>> we are basically overdue for a 3-5% pullback. >> we have seen reports from monetary and fiscal policy. >> things are very disinflationary. >> market has priced in a whole lot of bad news and a lot of risks and threats and we have yet to see all of them crystallized. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: stocks are doing ok this morning, live from new york city, good morning, good morning , for our audience worldwide, this is bloomberg surveillance. looking at the equity market on the s&p 500, just about positive and the inflation in china is the focus this morning. every single data out of the

country seems to be fueling some kind of negative sentiment worldwide. tom: i agreed to start there for the western world. it's not just about china. there disinflation, we don't need a bunch of charts this early in the morning but the vector of deflation and disinflation in china from the beginning of covid and they did covid differently than we did but i'm sorry, it's disinflationary and get you down to a run rate of a positive 1% even with the present deflation and that's not good enough. jonathan: at the same time, the western developed markets are finding inflation and we had deflation in china and people are asking, we are in it now so how long will it last? lisa: and is this the bottom? it could have a more inflationary time later on.

how much does china matter as a disinflationary force for the rest of the world at a time were places like the u.s. are moving away from importing some of their goods and the eu is trying to be more aggressive with lyft service. and we have budget deficits this large with unemployment. jonathan: tom: there has been a lot of good work. brian setser of harvard had some good work. mike -- enough with the micro details, look at the bigger picture is what these people are saying. jonathan: what time did you get to bed last night? tom: i pulled an all-nighter. jonathan: you stayed up to midnight? tom: no i stayed up all night. and i read the telegraph in the morning. jonathan: let's get to the

equity markets. on the s&p 500, we are up by one third of 1% on the s&p 500. the 10 year is 4.0%. lisa: it's a quiet day when it comes to data but i'm watching the mba mortgage applications today. two days ago, the 30 year fixed rate mortgages, the rate on that went to the highest since 2000 and that's how high we've gotten. how much does that dampen demand. u.s. treasury is selling $38 billion of 10-year note and this matters. there was a very successful three year note auction yesterday and it gave a boost to the market. doing the same kind of thing with 10 year notes might be more telling and we get some earnings but it is slower. roblox and wendy's.

disney is the big one. i want to hear what they have to say about how they plan to use artificial intelligence to replace some of their storytellers, some of their actors even at a time with the strike going on. this has been one of the most controversial areas and i want to see what they had to say. jonathan: we will talk about that a little bit later. tom: i don't get it, you can brief me. jonathan: my news this morning is i applied for a job at ups. 175,000 people have applied. lisa: don't you need a driver's license for that? jonathan: i will do that. it's all done. tom: you have to drive on the others of the road. lisa: you are going there? jonathan: i'm going to work in the house for little bit and do some package sorting and get the

u.s. drivers license. mary adams joins us now. don't worry, it might take a while to get that gig ups. from hsbc -- as the pool of negativity still there for us to feed on? >> we think the market is fair value where we are now and i think there is some risk in this market in the sense that we think you will still see mild recession unfolding. everybody is just getting overly optimistic on the equity market and the economy and i don't think that's warranted. there are signs we are looking at a recession by the end of this year. jonathan: where do you think this starts to turn in a negative way? >> by the end of this year, the economy starts to go into a recession. what's been holding up the

economy is the service sector. when you look at the evidence out there, everyone's been calling this the taylor swift economy. even the fed has noted that in their beige book. today is the last day of her concert in the units -- in the united states and then she goes globally. you start to see some softness in the attendance there so i would watch disney reporting after the close to see if that trend continues. when i look at restaurant activity, you're starting to see less activity and restaurants. i think it will be the second mildest recession we've seen in the post-world war ii era but i think you will see a mild recession. tom: at alex brown, you would say to people to calm down among the fears of investment but there is a fair amount of fear out there is what you do with big tech if you own it and you've got a capital gain? do you have the alex brown patients of years ago? >> i still do like the tech

sector. one thing is for missing and earnings as if you look at the nasdaq, the earnings bottomed on the fourth quarter of last year and since then, you see a rebound and if you look at the back after this year, you see a significant increase in earnings. the s&p 500 hasn't bottomed yet but more likely, it could bottom quarter. ai continues to provide that visibility going forward. from a valuation perspective, i don't think people take into account how much tech has beaten earnings on average. when you factor that in going forward, tech is not as expensive as people think at current levels. i still like tech going forward. tom: lisa mentioned ai and disney but i think they have bigger worries. how do you extrapolate ai to non-tech companies such as walt disney in burbank? >> i think it's all about

productivity and you've seen how that's been helping with the efficiency of these businesses around the world. i think that trend will continue because with this lack of workers we have, you have to find a way. ceo's will wait for employees to knock on their door and they can do that through ai and that's a broad term. technology in general is helping alleviate some of the pressures when it comes to workers and that will help drive earnings and drive margins and i think that's not -- that's why we are not looking for a big decline in earnings even if we have this recession. lisa: to underscore what you are saying, are you saying that tech companies could act as havens in this neck cycle even if we get into a recession? they could be the defect -- the defense of plays at a time of potential stress? >> if we have a recession and a market selloff which i think we will have, we could have 3, 4,

5% pullbacks in any given year but we only had one. we are in the seasonal time where you could see it rolling over of the market. i think tech is part of that but if you look through the day to day, week to week, i think tech will provide that visibility of earnings which gives you a little more of that haven of a fundamental basis for being in that sector. i still like tech from that perspective. lisa: where do bonds fit in at a time when people are looking to the supply in the potential for the u.s. treasury to sell an increasing amount of debt at a time when the deficit is at a level it's never been and when unemployment is this low? >> i have heard these concerns about the market not being able to absorb the supply and time and time again, it's been able to do it. if you look at the expectation of seeing a modest recession, it takes interest rates lower. contrary to what people say, rates will stay higher for longer and we think the 10 year

treasury could get down to 3.5% by the end of this year. with the tenure being around 4%, i think that's a good upper -- with the 10 year being around 4%, i think that's a good indication. tom: where's your level of spx? we see bears who have missed it but even the bulls are tweaking flat to up a little bit. what's your tone on that? >> 12 months from now, june of next year, we think the s&p 500 is up to about 4600. we were much more optimistic coming into this year. a lot of the uber optimism is replacing the over pessimism and that makes me nervous. tom: you are a baltimore orioles fan, can you give me an spx 5000? >> maybe at the end of next year, going into the following year but right now, i think we are more cautious. once we get the pullback, all of a sudden, there is upside. volatility is part of the fabric

of the market. i think that is a positive if we get some volatility into this market. tom: it was the world series, 2024. jonathan: how does a man get suspended from his job for just stating the facts? how does that happen in baltimore? >> i agree with you 100%. if we all got suspended for that, i wouldn't be on your show. we tell the facts and that's what we do. jonathan: is this the baseball equivalent of what's happening with the orioles? stocks went down last year. tom: people that grind this out every day in sports, it's a tough job. i fake it but it's a tough job. these guys are grinding up away from their families have to year and they are getting grief from owners about this? jonathan: larry, thank you for that. we will go through that story if you are not familiar in a couple

of seconds. you've got this local baseball announcer for the team, the orioles, and he has stated the facts which they have a terrible streak against tampa bay or whoever it is and he gets suspended. tom: the guys from san diego and cincinnati do it every day. they all do it in this guy does it and he gets hammered. jonathan: it's amazing. apparently the job is to spread propaganda. tom: in the old days it was understood you were hugely employed by the team and you said good things about the team and the same in hockey. jonathan: is that still expected of you? tom: i didn't know it was. lisa: my favorite part is he made his comments about their streak at the same time the graphics were showing. jonathan: socially. lisa: it wasn't as if this was this random castigation of the team. tom: the new york jets did this in the only announcer for the

new york jets can be mohamed el-erian. jonathan: i find it amazing. that's the latest from baltimore on the market and the sports side. in 48 minnis, we'll catch up with -- to talk about data ahead. cpi tomorrow at 8:30 a.m. eastern time and onto friday, it's about ppi and there is a feeling even from those, citibank expects the data to confirm the soft landing view even though they don't expected concern -- to confirm it at the end of the year. the next few months may play with the bulls. lisa: when people say the fed is following the date to come in people say the data will be a head fake and won't necessarily show a reality that will play out over a longer time. it plays into the hopes and dreams of this perfect scenario

that doesn't really happen. tom: i go to three month, 12 month annualized depiction and japan will be -- jonathan: you mean china. tom: sorry, china. cut me some slack. the answers tomorrow. jonathan: it's no longer the early to thousands. china is in deflation. sometimes i wonder. tom: i thought i was married for 30 years. ♪ at the counter or on the go, save 20% with the lowest transaction fees and keep more of what you make. start saving today at godaddy.com

hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business.

but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

>> we are not going to see china go back to where it was. it is a very big component of the global economy. it's a consumer of all metals. also, i think we've got to be reminded that if we give a better world for everyone, we need development so metals are important. copper is the most strategic of all those metals. jonathan: the president and ceo of the metals market in a situation with china at the moment. they are in deflation in the country in the economy is not doing so well relative to lofty expectations. more broadly, we go to equity

futures on the s&p 500, positive bite 0.2%. inflation data is tomorrow morning. the dollar showed some strength yesterday but we are rewinding some of that this morning. wti is $83 and about $.70. tom: it's interesting to see and it keyed off of the data tomorrow morning. jonathan: did you see the oil productions in the united states? lisa: record high crude output that could take over from the rest of the world when people have written off this trend. jonathan: close to $13 million -- close to 13 million barrels per day. tom: sort of like how we saw you light lily yesterday. this is the conversation of the day in china. the book the new china playbook

is definitive on china. i will cut to the chase and not mince words. you nail it with a deficit of demand in china, there is an ancient common's party calculus of what you do with a deficit of demand. do those processes still work to boost demand? >> the communist party doesn't really believe in short-term demand driven stimulus. it is taking a very different route from the western governments. it is still focused on supply and it's about long-term and about harvesting resources for the long-term goal of technology so they are not interested in short-term demand stimulus. they are trying and setting the tone for the private sector but it really is up to the private sector and entrepreneurs to fend for themselves, really. tom: i spoke years ago about the

diffuse mint of productivity in europe. how does beijing disperse the message to boost demand? do they do it federally out of beijing or do they do it city by city, mayor by maier? >>tioned an important thing here. that's the political economy problem or advantage, if you will. the central government sets the tone but then it's up to the local governments to implement apart from the large policies and there is a lot of things that can go wrong in the implementation so even if the central government want something to happen, it doesn't mean it will be delivered. lisa: there are reports that the chinese come's party is going after economists who use the word deflation and talk about the negativity of some of this data. does that make it a better or worse situation to grapple with the task at hand? >> if there is no transparency

on information or how economies are doing, everybody knows of the economy is doing but if the leaders can't see it, that's a big problem. e the focus and china has lost the momentum of the last 10 years and it does it sooner, you can't talk about other things like security or social stability. that's got to be the focus. there is much more control on economic discussions and not enough transparency and i think it's a huge disservice. lisa: we've heard reports that even business leaders to go to china to have discussions are really managed and they feel they aren't allowed to have honest conversations with people at a time when there is real concerns around the housing industry and the potential brink of default. what do you make of the inability to have free discourse and what that does to actually grapple with the real issues? i ask this to build on what we were talking about with the idea

that if you do not have the social spending, a social mobility, a social employment especially for younger people, are we entering a situation similar to japan? >> it's possible but not for the same reasons as japan because we haven't seen china with a big asset price collapse. people are very clear of what's going on on the ground. private businesses and even the policy institutes and the government, we don't know how much the top leadership gets it. my suspicion is things are just done. there is policy and there is reaction and reality and there could be a big discrepancy. the economy is sluggishly recovering even if we can't talk about things openly, investors make their decisions based on information. tom: all americans have a legacy of a certain vintage of how incredibly wrong we got the breakup of the soviet union.

we did so because we have the wrong intelligence and the bad intelligence and not enough. from where you sit, do we have good intelligence on the political economy of china? >> by and large,, no. it's a very unique structure on how decisions are made and how things are implemented in the divergence of interest within the party. the setting up in the strategy of the implementation, there is a huge discrepancy and even internal mechanisms of competition, all that is rich stuff. china is seeing a lot of problems and challenges now but they are are also advantages. china is entering a new stage. jonathan: thank you for the update. it's been a difficult week for data out of china and the trade data was terrible and the inflation data.

we should call it deflation data. tom: it's a rich set of data but a lot of people said foreign direct investment in china, the lifeblood of technological advancement of china with joint ventures and i'm old enough to remember when this was a brand-new idea of joint ventures between the east and west. the british go before us and that didn't work out but the answer is where is fdi? jonathan: joint venture, be our partner and we no longer need you anymore. the united states 20 years later has decided to do something about the investment going into china but we found out month after month of the last 12 months that this outbound investment restrictions that will come out of this administration will be more narrow than we thought it would be. janet yellen spoke to us in the last month or so.

anne-marie has gone missing. tom: she lived in europe for two years. jonathan: janet yellen gave us an idea that it will be more narrow. lisa: trying to restrict investment in companies in china with ai related to military capabilities. there is something more nuance here at a time when they don't want -- the u.s. doesn't want a total divergence from china but to curtail some of the competition people think they bring. tom: i think the three of us in shanghai would be good. we could take thebramo if we can get it through customs. lisa: surveillance would take on a different meaning. jonathan: i'm not sure we can say that. lisa: i don't think so but i think it's an interesting moment and i think we are talking about

the deflation numbers. china export prices saw the biggest drop in a decade. jonathan: that's a big move. state street will join us shortly, equity futures are positive by one third of 1% on the s&p 500. in the bond market, yields are unchanged as it has been over the past couple of days, around 4%. from new york city good morning. ♪

jonathan: the conversations in the commercial breaks are always better. sometimes guests don't know they are on. lisa: that was good. jonathan: deutsche bank at a single name call. tom: he believed in the market at the bottom. jonathan: i agree with that, it's just a joke. we are allowed to make jokes. equity futures on the s&p are up a third of 1%. the main event later, walt disney company after the close. in the bond market, the

three-year issuance yesterday went well and the 10 year debt today is when the test begins. the 30 year debt is tomorrow so the 10 year, on the 30 year, just short of 420 at the moment. lisa: all eyes are trained at the 1:00 p.m. auction of 10-year note's and i think it will be important. the three year note yesterday was not the point. that was the appetizer speaking to short-term yield and it didn't have a significant impact. it went well and you saw the immediate readthrough in the broader market. imagine what that means. tom: can you see her at a bar ringing a bar to a complete stop? with her enthusiasm on the three-year auction? turn the mets down, this is worse. lisa: that would be good.

jonathan: i'm just gonna put my face all over the gym this morning. china is sliding into deflation with consumer prices and a four prices falling for the first time signaling a worsening outlook for the world's second-largest economy. cpi, its first decline in more than two years. ppi down for a 10th consecutive month. we seen this developing for a while now. tom: it's not the same inflation just -- statistics we have. i used to make jokes about poor but it's really serious in china, feeding people. and they are getting a pork and chicken in -- a pork and chicken disinflation so was a number of things linked together. jonathan: speaking of food prices, rice prices, you saw the headline? lisa: rice prices are surging and used see the potential for that to affect a broad swath of land so how do we factor these

things in because people are saying commodities will be impacted and they are not. whether it's crude or wheat and now rice. jonathan: just under the radar and creeping up on us. tom: i did a lot on this 15 years ago. this is deadly serious and for certain nations, their answer is we need to fix this now. when rice moves, it's done that three times in recent years up to where we were in 2008 and when it moves, conversations are had immediately. jonathan: prices were high since 2008 and the u.s. plans to limit investment in china will be less restrictive than originally thought. they will likely apply only to chinese companies that get half of their revenue from computing and ai and this according to people familiar with the matter. if you thought it was narrow couple of months ago, it's more

narrow based on the news we've got now. lisa: it raises the question of where the conviction is for this administration to go after some of these policies instead of trying to make peace with the world second-biggest economy and that's been the tension underpinning the recent diplomatic forays into beijing and it has a political tinge where how they signal one thing and do another. that's what people are talking about. jonathan: first year analysts, eat your heart out, ups driver's could make 100 $70,000 per year in annual pay and benefits thanks to a new five-year contract. -- $170,000 per year. they made a new deal with the teamsters union. employees have to work inside the building first for several years and those jobs pay less than part-time. this will be the end of the five-year contract so that's

2028 going into 2029 but $170,000 for ups driver? lisa: we need are packages delivered especially during the pandemic and people are saying you need us. they are saying pay up and we will effectively get those costs in higher rates and we heard that from bloomberg intelligence yesterday and that will directly feed into the higher cost of shipping. the third thing i want to say is who is next given that wages are rising? the united auto workers union is proposing $44 billion of raises. if you want workers, you got to amp up the salaries and if you want consistency, what does that mean? that's the inflation story. tom: it was in our conversation with the head of teamsters. there was a massive uproar good enough for hollywood. he was the underdog and came in

and he won because he went with the little guy. it was a little guy victory at the teamsters. this was absolutely original triumph of the teamsters and there is a massive labor now what after what sean o'brien did. jonathan: this could be the last contract they signed because ups will invest so much in robotic delivery. they campaign the delivery driver $170,000 consistently. there is a feeling from some people i saw it on twitter, ultimately, there is a belief this is a short-term move to satisfy things now. if you've got a labor-intensive business and that's the salary, is your business viable in five years time? lisa: you have seen this in the service industry where you order

on a tablet and somebody brings it. the efficiency to try to reduce the number of people they need to staff. tom: i'm wondering what does fedex do? it was a pause. i -- my doctor said don't start tang until 7:00. jonathan: it will be a difficult five years. the ups job will be a difficult job to get. i'm sure they are exceptionally happy with that. tom: futures are up 13 and the vix comes in from a 17 level at 15.64. the senior global market strategist at state street is watching the ebbs and flows of august. are we in the august doldrums? >> august is weird.

i wouldn't say we are in the doldrums but keep in mind that we don't have much liquidity so any of these stories out there, it will get accentuated. we've seen the moves even over the last week across these different asset classes. jonathan: what is it about august and china? a few years back in 2015, august and china. how reliable is this data? >> they say at the trading desk august is when things happen. be around during the third week. it contributes to the volatility that's ultimately out there. jonathan: a guest earlier talked about short-term demand stimulus and how china doesn't like short-term demand stimulus. but local governments do and their struggle is they can't lever up. what happens from here? how bad do you think it is you got local governments that

cannot lever up to help hit the growth targets? what will happen? >> the property market took a few steps back with problems with some of the larger property developers out there. that provides a lot of the collateral for the stimulus people think is easily put out there and i don't think it's that easy to put out there. ultimately, the concerns we are seeing around the property developers also ebbs down to the actual consumers of that property. the kind of people that generally have bought these homes are willing to go down that route again given everything that's happened. it means the amount of growth we are expecting a quick bounce back because china has typically put a lot of stimulus into the system and it might not come the way it typically has. lisa: country garden holdings which is a bigger developer than the evergrande group has missed a payment and people are wondering whether they will make

it in the 30 day grace period they have lived -- left. what does disinflation in china mean for the rest of the world? is there is much of a correlation? >> i focus on the china story and how much of it makes it here. it will have an impact for sure and i will have an impact on the good side of the discussion which is already collapsing. we see broader consumer demand for stuff, not a silly services but for stuff coming down in that driven a lot of the inflation discussion. the focus from the monetary authorities, the focus is on some of the stories around ups and wages and the services part of the discussion in the last mile part of the discussion compression, disinflation, could be much harder than the good side of things where we do see

that demand coming off and it continues to come off. tom: can i go to a kitchen table question? >> of course. tom: the standard and poor's 500 , back to 2007, the credit crisis, it's been one big fail for the international markets. you are a global strategist. can you tell american investors to get off the standard & poor's gravy train and go international? >> i would look at it from asset allocations. there is more value in a lot of commercial markets. tom: we'll get a short ratio pop if you go international? >> not that much. may margin expansion perspective and a company beat perspective, the u.s. is deleting that discussion. jonathan: where is the margin expansion going to come from given the ups discussion we just had. jetblue, southwest are talking about flagging demand

domestically. and we are talked about a labor market that still has levered so what happens with margins in the labor industry? >> that's probably the correct discussion, thinking about next year. this year, the earnings estimates are pretty easy. we went in with long single digits -- with low single digits. it's within the realm of possibility that we get losses and we expect 10% next year eps growth and a lot of that will be margin expansion. you have to look at the sectors that are able to either have topline growth and or expand their margins. tech comes to mind even though valuations are tough on health care from a valuation perspective. it probably makes sense.

some of the work from your equity team really focused on the energy discussion from both the top line and margin perspectives. i think that's how we approach next year, looking at the industries that might have a moat they can defend. jonathan: are you worried about analysts and ups? >> of those levels, i might not have gone down that route. jonathan: game changer potentially. lisa: that's the point, nobody wanted to say their child is trained to be a truck driver 10 years ago and now we have no truck drivers. that's a big issue now and there is a dearth of them and they are crucial. who knows whether they will be cost-efficient to make it work. it's sort of this reality check of the physical economy and now it's coming to roost. tom: you take $175,000 and you

get 30 grand for benefits and your down to 140,000 in five years? do the math, it's a pop but it's not that big when you adjusted for some of the realities. jonathan: it depends where you live. tom: five years out and this is a major thing. people don't factor in benefit costs when they look at sales. jonathan: you are right to point that out. 7:30 a.m. eastern time, bank of america coming up shortly. it's good to see you, thank you. are s&p 500 is posited by a quarter of 1%. live from new york city, this is bloomberg. ♪

you can choose the best price for you because we want everyone to get the most out of their homes. get started. today. at angi.com. dad, i need a cooler night. are you trying to ice me out of the bed? maybe only on game nights. do you know you're retired right? am i? yeah. save 50% on the sleep number limited edition, smart bed plus 36 month financing on select smart beds. shop now only at sleep. number. as your advisor created a portfolio based only on your age and risk tolerance. that's simply not good enough. it created planning. our private wealth managers learn about you first. don't settle for a standard portfolio. book your free

tom: what is a soft landing? i guess they are looking for what greenspan would call quiet inflation and not a 6% inflation rate. put it in simple terms. jonathan: in simple terms, down

to 2% with low inflation. i think the fed's view is precisely that, they are wondering if we are convinced on a path back to 2%? will we call that a soft landing? tom: we will be at jackson hole in no time. you and i will be sitting at the bar with fed presidents next to us. jonathan: alix: then they start whispering. tom: then jonathan takes notes and this is how it begins. now we will go technological. the senior tech analyst at bloomberg intelligence joins us. how do you as the adult in the building, how do you respond to the idea we will keep ai out of

china? to me, it's a complete hack and it sounds completely sophomore. how does an adult respond to that political statement? >> look at how these large language models are built. they are scraping all sorts of open internet data that's available on the web. in the case of china, they monitor everything. they restrict your ability to even scrape any type of data on large language models. i feel now they have realized that generative ai is the new big trend. they are trying to catch up but in terms of what they have done so for, clearly, i think data is an issue and it's more restrictions when it comes to getting the latest equipment. that's an issue so they are clearly a few years behind when it comes to this trend of generative ai. jonathan: this is ahead of the disney earnings. a lot of people in the industry

are thinking about does this mean their job will be in jeopardy? are you a backup actor where ai can replace you? are we looking at that type of ai future? >> content matters when it comes to generative ai because all you are doing is making it easy to do permutations and combinations and come up with a new source of content that leverages existing content. generative ai is built on training data. vast amounts of training data. where you get this from? it's coming from existing ip so anybody who owns existing ip whether it's disney or anyone else, they have an advantage because that is what is going into training. you can argue why these companies are leveraging proprietary ip portraying their algorithms and i think there is a case for it. lisa: we are talking about the reality of artificial intelligence at a time of

increasing labor power. were talking about the potential for automated truck drivers and things of that nature. how close are we to that type of reality at a time when you still have ridesharing services that are very much dependent on humans? >> clearly, the large tech companies are investing whether it's amazon or venmo. tesla has ambitions in that space. clearly, they have been burning a lot of cash and investing it. these things take time. generative ai was in the works over the last five years and then it had an inflection. to my mind, the key to this is training the algorithms, getting that 99% accuracy or even more. that's what will take is there. it's not going to happen over a weekend, it will take years and i think there is incremental progress right now. when it comes to marketplaces like uber and lyft their entire

business model is built around supply acquisition. the supply acquisition is worthless if you have autonomous driving. those business models could be completely disruptive if and when we get there and that's what the market is watching out for. tom: driving up the fdr to work. jonathan: it's getting expensive, uber is getting expensive. >> not with lyft, they say they're pricing is going down 5%.they are lowering their prices so they can bring back the volume and i think that's a struggle they are having. jonathan: do they give you a rating? >> yes. and they are a commoditized service. jonathan: i got a good rating but i hate being graded when i get in the car. i'm it for 96 and i will take that. lisa: part of you wants five. you want to be perfect.

jonathan: i will always be have whether it's a yellow cab or an uber but i don't like being a consumer and being rated at the same time. your rating is terrible. lisa: i've seen the other side. jonathan: suburbans are not big enough. there is a particular model you don't like. tom: the newer models. jonathan: he doesn't say hello to the driver and opens the passenger side door and gets in and yanks the chair forward and criticize the new car and says the older models bettel and gets in the back and doesn't say hello. every time we go there, i have to apologize. lisa: this is the key. will you ever get an uber on your credit rating with tom? jonathan: absolutely not, never. tom: on radio and television,

lighten it up in your world of technology. there is a chart today on cloud percentages, amazon and microsoft with a little bit of an side. do you soon it's a try five years out? -- triathlete - triopoly. >> i wouldn't rule out media coming out and doing the cloud. they could get this intermediated. if amazon develops their own chips and google is doing the same, they could it intermediated down the line so they are going vertically up the stack. tom: i've been intermediated out of uber. jonathan: mandeep, thank you. i'm looking forward to the earnings from disney later.

the program is fascinating and i would argue it's been going on a long time when you think about developing house of cards on netflix years ago on netflix. it's been in the works for years and when you start to climax or start to strike and this is where you have to make tough decisions. lisa: where does the investment go and who today higher on the ai front to do that and how do they bring workers back for the short-term who are striking because they want to understand with clarity what the revenue stream is, not just from ai but also from the streaming networks and the reruns are different in terms of royalties than in cable reruns. tom: the disney board room is talking only about barbie. they are doing nothing else. jonathan: yeah. and espn as well will talk about that. tom: you are big on that and we will get a brief on that. jonathan: in the next hour.

lisa: is that what you think? jonathan: what can i do? lisa: they sit around talking about barbie? tom: bronny -- barbie brought in $1 billion. so they are saying where is there barbie? jonathan: they are excited about the franchise. tom: and the prospect to get to that franchise. it's just hollywood history. jonathan: how many marvel movies have they said the same thing? tom: where is surveillance? jonathan: is that what they are saying in the boardroom? seriously, they should be. mandeep, thank you and sorry at the same time. the yields are just about unchanged in the bond market.

inflation data tomorrow, consumer prices and ppi on friday. from new york, good morning. ♪ the first time you connected your godaddy website

and your store was also t tiou realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

>> we have seen extraordinary support. >> and the data starting to come in as we've been anticipating. >> at the end of the day, stocks do well in the long run. >> we have yet to see all of

them crystallize. >> everybody sending in their ratings. only the people who got ratings of five. from new york city this morning, good morning, good morning. for the audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz another morning where we have to start today talking about the data out of china. earlier this week it was the trade numbers. this morning, deflation in the world's second-largest economy. growth good. it is just amazing to see. tom: the fda had a great chart showing five or six nations including japan. forget about the emotion of deflation, it says disinflation in china, disinflation in japan.

we don't really have a vector yet. we have sort of a rollover. u.k. doesn't even have that. other than that, there is the basic idea that we still need to prove disinflation as we go to those numbers tomorrow. jonathan: in china right now there's two questions, can they and will they stimulate their way out of this? lisa: people are just not spending savings. they are saving more, they are not buying properties. this really raises a question of what kind of disinflationary force it is in the rest of the world. on the good side, we are seeing that. on the commodities side, your mentioning price. oil prices, gasoline. all of these features that really lead to a separation of the u.s. and the chinese economies. jonathan: let's turn to the price action. the s&p 500 posited by 0.2%.

tom: it is plus 5.0. that's not right. jonathan: you are going to pass over your phone in a minute and i am going to find your rating. they say 5.0. that's get back the bond market. 4.0 2% on a 10 year, lisa. bouncing back a bit stronger here. lisa: we are waiting for those mba mortgage applications that are supposed to come out any minute at a time when mortgage rates are the highest level going back to 2000. i keep thinking of that well north of 7%. how many people still want to borrow to buy homes and what price to those homes have to be? then at 1:00 p.m., u.s. treasuries lenny to sell $30 billion of 10-year note yesterday. there was a pretty constructive three year note option. it really isn't the longer duration. that is just because it was the

appetizer, not because people didn't care. and the markets still responded. tom: you are correct, it was a response. lisa: we just got wendy's which looks like it is a bit disappointing and we can get into that later. we also got roadblocks today before the bell. the key thing will be disney which has underperformed pretty dramatically this year. only 1.4%. i really do want to hear what they have to say about ai. espn, we haven't even talked about that. investing more in sports betting. how are they going to pare that with their family-friendly image? jonathan: lyft, uber is deleted. lisa: hold on a second. hold up.

you know, it is a wednesday, i think. tom, have you ever used lyft before? tom: i use it all the time. lisa: and you've got a 5.0 rating? tom: i guess i do, i've never looked. jonathan: victoria, not going to ask you your uber rating this morning. it's amazing we are seeing this kind of data come out of china. typically what we would see is just an aggressive rally in the bond market. what has changed? >> i think we have to look under the hood a little the. yes, the headline numbers are down and we are seeing disinflation, but the core number is the highest january. it is the food prices in china that brought down that headline.

you have prices up 26% in june of last year. they are flat this month. we have to look a little bit more and see what is driving it. typically would see a response but i think because that underlying core inflation, which is a concern here in the u.s., what is that core inflation going to look like? is that going to remain sticky, especially with wages? tom: i'm so happy you are here. such a pulse on what the people emotionally are doing with their money right now. institutional, high net worth. what is the fear level out there? >> it has gone up. each meeting that we have, people are concerned because we've been telling our clients we think there's going to be some choppiness here. we think we are going to see a pullback on the fourth quarter this year, so we need to be prepared for that. what we've seen as of late as more people wanting to go into the bond market.

we think that is the peak for the cycle. if those yields start to come down, they want the asset duration and their fixed income market. they like the fact that we are being cautious a little bit in the equity market. we are invested, we are in there, we are getting a good return, but we are being a little bit cautious. lisa: i just want to go through the chronology of this year. a soft landing it no landing, hard landing in march. now we are in soft landing. do you buy it? are you leaning in that there is this idea to define soft landing, but we can get back down your 2% inflation without unemployment rates rising all that much? >> i don't think so. i don't think we are going to be able to have whatever the magic is that is going to make that happen for us. we are close to peak fed

funding. are we there? i don't know. i wouldn't be surprised. when you look at some of the inflation numbers, average hourly earnings, it is up about 5% on an annual basis. if you look at just the goods-producing sector, up 7%. the uaw contract ending in september. we could have wages going even higher. i think there is an underlying pressure on inflation that is going to continue to be there, and you have an economy that is doing pretty well because the labor market is strong. at some point we are going to have to pay the piper for everything that we've seen up until now. i think we could start to have a consolidation around 4200, 4300 on the s&p. to us, that is your opportunity to get into the market. tom: are you staying away from companies with our strong labor negotiations for either shutdowns or a significant

increase in compensation cost? >> i wouldn't say we are staying away. we are not pulling out completely, said it's a start to see more pressure ramp-up, especially with the automakers, then yes, we could come out with those names to avoid some choppiness. tom: this is insane, we are down 6%. we are down 1.5% from the recent peak of days, weeks, months ago. it is literally august financial media hysteria going on. not only tv and radio, but print. we've got nothing better to do, so let's talk about spx down five days in a row. jonathan: you think this is really negative? i haven't felt that. tom: i don't think at bloombergtechtv, i think we're just supporting the statistics.

jonathan:jonathan: but you are blaming other media organizations. tom: no, i am just saying there is a scare out there over viewers. >> you are saying some capitulation along that line. tom: how can it be capitulated at -1.44%? >> is exactly right. jonathan: how much multiple growth has there been? >> the gains that we've seen in earnings are all expansions. it is not the earnings itself that are really driving it. we are in the third month of an earnings recession going on here. i think we have to be very cautious. valuations are too high, especially for the level of inflation that we are at. we are going to have to see something give and i think it is probably going to be pes. jonathan: where is that coming from, who is driving that? >> i don't know, we are not

seeing that really and truly. to me, that is pretty shaky ground if that is what you are betting on. we've always been cautious this year and we talked about the story that adding some cyclicality to your portfolio along with some of your more value-focused anxiety is really smart to have that balanced roach. i think we need to do that. have some cyclical names. look at the finance names. thanks have taken a hit because of the headlines, the downgrades coming out of the mideast and italy as well. financial services should do quite well. i think you can find pockets. the correlation between stocks is very low right now. that tells us it is a stock pickers market. tom: thank you so much for coming in. can you explain astros-rangers rivalry.

for people like us, it is literally a foreign country. is anything deal? >> not as big a deal now as what it used to be. houston-dallas, there is a rivalry on everything. even though we are in the same state, we are worlds apart. tom: road trip, i think it is near dallas. jonathan: which is the team that cheats? tom: listen to you. >> i think it's time for me to go on that one. it's the one that won the world series twice. jonathan: that's the one that cheats, thank you. lisa: you're going to have the second guest in two days walk off the set before the end of the segment. jonathan: i don't think victoria was going to be quite as nice. if you are just tuning in, welcome to the program. equity futures look like this, posited by 0.2%.

coming up in about 48 minutes, darrell cronk of wells fargo. do you think it has been that negative, that pessimistic? tom: i agree we are seeing that, but people are addicted on a week by week and month by month basis. that is coming out of a bull market. to me, the question that we have to live every day is where is the second leg of the bull market? that is a lot harder to find than coming off the bloom of the first leg. more >> people are coming here and seeing consolidation. even the bulls are saying you could season's with consolidation. i think maybe you are hanging out too much with some people who might be a little more negative. >> connections are in normative function. the bear market is 18%. often 25% or 35% down.

jonathan: i hear you. tom: sorry, it's ridiculous. jonathan: can you point to someone who is worried about it? tom: i think there's a lot of people day after day. jonathan: is that the data points crowd? tom: no, they are looking at a three-year year, five year hold. but spx. jonathan: i think they are the kind of people to get all fired up about 5% moves. lisa: what about people with 5.0 lyft ratings? jonathan: mark cabana about 25 minutes away. from new york, good morning.

how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost is just another word for not as good as mine. save 50% on the sleep number limited edition smart bed. plus, 36 month financing on select smart beds. shop now only at sleep number.

♪ >> every time i get indicted i like to check the polls. one more indictment and i think this election is over. but these incredible numbers are the primary reason that crooked joe biden has weaponized law and oarsmen. they rigged the presidential election in 2020. we are not going to allow them to rigged the presidential election in 2024. we are not going to allow it to happen. jonathan: former president donald trump speaking in new hampshire, not exactly backing away from the allegations is made over the last several

years. tom, those accusations continue. also laid at the feet of chris christie, the former governor of new jersey. the former governor of new jersey snapping back on twitter. if you have the guts to show up the debate and say it to my face. we will see if the former president even shows up to these debates in a couple weeks time. tom: it has gotten a little more testy, there's been some other things i've seen. i can't remember the names and social media, but he would agree the pushback meter here has gone up a little bit? jonathan: it has gone far enough. tom: the former president speaking as well. i guess i will address it right now with wendy benjamin's and in washington. huge debrief in america. very quickly, when do we see an indictment in georgia? is that on the calendar for august? >> yes, most likely next week.

there were some final subpoenas that were issued early this week and the grand jury meets on monday and tuesday. and maybe on friday. anyway, we do expect them to come out next week and really interesting thing about this indictment is that this is the one in which trump could not pardon himself if he became president because they are state charges, not federal charges. other than that, it is the fourth indictment. that clip he showed, he is not wrong. tom: it is not beneath the radar in august that there is a legitimate national headline to go to state legislature, state judicial systems. it doesn't make for fun and games in washington but would, it is important and yesterday, ohio was important. explain to our audience the immediacy of when a state decides on key national issues.

>> you've framed it exactly right. ohio was hugely important yesterday. what we saw was a rip rock red state that has been going for donald trump and for republicans for a very long time, and then abortion rights advocates were going to put a measure on the ballot this coming november, and republicans put a measure on the ballot yesterday for an august election saying that any ballot measure to change the state constitution must now have 60% support instead of just a simple majority. and voters turned out in ohio to stop that in numbers higher than in the 22 -- 2022 election when the governor and the senate and house members were on the ballot. this time they turned out in massive numbers and defeated by 57%. all that means at this point is that the abortion measure will be on the ballot in november.

but it wasn't antiabortion people who were showing up for that. so it shows that there are these breaks and even a fully republican state, and that could be one thing that could hurt donald trump later. lisa: i want to go back to this point where we are hearing a definite tone shift among the republican candidates to be the candidate for president. basically, increasing pushback against the former president, we heard that from ron desantis, saying clearly biden is the president who won the election. we hear that every from chris christie. why the substantial shift. why suddenly are people saying we don't care if we lose voters, or we have to go this route even if we do? >> i think it is the latter. they are not moving in the polls by being supportive of donald trump. they must distinguish themselves, and they have this

debate coming up on the 23rd which trump may or may not show up to and if he doesn't, they get two hours to make their case to the american people and distinguish themselves in some way. so far, supporting donald trump has not done it. chris christie as he pointed out is the most ferocious against them, the toughest attacker. i'm not sure how that is resonating with republican voters, although he is inching up a bit, and it would certainly help him in the general if he were to win. >> last night the new york times put out a report about this secret memo that has been revealed in one of the recent allegations against the former president about january 6. and actually lays out the strategy of how to basically win an election regardless of whether there are the votes behind it. does this change the game materially? >> i don't know that it will change the minds of the people who already believe donald trump

when he says he is being persecuted for political reasons, although it really is a rigid detail laying out the strategy of what jack smith, the special counsel calls a conspiracy in eagle terms, to overturn the election. there was a memo laying out let's get the fake electors going, let's have them vote for trump instead of biden. and yeah, the supreme court will probably overturn it but by then, it may not matter, which is really sort of surprising to hear. lawyers for the president of the united states saying this. and laying out the plan to request mike pence to overturn the election once he gets to congress on january 6, which of course, we know he rejected that. but it is very detailed, a very rich memo that pretty much lays out the plan that trump accepted, apparently, because it all happened, except for pens

overturning the election, and certainly strengthened -- jackson its case against them. jonathan: thank you. pushing ahead for the rest of the week, tons of economic data thursday, friday. high yield spreads disconnected from fundamentals. a lot of people have made that point. high yield spreads at the moment, about 3.9. historically, is still pretty tight. tom: after you lose money the third time because you are an equity idiot who doesn't pay attention to the bond market, you start really paying attention to the world of brando. and this is a conundrum. right now, bonds are priced to perfection. price up, yields down. lisa: that's true, but it also points to a very different market today than 20 years ago. the high-yield market right now is a very mature market relative

to what it used to be. you have companies that are more leveraged to go private equity firms, going to private credit firms. tom: what is oil doing? oil we did in the way and make the map not as good. are they going to private equity? >> the oil companies were a big return. since then because of what happened in 2014, we did see a real decline in the proportion of oil companies that are represented in the high-yield market. but overall, they've got better credit, so people are looking at that and seeing fewer default relative to the cycle they are expecting. jonathan: we start thinking about that in 2024. i don't know if jp morgan made this point. she thinks if we are not producing rates by next year, and then we start to factor in these companies coming back to the market compared with the

debt profile looks like now and their borrowing costs, it's going to hurt. tom: and i have great respect for her and everybody we talk to daily. these strategists have a responsibility to look out six months, 12 months. but there's too many moving parts for me to look out to look at the march of next year. too many things going on post-pandemic. lisa: this to me highlight the distinction between raising rates to a certain point and keeping them there. you keep them there for long enough and suddenly these companies feel real pain. jonathan:jonathan: especially with inflation coming down. will rates increase? your equity market on the s&p 500. a little bit of a lift, but that list fades. from new york, this is bloomberg. -- but that list fades. -- lift fades. ♪

it's not just tech, it's not just people. it's how they work together to provide that experience to the customer. as a finance organization that is what you want to do. ♪

i don't want you to move. as a finance organization i'm gonna miss you so much.. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with the xfinity 10g network.

♪ jonathan: equities positive here on the s&p 500. and the nasdaq, two. likewise, in the bond market, two-year, 10 year, 30 year into inflation. couple of basis point on a two-year. higher by a single basis point, 4.03%. supply on the 10 year, a little bit later on this afternoon. the 30 year supply coming

tomorrow. foreign-exchange, let's finish on the euro. why is the euro weaker? this morning, they say it is stronger by 0.16%. lisa: although in fairness, this has been basically the range for a while. i feel like this with the range a while, and it just keeps fluctuating around this exact point with the push-pull of the u.s. about to end some of their easing -- some of the tightening, excuse me. at the same time, the european economy is flat on its back. they both might be done. tom: i'm going to defer to the adults in the room. i'm just going to look. do you know what he is doing right now? do you know what he is doing? he is at goalie camp coaching

kids on being a goalie. that is how cool he is. i look at two standard deviations of the euro, i've got 111 down to 109, but i've got to get to 107 to be excited. jonathan: as lisa said, it has been a bit of a snooze. in china, anything but. china sliding into deflation. for the first time, going all the way back to 2020, the outlook is getting worse. cdi registering its first decline in more than two years. lisa: there are a couple of questions here. number one, is this the bottom question --is the bottom? number two, what could they do to shift this to a re-inflation. and this is where you get an increasing number of people saying that the distinction between the u.s. and china has

never been bigger. the services side matters that much more, and that is what we have to be focusing on. jonathan: not catastrophic yet. we worked plunging on concerns about the company's future. there is substantial doubt about its ability to continue operating. let's just frame this. based on when it was closed yesterday, this was a $447 million stock. back in 20 it was valued at private markets at 47 billion u.s. dollars. that is remarkable. lisa: it is still looking for a ceo, let's just put that into perspective, at a time when initially they were saying that they could get to the pandemic with a number of different debt deals and then suddenly, what is their future if office space is called into question? a lot of physical employers are creating office space in terms

of have regular you can come by. it's not necessarily going to be the same kind of you have a desk. i'm wondering whether that is the new model. drop by a couple times a week. jonathan: for years ago the biggest private occupier of office space in manhattan and london. just four years ago. it's just crazy how fast this company has collapsed. tom: i remember walking into a we work about every 5, 6 years ago and just saying i totally don't get it. again, this is all about revenue, revenue, revenue, we will worry about profit later. that is the whole game. all the other internet companies, revenue, revenue, growth. lisa: i think the other issue right now, people have adopted work from home, so they don't have to go to this physical office. tom: technology caught up with.

lisa: i do wonder if in two years time people are going to look back and say can you imagine people actually thought that was going to be a thing? how many ceos do here quoted saying it is my biggest regret letting that genie out of the bag because productivity hasn't gone up. tom: i'm not going to blame ceos , but the bottom line is there was a pandemic and now it is over. now what is the question. jonathan: and lifestyles have changed. tom: i am team is all work from home. you can run a bowling ball through the control room, everybody's work from home. lisa: google says working in the office to is performance reviews. i love that zoom said get back to the office. don't assume your way in. jonathan: if you care that much of that company culture -- i

don't, either. tom: he has like 35 people on a zoom call. it's amazing. it's like hollywood squares. are we still on air? are we still doing surveillance? jonathan: i want to squeeze the story in. espn signing an agreement with casino operator penn entertainment. they will launch the espn brand in the u.s. with a casino operator selling the brand backed by the founder dave portnoy. portnoy get it back after selling it for more than 550 million u.s. dollars back in 2020. he's just absolutely crushing it here. there is a risk of some kind of monetization down the road that they are going to get a lot of money out of that deal, but it's

amazing how the story has developed, effectively, essentially, the walt disney company doesn't like the brand barstool, doesn't want to be associated with it. once again wind of that, you've got them over a barrel. lisa: you think i will just walk away. jonathan: they want to seal the deal with espn and disney. lisa: now it's going to be dave portnoy unleashed. jonathan: good for him, what a turnaround. selling that for $550 million a few years ago and getting it back for free. tom: what it reminds me of is how i feel about gaming betting and that microsoft, activision, it is a world i don't know. so the cash flows are just frightening. going to move on to bonds. we do that with mark cabana, one of our favorites on bloomberg

surveillance. in the hallmark here is he writes with clarity and avoids bs. so you lead with one of the all-time jargon words of the moment, resilience. the boston red sox are showing resilience. what a bunch of baloney. translate your use of resilience . >> i think is a generous characterization of the red sox, but what we mean by this is that the economy has really shown that it has been relatively insensitive to higher interest rates so far. we all thought that we would see the unemployment rate higher. we thought we would see fixed investment dropped by more. we thought we would see financial conditions tightening more substantially as a result of all of the rate hikes that have been delivered so far, expected either in the future or to remain elevated for a while. and what we seen as the economy has really held in. and that has challenged some perceptions about how much we would expect to see the economy turn.

our economists just last week changed their base case from recession to soft landing. that is a minor distinction but nonetheless it implies less aperture in the unemployment rate. it implies an economy that continues to grow for longer and it implies the fed is going to have to adjust accordingly. and the way we think that adjustment takes place does not necessarily through a higher overall terminal rate, but for a fed that does remain higher for longer and by cutting slower than the market anticipates. certainly, higher for longer can mean that you hold that for an extended time or that you made the cut once a quarter, which is now our base case as opposed to the almost every meeting rate cut that the market has anticipated when it gets started. lisa: so would you push back against the people who have come on the show saying we are buying long-term bonds because we think it is great to lock in 4% yields? >> we are still reasonably constructive on duration.

we do recommend that clients trade the back end of the curve with the tactical long bias. you got to respect the range. and we think that because we just believe that long rates are somewhat skewed to the downside. it's a lot more difficult for us to envision tens of five and it is tens of three. you are not going to maybe see as significant of a bond market rally. you are not going to see as rapid of a yield decline, but we still think the yields will be moving lower in time as the fed moves to cuts. lisa: i want to just ask about the consequences of holding rates at this level for a longer time. our people adequately understanding how restrictive that becomes, as growth slows, and as growth slows, and is companies have to start refinancing? >> it's a great question, i heard your comment earlier about credit, the fundamentals there. we do think that the credit

markets are going to be ok if the fed ultimately delivers on what is priced for costs, because as you have a lot of maturities that come due, that is going to soft and the blow to some extent. the challenge will be if the fed does indeed remain higher for longer and if you start to see some of those refinancings occur at higher rates, companies beginning to adjust how they are going to manage that cost factor into their own calculus. but it is a part of what i think the fed is looking for. they need to ensure that inflation doesn't move around, too. they do think that inflation just falls slower, understandably. you're going to be averaging 2.8% next year, almost 2.5% in 2025. and the fed is going to have to move rates slower to allow for more stricter monetary policy over time. tom: tight on time, but can price give way as yield moves higher?

if i look at the bloomberg total return index, i've got a pendant formation i really support right now. can we go price down, yield up? >> you need to see some type of economic driver for that. we know that supply and demand is really quite daunting right now. the number one question that we get right now, who is going to buy the bonds? we need to see the economy provide cover for investors to justify that long-duration bias that we've been recommending, that they appear to be holding. and thus far, you haven't really had it yet. cpi tomorrow should fully move us in that direction, but you really need to see signs of broader economic moderation in right now, the data is not providing that. jonathan: good as always. if you are just tuning in, welcome to the program.

coming up shortly, nationwide mutual insurance. that conversation just around the corner. some data going into the weekend on friday. tom: atlanta gdp now, i'm not a big fan of the series, but there it is. 4.1 percent. i didn't frame it, i didn't guess it. i'm looking at the bloomberg screen of 4.12%. whatever the calculation is, that is a boom economy. jonathan: they back off prematurely. there is a risk. the next few months looks like a soft landing. you listen to them, they start to back away and they start to embrace the prospect of a soft landing. a re-acceleration in the economy. recognizing inflation risk all

over again. lisa: i'm seeing this increasingly in the breakeven rates we are seeing moving forward, whether it is the u.s. or europe. going back to 2008. this raises the question, ok, i these accurately pricing and expectations for inflation over the next five to 10 years or is this just a reflection of oil prices going up? these are some of the things people are thinking about when they are trying to determine their long-term policy. jonathan: big dose of the latter. i say economies loosely because i'm talking specifically about the united states. from new york city, good morning.

wake up, achievers. you're making the most of every hour of your life. except the hours that you're sleeping. so why do we leave so much untapped potential on the table?

this is a next level bed, for a next level you. my circadian rhythm is kicking your circadian rhythms butt! it's not a competition. i know, but i'm still winning! so, it is a competition. save 50% on the sleep number limited edition smart bed. plus, 36-month financing on select smart beds. shop now only at sleep number. was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com ♪ >> i'm not a person who pre-

declares where i think rates ought to go, i just lit the data tell me. we have time before the next meeting and the meeting after that to figure out whether the various forecasts of where the economy is going come true. jonathan: the next meeting on september 20, before we get to the 20th, we have some inflation data tomorrow morning. the next inflation print after that is september 13. one final payrolls report comes in early september. tom, going into the fed decision just around the corner and just around the corner is an ocean report which should show further signs of disinflation. some basic facts in the next which puts headline and the higher potentially. are we looking for further progress going into september? there is a little bit more unknown. some say yes, others say no. time: -- tom: break of here is

going to be interesting. food, frankly, i hear there is chicken disinflation, pork disinflation. tyson the other day was mentioning it. lisa: deflation actually hurt their bottom line. tom:tom: that is a story right now in commodities. lisa: sorry, that was just terrible. it's pretty good. whatever. jonathan: different audience. tom: thank you for tuning in on radio and television. this is an important conversation that goes to the heritage of world war ii. out of world war ii, there was real worry about food. it was starvation in war-torn europe, it wasn't funny, there was some science, better

technology. all of that leadership came out of the world food program as one of the things the united nations did right starting in 1961 in support of the united states and other countries in rome, italy. our next guest joins us right now. i think a lot of people don't know that rome's ground zero for food economics, food science. what was it like growing up wrapped around the food program in rome, italy? >> number one, rome is an extraordinary place to be raised like no other. you are right, the united nations food and agricultural organization, it all seems to be based in rome in terms of the work they do. not just on economics and fundamental research, but also

helping to get the food to where it is needed the most. tom: i don't mean to pick on cambodia, but that is always the country i've used where we have 70% budget among the people. what does this mean for the countries like cambodia? >> pretty intense, pretty acute. prices globally are the highest they've been since 2008. it stems from the ban on some of the key rice exports. so the fact that rice is the major stable for at least half the world population, cambodia included, means a lot of people with disposable income are going to be spending on that.

pre-extraordinary. lisa: the disruption that we are seeing, are they long-term events? for they have staying power, or is this sort of a one-off that will require some sort of action by a number of nations that have rights they can produce it? >> so i would say the first part of the question, rice, it is not too many countries that can produce rice. the fact of the matter is most of the southeast countries that produce rice are seeing a real decline. on the grain side, the black sea right now is under a lot of geopolitical tensions because of the black sea being blocked for under huge military threat.

that is one reason why today's wheat prices are not as elevated as they were pre-invasion. lisa: so rice is sort of it's own story in a different kind of way, on a broader level. i noticed the european natural gas is jumping right now. we are talking about gasoline prices rising in the u.s. and we talk about oil prices which are bumping up past $80 per barrel. i'm curious from your vantage point whether you see this continuing. the disinflation commodities that we saw six months ago have reversed. >> that was our call, that in the second half of the year we were going to see commodities. the premise for this was because we saw the dollar weakening in the second half, purely because u.s. interest rates were going to have --. we are seeing a head of that money come back into commodities. but the big kick was really opec-plus substantially making

cutbacks. that has fundamentally altered oil, crude oil, and i think we now know that is fundamentally going to have to require higher prices. $80 to me feels like a fair price considering how tight things are. the only caveat i suppose is china. i think that is a worrying signal. but the balls out there will think this is exactly what is needed to acquire a stimulus in china which will ultimately result in more demand push for key commodities. metals in particular, as well. jonathan: what does your base case for stimulus out of china? what are you expecting? >> i think they are worried about maybe their financials and some of the key states in china. i think something is going to have to be done because these

disinflationary trends are not sustainable long-term. they have to do something to improve purchasing power and confidence. i feel something is going to have to happen. this probably going to have to be more physical stimulus. obviously i've been surprised, and that makes me worried they are not heavily invested, but at the same time, they have no choice. they have to do something. jonathan:jonathan: out of london on the latest on the commodity market. if we didn't have deficits like we have here, if we didn't have unemployment, if we didn't have a higher gdp figures that you referenced just moments ago, we would be so much more worried about what is developing in china. tom: totally agree. jonathan: which means the conversation is just so different over here. tom: how much do we spend on

food? 5.6%. food away from home, we spend 5.6%. we spend about 11.3% of the budget -- downtown is under 59th street. but the bottom line here is we spend 12% on food. we're talking about nations where they spend 60%, 70%, almost 80% of their livelihood on rice. to your point on china, we are totally removed from this. jonathan: what happens next and some of these countries? tom: right now it is senator mccain's widow, i believe. she is leading the u.s. charge in rome at the world food program and i did a lot on this

years ago when rice went out and all of a sudden i had to be a rice expert where a lot of smart people told me what is wrong with my american stereotypes. lisa: and it also raises questions for businesses operating in those countries. i think about italy when they tried to report -- verse course a little. cost of living crisis. cost are going up. tax the banks, give them the money. less than 0.1% of revenues or something. tom: is that anyway to run a country? jonathan: brutal. tom: i've heard worse. jonathan: taking shots at italy. tom: i'm not taking shots at italy. jonathan: it sounded like that. tom: that was supposed to go to -- jonathan: darryl cronk of wells

fargo joining us next. i might not be here. tom: you will be going to the three islands you live on.

wow, you get to watch all your favorite stuff. it's to die for. and it's all right here. streaming was never this easy, you know. this is the way. you really went all out didn't you? um, it's called commitment. could you turn down the volume? here, you can try. get way more into what your into when you stream on the xfinity 10g network.

>> this is not a market for easy money. >> u.s. economy has proven to

the upside over and over again. >> i think they -- the economy is probably able to muddle through. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa ambramowicz. tom: good morning. 24 hours, 30 minutes away from the disinflation report of the united states of america. off of china deflation, do we assume american disinflation? jonathan: most people are. citi veronica clark say it is unlikely to challenge the narrative of his soft landing until latest -- of a soft landing until later this year. the data looks good and inflation show signs of coming down. risk assets perform and then what? does the fed back away?

that is going to be the story for the back end of the year into 2024. tom: as a measure i do 90 days, and utilize. -- annual. i wonder how jay powell does it. jonathan: if he does speak in jackson, what can he say? can he draw any firm conclusions are on the day that we have seen, particularly going to the meeting at the end of september given another cpi print after this one. i think we have had a teaser from various fed officials. because of the new york fed president speaking to bloomberg, speaking to new york times earlier this week. he made the point and i think it is an important one. as inflation comes down and at nominal rates increase and we will have to do something about that. the problem they will have if they start having a conversation

too early. financial condition start to ease growth is supported and inflation can accelerate again. this a pre pretty fine line -- pretty fine line to walk. lisa: i have to say this should be a sleepy august where we are not going to get data that will be conclusive, fed officials are not going to give us a guide afford but it is not. i feel more guests are come into the office and we are seeing this groundswell of concern. to your point at a time when we do for narrative shift? tom: you take the pandemic trend of inflation in america and we rolled over in core cpi and we are exactly at two standard deviations negative so this is the reading where if we get

further disinflation, you break out of that poor statistical study and someone like darrell cronk can go we have disinflation. jonathan: we have made progress. it it too early to declare victory? we have seen payrolls decreased. unemployment still three point 5% and it is 100 basis points out of where they thought it would be. tom: maybe tomorrow we will see two standard deviations of disinflation. we are not there. how about the real yield 1.66% between -- and between is bible college. jonathan: you could share my pain. the 10 year 4.60%.

crude at $83 a barrel. tom: joining us right now darrell cronk with decades of experience. it is wonderful to have you here. is a fancy chart and i went to the y axis, what it means is the vector of disinflation in place in america. is it? darrell: it has been but i would take a contrary inside, i think second half a year inflation goes higher. i think we finish the year closer to 4% at my cpi that we do 3%. core probably flat lines around 4.5%. thursday renee -- thursday's reading probably be a take up -- tick up. core probably comes in around 4.7%, too hot and too high for the fed. the problem is back half of the

year you use comps. you need oil prices to be $70 in the back have to keep cpi flat. you have gasoline prices going higher. writz are starting to growth and go higher -- rents are started to grow and go higher. you're starting to see people come in the office and getting nervous. we just put 89 with high on the 10 year. you're getting real yields drifting higher. everyone is looking at that. this causing pressure on your long-duration equities. you lost three of the seven magnificent seven, technically they are all below their 20 day. nasdaq sitting on top of its 50 day. if you lose the 50 day, there is blue sky below it. jonathan: nervous about the job or markets? darrell: more about markets. i think we are overextended on markets.

if you look at the data, it is missing cement. the sentiment -- if you look at the data, it has been sentiment but the data is not telling the same thing. the leading of the subcomponents are still drifting lower. if you woke up from a two your slumber and you handed me a package of charts and i look at them, i would say we are kind of on the precipice of a tough second half of the year and you are heading into august, september, october which is as we call it murderous world -- row for seasonal. jonathan: that is more brutal. tom made the point on friday it was the first parable port that felt like a payroll purported pre-pandemic. is that what is happening? i saw delinquency rates come in from new york fed, credit card data,

and you go through it and he says rates are back to where they were 2019. is it an economy still normalizing? were we were? darrell: yes, normalizing, but normalizing in a different environment. 5.25% by the fund --fed fund. visit our commercial loans and credit conditions, there as tight today as they were 2008, 2009, 2000 and even the pandemic which credit conditions would suggest on commercial and consumer drug back where the real conversation is -- consumer data back where the real conversation is. i know it is a non-a consensus view. everyone says the world has turned and it is great. led to gdp it says 4.2% but that

is off of the budget deficit they came in yesterday. that pushed the number hard. if you look at what happened, and poor's load which shows you demand is slowing. -- imports slowed which shows you demand is slowing. lisa: what are they looking for, technical breakdown because things are not factory in inflation remaining higher for longer or is they are worried about accidents as credit conditions tighten as people start to see lending tighten on every level? darrell: in our office, people have their head on a swivel looking forward does the accident come from because is the variable you tend to get in the tightening cycle. it probably comes -- the most robust candid your high leverage candidates perhaps private credit manager, emerging-market,

something that triggers this. we thought maybe the fitch downgrade, people got excited about, but it is worked its way through so i think people are right most about rates and where they go from here. as you have, the treasury market at 25 trillion dollars. go to put away 11.7 trillion of issuance on the back half of the year which almost half of the entire treasury market with the role and put away. all of that will put continued upward pressure on rates we think in the near term and when the 10 year is above 4%, but it's been in this cycle anyway brackish points for equities. lisa: where is the haven? darrell: that is a good question. i think you have to play defense. if you stay on the short side of the curve on the income side -- fixed income side, credit to us look overpriced. we have been favorable on large

cap over small. the trade as hurt as the last two must but it has been there all year. we took tech down. we were terrible on it -- favorable on it within downgraded it. look at health care and industrials and materials. you look where you're going to get the best earnings protection relative to valuation and those make sense now, jonathan: this was fun, kind of. there are some important stuff about how the back half of the year develops. can you take the data through the summer and extrapolated out the next 12 months? most people will tell you it is risky. lisa: that is what citigroup is saying that the year-over-year comps make it likely to see a resurgence in inflation later this year which could cause more

hiccups. i'm trying to understand where you parked your cash. is it just cash? is it boss stocks 60/40? people say maybe. tom: i think what lisa said is important. park your cash is something from over the last 15 years. he park your cash and you make a living. jonathan: it depends on how much cash you are making. tom: we have outflows on the cash fund but can you imagine we get the screen to break to the new high yields. how many people are looking for that? i think very few. jonathan: if you are just tuning in, welcome to the program. joining us in a tournament it's time we catch up with kathy of nationwide insurance. it is an important conversation.

tom: the answer is we have not had this conversation for 15 years. the answer is we are now back to it is valuable and why not park some in cash and wait? there is a lot of people taking their fear of missing out and shifting it over to maybe not. jonathan: lisa want to talk about -- lisa: in this market is not correlated, you get these stories and now it is weight-loss drugs and the injection providers are getting their stocks bit up. jonathan: the team at the london desk is talking about it. nordes takes over lvmh. lisa: people can take this injection and lose a ton of way then it could replace -- i'm not looking at you i'm just saying directly it would have big marketable.

jonathan: but was annoying to me is we had this rally off of the back of data that i do tests or something, said apparently it drops the risk of heart failure and disease and strokes. obviously. lisa: you lose weight. jonathan: did we need someone to tell us that yesterday? tom: i promise i will call the doctor about it. jonathan: what is it? lisa: ozempic? tom: you both are looking at me. jonathan: i am pleased we were prepared for the segment. ♪ er refund to build an outdoor patio. clink!

dr. marshall used part of his refund to give his practice a facelift. emily used part of her refund to buy... i run a wax museum. let innovation refunds help you get started on your erc tax refund. stop waiting. go to innovationrefunds.com you really got the brows.

oh, oh, oh...i'll be the judge of that. oh, that's nice... oh!! searchable, verified reviews. that's better than the ham, and i've never said that. booking.com booking.yeah

>> i think the fed has the power to get inflation back to 2%. it is matter if they do they need to do it are they prepared to take whatever pain that brings with it. i am more worried about the 2024 and base case we do muddle through but i think if we get a recession i always felt it is more likely 2024 then this year. jonathan: they're on the inflation data. plenty of debate. get the numbers tomorrow.

24 hours and about 30 minutes away until the inflation data -- 13 minutes away until the inflation data. tom: not only is it the data of the week, it has supremacy over the jobs report. jonathan: for this federal reserve? sure. tom: it is a dual mandate. inflation and core inflation as well. jonathan: yes, that's the story. tom: cronk is right. wage inflation has not come down. lisa: it has come down but at a slower pace. it doesn't matter? get a data point they'll be either high or low people will say it is not matter because will be a different or a head fake. jonathan: there's a new bias. thomas ago tell me why not to hike, thomas later tell me why i should -- 12 months later it is tell me why i should. tom: we're going to get to this.

expert on disney, i'm going to go back a few years to the summer of 2003 or you are a young analysts and you are forced to watch finding nemo, parts of the caribbean, and proceeded friday back to back. disney was riding high, a double-digit layout. it has been the mother of all disappointments what does iger do today and the next three months to right the ship? michael: he has a long checklist of things he has to fix. your content pipeline is broken. it'll but not be -- he has to work on trying to figure out why they misfire so much. maybe changing leadership there. he has to work on getting espn

to new partners. maybe finding a partner to invest in espn and potentially getting out of -- he needs to figure out what to do with the cable network. maybe sell those as well. he has to work with comcast to buy in the hulu steak has come to him next year. also worry about desantis in florida. he has a busy 90 days ahead of him and probably the next two years to fix what he has to fix. jonathan: what is not for sale? michael: the parks. i think what is happening is the parks are taken of the leadership of the company and as long as u.s. economy does not weaken materially, the parks story she told well. our thinking is the companies in transition for what ip led company for park with streaming

attached to it. i think were in a rough transition for disney assets. jonathan: how long will this take? because there is a embedded in that. michael: the next two years and it is what he has been pre-extended. they need to make tough decisions which he has hinted about. our point is, the weakness is apparent. he was against the businesses off of this book. -- wants to get the businesses off of this book. it is going to take time. lisa: when you talk about the units for sale, i want to have a deal announced yesterday with espn and penn detainment factors

in to that. espn going into sports betting which is not concurrent with the family-friendly mhd parks cater to. do you think it is a predecessor to a spinoff? michael: i think it is. i think they decided the past two years u.s. perception on gambling had changed. this is a deal where espn gets a billion have dollars but i do think it is a predecessor to find new partnerships and trying to reposition espn off of their books. espn troubles are not easily fixed. perhaps you can find answers in gambling, e-commerce. build a new streaming business so i think you will see espn spinning off of disney. maybe private in a couple years.

lisa: when it comes to fixing content issues, how much focus will be on artificial intelligence, creating content that is less dependent on some of the talent, writers, actors, etc. versus streamlining everything and having a more targeted package and then selling off the rest? michael: that is a good question. in near-term, it is about streamlining. i think they would say they have made too much content. they have been stretched too thin with marble, lucasfilm. i think is the near term is trying to figure out the optimal set of content choices, trying to look at leadership of some of these verticals. mother term the ai question is -- the longer term ai question is over the industry. tom: i have eight ways to go

here. i will go financial. i have 60% plus data add per month, discovery. at 30 at fox. disney debt less encumbered at 21% on the balance sheet, is iger salvation to merge for scale? michael: i think his salvation is getting his -- used to generate 10 billion of cash flow a few years ago. now they generate about 4 billion of cash flow. i think his opportunity is going -- focus on the park business and fix streaming. to your point, because he owns the parks the balance sheet is not the same risk of the other companies. the balance sheet is going to be the story the next couple of

years. i think disney can work out of it by focusing on the parks and fixing profitability on streaming. he has flexibility here. i think the story if you look at the value of resort assets, where they had moved to, disney stock -- a different type of company led by resorts and hotels and parks. jonathan: early november 2022, everyone hates facebook, and meta, and zuckerberg. summer 23. everyone loves facebook and meta is hates zuckerberg. as a something to can announce the same way zuckerberg did in november to turn their name around quickly? michael: yes and remember i was on air defending meta the whole time. yes, because reality is the streaming businesses lose too much money.

netflix worth $200 billion. disney worth $10 billion. the focus is fixing profitability of streaming. let the parks continue. people will look at this and say the stock is cheap. jonathan: thank you, sir. michael nickerson -- the good call on meta. it is amazing what has happened there at the last nine months. tom: the degrees of freedom iger has is about zero. i figured out barbie. they just do bambi. jonathan: ok. would you like me to say something back to that? lisa: [laughter] ♪

the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com with your hearing, if you start having a little trouble, you're concerned that it's going to cost you money. to this day i only paid what i had to pay for the device... when i go back everything is covered. there's so much you're missing by not having hearing aids. we'll find you a hearing aid that fits your lifestyle and budget at one of our over fifteen hundred locations. call miracle ear at 1-800-miracle and schedule your free, no obligation hearing evaluation today.

hi, i'm lauren, i lost 67 pounds in 12 months on golo. and schedule your free, golo and the release has been phenomenal in my life. it's all natural. it's not something that gives you the jitters. it makes you go through your days with energy, and you're not tired anymore, and your anxiety, everything is gone. it's definitely worth trying. it is an amazing product.

tom: good morning everyone. jonathan ferro on assignment getting ready for the next hour. we are 24 hours and 15 seconds away from what matters. did you notice there is another patient report tomorrow? kathy: that is what i have heard. cpi report to talk about how much progress we have made and is a turn of the heat to raise the bar for the fed to go again or stay on hold. tom: will go to kathy bostjancic

but first a briefing with michael mckee. yesterday out on x. there is a xeet. my fever is down. he tore to shreds the map of atlanta gdp, 4.12%. is it just a marketing series? is it a think we really should not pay attention to? michael: it is a thin to -- thing to track where we are. this is the beginning of the second month of the quarter so we are only getting data from the first month of the quarter, july. we only gotten half of that so the number is not going to be based on any kind of end of quarter reality. you do not -- it is sort of like

looking at a presidential election poll a year ahead of time. it will not tell you who will win because you do not know who is running but we can say the atlanta fed noted the last quarter. their final figure was 2.4 and we got 2.4. lisa: we're looking at your for your comparative figures -- year-over-year comparative figures. do you buy arguments we could see year-over-year disinflation now but it can be re-inflation later in the year? michael: i think it is different. we are not going to see probably disinflation now because we have such easy comparisons to last year. last year there was 0% inflation measured so any inflation will push of the year-over-year number of which is why we are anticipating a slight jump --

up. after that, we do not know for sure what the impact of energy prices is going to be on the headline. it is going to have an effect going into the next month. we will see headline inflation go up but the federal focus on core. one of the things where looking at is that of year-over-year, look at month over month to see if progress contains to be made. -- continues to be made. 4. -- .2 is the forecast. the fed will see that is progress. lisa: you are seeing the call down more broadly in print -- rents. how much in the housing sector as well as auto price sectors

move key figures in cpi report? and the core, how much does that seem to be stable staying fairly constant and not rising? michael: they're not arising anymore. they are falling and that should be good news overall and help push core down. used car prices at the wholesale level they are down 11.6% year-over-year. we are anticipating used cars push down on it. housing has been going down. everyone has been waiting for but it has been a very slow. to get back to your earlier question, because there's nothing for sale, home prices have gone up and what what we have seen in the bond market the last week, mortgage costs are up again. that would take a year to get into the system but it does present inflation down the road. tom: you and kathy bostjancic are fancy people.

our listeners and viewers can they do not look at it like that. two year or four year inflation, i have the eight quarter moving average of pandemic inflation lofty. headline inflation 6.6% which the inks -- fuels the angst i get from the listeners and viewers. they seem almost unattached about what price change is doing. michael: we are talking where their prices are going up or down month and whether they went up .2, the average person is going to the grocery store or at the department store is saying these prices are higher than they were one year ago. when we talk about disinflation we talk about the rate of inflation going down. we're not talking people cutting prices. people are not cutting prices so people are looking at what used to be because they have not gone

back to school shopping since last summer so not a look at what school close calls -- clothes cost. we have inflation. tom: i suggest two year headline 6.6% inflation is the emotion out there. right now, kathy bostjancic joins us, chief economist and nationwide. am i right that the public does not care about all of this micro data analysis? there looking at one year, two year pandemic inflation and it is killing them. kathy: good morning and i'm happy to be with you, lisa, and mike this morning. i think that ways of the federal reserve and not just consumers. it is in the back of the mind of fed officials. yes, they're looking at the most recent print but they know this

inflation is really a tax on consumers especially lower income and middle income households so chairman powell wants to make sure when he looks back at his legacy is a says he is not seen us leaving with high inflation. the fed thought it will be transitory. they do not want to leave and move on and still have high inflation as you end the year. lisa: the believe he cpi report will be important to determine if the fed hikes or stay put? or probably it will not give us a whole lot of information and it might be a had fake for reinflation we see later this year? kathy: yes, timing is difficult. i think for now we are in disinflationary trend and i do think tomorrow's report and subsequent report after that will be important as the fed convenes september to decide whether to keep raise rates or

be on hold. but you're are right when you look out, the problem areas their local lag so you look at home prices, they lead into inflation by about 1.5 year. yes, eventually you start to turn back up but it is a long time before that. we are concerned about that. i'm also concerned about the fact you have been talking about this earlier with gdp growth. we seem to be accelerating. 2% to one -- q1. were not so at the 4% like the lintel fed has said. the economy not slowing below potential with the fed wants. lisa: from economic perspective, we were talking about wage inflation to the union organization and what we saw

with ups and some of the wages. does that factor into your estimates of wage inflation, of the dynamic of how you might you can get in acceleration of the economy as wages continue to increase? is that something you're looking at more closely at as you hear more of these organized labor discussions? kathy: i am concerned not that wage growth, strong equation growth is causing inflation but it is a barrier to low inflation. it is great for workers to get their share of the income pie but it comes at a time when we had these inflation pressures and again it is a barrier to lowering it. it makes it more difficult. keeps the fed in a more hawkish tone or mood and may lead them to raise rates further. tom: away from rent and housing.

what is food inflation doing? what is also inflation doing? kathy: food inflation has come down quite nicely since the peak especially after the ukraine outbreak of russia war. that is encouraging. there are still concerns if there is some kind of blockade and will help wheat prices -- what happens with wheat prices. and there is uncertainty about if there could be disruptions but generally food inflation, inflation is flowing but were not in outright declines. the auto sector is different. we are seeing use car prices decline and it is welcome as before consumers and inflation measures. how far that goes is key.

we are still seeing supply demand imbalance in auto sector meaning auto companies when they do produce and supply comes online we see demand exactly match that. i think there is still up pressure. resistance in the auto sector especially for new orders. tom: remind us the inflation series that mazars to chairman powell. which is it -- the inflation series that matters to chairman powell. kathy bostjancic: i will say core inflation. and then the reason being that rental inflation even when we model that should come down sharply. we think it goes from 8% to 5% by year end. they want to see what is happening to service prices elsewhere outside of rental. tom: kathy bostjancic, thank you so much. we are 24 hours away from this

important print. what was the thing that mattered to you there? lisa: the difficulty gaining out the various elements of inflation. housing is the real mystery. i see some reports that brent continues to come down and the rent equivalent -- rent conveys the come down and the rent equivalent lags but you do see print accelerating --rent re accelerating. tom: median wage compared to the studio apartment and there is sort of those people elevated then there is new york, mo shot on affordability. -- moon shot of affordability.

lisa: as a platform for -- it is a platform for different games. there loosely affiliated with the same platform and they can program your own game or play others peoples and it is interactive. the shares lower it by 8.3 percent because people are spending fewer hours. the hours engaged were 14 billion versus the estimate of 14.4 billion. i would at this and i have to be honest, no offense to them, but i was like, it is not the worst thing in the world people are using it less. tom: i am deficient on this because i deficient on this because i would not let the machines in the house. it is the one thing i foot down on. lisa: what about the phones?\ tom: the phones i have and it is a disaster. the wii, i'm ignorant. lisa: the wii is an exercise

routine though. all i know is this question of what is the correct usage for some of these companies escape post-pandemic reality people do not have 14 screens in front of them to try to take their mind the fact they have nowhere to go. tom: i have six books right now. our games addictive? is this addiction like cigars or whatever? lisa: china think so and even china thinks iphones are addictive. they're limiting the use for children to use it and i think -- tom: good morning everyone. this is "bloomberg surveillance." ♪

>> we are seeing the effects of

baidu now -- bidenomics. they're still figuring through and will probably continue to filter through. we think inflation will come down. spending is strong but has decelerated. those are the things the fed is looking at. tom: we speak to authorities on these statistics that matter. on the important inflation series tomorrow. michael mckee will go beneath the headline data at 8:30. there is a singular headline out which is a certain normalization. from the wall street journal moments ago, united states and kingdom of saudi arabia agreed to terms for israel normalization. the story is breaking right now.

of have much more on this. first perspective -- for more perspective, francine laqua with benjamin. the simple headline to go back to my memory of the 67 and all the history of lewd, an agreement between united states and the saudi's. lisa: this bush at a time people expected increase intentions -- especially at a time when people excited increase tensions. trying to put forth some rationing back of what they were talking about during performing or changing the core system. making it a little bit less independent with the fair.

tom: there is the headline there from the journal. one of the things we have been talking about and i've been hugely remiss on this, to get clarity on commercial real estate. this is to be generalizations out there by people who are not experts and the fact that maybe we should speak to somebody who actually knows what they're talking about. we will have to see on that but the matter is cre. look at the office trauma of work from home, or is there more going on then just work from home? lisa: is isolated to the office space sector? there was a story in wall street journal talking about how building, multifamily housing units are seeing huge declines this evaluation right now. this is tied in part to the story of work from home there are people who do not want to live in cindy centers.

there's also this question of is there something else going on. every person i talked to says there is a distinction. you have the warehouse page which is holding up is value considerably it feels like there feels like -- there something going on we look at the mortgage rate. tom: i think the mortgage rate question and to me it is a 30 year question. the bottom line for me is commercial real estate redo, recommitment is a five or seven year timeline. it is a much shorter timeline where the optimism in get solved quicker. joining us right now is our guest from hyper similar. --piper sandler. i want you to speak on the stereotype that is wrong? what upsets you most about the

analysis of the media of cre? >> thank you for having me on this morning. i appreciate it. i would say what is most troubling about commercial real estate and we have been running about eight for quite a while is people will make broad categorizations and they will not dig beneath the surface so they will make a blanket statement drop the mic and walk away. i'll give you two analogies. years ago people said the -- is dead and they would go and show some derelict mall that had long since ceased being relevant. then the same at christmas time they showed the westchester or roosevelt filled and show all of the kids and families coming out to meet santa and there was like wait a minute what is going on and the same things happened with the office. everyone says the office is no more and yet if you look and say

wow, 50% stake in to 45 park avenue and everyone is going away and amazed that people are interested in office. does the same thing. people need to look between for the state to figure out what is legitimate -- real estate to figure out what is legitimate and what is fading away. tom: lisa want talk about the realities. i want to talk about the landlords. they have an adjusted return rate of return? as the market clears, is it business as usual or a new territory for landlords of cre? alexander: i would say for cre the biggest change that occurred the past decade is people realizing it is not just the market that wins, it is the product. that is first. second is development is a lot riskier than people realize. third the best laid plans often

go awry so if you take it in that order. years ago new york was the end all be all and now people realize sunbelt is an amazing spot to invest and make money in real estate. people are realizing that you have to own the right assets so you have new people who go down to the sunbelt and rma's their supply -- amazed their supply people in there for decades understand how to work around the supply. same thing for urban areas. people in manhattan people pay big numbers for real estate and they get left holding the bag meanwhile others have been successful for decades investing in manhattan real estate. it is the market knowledge and i think the past decade the re-investors have come to terms with -- to better isolate and understand the dynamics in a way that did not exist when rates are coming about out of the rtc days. lisa: is the money from japan drying up they succumb is the

u.s. by commercial real estate? alexander: the money that came from china, everyone is making headlines because japanese the cycle. the chinese were the japanese of the cycle. right now the japanese that they be the smart money. they are coming in and taking off low post-pandemic prices. the chinese, definitely. look at the prices that were paid for the stake at 245 park. you can go down the list. the chinese paid top dollar. a lot of overseas investors is really a reallocation trade and that can do wonky things. take latin america miami as we know for decades, latin america comes to miami not because of value, but as a store of value. unfortunately for the chinese they were pretty aggressive in coming to the u.s. looking for the store value last cycle and

we have read the headlines of what is transpired. lisa: do you think people are overestimating or underestimating the pain likely to come down the pipe with commercial real estate? alexander: i think it is both. on one hand, the at what happened post credit crisis, their worst fear of peak see mbs that would overwhelm the system, did not happen. the condo loans worked out. but most of those loans that resolve. the big benchmark i doubt many people know it happened to that cmbs she was so when you look at today's and if there is a lot of stories, we look at that, yes will be loans they go back because those buildings are not desirable and there are no economics and not worthy of investing. on the flipside, you have what varnado did to restructure a loan on one of their high street

retail assets. if there is value, and economics make sense, lenders and borrowers will work it out. if not, it will go back. but no bank wants to get the keys to a derelict asset. they have every reason to work with the bar work. the special servicers make more money the longer they deal gets wrapped up and goes back and forth. tom: alexander goldfarb brilliant there on cre. i feel terrible about this because the huge part of what we do is economics and finance investment and we do cre and effort dog right now it is not -- we do cre and right now it is not an afterthought. tomorrow we have been waiting all week, the week begins tomorrow at eight: 30 on thursday with an inflation report.

michael mckee will be in to give report and perspective always with the best guess we can find for you. this is bloomberg. ♪ he snores like an angry rhino. you've never heard an angry rhino. baby i hear one every night... every night. okay. i'll work on that. save 50% on the sleep number limited edition smart bed. plus, 36 month financing on select smart beds. shop now only at sleep number.

wow, you get to watch all your favorite stuff. it's to die for. and it's all right here. streaming was never this easy, you know. this is the way. you really went all out didn't you? um, it's called commitment. could you turn down the volume? here, you can try. get way more into what your into when you stream on the xfinity 10g network. (jennifer) the reason why golo customers have such long term success is because we focus on real foods in the right balance so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy. release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off.

since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time and constantly thinking about food. after taking release, that stopped. with release, i didn't feel that hunger that comes with dieting. which made the golo plan really easy to stick to. since starting golo and release, i have dropped seven pant sizes and i've kept it off. golo is real, our customers are real, and our success stories are real. why not give it a try?

jonathon: live from new york city this morning, good morning. counting you down to the opening bell with your equity market slightly positive on the s&p 500. the countdown to the open starts right now. announcer: everything you need to get set for the start of u.s. trading. this is bloomberg "the open" with jonathan ferro. jonathon: live from new york, coming