>> this economy has outperformed this year in terms of growth and bring inflation down. >> this would allow the fed to cut in 2024. >> they been able to slow employment and do it without significantly raising the on climate rate. >> labor markets are normalizing. >> i think it's unlikely they will move at the next meeting. >> this is bloomberg surveillance with tom keene jonathan ferro and lisa abramowicz. 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 on tv and radio. your equity market is negative

by 0.2 percent on the s&p 500 following the biggest we of gains on the s&p. happy talk begins in september with goldman cutting the recession chances to 15% after week of decent data to keep this fed on the sidelines. jonathan: good research over the weekend and goldman leads the way with that lesser call on recession. it buttresses against a china basically in policy chaos. to the global town, i'm unsure of where we go other than jerome powell has a spirited leadership on economic growth. jonathan: later, as good as it gets. tom: he's still bullish. it is as good as it gets in the nuance here is that we peel away and maybe we get lesser and then he goes to a soft landing but i don't know what that means. soft landing bramo comes back

from her sabbatical. jonathan: she returns less bearish from vacation. lisa: first of all, nobody is very happy the summer is over. there is this feeling of what are we heading toward. jonathan: it's in the 90's in new york city this week. lisa: are you going to wear white pants? jonathan: i wear them anyway. lisa: it's been said there is a lot of people that a complex economy can be explained with half answers and armchair quarterbacking. and she is right. you have both sides hunkering down for what may happen at a time when we are on the precipice of understanding the rate hikes. tom: we've had a spectacular

summer and summer comes later in new york. it's summer and it's 33 celsius. it doesn't translate in early-morning speak. jonathan: it's going to be hot in new york city. tom: it's still summer. jonathan: it's hard to embrace fall. tom: september is terrible. jonathan: a big decision for christine lagarde. going into last week, the data it needs to tell them why they need to hike. but they failed to do that based on every piece of data last week. the -- our fed is on the sidelines unless you get a blowout labor number. tom: all of this is the transatlantic disparity there and it for into a stock market that's resilient. this is like new year's. in america the day after labor day is just like january 3.

jonathan: equity futures on the s&p 500 are just slightly negative down by 0.2% and yields are higher by four basis points on the 10 year. yields aggressively lower on the front end through the last week. it's on the back of economic data in the united states. lisa: it's amazing to see 20 basis points plunging on the heels of some of that. this week will be quiet but there are interesting things coming up. wednesday at 10 a.m., ism services in the u.s. for the month of august. i'm curious to see whether we see a rollover at all above the 50 mark which is above recession even as we seek a contraction europe. we also get the fed beige book and will see the effects of beyoncé and taylor swift and the barbie movie. throughout the week, tons of central bank speak. christine lagarde is being

today, andrew bailey, on and on and the fed speakers john williams speaking. there are t-bill auctions coming up throughout the week. a lot of what will be interpreted in the price action of the central bankers. thursday is under the radar and that is the striking action that could potentially happen around the world with what's going on in detroit next week. this week, chevron's lng workers in australia have threatened to stop work if they don't get an agreement it will affect prices for china and some of the other asian nations but also in europe. tom: how does that affect europe? it's australia's so how does lng in europe -- in australia affect europe? lisa: it will create a pricing were because you are reducing supply. even though there are

well-stocked countries now, later on, it could elevate prices. we seem price pops in the heels of this. it points that stagflation is happening in your. jonathan: the stealth rally in crude, the energy market is just not on the radar. brent yesterday is getting closer to the 90's. tom: we heavily covered this on friday when both of you were not here. $88.41 of brent crude. jonathan: we thought we might get a long weekend. good to see you. do you think this rally has likes? >> i'm going to hold onto my white pants and summer as long as the weather will allow me. i think the rally does have legs. this argument over recession or not and whether we are headed there, it's hanging like the sword of damocles over folks and

keeping people from being tactical. if you look at the fed cycle, you have a fed that was hiking, they are either on pause or close to it, markets rip when fed's pause. each of the last time the fed has been on pause, you've seen the s&p 500 hit an all-time high and i thinks that -- and i think that's the path of least resistance this time around. you pointed to the oil market and you don't have energy prices rallying year to date highs on the verge of rolling over in the economy. it doesn't mean that rate hikes won't bite but we are just not there yet. i think the rally and economic strength has likes for the time being. tom: you add huge value in asset allocation. it's a great marketing tool but you really deliver. go through the process right now of how you would reallocate a

typical investor who's been in the market and maybe they are up a little but they are not up a lot. >> the first thing you do in the biggest value we can had now is keeping for -- folks from getting seduced by 5% yields in cash. that's been a stalwart last year. it's an attractive yield but looking at the fed pauses, on average, you will see 10 year yields fall 3 quarters of a percent which hasn't started yet. equity market returns, we think we are in a time where inflation is moderating and growth is resilient. could storm clouds form nine months away but until you think the fed is on the verge of cutting we think we are at least nine months away from that, we think there is better returns to be had in equities and bonds relative to cash. lisa: how long can the u.s. economy and stock market diverge from the rest of the world?

you see europe facing stagflation. the u.s. keeps chugging along but in isolation? is that plausible? >> when growth is most scarce, growth gets the best premium. if you were looking for growth, you are looking at the u.s. in u.s. growth stocks that are producing their own growth. over the last decade and what you are seeing now is when economic growth is subdued and the rest of the world is softer, people flock for the growth and you find it in the u.s. tech is 18.5% more tech in the s&p 500 than any other developed market index. that's where you have to go for growth and that's why you see the valuations where they are. jonathan: growth has not been scarce in the united states. this rally has been built on upside surprises. now we are sitting here suggesting that when growth starts to disappoint, we can carry on rallying.

can you make sense of that? >> i think it is a matter of degrees. growth is starting to moderate in the u.s. and you see the surprise index rollover and all of last week was a set of softer prince. it's moderating it apace where no one is spooked by it. it's a soft moderation allowing folks to at least believe for the time being that this is softening consistent with a soft landing, if you will. the pace becomes more important. bad news is good news when it's just a little bit bad. if it starts to deteriorate too quickly, everyone gets worried. . i wouldn't call it goldilocks come it's moderating at apace people are comfortable with. it's tempering as opposed to mineshaft. lisa: are you pushing back against the fact that the market has to broaden out? >> it has to broaden out. i talked about the exception of u.s. growth but what you will see is where we had weakness last year, the most severe is

outside tech was in some of the economically sensitive cyclicals were valuations are not as stretched. if you are really pricing out recession risk like oldman did this morning, there is energy stocks and materials and materials and work cyclical areas where i think you could get some reevaluation higher. tom: in the second leg of a bull market, do you imply we broaden out from the seven or eight wonder stocks? >> you talked about asset allocation and in the equity market, that's our big bets. we are under cap large cap growth and underweight everything else in the expectation it will broaden out. tom: you said you don't like cash, 60/40? >> what you see is on the fixed income side, given the storm clouds come you don't want to be heroic so you lengthen duration. we are underweight credit. the idea broadening on the

equity side and overweight equities. if you are in a position where you are 10, 15, 20% cash, you need to start working that down because there is better returns and equities in the short run and at the storm clouds do materialize, you want traditional fixed income. jonathan: do your clients worry about nasty politics on the horizon? >> we are starting to get those questions. we do a good reelection dashboard. it looks good for the incumbent but there is a lot of uncertainty in utero in the idea that you may have one of the parties nominees on trial the day before or after tuesday. jonathan: do you realize how messy this could be? >> it so far out that folks don't know how to price it in. tom: the wall street journal poll released in the last 12 hours i think --jonathan: brutal. tom: brutal but we've had these

fractious times in american politics but other than alien sedition in 1802, we have not added more uncertainty, the polls are shocking. jonathan: 73% of voters said biden is too old to seek reelection. two thirds of democrats said he was too old to run again. >> the possibility is that we don't know the nominee of either party at this point. that adds another level of uncertainty. this is going to be something into the back half of this year, the last quarter and that your becomes a bigger issue. we will see. you have totally different views on the markets and how to run the economy and a ton of candidate uncertainty. it could be fuzzy next year. jonathan: fuzzy, very diplomatic. steve, thank you for being with us. tom: i wonder what the market is

betting on. i cannot get a handle on the gloom level now. lisa was gone for three weeks but i just can't get a handle on the equity market right now. jonathan: the data is calling, it's just not freezing cold. would you say tempering? tom: 33 celsius. people have no idea what celsius is. from new york city, good morning. ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

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>> for a lot of politicians in this country who don't know how to say the word union, they talk about labor they -- but they don't say union. i am proud to say union. let me tell you what we are celebrating, we are celebrating good paying jobs, jobs you can raise a family on, union jobs area jonathan: president biden at a labor day rally in philadelphia over the weekend. this is how you have your cake and eat it too. you can talk about unions but union participation is the lowest it's been in history. tom: it's away from public service, the people working for the greater american bureaucracy are unions.

how many people outside it are in unions? jonathan: they made the point of how much worse things would be in this economy if union workers were as high as it was in the 70's. you can go on the campaign trail and say you love unions at the same time, membership is so low. if it was high, you would have a different point of view. tom: if you go to europe, it's not like america over there. that makes for a lot of rigidities within the united kingdom. jonathan: similar trend in europe. tom: we begin with -- when is the next debate? jonathan: the 27th. tom: you nailed that. same crew? same motley crew?

stuart will kill it. wendy schiller is with us now. truly one of our most popular guests. we get huge response when she's on. let's go to the images we saw on radio, the president doing what he does with his baseball cap on, harkening to a union he knew in eastern pennsylvania long ago and far away. don't they vote for trump now? >> there is mixed voting in terms of unions. the teamsters lien a little bit more republican in their voting but a lot of other private unions physically on the local lever - level because they believe democrats will spend on infrastructure which means jobs for them. it depends on the local balance as to where the jobs are. about 7% of the private sector

is unionized but public sector is still in the 30's in terms of unionization and that can matter in key swing states when republicans go after unions and labor. that could cost them votes so biden is skirting the line. public labor unions are very public as well for elections. tom: do you see a rejuvenation of unions moving from that 7% higher or is that wishful thinking on the part of union types? >> there seems to be a concern and strategic effort for unions to branch out to like college campuses, unionizing graduate students. that's a group that is still really ripe for the picking in terms of votes. it's a group the democrats need more than the republicans to get out the door. every time you have a new union agreement or new people coming into the unions fear, that's a

guaranteed vote because unions are excellent at getting out there base to vote. lisa: it seems like yesterday's speech highlighted the union membership it also highlighted the fact that there has been more union action recently. this is also what biden said -- we are turning things around because of you and the last guy who is here was shipping jobs to china now we are bringing jobs home from china. how much is biden trying to galvanize his campaign by going after president that he will be the person he is facing off against? >> he has not done enough yet and to show biden out on the trail, he can walk and talk and he's clear and energetic. given the most recent polling that has people doubting his agent capability, the more he can get out and show he is still vibrant, the more he can mitigate those kinds of concerns. i think that's an important part of this strategy.

you think about some of the most recent polling about trump's job performance in office, it's relatively positive. the covid aftereffect that some people argue because trump the presidency, that seems to be diminishing for trump. after the indictments, there could be a rosier glow on how trump presidency went. that's a real concern for the democrats. biden has to remind people of what that administration was like in white they rejected him in 2020. lisa: does biden have a chance if he's not facing off against the former president? >> that's the existential question. you have to believe that the negatives associate with trump in swing states -- some of the swing states have swung more to democrats in recent elections. when you think about that, that is their issue. would they do better if nikki haley was on the ticket or ron

desantis? i'm not sure if ramaswamy is the guide to go through. he is like trump lights. if they didn't have the liability of trump, would they be polling more strongly on independents than they are now? tom: there was an article on the nations deficit. i've lost track of the billions and trillions. is the debt a concern to an academic like you or is it the usual debt angst and not understanding the massive size and scale of america? >> i think the parties are seriously worrying about the debt. i think solving the debt limit crisis as we saw was something to both parties understood they had to finish and get done but you will see this rhetoric in the next four weeks. the republicans will claim we spent too much money and they

will want big cuts and biden will have to hold the line which may lead to a government shutdown a couple of days after the second republican debate. that hurts biden in many ways because he is the incumbent and the income it is supposed to run the government smoothly. if you have another union strike like the autoworkers strike, that creates uncertainty among voters about the biden administration. jonathan: wendy schiller of brown university, thank you for the latest on that. tom: buried in the jeff stein article in the post is the tax cuts of i believe 2017. i can't remember but they are identified as the trump tax cuts. there is a point within the distractions of legal proceedings where you are going to get a raging debate into 2024 on sustaining those tax cuts.

that's not on the radar yet but it will be. jonathan: you mentioned the debate on september 27. will the former president show up to that? tom: it depends on his legal troubles. jonathan: i think people feel the same way about that. lisa: what happens when he starts to campaign more aggressively rather than being the defective front-runner? does he have to? given the wall street journal poll, does the concern about age , what are the concerns about joe biden running? jonathan: that's the man he wants to face. tom: absolutely, the distraction of the first lady with covid, i was thunderstruck by the rekindling on a sleepy labor day weekend of a president who is 80.

this is the weekend where 80 came into the zeitgeist. jonathan: even last weekend. all of this is building. coming up, simon french will look at the economy. painting a picture of maybe a soft landing in a fed that doesn't have to hike on september 20. tom: we got through the first half hour b andramo after three weeks off is right back in it. lisa: what can i say? tom: just check out the brmao- cam. jonathan: equity futures are negative by 0.1%. from new york, this is bloomberg. ♪ that makes it very, very cumbersome. ♪ it's not just tech, it's not just people. it's how they work together to provide

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jonathan: two weeks of gains on the s&p 500 so let's see if we can make it week three, equity futures are slightly negative by 0.1% and the nasdaq is down by 0.2%. a monthly loss of 1.77% for august on the s&p 500. the first loss going back to february but really tame stuff considering what that looked like halfway through the month. tom: a very tame summer. sell in may and then go away, up

8% and then august recovered. we had 20 7% -- 27% annualized. jonathan: the 10 year is the height of the month and high for the year all the way back down to the 420's at the moment. four months of gains on the 10 year yield and the two year, a 20 basis point move lower, 4.9%. tom: i don't look at the real yield. we haven't talked about foreign exchange which is fascinating. the 10 year real yield is what the adults are looking at. it's buttressed up against 2%. to have that breakthrough was framed out last week for us. jonathan: scream and buy.

tom: people are placing their bets for september. jonathan: we believe stocks can't rally from here and that seems to be the belief that morgan stanley. let's finish with the euro which is holding on $1.07, negative by a half of 1%. . people of thrown in their call for $1.15. it might hit $1.05. tom: the euro-swiss to me is the test. four days in a row of ever so slight strong swiss franc versus the euro is an indication of the

european tension. jonathan: president joe biden contrasting policies with former president donald trump in a labor day pitch to union workers in pennsylvania. he said when the last guy was here, he looked at the world from park avenue but i look at it from scranton, pennsylvania. lisa: that was an area that could tilt to former president trump and union membership tilted to rhetoric of the former president and what's interesting is how much is biden hoping trump is the counterparty and how much is that the predication of his run? what happens if he is not the front runner? tom: trump is not on park avenue, he's on fifth avenue. that's identified. jonathan: i am aware. there are many quotes from his pitch that didn't make a lot of sense.

when the last guy was here, he was shipping jeff to china now we are bringing jobs home from china. when the former president went off in his tirade about china and people in washington called him a lunatic and now we are using the same language. lisa: let's see what sticks with union members kind of on the fence of whether they go republican or democrat. it used to be a standby democratic vote and that is change in how much can biden change that back will be the key question. jonathan: the chinese economy with the services sector showing more weakness, expanding at the slowest rate this year in august. it the pmi fell to 51.8%, down from 54.1% in july. the hope is the initiatives of the past week could turn the story around pretty quickly. lisa: i've been reading over the past week about how much the chinese economy and the slowdown there will affect the u.s. and how much it will transmit to

europe. the transmission to europe is more direct. there was a really good commentary and how they can do this through the currency transmission. if they let the u.n. -- the yuan depreciate, that could depreciate the trait mechanism increase trade to the u.s. more than the biden administration would like to see. tom: we emphasize that last week in the yuan is 7.30 and to see it pop through, not to get back to 8.22 in 2005 when they let it go to strengthen but the answer is currency is the sure way to give way there. gdp is not that bad. this is a balance sheet issue in a crisis of real estate and garbage investment. jonathan: they had a major win last week.

it was talked about, huawei, we did the tear down. i reporting suggested that huawei has built an advanced processor and basically, succeed even with these sanctions from the united states, attempting to stop them from doing so. tom: you've been great on this for bloomberg television but the answer is we are more concerned about the huawei chip than the new chip in the iphone coming out whenever september hits. to my families iphones broke this weekend which is fantastic. two of them. jonathan: i think the effort is phenomenal. the fact that they dropped at the same time as officials from the u.s. were visiting the country, look at the action. to unveil that quietly --it's phenomenal. tom: the g20 news of china and

america is amazing. jonathan: that's the perfect example of how the west looks at the world. they might not show up to the g20 but at the same time, they did something phenomenal with huawei which is far more important. that's just a western bias of the world. as if that is real significance who shows up to the g20 when they engineering those kind of changes on the grounds? the ecb chief economist is expecting core inflation too slow for the remainder of the year. the next decision for the ecb is a couple of weeks away. tom: we were on the couch at

jackson hole and reading about christine lagarde's speech. this is an important voice. there is no american equivalent to philip lane being the lead economist and more so because cruising -- because christine lagarde is not an economist. jonathan: the ecb september 14, next decision. tom: let's get a brief on that and how it folds into american markets. simon french is with us. how far apart is the american/ european experiment now? >> there is a big divergence now, probably the largest we have seen since the start of the rate hiking cycle. about 175 points of hiking in

europe and 100 from the fed so it's a different pathway. because of the transmission mechanism, it means the ecb are flying into next week's meeting with much less data on what transmission has come through from their policy decisions into the real economy. you picked up philip lane's quote. the data they came out this morning from the euro zone slightly undermines that rhetoric. it picked up a three month high on inflation and while he's right on the euro, they are in heavy deflation territory. with crude oil picking up in a bit of an inflection toward core wages inflation, is that narrative a little stale. christine lagarde as consensus builder is in doubt. tom: i think it means pause.

it is pause in the vocabulary of the hawks in germany or america? >> it is in the vocabulary. we haven't got consensus but we still have the market 75% likely for a pause, thinking we've been here before with the ecb. we had the germanic lead view which is more hawkish on inflation. it's been defeated around the table on the basis of data and i think the latest pmi data more broadly in terms of output was pretty broad-based downside this morning. i think that gives the pause rhetoric a stronger hand than it would've had 24 hours ago. lisa: christine lagarde is a consensus elder and she's trying to build consensus with different views on the governing council. i'm thinking about isabel's

schnabel. she says it's going to be stickier. how much does she represent the core of the committee that wants to hike rates in favor of the risk of going too far? >> i think her speech -- she is one of the most interesting thinkers but thinking in good-quality speeches does not necessarily translate through to building a consensus for driving the boat when the ecb governing council meets. i think she is correct but if you took just the imported inflation component, it's consistent with eurozone headline inflation being negative. i don't think they see that and i and there is a d clubbing of

-- a decoupling of the historical relationship. what she is talking about is this speaks to the degree to which there may not be much spare capacity given the ongoing strength of the euro zone labor market which is in contrast to the more cyclical activity. lisa: can that be sustained? is there he -- a deep recession necessary to upset the labor market or do you think it will continue regardless because of structural changes? >> i personally hate the phrase in the idea that inflation -- that recession is necessary in the labor market economy and the effect it has on productivity and individual outcomes of people losing their jobs and what that does to long-term

growth prospects of an economy, given the structural challenges the eurozone faces. the idea that there will be people around the ecb governing council saying we need to have a relatively deep contraction and output in order to squeeze out core inflation. they may have one or two voices but the majority is uncomfortable. jonathan: maybe they have a mandate they haven't officially announced? >> the rest of the market has interpreted that. jonathan: even the one with the mandate, their questions whether they would reduce the inflation story by allowing the labor market to run hot. let's build on the trade-off. in the federal reserve, at -- if that's the single mandate of the ecb, not allowing the labor market to crumble to get inflation back to target, why would the federal reserve do anything like that? >> one of the reasons why the

second half of august was so strong is we saw the inflection point in global equities was the idea the fed got the message on that and they have interpreted their dual mandate system. the market started to support them with a series of data suggesting a soft landing. jonathan: interesting, simon french, thank you as always. from new york city, futures slightly softer. we will have the latest data out of china coming up next. ♪

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>> the way i think about china now is one word, and that word is traction. when are these trips and drafts going to actually get traction

and move the economy forward? the consumer in china is not hiding under a rock. there is plenty of room to consume. it is a confidence issue. jonathan: addressing the confidence issue from tbw advisory, live from new york city, good morning to you. a shorter trading weaken your equity market is just about negative on the s&p 500. it's trying to build on the gains of the last couple of weeks in the s&p 500. tom: jay was on and when he was a kid as a sophomore, he walked in front of 105,000 people in michigan playing guard. the duke blue devils really crushed clemson. it was 28-7. we are doing this for everybody. jonathan: did you watch it? tom: i don't give a damn but

it's impressive. we only doing this because there is a group of duke alumni. jonathan: david rubenstein went there. what do like about michigan? tom: michigan is ok. jonathan: shall i complete the market check? thank you. tom: bring up the board here, we are open for trading. jonathan: i thought you would want to talk about max from over the weekend. tom: it was fun. it's 101-year-old course. it's flat and they struggle going through the terms with the best thing about this is bumpy. the cars are bumping around. it's not a smooth, perfect pavement like miami. jonathan: he makes it look easy. tom: he went by the other guy in the red car.

it's like see you later. they ignore the number one guy for the rest of the race. jonathan: the battle betweenferraris, congratulations to max and the red bull team. tom: thank you for giving us access to mr.verstappen. damian sassower is with us. we will get to that in a moment, good morning. in japan, 3% inflation is there and a weaker japanese yen.

that's the pacific rim tension this morning? >> that the only one we have to talk about with the ppi print where inflation was down about 3% in china. even though it's a short week in the u.s., a lot of data consumed out of china and nothing more relevant than what's going on in the property sector. they made payment on 22.5 million last week. they extended a you on base note and they have one billion of you on base note on into the year insulin to restructure that. we will see if they are successful but people are looking other property developers. all the debt that's maturing over the next month alone and people are getting frightened about it. jonathan: what about the policy shifts over the last week? can you go through some of the big calls they have made? >> around mortgages?

they did extend the down payment on first and second time home buying which was lower to 20% and it doesn't impact much because most of them, they are already at those levels. it doesn't really move the needle so much. you talk about country garden which is a tier two and three in cities across china. it's not going to move the needle that much. i don't think the government is really helping. pmi data came out which shows the economy worse than they have it. lisa: what do they do if they have xi jin ping thinking this is welfare? what will they do regardless of policies? >> i don't believe they will do

any bazooka big names yet but that's an upside risk to the economy. when we talk about traits in the emerging markets like argentina and venezuela with assets that road for -- that rose 50% and we talk about the china property sector. those types of trades, the ones where there is no fundamental justification for owning it and no structural reason. you look at venezuela and argentina and you look at turkey and china high-yield and the property sector and maybe you have to have a little bit and it especially if the rest of the world is not going into recession. lisa: are you saying the risk of china falling into recession or the risks circulating around china have been overblown and over traded? >> they are all very justified but i'm saying the asset prices

because it doesn't take much to move the needle. it doesn't take much with no fundamental justification but you cannot ignore it. it should not be zero in portfolios. tom: to cut -- discuss the fondue of the moment. >> i got in trouble the last time i was on here. i believe china's going from bad to worse but 0% portfolios might not be the right position. that's all i have to say about it. you couldn't hold back the formula one race. tom: what is drs? jonathan: that's drag reduction

system. tom: some people use it better than others? jonathan: the rds system of red bull is better than others. tom: ok. it was bumpy. they need to put lewis hamilton and a proper vehicle. jonathan: this is the question i want to ask -- do we get that the chinese leader is not going to the g20? do you think he should? >> you want to have dialogue there and transparency and see that people are looking to play even though the sandpit is to sandy.

it will be interesting to see how the u.s. is moving into a multi-polar world where people have to pick between the u.s. and china. people who can reach neutrality should be at a premium. their economies are much directly -- much more directly tied to the economy. india is pivoting away from china which is interesting. tom: i was stopped on the street about college football. explained to her international audience how a stud like dion becomes a coach? >> if i go over on this, have somebody smack me around. tcu was number 19 in the country

and they almost made the top for last year. deion sanders a taking advantage of the players moving freely and not have to sit out year ends bringing in some of the best talent to colorado and brought his son over who had like 500 all-purpose yards. it was outstanding and's about prime time hall of fame quarterback. tom: you couldn't get into the sink afterwards? jonathan: do you want me to say something back? tom: that's the most famous bar in america. jonathan: damien, thank you. are there any bars at these college you haven't had a drink at? tom: you go down the road there and there is like 14 bars in a row. you don't know which to go in. jonathan: you've done that, too? tom: me and rachel.

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>> this economy has outperformed this year both in terms of growth in bringing inflation down. >> this would allow the fed to cut in 2024. >> they've been able to slow employment and do it without significantly raising the on appointment rate. >> labor markets are normalizing. >> i think it would be unlikely they will move at the next meeting. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: it is not the

september people forecast about nine months ago. hello from new york city this morning, good morning, good morning, this is bloomberg surveillance. your equity markets on the s&p 500 is time to -- trying to recover. things are better, far better than we thought they would be nine months ago. tom: kids are back to school today and tomorrow or whatever. it's an important moment forward. nobody predicted september even five weeks ago. it has been a topsy-turvy end of summer, why should september be any different? jonathan: we get this quote with disposable income looking to react celebrate in 2024. it says on the back of continued job growth.

lisa: he is basically pushing back against everyone who says we will see a natural slowdown in growth. how bullish do people need to get with goldman sachs saying that tech needs to rally. does the fed have to do more to curtail some of the growth and strength in the ongoing stickiness in inflation? tom: the bulls are not getting enough love and they did not get enough love over the long weekend.

sell in may and go away is what they say. may 1, spx up 8%, that worked out. jonathan: those were the gains year to date? i think the bulls of had some love this year. tom: the modern internet and digital media has a gloom bias. jonathan: of course, the click bait. tom: on friday it was out of control. lisa: thep push back to theerma-bears has been increasing. many people say you got it wrong just to concede in the bears are not conceding even though they are coming under heat. jonathan: futures on the s&p 500 look like this -- tom: is bramo ready to go? jonathan: negative by 0.2%.

biggest week of gains going back to june for the s&p 500. we are aggressively lower on the 10 year. lisa: it's a quiet week to start the new year in terms of just post labor day workweek. wednesday will be key with the fed beige book in my i'm interested to see the influence of barbie and oppenheimer and beyoncé and taylor swift which people are looking at. we also get ism services data for the month of august and we have a similar feel we saw in europe overnight come a sense that there is this cooling and it could cool into sub 50. who is not speaking from the central bank across the world this week? christine lagarde, bank of england and the fed and how much they guide toward some sort of balance of risks in terms of

weighing the potential damage of the labor market versus curtailing inflation. thursday, we're focused on the union activity. i feel like we have to keep focusing on what this could mean longer-term. there are unions at chevron's 2 lng plants in australia that have threatened to stop work if they don't get concessions. there is some risk there but this is one of many of the same kinds of anecdotes of increasing union activity whether it's the uaw or australia. jonathan: we will catch up on the union action stateside in about 10 minutes. i think this is important, the beige book finally and i thought maybe the beige book from the fed is more important than the

hard data? if you look at the commentary from businesses, it's not pretty. i wonder how much that shows up later this week? tom: in philadelphia, there is the character of the small business but like 1200 employees. harker not only is a wharton guy but someone who is steeped in the business pulse that makes for an important comment. jonathan: that's my best effort at selling the beige book at 2:00 p.m. are you still short on the treasury market? >> yes. tom:, on. jonathan: there is a follow-up. it's ok, we welcome short answers. let's elaborate on that, we saw 436 and the tenure and get back to 5% so what are you looking

for? why is the juice worth the squeeze? >> everyone keeps saying let's be bull as the bond market but look at the price all summer. it has continued to go up and yield so even though yields pullback last week, they couldn't -- they continued friday and they are still continuing and we need to see a flatter yield curve and everyone is really ready for there to be a pause and this probably a pause but i think it will take a while before we see a flatter yield curve and a situation where inflation comes down. we are going to see higher yields for a little longer. lisa: what does it mean to be bearish at a time when yields are jumping all over the place? are you just not buying the stuff? >> in the futures markets, the technical signals have been very short for two years. it sounds interesting but it means they are in contrast to what you would think about most fundamental traders think about

in the bond market. we started to see fundamental traders saying they are also short the bond market which means they are shorting bonds and expecting we will need to see a flatter yield curve and we will need to see a higher yield return on longer-term debt. it makes sense because maybe we need a duration premium back in the curve for the short-term. lisa: when people ask you for some sort of fundamental explanation for why longer-term bond yields remain high, thinking we will go back to some sort of normal pre-pandemic, what do you say? is it technical or foreign buying or is it something about the debt load of this nation? >> that's a good question. i think it's a combination of either a preference for holding that long-term debt either as a hedge for potential deterioration and financial conditions, a view we could have rate cuts faster than they might occur.

those of the two common ones. many people are thinking that things look good in the fed will come in and cuts. my concern is that they think that but now it's looking -- it was originally going to be 2023 and now they are saying 2024 so who knows if it will be 2025? we will take time to get to that point with the fed and thus interest rates have to stay higher for longer and if you're going to hold a long-term bond, you need to have that duration premium over the shorter return of holding shorter-term debts. and that sense, it's a fundamental view. jonathan: that might be an argument for white yield should stay hypo with the argument for why they will be higher? >> i think it's not priced and it could take longer to get to cuts. people are assuming that things will go back to normal and shorter-term rates will go down and we will have a healthier curve. if they have to stay higher for

longer on the short end, that means longer-term rates have to go up. when people start to realize that i'm getting 5% on the two year, if i holds on the for 10, maybe i want more. tom: let's talk trending, let's talk katy on the great giant wells while there. if i look at brent crude, ivan nason uptrend like i had three or four years ago as well on exponential climate moving averages, is brent crude trending higher? >> yes, and that's the biggest thing we focused on. we want to connect the inflation story. we are watching the oil market. we're looking for a catalyst, something that might give us another wave or upside risk in the inflation numbers. those the things that will cause the fed to be more cautious and

we are seeing signs of that outside the u.s.. tom: it's the beginning of the year, the business year so what is your target on brent crude right now, over 100? >> i don't have the exact number but we are seeing one of the biggest growing trends in terms of our signals. the signal strength for brent crude has been one that's been taking up lately and did revert a little in august based on some data on china and the dollar also weakening a little bit. we started to see some dollar strength and dollar weakening messing with the trend but in general, that has been the trend to watch more recently. the reason that is important is because that is one of the indicators we have seen down the pipeline. brent crude in 2022, it tended to be something to follow as a catalyst where you start to see inflation numbers tick up later

in the year. jonathan: thank you for the up date. tom: she didn't give a price. jonathan: brent is a bit softer this morning. does it matter if it's a demand-side rally or a rally led by the supply side? over the last week, this is been a story about tighter exports and output from russia and potentially from saudi down the road. tom: the answer to me is the supply and demand, if you get it post-pandemic, is just another indication we are beyond covid. if there is better pacific rim demand, that's what you get. jonathan: if you are just tuning in, welcome to the program. the s&p 500 is slightly negative. lisa: i think there is in a

pushback that that's not were things are going. we don't think it will stop but people are getting sick from covid again and we are not talking about just joe biden's wife. i have friends who have it as well. it's the first lady -- seriously? what is this? i've got friends and relatives. jonathan: sounds like the lady down the road and around the corner. tom: when the booster comes out, i will get it and i hope it's a pfizer booster which is what i took before. i predict there will be a massive political and cultural debate over boosters. i will listen to the pros like at johns hopkins. jonathan: we will catch up with them about that. lisa: jonathan: jonathan: every day? i don't want to go back to that. lisa: we been exposed to it so

you will not have the same kind of mass hospitalizations. that would be terrible. tom: i think there is a lot of bad science going on now. the bad science is not understanding the purpose and outcome of boosters and vaccines? they protect you if you get it is the first lady said. thank you. jonathan: that's enough covid for this week. lisa: you are going to blame me for this? tom: we are the world. lisa: aren't you glad that i came back? tom: you were gone for three weeks. jonathan: coming up later, winnie cisar from d.c. ♪ endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

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>> when the last guy was here, they were shipping jobs to china. now we are bringing jobs home from china. when the last guy was here, your pensions were at risk. we helped save millions of pensions with your help. when the last guy was here, he looked at the world from park avenue. i look at it from scranton, pennsylvania. wall street did not build america. the middle-class built america and unions built the middle class. jonathan: president biden at a labor day rally in philadelphia over the weekend, making the point that he is your man for the unions going into the election next year. tom: that is core joe biden, the religion from a long time ago. i'm not sure it has a place today. jonathan: he's still the man from scranton, pennsylvania.

tom: comfort level off the chart and adjust wonder, thought professor schiller was brilliant on 7% unionized in america does not get you elected. jonathan: you get to say you are a union guy at the same time that unions don't cause you much problem because membership is low. tom: it's a trend. it has crept up on us through this summer. all of a sudden, it's their. there is a scathing article coming up in one week. jonathan: what did he say about the unions? tom: he calls it pricing, payrolls and pay back. it's the same with the teamsters. jonathan: this is a decade they've been underpaid and we

reflected on this on this program. everybody has had the annual valuations and they've been told not this year and this is the moment for some of the unions to say the time is now. lisa: i would argue they are getting the wage increases and they are not striking and president biden is getting a pass because he can of prounion rhetoric without the strikes to accompany it that shut down business and potentially mess up the infrastructure and supply chains. jonathan: if you had union membership like it was in the 1970's pass through from inflation into wages, it would have been rudely high. we have a different situation so the soft landing the president's opening for into next year arguably would never have materialized if we had the kind of union membership we had back in the 1970's. tom: i will go with the disparity of the uaw and the whole burgeoningev market.

they are trying to set up a two-tier labor market which sounds like the airlines a couple of years ago. september 27 is the next presidential debate? jonathan: yes. tom: can you imagine that debate with the uaw on strike? anne-mariehordern is joining us from washington. you brought that wonderful column fromliam denning and he talks about pricing, payrolls and pay back payback is your territory. who is paying back home? annmarie: workers feel they have leverage and they feel they have been left behind. they were taking pay cuts when there was the potential shutdowns of all these big auto companies and the bailout and they want to make sure those auto companies would remain in america and they could continue working there. they took pay cuts. over the course of the pandemic,

you had a lot of people in the private sector working from home. you also have this quietquitting with people extracting more from big companies in terms of pay and leverage. now what you see for these workers, they feel for years, they have not gotten a fair deal and they feel they were during the dish they were there during the tough times of the pandemics over there not just asking for 40%, they also want a much less working week. that's what you see now when it comes to payback. it was interesting to hear the president speak when he was asked by reporters on the sidelines who thought there'd be a strike and he said he didn't think so and the uaw president came out and said will he must have different information that i have. unless these companies --tom: what is he supposed to say? annmarie: he could say that he

is concerned but there is consternation in the west wing about a potential strike. tom: off the record, at your corner of the bar where you're five days a week, we roll off off the record and write up the road is the uaw headquarters and joe manchin is really threatened in reelection. how does someone like joe manchin or kristin cinema or even bernie sanders in vermont, how do they deal with the burgeoning union movement? annmarie: i think you have to go back to john's point -- there is potential we will see a strike from the uaw, there is also that the potential there will be a strike from american airlines flight attendants. we still have the writers union on strike. but it is not impacting the overall economy just yet.

i think it is way too soon right now. what is front and mine for the senators is there back today and they do figure at how they will keep the government open pass september 30. for the white house, this is a huge issue because the president continues to want to have events like he had yesterday saying he is the most prolabor union president in modern history. lisa: so we will talk more about this deadline and the potential for government set down the on a broader level, there is an issue in the democratic party that they have lost the rust belt and the working class voter. how much are they winning it back with this type of rhetoric? annmarie: it's difficult because this administration is also pushing for a climate industrial policy. liam denning said it's more for the political and economic will for this industrial policy, not just climate change provisions

but this is the biggest industrial policy we've seen from the u.s. government since the end of world war ii. at the heart of that is electrifying the grid. where these plants are opening up to do that is in the south which historically has not been a prolabor union sector of the economy. this is why you see a lot of companies making sure some of these plans are in the south like tennessee and you seen the uaw workers have a strong reaction to the u.s. government when they were giving a lot of subsidies and loans and grants to these companies that were open up factories in the south. just last week, the energy department came out with $12 billion to retool current facilities so that would be in detroit in the rust belt to make sure they are ready for electrification. i think you will see more items like that from this administration if they want to make sure they are shoring up

the individuals in the rust belt. jonathan: here is a pull out of the wall street journal -- 73% of voters said they feel biden is too old for a second term. two thirds of democrats said biden was too old to run again. two thirds of democrats? how does he respond to that? annmarie: the president responded to it yesterday, saying yes some people say i'm old but i come with wisdom. he is trying to use it to say i am wise and something the president likes to talk about is that people doubt him and he is able to succeed. that's really the story as well a president joe biden over the course of his entire life. it's especially in his political course of life and many people didn't think he would be the nominee to be the democratic -- to represent the democratic party. whether it's the wall street journal poll or the ap poll, this is becoming an issue for

the administration because it's not just independents they are worried about but within their own parties but still, democrats will maintain that regardless, they still will vote for biden if he is the one the democratic party will put forward as the sole nominee for the primaries. i expect more of this. it's a big issue in congress as well. jonathan: it's not going away anytime soon, thank you. the latest in washington, d.c. coming up, the latest on the pricing of the arm ipo. live from new york

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jonathan: life in new york city, your equity markets are shaking up as follow. negative 0.2%. much more negative, down by -.7 9% we are still down 1.62. tom: the euro's threatening

1.06. jonathan: would you like to skip the bond market? tom: the drama in the bond market, look at the real yell? the 10 year is five basis point jump to 1.97 percent, there is some drama going on. jonathan: two-year, 10 year, 30 year, force 36 on a 10 year but now down to four .33. the two-year is down to 4.9 2, 10 year is up .04 out 4.22. tom: it make it down to 1.24,

the different price point. jonathan: yeah when the price changes it is at a different point. you are killing me. we strongly disagree with friday, let me start the quote again we disagree with the notion that a growing drive from the long variable lags of monetary policy will push the economy toward recession. it made good on to bonds but the debt crisis not over. country garden is trading at point oh nine cents on the dollar. has the state spent enough? tom: this is about the property

market, domestic affairs, the state owed enterprises and the rest of it. i saw on the financial times china's growth should be out 4, 5. thus on with this is about, it's about the domestic balance sheet which is a train wreck. jonathan: we thought it would be close to six at gdp but not a for handle. soft banks are planning to raise 4.8 billion in what would be the biggest ipo of the year. the lower 8-10 they were looking to raise, 4.87 they were looking to raise 4.8 to 10, that ipo looking to raise closer to 50 billion we have cut this one big time. lisa: 50 billion valuation with

the vision find and we are looking at 50-54,000,000,000. softbank, obtaining a bigger slice than they previously thought are they trying to minimize losses? does this speak to the appetite because it will be the biggest ipo going back to ruby and how does this speak to something more general? jonathan: you think they have a valuation problem? there are so many valuation problems. you can't get away from it. it's meant to be a wind tunnel. tom: you look at the a paragraph summary they announce the launch of ipo roadshow. securities usa, the roadshow manager.

it's a rubber chicken at a hilton hotel qualified people and we have apple is a minority interest what price will you take because we screwed up so bad? that will be the real conversation. jonathan: the reviews of the food on roadshow? anything else? tom: will now it's all merchant swagger. you do it 3, 4 times a week. in the old days, there were enough ipo's where it was rubber chicken four days a week. jonathan: was that you back in the day. tom: now it's all financial advisors and joint book running manager's and those in charge of

table at the roadshow. in the old days you had a red errant, some read it with high later so they could look at the cash flow. that was called securities analysis but i don't know what is called him bonds. jonathan: based on what they're looking to raise its half of what they're looking for? tom: was the roadshow of the one with the umbrella in the drink? the dorchester? jonathan: i haven't had one of those. tom: as just part of going to london. jonathan: we have a good guess if you want to get to her. tom: this is important for the global wall street with the relation between that, stocks and bonds. what is the spread market

telling you? can you give categories of debt? was the difference between great and bad debt. winnie: is telling you things are looking better than they did 12 months ago. there's been a nice recovery but it's not screaming things are overheated, super rich. we are seeing higher quality spreads are still wide because duration this as such a challenge. tom: what's the link between credit size and guessing equity market and spread analysis and take it to an equity call? winnie: it's tricky to bring it to an equity call what we can say is credit, investment grade on a yield basis looks far more compelling that it has for the

past 20 years relative to equities and turn up by hundred yields. that is why remain constructive on credit with the carrier oriented position in high yields because there are values compared to equities. feels where you have downside protection and corporate credit and an income generation. lisa: investment grade high yield bond fund issuers lining up a busy month is september. why would any high-yield company cell debt at a .4 percent coupon when there used to it free? winnie: for the high-yield market we have seen an issuers strike for the past 12 months

they don't really need to do anything. maturity schedules have been pushed out not a lot of m&a, lbo's, not a lot of reasons to come in the market. investors are starting to get concerned. it's a show me story. a lot of companies say this may not be the most attractive financing would get but we haven't seen valuation come down over the past 12 months so we should perhaps raise capital, demonstrate to the market there is ress subjectivity to our company in business operation ends in 2, 3 years, giving title bonds are colorable it will be more attractive. lisa: there is a 5'7" rate, higher rates but less so in the high-yield market. is this where yields will be?

officers are saying this is the new normal and we have to adjust? winnie: that's happening to an extent and there is a fear and higher for a long bear, high interest environment that yields go higher and our costs go higher. we see some frontloading of issuance ahead of potential fed meanings with more rate hikes or moves upward in the long yields of the treasury curve. investment-grade market has a lot of maturities that need to be rolled over. a high concentration of banks that have regulatory capital reasons in the new issue market so investment-grade does not have the luxury of gilding's budget is the high-yield market where maturity files get pushed out. tom: speaking of roadshows, our bond deals getting done?

winnie: it depends on the credit. we see some issuers come to the market with little new issues. not a lot of a discount to existing bonds. then you see some issuers come to the market and they could have just chosen the wrong day where markets are more volatile, maybe negative headlines around china and they get punished with new issue concessions. for the most part deals are getting done they don't come to the market and get pulled. there is still a lot of cash that needs to be put to work. jonathan: supply the tweak? winnie: we have the fed and cpi and other headline things

midmonth so issuers will be looking to get ahead of those events. jonathan: that's what we saw the treasury market. winnie cisar when you expect the big supply of traded cakes around in the treasury market. tom: i can't remember when yells and a real yelled out there, do you do business as usual? jonathan: the market is not shot is just more expensive. tom: i like the word more expensive a lot. jonathan: your equity market looks like this, slightly negative, down by 0.1%. coming up later is neil dutta,

pushing back aggressively through the whole of this year. look at him, he's smiling. he will be here 8:30. tom: he wrote to paragraph saying, wage growth will be what it will be and if inflation comes down the vector is towards real income adjusted wages. he was lonely on that. it was strong language, you quoted you strongly disagreed with the call. jonathan: i win about 15%. tom: peter oppen higher -- open

heimer with an important word. jonathan: i saw that too. alex webb is coming up as well. we worked out that maybe this is been done with these chips? tom: we found the secret thing and chips to monitor us? jonathan: there have been tons of sanction to slow down the development. lisa: and they haven't worked. jonathan: this sanctions have sailed and they released it, that is an amazing turn of events. futures are slightly negative from new york. this is bloomberg. ♪

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>> in china they have structural problems after 30, 40 years they are reaching a level of maturity

where you are dealing with structural issues as well. we have to take a cautious stance as rpg develops and not expect rapid growth. jonathan: speaking at the motor so in munich. catching up and talking about a week of the chinese economy, what about the competition domestically? tom: i'll step away from technology, the seven nano processor. i learned a long time ago to listen to the prose hardships and i get the feelings that they been surprised about that. jonathan: you want to talk about huawei? the top chipmaker and in china

coming together with the fancy process. you think apple should be worried about that? tom: i don't know if they should be. you have been leaping on this and you're right. why do we worry about giving them technology if they already have it. alex: thus the real news here, we were asking are these chips that they have left over before the sanctions kicked in? it shows is a a check made by china's homegrown competitor. the maker of chips under contract from people to apple and nvidia. if they make chips for other

people's design in china? jonathan: this is quite a statement and we could talk about different dimensions across national security. can we focus on apple in the competition they could get for the iphone in a week or so? alex: there feels like a little bit of competition but how had they made these chips at scale? they were scriptable whether smi p can do that. if they can't, they're unlikely to have competition but sales have been growing them out -- for apple. apple will reveal a new chip. it is further ahead than what's happening in china. tom: thus the heart of the matter.

the bloomberg photos of the teardown of the phone is world-class. they are doing 7 nm, apple is doing for nanometer and then they will announce 3 nm peter what is their belief of their technology to get to 6, 5, 4? alex: it's really hard. when you talk about the machine, the ultraviolet lithography machines. there is only one company that can make them asml in the netherlands. there are companies in the supply chain for which asml has a lot. those companies in supply chain, china does not have access to.

they have gone upscale with this device but they are two generations behind. lisa: what he make of what john was saying, gina raimondo was touring china and there was a clear statement it is not affecting us that you're trying to sanction us from this technology. how far does it go as an expert vehicle versus a comeuppance to the u.s.? alex: huawei and apple, the real strategic value of huawei's head of the network equipment. they are the biggest player in that space competing with nokia and ericsson. they are building their five chain network in asia, they been blocked and the rest of the world.

if they can't get the leading edge chips for those application that's a blow to their global ambition is something that affects her ability to have access to cloud computing the best 5g antenna at the edge of their network. that is the real value rather than in devices. lisa: given the fact that china is clearly stealing technology we had a council that supported private businesses, what does that mean for apple and their chinese business? alex: it's a symbiotic relationship. it not in china's interest to kneecap apple because it employs up to one million, china needs apple and apple needs china. apple devices are hugely popular .

will it hurt them on the fringes? may be. will it destroy their business? highly unlikely. tom: there are so many stories flying around, john has been out front with huawei. a nanometer, which i have no sense of what a nanometer is. one billionth of a meter, a human hair is 100,000 nanometers. that science to our worries about defense technology in the chinese. how did they get from huawei over to our worry about satellites spying, the rest of it. alex: the real conversation around the bleeding edges is ai. president ai functions with

energy efficiency and cost efficiency that make it worthwhile, it has to be at a small scale. the argument that the u.s. has been making that stop being the chinese more broadly from being able in that space. others will say that's just about the chinese economy as a whole and usurping the west. there are a lot of things that china will find it hard to do the most recent round of sanctions says we want to ensure that they can't get access to cloud computing. if they can use cloud services in france or singapore it becomes redundant. so they stop access to that as well. it's about the next generation

of ai generation. jonathan: just on technology, how many years behind do you think the chinese efforts are now relative to where it was? alex: 7 nm have been around in large-scale applications for 6, 7 years. getting to 3 nm is a lot higher because the hurdle of getting into extreme ultraviolet lithography is massive. it's a big leap sickness to the point. that is why the intel missed out on it. there is a long way to go from this to the next phase. jonathan: thank you for the update, out of london. tom: i think it is a huge

wake-up call. the bloomberg article is superb it educated me on where they are. my answer, they go from seven to six and they have this process lithography where they get to three. i don't think they'll be able to do that. jonathan: they did it so quietly in the last week. secretary ray mondo talks about what they need to change to make the country investable and they release this. tom: there's another story here involving politics and brought technology. i don't know how this goes to our legitimate defense worries? like submarine telemetry off the top of my head. i will put it out on twitter. jonathan: coming up next

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the distortions in the labor market are working out of the system.

this is what the fed is looking for, normalization and the labor market. over the course of next year, i think employment will slow. the fed will get this way with the labor market. this is bloomberg surveillance with tom crean, jonathan ferro and lisa abramowicz. tom: it is back to the real world of equities and bonds, 18 stores to talk about. the real yield interests up against the middle of august. real yield 1.94%. jonathan: maybe not higher for longer. october 20 we have the decision from the federal reserve. that could be lingering?

ecb is on next thursday. tom: you get in inflation surprised? jonathan: we are making the london announcement what are we doing over there? tom: i'm really looking at arsenal. jonathan: i was going to watch football. lisa: lisa is going to be cooking. jonathan: does she know? lisa: great, sounds great. tom: everybody i know is for arsenal. lisa: sure, i've got it. tom: it is a toxic brew of post-labor day stories. jonathan: it hasn't been that toxic. the federal reserve has more ammunition and i can show comments with my friends saying

the labor market is coming into balance. morgan stanley says the report talks about the labor market softening but falling -- but not falling off a cliff. and then you introduce, goldman sachs charts of recession with long, variable lags. neil dutta talks about an economy are performing in the fed may have more work to do. tom: it's not 15% recession is 85% what? lisa: it's not as toxic brew but what is this look like? we heard from kitty kaminski and this could mean that bond yields are higher for longer.

this idea you don't need to see the fed cutting rates because the long and variable aren't that long for variable. it leads to a new rate regime and people are going back to that idea. tom: 8841 on brent crude and she made it clear that the trend -- lisa: alpha simplex. tom: semi conductors? oil, brent crude. jonathan: do you see this expansion going on or what's happening on the supply side? if it's the demand-side you could make the argument they would have work to do. if it's a supplies side is a recipe for a slow down. the move in the last week, people would say that's down to

russia cutting back. there's a lot out there on commodities. tom: let's open this up because i didn't ask i guess this, what is the moon trade, i can't get a handle on that? jonathan: jim beyonca is going to join me later. what is consensus? he believes it's polished, yields lower. tom: we have people leaning against that. what's the bet on the stock market? i don't have a handle? lisa: they said they haven't seen one and others say the option market is not as rosy as previously expected. tom: we pulled back when you

weren't here from the 13 level to 13. the vix is 14.9 is gloomy out there. jonathan: the euro is holding onto 1.07. tom: i guess it is important we have to get them right away. jim carson with morgan stanley. it falls into everything else. we are playing data roulette this morning. how do you interpret brent crude on the age of a moonshot up to $90 a barrel? how to see world change? jim: i always think of the demand that goes into it. there are technical indicators for oil from supply. could it also be global demand

is not as soft as people think? things are slowing down but could it be that production is not enough to sustain a softer landing in the u.s. or globally? things are slowing but not collapsing and that is the key in one of the things that's going to be somewhat supportive of the technicals. jonathan: talk about the equity market, we spoke to that he believes this rally has legs? i remember conversation talking about risk and you said downside risk is something where talk about but upside we should appreciate. what about now? jim: i am still not can't. i want to be clear. i think the economy -- there is a slow underway.

i don't think people are position for it and that is one of the key factors when we look at equity positions, positions and equity is not overly long. where the market is vulnerable to move higher on modestly good news or less disappointing news. she earnings were supposed to be down 70% by came down to 4%. thus side a good number but better than where it was. if we think about the third quarter earnings might be five-seven positive. this could be the inflection point and this is what investors like to buy into when there is negative for earnings growth to positive. given the fact that people are not overly positioned in equities there could be some possible legs. what disappointment are we talking about?

disappointment and earnings for if growth continues to chug along with yields where they are they can sit here or even go higher? that's a great question. is the disappointment and growth. everyone is focused on the outcome of. third-quarter gdp estimates are being upgraded not downgraded. we may be slowing but were also getting good tailwinds to solace of a slowdown going forward in the fourth quarter and into the early next year mike not be as bad. i have a lot of sympathy that you could have a softer landing and people are not position that way. it is something that john and i would speak about, there is a risk that needs to be hatched.

i don't think people have enough risk in their portfolios in terms of the balance of that risk relative to fixed income, people stay in the bond market and they are going low with the person yields. lisa: they believe the lankan variable log will not factor into a slow down. jim: that's where i push back on that call. interest rates are high, financial condition should be tightening. it's not like that goes away. not like the long, variable logs go away but the lags in terms of where it could be growth in

other sectors and value sectors, the sectors could stand to do a lot better. while we look at spector's specific areas like growth, technology, which is done well this year. those make an impacted later on but the broader sectors of the market like materials and industrials and some consumer staples could get better. jonathan: what do you think november hikes still in play? jim: we would have to see some change in data. jonathan: the next dana point is a week or so away the ecb is moving -- meeting on september 14. tom: we have september 13 things

cpi, in september 17th a formula one in singapore. that should be interesting. then we have the 20th which is fomc. event arsenal on the 24th. and then the 30th in liverpool. today is the 104th anniversary. jonathan: are you celebrating? tom: i was going to take the day off. jonathan: i see you are taking tomorrow off. tom: you don't walk on to school they walk six feet in front of you. jonathan: well yes, when they are teenagers. i think it is sweet that you still walk them. jonathan: jonathan and i will be

here on your way children. s&p negative by 0.1%. coming up, neil dutta with renaissance macro. justin defined the doom and gloom. tom: whether you are cautious or not, this is the conversation as he rephrases his brilliance from 18 months ago. he was alone. jonathan: but not lonely anymore. coming up into the next hour, jim beyonca oh, tiffany wiley with pimco, led by the fed vice chair talking about tolerating to point something. that becomes an issue to a lot

of people at year end. tom: i'll go to the 10 year yield at 1.95%. ian lincoln has set up to .0 something percent. there is a raging debate about what the real yell does in q4. jonathan: the question is is the fed willing to destroy the labor market to get inflation down 100 points? tom: is still the question. i'm looking forward to talking to stuart. jonathan: but you taking off tomorrow? i will miss you. from new york, this is bloomberg. ♪ get help reaching your goals with j.p. morgan wealth plan,

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we want to connect with the inflation story, we are watching the oil market. the reason that's important it's an indicator we have seen inflation affect the pipeline. brent crude tends to follow other catalysts and inflation numbers pick up. tom: katie kaminski was talking about the trends that her and alpha simplex c. it was an extraordinary review on the trends of oil. american boy will price to 85 .29, west texas,88.36. lisa:

you have seen food costs going up significantly. when does that challenge the idea disinflation when you have gas and oil prices climbing? tom: along those lines, my book of the year has just come out in the last week. it is hugely anticipated. roger kaplan and exquisite on geopolitics, i can't say enough about it. i put it on twitter last night. lisa: right when you see into southeast asia, prices climbing back highest in the past 15 years.

this just change going around the margin said is a getting talked about. maybe because it's on the supply side. it could save the next couple of months. tom: we will frame out your next couple of months. there is robert kaplan, " the loom of time". on the equity markets, and chief investor at merrill. i love your note. you have to participate but you are scared stiff. how do you participate in equities if you are scared stiff? chris: you have to have a plan. you almost have to have an understanding you will have a lot of crosscurrents, inflation, energy markets, food prices,

labor market which is normalizing. you have a slowdown in china and the war in ukraine. you want to look at the weakness in the markets. markus soeder on this sidelines longer than they should. you should not be underrate equities at this point. lisa: what point in the cycle are we? chris: borderline between late in the window between late and early. we are all waiting for the sides to see this done. when the fed is not cutting come they usually don't come for a reason. they have to do something and

everyone is thinking that will be in the spring of next year. we don't know when it is going to be. at that point, that is when you should start to see earnings discount something better. marcus don't wait for that. between now and then we are in limbo and await cycle. lisa: and we are seeing now wall street is raising cross earnings at the highest for years. is there some sort of incoherence with the idea baiting on break because when we have concerns about commodity inflation with higher yields for longer seems like the most likely outcome going forward?

chris: this is the issue going on and why there is still so much cash at the short end of the curve. this is not a normal story. you have overages in some places and slowdowns in china mixed in with whether the fed will keep real guilds or expand them? for what it's worth, on the earning side of the equation, most of wall street believes the central corridor was the trough. i feel like it will be a bumpy earnings in the next year, you start to grow again for real. in this point of the cycle you get better economic numbers right before you dove. tom: how do you address a 60/40

and the partial differential of cash buttressed against the 5% yield on cash money market. how do you utilize cash as a tool to get out three years to debt equity optimism? chris: guys at the shortage should be used if it's investable. if you're waiting to invest so dollars, it should be used as cash flow for an investment. if you have weakness in september, right around worries of shutdowns. use that into cash flow where you are underway. earning should be back on track and the economy is way from distortion. tom: what you say to people who were downright cautious about the market? david rubenstein will talk about

jeremy grantham and he has been really cautious on stocks for a long time. i will say three years. how do you just those people is say you have to participate if you want to retire and if you have goals down the road? chris: it's important to understand all cycles have a catalyst to them. they may have a core on how it works from one class to another. there are major drivers in the innovation cycle in this real economy constantly reinvents itself. you can go into a new cycle much

quicker and valuations in this market are higher than traditional cycles where you did not have the same innovation speed. it doesn't mean it's completely different but it means there is always something to worry about and usually when the worries are high, and they don't hold through you have a good market. tom: chris, thank you so much. to go from cross assets to chris talking to people what do i do whether i got the bull market and meal data who is coming up who was an optimist. you have to say let it go, you have to invest but a percentage of people are frozen. lisa: they are saying you need

to own stocks. you heard earlier this year be cautious, cash is good and now you're not hearing that. why can't some of the stock get love. it seems like this has room to run. i think it's a confusing economy. i don't think anyone has a handle on which crossroad will bid now. tom: shout out to our team as bringing us great voices. lisa abramowicz is back, we have great voices and meal data coming up as well. futures are .1% negative. good morning. ♪

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tom: bloomberg surveillance it we say good morning to you, good september to you. maybe it's wednesday, thursday? on september 15 we are going to london. the entire team, 40 people on the plane. were on separate planes i can travel with jonathan ferro it's too big of a risk. we will have a heckuva time talking to british voices.

i believe we are on the plane the day after the ecb meeting. lisa: we will get in on the ground response to what europe is doing. tom: and over the weekend there is so much news over the weekend but one of the things that i saw the miss on growth in the united kingdom it was demonstrable how much better the u.k. has done versus the gloom that was out there? lisa: did you see this services pmi it was different than the rest of the european region because they outperform but i can't say enough about diane swonk came out and said i am humble enough to know what happened these past three years with complex ways that we will figure out for years to go.

we hear about take innovation, psychological impacts from covid, we think about the decoupling of economies and you have a stew of uncertainty that leaves a lot of people thinking we are starting a new market cycle? tom: or a partition between the tech and after covid halves and on the other, half of americans are flat on the back within a 3% gdp? lisa: what do you do with that? this will be an important question how the economy has left people out of the workforce? tom: it was october of last year we were all gloomy. it was a really difficult

september of 2022 and there was something in the air. in equity we heard from cj lawrence get into the stock market in october of last year and on the economic side was neil dutta, very lonely a year ago. we came here a year ago from your arch call. what did you see in september of 2022. neil: thank you for making me look better than i actually am. for me it was simple, wage inflation was hanging in there while price inflation was coming down. that was the principal risk to the economy in the spring of 2022.

you had aggressive dad, rising food and energy prices that shocked incomes due to the russian invasion of ukraine. as we got to the end of the year a lot of the socket gone away while labor markets were hanging in there. that meant stronger customer spending and that's why the economy showed up. earlier in the year everyone was betting on a fed pivot and we saw a modest decline of mortgage rates as a result but that modest drop elicited a robust response in the housing market. there was a lot of demand for housing. when housing is working its bearish on the economy. tom: if we have a leveling of inflation what does nominal gdp

because topline gdp, linked into revenues of corporations, what is the nominal gdp call? neil: at least 6%. tom: wow. neil: if you believe the last employment report when you look at aggregate weekly income, over the last three months, that number is up 7% on an annual rate. the labor market for nominal growth is strong as well. we have an unsustainably strong economy and this is that is time the fight is taking steps to the exit door. to me, i think the risk which makes me nodded optimist, the risk is that the fed is

prematurely declaring victory. i see a lot of cyclical momentum and the fed stepping back which could be a problem for 2024. lisa: the fact that you said an unsustainable rate of growth what will make it unsustainable? if it's the inflation story and the fact the fed is not there or you cannot continue and vacuum. so it will implode? neil: i don't know it will implode without the fed doing something. the problem for mark is is when there is a disconnect from what the fed wants to do and what they should do. that is when the problems come up. i think the fed should not be signaling rate because. that is an easy first thing is not signal rate cuts.

they need to maintain a tight monetary's dance -- dance. 6% at an annual rate, you can talk about provisions, if you look at monthly gdp as of july, over the last three months ended july is up 6%. i don't know this -- i know that's not above trade business above trend growth. lisa: we heard from katie kaminski saying the same thing you are in a different way and she is bearish on bonds because she sees yields having to remain higher. maybe this economy can shrug off of 5% fed funds rate and not matter.

at what point do you see higher bond yields not inconsistent with higher stock prices? neil: the combination is reasonably good for stocks. the fed is backing off and you have strong growth. the fed is off your next through the year. if they hike again it will be in december so i don't think we have to worry about the fed until then. this is happening at a time where there is cyclical momentum in the economy. it's consumer spending on codes over 3% against last year and during that time, inventories have been contracting around .5%. that is an unforeseeable draw down on inventory.

you will seek inventory restock which will buoy manufacturing. that should be good for equities but when does the fed wake up and realize log and variable lags are not working out as cleanly as they have in the model. they have to step on the brakes. lisa: what does that mean? how high do rates have to go to curtail unsustainable growth in the u.s.? neil: simi you need to keep the possibility for the first half of next year. at a minimum, they have four rate cuts priced into economic projections. it is hard to see that surviving in september. let's start there. tom: in the economics textbook,

take the dutta optimism and corporations will have to deal with the improved real rates, a high nominal rate, how does the stock market respond to that? how does it react to and overweighted, optimistic dutta world? neil: an inflationary boom. i think that's what we're returning to. that's a place where stocks can work. first stocks, you should continue positive returns but below the historical norm. if you have continued growth in the economy projected earnings will hang in there. tom: how is an inflationary boom

now from the horror of the 60's? neil: the horrors of the 60's and were reasonably good for the stock market trends. an inflationary boom where equities can work. what you don't want is stagflation where productivity comes down and repeated supply shocks. that is where bond returns are horrible. tom: your q4 gdp number? neil: we are running so strong so i think we floated 2.4. the consensus is missing a robust inventory restocking on our hands that will bleed into

manufacturing. tom: congratulations on your economic work. there it is, it's a guy looking for a legitimate economic growth. it sometimes stagflation at 2%. lisa: one tension we saw a morning is this optimism that the equity market can continue to rally in the economy continue to grind forward. but the bond space is a different story in terms of how high heels can go. as the price gets more expensive and as they throw in the towel. tom: standard & poor's futures up .3% much going on here on a tuesday.

a quieter economic week after the festivities of last week but a lot of crosscurrents stories. i think we have to go back to the pacific rim and barely mentioned to us is the yen weakness and over the weekend, had a real nice inflation story in japan. 3% inflation for the japanese is a shocker. lisa: household spending has been going down as a result. when you talk about the pacific rim, later this week we have the g20 in new delhi and india and we will see xi jinping which is interesting because of out of damien said. when it comes to the question of where the allegiance of india and china is? how connected are they as china

moves away from the u.s.? tom: i was thinking of john kenneth galbraith in india and we have these legacy thought of india. we will have our team in bombay in new delhi at the g20. david rubenstein will defend a number of people wants to touch on the caution of jeremy grantham. in new york after labor day, this is bloomberg surveillance. ♪ availa in siding colors, styles and textures. curated by joanna gaines.

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they have never called a recession. tom: jeremy grantham had an insurer seeing time with his caution of stock market and equities, an important conversation. jeremy grantham of boston and conversation with david rubenstein. i put out an emily bronte poem for jonathan ferro about the joy of leaves changing. you were up at the lake this weekend. lisa: yes, i saw a red trees and i saw the red leaves fall. tom: david rubin side joins us from the carlisle group.

including stacking duke football. how did you contribute to this? >> i was calling the signals and from the sidelines. if they listen to my signals earlier they would've been a better team all along. tom: did you hear the d1 resurgence story? lisa: i love the thought of your hand signals. >> i have a lot of respect for mr. grantham how did you address the three year, four year hush this is had on the financial american experiment.

>> jeremy grantham is a financial analyst that has been prescient in predicting bubbles bursting he is good at that and he has predicted many bubbles as a result he has a terrific record us and investor but now he spends most of his time investing in climate change, climate tag. the greatest challenge is the climate problem. most of his money is in a foundation that goes toward side. he likes to call bubbles and says artificial intelligence is a mini bubble. were coming out of a tech bubble . he is a british citizen but lived in the united states after harvard and built money management firms and is well known for his philanthropy and

for predicting bubbles. he also said the fed is almost always wrong in predicting recessions. he says we will have one for sure. lisa: does he think it's hard to see a bubble now than in the past? is it more difficult to stop them in an era where they have been raised through the financial crisis and the big short in the glory around bubbles? >> you don't know you are in a bubble until it burst. the reason we have them as the phenomenon that everyone believes their neighbor will get rich and they will miss out on it. sir isaac newton, he got into an investment, doubled his money got out and then they saw it go up so he put all his money back

in and lost everything. lisa: market timing and physics don't go together all the time. there is a question going forward at a time when people are trying to gain outward. the crosscurrents and uncertainties and how the u.s. diverges from other places. they think that is over plays based on ai that they're not looking to look more. david: if you look at history when you have these inflated bubbles, it's inevitable they will players. we have had dot-com bubble's where he made his name because he was in effect predicting that would happen in 1998-2000 and his firm avoided the tech bubble. he's legendary about predicting folly and is not afraid to tell you you are

stupid and doing something wrong. he's not afraid of going against conventional wisdom. he is willing to say, you are wrong about this. tom: that's why this conversation is important. you are a congenital optimist, you put money where your mouth is. the heritage of the financial american experiment. there is a built-in optimism do you still have that with the perpetual caution of wrentham? david: he's more negative on things but that takes courage to tell people the wrong all the time. i'm not good at telling people they are wrong to their face. tom: all of us are rocked by the

climate change story of the summer. what is his prescription to have america address facts of climate change? david: he thinks were not doing enough and he can solve the problems to solve but he takes most of his money and invest a tech companies, hoping one thing will come along that will make a difference. he's not trying to influence policy. he is a clever person who has made his main purpose climate tech and investing in things that will maybe help with climate. lisa: you said that he is not afraid to tell people they are wrong, has he said it to you? david: not to me necessarily but when you are predicting bubbles are going to burst you are telling people, 90% of people they are wrong. you had to have a certain personality.

lisa: he invests in niche companies venture capital, climate change, is that a more sure but at a time where there is such a high degree of uncertainty on a macro level? david: climate tag? lisa: in general, the niche concept to go on a small company for a big return. david: the biggest concern i would have is where not quite the past the point we will have recession. no one knows for certain. the conventional wisdom is we won't pass the likelihood of a recession. and then there's some people who believe it'll be not this year but next year.

most people would say we won't have a hard landing by the end of this year but next year, jeremy grantham thinks there will be a recession. predicting recessions is a fools errand. tom: the quarterback for dukas totally irresponsible. rheinland is he destined? david: in college football and basketball you commit more money playing then going to a private equity firm? tom: what is you think of the

internship pay? david: i didn't have an internship i think my first job was selling magazines. i didn't have a finance internship. tom: write a letter at one 800 rubinstein. duke, it's exciting it's college football season? lisa: that was quite a game, i'm sure you will hear plenty about it in your next hour. tom: colorado buffaloes, ralphie comes out on the field. a real buffalo comes out on the field. lisa: we will have to bring him in here. tom: tonight, this afternoon, a timely conversation, lauren culp, -- larry cole at 1:30,

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>> live from new york city, good morning, your equity markets slightly negative on the s&p 500. 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 where jonathan ferro. -- with jonathan ferro. tom: coming --jon: coming up, economic data keeping chair powell on the sidelines.