u nt people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> welcome to bloomberg markets. >> the s&p 500 isn't going anywhere, but that belies what's taken place the last few hours. there is a bifurcation in the chip story. crude oil firmly above $85 per barrel. the dollar is bid once again today. the two-year yield, we saw a

round-trip today as it plunged after the jobs report then it was reversing the decline right before the manufacturing data which showed strength particularly in prices paid and also in employment. that had an impact. we are exactly where we were this time yesterday. get a quick check on where markets are pricing in fed policy. we are very close to the terminal rate. we may even be there. we're just a couple of basis points from where the market is pricing in right now as the terminal rate. jon: that its health context. let's stay on the theme of central-bank strategy. higher interest rates have been cooling not just the u.s. economy, but the canadian economy. today we get gdp for the second quarter and it showed a contraction. there is an expectation in the economist community that we would see again. on annualized basis, gdp

declined 12%. -- .2%. even the bank of canada had been anticipating stronger growth. we have an interest rate decision from the bank of canada next week. households dealing with higher debt loads are increasingly feeling squeezed. we saw that in the overall spending trends given the interest rate hikes that have let them and canada have more than a two decade high. vonnie: as traders and economists digest data from the united states and canada, our guest sees pain ahead. 5 guest: there's a lot of headwind to the economy in the back half of this year. obviously discussion around student loan prepayment starts. the fact that we have seen tighter credit conditions, that also impacts the economy with a lag. loan growth has been pretty

stagnant. you will start to see those effects. we think they will become more clear in the back half of this year. in that kind of environment, it's not necessarily clear that the fed needs to hike again. jon: in light of those comments around headwinds, let's get more perspective. her economist stuart paul joining us for his take on the jobs and manufacturing data today. let's start with the jobs report. at the end of the day, the headline number showed more jobs created than expected on wall street but when you look at the actual strength of the jobs market, what do you see? guest: the headline number totally overstates the strength of the job market. you need to read through the jobs added. every single month this year, the number of jobs added has been revised down. the june figure when it first came out showed 209,000. it revised today to show

105,000. with workers entering the workforce primarily older men and prime working age women, households have been able to rely on savings. it is clear that the labor market is loosening. also declining the number of job openings that we saw this week. vonnie: how do we read the ism data? we saw strength in unemployment and prices paid, but we are still in contraction territory. guest: what's clear when you read some of the comments that come from the respondents to the survey is that there's limited standoff between producers and consumers about who will run down their inventories first. consumers are trying to hold steady if not run them down so they don't have to pass along any additional rice cuts down the supply chain. producers are doing the same

thing. they don't want to end up with excess stock on their shelves when they see demand falling off deeper into the second half of the year. based on factors that tiffany was just describing. vonnie: thank you for all of the context. let's bring in our next guest. we are about to head into the fourth quarter, we have a full month more before we hit q4 but september begins the process. what stocks do for the rest of the year? we've had a lot of data since jackson hole. guest: i think the best read of the market is that we are on a wait and see. i think the reason we are talking about jobs to begin with this because we are fighting inflation and ultimately, the labor market is a limiting factor to what the fed can do. you look at the report today and you say this is good news because ultimately, this gives the fed more room to do what it

wants if it feels that -- in other words whatever it has done so far, it has not affected the labor market much. if it needs to stop, find. if it needs to go further, that's fine too. ultimately we are waiting for a destination and it's not clear what that destination is although it is getting clear no question. until that happens, i don't expect -- i would be very surprised if you see a lot of movement from stocks. jon: when it comes to valuations of stocks in an environment where we are talking about a cooldown, what would be your analysis on how you measure whether stocks are pricey or not at this stage of the game? guest: you have to look at a couple of things. one, you have to separate what is done great this year which is let's call it the magnificent seven, big tech which has had a

huge rally, it has given back some of that. but the valuation is there in the high 20's or low 30's and that is rich by any standard. the u.s. market in general it's operate cheap. there are certain segments of small-cap value that are bona fide cheap. in general if you look at the value space in the u.s. market which he generally would consider cheaper than the broad market, it is still trading in the upper teens low 20's which in historical terms is pretty expensive. in a mode of uncertainty depending on where things go with inflation and larger economy, you would expect to see valuation contraction but there is also the issue of these creeping interest rates which i don't think you can draw a straight line between the interest rate and valuation but a lot of people think of the interest rate as the opportunity cost of the earnings yield.

if you flip the valuations on their head, and some cases the valuations are well below what you would get from t-bills which is north of 5% now and that will be a headwind for valuations also. jon: it's a good point. if we are in an environment because we were alluding to the fact that in canada there is an expectation for example given some of the contraction we have seen for the actual economy that the bank of canada will be sitting on the sidelines at their next meeting, that we have to get used to higher rates longer. that environment could potentially change where investors put their money. you alluded to the fixed income market. you have a turbocharged ai boom which will keep some investors interested in technology stocks. if it's a new interest rate regime even if we are near the end of rates and people are tracked analyze that, how does that impact sector strategy going forward in your opinion?

guest: it is so difficult, i am working on research now about -- one of the things we always here is ultimately higher interest rates will be harder on growth stocks and value stocks. that plays into your sector question because growth is predominantly tech and value is predominant really energy. thanks, you have some sectors that straddle both sides. if we can rely on the idea that we are talking about discounted earnings and that's the way stocks are priced, then you would have to say that higher interest rates would be bad for growth and for value but looking at the numbers now and i will publish them soon, what i'm finding is it's very difficult historically to rely on the theory and practice. what i would say is that ultimately, higher interest rates are harder on business in general because when the cost of capital goes up, that makes the

business environment harder, it makes it harder to borrow and leverage. all of those things are difficult. with her they impact sectors in particular, i'm not sure we can say that with any confidence. i think investors we better off looking at the strength of the balance sheet and making assessments on individual companies versus individual sucked -- sectors. >> this year last time, we were looking at higher interest rates, indices to expensive. here we are a year later, we have had this massive rally and the ai story blew everybody away and it continues to. we miss something if we don't laterally? >> i think the surprise is instructive in that what it tells you is that it's very difficult to know in short-term what macro economic signals will affect what stocks.

from that perspective, i would hope people are humbled by the extremes we have had this year. i do think investors are making the mistake if they don't young our borders because what's interesting to me about this moment is to the extent that you want -- a lot of investors are looking at quality. people in stick dudley run to the u.s. when they think about quality -- people instinctively to the u.s. when i think about quality. however there are quality companies all over the world and what i would say is if you look at quality companies in particular in emerging markets and you look at various quality indexes in emerging markets on the web or on the terminal, what you would see is they are trading evaluations that are one third to one half of what you are paying in the u.s. and other developed markets. if i had to pick one thing, i think that's the one place

investors are missing the most. vonnie: thank you so much for that. coming up, dealt source to a record as earnings point toward a recovery in pc demand. this is bloomberg. ♪

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jon: time now for our stock of our. dell has a message to the market different from what we heard from hp then the on computers, analysts like what they heard

about the artificial intelligence boost that dell is seeing within its server business. vonnie: a pretty phenomenal move today. our guest is reporting on this and will explain it all. what was so different to what hp said earlier in the week? dell seems to be saying the exact opposite. guest: it's been about a year of this pc apocalypse. in the pandemic, we all work from home and everyone but computers. the computer makers have had a really rough patch saying nobody is buying things. today what we're saying is one of the biggest examples of better than feared. sales were down, but it was better than expected. why did dell do better than hp, they have a better mix of corporate customers. there's also a difference in

their exact markets. maybe dell has better pricing power. the reason they diverged is not fully understood at this point, but it was different and that's why we see the stock pop. jon: speaking of not necessarily understood, we have talked endlessly about ai this year. we know the usual suspects that we cover that story through, can you connect the dots on how dell is capitalizing on ai? guest: you make a great point that everyone wants to tell an ai story. with dell, their argument is they make servers. no matter how much we hear about the cloud, plenty of companies still need physical servers to run things like large generative ai models. their argument is we will sell you the servers that are chock-full of great nvidia chips and it will allow you to run ai workflows. what we saw during the quarter is they said they had $2 billion in contracted sales that they

had not seen as revenue. it's not lifting the top line yet, it's more of point of long-term investor excitement. i'm sure that's part of the increase we are seeing today. jon: the ai excitement, a possible pc trough. the one-two punch today for dell. thank you for breaking it down for us. we will continue to track the dell story today. coming, the sec delaying a decision on coming etf bitcoin decisions. this is bloomberg. ♪

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filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh >> i think the initial reaction, the initial headlines were grayscale achieves a victory in court versus the spc. but once people had read the

ruling and what it meant, what it meant was we are closer to having a physically backed bitcoin etf but that day hasn't actually happened yet. as people have digested that, some of the enthusiasm over exuberance, there was a bit of a reality check and there are still a number of hurdles, milestones they need to be crossed before a bitcoin etf will be listed in the usa. jon: this is bloomberg markets. some of our conversation yesterday. let's discuss more on the bitcoin etf developments. within your shop, kind of want -- watercooler talk has there been? how big of a moment has this been? guest: in the long run, it will prove to be incredibly important.

you had to things going on. first, the nature of the decision itself which puts to bed any argument about manipulation and markets being different. it was always silly to those of us in the industry. when you have a diverse panel of judges literally with significant age difference all saying the sec was arbitrary and capricious in this ruling, it is a very big. it will be used by people throughout the financial industry to say the sec what they say can be challenged. i think that matters. but the watercooler is funny because basically we have seen this twice now. i will do a piece later: the boy who cried wolf. people are looking to buy bitcoin from the average walks of life. people who have registered

financial advisor and all of that and that requires etf's being approved. this is news that makes it more likely that the future news will happen. considering what's going on in the summer the doldrums of the market, now twice speculators that pumped up the market this news for future news have been burned and the market is back to where it started. jon: i was going to ask about that because that has come up repeatedly that a lot of people see huge positive developments yet if we look at bitcoin prices today, trailing off as they have for the last couple of sessions, walk us through again how you feel the market has been reacting to this. guest: we have been stuck in a trading range for quite some time. the market made tradable lows when ftx collapsed. those tradable lows were people were forced to sell bitcoin and

it pushed prices down to the 15th. there was strong natural buying demand that bumped it up. since that point, we have had several attempts recounts. most of those, the first big one was on blackrock first filing in this one yesterday. basically, what you have is speculators buying and selling on the margin. the important step to take -- to keep in mind is $.75. 75% of all bitcoin have not moved for a year. long holder percentages are way up and it has been steadily increasing for a while. you have certain people who i will label them smart money who are long-term buying on the basis of effectively potentially large outsized returns relative to risk in the long run. in the short run, those same people are patient. they don't chase prices.

when these big changes happen, the only thing that will make the long-term holders participate is quite frankly it not coming back down. they need confirmation of that. in bitcoin, a lot of people say price action begets price action the truth is you have alignment fundamentals and rice action. supply demand dynamic hasn't changed yet. vonnie: at the moment, the courts are more favorable than the agencies to business interest. at the end of the day, the sec will have power. is there need of 30 of these products and why 30? guest: no, but look how many gold etf score silver etf's for etf on large cap tech stocks or whatever. i got started on etf's a long time ago. the etf industry as a whole provides immense value.

obviously, the first two or three or four biggest ones will end up with a lion share of the assets. eventually, you will have etf's that have digital assets as a component or bitcoin as a component of etf's not just a bitcoin etf. i don't there will be 30 bitcoin etf. i agree with you, basically. jon: thank you for your time. we continue to track what is happening in the crypto market but also what's happening in the broader markets. we started a new month of trading. a quiet day overall. we have been adjusting economic stories, the job support coupled with the manufacturing story that is left investors on the sidelines leaning into financials and energy more than tech which is -- as a group has been softer overall. we continue to track where the

fed strategy goes from the economic report and in canada, we have an interest rate decision heading into next week. this is bloomberg. ♪ ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

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. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

vonnie: jobs data show a smooth downshift in the labor market. live from the studio at bloomberg headquarters in new york, on vonnie quinn. >> we are kicking you off to the closing bell here in the u.s.. starting the month of september, coming off the worst month for the s&p 500 since the first quarter. we had what