can't ignore you. it's the way my mind works. i have a very mechanical brain analytics and empathy. that's how getting clients am more. i'm more than a paper. i'm jon erlichman. welcome to bloomberg markets. and i'm matt miller. let's take a quick look at what's going on in the markets at this hour. the s&p 500 is down 8/10 of 1%, 4454 is the level there. and there are no industry groups gaining on the s&p. they're all in the red after minneapolis fed president neel kashkari said inflation is still too high. you can see the ten year yield right now. really unchanged at just about 424. spot 1933. the bloomberg dollar index

gaining strength again today, although really it's also little changed at 1238, up only 4/100 of 1%. and crude is down another dollar 91. so crude wti back down to almost $80 a barrel at $80.60. john. and that's certainly weighing on the canadian stock market with energy, with such a big subgroup component here. financials is well under pressure in canada and we're seeing that in the us indices. matt mean, beyond just figuring out the story on rates and inflation from here, fitch raising some fresh concerns around the banking sector within the dow. you've got jp morgan, for example, as one of the lead laggards. it's down about 2% right now. watching tech is kind of interesting when you consider the fact that we started the day with some muscle calls, if you will, from the analysts on wall street. you had baird with bullish commentary on nvidia. you had morgan stanley saying despite the recent weakness, this is a winner. the stock is gaining on the news, but it's up a modest 1.5%.

then of course, we're continuing to watch through some of those regulatory filings. d.r. horton has been a standout stock on the day right now, up less than 3%. but berkshire hathaway adding a stake there. so warren buffett giving a homebuilder a thumbs up and obviously a lot of those homebuilders, at least they're activity can help the home depot business. right now, home depot is modestly higher, matt. but as we've assessed those results and we'll talk a little bit more about them later in the program, it just feels like consumers are not buying the biggest ticket items these days, still doing some spending, but less so. well, you know, i was talking to an analyst about this earlier, drew redding from bloomberg intelligence, who said the problem is the comps are from a time when people were out there buying the big ticket items, they were getting, you know, the big weber grills or, you know, decking for their patios. and now that that's done, it's not the kind of thing that you buy every month. you just do that every few years. and a lot of consumers have already done that with the

excess savings they had. and the question is how much is left? let's talk about that right now, because us retail sales rose in july by more than forecast. we saw increases in sporting goods stores, clothing outlets and restaurants and bars. but is this the very last of those savings? tiffany wilding is managing director at north american and north american economist, i should say, at pimco. and tiffany, this has been a debate for the last few months, but we're getting towards a point where consensus is that americans, at least have spent their excess savings. what do you think? yeah, i mean, i definitely think that the statistics would suggest that we're getting close to that. you know, we we have been americans. when i say we, i'm in newport beach, california, for, you know, americans have been spending more than they've been making on a real basis throughout this year. and that's been resulting in, you know, that excess savings that they built up during the pandemic on average to come down.

you know, so i think there's a couple of other things to keep in mind here as well about the retail sales report that came out today. you know, it was it was probably boosted by promotions led by amazon prime day. and what we've seen in the past is that you have other retailers that sort of follow on with those promotion sales and, you know, and that those discounting that price discounting really drove volumes. so consumers are you know, with that excess savings coming down, consumers are becoming more price conscious, you know, and that just means that overall demand is slowing. what do you think about the inflation picture overall, tiffany? because the most recent data points we saw were pretty encouraging. on the other hand, the comps are going to start to get harder and we're looking at some things like airline tickets and health care costs that don't seem like they're going to go much lower. yeah, well, i mean, in the united states, you know, it's kind of interesting from the canadian statistics that on inflation that we got out today. but you know, in the united states, inflation has been falling, you know, pretty pretty

notably more recently. and we expect that that to continue through the second half of this year. and really the drivers of that is what would, you know, kind of from a high level call these pandemic related factors was they're just fading, you know, so obviously we have the whole used car story in the united states, which was very idiosyncratic to the united states. that's coming off. you're seeing used car prices drop pretty dramatically now. now, as you've gotten supply, you know, that's coming back to the market. but in addition to that, you know, you mentioned it travel services is, you know, airline fares are coming down, but hotels as well, you know, some of that is allowed, you know, has been allowed by the lower jet fuel costs, which are now going up again because of the acceleration in global energy prices. so so that'll probably, you know, those price declines will moderate. but, you know, but nevertheless, you know, we think over the next quarter or so, you will start you will see us inflation, core inflation on a three month annualized basis, you know, get

down pretty close to the fed's target. but but they have to be careful. you know, they don't want to, you know, prematurely declare victory because you could see some re-acceleration back up, you know, in, you know, next year, early next year. well, tiffany, you did bring up the inflation data in canada just as a comparison. and so maybe we should go into some more detail there just because you had a headline reading that showed re-acceleration. but to your point about core readings, one could take away from that some improving trends there. i mean, i guess the central bank question at this point is which inflation gauges do we want to watch? if you know, even in canada today you had mortgage related costs that have skyrocketed, which is somewhat ironic considering higher interest rates have made that an inflationary factor. yeah, exactly. you know, because of the way that the statistics are calculated, the hiking rates is actually contributing to inflation somewhat, which seems a little bit counterintuitive. yeah, you know, it depends on what measure you look at. you know, overall, i thought today's cpi report in canada,

you know, it was a mixed bag. you know, i do think that the headline surprise, higher surprise ultimately is not good news for the bank of canada. but when you dug down into the details, it was really the travel services categories that were really resulting in, you know, some of that upside surprise. those categories are notoriously volatile. you know, it's the summertime. you know, we have had, you know, very nice weather this year. you know, obviously heat waves in some parts of the world, but it's been nice. and so i would expect inflation in those categories to come down, you know, as the summer passes, you know, and, you know, looking at the rest of the categories like the so-called super core measure of core services, shelter, you know, that actually looks quite good. it's getting close to the or much closer to the box target. you know, so overall, you know, i think the bok, when they're thinking about their rate hiking decision in september, you know needs to take into account the broader range of data. you know, we suggest that the canadian economy is slowing. the gdp suggests to us that it's

slowing. third quarter gdp looks like it's going to be sub 1%. you know, and of course, the labor market, the unemployment rate has increased by 50 basis points over the last three months. you know, and historically, that's more consistent with a recession. so bok is going to have to be weighing these things. you know, it's going to be a close call. you know, i think on net, they probably continue to pause, however. so let me tie it back to the the spending and the retail spending story, because matt started the conversation by asking, you mean how much do americans have left to spend? and i wonder for the central banks at this point, like what is the goldilocks level of spending when central bank action is meant to cool down the economy at a time when, you know, every time we get a reading that's better than expected and people say, well, that shows a resilient economy, everybody starts getting worried about, well, that means interest rates are higher for longer. yeah, well, i mean, ultimately, you need to see consumers that are more price conscious for sure. and that helps bring down inflation in. you know, now i think the question here is, is in order to

fully restore inflation back to target, you know, where do you need to be in terms of the unemployment rate and how much additional capacity in the labor markets do you need? because keep in mind, if the labor markets are tight, you probably will continue to see, you know, more bargaining on on wages, more, you know, and wage pressure that's increasing aggregate earnings, you know, which is contributing to more resilient consumption. so it's all interrelated. you know, but really, it gets down to in our minds how tight is the labor market and how much does it need to weaken moving forward in order to bring inflation all the way back down to target? you know, in the united states? i think that, you know, and elsewhere in the world as well, you've seen wages. you know, in terms of their level terms, wages have not fully caught up with the price level adjustment that we've seen. and and that's, you know, resulting in people still wanting to catch up. so you're seeing you're seeing increases in strikes in the united states, you know, as well as canada in order for wages, you know, to try to get people's

real wage, you know, at least flat versus where they were pre-pandemic. and we think that continues. you know, of course, unless you see a recession and you kind of we think you need to see that weakening in the labor market, higher unemployment in order to to bring in wage inflation down. tiffany, great having you on the program. thanks so much for joining us. pimco's tiffany wilding talking to us about the economy. she is their north american economist. coming up, home depot earnings beat estimates despite a pullback in us homebuilder sentiment. john and i were talking about that at the top. we'll explore it more in the next block. this is bloomberg. you know that tech stock we talked about picked up 500 shares. you get in at a good price. oh, yeah. schwab saved you. how much with schwab order execution advantage, you get price improvement on 96% of orders and commission free online trades. i'll take care of this.

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the hour and we're watching home depot today. it's been a mixed session for the stock. the retailer reported earnings that were better than expected. now high mortgage rates, those have been a headwind. we're also seeing fewer big ticket item purchases. matt was making the point earlier about there's only so many barbecues, you might buy in a given year. there were some smaller projects. sales, though, people doing landscaping, home depot, there, matt, seems to be able to keep some of their shoppers spending right now. yeah, absolutely. and they have made a big investment in employees as well. let's go to laura champine. she is loop capital markets managing director. she has a hold on home depot with a $315 price target. great to have you in the studio. thanks for visiting us. what do you think about the earnings report? first of all, what did you glean from those numbers? so the earnings report was better than expected, meaning sales declined, but only 2%. so transactions are trending in the right direction. ticket, though, barely grew. it was at its lowest point since october 2010.

so ticket. that's a good news. maybe because inflation is certainly cooling off, but it's a little bit of a worrying sign that they're going to have to get people through the door because they can't make it just on the price tag alone. laura, what do you do then? i mean, do you do you offer more doorbusters or are you trying to grab the traditional say, contractors and stay locked in a battle there with lowe's for some of those big consistent shoppers? home depot seems fairly content to let the market come to them. it's easy to do with their size, so they're sales just for this quarter were $43 billion today. so what they're doing is offering the best prices. once again. they've got the best scale. and to your point, pros really like them. pros still were down though pro backlogs are down. sales are down both at pro and diy, but home depot is in a good relative position with that pro in terms of the home depot lowe's competition, given how much of it is about being a

better store and how much of it is about being in a better place, because i go to home depot all the time, not because i like it better than lowe's, but because it's right there and there isn't a lowe's near me. right? so the footprint for home depot is more urban, more coastal, more big cities. lowe's, because of its heritage, it's tends to be more rural, more in the south. luckily for lowe's, that's a part of the country that's growing. but people do typically shop wherever is closest to them. some some stores. so lowe's overindexes to appliance biz, they do a little bit better with diy home depot does better with the pro. okay, laura, this is such a busy week for retailers reporting. hopefully we'll walk away with some signs on who are the clear winners and the laggards out there. i mean, you got target tomorrow, likely going to be, i believe, the first sales decline in upwards of four years. how are you thinking about we were just talking about the health of the consumer right now. how are you thinking about this? so a big worry for me and i cover off price.

so i cover tj maxx and ross and burlington. i think they'll do well in this environment. but right now i'm starting to study the the student loan payments record occurring in the back half of this year. i think that that's just another thing to worry about a little bit overall, though, inflation easing is really good news. we've had wages come in ahead of inflation just a couple of data points, but we'll take what we can get. i cover costco as well and they've said that inflation has been less sequentially every month this year. that's the metric i'm really watching to see trend down and maybe even reverse to keep consumer shopping. do you expect a recession? and the reason i ask is that a lot of times when we get a recession, analysts will say that consumers step down to a tjmaxx, you know, or from a target to a walmart is kind of the narrative we're hearing this week. i think that it's not off the table. the fed will decide whether we go into a recession or not.

are our positioning is that you need to be defensive in case don't see a recession today in consumer stocks or with retailers. but we like the off price names. we like costco, bj's wholesale club. we think you want to be defensive right now. it's too soon to call it either way. all right, laura, great perspective. we'll watch for those numbers tomorrow. and good to get your take on home depot as well. loup capital's laura champine joining us with her perspective. we're going to take a quick break. when we come back, taiwan's vice president and the leading presidential candidate discussing some of the challenges that lie ahead with business week. and we'll get a full report. this is bloomberg.

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avalara. we can calculate sales tax automatically. avalara. what if tax rates change? filing sales tax returns, business license guidance. cross-border sales item classification? does it connect with the. 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 cookies, manage all your sales from one place with a partner that always puts you first. start today at godaddy.com. this is bloomberg markets. i'm jon erlichman with matt miller and matt taiwanese vice president lichinga is seeking to

reassure voters that he's a steady set of hands as he campaigns to become the self-governed island's next leader. he spoke exclusively to bloomberg business week in his first interview with international media since becoming vice president. he told us about his plans for relations with mainland china. he also also with the us. we must abide by the truth, which is what i mean by pragmatism. it is that taiwan is already a sovereign, independent country called the republic of china. it's not part of the people's republic of china. the r.o.c. and prc are not subordinate to one another. it is not necessary to declare independence. what is your roadmap to a formal independence? well, we my response ability is to maintain the status quo in the taiwan strait while

protecting taiwan and maintaining democracy, peace and prosperity. so no such framework exists. we must work to maintain the peaceful status quo because taiwan is already a sovereign country. how confident are you that the us will have taiwan's back should the situation with china escalate? the main goal, said taiwan to the us, is a close friend of taiwan. we are partners in a number of areas from politics, the economy, human rights to our society. england, taiwan, the because taiwan's security challenges are a global concern. the upkeep of peace and stability in both the taiwan strait and the indo-pacific region fulfills the common interests of the international community. i believe that all democracies in the world, including the us, would be aware of how to respond if such a scenario were to take place. what do you want the world to know about you as a person? was lying.

i am a rational and steady leader. i know how we can respond to the challenges we face as a country. i also understand that the serious and complex nature of issues in the taiwan strait call for rational and steady leadership. this will enable our country to move forward amid changing geopolitical circumstances. let's bring in bloomberg businessweek editor joel weber. he did the interview. he's now back stateside with us here. so, joel, fascinating stuff. does the us, does the current administration, for example, have a preferred candidate? it's a great question. no, they wouldn't say. they won't say. and it does speak to just how fluid even the election is. we're still months away, right? taiwan's going to vote in january. a lot can happen between now and then. the last time taiwan voted for for president, which ended up being the current one who can no longer run because of term limits. that race was upended basically

within the last few months of the race. so all eyes on this still and we'll see how it plays out. us, you know, will stay out of it, right? officially, they will stay out of this one. they have been known to kind of like weigh into it at points in the past. but i think everybody's on the sidelines for now. joel lie reiterated that idea of being a rational and steady leader in addressing that elephant in the room, if you will. you got some really incredible access. you went back to his hometown and you also talked about some leadership lessons even learned from volodymyr zelensky. yeah, so what i was really interested in was if he finds himself in a role like this on the world stage and these tensions with china escalate, what's he going to do about it? and of course, there's this comparison that gets made a lot in the us and europe, increasingly where maybe taiwan looks like asia's version of ukraine. so basically was like, i wanted to ask him like, what have you

learned from from watching what's unfold there? and he said, you know, completely different place. and taiwan is so much more instrumental to the global economy than ukraine. and chips alone, you know, 90% of the world's supply comes from taiwan. without that, we're back decades. in the past. right. but he also recognized that that taiwan has this coalition of the international community that he thinks has its back in a way that, you know, resonates with ukraine, too. and that was sort of, i think, part of what he tried to express with this solidarity that the international community has for taiwan. and he emphasized maybe over emphasized taiwan's independence from china. how true is that in an economic sense? we know that there are some liquidity issues going on, and especially the chinese property market right now. you saw the rate cut yesterday. if china catches a cold, does taiwan get sick economically or does the chip factor kind of

save them? no, i think taiwan's really actually moved a lot of its economy out of china over the past few years and decades. they view themselves as their own entity. of course, there's a lot of operations that are still there. you look at foxconn, which is has huge operations in china. but even then, you know, apple's moving production towards india over a long and elsewhere over a long period of time. so so i think taiwan views itself as its own own world, really. and they have prospered in that world. and that's the key thing to understand here. they have been part of this triangle between the us, china and taiwan, and they have prospered on it. but it also speaks to just how complicated of a geopolitical situation this is. i mean, you cannot imagine a geopolitical situation more complicated than what taiwan and and vice president lai, who is, again, the leading candidate in this, of course, there's other candidates and lots of turbulence yet to play out in before the election. joel, thanks so much for joining us. joel weber, bloomberg businessweek editor, he did that

interview and you can catch it in its entirety on bloomberg.com for jon erlichman, i'm matt miller. this is bloomberg. internet without trackers. without malicious websites. it's without doubt malware ridden files, zen your data more secure your connection protected and be more cyber zen. get nordvpn enjoy a cleaner, safer and more private internet daily you can't buy great conversation scenes or moments that matter, but you can invest in them at zero price. our strategic investing approach can help you build the wow, you get to watch all your favorite stuff.

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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. we get it. we're the same way. offering access to product experts to help you quickly and easily find what you need. so whatever your industry, you know, you're always getting professional grade products. call click granger.com or just stop by granger for the ones who get it done. from our studios in new york and san francisco, our expert hosts of the data and analysis about the companies you know and the startups to watch plus the interviews you don't want to miss. watch caroline hyde and ed

ludlow on bloomberg technology, the only daily business show dedicated to tech right in the middle of the trading action. 12 p.m. on the east coast, 9 a.m. in the west, only on bloomberg television, your global business authority. retail sales improve, market sentiment deteriorates live from studio two at bloomberg headquarters in new york, i'm romaine bostick. and i'm katie greifeld. kicking you off to the closing bell here in the us. less than two hours to go into the close and you're looking at a market with pretty red moves on the screen. the s&p 500 off as two is the nasdaq 100. i'm not going to say good news is bad news, but i could because retail sales came in hotter than expected. that's increasing bets that the fed will have to doo