>> welcome to bloomberg markets. >> let us get a quick check of what is happening in the markets at this hour, the s&p 500 is down a third of 1%, creating a 45 hundred even, we do have the u.s. 10 year yield moving a little bit higher, eight basis points. investors sell those bonds, the dollar index moving higher by .6%, 12 .52, a level on the u.s.

dollar index continuing to climb higher and higher out of the case as well for crude oil. this is the global benchmark. imax is up as well, over $96 a barrel, real strength in the oil market as we heard the russians and the saudi's will continue production cuts at least through the end of the year and also in the last few minutes we learned that united airlines is issued a nationwide ground stop for all flights due to a computer issue. this is according to abc news and they cite the faa and united for this nationwide founding of all united flights. the shares are down to session lows off of 4.2% -- 4.6%. john: we will continue to watch. you are talking about the energy trade today and the commitment for some opec-plus nations to supply cuts the has few energy

stocks on the down day for most sectors, but occidental petroleum up 3.5% at this hour. as we continue to read through to the health of the economy, america's car market was an interesting example. a used car dealers profitability is taking a hit as it sets aside money for potentially bad loans. they did a management change as well, the softness in the market is evidence during the credit bidders as well. we will watch that story and we are also watching some news about a couple of names coming to the s&p 500 later this month including airbnb and investors like that news, a big drop from manchester united's stock in u.s. trading as reports indicated that a family is changing course on a possible move in that team sale of teams based on the offer coming in. investors trying to make sense of that, investors losing a fifth of their value in trade

today. jon: fascinating story, let us take a look at the bigger economic picture. matt: markets are watching every comment from the fed and every data point that gets hit on the economy, jeremy grantham spoke with bloomberg's david rubenstein and he gave us his take on the chances of a recession. >> i think we are descending from the 2021 bubble which was one of the great bubbles. this should be normally the deflationary period. the deflating period. it is a function of will the earnings decline? will profit margins decline? will the economy go into recession? we will have a recession running perhaps deep into next year. and an accompanying decline in stock prices. jon: let us get some more

perspective, we have a chief investment officer at riverfront which oversees nearly $9 billion in assets. everybody is trying to make sense of where the economy heads from here. what is your outlook? >> my outlook for the economy for the end of the year is strong and for us, we believe that your not going to see a recession until late in the second half of 2024. we are of the opinion that it has one more height left in it. if they are going to get to their terminal funds rate, we think that the equity markets will be reached by 4400 and 4600 in the near term and the fixed income markets will be branched out as well when we think about the 10 year treasury. we are thinking it will be in the 3.15 through 335 area.

matt: it is no surprise to hear that jeremy grantham's parish and he thinks we are coming out of a big -- bearish, though we are coming out of a big bubble. goldman sachs are bringing their precision forecast to 15% which is pretty much nothing. they do not think there will be long and variable lags that will hit us down the line after the fed is raising interest rates so far, so fast. what is your view on that? >> first of all, let me clarify, i think it is at 3.15. i met 435. there are going to be some long lags. i think that the economy is going to continue to progress forward. one of the things you have seen thus far this year is that anyone who has been calling for a recession or especially an earnings recession, that it has

not panned out. we have seen earnings revision upwards. i think that from a recession probability standpoint, i would put the probability of a recession especially within the next 6-12 months. probably around 10% at this juncture. jon: as for the markets, looking at the s&p 500, we are entering this period were september can be challenging, i would say since the start of june, it has been within a 5% or 6% range. on the fixed income side, what is the strategy you have been using given the economic realities right now? >> the strategy we have used on the fixed income side is we have been opportunistic as it pertains to adding duration to the portfolio. one of the things we did not leave early on was that the fed was going to -- believe early on

was that the fed was going to cut rates so soon. we have been underweight to ratio or for to duration when it pays to the aggregate all year. when we look across our portfolios, we are a year's short duration. this is because when you look at the curve, especially in the her we think it is still too expensive and that is why we have been opportunistic. we are adding duration to the portfolio. when the thirty-year finally got a 4% it is when we started thinking about adding duration to our portfolios. matt: what is the most important thing we have looking forward to kevin? is it the dot plot? are you watching out for the ecb? what is moving in your world in the doldrums of summer? >> i think the big thing i am focused on is a couple of things. you will look at the dot plots

when they come out. i am paying really close attention to credit. in our fixed income strategy, we have taken credit risks over interest-rate risks for most of the year. the credit markets continue to hike. that is interesting to me because that is giving an all clear to the markets. it is flying in the face of the idea that a recession is near. because of the yield curve we have had for over a year now. i am paying close attention to that because when you look at the high-yield market in particular. spreads are a lot tighter than the long-term average. we are not seeing the faults being taken out and that is a place i am really focused on, especially going into the last quarter of the year. jon: if companies and consumers

start flipping in terms of making payments as the rights to refinance, and you for joining us. that is kevin nicholson giving us his take on the economy and the markets. i want to get back to a breaking story, united airlines have rented aircraft do to an unspecified quitman outage -- computer outage. according to the faa's website, our airline analyst is on the phone. do you have any idea what this could be and is it unique? or not at all unusual? >> we have not heard exactly what it is yet. it is a computer problem. is it unique? no. we have seen airlines have problems with computers time to time. a pretty busy day for united, i would be surprised if they are doing any major computer and off for some sort

of an upgrade. we will watch it closely. they have a ground stop issue in the middle of the day. that is bad. it is only important for the financials, they cascaded into multiple data problems which i would expect. i expect they would be all over this today. 2 we will watch to see how it all plays out, great to get your perspective on this developing story. that is a senior airline analyst on the united airlines headlines, time for a quick break, potential uaw strikes and electric vehicle price war. the auto outlook is involved in very quickly. you will dive in. this is bloomberg. ♪

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jon: this is a bloomberg markets. time for our stock of the our segment. the auto sector where recent headwinds for general motors have pushed it stocks into negative territory, circling the detroit automakers as they are going to transition to electric vehicles and beyond competing with tesla, you have ubs with suggestions that china's delete players will put pressure on the western firms as well. matt: all of these issues from the past few days we have had the international motor show in munich, take a listen to this, the executives from the event. >> we have to avoid entering a price battle in the short term. we have discounts and stuff like this, it is a good investment

for the consumer. >> pushing volume, we are careful about how we go to market. our market strategy. as you see from our results, the has been working quite well. >> let us embrace the competition and try to have a fair, and competition to build better products for our customers. >> we have good performers in china, it is our strategic market. we want to try, we want to connect with the customer here. that is the opportunity and to have this conversation. >> it is about electrification and conductivity. autonomous driving. i think most of our group are going up. matt: those were the overseas carmakers but it is interesting,

the possibility of a strike. that being over in the u.s., david is here to talk about how detrimental this could be to the bottom line for gm, ford, and still lantus. how much does the union want to raise the pay? >> they asked was 46% from the u.s. car companies. you can call that an opening bid but considering we had to percent or 3% raises last time plus a couple of 4% lump-sum bonuses, the bid ask is pretty wide. they want a lot of other goodies activity, they want retiree benefits which i do not think the companies will give in on that. that is what played a big role in the ford for gm and chrysler bankruptcies over 10 years ago. they want the cost of living adjustments. i think they will get raises, not be 40%. they're looking for an

awful lot of money. jon: allotted detroit makers are in the midst of this transition -- a lot of detroit makers are in the midst of the ev transition? >> the union president has threatened to strike when the companies are spending billions on electric vehicles and i think even if the unit rhetoric started, we are seeing questions from the car companies and others about how much electric vehicle demand is out there. you have billions being spent to develop these models, planning a whole infrastructure. demand is uncertain and profits are not certain, gm is building on his program until 2025, ford has lost money. losses are piling up and you have the union coming in, in a

lot of ways justifiably asking for a raise, they are looking for more although the company has put out record profits. your looking at a lot of cost and potential losses for a lot of new models coming forward. you have to add your labor costs. it is not huge, it is not earning their profits a lot when you have this going forward, it makes ceos and investors very nervous. matt: president biden does not think there will be a strike and he is the leader of the free world. is that presidential optimism or does he know something that we do not? >> there is a chance that he and his staff have been talking with sean fain, the president of the uaw but that is who will decide if there is a strike, sean says the companies decide if there is a strike or not, he is under a lot of pressure. he won the election in a runoff

by a narrow margin, he has to deliver the goods and he has been promising bringing back all kinds of benefits and paid or given away in 2007 and workers -- were given away in 2000 seven and workers are expecting it. he has a big contract to them out of the companies, look at ford's offer, it was a quarter of the 40% pay. there is a big gulf that has to be settled. he may have to do it just to prove to his membership he is tough and he is trying to get the best deal for them. jon: thank you, david joining us from detroit, the outlook for general electric of the ceo larry culp. that is next. this is bloomberg. ♪

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united airlines ground stop has been canceled. we are tracking all of those united airlines updates on the computer issues that seem to be impacting the company's flights. matt: the computer problem, they turned it off and turned her back on again and the planes are back in the air. there is a lot of pressure on ceos as economists forecast an economic downturn. david westin spoke to ge chairman and ceo larry on wall street week. >> we could not be in a better position with respect to the post-pandemic recovery in aerospace. you have seen the performance thus far this year, we are on the record pace. given both the return to flight around the world now. as people get out and see places they have not been to. at the same time they are looking to modernize and expand their fleet. we have tremendous backhaul from

airbus, for example. the challenges are significant and right alongside it on the commercial side we have seen a really strong uptick in our defense business. as one would imagine with road rate in terms of how this business can be, i think on a path where we can be drawing in the mid-single digit, high single digit range for some time, the output is well north of $40 billion in a few years. a lot of opportunity. an enviable position in propulsion. it is not about how big we get, it is about how strong we are, are we serving our customers, are we doing well by way of our shareholders? >> you are not going to get ahead of the board. you would be wise not to do that. what is on the table? you have spent five years really redoing the balance sheet, fixing cash flows.

retiring a lot of debt. allocation has not been an issue because you are trying to advertise the debt. going forward you may have some capital to work with? what are the possibilities in terms of acquisition and sale? >> we want to be wise stewards of that capital. i have long believed in investors giving you a license to reinvest in your business. you could be careful without license. i think what we have tried to do is we have all three businesses to be in a position where they are well-capitalized, investment grade. we will have the opportunities to think through not only the organic options, be it m&a, small midsize, probably not something large and headline breaking. at the same time, how do we think about buybacks? dividends? you see the three companies once we spent ge sometime next year, being in a position where they will have tailored, balanced

capital allocations in effect. i'm confident all three boards will carry forward that responsibility well. >> let us turn to power, renewables have been a challenge for everybody at this point. including four ge although you think you will get to profitability? what is the potential for profitability and the renewables business? >> we have made a lot of progress in rge power businesses -- our ge power businesses. that is ground zero with respect to the improvements we have made in ge at large. we are running the power playbook in our renewables businesses. principally in our forehand which is the battleground today. we think that can be a tight single digit operating margin business in time. everything we have talked about over the last four orders in

terms of the nature of that turnaround is played out both in terms of our field performance, our cost reduction efforts, and just the day-to-day rhythms of the business. i was with them a couple of days ago and i am encouraged by what we are seeing. the inflation reduction act has driven a lot of demand only in our onshore and offshore wind but also in our grid automation businesses. jon: that was a ceo and chairman larry talking to david westin. matt: on this edition of wall street week what you can catch fridays at 6:00 p.m.. jon: it has been fascinating to watch ge shareholders buying into the turnaround story. still a ways to go to where the stock was about a decade ago and as we kick off this september trading story, we are looking at some cautious action for the s&p 500 today, outside of that interest in energy stocks,

investors keeping an eye on where the economy goes from here, down 12 points in intraday trading. this is bloomberg. ♪ ♪ 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. so, you've got the power of xfinity at home.

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>> goes higher, the stock market stuck in the mud, live from studio two, i am romaine bostick. katie: the closure bill in the u.s., go hours ago you are looking at stockmarkets like romain said a little bit soggy, the s&p 500 off by .3%. big tech doing slightly better, looking at the nasdaq 100 higher by two -- .2% the