jon: welcome to bloomberg markets. matt: let's get a quick check and where the markets stand this hour. we've had some pretty fascinating levels today. the s&p 500 is only up one quarter of 1%. a little bit risk on. it's a monday and it's got that field. the u.s. 10 year yield is interesting. this morning we had 435. that is tied with the highest yield on the 10 year treasury

since 2007. pushing those upper bounds in the bloomberg dollar index is down. still feeling pretty high a nearest 20 year highs. nymex crude right now is only up $.10. i have seen and 92 print for the day on nymex. i've seen 95 on brent so we are looking at high prices for oil as well. jon: let's also take a look at individual movers and the equity world. nikola has news every new ceo, staying with the technology theme. arm holdings are down about 9%.

lyft shares are down with an sec settlement dating a day -- dating back to a stock transaction. we had to take a look at what's happening from general motors and stellantis shares as we track the story from the uaw strike. a lot of the analysts on wall street are trying to piece together what the financial impact will be. it depends how long things go and we are seeing all their automaker shares in the red. matt: uaw president sean fain says his union workers deserve more from their employers. here is how he put it this week. >> we are prepared to do whatever we had to do so the membership is reverie dishes ready and were fed up with

falling behind. it's been decades of falling behind and especially this past decade in the wealthiest ties in the history of these companies. these companies have made a quarter of a trillion dollars in the last 10 years. $21 billion in the last six months alone and conditions of going backwards for the workers. jon: there is the view from the head of the uaw. we are covering every twist and turn. where do things stand right now? >> they are still fumbling around in the latest proposal from stellantis took the pay increase offer up to 21%. gm and ford are a 20% and the workers are 36% so there is a wide divide. matt: have they got back to the levels they were pre-financial crisis?

they gave up a lot. are they going to get that back even with the 20% increase? >> even before the bankruptcies of gm and chrysler in 2009, autoworker wages, real wages have been in decline for a couple of decades. it's going to take quite a bit to clawback all of that. i'm not sure it can be done one negotiation. sean fain thinks it can be. jon: speaking of sean fain, we are getting lessons every day in the approach he is taking with his team and with his social media. >> it's a completely different approach. he stood up to the chairman of ford and the great grandson of henry ford when he showed up to negotiate and offer what the company says with her -- was their best offer ever and shawn

wasn't there. matt: what about the request for pension benefits? they were getting those before they gave them up to help the automakers operate more sustainably and now they are making record profits. then they asked for a four day work week. does that seem silly? >> those are two of the biggest asks they had on the table. they started backing off the four day work week but in exchange, they want more paid time off. the pension point, they are trying to make a point there is still a group of people in traditional venues that are ceos. matt: $30 million and pensions, thank you so much. the strike is in his fourth day. i caught up with the ceo of

mercedes about the strike and its impact on his business. >> we don't expect any major impact on our business and were cities bends is doing business in more than 150 countries. we tried to make sure we are competitive and we are an attractive employer but at the same time, we are in transformation and the automotive industry is getting more competitive. whatever precious we have on cost will have to be made upon productivity. we had to be very mindful to keep the gain on productivity up. if we look at mercedes-benz around the world and primarily in germany where we have most of our operations, we are investing emily into the new technologies and the lion share of their capital allegation goes into electrification and digitalization and we are creating new jobs there. on the powertrain side of things, the net net at the end of this transition which is a 10

year affair is going to be less jobs on powertrain and it's about the same on vehicle assemblies but we will use demography over this 10 year plus period to make sure we can get into vision where we do this in a sensible way. jon: let's bring in the vice president and ceo and director public policy for the anderson economic roof. that firm's stats on the economic impact from this labor disruption have been getting a lot of attention. great to have you with us. as people try to figure out the economic impact for every additional day of strike action, there are different components that go into that. can you walk us through how the math breaks down? >> thanks for having me. last month, it seemed unlikely a strike would occur against the detroit three. our analysis properly took into

consideration the magnitude of impact and the economy of the whole if that were to happen. while we look at these targeted strikes against gm ford and stellantis, we consider a couple of important categories. the first is the lost wages to the workers on strike. the loss of their economic spending power and their local economies and it's going out to eat and buying kids new shoes. the workers are cutting back on the stuff and we know they voted to go on strike but they didn't necessarily vote to lose a month and a half of wages. we looked hypothetically at a 10 day strike and we calculated that the losses could exceed $5 billion in 10 days with all

three. we talk about the lost wages there in the next category we look at is losses to the oem's less the wages they are not paying and we look at very conservative industry multipliers, losses to dealers and consumers and that's where we get that total of potentially over 5 billion in 10 days. jon: what will you be monitoring to determine whether this gets to 10 days and whether we go beyond 10 days? a consultant was cited who said if you get to halloween and people are still striking, there will probably be a growing conversation among the workers about the need to get back to work. what will you be watching closely on size they give you an update on how things are playing out? >> to me, inventory is a major important indicator to be looking at. inventory varies greatly among

specific makes or models and among manufacturers. if we look at a rough average, we are hovering at about 55 days inventory. that's different from different data sources but this is about 2 /5 of 2019. we have been attempting to estimate loss of units. we are looking at a little under 10,000 units per location for a 10 day strike with locations that are currently on strike. when we talk about this inventory and how it affects consumer and dealer losses, i mentioned the 55 day mark but we have dealers saying prices may increase after 30 days. that's where you see changes in the automotive industry and changes to consumer behavior and changes to insurance rates where those consumers get on those vehicles. when we estimate losses of

units, there are three ways you can consider that loss. what is a substitution, consumer goes down the street and buys a foreign brand because they don't have certainty on their domestic vehicle purchase. the other is a delay, there is always hope the domestic brands can work overtime after a strike. the workers can earn more and make up for lost time and a third is a complete loss if a consumer completely loses confidence in the opportunity for a short-term vehicle purchase and they delay that vehicle purchase. matt: how hard is it to do this kind of research when the automakers are hinting that are hitting individual lines. they've hit bronco, colorado and wrangell -- and wrangler. it's difficult if they to ship instead they go to the f-150's. it's a very different kind of strike. >> certainly, these strikes are

incredibly targeted two-hit pain points. maybe not come out showing all the cards and hitting the absolute most painful points. these production facilities and assembly facilities that are affected are some of the higher producing of popular brands. it could be a long wait and this as to the uncertainty and possibly removes purchases. some of what's happening is exactly what we expected last week. i was skeptical these targeted strikes could allow for the opportunity for fewer losses in other areas and the additional layoffs we see are exactly what i expected. oems are keen to cut costs at any facility that may not be able to operate efficiently during the strikes so we see those multiplier effects in the automotive industry in the production and assembly process.

matt: you may have heard i asked competitors, other foreign brands how this affects their u.s. production in terms of supply chain difficulties and in terms of the wages they pay their own workers. if union workers are already getting more and they get a 25% increase, you can see the foreign workers going from those plans to detroit. how much of a difference will it make to those who aren't directly affected by the strike? >> i think the strike is like the firm automaker with an opportunity to sell their vehicles possibly at a slightly higher price. i was watching that interview and they hit the nail on the head. the contract negotiations here have to and in a very sustainable result.

we cannot go back to what we saw in 2007 and 2008 that resulted in the bankruptcies. we do not want to push our domestic automakers to invest even more heavily in workforce reduction advancements because they cannot afford to employ workers. uaw workers deserve a fair contract and hopefully, that can happen in a way that creates stability and balance within the u.s. automotive industry. as we've seen, the european automotive industry with a smaller industry in smaller number of workers to work with, they have a leg up in their ability to measure against what happens here. matt: great to have you on the program and thank you for joining us.

coming up, u.s. airline stocks are under pressure today as well because brent crude hit $95 per barrel. they are the focus in our stock of the our next. this is bloomberg. ♪ ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

jon: this is bloomberg markets. time for our stock of the hour. we've been watching the airline stocks today like jetblue under pressure. it's at its lowest level in about a decade. the industry is feeling jitters from investors from a big summer of travel investors getting worried about bottom-line performance with these higher

jet fuel prices and rising labor costs whether airlines can raise their fares to offset those expenses. matt: let's talk about that with one of the best voices in the industry, george ferguson who covers airlines here at bloomberg intelligence. we are seeing a big jump in the crude prices and that affects the jet fuel market. as you would expect, those prices are following. what does it look like to you? >> you framed it pretty well in the last session. fuel prices have popped quickly, 50% since last quarter. i think airlines had dialed in the right level of fares to manage the higher labor costs. fuel has been a surprise that knocked the heck out of earnings estimates for 3q. it felt like there would not be enough

strength of demand in two q to keep fares up. we had seen domestic fares starting to slip. the challenge here is with domestic fares already at near records, when you add higher fuel costs, it's impossible for the airlines to get the right fare increases to manage the increased cost. it looks like profitability is probably sliding because of the higher costs and weaker demand. jon: what with the companies possibly consider they don't want to accept weaker bottom-line performance and present that to wall street? are there other things they might be thinking about? >> this is the real challenge in this business, when to buy an air plying, you want to dish an airplane, you want to flight and what will happen is that capacity needs to be brought out of the system so you need to keep fares higher.

i don't see that happening now. maybe demand has softened a bit but i think they will try to fight over market share and as you do that, the fares slip further but what needs to happen is capacity needs to commit of the market. jon: we will see how it plays out, grit -- great to get your perspective. we will continue to track the airline stocks and we are tracking the auto sector and from the maserati perspective, the ceo giving his perspective as parent company stellantis deals with the auto strike. ♪ quick to pin the blame for the strike on president biden and democrats, former vice president mike pence did that when speaking on friday to bloomberg. >> the heavy-handed effort with their green new deal use taxpayer dollars to drive these companies away from their

traditional manufacturing of so many uaw manufactures. i think that's the problem today. ♪ sweat isn't sweet. it's salty. lmnt. more electrolytes. zero sugar. you feel the difference when you get it right.

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matt: this is bloomberg markets. the ceo of maserati says is still unclear what the long-term ramifications of the current auto strike which is what stellantis is involved in, will ultimately be for all of the other automakers out there. maserati is produced solely in the country of italy so not directly subject to uaw strikes. i asked him nonetheless about his thoughts as well as the state of the business. >> clearly, we are a global brand. north america is an important market so we look forward to the resolution of this.

the longer term impact will be on everybody. so far, we have not been impacted but the long-term ripple effects could be far-reaching for everybody. when you work in luxury, the focus is not on volume if you want to be healthy and delivering to customer needs, you have to focus on profit. and quality of course. these are the two fundamental elements of their plan. without quality, you don't have luxury. luxury brands in other fields are normally like 100 years old and they have a high quality plan. over time, you become luxury because you have steady delivery. you need to have added value recognized by the customer in pricing. we put a lot of effort in that and are finding our business model.

we now have a 9.2% aui margin and our goal is there is no reason why we shouldn't be at 15% first which is benchmark and above. matt: he was talking about a new slate of maserati products. they have this supercar out, the mc20 and the neptune v-6 engine. they also have more affordable products but they are still expensive. they also have a midsized suv. are they -- are there going to be impacts on this italian brand from the u.s. strikes? jon: that's a great question. it was a great conversation we will continue to track that part

of the sector and what's happening in detroit and beyond with the strike right now. this is bloomberg. ♪ ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™. fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company. ¡se fue la luz!

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