>> we wonder if the consumer is beginning to bend, not necessarily break. >> the last thing consumers need is a spike in oil and gas prices. >> does energy drive the economy or does the economy drive energy? >> prices going up even for short time complicates this narrative for the fed. >> figuring out when to stop the rate hike cycle is a tricky business for central banks. announcer: this is bloomberg surveillance with tom king, and lisa abramowicz. jonathan: live from new york city this morning, good morning crowder audience worldwide, this is bloomberg surveillance alongside tom keene and lisa abramowicz, i'm jonathan ferro. i difficult couple of days, futures lower this morning,

front and center at the epicenter of our conversation this morning. apple negative by 2.7 percent in the premarket. reporting a bloomberg, allow me to sherry, china plans to expand a ban on the use of iphones, it is sensitive -- and it's into the departments to government-backed agencies and state firms. tom: there's a headline. the other one is two of my iphones are broken at home as we get ready for the apple meeting, coming up the next number of days. apple drawdown is 8% from the intraday peak. it has pulled back but this has happened before but i take your point, is this time different? i think it bears a lot of scrutiny by mark gurman and our team on the pacific rim. jonathan: you are right to mention september 12, the new iphone launch. china is really important, it for apple, and it is not just this line, it is the competition you might get from huawei as well. how difficult are things going to get in that country for this

new launch? lisa: especially if you can tell the authorities are not on their side and working actively against them. you asked me who has more to lose if the apple partnership breaks apart? i hemmed and hawed and did not know and i was looking at the millions of people that apple employees and ability of china to really reignite confidence in its international businesses and how much they are open to business. what does that do to this if they break in and erode apple's position? tom: let's go to catherine man and the bank of england, codependency between american china, codependency with apple where i call it the chinese labor model. i think your point, millions of people involved, is not off of the mark. i wonder how much of the " government" is going to be on huawei and not iphone. i think the answer is we don't know. jonathan: how much of the public will be on huawei and not iphone. i also thing from the

perspective of timko, he has been phenomenal on the diplomat, being able to play both sides of the tension between the u.s. and china. what the story conveyance is china sees apple is a u.s. company, a u.s. company, which is why we see those bands at the government level for staff and those agencies. tom: the answer is pull back. we are back to a level, early summer level on apple, they have had a helluva run over the last number of months and the answer is we will have to see. my focal went here is how big is that government exclusion of apple products? jonathan: and doesn't stir up national -- nationalism. tom: nationalism already, there is no question the anti-american sense is there but they want their toy, they want their iphone like everybody else in the world area jonathan: equities on the s&p 500 more broadly, -.25%. apple lower by a little more than two percent. two days of losses on the s&p 500, done more than 1% over that period.

yields come in basis point on a 10 year, tons to talk about in foreign exchange. just about holding on 107 for the euro. euro 10714. lisa: basically coming out saying why even have this high considering the pressures on the euro. 830 a.m., initial jobless claims and nonfarm productivity, the ftse is releasing a quarterly report in the banking system. really it is jobs that will be front and the focus. if the jobless rate is ticking up slightly, where is it in the jobless filings which have not ticked up in any meaningful way? it was now speaking on the federal reserve? i will just give you this, patrick harker, chicago fed president, atlanta fed president, fed governor, dallas fed president, but the big event is john williams, the new york federal reserve president speaking to michael mckee at 3:35 p.m. in new york. tom: this is the punchline that i'm the warm-up act. lisa: are you? tom: i'm going out there with a

bunch of worthies and we will talk about foreign-exchange and micro-and they booked some guy after me called bloomberg and he will show up to introduce michael mckee and john williams. i am the afterthought. lisa: let me reset. [laughter] tom keene will speak to gay and you might want to pay tension to that and there will be fed speakers as well. present biden will be departing united states to head to the g20 meetings in new delhi. there are couple things that are important. first, how much does present biden take advantage that vladimir putin and xi jinping do not show up? does he solidify the alliances? number two, what is the meeting was saudi arabia with all of the oil output? jonathan: fist bombs and all that? lisa: you think everyone fist bumps? jonathan: no idea. tony dwyer joins us now. light and tight was the diet for you in the summer, is it still like anti-and what would make you positive in this market? >> it still is.

you can see them a little under the weather but you gotta have a dramatic improvement in credit and i know the first response is anybody in our business is going to say what are you talking about corporate credit spreads are tightening? what they are tightening mortgage spreads, corporate credit reds, tightening because the tenures going on, tightening for the wrong reason. i cannot find a soft landing scenario whether it is 1966, 1995, or any recession based recovery. any economic weakness is always associated with a significant sustainable drop in rates that has not happened. the absolute level of rates remains high. as you guys now, i believe the soft landing scenario is the worst case scenario. it keeps exactly what we are seeing, keeps inflation elevated and keeps the fed higher for longer, which gives more time for resetting and debt to have

to do it at a high level. tom: i look at where we are and there is a paper merger going on. i looked at something called smurf and cap and group out of dublin. they trade at a pe of 10. i believe there is seven stocks trading higher than that. i see minimal evidence of a broadening out of the standard & poor's 500 if we hold on or even if we advance into 2024. do you see any ability of spx to broaden? tony: it did for a little while over the summer. we talked about the hustle and russell and look for a trade up to 2000 on the index but the problem is everything is temporary until you get the dramatic improvement in credit. say the economy is ok, let's say somehow it will mystically, after the fastest rate hike cycle into a leveraged system with quantitative tightening. the say will not impact anything, all good. how are you going to get, when

you are already at full employment, the double-digit earnings growth next year? some of it can come from ai, productivity, we can get numbers today but we'll double-digit growth with flattish revenues is a tough call when you are already at historically high margins. lisa: you talk about light anti-and staying on that level in the protective stance. with the expectation only feels material drop, will you see something more constructive? what could make you that much less constructive on the other side is freshly the soft landing scenario you talk about if it starts looking a little more likely? tony: i just don't -- lisa it would be so historically unique to see a soft landing here without a recession that where i will be wrong is if nobody cares if recession is coming. the reason to explain what light and tight means, it means have a little extra cash and be tied to the benchmarks however a little obviously more defensive based on my tone but the reason it is

not get the hell out is because so many stocks are already down significantly. i looked at the s&p 500 department store sub index, holy cow. a lot of stocks already reflect the kind of economic outlook i'm talking about, so the time to really be super negative, which was last summer, and last year when you knew the fed tightening cycle was directly ahead of you, it starts out as good news is bad news because it means tighter fed. that news is good news, we have been in that, meaning the fed will stop but ultimately bad news becomes bad news and when that happens, i want to attack the weakness versus try to play it. i think staying out of the way when you're earnings yield is below the risk for a greater return, i don't have to guess, guys. we don't have to guess. we're getting over 5%. lisa: i have to relisten to that to make sense of it. can you tell me what conflicting news means for markets? esther day there was tension

between the beige book which painted somewhat of a soft landing picture slowdown story and then the rsm said let's go. how much weight should i put on one versus the other? tony: that's a great question. the bee in my bonnet lately has been if you look at the establishment survey, and i got this idea from my friends at matt davis, the establishment survey, which polishes the payroll numbers came out last friday, as you know there has been a huge amount of revisions. we were revised down $100,000 -- 100,000 jobs in two months and the reason is get ready for this, the establishment survey initial reach out from the government to the business, and other words participation, initiation of the conversation, that the rate, that reach outrage, was over 70%. it is currently 32%, only 32% of

businesses that picked access to the government are answering the call -- the question on the call. the idea any of these economic numbers should be used is outside of the room for me. lisa: this is pretty profound. are you saying either the beige book is more accurate, that anecdotes are more accurate than hard data that does not have a high response rate or you have to look entirely outside of the official data because it is all inaccurate? and not giving the correct tree? tony: i believe that is true. what i use is those organizations like the ism is good to have generally because it is an organization with member firms in scented by being part of the organization to answer the question, but every other government based status here, go back -- i got this great new system has names google, google soft landing scenario -- soft landing

bernanke, soft landing greenspan, soft landing yellen, it is always a soft landing until you get to the hard landing. but just to be clear, i want to buy the weakness versus try to play it. i don't see how you will get double-digit growth in earnings next year when you are at full employment and absolute level of rates remains at the cycle high. jonathan: it looks soft until it is not. thank you, sir. i know you are under the weather so feel better. thanks for joining us. tony dwyer of canaccord genuity. light anti-until we see real weakness. tom: he has been good about this. he is in the market like a lot of other people i do can be 100% catch unless you are me but the answer is he has been cautious into this and looks smart given the flatness we have seen not just the draw as well. i was out yesterday and i had to get the afterthought back to school. taking physics. jonathan: nice, cool. you walked in the heat. tom: we walked in the heat.

it was brutal and i want to get to that, you follow this more than i do. u.s. open, braemar has box seats but 502,000 -- 502,000 380 people attended in the first week, that is norma's. jonathan: try playing in it. tom: five sets, you gotta go. jonathan: warning somebody's gotta die in the heat. they are going to work this out at the u.s. open. it is so hard for those players. tom: full disclosure, i think last year or the year before, i was not impressed, it was too packed. i felt like a sardine. lisa: but this is next level heat. if you're playing top-level athletics in 95 degree weather that feels like 100 a degree weather when you look at the humidity, get an ice bath and you feel like you will die afterwards, why don't you say we will postpone it? but he acknowledged that is messy. tom: five to six weeks ago in the midwest eat the san diego

padres picture went down on his knees on the pitching mound and they had to come out -- i was surprised they kept him in the game but they had to resuscitate him with whatever they used. lisa: just a straight shot of vodka. jonathan: if you have spectrum, you are not able to watch the anyway. tom: what was that? jonathan: it's embarrassing right now for spectrum because even the players are talking about their inability in the hotel rooms to watch the events themselves. we will catch up with michael nathanson in the next hour. hall live from new york city this morning, good morning.

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♪ >> it's probably wise from a risk management perspective and necessary based on the data we got that we keep the extra rate hike in there. and to in a way that does not shock markets i think markets should be putting some probability on that possibility, even if it is not maybe the main possibility here. jonathan: is jim bullard the fed whispering even though he is no longer at the fed? i think you might be a little quieter since he left. tom: i agree. jonathan: he's been talking week after week and sometimes multiple weeks. tom: and on radio you can see it but he is at purdue. i think he is doing something with the football program. jonathan: i thought that is with the direction you're going in. tom: it's the new look. jonathan: slightly questionable,

wasn't it? like a brown jacket with a light? tom: when you go to harry's chocolate fountain shop, whatever it is out there, we are doing remote, it is scheduled for may next year. lisa: can i say with the idea of the fed whisperer, i think it is more of a fed megaphone. how many times do broadcast it? anyway. jonathan: insight, some insight. tom: what is shawn williams going to say today to michael mckee? what is going to be his message? jonathan: patients. tom: he's gotta go talking to them. jonathan: john williams and michael mckee, john williams already set us up for something intuitive which is basically inflation coming down, what they don't wise for real rates to go higher. they don't want policy to become more restrictive, they want to maintain restrictiveness. he has talked about this on the record. i find mike's approach more because the optics of the conversation are counterproductive. in this point, of the efforts to

get inflation down, you don't want anybody talking about rate cuts and john williams has gone there. i think mike mckee will have a play around with that conversation. tom: i like to see if he reaffirms if we go back to a low r-star which is his territory and that will be something. we will see this this afternoon. michael mckee in conversation with the gentleman from the new york fed. the gentleman from emerging markets, damian sassower, is here and the mr. you have about china, about japan at the e.m., 147-140 eight on e.m. in yen and we will go more walk. we will talk about what matters, to me what matters is the real rates in the united states, 1.9 seven. in your world, relative real rate differentials matter. explain the real rate of indonesia versus a real rate of others. seema: so good you picked indonesia were market rate measures a real yields of term

positive. brazil and chile being another one. looking at real differentials between the emerging markets in u.s., currency strapped that well over time so real yields metal. -- matter. what we see with chile and pull and more recently -- jonathan: that was a big cup from poland. seema: very unexpected. no one saw this one coming. there's a cost-of-living crisis in most emerging markets are now and if the central banks start to jump to gun and react, their currencies are going to suffer off of the back of this. this is down big because of the big cup. jonathan: doesn't this raise questions about what is happening across the border? you have the ecb hiking next week, a week to date and poland cutting from 675 to 6%, what is happening there? can we go in one direction and the ecb and go in another? seema: normally you don't see that. whether or not the ecb delivers on the hike remains to be seen. that is the big question. everybody has been talking about

china. 733 on you on and everyone says what is the spill over to europe specifically because there's a bigger corollary between europe and china, as opposed to the u.s. and china. china, 50% of global commodity demand, second largest economy in the world, you just can't avoid it. what you are seeing, what the market i think was hoping for was stimulus to come in but if they try to come in and it's not the valuation of the yuan, that could destabilize the yuan itself and its whole premises being a reserve currency and trade currency. we have thrown it under disarray and you will see capital out was such as we see from blackrock and fidelity. lisa: which is the reason why we have seen more than 50 days of a stronger, the strongest pay for the u.n. versus where comes in its which is the longest streak since 2018. you are seeing it on the level. is there feeling, and maybe the six lanes rate cuts in poland and elsewhere, is there a feeling a weaker currency could

benefit certain economies at a time where growth is found in the u.s. but is scarce in other places and export is a key indicator and key mechanism. seema: i am of the belief the gains from increased exports due to weaker currency is not nearly enough if you're talking about the value in the yuan and destabilizing the one and capital outflows that can come off of the back of that. you saw apple overnight but forget about that, we see capital outflows out of china and we have seen that for the better part of the last year and now we see fund managers and junk debt, the liquid which you can't -- lisa: are you saying what happened with apple and china will prompt more investors to withdraw cash from china? seema: let's think about china. china is using southeast asia as an intermediary to deliver goods to europe and the u.s., right? all i'm saying is more of a rerouting of components and what have you but i do think trades

will continue to go down off of the back of this and you were mentioning earlier, what does this mean if it is not housel's in china who will be using apple phones, it is those employees and state owned enterprises. the state owned enterprises, cmp see and others, employed millions of chinese. if they stop using it, it will spill over to the households and you will see a huge impact on trade. tom: in beijing, i'm thinking of the economist mcdonald's index and i'm thinking of the big mac and vision for edits, maybe it is two dollars, it is 13.9 yuan. it is dirt cheap. where is fire value on china. do we have metrics that say they are going back to 2005, it is undervalued now and should go? what is the value we have? seema: fair value on a currency, if you look at anything like a big mac, purchasing power, it will be very tough because the inputs you will be using for china don't really add up. all you can really do with china is assess the near-term direction of the yuan and in the

beginning, this conversation, real rate differentials. if you look at the one, and most asian currencies, they are funding currencies. it makes sense that we see this risk on move u.s. exceptionalism and otherwise people will put that carry tree on and carried in the economies with high real yields and sell those with low real yields and that is what is impacting currencies more specifically jonathan: have we got a decent rate on treasury holdings? seema: it came in last night and barely budged. jonathan: do you believe it? seema: 3.1 trillion in reserves and dollar tariffs. i do not put much stock in it. i used to love that number, used to be 2.5 and going up to three. jonathan: you don't love it anymore, you don't believe that's actual number? seema: it doesn't move enough and i don't have transparency there. tom: aaron schatzker will peak with the gent -- speak with the gentleman from canada, mr. trudeau. on loonie. seema: that is a little out of my raiment. [laughter] tom: it's an emerging market.

jonathan: wow. canada is an emerging market? tom: it's an emerging market. seema: the original g7 with the g6, it was canada in the g7 so let's look historically on how important canada is to the developed world but taking a step back, this meeting coming up, not having china there is not really a message directly of the u.s.. i think you can't ignore what is going on with china and india, especially on the heels of a bricks conference. there's a little animosity there may cannot be ignored and something i'm keeping a close eye on. jonathan: apple someways ways at the epicenter. seema: and south korea. there finding their -- chips are finding their way into the huawei phones. jonathan: thank you. tom: i'm big on -- jonathan: india, china, canada. [laughter] you will get some lovely emails this morning. trudeau wanted to be the dean of the g7 and still entertains me. what is that about? tom: it will be a spirited

conversation, erik schatzker with mr. trudeau in our new economy. jonathan: in 20 minutes we will bring you that. if you are tuning in, equities look like this on the s&p 500, slightly negative down by 0.3%. data this morning, jobless claims in two hours five minutes from now. and a ton of fed speak. it went through the who's who, kind of like who is not speaking on the fomc a little later today. lisa: tom is speaking too. jonathan: tk as talking as well, he is the warm-up act for the fed speak later. from new york city this morning, good morning to you all, this is bloomberg. ♪ ♪ introducing j.p. morgan personal advisors. hey david. connect with an advisor to create your personalized plan. let's find the right investments for your goals okay, great. j.p. morgan wealth management. hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars.

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jonathan: we saw already planning and i's vacation. [laughter] equities on the s&p 500 -- tom: one we look like we are at steve's for an hour? more to go. jonathan: let's wait to the price action, on the nasdaq down by 0.6%. the russell, little self -- soft by 0.1%. the nasdaq, blame apple, we will talk about that moment, down by 2.7%. in the bond market, two-year, 10 year, 30 year, 43670 eight. down about a basis point but the 10 year over the previous three days, three days of yields, climbing ever higher. getting closer and closer to the

cycle high, shot by 10 basis points or so. tom: there is interest in the 10 year and 30 year, but i will go to the two-year pushing 2.4 4%. a 30 year bankrate mortgage coming in the next hours. right now at a record high and there is enough things pushing up where you go what are the ramifications of we get to the next level of higher yields? i think there is a great unknown there? jonathan: the euro holding onto 107 at the moment, the euro dollar 1:07, the dollar, don't realize until this week, the dollar index down for eight consecutive weeks. this is week 8, 2 months of this, just described. tom: two indices are dxy, making trading partners, bloomberg statistics which are better and there is an and archewell force of stronger dollar, explain how that reverses. and gross fed action.

i don't think anybody thinks we will see. jonathan: south of 105 on the dollar index. let's get to the data and stories as well. china, planning to expand a ban on the use of iphones sensitive -- in sensitive departments. this is according to bloomberg reporting, posing a threat to apple's position in a market of what accounts for fit of its revenue. this tucked onto board 7%. tom: pull back negative a percent off where it was a number of weeks ago. there is a drawdown of 8% and that is fine and well but i would be fascinated how they respond. you mentioned earlier the diplomacy of cook and cupertino, it will be interesting to see, i have no clue on this, i defer to mark gurman and other people we talk to but how do they respond to this, with silence? i don't know. jonathan: next week is big, unveiling of the iphone and a deadline for these talks between unions in detroit. united -- united auto workers are making a counter offer to

fort after rejecting the company first proposal. it included a 9% wage increase plus a $12,000 cost of living assistance but that felt -- fell well short of the 40% wage increase the union was initially seeking. lisa: didn't the union call off or insulting? wasn't that some of the language they talked about? while this is happening, today there is a meeting between general motors and the union leadership to try to figure out what is going on with that. a lot of people said ford is the leader here because they will be more amenable to certain union terms. if the union gets what they want and what they're asking for, that would be $80 billion of extra costs for each of the major three and what people are looking at from an investment standpoint, well what does this do to free cash flow profitability? the flipside, you need the workers and they want to get paid. lisa: how do they compete -- jonathan: how do they compute as luck, with china? even the -- german automakers are concerned.

on a cost basis, whether they can compete. lisa: this has been an ongoing concern even with the electric vehicle brush, how much of the union anchor is stemming from policies that prioritize electric vehicle production and my come at the expense of some of the workers in the rank-and-file. tom: my take, there is across car going on. you mentioned ev yet i am reading a lot from bloomberg, reb's selling? where's the depth of the market? the other thing, the history where they pick one company. they don't strike against all of detroit and dearborn. they usually find the company they want to strike. that is the tradition they stay with. jonathan: it seems like talks with fort on a relative basis a little cozier than talks with the others. jonathan: there's a theory -- lisa: there's a theory i was reading the past couple days that in an union negotiations that go after the lowest hanging fruit and use that as a template to cause -- to form the agreement with other wen yu

venturers. in this case, ford seems to be that one and that is why they're going after them. jonathan: so beat up on ford first. [laughter] tom: i have to run off the bloomberg, for total vehicle sales is not the boom of years ago, 16 to 17 million. 15.4 million. it is not a make it to the max auto industry. jonathan: want to finish on the story, gas prices are higher, particularly higher for this time of year. crude is to about 90 and this drops, the biden administration canceling the -- and planning more conservation in the states petroleum reserve. the moves after biting controversy approved the six hunter million very project in the reserve back in march. this is a curious one because on the surface, you can say it is biden against the energy industry and then you look at data, output and america is 12.8 million barrels per day, just

shy of a record. i'm not sure what to say about the story this morning. lisa: you frame it perfectly, i don't think you can say this is the biden administration against big oil. this might be a question on messaging and how you cater to both environmentalists and who also foster an industry that is crucial. energy independence is increasingly crucial and that is clear. even the biden administration hemmed and hawed but hinted they can exceed to that this is helpful. i don't know if we can make something bigger about that. i was in alaska recently and i can understand some of the vast wildlife and the tension with even people who live there. jonathan: it's amazing. lisa: who enjoy the drilling and one thought to foster the economy and jobs at a time where -- jonathan: do you have an eyesore of the drill when you look from your cruise ship? lisa: first of all, i did not going to cruise ship. tom: did not go on a cruise ship? lisa: i will just say, it would

be. tom: longitudinally, i want her life. she is in norway, polar bears, then in alaska. jonathan: she continues to write the newsletter on vacation. [laughter] impressive. tom: wfv. my basic point on this, this is with the death of bill richardson, an energy secretary, we don't have an energy policy so this is the biden policy but whoever is in office in four years whoever that may be, they will have a whole new policy. we are making it up as we go. jonathan: i would agree with you, oil produces energy players. a tough spot. tom: i'm taking a vacation and my goal is to get -- below 59 stream. let's move forward here, an eventful week to say the least. the chief global economist of capital economics, really trenched reports. i want you to validate the imf call of a global tepidness out

to five years. does capital economics through the battles of china, all the other things out there, do you look for subdued to global gdp forward? >> well in the short term absolutely. we think there are a lot of headwinds, most obviously stemming from tighter monetary policy and all that is yet to come through. i think we will see a recovery in advanced economies after this sort of period of weakness and particular we are optimistic about the effects of artificial intelligence on productivity growth so looking out to those five-year horizons, i would be a bit more optimistic. but not so about china, there are clearly major structural headwinds from china stemming particularly on demographics, it's state led model which means we would long expect growth to slow to the two percentile level. tom: that is where wanted to go.

you have capital economics modeling a 2% china gdp. jennifer: yes, out by in the next 10 years, yeah. it'll slit uncertainly from what we have been accustomed to the past decade or so. tom: do your experts believe that is workable in terms of totalitarian mandate to employ the masses? how do you do that with a 2% to 3% chinese gdp? the math does not compute, does it? jennifer: it is largely about the state model and inefficiencies that has driven. china is no longer the developing economy that it was. it no longer has -- it has expanded into global markets, it has done what it can in terms of exports and infrastructure. what you need at this stage is a shift toward the consumer to a more developed economy type standard model and that, china is not moving that way at all. if anything it is doubling down

on its state led interventionist policies which will be what will lead growth to slow alongside the demographics which are unavoidable. lisa: what's the path for germany to climb out of the soft batch, potential recession, that could last a bit without china really picking up? jennifer: to all intents and purposes, germany is in a recession now and that is likely to last for a couple more quarters, probably. i think the path for germany to climb out all to bit.ly will be by the ecb but that is unlikely to come until well into next year probably and probably late next year. it does not stand to get that much support from china for sure on car exports where they picked up a lot lately after this dead cat bounce after the pandemic and supply shortages around that. that kind of recovery is not likely to be sustained. what you will need to look for is for the german consumer to start to spend again and that is probably only going to come once

we have gotten through this difficult patch around policy tightening. lisa: if this is a recession that will continue and we are seeing that weakness start to percolate into even some of the economies that have gotten boosted by tourism in europe and other industries, are we going to see this because inflation to come down? if it does not, what does that mean about the ecb's role next week but also going forward what it will take to bring price stability? jennifer: i think it will bring inflation down i think -- and i think already we have seen core inflation off of its peak in the euro zone. there are various reasons to expect that to continue, certainly on the good side it is clear the shortages driving up goods prices have eased off dramatically now. services, we have further to go for sure. in the euro zone, you are not seeing the same signs of normalization in the labor market you are seeing in the

u.s. so far. labor market still looks tight and i think there is more upward work -- upward pressure on growth to come. it's going to be longer before the ecb can cut rates than it is for the u.s. we think where core inflation is likely to fall more sharply. this recession will result in easing in price pressures and in the labor markets to some extent which should allow the ecb to ultimately start using policy. next week is a tough call. we are still going for a rate hike, though that is very much still in the balance, the minutes suggested the ecb is confident we have seen more of that path. tom: we are out of time, lucky for you. what is the animosity between if i have to pick germany or portugal? what is the tension of the meeting between the centrist hawks and those more dovish? jennifer: i think there is still

attention but with germany and recession, perhaps the tension is not quite what it would otherwise be. the dutch central bank governor was saying there is scope for another rate hike so clearly there are those that are still concerned about wage growth, inflation expectations, but it is clear this is a boost we have seen in the southeast going to fade, that those economies will start to struggle more, they are feeling the effects of the interest rate hikes more quickly because of the structure of their mortgage markets. we are going to continue to see the tension which i think is one of the reasons why this call next week is a close one. jonathan: stagflation in europe, the economy stagnated, big inflation problem, a tough call for the ecb next week. jennifer thank you. jennifer mckeown there of capital economics. they acknowledged that at their last meeting of the ecb and i imagine that is going to be acknowledged publicly by some journalists, maybe two to five asking the question healthy next week.

tom: is germany in recession or is it something different? when you affect yours year-over-year, smart people say -4.5 and a comes in -10.5? that is not a miss. jonathan: some people who follow the data no german markets can be volatile but it is hardly an isolated data point, is it? germany has been pretty terrible. tom: it is more than a mess. jonathan: without a doubt, that decision, a week today. this is bloomberg. ♪

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-coming through! -or 3, let's go. the network more businesses choose. transplant received. at&t business. >> the fed will be unwise to raise rates again just because of a short-term spike in enthusiasm and the service sector. i think there's a window for a soft landing but i think they should be aware of the fact there is a squeeze play going on.

these higher oil prices, higher gas prices, people are having to deal with higher mortgage rates and they are gradually pushing up their credit card balances but there is a limit to that so you will see consumer spending slow jonathan: david kelly there, chief global strategist at jp morgan. equities on the s&p 500 down about .3%. there is one story i think is dominating thing for the stock market yesterday and today, the move lower in apple. softer yesterday, again this morning the stock is down by close to 3%. i would offer you the reporting and then i will get you sell side, bullish analysis, from those on apple. china plans to expand a ban on the u.s. of iphones on a sense of department's to government-backed agencies and state companies. this is a sign of growing challenges for apple and in its biggest foreign market with a

for the revenue coming out of china. this was written this morning, just to give you a perspective on things, on the recent china news over the last three days we believe in a worse narrow any china government agency iphone ban is way overblown as to quantify its less than 500,000 iphones of roughly 45 million we expect to be sold in china the next 12 months. they have a number according to dan ives. i would raise this a question, what about the signal that sends to the public in china? as apple unveils the new iphone? tom: i would say that but what is also the signal to apple? you wonder when apple has to really makes manufacturing decisions. they have done it tentatively, but my amateur take, off the world-class expertise of mark gurman, it has been not clumsy but we really like making phones in china sort of feeling. lisa: they have a good infrastructure to do so but as john said, at the heart of the

g20 when you're looking at india with the manufacturing move in china for apple, to india, i would say on a larger scale issue how much is this indicating an acceleration of capital flows out of china. this is what damian sassower was talking about, as investors say, if apple which and ploys millions of people is going to be targeted by the government, who is next? jonathan: had of everyone who handled the was situation pretty well over the last for years, to put a price on dan ives and wedbush, this is what they think, outperform, to 30 price target on the stock calling the new unveiling of the new iphone 15 a mini super cycle upgrade for cupertino, the dan ives bullish view on the stock. tom: smartest thing i've seen, i could barely handle it, he was dressed, blinded by ives, but the smartest thing he said was there is doubt whether the cell phone companies will

finance your overpriced purchase of a toy. and he really pushed against that and said at&t, t-mobile, the rest, verizon, will pony up again and subsidized. jonathan: i'm with you. price tolerance, mine is doing alright, i don't feel the need to upgrade this soon. tom: i have a new fancy one and it is the battery. [laughter] the battery on this one is dingy. lisa: you were the one that told me, i did research about it. jonathan: jonathan: they slowed yours down? tom: mine is not slow down but there are two and the family that are broken and the last couple days. jonathan: right on cue. perfect timing. tom: we will have to see how that goes. let's to commodities, we can do this with an expert away from oil focus, outstanding at ed and f man on the aquacultural's and that. i'm really trying to cut back on my sugar consumption.

i am just thrilled with tang zero, it has helped me out with less sugar but sugar to the moon. is there a global price for sugar? should americans be concerned about a surge in sugar in india? >> yeah, we have the global sugar price at 11 your highs. this happened yesterday. it is because we are following into deficit. this el niño we have seen the last three to four months, it really impacts the weather in asia, particularly those regions in india and thailand who are major sugar cane exporters. they are suffering from declining yields and the world will have to live with less exports out of these two key regions. that is some tightness in the supply demand balances for global sugar which is causing prices to search higher. tom: i want to go back to what

it means for americans because all of us around the table, less sugar, john less sugar, even i'm trying to cut back sugar, it is sort of a zeitgeist in america, are we going to adjust because of higher sugar prices like you with a higher cattle prices? >> difficult to see how quickly the follow-through will be at the retail level. i think obviously because it is the futures price it will be a time the sugar by has priced at the supermarket level so there will be some lag on that. eventually prices will have to rise higher and it is a question of income elasticity, how much do you consume sugar? is it going to be high and f for you to reduce intake? i suspect a lot of americans probably do not consume as much sugar as maybe someone in africa or asia does where sugar is a cheap calorie which still

compounds for quite a bit of your average -- in actual consumption, the trend has been falling in countries because of obesity concerns, die concerns, but in other parts of the world, i think it is a cheap source where it is part of the basket. lisa: we were talking about sugar, we weren't talking about it the day before even as a search to 11 year highs. we were not talking about rice surging to 15 year highs, we were talking about oil and wondering whether this was supply-side or demand-side and whether this was something a broader indication of activity and demand or something with saudi arabia sticking their thumb on the scales. do you think there is something bigger going on throughout the commodity space, unlike the prices increase as we have seen in a number of sectors? >> i think oil ultimately is a linchpin, the driver and the

biggest component of all of the futures commodity indexes. i think the fact oils reached $90 per barrel is significant and means the whole commodity index pushes higher. for sugar, it does impact because brazil, the largest sugar producer in the world, has an interest in producing sugar and ethanol. there is that linkage but right now, today, the agricultural commodities sector is slightly diverged away from crude oil, only because we are looking at a weather market. lisa: i want to take this further because let's say putting the agricultural side aside -- side aside, there is a question on whether iron ore is sending the same signal oil is, that something is maybe not as weak as people expected whether it is china or elsewhere or if there is other dynamic they could cause inflation to surge again in other areas. do think that is a fair

categorization? kona: i think one thing common to the whole complex is the fact china, which has been a drag on the commodity sector for much of this year, is really talking up the stimulation the government will be putting in. that in itself can provide some optimism that if china starts to -- its economy, there will be more demand for ocher -- agriculture, metals, you name it. that could be one potential. otherwise, we are looking at disparate sectors, metals and energy of this moment time, and crude oil is rising only because of the opec cut back. otherwise demand has not shifted so much. i would say that comic site for crude oil has been bearish to neutral. jonathan: we gotta go, thanks for the update. i thought you would bring up the sugar lobby of the 1960's. in the united states.

it is the problem, that. we should talk about that, the fact we deal with the consequences decades later today . tom: it is not just on sugar, it's on a lot of other products. i did not want to bring up because leaser -- lisa is right but i am sorry, it is an important thing and she dow's in it is about obesity and all of that. all i can say is tang zero is also gluten-free. lisa: jon is trying to wind me up. i feel strongly about this in terms of if you want whole foods that don't have added sugar and have whole fats, it is better than white fruits. and tons of sugar. sure lobbying, go back to it. jonathan: the poison in this country is kinda bizarre. [laughter] this one guy becomes wealthy investing in companies that go around poisoning people. the prince will asset management up next.

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>> we wonder if the consumer is beginning to bend, not necessarily break. >> i think the last thing consumers need is a spike in oil prices and gas prices. >> does energy drive the economy or does the economy drive energy? >> oil prices going up even for a short time complicates this narrative for the fed. >> figuring out when to stop the right height cycle is a tricky business or central banks. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: attempting to avoid a third day of losses on the s&p 500.

live from new york city, good morning, for our audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene, and lisa abramowicz, i'm jonathan arrow. equity markets negative by .3% on the s&p 500, apple down hard, off 3% after a soft session yesterday. tom: a lot of opinions on this and the unknowns as dr. el-erian would say, we don't know what the ramifications are. certainly you mentioned mr. ives with a bullish cast on apple says it is not that big of a deal but i agree there is a lot of jury out on this and big walks away and that is what we've got. jonathan: the headline from our story, china broadening the iphone band to stay firms and agencies following the yesterday, dan ives framing it nicely, -- nicely, dropping in terms of what this could come for overall sales but for me is it about -- it is about the optics and signaling the on the story. lisa: i think it's a bigger story beyond apple.

apple was the brightest light in china. they contributed millions of jobs and they had a huge amount of manufacturing there. they were thought to have a symbiotic relationship with the nation. if the nation is going to go after them, if the government is going to target them and try to call out their phones, is any investment safe and what does this mean for capital flows, what does this mean for supply chains, and what does it mean for the cost of decoupling in a meaningful way? tom: part of this is complications. new a richardson, she was great at jackson hole and i love which he says about apple, about china, about oil, this complicated september. it is all of a sudden things are complicated and there is apple, oops. jonathan: we talked about the toxic brew, you mentioned oil, brent crude back to 90 so we have crude at levels we have not seen all year, gasoline prices climbing, the resumption of student loan payments, retailers across america from sports,'s working retailers, walmart,

target talking up the potential for weakness for the consumer. the problem we got, we have heard it a million times and then you look at the ism services number, my just look at the ism yesterday, no problem at all. it is ok. >> porters picking up, headline figure above expectations and the price component taking upward for a second straight month so not exactly giving the sense of gloom and doom and then this from the chicago reserve, saying most of the effect of the rate hikes has already been transmitted and it looks likely we will get back down to 2% by mid next year without a recession. so seeing this softness is a positive, it is a positive toxic brew. jonathan: that's what you would expect a here from golds become a we're done here? [laughter] lisa: basically most of the transmission has gone through the economy, there is little more, a perfect amount to calculate the percent and then boom. jonathan: so easy, isn't it? making it so easy and then you have tony dwyer saying it was

soft and tony in the last hour. tom: he came out, really sick, four-week moving average on initial jobless claims 237, which is not where it was. it was a lot lower back -- i got it to a low of 190, 191 rounded up a year ago claims were 190 and now they have ballooned out to 237. it is not enough to change it. jonathan: remove the pandemic like 230, nothing. tom: how does john williams with michael mckee this afternoon address that? it is part of their dual mandate and i guess they are employed. jonathan: the new york fed president coming up later, i can confirm you are employed and lisa is too. [laughter] hopefully it stays that way. john williams and a ton of fed speakers later let's get to the equity market on the s&p 500, slightly negative, down .3%. will we get a three for the s&p? three days of losses after a

two-day losing streak. amounting to more than 1%. in the bond market, yields lower by a single basis point and the tenure this mining, 42659. lisa: we will look out for both things you are talking about today, 830 a.m. we get initial jobless claims tom was mentioning that have not gone up materially. when we see the increase in unemployment, increase in jobless claims with so many people expecting. john was mentioning this, feds become a philadelphia feds patrick harker, the chicago fed president, raphael bostic, michelle bowman, they are trying to pick a new fed president and michael mckee in the spotlight figure. other than tom keene talking will be john williams of the new york fed today at 3 p.m.. tom: this is such an eclectic brew. the bank of england even go with foreign members but all of those names you mentioned have all radically different backgrounds. i think it is cool.

lisa: and they all, and say we don't want to commit to anything and we have no guidance but we are going to signal hawkish maybe but maybe also dovish. then we get president biden leaving for the g20 meetings in new delhi. apple is sort of interesting, you were talking about this earlier, are they front and center in these discussions as the u.s. tries to cozy up to india as tensions increase with xi jinping not attending the new delhi summit. jonathan: plenty of meetings to pay attention to including the saudis. a couple times a last day or two, looking forward to all of that. joining us visit chief global strategist at printable asset management. we would live moment to go why pay for apple, 30 times earnings for slow -- slowing growth. is this market expensive or is it a handful of names on the s&p 500 that are expensive? >> that's a great question. clearly we know that those companies are extraordinarily expensive. this is probably not the best

time to be increasing exposure to them, the market is looking frothy. as you talk about geopolitical tensions which continue to brew, maybe they do present challenges ahead. if you look at the rest of the market, the rest of the market does not look that strong. you can see some of the pressures or concerns about potential economic pressures are weighing on some company performances. we could see the valuations of the big tech names as they start to be pressured. that will pull down the wider market but ultimately if we want to ca sustain -- if we will see a sustained drop in the market, it has to be driven by consensus about the economy which as you have said today it is not so clear. tom: the heart of the matter, jon ferro mentioned this earlier, is stagflation is i would suggest a pretty wide outcome for a lot of our listeners and viewers. what if we get a true disinflationary trend based on tepid growth? all of a sudden you have a model

disinflation into the market. how do you accomplish that? >> we are expecting the inflation numbers to continue to come down. we are also expecting the economy to slow, which would drive inflation lower. the idea is how much lower do they go? to the 2% level? what is the implication for the fed policy be on the next six months if you know they will hike again or not. that is the longer-term question. for us, it is a difficult tossup. the general thinking the last 68 months was because of climate change, because of monetary policy, fiscal policy you can have higher inflation in the next 10 years. when you start to bring ai into the conversation, maybe that gets more dicey so i think the conversation is to be had if you're looking over a five to 10 year horizon. lisa: how much does this moving is the iphone really and china accelerate some of the decoupling and deglobalization's with the supply chain sort of

redundancies that have to be built in that will cause inflation to remain higher? are you rethinking any of your thesis based on increasing tensions there? >> i think the geopolitical tension discussion and with the impact on global growth will be has been around for so long. we have seen repeated moves by both parties against technology firms. this is not a new conversation. for apple specifically, it is a couple months, maybe a couple days, of struggles. then the market goes back to responding and thinking about what is the long-term productivity growth potential from apple. that is what drives the market. for the next 10 years, we now, it is clear, geopolitical tensions will only increase. the supply chain's we have been used to the last 10 years change and rethink all the new terms are coming up, far showing, near showing, ally shoring, these will be things that continue to be perspectives which will put

upward pressure on inflation but i do think that has to be offset by the idea ai can put downward pressure on inflation as well. lisa: putting together what you are seeing in terms of an investment thesis, does this mean you are staying away from some big tech names in the short run because of the lack of clarity as john was asking about in terms of valuation and with the forward look is and going into bonds, if you have conviction inflation will come down? >> we have had an overweight these large cut -- large-cap mid cap tech companies. we have had a reason to stay overweight. would we look to increase exposure? no because lu asians are too extended. we think there is little potential for a bit of a pullback but a long-term perspective is important. we also have a slight overweight on the duration side. looking to increase our exposure because of the expected drop in inflation driven by expected weakening in the economy.

there are different levels in the space. september is a tricky month. there are so many paths, there is so much data which is contradicting each other where at this stage in time come across that -- cross asset will have to be neutral and you're waiting for a clearer narrative to come through but with asset classes you can take longer-term perspectives which show up within the positioning. tom: so what is your marginal allocation to the seven to eight big tech names? i think this is -- >> we are overweight for big tech names. tom: so you are buying more of them? >> not at this stage. because the market is looking so frothy and the geopolitical tensions make it at this point time for the next couple months it will be a little more pertinent. as a long-term investor, i am not going to reduce the exposure for this point time. i think may be cap tech will continue to deliver if you are looking over a longer period.

jonathan: let's catch up in london in a couple weeks. the word geopolitics often frustrates me sometimes, a word we throw wound to mean whatever we want to mean and we don't want to fight because we can't. i think this is fascinating into the g20 what is happening with apple. dan ives taking the other side of the story on twitter, little more context of his views, despite the loud noise, apple sees massive share gains in china, smartphone market, we estimate cupertino gained roughly 300 basis points of market share in the key china market the last 18 months. he thinks iphone 15 will help out on that effort and finishes with this, the bark is worse than the bite in our view. >> this is what you will hear but you also have a lot of people looking at single digit revenue growth overall, including what we will see you rejuvenated on september 12, and the enter -- the answer is there's a body of people saying there's a great company but --

and i think i heard that from another as well. jonathan: the stock is down by 2.7%. timely conversations into the g20, happening in singapore, canadian prime minister justin trudeau speaking at a bloomberg news honey series about an exclusive interview with our erik schatzker. let's take a listen. >> productive ways. one of the things canadians deeply understand is global economy is not a zero-sum game. it is not just possible, it is only optimal when everyone gets to draw benefits, whether it is on trade deals come on business deals. if you are in for the short-term , you can do short lose. if you want to create stability, you have to make people understand we are all deeply invested in each other's success. that is a bit of a shift from some of the ways we have seen the global economy acting the past decades, but climate,

pandemic, and the need for more resilient diversified supply chains is driving that and being there to show up and continually make the case is the most important thing we can do. >> i can't think of a country in the world that does not want to get more out of its relationships in the end of pacific region. which you spoke of partners willing to engage, which of the partners with whom you spoke i pursue my in jakarta and will subsequent -- subsequently speak with in india are most willing to engage? which countries are stepping up? >> i am biased or not because i just came from indonesia but my conversations with the president, with whom will be hopefully would very much on track to sign a free-trade deal within the next 12 months as a precursor to the free-trade agreement we will sign with another the year after, that is a lot for the them to deliver on but we will do it because canada

even figured out this error of protectionism, how to get free trade deals done and the key to that is, it is certainly something the president understood and understands, trade as you know creates growth but it does not inherently make sure the growth reaches everyone within communities in societies. that is up to policymakers and partners to make sure people are feeling the benefits because it goes to not just economic stability but political, democratic, and community security as well. so that pitch we continually made, that trade can be about mutual benefits flies in the face of the narratives people are worried about around globalization the past years that demonstrates that we are able to engage on bullish canada and indonesia right now. that might just be recency bias.

[laughter] >> how would you characterize canada's relationship with china? >> obviously we have had a challenging few years as many people have. the arbitrary detention of two canadians for political reasons put a real chill on the relationship, but china is one of the most important economies in the world and is not a country that anyone can ignore. we have to be eyes wide open as we engage, have to look for where we will compete, where we are going to be clear, contest faced on values, based on principles and canadians expect us to adhere to. but we also need to look at where we actually can cooperate and work together. one of the examples happened last december where montreal hosted the chinese cub 15 on biodiversity. so canada and china worked

together to make sure we came out of that cop 15 on nature with incredible ambitious targets, protecting 30% of the oceans and land on the planet by 2030. that required us to work together and constructively on issues like climate. we are going to have to make sure we are working together. jonathan: the canadian prime mr. speaking with bloomberg in singapore. you can continue to watch that a bloomberg.com and youtube. "bloomberg surveillance" continues now. you recall the canadian prime minister was giving -- given a dressing down by the chinese president, diplomatic take from the canadian prime minister. tom: the grim circle right now, we have to remember in the g7 and g20's closest approximation to a royal family we have, he was 28 when his father died and this was a kid who was handled by richard nixon, pat nixon brought him a snoopy dog

as a newborn. this is something -- the sky was born to do this. yet i've got tristan hopper and the national post of toronto first reading why trudeau is not resigning. he is getting clobbered in canada by all sides so why not go to the pacific rim? [laughter] lisa: there is that suggested maybe he is trying to avoid to messy politics on a broader level. there's a real awkwardness with what's your relationship like with china and i think that will permeate the g20 conversation. what is your relationship with china? what is your relationship, who is your alliance with? will it be u.s. or over the eastern hemisphere? jonathan: if you are europe, can you sit on the fence? they have been sitting on the fence for long time. how sustainable is that position? tom: i strongly agree with that that europe with china is a major focus and particularly with huawei, it will be interesting. the fears americans seem to have

on a bipartisan basis, i agree europe is the tip of point as well but most of it is domestically china. i would suggest just a messick we china. we are going to get a brief on this. we can make up as we go, annmarie hordern, bloomberg correspondent that joins us. we heard from the prime minister of canada there. what is our relationship in washington with canada. i recall president trump had a tariff battle over lumber and friedland was going back-and-forth and forth on that. what is the present relationship with canada and biden administration? >> i think throughout history even if there is arguments between canada and the united states that there is still friendly relationships. it is the united states's biggest land border and this administration does have a good relationship when it comes to justin trudeau and his team. a lot of that has to do with

what they're doing and asia-pacific. i have spoken a number of times with canada's trade minister and the work they are trying to put into what is going on in asian-pacific, trying to diversify supply chains. so they see i to i in that and they remember they saw i tie in what they were -- on a what was going on on national protocols and it comes to mexico and some of their industrial policies. i would say this administration has a good relationship with canada and they seem to see i to i and the united states almost sometimes feel like they are bringing canada along in some discussions but i would say it is a healthy relationship and even if there is frictions in the past, for the most part usually is. tom: let's cue to the domestic front as only you can do on balance of power. help me with the president's relationship with what he believes is his core constituency unions. give us an update here as we stagger to ford motor and maybe

next week a strike. >> yesterday he had the unions for the longshoreman, the individuals that work at the warehouse in the pacific rim and e-sports celebrating this deal they were able to a. it will be more challenging when looking at the autoworkers. we are coming up close to the september 14 deadline when the contract ends. what we know is the uaw was supposed to send back a counterproposal to ford. does seem like they are more ahead when it comes to negotiating with four than with gm and still is, maybe gm more friendlier dance to lantus, that has more work to do. when sean fain asks, will you strike if you don't get a deal you deem appropriate, he said yes. they are preparing for that in terms of the unions and it is going to be as we set a number of times difficult for this president. he does not want to see autoworkers on strike. first out that could be incredibly difficult for the economy as well as the fact there are lower supplies of

vehicles at the moment but at the same time, he wants to make sure he is standing behind these workers. he wants their vote. he said time and time again is most used phrases i will be the most pro union president in modern history so that is going to be on display next week. lisa: i apologize in advance for playing topic roulette but shifting from what we speaking -- >> thanks, someone is. lisa: going forward with respect to china, i'm curious how much the move from apple ups the ante. there i headlines out about potential additional steel tariffs from the u.s. and -- from the u.s. and europ on china, whether this reignite stick duck bands. how much is that discussion kind of getting reignited by some of the moves by china we have seen over the past few weeks? >> i think this would be the elephant in the room at the g20. china, xi jinping, he is not going to represent china. he is sending someone else, a deputy, so what you have is the

united states is going to be trying to, with hard and soft power, explained to other members of the g20 why they should be looking to the united states and not be looking to beijing, one big topic will be how u.s. administration once to bolster the world bank instead of countries looking to road initiatives and she thinking will not be there. the issue is of course -- xi jinping will not be there. the issue is other countries have commercial ties with china and similar to bidens difficult lines with the union, it is a difficult line to walk with beijing. there potential biden would sit down with xi jinping in san francisco before the year is up, that is happening in november, but how much can you do that and maintain a dialogue if you are poking the bear? the issue is of course when it comes to china with things like the government saying they will potentially not let you use

iphones, similar to way the united states that if you have a government phone you can't have tiktok rate huawei comes out with a new phone, how did they get there? michael mccaul says they potentially use -- you serve sanctions. this means there will be a lot more pressure on this administration to maybe not take that narrow approach on national security when it comes to sanctions and expert controls on china. lisa: when i think about bouncing the business interest with political concerns with respect to the u.s./china relationship, i think of janet yellen has often come out more on the pro-business side of things, trying to encourage their relationship, saying they cannot decouple from themselves, china and the u.s.. where is the mindset of the white house? where is the balance of power in discussing business interests versus the political will to decouple more aggressively? >> there is one thing the administration wanted to make clear is not decoupling, it is de-risking, and still people maintain they don't understand the difference between the two.

while you are correct, secretary janet yellen of the treasury really has been seen as a pro-trade individual when it comes to her past work as an economist. she did give this landmark speech that she was talking about this china this year and she said above all, national security is paramount to any business we can do. it is a similar message from gina raimondo which was the last of the cabinet officials to visit china, and she said we can have a bedrock of commercial ties to really ignite this relationship, revamp the relationship, but we will never walk away from our national security concerns. that really seems to be the tone this administration wants to take. jonathan: thank you. a bit of tension between the state department and treasury on some of the issues. tom: you nailed it and anne-marie also nails it.

all this is as u.s. officials, and i go back to the initial effort by hank paulson, the secretary treasury, to go over and jumpstart something in an honest china u.s. dialogue. from what i can tell, there flying to china to play to the american press. jonathan: follow actions. tom: anne-marie nailed it. optics, yes. jonathan: good morning, equity futures and session lows, down by 0.4% on s&p 500. yields down by almost a basis point on a 10 year, this is bloomberg. ♪

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van --ban for the iphone spreads to others at the state level. scarlet: you wonder if they will --tom: you wonder they will break protocol. moments ago, publishing the 10 year real yield. i will suggest that fulton into big tech -- that folds into big tech. jon: the tenure looks like this, your yield, 4.2698. they yields -- the yield is higher for three consecutive days and not one million miles away at the cycle hive a few weeks ago at 4.36 at the 10-year. before 90 not -- 4.9930.

the beige book said a little bit of weakness and maybe asaf landy -- a soft landing raising the themes, the highest some said what slowdown? lisa: it is interesting to me, what date it the market respond to? does it mean there is a biased baked into the market looking for a stronger than expected economy leaving rates higher for longer? jon: we are drawing in ambiguities. i love what one person said. the basic idea -- jon: banks are following the shelf. tom: i am outside school and they are talking about farrow. jon ferro got you through the summer. i didn't get you through the summer?

i have some illness there. jon: you will give you a break. -- we will give you a break. tom: the euro clinking -- romaine: the euro --jon: the euro clinging at 1.07. inflation is still elevated, the ecb is trying to do what it is trying to do and i talked to guy johnson about this, this is important stuff in the u.s. so we have an case study and they have their damaged down to growth but they haven't got inflation anywhere near back to target. tom: my textbooks, which i guessed -- guess aren't valid anymore, if you get growth slowdown, somehow you get disinflation. i would love to hear what john as today. jon: i guess we will find out from president lagarde. crude still, brent, $90 a barrel

and wti unchanged at $87. china's trade slump easing but still in contraction and exports -- exports are falling at 9%. in that data, demand for commodities surging. for the likes of -- cold and -- cold and crude and covered. -- -- copper. lisa: china may be slowing compared to the u.s. but having more strength for some people are getting -- getting credit to. it might be more domestically focused but it is bleeding out in certain commodity markets that my flight in the face of china is falling off the cliff narrative. tom: for our listeners and viewers, get your radar up because people are complaining their domestic balance sheet challenges with their foreign,

economic dynamics baloney. do they come in at 5%? i don't know but there is a school of thought of that. jon: there is data out of germany off the back of that week -- eurozone gdp very growing -- barely growing. jobless claims later this morning and under an hour away and a slew of that speak will respond to some of this and lisa went through it. this is the big one, mike mckee sitting down with the new york fed pellet -- president john williams 3:35 eastern time. that is in focus for all of us. tom: who is this guy? this is the monetary theorist. he came up with a double plug-in

idea of what is the most optimal place to be for growth given inflation and he answers we will migrate to a pre-covid lower r stard. jon: chairman powell does not want to engage that conversation at all based on jackson hole. tom: jerome powell cannot do the math. it is interesting lagarde cannot do the math. tom keene cannot do the math. i will -- how will he listen to the people do the math -- cleared out, who can do the math suggests --clarida, who can do the math suggests. let's get a brief on the global economy and american economy. you have a single sentence, it is absolutely -- hearken to the

conversation with someone in london in 10 days and it is simple. you see growth resilience with fiscal support to the rescue. where is the fiscal support going to come from? >> it is so interesting because when we looked at the traditional measures of fiscal and post, the declining deficit and the declining government spending growth, everything is pointing to fiscal and not being a tailwind to the economy but you have to dig deep on looking out how the inflation reduction act and chips is going into the financial sector at a time where residential is collapsing and you need to look at how small business balance sheets are being listed by the employment retention credit and all of that are providing another lifeline to the economy at a time where

interest rates are increasing significantly. sebastian page -- tom: we are not going to sustain rick -- 6% real gdp but what level will be sustained if we get a poignant --buoyant fiscal support? blerina: the second half of the year, it is shaping up to be about potential and we have an unemployment rate that is at historic lows and the recent increase in apparel data for august was driven by increasing precipitation rates not because we are laying off workers in large scale. lisa: the chicago fed paper came out and said the economy was resilient but it is slowing and it has felt most of the impact from the 5.25% increase in

rates. 5.5 -- that is the level we are at, do you agree with this? they see inflation coming down to 2% by mid next week -- here and -- next year and avoiding a recession. blerina: this is a very difficult question. we have been looking for a recession because of the speed at which interest rates have been increasing but what is different in the cycle is the health of the balance sheet of the corporate sector and the consumer specter is the fact that a lot of the debt in the u.s. was locked in at the august lower interest rates which means we should be looking for the lags of monetary policy transmission into the indented side of the economy to be longer. policy transition is faster to this forward guidance -- through this forward guidance -- when debt is fixed, that makes the

economy not as sensitive to interest rate increases so i am not sure we have seen all the pain the increase in interest rates will cause the economy. lisa: how difficult is it to parse out the -- to the economy at a time of such geopolitical tumult, where there is a question on where investment is coming from. what is happening with german manufacturing and the heart of it, how isolated the u.s. really is in its strength that it can keep going regardless of all of these headwinds? blerina: there is a lot of realignment going on in trade channels. we had the french shoring and we shoring. --reshoring. you don't have to announce tariffs to announce protectionism. we know what this does, it is to decrease efficiencies in global trade, economic efficiencies and

reduces productivity and what does a due to cost of production ? it is interesting trying to bring this in an taking what is the medium and longer-term inflation outlook? >> one final question. are we going to get housing disinflation? are we going to just inflate -- disinflate home prices? blerina: that was widely expected this year. the demand supply and balance in the u.s., we have had a chronic undercooked -- under construction. you look at the inventory for existing home sales, especially, it is pretty low and you have the mortgage low. when you have the mortgage at 3% and new mortgage rates are at 7% so i don't think the risks of disinflation in the housing

market are as high as they are in the u.k. and different housing markets in different mortgage systems. -- and different mortgage systems. jon: the differences are huge. tom: with all the american press, i think you have really let on, with the reading i have done over the last number of days, including yesterday, i learned that america has a corporate investment in a housing and they have gone full animal and it is like come away overbuilt -- it is like come away overbuilt and they look through rental compression. that in greater new york. across the nation, rents will come down. jon: blerina uruci up t. rowe price -- of t. rowe price. if you try to watch the u.s.

open in america and you have spectrum, you have probably struggled to do that because espn, the walt disney company having a battle with that. we will have a chat with michael nathanson in five minutes. tom: this is the heart of the matter which is cord cutting. we have been waiting and waiting and waiting and waiting and it is the time now. i look at everyone else, with the action i have seen at home, cable his head -- cable instead. jon: sign-up two hulu is the message from disney. it is pretty pricey now. try broadband and you have a expensive monthly bill. lisa: it lies with smoke -- sports and whoever wins the sports and the key teams and the lionel messis of the world will really key.

tom: i watch formula one on the formula one app which is british announcers, sky tv. i don't watch it on espn. jon: i wanted to espn. what are you watching it on? tom: i am watching it on an app called formula one where everyone looks like you. jon: what do you mean, everyone looks like me? tom: european and kind of chiseled and a skinny tie. they are hanging out, max. they have little blankets. they have like it's over the tires. -- they have blankets over the tires. [laughter] ♪

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>> you look through a variety of earnings calls and company saying consumers are becoming more cautious -- cost-conscious. there are adapting to the intense price environment around them.

i would expect some moderation but i would not see that as reason to panic. jon: welcome to the program. every markets, session lows on the s&p. a third day of losses potentially. next story, this one right here, a contract dispute between disney and cable tv provider charter communications leaving millions without espn as the nfl football season kicks off and as the u.s. open is ongoing and both company during customers to online services -- both companies steering services -- customers to online services. carter is urging customers to sign up for rival fobu dv --fubo tv. tom: john, we have all failed at

this because we added back to what was a cable tv bill. jon: the bundle is back. it is so expensive. tom: people get to michael nathanson but one more comment, this time does seem different. charter has said enough. i don't know what that means. jon: you don't think they will selloff the sale? tom: i don't know. they always do it at the nth hour. michael nathanson joins us. you guys absolutely nailed cord cutting. where are we in the continuum. if you were talking to charter management, how were slowly get for the charters of the world -- how worse will they give for the charters of the world -- how worse will it get for the

charters of the world? michael: going forward, they are saying to us we don't need to be in this business. it is a low-margin business and broadband and mobile phone is our future. if you are pushing rates as high as you are, mr. espn, we cannot afford to service this business so it is bad enough for them to walk away from video which is a shocking statement given they have more video customers than anyone in this country. jon: how do you think this gets resolved? michael: i would have thought it would have been resolved by today. this goes into another weekend. the endgame, if it is not resolved by monday night football, what happens is disney will be dropped nesn -- and espn will be dropped by charter systems and disney will have to work extra hard to convince people in charter to take either

hulu or -- charter wants the apps disney is selling to its own customers, given for free to charge customers. we all complain about the billing and the expenses of building a new bundle. they want to get the bundle back for free, the streaming bundle to their customers. that is a nonstarter. the ask is so wide from what disney can do. we are not hopeful this can be resolved. jon: given that we have tennis players in news conferences at the u.s. open saying they cannot watch the tenants themselves from their hotel rooms. when we think about lewis, i think the customer who cannot watch the sport they went to watch without pain for alternatives. who is the big loser out of these two sides in this conflict? michael: the big losers are both. the bigger loser is disney

because this would become standard operating procedure through the industry. disney, which has a ton of fixed sport contracts, loses a lot at the pay-tv world and that is untenable to unthinkable i think -- a week ago. the bigger loser -- will be sports leagues and all the leaks and all the players who count on tv inflation to pay their salaries, that is going to be a huge challenge. that will be the beginning of a multilayer problem for a lot of industries no one is thinking about. lisa: does it point to a new model for sports and springing and its model pioneered -- exemplified by lionel messi and what he's doing with apple plus given the fact he is getting a chunk of that.

there is the revenue. apple plus sign-ups have been through the roof in response to his celebrity. is this the new model and the winning model that you foresee going forward? michael: i would have said to you the new model is the old model. the old model worked well which is, one place, one linear bundle where all your sportswear available -- were available. we don't understand the -- by the industry has not worked to make a skinnier bundle of sports. john talks about peacock. that should be the bundle. when the u.s. explained the first couple rounds of golf, i want to see that on espn. the two sides have not come together to create a new bundle and the older rights have fragmented so i am fearful for the consumer experience going forward is not solved. it is suboptimal to watch 17

different sports apps to watch her team -- your team. it is killing the golden goose and it drives us crazy. the model worked in biola bundle, that was the best way to get sports. tom: michael nathanson, buy, hold, sell? loaded my -- boat on -- 189 and we are joined at an $81. justify your outperform? michael: we upgraded it when bob iger came back at $90. we are down 10% and the problem years is that the streaming business should be more profitable. when they buy in hulu, we think there is a lot more margin opportunity and act streaming. --at streaming. our call, you buy on the stock

web parts fully valued and options on -- streaming on optionality. this doesn't matter, how much, the long term because the market put so little value of linear assets. look at where paramount trades, or warner bros. traits, they are lower value companies. tom: john wants to get in, if you have the parts of the -- can you join generated free cash flow out of the parts business to support the dividend and use of cash inside? michael: it is a great question, the companies make 10 billion of free cash flow and $4 billion today and 4 billion is largely part. --parked. there are media companies that

try to get yields. we are looking at cash flow yields explode and no one cares because the sustainability is in question. jon: i cannot think of a ceo there's more love despite the fact that stocks are not doing well, goldman is down 6% yield today and solomon gets a ton of bad press. disd is down 6% year-to-date and bob iger get space -- disney is down 6% year-to-date and bob iger gets this media love. when does bob iger earn some of these issues? michael: our call it is give bob -- our call is give bob 2020 according -- 2024. chapek overspent on streaming. it takes time to turn that around. they have to buy in hulu.

what we would say is that the communication at disney, since bob has come back, has been poor. they have thrown out a ton of ideas and they tease the market without delivering with what the story will be. the stock is trading where it is and there is very little support right now so i think the market has voted. our calls, this is about 2024, fixing businesses special be more problem -- profitable. it is a fair comment. this espn issue, a lot of it was but on what bob was talking about what they would do any future because disney has not been licking their content into streaming, espn anyway. if charter says -- jon: i have been screened out -- screamed at because i have five seconds on the clock. michael nathanson.

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>> we are seeing the turning point in global monetary policy. >> we are staring down the barrel of what is probably sluggish economy for quite some time. >> you are seeing investors be -- beginning to entertain the

idea that maybe a soft landing isn't a guarantee. >> the fed's job now is much more, katie. -- is much more complicated. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. tom: the nasdaq heading for a -1% to start the morning, a little bit moldy. awfully employed america maybe claims. jon: a bit of tension in the economic data and conflict between the beige book which signaled a slowdown. compare that with the ism that came out yesterday which was booming and pretty decent and strong and that pushed yields higher in the two year back on 5% -- and the two year back at 5%. seemingly at the moment, rate hikes our own eyes. tom: we are warren by -- warrene

out -- by all sorts of ideas. i am numbed -- i have been surprised equities have held up. jon: but sit on that for a moment, the stock is down by about 2% this morning and trying to come back on my screen, down a little more than 1%. tom: it is a correction. jon: it is week is on the back of may -- on what may or may not happen with china. based on what we know and -- on reporting for martin, -- on reporting from our team. for government, iphones, that is a drop in the ocean. as lisa mentioned, the signaled thing -- the signaling and options -- the optics going into the launch of the iphone 15.

tom: this is an opportunity on a -10% correction and they have come in and by back shares and that is a belief apple will do that. lisa: you have been reading dan ives. he would say i agree with you. here is the existential risk of it is a small drop in a bucket when it comes to government funding -- phones but what is it mean when it comes to where apple will try to do more of its manufacturing. what does it mean in terms of broader decoupling and what it means in terms of the growth trajectory for a company that got an upside surprise from their china business in the previous earnings report. that has been a point of strength for them. tom: it is in all that we have been talking about this morning. thank you for your emails and suites and the love you get jon and i get nothing. i am waiting for the inflation reports for various countries, germany included. waiting for the u.s. inflation report because maybe that is all

that and -- matters. romaine: $90 crude --jon: $90 crude. $90 brent. tom: this might doesn't work -- this mic doesn't work. i will go to the brent crude, $90.14 and the 10 year real yield, 1.96% elevated. jon: let's call this 4.2698 in the fx market. the euro clinging to 107 -- 1.07. have we have -- have we headlines on ford? offering further improvements on the next contract, nearly 8000 uaw employees received a raise. this is sufficient? based on what we have talked about this morning, the offer was 9% and they were looking for

already present. happy a resolution -- do we have a resolution? lisa: they are putting out a proposal and we will see if it is accepted by the uaw. i am interested to see if this has -- is a template for other auto manufacturers in detroit and this is the question. the strike will go into effect if they don't come with a resolution. jon: they have fast-tracked the papers for over 8000 uaw employees in floor -- ford. tom: it is hardball at the time of huge stress. the real yield is real. it permeates energy and every other sector including labor cost, and a big and complex countries. jon: are these the dying embers of labor market power over the start of something stickier? tom: we have a your instructor -- we have a yield structure

that to 2006 -- back to 2006. we have an important guest here. anastasia, rosa --amarosa. her charm is that she says exactly what he thinks in her notes. a single sentence, it is what everyone wants to talk about, you say buy the dip in tech ai. >> this time, i put it at the top of the note to make sure it did not get lost at the bottom. [laughter] as uses a headline and i think investors should use the spike in deals that are denting technology to get into the shares and artificial intelligence because if you think about long-term what drives shares, it is not valuations and it is not rates but is whether tech and stocks can deliver revenue growth.

that is wafting investors would be smart to look through near-term volatility and entered this long-term theme on any tips. --dips. jon: is it just ai or is apple part of the story? tom: there is an >> -- svb there is an >> -- >> there is an apple part of the story as well. at the same time, they are benefiting from the cyclical upside. i would squarely look to the ai beneficiary basket and we could find both of those. lisa: does this sort of decoupling and shift towards certain industries at the expense of others mean we are going to have higher inflation or lower inflation? does this boost some of these

talks are will be stocks grow -- does this boost some of these stocks or will be stocks -- the stocks -- anastasia: if we are to solve that challenge, the great thing to do is to invest in artificial intelligence and that has the potential to boost productivity. as more cfos, ceos and chief technology officer's are racing to boost their investments in artificial intelligence because they are trying to preserve their bottom line, that will provide a big boost for ai companies because there is a bit of promo going on right now -- a bit of foam oh going on right now. lisa: i am trying to wrap my head around what the implications on the broader level are with companies investing in ai and a number of these very specific ones doing

well and a whole bunch of industries doing terribly. getting left out and certainly with jobs that are not going to be available, cashiers getting put out of work according to the recent u.s. data. what sectors are going to lose, are you avoiding as ai reigns supreme? anastasia: anything that is related to low-margin sectors like retail, that is not the space i am interested in right now but if you think about long-term, if you are trying to boost margins, maybe you do replace some of the labor that is -- comes with higher rages -- wages. if you replace that automation, that is up -- away to preserve margins. where do i think the incremental dollars spending of i.t. managers will go -- our team

managers will go, -- this is a theme that managers are prioritizing. jon: it makes you wonder whether some of these labor deals are the last kind of labor deals we will see given the acceleration of things we are talking about. anastasia: that would be a big call to make. although this tremendous artificial intelligence potential, it is not going to happen in a blink of an eye. the adopt -- the adopt tape -- the adaptation to chatgpt seem to happen quickly. it does take time to install automation in a factory. it takes time to make sure that ai can go mainstream. that time is years. lisa: you were saying right -- weight spikes come and go. there is a preference for ai. the balance to the offset for

your portfolio, had it -- still be up on call. your call of ai is independent of that in a strong way. anastasia: it is, it is one of the things we will have the highest conviction in but it cannot be the only thing and i think the other balance of the portfolio has to be something that provides you protection against inflation being more sticky. we have oil prices and john's work whispering, spiking to $90 a barrel. jon: in case you heard it. anastasia: just barely. [laughter] tom: biontech in ai --buy tech in ai. jon: that is a bit creepy. anastasia: if that is the case, i want to be in that space. jon: anastasia amoroso

outspoken. tom: one person at be more capital markets modeling 5000 [indiscernible] some are modeling we are 5000. amoroso is on the edge of 5000. jon: i like brian. bullish and right. tom: anastasia is on the edge of 5000. jon: i am not sure she said that. lisa: she is still right here. [laughter] jon: if you are, tuning in welcome to the program -- if you are tuning in, welcome to the program. coming up later on this morning, 18 minutes away, we will catch up with someone of jp morgan private bank. tom: there are huge opinions on the crew surveillance.

the big decision is do we go caribbean, or do we go not? i don't get the cruiseship in venice. the big ugly cruiseship in the square. but do you go to cozumel or do you go to toronto? you can take the cruise around the italian coast? jon: i was impressed with the accent on those names. tom: it in a lit -- did in a lit? -- did i mail it --nail it? what time of year but you do a -- what time of year would you do a -- jon: on a yacht. lisa: he is talking for --full -- he wants the whole thing.

you want the all-you-can-eat and all you can drink. where you get the show at midnight. tom: there are six goals. --pools. jon: the hotel in a tanker. i hate that. tom: i hated to but if they pay us who cares -- i hate it too but if they pay us, who cares? anastasia will show up. ♪ lection. available now in siding colors, styles and textures. curated by joanna gaines.

>> the remaining ugly indicators are moving as we expect them to move. -- the remaining of the

indicators are moving as we expect them to remove -- to move. jon: is he hiking or not hiking? a day after the federal reserve decision and a couple weeks away today and a week after the ecb, next thursday. tom: this is a guy you did not want to declare agree but i cannot remember we brought this up, how off the statisticians have been in the u.k. in gaining out u.k. real gdp. governor bailey is flying blind in a lot of statistics. jon: it is -- he is not the only one. tom: i don't think jay powell is flying as blindly as governor bailey is. jon: -- tom: this flow talking apple in china and i am -- this is in,

emory -- annmarie hordern will cruise with us -- cruise puglia with us. jon: you can get apple spritzer. tom: thank you. 2025 people to make this cruise happen -- we need 25 people to make this cruise happen. jon: we need 25 people? tom: royal caribbean you need a minimum of 25 people to get the wounds we would want. jon: like a casino? i hate that stuff. tom: do they have bloomberg's onboard? look for that. "balance of power" -- [laughter] jon: d7 next year -- g7 next year.

tom: if you are in equities, if you are in bonds and commodities, he is the definitive cross rates expert worldwide. he escorted standard -- i have a seminar today i am doing with someone from apollo and other people wrapped around the u.s. dollar, do you believe in dollar strength over the next 12 months? >> think momento -- i think the momentum it has had is impressive but we know the factors that are driving it, some pessimists in the economy and weakness abroad and term premium moving in the dollar's favor. i don't think all of this will persist over the next year but i think the market is waiting to see the definitive turnaround in

these factors before being comfortable selling the dollar. the momentum trade is clearly dollar positive at this point. tom: if america has a unique disinflation, how does the dollar change on a relative basis to other currencies if we get american disinflation? how does that play into the dollar call? steve: if we get disinflation with higher unemployment, it means lower rates. that is what we expect. we think that would be enough, even in this world, i have the dollar and -- weakening slower. for the weakening to be pronounced, you need to see signs of growth elsewhere. from all the fed comments, they are skeptical about disinflation -- disinflation for free. i don't think they will be comfortable saying we have won.

unless they see some signs the economy is responding. if you get to 2% and there is no higher unemployment, the fed will eventually ease. i think they will use quicker if they see some signs and unemployment is picking up and that will be the quickest path to dollar weakness. jon: let's tee up your favorite subject. steve: right now, we thought tcw would have risk of showing there is much more lead through than expected and it is a quarterly set -- sensors which is accurate in terms of jobs. it showed some weakness but mostly q4 last year and nothing special in q1 next year so the data seems to be ok.

that said, the indications are that the labor market is slowing and what we suspect is the case is that claims are low but the hiring is low is well -- as well and we don't have data on hiring in real time as we have all claims or missing that aspect. there is no ogre in the closet waiting to give us a mess of downward revision. lisa: what we are seeing is lots of ogres in the closet when it comes to yogurt -- when it comes to europe. why can't the euro follow the dollar in a significant way? steve: you have to think everywhere you see this kind of weakness, there is bound to be a policy response. i think the europeans are going to have to date themselves out -- to dig themselves out.

they have dealt poorly with the shock from the russian-ukraine war and secondarily with the shop from weaker chinese demand -- the shock from weaker chinese demand. they talk about fiscal policy and invest -- and investing in green technology, doing their version of the inflation reduction act which is to stimulate investment to the sectors and they have to do something like that to get things to turnaround. the other part about europe, we have to see that the slowing in inflation is confirmed. in the data, there is some but it is not as pronounced as it is in the u.s. and elsewhere. they are reluctant to talk about more hikes. we don't have a hike in the future of the risks are more on the upside dan on those that -- upside dan on the downside. lisa: the arming of going to

fiscal policy now and going to spend when rates are higher now than they have been in a decade, it is curious. jon: as not always the way -- is not that always the way? steve: the inflation reduction act is an entitlement for businesses to invest in green technology. they are taking advantage of the incentives. europeans are playing catch-up on this. jon: they don't seem to have a plan on the front? what is their plan to respond to the inflation reduction act? steve: it is always lag. eventually they will come up with something. jon: in about five years. steve: i would say the room for the u.s. to have a physical response if there is a steady weakness is limited at this stage given how back -- bad to the physical picture looks. jon: steve englander there.

the euro clinging to 1.07. it is the low of the session. tom: we haven't done the technical work where if it is a 1.06 handle the people are looking for a giveaway and i don't hear people talking parody stop i have a poll question i will have this afternoon and the distribution of gases on the euro, in -- i am not sure it includes hypo -- hyper week euro. someone up morgan stanley will talk about this issue. white mike thinks the tenure can get to 350 and we will talk about tech with emily rowland of john hancock investments and all that coming later. we will lead with king dollar.

tom: i would watch that. it is valid and the one thing -- euros swissie. the fear is not in the system. jon: this conversation starting in 35 minutes or so. good to have you back to cap -- it's happy back, -- good to have you back, t.k. lisa: we will practice it. jon: i might stay with them. tom: i will have my floaty's on♪

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tom: on radio and television, it is bloomberg surveillance. meet with a pristine -- me with a pristine both time -- bowtie. jon ferro is booking our cruise. lisa: is it going to be a tanker or a got -- yacht? tom: this is out more in the sea. right now from sea to shining sea, we look at data including important claims data, i am befuddled. michael: i have not any less

befuddled than you are because we are supposed to be seeing layoffs, according to the fed. jobless are coming in at 2 16,000. tom: is that lifeguards back to school? kailey: take a look at this -- michael: take a look at this, continuing claims is down from 1,719,000. continuing claims are important because they are telling people -- us, people are out of work and the number of people who are collecting benefits and out of work is falling along with the number of people who are getting claims for the first time so it is a stunning number in the claims department. this is a revision to the second quarter, labor costs at 2.2%, up

from 1.6%. these are all -- old numbers so they have less utility to the fed. tom: you're getting ready for this afternoon and we will go to mike mckee and we have a significant move in the market with the vix at 18.20, s&p -- 15.20. the bond market moves at how year it's coming off lower yields moments ago. lisa: the expectation here that strength in the labor market means that the economy can check along the euro. the euro has been tracking the 1.07 level versus the dollar. you see strength in the u.s. continued despite the weakness we see out of data in europe. tom: i will look at the again -- yen. it has moved. if it were to break out to 1.48, that will get my attention. there is not that global angst,

but there is a feeling of that action to come. brent crude, stasis. michael mckee is our chief correspondent and joins us in reparation for his conversation with john williams. cut to the chase, he has reaffirmed to return lower -- many people disagree with john williams. michael: the bottom line up the whole debate is you don't know what r-star is. it is a long-term return to lower interest rates, lower inflation environment and if that is the case, the question that follows is what monetary policy -- what is the monetary policy? if he is wrong and the natural rate is hunger -- higher, growth can be higher and does the economy have to slow because the fed keeps rates higher? we are going back to the 1990's were growth was strong.

tom: we'll rates were different there -- we'll rates were different there --real rates were different there. usually anticipated conversation and you will see this afternoon at bloomberg ahead of the new york federal reserve bank. where changing markets, a brief from stephanie roth. good luck with this data. a question -- no question about it. how do you with the continuum of jp morgan look at the american economy given the shop i -- the shock i see on the screen? >> claims continue to move lower. there is seasonality issues within the summer months so it is possible we will see a reversal when we go to september and if you look at the overall jobs picture, what we saw is the opposite picture. those are less volatile data so

we call with --quits rates continue to back down. you saw the jobs picture continued to see a rebalancing in the labor market. especially if you factor in immigration trends. lisa: you believe in immaculate cooling of the job market? stephanie: we are seeing signs of that, it is pretty impressive, the extent to which you are seeing the job market cooling down absent of data. wages are softening and the demand of data continues to cool down and i think we will continue to see more of this. it has been an impressive cooling of the labor market through the course of this year. at the beginning of this year, jobs rates were double where they were -- are today? . lisa: -- that has mostly been

percolating through the system and it is having its effect and it can bring us down to 2% by next year? stephanie: if you look at inflation, it has come down and inflation is trending around 3% and summer months brought down the data artificially so probably in the next months, it will take up --tick up. tom: let me stay on the markets and they are on the move and jon ferro at 9:00 on television and i will be would jobs we need to get to the market opening. -- and i will be with job sweetie --john sweeny to get to the market opening. you mentioned the euro through 1.07 and there it is strong -- it is, stronger dollar. lisa: this is a concern for europe, do they have to hike

rates further regardless? big u.s. continues to be strong and it seems like the soft landing is the preeminent issue people are talking about in the u.s.. what does that mean in terms of higher for longer and not seeing rate cut? tom: yuan, seven .33. there is a global follow on. what is your conviction? you have such a eclectic team at jp morgan, what is your conviction in your belief or do you feel like you can change it suspect -- december 12 cpi? what is your belief and theories? stephanie: i believe in the base case that we will have a soft landing. the one tale is growth is better than expected in the next couple months and you have the of desk the other table. -- and then you have the other table.

there is a lot of uncertainty. do you think inflation can stay at 2% if the fed aggressively cuts rates last year -- next year? stephanie: they can do it if they feel good about the labor market cooling. in order for the fed to be cutting interest rates, you need to see more softness and that coming from a more material rise in unemployment. lisa: what is that line in the sand. visit the 4.5% in terms of where they expected this year's unemployment rate to end? stephanie: it could be lower than that. someone between 4% and 4.5% because back then, inflation was higher and it has come down. the importance of getting more material slowing in the economy but less so. tom: we have free market moves, -30 on expx/

. apple is moldy all day and now moldier. that is off a couple days of retreat. lisa: it comes on the heels of headlines that china is banning the iphone among certain government officials but time back to the economic story is important when it comes to what this means or ongoing trade tensions between the u.s. and china and how isolated the u.s. strength is from some of that and that is a big question. tom: the big question is the heart of the matter and it comes to me, the september meeting in play. the jargon -- lisa reads it and i don't. it is a live meeting. is it a live meeting? stephanie: every meeting is live but the november meeting is when we are talking about a hike.

it seems like the desire is to pause and wait. what you saw in the beige book is that there are signs of softening in the labor movement. tom: mastec down 1.3% -- nasdaq down 1.3%. lisa: is there any knock on effects that people are fully accounted for when it comes to -- i don't want to say decoupling. they safety risking. however you want to phrase it between the u.s. and china. stephanie: dear getting onshoring -- we are getting onshoring back to the u.s. economy so production is picking up and you're getting the semiconductor chip facility duction is really strong so the structures have been one of the reasons why the u.s. economy has been so resilient so at the margin, it has been a support for the u.s. economy and the manufacturing sector and i think we forget that china is a little bit less relevant for the global economy than it used to be and

it is not really the importer of goods especially since it is not really boosting their property market and it hasn't for years. lisa: given that a lot of people say the decades of disinflation and very low inflation were driven by globalization and by importing cheaper goods from overseas, does that reverse and this sort of underpinning banks about higher yields for longer? stephanie: i think it is a long story and we still import a larger share of goods from china than we -- then we used to. import goods, it is a commodities channel till -- so be extent that it impacts -- tom: what is your run rate and real gdp? what is the math to get us to the end of the year? stephanie: we are looking at 3%

higher in three q and four q. you have some debt payments, seasonal factors and the momentum should be slower. atlanta fed is very much overstated and they know that error and then model -- in their model. tom: stephanie roth with us from jp morgan bank. futures at -40 pursuit -- -42. mastec at 1.3%. -- nasdaq at 1.3%. lisa: right now, if you are just joining the program, we have been focusing on apple and it is one thing, it is a specific stock and one of the biggest since it is the nasdaq but the larger question for the growth story and that was some of the angst we heard from someone.

she was overweight but not adding to that position in big tech on the heels of some -- tom: anastasia amoroso went the other way and that is what makes the show but amoroso says by the tech ai dip. dear it is. lisa: this is underpinning a lot of moves -- how much is this tech story underpinned the u.s. story of growth and they u.s. story of continuing to decrease and decouple in terms of strength versus the rest of the world? how long can that continue and that is being thrown into focus especially ahead of the g20. tom: as the september -- isn't september supposed to be complex? how about school supplies? when did this start? lisa: textbooks in college, that was the key racket.

those textbooks are $150 each. what kind of school supplies are you getting for your -- tom: she is taking physics and she needs a scale that weighs atomic weight or whatever. lisa: what kind of scale did you get her and did you -- tom: her first papers are on the physics of new tele-. lisa: i don't want to know the physics of new tele---nutella. i serve that to my child. tom: daniel tennenbaum next. ♪

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have to be eyes wide open as when we engage. we also need to look where we actually can cooperate and work together. lisa: that was justin trudeau, prime minister of canada speaking with our reporter homes ago as we get the warm-up act to the g20 meetings in new delhi would start in a couple days. president biden will be there later today. i want to rehash some stories we have been talking about. apple is the number one story of the morning, not just because it has been leading some of the declines in the nasdaq and beyond but also because we are looking at the potential for apple to get entrenched in the u.s.-china concerns. and what happens if china goes after apple in a more material will -- wait, what does that mean for their funding this and openness for international

businesses? tom: the answer is, i guess this is supposed to happen and pulls back and the bulls have an opportunity to get resilient into the product announcements of the 12. i don't know what they will say. the answer is is this a tech ai opportunity as anastasia amoroso was rudely pounding the table on. lisa: anastasia was talking about how important it was to believe in the long-term pieces and nvidia tied to it and buying into weakness and the weakness down 2.6%. there was a couple companies pointing to some potential softness. c3. ai said profit would be delayed from some of their ai interface so i wonder how many are not checking it or taking tips off the table. tom: we will have to see.

it is a good september, in the markets. the vix is starting to move. we are done with the stock report? lisa: i was going to mention ford. tom: the euro breaking down 1.07 is a big deal. it is not a stock. lisa: we can create a stock for it. behold -- the whole concept for your test unions in florida said they will offer up additional pay to employees and this comes ahead of an ongoing tussle with uaw. will it be enough if they are getting $9,000 additionally four-year -- per year with overtime? scarlet: that will be great particularly through a tumultuous august. we couldn't get daniel tennenbaum earlier because he has six summer retreats he goes to. lisa: you can ask him about it. tom: we couldn't get him in august and in september, daniel

tennenbaum joins us, about the sum of all our fears. how do you interpret the media frenzy and lots of nonexperts acting like experts about stuff you are an expert in? daniel: that is not out of sync. some of the reactions you are seeing out of china, china has had somewhat of a muted response to years of trump aggression, they never really reacted to that. they only reacted in time where it it was visits with officials -- banning access to certain commodities and banning potentially certain devices within chinese government offices. we are finding ourselves in a true tit-for-tat we haven't seen

before and i think the government is calibrating how to respond because we have had a lot of fishes -- visits from u.s. officials to china. they are trying and moves wet this we do the opposite. tom: the tea leaf i follow his foreign investment into china and you are hardwired -- hardwired into this with clients with oliver hyman. daniel: the question i get from clients and we get from client is what is everyone else doing were china so everyone is looking to make sure they are not out of sync. i don't see pullback and you see companies begin to and following janet yellen's remarks, de-risk their supply chain in that is where india has potential opportunity on the heels of the g20 to try to encourage foreign investment and manufacturing in india and taking advantage of some of the things in china most

of my clients are looking to understand where they are potentially exposed. they may not be deepening any relationships but they are not pulling back. lisa: this is a compelling point and something leland miller talked about. you have to refrain the growth opportunity in china -- you have to reframe some of the growth opportunity in china. did you get phone calls -- which employs millions of chinese? daniel: i didn't get any calls on this today although it is early. [laughter] i got a lot of calls on the outbound executive order and there are a lot of questions and an industry comment period that has been proposed to look at where potential investment into china may be heavily shifted in the u.s. but there are questions on what that looks like so it is halting investment but not forcing an preemptive dive is --

divestment. lisa: the value of completed -- in the u.s. was about 2.5 billion balked -- dollars -- $2.5 billion last year and that was less than half the amount in 2021. the smallest since 2009 and we are looking at something that's percolating. do you think the companies you speak to fully appreciate how quickly it is moving now #? daniel: i don't and you see actions this week like banning certain technology devices that weren't necessarily on everyone's radar. everyone is trying to react and assess their risks and exposure as rapidly as possible and that is the best you can do at the moment which is trying to see where i have the biggest potential talent -- challenges based on where china is going and where the u.s. is going from a restriction standpoint and how do we not get caught in the middle which is the last things companies want is to be ground sick -- down zero on some of

these issues like some banks have been. tom: to shift to europe and ukraine and the war of ukraine, the indian lectureship with russia was complex -- the indian relationship was complex and mystical. is india our ally? is india ukraine's ally or not? daniel: india is walking an interesting line that will come to a head this weekend. they have a prominent role in brics but they are also hosting the g20. they have given -- been taking advantage of russia's predicament economically and buying cheap oil to further their own ambitions. i think in the u.s. has been reluctant as of its allies to force countries to choose a side but you see u.s. pushing more u.s. -- most of its arms from

russian suppliers and now the u.s. is looking to try and diversify as an enticement to bring them into the warm hug of the west side. lisa: is this the reason why we are seeing a solidification with the potential meeting between russia and north korea and the leaders of those two nations, that we are seeing a solidification in other areas? daniel: russia turning to north korea, they are not turning to north korea for advanced rest -- weaponry but for basic munitions. i am not a military expert they are not going to north korea for advanced things but for basics. that is not a ringing endorsement for how well things are going. india has an opportunity to play a much larger role in the global economy but it is walking that line. it has actively spoken against the conflict in ukraine. it is trying to benefit from its

relationship in the u.s. and be the leader of the global south. tom: thanks for the brief. don't be a stranger. mr. tennenbaum is with oliver hyman. an expert on sanctions and there will be an interview this and -- this afternoon, michael mckee with john williams. i don't know if they will do a market check with you but we need a market check right now. they deteriorate. lisa: till your heels crossing the 5% line yet again -- two year yield crossing the 5% line yet again. tom: the nasdaq down 1.3% and that is some of the apple outflow in the coming days. pay attention to mark gurman of bloomberg news, not only to apple now and china and apple to their confab on september 12. on radio and television, this is bloomberg surveillance.

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jonathan: equities at session lows. good morning, good morning. down three quarters of 1%. the countdown to the open starts now. announcer: everything you need to get set for the start of u.s. trading. this is "bloomberg the open" with jonathan ferro. jonathan: live from new york, coming up, the uaw planning a counter offer to fort. china looking to broaden its smartphones. and arctic