>> 2% is and will remain our inflation target. >> it's critically important that inflation expectations remain at 2%. >> if the right inflation target is 2% and they want to get there in a credible period of time, then we are not sufficiently restrictive. >> we are all committed to that. question is how to get there. >> if we are stabilized around 2.5% and the economy is humming along, will you break it? >> this is bloomberg surveillance. jonathan: let's get back to work, live from new york city this morning, good morning, good morning for our audience

worldwide, this is bloomberg surveillance. together this morning with kailey leinz. your s&p 500 is slightly positive. tk leaving jackson hole behind and pushing ahead to payrolls friday. a sneak peak, 168 thousand, the lowest number going back to the start of 20 21. tom: a sleepy week in august, it's not. there is a lot going on this week, not only the jobs report but the jolt survey tomorrow. a massive recalibration here as we prepare for september. jonathan: our week making an of progress -- are we making enough progress? tom: i like the eight dollar gin and tonic's at the cowboy bar in jackson hole. what's interesting to me is maybe the theme from christine

lagarde in her speech and that is clarity, flexibility and humility. it sounds like surveillance on a daily basis. jonathan: china is looming large after that conference and the slow down there. the latest measures over the weekend, stock purchases, limiting ipo's. the equity market rally was not impressive at the close. kailey: 5.5% would have been the best day in three years not fated to a one per -- a 1.2% gain. the stimulative efforts are not really sticky and not having the full desired effect that china would be seeking as they attempt to shore up the equity market and shore growth as they arm dealing with many fragility is the market. nothing quite seems like enough and is more coming? jonathan: we had a big pop at the opening bell from china and then it faded big time.

tom: i think there is a huge lack of confidence. the number of thought pieces on china right now, the industry is in full late august rourke - roar as to where china is going. jonathan: let's go through the price action. your equity market is slightly positive on the s&p 500 with the first week of gains last week. if we can build on that as we close out the month into the effects market. euro-dollar is just about positive. the 10 year is up and a two year at a new closing high for the year. tom: past labor day into that tuesday, i have no idea where it will be eight days from now but that is the single data point that matters. with all the agony in the equity

market, 16.14 and the vix is turning over the last couple of weeks. kailey: as we look ahead to what the federal reserve will do in september, there is a question as to whether the ecb will make a move in september. we had tom's interview with christine lagarde at the end of the week last week where she talked about how expectations need to remain at 2% but left september as a question. we will look for more clarity today. there is a case for a rate hike of no surprises turn up. we will look for more details coming up in about two hours from now. at 10:00 a.m. eastern time, an important hearing in washington. there will be the first hearing in the trump's 2021 election craze this case in which he expects to set a trial date. the doj is looking for january

year. this is the jack smith 2020 overturning election case. there is a hearing in georgia today. finally, as she was yesterday and will be for the next couple of days, secretary gina raimondo the commerce secretary is in china, the fourth administration official to make a visit the next few months and trying to repair relations and it seems there is tangible progress is more hot air. tom: the most important imagery is in the houndstooth jacket. she is truly one of america's experts. you come out of school, you write a thesis and you make a book. it's like taylor swift, it's

like a platinum album. jonathan: it's four days of this? kailey: yes. jonathan: we will get the latest update this morning. from evercore, the reaction to nvidia earnings last week at a to the wall of worries and surging interest rates and u.s. retail is a caution. is the pullback more than a seasonal setback? the chief equity strategist at federated joins us now. is the pullback more than a setback? >> julian is a smart guy. we have been looking for let's call it a 10% correction in stocks over the course of the august, september, october per whichiod -- which would be seasonal.

the first seven months of the year, the tech stocks have dramatically outperformed the rest of the market and we felt there would be a reversion of the mean during this third quarter. 10 or 12% is a reasonable place to start so let's see with the valuation looks like once we get there. tom: i'm at the kitchen counter on labor day i'm trying to reallocate the portfolio. in my real -- reallocating with enthusiasm looking out three years or can i not have a three year view because of the jumble of the news flow right now? >> if you've got a three year time horizon, we are extraordinarily bullish. our near-term call is somewhat defensive. we've got a 3% overweight to stocks for all. our overweight's are in domestic value, small-cap and international. one area we got a negative bias

on his these growth technology names which we think that ahead of themselves. as we look out three years, we will see peek inflation we will have seen peak fed valuation levels, maybe we get a change in leadership in washington with better fiscal policy approach. all of that suggest that stocks three years now will be in much better shape. kailey: you say we will see the peak in inflation and fed funds. can you get more specific about where that is if we are talking about higher for longer? >> i think we are looking at about 6-12 months. inflation has clearly peaked last year. is the divergence between the decline in headline inflation versus core inflation? core inflation is coming down the slower pace. the federal reserve probably has one more quarter-point hike up their sleeves, maybe at november

and then they pause. but plausible last a while. we don't expect them to come back in and start cutting rates until perhaps this time next year. valuation levels because of the tech stocks were extended. the valuation levels are coming back. stocks are down about 6% over the course of the last month or so. we've got this big election coming up in november of next year. it will take a year or so for all of these things to shake out but using tom's three year time horizon, we are pretty excited about what the longer-term picture looks like. kailey: how does the longer-term view and equities conflate with what you expect in the bond market? the bond market looks quite confusing the moment but i wonder how much the rate story is contributing to the stagnation in the equity market? >> great question, the backup and rates we have seen from

3.75-4.75 over the last six months, that's exactly what our duration committee was looking for. the idea is that rates will peak in this 4.20 5% neighborhood. over the course of the next 6-12 months, we will see rates rally back into the 3.25% neighborhood. it's been painful for a bond investors over the last six months or so but looking over the course of the next year with the potential for slower economic growth, we will see a rally. tom: retail got absolutely slammed last week. does that give you pause in a profitable walmart trading at 20x earnings? >> one of the things we track pretty closely is the performance of the consumer during april, back to school and christmas. back-to-school season, we only two months in. got june and july data but

retail sales are only up about 2.4% year on year. i year ago, retail sales were up 9.8%. we saw the same situation with march and april easter sales only up one point 7%. we think christmas sales will be that low single-digit. for a number of reasons, the consumer is slowing down and gdp is 70% generated by the consumer so that's something we watching closely. jonathan: do you feel tension between what we are pricing in the bond market and the front end which is higher for longer and what's developing abroad? >> china has been a disappointment, no question. we've got a longer term view on china that given the problems they are having now is -- it's inconceivable to us that we do not see aggressive fiscal and monetary policy in china looking over the next 6-12 months to try

to reverse those fortunes. we like international in part because we are expecting the chinese government to step in and try to turn things around and improve the economic course of china over the next year. jonathan: it hasn't happened yet, thank you so much. stock market closed higher by 1%. it's not that way today. tom: i take huge issue with the omg issue. he talked about a corrections 10% in a bear market is 18% and often, you are supposed to be down 35% if you enjoy owning equities. we heard that tone from mr. orlando. jonathan: i will give you a range of views from friday. tom: i should be out there

canoeing. jonathan: did you go canoeing? tom: no, i did not. jonathan: i can imagine you in a canoe. kailey: he just gives directions. jonathan: does that work? let me go through this again. a neutral speech, i went through back through the speech yesterday and when you go through the break tenant economic growth, they had to do more. there is a hawkish conclusion on the labor market and the conclusion to the whole speech was navigating the stars of these cloudy skies. basically, we went from needing to do more maybe and risk management perhaps nothing right now. tom: it was like starry, starry

night. they put me up in this incredible ant-free room. jonathan: my bed was not ant-fr ee. tom: you come out and there is over ryan - orion in the evening -- in the morning sky. jonathan: it's a beautiful sky over there, no streetlights. tom: i was looking for cassio. and i couldn't see it. jonathan: live from new york city, this morning good morning. ♪

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>> we are prepared to raise rates further if appropriate and in hand -- and intend to hold restrictive policy the same level while we decide to tighten further or hold the policy rate constant and await further data.

we see the data as restrictive in putting downward pressure on economic activity. 2% is and will remain our inflation target. jonathan: chairman powell less blunt than 12 months ago and the speech longer in jackson hole, wyoming ride a. 2% and is and will remain our inflation target. that's the official line for the fed come you speak to the economists around the event and you ask them what the objective is. they are not sure it's 2.0%. tom: it was a huge disappointment. it was there in every conversation but it was not codified in the papers. the only paper that really got it was one.

there was a dearth of our start to the discretion. i was disappointed. jonathan: it was optimistic and instructive. he said we can tiptoe through this issue. tom: one economist made it clear that the debt is containable and the idea that we will clear our debt by growth he really pushed against. jonathan: let's look at the price action. good morning to you all, we are just about positive on the equity market. we are building on the gains of last week. into the bond market, 424 on the 10 year. the two-year is higher by two basis points. 5.1% this morning on a two year yield. we added a little bit of weight to that in friday's session and it continues this morning. tom: the three-month t-bill at

5.1 percent gets my attention. it is the end of the summer and we are all recalibrating. children are being lectured on summer reading and getting ready for school. part of that across the nation is the tone of america. no one does that better than gallup. an open question -- what is the mood of america as we enter september? >> not good. on several fronts not good. if you are of government official, matter what institution you are leading come your facing a record low in confidence. that even applies to the military. politically speaking, what we see is the biden administration struggling to get americans behind what they are doing with the economy.

a big effort the last couple of weeks but right now, president biden has 60% of people who approve of the way he's handling this economy. as people go back to school and as confidence and higher institutions is at a record low, people have the economy on their mind. tom: does president trump owned the republican party or is there a party out there of our collective memory? >> right now, if you follow the numbers he does. nobody is even close to giving him any kind of a challenge in terms of favorable race. that being said, his favorable rating is only 41%. it's the same as president biden. we will see an election where americans for the most part are choosing between options they are not thrilled about. unless someone miraculous jumps into the ring, it doesn't look like that will happen. kailey: to return to president

biden and his approval ratings which remain low on the economy, you have a graphic that shows over the course of the last year as we see inflation going down, the line almost moves sideways. is not getting credit for things improving. will the greater credit come potentially on the downside for blame for further deterioration from here? >> presidents it into a great job taking credit for the economy where they do a horrible job and they get blamed for anything going on. right now, biden is in the latter category. president trump was doing a good job taking credit for a booming economy before covid. those dynamics are probably not going to change terribly. i don't see biden suddenly convincing the public he's doing a great job and support among democrats was a little lower. he's really got who he's got. to be an income but that has a

chance, you got to hit 50% or more. the big thing in the polling world is is that a dynamic of the past and are we moving into a different area now. neither one of them are close to 50%. kailey: we have this hearing in the washington case and a hearing in georgia as well today when we will talk about a trial that could fall in the middle of primary season. we understood from reporting that the fourth indictment of the president and his arrest in mugshot in georgia seems to have accomplished raising a bunch of money, $4.2 million on friday. do you expect he will see a deterioration in his attractiveness to his base as these legal challenges keep mounting? >> we did a recent analysis looking at the past 20 years of the issues. democrats and republicans have diverted the most funds. the number one issue is the size of the federal government.

a 50 point gap between republicans and democrats and president trump is basing his defense on an overreach of government that's stifling his right to free speech and his right to challenge the election. the more he does that and the more he drives right into the narrative that is based wants to hear. the better he will do. i don't see things changing much. tom: which state is your gallup guidance for november of next year? is there one state where you say pay attention to ohio or georgia? which is the state you study? >> there are none that we study. but we do is try to understand the national mood and the national average. a few states are key but every cycle in the last three or four, there have been different case states. it's really early now. it will be different when we

have one person running for the republican party but it's not going to be a one state game this year. kailey: when i look at the breakdown of the situations and the approval for the president, his highest approval reading -- is on the idea that the u.s. should continue to provide funding members of congress and making a lot of noise about the u.s. not aiding ukraine the same way we have. where are the american people on this issue? >> the american people are mostly behind ukraine but republicans are split on ukraine. this is a persistent split that is consistent since the beginning of the war. half of republicans are very much of the opinion we should not be doing so much but another half come around 45% that want to see ukraine when the conflict. tom: what is the taylor swift

impact across america, is it permanent? >> i think the future of america has more to do with entertainment than anything right now. jonathan: thanks for that final point. are you going to watch that concert, taylor swift? tom: i don't do the concert. kailey: it's a culture moment. tom: have you been? kailey: i have not. tom: i can see you going three times. kailey: i feel like i'm missing out. tom: i have my favorite songs. did anybody expect this to or three years ago? i don't think so. jonathan: can she dance? i was watching some clips the other day and i don't get it. it was a little messy over the weekend.

i saw how much people paid for those tickets. kailey: it was like 10 grand. jonathan: can you see kaylee paying the kind of money? tom: everton is the team. mark carney said you will be relegated so watch it. jonathan: that sounds like a threat. from new york city this morning, good morning, this is bloomberg. ♪ to this day i only paid what i had to pay for the device... when i go back everything is covered. there's so much you're missing by not having hearing aids. we'll find you a hearing aid that fits your lifestyle and budget at one of our over fifteen hundred locations. call miracle ear at 1-800-miracle

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jonathan: let's get your week started with your equity market just about positive by 0.1%. the first weekly gain for the month of august, the nasdaq positive by 0.3%. in the bond market, a new cycle hi. we had -- we add some weight to that, up another couple of basis points on the two year yield. tom: are we going to get a three-month t-bill edging toward 5%?

the 30 year mortgage is one i follow. 7.61%. rounded up to 8% with closing costs. jonathan: have they messed up this mortgage market for a generation? in two years, we have had -- we have equaled the record low interest rate and we have got an interest rate now at a high we haven't seen in two decades. that's happened in two years. tom: we have destroyed the american housing market. it is just not enough. jonathan: what will it take to recover? $1.08 on the euro. the austrian central bank governor is leaving the door open to an interest rate hike in

the middle of september. president lagarde does not want to engage the debate on september. tom: a huge discussion off of the speech. she does not want to talk about monetary policy. she asked if i was enjoying jackson hole. she said i look great and i said she looks great. jonathan: what about when you went live on air? tom: the thing about christine lagarde is humility. the american parlor game looking at the fed game, forget about humility.

jonathan: the china stock rally, erasing gains after a number of markets fell flat. they opened the session higher by .5% and then getting back to a more modest gain of just 1% at the close. the one that fascinates me is when they reach out to some mutual fund and say don't sell more than you buy in one session. kailey: trying to pull out a number of stocks and not having the desired of fact, i was struck by error poll survey. 19% of participants plan to increase their exposure over the next 12 months. it seems like a small fraction as china's turning things around.

jonathan: they have poured cold water on this equity market for a couple of years and all of a sudden, they want to get people back in? tom: how manipulated is this? jonathan: it's mutual funds and they are distorted. can you imagine the american equivalent of that? tom: the global fiction is what the chinese stock market is. jonathan: central-bank leaders in jackson hole threatening to keep rates higher for longer with speeches from christine lagarde and jay powell highlighting the challenges facing the ecb. the federal reserve a week or so after their announcement. tom: several governors were missing.

i looked over my right shoulder and there was a bar out there while they were chatting it up. full disclosure, i got more response from the lyrics of the ballad of davy crockett than i did from anyone at jackson hole. jonathan: this is my third attempt to give the data for next month. 14 for the ecb case september 20. jon: kailey: and a lot of data in between coming this week. payrolls friday and pce, the one the fed looks like coming over the next desk over the course of the next few days. they're trying to keep optionality. jonathan: cpi on the 13th of next month.

a third straight championship. tom: the rain was torrential. there is a diked between the north sea and the course and he's got his finger in the diked the whole time. there are two rain tires with treads. they were talking about getting rid of one of them. there was a point where the water, they were hydroplaning and the experts could not steer. jonathan: that's when they reflected. for ari came into the pit -- for ari - ferrari came into the pit

that way. tom: there are teams like the braves. jonathan: next weekend, home race forferrari. tom: is it a monte carlo racer? jonathan: it's a classic, nothing like miami. it's a real race. victor hovland of belgium winning $1 million in the fedex cup. i believe his winnings over the last two weekends were $21.6 million. tom: to be clear, this is pga money, not the saudi money. jonathan: then we are onto the writer. -- onto theryder cup.

the u.s. cares about it as well. tom: i don't think they do. jonathan: first place is $18 million. kailey: i would take it. jonathan: can you imagine the difference going into that? tom: how much do the caddies get paid? jonathan: i'm glad you brought that up, 10%. typically that's what you get. it's not bad. kailey: tom is reconsidering his line of work. jonathan: you could be a caddie. tom: i caddied at oak hill country club in rochester. jonathan: did you see that the former president won his golf club championship? he shot 67? tom: we need to get to our wonderful guest.

w abigailatt joins us now. the planning into september seems to be jumbled. the word at jackson hole was complexity. simplify how we get to september and what are you focused on within the present complexity? >> thanks for having me this morning. i think you are right, it's very complex environment. wherever you look in the global economy at the moment, if we are talking about the u.s. are looking at the fed, i think policy friday was no new news. the way he delivered his messaging was not novel. the idea of proceeding carefully and the data dependence is something is a common theme across major central banks. the ecb, the fed can the bank of england are all saying that currently. the key thing therefore will be the data that we have between

now and the next meeting. tom: you keep track of innovations on the continent of europe and great britain but also the united states. that was the theme at jackson hole the got some traction. what is the aberdeen innovation meter for europe? can that jumpstart gdp and equity performance? >> one of -- there has been a lot of attention on artificial intelligence and the implications of that for productivity growth and the ability for that to boost economies and boost potential growth. one of the key things i would be thinking about in terms of those gains on artificial intelligence is the need for them to percolate through the economy. there is a question as to whether they are a general practice technology and of -- and it's like electricity or the computer revolution. if it is, you could see a boost to growth and potential growth

in the euro zone. kailey: we mentioned earlier this hour, a member of the ecb governing council gave an interview in which he said if there aren't any big surprises, i see a case for pushing on with rate increases without taking a pause. where is the room for a big surprise? >> one of the things they will be looking for is the inflation data it this week. we will get that thursday i think they will be looking for no big surprises in the inflation data next week. one of the key areas we been watching his this balance between weaker activity data in this stickiness in the labor market and wage growth remaining strong. i think that creates a lot of issues with the ecb in terms of their policymaking. one of the key things is that we remain on hold in september.

that's because this messaging from christine lagarde on data dependence which is similar to the fed is important even though you see the economy weekend. tom: what about the glide path of the real yield? we use the 10 year at 1.9%. if you see these rates moving up nominal but also inflation-adjusted rates moving up, do they have a glide path in a stable drift to them or do they fall apart at some level? >> for the real yield, it depends what's happening on the inflation side. we expect to see inflation pressures weighing on the u.s. economy and there's a number of drivers like the shift from goods to demand that means that core goods prices will continue to decline. i think that's going to be the

real driver as we continue to see progress toward the sustainable rate of inflation in the u.s. economy. the area we are more concerned about is the stickiness in the core services measures. i would say that's one of the things that we are thinking about. jonathan: thank you for the update. that's the latest out of europe and beyond. we will have the latest from europe and your interview with christine lagarde friday. the ecb decision is coming up september 14. tom:maria todeo is expert on european and barcelona for all - futbol. we have less chance of getting

in the timeout chair. jonathan: we will have a conversation in about 45 minutes with sonja meskin. standard rate 10% for a caddie and could be netting $3 million for this year. tom: i could double bag 36 holes. if you came up with $22, you are living large back in my day. jonathan: from new york city, equity futures are positive, this is bloomberg. ♪ ade a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

>> it's critically important that inflation expectations remain at 2%. trade unions and business associations appreciate that in relatively short order, inflation will be back to 2%.

they will not want to fuel more inflation by having wage or margin increases that could not be consistent. jonathan: the ecb president catching up with tom keene going into the weekend. that was an elegant effort to inform the unions not to ask for a pay rise, wasn't it? 3 tom: it was an extraordinary speech. i was thunderstruck in reading it while she was giving it. matt turned to me three paragraphs and and said philip lane. my second question was who wrote the speech. she was adamant that this was her baby. she made clear this is her clarion long theme and philosophy. when you open within early 19th-century danish philosopher,

jay powell will not do this. jonathan: if you open with a philosopher, i expect she will did not want to talk about september. tom: they kept urging me to ask about september. jonathan: let's talk about unions. this is on everybody's radar right now. uaw union, the auto workers union, 46% pay raise, a return to traditional pensions and a 32 hour work week. tom: that's like hour work week. kailey: even sean fain who leads the uaw has called this an audacious request but given the demands they are seeking, what agreement can be reached here and cannot be reached in time considering the deadline is

september 14? if no deal is reached, 150,000 workers could be striking all three automakers at the same time. austin goolsby was at jackson hole and he said he's worried about the impact can have on the manufacturing economy. is difficult politically as well for what is supposed to be a pro union administration. tom: they shifted the labor agreement in detroit into crisis and bankruptcy and now the union wants it back. they want to get back to where they were. this is the way it used to be in these executives are making lots of money. we want to get back to the structure of another time and place. jonathan: i think that september 14 deadline is more interesting than a september 14 ecb meeting. in some ways, the union action

informs the decisions the central banks have to make anyway. labor market is still important with unemployment around 3.5%. tom: or when you look at the risks we have an jonathan ferro could work for ups in his brown shorts. jonathan: ups part time. american airlines part-time. there is some training that needs to be done before this happens. tom: you and i are working right now. jonathan: perhaps revenge is too strong a word. let me unpack what that means. it's 15 years in their minds of being underpaid and this is the first step to getting back to where they were. tom: i strongly agree with that. jonathan: some people say it's

justified. every single year for the best part of a decade, these individuals have sat in front of a manager who told him inflation is low and this is your pay rise. that's the conversation across this country and now people want to go to the manager and say inflation is not one point something percent anymore. the last 10 years, you told me i could not have a raisin out things have changed. tom: we will come back to this later. an important conversation now after a six week holiday. is the grand tour for maria tadeo. she is joining us from brussels. we want to congratulate her on her spanish victory. jonathan: it's fantastic to catch up with you. the controversy has drowned out the win so is that happening

domestically in spain? has that been drowned out by the controversy? maria: absolutely, this has become a political story in the country. on saturday, fifa, we know they handled the world offutbol in europe and put out a statement with strong language saying they would suspend the head of the spanish football federation because there is inappropriate behavior. pending the investigation, he will not be able to deal with the domestic and international operations of the spanish national team. spain is actually training to get the world cup for 2024. the optics of this are terrible. this is going back to the world cup. this has become a story about the politics and about feminism. he blamed fake then it -- fake feminism.

in the government is very progressive. tom: the slight headlines on the war in ukraine and the singular feature is ukrainian victories against russia is where mr. putin has to send in elite troops. give us your take on this. who is winning the war? maria: it's a good question. it depends who you ask. the overall theme and when you ask those not involved in oversee this from the outside, they say the way to portray this as this will be a long war and they are not making advances perhaps as fast as expected. the ukrainians have pushed back and they say it is a difficult war because the russians have had time to entrench. we are talking that a trench war in 2023. they have had time to reinforce

their position and ukrainian say a lot of the weapons that have been offered to the country, there is a lag between the operations and the training that goes with it. the implications perhaps on the battlefield but the reporting we do behind the scene suggest this is not a story for 2023 but probably extending into next year and that takes us to the u.s. election. this is one thing that ukrainian officials really care about, who will be in the white house next year. kailey: central bank officials also have to care about the geopolitics. christine lagarde was talking about geopolitics is one of the big shifts see is seeing. what to she make of her reluctance in that conversation to address the month of september? maria: i think there was a mismatch between the expectations of the market that wanted to get a roadmap to september. it was clear that this was not something she wanted to talk to. she wanted to be intellectual

and almost take a step back from relations with the economy and talk about the big picture and changes to the economy. it was interesting how she said you have to look at almost a new playbook with big changes in labor market. we see that in europe and energy security has been top of mind in your for a year now and will continue to be as long as the war is on. i see it repeatedly, before the politics, people thought there were the separation between the central bank and the work of the commission but they seem to tie in is one. she obviously did not want to send a message about september. she talked about the data and wanted to be at her most intellectual. jonathan: with stagflation in the euro zone, wonderful to have you back. tom: how do she take a vacation that long? jonathan: europe is completely

different. it's just the way it should be. one month off in august. tom: i'm going to take a vacation. jonathan: i gave my time tobramo. jonathan: did she extend her trip. tom: where is she in banff? they have a big lodge. jonathan: that's in canada? kailey: yes. jonathan: thank you, is geography done for the day? welcome to the program. just random geography and random trivia. don't even try to prepare for any of this. on the s&p 500, we are posited by 0.1% and the two year yield is climbing by a couple of basis points. yields are up and away over the last month. from new york, this is

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♪ >> 2% is and will remain our inflation target. >> it's critically important that inflation rates remain anchored at 2%. >> if the right target is 2% and they want to get there in a credible time, and we are not sufficient restricted. >> we have to get inflation down to 2%. we all agree on that. the question is how to get there. >> if the economy is humming along, are you really going to

break it? >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. anna: the last week of august. where did the summer go? good morning. on tv and radio alongside tom keene, i'm jonathan ferro. the s&p 500 posited by 0.1%. that line from chairman powell, 2% is and will remain the target. if it and will it? still a question out there. >> dr. coronado is up to two point 5%, but that is the raging debate. i would suggest some real disappointment at jackson hole that this was not addressed in the papers. it was not addressed more intelligently, i should say, about how you get to where you determine that rate. it was devoid, there. perfectly set. anna: this is something that came about.

that expectation existed. this economy is still outperforming even with rates at 5.5%. i think that introduces this conversation coming into jackson hole, clearly not something chairman powell wanted to entertain. >> the 11 ratio of bloomberg financial conditions index does not scream restricted, it screens nicely accommodative. that chairman has failed. not a personal failure, but the fed has failed to get us to a restrictive statistic based on michael rosenberg's great academic achievement. jonathan: you go through that piece by piece on the economy. he suggests the prospect of doing more. on the labor market at the end of that he raises the possibility of doing more. at the very end he starts talking about -- i've forgotten that line.

>> something very poetic, but it -- tom: no, no, no. >> sorry? jonathan: this happens daily. you carry on talking and you will get this trend of interruption. sometimes it will make sense, quite often it won't, but you just keep going. >> might take away from the chairman -- tom: she doesn't know. >> you're right about that. my takeaway was there is a lot they don't know, however, the bias is still going to be to do more rather than to do less because they are trying to win this battle. talking about the economy, talking about above trend growth and how that could actually be problematic and the inflation fight and the resilience in the economy we are talking about, that could be not a good thing for this federal reserve. jonathan: you got through it. >> should i hum a few bars or something? jonathan: you want to sing some

lyrics? posited by 0.2%. over in china a big effort on this equity market. tom, they are cutting stamp duty on stock purchases for the first time since 2008, limiting ipos. they are even asking some mutual funds not to sell more stock than they buy and yet the stock market has moved by just 1.0 something. tom: at some point they are going to blink face of economic data. i thought about that this morning. basically it means if china gets a rate sub 5%, even 3.8%, when the facts change, president gees going to change. jonathan: yields up to 5.1%. >> whether or not we are going to see a hike or a pause of the federal reserve, we talked at

length about how christine lagarde gave no clues what was coming in that september 4 meeting but we will look for other clues from other members of the governing council. of course, we already heard from the latter, he gave an interview to bloomberg this morning where he says he doesn't see a case for a rate hike if no surprises turn up. back in d.c., there is a hearing in trump's federal 2020 election case. we are expecting a trial date to be set today. the doj is looking for january 2. trump's defense team is looking for august of 2026. secretary of commerce of the u.s. gina raimondo is in china and we are getting some headlines of her speaking in beijing. she says trade can bring stability to u.s.-china ties as it is profoundly important to manage that relationship. she also spoke with her counterpart in china for more than four hours in which they

discussed strategic interests, agreed to communicate regularly and once a platform on control info. jonathan: would you say that one of those individuals is sitting in a stronger position than the other with what is happening with economies at the moment? >> and looks like china may be talking from a position of relatively more weakness given the fragility that exist in that economy and their attempts to address it that haven't yet seen to be the stick to this point. jonathan: more on that a little bit later. joining us now, chief investment strategist. you got this late in your research, september slippery slope. what is september slippery slope? >> in terms of the slippery aspect, what is it that is going to cause share prices to continue i think is the uncertainty surrounding the

coming meeting. also a backward uptick year on year for headline. that's going to give additional reason why september is the only month to decline more frequently than advance. tom: your history is to get beyond the moment, dare i say even conformant. are we looking to a second leg of a bull market? >> when you look back to the election-year of all first-term president since world war ii, that is not a guarantee, but it certainly is a comforting statistic, the possibility that the market will be higher next year as well. >> the chairman is looking at the stars in jackson hole. you remember don mclean and vincent.

let's go there, sam. is the migration from four to five stars, or are you seeing more downgrades? >> i think we are holding still right now. we have essentially all of the sizes, styles, and the majority of sectors below the moving average, and five of the 11 are below the 200 day moving average. i think we are going to experience a recovery in the fourth quarter of this year. i don't think the fed will be raising rates in september, but we do see the possibility in november but then our belief is that won't be the last one for the cycle. >> it's one thing for the fed to hearts -- start hiking, another for the cuts to start. does the equity market have a

little bit of optimism on that front? >> i think that is a possibility, higher for longer relates not only to the fed tightening program but also for the change in headline pce. we don't see it approaching the fed target until the end of next year, so the real question is how long do they maintain the elevated interest rate? typically they span between the last rate hike and the first rate cut, nine months. the market does exceptionally well in that pause. our earlier expectation was sometime in the second quarter of this year, but now apparently it's six months later. >> we know the fed decisions are going to be informed by the data. i the catalyst for the equity market also likely to be economic data more so than anything else?

our markets also data-dependent? >> i think they will need to have confirmation from the data. that is one reason the market has done so well so far this year. even though expectations are for a flat to down earnings year in 2023 when all is said and done, expectations are for a 12% advance in 2024. i think we need to start to see earnings improve. we are expecting the third quarter at about a 5.5% decline. sorry, the second quarter. actual results exceeded" or estimates as likely to be the same story for the third quarter which is expected to be off by less than half of 1%. things are getting better from a fundamental perspective. >> closing out august and

looking ahead to september. let's bring up one name, one stock. we just had a statement from a subsidiary, a statement addressing the fires in lahaina. i just want to bring a couple of paragraphs" from this. a morning fire on august 8 appears to have been caused by power lines that fell in high winds. the fire department responded to and reported was 100% contained. then in the afternoon according to this statement, the power lines in west now we had been deenergized for more than six hours. a second file referred to as the afternoon fire began in the same area and from what we understand, the cause of that fire hasn't been determined. >> remember, this is after a 72% decline we've seen since august 8 when that fire happened

because of the concern that this company was going to be found liable, that we could see something akin to what we saw with pg&e in california where the legal liabilities with the in the billions of dollars, should their equipment be found as a reason why the fire heads red. it seems like what they are trying to address in this statement is that this is not the case at least for the later fire that had horrific, deadly consequences. tom: for me it's almost too early for these kinds of discussions. the horror of what happened is still with us. i am fascinated how the tourist industry of maui rebuilds. jonathan: more on that a little bit later. if you just tuning in, welcome to the program. as we are in the bond market, yields basically unchanged.

why didn't you just say he was the american guy? >> i know the song. jonathan: we all know that song. a big moment. tom: we've lived this. he was legit from day one. he had an incredible craft. and what was interesting was the hugeness of american pie. you would take a course and tear apart american pie, that there were so many other songs. lightfoot never had the joy norma's -- ginormousness of american pie. this was vincent. this is 52 years ago. this is a few years back. >> i was negative a couple decades at this time. jonathan: tk, aging yourself. tom: bramo would never say

that. jonathan: good stories. tom: i talked to my father the day neil armstrong died and he said to me we were so lucky to live that generation. i feel that way about music in that -- the clearest memory of sitting on the bed looking at sergeant peppers going, are you kidding me? jonathan: you are not a fan of the autotune music these days? tom: i know you are a big fan of autotune, that is a different story. but the answer is yes, there was a certain amount of craft lost. jonathan: from new york city, good morning.

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>> if we continue to maintain strong consumer spending and continue to ease off on inflation, that has certainly been the pattern over the last few quarters, and so as long as

we can maintain the take job market continues to see inflation ease, i don't see why those trends tend to persist. >> the white house council of economic advisors speaking to bloomberg. good morning to him as well, tom. tom: he's an important voice, a huge supporter of what we've done for well in excess of 20 years. he drove the bus in the center of budget and policy priorities. an inspired selection by the biden administration. he with the liberal think tank economics guy with conservatives were forced to read. jonathan: robust exchanges whenever you hear from him. tom: conservatives always read him. >> as he is talking about the biden administration and the idea that inflation is coming down, he's confident it is going

to stay on this trajectory. i'd like to recall the conversation we were having in the last hour with the president have 37% approval on the economy, no matter what economic data is saying. the feeling of the american voter base. tom: let's get to that right now. ukraine and race relations, is the president of the united states with a sterling approval rating of 42%, that leads to a conversation at the end of august. annmarie hordern joins us now. anne-marie, gallup carries a certain authority. tell us, what does a 42% approval rating mean for this president? >> i think the issue is more the approval rating on the economy which is actually lower than his overall approval rating. and when you look at where we might be in 2024, the economy still is ranking high on individual issues and why they

go out and vote and how people feel about this economy. no matter what jerry bernstein wants to talk about with some of the data in the u.s. economy, the fact is that is not how people feel, and that is because they are paying higher prices even though the rate of inflation is coming down there basic necessities like rent, like groceries, like gasoline. and that is the issue this president races. but another poll this morning overwhelmingly shows many americans just feel this president is too old to be running again. they also didn't have the nicest things to say about his potential rival, former president donald trump, if he was to get the nominee. tom: what is the biden plan or point of discussion to get to the first tuesday of september? where do they want to be coming out of labor day? >> the president just got back

from his holiday trip in lake tahoe. right now you see the schedule for the week is he is going to be touting a similar agenda item we have heard throughout the year. i've even seen ads on television, they are trying to sell the inflation reduction act because remember, when you look at holding for the inflation reduction act, americans don't really understand what it means and how it could benefit them. it would benefit them if you have the buy a brand-new tv or the money to upgrade your roof to solar panels. but they are still trying to explain everything they've done. things that will come up this week, obviously they are going to have a speech regarding the march on washington. they are going to be talking about how they are allowing medicare to an elderly go back to the pharmaceutical companies to talk about drug pricing and of course, they are going to talk about selling the inflation

reduction act as well as heart infrastructure. they try to encompass all of this as biden nymex. -- bidenomics. >> he has also been touting himself as a prounion president. as tom asks about september, september 14th or after could be a pretty rough time for this administration and the economy overall if we see the united auto workers actually go on strike. 46% pay raise, 32 hour workweek. how problematic could this get? >> not just that, they also want to make sure ev workers, because of some of the work and the legislation fighting administration pushed through, they are starting to build up these battery plans and those workers are not unionized, and that really bothers the uaw president. they've authorized their leaders to strike if they do not get the

deal they want. right now, it is miles away from of the car companies say can be done to make sure the car companies are still competitive. but they feel like they've gotten bad deals for years, and they want to make up for lost time, and a lot of them definitely feel left behind. we know this has drawn a lot of stress within the white house because the president already has spoken about it and has put out a statement about it, and we spoke into the president's former labor advisor who helped and coined the term that biden was going to be the most prounion president in modern times, and that individual, he thinks that this is going to be a strike and that is going to be incredibly difficult for this administration. >> tom told me that people don't walk up and washington, d.c. before 8:00 a.m. have they started drilling at 7:22? >> we are facing an election in

2024, so they start as early as i do. >> you have to put up with that every single day? what did they do? >> it's actually the ceiling of the studio, the floor above. in a d.c., it is a smaller operation. we don't have the whole skyscraper like we do here in new york. jonathan: the latest down in washington. she is right to focus on the demand we are seeing from detroit at the moment. we've seen a lot of evidence of labor power over the last year. agreements for ups, american airlines. but we haven't seen are the big stripes. and the potential for that to happen across detroit's big three from the middle of september is something we can't ignore going to september. tom: and the downtime of strikes, there is a huge cost estimate of what those strikes

mean for ups or whatever as well. so they come to an agreement, to a solution. within 32 hour workweek, for detroit or dearborn, but the answer is these are bold demands. do they want to strike? what i know in the zeitgeist of august, all of a sudden ev's are selling like they used to. >> but this really is the question. this is supposed to be energy in transition and theoretically that is going to have to transition along with that but workers want to be protected. what you hear is that there has to be a way for everyone to win, but this is going to get much more difficult to broker if we are september 10, september 11, september 12. and do they actually have to get involved with just an acting labor secretary who still hasn't been confirmed? tom: first we got together september 2. you know what september 2 means.

it is a big football game in nashville. it is uva vs. tennessee, number 12 ranked tennessee. jonathan: uva does not have a good football team. ui basketball college. >> basketball, swimming, soccer, lacrosse, tennis. basically everything else. tom: this kid is 34 years old, he is a walk on graduate student at uva, ex-marine helicopter pilot. this is so cool. a 34-year-old kicker. that's because you only pay attention to basketball. i love this idea. they let the kids from vietnam come back and play college basketball. this kid is 34, a graduate student at darden and he made the football team as a walk on.

jonathan: we could go back, you could play ice hockey again. i'm sorry, this is inspired as well. this is enough to get fired up. jonathan:jonathan: is that a big game? tom: duke late in the season i guess is a big game. jonathan: kaylee wouldn't even turn up for that game. tom: she wouldn't. jonathan: bny coming up shortly. equities positive by 0.2%. this is bloomberg. rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq,

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jonathan: the opening bell hours away. equity market to kick young's office monday. s&p 500 index up like .2%. on the nasdaq, up. limiting ipos, mutual fund according to our reporting, not by. not to sell and sell more than you buy, effectively is the message out of china. csi 300, top 5% and some. faded big-time into the close. 1%. tom: i am a huge fan of former governor of rhode island.

forgetting about that, rule number one of diplomacy including ambassador nicholas burns, show the flag even with the debate. i am enthused in that we are getting up and saying, let's go. i believe it is a four day trip. this is some serious commitment by a set of officials to maintain the dialogue under maximum stress. jonathan: under surveillance this morning, u.s. secretary gina raimondo in beijing looking to expand business ties in china throughout this week. the secretary of commerce tapping her -- telling her chinese counterpart, it is important we have a stable, economic relationship which is to the benefit of both of our countries and in fact what the world expects of us. she would go on to say, in the matters of national security, there is no room to compromise on or negotiate. >> this is what we hear from the

administration. the aim is to protect u.s. national security interest, not china back economically. we were hearing from the commerce secretary speaking in the last hour. she said chinese economic growth is in global interest, but speaks to the difficulty, the needle you have to thread when the u.s. is trying to protect national security interest in doing so proposing various restrictions on outbound investment into china on specific tariffs that are still in place while also not trying to poke a fragile economy and risk the ripple effect that could hit the u.s. jonathan: we are on the same page. it is a nobody's interest from an economic perspective for china not to deal with this in an orderly fashion. we need them to be able to do with this in an orderly fashion from a global economic perspective. tom: we began strong in jackson hole with adam posen. the two essays in foreign affairs, it is dr. posen and ian johnson. the writing shows the immediacy to be knowledgeable and address

this and interpret the reaction we -- reactions, we see out of beijing. jonathan: we get the payrolls report for august on friday. september is around the corner. tom: bramo will be here. jonathan: a sneak peek of the number. shy of 170,000 jobs is the estimate. the average increase in job growth over the past three months will be the smallest since the start of 2021. seeing that deceleration, that is the objective. so we are told tom: of the federal reserve. david kelly of jp morgan makes clear, there is a negative payroll statistic out there somewhere. i do not know where it is. we are taking our suite time to get there. jonathan: will not be on friday. you will be here on friday. tom: the kids are back. they are in their school thing and are worried about this. jonathan: september weather in

new york is the summer equivalent in the u.k. i am not letting go of summer. tom: we will go to jackson hole,, out from the walk up i have on in manhattan, the leaves beginning to change across central park. jonathan: you love that. tom: the a tumble change we are beginning to see. jonathan: what is it, leaf peeping? tom: yeah. very good. jonathan: thanks. florida's gulf coast preparing for tropical storm idalis, expected to make landfall on wednesday as a category one hurricane. some areas of the state could say -- see 10 inches of rain and flash flooding later this week. moments like this for florida, governor desantis has a day job. has a day job away from the campaign of trying to become the next president of the united states. kailey: he is going to have to step away this week to address the potential crisis that florida is facing, as well as

the aftermath of the shooting we saw in jacksonville over the weekend. he is in florida for the time being as he is languishing in the polls as he tries to campaign for the president of the united states. jonathan: it is that time of year, hurricane watch in florida. tom: pros are telling us, pay attention. carolyn giving us terrific weather perspective. sonja musk is is hugely confident, she has had the toughest job in economics, advising people of the new york fed about the real world. what was it like advising people at the new york fed? that is a crucible of foreign-exchange and market analysis, given all the fed blah blah blah. what was it like in that job? how do you survive day to day telling smart people what to do? sonia: it was very interesting.

the relationship between economics and financial markets. sometimes -- tom: the word for me at jackson hole is complexity. how much is the complexity you see right now? gauge that. sonia: an honest amount. i think most speakers admitted, including chair powell, it was quite interesting for me that he did not discuss they are complicating the picture. the situation in china, how does that play into the fed's reaction function? our fiscal excursion, how does that play into the fed's reaction function? finally, what is going on in the labor market. we are seeing structural changes, or still the precautions from the covid stock? kailey: to the point on the labor market, the resilience we have seen there, supply and manned which still seems it is mismatched even when the fed talks about progress towards making it better balanced -- combine that with the above

trend growth we are seeing in that the chairman talked about. how much longer can either realistically last? window those lagged effects of tighter policy start kicking in? sonia: that is a great question. as you guys just mentioned, even though we are inspecting smaller gains in payroll numbers, the on employment rate is still well. a fiscal policy is -- i think the strikes need to persist into the year. especially as corporate begins to refinance in a higher rate environment. kailey: do they begin to bite enough the federal reserve is going to have to turn around and start easing policy? what is your expectation on 2024 and whether any rate hikes could come? or, cuts, rather. sonia: we also believe that the fed will have to upgrade its growth forecast, its inflation

forecast and downgrade on a play mid forecast. come this september meeting this year. that would entail some upgrades into 2024. tom: when i look at where we are, we have to stagger the meetings. do you look at the september meetings of different banks, are you looking out to november, december and dare i say the first meeting of 2024? sonia: of course. the divergence that was discussed at the jackson hole meeting and the global divergence is going to be quite important for our forecast. of course, the u.s. is doing a bit better than europe and china at the moment. tom: i guess it is there, but did not come up at jackson hole as jerome powell is central banker to the world. lagarde made a splash. you showed up. give us the level of international-ness of jerome powell after jackson hole. is he really central banker to

the world? sonia: well, he has to be to some extent. 2013, we saw considerable outflows from the emerging markets when the balance sheet tightening started getting discussed. again, into thousand 18, when the fed began raising rates. i think emerging markets for us are better prepared today than in those two previous instances, but it is still a risk. kailey: what about china, specifically? you mentioned how the u.s. is doing better than europe and china. given efforts we have seen and efforts trying to stimulate the equity market or put a floor underneath, how much further you think china actually needs to go to accomplish that goal? sonia: it is a very difficult situation they are in. they are trying to deliver in an orderly fashion, which is always difficult to do. it is especially difficult to do in an economy that is not

especially market oriented. it is definitely a risk for the global outlook. kailey: how large a risk? what kind of ripple effect realistically do you think the u.s. could feel, or europe if the fragility's in china maybe get worse? sonia: first of all, through trade. secondly, through global financial conditions. i think both of those are important. jonathan: great to get your perspective. thank you. if you are just tuning in, welcome. tons of feedback on the powell speech on friday. tons of reaction, including this from stewart kaiser of citi yesterday evening. allow me to share this quote. he says, the combo of solid labor markets and down trending inflation is good for risk assets. keep it simple until that changes. comments today suggest that changing is the desired fed outcome. if you go through the content of

that speech, the actual substance of it, it is the need for below trend growth. not have it right now. it is the need for this labor market to ease even more. perhaps you have seen that on friday. that is the objective from chairman powell and his federal reserve. tom: they may get data and disinflation that is suddenly, a soft landing. i have felt the idea out there was within the data dependency, unlike in europe. there is no real aggregated slowdown in america. do not tell that to the press. the president got a 42 percent approval rating. there is a slowdown going, not in the markets. jonathan: the likes of -- tom: dr. brainard was not there. he was at jackson hole. jonathan: powell alluded there may be significant drag in the pipeline. there is debate about that, to be clear. tom: both on acquisition, this is what you do in academics. you do it in a your england.

this is the university of cambridge, years ago. on protein science. this is actually shipping protein stuff to biotechnology labs, researchers and sciences -- scientists. they are taken out this morning by the life-sciences juggernaut. if you are a hedge fund, usually you want to own something in medicine. one of the popular names is dhr dan hurt of washington who has skewed over the last five years towards life-sciences. this is almost a text bolt on. jonathan: $24 a share. in cash. the headline dropping moments ago. welcome to the program. equity futures on the s&p 500 positive by .2%. coming up at 8:30 eastern time, we catch up with dana peterson of the conference board going into that payrolls report this friday. tom: i think there is raging

debate. the key thing here into the end of the month is, in my opinion, the disaggregation of economic data and america. i do not think it is easy for dana peterson -- i thought richardson was brilliant in jackson hole. michael capon, the retired ethan harrison of bank of america. this is difficult to aggregate a fractured america. jonathan: as you start to look at specific things, you can start with the diffusion of jobs gains. which is how much breath is, how broad are those job gains? how isolated are those job gains? kailey: we will be asking questions around what we are seeing in wages, especially as the fed is looking not just for slack building in the labor market but what inflationary impulses are coming on the wage side. another thing we heard from speakers at jackson hole, they do not see a wage price spiral. you see headlines asking for a 46% raise and you may be asked

questions. jonathan: i agree. tom, going into year income you see headlines like that from uaw, no idea how those negotiations conclude. a lot of people think there will not be. we have seen big gains at ups, big gains at american airlines. people take notice of those things. we see them and it influences the way they think about them. tom: i agree. the barbell of that is the real estate market, which is always a top at jackson hole. i look at a four bedroom in jackson hole. it was $2.6 million. jonathan: $2.6 million. $2.6 million. tom: it was a ranch, one acre. jonathan: are you doing that cash? save 50% on the sleep number® limited edition smart bed. plus, 60-month financing on all smart beds. shop now only at sleep number®.

j.p. morgan wealth management knows it's easy to get lost in investment research. get help with j.p morgan personal advisors. hey, david! ready to get started? work with advisors who create a plan with you, and help you find the right investments. so great getting to know you, let's take a look at your new investment plan. ok, great! this should have you moving in the right direction. thanks jen. get ongoing advice; and manage your investments in the chase mobile app.

was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com >> we are facing major shifts. i will mention three for you. one, there is a complete change in the lever market. there is a complete change in the energy future that we are

facing. and, there is a complete shift in how geopolitical forces organize our economies. jonathan: labor, energy and geopolitics. a deeply thoughtful steen lagarde, ecb president catching up with tom keene in jackson hole. tom: you would not believe the snark she gets on twitter. they love to go after her. i think she is lovely. she is really unpretentious. she is doing social media. the fandom, the selfies, all of it. she is like a rock star. but, she has time that when odd lots tracy alloway walks by, lagarde goes, tracy, i love your cowboy boots. that happen. jonathan: jackson hole is bizarre, the people you see. my good friend, the south african bank governor. he is lovely. he is lovely, as well.

a lot of love for central bankers. tom: kashkari shows up with various children until they were well mannered. jonathan: here because. one frustration i have with the central bankers, the way we spoke to the emc central bankers, the south african central banker -- a question you have to ask those guys right now, what can the federal reserve and the ecb and everyone else learn from you? we touched on that on friday. i think it is an important question. they smell inflation, they smell it from a mile away. they act, they act fast and decisively. to some extent, i knew we -- i know we have moved on. we need to look back at the mistakes made at the federal reserve and elsewhere. tom: damian sassower has been great. i see depreciation, devaluation. my first question to the gentleman from south africa was, what you do when you get south african rand to 20? it has weakened 14 to 19.

jonathan: dollar rand. inflation issues have gotten better. tom: good morning to all of you. kailey leinz is in for lisa abramowicz. are you here for today or the week? kailey: through thursday. tom: very good. jonathan: tom said, through friday? going into the weekend stateside? it is payrolls. it is a good day. tom: how fun. you are going to be in flip-flops. jonathan: i do not do flip-flops. not really my thing. tom: saving the show right now with your eurasia group. the spectacular ai article in foreign affairs magazine with china and their corporate affairs at eurasia group. anna ashton joins us. what do you think of the chinese coverage? it is a cottage industry right now for people like you. there is like five articles a

day. i feel like i have to read. what am i missing? what do you see in your china analysis that is not in the zeitgeist right now? >> hmm. so, i wish there were only five articles a day that i had to read. [laughter] it definitely has become something of a cottage industry. i think the interesting thing that is happening right now really is this -- that the biden administration have been pursuing this summer. i know that is not new and something people have had every reason to see. i think the fact that it is being carried out by the biden administration at this time when we are headed into a presidential election year, i had expected a couple of years ago that by now, there would be nothing but competition to be

the most hawkish on china. it is very interesting to see the biden administration deciding that stability is the course it wants to charge. jonathan: what to expect from four days of meetings from the commerce secretary? anna: this is the most important visit we have had so far from a member of the administration. she oversees export controls and export controls are the things among others, but the mainstay of tech policies that the united states has rolled out in recent years that china is most bothered by, feels this is an effort to contain their technological advancement and even likely to undermine their economic prosperity's. they're pretty upset about the export controls and things like the executive order on investment that constrains u.s. abilities to invest in certain

sectors of china, including ai, quantum and semi conductor chips. now, they are getting to speak with the woman who is overseeing all of that. she is already said on the ground that national security concerns are an negotiable. she hasn't sized that is 1% of the u.s. economy and has pushed for a more robust and stable commercial relationship. she has gotten receptivity from her counterparts. kailey: we have heard they are going to be talking. there is going to be an export group meeting tomorrow on august 29. we have heard from her and continuously from administration officials this is about protecting national security interest. it is not about holding china back economically. and you have one without the other? isn't protecting national security interest to a certain degree going to hit china economically by default? anna: yes, by default it will. the reality is, these export controls starting last october with the ones that jake sullivan

announced, they are quite restrictive. they do not just prevent china from buying things that are state-of-the-art. they prevent china from buying anything in the future that is smaller than what these restrictions have set down. and, smaller being more state-of-the-art. they are trying to hold china at a certain place in its technological development. tom: all of this is about fancy technology stuff. the fact is, in my house still, 80% of the garbage that comes in the door in cardboard boxes says made in china. has there been any lessening of all the stuff we buy that is made in china? it is not going to be in a balloon over wyoming? anna: this is an interesting question because of the recent numbers. the numbers for all of 2022 showed that trade was at an all-time high.

but, recent numbers have indicated that exports from china and united states specifically have dropped by 25% so far this year. the biggest drop in a very long time. tom: what was that? i do not mean to interrupt. what was the drop due to? was it electric vehicles from china, or was it the coasters? we had to get coasters for the debt. jonathan: i am lost. where are we going with this? tom: what caused that drop in chinese exports to america? anna: there is lots of speculation about that. i think it is likely it is a sign of u.s. companies getting to diversify supply chains. so, more of the inputs from the goods they are bringing into the united states are made in places other than china. that does not mean they are leaving china. it just means that the business that involves manufacturing to

exports to the united states, more and more of them are doing that elsewhere. jonathan: is it going through india, vietnam? where do you see that show up? anna: a combination of those, and other places. the reality is, there are no markets that can just absorb all of the export -- all of the manufacturing that is done in china for the u.s. market. so at a certain point, probably in the near future, these other markets are going to hit capacity. then, it will be more difficult and expensive for companies to figure out where to go. jonathan: could you think has got the best strategy and how to handle that, to move your manufacturing base out of china without isolating the chinese consumer? anna: i am going to avoid naming any companies. jonathan: sure. anna: i think the strategies are focused in china for china, ramping up the manufacturing and element going on for the chinese

market are good strategies. they do not check every box for the chinese government in terms of risk management, but they checked the most boxes. jonathan: what a change. anna ashton of eurasia group grade just a month to change in china, for china and maybe a base elsewhere for the rest of the world. tom: around jackson hole, we read a lot of international relations, think tanks, stuff like that. when you address whether it is exactly the point, the touch point for every single article. so, they make something in vietnam. some of it is basically made in china. they put a label on it, made in vietnam and ship it to us. some of it is made in china, made in vietnam and they ship it to us. jonathan: do you want to tell us more about those coasters? tom: you cannot have coasters with a fancy crystal that slips. it is dangerous. jonathan: got it.

ones to have some gin and tonic? tom: yeah.

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life,

then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> we are prepared to raise rates further if appropriate and intend to hold policy under restrictive level. >> with the exception of the inflation target which is set at 2% and will remain 2%,

everything else is uncertain. >> we need to see inflation moving down. we are seeing early signs of it. >> who knows when gdp is in real time? follow the labor market. >> this is bloomberg surveillance with tom keene jonathan ferro, and lisa abramowicz. tom: good morning, everyone. monday of a slow, boring august week? no. it will be a most interesting week. bramo is off. latitude north of 55 degrees, i think. kailey leinz joins us this week. good to have you here through thursday. kailey: good to be here. jonathan: say it and mean it. kailey: did i not say that with conviction? very happy to be here.

tom: christine lagarde said in the opening comments about fragmentation, that was the zeitgeist on friday. talking about fragmentation, how about the fragmentation of the market? jonathan: hearing from a german panel as well. the word balanced. neutral. patient. when you go through the body of that speech, there is something for absolutely everybody. if you want a hawkish federal reserve, above trend growth could warrant further tightening of the labor policy. could also call for monetary policy response. just a touch of hawkishness there. the conclusion, that neutral posture comes to the surface.

navigating stars under cloudy skies. their risk management position of going more slowly. alluding to all of that in the speech. tom: it was a lot of central bankers and fancy people in jackson hole trying to deal with an america that receives -- perceives it to be flat on its back. you go to the airport in jackson hole, you go by 45 gulf streams, the private planes are lined up. not for the meeting, just for the prosperity of jackson hole. it really goes to the two americas out there. kailey: while we have seen inflation going down, the average american feeling it in their wallets. price is not going up at the same pace but they certainly are not coming down. you are seeing a re-acceleration of prices at the pump. all of that pinches the consumer.

while we are still seeing resilience in the data, a question of when more deterioration kicks in. tom: i take issue with the inflation economics guys, taking a look at important data this week. did you see the entourage of digital people that travels with them? jonathan: they have more producers than us. very well dressed, too. suits. kailey: the jonathan ferro look. tom: i look at the inflation, and that is what america is feeling. they don't care about this economic mumbo-jumbo. they are looking at chips up three dollars. jonathan: there seems to be a difference between what companies are saying -- think

about u.s. retailers over the last few weeks -- and what we are seeing in the heart of data. interesting to hear from patrick harker at the philadelphia fed, going through my he things we should pause here. going through anecdotal evidence of what mps are telling him in his district. how many fed presidents do the same thing? tom: each is different. kansas has a completely different history compared to philadelphia which is lots of midsized businesses, not smaller businesses, but 5000 employees, that is the heart of the pennsylvania, new jersey district. jonathan: you could sense a worry that maybe this fed has gone too far, they are at a level that is already restrictive. i'll be interested to see how the debate unfolds, fed

presidents pushing back in certain districts, and what is happening in the board of governors in washington. tom: what do you see as the politics here? is paolo a political debate? kailey: the chairman has been political, i would argue, for his entire term. you are starting to hear more about his future, in the middle of an election cycle, a number of potential republican nominees competing for the ticket, mike pence, donald trump, others suggesting that they would not reappoint this chairman. too late is the accusation on multiple occasions. tom: when he said that, is he talking about meetings? jonathan: does he turn up to the president, i didn't know where that was going. tom: quickly on the data, 15.99

shows a resilient equity market. jonathan: up by a quarter percent on the s&p. yields coming in at 4.22. just shy of cycle highs on the two year yield. tom: going over michigan, you look down, wrigley field, cubby land. i said book somebody from chicago. katie nixon from northern trust bank, great seats for the cubbies, just north of the golden mile. how golden is the american economy right now, do you really buy economic slowdown? katie: thanks for having me. as chair powell said, we are growing above trend. we are seeing surprising resilience in many areas. that may continue. that was a part of the cloudy skies comment that powell made,

the ability to accurately forecast going forward has been impeded by some of the nuances of this post-covid recovery. as your guests have noted, it will come down to the labor markets. there we also see abnormal strength given the amount of monetary policy tightening we have seen. we will see on friday what happens, but we continue to see strong and tight job markets. kailey: we are seeing strength, resilience despite the incredible pace of tightening we have already seen. that is continuing this higher and longer narrative. theoretically, no reason to bring rates down from the high levels where they sit now, if you don't see them transmit into the economy, how do you position for a higher and longer world? katie: thanks for the question. i think we are there. we have seen a dramatic re-

rating in the curve the last few weeks acknowledging two things. first, the economy is not going into recession. the soft landing scenario has taken hold. secondly, it is the longer part of the monetary policy that i think more investors have gotten on board with. i think we are already there in terms of seeing how high rates can go. positive real rates across the curve right now, something else that powell noted in his speech. we think the economy is strong, rates will stay high. that will be good for bond investors. jonathan: we are far along in the process of the bond market, but can you see the same thing about the stock market? katie: good question. here is the problem. there are many dimensions to the headwinds for u.s. equities in particular. one we have talked about, monetary policy, higher and longer.

higher and longer rates will be a headwind to valuations. valuations are stretched relative to historical norms and averages. second is inflation, which will be persistently higher, which is why the fed will remain higher. inflation has been a friend to corporations over the last few years as they have been able to easily pass those on to consumers. as nominal growth has been strong, we are seeing now more of a difficulty in passing those prices on. last thing, it is a global economy. we are seeing a slowdown outside the u.s., china and europe in particular. tom: the northern trust company is as cautious and measured as can be. what are you hearing from your

marry that with equity markets that have been incredibly buoyant marry that with equity markets that have been incredibly buoyant this year. most of our clients are cautious right now. the other side of that is they can get very high returns in cash or longer duration fixed income. we are seeing a rebalancing of portfolios away from risk and more toward locking in goals, funding of goals with these short-term interest rates. jonathan: katie nixon, thank you. 5.1 percent, just short of that at the moment.

yields higher by have a basis point on the two-year. 4.22 on the 10-year maturity. tom: great to talk to her. we don't go out to chicago enough. i hate driving in from o'hare, never pleasant. we have to get the helicopter. i had family way back that was there. they would go to daly's restaurant. fancy people. great to talk to katie. we forget about chicago in our financial history. kailey: you just got back from jackson hole. jonathan: sometimes the program is just establishing where we are going next. tom: london. jonathan: tom often features a bar that he wants to go to, or a football match. tom: the bar that i go to,

everyone is an arsenal fan. nick and the team at the cigar bar, they are all arsenal. jonathan: equity futures on the s&p thaws of -- positive. stick with us. i am so sorry. tom: harry kane. two goals, penalty shot. i never heard the guy talk. the totts kept him so removed. he is making an effort to say, i'm here. jonathan: sometimes when you are the man, it comes with a burden of pressure. seeing him play at bayern, there is less pressure on him. tom: are the totts playing better? jonathan: they looked good, watched a bit of them over the weekend.

james madison looks like a good signing. tom: he is pretty good. what is son going to do, the spectacular korean? jonathan: every time they show the highlight of the premier league, that son goal is there. i think of you because i know that you were right behind. tom: i was having my meat pie. eating it wrong with a knife and fork. a guy came up to me and said, you are here. ferro wouldn't eat it that way. jonathan: with your hands, tom.

>> we have to get inflation down to 2%. we all agree on that. we are all committed to that. the question is how to get there. we are at a restrictive stance in my view and we are putting

pressure on the economy to slow inflation. the question is whether we need to increase the pressure or keep pushing. i'm in the camp of keeping the pressure going, let this work through. jonathan: patrick harker, the philadelphia fed president, endorsing to some degree a pause at the september meeting. much more to come, payrolls on friday. the estimate, 168,000. the fed wants smaller and smaller numbers to take pressure off the inflation story. in the equity market, elevated on the s&p 500, up by 0.%. two year yield up by a single basis point. 5.09% in the treasury market. tom: i don't think we talk enough about patrick harker, former dean of wharton.

what is important here, this guy is an operative thinking engineer. he understands manufacturing processes arguably more than any other fed official. jonathan: he is also really nice. tom: he is not a phd, academic type. we talked about williamsport, pennsylvania, little league. we should do another surveillance remote. jonathan: we can set it up for the election year. tom: diving into the bond market at the end of august. not a lazy summer week. we do this with ira jersey bloomberg intelligence. if we get a yield breakout higher, price down, yield up, three-month t-bill.

the real yield goes back about 2%. what are the ramifications of a price up, yield down move? ira: the way that you get to that really matters. if we wind up with a bear market more than we have recently had, that shows the market is thinking that that will not make a policy mistake. the big risk now is the market starts to price for a federal reserve that ultimately hikes another time, maybe even two. we are not price for that yet. if you wind up with an environment where you get 170,000 jobs a month for a long period of time, the market may be thinking the fed will eventually make a policy mistake. we have an important test. jonathan mentioned a second ago how busy this week will be. at 11:30 today we have a two having your auction. above 5% again, up to 5.10,

which is fair value if the fed will hike once and then hold for 2024, it will be interesting to see if we have decent demand. tom: bramo is away so many to have an auction chat. out to curve, where does the fed influence rates? three-month t-bills, how do they really influence the curb? ira: they influence all of it. the two-year will be sensitive to where the fed funds rate is now, where it's going over the next year or two. it should be the average or where fed funds will be over the next two years. farther out the curve, do they set expectations in a way that yields will be lower because the market thinks the fed will be cutting? one of the reasons you have seen this reasonably substantial

backup in 5, 10-year yield in the belly of the curve is largely because we are pricing out interest rate cuts that were priced in earlier in the year. we were pricing at 1.4 five interest rate cuts in 24, but now we are pricing in barely two. you wind up with a situation where the market thinks short-term interest rates will remain higher for longer, and because of that -- some are calling it a bear steepening. it is really a bear un-inversion. you are not talking about a curve that is steep at all. jonathan: well we are at it, to your notes, five-year notes, seven your notes tomorrow. $36 billion worth of seven your notes tomorrow. can i do the juvenile stuff? september 20.

how high is that bar for a hike at the federal reserve? we have a payrolls print on friday, cpi report on september 13. how high is that bar? ira: i think reasonably high for september, given they moved last month. i think they are on a path to go every other month at this point. a pretty smart investor that i talked to said that they were hiking at 75, 50, 25, now in 12.5 basis point increments. another 25 points in november is not out of the question, but i think a september pause is the base case scenario, unless we wind up getting something crazy in the data that doesn't seem likely at this point. kailey: we have all been focused on will day, won't they hike, where fed funds are going ultimately. what about the balance sheet? how should we be thinking about

the runoff and its implications at this point? ira: what president harker would say, like watching paint dry, it is priced into the market. we wind up every pricing a lot of the quantitative tightening that we were going to get when it was first considered. we actually have a note out on the bloomberg terminal about this. the fed will have to stop quantitative tightening at some point for very technical reasons. banks need a certain amount of reserves to comply with a lot of the basel capital regulations, around $2.5 trillion. around the first half of next year, reserves are lucky to hit that point where the fed will have to stop quantitative tightening. will it increase the balance sheet? not necessarily. it will just need. to stoprunning off the balance sheet we think that will happen before the fed starts to cut. kailey: when do you think the

fed starts to cut? ira: a review is not until the fourth quarter of 24 primarily because we think that things will be good enough, that the fed will not feel compelled to cut very early. because you need two factors. you need inflation to be near their target. two, you need to see job losses. look at last week's jobless claims, they were fine. until you wind up with a period of job losses, several months of job losses, the fed will not consider cutting. jonathan: important question, were you there saturday night? ira: i was actually on holiday with my daughter. i was not there saturday. i did watch part of it. tom: what are we talking about? ira: lionel messi in new york. tom: to both of you quickly, i

don't want to take away time. is he in his prime, past his prime? how do you judge this messi in america? ira: skilled allies he is as good as he has ever been. he will not go 90 minutes every game anymore because of his age, but when he is on the field, fresh and not injured, he is as good if not better that he has ever been. tom: how could the totts not pick him up? jonathan: i'm not sure they could backup into that financial arrangement. the price of ira's vacation is the same price of a ticket on saturday. tom: i will be with paul sweeney on radio in a bit. the whole pricing of sports, i cannot imagine it. tom: imagine the world -- jonathan: imagine the world cup

in 2026. tom: formula one in las vegas coming up, different pricing than in monza in italy? jonathan: u.s. sporting events cost an absolute fortune. tom: david rosen publishing with a bullish bond bias. that is the great mystery call out 90 days. jonathan: we will pick up on that note. all of that still to come in the next hour on bloomberg tv. live from new york city, this is bloomberg. ♪

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tom: good morning, everyone. bloomberg surveillance. kailey leinz in for lisa abramowicz. what i really want to convey right now is this is not a sleepy august week, a ton of economic data. early jobs day. i am working friday. mike: nothing happening on friday. what is weird, it is not an early close in the markets for a three-day holiday weekend. bond traders are upset about that. because it is jobs day. tom: i think it will change the

political dialogue, the sum total of what we see in the spirit of america, adp claims, what we see on jobs day. kailey: this president has touted job gains. emerging from the pandemic, so that they can tripping factor, but also the on up limit rate at 3.5%, the lowest in decades. that is something this administration has tried to tout but is not showing up in approval ratings. tom: across the span of bloomberg news over the decades, many people have given us leadership. he is our international economics blah blah blah correspondent. michael mckee is our foundational voice in print. he truly led our coverage at jackson hole this week.

christine lagarde was a highlight. barry eichengreen was great. i can only describe mckee getting me on a saddle, not on a trail, but getting me into the million-dollar cowboy bar in jackson hole. a guy from jp morgan came up to me, others that watch us. the vibrancy of that economy speaks to a split america. mike: it is a tourist place. doors and has grown tremendously. a lot of americans are traveling domestically, so it is crowded these days. it is hard to get into the million-dollar cowboy bar. i am sure you got past the velvet rope because you are a celebrity. kailey: you got in because of

your cowboy hat? tom: i went to the gun barrel steakhouse which is legendary, people showed up to meet us because they are fascinated with what we do. you should have seen all of the stuffed animals. kailey: i was not invited this year. tom: you get your drink with a winchester stir stick. what did you learn from this? the grind of all of these seminars that you saw, what was distinctive? mike: the takeaway, right now is a very uncertain period. because they get asked about it, fed officials, ecb officials -- a lot of ecb officials there. they are telling people what they think about also cautioning, we don't know how we will vote because we don't know what the date is telling us. the short term away is it is hard to know exactly what to do now.

medium-term to longer was interesting. that was the theme of the conference. there would be a lot of changes in the economic world over the next decade. we'll make it more difficult in some ways or central bankers, but it will be different. when kailey is our age, the issues will be quite different than they are now. trade is changing. housing is changing. tom: the glaciers will have finally pulled back. kailey: looking at not so much the longer term, but the next week, you say the data will be important. jolts, pce, jobs on friday. how indestructible that before a federal reserve try to make a decision, about whether it will leave rates on hold or hike again? mike: pce will be important. even though they target the headline rate, they are following the core rate. we are watching to see what the

monthly change in the core rate of pce is because at this point you are going to have base effects in the year-over-year numbers. but do we see the core rate going down on them month over month basis? that is what they are looking for. probably more important than jobs. job sibley a confirming piece of data, if it slows down as expected, they are on the right track. tom: there is this bear, about 12 feet tall, and you go through these doors. they wouldn't let me in the room. saturday, barry eichengreen discussing debt. you were in the room. tell us what the room is like when you have a giant of international economics like him ? mike: it is fascinating because you have an audience of giants

in the economic world. academics, central bankers. tom: did carmen start yelling? mike: she didn't. but it was the most interesting paper, in the sense that he presented the idea that growing debt will be impossible to sustain, but there is nothing that will be done about it because clinical will is not there. people in the audience were so disappointed. there was one person who said i may have to watch tv comedies all weekend to get over this. tom: that is the caution of barry eichengreen. michael mckee leading our coverage at jackson hole. i wanted to talk about that with dana peterson with the conference board. hugely aware of the consumer and the business tone out there in america.

are we over did it right now? are we up to our eyeballs in credit debt? dana: absolutely. let me look at the consumer, debt has risen to where we were pre-pandemic, delinquencies are up. sovereign debt in the u.s. is extremely elevated. interest rates are rising and that is causing debt service to rise as well. we are concerned about the sovereign situation as well as consumers heading into a seasonable they -- when they will run out of excess savings, may be laden down with student loan repayments. kailey: we've been talking about the month of september. i'm interested in october when payments resume after being on pause due to the pandemic. one economic impact will that have, given this could be a large factor in household budgets? dana: it will probably take several tenths off of gdp growth in october, will weigh on the

outlook going forward. certainly, if people were using credit cards to finance their debt, also taking that reprieve from student loan payments, when all of those things come due, they will not spend, and they will probably start fearing for the economy in general because their own personal finances will not be as robust. kailey: are we starting to see consumer behavior change already in anticipation of that? what evidence might you be seeing of that? dana: not really. we think consumers are still looking at the fact that they are still working, still spending on services, even though they are saying that the types of services they spend on will be more toward needs than wants. they still anticipate they'll be spending. they are not looking forward to the fact that, yes, they will have higher debts, balance sheets will not be as healthy, and certainly interest rates will be elevated.

in case they have emergencies where they need to finance something. i think consumers are not really that focused on the future as they should be. tom: the theme at jackson hole, the imf, ecb, they both brought up fragmentation.how fragmented is america right now ? how does aggravated -- aggregated are we are right now? dana: you have different responses in the economy, even looking at our own consumer confidence measure, you get different responses by age and income. we think there is quite a bit of fragmentation in the economy right now. tom: the fragmentation that is there, we see it in the child support on friday. a lot of people are waiting for sub 100,000 nonfarm payrolls. 150 million for conversation,

but is part of that 150 million flat on their back, the other part confident? dana: it depends on the industries that you are in. the industries that you have to show up to work are still hiring. the pandemic darlings like tech, finance, transportation and warehouse, they are seeing some weakness. even with the revision in the payrolls data dating back 12 months prior, we saw that there were entire gains wiped out. if you are in those sectors, you are probably not as a bully and as other sectors where there is hiring going on. kailey: can i ask you about the housing market and the mortgage rates people are facing if they are trying to buy a home, thinking about selling the home they are in? how is that a factor in the perception of the economic

health of the country, if they are looking at home affordability at the worst in decades, rents also incredibly high? dana: you see bifurcation in the housing market. existing home sales are down in the dumps, prices are falling year on year because mortgage rates are so high. why would you move if you have a higher mortgage rate after you refinance a couple times in the pandemic? with new housing, we are starting to see a pickup. you cannot get an existing home. all in all, affordability is don't because interest rates are so high. also in certain markets, prices are still rising year on year. this is very much about location. tom: thank you so much, dana peterson. kailey leinz, tom keene here with you on bloomberg radio, television. i want you to dovetail your

washington view here. my basic take is, the history is washington is sleepy in the summer. i don't get that this year. kailey: i was told august would be a chill month. that is what i was promised moving down to d.c. instead i cut multiple indictments of a former president, natural disasters that the president has had to visit, conversations about policy matters including a government shutdown which could be on the horizon. it has been anything but sleepy. and a lot of it is not informed by the economic reality that americans are facing right now. that factors into the electoral politics, biden on the road touting his economics. tom: dow up, futures up. vix at 15.83.

spx up half a percent this morning. to all of you, welcome, as we start the week out. right now, it is back to school. we are thrilled that kailey leinz is with us. i want to talk to you about a huge deal for parents. you were an acclaimed dancer at school at uva. all sorts of national cred. how do you do dance in college? how do you pull that off? kailey: important conversation for a monday morning. tom: the physical parts of it is like a sport. kailey: maybe not as demanding as ncaa athletics. certainly in not as great shape as i was then. tom: i think of all the parents doing this out there with their

kids. it is that time of year where you have to figure out what to do in the fall. it is just like a sport. 365 days of the year. kailey: whenever you need to do to pad that resume for college applications. tom: there is none of that this last week of august. i would never want to hear from that as well. this is the strangest of august weeks. jobs report on friday. kailey leinz with us the entire week. that is a good thing. futures up 20. stay with us through the day on bloomberg television and bloomberg radio. you know you are retired right? am i? ya! the queen sleep number c2 smart bed is now only $999. plus, 60-month financing on all smart beds. shop now only at sleep number.

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and schedule your free, no obligation hearing evaluation today. and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com >> if there was a big strike that affected multiple auto manufacturers and lasted for a long time, my fear is that would have a pretty material impact on the manufacturing economy.

about wages, as i highlight, as we just described, i think wages move slower than prices. tom: austan goolsbee of chicago, somewhat controversial replacing charles evans in chicago. great supporter of the program for years. great to see him out at jackson hole. right now, let me try a market check. futures up 19. vix under 16/ . 15.86. the very difficult august challenges we have had. yield, 5.06% on the two year yield. brent we have not mentioned. $84.85. gold, 1944.

strong dollar with dxy over 1.04. a little bit stronger euro today. with all the economic data, of note will be the movers away quite summer week. kailey leinz is in for lisa abramowicz. what do you have this morning? kailey: hawaiian electric has been hammered in recent weeks given the role it theoretically could have played in the wildfires in maui, concern about potential liability. the stock was down 72% from august 8 when the fire happened to the close on friday. this morning, up 37% after the company that owns the utility put out a statement saying our lives were deenergized before that wildfire that killed 114 people. maybe a little bit of relief in

that stock admits the horror that is still going on. tom: an ongoing tragedy of immense size. i honestly think the number of time zones has to do with this, off of our radar, out to the west in the pacific ocean. but you have to believe not only the litigation to follow after this damage and tragedy, but also this year process of rebuilding. you wonder where that will be. what else? kailey: in other news, 3m is higher on news on reports of a settlement, $5.5 billion at the company has tentatively agreed to to resolve more than 30,000 lawsuits claiming it's all the u.s. military defective earplugs for combat. that $5.5 billion settlement

amount was smaller than what many thought, so you are seeing shares up ticks percent in premarket trading. i wanted to point to alibaba. any chinese adr that you can look at. a litany of measures coming from china to shore up stocks. initially worked well, up 5% at the open, but we saw that feed. alibaba up by 1.7% this morning. tom: weaker renminbi. you can do that on bloomberg terminal. usd-cny. the foreign-exchange power of the terminal is breathtaking. out to two standard deviations. right now, 7.34. continuing to watch with stephen

engle and our evening coverage. in detroit, the uaw with strike approval, needs to figure out what to do. following this is somebody who is encyclopedic on detroit. david welch joins us. how close are we to a strike? david: i think we will have one with at least one of the companies. this always happens, the workers always vote for it because that gives negotiators the leverage to negotiate a deal. it is sort of a legal requirement that they do it. i don't want us to get carried away even though this will which was a landslide means that they've a walk out in the next couple of weeks. we have a midnight september 14 deadline. we have been union president who has demands, and companies know they have to pay these guys

something because they had very cheap contracts over the last decade and a half. how rich is the question. tom: the average suv, car, truck takes 17 hours to build. they are going to build less than two cars a week? david: not sure i understand the math. they build multiple cars per hour. tom: 36-hour workweek. most of america is not. how is the uaw going to get a 32-hour workweek? david: the whole thing, how this has unfolded is interesting. weeks ago, the uaw president and vice president negotiated with each other, the three car companies, wait out their goals for bargaining. the 32-workweek, bringing back

pension benefits was not there. he took a list of demands from membership, and that was included in there. something like a 32-hour workweek, to me, is like the guy that runs for student council -- kailey: aspirational. david: i think he is serious about pensions but i don't know that he will get things like that. pay raises, better pay for battery workers, all of those things are realistic. the car companies know they have to do something. tom: also getting the detroit tigers over .500 baseball. kailey: aspirations abound. this is not just about the actual wage number, whatever wage comes out of this, agreement to pensions, hourly workweek, it is also more fundamentally about the ev transition and what will happen

to workers in that. can you walk us through that? david: the first part of it is what you pay battery workers. general motors as a joint venture in ohio, the only unionized plan in the country right now. they just cut an interim deal to raise pay by three or four dollars, so most of the workers are making right around 20. that is still well below the $32 an hour that assembly workers make. the union wants to get that pay up. these battery plants, electric motor plants that the company is doing will replace workers who make engines and transmissions, exhaust systems. it will be about organizing those people, too. tom: have we stop buying ev's? everyone has gotten one, and that's it? david: no, but growth has slowed down. we are reaching a point where

the early adopters, and ev's have taken over the luxury market in many areas. there are so many people who can buy a $60,000 ev. that is why tesla is dropping prices, why others are dropping prices. there is growth out there, but even with the pricing decreases, they are still not cheap vehicles. tom: terrific brief, great knowledge. david welch is our detroit bureau chief which barely describes his contributions with auto making, particularly down the interstate of the midwest in this nation. your observations as we stagger through this monday? kailey: i'm watching to see if we can pull the gains that we see from future sessions today. we have yet to see two back-to-back games with the s&p 500 in august. only a few trading sessions left in the month. if we don't get back to back gains, that would be the first time that we are lacking that since 2002.

it shows you how an equity market that ran really far until this month is 22 faced challenges. tom: i have troubles with this. we could go back to sam stove all at the beginning of the show, this idea with equities, but 10% correction, 20% bear market. then the idea that everything gets ugly, going down 35%. we have barely nudged toward a sense of correction. everyone in the bart simpson school of strategy is having a cow. kailey: just pointing out my stat of the day. tom: can you come back tomorrow? kailey: will you have me? tom: if we cannot figure out where bramo is. she went off somewhere on a gulf stream. jobs day on friday. this is bloomberg surveillance.

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jon: live from new york city, this morning, good morning. 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 jonathan ferro. -- with jonathan ferro. jon: they're from new york, coming up, officials stressed the need to keep rates high for longer. autoworkers are put -- putting detroit on notice.