othersothers there, just some oe voices from yesterday's gop debate on fox news. a lot of people probably already had the channel and so watched that and others may be switched to twitter which is now known as x letter -- x, to watch the former himself interviewed by tucker carlsen. donald trump was not out the debate and donald trump is today expected to head to georgia. gina: right. this will be the big news of the day as what happens in georgia. matt: is he getting a fingerprints? >> i love georgia, never visited. gina: it's unbelievable. >> we were just talking, i had >> unfortunately, we have seen someone write in, what is going on is a 200 ship logjam outside deterioration across the board. the panama canal due to a drought going on there. gina: there's not enough water >> the consumer can spend if it in the canal. >> exactly. wants because it has savings but it was built in the early 1900 it is a question of confidence. so if you want to talk about

>> they continue to prioritize something that might impact services and food and drinking places. supply and beat inflationary -- >> it will be difficult to get be inflationary and -- in to the inflation declined from 3% to 2%. nature, these things build up. matt: that is fascinating and >> a serious market moving concerning, when there's not enough water in the panama canal. i was living in germany the past event. we had a big one last sigh after six years and we have had those the bell. nvidia came out with earnings problems the last few years on and eat already heightened the rhine river as well, also something that is probably very expectations even after more than 200% rally today. inflationary. gina: speaking of germany, the ecb has been at the forefront of trying to monetize or figure out the stock is moving higher. a lot of other issues to talk the monetary impact of climate about. change and ultimately the nvidia is not only the big results have shown the impact market moving issue of this will be through higher inflation volatility. to your point, all of these session but of this year. issues as they pop up one after what do you think? another, the net effect is >> i agree. it is amazing how much nvidia continues to be the expert higher inflation volatility over time if not higher average inflation over time which has nuisance. severe conference -- we started to see flows out of consequences for how you nvidia in anticipation of this structure your portfolio, especially off a period of time and credibly suppressed event, thinking there is no way

they could possibly satisfy inflation volatility. now we go to a higher inflation analyst expectations but they voluntary -- bill attila t -- blew them away. they also saw so much cash that they will give it back to volatility landscape. shareholders. these are strong changes investors will have to contend they keep substantiating this with over not just the next year theory this is more than just but the next several decades. matt: climate change, i'm heights and this is real economic activity. guessing that was not a topic this could be generating a new touched on too much of the republican debate yesterday. cycle of growth. [laughter] they have so much cash that they let's get to annmarie hordern, will give you a bump on the side bloomberg washington correspondent standing by after as a shareholder. there is nothing bad about this i guess having watched the whole report. thing last night. i hope you got some sleep. max: they authorize another -- what was the main focus? matt: the authorized another was it all about kind of piling on vivek ramaswamy for his buyback. there were some concerns about china saying if we get continued russia/ukraine stance? annmarie: there are a lot of narrow regulation in what we sell to china, that will be a different topics discussed and the wall street journal problem going forward. editorial puts it, without trump in the room or calling at the >> it is amazing what a blowout quarter can do to market sentiments. dawn-les debate, there was this room to talk about policy. it has been a brutal month for climate change was one of them. financial markets. nikki haley had a breakout

i can talk about all the moment there as well. currencies down 3% to 4% alone. there was a lot of pylon vivek ramaswamy, the entrepreneur. matt: i already have a listener many thought the pile on would and viewer writing in. be about the other individual for our listeners and viewers on the television writing, why is centerstage, governor desantis, but the pylon came to the vac nvidia buying back the stock and some of his views, when it is already up 250% year especially on foreign policy. this is where we saw him and to date. gina: this is fair because it is nikki haley go back and forth that and she said to him you have no foreign-policy the first thing i thought of. experience, pause, and said it shows. this was a moment where you had shouldn't there be reinvestment? but the reality is there is a hawkish republicans take it to this idea of more populous lot of reinvestment but there is just so much growth off ai, so candidate who has been rising in the polls. much unexpected cash. when i was flipping through what will they do otherwise? channels that have -- had a lot they can only invest so much. of individuals and voters talking about what they thought i am really looking forward to talking with our b.i. team later of the debate, for the primary on. voters, vivek ramaswamy is but that was the first and that someone resonating, but for a came to mind as well. damian: can they provide enough potential general election when you need to draw independents, a lot of people were talking about equipment so nvidia can keep doing what it is doing? nikki haley.

a quarter. some say she was a pleasant it doubled its market value to surprise. gina: what was it about nikki haley that really stood out? 1.2 trillion dollars in the last annmarie: i think the one moment three months. she had with vivek ramaswamy back: -- matt: it set out to me talking about foreign policy, she really went through it and said he wants to have china eat as well. i guess they are getting preferential treatment from tsmc taiwan, he wants to allow putin to take over ukraine, then she because they moved to $60 also went into his remarks about billion in the previous quarter aid to israel. and expect to move $60 billion this was a moment where she was of chips in the next quarter. able to show in her former post as the ambassador of the united in 25 million-dollar buyback is not the only issue affecting nations some of her foreign markets. policy chops. we had a crazy run on heels. there was also a moment where no one was able to match her and this was on abortion. it went up to 34, the highest she wanted to level with the american people saying there can never be really an abortion since 2007, and then just ban. dropped. never say never but she said it gina: over the summer, it became would be difficult given the fact you would need 60 senators in congress and she said that is a big issue. over the summer, it disrupted. something we do not have. so we need to have a consensus there were broader market and she talked about a consensus conditions. underline what is happening in that could potentially be

yields is the earnings recovery actually one that could be story. nvidia is not the only company struck in congress between democrats and republicans. for this moment, then you had producing earnings. we have a big thing in the s&p mike pence come back and he said consensus is not leadership. but her views on abortion might be something that could do her 500 going on which is creating a well in general election because lot of offset. we know abortion is one really if you are at this major critical inflection point in bonds were suddenly you have moved to a bear market, that is -- it is really a voting driver for a lot of independent voters creating a very different area in equities than we have become and we saw the in the midterm accustomed to for the last 40 elections after we had that years. strike down of roe v. wade. there will be bouts of volatility and indigestion around the bond market. so she took this town that very consistent with the environment we have been in. potentially could bode well for her if she was to be the nominee damian: you have to look at what in the general. damian: i didn't see the triggered the rising yields entirety of last nights debate from what i can tell, governor initially which was supply yields. desantis stayed out of the line it is really the euro pmi data of fire. who were the winners and losers which drove the retrenchment we last night? was that the right approach by the governor to sit back and let have seen in european and u.k. everyone fill it out? yields. for that matter, did donald it will be interesting to hear christine lagarde, not jerome trump come away from last night? what happens to him?

is he a winner or loser by default? powell, out of jackson hole and annmarie: two things, i think see how she responds. governor desantis stuck to the sidelines but the bar seemed low matt: we also had a couple desk. from his camp. they just wanted to make sure he reportedly, per goshen died in a got out of this alive and was still living on the next day in the bulls. [laughter] if the bar is that low, he plane crash. cleared it. we will talk about this on he did not get too much into the international politics. back and forth but came with his much more sadly, we lost laszlo well prepared remarks and defended what he said was his for rainy who was a good friend policies in florida that should be the policies he wants to take nationally. most notably he leaned into covid, took a swipe at trump and and invented money analysis how he handled anthony fauci. which is something we have been doing the last 20 years. when it comes to the former gina: and legendary market broke president, i did catch part of his interview on twitter with tucker carlsson. not a ton of news was broken this down. we get to present where the there and he talked about the economy is going but in the fact he things everyone is against him and he can get more reality, supply and demand is ratings on this crazy platform. everything. he continuously brought us back the former president -- with the to the reality of if there is former president out there, he accelerating demand on a was asked about.

restriction and supply. very much the element on the room. the candidates were asked by moderators to raise their hands this has been one of the key if they would support trump as characteristics that has driven the gop nominee if he is the equity market for the last convicted on criminal charges. couple years but also the last mostly all of them raise their hands, six out of eight decade and change. candidates. they put it back to the as we get scared by what is happening in bonds and concerns weaponization of the justice department. a are doing this because they do about inflation dynamics. not want to ostracize those if you follow the flows, you can do quite well as an investor. individuals that are supporting the former president because he he taught us that. is dominating them. damian: we also have something by 40 percentage leads in these polls. while potentially today we talk interesting last night. i think something on fox. about the candidates that may be shined on the debate stage, by a republican debate. this evening, you are likely going to see the former i am interested to hear what amh president go down to fulton county, georgia and turn himself has to say about that. in and there will be a mugshot likely that is going to blow up it is pretty interesting. the internet and once again he that donald trump was not there will be dominating the news but he may have come across as the winner. cycle. matt: it does seem like the who knows? matt: a republican debate without donald trump is far less indictments helped, though it is an interesting question to interesting, i am sure a lot of people tuned in to watch. whether he will be able to run it all considering the 14th amendment. what about president biden? they also provide for a second a number of viewers have been writing in to me this morning

asking the republican debate fine, his present biting going place -- also were vying for to get primary door who would run if he decides after a year second place. it is interesting to talk about and a half still to go if -- laszlo birinyi because he made that he won't run? such pressing calls. he called right before in march annmarie: he certainly running of 2009, a gain in the snp. to be the nominee. at that point, we work 666, -- it was a question asked yesterday about age limits. if you are looking for we were 666, but now we are 4400 potentials on the democratic bench, i think you have to look to the governors, governor newsom, who has been trying to build up a national case and sat down for long ranging interview 68. quite a bit higher. on fox news recently which on we are still a couple cents away hannity and someone like governor pritzker who has the cash to potentially get in at from 2.5 but we are coming down the last minute. at this moment, everyone is a little today. of course, jackson hole will talking about biden and it would have a impact on what we see be biden. matt: annmarie hordern joining us from washington, d.c. there and the race. thank you for the that. a very interesting level at 4.20 no want to talk to better than mh when it comes to washington. on the 10-year yield. next, earl davis gives us his take on fixed income.

4.1978 to go out significantly. this is bloomberg. ♪ but we were just at four point 37 and 4.35 couple days ago -- 4.37 and 4.35 a couple days ago. then nymex crude, it has been interesting to watch the market even as we have a drawdown in supplies. let's bring in max kettner who joins us live out of copenhagen. let me get your take on the big news of the day which is yesterday's nvidia earnings report. i thought expectations were so high it would be tough to beat but they did it. max: good morning. like we have heard before, there is nothing bad about that report. it will be interesting how the stock opens. i guess we will go to yields on high.

in turn, it is the market sentiment, a complete switch from last week. in terms of the broader market sentiment, not just nvidia and ai, that has clearly become a little bit more bearish over the last two weeks or so. when we look, for example, at bank sentiment and the aaii survey and several other indicators. they have become more bearish which is good news. that means if we get further depths in u.s. equities, that is good territory to buy our debts. gina: you've been constructive in talking about buying on dips. talk us through your justification for getting more bullish as we approach the end of the year. it seems to stand out as many people have gotten scared by what we have experienced over

the last month. max: i think there could be a few further dips now or in the next two weeks with jackson hole and you guys just mentioned treasury supply. this may bring a few further dips but they have to be bought. it is number one the sentiment side of things we talked about but also the fundamental side. you mentioned the broad earnings recovery. we just had the second quarter in a row where average earnings surprise factors pick up again and the earnings trade has picked up again. both way above pre-covid averages. that is pretty good. it is also when we look at the strength of the u.s. economy overall. that is pretty broad faced. whether that is the consumer or easing of financial conditions compared to a year ago. if we look at some and the cares

of the manufacturing industry, like regional fed surveys, even what we have gone for august, they are pointing to having some turning points, even at the struggling money manufacturing industry in the next couple months. damian: fundamentals don't matter anymore. let's get back to positioning and focus on seasonals. the notoriously week in september and october. should we even remotely be looking about buying the in that or should we be looking to cover our debts. one of the features has been a stronger dollar. what does this mean for equity earnings? max: let's remember the dollar he snores like an angry rhino. you've never heard an angry rhino. baby i hear one every night. every night. okay. i'll work on that. save 50% on the sleep number® limited edition smart bed. plus, 60-month financing on all smart beds. shop now only at sleep number®. hi, i'm jason. i've lost 228 pounds on golo. so when my doctor told me i needed weight loss surgery, i knew i had to make a change. golo's helped me transition to a healthier, sustainable lifestyle. i'm so surprised just how crazy my metabolism has fired up. i have a trust in golo 'cause i know it works. golo isn't like every other program out there, and i'm living proof of it. (announcer) change your life at golo.com. that's golo.com. matt: this is bloomberg surveillance on bloomberg is still significantly weaker television and radio. i matt miller with gina martin compared to a year ago. adams and damian sassower hour. when we look at the tom, jon, and lisa are off air year-over-year change of the dollar, that is typically quite a well correlated with earnings but they are still working, in jackson hole. of the snp. the s&p still has surprising

gina: so we are told. matt: working the restaurants revenues of the exposure. and bars and talking to other compared to a year ago, that is economists and market participants out there and i coming through in q3 and q4 think it is a great thing they are doing and we will see them tomorrow on their special, earnings. number two, i detest seasonali jackson hole, special coverage at 8:00 a.m. new york time on bloomberg radio. i want to get into some of the ty. but we look at that to be big stories we are watching this perfect. morning under surveillance if you look at studies over the last few years and adjusted for obviously nvidia. big events like 9/11 and 2008, soaring in the premarket following another blow out fueled by demand for the ai they frankly did not have a lot of awful -- an awful lot to do chips that nvidia makes. the company ceo distilling fears with seasonality. that production will not keep up the seasonality gains people with demand. were able to harvest really jensen wong says we are focused stopped with the search of on increasing our supply, we computing power which brings us have to do that with great back to nvidia. urgency, and we are. it really stopped from the end of the 90's to the beginning of this is one of i think the most interesting things because a lot of people want to make ai chips, the 2000's. amd, intel, and nvidia does not since then, seasonality has not worked. he would have thought, let's sell.

what happened was the rally took produce chips itself. tsmc supplies them with all of off in june and july, so even the chips they order and i guess they're doing a good job filling this year, seasonality did not the order books. work. matt: thank you for joining. gina: mandeep singh did a good job of articulating this but max tanner from hsbc out of they have been able to convince copenhagen. tsm to work for nvidia. coming up, when control of kimco they have no problem getting tsm to feed them. -- libby cantrill of pimco. which is a pretty big shift from three to six months ago. this is a big win for nvidia and we will get her opinion on the for the theme at large in terms of potential impact. debate and what it means that damian: i was most impressed prigozhin reportedly died in with the forward guidance or man deep's -- mandeep's forward pain -- plane crash yesterday. this is bloomberg. guidance perspective. ♪ it's forward guidance can't be strong, satisfied with the markets are looking for in the answer is a resounding yes. matt: they think they are even sandbagging. interesting stuff. boeing has found a new defect in 737 max jet, threatening to derail delivery targets for its

top-selling model. the airplane manufacturer found, brace yourself, improperly drilled holes in component that helps to maintain cabin pressure. doesn't sound good at all. the faa said the issue is not a safety threat but it would still worry me. damian: qantas ordered a bunch of airbus, the australian airline, so i think it speaks volumes. matt: one of the safest airlines in the world. damian: i think it speaks volumes of i don't want to say how far boeing sunk but the quality of its product now leaves something to be desired. gina: how many years have we heard something seems to pop of her boeing, just about every year, but every other year. this is the latest in a series of issues that popped up which is a great shame considering how robust activity has been in the airline industry. passenger traffic still strong. i've been traveling all over the place this summer, everyone is packed and it has been an

incredible amount of tropic and robust rally and recovery after pan-dem glows in the space. it is a shame for boeing not to participate to the degree maybe they could have. damian: when you travel, do you look at the plane you will be on? gina: i don't. i probably should. i don't know if i could handle that. the mental anguish that would create for me is far too much so i just sort of blindly get on, do what i need to do to get to the place i will go and keep your fingers crossed. matt: if i have a choice, i will fly a 747 800 any day and i like the wide bodies but they are so rare you usually have to accept you are on a 737 or 83 they are just too cramped. gina: too slim anymore. matt: the republican presidential candidate targeting joe biden in the first debate of the 2024 race with leading contender donald trump notably absent from the debate.

candidates debated the u.s. economy while also sparring over foreign policy as well as abortion rights and border policy. annmarie hordern telling us they even brought up nikki haley -- nikki haley broader climate change. it is interesting we saw a picture of chris christie. he does not want anything to do with donald trump in politics ever again. i'm sure i would assume mike pence does not either but the >> i just felt it would be more rest of them seem to want second-place. gina: it is so fascinating. appropriate not to do the it is hard to watch and think we debate. take this seriously as the real i don't think it was a right to do it. if you are leading by 50% or candidates for the republican ticket or not considering the front runner is not even on the 60%. stage and is doing another at one point i was leaving by interview separately and coming in and bashing the entire stage 70%. i thought, why am i doing it? of participants later. i will have all these people it is difficult to sort of get your head around the meaning screaming and shouting russians. behind this particular debate. i love answering but it does not that said, it appears there were make sense to do it. matt: former president donald a couple standouts. let's see where they go, it is early in the process yet. we have a whole year left until

trump talking about why he skipped the first republican we get to the actual general debate that you can watch election so i'm sure there will yesterday on fox news. be plenty of twists and turns. many of us had to wake up very nonetheless i guess there were a few takeaways. early this morning. damian: i was encouraged by amh we may have missed it. you have seen the highlights and said nikki haley performed well. we knew they were going to that is a good thing i think but basically all get together and what is interesting is no one is attack ramaswamy on his talking about mike pence. that is a very interesting outspoken foreign policy ideas outcome because one would have damian: and his position on thought at least he would use that as a form -- forum to talk economics and the fed and about his self and policies and central-bank activity. i guess -- gina: or desantis for that all of which is in the spotlight. matter. what was interesting for me is, he was presumably a front runner when asked whether or not they months ago, did not really stand out last night. would vote for trump if you were the nominee, not all of them anne-marie informed us the bar raise their hands. was low by his team and maybe gina: you saw them capitulate also down the line. that was by design. a few on the right side or left side certain raising their hands matt: let's go to politics -- and then they started saying, ok, i went to. from politics to fixed income. earl davis joins us from bmo you can see it in the sentiment asset management. of i could not possibly stand out that much. matt: they are so defensive of my first question is one that maybe won't make a lot of sense

but i feel like nvidia has had donald trump. such a huge effect on a lot of when donald trump was indicted, different asset classes. ramaswamy went and set up a stand. gina: i don't know if i missed do you see an nvidia effect in fixed income at all? it. >> we deftly -- i did not watch it. earl: we deftly do on the credit that i really miss anything? side. if you look at cx, the questionable. my take is, are we really derivative for credits, that's watching the debate for who rallies or gets stronger. could possibly be donald trump's spreads narrow. when you see nvidia do well, it vp nominee? he is so far ahead of the field, does impact the risk tone for he obviously use this as another all risk assets. gina: moving beyond nvidia to chance to stand ahead of the crowd. other big news obviously is use this to tell everyone, it is jackson hole. what are we going to see checks not fair. in whole? i cannot lower myself to talk with these plenty of. how do and to support -- do you -- these plebs. anticipate the bond reaction to be? earl: i think we are on track gina: let's get to libby for seminal change on the fed targeting inflation and cantrill, managing director of resiliency of the economy. i think now they will pivot from overnight rates to targeting 10 public policy at pimco. year to 30 year rates and they will do that through one of two i am guessing you watched the debate last night. things and maybe both, either what was your take away? mentioned they are comfortable are they all vying to be vice with 3% target on inflation as

president, with the exception of opposed to two, basically 100 a few who have counted themselves out? libby: i did watch all of it, a basis points higher, impact on nominal rates, or they might say neutral rates we think is higher than we originally believed little like watching because we see such a resilient thunderdome. if you takeaways. economy. that could have 50 basis point the debate last night did not do anything to undermine president target on the higher rate. trump's very secure position as i think what they will do is front runner, as you all have they are coming to the end of been alluding to. hikes without a doubt, 6% is a leading in the polls nastily but hard cap but they will let the also in early primary states. term rates do the rest, bring in -- nationally but also in early primary states. more resistance to the economy. this was jockeying for the make it more restrictive. damian: thanks for joining, consolation prize, the runner long-time reader and big fan of up. but this may have done is remind your work. let's talk about rate differential, something you have folks there may be an written about specifically, alternative. differentials between the u.s. and japan. that is certainly what nikki talk about foreign demand for haley was going for. u.s. treasuries and talk about of course, mike pence. japanese buying of u.s. and also, the that ramaswamy -- treasuries or shall we say japanese telling of u.s. treasuries. what is going on there? vivek ramaswamy who had the why would an investor in japan where yields are lower than that

of the u.s. be pulling out of second-most speaking time, second to mike pence. u.s. treasuries, investing at i think this was a chance for home in jgb's? earl: it impacted part of my others who are looking for an role as an asset manager, used to run a fixed-income group of alternative. $100 billion in fixed income and but the big takeaway here how we look interest rates was politically is this does not really do anything to undermine through developed markets interchangeably. president trump's unequivocal diversification and because the position as the front runner. gina: when you dig into the underlying fundamentals were all developed markets, as we see now, is similar. details, most of the debate was in regards to rate focused on foreign policy differentials, i think there is concerns, but what did you take more than japan to look at. away from the candidates with japanese tenure bonds are .65 and we can see that going as respect to their domestic high as 1%, 35 basis points policies or economic slant with respect to this conversation? higher. that has a substitution effect on treasuries. libby: then the first 20 the other two markets to look at from ray differentials is the minutes, there was a lot of u.k.. discussion around the federal u.k. has a serious inflation issue, growth issue, but rates debt and deficit dynamics. as an economic policy nerd, i are about 4.5%, to make that was getting excited, thinking we easy. were going to have a substantial the final country to keep and i conversation about the trajectory of government own is germany. people really like using germany

spending. he did not see any details, not and u.s. interchangeably. surprisingly, as there were rates are around 2.5% and that superficial comments about how could go higher because of the we are spending too much. inflation impacts affecting the world globally. there were some folks who talked wages are more important than about reducing the size of the cpi inflation right now. federal government which is damian: we had a poor 30 year difficult to do without congress. option last week that stoked the but the bulk of the source of spending over the next 10, 20 bit higher in yields and that good stuff. can you talk to us about the and 30 years is on entitlements. plumbing of u.s. financial markets? medicare and social security and the tga, rrp, fed runoff? medicaid. there was no discussion about where you see pockets of risk entitlements. building if at all? it was sort of disingenuous to earl: it's a great question. have a discussion around the i think the markets from a risk fiscal deficit or debt situation -- financial stability without tackling that. there was really no mention. perspective are very safe now. the plumbing and backdrop especially after parts the fed the reason why? because it does not poll very has put into place. well with folks, particularly you see it there. where you are seeing risk is a some of the demographic of the repricing of bonds because of republican party in terms of what we are seeing. older voters. interest rates globally could go the bottom line from an higher and that makes us go higher. another thing that could impact the u.s. is interest payments.

economics discussion as there was not very much except for they are significant and assumptions by the cdo for passing comments about reducing the federal workforce which is interest payments are 3%. difficult to do if you do not so just think about how that control both chambers. damian: i wonder if we cannot could add to the deficit over time. where the risk is is rate switch back to foreign policy. pricing to higher rates as well with the exception of ramaswamy, as mortgage hedging by banks, all the candidates said they rates go higher because of were in favor of continuing aid negative convexity, durational to ukraine. did you expect to see such banks go higher and you have to sell bonds. i don't think it is a financial consensus on that issue? libby: there were more folks who stability question but there will deftly be murmurs in the were vociferously in support of market. matt: gary shilling, a few the continued funding of ukraine . i would go back to nikki haley's and mike pence's statements. months ago or maybe last year, did a survey looking at how the u.s. dealt with the highest yes, the unanimity around ukraine was mostly supportive. average interest rate and terms of servicing our debt, i think i think governor desantis kind it was the early 1990's we got of equivocated a little, saying to over 6% in terms of the he would diverse of funding to average. we are not there yet, but when the southern border. but outside of ramaswamy, there has become a problem? was not anybody who said when is debt servicing becoming unequivocally no more funding of ukraine. a problem for the u.s. economy?

am i surprised? earl: there was an article in not very. the paper a couple weeks ago politically, to be against that said the deficit could rise funding of ukraine in some ways by $3 trillion in 10 years. can be characterized as being that could be significant. supportive of russia. i think with the u.s. in regards there is a lot more nuance to servicing its debt is fine around that, but politically right now. we are the country of choice, speaking, that could be the spin the reserve country of choice, . i think that is why the and i think the change to other candidates were careful. countries to currencies is -- as most said, in addition to a reserve is 10 to 20 years away ukraine, they would also increase or continue funding the southern border. so i think the u.s. is in a good that is an issue, particularly place with debtors servicing. in iowa. i think that will not be amid that plays very well. see moment to not resurfacing broadly speaking, given how it debts and they print their own currency but there will be can be spun on the heels of higher levels. the last year -- the last here prigozhin's death, it is that these levels was 2000. it wasn't the 1990's, early to untenable for folks to be thousands we were at 6% in anti-ukraine. gina: we still have -- matt: we tenure bonds, not average for 10 year bond yields. still have over a year and a lot matt: thanks for joining us, great to get your perspective out of toronto. can happen.

november, when president biden earl davis of bmo global asset will be turning 82, on the management talking to us about democratic side, who could fixed income. in terms of what to expect from primary president biden. jackson hole or ever, the fed is or if he decides not to run, who will run in his place? not going to change its target libby: it is an important point. rate. no matter how much you hate to percent, know-how -- no matter we are still super early days. how silly you think central on the republican side, banks have adopted it, it is president trump is still the here to stay. gina: i think the fed has been clear front runner and is also, careful to even say 2%ish, that really importantly, has changed sounds good but they will explicitly state to percent is a lot of the delegation not there specific target. i don't think they want to go to a target -- allocation rules at the state gina: but how may times -- level. as long as he is getting the matt: but how may times has boat in a crowded field, he is jerome powell said he will not stop until he gets below 2%? positioned to get all those gina: there's the language votes. he has played the inside game in around this i think is meaningful because the fed addition to his front runner status. specifically does not want to on the democratic side, what we become the ecb with an inflation are telling clients is president target per se. they have a dual mandate, they are careful about this and biden is very likely going to be the nominee, save some really anything near-ish to percent has historically been fine.

closer to 2% is the latest sudden health issue. outside of that, we are linkage of the day. expecting him to be the nominee. the 3%, was compelling. something to keep in mind is the if they moved to some 3% level, first of the state filing i think that would really create massive riffs. matt: in that case, think i we deadlines comes mid october. that is the de facto deadline on have tom, jon, and lease sat both the republican and jackson hole and michael mckee democratic side for a new person who we sent out there. to get in and list themselves on that would be genuine news. let's take a look at what is the balance of all 50 states. going on. if you're joining the program, we are looking at rates rising this should be the deadline. we do not expect any big changes again, tenure about 421 and the on the democratic side. s&p 500 futures up .6%. matt: libby cantrill of pimco. thank you for joining. coming up at 8:30 a.m., michael today is the day donald trump is darla, chief economist at macro expected to fly into georgia and strategist of roth and cam partners will join us. surrender himself to fulton i have to ask him about the bill county authorities. we will be watching that. because surely in rudy giuliani flew in yesterday in a private jet. this is bloomberg. ♪ michael dart's career, he have seen the importance o that. limited edition smart bed. plus, 60-month financing on all smart beds. i wonder whether conviction is a shop now only at sleep number®. people piling back into equities like maximus says he is buying

this dip. coming up, jim tobin on the national association of homebuilders. this is bloomberg. ♪

matt: this is bloomberg surveillance on bloomberg television and radio. i am matt miller with gina martin adams and damian sassower hour. in four tom, lisa and jonathan who are preparing for jackson hole. let's look at the earnings. nvidia shares beat heightened expectations. those shares are rising as well as nasdaq teachers. s&p futures are rising over

0.5%. kind of a strong rally. they are selling off the tenure today to some extent. right now we are 4.20. really 4.1998. the euro down just under 1.10. the focus this morning is going to be on the equity markets after the big beat yesterday. we are going to kick off under surveillance with that story. nvidia soaring and premarket trade falling. another blowout forecast fueled by ai chips. the company is dispelling fears that production will not keep up with demand, saying "we are focused on increasing our supply. we have to do that with great urgency, and we are."

one of the most important points is they do not make their own ships. they still have to get tsmc to put them in the front of the line if they want to saw the most product. damian: that is right. taking a step back, this is more about what was once inflation and price points. it is not a clean transition. when you look at nvidia and go get me my growth and go to generative ai, that's the way you will get it, how willing are investors to do that when rates are at levels we have not seen in decades? and really yields are incredibly positive. gina, i would love to hear your thoughts. if you look at u.s. humans on a nominal basis relative to the equity yields, there seems to be a pretty big divide. gina: first, let's not forget a year ago we were talking about excess supply.

now we are talking about not enough. this has been a severe transition. matt: is there a deviation because of the -- gina: type of chips? yes. think about what this means for the supply chain and how much pivoting production companies have to do. and we have been talking about deglobalization and diversification of the supply chain. semiconductor chips have been at the forefront. it is worth watching but also worth dissecting to the base level. in terms of the yield, this is something investors are talking about a lot. we noted the equity risk premiums were at levels we have not seen in years. what does this mean long-term? the same as the third quintile. low single return digit stocks -- low single-digit return stocks. vigor picture, we have moved into this bond market -- bigger

picture, we have moved into this bond market we have not seen in a while. we were in the most idyllic situation possible previously and bond yields were so low. the return on expectation was double digits. everyone was very happy if you were an equity investor. the situation is different today. this creates a much more tenuous condition. a difficult equity environment. you cannot just throw money at the equity market and ask it to produce. matt: -- damian: we are going to talk later about negative equity risk premiums. at the brisk summit, leaders agreeing to expand their group to include six more -- the brics

summit, leaders agreeing to expand their group to include six more countries including saudi arabia. i think this is a fascinating turn of events. brazil is the start. but saudi arabia is not the s. damian: saudi arabia seems to be most concerned with how perception is in the west. but we are moving into is a multipolar world where countries will be forces take -- will be forced to take a stand and will have to take a side between the u.s. and china. you mentioned brazil. i will even add india to the list. those countries can kind of remain neutral and not have to pick a side, given their state of affairs. the actually command a premium from investors in the market, something we have been grappling with and something i would like to hear more about from our guest. gina: i would like to say why we even still say brics.

russia is no longer investable. it is no longer an investable markets in the world. emerging markets have really shifted. the biggest flows are going into em x china so there are two letters already under question. why are we still using this old moniker which was developed years and years ago when this was a viable segment of the world? we are thinking of adding indonesia and saudi arabia. what we going to call it anymore? damian: how can we call emerging markets emerging markets anymore? it is the same statement. it rolls off the tongue nicely. we could call it bricis? matt: part of jim o'neil's claim to fame is just coining that term. if you come up with a new one,

we could be talking about you in 20 years. republican candidates targeting joe biden in the first bay of the 2024 alexion, with -- in the first debate of the 2024 election. they sparred over bidenomics, abortion and border policy. not a lot of talk as libby cantrill told us about the economic policy. there are a lot of tax breaks that will expire. i cannot wait for salt in 2025. there is so much they missed. gina: it is fascinating. i spend a lot of time overseas this summer and everyone wants to know what is happening in the united states. but here we have a debate talking about foreign policy. the investor universe wants to

focus on the u.s., where will growth come from? how are we going to fund the deficit? where are we going to see interest rates go as a reflection of the extraordinary debt deficits we have? yes, we are not addressing it. it really deflects the economy from what is going on in washington and wall street. damian: it felt like a love scottish nobles scrabbling for scraps across the table. matt: let's talk about the importance of other events we are watching closely today. jackson hole. in the very short term. and what is going on in china. neil shearing joins us, the group chief economist at capital economics. we kicked it offers with jackson hole. there is a great debate about is in video important to macroeconomics then this fed summit? we are paying close attention to

what is going on out west. what do you think? neil: a lot depends on your time. ai is back to undertaking a massive piece of work and looking at the potential macroeconomic fallout from ai. i think it will be huge info principally over the next decade. ai has the capability and potential to transform the global economy in many positive ways. but this will play out maybe in the 20 30's -- 2030's rather than the next year. jackson hole is the main event this week. what are we going to hear from jerome powell on inflation? last week, he had a speech and gave that to get back on top of inflation and gave a very hawkish method.

are we going to get the same this year? i suspect there will be some fireworks. gina: i want to prevent talk about your perspective on china. one of these underlying beliefs in the markets is that china will export de-flation to the united states. we are contending with pretty rapid disinflationary methods. if we keep getting this from china, what does that mean for the u.s.? you have an alternative view. talk about what this means. neil: the first thing is it is not that uncommon for china to have negative inflation ratings. it is structured because of its high savings and high investment course model. this occasionally means the headline cpi rate turns negative. it did in 2021. of course, this was the period

when inflation in the u.s. and europe was soaring. there is no direct read in china to what is happening in the u.s. or europe. fundamentally, you have to ask, why would weakness in china translate to weaker price pressures in the u.s.? there are several mechanisms to which that could happen. one through unfasten -- one is through old-fashioned demand. and the other is reducing price pressures in the u.s. economy. but it is not a big net importer. it is a big net exporter. the second is the commodity prices because it is obviously a big commodity consumer. there has been some surprise in commodities over the last week or so but gas prices have been rising because of supply concern. clearly, china matters as the

world's second-largest economy. but sometimes, there is too much hyperbole. some headlines are a bit breathless. like principally, u.s. inflation will be determined by what is happening in the u.s. and u.s. macro conditions rather than what is happening in china. damian: the dollar you on is down on the month. i believe is down something like 5.5% year-to-date. it has been a thorn in the side of investors. what is the pboc thinking? what is -- obviously, the dollar-yuan is changing. neil: on a level space, there is a political message in the level and seven point 3% seems to be a level that falls below that.

it starts to have geopolitical ramifications in terms of china's currency and what this means on the global stage and the all-out. from a macro and financial stability perspective, it is not so much the level of the exchange rate but the speed of the all-stars to create problems. 2% fall on the month does not give major signs of stress or is not a major source of stress in financial markets and not a big inflationary concern. if you are sat at the pboc, you are concerned about trying to avoid big moves in the exchange rate rather than the particular level of the exchange rate. matt: thank you for joining us. neil shearing of capital economics talking to us about china and the inflation issues we are facing with china -- we are facing. seemingly slowing down at great

pace. not as quickly in europe. they have bigger problems with inflation and a lack of growth. damian: some people said they saw state run banks coming down. to your point in europe, if you look at rate differentials alone, it should be around 1.05 or 1.08. if you are an equities investor, it has helped out this year. matt: we are going to focus on a more in-depth way. mandeep singh comes in. after a big beat pushes of the shares in the market and fears in the index. at least early trading is all about ai. this is bloomberg. ♪

>> we really missed the extent to which this interest rate and sensitivity when processed. and to the extent to which household balance sheets and corporate balance sheets have thus far been an united with their spending patterns and been immunized from higher interest rates. matt: lisa shalett, cio at morgan stanley wealth management. talking to us about her views on markets. today, it is about nvidia. to some extent, it has been for a lot of this year. company coming out with a bang-up outlook. i think they expect revenue of $60 billion plus or minus and the street was only looking for around $12.5 billion.

mandeep singh joins us in the bloomberg surveillance studio. i thought it would be tough to beat expectations because they were already so high and the stock was already up more than 200% your today but they have done it. mandeep: this is unprecedented in a lot of ways and tells you not only how powerful generative ai is as a trend, nvidia raise guidance last time around and beat it by $2 billion. chances are they will beat it again by $2 billion. the reason i feel this way is because of the confluence of factors when it comes to supply chains this was a problem when it came to the manufacturing capacity. this has eased and is helping the most because there is no other demand for any other kind of chips. it is only about gpu's and they

are getting the supply capacity. this actually expanded almost 500 basis points and shows the pricing they have in the manufacturing capacity they are able to get. gina: where are they getting that capacity? this is really key to investor concerns. how do they clear it so quickly? where are they getting it from and where will they continue to get it from? mandeep: it is all tsmc. tsmc before was allocating that two different things. now it is smartphone demanding npc demanding. all this leading those note capacity is being elevated -- is being delegated to the gpu's and there is insatiable demand. even with the pricing they have, the demand outpaces the supply and that is why you are seeing this margin expansion. damian: the gpu's are being used

to build large language models but is this enough to justify a $400 billion increase in market cap over the past three months alone? mandeep: look at the data center revenue. this is a $50 billion business. seven years back, they did not have this business. $50 billion. this is a much higher margin than their gaming chip. clearly, you are seeing the best topline growth and margin expansions during tech. the proof is in the numbers. last time, they said they have visibility to 2024. some people were disappointed they did not call out where that demand is coming from but the company is saying they have visibility. matt: i am wondering why they buy $25 billion of their shares, especially at these levels. how do you value the stock?

clearly it is not on trial with eps, but even if you look forward to 2025 expectations, they are still trading at 40% -- 40 or 45 times that. mandeep: if you compared to other tech companies, they are still trading at somewhat of a lower pace. to have to look at multiples relative to growth. there is no other company in the back deficit seven growing topline at 50% or 60%. relative to growth, the multiples do not look that high. the question is, what happens after four quarters? after this, get harder. we know with semiconductors, there is an element that after a period of growth like this, there will be a digestion period. it is during tv you will see

digestion because most of their buyers are cloud companies which will launch their own ai services and could be competitors in the long term although there are no signs right now. gina: can you take a step back and right size the approach of ai on the market? it is a 30 year time horizon impact. it seems like we are seeing real-time growth. this is more than just hype which was what it was characterized as just six months ago. can we see real-time economic impacts follow-through as a result of what you are seeing? mandeep: there are a couple of notable changes in terms of how software is used. the copilot as ted is being rolled out to everything we use in our day-to-day -- copilot aztec is being rolled out to everything we use in our day-to-day lives.

when you look at these semi companies, these are costs for businesses. and videos margins are going through the roof but this is somewhat -- nvidia's margins are going through the roof but this is somebody's cost. clearly, the tailwinds you are seeing when it comes to the shift demand and marketing -- and margin expansion, you will not see this in companies buying this. they have to figure out how to monetize or pass it to consumers. damian: i am wondering how you can put this with the large manufacturing. saudi arabia is a big client. talk to us about this. mandeep: there could be a pull forward elements because of the export restrictions. everyone is trying to get their hands on these chips. if the u.s. government bans all exports to china, nvidia has a

20% revenue exposure and they will take a hit. they have found a way to score around it -- to skirt around it. there is the demand aspect where everyone wants to get a hold of these chips. matt: on the 50% to 60% growth in the magnificent seven, just look at tesla. in the past few years, they had 2021, $50.8 billion. 2022, $80.5 billion. mandeep: look at their gross margin. they have a 70% growth margin versus nvidia. [laughter] matt: good point but most of the margin is a dream come true. do you look at the secondary effects of ai or companies that are not pure play? what else out there could be an

nvidia if they focus harder? intel is now entering the fray with gpu's capable of power and large language models. amd is out there too but neither has the supply to fulfill the demand. mandeep: i a worried about intel because of the nvidia print. at the end of the day, semiconductor market long-term growth is still going to be high single digits to low teens. over the next three or four years, someone is losing share. in the data sector right now, intel is incoming with their cpu . they do not have the gpu. they could catch up but on this x86 system, this goes to show there is a risk they will continue to lose share. i think there is a shared

learning aspect to what nvidia is doing. matt: just to be clear, because my mom is watching, that is compound annual growth rate. we have to explain this. great having you. thank you for joining us. mandeep singh, bloomberg intelligence. covers companies like nvidia which is expected to drive markets. how key has nvidia been to the rally we have seen? gina: it has been a huge part. in the spring months, the peak concerns around concentration rest occurred. a lot of this was a reflection of nvidia's recent announcement that they would crush earnings expectations which re-floated the space. there -- the bigger trend for 2023 is the magnificent seven driving everything. matt: we will see this play out in this morning's trend. kara murphy of kestra joins

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>> now unfortunately we have seen this deterioration sort of across the board. >> the consumer has a lot of savings but it is a question of confidence. >> they contend do to prioritize services, food and drinking places. >> the consumer will face headwinds in our humble opinion. >> it will be difficult to get to the last mile of inflation declined from 3% to 2%. announcer: this i tom

keene, lisa abramowicz -- this is "bloomberg surveillance" with tom keyed and -- matt: tom, john, and lisa are in jackson hole ahead of our special coverage tomorrow. i am told that they are doing some reporting today. obviously there are important people there hanging out wherever the million dollar cowboy bar or mangy moves, wherever the cool place to go is. tomorrow at 8:00 a.m., we will have our special coverage of jackson hole so 8:00 a.m., i believe until noon new york time, it is 1:00 p.m. in london and 8:00 p.m. hong kong. don't miss television. can't wait to see if any of them is wearing a cowboy out. -- had. michael mckee had. did you see him yesterday? >> i did. matt: amazing outfit.

>> he always brings it to jackson hole. >> not only did he have the couple help of the dark glasses underneath. matt: i hope jon ferro has a piece of straw in his mouth. , talking about the ranch. it will be a credible coverage and i can't wait to watch it. today is as we have been talking about all about nvidia. there were other issues, the death of it guinea pig godin -- yevgeny prigozhin. gina: not very many viewers and not much news. it was interesting. matt: we showed a clip of i think tucker carlsen interviewed the former president on twitter and it is now known as x. i wonder if people chose to watch that rather than the debate. >> that's your question. i would be curious to know with the viewership was for both the

debate and tucker carlsen interview. gina: yeah, side-by-side comparison. he was still front and center in the conversation, all the quotes are what the donald trump think of the debate last night? what was donald trump weighing in on. as much as he was not there, he was looming as the figure they are gunning to meet and it became clear in the news this morning. matt: we also, yesterday, heard the sad news of the loss of laszlo birinyi. that was a man who loomed large over markets for the past 25-30 years. he came up with money flow analysis, something we all did a lot of back in the late 90's early to thousands. he made incredibly prescient calls at the internet bubble and at the bottom of the s&p march nine 2009 he forecasted stocks would rise and of course he was very right.

laszlo birinyi was 79 years old. let's bring in cara murphy, chief investment officer at castro -- kestra investment. we have had an incredible rally, year-to-date s&p 500 is up 15-16% and a lot of that driven by what is called the magnificat seven -- magnificent seven. how do you see it? kara: i want to apologize for not bringing my cowboy had today. [laughter] i am here in austin, texas, so i have one but next time. in terms of the market, we are right and we had this incredible run so far this year and it has been driven by just a handful of stocks. we've been looking for broadening out of this market. last nights nvidia results notwithstanding but we think eventually we start to see leadership shift elsewhere. think things like mid-caps, small caps, industrials is

another area where looking at, non-us stocks. there are a lot of interesting opportunities in the market. it does not have to be just for the big seven. gina: dig in on that small-cap call, this is something we have been watching all year but that group is stuck in this rain and seems to be struggling to produce a breakout which is very unique in the long-term perspective. usually after a main loan, small caps outperform large cabs but something is holding small caps back. what is going to catalyze a breakout? kara: we have great secular stories among the big seven but looking at the small-cap stocks, we have close to historic differentiations. when you're being paid to take more risk in the space, and if you look at the russell 2000, down more than 20% from the peak last year so they are very much still in the doldrums but the

bilo saw how you have a real nice opportunity once the market starts to shift. gina: can you talk about the broadening trade as well that you alluded to? if it is not the magnificent seven, after nvidia's announcement, where are we going to see leadership develop in the s&p? kara: one area we have been looking at is industrials. that is an area of the economy that suffered pretty early on as we saw industrial pmi's come down, industrial reduction, so we look like we are having some sort of bottoming in industrial production. if you look at valuations and names in the sector, they are below their tenure averages as opposed to a lot of other sectors where we have pretty lofty valuations. you are paid to take that risk and if that is the next area of the economy to sealift, we think there are opportunities there. i also want to mention outside the u.s., when you look at non-us stocks versus u.s. stocks, similar to small caps, you have some of the largest lu

asian differentials you've seen in quite some time, much more attractive dividend yield, more realistic earnings expectations, so we think there is great opportunities out there as well. >> credit card delinquencies are five of pre-covid levels, bankruptcies rising, housing activities decline. prime ei cavity -- primary activity in u.s. credit remains heavy. what are your thoughts and the current environment and do think the fed can achieve the soft landing? kara: i think this dichotomy mentioned between let's say rising credit card billing quincy's and still pretty active -- activity in the credit side has become the impact of monetary tightening and this is been an interesting cycle and even though the fed raised rates an certain area mouth, there are parts of the economy that remain insulated from it. if you look at outstanding mortgage, the average rate is about 3.5%. a lot of people and a lot of companies are not feeling the

pain of these higher interest rates. with that, looking particularly in high-yield, a lot of companies are termed out so they will not see a heck of a lot of increase in debt until 2025 but we think we will start to see an increase in business bankruptcies and so that is where, as we look out on the credit curve, we have stayed more in investment grade where we think credit -- think these are more a knock elated from higher interest rates. >> doesn't that talk about the exceptionalism of the u.s.. we saw pretty weak results as retailers, footlocker, decks, so talk to us about that. is this the signal bears have been looking for? kara: i think we are early in that cycle. we don't think it is flashing red flag but it is a yellow flag worth watching. typically consumer spending is a combination of confidence and also jobs.

the labor market is still very tight, people are comfortable in their jobs, we see decent wage increases. what we see on the other side's confidence is maybe being challenged a little bit. someone higher gas prices and then we have people who have wound down a lot of their covid era savings. we can debate about how much they might be left but what we do know is credit card balances are starting to go up earlier this year and we also know that interest rates on that debt has gone up a lot. it is taking a bigger chunk out of people's paychecks. it makes sense consumers would be a little more cautious here, but these delicacy rates if we look at a longer period of time compared to pre-covid, they are at reasonable levels. matt: one of the things tom keene points out in this program is we tend to aggregate this data but it is important to look at i think dichotomy is the word of the day, it is imported to look at the fact lower three quintiles or four quintiles have

spent everything they saved up and got during covid and only the top 20% are still able to do well. it can that drive the market? is that enough for the retail sector? kara: typically, that highest quintile of income has a disproportionate impact on overall spending in gdp. at the lower end, you have interesting dynamics there as well because, during covid, it was that cohort that saw by far the largest weight increased of any of them. that means they have more of a cushion. the u.s. economy can't grow forever with just the top 20% of spenders. i think it is a concerning sign. it is another sign that these lower income spenders are more interest-rate sensitive than the high income spenders. matt: what is the economy like down there in austin now? from the boots on the ground perspective, cowboy boots on the ground perspective. i would think it is red-hot

because you think about people moving from high tax regions down to texas and florida. on the other hand, it is red-hot and that tends to crib the economy, right? [laughter] kara: i would say the economy is still booming. there are a lot of people still moving in, you are starting with a relatively small population compared to a place like new york so you don't need that many people to move in to have a grow on a percentage basis. still a lot of building a new businesses opening up and it is hot but eventually it will not be. matt: cara murphy of kestra investment management. thanks for joining us. i was down there couple months ago for the moto gp race at coda, the circuit of the americas, and what a cool town. >> it's like l.a. in the middle texas. south congress, then you have rainy street, it is an awesome city. matt: i was on rainy street all night pretty much every night. >> the music. matt: very cool.

have you gone? gina: yeah, i love the river walk. i love to take a nice drug down the winter walk. maybe not in the sea. matt: a bloomberg opinion piece was written the other day saying hi heat has had a negative effect on the economy. if you are a construction worker trying to get a house built, you will not have people doing it during the day in the sea. gina: then all the migration has gone down to the heated area of the united states, everything in the southeast, southwest as well, and a massive southwest weather event with the hurricanes hitting southern california. where can you go? you will have to stay in the high-tech tax northern states to be relatively cool or stable. >> thaad one nice thing, there's a draft in panama affecting a logjam in the panama canal so if you want to talk about climate change and how it is impacting things, look at that. matt: if you're just running the program, we have nvidia earnings that came after the bill

yesterday, driving the stock higher in the premarket, driving the s&p higher in the premarket. features here up .6%. coming up at 8:00 a.m., michael mckee in jackson hole speaking to former st. louis fed president jim bullard, an interview you don't want to miss. next, annmarie hordern will join us on the first gop debate minus of course the front, front, front runner, former president donald trump. we will talk to her about the reported death of goshen taking a flight out of moscow that crashed. this is bloomberg. ♪ we are still looking ahead to a number of really important guests as i said there and also to some data this morning, right? we will get jobless claims out. >> i think you have to look backwards, yesterday of housing

data. we saw a really weak numbers but then interesting news on the new home sales front. they were better than expected. if you're looking at the state of the u.s. economy, it makes sense there is a supply overhang, not enough supply at current levels, it would be very difficult to get anybody moving at their current mortgages and -- out their current mortgages and looking at new ones. gina: and the housing and auto market have been these leading indicators of economic growth but there seem to be -- they seem to be detached on what is happening in the rest of the economy. is it sustainable, not sustainable? the equity market is on fire despite this negative macro news. matt: next as i said, annmarie hordern joins us on the geo b debate. this is bloomberg. ♪

>> joe biden spite how mx. led to the loss of $10,000 of spending power for the average family. >> unlock american energy, drill, frack, and embrace nuclear. [laughter] people no longer want to pay more to stay at home. stabilize the u.s. dollar. >> joe biden and weakened america at home and abroad in the american people had enough. matt: senator tim scott and

>> i don't think this is the moment to declare victory. on the one hand you want to say core inflation is declining and we have economic growth, but we have 5.5 percent interest rates and close to 6% gdp. that is not a soft landing economy, that is a no landing economy, an celebrating economy. matt: that was anastasia and barroso, chief investment strategist at i capital talk about the economy. we have fascinating news on the u.s. economy yesterday in terms of housing when we saw new home sales rise. we expected a rise but they were even higher than expected. 4.4% month on month so a really strong picture for the new stuff because there's not enough of

the used stuff. jim tobin, president and ceo of the national association of homebuilders joins us now. jim, the homebuilders have been on fire in terms of the stocks this year and, as long as people with 3% mortgages are not willing to get out of those and go to 7%, which obviously they are not going to, new homes are the only game in town. but they have problems as well, don't they? in terms of cost, finding workers, those high interest rates themselves. how does it look to you? jim: thanks for having me. it is simply this, new home sales continue to defy gravity of all the headwinds we talked about. we continue to fight the labor shortage, the persistent labor shortage in the construction market. we continue to fight obviously 7% mortgage rates and we continue to fight supply chain costs. we are looking at a transformer shortage, talking about other supply chain issues that continue not only to drive up

costs but when you take the three together, it is strange that housing, new-home sales continues to be the strong but we are the only game in town. gina: do you think there is a level of trades that slows down activity? we have been talking about 7% to a percent mortgages depending on the mortgage type as likely over the course of the next few months. is 8% a magic level? is there a level you would watch for where you see a material slowdown in activity? jim: i would have thought 7% was a but obviously we're looking at july numbers and in july, mortgage rates are 6.7%. i think the august numbers, we may not see as robust activity in optimistic numbers when we get later and look back on august. i think north of 7% is psychological, six is a round number, seven is a pointy number so my feeling is we not quite at

the top of what rates look like so i think 7.5% might be the magic moment but when new home sales are the only game in town, if you are a credit where the borrower and want to get into the ownership space, maybe find a way to do it. a lot of people are tripping in a lot of people's ears talking about you can get in the market now and eventually rates subside, you can refi. if you are a credit where borrower, there are a lot of our -- there is a lot of opportunity in the new product market. gina: it appears activity slowed enough relative to the supply advanced, creating near-term and balances. you talk in your notes about the months supply in the market above 7%, neutral is about 6%. talk is about new supply. the builders seem to be optimistic and are continuing to put houses on the market. jim: we are the only game in town and in those markets where there is high demand and inflow

of population, we are still seeing we can sustain this demand but for how long? i will point is that breakpoint where people really truly sit on the sidelines. that is why it is important and i'm curious what chair powell has to say friday. are we finally at the end of their rate tightening phase? we have one more rate increase, maybe two, but remember shelter inflation is 90% of the course evi right now. chair powell could fixes if he wants, he could continue to raise interest rates and crush the housing market. we have seen what we are going through right now because of that or policymakers can decide to help the fed out, get used to the soft landing by creating policies at all three levels of government that help us put more supply in place and drive down cost the old-fashioned way. meet demand with more supply. damian: u.s. new home sales rose to their highest level in over a

year but if you look at mortgage applications, they fell to their lowest in three decades. looking at the mortgage purchase index, its lowest since 1996, the index that includes refi's at its lowest since 1995 p application, sales, rates, supply. what data points are most important to you right now to give you a sense of this state of the u.s. housing market? jim: i think it is permits. that is the biggest forward-looking piece we can figure out what our members are looking at down the road. nhp, wells fargo, hmi is another one six months out, we saw that for the first time this year. that fell six points back to a neutral 50 a couple weeks ago after seven straight months of increase in optimism by our members. that was following the entire 12 months of following in 2022 so i am wondering if our members are starting to get a little more skittish. we talked about the headwinds, interest rates are the biggest part right now, despite demand

being out there and that is why it is critical like i mentioned a policymakers help us out because as much as i respect chair powell and what the fed is trying to do in bringing down the soft landing, my fear is they will go too far to cool the housing market or at least really get shelter inflation down to a more manageable level so they can meet the 2% target. damian: i know base fx plays a role but new-home sales were up across the country with the exception of the west down 8.1%, the affordability-challenged west as it were. talk to us about the challenges going on there. what would it take to write the ship out west? jim: i think when you look at california and west coast states, they are among some of the most overly regulated states when it comes to whole building -- homebuilding in the u.s.. my feeling there is if california has a housing crisis, and the governor out there is

trying to get localities to play ball more, home prices in california are absolutely out of control, the highest in the nation. then working your way east through phoenix and nevada and people still want -- despite the headline risk of heat out there, people want to move to those states because there is a little freer economy, home prices are little more manageable out there . despite the weather at the moment, it is a nice place to live. i think it is if governments get out of the way and let our members build, we will find the west will catch up. matt: the west is the best. if i could find a job out there i would be out there in a heartbeat. [laughter] what about buying points, getting the rates down, what can the businesses in the national association of homebuilders do to help prospective buyers get in at 6% or 5%? are they doing that? jim: we are seeing some members

do rate by downs. we see discounted prices on homes to help on the cost side to match the increased rates. we also see a trend in smaller homes. one way to lower the cost is to build not as much square footage and that is a trend we always see when markets constrict like this is smaller product that people are willing to get into in order to beat those cost constraints, those are three of the ways builders are trying to fight this environment right now and make sure they can still move product or get people into homeownership. matt: thanks for joining us, jim tobin of the national association of homebuilders talking about the big spike in new-home sales we saw yesterday. month over month there was 4.4%, but if you look year-over-year, 31.5%. base effects are important but that is a huge jump. gina: still and it is baffling

as he mentioned, 7%, everyone thought 7% would be the rate activities started to slow but now maybe it is 8%. no one knows where the rate is. we know people have jobs, they have income growth, they want to own a home and they are still looking at least for now. damian: someone needs to answer who these animals are in westchester to pay $2 million to $3 million, waive all of their contingencies and cash. matt: yesterday tolls said 25% of their sales were cash sales and that is a luxury homebuilder. i guess those are the people that actually have the cash to do that kind of transaction. coming up, mike mckee joins us out of jackson hole. he will be speaking with former of st. louis fed president jim bullard. we will get his take on the possibility of a soft landing. this is bloomberg. ♪

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>> now, unfortunately we have seen a deterioration in breadth and across the board. >> the consumer has a lot of savings but it is the question of competent. >> they continue to prioritize

food and drinking places. >> it be difficult to get to the last mile of inflation. >> this is bloomberg surveillance. matt: from new york city for our already in's worldwide -- our audience worldwide, i am matt miller, tom, john, and lisa are on assignment in jackson hole ahead of the special coverage tomorrow. that is a show you do not want to miss starting tomorrow morning at 8:00 a.m.. they will broadcast from the economic symposium the kansas city federal reserve in jackson hole. they will be on bloomberg television through noon. we have great coverage we expect. there was a lot to talk about. i did not think we would even consider the fact they would the

inflation target. we do not think that is a possibility, right? gina: they want to keep that as lawful as they possibly can and ease the inflation rate. matt: they say inflation so much that even if they use language that waffles around it i think everyone expects 2%. damien: it seems to be interesting to suggest the fact that it could have an impact or influence and that is interesting to me. matt: let's get out to jackson hole. mike mckee kicks off our coverage with former president of the federal reserve. jim bullard. take it away. mike: good morning everybody.

it is a tradition here at jackson hole to start our coverage with an interview with jim bullard we come out at 6:00 a.m. and jim joins us in the cold every year. and he is joining us now from the university where he is the dean of the daniels school of business. welcome back to the show even if you are not here in person. jim: i am glad to be here and i wore my jackson hole coat in solidarity with the cold weather you have to endure every year when you are in the mountains there. mike: i offered you coffee, i wanted everybody to know that, but you did not want to come get some. the first question, i am sure you know this, why you left the fed when you did and why you took the job you have now area now.

jim: this is a great opportunity for me and the school of business. we were going to get much better we are good, but we are going to go to great. i thought it would be a great opportunity. i have been at the fed 15 years as president and longer before that. my time was running out. this is a great challenge later in my career stash i'm really looking forward to it. mike: you just recently moved. i'm sure you have economic policy on your brain. let me pick at it a little bit. i would like to see what you think about the economy and what you think of it at the moment. if you would like to vote one way or another do you have signals that give you a strong view one way or another? jim: the biggest question right now is the re-acceleration of the u.s. economy. the gdp showing substantially

above trend growth for the economy and the third order. following higher been expected growth in the first half of 2023. and the second half of 2022. i think those that have been predicting a recession are having a lot of trouble. it does not seem to be happening. if this -- this reacceleration could put upward pressure on inflation and stem the disinflation we are seeing. instead, delay plans for the fed to change policy. mike: let me separate those questions a little bit in terms of inflation. absent the growth level we have right now, that is an early read from the atlanta fed, absent that, would you think inflation would -- re-accelerate based on what you've seen in the economy?

jim: there is some talk about base effects fading and going the other way in the second half of the year. we will see if that occurs. i like to look at the 12 month numbers because they rent out some of the seasonal effects. you could get at least pause in the disinflation or even a little bit of reacceleration. i think that would suggest a higher rate profile for the fed than otherwise. so, yeah, it could happen. mike: chairman powell and the other members of the committee have been careful with what they said about additional rate increases because they seem to feel they are pretty tight right now and they want to make sure they do not to the economy into a recession. how great of a danger do you think that is? jim: i don't know. i think the committee should

take a little bit of a victory lap. the unemployment rate is 3.5 percent. we are very aggressive in 2022 and into 2023, but the real side of the economy has been growing faster than potential labor markets. -- label market still very strong that should support consumption that would precede the pace here in the second half of the year. in the meantime, cpi inflation, headline cpi inflation was 9% at one wait, now 3%. one point, -- one point, now 3%. now the policy with hikes with four meetings in a row has a good chance of success. you never know. it seems like it has a good chance of success here.

if there is ever a soft landing taking six points off of the headline inflation rate without increasing an would sound like a soft landing to me -- increasing unemployment would sound like a soft landing to me. mike: we have long and variable lags that are just beginning to hit the economy. the 2022 rate increase path is only beginning to hit the economy. we only -- we see some sentiment indicators suggesting that. we see a manufacturing drop off. do you think we really need more rate increases or should we wait and see if the lags are starting to hit and if this speeding economy will slow down at last? jim: i do not think long and variable lags are quite what they were when milton friedman talked about them decades ago. i think the transmission is much faster than it was at the time.

i would point to housing as one of the prime examples. the housing market basically came to a stop in the spring of 2022, at that point, the committee hadn't actually done anything. policy was still not that far from zero at that point. markets anticipate what the fed is going to do. you've got a big impact in the spring and summer and fall of 2022 housing market. that's an example of how they pull forward the policy of the fed and nothing that is prevalent today than it would have been in the 60's or 70's. so i think the long and variable lag estimate are a little out of date area you have to think about the transmission coming much faster than it would have during that period of time. mike: a couple of newspaper

stories and all wall street is talking about is whether the fed will be adjusting its estimates. two questions, what do you think it is, and does it tell you anything? the second question is, is it relevant to policy at this point? jim: i think it is relevant. they have good estimates of the number. i think chair powell has said we really do not know. that was one quote from your own -- from him on r-star it is a good debate, but you cannot make too much of it because the estimates are so uncertain. i do think it matters because people want to have some idea of where they think they are going in the medium term. mike: that is my next question, where do you think we are going in the medium term? some people think the new york

fed president, r-star in the neutral rate interest, let's put it that way is going to be somewhere that it was prior to the pandemic. others think we move into a new regime and we will be back to the 1990's version of interest rates and growth rates and inflation rate. writer you think we come out of the pandemic? jim: yeah, i think the probabilities are we are in a new regime that would be high interest rate. it would be more like the 90's down we are used to in the last two decades. the reason i say that is inflation is above target today. more inflation is likely to be sticky and come down rather slowly. the rule of thumb would be that the policy rate has to be above the inflation rate in order to

continue to push inflation back toward the 2% target. you would expect from those considerations that the interest rates would be rather high over this time frame going forward over the medium-term and more like the 90's, less like the 2009 through 2019 where you had inflation below target and interest rates pinned down at low levels. i think we have probably switched here to a higher interest rate regime. that is with higher nominal interest rate. about the 90's, you and i have talked about this before. the second half of the 90's would be one of the best period for u.s. economic performance. maybe it is a good sign for the economy that it can boom even now with a higher interest rate environment. mike: we hope you are correct.

jim bullard the dean of the business school at purdue university. thank you for helping us kick off the jackson hole coverage. matt: thank you very much for that and thanks to jim bullard who is at purdue but wearing his jackson hole windbreaker. that is quite fitting. he said he thinks the transmission mechanism of rights is faster. it was a little surprised by that. if you're just joining the program, you see the s&p 500 futures rising about .5 percent. you know, the puzzling thing to me is that i thought long and variable lags were even longer now because everybody has a fixed rate mortgage. nobody is moving out of the 3% mortgage and it doesn't matter to most of the country that mortgage rates are at 7%. gina: we are more debt dependent

if you think about how the u.s. economy works there is a greater degree of dependency than there was in the sixth these and 70's especially in private sector and household. i think that is what it means by long and variable lags being not as significant. interest rates should impact that u.s. economy. damian: i cannot believe we are talking about gdp when employment is at the numbers it is at. gina: and that raises the key question of what is the level supposed to be? matt: we talk about that with michael darda of him km. --mkm. this is bloomberg. ♪

>> recently the market has decided to believe the fed and that there will not be an interest rate cut in the u.s. by the end of the year. we see that coming through in the u.s. dollar. i suspect this has further to go because i think the market will look at the european data, the u.k. data, pmi we saw this week and say why am i so -- maybe i should rethink my dollar positions. matt: that was head of fx strategy talking to us about the u.s. dollar and the strength we have seen due to the higher rate. those came down quite a bit yesterday. and we still see the bloomberg dollar index about 1240. relatively high levels.

diana imola --amoa at kirkoswald asset management joins us now. what is your view of what we see going on here. a couple days ago we were at 4.3 four on the 10 year and it did not dissuade everybody from keeping the equity markets at relatively high levels. diana: i think earnings is supporting this. the last earnings season is a surprise we see revisions in the key sectors that are big components of the industry such as the tech sector. and that gives investors a degree of comfort that companies can generate profits with higher costs. gina: you do see some central banks pivoting. can you talk about the

implications of that and how it plays out over the next 6-12 months. diana: indeed. some of the specific inflationary trends we see have turned into strong disinflation. markets appreciate how synchronized this is. similar to when we saw inflation pickup and the developed markets are ignoring the science inking it was em specific or transitory. i think this may catch markets by surprise. that is the one thing that has been a big turn in the context of growth outside of u.s. and it is looking lackluster. you see the pmi out of europe, the data out of china, the data out of specific emerging market economies whether you look at retail sales, credit growth across key number of economies. this points to tightening financial conditions hitting growth. inflation is off of the highs.

-- over the last few months we see brazil, chilly, and others cutting plates -- rates. gina: are we moving into a world as you correctly identified where emerging-market -- are they liking to -- likely to lead developing markets? how do you structure a portfolio environment where emerging markets are leading developed markets? that seems a different development construct than what we have lived in the last 20 years. diana: it is. the inflation dynamics we have experience the last few decades are coming as an advantage to policy makers. they hiked aggressively. they got to the terminal rate faster and have been on hold for long enough. keeping the conditions tight

enough that inflation is responding and consumption is slowing down across a number of economies. the context would argue that if there is a chance that we might have a recession and the key of economies, you need to have some duration in your portfolio, with the context of the price action we saw in august the duration seems to be going in and out, but you may think that the real rates are going out in key economies. and they may cut rates in what is playing out in the rest of the world. that gives us comfort in seeing em as a good diversification in portfolio. damian: you participated in our investment conference here, one of the things we debate it the shift into the world where countries have taken a position, are they on the side of the u.s.? china? now we see a brakes plus model

and we see the u.s. making efforts with south korea and japan. talk with us about the countries that do not have to pick a side. diana: it's interesting you bring that up with the bricks taking place right now. china announced overnight they would set up a to billion-dollar fund to support certain parts of emerging markets. and to help the supply chain integrity. i think that theme, it is a long-term theme it. we see countries across the board really thinking about where the supply chains are, where the key nominal results are and how to secure those. as a result, you see this being more of a conversation going forward. you see countries giving more toward nontraditional allies and you see other players such as the likes of india and mexico becoming strategically altered to the likes of china as far as

india goes to mexico and the u.s. as far as the manufacturing hubs and how they set up the supply chain. this multiple air t is happening -- multiple polarity is happening. if you do have a geopolitical fragmentation, you start to look at the countries. india being one that benefited from this geopolitical splintering. it looks strong with manufacturing over the next five years. this continues to go forward. damian: you mention china, that is critical. from a -- we see money exiting the market in the last two weeks. and china at its lowest levels

on record. how do you approach china in this environment? diana: one needs to understand the policy direction of china. what makes it different directing to china is the uncertainty as far as uncertainty and the tension domestically. this is an economy that looks like it is accelerating and continuing to accelerate. you have unrest coming through and then you have key sectors of the economy whether it is the financial sector, shadow banking and the issues we've seen the last couple weeks, the commercial real estate space that is key for business and domestic real estate orchids. and -- markets. it becomes difficult to look at traditional sectors. their interesting stories bubbling underneath the surface.

from an aggregate portfolio, direct investments become hard. the second layer you have to think about who benefits outside of china. which countries are likely to benefit. if you end up getting the plan of the last just rebuild roads commodity exports will benefit. china has now saved the opening -- to the europe and you -- to europe and the u.s.. we see that in tylan. that is another proxy where we think those are the places that could benefit. there are ways to position for the china story without direct investment in china. matt: thank you for coming and it is great to get your perspective on emerging-market. diana of asset management. the dollar call, it is so interesting right now. didn't we think the dollar was

going to lose a lot of strength in the beginning of the year and we began at 1240 on the bloomberg dollar index. damian: it is more u.s. growth staying resilient and the rest of the world not cutting to the chase. that has something to say. gina: it is creating a lot of interesting diversion says. em changes so much when we think about where we were five years ago em versus today. the outlook is compelling and different. matt: coming up we speak with michael garda --darda at roth m km with the data that we get coming up in just a few minutes. this is bloomberg. ♪

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matt: this is bloomberg surveillance i am matt miller in for tom keene, jonathan ferro, lisa braun ado -- i am here with damien and gina martin adams. we have a survey of 230,000 four claims coming through, jobless claims, we are looking at one million 705,000 through august 12. we are starting to get some of the numbers coming across the wire. 8:30 is when the data is due. initial jobless claims a little less than anticipated. 230,000 compared to the survey

of 240,000 area and the claims are at 1702 we were looking at 1705. hitting the line of continuing claims. michael mckee is in jackson hole getting ready for the suppose em that kicks off tomorrow. what do you think about the numbers? mike: they will continue to surprise the fed. they thought we would see unemployment rise with the higher interest rates they put on the economy and it is not happening. companies are holding onto workers and we are not seeing the kind of changes in the market the fed was anticipating. the question is can they figure out a way to do monetary policy with a different kind of them i meant target. and durable goods down 5.2% after a 4.6% rise the month of four. transportation up .5%.

without having the break in front of me, this is probably fewer aircraft deliveries. companies still spending money, but not as much as they were perhaps earlier in the year but we are seeing companies still ordering area that is good news for the economic growth story. gina: how will the fed balance this environment where you have a resilient job market, but some weakness of it in the manufacturing sector. inflation clearly decelerating in the short run. can they start to think that inflation has eased enough that growth could stay stable and then move to a stable policy stance or is that not of a justification? do may need to see evidence of the job market falling?

mike: that is an interesting question. they say they need to see week as an next week we get the jobless figures. we have seen the slower job creation so far, but inflation has come down. the question is, will it keep going down? they don't know. they probably think it is too early to say that we are diana. we spoke with jim bullard former st. louis president a few moments ago and he basically said he thinks we are still in line to get higher rates. jim: i think the biggest question right now is the reacceleration of the u.s. economy atlanta fed gdp now showing substantially above trend growth for the u.s. economy in the third quarter. that is following higher than expected growth in the first half of 2023.

and the second half of 2022. mike: so, we are watching to see what comes out of this meeting and jay powell switched to see if he is going to be able to balance all of the things that they were talking about. matt: you mentioned durable goods, you know me all i care about is cars. durable goods are down extra transportation up 0.5% what does that mean? mike: it was as i suggested aircraft. we see the non-defense aircraft we are down 43 6% on the month. this is what you get out of boeing. their planes cost so much that they have a effect on durable goods. last month they were up 71% this month down 43%. we would be happy to know that the automakers are still working on vehicles and parts orders were up during the month.

it is transportation, but it is only aircraft. matt: ok so it's not about cars. if it is not about the cars, i do not care all that much. mike thank you for joining us michael mckee at jackson hole preparing for the fed symposium tomorrow. we are in for tom, john, and lisa. they are out doing reporting at jackson hole as well. there could be big market moving speeches out of this symposium or maybe not. let's ask chief economist and macro strategist. what do you expect from the fed in a week when a lot of people have been saying nvidia is more important than jay powell speech? michael: thank you for having me on. that has been the case in terms of the equity market. all eyes will be on powell tomorrow at 10:00 a.m. last year was very short, blunt and to the

point, the fed is certainly moving quite a bit over the course of the last 1.5 years. i do not powells intent will be to make new news. the fed is getting close to the point where they think the policy rate is above neutral but their eyes are on the macro policy data. and they say if the data looks like it is above trend the fed will believe their job is not quite finished. i do nothing powell will come out and make a declaration that the fed is done tightening. i think they will take it meeting by meeting. damian: rising yields are a negative for the u.s. assets. here we have real yield at 10%. it is jump 50 points since july. how high can real yields go from here? michael: that is an important point. it could certainly go higher

with tightening. real policy rates can go up, but consider the fact that the last period where we had 10-year real yields around 200 basis points spanning from 2003 to 2009, the s&p 500 ratio was around 15 and we are at five t -- 19 times that. i think that ultimately will be a hurdle for the market. there is competition from the bond market and there's a lot of competition from cash read -- we published a piece yesterday that looked at yield relative to earnings and stocks. the yields are now higher than the earnings yield on the s&p 500. that is rare historically and the equity market has tended to fall into serious corrections or

bear markets. it will be put -- the point is a good when the higher the lower the pe ratio area the p/e ratio with the equity market -- is looking that way even with the forward basis. matt: this is where gina michaels will talk about the equity risk premium. it is difficult for me to get my head around that. gina: right. the thing i think you want to focus on with respect to the equity risk premium is most analysts are going to look at the pe on the s&p 500 and compare that to some version of the yield or cash yield. i think the missing link is when you look at the s&p 500, you are looking at a historic pe based on stocks. when you look at the broader equity markets you look at global stocks, small-cap stocks,

the s&p 500, you find the risk premium is closer to long-term than average. you have distortions that are creating a really bizarre environment for investment. my question to michael would be where will we go with this? will we see some rotation as a default of the equity risk premium or is this a cell on stocks -- a sale on stocks? michael: that's an important question. the answer is it depends on how the business cycle fares from here. we've seen the rally brought in out and we've heard the -- heard the words soft landing and goldilocks fairly frequently. it looks like a soft landing in the sense that the economy has slowed to about trend. inflation is coming down and it is starting to catalyze a lot of confidence that we will avoid a recession and there is no recession happening now. we know there is a recession out

of an unmet rate area and it not taken occur yet, but i do not think we are out of the woods in terms of looking over the year. i think the probability of a recession is high. just because we dodged one in the first half of the year, i think it is a bit premature to say we will be close to clear now area if we end up with a recession hitting sometime between now and the summer, i think that will be a different environment for the equity market even given the fact that we have these distortions by the specific stocks you mentioned. the rest of the market does not look that expensive but the market growth is weakening and potentially falling. we have pressure on profit margins. i think we will have difficulty in risk asset. not just equity, but the high-yield market looks insanely expensive. i would not touch that with attend -- with a 10 foot pole.

matt: he has avoided bitcoin from like $600. i want to ask getting back to jackson hole how restrictive the fed is. you point out that we have an inverted yield curve and we see shrinkage in the money supply for the first time in who knows how long. typically, that indicates recession. on the other hand, kneeled out of -- neil put out a note -- a point on the notes that said we have growth that looks like 4% right now. how restrictive can the fed really be? michael: that is a critical question for the fed. if they are looking at the incident data month by month, week by week, if the data looks like it is coming in above trend, the fed is going to

assume whatever the policy rate is, it is not high enough. that is why there is ill a question about whether they raise rate again and whether they are done in the futures markets and they start to price in at least one more rate hike even though it is low probability. so if you continue to get hot date of the fed will keep at it. they will admit that they do not really know where the so-called r-star or the equilibrium is. if you think about what most of them have been saying, this is since last year, the fomc voters have been talking about getting to a restrictive stance. and what does that mean? it means activity is coming in below trend. that's not happening and it will keep going until they -- that does happen. in my mind about is the risk to the business cycle. it reinforces the message in the yield urban the longer leading indicators that we can growth.

the problem is, there are long and varied lags. you can have riproaring equity markets even if they are narrowly driven. we saw this in 2006 and 2007. in the late 90's. so most of our time here. matt: for all of us here he was way before our time. thank you michael at roth in km talking with us about rates. the s&p 500 is rising this morning in the futures are up .4%. in terms of our -- r-star and restrictive rates, that will be the big debate. i guess it is always a debate, did we ever know? damian: we have the claims data that came out and for me it is more of the rate we had 31 positive payroll rates going back to december 2020.

it will keep going. so if you look at the next fed meeting the only two data points that matter is a roles and cpi. that is what we will be focused on. gina: that is what i was trying to get out of bike is can the fed pause with the job market fairly stable? can they lean on the disinflationary trend more? this is the key question because they continue to point to the job market as unusually strong. all the data suggest that it will stay strong. matt: and that does not play any role in what the fed does. coming of jane harman commission on the national defense strategy.

>> russia is in a state where --

everyone -- it is possible that putin will continue this. aggression will be -- [indiscernible] it's not a mistake or accident for sure. [indiscernible] matt: that is the belarus opposition leader speaking with bloomberg earlier this morning. jane harman chair of the commission on the national defense strategy joins us now to talk about what this means for russia, ukraine, and the world. so great to have you on the program. we appreciate you joining us this morning on a short notice. can i ask what this means for the faulkner group?

my initial thought was they are the only soldiers that seem to be making a difference for russia in the war on ukraine. now with the head cut off of the snake so to speak it seems like they would be fairly useless. jane: i think that is right what happened to per goshen -- pr igozhen it reminds me of the end of the movie where the capital -- police chief says i am shocked. -- they were required so i understand to sign some oath of allegiance to putin. which is why they led the meeting whatever in the first place. many mutiny in the first place. because he realized that his body, the body was being cut off

from the head of the snake. now, it surprises me that he would have flown in and airplane identifying with him out about moscow airport. he seems very careless, i do not get that. i think the mutiny of the group is over, will something else happen? perhaps because putin is weaker by this. he handled this in a bizarre fashion. he basically did nothing for about a month and tried to figure out what was next. he also now has been indicted for war crimes and could not go to the meeting of brazil, russia, india, china, and south africa in south africa a few days ago. he had to send a video in. what i learned from that is that he is caged. i am not sure that he get stronger, your commentator said he will get stronger i am not sure he personally will get stronger.it

is not mean democracy will rise up in russia anytime soon. damian: talk with us about his inner circle, what does the goes ins -- this death mean for them? jane: is it business as usual? yes, but he played people off of other people. he targeted them because he was anxious that his inner military circle were not getting the job done. they were not getting the job done in ukraine. i do not know who will play off against houma, but i think all of them have to worry. if we can focus on ukraine for a moment, there was a lot of news coverage that the war is not going well for ukraine, how about this, russia is still blockading ukraine grain going to africa. putin's video at the conference

said it is ukraine's fault, not our fault, yeah right. that is the black sea -- it is open waters bordered by three nato countries. maybe it is time for nato to institute a no-fly zone over the black the and let the grain move out of -- by ukrainian vessels. i think that would send a strong message to russia when put is weaker and that would perhaps hasten one would hope retreat from this ridiculous and cruel war he is waging. gina: bring this home for us and talk about the implications of the dynamics of some or inside washington. we just had the presidential debate and the republican debate last night. it was mentioned in a foreign power of -- policy is a hot topic, how might this impact what is happening among policymakers here at home? jane: there is no love lost in

congress for food perhaps -- for putin perhaps a former president but his fortune seem to be slumping. congress is of a mixed mind, about half the people on the stage especially vice president pence and nikki haley were vocal in support for continued aid to ukraine as i am as well as democrats are. the dod is frontloading some of the additional cost for weapons and support into or trying to frontload it into the next budget plus the supplemental. hopefully congress will improve that. there is strong support by mitch mcconnell, the republican leader in the senate, i have not heard kevin mccarthy latest version on this. we could be headed for a shutdown, unfortunately at the end of september, but i am

betting that congress keeps fighting the war and i think congress should keep funding the war. i think the future of the peace in the west is at stake if we do not stop russia. damian: they are well represented in the central african region in libya, syria, and others. what does prigozhin 's death mean and what is it mean for the countries? jane: it leaves a void. he was a leader of a corrupt group in africa. i have not heard about his deputy moving into phil the role, -- to fill the role. i think that putin has long tentacles and they may have fear of crossing russia. perhaps another group will fill the void but some in africa who

were dependent on the mercenary group say that they had better watch out. the protection has maybe been removed. matt: it is great to get your thoughts this morning, jane. we really appreciate your insight. i do not think there's anyone we could have gone to a better idea of what is going on. jane harman the commission on the national defense strategy we appreciate your time. while we were speaking we saw a red-hot sticky headline because the bloomberg terminal that the turkish lira extended its rally against the u.s. dollar more than 10%. this is when they raised interest rates more than expected. the currency is trading at about 25.5 four -- per dollar. that is a week level.the last time i was there i was buying five or six lire for a dollar. talk with us about what is going on here and where we are now in the fight against inflation. damian: it is clear the lire,

there is basically negative reserves they are they cannot support the currency at the way they used to, the central bank cannot. when people talks about the declines of the lira they forget about the yields in turkey which are astronomical. when u.n. basin of -- invest in a place like -- when you invest in a place like turkey, the yields could compensate for that, but it is down this year but not as much as people would say. gina: i think it is an area where investors struggled to put capital because there is stability in the currency and yield are all over the place. capital generally tends to concentrate and areas of certainty and relevant terms of equity market. this region of the world is difficult to invest in even though the economic trend could

in -- benefit. you see diverse supply chains play out. they should be beneficiaries but it is tough to attract capital. damian: you're making you good point from foreign investment, but if you're inside of turkey, there is no other place to go if you want to invest. matt: matt: i assume they must be using euros or dollars rather than lira.it is so sad because it is a beautiful country. i was lucky enough to spend a month there with my english professor who took us for a great trip to roberts college and around the border. tough time there but at least they are getting strength against the dollar today. it has been great hanging out with both of you today. thank you gina martin out of and damian sassower hour. coming up in the next hour nikki haley following last night bait -- last night's debate.

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>> from new york city, i'm alix steel in for jonathan. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading, this is "bloomberg the open." alix: coming up, big tech get a big boost from nvidia. chair pouille on deck, as republicans target president d