when i see is a pull forward of consumption. >> we are expecting to stay on hold next month. announcer: this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: let's get your week started. for our audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz. equity market positive five half of 1% on the s&p 500.

the main event taking place ont friday. jackson hole and chairman powell just around the corner. lisa: -- tom: i think they really summed it up as a free frame what if. that is how many moving parts are going on. i'd like to suggest we have clarity of thought by thursday before friday. can we say who i have to say thank you to? a philippine doctor who invented or through myosin. he's the one who figured out the wonder drug. so fate -- say thank you to him and eli lilly. i had pneumonia. i'm down and it was kind of like a vacation. jonathan: i'm sure people wouldn't describe it as a vacation.

we've missed you, great to have you back with us. your range of issues including this morning, china. some confusion. that confusion continues this morning. lisa: they did not cut five-year rates. they cut one year rates less than expected and that goes to the question, are they not stimulating more because they don't want to inflate a bubble, or because they can't? if they want the chinese economy to actually get its feet under it, they need something more substantial. tom: china, the confusion is right over to jackson hole. the mathematics of this is the convexity of it, the acceleration of trends we've seen over the last 10 days. jackson hole, that is acceleration, things are moving subtly and i'm sorry, beijing is in jackson hole on friday.

jonathan: you've missed quite a bond market move, tom. let's get to the markets. tk, when you left, these yields looking at highs we haven't seen in the closed since 2007. some serious level. tom: first thing i did today is look at the real 10 year yield. 2%, 1.98%. it is simple. there it is, almost back to where it was, jackson hole of 2007. you say what is a fancy number? 2.22. we are not yet to june and july before the crisis. jonathan: this is real rates. tom: real rates, which is how the adults think. lisa: there are different ways

of measuring the mortgage. when you take a look at a range of different yields, you are seeing some of the highs going back 15, 16, 17, 18 years. is this the new normal even if inflation gets under control? >> yields are up this morning by five basis point or so. equity futures positive by 0.5%. lisa: some would say the week starts friday, but i say the week starts tomorrow. tomorrow with the beginning of the meeting in johannesburg, south africa. very interesting in light of china and how much they are pushing to really create a rival to the g7 and what they are trying to get. why are you shaking her head, tom? tom: putin can't even go because he would be arrested. but what really upsets me, there's divisions of bricks.

there's basically china, who really wants to get this done and expanded out, and everybody else is like -- am i right? lisa: it depends. there's this question around india. we can go into the whole discussion that they are trying to adapt to a larger group. wednesday we are also going to be talking about nvidia reporting earnings. also republican primary debate in milwaukee. the question here, how is the market going to respond? it is going to be about the jackson hole. fed chair jay powell coming out at 10:00 a.m. eastern. christine lagarde will be there. i want to understand whether he takes up the point and it doesn't talk about anything substantial and basically just goes after some esa tarik canonic debate just goes after something less consequential but that sounds like it has gravitas. jonathan: do no harm, tom.

first cause of action, say nothing. he is going to say something. i'm not going to say he is going to say this, but jason furman -- tom: has been on fire. jonathan: further down the road, tolerating something just below 3% on cpi. a few years later, maybe formalizing that at the new price target. tom: we really need to frame it for you, this debate between getting back to 2% or even below that versus whatever. but that debate needs to be framed absolutely. >> wonderful to get you on the program with us. i know where you stand on manufacturing coming up to services. for people who haven't followed the global economy, services is still ok, stateside

manufacturing just a little bit softer. you are expecting manufacturing to actually reconcile. how would you reconcile that with what is over and china? >> i think we certainly say that what is happening in china is a challenge most certainly. over the past 15 years it has been one that everyone, he much the same thing happened after the financial crisis. the second common factor with global goods cycles being injured by the china credit cycle completely. we are now heading into a world webank where those open forces are no longer going to be the driving forces in cycles and economic ebbs and flows in general. that means we have to be looking for some of these connections that are driving that end right now we think that the real income side and the inventory restocking side, particularly in the u.s., is going to draw more

of a convergence of manufacturing services. tom: while i was on my hospital flat on my back, john would brief me every day. the equity market really hasn't pulled back all that much. do you see an equity market that has been resilient? >> certainly one thing that really stands out is how rational or orderly a lot of it is. if you look at what has on the worst, it has been rate-sensitive. it has been china-sensitive and then more speculative pockets market. that to me says that this isn't yet about any kind of slow down from what we are seeing in china. that doesn't suggest that that has passed yet. the one thing we continue to hang our hat on is if global growth estimates are up 60 basis point since the start of the year ended 20 basis points, that

tells us that a lot of the strength in earnings we expect to keep a bull market power forward, it has somewhat been cushioned even amidst the economic pain in the manufacturing side that we are seeing recently. lisa: so how much are you paying attention to jackson hole and the potential for some acceptance of higher inflation at higher rates for a longer time? >> certainly that message that you alluded to about the potential to factor higher inflation target, i do not think you will get a sniff out of that at this jackson hole in particular and quite frankly i don't think you can you touched 2% at some point going forward. the message we expect to hear from chair powell is actually pretty similar to the one that was detailed in the minutes, and it only differs in tone and in starting point. last year it was simple, short. inflation is too high, we are going to get inflation down.

we had inflation come down a lot of the way without much of the economic pain. the fed is still seeing that below trend growth is going to be necessary to get that last mile of laois and on a sustainable target. our view is that that is going to be somewhat reinforced, and the danger of what the market could be looking for is the 2024 dots, the 100 basis points priced in. i think the market has about 40 basis points priced in more than the fed right now. the danger is that with growth so resilient, the fed shouldn't be showing as many cuts in 2024 even as inflation has come down under that operating a more. i don't know if that is something you can allude to in this, the fed's willingness to keep rates higher for longer. lisa: when we take a look outside the world of jay powell, it really has been china.

earlier in the year, you were a little bit more constructive. have you shifted your view in light of the lack of policy response we've seen consistently out of the chinese communist party? >> in a word, yes. we shifted our views on china to be more neutral for several months now. right now the kind of juxtaposition for how we are weighing it and thinking about it is there is no catalyst on the horizon suggesting there's going to be an abrupt turnaround. it's not just the magnitude of the stimulus, but the nature of the stimulus. whether you're in a liquidity track for a balance sheet impairment on the private side, those kind of measures would be the most efficacious. so we've changed their view on that. on the other hand, we do have to appreciate that when valuations are this low in china, this tends to be the starting point for a pretty for tile rally to

the other side, so it is balancing that kind of view on the macro side. on the valuation side, you're very dangerous to be sure. tom: it always percolates the third week of august. what is the short cover ability here right now? we've been pretty beaten up. the numbers aren't all that big on the drawdown. it seems to be a lot of betting on gloom. what is the short cover potential? >> if you mean the short cover potential on equities, i would say that our view is that heading into the last leg of the year-to-date highs, that was the normalization of positioning for pessimistic levels to kind of more normal levels. i would say on the equity side, the positioning is a little clean. what is a little more worrisome is that from the surveys we've been looking at, it seems there is very much an itch to talk on

yields. that is the position seems to be getting squeezed a little more lately, particularly in august. that, to us, is the scariest thing in the bond market. it is the momentum that yields have to topside. jonathan: feeling that itch. good to see you as always. have a good week. coming up very shortly, we will catch up with wendy and we will be talking about this poll from cbs over the weekend. former president donald trump with a massive lead for the gop. this question stood out for so many people and if you are not familiar with this, allow me to give you a sneak peek of this poll. who do you trust to tell you the truth is essentially the question they asked. 71% of trump voters said trump. 63%, friends and family. 71% trump. 63% friends and family.

basically, trump supporters trust him potentially more than potentially more than their own family members to tell them the truth. tom: what is important here is this is anthony's of alto -- all that coming up anymore. equity features positive. good morning.

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♪ >> i serve alongside the president for a long time and one thing every last about him, it is not over until it's over. i'm actually still hoping he shows up. >> i think everyone of us who qualified for that debate stage all to be willing to swear off, answer the tough questions, and also draw a bright line contrast. jonathan: mike pence speaking on abc over the weekend going into that first presidential debate for republicans taking place on wednesday. the latest information we have from the former president, he won't be there. the latest poll we have, this one right here with a dominant lead for the former president.

62% of likely gop primary voters stand with the former president. the second-place lead, 16%. then you've got 7%, 5%. the rest just single digits. low single-digit. tom: i talked to margaret every week who does a wonderful job for bloomberg radio. anthony does much more of a pole. frankly you are more up to speed on this than i am. top reasons for considering trump. things were better under trump, 99%. in this when i think is the emotion of it. fights for people like me, 95%. this is a personal, may i say crusade that this captures. >> wendy, you going into that debate on wednesday.

one of the argument for the former president showing up with poles like this one? >> it is a rose garden strategy as an incumbent in the republican party. it is hard to argue with such a big lead, but you don't want to not be there to volley off your criticisms and presuming chris christie is going to show up ready to fight and make the argument that trump is not the guy, criticisms that could stick. the other question, will any of the candidates actually criticize donald trump on the stage? it's like criticizing a ghost. remember clint eastwood with the empty chair, that didn't work very well. trump knows that, he knows television, he knows how things resonate and he figures it is much harder to attack him if he is not there. tom: a pertinent question into this debate, william jennings bryan, there's a lot of parallels here.

but the answer is after williams -- william jennings bryan, the republican party the high ground, the east coast agricultural party, if you will. what happens after trump? with the dominance that he has, what is next? >> i think there are people waiting in the wings. tim scott from south carolina has a message that builds up his evangelical base, that builds on conservative voters, particularly in the south that seem to really love donald trump. i think there are people who can take the mantle. we've also got chris sununu of new hampshire, brian kemp of georgia. he can't run again, presumably, if the constitution holds. 2028, some republicans now are lining up, and they seem frankly more compelling in a lot of ways than the current lineup of challengers to trump.

lisa: which raises the question, who really is the number two if ron desantis is getting pushed out? over the weekend he made to simply reference to trump followers as listless vessels and it is sort of getting compared to the whole concept of deplorable's. is it looking more and more likely that he is not really the number two, that he is not the main contender when we had to get closer to the actual presidential election? >> i think ron desantis has the most to gain in the most to lose. can he get out there and project a coherent method for the republican party, saying i am the future, trump is the past? if i am the future, i can win. can he actually make that argument? if he does it well, that he keeps his post at the second in line. if he doesn't, you might even see donald trump offer tim scott the vice presidency in a month. donald trump doesn't play by the traditional rules. and that is a tough ticket.

jonathan: this field is already deep and yet already we are asking who is next? there's a report over the weekend that maybe mr. murdoch had a conversation with a certain glenn youngkin. >> glenn youngkin is a perfectly reasonable politician who won against a person who had been governor already. he's also made parental rights one of his big messages. you can see it is starting to backfire a little bit ron desantis. so what has youngkin done for the economy? i just don't see on a charisma level that he can go anywhere close to trump. tom: the other side, what should be the do list for the president and the people surrounding the president? what i see is silence. what should they be doing? >> president biden emphasizing

that the election is 14 months away, that is a long time. that is pretty -- george bush was pretty popular in 1991 and lost in 1992 for all sorts of reasons. he has got to engage trump. he has got to remind people what life is like under trump and the chaos that ensued. he has got to appeal to those voters today, now. just hammer home and engage not ignore. i don't think you win when somebody else is out there getting a lot of press. you've got to go out there. lisa: do you think the kamala harris has solidified herself enough to really gain the traction in perhaps a younger way that many people said was necessary to give biden's campaign a little bit more traction? >> it's a very complicated situation with harris. african -- african-american voters are loyal and a huge majority vote for the democratic party. they are also key in places like georgia and wisconsin in

pennsylvania and michigan twin the presidency for the democratic party, so i can't see biden making a change unless it is to another african-american politician like rafael warnock to treat the senate for a guarantee victory in georgia and then find something else for harris to do. remember, the house has to approve another vice president. she can't step down because kevin mccarthy won't approve another vice president. it gets very complicated in an age where typical rules don't apply. jonathan: thank you, political coverage continuing going into that first debate. some interesting snippets from over the weekend, tom, did they go after the ghost on the debate stage on wednesday? gop primary voters, who's the president's opponents focus more on? make the case for themselves, 91%. make the case against trump, 9%.

that is a pretty big divide. tom: it's interesting as you go from beginning of all this into next year, how many primaries do we get in to where they shift from a very trump-dominant focus over to ok, we've got to get elected. lisa: how do you pivot from primary to the general? that has been a consideration when you got when the primary first. this is sort of the rub. trump said that he is going to be potentially interviewing with doug carlsen. we haven't really heard any confirmation that that is going to be the platform of choice. there is a question about whether fox news still has a contract with tucker carlsen to prohibit him from counter-programming. there are somebody really intriguing questions around that whole situation. jonathan: i'll watch the debate wednesday regardless of what the former president does. i'm more interested in new stuff

from the other candidates we haven't heard of. are we actually going to hear anything new from the former president? that's just my opinion on what i will be doing. tom: on both sides the aisle, people are starving for something new. >> the problem the other candidates have is they need to make some inroads with trump supporters who will be watching the former president. coming up next, policymakers continue to confuse investors worldwide. equity futures on the s&p 500. live from new york, this is bloomberg. tion refunds. their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your small business qualifies.

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♪ jonathan: cointreau day losing streak on the s&p 500. attempting to prevent it from becoming five. friday's session and the equity market, up by 0.4%. the nasdaq right now up by 0.6. the nasdaq on the month, we are down 6.7%. pretty brutal stuff from month of august. tom: i was tearing up this weekend watching him, but while i was doing that, i was looking at the drawdown. you are on the phone with me briefly. the answer is i'm sorry, with all the gloom that is out there, august drawdown from the peak,

down negative three. nasdaq negative seven. those are even corrections. jonathan: told me where the bond market would be and you said we would get to these kind of levels again. i'm with you. perhaps i would've expected more damage on the likes of the s&p 500. tom: i was thunderstruck. i looked at nvidia and it has basically pulled back. microsoft, apple, some of those names. what does nvidia do? jonathan: we will talk about that later, tom. two-year, 10 year, 30 year. some really interesting questions in the last week or so. if you've been at the beach, welcome back. the yield that we haven't seen for the best part of the decade. going all the way back to 2007.

lisa: and we've been talking about what is driving this at a time when we are going to have a couple auctions this week ahead of jackson hole. should be interesting. here's the question. is this being driven by higher inflation expectations, or by a higher premium expectation, that basically people are going to demand more to lend to the united states because of the deficit, and the lack of fiscal restraint that we seen even during a time that has been strong? jonathan: let's turn to foreign exchange to wrap it up for you. 108 .94, that currency back positive by 0.2%. counting down to jerome powell's speech at jackson hole friday morning. jason furman writing in the wall street journal in the short run, the fed should be able to stabilize inflation below 3%. if it can achieve this goal, then it should shift to a higher

target range for inflation when it updates its overall strategy around 2025. this is so controversial, so divisive whenever this topic comes up. i remember when this was floated a couple of months ago, he asked a pre-simple question. if we all got around a table today and said one of the appropriate inflation target, when we come up with 2% or 3%? tom: a symposium in dallas years ago, they actually agreed that they were sub 2%. then you engaged debate with a lot of mumbo-jumbo on our stuff. i would listen to experts. richard clarida owns the high ground on this. and even the former vice chairman migrates away from 2%. as a former official he is a little vague, but is it 2.7, 3.2? that is the debate.

jonathan: it was a question as to whether they would tolerate two point-something. the difficulty getting down to two flat is going to be pretty hard, pretty tough. lisa: another way of looking at this, we don't need to see the pain that was talked about during the speech a year ago where we have to experience a lot of pain to get inflation under control. what if they don't have to force unemployment rate stuff, force people to essentially lose their jobs in order to get something price stability if they sacrifice what that level of price stability is? that is going to be the philosophical debate everyone is going to be looking at. jonathan: if you start to get flaky on two, you start to wonder about the commitment at three. jonathan: you brought up jason at the beginning and this is the heart of the matter. it is almost like the analysis and equities anchored. you are going to hear a lot of anchors aweigh at jackson hole.

wherever you land, if you become unanchored from the core religion, the core belief, everything changes. jonathan: that speech on friday, 20,000 different ways over the next five days or so. that is when chinese banks discuss a key interest rate, making a smaller than expected cut to another rate. these price moods over the last day or so, over the last week just highlighting balancing act facing beijing as it looks attractive with borrowing. things getting harder and harder for the policy-making and china. tom: who is the policymaker, let me know. give me a brief when you figure out who the policymaker is. this is monetary theory dovetailed against strategic economic reality in a totalitarian regime. period, end of discussion. there is some great work on this in the last week, with a strong

work. i would lead to adam hose and, in his article in foreign affairs magazine is your first read on this train wreck. jonathan: kicking off our coverage with adam on friday. just to round things out for you this morning. if you are just tuning in, welcome. former president donald trump announcing he will skip the republican primary debate starting wednesday in milwaukee. trump pointed to his wide lead as justification for the decision after that blowout poll over the weekend. tom: you guys are more focused on this than i am. they will be some fanfare to it. what i their, 42 people on stage? jonathan: it's a deep field. tom: i just wanted to be like england, just a six week dash. i just can't get into this. i'm sorry. jonathan: but you will get into it. tom: yeah, i don't have a choice.

jonathan: guaranteed to talk about it at jackson hole. tom: we are really looking forward to this. a great lineup as well. off of lisa last year, i think off of what lisa did last year, all of that reaching in, i'm sorry, i'm looking up western river anglers which is a fishing, they take a fishing thing out. i'm going to go truck fishing. jonathan: you're going fishing? tom: i'm going to go out there and look for sturgeon. jonathan: looking forward to that. tom: joining us right now on china, the definitive conversation, william lee joins us with all of his work at the international monetary fund. anybody that watches surveillance knows he is --. i want you to pull back the curtain right now particularly on the three cities. what is the level of panic in beijing?

>> it is huge. when you were asking who is the policymaker in china, when you talk about it, there is only one policymaker, that is xi jinping. when you have one policymaker interested in not only preserving the economy but also preserving power, there is only one set of solutions, which is we've got to get the private sector under control. unfortunately that is their achilles' heel because right now to restore the chinese economy, to get unemployment down, to get growth going, you need the private sector. but who in the private sector is going to trust the policies of the ccp? tom: what is the importance of the dry up from america, from the western world? with all the great work i've seen, the number one thing i'm focused on is that we've lost our trust with investment in china. how important is that? >> that is absolutely critical. the discussion among our sponsors who are some of the biggest investors in the world,

they are all asking, how do we do due diligence and china where the information is controlled by the policymaker? private sources they normally relied on are now restricted. when you restrict information flow and direct, prosperity themes that essentially say to people you can be successful, but not too successful, those are the kinds of vulnerabilities and risks that western investors are watching and they are asking the question, do we really need to go to china? lisa: which raises the question, is it xi jinping at his party not stimulating the economy is much as people expected because they don't on or because they can't? >> i've come on so many times talking about the fiscal policy tools they have. the fiscal space they have, the degree to which they can increase fiscal spending. it depends a lot on the health of the local government. local governments are now so

indented, they can't sell more land to finance more infrastructure spending. right now, i think they are pretty constrained. it is very hard for the central bank to be dropping interest rates. we have these 5, 10 basis point moves. this is surely a situation where monetary policy is on a string. we are asking them to go borrow money at even five or 10 basis points. lisa: when i talk with different investors, some of them save maybe this is a positive for the rest of the economy globally because this will import disinflation to the rest of the world. do you by the sideman? >> xi jinping's plan is to make china into a domestic economy with production. that means low value production is moving out to the rest of asia and other locations.

that is where i think capital flows are helping the rest of the world. in terms of the chinese economy, it is going to be a real hat trick for innovation in the direction of these high-tech and high-value-added industries and to pull about successfully right now with such low credibility. tom: so what is the to do list for beijing? do they use the formulas proven beyond now? do they stay with mao? what is almost the math on a day-to-day basis? what do you expect to see? >> if they put in a social safety net, that would immediately cut out the need for -- tom: i'm going to interrupt you there. we've looked for a safety social net since you and i were in our youth. there is no social safety net, there is no dominant consumer.

it is the same old for beijing. today stay with it, or can they do something? >> if they don't change the script, you are going to have these rising inequalities generate social unrest, and that of the last thing they are able to tolerate. i suggested the social safety net for singapore and two years later, they built one in. their real life that is either social safety net that allows people to feel safe and they don't need to save as much for themselves, or you get social unrest. and if those of the trade-offs, i think xi jinping will go toward safety nets. jonathan: phil, thank you, sir. if we played the game at the start of the year, how many people would have sent down 11% year to date? 25 points about performance s&p 500. tom: the china reopening a sale.

this is where the currency comes in, showing it on tv. no one thought we would get that -- and i'm going to use this word carefully -- devaluation. not that you have to tell me i'm wrong, but this is a devaluation of the currency. the sweat and panic i see, that accelerates out 7.40. the answer is that is the single statistic to watch. jonathan: the under-performance from china and the upside to prices we've seen from the united states going into jackson hole later this week. it tom: is going to get even further with nvidia later this week. the technological superiority right now.

the year-end price target at the start of the year, it was all soft landing hopes and dreams. the fed has got to do more. yields right now higher in the bond market. much more on fixed income in the next hour. a lineup of blackrock 7:30 eastern time. equities positive here by 0.4%. yields are up, treasuries are down. good morning.

>> if you continue to see that movement higher in yields, of course you have to look at tech stocks that traded up just a couple of years ago and that is why they are underperforming.

not because they all of a sudden became worse companies, but because they went up a lot, got beer he expensive and now in the context of higher yields, you can't the justify that expense of this. jonathan: continued this morning. let's talk about that. around about half of 1%. the move continues in the bond market, or should i say, resumes. think about the level last october. we are at those levels again in the bond market. 10 year on a closing basis, the highest levels we've seen since 2007. we are talking about decade highs on a 30 year right now. this with the stuff of dreams in the depths of the pandemic when all you could pick up with something like 60-ish basis points. now you can get 4.30.

do you want some of that? tom: i'm going to go from the nominal yield to the investable real yield and all of a sudden there's a substantial real yield where you go wait, how does this work? for example, pick a number. 7% mortgage rate, whatever you believe the inflation rate is. let's say 5%. you've got to pay out a 7% mortgage with 5% inflation. the math doesn't work. jonathan: 70 basis points. nobody that came on with us at that point was looking out tour three years and suggesting we would be anywhere near where we are right now. lisa: maybe it is just the people who i speak to, the people who did suggest rates would go substantially higher recalling for some sort of financial meltdown in response because everything has been hinged off this rate that would

cause absolute havoc, and here we are, stocks grinding higher and higher, people looking out that soft landing and gaming out that the fed is going to win this. jonathan: is the fed going to win this? lisa: no, but they will win the war on achieving some sort of stabilization to a new high that doesn't destroy the rest of the economy. there was a recent poll done that basically confirmed 70% of respondents that the fed would achieve a soft landing. 70%. that is turning on its head of what i would have thought a year ago. jonathan: hopes and dreams. tom: the hopes and dreams are the august 31 pce number. maybe that will be in the speech. jonathan: dancing around what they will and won't do by september when you've got more information still to come.

tom: muhammad al aira, the interns left, but he is coming on later this week. what is not in there is data dependency. that is the excuse chairman powell has. jonathan: we are data-dependent. tom: we are also in turn-dependent, and look where that got us. what i really want to do is once and for all dive into what this thing, nvidia is. mandeep singh, we really haven't done this exercise. nvidia rtx ant -- deliver the performance to help professional creators, developers and students worldwide have creative workflows and build, operate and connect metaverse applications. butch cassidy and the sundance kid. who are these guys? >> they have a history of almost

25 years in the graphics domain where they made the chips that enabled all the games and gradually, they branch out into first crypto and now generated ai. and what they've been really good at is catching the new trend early on. i mean, this space isn't new. intel has been around. but what nvidia has shown time and again is they can catch a new trend early on and they can actually have performing chips in that space. tom: when they report this week are they going to stay financial analysis green? i see popping 70% gross margins, down 40% net income margin. this is like a cartel. >> it is. even before ai, they had was operating margin. what is really unique is they've got the pricing power. no one else in this space has been able to show that kind of pricing power that nvidia has

shown, so that just goes to show they've got some real ip when it comes to trading these large models, which is why hyper-scalars, they are willing to pay nvidia the dollars comes to getting the inventory for the chips. lisa: which is the reason people are trained on wednesday and the fact they are going to report earnings. more interesting to me is less the earnings and more the market response. does the market need to see the dollars coming in the door to justify the hopes and dreams baked into the valuation? >> absolutely. last quarter they raise their guidance by almost $4 billion. when you blow out the numbers like this, the stock is obviously trading 25 times sales. you have to ask yourself, even if there is guidance this time around, can they raise it by 40%, 50% the way they did last time? lisa: there's a question also around whether the halo of this godliness of ai which seems to

be going through the entire tech sphere in the u.s. equity market, whether that is going to percolate out the ipo. i woke up this morning and i was reading about and i didn't totally understand that there was this offshoot that is not important. on a broader scale, it signifies how much demand there is for the hopes and dreams of ai. what are you looking for that could really bleed into the sentiment around nvidia? >> when it comes to generative ai, everyone is saying what is my non-disgraced earnings spending when it comes to building the data centers? it used to be cloud, now it is more and more ai. every discussion is about do we have exposure to ai, and even though the roi is an established yet, every company right now wants to invest in ai and makes the case of the next 12 months. tom: i clicked on the word

cloud, i'm going deep into this. unleash the power of accelerated computing in the cloud. is nvidia microsoft's friend or foe? are they alphabet's friend or foe? are the elon musk's friend or foe? >> when it comes to microsoft, microsoft right now wants to be friends with everyone. that has been the approach that has worked really well for them over the last five years. i think when it comes to amazon and google, they had their strategy. they want to sell more of their own chips. so it will vary. tesla, tesla has their own gpus. they started off with nvidia and then gradually pivoted to their own. clearly, hyper-scalars are a threat to nvidia. but what nvidia has done well is they are always -- tom: what in god's name is a hyper-scalars? >> hyper-scalers have huge data

center footprints and they are really getting that to all the small and midsized, any businesses whose core competency is not to deploy their own data centers. jonathan: i remember a company who would arm holdings used to be listed in london. wonderful management team. is that coming back to market now, and that what price? >> yes, we are expecting the f1 to be filed today and then they will do a road show. from what we've learned, they will probably price the ip about $70 billion. they are looking to have 10% float here. the revenue trailing 12 month revenue was around $2.5 billion. so clearly, the valuation is rich in this case for a new ipo, and we haven't tested that market lately. it will be interesting. jonathan: what does softbank pay for that? >> they paid $32 billion. nvidia tried to buy that company had $40 billion.

that got terminated because of antitrust concerns. but $30 billion is still a stretch. jonathan: it's good to see you. mandeep singh of bloomberg intelligence going into nvidia earnings. wednesday. jordan emanuel is going to catch up with us. chairman powell on friday. and of course, the earnings from nvidia on wednesday after a gain of close to 200%. tom: that's got to be important just because of that but also after what we've seen from the others in the drawdown in microsoft and apple. it is going to be a reaffirmation of how tech is doing getting up to the end of the quarter. jonathan: the s&p 500 up by 0.4%. the band is back together. tk is back in the hot seat. tom: it's good. i thought brendan was beautiful.

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>> this entire economic cycle like it was on fast-forward. thanks so far, all this talk about the recession has not panned out. >> vi expecting that they will stay on hold month. >> this bloomberg surveillance. jonathan: my from new york city

this morning, good morning. what is that about, wishing some real way in america? tom: people who live on the continent, they are planning the next holiday. all we do in america is work. jonathan: i would stretch summary right through september. lisa: what is this generalization? i like vacation. jonathan: it is good to have tom back with us. equity futures are positive. yields are a little bit higher. tom: that is a huge debate.

it is a raging debate that we are at these levels. i looked at the total return bond fund. we five standard deviations down in price. i do not think people realize how downtrend be our. jonathan: growth is still running above trend. inflation starts say sorry again , which is what they want to avoid. tom: it is other times in central-bank history where we are going to raise or lower rate.

that sits in the mind of everyone reading those papers. lisa: he could look back at transitory and say we are entering some shifts. let the data come in. just talk about a point that matters to no one and come out with some conviction on a. you have done nothing to really change anything on the fed. tom: the papers are really important. we do not know what they are. they keep them hermetically sealed.

of the papers, everyone will have their favorite papers but what i will focus on is the debate. jonathan: a quick snapshot of the market. lisa, just short at 62. lisa: key question will be how they bring indiana to their side when it could -- when it comes to creating economic and strategic rival. nvidia earnings after the bell. a key question around whether anybody will be watching.

jay powell will be speaking. will there be some sort of cohesion or are you going to start to hear a difference between these policymakers in terms of their hawkishness or not? tom: i do not think they are going to talk monetary theory. jonathan: they have no idea what to do beyond next month. a great guest in the studio with us. let's start here. if you are coming back from the beach and you had to pick one right now, which should he be focused on?

>> all of them matter. people taking risk off. this is not an in of bull market run. normal and seasonal. what is really important is less what we will hear and overnight, we have some moves from china and more price action. it is frankly an open question. tom: ed has been out front. how do you dovetail that?

>> continues to think by part of that is we will have a mild downturn early next year. there are three lessons from the 90's. we think that is real. there is a time where they pull back. you are able to make money when yields were five and 6%. this is going to happen in the next four months. lisa: we have seen this before and it is fine.

is there any silver lining creating more disinflation? or do not buy that? >> chair powell would love to be able to think that but i do not think he will be able to discuss that. if you look back at the episodes , they had a volatility inducing effect, very temporary. it is very much its own engine. jonathan: do you think that divergence can continue? >> there is a point to which it cannot. what is so important is, are we going to have a whatever it takes moment or, if we have with dr. thieves, be that phrase,

pushing on a spring. tom: 95 shot. can you call a second leg of the bull market here? >> we think it lies ahead. this is another lesson of the 90's. it did not negate the idea of a recession. it postponed it. that is part of the narrative. business cycles are not.

lisa: some areas fell out of bed. are you looking for there to be similar carnage after growing up in an era of zero rate? >> it will have to refinance. it will be under stress. an environment where rates are high, gdp now is an unfathomable number. it looks interesting to us. the fact that interest rates are over 5% is very good. tom: he has no clients that over 70 years old, but how do you

explain to people who have never enjoyed high interest rate a legitimate risk-free rate? >> what is fascinating about it, if you remember, for much of the world, there was an angst every time the market started rallying and there was a feeling that it was going to run away because he could not make anything on your cash. this time, people are saying, i'm good. i'm still getting it on my cash. it is what feeds the longevity of april market. jonathan: the demo goes beyond, doesn't it? what is he talking about? >> given the work we have done, we have it all covered.

jonathan: the dial 8% through august. tom: i'm saieh. i'm watching what the adults are doing. we talk about the banks. these cre people are act. there is no task force. how do we get the japanese to buy a building or whatever? jonathan: welcome into the program. very quickly, what is that about?

the banks are actually selling off. >> our base case is somewhere in 2024. jonathan, -- jonathan: -- tom: everything else is fine. i am watching the action of these people. lisa: there is an issue where people do not want loans. deals are not getting done because yields are too high.

all those mortgage brokers, give a thought to them. tom: over the weekend, there was this percolation. says to? whatever. software. jonathan: we will have a conversation about fixed income and credit, and the refinancing that never was. how painful it might be. all of that good stuff on a monday morning. this is bloomberg. ♪ 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.

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>> do you think donald trump trump should drop out of the race? >> i think so, but that is just an opinion. but he will lose to joe biden, if you look at the current polls. jonathan: live from new york city this morning as we kick off a brand-new trading week with a little bit of a lift. up by 0.4%. just publishing moments ago,

scaling of exposure even further. when you get paid lots of money, you have to find new ways. that is if you paid a lot. looking ahead to chairman powell. a lot of worries, no doubt about china, somewhere in between. tom: he is the real deal. he said, lose some weight. jonathan: he speaks his mind. tom: there is a lot of that going on here. you guys are way up to speed.

this is the depth of the pole. it is extraordinary. christ is the widest that we have seen yet. his hold on the republican party comes and of a crucial week for the gdp and the candidate. the former president does not plan to attend. we should know that his former vp said over the weekend that he knows the former president very well and you do not know until the very end. there is this little bit of potential that he will show up. you have to think, why should i?

i am dominating in these polls. governor desantis is now at 16%. his numbers are falling and everyone else is in single digits. but it is showing that there still is a little bit of wiggle room for others to potentially shine. it is still early on, but the former president is an incumbent , so it is different than anything we have seen. lisa: ron desantis losing a lot of his question around the machine. is there discussion about new entrants into the race?

>> when you see the favorability of this individual, he has really good memories. high numbers on favorability and numbers on individuals who do not think favorably of him. he has this potential and people want to hear more about him. i would go more so about what is being spoken about of the individuals not currently in the race. governor youngkin -- both of these individuals closed this conservative gathering in atlanta. they are not running, but the fact of the matter is this is someone who has stood up against the former president when it comes to integrity and the election.

a lot of donors and republicans are in his ear. the most important one is rupert murdoch. tom: this poll is just in. it says that the yankees are in the last place. let's move over to the other side. what is the plan? camp david summit's. wonderful. what is the plan? >> biden will be visiting hawaii. this is one of his biggest domestic policy issues or controversies because he was silent for a number of days and was asked about it when he was vacationing on the beach. many people view biden as a compassionate leader, so he has

a moment today to potentially earn that warmth and empathy. the death toll among children is horrific. there is this controversy because he remained silent for what many say was too long. tom: does he have a plan in ohio, atlanta and georgia? >> this is a great question. what you have seen in past is that you do start to see independence dwindle in the swing states. what the is doing right now is they are going around the country.

they have been in arizona and they are talking about the winds that they have had under the last two years and they are trying to sell that they would be good for the economy because it is still top issue for american voters. they want to hear candidates talk about it. obviously, this will all ramp-up next year. lisa: when you dig into the granularity, what is the economic issue that there is any cohesion on both side or is simply bringing cohesion lower. what is the driving force in the election? >> biden is going to be the nominee and he is the current

president. they are all going to bash the biden administration when they talk about the economy and the number one issue has been inflation. still, americans are paying much more groceries and for rent and they were before biden came in. when it comes to the fed, we have seen very different views. there are those who want to get rid of jay powell, if he is elected. there are others who do not want to pinpoint specific decisions just yet and then there are others like chris christie who do not think they have done anything wrong. these issues will be front and center.

jonathan: it is the cheat card going into wednesday. they seem to be -- tom: i agree. you put that first because it is a bipartisan effort. it is about turnout, and i cannot say it enough. it is about turnout. tom: i'm looking. did you know there was formula racing this weekend? jonathan: very cool. ♪

jonathan: looking to change that this morning. welcome to all of the action. on the nasdaq, up. the nasdaq at 100. close to 7% so far this month. if we shut it all down for the month of august, worst month of the year. tom: there was a lot of work on correction. i do it by standard deviation. the answer is we are supposed to

do this. this is normal. you do not go up every week with your apple or whatever. it's jonathan: could this move in the bond market continue? the 10 year yield climbing for four consecutive months. higher by 30 basis points. up another four. tom: if you have a chart and you take the y axis, that is all i'm going to say. if it is still curvy, everything , including the renminbi, the german paper, everything right now.

lisa: reaching levels that we have not seen. to tom's point, that is notable. we would have gotten some rigor traces. but not anymore. what if they stay here? so what? we have done this before. this is normal. jonathan: we will talk about changing some of these prices in just a moment. in and around this morning. positive by one third of 1%. doubly down in the face of subpar returns. among the bulls that are still bullish, every dip in bond prices. they have been pretty -- plenty

of dips. tom: there are five or six of them, the bond market is all in and it has been priced down and yield up. we are way off the trend that was talked about for years. a standard deviation move. jonathan: two years ago, these were the yields of dreams. if you sent this two years ago, we would be here. no one would have believed you. now they are here. tom: it was stability and it was

forever yield lower. this is going well. the great moderation is over and that is the backdrop. jonathan causing the longest losing streak since 2021. surprising banks. lisa, where is that stimulus that so many people are waiting for? lisa: raising the question on willing or unable? we heard them say they are pushing on the strain. they cannot stimulate without causing pain and further contagion.

tom: we go to the article in the new edition of foreign affairs that the dictatorship envision is -- envisions facing. way out front. jonathan: california is bracing for flooding. life-threatening and catastrophic flooding over 550 flights canceled over the weekend. we are talking about a years worth. tom: it does go into the

aberrations of the moment, but three tropical storms in the atlantic is highly unusual. only three times since bogart was in that place, but the answer is about how unusual it is. the middle child is out on strike lines. she is striking come out picketing. i do not know what for. she has a degree. she never watches. this is too early for her. a macro credit research. amanda, thank you so much.

fixed coupon dynamics. it floods around, given the movement and we have crv, commercial real estate. how unstable or potentially unstable is the fixed income world right now? >> i think they are all impacted by this environment that we are expecting. i think the key difference between what you highlighted is that for the fixed income, fixed rate part of the market, they are getting impacted on a different timeline. that floating rate part of the market -- you are seeing an uptick in defaults. this is something that has been happening for the past few months, but the back -- the magnitude outpaces the -- it is

the widest margin. we see scope for that to continue, even though it is unusual. we are expecting this higher cost environment. the fixed rate investment-grade universe is much that are positioned to manage through that higher cost environment because they have more optionality in terms of refinancing. in this instance, having the ability to replay -- replace maturities will be helpful. nothing in the news flow over the last few weeks has changed our view that we are in the early stages of the distress cycle. the news flow has reinforced that view. it is a combination.

jonathan: this is happening even with the federal reserve. walk us through it. why spread this type? >> two things. as it relates to refinancing, the maturity that we know, corporate's will want to address that beforehand so the debt does not become current. we still have some time. it was not unusual during that period of work -- after covid where they were pre-funding four years in advance. we have some time. this is a conversation we have been having more with clients.

they are quite tight, but for yield based values, the elevated risk free rate, which has intensified recently is giving them some cushion to deploy capital. it is still relatively attractive. ironically, even though spreads are quite snug, the overall value provided by corporate credit has insulated that to some degree. lisa: private credit is the new high-heeled. we are looking at an entire spectrum of lending below the covers that is taking care of some of the financial pain that we might be seeing. >> they have had a lot more overlap.

there has been this rising star dynamic that has intensified. it moves a little bit more seamlessly between the markets. the high-yield market has shown its ability to absorb those capital structures. there have been meaningful shifting. changes in maturity and duration. those are all probably contributing to this tight spread and environment. this is specifically an environment like this where you can introduce granularity and selectivity, but to your point, the asset class is that it relatively posts phenomenon. it makes things that we have looked at in prior cycles,

perhaps less directionally correlated into the broader state of the market because you now have this asset class allowing them to diversify their funding away from the banking channel that was not in place to as much of a degree. when you think about automatically leading to a recession, that might not be the case this time around because you have another source of funding. if you are in an environment where you need to be granular about the company's ability to absorb higher costs and manage through a higher cost environment, you want to be more selective. they allow you to do that in a higher cost of capital environment. jonathan: the s&p 500 -- we will catch up with claudia. a former fed economist later this week.

can we squeeze one in? do you have one? >> over time, the financial sector does look attractive. in addition to some of the cyclical concerns, it might be regulation and refinancing needs. it will be a pretty attractive place to look. tom: it is a lot more than that. it is about how they adapt and adjust to interest rates. it is banks back to the 90's. jonathan: yields are higher and we talk about that correlating with underperformance in the market. demand for loans. a massive feature. not just stateside. making the argument for china.

it is not there. lisa: to amanda's point, the degree that they borrow, they are going to channels outside of the banks, whether it is the public debt markets. it is creating a problem for the banks. where they going to get that extra yield? jonathan: need to do this on a weekly basis. i do not know if you or blackrock went to do that. they are on fixed income. this is bloomberg. ♪

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have to lower interest rates. the body yield will keep going up. they have to to calm the market down. some comments on what he thinks the market can do. goldman acquired a california-based investment advisor around $750 million. united capital. an investment advisory business. this is what they are reporting this morning. they are exploring the sale of that business. the wall street firm said it was evaluating a -- alternatives which encompasses goldman's

advisory operations and supervises. stocks are up a little bit. tom: this is not about markets. headlines are coming out and are a little bit confusing. is discrete to parts of their wealth management business. not the drama of saying they are getting out of consumer business. jonathan: i do not think we can make the same argument for china at the moment. we are around the table with plenty to say, but this is not what we expected to see.

tom: everything has a subtlety to it. what does that signal to you? >> it is messy. i'm looking at brazil and chile. the growth miracle is over. no doubt about it. trying to get consumption back online, it will be a monetary policy event that will have to do it. hang seng down seven straight days. they were down overnight. jonathan: for those who gave them the benefit of the doubt, they have been rewarded repeatedly. do you think they have control over what is developing?

>> unfortunately, i think he has his finger firmly on the button but in terms of getting foreigners to invest in china, it is not happening. indonesia, saudi arabia, we are talking about new blocks, but there are a lot of risks. china and india are at a little bit of a divide for a number of different reasons, but they think this will be more of a talking point for china. we will see if that materializes and if good things come out of it. certainly, i do not think it is anything to give us great cause for concern. really good.

i have been reading about this all night. we are talking about all-time highs. the market is giving it to you. jonathan: not so long ago, we would be talking about cutting expectations off the back of that. is it different? >> we have been looking at driver returns this year. take a look at growth differentials. they are converging and the u.s. is running about 4% gdp rate. what that means with the growth divergence is -- they are not going to step in and intervene

until the dollar hits 150. this is a dollar bull story. they are positive to the extent that they are now 90 might get this kind of u.s. dollar strength coming off of the back of that. it is a no-brainer. lisa: is china's lost -- loss a gain for others when it comes to economic momentum? >> it is so difficult to tell. you are going to have winners and losers -- and losers. is anyone's decision. it comes down to currency. i forget who was on earlier

talking about reaction. it is so important to look at that. how are markets are reacting when china tries to stimulate? it is the price reaction that matters the most. tom: we are going to london with a great effort there. they have a gloom out there, five years of global gdp. geo fragmentation. i do not hear that from you. are you more optimistic about em growth than the consensus? >> i think you are spot on. all these countries -- think

about who is in the u.s. today. that country is in utter disarray. a bit of a right-winger is leading in the polls, their whole balance sheet or a great portion of it. they are vested in the success of that story. some of the policies he is talking about. he is outward about that and has put a lot of the nations -- it is because they are leftists. he sides with the bolsonaro and trump regime. he has been talking about blowing up the central bank completely. but these are some extreme

things to be saying when the finance minister is in the u.s. today, appealing for more funds. we had an election and guatemala overnight. there is an election that is very important and these are issuers. tom: you can figure this out later, but you need to come back and talk about dollarization. the other thing is, you have to explain college football. it is not, all the different leagues. >> that was wonderful. jonathan: we asked maria to join us and she had to travel. she did not want to go there. tom: was there enough love from

the prime minister? jonathan: i think they are going to be really high. very cool. very happy. when cheney resigned -- it can be a good thing as well. lisa: a little too much love. not so much. tom: are they as good as the premier league? i'm not sure they are. i'm sitting there watching 50 yard line. i like waving at mohammed.

jonathan: good to see you. ♪

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>> the first quarter is going to stay resilient. >> i'm looking for the market to move sideways or continue with the pullback.

>> was this another soft landing or a false signal? >> i would argue the legs are longer and more variable. >> we're going to see some of this comeback into the numbers. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, on radio and television on monday before wyoming and jackson hole, leaving on a jet plane on wednesday, at we go, a different jackson hole than what we said -- what we had last year. jonathan: so different, what about inflation and growth? andrew at citigroup with some questions. the reality of continued upside risk that jackson hole on friday. he goes on to say the answer, it may determine if there selloff in long-term bonds continue or fade, that resumes.

tom: it resumes this morning. while it resumes this morning i'm looking at nasdaq up .7%, which gets might attention. but there is a lot of trauma in the last hour. i'm going to mention data dependency. i'm waiting for august 31, september 13, can we all move on? jonathan: i mean treasury, yields up by four basis points, people would love it if they could buy there and move on. the question is, can they? lisa: especially if they look past the moment, will there be a dovish message that could only encourage the selloff on the long end of the curve? yields will go higher, they are going to be more patient, that means longer-term inflation can stay higher for longer. tom: damien from blackrock said that real yield analysis is tangible. the mass -- the last number of

days, the inflation-adjusted yield is speaking volumes. how is that interpreted, not so much by the academics at jackson hole, but the phd's around the table? jonathan: is that going to stop growth? it has been tremendous relative to expectations. bank of america called on friday a scorcher. price action, equity up by 0.5% on the s&p 500. four days without gains, maybe we get some today. and the bond market, yields higher by four basis points. tom: and i'm not at a 20 the experience met 12, 13, 14. johnson: it speaks to correction, what you said an hour ago.

tom: he dovetailed his work. it wasn't too big, banks, but he said get ready for another leg up. jonathan: who wants to by the weakness? other people, mike wilson, morgan stanley says this will continue. lisa: it is toxic but slightly commit gives you a bad stomach ache and then you feel fine and ever but he keeps going. that is what some people are banking on. tom: the euro and the yen, right now, to help us out, drink market strategy and? global investments, looking at the allocation of portfolios, vittorio fernandez. is it a time to reallocate, what is the nuance across what to do h a marginal 5% of the portfolio? >> i think if you are

overweight, some of the names that have been doing so well that have been over but -- overbought, you should be reallocating, trimming, going into something different. the approach we've had with our clients as we have been much more conservative in our approach, assuming we would see the equity market pullback. we were talking a seven to 10 percent correction, down around 5% now. having the balanced portfolio, some value names, cyclical names, that is where you should have your portfolio positions now. if you are not there, it is time to reallocate. tom: how inpatient are your clients who ask why don't i own more pick your tech name like nvidia -- what is the inpatient level? >> we had a lot last quarter when the big run-up was happening. we had to explain what we saw in technicals, where valuations were, they were so stretch.

we have seen valuations come back on the mega cap, the magnificent seven, 27 times now. it is coming back. you have exposure but you need to have exposure other places where valuations make more sense. i think our clients understand where we are coming from. lisa: do you believe this is a pause ahead of a rally or a recovering trade? yields are higher, but growth is coming in strong. >> it is a double-edged sword. you have these growth expectations, which is great. everyone wants that positive element in your economy and it helps wages go higher and the labor market. but what do those do? they are telling the fed they need to continue to tighten financial conditions. it is a very thin line you have to walk on these elements. we need powell,. if we want the equity market to

settle and yields to settle, and to continue to move higher for the equity markets, powell has to reaffirm what the dot plots were saying. it will be cuts in 2024. we were never fans of cuts in 2023. the market has come along to that positioning but the market wants to hear there will be cuts next year. if you reiterate that, think you will see the longer end of the curve can down, equities go a little higher and the growth story will continue. lisa: are you saying yields have to come down for the equity rally to resume? >> i think they have to stabilize. we can't continue to see this move higher. everyone wants to see a re-steepening of the curve but they want to see it with the lower end yields coming down, not the higher end moving up. i think we will need to see yields at least, down from where they are, or come lower on the

longer end to let people know that inflation is in check, the fed is going to cut rates next year. that is what the equity market wants to hear. tom: you are comfortably distant from five banks in new york city that basically have the wealth of the world at hand. from the distance of texas, what are the regional banks and the smaller sub regionals -- what are the banks we never talk about? victoria: there is concern here. you were talking about it, when you look at commercial real estate and how large a percentage those loans and other leverage loans are of their balance sheet. it is higher than when you look at larger banks. they are more at risk to commercial real estate in the elements that we are seeing in that sector of the market. i would be very cautious. the big banks, when you look at the balance sheets, they have

large cash positions and they are well-equipped to handle volatility in different sectors of the market. smaller banks are not in the same situation. i would be cautious and if you want to be in financials, i would focus on larger institutions. in lisa: are you going into energy when we have seen the prices increase despite the slowdown in china? some say it can't last. victoria: are asking a houston girl. lisa: i want to hear your reason. victoria: we need exposure to energy. we know there is concern about demands coming out of china but we also know that supply element of the equation is being held tightly. by the people producing it. i think you are going to continue to see prices move higher. you need some exposure. a name we have added to over the last few trading days, yes, you need some exposure. you don't have to be overweight

but i would make sure you have some in your pro folio. tom: -- portfolio. tom: there's a lot of suddenly going on right now. conservative want to buy growth. can you do that in this environment, can you do equity analysis giving how things are moving? the tory a: not only can you, but i think you need to. when you are looking at your portfolio you want the top down a macro approach. but you've got to look at fundamentals, technicals. that is telling you you can still go in and there is a place for dividend growth. we have strategy is built on dividend payers, global strategies, a huge component of our large-cap strategy are dividend payers. it provides a little buffer in a choppy market. if there is anything we think we will see, it is definitely a

choppy market, especially if the s&p goes below the 200 day moving average. i think there is a place for that in their portfolio. do your homework on those names. don't just buy one because it has a dividend. jonathan: when you have conversation with client to discuss this move, are they running toward or away from it? victoria: towards it. a lot of people are saying, why aren't we dumping all of our money in short-term bills and getting 5.25% and letting that happen? there is reinvestment risk and we want to move throughout the curve. but we have had a lot of clients put money into the fixed income markets with the belief that we are getting to the top end of where yields will be for this cycle and they will be able to benefit from that as yields could down. jonathan: i wonder how many people are feeling the same course. the tory fernandez at cross market, the 10-year at 4:30, the

three year at 4:43. tom: we move so far, so fast. five point 43%. what are market funds going to do? jonathan: how many people want to go out further on the curve to lock this and for longer? tom: when was the last time we talked about three or five year cds? the answer is it is convex. every thing we move out on a three-month t-bill, people are sitting at home or in their office, going what we do? jonathan: a lift on the s&p 500, up by 0.5%. the conversation 18 minutes from now, with former fed economist claudia, 8:30 eastern.

a great preview. we are expecting a fantastic conversation. tom: this begins our ramp up to jackson hole. we really don't know the attendance yet. kansas city keeps it under fold. but when we are starting wednesday late to really book that solid, we are starting out strong with claudia and the rule who is looking at the recession granularity and that is something chairman powell is focus on. lisa: and the cost of inflation at 3% versus the cost of higher unappointed that could have long legs in the economy. this is a theoretical question. is inflation not that punitive for the masses, including everybody who lives in the country? and at what point does there need to be a higher on them limit rate to bring that down and control it? this is an uncomfortable conversation. nobody wants these things, high

inflation or not implement. tom: there was an essay in the financial times, one of the theories is the beverage curve. and larry summers at the washington post said the same thing. the theories that have been there, are they still at play? jonathan: they were there the last decade pre-pandemic. are we going back to the old ways? what are we returning to? cibc, foreign-exchange and rates, coming up shortly. from new york, good morning. ♪

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>> it is all about global economic growth and how much of the burden can the u.s. continue to shoulder? china is no a detractor to global growth. that is been the story of the year. the u.s. has continued to do well and is exhilarating even though the rest of the world has been sluggish. of jonathan: amazing to witness, bloomberg opinion. the focus still there, looking at the bond market. in spring off the back of the failure of svb, let's permit the board. good equities.

4.2 923 on the 10-year. the load of april, 3.2477. that is 100 basis points on the 10-year this morning. tom: you got the acceleration of the mortgage rate, the housing economy. that goes back to the owners equivalent. what is the gas on inflation? i would suggest it is a guess forward to sitting with 13. jonathan: i just picked up an email you sent me. you're referring to jackson hole as colombo. tom: you don't get to see the imagery of the three of us freezing last year at jackson hole. jonathan: i love it. tom: last year i took a

wonderful burberry jacket and it looked like colombo. were you on a tv show? jonathan: i used to love colombo. tom: i would like to thank our team for letting us be there all thursday. lisa is going up the meriwether lewis river with matt lloyd and -- there are rapids on the lewis river, the prettiest river. and you get trout the size of your leg. this is matthew lloyd and western anglers. lisa: i went canoeing once for an hour during the break and now i am exploring. tom: it goes on to jackson hole. tom: there are trout.

you hire them for like $2000 a day and you catch trout. jonathan: really cheap. tom: have you seen housing at jackson hole? jonathan: tens of millions. tom: we are going there but we understand the geography is not real, though the effort leads to important discussion. lagarde speaking as well. [indiscernible] tom: her people did not talk to my people. what we are doing on monday before jackson hole, blackrock, now you need a foreign-exchange brief from the right guy, german stretch is the cbrc. he has a shingle out in london and joins us this morning. i don't know which pair to go to

but i'm going to my pro pair, take out the dollar and i'm looking at the hero-yen, i have a 159 print. what does the foreign-exchange space out of the euro-yen say about the stability of the global system? >> in a broader context, i think it was interesting listening to mohammed earlier. i think it is the case that we are in an environment where the global growth trajectory is being sustained by the dollar. you may want to take the dollar out of the equation though i think it is difficult. but we are seeing concerns regarding the global recovery narrative and that will continue to be reflected in terms of the currencies remaining on some degree of confidence regarding

the chinese recovery story. that is not getting the impetus one would like, particularly with concepts are disappointing. tom: when i met jonathan ferro, we were in zurich having an overpriced lunch. swiss national bank acted. we are seeing the same thing with euro swissie. against a weaker euro, i get that. but are we at the point where it is not argentina but major developed systems as they intervene to adjust? >> we are certainly getting into extreme environment in many ways. we are seeing stress in terms of the marketplace. willoughby intervention to stem those moves? in terms of the yen, we are getting to extremes, not just in the context of the euro-yen but the dollar-yen as we get close to the intervention corridor

that was evidenced in q3 and q4. i think we are in a situation where we are seeing pressure on central banks and concepts on the evaluations and the impact they have in terms of competitiveness or inflation dynamic. in many instances, that is causing a consternation to see how high on the agenda those consumed desk concerns are. tom: 12 or 14 years ago, we are not weak or strong on the swiss franc like we were in 2015, pretty much on trend. but we are not two standard deviations out like the stresses in the swiss banking system. lisa: in europe there is a question of what the differential will look like. we're looking out to the speech by jay powell. christine lagarde reportedly going to speak at 1:00 p.m.

local time according to the ecb. who do you think has the harder message to give at friday's jackson hole symposium? >> if you are looking at those central bank governors, christine lagarde has a harder balancing act to fulfill. chair powell in the fed are geared toward data dependence and they are the reason around inflation and employment data, all the upcoming decisions. he can maintain this in terms of looking at the data and reacting accordingly. from the ecb perspective, there are concerns regarding the headwinds in terms of the manufactured sector and it reflects to what we are seeing in china and they service sector under increasing pressure. we will no doubt see that demonstrated in terms of my data on wednesday. and bottom lagarde will be speaking after the iphone. and it's also in terms of

downturns, the differentials among the governing council and the need for additional policy typing will become more strange. that is going to test charlie guards political credentials as well as monetary ones as we head toward the september ecb. jonathan: the ecb set to go first, in the middle of september. thank you, jeremy stretch of cibc. next on bloomberg tv, here's the lineup. wells fargo, alongside lisa of morgan stanley. we joined j.p. morgan asset management. all of that and more in about 30 minutes. tom: the heart of the matter, i see this in the triple leverage. it is been amazing to step into it. lisa shalett is a conversation i want to hear. i want understand how lisa

shalett and morgan stanley utilize 5.5% yield. jonathan: they will have to buy it may be further on the curve. the view from the and others. a flavor. you just go further out on the curve. i hear you. lisa: a little less risk. tom: yield immaturity works. jonathan: something like that. what are you talking about? [laughter]

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tom: on radio and television, it is an august monday and it is nuts. joining us later in the half hour, our retail america. if you look at atlanta gdp, walmart thumbs-up. lisa: and you hear from the people in the c-suite saying maybe sideways. people are not going to those people are going to struggle to pay their bills which raises the question, is this lowering the bar so they can jump across it later or is it really real in terms of pressure on the consumer? tom: somebody said in manhattan,

are there empty seats in the restaurants? lisa: it is true. people talk about how expensive it is getting. when two people are eating out so they clearly have the money to go. tom: the nasdaq up .7%. the monday lift. claudia joining us in a moment, an important discussion to prepare for jackson hole. she is -- he has been hermetically sealed, i, keep leading our coverage in jackson hole. i want to first explain to our audiences the important process that kansas invented. first, we don't know who is going to jackson hole yet. mike: we have an idea of some of the people. the fed has announced a jay powell will be speaking and the ecb has announced christine lagarde is and the same with ben from the bank of england and the bank of japan.

in general, the kansas city fed has a guest list until thursday. tom: it is not for ballplayers and the kansas city chiefs, it is not corporate ceos. the bank economists. mike: several years ago they shifted away from the market economists and bank economists and now it is largely federal reserve and other central bankers from around the world and academics who are presenting the papers. lisa: the question we were talking about earlier about allowing inflation to be 3% rather than 2%, is this really getting traction among the individual fed members? mike: not at this point. the idea is gathering pace from the outside. i know jason furman was writing about it and others will talk about it. the problem for the fed is if

they believe -- they believe if they said we are going to change our target to 3%, you could make a case that is logical but it is also important total markets we are docketing to 2% in the markets are going to overreact and that is the problem. you lose credibility because what happens if we have inflation again, do we change it higher? there is some question about whether jay powell will talk about this and of course in the kospi, the neutral of rates, and even if he brings it upcoming the markets are probably going to overreact. i would not expect a lot. but we make it discussion in the enclosed sessions of the conference. lisa: the title is structural shift in the global economy. people are looking at the potential for higher inflation, higher rate regime for longer.

of that seems to be what people are gleaning from the first inklings of what they will talk about in wyoming. dani: mike: desolate -- mike: one of the most interesting discussions in the next 12 or 14 months, what happens when we are putting these pandemic disruptions to economic data behind us. do we have a 3% economic -- inflation economy jericho do we have one that has higher neutral rates jericho how do you make policy under that situation. i think the topic is designed to give them the flexibility to talk about those things without specifically saying this is what any bank is going to do. tom: isn't that out here frankly for lagarde and even more so? they are just data dependent and

they have to stagger into september. isn't that the quickest exit? mike: it is interesting because the market only cares about eight to 8:30 p.m. and the 1:30 eastern. tom: we care. you, of the pioneer grill and they walk out. >> it is interesting, the question of protocol, who gets to walk with jay powell and what the press because the perp walk which drives the fed crazy. but for all four of the major central bankers, it will be data dependency. they are probably not going to go into detail about their plans. tom: were you on a cliff once on an icy august day? >> is legendary.

tom: we have got a great team to go through the day as well with the governor of the bank japan jackson hole. with our economic conversation, claudia some -- claudia has been a leader on economics in america, a former federal reserve economist. what would you like to hear inside the supersecret embargoed room michael mckee would be in? what academic thing would mean you lean forward and listen to the debate? claudia: a discussion of the neutral interest rate. and what is the case? are we continuing trends, not doing trends? there is usually a panel discussion in the mix and we don't learn anything about it. and we're almost -- it is going

to be the all-star panel. those are important. tom: the idea of the mystery of becoming anchored or unanchored. if this is the great fear, how close are we to an unanchored u.s. central bank policy? claudia: the unanchored they talk about is the inflation excitations. we have not seen any evidence of them d anchoring and things have gotten closer to normal in terms of expectations even in the near term. there is a question if those would move or the fundamentals of inflation would move, then we are in this conversation, is to percent the right number? all of this fits together. the neutral rate of interest, the inflation we should be targeting. i agree though, this is not going to be talked about.

i don't think they will hold it to the very end. lisa: there's a question about the lag effects where suddenly the bond yields -- causing the restriction the fed has been looking for. are they going to welcome the move we've seen particularly in 10-year and 30 year treasury yields? claudia: they're going to be amazed at what the markets to believe them. the -- they say basic of the same thing. they're going to keep it higher for longer. as much as markets want to know how long does it have to stay high to get inflation down, fed officials will let you know the answer. that is not anything in this, the structural global economy shifts. it is going to be data-dependent . you know could to see into the future to see what they are.

lisa: for months we were not on a high-yield environment. but everyone was saying we will revert back. there has a shift in tone but has been recent. you've seen financial conditions effective anymore material way. how much do you think that now you're going to see the restriction you've been waiting for that has not been coming through the market in the same material way? >> think the fed had to be heartened to see markets make a move on the long and. we're going to be in this for a while. i don't think the fed looks at this as some structural shift. i don't think the market should either necessarily. we might be in and continue to be in a higher interest rate environment. i think it is hard to make that case right now. you want to look out years. i think it will take years for us to get back down to the interest rates coming down, the

fed funds rate coming down. but i think this is going to be the topic of conversation for a couple of years. tom: what does the rule say now jericho the granularity of recession in america jericho claudia: we are not in a recession. and you don't need the rule to tell you the labor market is strong. it would be hard to have a recession cold it did not have the substantial weakening or the trend of weakening in the labor market. i have said a lot of times this economy is not the way economies have been in the past. we could have the fed forecast where the on employment rate would go up to four and then it hangs at four. that has never happened. that would be a great outcome. it is hard to imagine some of these things that have never been seen. lisa: that raises the question,

do you think we can get this good where on employment does not tire inflation does come down to 2%? is that realistic jericho -- realistic? claudia: i don't think it depends that much on the fed. interest rates are an investment. the consumers and visitors are less responsive to interest rates. they have more money in the bank than they had before. what has to happen is this disinflation coming from rebalancing the supply chain getting better, people going back to work, people's spending patterns getting more normal. we are going to see inflation coming down. the fed will back off if inflation comes down. but if the fed had to this alone, it is hard to see a path where we avoid a recession. tom: a great brief to get to jackson hole. claudia from michigan, and

former work with the federal reserve as well. we have eight ways to go to try to get to retail america. the news flow is its ordinary and i am going to go to what nobody expected, goldman sachs with a note that maybe the savings is open that the savings is over. lisa: people have been saying that for so long. you had a fed office say they are getting closer and closer still. but they are making more money. this is sort of the conundrum because you have seen consumers keep spending. tom: we will get retail perspective. it is a lift to the market. the standard up a good .4%. lisa: we think about winner people going to run out of money, discretionary spending started to pull back, but in the travel see her, you've seen a

little pullback. but you look at the projections, a number have,. it is expected to continue, a rolling ball of travel plans from one place to another. tom: they are there. again, it is the basic boom out there. forget about the recession. when do i get summer stagflation? lisa: i will give you the statistic. this is according to an industry group talking about travel. it is set to become a $15.5 trillion industry, accounting more than 11.6% of the global economy. tom: the percentage is important for new york city, particularly with the european summer we have seen. people are moving in different places as well.

lisa: the irony that germany used to be the leader in terms of economic growth. now they are on their back and the tourism of spain and greece, they have been much more powerful than the industrial arm of germany. tom: the issue here, we have seen it this morning, the many narratives out there. 1.5 915, how unusual. brent crude -- yields on the move of four basis points. the 10 year real yield, 1.97%. stay with us on radio and television, on our way to jackson hole. good morning.

>> lengthens of the that is bringing inflation down, administration has been on the spending path.

it will increase demand and when it is higher, -- lisa: that was the former fed governor talking at the spending we see filter to the economy. underpinned by the u.s. exceptionalism where a lot of the rest of the world is not having exactly the same story. i want to get to a number of different stocks this morning. we mentioned goldman sachs earlier people are thinking shares of .8% after a lot of questions about management as well as turmoil on the inner thanks. lead us, they're looking at capital there is is with the

question of questions is more for the tom: i look at the -- there was a diner downtown. it made mckenzie like strategic decisions. now things are open. they have to drag them into the modern age. and maybe these are experience were to not work out. lisa: is it the modern age of ai, wealth management?

people are reporting on goldman sachs. the other stock is palo alto networks, which friday, this is security. cybersecurity. everyone was freaking out about them on friday. their earnings to, after the bell a sleepy summer friday. everyone expected something terrible. they rejected stronger billings for the year, shares of almost 13% another ceo -- the ceo saying sorry, did not mean -- we did not mean to freak,. coming up on wednesday, shares ahead of the open, 7% so far this month alone. it could potentially have significant matters.

tom: speaking of bloomberg intelligence, retail, maybe luxury all the way down -- the leader joins us now. what you learn from walmart? it comes down to the walmart experiment. they either way. what did you learn from walmart that set you up for back-to-school in the here and? >> walmart posted great results and when you think about it, virtually every person in the united states shocks at walmart. they have a good read on where the consumer is at this point. ceiling is there continuing to seek value. household walmart's walmart is positioned an average of sharing

on spending more general merchandise, a higher category. tom: what is the duration when you study retail? are you looking at three years, five years, seven? what is the view of how far can go out to guess how they will do? >> in retail, because things switch so quickly, you have to look at something on the three year timeframe. there are lots of things that impact the consumer, whether internal, personal circumstances or external. a longer time horizon has the forecast. but usually it is billing cycles. what we are seeing is a retreat to value. as the consumer feels more confident, discretionary spending search to get lower. and retailers that are more on

the discretionary sector will have their day in limelight. lisa: someone from walmart last week said you are seeing this move in retail spending, but rising energy prices, resuming student loan repayments, higher borrowing costs and tightening the standards on the drawdowns next to savings meaning that household budgets are still under pressure. is this a true assessment of where their customers are or is this lowering the bar for them to hurtle across at the next earnings season? >> it is a little conservative. but in the last two years -- but when you look at the average consumer, the prices are up. rent prices are still up. there are -- with the student loan payments, the average

consumer, the average american household could put additional pressure on this. we are anticipating the value will persist through the second half of this year and into 2024. lisa: one thing i'm curious about, of all of the earnings, we have those of macy's on tuesday, calls on wednesday, thursday we get norstrom, dollar tree. where is its place with midtier retailers when the two ends are both gaining whether it is bargain-hunting or luxury, the middle is left out? >> that is a great example of where the middle is -- new strategies are required. we have seen -- one season has held true. people in areas that are of special concern, who talking about travel before the segment started, that is still something people are focused on.

but when it comes to something like that gap with they don't really straddle the higher and/or lower end, that is where we are looking for whatever strategy management has come up with to reconnect with consumers that would be in the target demographic. tom: we appreciate it, jennifer with us, from bloomberg intelligence. so many stories going on and i think we just have to stop and reassess. i was out for a number of days due to illness and the one thing i followed was the real yield. 1.90%, a four basis point move, 10-year real yield. i can convey enough the importance of how it permeates through the american financial system. this is something chris is an

expert in. what does it mean? lisa: there is a question about whether people are actually gaining income, with it is positive that they are getting interest for the first time in as we have been sitting here, the 10 year yield through 4.3% of against those highs, yet again a time lead by the real yield not inflation expectations, but something else happening. tom: it sleep the triple leverage. pay attention to them to coming in october. but the other side of this is if inflation comes down, i'm making more money which keithley retailing. lisa: you do get some of the

savings down. tone: i'm back to 2008, i can even go back to 2004 on the 10 year real yield. your adjusting back to the 90's dialogue. we see the 90's dialogue jackson hole. lisa: one is have these rates for a long period and we have took these points in longer-term yields have come in because of bottom. is that a new level of restriction that actually delivers the witness people are expecting to tom: what slivers the weakness is little that went wrong. the 3:30, stay with us this

week, on our way to jackson hole. ♪ 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

jonathan: live from new york sortie -- new york city this morning. equity market positive by 0.3%. the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading. this is bloomberg: the open with jonathan ferro. ♪ jonathan: live from new york coming up, chair powell taking the spotlight at jackson hole. why some of the biggest bond bulls are bullish and latest moves in china leaves inv