>> u.s. growth both accelerating and surprising to the upside is something that will change. >> the u.s. economy near term will probably be slowing down. >> when i look at the bond market, it's pricing to slow down and when i look at the equity market, it's not. >> what people have been doing all year is confusing bonds but they like them. >> we are still in the annoyance phase of inflation. i think that will persist. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, everyone.

we are on radio and television ,fx tuesday and we're looking at markets. teachers are -25 and or substantially lower than 24 hours ago, dow futures -160 in the vix was in 18 level. away from the markets, foreign-exchange is a litmus paper for the system this morning. lisa: the dollar is front and center and has been but giving -- but getting back a little bit of it. when we talk about dysfunction in washington, d.c. is the dollar. the currency of the nation, are we at a breaking point? tom: it's a theme we will go through today and lisa has an edge on what i'm doing. each pair and the triangulation of foreign-exchange speaks to what we see in the bond market. we will do it in the data check today. lisa: you buried the lead. we had an argument about much gloom as warranted, something that always happens in this time of year.

it feels different to me. i think yield space feels difference -- different because there is a backdrop of what it means if you have rates that can keep climbing potentially to 7% in the face of strength? does that lead to weakness in stocks? tom: jamie dimon looks out at the least likely outcome but it's a gloomy outcome of much higher interest rates. jonathan ferro is on assignment. in 7:00 hour, he will be talking with the former prime minister of the united king, gordon brown. his book is how we extract ourselves from these post-covid challenges. lisa: especially at a time when we are readjusting to rates. can we get to a new rate regime

of higher rates without something breaking and people keep asking that question and the answer is yes and now people are saying if it keeps climbing from here, we still so confident that nothing will break? tom: let's go to the bond market. i want to know if i see a real yield out to 2.17%, if i see the 400 51 on the 10 year yield, what do spreads tell us? our corporate spreads giving away? lisa: a little bit, particularly in the risky sphere. the premium is increasing that investors are charging over benchmark rates. when do risk assets fully adapt to this idea of higher yields? do rates really matter for stocks? if so, it's not priced in this has basically been the theory

when yesterday, seven magnificent tech stocks did not up rhonda in the face of the highest yields -- did not respond in the face of the highest yields in a long time. tom: today, we lean on foreign-exchange. futures at -23 and the vix 17.59. we were higher earlier on the two-year and oil doesn't give me much. 92 on brent and foreign-exchange, the yen is $1.49. that blended major trading partners. give me that chart if you would. the bloomberg dollar index goes back to the financial crisis in 2007. this has been the great missed call in the street.

everyone is looking for weaker dollar but it's up 5.7% since mid july and then back, back, back. lisa: is the data for today. it includes a lot of information about the housing market which people would say is broken. we get some u.s. price index data throughout the morning. this will come out at 9:45 a.m., the s&p case schiller index. it has reached a high of pricing. we are seeing declines that we haven't seen going back to 2012 and we get consumer confidence data in the was treasury auctioning off two-year notes, 48 billion of those at 1:00 p.m. president biden will join the picket line for uaw workers in detroit. he has gotten the support of them the day before the former president trump goes to the same

area to recruit the same boats. at 1:30 p.m. eastern, the fed governor michelle bowman will speak after we heard from neel kashkari who expects one more hike by the end of the year. there is this bias where higher for longer but maybe that the risk is still to the upside in terms of how high rates have to go. tom: we will talk about that a bit later this morning. russell costeridge is with blackrock. the bears are out in force and we are not down that much in the equity market but bonds are moving. what are you doing? >> good morning. we are kind of holding steady. i think there were a couple of things going on. you have seasonal weakness. we have it every year this time of year and so far it's about

what you'd expect but as lisa mentioned, there are some other issues. two things you have to be aware of. we are back in two an environment like 2022 at least temporarily where you are punished for high volatility, low-quality assets. the market is rewarding consistency. if you are a small-cap stock, you're getting penalized. focus on going up in quality. clearly we are in an environment for much of the last two years were bonds of not work as a hedge. what has worked is the dollar. in an environment where people are scared of the fed, scared of what they will do -- tom: did i lose russ? lisa: as you talk about being more cautious, what that means in an era where bonds are not the cautious that. >> i think it means you have to think about where else in your portfolio you will get that it's.

for 20 years, bonds were remarkably good. you got incredible risk-adjusted return to portfolio and we haven't been in that environment for at least two years. in an environment where the fed is the closest, the factor that's most disrupting markets, the dollar can be an effective hedge because is negatively correlated with stocks. the other thing to think about is what's the volatility in your pro for leo and look for quality, look for companies that are generating consistent revenue and consistent margins. the magnificent seven did well yesterday despite the fact that rates were surging. part of the reason is that most of the names in that group generate tremendous cash flow. they are not the ones most at risk. the ones most at risk of the early growth names for their cash flows 10 years and in the future. tom: i lost my audio.

lisa: he's talking about the leverage dollar fund. there is the idea that the dollar is the best hedge against equity volatility. are you saying that it will ignore and possibly being even better bet regardless of some of the circus going on in washington, d.c.? >> in the timeframe we are talking about yes. i don't think you state long with the dollar until the end of time. one thing about this environment is your hedges are changing. back in march and april, we were worried about another banking crisis. since the summer, the dollar has worked so it for more dynamic folio. right now, an environment with the fed is what investors are most concerned about. the dollar is effective them i would guess that the market will look past some of the shenanigans in washington and focus more on what the fed is

doing than what's happening on capitol hill. if we are worrying about rates higher, the dollar is likely to be negatively correlated with stocks. lisa: what's your opinion on the jamie dimon call for 7% rates? is the risk on the upside for benchmark rates and that eventually will cause to the rally? >> that will disrupt markets. we have a levered economy and i have respect for jamie dimon but that's not obvious. the economy is slowing, inflation is decelerating and i think there is some recognition by the fed that if you tighten financial conditions much more coming you will do real damage to the economy. since the fed's last hike, real rates have gone up quite a bit and the dollar has gone up and

we are seeing more contraction in credit and lending. i don't see us going to 7%. tom: a blistering short note this morning. this is talking about the fed put coming back. it's how the fed responds like alan greenspan 20 years ago. what you are suggesting is the fed has more power to change the dialogue if they get the data and if they choose. >> i think that's right. i would also say between the renewed bond vigilantes we thought were gone and clearly have come back and the dollar and we are seeing in lending markets some of that tightening the fed was concerned about slowing the economy but it's already happened outside the fed's actions. tom: i look at the correlations today and it will be a foreign exchange tuesday, no question about it.

which major pair is your closest study this morning? >> i think the pairs that generally we think about are the ones that are represented in the dxxy, the large pairs like the euro and the yen but what we are thinking about is the rate differentials and if we continue seeing an environment where justified or not, the concern is the fed will keep going, that will favor the dollar on a lot of these developed market crosses. tom: thank you so much. that gets us started this morning. which pair are you looking at, lisa? lisa: i have been looking at the euro with the question about how far and how deep it could weaken and reverses the dollar. in general, it's fascinating the dollar is the haven call regardless of the fact that the u.s. is the epicenter of big political drama.

at what point does this create a difficult moment for the rest of the world? tom: on euro-yen, you take dollar-yen or euro-yen and you triangulate which pair gives you the most information. right now i would say it's dollar-yen. lisa: you take a step back and there is this feeling that suddenly, we have to readjust for a higher for longer regime and maybe this will not kill inflation. if you have that kind of regime, everything will have to reset higher including in japan's of people was still game out what they have to abandon. tom: end of september, we will get some data and we have the shut down is important. they are starving for data.

we get the jobs report and let's in's -- assume the shutdown gets fixed and we get an inflation report. we will learn more going into october than we know right now. lisa: the idea that we maybe won't get some of the date is a real concern. how much does that affect the fed? tom: how much does it affect us? have you seen the mortgage rate? i think it will be a new high for 30 year mortgage. lisa: can we call this a housing market at this point? tom: i think it is the price of what we've seen. it is an amazing tuesday and here to synthesize it is emily roland in the 7:00 a.m. hour. stay with us, bloomberg. ♪

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of congress saying it's a responsible and inexcusable you would let government shutdown. it is also irresponsible and inexcusable to not cut all of the spending. they are using our budget and keeping it in pandemic spending. we are no longer in a pandemic, why are they still spending at those levels? tom: a republican candidate, the debate is tomorrow night? lisa: yes. we will get shut down updates throughout the morning here. as we look at the markets, we will also dive into some very careful analysis of the budget. we will do that in a moment. equities are down 22 on the s&p 500 which is more than yesterday. were you surprised by the little uptick yesterday? lisa: driven by the big tech which was really surprising. do they care about rates being

higher? they were hitting multigenerational highs and you stocks kept grinding it out especially tech stocks. we used to think they were intraday sensitive. tom: i will go back to fiscal 101, the real rate is five point 27. -- 5.20 7%. i saw owner delinquencies on loans which moved. there is a tangible bad news there. lisa: my actual fear is that people are basically so sick of talking about recession that they have taken the bad outcomes off the table and everyone has bought into the idea the economy is rebuilt -- is resilient even as people start to feel the strains of higher rates in a more material way and it will become a surprise after a year of getting the recession call wrong. tom: that pushes up against soft landing which is last week's

story. the yen is out near $1.49. look for jonathan ferro's interview in the next hour. right now, without question, our interview of the day on our debt, or deficit -- our deficit. she is the president of the committee for a responsible federal budget and an equivalency to what we see at the congressional budget office. yesterday, somebody said let's bring back citizen bulls. we've done this before.

than the politicians ignore those commissions. is that where we are heading? >> i actually do hope we are bringing back the commission because one thing is certain is our partisan politics will not resolve this issue let alone really confront the huge fiscal issues of the things we should be talking about. the policies that we are about to shut down the government over are just a tiny fraction of the government. what we have is a situation where politicians in the moment we are facing record levels of debt, interest payments being as much as defense spending the next two years, long list of risks are -- our politicians are promising not to do the things we have to do to fix the budget. i think the idea of a fiscal commission could help insulate the lawmakers from the hard choices and the difficult politics but as you pointed out last time, simpson bowles did

not even get a vote. we need to build in a process where is to have a vote and an expedited process insulated from the poisonous politics on this issue. tom: the primer for all of us on this was brenner and bernstein's debt and the deficit 34 years ago. what they said was everybody calm down, you are conflating family accounting which is what we all use versus the accrual of the federal budget. is this budget like what they know or is this budget out of control? >> this budget isn't like a family budget because they have the ability to tax but it also isn't a budget were any of the signs are saying don't worry about things. for years, we had people sing interest rates are so low, don't worry, we have a printing press and we can borrow what we want and print money.

now we so that fiscal policy help kick off inflationary situation we are in. even though interest rates are low for a long time, now that they are higher and we have a much greater debt because we did borrow so much in the past decades, not just for covid when it made sense to borrow but when the economy was strong. now with every increasing interest rate, our interest payments grow dramatically. now we are in this dangerous situation that people are saying don't worry there is not a problem. i would also make the point that fiscal responsibility, where we have been used to be was about an economic threat, slowing growth living is unprepared. but now it's more than that. it has really expanded into a national security threat. our fiscal vulnerabilities are also air geopolitical vulnerabilities and we have to think about this on the broader stage in terms of the risks we have created. lisa: is there any party or a member of any party having a

responsible discussion about some of the aspects that need to get change in the budget to get to a more responsible budget? >> there are. there are members of the group in the house called bipartisan fiscal reform and many members of both parties were talking about the issues with the problem is, you cannot go out on your own and say i will tell you the truth, you have to fix social security, medicare and we will have to raise higher revenues. they can't do it alone. there needs to be a bipartisan space where people can talk about this. i also turns the idea of a fiscal commission to create the safety of a bigger block saying it's time to level with the american people. it would be interesting what happens in the presidential campaign. you just had a bit of nikki haley talking about the issue. she's been bringing it up a we have a situation where both former president trump, president biden art promising

not to fix entitlement. that will play what with the public but is not the truth. we are heading toward insolvency in those programs and we will have across-the-board cuts if we don't do something to fix them. it's important we have truth tellers during this campaign to reach a mandate to address this way -- to address this in an honest way. tom: we saw ms. haley talking with alix steel and it was a simplistic analysis of this asset. both republicans and democrats in washington want to bring this back to basically home ec 101. how will we do this outside of commission? is the committee system you were weaned on, does the appropriation committee still appropriate like in our youth? >> the budget process is plain out broken. it's not entirely surprising. we put in place budget rules in

the 1970's and congress slowly figures out how to go around them. you reach a point where they are no longer working. our budget process needs a huge overhaul. the senate budget committee didn't even bother to put out a budget this year. they just skipped it and both of those committees should be able to go forward with work after you put the budget out. we will have to do a major overhaul and look things like what kind of fiscal requirements are there, how do we commit to budgets being put out. there is a problem in avoiding the default a few months ago but we have to deal with the debt ceiling in 2025 again and i don't think it will be the same feeling. i make we had to reform the debt ceiling and we probably need to put in place something like automatic continuing resolutions so we are not talking about government shutdowns. to your question, no, none of this works anymore in the budget

rules are broken and gimmick and we will have to make a big effort to fix the budget process and change it into something different that starts to function again. tom: thank you maya mcginnis. i can't say enough about the importance of this. we will look at this particular from groups like that and the congressional budget office. case-shiller housing data, negative statistics, wow. lisa: we are starting to see prices go down and have they readjusted? and is the mortgage rate 7.75? tom: jonathan ferro in the next year -- in the next hour next. ♪ u even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures.

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bloomberg surveillance, mr. farrow on assignment and you will see him in the next hour. jonathan ferro from queen victoria street with the former prime minister gordon brown, michael spence and a guy named mohamed el-erian. these are three competent people in different areas and they've got a book out called perma-c risis. it's an effort to fix abramo world.

lisa: there is a concern that people have that we have gotten so immune to the rate hikes. if you think about it, people are moving beyond the permit crisis. everyone was looking for a crisis and it never happened in the past couple of years even during the pandemic. people have moved on so what is this new world? tom: qc in the uaw strike as we come out of the pandemic, the definition of that. i was doing a routine checkup and they are all back to masks. i was shocked to come in and say for us, covid is still here and i was not expecting that. lisa: it is still here we have people in our orbit wearing masks. it's being treated differently. here's what we are watching this morning -- neel kashkari saying he expects the u.s. will need to raise interest rates one more

time this year. this has been heard from others. he set up the economy is fundamentally much stronger than we realize on the margin, that would tell me rates probably have to go higher. and be held higher for longer to cool off. jamie dimon weighed in. tom: these are two smart guys but they are looking at the distribution of what we will do an jamie dimon maybe they don't agree but it's looking at one outcome that could be out there. people here are looking at the margins.

the first and second derivatives in bonds and affects. it's like calculus. lisa: i'm looking at the idea that the risk is increasingly to the upside and everyone it talks says the risk is the economy is that much more strength behind it. we are back to pre-pandemic times when it comes the savings rate for the vast majority of people in the u.s. is that accurate? is the risk going to be on the downside with respect economic data on the upside with respect to strength? tom: we will talk to david page in a moment. lisa: the senate is nearing a bipartisan bill on a short-term spending deal. it could avoid the government shutdown. they could extending -- extend funding for 4-6 weeks. it could put a lot of pressure on house speaker kevin mccarthy because if he has to bring this to the floor, he could face some sort of loss of confidence vote that leads him to lose his

position and total disarray on the republican party. tom: we just talked to maya mcginnis. lisa: do voters actually want to hear it? tom: no, they don't. you're 100% correct. lisa: is it essentially having an honest discussion about finances and people don't want to hear the truth? that's what happens time and time again. the crisis deepening after the mainline unit failed to repay an onshore bond, adding a new layer of uncertainty to evergrande. there are reports that the companies ex-cfo and ceo have been detained by chinese authorities. there is a feeling of deepening distress in the housing sector in china that is being allowed or at least uncontrolled by the

government. how far will the government go? tom: and the devaluation of rem embyi, do you get back to the 7.52 level of 2015. you say it won't happen but given the domestic balance sheet issues, that's how you devalue a currency. lisa: and so many notes i've been reading, everyone says they are going long china because it's gotten so beaten up in terms of assets. they are saying how bad can it get. they say the government will help on the periphery. we are talking gloom and doom but others are getting in. tom: why don't we bring in david page two hot -- he gets to work gil moek. lisa: he's joining us here on set in new york. we keep talking about the balance of risks to the upside

with respect to rates and growth. do you think that is the greater risk than the risk to the downside right now? >> it certainly has been but i think we are at a peak now. going into the summer, we wondered if it would be a soft landing. coming out of the summer, it's either a soft landing or maybe no landing at all. that creates a dangerous backdrop. what we are seeing now is a backdrop where we look at the data harder. we see it in the early retail numbers with gasoline picking up a little bit and debt payments coming in. we've also got this excess savings story. q4 looks difficult to us. once we start seeing the more negative data coming through, then we will start to see a readjustment come through that's not as resilient as all of that. the market reaction to date has

been resilient. lisa: the jamie dimon comments about a 7% potential rate does not speak to an incredible strength, it speaks to stagflation and the idea that the labor market is not balanced. it's about the fact that workers at many of the smaller businesses are seeing costs around them increase of they have to keep up a business managers have to charge higher prices to keep up with that. why is that not the reality that any kind of softening will not decrease inflation materially the way people were expecting. >> i think it will. if you look at the data, you are seeing a softer look on inflation. you can create a scenario you have to see this stranglehold on the economy that doesn't look necessary. unemployment is at 3.8% and we are starting to see this coming off. we think that continues that it needs aperiod of below trend growth and then you go back to

the immaculate soft landing. given what we see come through from the investment side of the economy, we might just get that. i don't think it will be painless. i think we will still see a contraction within it relatively soft first half of next year. that disinflation i think comes through and i think the fed acknowledges this. listening to howell, he wasn't saying we are definitely going higher. it was a 12-7 vote and all powell could say is we are data dependent. the fed is retaining its optionality and not saying we are going to move higher to 7%. tom: what's the message from institutional clients? what are people actually doing with the current yield on cash? >> that means people are happy with cash in a way we have not seen for quite some time. short duration funds are doing quite well. there has been a lot of

uncertainty about taking the duration longer but that's starting to fade. there is a move to longer-term yields because they offer good value again. tom: you see a duration of migration? >> yes and it offers you the hedge against some of the risks that are still out there which has not been present. tom: are we setting ourselves up for another 2023 short squeeze? >> i think we will get tom: maybe barn squeezes, not just equities. >> we think the peak has been recent yields we think there is a risk of quite a meaningful adjustment. different from the start of the year when markets thought there was a good chance of a recession and therefore the fed will cut and that eased financial conditions.

you saw that narrative coming through. now longer-term rates will stay high longer and it's more difficult for companies. the tightening of financial conditions is starting and if we start to see economic data soft in the first quarter which we think it will, i think the market will find it difficult to differentiate. lisa: how much conviction do you have in that? >> we see risks on both sides. we have just adjusted our view given what we've seen in the last few quarters particularly in terms of investment. we don't think we will see a recession. we used to think we would see a mild recession but we don't think that's the case. the indicators are therefore that but we have to be mindful that with excess savings, there are risks to the upside as well. we see risks on both sides that are achieving a relatively modest price. lisa: it's my job to be gloomy

and perhaps skeptical of the optimism that tom talks about. unfortunately in my dna. there is a question as i look at these moves and pointing to the dollar and some of the shots we've seen over the past couple of days, i look at yields as well, when do something break? are you seeing vulnerabilities in particular sectors that are reaching fischer points in a material way? >> we have not identified those fussure points. against the backdrop of these rising rates, you will get problems come through like we saw in the u.k. they haven't been systemic and we don't expect that but there will be people coming under pressure, leverage loans, small businesses, all of these are not insulated from the significant tightening of these companies

and it puts pressures on financial and nonfinancial firms and is likely something blows up. tom: we think double digit in 60/40 a nice recovery. can you rio form 60/40? -- can you reaffirm 60/40? >> our global funds have tom: is there advocacy on 60/40 in 36 months? >> we don't really put rates on that. tom: thank you for all that. one thing we haven't talked about is futures at -20 and the equity market did not have this yesterday before the hail mary recovery late in the day. lisa: do we trust these moves? there is no conviction right now and markets, let's be honest.

the only conviction has been short bonds, the idea of yields going higher. people say they will buy and then the yields keep going up. i'm curious about that auction today. tom: post-pandemic and i was guilty of this but jonathan ferro is never guilty. is the panic over a correction, a bear market or something worse? let's recapitulate from yesterday. we had joe biden up there at the uaw strike. we will get to that. the nasdaq 100, the beautiful seven cratering -7%. in the old days, october of 1987, the vix was 150. we are nowhere near blood and sweat on the street. lisa: focused or test people are

focused on the downdraft. it's barely a correction were not a correction. it's so rare. i think that's important. that's something people talk about. citigroup came out and said there is a big amount of short positions being put on the nasdaq. but we don't see it, not yet. tom: i will not predict the short squeeze but that's a short-term phenomenon. we are looking at the long-term phenomenon. looking at the oil market with our great team. will kennedy will join us. brent crude is $92 per barrel. what's next? futures are at -21, the real yield 2.15%. bloomberg surveillance, good morning. ♪

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the higher price is a reality we will have to deal with as we think about our investments and the energy needs of the globe. tom: is $100 per barrel a different $100 per barrel? that's one of the arch calls at the end of september. lisa says yes on thebramo cam. you are nodding your head and you're going this time is different. lisa: i will not way in one way or another. if you see inflation take rises of more generally of everything, this is an economy that can withstand $100 barrel per or just for oil in different weight rather than 10 years ago. i think that is the argument of jp morgan. tom: i was in london and in the food court where they have real food over there, protein and things like that up against porridge. lisa: they have actual porridge.

tom: they have little bags full of sugar and chemicals and they have that's of porridge -- vats of porridge. will kennedy whispers in my ear, cocoa. he said stay long cocoa because that's what's happening in the commodity world. futures at -19 and dow futures -130. oil is $93 per barrel and bonds and the litmus paper foreign-exchange that we are looking at. the yen is at $1.49. the yen matters but it's distant. you said you're looking at a sub $1.06 euro. are we on parity watch? lisa: people are saying that

something needs to happen to get to parity but the moves have been notable. this is not a boring moment in the fx market. tom: you wonder about the trends as we see a trend in dxy. will kennedy a senior managing editor at trend analysis at bloomberg and has commodities trending like cocoa and sugar. is oil trending like cocoa? is oil technically in place to drive ever higher? >> a lot of people certainly think so. mr. lawler think so based on the interview we had with him. it's a breather, clearly and we are back down from the 95 but a lot of people believe that trend is still in place to take a run at $100 per barrel in this driven by the continuing production of saudi arabia and russia and what looks like fairly robust demand around the

world. fossil fuel demand continues to grow. the economy is seeing record demand for oil. tom: what a great conversation we had with you and empyrean's bite hobby year - i look at the arch question is this time different? how is this belief in $100 per barrel different from the last time around? >> one key difference is that one today is a different $100 in than the past. if you talk to people in the middle east, they would tell you $100 is a pretty fair price for their oil given how much the global plight -- price level has risen since. one way to see this politically is that saudi arabia and the other big oil producers ca fair price, they see the purchasing power there dollar has eroded

away in the drive to get oil higher. i think that's one way in which is different. the other way that's different is there are always in which the men can be substituted. one of the key things going forward is if we get to $100 or more, what does that do to demand? what about the demand for ev's for airline travel? people are looking for that point where demand destruction kicks in. lisa: one thing we heard from oklahoma city yesterday is it will not happen at $100 per barrel and people are seeing renewed buying. one of the interviews was with harold hamm the billionaire who oversees continental resources. he said oil prices will go to $150 per barrel if the government does not support new drilling. is this a self-serving comment or is this true? >> mr. hampton likes to say

provocative things i would say. it's not entirely clear what the government is doing to drive prices to 150 dollars per barrel despite the rhetoric. biden and the administration has not done an awful lot to slow down shale drilling. what's probably slowed down shale drilling is mr.ham's investors are demanding an emphasis on cash over volume and that's been a sea change the shale industry. it's about returning cash and making profits. secondly, for many shale producers, they have drilled the best bits of their holdings. the days of really rapid growth are harder to achieve. there is a secular slowdown in the shale industry. most people would say those of

the factors holding back shale demand rather than government regulation. it's a lot of rhetoric and what he says. lisa: we heard david solomon from goldman sachs yesterday at that conference talking about how it would be folly to move away from financing some of the fossil fuel companies. you still need to invest in oil and gas in a more material way and we've heard this from others. it's a reality check and we are using some of these materials so if that's the feeling from tanks, won't some of these projects refinance now more than two years ago? is there a sense there is open financing available to some of these companies? >> i think that was the important, yesterday. you had the chairman of one america's largest banks saying clearly that they don't want to miss treat this industry and it remains an important part of the american economy. the bank they said will be there for them. i think this is a big shift from perhaps a couple of years ago

when mr. solomon would have been more reluctant to say that. he is in their backyard and is the place to say that but the fact that he went there at all to say it is interesting. there are people still willing to finance that industry. lisa: what is the biggest concern now? a barrel of oil in the u.s. or natural gas in europe? we are heading into a colder season. >> there are clear risks for both markets. we will want to keep a very close eye on how cold this winter gets. people were saved last year but it pretty -- by a pretty mild winter. it remains a very tight market. if you look at diesel fuel, refining industry worldwide is stretched and we are constrained

by how much fuel we can make. that tells you that governments are worried about getting enough fuel to their customers. a cold winter could make for an interesting energy market. tom: thank you so much for the brief from london. west texas intermediate is down back under $95. what are you looking at, equities, bonds, currencies, commodities? lisa: i'm thinking about what will kennedy was saying is if you have david solomon making a trip to oklahoma city and saying we will keep financing you and banks are committed to doing that, doesn't that increase investment at a time where people wrote it off? maybe they will increase production down the line. the nuances that go against the common belief of fossil fuel's dead, maybe not so fast.

tom: there is a belief here on underinvestment in hydrocarbons. you've got to believe with price and assisting saudi belief in $100 per barrel, it has to come back including from a chinese, that's different from the 80's. lisa: how much does that go against jp morgan, this chronic underinvestment? you can catch up over time but on the margins, you are seeing people go into energy debt, go to energy equities in a way they haven't for decades. that is a big shift to me. tom: does your family drive a vw diesel? lisa: a 1965 oldsmobile. tom: no, vw diesel rabbit was a

cool car. lisa: we had the windows down in the triangular window you could push out. tom: we didn't have radio in it so we couldn't listen to bloomberg surveillance, good morning from radio and television. ♪ ♪ ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

>> u.s. growth is accelerating and surprising to the upside, something that is going to change. >> the economy is going down. >> the bond market is pricing in a slowdown and the equity market is not. >> what is confusing me is people are selling bonds and saying they like them. >> we are in the annoying space

of inflation. that's why we think it will persist. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, jonathan ferro, lisa abramowicz and tom keene, right there is what we are about. katie kaminski and eric davis yesterday, equities and bonds, looking for priced down, yield up. not so much in love with tuesday, but the toxic stew or brew over the last 48 hours is something. lisa: we saw yields climb to levels people didn't not think possible. we had seen the peak about six months ago and here we were reaching new post 2007 peaks in the 10 year yield. we're seeing a little bounce back but not with conviction. can we live at dues rates? why are risk assets holding as much as they are?

a new regime is unfamiliar to anything we've seen in the past 20 years. tom: i don't have a mortgage yet, at 7.75% is an american statistic for our global audience. it is like the dow jones industrial average, 34,149, a heritage statistic for our was nice and viewers. can you imagine that breaking out and not going where jamie dimon is blathering on, but the bankrate at 7.98%? lisa: what if it stays there for the next 10 years or the next five, the next three years and people have to start moving. you get price discovery and the existing home sales of fallen off a cliff. is that when you start to see repricing or are we adopting -- adapting and people are managing through a world that is different? tom: michael this morning, i'm not going to call it, s&p

corelogic, robert shiller, that is the way it is. we will get a negative statistic year-over-year. new-home sales, who knows what we will see? but that becomes the datapath into jobs october and inflation if we don't get the shutdown. lisa: disinflation can be positive. if you get the idea of prices going down when affordability is at a record low for the average american, that might be what the fed wants. it has not been deeper. we've not seen the 20% correction of home prices if you had a tripling in terms of mortgage rates. good -- we don't understand the long and variable lags. tom: .4%, the spx down half a percent as well. the vix in from the 18 level yesterday. the yield space, four point 50

after a higher yield on the 10 year, real yield 2.14%, we got up to 217. oil is stable, dollar -- the yen rounded up. coming up, jonathan ferro in conversation, they sold the movie rates of this book already, because of gordon brown, the prime minister of the united kingdom writing with others in the parma crisis, a primal scream about the technology expense buttressed up against the gang theory. many decisions in the book. and gordon brown about the politics of how we extract ourselves from the emotion of the time. jonathan ferro with that later in the hour from london. lisa: i'm looking forward to the conversation. get economic data including the

economic core logic price data and new-home sales, consumer confidence. i'm curious to see how much the downdraft evaluation accelerates. do we see a correction in a market that is not a market because houses are not moving into the existing home space? new homes, yes. tom: how does this come over to rent? there is rental disinflation across america. you and i don't know that in new york but rents are disinflation. >> some nuances around that. important things to watch because they feed heavily into the inflation gauges. at noon we see president biden joining the picket line with uaw workers in wayne county, michigan. it will be a pivotal moment, the first time in more than 100 years that a sitting president has done that. tom: we don't want to stop the show for my thoughts on this, but what harry truman do this?

i don't think so. after fdr. lisa: i appreciate that. the juxtaposition between president biden and former president trump will be interesting. fed governor michelle bowman will be speaking after we heard from neel kashkari, saying one more hike for the remainder of this year. the risk to the upside when it comes to inflation. tom: let's bring in emily roland. i was talking with her early in the season and the third week of april i said it is over. she said no, those red sox will come back. she and i are not on speaking terms. lisa: i will you work it out. tom: the last place boston red sox, they took the sign down. lisa: co-chief investment management, this morning. i'm curious on your perspective.

when we look at some of these yields, are they sustainable? doesn't look logical that we could see a 10 year yield at 4.5% and heading north? >> it is unbelievable the backup we have seen and yields, seemingly on no news at all. friday we were coming the headlines trying to figure out why the 10-year treasury yield backed up 10 basis points in a day, it was note news and no economic data. it feels like a move that is driven on sentiment and technicals, maybe liquidity fears, supply fears. but we see the cycle as being more relevant. if you look at this backup in yields against the macro backdrop, it does not make any sense. you looked at headline cpi at 9%, yields were lower. at 2021, manufacturing pmi's were at 63 in the united states and 10 year treasury yields had a won handle on them.

that's one handle on them. even the face of sluggish economic growth, it is decelerating and the moderating and inflation, you've talked a lot about the housing market. we are seeing disinflation and housing. housing prices on a real basis, you talk about real-time measures of rent, are probably flat. it is strange to us, the ceo's backing up to this extent. of tom: the difference between you and me is that the red sox never won, they were always disappointing. you know all of those glory years. the end of september, we are both crushed by the last-place boston red sox, like the red sox, is all of this gloom and tension in the market seasonal deco is it just a month we are in, the week? >> september is a difficult month for markets. we try to look past that in there is all sorts of data suggesting when september is bad

and we are going into a positive time for seasonal, all of these are shorter-term gyrations in the market. i think it is possible we will see volatility and we will start to hear from from corporations one earnings season picks up. it is hard to see what the positive catalyst is for markets today in an environment where the economic data is slowing, the cost of it is elevated. it is turning consumers and there is major headwinds. you've talked a lot about this, everything from oil prices rising which acts as a tax on the u.s. consumer, more good rates approaching 8%, auto loans the most unaffordable in u.s. history. the labor market is looking fine but eventually the consumer is going to start to do the math and with a look at the restrictive cost of borrowing, they potentially pull away. tom: you beautifully explained that. a cost of capital, a real yield

and a lot of people have never experienced this. and it comes down to what i call the choice, and by definition within elevated real yield, don't i have fewer choices in my set of opportunities? emily: absolutely. what we are trying to do is minimize our exposure to companies that need to issue debt or equity. we look at unprofitable companies, growth and any price companies, when you go way down a market cap, the russell 2000 is comprised of companies that don't make money. that is not where we want to be. we are finally seeing defensive equities perk up and you can give me a hard time. i've been talking about defensive equities since the spring and i've been wrong. who needs defensive stocks when you can own tech stocks up 40%? but i think the baton to be passed -- past.

the companies get a bid into the backdrop into the year. tom: in massachusetts where in mutual funds were invented, in the two this morning or convertible bonds. lisa: well -- >> tom: the new stock is a 5% convertible bond. lisa: any kind is what we have heard. but what are the challenges does one of the challenges to conservative stocks, it is unclear what that means. people are saying that is big tech. how do you define it? >> we still do like tech and it is the classic s&p 500 tech sector, not the growth in any price tech. tech is the poster child for quality. these are companies with tons of cash, unlimited need with

capital markets to grow but tech has gotten expensive. want to use technology stocks to protect portfolios but also protect stocks from valuation risks. you need to come through the value side. we don't love everything value. you need to be selective, sectors like health care have a 20% r.o.e., trading at a 10% discount to the market they left in the desk. these are all areas that can do more heavy lifting in portfolios. tom: follow out of all john hancock, wander to the trinity church, sit on the front stairs, looking at the pigeons and prayed for a shortstop. thank you. in boston, with john hancock this morning. that was a brilliant conversation. i bust your chops all the time, lisa, but you can't go up without fear. cardinal rule. will have to discuss that through the conversations later.

jonathan ferro on parma crisis later. lisa: equity futures down. -- s&p futures down, as i futures lower. there is an issue of what does defensive mean? what does it mean to be cautious at a time when the rules haven't flipped on their head? i liked what you asked this morning, does a-40 work in a year or two? tom: it is a serious question. we set was way out front on this. bloomberg total return index, whatever you look at it has been an overly 18 months and that was the destruction of the confidence of 60-40. lisa: she was saying yesterday we are facing another year potentially of negative returns. and if you look at the bloomberg aggregate in -- of bonds, it is poised for a third straight year

of negative returns. which is the reason why actually the dollar is why it has become so interesting. we heard this morning that that is the made estimate hedge, more than a bond. tom: leases citizen expert, but everyone he talks of the president and bonds, they never look back like in equities. the answer is they've got to spread a strategy. you know the lingo better than i do. it is price down, yield up and 18 months, 24 months price down. lisa: when will people search a care about that? a shock. tom: wall street pros maybe don't care but jim at morgan stanley cares, he is listening to mike wilson. mike wilson of morgan stanley, 8:00. in 30 minutes, jon ferro on the permit crisis. -- permit crisis -- per macrisis.

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business, you have no idea which direction washington is going in tomorrow in whatever direction it is going in tomorrow it might change after the next election. that is tremendous uncertainty. a potential government shutdown confirms that level of uncertainty. that is a wet blanket on any business. and on the economy. tom: neil bradley, u.s. chamber of commerce, executive vice president with a lot going on. we have not touched on it with the markets, futures -22, the vix 17.5. a 10 year yield, 4.51 and all of this elevated in the last number of days. i'm watching the real yield, 2.14%, and let me run over. i'm doing this on the bloomberg affectional service in real-time. mike lets me keep my job. 7.75%, we don't have a 30 year mortgage print today and that is something that you think on air

force one or whatever it takes, he will drive the car to detroit. the housing market, he has to be up on the housing market as he is uaw. lisa: people feel these higher rates as higher inflation. we've been talking about the government shutdown. annmarie hordern joining. answering the question i've been unable to answer, which is what is the political implication of president biden going to michigan? is it well-received or highly criticized? annmarie: the president wants to make up a little statement. he continuously says and ran a campaign that he is a boy from scranton, the most pro-union president in modern american history. he is now putting his money where his mouth is by actually going to the picket line. the white house is trumpeting this as the first president to

do so in modern american history. maybe ever. the only moment i can see as an individual putting their thumb on the scale for the labor union has to be the 1900s with teddy roosevelt and the coal miners when they had them at the white house. this is a historic moment for this president and the white house is touting it. if you look at the polls, one in six americans researched this in august given the labor of summer. one in six come from a union households and 70% of americans support labor unions. it is very helpful for the reelection campaign next year. he is able to go with an invitation for the show on fame, not just showing up on his own accord, an invitation from the uaw and what the white house is calling stand in solidarity with union workers. lisa: as you said, he sort of has insurance so the other side

is making the same case, there is an argument of pro-business support the big manufacturers. what is the response from these men fracture is a? they're sitting there and watching this unfold. annmarie: they have just been quiet. they understand the politics at play and they want to make sure they can get these negotiations under wraps. this is the second week we are seeing these protests and the strikes. the worry would be if they start to expand and hit other plans, it seems like they are ahead of these negotiations and the uaw decided not to expand and hitting some of those plans. i think they understand the politics of the moment. at the same time, the president has made clear and the white house says -- the press secretary was asked relentlessly and she made clear they are not trying to inject themselves in the negotiations. the president just wants to

stand with workers. the president has said yesterday that the workers are part of the reason why the auto industry was saved and they took a lot of cuts over the years. now they deserve to make some of that up. tom: you're always great at the history, taking it back to world war i and the trauma. harry truman saying to the steel industry we've got a war in korea, you are not going on strike. the supreme court said -- this is april 8, 1952. it was really about who is supporting business? is there anybody in washington supporting the automakers? annmarie: here's the issue. there is support for the automakers, but it is politically unattainable to come out and say you do not want to see these wages.

tom: where have we lost the chamber of commerce about? annmarie: i don't think there saying they don't support business. they are trying to walk a line that they are pro-business but we want to make sure that workers are getting a fair wage. republicans easily turn this around and say this is caused by the fact that these workers are asking for a 40% wage, lowered to 36 at this point, because of inflation. they need to keep up with grocery bills, gasoline prices and higher rent. they're putting it back into this is a problem of the biden administration's making. tom: this is not a bloomberg surveillance topic, it will be of the atlantic or bloomberg opinion. but this is polo oc, wall street, main street. who is supporting wall street anymore in america? mitt romney, and he is retiring. annmarie:--

lisa: i would step back and give this an economics lens. the signal is being sent, right now the discontent around the economic state of this country has to do with the fact that inflation is so high. forget about whether it is disappointing -- edition plating, people feel it when they go to the grocery store, anywhere in their lives. at what point do you have to, in favor of higher wage increases just to keep up, which supports this idea of a more inflationary push for a longer period of time? annmarie: there is a great piece this morning about how economically their is a can of worms. in the fed if they enjoy this, this does not help with the fed rate hike cycle. what can happen is obviously you see wages outpace inflation, but inflation is so high and you

have to see wages really outpace inflation when you can have a cycle like we saw in the 70's, and table right now. i don't think this administration is going to want to get into the weeds of any of that today. they are want -- they want to avoid inflation and the words ev transition, which is the bedrock of the tension with these discussions between the uaw and the big three. that is what makes this moment in history and economics and politics so interesting. not only is this a hot labor summer with the support of the self-described most prounion labor president, with the fed is trying to tamper down inflation. tom: balance of power driving the president visits detroit, and the picket line is visiting as well. i wonder, i look at president

trump's phrase republicans in name only and maybe there are democrats in name only. the middle ground that says may be politically we should stay out of industry warfare it with the supreme court told harry truman a lifetime ago. lisa: she said the automakers are taking a stand and there is the idea of expressing solidarity with the wages not keeping up with inflation. there's a policy groundwork for wages to stay higher, making the inflation more entrenched. tom: the vicks 17.47, yields have quieted down.

in 15 minutes we will introduce you worldwide with the good work of jon ferro, and says we have staggered from crisis to crisis. ian bremmer says of brown, el-erian and spence, vivid detail, parma crisis offers hope and good sense. in equal measure. lisa: that would be very welcome by a lot of people right now. it is difficult patching up mistakes from the previous years. tom: these guys have differing skill sets. you can pick event diagram and all of that. we will do this with jon ferro and about 16 minutes. the s&p 500 down .4. (♪♪)

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tom: bloomberg surveillance, futures worse than monday, equity monday and the recovery. the nasdaq down .4%, i will get it down .4% as well. a massive must listen global

conversation with kathy and schwab in a moment. he likes the skepticism all kashkari and the reaction to that. torsten's lock publishing a moment ago. was very cool. torsten notes the cost of money is beginning to affect venture capital. it is a huge deal, permeation of the real yield. a whole new world. lisa: we were talking about instacart coming up with ipo's, a fraction of what they were valued out -- not a year or two ago. it has gone down. tom: 1.0 6 -- 106.00.

swiss franc does not give meat loaf and i do not get stronger swiss franc off that, which is of no. i've got the yen, noted up at the 150, giving pause worldwide. we will do under surveillance quickly because we have an important global wall street guest. lisa: president biden joining the picket line for their striking uaw workers. tensions between union workers and forte have been ramping up because the company is halting production on a $3.5 billion battery plant in michigan, with scrutiny coming based on chinese backing for the factory. this keeps percolating out. the most interesting aspect of the story is how it really supports wages going up and gets in the crosshairs of so many different baits and it is so messy. it is hard to parse through the

strains, separate away from china and make sure workers are fully compensated. tom: credit to the economist on europe, china and and overcome by events here to the manufacturing race on new technology. lisa: i will move on and get to the senate nearing a bipartisan deal of a short-term spending deal, which could extend funding 2426 weeks. the focus is on how kevin mccarthy and his future, if it does pass the senate, then he has to decide if he brings it to a vote in front of the house, bitterly divided against some of the protests of his more hard leaning constituents. this lead to him getting a loss of confidence vote at a time when nobody could take his place at jericho tom: surveillance

shutdown central, we had a team of people led by michael mckee at annmarie hordern look at this. lisa: shutdown central. tom: account on clock. lisa: the citadel founder ken griffin, the u.s. takeover of london, we've been talking about football teams but ken griffin is reportedly backing a group to take over the telegraph media. the auction for the publishing of the conservative titles, a spectator expecting to garner the attention of this as well, we are talking about the managers, other forms of entertainment as well. tom: we talked about this in london and all the media said we don't have an opinion but we do. there, we have an opinion by our newspaper.

it is more vibrant. lisa: jon ferro explains the genesis of that. they had a point of view and it is a different generation of news in the united states. tom: and mr. murdoch retiring in tablets, not that i would ever read a british tabloid, i could not get past page three. joining us is the chief income fixed strategist on the real yield. it has been an adjustment. lisa: people are looking at the yields and sink in the last? you are saying as you look at them, why? >> we are adjusting to the new world where we have a positive term premium and certainly higher for longer yields. the question is what is the

endpoint? you say the fed might hold for a while but it is difficult to see why they would want to go a lot higher from here. inflation is falling. it will be two, two point 25 on core pce. we are almost there and it -- there are risks in the market for could spread into banking and it suggests that they have done enough. i'm curious to understand why some of the fed members are talking about raising rates further. lisa: partly because it keeps surprising to the upside. we keep hearing from different ceos, jamie dimon talking about resilience. consumers are still able to

spend, not a few levels they thought. i will point to the lien in and say we are willing to -- are going to see this previous? clicks we are not going back to zero, 1% or 2%, consumers are spending come up with their filing for bankruptcy. it is the two-sided issue here. we are seeing a lot of delay quincy is on credit cards. rinsing devotes, the default rate is starting to pick up. there is a lot of evidence that higher rates are biting. it takes time to work its way through. the question is does the fed really want to send it over the edge or do they want to try for

the self-limiting? we think there is value to fixed income. we don't have to go to tens. but there's plenty of value. you can look at positive returns going forward because you have a higher coupon and not that much duration risk. tom: on the radio, it is the 10 year chart in the yield here. i'm going to get fancy with kathy jones, she is a fancy person. i have a beautiful two standard deviation trend and a higher yield. got elegance on my moving averages. the how do you know when the yield turns and goes lower? i see a higher 10 year yield. kathy: trying to pick the peak is really hard. the cycle has been particularly unusual because of the pandemic.

a fiscal stimulus, all the special things. tom: my brave, for on a knife and dock in here? dollar cost average into it? kathy: we don't follow knives. but we leave that for the equity folks. they can try that. but we are looking at the agua with the duration of six. having a barbell perhaps, you do get a lot in cash and the short end. you don't want to read the cycle up and down because you are not getting the benefits. it is a huge opportunity for people investing income.

lisa: the concern is that on vigilantes are getting stronger. there are many more of them and many fewer of the international buyers that might step in say from japan. are you seeing the mix of buyers change and become more aggressive in their demands? kathy: foreign inflows are stilly -- pretty attractive and steady. foreign investment is still strong. not too worried about that. a lot of it is the fed is pulling back. the fed was our big backstock and now the fed is not buying, it is allowing it to rolloff. that is one of the drivers of this last leg up, you don't have them stepping in. tom: i'm asking for a friend. the austrian 97 year, i've

enjoyed it, i bought it when 31 to 36. i am down to a nine year paper. how do you know it will reverse and be the distressed debt of all time? kathy: i wish i had the answer. tom: we have not seen this in 17 years. lisa has no memory. what percentage of wall street has no memory of going when do i go to ultra? that has often asked for 17 years. kathy: i think when you go along duration you will have to wait for a pivotal moment such as a big recession or crisis. lisa: such a diplomatic way of answering a question where tom is trying to offload the austrian piece.

tom: these are markets that what percentage of the public in their adult lives have never even listened to the surveillance dialogue? lisa: they were probably not thinking about sovereign debt from top-rated governments. we are thinking about top-rated debt from sovereign governments because that is what we are getting. tom: the vick 17.23, bitcoin, matt miller says why don't you quote bitcoin? no standard is down .4%. lisa: we will hear from the permacrisis, the opposition our

colleague had with michael spence, gordon brown, others. i'm curious to hear some of the prescriptions that they have as they try to grapple with what the new norm is. tom: we are going to get to the peace and it is going to be interesting. a former rugby player, he got really hurt in high school. the labour party from another time and place, political angst about what we do. spence, who invented graduate education in american stanford, has an understanding of what is asymmetric information and things we can't see within the system. many but the gang theory. lisa: i will say it is tricky to

figure out how to model the on model a bull. my father-in-law -- he said to me once they can create the most perfect model but the parameters will be wrong. if that is where we are right now. tom: in 2010 on the certitude, there are things you can't see. coming up on your federal reserve, the fed put julia coronado, macro policy perspective. futures at -15.

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tom: jonathan ferro staying in london in conversation with the former prime minister of the united kingdom, orting brown, mohammed of the university of cambridge and the nobel prize-winning in congress, michael spence of new york university. brown, el-erian and spence, ayotte and crisis to manage in the future. here is professor spence. >> went jen ai came along and i saw they capability, the fact that you can use it with no technical training, a little bit of practice, creating prompts, and the applicability pretty much everywhere, even though it is early days and we are in a period of exploration and experimentation, i think it is a reasonable forecast. this is an important part of a future productivity surge.

if it comes it will make it a lot easier to do inclusive growth patterns because there won't be a zero-sum game. it will be easier to invest multi-trillions of dollars in the energy transition. it is going to be terribly difficult to get that done with fiscal space declining, rising debt levels and rising interest rates. that is why we spend a fair amount of time, it is not that the growth by itself is the only thing. it is that it enables a lot of what we want to accomplish. >> i think we are heading for a low growth decade if we don't have the productivity surge that ai can give us. what mike is pointing out is it can have a whole range of industries. they will never see the accountancy on legal or medical professors -- professions or teaching professions be the same. equally, we've got to have the productivity surge. without that, the inflation and the fiscal space being narrow,

the debt we are running and the supply-side shocks and constraints in existence mean that as things stand we are heading for a low growth decade. ayotte is the way to take us out of growth. >> and it is critical because we have a issue that has to be resolved. we need resources for critical transitions. the notion as mike quigley said are that higher, more inclusive and more sustainable growth is an enabler. tom: all of you understand the risk -- jonathan: all of you understand the risk. the united kingdom as well, why would ai not to the same thing to services? my question if i am a member, a citizen, someone who is got to vote is why would i trust the same people again? who should i trust to manage the transition and the integration of those technologies?

>> that is what my teenagers say. you guys have messed it up and it is true that we tried to create a more inclusive system. we tried to deal with the problems of the environment but we could knock at the agreement that we needed and we tried to have more equity and better jobs. i do think when i talk to young people they want to see this change. the issue is not whether you have change or not, the issue is what kind of change. got to make that inclusive. >> upgrade. nelson talked about the touring, it basically pushes you in the direction of automation. we want to push and policy should be pushing in the direction of augmentation and giving people powerful tools that make them more productive. this is the journey we are setting on but i don't think it is right to just capitulate and say productivity produces employment problems.

it is at least more complicated than that. >> but our institutions have to reform to be capable of dealing with this. the imf has to be a prices -- crisis prevention reckless him. it can't just be a crisis resolution. the world bank is going to become a global public goods bank and deal with the energy transition as well as human capital. the wto has got to find a way of negotiation and arbitration working better than it has in the past and we need a better concept of burden sharing. i can't understand why when you have a humanitarian crisis and many around the world of the moment, all we need to gush always seemed to be able to do is pass the ball around and hope someone can come up with money. we have burden sharing, for the environment, public health or the global public goods that we wanted to now. i've just come back from the united nations and people around the world want this to happen. we need to show that this can

yield the best results and create the political will for this. jonathan: i'm getting the same feeling i got when they read the book. this makes a lot of sense. and i may end up in the same place. is there evidence that people are willing to vote for it? you say it is popular, you speak to people and they're convinced. i don't see any evidence from recent general elections that anyone wants the vision the three of you have. >> i think the lesson of covid and the energy and food crisis and people's reaction to the war in ukraine is that things are going to be better than this and i think those leaders that can show there is a hopeful future, you see mia in the caribbean producing her plan for global growth. you see politicians in africa talking about green growth. i think there is a movement now that says we cannot have politics just as a negative sport where people are attacking each other and it is all about

this. that sound bites. i want people one politicians that can give them hope. that is the next generation. >> he's right. people want hope and there is a recognition that the road we are on is unsustainable and it is getting more and more bumpy. third, we are dealing with a loss of trust and if we don't directly reestablish trust in our institutions and policymaking, global corporation, things are going to get worse. the reason why we wanted to put this down is hoping to start a conversation on a set of steps. we keep saying there is no silver bullet, this is not a big bang. this is building a foundation that turns vicious cycles into others. jonathan: the federal reserve as an example. of written about it over the last 18 months. her memory conference in the summer of 21 you warned about what could be coming. how it prepared -- ill-prepared

the federal reserve was for this moment. how do they recover from mistakes they have made in the last 18 months? to help contribute to the vision the three of you have. >> there is much recognition that there have been five failures. forecasts, consistently to optimistic, action too late, communication muddled and regulation. we all most had a big banking crisis just six months ago. there is more understanding and what we propose is a few steps that would reduce the chance of that happening. things that minimize groupthink, increase accountability. without accountability, the independence of the fed is going to be challenged going forward. the fed has huge interest in embracing the things we proposed in order to restore trust in an institution that is critical and

must have political autonomy. tom: oh larry and -- el-erian, brown, spence. you may not know this, but michael spence is our link to the past of economics, he studied with a true giant, john hicks at oxford cap a century plus ago. and john hicks, a contribution to the theory of the trade cycle , 1950. nothing has changed is what i think you could hear from the professor. we see it this morning when we talk about precrisis -- permacrisis. i saw tesla's outside of the natural -- national portrait gallery in london. let's go to china about importing tesla's from china. it takes the crisis right down to the granular of this morning.

lisa: how are you proactive when the parameters are so unclear. you think about how we can change work and productivity but it could still put people out of work and you could have a permanently unemployed group. how do you have this discussion when people are worried on an existential level about their employment prospects as we see in michigan, hollywood, and that is the difficulty around having this conversation but the necessity to have it in a real way. tom: but are they the conversations of the what if of ai versus the realities of diminished global trade and the fragmentation that imf talks about. the permit crisis -- the crisis to meet as a return to the 30's, for world war ii is the angst. he said: i'm not sure with the analog is, definitely a moment the calls for some leadership and some ideas. tom: while continuing coverage

particularly on "bloomberg technology", you on musk, tesla and the eu. futures -17, top of the hour mike wilson of morgan stanley. this is bloomberg surveillance. ♪

>> there is a limit to how much

the good news for the economy can be bad news for stocks. >> the u.s. economy is doing better than existed, whereas euroville is in stagnation. >> i think their earnings estimates are too optimistic. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. lisa: this is bloomberg surveillance. tom keene, jonathan ferro, lisa abramowicz. we are focused on the moves we have seen the past couple of sessions and whether they cohere with a resilient stock market and a resilient economy that people seem to be gaming out. tom: with the drawdown earlier that is a favorite phrase of mike wilson's. what everyone called on would --

wilson is not 100 percent in cash. it is measured. it is september. lisa: is this just a seasonal blip? if it is, is there any coherence whatsoever in the moves we are seeing in bond yields and the understanding of what that would do in equities that are resilient? there has not been that much gloom. especially yesterday, the magnificent seven outperforming despite what we saw with yields. lisa: i will -- tom: i will take a lot of solace from the global exchange. what i would go to -- it is september. it is a saturday. michigan comes out, scores 30 points, and they win. michigan and nebraska this weekend, a bloodbath.

lisa: let's get right to the check, because we have an incredible guest coming up and i really want to get his view. down, although paring back some of the losses, s&p is down less than a 10th of a percent. tom: cratering. lisa: to me it is the 10 year and the fact that it is 4.5%. 4.5%, tom, after people thought this was implausible! tom: it is an incredibly elegant chart. it is well behaved on a series of long moving averages. lisa: while we are focused on gas prices, we have seen the adding to the toxic brew of the past few weeks. people are saying they could go potentially higher. tom: we have to have a lot of

different cross-sections of opinions so in meetings that we have, when we meet three hours a day arguing about this stuff, jon and i say we need someone 'bramo is comfortable with. lisa: [laughter] the latest warning from morgan stanley says that risks are building for u.s. consumers. "this price action is picking up on slowing consumer spend, student loan payments resuming, rising " how much pushback? we talked about this before. do still get the same amount of pushback that you got one month ago, or are people listening? >> i think the question for

investors is always price. we are in a late cycle environment. we have been for the last year. when you are in a late cycle environment there is a lot of uncertainty. people erroneously called for a recession at the beginning of the year. they have probably overpriced priced out in the summer so investors get whipped around by price action. what has happened in the last two months as we are seeing a breakdown in a lot of the stock market. some of these consumer stocks are really struggling. that reflects what we were talking about a moment ago, which is that the middle consumer is out of excess savings. we have the student loan moratorium. that is the wildcard. that is the risk for the fourth quarter, can the consumer continue to surprise on the upside? lisa: do you see some of these

small-cap stocks getting blown out, having their valuations completely decimated, and did no one notices because the magnificent seven keep heralding all of the votes of confidence from consumers who see them as cash cows in perpetuity? mike: if you have a hard landing, even the big winners will feel that. the market is betting there is no recession. is that cycling -- signaling that the bond market is pushing back on extra spending? the big names will continue the lead because they have better balance sheets. tom: how can you be as cautious as you have been and not have a massive cash position? what is your cash position? how invested are you within your caution? mike: we are 95% invested. we are 5% underweight equities.

we never go 100% cash. tom: but the financial media does. mike: what we can do is position more defensively within our equities push. we are skewed more towards defensive growth, late cycle cyclicals. we are not grabbing for small-caps, things that are vulnerable if things go sideways. tom: mike, tell me about the damn banks. you and i know it. the answer is it is a grim charge. you go back to pre-california, pre-a dsca out there -- pre-idiocy out there. it is one of the barest charts i have seen in years. mike: the bigger are getting bigger. there is concentration in the winters. her quality -- in the winners.

apple is another quality of stock for people are paying for the quality of the stock. the banks are representative of the rest of the market. tom: "ask mike wilson about his easy day job." who did we talk to in landon -- london? cathie wood arc? do i want to get more idiosyncratic? mike: you want to be more idiosyncratic this whole year. the market has outperformed, but only on 10 stocks. if you picked the other 93, you didn't do very well. right now the market is paying

for operational efficiency. it is paying out for good balance sheets. it is paying at first scale. can we broaden out to the lower end of the market? if the market believes there is a react seller and, -- this purgatory land and the market will continue to rotate toward the lifeboats. lisa: some people say it is tech stocks, some people say it is consumer staples. what do you say? mike: it is both. the market has voted with its feed saying that they want to buy a large cap tech stocks. i want to point out something that is important. tom: please. mike: ex-one or two, they have

been the result of cost-cutting. if they don't see topline re -acceleration, that will be another story for the fourth quarter. the market wants revenue growth. lisa: what we're talking about now is the bottom line. we are not talking about the rates picture. think of america strategists came out today and said "do rates matter for stocks?" do you agree? mike: we said this at the beginning of the year -- this is the most difficult part of the economic cycle. we are late cycle so we cannot argue we are midcycle or early cycle. what you can argue is that the late cycle period can persist for longer than people expected. rates have really surprised everybody. normally and a late cycle

environment, rates come down because the fed is done. this cycle is unique. that is the tricky part. the fed cannot be proactive in cutting rates ahead of the recession, so we will ride this until you run out of gas. that could be another year. tom: i find it absolutely fascinating. i want to touch on this. mike wilson of morgan stanley with us. dovetail your revenue line, your animal spirit in the market with alan zentner's nominal gdp. karen doesn't have a clue. model out nominal gdp and how it affects your line? mike: this is where ellen and i are aligned. we are the only bank that called for a soft landing and an earnings recession. pricing has not been as good as

the pricing and inflation numbers in government statistics. ellen is far from excited about economic growth, but she is looking for 1% real gdp growth. 3% to 4% nominal gdp growth, does that lead to 5% real growth ? maybe what companies are seeing in pricing is very different than what the economic statistics will tell you. very similar to 2021 when core cpi were great. you actually have -- tom: mike wilson with us here. futures are -15. lisa: i'm curious as we parse through all of these muddled signals, what is the one

thing you think people are getting wrong? mike: pricing. from a stock standpoint, this is where we are most out of consensus. this is the boom bust. what you see in the amplitude of pricing is much greater in the real economy than it is in government statistics. there is this illusion that companies can continue to price on these higher costs. the markets are finding out that most companies don't have pricing power. lisa: would you ever consider buying bonds? mike: [laughter] we have been buying some bonds. lisa: really? have you done that before? mike: we have bought everything. we think ultimately that will be of value. tom: let's go back to our youth. i know we are running out of time here, but is mike wilson in

convertible bonds and preferreds right now? lisa: you have to -- mike: you have to own equities because we are in a higher inflationary environment. that is your protection against this new regime. bonds rsa for asset but in the near term --bonds are a safer asset. tom: mike wilson is with morgan stanley and he is not 110% in cash. 17.22 on vix. in washington elaine kamarck joins us on the shut down. good morning from new york. ♪ (♪♪)

(♪♪) (♪♪) (♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪)

>> the economy -- if the economy

is fundamentally much stronger than we realized on the margin and then be held higher for longer to cool things off. tom: minneapolis, the federal reserve president. why are the feds all different? minneapolis is the research combine. no one in america is looking at infant education. they own the high ground on that . gary stern over decades and decades and this education scandal that we have in america of our youth versus so many other countries starts with gary. lisa: all of the different regions about where we -- tom: what did you take out of

mike wilson? we had to slam into the break. ferro always gets the break perfectly. they had the bloody maries out in the break early this morning. what did you take away? lisa: gloom is nuanced. he says we are late cycle, but this is an era where the fed is not expected to keep cutting. something has to give. to me it is rates going down because, of some depressed growth or rates staying here. it can't be both. tom: you heard it early in the interview. the disease -- i make a joke about it with cash in and out of the market, and these adults are saying no, you have to participate. i think that is underplayed. through all of his bear market

call, mike wilson is participating. lisa: he is not exactly saying go all to cash. he is being nuanced about how he is allocating. tom: right now on presidents and history across the americans fabric elaine kamarck joins us now. her wonderful books are ritually researched and written on the foibles of our presidents. thank you for joining us. you and michael beschloss are the ones i want to talk to this morning. what is the significance of a president on a picket line? harry truman would not have done that. elaine: i think it is a big deal and it is probably long overdue. the american labor movement has gotten weaker and weaker since the days of harry truman. it used to be that 33% of the

american labor force was unionized. it is now down to 9% of the industrial lyoya ins and a little more of -- unions and a little more of the government unions. we have had this enormous ballooning in executive pay. there was going to be a come to jesus moment with this. the president of the united states is saying if a company is doing so well that you pay your executives in the hundreds of millions of dollars, you have to do something for your workers. tom: who has the voice of business across america? elaine: i think the president is very concerned about business across america. the old republican party, the traditional republican party, used to be the party of

conservative business across the country. now this republican party is off in lala land and cannot even keep the government open. you lost of that balance we used to have between the party of workers and the party of owners. now we are in a crisis point in both situations. lisa: how complicated is this issue at a time when democrats have been trying to transition away from fossil fuels and lean into electric vehicles at a time when electric vehicle battery manufacturers do not have unions? this occurred a lot of the discontent among the unions. how confusing is the messaging right now? elaine: it is pretty confusing and difficult, but it is the price of progress. we will move away from fossil fuels. we are moving towards electric

vehicles. between washington and boston where i travel a lot, there is a town of ev charging stations at all of the rest stops. it is coming. the unions need to cope with that and try to organize as much as they can. the bottom line is we are out of whack here. we are seriously out of whack in terms of worker pay versus ceo pay. that is what is driving this. that is why the american public is on the side of the uaw and not on the side of business. lisa: is this enough of a headwind, or rather a tailwind for president biden to get him over a hurdle in terms of popularity, which is cost of living, his age, a question around some of these confused messages supporting labor, but also having the energy policy that goes against some of what

he is talking about? elaine: that is a great question. what you have to remember is presidential elections are not about the whole country. it is about winning certain states. this is going to be a big deal, a big effing deal as the president himself says in states that are swing states. it will be important in wisconsin, important and a lot of those midwest industrial states. it will be huge in terms of his reelection. tom:, elaine kamarck does the president need a new vice president? there is such a tradition to recharge, reinvigorate, figure of the politics of the next vice president. what does he do with the present vice president as he moves forward? elaine: i think she stays in place. one of the things that is missing in all of the discussions about kamala is that

she does really well among young voters, voters under the age of 45. one of the things that is always forgotten in these discussions is by the time of this election, people under 45 are going to be practically 50% of the electorate. by 2028 people who are today under 45 will be 54% of the electorate. there is a new generation taking place here, and they are a different generation than us baby boomers and the president's silent generation. their politics are different. they like, harris, they are -- they like kamala harris and they are happy she is there. lisa: there is a debate between gavin newsom and ron desantis, an unusual debate at a time when gavin newsom is not running. do you think it will be a good thing if there were other

options out a time when a lot of voters are concerned about joe biden's age? elaine: they say so in polls but they do not vote that way. they said so i -- every special election in 2023 has seen a growth in the democratic vote. people are concerned about biden's age. you have to be. you have to be concerned about trump's age too. he is not a spring chicken. he looks like a walking heart attack. tom: [laughter] elaine: that is not related to votes. tom: thank you. when is the next book out? elaine: the next book is probably out in november and it is about disinformation in american politics. tom: whether you are republican or democrat she speaks her mind,, and every time she is on the show i learned something. i had no idea the preponderance

of people under 45 years old in america. lisa: it speaks to the anger that people have. there is no representation. tom: it is great when she is on, whatever your affiliation. it is great when you do a data check when the tape has improved. . we are up a solid -- we were down 23 there. lisa: we are moving away. you can see a little bit of a retrieval from yesterday's 10 year yields. tom: how many fed speakers do we have today? lisa: just one. tom: julia coronado will be here. looking forward to that. stay with us. futures -18. this is bloomberg surveillance. ♪

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tom: bloomberg surveillance on radio and television. jonathan ferro, lisa abramowicz and tom keene. jonathan ferro is on the plane coming from his interview with mohamed el-erian. we have a 'bramo yield space. stasis off of the theater

yesterday. lisa: stasis off of theater that pushed yields beyond where people had previously expected. you would expect if it was just a blip on a thinly traded day, at a certain point you would expect a big bounce back with people flooding into buying. you're not seeing that. that is notable. tom: julia coronado to be with us herein a minute on fed speak. first, michael mckee is with us. as we spoke to mike wilson about nominal gdp, you are looking at what we do at bloomberg economics and they have modeled out 4% nominal gdp. elaine: we have the new bloom -- mike m.: we have the new bloomberg economists survey. here is the interesting thing for september. economists are now seeing 2.1% growth for 2023.

in december of last year, they saw 3/10 of a percent, so we have really marked up growth. it is coming in stronger than the fed had been dissipated. the study suggests we will see 3% growth in the third quarter, which would be lower than the atlanta fed gdp is forecasting, but that is up from august. some real changes to the way people are looking at growth. if take a look at the five-year forward, it has been pulled up by these growth forecasts. wall street is now expecting more inflation, is why you get people musing about the fed having to go much higher and throwing out silly things like 7%. tom: we can get in -- lisa:. i'm tereus new start -- lisa: i'm curious. when you start gaming that out,

what do people say when people are talking about the toxic brew of student loan payments and gas prices? mike m.: we are looking at a big drop in the fourth quarter gdp is only half a percent according to the economists because what we are seeing is a 3% forecast for consumer spending, but consumers spending falls off to just 7/10 of a percent because of all the things you're talking about. the only thing you can say is that economists have been wrong for the last year, and they could be wrong again. the fed has to keep an eye on it, which is why they keep that extra. in there -- extra dot in their. lisa: have people move beyond the lag effects of monetary policy?

are people coalescing around the idea that we have already seen the effects of rates going higher? mike m.: there is still a division on that. you don't buy a house every day. you by -- you don't buy a car every day. many think we will still be subject to lags. other say the market prices this stuff immediately, so you do not have to have the same kind of lags that you use to. this is one of those things the fed does not know for sure. tom: on housing data, we are all stunned by a 0% statistic in housing. how does your study of housing data folder over to rent disinflation in america? mike m.: john authers was talking about it in his column. the way the government looks at

it is they take rents over the course of a year, and they assumed that a certain portion of that, they ask people what you would pay to rent the house that, you own and that is how they come up with the numbers. other suggest that you should take the changes in rent month by month because rents are constantly changing and they have been going up and down. that is not what government does. kimball harvey suggested if you did that inflation would be 1.5%. there is a significant difference in policy from that, which the fed can debate at its next meeting. tom:tom: i knew you were going to go there. julia coronado joins us with the macro policy perspectives. i was setting mike up for that question because i knew what the answer would be, but if you play with the answers disinflation is really in trend. why do we not believe that when

i look at the bond market? julia: they are not necessarily inconsistent. one of -- of the key thing that has helped explain cooling inflation and more resilient than expected growth is productivity. we are enjoying a productivity dividend as pandemic frictions fade both on the supply side and the demand side. consumers have a normal demand pattern. they are more price-sensitive than they were before. what we are seeing is a tremendous rebound into productivity. companies have also been reinvesting in transformation through technology that is laborsaving. that should also pay dividends over time. we may end up with a better productivity trend this cycle then last cycle. that means we can have higher inflation and -- lower

inflation and higher growth in bond deals. it is the secret sauce. tom: lisa, jump in here if you will. the secret sauce of this is the heart of the matter, which screams we are data dependent. lisa: we will get there in a second, julia. to build on what you are talking about, productivity filling the gaps at a time when we are learning to live with this new rate structure, do you believe the long and variable lags or have we already adjusted? julia: there are two channels -- the capital markets channel and the argument that through forward guidance the lags they are are shorter than they were. that resonates. we see the fed engaging in a lot of -- then we have the credit channel, that moves a lot slower. something like commercial real

estate has yet to reprice and reset to a world of higher interest rates. the credit channel just takes longer. there is more fixed-rate financing. the full impact of monetary policy still has long and variable lags. those are difficult to calibrate in real time, and that is what leaves the fed data dependent. lisa: we are looking at a situation where we could be entering a quiet period, because we won't get data if the government shuts down for the foreseeable future, how much can you lean into the upside risk, as opposed to the downside risk of a consumer getting increasingly strapped, that has run out of savings, and cannot afford prices where they are? julia: we have a tailwind from spot inflation. inflation has been trending rapidly lower, much faster than the fed expected.

we'll rates have just taken another 75 basis point leg up. the fed does not need to do anything here. as long as inflation keeps coming in below where it has been on its way towards the 2% target the fed should say less is more and hold its fire. inflation risk, the whole notion of reinvigorated inflation risk comes from equating growth with inflation pressures, but if you have productivity that breaks down. tom: dr. coronado, the jobs report we see for september, do you have clarity with it or is it a tossup? julia: in terms of whether we will get it or not? [laughter] tom: i'm not talking about the shut down. what are we going to see in that data? julia: in contrast to the gdp tracking, we have really seen

some cooling in labor demand. we have seen it in job openings. hiring has been narrowing. the sectors hiring have narrowed. we have seen no evidence of broad-based layoffs. demand has cooled off considerably. it has narrowed to a couple of sectors really driving job gains. i would expect to see moderate, modest gain in jobs. tom: that is going to be the first question on the jobs report. this is a joy. let me give you an anecdote of the romantic world of bloomberg surveillance. we were sitting in the washington office. i turned to michael mckee and i said, "mike, if i can get tickets in this section 42 rose up and the -- 42 rows up in the

capitals arena rink, do you want to go?" and there we were sitting over of that can's -- over ovec hkin's shoulder watching the game. mike m.: they have fallen off. the real question is whether ovechkin can score 40 goals again. tom: we saw that game. on radio you are seeing images of the game we saw. can ovechkin go over to the washington commanders and sellout the season? [laughter] mike m.: the commanders have been playing better, you have to give it to them, i suppose. neither one of us is a commanders or capitals fans. we have our own teams.

tom: it was a vignette that we showed up to the capitals for 30 minutes or something. we talk about that in a minute with sheila johnson, a force. we have been remiss with all that is going on. the jobs report -- lisa: especially at a time when people are expecting that kind. of resilience to continue jobless claims have renewed importance after he keeps coming in lower than expected time and time again. tom: i don't have the patience for it, but are we at a 75% probability on shut downs? lisa: some people are saying that. tom: lisa and i will recap the markets. it is important. lisa: right now we are looking at markets that are doing alright. they are basically staying

around this 4 to 5/10 of a percent decline. i was looking at what stocks are driving at lower, and his consumer discretionary is. it is some of the big tech stocks. it is a motley picture of people trying to game out what we can glean from yields where they are. tom: maybe we are in an information gap there as well. brent crude make it $93 a barrel. the foreign exchange is interesting. on sterling 121.81. that speaks volumes to weakness on cable. it is still the bond market we have to go back to. lisa: i do not feel conviction this morning. i don't feel conviction anywhere. do you? are there any screaming buys? everyone is trying to adjust

to where we are in figure out what is noise and what is signal. tom: that is the data dependency. we have not touched on that yet, but the degrees of freedom that authorities in japan have -- i am on the edge of nil. should we be alert tonight? lisa: intervention? you think so? lisa: -- tom: the challenges of japan, we barely touched on that. coming up, this is an extraordinary story. sheila johnson will join us. you know her from bet, the johnson family, everything they have done in media and sports. it is an interesting story. this is bloomberg surveillance from new york. good morning. ♪ tyles.

it's possible. with james hardie™.

>> i think it will be hard to

get inflation back to the target. that means if inflation is sticky, we will see additional interest rate increases, and ultimately that probably does lead to a slowdown in the economy, whether that is a recession or just a slow down is hard to say, but it would be unprecedented to go through this type of tightening cycle and not cs get to a little bit of slower economic growth -- see us get to a little bit of slower economic growth. tom: why don't they come out and say -- i was talking with bank of america. i was talking with dr. hot cs and what i find interesting about his research is it really sits forward. lisa: they have to prognosticate, and they are. we are hearing about higher for longer across-the-board. tom: ferro probably would have

beaten him to death, but there is this idea of jamie dimon coming out with that statistic. lisa: it speaks to where we are in this moment. what is the ramification for consumers at a time when costs are going up? i want to look at some of the consumer discretionary stops. they are underperforming the market in the mike wilson vein of the world. when you look at the decreases in expedia in hilton. travel could be crimped. tom: i went both ways on united. i cannot find a place to sit. it was like happy hour at the university of illinois years ago! i could not find a place to sit in the clubs coming and going from london. lisa: there is still a lot of

travel. when does it get used up ? tom: i am seeing prices come down, which means people travel more. the only problem is hotelss. lisa: and they are expensive. tom: this is a joy when we talk about all of these different themes of diversity. there is a breath of clarity coming out. sheila johnson, the author of "walk through fire," getting it done, getting totally slammed by a divorce and keeping it going. she has done better than good over the years in washington as mike mckee and i were talking about, a modest -- she has written an exceptionally terse book. you show up to pick up robert

redford in a humvee? and he gave you a lecture. sheila: i got to know him because i was on the board of sundance and i admire everything he has done for the film industry. we got to know each other. he came all the way to middleburg virginia, looked down on the town and said you have to put a film festival here. we are now in our 11th year. tom: i want to go back to the emotion of the beginning of the book. you did not come out of some fancy prep school and get it going with the first million or $2 million. what was the catalyst to pick the pieces up from your childhood? sheila: it was a learning area. for the first time in my life i had to grow up very fast at the age of 16. my father suddenly left. we were a middle-class family.

we were one of eight african-american neurosurgeons, in the country so we had some sort of status in society. for him to suddenly leave, it left my mother broke. women did not have the wherewithal to have our own bank accounts for anything. that has stuck with me forever. that was the impetus. tom: what people want to know from you, i will slam it forward to the present. what do you think of the expression of our culture war now is witnessed by the corporate effort -- as witnessed by the corporate effort at diversity, which seems to stumble upon itself, or just to the general debate over this word "woke." how do you synthesize it? sheila: i don't understand woke. i understand that hard work is

at the bottom of everything i do. my value systems are there and it is important that i continue to push on. that focuses so much on race, and the pitfalls that i try to fight through it, and i deal with the people who want to challenge me. lisa: what do you make of some of the recent striking activity with hollywood at a time when people are trying to take charge of their life and don't know what the future landscape will look like with artificial intelligence and streaming, and don't have those guarantees? do you think there are legitimate issues that are not being dealt with responsibly or in the public eye? sheila: all media is transitioning so fast, even in the film industry. i know people in the film industry. they are seriously concerned about what their futured are going to look like. i deal with the film festival.

i have a film advisory board, and they are talking to me all the time "will we get any films this year? are there any films being shot?" the landscape is changing quickly. tom: you have these great vignettes. you are sitting there one day over your coffee, ben's chili bowl, you street lunch, i think we can do that. whitney houston wonders in! what is it like when whitney houston comes in the door? sheila: she is one of the most beautiful women i have ever seen. she was very thin, very beautiful, but troubled. i admire her. she is a great talent. that was one of the fun things about bet. ucl of these celebrities you have heard about, and they are coming into your studio -- you see all of these celebrities you

have heard about, and they are coming into your studio! tom: in some ways it blew up. i have to drag it forward now. sheila johnson, another cup of coffee, except it is a fancy cup at the tower hotel and it is you and mr. iger. what is your advice for the modern train wreck that is disney? sheila: that is something i really can't answer. disney has always been a force. it is a force in media, entertainment, and i am terrified about what is going on in florida right now. lisa: if you push it forward from your bet experience, would you be able to found that company in today's world? sheila: this question has been asked of me many times. i am really concerned about where bet is now. we need to look at it.

i have not been happy with it for years and years and years. there is not enough balanced programming. i think the landscape and the racial landscape of what african-americans are watching is changing. i think we have got such a broad perspective of people out there that want something different, especially this younger generation. we need to reevaluate what are the goals of black media? what are our answers? sheila: the heart and soul of your voice, we will wrap it up here, but the heart and soul of your work is to find a middle ground, and in these culture wars -- i was weaned on edmund burke, senator from massachusetts. how do we get a fractured america back to a middle ground? sheila: i think what we are doing at salamander through my company is we are bringing in

programming. i have taken it from bet into the hospitality business with the film festival. i have been able to check the box on the diversity issues where i bring in top black chefs from around the country to celebrate food from the black diaspora. we do it in a fun way. we bring the american ballet theater in. i like to continue the entertainment part of it into my hospitality company, and that is where we are answering many of the questions. tom: sheila john bet "walk through fire." lisa: it is an important conversation to be had. we talk about all of the dissidents on the social level having an honest conversation. tom: what will be due at 9:00?

we have house -- we do at 9:00? we have housing data? lisa: we have housing data. tom: good morning. ♪

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matt: from new york city for our viewers worldwide, i matt miller in for jonathan ferro. futures down across the board. 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. matt: