>> central banks around the world both developed and emerging are your fighting inflation >> -- the consumer remain strong so there continues the challenge that the fed has. >> the last mile will be hard but i believe that we are on that disinflationary trend. >> i think we are in this hold your breath kind of moment. >> this is bloomberg surveillance with jonathan ferro, tom keene and lisa

abramowicz. jonathan: this is bloomberg surveillance on tv and radio. alongside tom keene, lisa abramowicz, i'm jonathan ferro. apple info, t. k., the iphone 14 is later this afternoon. tom: we should have all worn black turtlenecks today. it is a big marketing thing. the apple experts like mandeep singh are telling me i have to care. morgan stanley comes out and says "buy me," and tesla goes up 10%. jonathan: have you ever seen something like that? what is the signal you take from that? tom: there will be other companies going "please recommend us!"

w aree getting ready for this news don't we get wednesday, thursday, and friday. lisa: may be the signal is that foam oh has not died yet. the feeling right now is people feel a little loss and tech is the juggernaut that has kept on going. if someone says by, you do it -- buy, you do it. jonathan: that is what happened yesterday in a major way. futures are pulling back just a little bit. bond jonathan: the euro is a little weaker against the dollar. lisa: $1.07 is the new level it's stuck at and we will get that until maybe thursday. the opec monthly oil report is coming out and underpinning some of the angst we have seen

recently has been oil with brent crude climbing to the highest levels we've seen going back to july of last year. 1:00 p.m. is the launch of the apple iphone 15. why do we care? will it be a marketing event? i think it's more than that at a time were suddenly people want to understand what the next hot thing is in tech because that's what has driven the entire equity market this year. tom: i believe there are new chips in here and knew in her guts to the phone which make it special. i don't know, i will listen to the bulls and the bears saying slow down. we've been here before. everybody owns it. let me correct that, retail owns it and maybe this is the thing that makes people buy at the margins. lisa: and we will talk about the india factor as well.

david solomon is speaking at 2:45 p.m. i'm curious to see whether we have any sense of that shift from goldman sachs but more broadly what we keep hearing about, is it the typical calling of the herd or is there something deeper going on given some of the credit concerns? jonathan: looking ahead to earnings from jp morgan. what's the next big step for this market after cpi? tom: there is all this economic data and we will overanalyze it and i think cpi tomorrow is a big deal. october 13 is when we start the soirée. our first guest this morning is someone who has taken a more bullish stance. when do people start popping 5000 as a regular level?

how about 5100? jonathan: he was the biggest bear on the street and looking for dirty 400 and now he's looking for 4150. he joins us now. what do you feel like you got wrong? >> i think there's been three drivers of the market that have helped this outperformance this year. one is the ai story linked to tech. the second one was positioning. we were aware we were underway coming into this year. the third thing has been the date is been stronger than expected. many in the street were looking for a slow down and a recession

this year and it hasn't manifested. jonathan: you have reset and you're still looking for a negative market based on this call of 4150. where do you anticipate the weakness comes from? >> it's the manifestation of the slide in the economy. we know everyone was looking for a slowdown that hasn't manifested as quickly as we expected but it doesn't mean it's not coming. the massive policy tightening we've had will have an effect on the economy but it's taking longer than people thought. the idea of excess savings being run down, we think the consumer will slow down. we still think a lot of that can manifest but might be at a slower pace than previously expected. tom: this is been led by seven stocks and big tech. with your new optimism and your

new neutrality and you will announce today you are going to 5000 spx, will you do it with tech as a growth leader? >> it's controlled pessimism at this point. it's hard to get away from tech. there is this structural growth story so in an economy that is slowing at a more gradual pace and anticipated them the structural growth story will have weight. the issue with tech is how far it will go in the story going forward with tech will be about being more selective. we see things like semiconductors that have may be might pass the baton to software or other things. lisa: what about the concepts behind your bull and bear case? why don't you think a

re-acceleration would prompt more aggressive fed action that could torpedo the market? how much does that come into play? >> when we look at the correlation between equities and bonds, that gives us a window into that question. you look at longer term treasuries and you see the ratio between equities and bonds, we think it will point to the idea that valuations look good relative to rates. the higher rates could be a headwind so i think equities are's. between a little rock and a hard place and if it's too hot, it starts to bring the rates higher and that will bring multiples but a slowdown is the bear case.

we are not looking for that much upside. we think it would be driven or by value stocks and cyclicals if we have data surprising to the upside. lisa: do you believe in goldilocks or is this wishful thinking and picking appoint along a progression toward something else and saying just stay there? >> it's difficult to stay in this benign goldilocks environment. one thing we got wrong was underestimating the middle. we had an issue with the date of last year and we were way too hot and we thought it would become cold and take us into a recession but if you go from too hot to cold, you go through a piece in the middle that's just about right and that's where we feel we are as we don't think the data will plateau. we don't think we will stay in this goldilocks environment forever. we think it will continue to deteriorate into a shallow recession. tom: based on what you been

through the last 18 months, hout linked his economic analysis with the securities analysis of the market? >> i think equity markets are always very linked to the macro. there are these secular drivers alongside that area when we look at the bear markets over the last 100 years, they have a they are followed by a swift economic decline. i think part of it is the magnitude. when you are in a more benign economic environment, the economy is not the big driver for the market. when we start to see negative payroll prints, the attention will divert and people's ability to buy into the blue sky thinking becomes much more challenged. jonathan: can you talk about apple? >> i can talk about it loosely. jonathan: dollar stronger, china

perhaps developing different tastes, nationalism shaping perhaps patriotism at home away from foreign luxury items. the multinationals are in trouble with china. >> think about some of the general themes in terms of tech. those stocks will be incredibly resilient in a downturn because you have great free club -- cash flow and amazing balance sheets but it doesn't mean they are immune from a consumer slow down. one thing we think will manifest as the timing of rates will affect the consumer. the consumer just questionnaire is your first port of call but there are many text up that affect the consumer and apple sells goods and services to the consumer. the question is whether they will be immune to the slow down? jonathan: greg, thank you.

i wasn't sure where you're going with that. tom: we are in london next week. we should do the show from paris. jonathan: do you want to go to paris and back? tom: i think we should do the show there with greg, bnp paribas. i cannot focus. jonathan: really? i am shocked. tom: we have a new focus oneverton and they will be taken out. jonathan: they stem our reporting, this would make it the 10th u.s. representation. there is a real upside and the values of these football clubs. this is the world game and if you look at the french value of

a u.s. sports team, there are so many that dominate the top 10 even though this is a game for one country which speaks to the power this country. a lot of u.s.-based investors see the premier league as dominant in world futbol and they see a lot of upside to the value of this. tom: they can look at this is eight years of investment and they can sell it to the saudi's. jonathan: there are many clubs they could sell to the saudi's. america owns british futbol in a much bigger way. tom: do the guys in miami take it down? jonathan: it depends if they monetize their loss. they are spending the money. tom: they are not done. our bloomberg senior management

loves everton. jonathan: new york sports for a time look dreadful in the last 24 hours. there was jets, aaron rodgers going down and you are thinking never mind his season is over and jets season over and then they won the game. i understand he will get a scanned a scan little later today. it might be season over for aaron rodgers. tom: it's not funny but mohamed el-erian is ready to step in. see you, cambridge. jonathan: i'm sure the jets are saying it's more of the same. from new york city this morning, good morning to you all. ♪ but we help you shape your financial story. ♪♪ we're not an airline, but our network connects global businesses across nearly 160 markets. ♪♪ we're not a startup,

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average that yet without an outage? no. things are slowing in the economy but demand is still strong. saudi arabia will keep supplies to show inventories continue to drop and that's where we are now. jonathan: that's exactly where we are right now. a new high for the year and brent crude in the last 24 hours. your price action is as follows. wti crude, $88, posited by 0.9%. yields will be lower going into cpi year. looking ahead to the iphone launch later this afternoon. equity futures are negative by 0.2%. tom: it will be good to see a quiet economic day. was the latest based on inflation? i looked at the headline but core is supposed to be quiets

in. -- quiescence. jonathan: do you trade on the headline off the back of crude or the core? that will be the decision going into chairman powell and the federal reserve decision next week. tom: let's take a bigger picture. my book of the year is robert caplan's a loom of time. he has one chapter that is phenomenal. it's on saudi arabia. to help us with brent crude at $90 and on the reality of saudi arabia and $100 oil is francisco blanche from bank of america global. you nailed oil and you got your and 91 brent as well. the trajectory seems to be to 100 and clearly, that's what

saudi arabia wants is a domestic reality. they have budget requirements and fiscal requirements. will we see $100 barrel because the saudi's want it? >> it's possible. there are three things that will move prices over the last three or four months. supply, supply, and supply. we had saudi arabia cutting motion for close to a year now. they started cutting in september of 2022 at around $95 per barrel. they clearly want to have higher prices and they want to move the market there. the past few months, russia has finally started to align itself with saudi arabia and started to take supply out. the russians are maximizing volume over price or value for much of the past 12 months. they started to focus on price over volume.

that's a new development in russia in the last few months. we have also had some refining issues. we've seen diesel going higher. tom: there is a new linkage between saudi arabia and china. can china live with $100 per barrel oil? >> i think the saudi's have always been cautious about avoiding destructive episodes and i think they will become cautious again if prices go through $100 per barrel. as we saw lester with natural gas, if prices get out of whack, you can lose demand. the demand in europe is lower today than it was this time last year with a 90% decline in prices. if prices go up too fast, you're

hurting consumption and china today are one of the biggest -- are the biggest oil importers by a mile and is facing a weak economic outlook ahead. i think china is not in a great economic position to begin with so opec-plus will be careful as prices rise. jonathan: let's focus on supply. you mentioned a shift in russia away from volume to price. what's our underpinning the shift? >> in my mind, the pivot comes after a program set up by the u.s. treasury to put a price cap on russian oil. the price cap essentially encouraged russia to export high

volumes and low prices which were them resold across india and china. more recently, i think the russians have figured out that the russian tax authorities have not been able to raise enough revenue in the macro economy in russia has deteriorated. we seen that with tensions building up within the military over the past few months. i believe the kremlin is probably arriving at the conclusion that they need more money and therefore, the way to do that is with maximize revenue for the russian tax authorities. they are pressuring volumes lower and prices to rise in the price of euro crude oil which was now -- which was a -- which was $50 per barrel is now approaching $80 per barrel. jonathan: brent through 91

have we seen any sign of deterioration in demand from china even with the economic weakness? >> the august numbers in terms of import increases, we such china importing half a million barrels per day. we just the numbers were kind of weak but we hear from china and i was in singapore last week meeting the various energy traders. the main messages chinese demand is pretty healthy. it's a debate. look at the number of air flights and passenger traffic. demand is still pretty healthy. what has been week is industry related consumption. think about diesel and the petro chemicals. chinese demand is in a better place. even though the real estate

sector is not doing well, you still have a strong services sector come back after covid and that's supporting oil prices in china and crude as well. we see refineries running more crude oil to china the past two months. chinese demand for oil leads the world. this year and next year, the demand will come from asia and china will be a big part of that. lisa: the cut -- discuss the narrative. if we don't have the narrative, what would stop oil prices from going higher especially if demand continues strong from china? >> china over all is coming back from covid. they are still down 50%. there has been tension between the u.s. and china the past few

years. flights to the u.s. remain suppressed. that will have to pick up. we will also see a meaningful increase in chinese flights to europe over the next few quarters. in my mind, from a service perspective, the chinese store is ok. chinese gdp is weak but that means 4% which allows for growth . it was the same in the west when we came out of covid. the chinese consumers are doing all the same things and that's supporting the oil market. opec has elevated prices and brought inventories downward and we expect that to continue. we are targeting $90 per barrel for brent's next year and the current market is at $86.

there is a little bit of upside in our current prices but if you push too hard, the risk is that inflation comes back and the narrative we will have its peak rates with no recession and that goes out the window. we see the effect on the macro markets for a potential recession in the u.s. jonathan: always a clinic, thank you so much. speaking exactly to what j.p. morgan talked about yesterday, the potential for the commodity price surge to feed inflation and extend the hiking cycle. more on that conversation still ahead. from new york city, this is bloomberg. ♪

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jonathan: no drama this tuesday morning. yesterday on the nasdaq, best day of dan's of the month so far. a big event later on this month. tom: you were talking about tesla, the idea that any given southside firm can say, let's go on a giant norms stop -- jonathan: 10% move. not just any analyst.

i am with you, to see a move like that on the back of a single call is quite something. tom: and the idea of what china is going to do. i still think there is a conflation of the tangible gloom of domestic balance sheet china with what they're going to do in terms of economic output. most of the people i trust say, it is not going to be that bad. lisa: maybe this is the downside of humility, if people are aware of what they don't know and they say, maybe i don't know i should buy. that is a question of how much rumor fosters that. jonathan: maybe some fomo. your tenure looks like this -- 10-year looks like this. two-year. the euro shaping up as follows,

a break at 107 in the last week. negative by 0.3% yesterday, a ton of dollar weakness. the dollar bouncing back a text this morning. apple launching its iphone 15 model later this afternoon. while the majority will still be china made, indian-made phones will also be available on the first day of sale. that will be a first for apple. it comes at a time when there's increased tension with u.s. and china. tom: this is not some ceo delegating authority. this is how tim cook became tim cook. to me it is really something worth watching. can the labor execute? can they get out a zillion funds? is design there? the little cutesy box, pie box.

the kids leave it out. jonathan: this feels personal. what would you say apple is doing? tom: sending a signal to china that we have optionality. lisa: in some ways, xi jinping gave tim cook a free chance to be a bold end and embrace other countries by saying come you can't use the iphone if you are a state employee. how much does this give apple more room to maneuver? they can make a bit more of a show about it to talk about their prowess globally. jonathan: let's see if it spreads into china this quarter. will we see people flocking? we have scale to compete with china. does it have the technology to compete with the iphone? tom: what we do know is there

has been this belief for every launch, the black turtleneck and all that omg to decline. oops. jonathan: did not happen. tom: did not. jonathan: the united autoworkers , lori pay demands -- lowering pay demands. the deadline is just around the owner. the company still see domain as boosting labor costs too high. from 40 to 36. tom: i would how they pick which one to strike? i am fascinated by that. jonathan: you say that weekly. tom: how many cars are in the lot. which group of union workers will cooperate with union management. jonathan: i can't wait to see what the response would be if we get a strike.

tom: after the 48 hours, i don't know what his response will be. jonathan: based on what he has told us, most prounion president in the history of this country. tom: mr. trump is going to go out and -- jonathan: we will find out. new york jets appearing the worst after star quarterback aaron rodgers suffered an achilles injury just four minutes into his debut with the team. the 39-year-old helped off the field after being sacked. tom, this was not how this was meant to go yesterday at all. tom: i was talking to paul sweeney in the last hour. the idea of football is join or miss. the numbers, the top 30 or top 40 programs last year. jonathan: good news, we were

able to see this in new york. tom: at the last moment. jonathan: agreed right before football. tom: let's pick it up with lindsey piegza. $90 oil in the beautiful macro economics. let's continue this forward. i am going to them microeconomics of oil and how it folds into your inflation call. here at 90 or daresay higher, what does it do to the piegza inflation forecast? >> energy for costs are one of the big things that is facing. we did see inflation take higher. the committee seems to be brushing that all. if we do see these elevated energy costs sustained, under sustained basis, filtered down, this could cause a significant

reversal in headline inflation, forcing the fed to take more aggressive action. i think investors are bracing for. right now the notion is more for a patient position from the fed, but the risk -- we have heard this from chair powell before. the risk to inflation is significantly to the upside. tom: do they become more restrictive or move along the x axis? >> i think both. i think the fed absolutely has more a munition in his toolbelt to continue to raise closer to the 6% target come on top of which we could maintain the elevated level for a long period of time beyond even what the market is anticipating. even higher for even longer could be the scenario for the fed if we do see sustained heightened energy prices. lisa: it seems like everyone is thinking we are in a soft landing scenario, consensus among many at a time when you're seeing subtle shifts. you are seeing people's

pessimism about their finances start to really pick up. do you start to see some of these signals as a sign maybe we are shifting into something that is less, i don't know come off for? less benign than what people are portraying it as? >> the bar of expectation has been shifted so much lower that when we talk about a soft landing, it is simply maintaining the bare minimum of positive growth. right now the u.s. economy is far from robust. it is still in positive territory, but the momentum seems to be shifting to the downside. more consumer-based economy and while the consumer remains more resilient than we had anticipated, the mentor is clearly waning as consumers are relying on these temporary factors to supplement their spending. they are drawing down savings. they are pulling out 401(k) hardships, ramping up credit card debt. these factors are unsustainable.

as we do expect these factors to be tapped out, that is going to provide more downward momentum for the consumer and by extension, more downward momentum for the u.s. economy. lisa: consumers finding it most difficult to access credit going back to 2013. do you expect this to play out in retail sales thursday? do you think this will be on the table or do you think we will have to wait and see whether or not this is truly going to affect growth? >> we have to be careful when we are focusing on one data point, the latest, particularly when it comes to retail sales as we have seen a tremendous amount of volatility as consumers dramatically shift goods and services in their basket on a month-to-month basis. but that is a broader implication the consumer recognizing the fragility of their household balance sheets i'm a we do when we are increasingly concerned about our financial footing. it is not necessarily about one data point but that downward

trend of momentum. keep in mind, consumers have been pulling away not just in terms of the nominal dollar spent, but shifting away from goods or stuff, increasingly back to the pre-pandemic trend of relying on experiences or services for the vast majority of monthly experiences -- expenses. tom: one of those experiences is watching "bloomberg surveillance." did in analysis yesterday. 12 months forward, what is the combination of real gdp and inflation? what is the nominal run rate going to be? >> let's start with the real rate. i think the real rate is sub 2%. i think the longer-term trend for the u.s. economy is one point 8%. you layer on 2%, 3% inflation in an optimistic world and we are closer to the 4% range for nominal gdp.

lisa: let's finish where we began, oil prices and how that could change the fed's trajectory and the inflation picture. is there a price of oil where it becomes inhibitory for the consumer? were suddenly it does impede on their discretionary spending in a material way? are we getting close to that? >> yes, i think we are. as we just talked about, the consumer is on increasingly fragile footing. we use the word "resilient" for the consumer for that is in context of what we anticipated, more precipitous decline in activity given 500 basis points plus in terms of fed tightening. the fastest way to derail the american consumer is sustained heightened due prices. we have seen this play out in cycles before. if we start to push toward four dollars a gallon or over four dollars a gallon, that is going to be very difficult for the average household balance sheet to absorb, particularly when we have other costs coming on, particularly student debt

payments. with the average household has a difficulty footing a $500 shock on a monthly basis, any type of tweak to pulling away that discretionary spending, be that filling up the family car or paying down the monthly debts, this is going to have a significant impact on the consumers ability to spin in the marketplace and continue to prop up the u.s. economy. jonathan: it makes you wonder how many expensive iphones they will be buying this quarter. >> absolutely. that is become less of a discretionary purchase and more of a necessity. jonathan: the iphone 15, necessity. tom: my variable on this, i have said this, huge disagreement, are the phone companies going to help us with our necessity payment? to me, that is the heart of the matter. jonathan: lindsey piegza, thank you. let's get to a survey on policy. six out of 10 say the fed is done. in july, nine out of 10 said the

fed is not done. what a difference a couple of months makes. total mood swing on the back of the cpi data. tom: really the next 10 to 15 days we will be as data-dependent as ever. i don't have a clue as to where we will be. you can bet on the market and guesstimate. i would suggest a fair amount of gloom. gloom, i can't say gloom is back in place but there is enough narratives of gloom. jonathan: based on what i'm about to read. when was the last time we did this? we're going to be catching up on the new covid vaccine. tom: i said, get hansoti on because i'm going to get the booster. jonathan: you're going to have a

doctor's visit live on tv. tom: the websites are great. rheumatology is world-class. scary good stuff. jonathan: that conversation, just around the corner. tk with a doctor's visit. we should brand that, tom. tom: when i get the shot. jonathan: we're going to have the conversation next. tom: i have my comfort dog with me. jonathan: is it actually a therapy dog? tom: yes. he is coming to london. jonathan: that is sweet. and you expensive. equity futures down. your iphone 15 unveiling a little later this afternoon. ♪

it's easy to get lost in investment research. 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.

explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™. >> the labor market is so important because it really supports the consumer spending

and we have seen the labor market clearing off and we should see signs of consumer spending cooling off but then pressure on inflation. but it is really true the -- tricky needle to thread doing enough but not too much. jonathan: the founder and former fed economist. you could take that clip, play it all the way through the year. this is what is going to happen, this is what is going to happen and it is happening far more slowly than we anticipated. tom: humility tuesday. this came from jamie dimon talking about he wants a primal scream for humility on bank capital requirements. there are other issues on humility. that is an economics of humility where she will make statements but hedges every step of the what, particularly on recession. jonathan: one of the best at that. jobless claims, retail sales on thursday as well. tomorrow morning, cpi in america.

equity futures a little bit softer. no real drama here on a 10 year. i want to go back to the quote from j.p. morgan, the risk, the potential for commodity price surge to feed inflation and extend central banks hiking cycles. that is the call from the manor jp morgan at the moment. tom: we will have to see how it goes. the opinions will adjust by thursday -- or by friday. jonathan: it has been pretty bearish on stocks through much of this year. tom: this is a joy to do this in remembrance of how people stepped up big time in early 2020. i have the clearest memory of our first interview on covid with an acclaimed radiologist from mount sinai in new york who brought into our studios x-rays from china showing the outside lung damage that covid could write. john hopkins helped us so much

on this. joining us now on the booster uproar, bhaki hansoti. this study, the academics of professor hansoti. great to see you and your always covid faculties. when we were kids, it was routine to get a booster shot. is an mrna booster shot any different, any more dangerous, anymore at risk and a tetanus booster shot of my childhood? >> absolutely not. the covid dixie -- vaccines are updated vaccines that are targeted for the current are says that are circulating. they are equally say. they have full approval. they are safe and effective for the population. tom: i look at the science and

it seems in order, basically, i'm appalled at the government responds, the messaging from the white house to get behind this science community. what do you need from the president? what do you need from the administration to build confidence in this booster program? >> i think clear messaging, there is full approval. we need to hear from the cdc today. they will be deciding who should get the booster, who they recommend. but also reasons for those recommendations. why is that the current recommendation. and what are they trying to do by making the recommendation, prioritize those at highest risk or genuinely saying the vaccine is only recommended for those it will benefit? we need clear communication, clear logistical reasons as to their recommendations. third is we need to make sure our supply chains are strong. we need to make sure the vaccine

that comes out later this week, that folks know where to go, folks have access to the vaccine quickly and effectively. lisa: how much did the administration and policy makers set themselves back by train to clamp down message so hard and is surely? there was a court ruling said the administration did overreach and try to strip away any anti-vaccine messaging. how do you view that in light of what you're trying to put forward right now? >> we view that because it has per journalistic attitude to health. we're all our own caretakers. some good, some that. some here comes some elsewhere. by having communication that is less black and white, that allows for effective dialogue, that allows individuals to buy into the whole interventions, vaccines, therapeutics, masking. we need to ensure those -- there

is dialogue, there is debate and the debate is -- has a scientific foundation. lisa: there's been a lot of discussion about side effects of the vaccines in addition to how much they actually prevent from getting more. if you're going to still get sick and you have already had it and you're not going to die, there is the feeling of, what is the point of increasing the potential risk if on the downside you could spend another day in bed? what is your view on that? >> the fda would not approve a vaccine with the likelihood of you being sick is greater than the illness itself. that is not going to happen. the side effects do exist but they are over reported, partly due to the media. as far as the illness of covid, it affects people differently. if you have existing lung conditions, you may in fact require hospitalization. hospitalizations went up 8.7%,

so it is not as if the disease is of benign common cold where you will just spend an extra day in bed. i treated several patients over the weekend in the emergency department at johns hopkins and the majority's home. some did require intervention. some reported they were fatigued, exhausted, could not go to work, could not manage activities of daily living. if you are responsible for children, elderly parents, or you need to go to work, get vaccinated. lisa: how is this different from the flu? >> not significantly. the flu has the same consolation of symptoms -- fevers, chills, cold, congestion. covid will present the same as will rsv. that is the challenge here. covid will likely be underreported because some assume they just have the flu. that is ok as long as you're staying at home and isolating. tom: dr. hansoti, what is the

science of masks? i don't want the politics, the mumbo-jumbo. but what is the science of masks in this covid 2024? >> the science of masks is they are effective at preventing onward transmission. a lot of the literature you are seeing right now misinterprets the data and how the data is collected. a lot of the data is none covid eraas, individuals who are not accustomed to wearing mask. at the data during masking show there was very little health care worker to health care transition when health-care workers were wearing masks even if they were covid positive at the time. so the science shows masking works. i also hate masks. my patients feel better when they see my face, i am able to reassure them during their illness. i am currently choosing who i

mask and don't mask with. if someone does not have upper respiratory illness or flulike symptoms or is not immunocompromised, i am currently, today, i am not masking. in the future, i may change that if covid 19 cases continue to increase. jonathan: we want to see you smiling without a mask. dr. hansoti, i love seeing the doctor. let's hope we don't have to do this too often. tom: let's do science here. i want the politicians to be forthright about it. i get there is political debate and it had been to shoes outcome for politicians to politicize science. that has always been the case. jonathan: after all these years, why are we still talking about size as if it is definitive and not ongoing? tom: it is not definitive. i sat in classrooms in microbiology when mrna was a pipe dream of david baltimore and others on the island of manhattan.

baylor in texas. mental block. anyway. there were people with david baltimore 50 years ago doing this on mrna and now it is saving our lives and saving some lives at risk. lisa: the problem is there is nuance. it is very difficult to know and how do you come up with a public policy at the same time of trying to follow the nuance of science? do they do it perfectly? there's a lot of criticism. how do you form a policy now in public trust that has been impeded in a significant way? it will be a real challenge going forward. jonathan: public trust has been shattered big time. tom: that is accurate. in england where you have a huge microbiological imperial college, real belief and it. jonathan: we have been lied to on so many friends, not just misled. we will talk about markets and this about covid coming up.

from new york city this morning, good morning. ♪

>> central banks around the world are fighting inflation. >> it is about ecb policy and the u.s. dollar. >> consumer earnings are strong, so that continues the challenge the fed has. >> the last miles went to be hard, but i believe we are on that disinflationary trend. >> we are in this hold your breath kind of moment.

>> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: live from new york city, good morning. this is bloomberg surveillance on tv and radio. your equity markets slightly negative by zero point 2% on the s&p 500. later this afternoon, a much anticipated iphone 15 launch after a week of weakness from apple stock. tom: there it is. we are going to see it this afternoon. we have our full bloomberg technology team. jonathan: bases-loaded. tom: a new iwatched not getting much traction.

we have a set under the couch, so we have to replenish. jonathan: they do sets? tom: i have never owned them, but others. jonathan: you do not use them? you are still doing old-school? tom: they walk around the house. jonathan: i have no idea what your body is doing now. tom: this is yvette walking around central park. jonathan: your body is just sort of pulsing. it is distracting. tom: i getting ready for the music. jonathan: let's talk to the serious side. there is new competition in china and there is the government pushing back and banning the use of iphones based on our recent reporting. tom: they are looking at an india phone to be ready day one. i did not expect that, so -- did

they mention the politics? i do not think so. jonathan: the story is fascinating for so many people, particularly after the events of the last week. lisa: whether tim cook weighs in, probably unlikely. jonathan: do we get a higher average selling price off the back of a phone that does not have many big improvements? lisa: if they get subsidized by pay-as-you-go, can you see that kind of price going up? it depends on what you offer. this is an increasing staple. what point do you push people out of the market? tom: i take issue with push people out of the market. they have done this perfectly. they have monthly plans. your phone service can give you monthly plans. who pays $1100 for one of these toys? jonathan: it is a monthly

payment, but it is still a big monthly payment. tom: this idea that it is $1100 -- there is no evidence that slowed sales. lisa: if people are going to get concerned at four dollars of gas for a gallon and you are at $3.83, you are far away. at a certain point people are like, it works. >> they will go, can i get it in red? jonathan: i would say it is about these big tech firms. when was the last time they had a real, cyclical text -- test in the last decade? everyone got sent a check and a lot people got an iphone based on sales. they have had one. they are getting one now and we will see how it develops

stateside. futures on the s&p look like this. pulling back just a touch, yields unchanged. prude, $80 a barrel. -- crude, $88 a barrel. lisa: we are expecting an upgrade on the outlook from opec. we are curious to see how cuts are affecting that outlook. 1:00 p.m. is the launch of the iphone 15. very curious about india. today we get david solomon of goldman sachs. there are a number of other speakers as well from wells fargo, deutsche bank. i want to hear what kind of spending we could see going forward. jonathan: let's talk about inflation tomorrow morning. am i trading headline cpi or core? >> core inflation.

anything that rounds down to point to -- .2 the market will take well. and then drilling down to this core services bit as a secondary look. jonathan: any reason to be excited about chair powell next week? stuart: they are going to update the economic projections, so that will be most interesting. they are probably not going to move the terminal rate, but that would be a focus. looking at the economic projections will give you an idea to how they are thinking about the world. tom: we are feeding inflation and chasing growth. what is the bet on the market now? have we gotten gloomy? stuart: we pulled back in august. i think rates rose for not good reasons. tom: is there a big bet that we

are all going to die? stuart: hopefully there is not. our core view is mostly positive. i think people are generally in that camp, but valuations got to a level where the risk reward does not look great. if people are in the market now, it is with caution and the reaction of investors is to get out quick. lisa: was tesla's 10% rally yesterday caution? stuart: tesla has these rallies now and again. i am not too concerned about it. we have had a few of these moments are the markets move a bit. it is a concentrated move. i think that speaks to the fact that people are on edge and there is not a lot of tolerance now. it is and ask questions later tight market. that is what you saw yesterday. lisa: i want a sense of where you stand on the bull case and

bear case. a real acceleration would be the bull case. do you agree or think there is a perverse reality where things re-accelerate that could be the most negative outcome for equities? stuart: my view would be good data still good. they call it bad data because it is bad and good data because it is good. this is a nominal growth asset. if you are rooting for growth to slow down, you're probably rooting for the wrong thing but a soft landing, real acceleration in growth i think is the positive side of this. the strength of the economy i relative basis has been the labor market and it spend, so if it started to weekend, that is where you want to be careful. if you see payrolls come off, you want to be cautious and let that happen. this is a growth asset.

we are not rooting for bad news at this point. jonathan: the team did a segment about good news, bad news. it was interesting this year. we have had a year of upside surprises in the u.s. economy. we touched on this. we have had a growth rally. can you make sense of that? that is not what is meant to happen. shouldn't i see the rally elsewhere? >> the growth part of the market -- valuation gotten washed out. you had kind of a perfect storm pushing people into that space. the other part, even though growth has surprised, there is still a scarcity of earnings growth. it is those large-cap tech stocks producing that earnings growth and positive consensus revisions. our view is that is why they have performed so well.

sentiment and positioning was low and you got strong consensus revisions helped by ai. that is why we think that part of the market worked in a positive growth environment. tom: go back on bloomberg digital today and relisten to stuart kaiser. you nailed it. the pro tip is nominal is the way to think about this. it is a nominal growth asset. the answer is if we are still popping 4% nominal gdp, the we are going to die crew does not get it done. stuart: especially from the earning side of things, people got things wrong. there was a view that earnings would get massacred because the fed was hiking rates. jonathan: the fed -- tom: the fed works in a real rate environment. store kaiser -- stuart kaiser

works in a nominal rate environment. >> at least in this year. if you were expecting a significant deterioration in earnings, that was hard to accomplish in a positive nominal growth environment. the real test may be next year as nominal growth starts to slow. what does that do to margins in the equity market? we will have to see. that will probably be a discussion for 2024. lisa: when do you look at oil prices as a potential headwind? stuart: people have tried to take upside shots at that trade and have been disappointed. finally nobody is talking about it, so it is a perverse dynamic. at these levels, if you can sustain these levels, you start to worry. gas prices are near four dollars a gallon. people start to pay attention to that.

at these levels, you are paying attention to it. there's probably a few that opec is trying to keep oil and arrange on a go forward basis. as much as hundred dollar oil hurts, if the market becomes convinced oil is range bound that is something you can invest around. you can forecast that. you do start to worry about the impact on consumer spending but if we got to triple digit oil that is when you're really worried about what this will do to the market. jonathan: the crude bulls were right in the end for different reasons. i'm not sure that we had crude in the 90's with china disappointing on growth. tom: you can be right for the wrong reasons. jonathan: it is harder when you get the macro call rights and the market call wrong. equity futures here negative by

0.2%. coming up later, he is bullish on bonds. he is not alone. mike shoemaker says 350 on a 10 year. about a week ago, he said the 10 year was a screaming by -- buy. we will talk aaron rodgers. do you want to fit in a bit of football? stuart: if you are a jets fan and did not expect this to happen, you have not been a jets fan for long. >> then you win anyway. stuart: that means people will have hope for another week and get disappointed again. i have been a jets fan for a long time. jonathan: what is the trade? stuart: we get to keep our first round pick. you have to focus on the narrow silver lining. tom: you mentioned he is out for

the season? lisa: we have no idea. we will find out from the scan. stuart: we know. he is out for the season. jonathan: in football, is the season so short you are not coming back? you have four months to try to recover and turn it around? good to see you. stuart: thanks for the uplifting sports conversation. jonathan: bloomberg's chief washington correspondent. big conversations to be had in d.c. the potential for impeachment. from new york city, this is bloomberg. ♪

♪♪ we're not writers, but we help you shape your financial story. ♪♪ we're not an airline, but our network connects global businesses across nearly 160 markets. ♪♪ we're not a startup, but our innovation labs

use new technologies to help keep your information secure. ♪♪ we're not architects, but we help build stronger communities. ♪♪ we're not just any bank. we are citi. ♪♪ >> i think it is important to be able to have a dialogue with china and with their leaders,

and i think if we can continue to have that dialogue that is probably the best approach to take right now. maybe we can make gains in trade and other areas like cyber and at the same time maintain our differences with regards to our military positions. jonathan: effectively endorsing the position of the president over the weekend, the former secretary of defense speaking on balance of power. welcome to the program. pushing ahead to the iphone 15 release later this afternoon and then cpi just around the corner. this morning, equities shaping up, negative by 0.2%. yields going nowhere. jim mattis is looking for 4% year end, 350 by next year, so

350 is the number. tom: we mentioned the drama screaming by, but there is debate about this. somebody is going to lose money on this. there is as big a debate in the bond market as the equity market. jonathan: even talking about next year, we are still in and around 5%, just sort of maintaining these levels even though many people have said they are not sustainable. tom: people say they are not sustainable, except they were for decades. in the old days, this was normal. is a 7%, a percent mortgage normal? i do not think so. the answer is this is what it used to be like. >> 7% mortgages start normal. that is just the price now.

they share mortgages outstanding by interest rate and origination. this is data from early this year but i think still holds. that is 23% of the market now, 38%. above 6%, only 9% of outstanding mortgages as origination. so the price we are told at the moment is around seven but hardly anyone is paying it. tom: does policy clear this oddity? i do not know. jonathan: i am not sure how it does. tom: in europe and the united kingdom, we do not have this. jonathan: different structure and fixed rate agreements are not this long. tom: a couple years ago, there was a 280 page jewel by cass sun steen called impeachment. for all of us that think we know impeachment but we do not know

impeachment, there was a primer before andrew johnson and the 1860's. annmarie hordern joins us on the 2024 impeachment debate of washington. this is not in the book. the senate and house, the polarity has to be historically unique. is it? annmarie: they are very polarized at the moment, the house and senate, in regards to a number of issues. impeachment inquiry looks to be one of them as well as funding the government. if you look at how the house wants to have appropriation bills tallied and the senate, which has had 12 appropriation bills out of committee, we are looking at a $100 billion difference. it will be difficult at the house and senate are both able

to even pass those appropriation bills. then it goes to a conference. it will be difficult to see how they will end on the same page. the senate wants to spend more than was agreed upon in the debt ceiling while the house is looking to extract more in terms of what they are calling fiscal responsibility tom: civics 101. what this is about is linking a potential shutdown to a potential impeachment discussion or debate. how do those two conflate? annmarie: there is a potential impeachment inquiry we heard speaker mccarthy talk about. he is being pushed by the hard right flank of his party and punch bowl news is saying this week he will discuss this behind closed doors. he is ready to move and give his promise that there will be an impeachment inquiry into president biden's son as well as

the president himself. obviously that would be impeachment. speaker mccarthy is going to say this means the house judiciary can continue the work of jim jordan and getting the biden family's bank records. the issue is does he have the was to do this? there are republicans in modern districts that do not want to take this vote, even though the speaker and individuals say this is just an inquiry. what speaker mccarthy may be doing is angling out this impeachment inquiry to get the hard right, the ones that want to see a government shutdown because they are not happy with the level of fiscal spending, to go along and vote for a continuing resolution to keep the government open after september 30. it is a bit of a carrot and stick approach. lisa: the fact this approach is being floated, just that

indicate the chance of a government shutdown is looking more likely? annmarie: it depends. if you successful, potentially he will get those votes for a continuing resolution and it could garner democratic votes but does he now isolate those votes if he goes for an impeachment inquiry? it is difficult for speaker mccarthy. this does feel like this will be one of the hardest mazes for him to navigate. one representative yesterday put it well. you have an individual, any individual in congress saying i will only vote for this bill or priority if demand is met. so you have some republicans who say they are not going to vote to fund homeland security if maybe secretary mayorkas is not impeached. these are the kind of demands he is dealing with. >> has his leadership and challenged since a number of his

house scares and his ability to wrangle the votes needed to get this through? annmarie: not at the moment, but a growing number of individuals say they will challenge him if he cannot deliver. representative matt gaetz is saying he will vote to have a vote of confidence to make sure that speaker mccarthy is no longer speaker if he does not follow through with an impeachment inquiry, so this is why it is challenging for speaker mccarthy, because he does not have the support of the republicans on the senate side. tom: any president comes back from abroad exhausted. there's going to be a rest period for the president of the united states. what is his first order of work wednesday morning? annmarie: i would imagine he is laser focused on what is happening in detroit, michigan. we do not have an agreement between the uaw, the auto workers union, and the big three

car companies, and that contract ends thursday. that means we could see a strike at one or all three auto companies friday morning. this will be critically challenging for the president. he wants to make sure these auto factories are up. this could impact car production, prices of cars that we have seen recently come down, given the rate of inflation coming down, and could impact the broader economy. at the same time, he has said he wants to be the most pro-labor union president in history. that would make you think he would want to lead -- lean into support of the uaw. this will be a complicated line for the president to walk. as of now, there is no contract. jonathan: down in washington, the latest on uaw, united auto workers making a first move away from this 40% pay demand and

dropping it to 36%. the smallest of moves. that deadline thursday night is for nearly 150,000 u.s. workers. tom: are we going to be there friday at 9:00 p.m.? we should do a special. jonathan: i do not want to come in thursday night. we deal with this friday morning. that makes more sense. your equity market just pulling back. we are negative by 0.3%. ♪ ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

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jonathan: equity markets just off session lows. we are negative here by .25%. big event for the nasdaq later, the launch of the iphone 15 in california later this afternoon. that is the stockmarket story after a decent day of gains. we looked like this in the bond market, yields going nowhere. still stubbornly close to 5% on a two year. the main event for that one a little later this week.

tomorrow morning, cpi in the united states. the latest cpi reading due tomorrow with expectations that month over month prices are rising on higher gas prices. core will hold a 0.2 percent, according to our survey. how we treat those stores will be interesting, particularly if the commodity rally continues. new data in united kingdom shows the highest unemployment rate since 2021 at 4.3%. wage growth is close to 8%, excluding bonuses. close to 8%. stunning numbers. we will be interested to see how these negotiations go for u.k. based companies. tom: it folds into the uaw story. my perception is europe and the united kingdom are different than here. i defer to the governor and bank of england, but the answer is it

is different over there and really matters. jonathan: arm expected to close early. the public offering is oversubscribed by 10 times according to our reporting. chairs -- shares expected to be priced wednesday. trading set to start thursday. >> it shows how different it is when you have a business model that makes sense versus a business model that is more speculative. people want to buy profits going forward. instacart, not so much. the difference between these two points to the discerning features of investors. tom: to me, the whole thing is contrived. they are not selling anything near a majority interest. it is a contrived marketing scheme to bring money in by selling a little bit.

thus you get 8:10's oversubscription. but the answer is i would love to hear from people. the whole modern ipo process is a joke compared to what it used to be. lisa: there are two things here. there is one about the ipo process and another about softbank because it still is less valued than it was not long ago. tom: are they doing service to the shareholders with 8:10's oversubscription. -- with a 10 times oversubscription? jonathan: hello volcano eruption for the first time this year, the

repetition started on sunday, the lava is a safe distance from people. the images, are absolutely stunning. i had the immense privilege.

rates? yeah, i mean, as you say, it's been a misleading start to the

month. and i do think we're likely to disappoint historic september averages. mean september tends to be the largest month of the year. i think 2023 is going to prove to be the exception to that with the street by and large calling for the second lightest september going back all the way to 2015, because i think there are borrowers who are all in yield focused here taking a view that the scales are really tipped to waiting. the reasons for that are somewhat multifaceted. some of this is this notable front loading that we saw in the first quarter of the year. there's also very limited event related financings that are fueling sort of forced issuance into this fall window. so that would be typical of most septembers. we have we have an anemic amount of m&a volumes that are likely to look in this this side of the fourth quarter. and and there's just overarching patience in the face of recent rate moves, issuers have manageable redemptions. they've got diversified funding avenues. so if you think about the

function of primary markets across currencies, as the euro market is open, the yen market is open, the sterling market is open. so issuers are not beholden to a singular market or to a singular currency to manage their financing needs. so it's containing the size that we're seeing somebody like a nestle is a good example of that high quality borrower, well loved by the market, did a billion and a half dollar deal in dollars last week and they followed suit. this week with a with a deal in sterling. so there's an ability, i think, to appeal to multiple funding avenues to solve for size and that's keeping volumes at bay. we're talking about top rated companies. we're not talking about lower rated higher debt level types of companies that have less reliable types of cash flow. from your vantage point, what is the sweat factor in cfos offices for some of these more speculative companies that aren't as profitable, that aren't maybe getting the same kind of access to markets? yeah, i mean, balance sheets are still in a very good spot.

so in fact, the fallen angel volumes that we've seen this year have been a fraction of expectations. so even as we look to the high triple b's that have emerged this week, it's requiring some incremental marketing. so the majority of deals that moved yesterday that had less frequent issuance into the dollar market and or were cuspy or triple b's, did marketing to get investors up to speed prior to coming to market. but i think there's a comfortability with the fact that rising star volumes have been fivefold. what we've seen in terms of fallen angels. so there's a there's an underpinning from a just fundamental balance sheet perspective that's insulating investment grade. megan after the apple roadshow today, after they announce earnings, whatever it is, the end of october mean tim cook picks up the phone and dials one 800 megan are we going to see another apple mega deal? i mean, aren't they just addicted to the issuance of bonds to buy back shares? i'm sure investors would love that. i don't think you can speak to

specific issuance. i think i think the key question we keep fielding is whether or not we're going to see any major reversals in terms of investment themes for names like an apple or high quality tech companies that have part, the guild story is dominating everything in the market is compelled by those underlying yields. tom: the idea that spreads have stayed tight, do you see any give way there? meghan: volatility assented to year low. 119 ismeghan: within sitting die to be tight. the consensus view is for value here, it's hard to be overly bearish given the amount of cash

that is compelled by the opportunity afforded by credit. jonathan: sitting distance to be tight. the consensus there is a bunch f barclays. the cfo is unbelievable when it comes to supply. tom: fifty-year tranches they don't go to austria. they don't put the code. jonathan: high yield spreads are at 370 now. tom: that was a window for equity people, a major bond stock with macon. lisa: how can i be scared about stocks when bonds have no fear? about stocks when bonds have no fear? tom: one of the essays is lawrence mcdonald on his website

he have his the wall of money out there. jonathan: if you're just tuning in, the s&p 500 is down by a .26%. we will be catching up with william dudley. tom: we will speak with dr. dudley on capital. after listening to megan's bond shot, government officials are getting little boisterous. jonathan: with mr. dudley as well, it's so easy to go after people building skyscrapers on park avenue. jonathan: have you seen the traffic on park avenue because

of that? it takes up maybe a quarter of the lane. it takes up maybe a quarter of the lane. we talked about the lack reaper and he's not coming. maybe we have seen the impact on interest rates, it's already come through the economy. tom: eight months ago, nine months ago they were restrictive with all these other global events. jonathan: the former fed president bill dudley is up next. this is bloomberg. ♪

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with silicon valley bank and first republic, this must exposure and not that and that would solve some of these problems right there. it was never a capital problem. that was jamie dimon slamming the regulators bill dudley, bloomberg opinion there is a point of diminishing returns. capital is crucial but more capital is not the right solution for every problem. opiniontom: he was definitive .

swiss bancorp was taken out they are both gone from fortress, switzerland which had high capital requirements. gone fromdr. dudley, he writesr bloomberg opinion thank you so much for this important in the calculus of diminishing returns how efficacious is a lift and capital requirements of our big fancy banks? dr. dudley: it's a problem that were trying to solve. requirements of our big fancy banks? or an accounting problem with bank management? i think the problem with swiss bank and capital, they were

running towards the big banks, none of the big banks -- raised capital banks and that will push back into the banking centers. -- sectors. tom: should we raise the capital requirements of entrepreneurial upstart banks with a strategic gimmick to build growth? dr. dudley: i think we want to be very close that are using novel approaches, they need this provision to ground them. they forced the bank to make

those changes. better supervision, but a rules on their interest rate risk taking, that could go a long way , that could go a long way to raising the capital requirements. lisa: you talk about the importance of nonbanking importance of nonbanking institutions and really increase their share by extending the capacity of big banks. should regulators be going down to the lowest common denominator or put and i denominator or put and i regulate on smaller banks? dr. dudley: i think they should concentrate on the help of the system. to make them safer, what was the

problem and what is the right solution to solve the problem? more capital would solve the problems that we saw this year. lisa: can we say can we say thag

forward this will not be some kind of bigger financial risks that could torpedo the goldilocks scenario? we're waiting for the fed to make a decision, as the economy slows, it will put pressure on wages and inflation. how restrictive will the financial policy end up being? they could either do more keep rates higher for longer. jonathan: you wrote about this early in the summer, i don't think it was picked up on nearly enough. this quote from your column and

i have this quote ready for you. there is considerable evidence that the length is shortened and the economy has taken all of the impact of the fed's action. where do you see the evidence currently? dr. dudley: i think the market looks like is bottomed out. the other thing that's important to know, know, the financial conditions happened last year, not this year. jonathan: i remember the conference that you and i did together in the summer 21 around june and we were talking about him inflation may be stickier than people think and you

throughout a number that rates have to go to 5% and that sounded absurd. when we were at 2.57 and where all the way through to five. what do you think sufficiently restrictive will be? dr. dudley: i think they hold rates here may one more rate hike. i think where the market may be off base is that it will last until 2024. i think the fed will raise rates higher than people think. jonathan: bill dudley, thank you. former new york fed president and bloomberg opinion correspondent. interesting viewpoint on how high the fed will have to go and how long they want to stay at these levels?

tom: you see it with lisa's wonderful patients with this fed speaker that fed speaker, what dimon is the conflation of regulation versus supervision wishes go out there and look at what they are doing. this conflating of supervision and regulation. we failed and jamie dimon is correct, we failed. jonathan: you can speak about it with bob michelle.

tom: his mercy side better than liverpool? jonathan: man city? tom: i'm learning. jonathan: bob michele joins us next. tom: he has been an everton fan since whenever? jonathan: where did that come from? tom: i don't know. jonathan: i will get in touch

and try to work that out. equities are lower here by .31%. this is bloomberg.

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>> i do think the recession

threat remains out there. >> we have a long way to go before we can get out of this inflation cycle. we need to be careful about reading into a single data point. >> this is bloomberg we have a long tom keene, jonathan ferro and lisa abramowicz. tom: good morning everyone, on radio and television we begin the week with apple. in this hour, complete curbside coveragesurveillance with and ee there. it great, he will join us about apple's foolishness. this cleared this out of the way. it is a product launch. jonathan: apple captures every big story out there from my perspective. the tension between u.s. and china in the competition you're getting from huawei and cost

pressure because the consumer is weaker. can i cough up over selling at apple? tom: are we going to learn about those distractions today? i don't think so. jonathan: what we want to know, are you moving more into india and away from china? how much can you sell to that country? and huawei has the capacity at scale in the world's second-largest economy? tom: while way, they are looking at that carefully. the reality is that there are a $3 trillion company. lisa: if you're looking at this idea about what is driving

momentum in u.s. equity it has been on the heels of products in the tech world. that is why this is more important for signaling the bottom line for apple but going forward, artificial intelligence in the future of computers. tom: will be having different conversations, we do bonds in this half hour. i have to go to an equity moment. bear in stuart kaiser enthusiastically reaffirming enthusiasm into 2024. jonathan: what stuart kaiser is city had to say, was good news.

very clear about that. this rally has been built on good news and if things start to sour, things to start siring on equities as well. the real yield of 1.9%. 10 yeardo you buy against the c? bob: the product launch of the year is not chatgpt is the bond market, the repricing of bonds across the system and we are seeing money come in. even though there is a soft

landing a concern about inflation and the fed could keep rising rates indefinitely, the highest from october have held pretty well in the long end of the curve, curve, five, 10, 30. it is not just me taking advantage of the bond market, we have bonds debt and they are putting ladders of maturities in place. they are buying bonds up to 10

years every 6-9 months. they just want to get into the bond market before the yields disappear. institutions, whether they are insurance or pension funds, they are looking at really liabilities -- reliabilities deflated and they are looking into the bond market looking and for total returns. we haven't seen that since 2006, 2007. jonathan: the only sentence i heard us before yields disappear. what do you think is behind that? bob: this reminds me a lot of the second half of 2021 when yields were ridiculously low, the fed was talking about transitory. the market bought it. we are looking at inflation going up, inflation continuing

to accelerate. we are looking at inflation coming down a lot in the fed is talking about leaving rates where they are indefinitely, higher for longer. i want to see the summary of economic projections next wednesday and the infamous dot plot. they have 100 basis points of rate points cut for last year from the last stop a lot and they have inflation coming down. they are acknowledging if they keep rates where they are in inflation comes down than policy rates become progressively tighter and the economy may not be able to withstand that. i think that what is keeping rates where they are is the market is believing the fed rating. jonathan: than policy rates become progressively clearly they won't be cutting from a week till

tomorrow. whatwhat do you think will go io those cut so when you think in yields your thinking about yields in 2006, 2007, are you anticipating bad things? bob: at the start of this year we thought about a recession at the end of the year and then we have the regional banking crisis and we thought that will put recession forward so they should be cutting by september and i think what we lucked out and probably got wrong was the backstop that the central banks, the fed put in place. the big term funding program and we like to -- created more liquidity and backstop the system. the regional banking crisis has not gone away. i wish you had asked bill dudley

when he was patting himself in the back that this is in the rearview mirror? look at the bank firm funding program? it has quietly increased in size for nine consecutive weeks to 108 billion. the regional banks are not working down, they are barring at 5.5%. that is telling us that they still need cash available to meet outflows. there are still things slowing down growth and pressure is coming down. for the fed to pause you need to someplace and an inflation to come down to level set comfortable. there are still things slowing downi think tomorrow we will gee third consecutive core cpi print out .2. that's enough for them to pause with the disinflation we are seeing. for them to cut rates they will have to see unemployment go up.

it is possible they might tip the economy into recession first before they start cutting rates which would be something new for them. it would be like the ecb. lisa: how does this cohere with the 3% yield curve, a flight yield curve in the near future? by the end of this year or next year if you have a fed that is being patient and not willing to cut and economic data coming in hotter than expected? bob: this is the fed their promises transitory and then change their minds and started hiking rates. we think we will see the same thing this time. they will tell us they will keep rates higher for longer until inflation is that their target. but the magnitude of the slow down across the board tells us we will keep recession until the year ended that's when they'll

be cutting rates. i am still comfortable we will see 3% across occur. jonathan: you think i curled for longer is a bad call or that's what they want to signal apparently? bob: call or that's what they want to signal apparently? bob: i think that's what they have to signal because they have already been once on inflation and they can't be wrong again. they are telling us that they are prioritizing inflation overgrowth and that me -- over growth and they're willing to make the economy a casualty. jonathan: do you believe that they value inflation overgrowth? bob: i think the consumer is incredibly stretched. when you look at the beige book you see signs of that all over the place. they are talking about the last bit of spending on travel and consumers trying to maintain their level of spending because

savings of run out by putting stuff and borrowing which is the hard way to finance yourself. things will slow down pretty quickly. we look at news coming out of truist where they are meeting cost pressures by laying people off. the labor market doesn't look as good as robust. jonathan: let's dig into that and about five minutes time. tom: the data flow that were seeing, i've got a couple more questions for bob michele. we are completely data dependent starting tomorrow. robust. jonathan: equity futures are here negative by a 3%. we will have a second round with

bob michele. tom: tom will go to for of his eight questions. jonathan: do you have one about liverpool as well? tom: i adores solly, he goes right for the that. he's from liverpool but there is this option he could go to saudi arabia. jonathan: that window is closed. but that threat comes back later this year. bob: i think it does. i think saudi could be appealing to him and liverpool but they have a peek team and a lot of scores. they look very lively upfront. jonathan: are you comfortable with him leaning the attack? bob: they have more than just

him. jonathan: we will have another round of conversation with bob michele from jp morgan. equity futures are down by .3%. apple is in the crosshairs from. equity futures are down by .3%. apple is in the crosshairs of u.s./china tension. the weight on tim from jp morga. equity futures are down by .3%. apple is in the crosshairs of u.s./china tension. the weight on tim cook's shoulders. the need for this iphone 15 successes never been so needed. that will be coming up in about 30 minutes time. from new york, this is bloomberg. ♪ ♪

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>> we are moving away from a recession and the early part of the year, a recession is very much in the cards and in fact, if it were in the play out we should start seeing a moderation and then sells love. jonathan: brent crude $90 and about 60 students, $91.50 is the high for the year. where we are is 91 .45. global oil market is facing a supply shortage of more than 3 million barrels a day next quarter. the biggest deficit and more than a decade of saudi arabia as they extend production cuts a

little higher off that headline. tom: he set up the micro economic case of supply and demand. jonathan: headline inflation will speak to the story, high gas prices, how much will the fed pay for this in a week from tomorrow? tom: we will have to look at the aggregate data. lisa has been onlisa has been oe answer is oil and a gallon of gas is a political instrument in america. lisa: as oil goes higher it influences prices in other areas and it gives the appearance of a

inflationinflation -- of inflato does the fed use that going forward? tom:tom: the bottom line is, ifm at the jackson hole economic conferences nothing to get to the suburban. that is the way the rest of america is. they travel a lot, there is all the is to it. jonathan: you see that with u

has never lived with this rate structure, how do you address a whole new world after all? bob: marcus cofer cycles and they can be very long, probably the last 15-20 years were distorted years. they were the years that baby boomers overleveraged the property market. we think we are going back to an environment that is more normal and there is a demand for capital, is productive and there will be a cost for capital again. you don't get their all at once. 525 basis point hike is a shock

to the system and will slow things down and the next move coming out of the fed will to be cut rates. we think we go back to 2.5%, 3% and maybe they have to go to 6% and putting in the mirror image of what we saw in the late 80's and 90's with falling rates you may now see rising rents. central banks don't always bail you out. lisa: there's a lack of clarity of how central banks understand inflation. they take a look at core and that move sentiment and they go after that core and that move sentiment and they go after that. how much do higher oil prices play into the risk that the fed remains higher for longer? bob: there used to be a wonderful chart every time oil

prices went up that oil shocks create recessions and it was another one of these 100% perfect predictors and we are getting central banks don't alwl you out. lisa: another oil shock time. we are talking about business and households having to spend on energy and time when their real incomes are lower. they will have to cut back somewhere else. i think it's another one of these things i is a warning that the recession may be more present than the market things. lisa: we are seeing prices normally, they are not going as high as we've seen but they are the highest since last year. what is your tipping point for when it's prohibitive of growth? bob: you have to look at the cost of production and the cost

of getting a barrel out of the ground and where we are now and what we are seeing is that opec is telling the cost of getting a barrel out of the ground and where we are now and what we are seeing is that opec is telling us, maybe demand us and quiet there but they are not willing to live with much lower oil prices. the cost of getting a barrel out of the if they can't get demand they will meet that with pricing. we see how high it goes but we see it as a yellow warning fly. i don't think it helps the economy is another thing that squeezes a stress consumer. tom: at what level above 2% does inflation begin to impinge on the system? bob: coming off several years of infinite free money we are seeing it right now. we are seeing it in the housing market. we are seeing in the cost of funding credit card purchases. businesses front end loaded their prior weekend out there

addressing other class ventures and they're not doing it by borrowing more and observing -- absorbing the cost pressure but they are cutting costs. i don't think long and variable lags -- i think the next 12 months will be painful. lisa: what could they say that i have them change your view? bob: i would have to syria acceleration of core inflation and that would tell me we are in a different regime. maybe the x, y, z is large enough that it is striving in economy that is going to a new high in central banks have to come in and really dial down the desire of the consumer to spend. but right now, we don't see that. jonathan: are you googling the

x, y, c generation? lisa: is gen x, gen y, gen c. z. bob: are you googling if we go e financial crisis gen y was 17 years old. jonathan: the judge showed inspiring spirit overcoming a setback that would have derailed

other derailed other teams. we will remember this when for a long time. that sounds very official, from hammond. tom: his seats are unbelievable. jonathan: coming up on the open, we will speak with ed ludlow, from new york, this is bloomberg. ♪ ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com, booking.

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tom: how do you listen to what we do? we will take a's in the modern digital world, what do you do after the show? thank you for watching. the first thing to do is read the brammo letter. brammo letter. lisa: if you miss the interviews

i just pull together the snippets, but they speak to each other which is what i enjoy. people weaved together but they is narrative. but they is narrative. tom: it goes on for pages and pages and on digital bloomberg, but per our conversation. bob michele there was brilliant. without a mind, with international economics expert michael mckee. cpi is a big deal and i get it, but a day later at the retail sales. pieces together, inflation report and consumer report. mike: consumer report is impacted by the inflation data. as more of the trend people want

to say say -- see and i'm talkig about the fed. at this point they are expecting a reasonably good month for the month of august with retail sales up a little bit. not going forward, that is the question. what happens will be get into september, october, november? some of it will be determined by cpi prices. oil prices are going up and they will push up gasoline prices. the interesting thing about that we can wring our hands about the but there's not much we can do about it. lisa: it would great to get your sense of how the fed views energy prices given the fact that it is inflationary? the fed has moved money from discretionary spending.

mike: they tried to be accommodating lower interest rates to give people more spending power as gasoline prices went up and we see how that worked. they will not do that again. part of the question when we get the cpi tomorrow, how much does headline matters to people versus core because the court is not expected to have gone up any faster. .2% and falling to the 4.3% which would be good news in the fed will be looking more closely at core but after a while, if energy prices go up it will feed into the core. lisa: how many months do you have to see or for the fed will case? mike: they will know it when

they see it. increases will put more pressure for them to raise rates but it will be interesting to see what the s&p in the summary of the dot plots show. do they keep a rate increase in their to keep the markets from thinking they're done. tom: we will get that headline data tomorrow at 8:30, and core. chief economist of nationwide mutual insurance, when they talk about the dallas -- and which inflation series do you follow to get a feel for what america

is feeling from inflation? kathy: good morning tom. mike's comment was noteworthy oil prices are rising again up -- and driving up the prices of gasoline a. the consumer could save that energy is rising higher with the does it mean that inflation is moving out but it could contribute to inflation expectation. that is a worry from the federal reserve. the super core inflation with core services, that has started to roll over. but if you want to boil it down

it's really the court in cpa metrics and no one knows. tom: with a dual mandate fed and i have three annualized reports of unemployment are coming out nicely. kathy: we still have a very strong labor market but it seems to be cooling and it seems that the fed is getting us right here. they knew that some of that demanded froth, time will tell how this plays out. when you see the wage growth numbers cooling. i think the odds for a soft landing have gone up. we are more cautious we think of

recession for four will be mild versus moderate. inflation does seem to be moving downward. more quickly than we thought. lisa: we heard yesterday that we don't know yet we are holding our breath we will see a decline in employee momentum is a softening or something protracted? how are you looking at this? kathy: we definitely time, the research time, the research, the labor participation rate went up. we are back over the precolored levels. time,job growth could not takee

without. it is still not a weak labor market. we think the fed will hold rates will hold study. at the same time, if you can inflation coming down in a real terms growth is higher because of that. lisa: there's this lack of clarity around a structural shift in the labor market. we talked about this a few months, they are looking for workers so you had to pay up in order to get anyone through the door. we just heard from ups talking about how the increase in wages will impede some of their profitability but going forward, this is the norm for them. how to wages she your feelingsn

the john mica? kathy: that is the risk with the wage growth and inflation is talked about. energy prices going down beckoning for is service prices -- we still think the profit margins are a bit squeezed but it will not be quite as large though i thought. tom: can you explain the complexity of several labor picture? the plumbing of how we look at

the labor economy. there is a similar study to what you did 10, 20 years ago or do you have to have a whole new outlook on labor dynamics on america because is a new america? kathy: you do look at it differently now because we have a demographic change in america with aging in our society with baby boomers looking to retire. that is causing a labor shortage. they are leaving the job for us. what we don't know is what happens with ai? does that replace the shortage of workers, it's a very

different dynamic. the demand for work relative to unemployment is still very high. lisa: are you going to be watching the apple launch, at 1:00 p.m.. it takes a macroeconomic knowledge to understand. kathy: my son really likes these watches so i'll be watching videos on youtube. in general, will be are seeing really makes the top 10 stocks,

tom: thank you so much for the breach on the economic economy. i love talking toi love talkingf the knowledge and granularity underneath the headline data. jonathan: i also love that her son makes her watch up a watches and get excited about the courage she needed to buy. tom: we have dynamism and they

don't and that makes america different. lisa: coming up we will take a look on what to expect from this typical trend. we have dynamism and they this is the big deal. tom: i always try to not be a fan boy even though have a million apple things at home. what is different now is apple is cool with the kids. for years, you had the introit and that his change. i did not expect that. it is not while way, it is samsung. apple because of the ecosystem is cooling.

tom: we have so many cords for the dogs to chew on the cords and nobody cares. because we have so many more to replace them. tom: coming up, the most anticipated conversation of the day. stay with us, must watch, muscle us in. muscle us in.

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tech. there is the structural growth hard to get away from tech. there is the structural growth story. we are in an economy that is slowing at a more gradual pace than we expected. the issue with tech is how far it has risen this year. lisa: we heard from him earlier today as he talked about why he has the bear call. ahead of this apple event, right now, before we get to that i wanted to talk about oil. we are looking at $91.51 with rent after this announcement there will be a 3 million barrels a day shortfall and total production. tom: a 90 print on american oil

will be something. lisa: i wanted to take a look at some of the other stocks and focus on the tech world. oracle coming out the reporting earnings that were disappointing , particularly their cloud forecasts. there had been high hopes that you could explain a significant drop. tessa shares, they gained 10% on the heels of recommendation by morgan stanley to buy the stock that it was undervalued because of some of its newer technology. and then then apples -- when we talked about the market back really points to why we care. this is significant part of the market.

it is a significant part of economic optimism and it shows help little disappointment or side per sizes -- surprises. tom: i think a lot of people don't understand, apple is not releasing -- a growth. are we done with your fan boy market movers? this is really cool, ed ludlow with bloomberg technology. technologically he will look at anything. behind him, it looks like an ice rink but it's not his seat architecture of stephen partners

and it theater in the new apple campus that they have in cupertino. in what way will mr. jobs be at this waterway this afternoon? ed: it's a pivotal meaning for apple they cupertino knows what is doing. they are at the center of all of the headlines because of their relationship with china. this is not a company that has grown in the triple digits. in china, how policy action by the chinese government to tamp

down on the use of iphones with the iphone generation coming today. tom: don't lettom: don't let thf other opinions star not your own video voice. what is the end of voice of tim cook right now? ad: the iphone is everything. it generated over 2 billion last year in the criticism is on the strategy and reserving the technica;. they are raising asp's and hope that that resonates into key

markets. we know volume growth is not there. they have ha multiple closer with challenges. look at the market share data? apples been able to grow its market share even though out the markets of decline. they have a hiring process for a 17, titanium versus stainless steel. lisa: typically, when they say one more thing,. the exciting thing people will cling onto, how much are the

expectations baked into today's event? ed: we know a lot of people are coming today because of eric's reporting. this is just another thing that people talk about in the u.s. vc because as mandated by the union. it will settle debates that there is no greater challenge aid to the glomar consumer --

tim cook and co. have shown absolute restraint in talking about generative ai tools. the line from apple has they have had long-standing relationship with ai and software offerings. that will be part of today's presentation i understand. tom: one final question because i know you have to get to this set up to get your apple merge for this afternoon. the great debate with our guests is will the telephone, t-mobile and verizon come to the rescue? i am serious now, with your serious reporting, are they going to do it again or will they buy fancy iphones? ed: the support that apple is

expecting from carriers. they are incentivizing the consumer because the strategy for apple is to offer expensive products but they have to make it more acceptable to the broader market and how much pain they are willing to take to drive volume is that the discretion and this one that is talked about. tom: between mike gurman and ed ludlow, it is world-class of bloomberg. look at bloomberg technology this afternoon for our complete coverage. lisa: don't call him a fan boy? tom: i will. that fan duet will be with you with complete coverage of cupertino. somebody said today, is not a discretionary item anymore.

it is a staple so that would be the right train? lisa: an iphone is in the staple may be an iphone eight, for a kid. the idea of not having to search for all of the attachments in the right cords. tom: that little attachment think always breaks. i agree with you, we don't like the europeans to tell us what to do but the answertom: that littt think always breaks. is, i agree with you that we need a more streamlined ubs, and accord. this market is terrible. we are going south.

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jonathan: morning. equities a little bit softer. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: five from new york. apple set to unveil been slated iphone.