question. what sure number this morning. are you at 300, or are you moving around? wax we bunker number up. were at 375, and i think art of that reflects the fact that we saw a really strong main factory number. also, as we sit back and think about the structural elements, we see a lot of new business formation suggesting that the model boost is still pretty strong at >> jp morgan iconic. it was heated, and it's better than the gloom crew says. wells fargo shares that heritage with john silvia, and mr. price and and all of the people you have.

do you think they are wrong with the labor economy? >> directionally, the consensus is right. we are seeing signs of the labor market cooling i think it has been tricky. we have to fine-tune the degree of that, and what we see over the past few months in payroll and some of the more recent data on things like jobless claims, stabilizing, it's a very elevated rate of job openings, and the fact we haven't seen it come down at all. there are still a lot of resilience is in this labor market. it is very durable for workers, and you have to think about what it means for the income trajectory in this high inflation environment. if you have that, you have decent income growth against the high price movements. next forgive me for not looking ahead. i want to look back to 520,000, from a month ago. i'm blown away. what was that? >> i think it was perhaps the

seasonal, particularly difficult in july. going back, with a death model factor, there is a contribution from july with more than twice it is in the past five years, so that was coming at a month when it was expected to decline, so it gave a boost. it overstates the underlying run rate of payroll growth, but i think, even accounting for that, we are looking at areas from both, consistent with an elevated hiring plan we see from small business surveys. >> how sensitive do you think it is? from the 13th, how important will it be since they basically told us that story is much bigger than that? i think it plays a role for september. it will tilt the scales, but it will not settle the matter. we believe that for inflation numbers on september 13th.

we look at this report, there is inflation data with average hourly earnings, and i think that is one of the underappreciated aspects of the outlook right now. we are seeing some relief apply chains and commodity prices come down, but that only gets you so far if you still have elevated wage growth in terms of bringing inflation back down. they both run around 5% annualized, and even if you give some generous assumptions about what the truth trend is, it just doesn't cut it in heading inflation back. >> good morning. what if we have all of these rate hikes from the fed, and they don't cause pain in labor market? they said they will tolerate a little pain, but one of they are a little disconnected because of that tightness? wax i think it all comes down to what we see in those earnings numbers.

that is what the fed is willing to withstand pain for. they need to get the average earnings and inflation pressures looking at the labor market it needs to be reduced. whether we see inflation or unemployment numbers rise back to or percent like the fed who -- projects, and we project that through the end of next year, and the tolerance lies somewhere as it calls for inflation back down to target it that is the message. they are laser focused on this, and open and willing to accept collateral damage. >> i wonder how much those workers on the sidelines, those not participating, how much they are focused on the number. is there a sense that inflation will become more persistent, and if it is, estate of elevated levels. will it bring back people to the labor market?

>> i think the price environment does act as a push factor. sideline workers back in the labor market, but i think there is also a pull factor, and it's been exceptionally strong demand, and i think one of the things we learned is that participation is slow to respond to conditions. we have seen participation edge down with the household survey. it has been volatile from month month, but there is a lot of reason to be optimistic that we will have some improvement in labor force dynamics in the coming months, given the push factor from inflation pushing people back into the labor market to deal with the prices as well as the pull factor of tremendous opportunities in the job market. >> a soft landing. without a doubt. that's part of it. thank you. wells fargo. we always appreciate your time. economists are all the same page. resilient data.

new data out of the macro. a good friend of this program over the years. it's all right. if slowing the job market is a necessary condition to achieve the fed's objectives, it's far from declaring mission accomplished. as decline for three weeks, and the index just rose to 54.2. the highest since march. a lot of people speaking on this one. >> we've been an optimist through all of the cycle, and all of that history. it's coming on later with the perry, but it's a confusing time and we need to remember that the market which this friday. a labor interest in two hours. what really matters is how unusual the supply-side is. this is an original moment, and anyone with certitude, i'm laughing at them. >> a participation rate -- that is the big issue.

since chairman powell spoke, the fed has more work to do. every single data point has spoken to that thing. they more work to do. >> hawkish is also as he witnessed, but there's more of it. every single voice as been that way since. >> this is a british show. the conversation we just had an america is completely foreign to the conversation going on in england. >> you sound bitter? >> there are similarities >> you have a tight labor market in england. a tight labor market. >> absolutely. sprinkle in brexit. it's all the same factors your dealing with. >> can we get sprinkles of brexit on the program. >> that's like the three dog night song from years ago. >> sprinkles of brexit. >> can you explain that is? >> john, that's un-american. chuck got there. they band together and they say

that one is the loneliest number. >> one is the loneliest number he could ever live. >> that sounds deep and depressing. the future is down. were missing this one. 32594, from new york, this is bloomberg. >> keep you up today with first word, i am critic negative. president biden is stoking voter outrage ahead of the elections. he called on americans to reject the politics of donald trump and mega republicans. he warned that they threatened the foundation of our republic. house republican leader accused the president of slandering republican voters. bloomberg learned that the group is preparing to back a price cap on global purchases of russian oil. they hope that will ease energy pressures and/overall revenues.

a finance minister is expected to back the plan today. >> nasa will try again to launch its artemis run -- artemis one rocky. they tried earlier this week, but it was swapped because of a problem with one of the rockets engines and other technical issues. it is the first major flight in the ambitious plan to return to the moon. the mission is carrying test dummies instead of astronauts. you can watch the launch on bloomberg tv. that is new york time. >> ben van burton is preparing to step down. according to reuters, there are internal candidates plane to become the next canada. he steered shell through some of its most turbulent times. starbucks has named a new chief executive. they are slated to be a new ceo. he is a veteran of the industry, and he will join starbucks while a long-term leader stays in charge. they will fully take over in

april, and among the issues, there's a push to unionize workers. global news, 24 hours a day, on bloomberg quicktake, and i am -- and this is bloomberg. 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 against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

>> we do need to get a sense of inflation and how it because that will tell us when the fed is going to get comfortable slowing down. through its actions, at a minimum, it will cause a mild recession, and the longer this goes, the harder the recession gets. jonathan: a senior strategist. live from new york city, good morning p it with tom keene, i am jonathan ferro. together with anna, we have to catch up on tuesday. a long weekend for her. along we can. using all of tom staycation stays, and he is unhappy. very close to 326, and the euro

is stronger after a week of chopper -- choppy dollar strength. crude is up. 8842 as we count you down. if you are tuning in, it was a blowout jobs report a month ago. that was the estimate. >> they took a cold shower. >> a wise man once said, the refresh and -- recession is coming. 452 at the high. >> you did that tweet. it was a surprise. thank you for that. i have no idea how many people were up there. >> are a lot of people in the market. in and around 300,000. this is important. what we are going to do is victory lap with anna, who is made an interesting economics over the last six weeks. she is the chief u.s. economist at bloomberg, but dr. wong has done something so important here. there is a disinflation crew. everyone calm down. there is a tendency to call

andrew at citigroup. there are people that say no. they are going to have to do a lot better. anna is in that group. you haven't budged, have you? >> no i haven't i still believe, like anyone does that inflation is going to come down to below 5%. but i think it's going to stay and linger for a while. >> there is a strategy that works here after radically changing, and i crude -- quoted rudy stores in a classic textbook. you have to apply the same thing. for percent. you have to apply that an 8%. you agree? >> i agree. 4% is double the fed's target. unless we are closer to 2%, i don't think the fed will use up -- he's up we had ease up, meaning hiking. i think powell said earlier that

he is going to keep doing 25 basis points, even if we are not at five. it may be above 2%. >> i noticed in your notes around this jobs released today that we have to go back to 1969 to find unemployment rates as low as the one that we might get today. what will you be watching for in those stats? >> i will not put as much weight on the top line monthly. as long as we have a falling unemployment rate, and average hourly earnings, that is the same pace from last month, and there will be -- that will tip a balance toward 75 basis points. so, if we are talking, a minimum of 100 k if other things happen as well. >> 100 k means we stick with 75. that's what you are saying?

asked yes. 100 k, and a falling unemployment rate. the unemployment rate is measured with household surveys, and if you only have 130 in employment, a stagnant labor participation rate is what we expect we will seek with a falling unemployment rate did 2.4%. >> the labor -- i'm going to get it out. 3, 2, 1. the labor report follows a labor report that was stunning. 30 days ago. why are we getting this so wrong? what is the hard part of gaming this right now? >> we have a difficulty with other people, but one reason is that a lot of the news coverage is on layoffs, and it is announced by the sectors. that comprises of a small proportion in the total jobs

market. let's say snap. everyone is talking about the 20% layoff, but we look at tax services on the labor market, and that is 1.5%. i may be generous with tech manufacturing, but it's only two percent of the jobs market. we have some industries which over higher, and we are going to have to lay some people, but i tabulate that to be industries of about 10% of the jobs market. the rest of the 90%, a lot of them have under hired, and they still have a lot of labor shortage. >> let's cut to a basic question. how can we have a recession a normal recession, given where the labor economy is. it's not in a textbook, is it # >> the unemployment rate could jump non-linearly.

there is a fire, and everyone is trying --. >> are you going to publish this or a jump condition? we are talking about 3.4%. truman and eisenhower. you're going the other way, and we will see 150 people jump in the unemployment rate? >> yes. just look at 1950. in 1953, the unemployment rate was also around 3.4, and a couple months later, all it takes is a couple months. it's 150 bits higher. it could change drastically. i remember that well read >> here that old? i didn't know that. >> you're welcome back here anytime. great tom. >> go away. >> thank you. tom, are you done? you want to keep taking? >> it's fine. are you sure? >> what were doing when we

invented this is having a lot of different opinions. wow. there are a lot of different opinions. there are a massive number of opinions from a month ago. it was priya ms. road. she was looking for -40 basis points on two tens, and she got that and some. she backed away from those levels. >> she got there. what is so important is rarely, do you see someone with the magnitude of the move and the timing of the movement. it is so important, what she did. it was the when of it. she said this is coming soon, and it's not that people are laughing, but ok great. >> they are now. -24. it's a surprise for me. it's back up in 10 year yield spread is getting better. asked yes. >> this is really important. the spread is to interest rates, as mentioned. a lot of movement is singularly the 10 year yield. >> will catch up next.

the way strategy. we will do that in a roundabout live minutes. life from your city, good morning. with john farrow, and tom keene, and anna edwards. lisa abramowicz will be back. the 10th of 1%. nasdaq 100 is down point 1%. softer and lower and negative. just around the corner. >> we had 14032. >> q get used to this? 115. >> i'm not used to this. these are numbers --. >> it sounds like something you would see on sale in a shop. >> it is unreal. >> this is bloomberg.

>> the thing right now is of your dislocations in the labor market. we are seeing supply and demand. >> equities, you are recycling a path of policy tightening. >> the fed could use any help from any front a can get. >> the fed ultimately at a minimum because a mild recession. >> this will be a challenging back-to-school season, could be a challenging christmas season. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz.

jonathan: live from new york city for our audience worldwide, good morning. this is bloomberg surveillance live on tv and radio alongside tom keene erie dime jonathan ferro. together with anna edwards out of london. lisa will be back with us tuesday. futures done little bit, up one point --.1%. tom: i like [indiscernible] she leads with wage dynamics matter here. i totally agree, the adp report all news, wages 7% plus off of that report. you wonder what we will see about america's paycheck. jonathan: it has been great for a, better than expected. the team not looking for 75 basis points in september. tom: interesting. jonathan: now looking for a 50 basis points there too in november. a big change to chairman powell.

of a week ago. tom: it is a movable feast. we will have a good amount of guests with us as well but i really want to emphasize it is an unusual jobs day because it is an unusual global market. we talked about yields in the last hour, foreign exchange, you mentioned the word, it is unreal. jonathan: the dollar stronger, euro-dollar, 997. we have to get used to making cable at 115, dollar-yen at 114. something we have not been able to say for a long time, the global bond market in a bear market. anna: yes. i'm going to say that for generations according to bloomberg index. this is -- this takes us back -- we have already been back to the 1970's and 1960's during the program but i guess we go back to the 1980's. jonathan: even further sometimes, to the 1920's. [laughter] tom: we've had a three dog night in the last hour. jonathan: you've seen it all. tom: but seriously, mike mckee

brought it up earlier, i came in late, i got in about 5:52 i waltzed in the door. mike was in my ear and said if we get an unemployment rate down to 3.4%, how many people out there are going to call a truman eisenhower unemployment rate not a fully employed america? jonathan: if we get something like that, the overwhelming conclusion will be the fed has more work to do. i still do not think we have reconciled the two worlds. tom: fair. jonathan: the federal reserve with the white house. the federal reserve is trying to get unemployment high. it is part of their solution and they are comfortable with that idea, material high but close to something to the four year end. i wonder how that will settle out at the white house when we couched -- catch up with the secretary a little later. tom: it will be an interesting conversation. to start the data, i would dovetail it in asia in international monetary fund saying chair powell don. yen weaker in decades and

decades, 130 nine is not 140. we trooped through a weaker yen 140. jonathan: we are holding on in the equity market. good morning. here's a price action. x.3 futures down almost .1% on the s&p 500, done on the wii, softer on the session on the nasdaq, down 30% -- 30 points. tom talking of the dollar-yen move. euro-dollar, euro showing strength. 99.9 into the ecb next week. ecb says a move of .5%. accrued up as well. we need to talk about a g7 price cap on russian crude a later this morning. we will catch up with jack fitzpatrick for that. we need to get you up to speed on what to look for for this bond market once we get payrolls report in 19 minutes. we can do that with michael gapen, who joins us right now. -- we start with priya misra, who joins us now. the 10 year started to move out.

what are your thoughts on that? priya: i think it has been an interesting move. some alluded to qt, the fact the fed is letting the balance sheet runoff. i think we have known about qt. it has been happening for the last couple months. i think this is about global interest rates. the fact we had a big move on a bonds and you name it, the global bond market is repricing higher. i think to the global central bank community that is willing to risk a recession to fight inflation. i think it is more global. i'm watching the ecb next week, the bank of england. i think that will drive the long end. i think the fed is telling us there will be pain. i like moving the long end here. we are thinking they have capped out around 3.5%. tom: you have bank of toronto and it is simple, loony near 132 and that is not an emerging market. you have em in chaos. could your own powell fold in

this american labor up for and ignore the global economy affect? priya: he has got a domestic mandate. i think you will look at inflation. we are looking at inflation and i think it is public enemy number one so those wages today or cpi in two weeks, i think that is the number one priority. despite what is happening with the global economy, i think if inflation is high, it is much too high and they will have to keep raising rates. the terminal rate has moved up. i think it looks very freire -- very frail year-round. i think the fed will keep it there for a while and we will wait for them to ease and they will hold steady until inflation comes down. i think the global factors are secondary for the fed. anna: that kind of answers my question, i was going to asked, you are at 50 basis points for the fed peered what we get you to 75? i was going to ask you about international context. with that includes the fed, the

ecb? or maybe it is about the cpi print still to come? priya: i think it is. i think the fed is telling us the totality of data which means the cpi report which will show up on blackout. it is today, it is all of the data between now and then. i will say the markets already largely price 75. we are looking for 50 but i'm not feeling the fact the market is pricing almost three quarters of a chance of 75. if the number today a stronger looking, we are looking for a strong number, wages are still in that 5% number and if inflation comes down, if service inflation remains a solid, i think that 75 is a high chance. it is largely price in but will come down to the u.s. i think inflation data for that position in september. jonathan: you talked about what is priced in and what is not. i get a ton of questions on qt. i will talk about it later on real yield. tom: nice promotion. jonathan: could you tell me about what qt means for you? how does it work and what does it mean for the bond market? i don't get it right now.

priya: yeah, it is a tricky one. we do not have that much experience with qt. we did this once in 2017-2018. i think it is the total amount of qt that matters. the way qt affects the economy, it tightens financial conditions and moves real rates higher. and real rates have responded. i would argue qt over the next six months to a year's price in peered what we do not know is when the fed starts to ease, or when they do, we think they will be easing in the next year, it is not so much about the reaction function. the economy slows down and you get a nonlinear rise in the on employment and they will have to cut rates. i argue they stop qt then. if they say we will continue with qt, i think you tighten financial conditions more. it is the nonlinearity. like interest rates, i think qt matters and it goes on. the longer it goes on, it starts more of an impact. it is very less understood,

which is why fed officials do not really bring up qt. it is happening in the background but it is tight financial conditions. tom: there is a splash of a bear market in the bond market. i do not buy it. i think the bear market happens sooner, particularly on a standard deviation basis. if we get indices, full faith in credit, and regular credit high yield if they rollover to new price down, yield of, do we get convexity where's -- where there is a almost fear there were people start selling bonds? this is new. priya: i think some of that complexity -- convexity we have seen through bond outflows. people look at their returns and say bonds are supposed to be my diversifier. anything but a diversifier. they have been getting out of bonds. where i more about convexity for the credit market is if we have a recession. i think the interest rate move

is done but if we do have credit spreads widening, that can result in a convex. tom: she is channeling marty fritz. jonathan: a perfect soundbite there and you cut into it. tom: let's do it again. 3, 2, 1. jonathan: tell me about credit and the risk surrounded and what might happen with defaults too. priya: i think there is a cutie as week that is moving real interest rates higher. i would argue real rates ultimately would impact the economy and impact financial conditions. if the fed is telling you they are willing to tolerate, they have not quite defined what it is, for percent on the on employment rate? is it 5%? unfortunately the unemployment rate does not ever gradually rise, it rises faster. at that point, i think you have to look at complete credit and the lower credit companies i think that adjusts prices and that is negative for credit

spreads. that means you have to do work to figure out what companies to own. i think this qe had a price so i think that goes away. you have to do the research around companies that have cash, that have decent earnings. in general, i would say the lower credit sectors, i think those credit spreads can widen and towed -- and total return changes. jonathan: thank you. always appreciate it high-yield spreads close to 500 basis basis points, start to break out more. tom: this is why we love people like priya, she comes out of her wheelhouse and now it is fascinating about the idea. tom: i could agree -- jonathan: i could not agree more. especially getting to this idea that it could cause much damage. tom: we will come back and talk about this. jonathan: what are you going on about? tom: it is like sprinkles of

brexit. she is bringing back romantic memories of when you worked an 18 hour day and i was over at brown's hotel having rumbaba. jonathan: ubs will join us shortly in the equity market. from new york, this is bloomberg. ♪ ritika: keeping you up-to-date from news from around the world, i am ritika gupta. president biden has given a preview of what his campaign message will be in the run-up to the congressional election. last night he accused donald and republicans who back him as endangering democracy. pres. biden: donald trump and the people who represent him threatens the very foundation of our republic. ritika: kevin mccarthy accuse the president of slandering all republican voters. today, u.s. jobs report could tip the scale toward a third

straight jumbo sized interest rate hike. according to a bloomberg survey, 290 thousand jobs in august and the jobless rate stayed at 3.5%. that matches the lowest in five decades. those figures could be enough to meet the fed to raise interest rates by 75 basis points to fight inflation. bloomberg learned the group of nations are preparing to back a price cap on global purchases of russian oil. the u.s. says that will eat energy market pressures and thrash overall revenues. finance ministers are expected to formally back the plan today. nasa will try again to launch its artemis one moon rockets. the space agency tried earlier this week. the launch was scrubbed due to a problem with one of the rocket engines. and other technical issues. it is the first major flight in nasa's plan to return to the moon. this mission is carrying tech tummies instead of astronauts. you can watch launch saturday on bloomberg. coverage begins to :00 p.m.

-- 2:00 p.m. new york time. i am ritika gupta. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

pres. biden: mag republicans have made their choice, they embrace anger, thrive on chaos. the threat to american democracy

is real. i want to say as clearly as we can, we are not powerless in the face of these threats. we are not bystanders in this ongoing attack on democracy. jonathan: that was the president of the united states addressing the nation that yesterday evening. good morning with tom keene, i'm jonathan ferro. joined by an out of london, we will catch up with lee said on tuesday. counting down to payrolls on tuesday and that numbers drops in about one hour. equity futures down .1% on the s&p 500, on the nasdaq, down about .25%. the tenure unchanged about 326. 325 point 75. euro-dollar showing strength, just below parity, euro-dollar 99.91. you and i were talking about this after the show. yesterday afternoon. the math and reading scores for america's nine-year-olds deeply

threatened. i was just going through the npr release of this, they are writing up reading scores, the largest decrease in 30 years, matt scores the first decrease in the history of the testing regiment behind the study. tom: anybody with kids knows how serious this is. i got an email april last year to a required math course. i called up and said are they dumb? no, they are just behind. that is a fancy school. there's a lot of people not living large but they are behind by two years i would say. jonathan: i've read a lot of the ways this was recorded and they would often say because the pandemic. we have to be far more specific than that, because of the policy response to the pandemic. tom: yeah, i agree. certainly on the continuum there was the initial pandemic issue but you are right, the policy responses may be done clumsy. i would cut everyone some slack. this was what it is, a major

medical event, and this is one of the outcomes. the question is, forward, how do we help these kids rebound? jonathan: that's the big question, whether we can get those scores -- for teachers you were talking about the basis. tom: boston herald moments ago saying there's 200 slots in boston empty as they begin the school year. check fitzpatrick can do this and we will rip of the script with him now, with bloomberg government. do the teachers control the department of education in washington? that is the stereotype that is out there. what about the power of teachers in your washington? jack: it is a significant lobby. looking back to the height of the worst part of the pandemic, this was a big debate and democrats are definitely responsive to the teachers union . it is hard to draw a clear line from that to the variety of

policies that happened in response to the pandemic because if you are trying to answer a question about what is federal education policy, there are probably 10,000 different answers that come down to local and state and the whole interplay. the short answer is yeah, the teachers lobby is a significant thing, especially for democrats with the biden administration coming in, they will not ignore that. tom: there is percolating news this morning which brings me back to the great unknown, secretary allen, who was talking about price caps and their efficacy in this war with russia. all of a sudden this morning, maybe it is a quiet, sleepy friday in the summer, we have some form of trial balloon football and we are going to cap energy products to russia. what is the focal point of the biden administration? jack: the focal point in this news on the g7 meeting coming up

, it may be difficult to pinpoint a focal point for the for one because they have been searching and seemingly everybody in washington has been searching for what are the further opportunities to put pressure on the russian government and limit money to the russian government? the key question from the biden administration's perspective is at least in addition to the logistics how many people can get on board. this is going to be a g7 agreement, but they can -- but can they expand on that with other european countries? the eu has issues, they have talked to india, that is a big challenge. it does not seem like they have made a ton of headway on getting formal agreements to cap prices within you. the question is, what do you do to build on a g7 agreement? that is what the biden administration was like -- would like to add to it. tom: if it is a g7 meeting and

it is price caps, will the united states miss boris johnson? anna: we do have a prime minister but we will have a new one by monday. with that possibly new direction. we need to see the way -- the machine still functions i suppose even in the absence of the new team, the new leadership which comes in monday. interesting, if they do find common ground in the g7 on this particular topic, because it seems they are a class when it comes to iran and that has been a device across the atlantic as of late. jack: yeah, the latest news on that was a negative response from the u.s. that said the last communication from iran regarding the nuclear deal and potential for removing sanctions was not constructive. meanwhile, you heard recently from emmanuel macron, the french president, that he thought potentially there could be a deal within the next few days on this.

overall, i do not think the u.s. has slammed on the brakes on these talks, but there had been indications there was a possibility of a near-term agreement before the u.s. is putting out a vague statement saying they were not happy with what they heard from iran. the president was supposed to take a look at this after he had back from his speech he made here, more specific on what the u.s. would like or what they do not like. i guess a pumping of the brakes from the u.s. side on that. jonathan: how may times we have said we are close to a deal without being close to a deal? months, haven't we? jack: yeah. it is one thing to hope to be close to a deal but the number of players in this -- i think the latest news on the u.s. side indicates it is easy for someone to slow things down. it is not the u.s. has said they are not making any progress, but

it is a little unreasonable when you hear mccrone say potentially the next few days -- macron say potentially the next few days. you know what i can hear? i can hear in the green room, carl riccadonna. he is in the building. tom: with research. jonathan: the brand-new chief u.s. economist at -- tom: you're right. jonathan: sponsor of tennis, asm why there are such big tickets to the open this year. tom: that is why we booked him. i want to go and i guess that will not work out. jonathan: futures down .2%. she lost. tom: i did not notice. i was so far in the stands i cannot tell. [laughter] ♪

jonathan: on espn the other night, the first round, who is there and a bowtie and of a suit courtside? tk, i'm still bitter about it. he went to the tennis and did not tell me. i had to find out on tv. tom: yeah, i got nothing from

miss rodda,, she had nord me. jonathan: she lost and did not say hello to you. tom: she was her. it was sad to see. she gave the college try. jonathan: tickets are getting more expensive. tom: it was $10,000 a c. jonathan: is why we have carl riccadonna in the studio to find out what's going on. stay tuned for that. we are down about .3% on the nasdaq, softer session on the week down on the week as well -- softer on the session, down in the week as well. softer since chairman powell spoke and a day since then, the two year yield has been higher. two you yield comes in a couple basis points, breaks the street, 3004750a we did take out 350, that has disrupted -- 3.47 58. we did take out 350, that has disrupted it. payrolls about an hour for now. looking for 300,000. every data point this week claims lower than expected.

manufacturing, consumer confidence firmer, before concluding the same thing, every single economist at this fed has more work to do, just based on communication we have had from the federal reserve. that is market in america, we ho talk about in europe too. priya misra connecting the two. do your -- your has taken up. so much this week in and around peraktics -- paratics. tom: there's a seismic change in fx. jonathan: 50, looking at 75 for the meeting next week for the ecb and maybe 75 again from the ecb. so a bit cold for the european central bank. tom: a lot to see. we see the jobs report here in one hour. jonathan: we will. are you done? tom: i'm done. jonathan: let's get stock moves. ritika: good morning.

we have earnings after the bell, the chip store you are starting to see, decelerating demand, and for social spending is high and you see the chip demand stories, broadcom shares up, and the sentiment is not an nvidia or devices. amd unchanged. we will see of the price action goes throughout the day. lululemon coming out and saying the higher income shoppers will bear the ones -- they're the ones they keep our company afloat. shares of 9.6%. it is the retail story but yes there is inflation, there are a retail inventory buildups but the higher income chopper rescuing that. moderna about unchanged as well, one high earlier in the session thanks to the omicron boosts which are hitting clinics across the country. per helps -- perhaps helping modernity bottom line. and bed, bath & beyond shares are down about 6%. the turnaround plan, still not impressing investors. tom: thanks so much. bed, bath & beyond i believe is one of the meme stocks. this is a joy for me personally

because aerospace engineering matters. if you do aerospace engineering, you are denominator based, looking at the change in time. that has been the hallmark of record on economics --carl riccadonna economics over the here's. we are thrilled he has the best seats at the u.s. open. the chief u.s. economist joins us this morning. thank you for the tickets last week. it was really wonderful. [laughter] let's cut to the chase. this is a serious moment, you are where i am with the wage dynamic with the study today. what will we see about wages in america? carl: i don't think we will see a significant change in trend. we had to be cognizant wages, like all prices, tend to be lagging indicators of real activity. we will have to see that downshift in the pace of hiring before we see thierry overly fun the wage front. that said, even if we look at whether is average hourly

earnings or nonsupervisory production workers average earnings, we can see that high watermark has been put in place and there is a very modest deceleration happening. you will not see much of the trend at 500,000 jobs per month. if we get a slowdown into the fall, which is my belief, you will see comfortable relief. tom: let's go to the x axis which i mentioned the dt and your engineering background. let's go to the x-axis. this report this morning, how does it change the timeline for the fed if they make choices? does september become less important then november? etc. carl: we are in the end game for the fed. the fed is looking for reasons to downshift from these jumbo 75 bits. tom: is the market pricing it in? carl: the market is trying to see that downshift coming about over the course of the fall. it is pricing to some degree the

question is whether that could happen in september or not. ironically, if we look at inflation numbers, they are giving the fed space to start moving toward the downshift. but as chair powell highlighted at jackson hole, the labor market is not giving them that space. i suspect we will not get that in today's report as well because we are still on a hot streak. tom: why in god's name was rick a donna -- was riccadonna not i jackson hole? jonathan: thanks for being with us. what is more import and here, this idea we get more evidence of an economy toward the downshift in fed hikes from 75 to 50 back to 25 or the fact the chairman is talking about the pain we will see in this economy and the need to stay where we are, to hold rates and not prematurely loosen. we could be facing 3.5% to 4% through the whole of next year. is that not the most report and thing -- more important theme? carl: that is. this is this something that the

markets were not getting after speech esther -- speech after speech from the fed officials. i think that would be the main goal. he said at the onset of the speech i will be short and direct and we have a big inflation job to tackle here in this will require us parking the fed funds rate in restrictive territory and leaving it there for an extended period, recession or not. when he says some pain for households and businesses, i do not believe that is code language for recession. i think he is trying something different in this cycle which is not just pushing us into recession to deal with the inflation problem but pushing us into an extended period of below trend economic growth which will generate slack and ultimately allow the fed to fine-tune the situation. it could be a recession but even in a recession, inflation, he lagging indicator, will be too

high so the fed will have to keep its put on the brake pedal. that was a core message from jackson hole. there will not be rate cuts in 2023. anna: how much of a liking indicator our jobs? how much do we need to keep that in mind as we look to the data point today? carl: ordinarily, jobs are relatively concurrent economic indicator. there is not a big lag, but what is happening ironically is this huge what i call productivity whipsaw. very early on in the recovery from the pandemic, gdp returned to pre-pandemic levels only -- levels. only as a last month, the labor markets notched a full recovery. that means there was a big expansion in gdp, not as much in the labor market, so that is a big surge in productivity. productivity is being reverting and so we have gone back into the other side of the meme over the last couple quarters which meant we did not get a lot of gdp growth. it was negative in the first have of the year.

when we saw massive job games. the productivity trend is reverting back to the meme, which means the pace of hiring will track more consistently with the pace of growth. that was not the case in the first half of the yearbook gravity will reassert itself as i do not think in today's report, because everything is looking hot, i think we could see above consensus outcome in today's data, but as we are heading from -- you remember last year at this time, the gdp reported handbook saying 12% real gdp rose. at the end of the year, it will looks something closer to zero or zero and 1%. massive deceleration in the economy will take a clear toll on hiring but it will take a few more months for that to become apparent. anna: you seem pretty convinced fed officials are not comfortable with where they are with jumbo hikes and they want

to get to places they recognize and have to do smaller hikes. what makes you so sure? of all the language you talked about at jackson hole, which was a hawkish nature, it makes you think they feel uncomfortable now? carl: i do not think they are uncomfortable with where they are now. i think they realize there was more work to be done. that was a clear message from jackson hole and i think it is consistent with what it will take to iron some of the inflation pressures out of the economy. jackson hole was hawkish in the construct or in the sense they need to push market expectation, rate cuts in 2023, out of the picture. the fed largely accomplished that. i think in a sort -- short speech where he wanted to be clear about his objectives, there was not room for the nuance of him talking about a downshift eat. there was one line in the speech that referenced a downshifting likely at some point in the future but was not necessarily saying this is coming up at the next meeting. we need to see improvement on the inflation and labor indicators before that can come about. that was a major theme in the

discussions of the july fomc. we can see that in the minutes that they talk about policy lag and most of the medicine the fed has administered has not been felt in the economy. policymakers are sensitive there's a lot of tightening in train and if they ignore the lag , the monetary policy tightening, they risk overdoing it. they know there is more work to be done. getting closer to the landing, you need to downshift or you're making the classic fed mistake of murdering the economic cycle. jonathan: let's deal with arthur. why are the tickets so expensive? carl: we can see a lot of service sector inflation. this is post-pandemic spending, the summer of services, people are pivoting from things that could be shipped to your house in an amazon box to experiences whether it is air travel, broadway shows, sporting events, concerts, the real shift in spending. that is keeping the economy alive and sending a fall signal

if you're watching traditional retail goods metrics. tom: two seats, men's semifinals, you and me $23,000. jonathan: funny $3000? that's like first-class to milan and we can watch the formula one. tom: how about indian wells in march? jonathan: we could do len darby this weekend. tom: we could. jonathan: we could fly in first class and it could be cheaper. i don't get it. tom: i blame bnp for this. it is carl riccadonna. you know to get in the studio with you, you have to quit your job and then you can -- tom: really? [laughter] jonathan: that's ridiculous. futures unchanged on s&p. carl, wonderful to see you. carl: sure thing. jonathan: this is bloomberg. ♪ riddick a: keeping you up-to-date with news from around

the world, president biden the strength to stoke voter outrage leading up to november's congressional elections. he called on americans to reject the politics of donald trump and maga republicans. he warns they threaten the very foundation of our republic. house republican leader kevin mccarthy accused the president of slandering all republican voters. the u.s. called iran's response to the latest effort to revise the nuclear cord not constructive. that raises questions whether the two sides can reach a deal that would free up a rainy and oil for global markets. u.s. officials are looking at iran's response which was -- the european union. starbucks named a chief executive to be its next ceo. he is a veteran at the consumer industry and he will join starbucks next month while the longtime leader stays in charge. he will fully take over next april. amongst starbucks issues, troubling sales in china and a push to unionize workers. global news, 24 hours a day, on

air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. ♪

>> we think we still go meaningfully higher with this at 115. the bear market in stocks and bear market in bonds, that means the dollar is the only safe haven left standing. jonathan: that's the global head of fx analysis at citi going into payrolls friday. good morning, with tom keene and jonathan ferro, together with anna edwards. lisa will be back with us next week. futures unchanged on the s&p, down more than a little more than .1% on the nasdaq.

euro-dollar, your sewing strength, .9991. the yen is showing weakness, tk. very briefly, coming close to a high of the session. that high of the session is 140.4 nine. backing away in the last couple minutes. tom: this is unusual and of dry norma's historical moment. this easily goes back to an ugly august of 1998. frankly i would take this back to the rough formation of japan of world war ii ash after world war ii. we get wisdom here on the failed monetary experiment, fiscal experiment of japan with jeremy stretch, head of g10 fx at cibc of canada and mr. stretch in london. i don't want to make this a history lesson, but there is a point where everyone has said to me over 10 to 15 years japan

unravels. through 140 up to any unmanageable 150, are we at the point of the unraveling of their economic experiment? it's good to be with you. it is right we need to think about parallels. as you quickly say we are back to levels we have not seen since 1998. innocence we are seeing this japanese economic -- economy vetting tested aggressively because we are in a world where we were previously talking about in the last section regarding the policy tightening of what we are expecting in the u.s. for japan remains in a different monetary orbit and we continue to see corona, getting toward the end of the tenure of the doj, maintaining the expensive monetary policy stance. i think it's interesting we had the fireman's minister -- the finance minister talking about vigilance and suggesting or hinting indirectly that perhaps

there could be measures to try to stem the yen. it does not seem as though the market is taking any great notice or credence. as we continue to see the market reflecting the reduction in u.s. dollar liquidity's, we moved to mourn -- toward a more aggressive qt, dollar-yen is higher and the question is how tolerant will the japanese be? now that we are 140, we will see the discussion of 150 will become ever more important. jonathan: do you think that is the by point for this doj -- buy point for the doj to lean the other way? the big point from the doj, if you go through the commentary of the central banks, the ecb, the federal reserve, all on the same page. we have to do more. the boj saying we need to keep this on monetary policy. is there a time where monetary policy snaps the other way? jeremy: you are right the ecb is standing in isolation, but the

question is how much or how far can the elastic stretch in terms of this and before does not back. that is the classic debate on where should there be a line in the sand. markets like nothing more than big round numbers. the fact we've gone through 140 with what appears to be relative impunity takes away one obvious level so we will as i say inevitably failed to discuss monitoring, considering the risks of moving toward 150. the boj are still talking about their ability of inflationary pressures and we need to see wage growth pick in japan. until we see that, i does feel the boj in this and states of the corona number ship will tolerate that you breanne and the market will continue to press to resolve that boj policy as we move toward 150 threshold. anna: you took us back to 1998, the joint action to prop up the. what about policy makers coming

together to rethink dollar strength? periodically, we return to the scene and we are questioning about whether we will see some causeination. do see that yet? jeremy: i don't think i do. i was interested about the comment coming out about the bear market and bond markets which leaves the dollar as the last safe haven standing. i think we can and will see the dollar index probably continuing to make gains so that is the 110 threshold that we are close to testing. it will give way to further resilience in terms of the data backdrop and we can see? 's about -- see question marks about the scope of the bank. it is not the case where we see a scenario where we are getting toward the extremes that would prompt the international community to start to discuss meaningful mechanisms to try to stem that. i think in a sense more still in

an environment where there's a lack of international cohesion, which would be necessary to warrant those discussions taking place on a meaningful basis. jonathan: and i don't think many people have thrown around the word panic over the last week. i don't think there has been much sign of panic. i wonder how uncomfortable the bank of england will be with seeing cable sterling dropped to a 114 handle briefly yesterday. what do you think they are thinking about that? jeremy: i think all of the central banks, the bank of england is one in the greatest pine overall because as we know from some of the more extreme inflation forecasts we have seen around, there is a much more protracted and long-lasting inflation problem in the u.k.. the peak of inflation will be later and substantially higher than most of the markets. the banks will find it difficult to match that inflationary construct because of the weakness we will see on the macro story. clearly the u.s. -- the u.k. consumers are under significant -- will be under significant

stress and the business sector, unless they will beef profound measures -- be profound measures to address those concerns. this only seeks to amplify inflationary pressures and that leaves the bank of england in a bind and not least of which because the income of the administration of where assuming lose trust would be prime minister, has been critical of the bank of england reaction function. from an international investors sampling, looking at the diversions between the policymakers and bank of england and the backdrop of the problem, that amplifies the concern of sterling probably only having a route lower and if we're are talking about levels from 1998, i think we might have to go back to 1995. perhaps levels in terms of 110 in terms of cable as the of focus. jonathan: massive numbers to

think about. 110 on sterling, i think two months ago might have sounded like while but now, after we had a look at 114 yesterday and we are at 115-60 -- 115.64, maybe not a big call so far. tom: there's a lot of suddenly going on in foreign exchange. damian sassower was of immense value yesterday. we go into this weekend with the imf in full operational mode on em analysis of crisis. there is no other way to put this. jonathan: payrolls numbers and 34 minutes. we catch up with jeff rosenberg after the number drop. looking forward to that. from new york, this is bloomberg. ♪

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>> you are going to need to see very low growth to get the fed where it once to be. >> we think we are going to have a recession in the u.s. in 2023. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: "bloomberg surveillance", on jobs day. anna edwards in for lisa abramowicz. think optimism, could we see an unemployment rate that takes us back to harry truman and white david eisenhower? jonathan: the data this week has gone against the gloom. jobless claims yesterday lower than expected. last month, let's not forget last month. 528,000, where did that come

from. the estimate today, 298,000. tom: a chief economist said it was like a cold shower on the recession. he is going to study wages, so do i after what we saw with the new adp report. jonathan: the range, high 452, below, 75 has been the defining point of this pandemic. the last two years, every time we have had payrolls friday, the range you can get a london bus through. it has been that wide every single first friday of the month. we are struggling to read this economy. there is little consensus on how big this number will be today. tom: the london bus will have a price up, up, up with inflation. they look to a new prime minister announced monday morning. anna, how does the united kingdom perceive this buoyancy in the united states? anna: buoyancy in the labor

market, more details on how buoyant and whether we are getting any pain. it is the lack of buoyancy the fed wants to see. both from the u.k. perspective, there are similarities and differences. we have that tight labor market, that is the other reason, as well as similar, low participation. tom: we are going to start with equities, the stock market does matter. we wonder, is it about this report in september, or do we stagger the moment this report is out to that next fed meeting of november? jonathan: -- of kpmg put it earlier well, september is much bigger than that. the chair gave you the playbook, he is telling you we will see pain in this economy and we will remain keeping rates in for a extended period of time, persistence is the buzz word. persistence, you stay there and

do not lose prematurely. every single fed official has spoken and have done so repeatedly, they are on the same page. tom: i am going to go to data on the real yields. the 10 year real yield is stunning, it is weak. jumped condition up to .90, a positive -- -- .80, a positive correlation. jonathan: getting back to levels we haven't seen since late 2018. maybe that is the power this time, a lot of people do not think this fed is going to back away. yields on a tenure in treasuries, unchanged at 325.56. euro-dollar, 99.94. crude, 88.13. they are looking for 125 on brent crude. 23 target, 125. interesting. tom: we were rehearsing for

this, we never are. joining us, the senior strategist at ubs. nadia, i like how you have the courage to take your equity and economic and commodity study up to mid-2023. what does the stock market look like in june of next year? >> we are looking for about -- on the s&p 500 next year. a lot of what is going to drive where the market goes is where monetary policy goes. we have heard from the fed that we are likely to be higher and tighter for longer. that feels like a more range market for longer, we are seeing towards 4002 hundred. earnings estimates need to come down now, the consensus number is much higher, about 4% below consensus numbers. we think the consensus will come towards us, even our 2023 eps

numbers are dependent on where the terminal rate goes. jonathan: how mechanically challenged is the s&p given the federal reserve will be higher and tighter for longer? >> is a challenging environment for equities, that is why we have been positioning more defensively. recently upgraded consumer staples as a result of that, that is the joining of the defensive play which has helped offset -- equities. we expect the economy to slow. the magnitude of the slow is going to be debated. consumer staples tend to be more resilient in an economic slowdown, there is a strong inverse relationship between performance and changes in the ism manufacturing. yesterday was strong, but we expect it to decline and contract into 2023.

have seen a pullback on agricultural and commodity prices, this has helped alleviate pressures consumer staples versus other areas of the market. we are positioned even more to see what the fed is headed into 2023. jonathan: jp morgan has been constructive, they have been wrong, but we've got time left to see if they will be right. one spot they like and have been right at is the energy sector. the team put out this note, the energy sector remains in a sweet spot. my question to you after what you said about staples, do you agree and what is the correlation between the energy sector and ism with respect to ism expected to be rolling over in the next coming months? >> we agree energy remains --, we think that strategy will continue to work. even though you might expect the economy to slow, we still think

supply demand i namic still favors prices across the energy complex to be higher and stay elevated, especially as we enter the winter months. we know europe is going to have a likely energy crisis. we do not know the outcome of changes of opec, some of it depends on the potential for iran's nuclear deal. it is early, but we expect that brent oil prices to get to $125 because of the supply demand imbalances. when you look at second-quarter energies -- reporting's, energy was strong. anna: you might not be worried about balance sheets for oil and gas companies if we see oil back up at $125. from an equities perspective, jon was talking about how they are increasing concern for credit.

i am wondering, are you looking at dividend cover, balance sheets, the profile of debt repayments, is that looming large for you? >> it is something we continue to monitor. what i can say, the balance sheet across most companies remains fairly strong. we have had this low interest rate environment giving the company's opportunity to push out maturities. we look at corporate balance sheet's, companies have quite a bit of cash on their balance sheets. energy companies being flush with cash, we are left concerned about companies in terms of their balance sheets, being in a better position to go in for this economic front. we do not think we will get a recession. jonathan: can we play good news, bad news? tom: i am sorry, nadia. jonathan: what is bad news? good news, or bad news, what is it? >> if we get another print like

the july number, i think that is going to be bad news from a fed standpoint. tom: the research piece this week that had a both profound impact on me, was luke, boiling water with lobsters and potatoes. what is it like to breathe the same air as luke kawa at ubs? >> [laughter] >> it is good. jonathan: they love each other. tom: you know, -- jonathan: nadia of ubs. i think that was great news, is bad news, tom. great news is bad news. tom: you are killing me. you wouldn't do this to anna edwards. jonathan: to wind you up. tom: there is so much

navelgazing right now. jonathan: come on. tom: 30 days ago, in 20 minutes. stunning. jonathan: no one would send $500,000. tom: i agree. what if we kind of get that number again? jonathan: we sat alongside us in jackson hole last time must we, this cycle is moving quickly. tom: i agree. jonathan: 10 years into this, coming back into that mess of 2020, still trying to keep up and struggling to keep up. tom: goes back to the x axis, year in, going to dash to 141. jonathan: parity, less than point 5%. we will see if he's got any u.s. open tickets. after the break, we will see what he says. payrolls friday around the corner, then we catch up with

jeff rosenberg of blackrock. futures unchanged, going into payrolls. that number is 19 minutes away. on radio and tv, this is a "bloomberg surveillance." ♪ >> less than 20 minutes away from that jobs report -- u.s. jobs report. it numbers arts -- expected to show payrolls, -- that one matched the lowest in five decades. figures could be enough to lead the fed to raise interest rates by 75 basis points despite inflation. president biden trying to stoke voter outrage leading up to the november congressional elections. last night, he called on america's -- americans to reject maga republicans politics, he warned they threatened the

foundation of our republic. kevin mccarthy accused the president of floundering republican voters. the seven nations of the price cap of the russian oil, the u.s. hopes that will ease energy market pressures and slash overall revenues. nasa will try again saturday to launch the artemis one rocket. they tried earlier this week, but the launch was scrubbed because of a problem with one of the rockets engines. it is the first major flight in the plan to return to the moon. this mission is carrying test dummies instead of astronauts. you can watch the launch saturday on bloomberg tv. bloomberg has learned japan is planning to cut 20% of its staff at -- the biggest tech investor will slash 100,000 jobs this

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>> the danger is, wages get behind. there needs to be a catch-up, a catch-up of prices. this is an important time, the fed and other central banks can address inflation so we see less of a need to address wages. jonathan: the professor of

economics at stanford university. i always see it -- i always get excited to see mike mckee walk in the studio. payrolls number comes out in 12 minutes. jeff rosenberg of blackrock is going to break it down, the number you are looking for, 290,000. the wage is wide. your member the previous number of about 510,000. futures unchanged on the s&p, negative .2%. on the nasdaq 100, yields unchanged, let's call it 326 on a 10 year. tom: after listening to john taylor of stanford university, this great work of thinking through our monetary process. randy rosner is the economic professor at the university of

chicago, someone who has read john taylor cover to cover. randy, i understand you did not dress as a raisin to show microeconomics in freshman economics as professor taylor has done in stanford. i want you to talk about the efficacy of a rules-based central bank that john taylor codified with the taylor rule. how distant is this modern federal reserve from being rules-based? >> i think the fed has articulated a different set of rules, a different approach in their coverage of inflation targeting. unfortunately, i think that may have gotten them into trouble, keeping them a bit behind the curve. saying we can wait before trying to respond to inflation rising. i think they had a form of a rule, but one that didn't work. tom: are jobs of americans part

of that new rule? >> sorry, our jobs -- tom: jobs in america, is it part of their set new rule? >> it certainly is. tom: that is all i get? help me, here. jonathan: help me, here. >> i am trying to give you a short answer. [laughter] tom: i think this is important. where does the new labor economy, we are observing a boom economy in they were, a fully employed america, a unemployment rate that goes back to truman and eisenhower and we are trying to figure out the rules of the road for the central bank. what are they for labor? >> they understand the labor market is very tight. we had this unusual circumstance of having so many vacancies relative to the number of unemployed people, and that

means a super, super tight labor market, lots of wage pressure as john taylor was talking about. the key thing the fed is focusing on is making sure those wage expectations that have been very high recently do not continue to stay so high, that is going to make it difficult to pull inflation down if people demand high wage increases. anna: good to see you, and not in london. where do you think the transmission mechanism of these higher rates, where could it fall down? you described some of the process, interest rates go higher, way down on wage demand, way down on inflation, where could that oh wrong and not actually happen? >> well, it could be that there is this fundamental equilibrium in the labor market, some people have talked about that and makes it difficult because we've got

so many disruptions. we've got a big mismatch between what the firms are looking for and skills the people have. you might not be normal circumstance of higher interest rates leading to higher unemployment. i think we will get there. monetary policy has impacts of long and variable, it is usually six to 18 months that most economists think the policy has made its major impact. by this fall, we should be seeing it. the market continues to be on fire. here, as well is in most countries. anna: by that logic, the jobs print we get today is responding to what talk of a fed hike, or the first fed hike. >> it is the echoes from the past that will be coming in. the fed raises rates, it doesn't

mean the economy just goes down or the unemployment rate goes up. jonathan: you are sticking with us, i am happy to say. randy crossan are of the university of chicago, payrolls seven and its away. mike mckee, what are you looking for? michael: we might get an upside surprise for the month. one thing to consider, the bureau of labor statistics has gone back to an older form of their seasonal adjustment. they changed it during the pandemic because the numbers were out of whack. there could be a large seasonal component to this that would subtract a lot of numbers. we will look for that. jonathan: are you looking for a revision to the previous month? michael: there is pretty much always revisions. july is usually revised higher. jonathan: [laughter] michael: we could see a bigger number. one thing to watch going forward, the government has announced something like 526,000

jobs the past year that have not been allocated to various months, but overall employment is about half a million higher than originally reported. we will get those assignments come january. they've got the preliminary number out. we still see a strong labor market. jonathan: tk, get out the blindfold and the dartboard. feels like that with the range of estimates. tom: that should be contender -- consider normal. we are still in a pandemic. deaths going back above 500, not to be inflammatory. this is so unusual, so original of a cycle, the compare and contrast back in history is risky. jonathan: we are with you, to have a range that wide. everyone is taking it up. the median estimate is 298,000.

it was 528,000 equities, they are going nowhere into this jobs number. tom: there has been a turn in the market, even the fx market has pulled back from the excitement of the last hour. i want to say, the bond market is speaking. it will be interesting to see where it is in seven minutes. jonathan: the two-year close to 350, the 10 year close to 325. equities up .1%. euro-dollar 99.97. crude up by 1.9%, crude 88 pulling 26 -- 88.26. pu at fidelity, your dedicated job advisor will work with you

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jonathan: payrolls in america, seconds away. after that, operation get to the beat. equity futures positive .1% on the s&p 500, nasdaq unchanged with the jobs data. is mike mckee. michael: a number in line with what wall street expected,

315,000 jobs created during the month of august with 308,000 of those coming in private payrolls. we will have to look and a moment, there could be a seasonal factor with teachers going back to work. this could be a larger number in non-seasonally adjusted since. manufacturing payrolls up 22,000, we did see strength in that ism report yesterday. average hourly earnings coming weaker than anticipated. .3% up, which means the average year-over-year is 5.2% unchanged from last month, lower than the 5.3% that had been expected. here is an optimistic number from the federal serve, the labor force participation rate rises to 62.4% from 62 point 1%, a significant number of people going back into the labor force looking for jobs. that is something the fed wants to see. the music's underemployment rate

rises to 7%, from 6.7%. i do not know if i mentioned this, the overall unemployment rate rises to 3.7%, a function of people going back into the labor force. let me take a further dive into the numbers and then the markets. jonathan: yields down, equities up. yields down to 345, equities up .6% on the s&p. on nasdaq, up .6%. dare i say this might be called a goldilocks jobs report. even what i am looking at the moment, you've got a in-line payrolls figure, unemployment is up, participation is up, wages are softer. if the fed had to decide the jobs report this morning, would it look like this? michael: it probably would. this is what they are expecting. the unemployment rate rises because the number of unemployed people increased by 344,000, it

doesn't appear they lost jobs. it is people coming back in the labor force that hadn't gotten jobs yet. that is reasonably good news. the unemployment rate for adult men and hispanics rose, the jobless rates for women, teenagers, whites, children, changed. it is a number of men coming into the labor force that did not find jobs. tom: the dollar gives way, the and gave way. i am looking at this, the simple math at the top of bloomberg study by scott landman and team is 315,000, take away a two month revision of 107, get you to 208,000 summary of one of the studies from nonfarm payrolls survey. is this the goldilocks, is this a back to normal report?

michael: you could call it that, we do not know what normal is these days. going into the pandemic, we were looking 180,000 a month, something like that. at 315, we are higher. i might mention, tom talked about the 107 you subtract from the revisions. i was wrong. the lie was not revised higher, it was revised lower by 2000 jobs. most of that revision comes from the month of june. july comes in at 520 6000, still strength in these months. it will be interesting to see how much these jobs numbers change when we get the september report, how much august is revised. jonathan: mike mckee, thank you, buddy. looking at the market reaction, up .7% on the s&p. nasdaq 100, up .8%. yields lower at 340 five, down for basis points on a two-year taking back fedex from the

september meeting. we will see if this move sticks. if we can get the federal reserve and market board to agree on something, if they can design one, i think this is maybe what they would come up with. tom: i agree. the hourly earnings are way more quiet at the moment, we saw from adp a couple days ago. an equity lift, fix from a 27 level in the angst of three days ago comes in at 24.38. randall crossan are, forward mark governor of the federal reserve system -- forward governor of the -- former governor of the federal reserve system. i want to talk about america's labor economy is being a modernist. is it about the haves doing well in a good part of america flat on their back? >> there is a lot of diversity

in the labor market outcomes, i think you are right. this is not something that is even. if you are describing, this is what the fed is hoping for. or people are coming back into the labor market, that -- more people are coming back into the labor market, that helps with the tightness of the market, that helps manifest lower wage growth. which is what the fed is hoping for, more people will come in, leave the pressures in the market and take some pressure off the wage increases. that will make it easy for the fed to try to bring inflation down to its 2% goal without pushing the economy too far down. anna: we've got that participation rate to that point, 62 .4%. how high can the fed will that number to get? >> may be a little higher, it is

surprising how much it hopped up. my guess is, it may not stay that high or come down a little bit. it is going in the right direction, which is what we want to see happening to reduce some of the labor shortages, to reduce the pressures of the labor market. it has been surprising, given how strong the labor market is. a lot of people haven't been bothering to look. jonathan: based on takeaways, i think you are going to hear that word, goldilocks, a lot this morning. would you push back against that characterization of the market -- of the report, given what is expected in the months to come? >> we don't want to go too far, but i think it is consistent with where the fed wants to go. i think it has made the market happy, i think they were worried there could have been a blowout report. unfortunately, good news in the labor market can mean bad news because the fed will have to respond more. it is on a good path.

the fed is going to be debating 50 or 75 basis points, close to four by the end of the year, if not at war, and a four handle through -- if not at four and a four handle through 2001 3. jonathan: hard to get excited about one data point, it needs to be a trend in a conviction about the future around this. this is what i think equity market boards and fed might design if they went to call it a soft landing. a whole string of reports come in next year, to get us excited. tom: good bad, bad good, whatever it is. this does push away the arch gloom. on standard imports, futures putting 4000 moments ago. i want to get the dates, this dates back to july, back to june, then back to may of this

year. then, go back to s&p 4000 of early april last year, that is where that fits in the continuum. jonathan: we have faced fed angst into september 2021, that could change for the inflation report. mike, do you want to jump back in? michael: i noticed there are no real standout occupations one way or another. there are a few lost jobs, but very few lost jobs in categories. no major hiring, we saw 18,000 people in restaurants, but that is nowhere near what it used to be. they are still looking for people. one area you see a drop is in the category of that includes mortgage bankers, mortgage brokers, they are down by 2000 400 jobs. that is something you would expect because the housing

industry is in trouble. this is an overall strong report, it has a breath to it, not that any one particular category that is carrying it. tom: gloom or optimism, we speak to jeffrey rosenberg of blackrock. thrilled he can join us each job day. we need to recalibrate into next year. we need more data, but this seems to be one xi of relief. equities up. how does the bond market have a sigh of relief? >> it is a sigh of relief, you have a lot of expectations following the jackson hole presentation, the speeches both by powell and -- who were hawkish with regards to central banks, definitively stating they were focused on inflation. the -- instead of going -- the

fed going into today was skewed on the downside if it was a stronger report, that would have only solidified expectations for the 75 basis points in september. if it was a significantly equal report, the market might have looked through that as opposed to what we have seen in the last couple payroll reports, particularly over the summer rally. if it had been a bark -- market that, we but good news, bad news, it may no longer be the case that bad news in economic slowdowns is going to push the fed off its tightening cycle because they have been clear to tell us it is about inflation. the gloom and gloom today is, what does the report signal about any inflation look through? the labor force participation rate number is the key takeaway that is the most interesting piece, as you discussed with randy. which is, better than expected news, a little weaker than expected on the wage front. modestly, that is good news from

the bond market perspective of not having to see the fed react to inflation as a strong, one data point we are not going to over read. that is the one takeaway i would have from this report that i think is important, the look through to inflation. anna: with that participation rate, i report sharing a paring effect on rate increase. does it make sense to expect less hiking from the fed, and in what sense, less hiking in the near term, or less hiking overall, less hiking next year, what do we think? >> it is definitely about the near-term trajectory, what you are seeing in the markets today is about the 75 versus 50 debate. today's number maybe pushes back a bit, that is maybe why you are seeing the rally on the front end of interest rates. let's not over interpret one data point.

this is going to significantly change the trajectory of the fed, and the terminal rate debated is still very much unsettled. the labor market reported, going to settle that debate. we are going to focus a lot more on the inflation trajectory. a and ago, mike mckee mentioned some housing numbers. these are some big challenges we are seeing, a huge transition from homeownership ownership to home renting. that rental price is a huge component of that inflation outlook. those things are not being addressed on this labor market report, that market still faces uncertainty. tom: what is so important, what did we learn about where the terminal rate is for the fed? the answer is, it doesn't help us. jonathan: the fed once tighter financial conditions, that is going to cap the upside the next

few months if they are not satisfied. the fed is in control. have gone to a fed call. the good news is, this is a leaf. we will stick by the end of the day, futures positive .5 percent. catching up with victoria, michael gayton of bank of america, and secretary walsh at the white house, coming up. tom: very good. we will look for that on radio and television. joining us now, jeff rosenberg is still with us. we've got a great team lined up to get you out over the next 17 minutes of this job report. what are you seeing in flows? i do not want to know inside blackrock baseball, are people selling bonds, is money flowing out of debt?

>> if you can imagine, the flows are highly reactive to the returns. this has been a historic negative return year for all categories, fixed income, we have seen that in the past week in terms of acceleration, in terms of rates, spreads wider, this is a challenging environment for fixed income. we came into this year pricing the old inflationary regime. the inflationary regime has surprised the fed, the bond market. we continue to see those surprises. until we get a sufficient inflation risk premium priced into the bond market, returns are going to be challenged. you are starting to get more of that priced in, more of it priced into the front end of the curve. you talk a minute ago about the terminal rate, it is the backend of the curve where you see a lot

of confidence in the bond market. that inflation will fall back to 2% target. this is a bond market that gives the fed an incredible amount of credibility. that remains to be seen, that is a vulnerability as future fixed income returns. tom: jeff rosenberg, thank you so much. really appreciate you on jobs day before a holiday weekend. ira jersey is scheduled to be with us in a moment, we wanted to squeeze this in. with all the gloom, futures up 17, we wanted to talk to someone who has a framework of optimism about the american financial system, the american economy and stocks higher. michael purves joins us, always writing intelligent notes. let me cut to the chase, what is the why and how we get to

standard on course 4500? michael: one thing that has been working in the markets broadly, putting aside positioning and relief rallies and so forth is the corporate earnings machine has been performing. there is a lot of questions about whether that trajectory can be maintained until the end of the year, and until 2023. nominal gdp is very high, it is the components of nominal gdp in terms of waiting for inflation versus real growth are not what we want them to be. we are still seeing high nominal gdp drop, nominal earnings. we are seeing a continued strength. if you look at qts report, they came in at surprised levels then at q1. the other side of the valuation side, we have had -- you go

through this massive pivot the last 12 months, but it was well priced. te multiples in the equity risk premium, measures have recalibrated appropriately. we wake up next week and the 10 year is at 4%, which it will not be, but if it were to do that, we will probably see further speed and traction. i think right now, the markets are going along. we need to get through this september fed meeting, we need to get through. economic data is good. unemployment data is still robust, the ism is -- anna: maybe we are seeing markets coming around to that view because u.s. 10 year yields, 30 year yields resumed their rights. 10 year yields up to 3.27%.

you talked about stocks and the earnings story. others say that the earnings need to catch up with reality, that means we need to see cuts to expectations around corporate profits. why do you not see that? michael: i think part of this comes back to nominal gdp being high this year, probably high year. my biggest risk to earnings next year, we get a big recession, yes, there is no question that will be a big hit to earnings. one of the other risks for earnings is inflation coming down a lot, a lot of earnings and stock companies will -- some margin depression. tom: let me give you a victory lap, we had priya on earlier about curve inversion. every once in a while, purvis

nails it. a few years ago, you nailed adxy, the blended pacific rim currency regime x japan, we now have a yen through a new level, 140.80 on japanese yen, many talking 140 five weaker yen. michael purves on what it means to see such currency weakness and strong dollar on the pacific rim. michael: i think it is significant. the fact is, the united states dollar relative to so many currencies, the euro but particularly the end, many em currencies, the effect of the currency ceraintly -- currently at a relative basis. if you are talking about the yen, you have to consider hiking through carbon full or abilities. as painful as oil prices are here, it is a lot less so in places like japan or the euro zone. if you can tell oil is going to

150, i cannot imagine how the yen would get cheaper, or the euro would get cheaper relative to the dollar. i think that is one of the weird dynamics, oil is leading, it is a key thing that is thriving this leading currency by the nose. anna: that leads to a changing boj policy, -- michael: we have been waiting for that for some time. there is an interesting game of chicken the boj has been playing. we will see at what level sensitivity they have a. after three decades of centered deflation, disinflation in japan, maybe they will have a much needed wake-up of the economy there. it is a dangerous game they are playing at some point. tom: michael purves, thank you so much.

a real optimism on the equity market, we are seeing it now with futures up 20, dow futures up 149, the vix up 24.37. higher unappointed rate, michael mckee, -- higher unemployment rate, michael mckee, i want you to slip in. michael: a lot of people coming back into the labor forths -- force makes a difference. june was down, we have seen flat or falling hourly earnings. they are high, but coming down. this is a fed friendly report. tom: -- on g7, backing a price cap plan for russian oil to limit revenues. how will europe greet this, anna? anna: this is something europe has not been on the same page as the u.s. on. germany wanted india to be part affairs, -- part of theirs --

tom: let's go to ira jersey. i want to leave times for anna edwards on the politics of london. ira jersey, on the bond market, jon ferro was talking about this is the report the fed wanted to see. you agree? >> generally, yes. wages are slowing, the job market is ok. this is maybe leading us to a soft landing. it is only one report. i think the market is taking it as a goldilocks report, where you have had at least a knee-jerk reaction has been people to buy the front end and sell the long end. you have a little curve steepening right now, signaling that maybe we are not going to have as hard of a landing as the market was pricing before the report. anna: maybe not as much hiking, is that particular early -- i know one piece of research in my

inbox, the data point is still on the table. >> i think 75 is on the table. the inflation report, jeff mentioned inflation is what the fed is trying to fight, this is one component. the important component winds up being wages and the health of the overall economy. the inflation report will be incredibly important for whether or not the fed goes 50 or 75. this doesn't necessarily change whether the terminal rate is going to be. how far will the fed , even if they go 50 in september, we do not know what they are going to do in november or december. if they go 50 in those, we are going to price for higher terminal rates. we are starting to price for terminal rate to be above 4%, and we backed off a little bit from that this morning. we are still talking about another 100 to 150 basis points of hikes from the fed the next couple of quarters. anna: randy was cautioning black

effect is 16 to 18 months. what does that mean when we look at the jobs report? >> quite frankly, it might not be only fed policy. the higher inflation, higher input costs for some companies, we were talking about corporate earnings. he just had michael talking about that a moment ago. you might slow down the pace of wage growth and slow down the number of people you are hiring overall. those thanks will slow down the economy in general -- things will slow down the economy in general. this is just one report, last month was strong. we need to see a few more data points before we can make conclusions. tom: what does a normal tenure real yield, is it 100 basis points? what is normal? >> i do not think there is a normal. real yields have lowered for 40

years. we are making new real yields. i inc. a real yield somewhere between 50 and 100 basis points on a tenure tips is -- 10 year tips is what i would say. the risk right now is something the market needs to see is higher real yields to slow the economy enough to get inflation much lower. tom: thank you, ira jersey. mike mckee, one more insight. michael: late statistics, labor force prime age participation rate reaches 82 point 8%, highest since before the pandemic. we have 12 million people working in manufacturing, the most since 2008. manufacturing doing well. we mentioned seasonal's, only 6000 added. seasonals were not a factor. tom: i do not care. , i prime age?

-- am i prime age? michael: can i take the fifth amendment here? tom: from before and after brexit, to the strange politics of her united kingdom, anna edwards, our heads are spinning. who are the tiny, tiny group of people that anoint your next prime minister? anna: it is the conservative party membership, a subset of the voting public, a very fall subset -- small subset. they make that decision. they have already made that decision. we find that out when you are on a holiday on monday. tom: we talk about the first tuesday of november, when does labor get to participate in the election process? anna: that is interesting, officially, not another two

years into 2024. we had the last one in 2019, the one that boris johnson won. we could see the conservative party decide to call the election before then, they can try to do that. there are rules. tom: there are rules. what is the distinctive difference from where you sit between truss and soon at -- sunak? what are the distinctive differences between the two people voting for them? anna: a lot of it comes down to -- truss has been promising to cut taxes, what that is to interest rates in the u.k., soon at has suggested he doesn't like her economic policies. -- has set about wanting to address whether we -- the bank of england. tom: thank you.

thank you for joining us for the last two days, she will join us. football reference. let me go through the market to prepare you for the rest of the morning and driving towards jon ferro's important conversation with the secretary of labor. futures office jobs reporting, critically. the negative revisions, bringing the number down to a smaller, maybe what the fed wanted. we went from 315 thousand, you take away a negative 107 of revisions. it is a 200ish number, that is what they liked in the markets. futures up 25, dow futures up 180. spx back to a 4000 level. now under a 32,000 level.

i am saying that to aggravate jon ferro. we hope you enjoy your labor day. this is bloomberg. good morning. ♪ jonathan: we've got a lot to talk about. equity futures positive .7% on the s&p. the countdown to the open starts now. ♪ >> this is bloomberg the open with jonathan ferro. ♪ jonathan: live from new york we begin with jobs day in america.

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