taylor: stocks declining, yields rising, all eyes on the fed's next move. this is bloomberg markets. ♪ taylor: quick check of the markets. looking at significant read on the screen, and s&p 500 39.20 the level we are trying to hold. look at the nasdaq and the nasdaq 100, the low 12,000. the clear underperformer, up about 1.15% or so because of the huge rate of change again within the yield story. the two year yield refocuses as another seven basis points

higher. we had 18 basis points, then three, then another seven. 386 on the two year yield. we talked about the federal reserve sending higher. that means at 230 inversion, the highest this century. the highest since 2000. if you get farther inversion, up about 38 basis points, the 10-year does not invert just yet. all this volatility earlier today, we caught up with invesco 's representative. >> the most powerful in the world is the power of compounding. you want to put your cash in a place that it will continue to compound. for us that means high quality companies that have the wherewithal to survive periods that are inevitable. taylor: joining me now for more

insight is the senior u.s. equity strategist at a wealth management company. talk to us about the further equity selloff. the pressure you see staying invested in these markets. >> when you think about it, this will come from the market. markets were at a deep level in the spring and despite the fact that we have had a more aggressive fed. i would think about it as the price of volatility. in the face of these headwinds, partly because earnings have been better and we have not seen those massive cuts yet, we do think they are coming. that is going to put a cap on this market. we think about where we go into your end, we are kind of where we are today. from a positioning point, we want to be less in that. earlier, it was high-quality stocks. health care, consumer staples, coupled with energy which we

expect as we look out to the supply market. taylor:'s technology high-quality? nadia: yeah, but you have to be selective. there is a high portion of revenue that is seeing a downturn. taylor: is there a cap on yields? are you looking at peak yields behind us? nadia: if you look at it, 3.5% in june, we do think that is the peak of the cycle. as we know, within the bond market, volatility remains high. you could overshoot that. but we are looking three and 4% on the 10-year by year-end and we think that goes into 2023. it starts to obey and work starts to slow. there will be arranged range between 275 and 3.25.

taylor: the problem is the path to get to year end. how choppy are you thinking when you are navigating to your end? nadia: it will be a choppy market. we have upcoming earnings season and we will see on that comes through. through conference season, it seems like the earnings are holding in there. but we look forward to 2023 and the consensus is looking for the fed etf. it is already a trend. we are continuing to debate whether we end up in a recession or not. i think earnings are peculiar to us. the cyclical sector remains at risk. discretionary remains vulnerable. it was he volatility as those earnings estimates come down. taylor: only talk about the equity gap now, maybe more than ever in conversation with the fixed income as well, what is

your fixed income team asking within your world of equity, the most important signals they are looking for? nadia: they're looking to see what corporations are seeing in terms of the balance sheet, if they are putting money toward how resilient the consumer is. the market is looking forward to that. and is there an increased chance of recession, because not having this for the bond market, as well as the equity market. taylor: when you look at the recession indicator, do you look at two tens, to 30's? do you look at a three-month 10 year that has not adverted? where are you focused? nadia: 10 year. it is a better indication. we no the two tens are already inverted. there is a shorter one. five or six month window.

taylor: and you are thinking about allocating within equities, is inflation or the labor market a bigger concern for you? nadia: inflation of courses is top of mind for the fed. obviously we have to pay close attention to that and we saw that highs last week. actually, we have 75 basis points. the market is already there. but the job market is also important. if the fed wants to do that within the labor market. after keep labor markets under control because it is through inflation. taylor: some pressure, nadia level -- lovell, we appreciate your perspective. want to go to the first word news with mark crumpton. mark: president biden is

praising negotiators who reached a tentative railway labor agreement. the president called it a good deal for both sides. pres. biden: today is a win for america. together when we have reached an agreement, it will keep our critical rail system working and avoid disruptions of our economy. mark: president biden was pledged to be the most prounion president in u.s. history, joining the negotiated talks are virtually. negotiators had until friday to lead -- to reach a deal to avoid a strike. the january 6 committee has received new evidence ahead of a public hearing later this month. it includes text and chat messages between secret service personnel on the day of the capital assault. the chairman says he can't say yet whether any of the messages are among those thought to have been missing or erased. he says staffers are going through them, calling it quote a

work in progress. the head of the european union executive arm is in give. -- keith -- kyiv. she is there to talk progress toward recession in the block. a day earlier she spoke in her state of the union address to guarantee what she called see mills -- seamless access to help the economy recover from the war. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg.

taylor: this is bloomberg markets i'm taylor riggs. u.s. railroad and unions reaching a tentative agreement, avoiding a huge disruption to the supply chain days before the deadline. gupta is on the ground in the city. you are doing that reporting on the ground and the keyword is tentative. kriti: the keyword is tentative.

we still have a couple of steps to go. the two biggest unions have come to this agreement but they still have not voted or ratified, which they must do by midnight tonight. even if they don't there is the fine print. this is where that keyword comes into play. we know that the biden administration, the labor secretary has been very active making these negotiations happen. in the fine print means if they don't vote on union membership, they don't ratify it, you still have three weeks with the negotiations are ongoing and the strike is then further delayed. those are what we will be watching for. if it is not ratified, how much supply chain pain is left in a week where we have already seen a lot of companies shut down operations and potentially keep them shut for longer? taylor: talk about that, amtrak is one, canceling things in anticipation of the strike and

saying we are working to resume operations. what is the transition from cancellation back to normalcy? kriti: just like anything, the commodities, for transportation world, you can't just turn it on. norfolk southern which did earlier in the day say it is resuming operations as soon as possible, it was one of the people that said it is stopping its cargo shipments. when cargo hits a ship, to a train come to a truck, they are stopping because they don't want cargo and hazardous material left in the middle of nowhere if no one is operating that machinery and cargo. it is a slow transition and they are on this being ratified. but amtrak is still saying scheduling is not that easy. taylor: stick with us, i want to bring in matthew, president and ceo of the federation.

we have just talked about the aversion with this tentative agreement. matthew: we are all pleased to see this progress and commend president biden for his engagement, and especially the labor secretary for the herculean efforts over the last 24 hours. all of last night ended to the wee hours of the morning, to try to bring people together. it is extraordinarily important for our economy, consumers, mac and families and workers that we get the deal ratified. we can't tolerate any further interruptions to service. we know the challenges and the pressure of the supply chain is already feeling. consumers are facing increased prices across all commodities and virtually everything else they are buying. we hope a great outcome, let's hope we get this completed and get it ratified as quickly as possible. kriti: we talk a lot about the

pain in the supply chain, whether it is auto vehicles, oil, immigration and for commuting. retail has had a little bit of a buffer. you represent the national retail federation, working with walmart, bloomingdale's, macy's, target, you name it. walk us through why the inventory buildup in retail has a little bit of a cushion when it comes to supply chain issues. matthew: the inventory issue is fascinating. we know that early in the pandemic, 2.5 years ago we saw how quickly consumers pivoted away from certain categories. that caused retailers to then try to quickly backpedal and stock the things that suddenly became very popular. as we came out of the worst days of the pandemic and the economy began to recover in new ways, we saw stimulated demand because of the fiscal policy, the $10 trillion we put into the economy

over the last 18 months. then consumers began to spend. you have seen a push poll. at the moment it is based on historic averages, we are relatively low in the aggregate relative to historic averages of the amount of inventory currently held for dollars of sales. normally we hold about a dollar 45 in inventory for every dollar of sales. now we are averaging about a dollar 20 in nuven tory. it is relatively low historically but it does provide a cushion. and you can't just flip a switch and turn the supply chain back on. hopefully in some of these categories if we have shortages we can compensate for that. because we've got a little extra inventory there. kriti: speaking of that, a lot of planning for the holiday season, which feels like a crime to mention because we are just starting fall, but i'm curious how prepared retail is for the

holiday season when there are supply chain issues and labor issues. are we going to see a leaner christmas this year? matthew: we will see retailers continuing to be able to anticipate where the demand is coming from. we know they have had the change dramatically from earlier this spring. we saw a rabbit -- rapid pivoted away from certain categories as pressures started to peak in the spring. so it is a good indication of what we are in for this year. there's a lot of resilience in the consumer segment of our economy. retail sales were released for the month of august. on a year-over-year basis, up about 7.5% over last year, which was up 14%. there's a lot of robust consumer behavior notwithstanding the price increases. i think we are going to see

maybe more promotion this year. we know consumers are looking for real value, but we think our members will be prepared to meet the demand. taylor: talk about the display sherry -- the deflationary pressures. matthew: we have to keep an eye on certain segments because consumers will be under pressure. they're going to look for value and go to certain categories and segments of the industry. we see promotions every holiday season at some level. those promotions are generally planned and thoughtful and deliberate. so we know where you're going to discount and promote in order to attract the market and generate some attention. the question now is can retailers balance the demand in the market and higher prices against inventory levels? we feel like they know what they need to do and they will be well-positioned to make that a successful holiday season. taylor: really appreciate it, matthew shay, president of the

retail federation. kriti gupta will continue reporting on the ground. we do want to get you an update on some of the business flash headlines, big stories in business we are following right now. it is all about retail sales numbers. it was a little bit of a surprise with the latest numbers this morning. purchases unexpectedly rose in august after falling the month before. they will drop about .3%. reports suggest that consumer spending is far from collapsing. rapper ant designer kanye west says he is terminating his partnership with the retailer gap. lawyers sent a letter arguing the company had failed to release his apparel in the stores. he will be opening yeezy retail stores. and value in about $20 billion, the biggest ever takeover of a

private software company. this will have adobe expand its tools for creative professionals. sigma allows customers to collaborate on software as they build it. and those are some of your business flash headlines we are following at this hour. still ahead, bloomberg businessweek with the latest rankings. we will see who tops the list and which parts of the world. that conversation next. this is bloomberg. ♪

taylor: this is bloomberg, i am taylor riggs. bloomberg businessweek out with the latest ranking of business schools around the globe. joining us to walk us through the results is our senior

editor. it has been too long since you and i have spoken. we do this wonderful thing every year. talk to me about the rankings and the standouts. >> we have the top schools, stanford is the top once again. several years running. it has been on a run. it is a big undertaking, but people are very excited about doing this every year. stanford is number one, chicago and harvard number two, northwestern four and dartmouth at five. the top of the list has not changed. he sees changes in what you see a lot more of his shifts we are talking to schools about that are starting to happen. covid really had an effect on how people are thinking about what they are teaching, what they want to learn, how they are learning. of these hybrid models last two years, continuing schools and ways that schools are offering

more flexibility. there's a lot that we don't capture in the rankings but we do capturing talking to the students and schools. taylor: what is the biggest change year-over-year about some of long-term structural impacts from covid. >> the one that seems to be most lasting is technology and the tools that were developed for remote learning, now they're trying to think of more innovative ways to apply them. to really tap into bases of students farther away that would never consider maybe coming to new york, chicago, or cambridge. the technology seems to be something that they harnessed in a certain way the last two years and a lot of schools are saying how can we be more to teach again how we're going to use it going forward? i think covid and the last two years has changed people's priorities. we also measure jobs of course, paramount, compensation, what people earn is very important. and the top three incessantly

have been consulting, finance jobs and tech. but again as you talk to schools, you are you are hearing them say students are more interested in esg. there are schools we are hearing rumors about that will be announcing specializations in esg. we might have that in the story next week. climate change, columbia business school we are doing a story that will roll out next week. columbia business school has a new campus, a new building being constructed at the same time that a new climate school is. they are really developing a curriculum extremely tied to the climate school, the engineering school. because these are going to be integral for leaders of the future. taylor: we have about a minute. we talked about loan forgiveness. are any of those transferring from undergraduates to business schools and making it

affordable? dimitra: for some of them they are. but you are seeing high prices for these programs. these kids, some are older, summer outworking, when students come out of these are often moving into jobs that are well-paying jobs. that is why you are seeing the demand for the consulting jobs and finance jobs and so on. there's a little more of an ability to deal with that. also a shorter program. you are in school anywhere from three to six semesters at the most, not that much. it is not quite the issue it is at the undergraduate level. but you do hear talk about it. and covid taught everyone to question with those price tags look like because they were learning in different ways. taylor: well said, always have good time with you, our senior editor. i did do my financing my mid-30's so i'm still a child sometimes at heart when i think

about never too late to go back to school. stick with us, we're focused on the markets, the labor force tentatively avoided. where looking at an s&p that tries to climb back into the green. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile.

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her debut meeting as prime minister with president biden when he visits for the queens funeral. relations between truss and mr. biden are strained by plans to rip up the post exit agreement and northern ireland and the big question whether mr. biden has put a potential trade deal on the back owner. tentative labor deal reached on the u.s. rail lines the agreement includes 24% raises over five years and $5,000 in

bonuses. the strike could have cost $2 billion a day. amtrak canceled long-distance transit yesterday. eric adams says the city is committed to and required to provide shelter to assign them seekers and other migrants entering the city. more than 11,000 have arrived since may. this is part of the fight with greg abbott to bus migrants to sanctuary cities to pressure the biden administration on immigration. mayor adams has been criticized for saying he wanted to reassess shelter practices. roger federer is retiring. he made the announcement on twitter today. the 41-year-old has not competed since july of 2020 and has had knee operations. he has to play more tennis in

the future but next week's laver cup will be his last competitive tournament. this comes days after serena williams ended her career. 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 mark crumpton. this is bloomberg. jon: welcome. taylor: let's get a quick check on markets. some significant red earlier, the s&p was flirting with positive territory but we are off by .2%. next act 100 more firmly under pressure but off the lows we had

earlier. 10 year yield, here's our -- yields are rising. easing to an 18 basis point and then another seven basis points higher today. rate of change within the high year yield. this is the most since 2000. we think about duration of the inversion as well as the deepening magnitude. jon: helpful context. in terms of individual, moving sectors, there has been an appetite for some financials, tech still a bit of a mixed story. we are watching the story of adobe, which is spending big on a software deal but there is a reaction to the downside grabbed a few analyst comments boosting netflix, evercore with a bullish call.

just coming back, you've been covering it, so has wall street, union pacific shares up around 2%. taylor: appreciate the macro and individual stock stories. upside consummately big news in the market, the big story is the tentative deal announced between u.s. railroads and the union, a tentative breakthrough. earlier, we spoke with frank fuller to get his take on the deal. >> this is just one more disruption if you think about supply chains. shippers are the folks buying capacity on the railroads. largely what we have seen is we have not seen a letter pressure on pricing, which is suggesting

that everyone is in a wait and see mode. jon: there is a bit of a sigh of relief with respect to the threat of the strike being over now that they have reached a tentative agreement, averting what would have been a massive disruption in freight deliveries amid supply chain issues. kriti gupta has been tracking it all and she joins us now. you have been in new jersey today, pretty. -- kriti. maybe you can walk us through some of the specifics. kriti: it has been fascinating. this is not a new concept, this idea that people are renegotiating salaries, but for lower loads, there is a bigger story, the idea of sickleave, mobility, the idea if you have

an emergency and want to take off work, your job will not be terminated. that is new to the rail system at a temperature in the industry has lost a lot of workers post-covid that stress has been put on an intense job, 12 hour days and manual labor. that is exacerbated with supply chain issues. the solution that has been the game changer is that now the biden administration has helped negotiate one additional payday and less costs when it comes to health care benefits. we can get them and not pay extra. third, if you have to go to a doctor's appointment, get a surgical procedure or a wellness check, you can do that and not the finalize. taylor: kriti gupta doing some great reporting. absent want to bring in sarah house, senior economist. how are you thinking about the

inflationary versus deflationary forces that may have been avoided given this tentative deal? sarah: thanks for having me. the near-term impact of this tentative deal, it makes like it will keep inflation in check. you cannot have that additional inflationary shock, but in the medium term, it shows that there is still quite a bit of inflationary pressure. the 24% increase in wages over five years is still a far cry from that wage trend we saw in the 2010s. we remain in a tight labor market where workers continue to hold rates way in terms of -- great sway in terms of bargaining power. it is going to be hard to bring inflation not down to 2% and you

have this sort of weight. -- wage growth. jon: i wonder as people continue to see headlines surrounding inflation, does that factor into expectations? does it just become a conclusion that this is going to be a key talking point in any negotiations? kriti: inflation -- sarah: inflation expectations are on the top and of historic grim reaper seen two kinds in most visible prices, gasoline and some slower growth and food prices. that is gone a long way in helping inflation expectations but they are still elevated. the longer this goes on, it does risk becoming more entrenched. that is what the fed is worrying about, even as pressures begin

to ease, given how high expectations are, the fed is in no mood to let up just yet. kriti: i am pierced about the methodology. so many economists are talking about the labor issues, but it comes to working conditions, remote working, fewer hours. from a structural point of view, how do economists quantify that kind of change? sarah: i think the art seeing that this was that completely about wages. it was about benefits and flexibility, and being able to take sick time. when we think about the labor market going or what, we have to remember that we are in an environment where the labor supply is slowing. look at our demographic trend. that suggests that the labor market is likely to be tighter than not.

the continuing that shift toward workers strength, even when we are contrived for the business cycle. jon: as the market started to prepare for that next edit move, -- next fed move, give us a sense what -- what wells fargo is thinking about? sarah: we think they are going to hike 75 basis points. could they go up 100? i think we saw in june some unease with having to float their plan through reporters. i think they are likely to trying to avoid that at all costs. the hot cpi print we saw on tuesday does seal the deal for that 75 basis point move. the fed has done quite a bit of heightening over these past six months and that is another reason why they are not ready to

accelerate it further given how much tightening his been done to date and they want to see some of those effects take place. kriti: if it is 75 basis points, will that be the last hike we see? sarah: that is our baseline expectation, but chair powell will tell you it will depend on data, particularly inflation data. taylor: appreciate it. -- is seeing minimal disruption from the rail talks. appreciate everyone's perspective. coming up, chip wilson announcing a record-breaking conservation donation. we hear from him next. this is bloomberg.

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jon: this is bloomberg markets. for those who follow the retail sector, chip wilson, he just announced a big donation to a foundation he runs with his wife. british columbia's parks foundation will receive 100 million dollars canadian, the largest donation in canadian conservation history. chip: our family, for holidays the go hiking. we go on the road that he coming back to british columbia. we have a province trice the size of california.

-- twice the size of california. so little of it is inhabitable. it is so rugged, beautiful and relatively inexpensive. we put money into buying massive swaths of land, one for ecology, two for climate change, prefer the beauty and four fort -- which is seven generations down. we are looking at saving this for multiple generations. jon: the other big question is where the economy is going. you are seeing the same sidelines -- headlines everyone else is seeing fred what has been your assessment of the road ahead -- what has been your assessment of the road ahead? chip: i was looking at

successive civilizations and their rise and fall. stage five is overprinting of money, inflation. the next stage is some sort of civil war [indiscernible] these are -- i am sensing that there is something happening in north america that is not right. we have to probably reset our constitutions for 20 years from now. if we do not change with the speed the world is changing -- [indiscernible] jon: it is a challenging time.

yet, in the business world, we see some brands that continue to navigate through the storm extremely well. lululemon is an example of that. you have watched as it has continued to grow. the new management team is continuing to focus on growing the business. what do you make of the resiliency of rands like lululemon -- brands like lululemon when other brands have been struggling? chip: we started in 1998. we went through the 2001 crisis, the 2008 crisis, etc. it is not just lululemon. i am involved with other brands. we've been basically seeing the change in the way people are

spending their time. [indiscernible] -- people live longer, healthier lives. all of these brands are providing what people want. it is no longer the 1950's where people are smoking and drinking. they want the chance to work out and they are going outside. the digital world has people sitting on their butts. we have got to get outdoors and athletics works. the brand is involved in giving the consumer what they want. jon: chip wilson speaking with me earlier. more of that interview on the

website. coming up, our coverage of that tentative agreement to avert the rail strike. this is bloomberg.

jon: president biden hailing the tentative agreement between u.s. railroads and unions. let's keep that conversation going. he earl joins us -- pete earl joins us. what is your reaction to everything we have learned today? pete: thanks for having me. this goes back to 2019. there was a lead of delays and

posturing along the way, but the unions got what they wanted, pretty much. a lot needs to be approved, but for now, the major threat to the economy has been averted. taylor: what are you learning about the fragility of the supply chains in this inflationary environment? pete: over the past few years, we have seen virtually every link in the supply chain band or break. we have problems with ocean shipping and trucking, but rail was the last one that did not show major problems. the last most feasible meeting what is seen the cost of ship goods rise exponentially. it would have been a huge blow to the economy. jon: there were multiple factors

to get worked out, but earlier, sarah house of wells fargo was talking about how the longer inflation stays elevated, the more conversations we will see between companies, industries, labor unions. what are you watching for on that front? pete: most collective bargaining agreements have a cost-of-living allowance built in. typically, they involve some use of cpi or some range, but we have had a substantial rise within the last year and a half. you will see that any talked of bargaining agreement that comes up, there will be a higher risk factor, especially if that industry is significant on a macroeconomic level. taylor: cpa data that we got this week in the retail sales that we got this morning, how is the health of the consumer in

this inflationary environment? pete: it is a mixed bag. we should not be surprised that the numbers look strange. we are coming out of a strange environment the pandemic but we have a strong jobs market scout. there are still almost two openings for every individual looking rate job. consumer sentiment seems to rebounded and there is still a lot of savings, and if people still have savings from the stimulus payments. consumers are ok but that can change quickly typically unemployment and other events tended to happen up to a year after we have a dip in gdp. there is still a lot of time to figure out what type of situation we are in. taylor: pete earle, appreciate your time. as we think about the labor

strike and what this means about the supply chain, inflationary versus this inflationary headwinds and a market that is trying to find its footing and in s&p 500 under pressure. jon: and you talked about retail numbers and the health of the consumer we got you economic data pates -- we got new economic data points to chew on but the market is still focused on the cpi print on wednesday and we are looking ahead to next week with the fed decision in a market that is taking it cautiously. taylor: traders still debating 75 versus 100 as we look forward to that big fed meeting, the results coming on wednesday. that does it for us. quick check on these u.s. markets -- equities under

pressure, yields continuing their climb higher. this is bloomberg. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect.

mark: president biden is praising the negotiators who reached a tentative railway labor agreement. he called it a good deal for both sides. >> today is a win for america. we have reached an agreement that will keep our critical rail system working and avoid disruptions to our economy. >> mr. biden aspires to be the most pro-union president in u.s. history. he joined it talks of virtually wednesday evening. negotiators had until friday. leaders at the u.n. gathered to pay