>> we see this steepening and that should give investors pause and think that there is a fiscal risk premium coming back into the treasure market. >> one reason it is so high compared to other parts of the bond market is there is an enormous of five treasuries. >> there is a buyer strike in the treasury market. >> the 10-year needs to stabilize. >> the fact that 10-year yields are higher is probably consistent with what the fed is trying to achieve. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa

abramowicz. jonathan: live from new york city, good morning, good morning for our audience worldwide. this is bloomberg surveillance alongside tom keene and lisa abramowicz i am jonathan ferro. the best day of gains since mid-september on the s&p 500. bonds are just settling down a little bit. tom: i will go with that, but it is fragile. i would say that it is a fragile calm at best. after the festivities in washington, the matt gaetz interview yesterday, i have had time to look at a set of charts. i won't bury you with the details but it is a peter pan economy. i have never ever seen some of these charts in any of my studies. we are in a bond land that is never ever. jonathan: the bloomberg team has done fantastic work on the numbers.

the price disruption. the bonds showing 10 years or more. slumped 46% since peaking of march 2020 according to data bloomberg. just shy of the plunge in the aftermath of the.com bust. the destruction that we've seen in bonds is almost as bad by some measures -- almost as bad, by some measures worse, than what we saw in the dot com burst. tom: the 30 year guilt has worked out. the price takes you back on a 30 year british bond, 1998. we are going back to 2006, 2005, 2007, may be 2000 all the way to the great financial crisis. this is a tough chart to see on the x axis but we are back to the financial crisis of 1998. jonathan: do we need bad news to

put a lid on this? maybe we do. the adp report that no one cares about. it was amazing to see. lisa: the fact that barclays said that the one way to get a rally in the bond market is to see a crash, this is essentially what it seems like is the prevailing thought. that if things get bad enough in the financial markets it will get the fed to reverse course on some level. at a certain point my real takeaway is there is a deep frustration at the resilience of stocks to some of the selloff. tom: a lot of people are circling the word hope saying i hope that stocks go down. there is a lot of that going on. to get ahead of october 13, most banks will survive. i get it. come on. there have to be a couple of people getting hammered right now. jonathan: the bank of america. tom: internally.

you have this wonderful conversation with mary daly at the economic club in new york. not mary daly or any other fed president or governor, but their staff, you don't think they are looking at the selected 200 banks? lisa: my guess is every morning they look and try to understand. will it be a circuit breaker moment or a slow grind that is kind of a boiling the frog moment where credit is withdrawn from the economy and suddenly there is a wake-up moment where suddenly people realize that this is a very different economic trajectory with a much worse outlook? tom: don't use boiling the frogs with mary daly. they have restaurants in san francisco where you eat frogs. jonathan: what restaurant? tom: i don't know. i have looked at the menu and said, are you kidding me? lisa: can i call you out. john said it looked a little better. you said, just wait. jonathan: it is to against one.

tom: if you take 30 banks in whatever category, 29 of them will be fine. there will be somebody who got the trade wrong, got the overnight wrong. we will learn about it. jonathan: i am with you. jp morgan kicking off next friday, october 13. equity futures on the s&p 500 declining down .3%. the best day on the s&p going back to mid-september all the way back to august for the nasdaq. a decent day of gains off a big move in the bond market. yields are stable this morning, going nowhere. 4.7 373 on the 10 year. the dollar unchanged, 1.0506. lisa: 8:30 am we get u.s. initial jobless claims. i'm curious if it ticks up. since the pandemic you have seen it flatlined. the fed speak today includes the

cleveland fed president, the richmond fred president -- fed president, mary daly a new with myself. tom: absolutely grilled. lisa: michael bart 12:15 am, which i know you are interested in to understand the banking response and potential stress. european leaders are meeting in granada, spain to discuss ukraine aid and speaking about iation and enlarging the eu. this is their first meeting since they announced the probe into chinese electric vehicles. how much do they build on this in light of a rather fraught tension with the u.s. with respect to aid to ukraine and understanding how they are going to movefoward economically? to: i just wonder if all of the intelligent discussions on ev and the rest completely are overwhelmed by the migration discussion? jonathan: meetings by eu leaders --

tom: you lived at them. i have never been to one of these meetings. it is like watching paint dry, right? jonathan: no thank you. lisa mentioned barclays, only a stock crash can rescue bonds. do you agree? >> we don't. good morning, everyone. the economy is still in a good place. not a great place. we think that there is probably an incrementally modestly positive enough for the bond market to settle down. this morning you had revisions to july exports from germany. also a worse than expected current exports from germany. that has given the equity market some degree of relative calm. some data points are incrementally flat to slightly negative. it is probably enough to get the bond market as opposed to the minsky moment where we wake up and something really bad happens. we think that there are other variables that will get rates to

settle down, not the really bad cataclysmic-type of action. jonathan: are you saying that the ideal data point is one that is slightly negative? not bad, not great, but slightly negative? eric: let's call it slightly worse than goldilocks would be the role of the day. this friday's job friend, if we see something that is like 250 versus the expectations of sub two and we see a fanning out of job filling, that would be viewed as more concerning. this is an economy that is still in a good place. i don't think that we can move past that. the data is certainly incrementally getting worse, but it is still from a very strong level. that gradual wind down of positive news we think is sufficient to get things to settle down as opposed to that knee-jerk reaction. tom: a critical question with the bond hemorrhage that we are

seeing. is this a time to diversify? do you want to diversify here, or do you want to be more focused in sector selection? eric: our viewpoint has been to have a 60/30/10 approach to laddering duration. that means if you own a good pool of bond assets, 60% in the sub two range in terms of duration, years of duration. it is called 10 out. the diversification by sector standpoint, you aren't getting paid to own investment grade corporate credit versus treasury. that is not a high conviction area. we think that there are spots that are a part of the monarchy you can access their different ways. that is a spot where you are picking up coupons.

tom: what about in equity. everyone is like equities are not being hammered by bonds. we will look at price down in bonds. in equities, will we enjoy price down and diversify, or focus by sector bets? eric: i think priced down modestly over the next quarter. that gives you a chance to do a couple of things. we have been saying tech has been a great winner. the earnings momentum is there. earnings expectations are lofty for q1 and q2. we would be overweight technology but trimming back some of the excess return. the second area that we think is attractive is energy. this was the darling last year. it is at a very important technical level now if you look at the variety of different utilities. we are sitting at key levels.

>> envision a world with 10 year yield above 5% for a sustainable period of time. jonathan: one of the best on the

street. i had to say almost -- sounding spooked. here we are 50 basis points later on the 10 year, does not want to get in the way of it. lisa: i think a perfect time to stay on the sidelines. the phrase he use. at what point are we looking at technical levels and riproaring rally or structural change were price-sensitive buyers are the ones out there. as a student buyers are not in existence no more -- insensitive buyers are not as existed no more. jonathan: take a listen to this.

this quote from the walmart ceo saying on people taking ozempic, we definitely see a slight change compared to the total population. a slight pullback as the overall basket, less units, slightly less calories, how things are changing at the biggest retailer in the country. tom: i look at walmart and i look at my ozempic. degree selec -- the green select, natural tea. that is walmart selling me. 27.97 per bottle and that is the industry that is there you walk into walmart. jonathan: the weight-loss industry. great to have you with us on the

program. fantastic as always. walk us through how much detail walmart has on something like this, how the contract shoppers to find out these things in real time. >> it is fascinating and it is the new era of alternative and big data in action. the first think we should say is walmart isn't tracking individual people at what they are taking and biting. they are looking at group of people and they are saying because they have such large pharmacy operations, they can look at how many prescriptions are dispensed. they can look at that group of people who are on a particular medication and analyze their spending habits. this is really indicative of the health and wellness pivot these biggest retailers making the past few years. jonathan: how big a slice of the overall shopping base of a place like walmart are ozempic takers? we can track people on ozempic

and we know they are pulling back. sarah: i do not think they actually disclose how big that is. it is a small percent but we look at the overall health profile of the american public, the use of drugs like ozempic or other way management tools, it is growing. there is a health crisis in the country. we would expect that group of people that are on drugs like ozempic is only going to grow and it is why retailers are paying attention now. tom: what are the side effects of ozempic? is it one big free lunch which will change your world and all of our wars? -- worlds? jennifer: i am not a physician so i cannot speak to the specific side effects but when the purpose of these drugs is to help regulate your blood sugar,

regulate your hunger level, and so, if they are effective, for individuals, that it will play through in your shopping behavior. people focus on losing way, historically have tried to change their patterns. they bite more vegetables, fewer processed foods -- buy more vegetables, fewer processed foods and that is a trend that will continue to play out as we see people benefit from the drugs that are out there. lisa: morgan stanley crunching numbers and expect 24 million people, 7% of u.s. population, taking some sort of weight-loss drug similar to ozempic by 2035. it is a survey is currently taking it. how much is this going to be an issue for companies that have designed themselves in the

retail business around the snacking culture, bags of chips? jennifer: that is where you see companies bringing its up as a snacking company taking a closer look at some of the trends. when you look at companies, they have initiatives in place and are focused on smaller snack sizes so -- pack sizes, things that are -- you do so in -- you can still indulge. reluctant to see that in response to people trying to manage the calorie intake a bit better. lisa: the tactic that was coming after a decade, many decades of growing up with snack culture, i am wondering how awkward it is from a pr perspective for some of these companies to come out.

they have to embrace the healthier eating even though they have grown out of the opposite. bite more, eat more -- buy more, eat more. and that is part of the problem. jennifer: it is. indicators over the years to reduce sugar, lower sodium are things the companies are going to fall back on and say we have been thinking about you for years. whether that is -- how much people believe that or not, but it is what the message is i would expect they will amplify as this goes on. let's not forget there is a whole other segment out there which is fast food which could be impacted by this taking of these drugs. jonathan: 26% of u.s. adults said they are interested in taking drugs like ozempic for weight-loss. tom: pepsi -- i am gasping

because i missed my ozempic. pepsi is selling into walmart. they are a meeting with what do they do. jennifer: i think for retailers like walmart and these package companies like pepsico and others, it is about having a conversation. it is about how you find mutual benefit of the products you have, where you going to choose to do promotions and marketing, and how you're going to let the customer know there are parts of your brain portfolio that can meet their needs, regardless of what your individual focus there are people who do not care what they eat but for people who are one of these drugs are looking to lose way, this is where the idea of pernlization and floating

things up to customers, based on their of their pattr come into play. it is going to be a collaboration between the brands and the retailers to position products in the right way for the right customers at the right time. that is the pattern we have been seeing with are talking about their approach to how they're going to be doing marketing and personalization going forward. jonathan: wonderful to get your insight. a lot of this stuff is like the next decade. teachers now -- barclays recommending shorting fast food credit because of ozempic. lisa: you talk about 30% decline in calorie intake and people will probably made this a partially frequent some of these outfit you're talking about a real loss of financial revenues. i am wondering how you extrapolate who is going to take

it, how they're going to take it, what else has developed, and what is it due to model built on the snacking culture. tom: i do not know about the bramo house. it is gluten-free. at my house they are eating the doritos and salsa verde. jonathan: i go into your house and i bump into a bar cart. tom: but the bar cart has wh eels. do you have doritos? lisa: i am not into that. jonathan: coming up, sarah hunt will be joining us. ♪

>> we see and i think it should give investors pause and there is a risk premium going into the treasury market. >> there is an enormous supply of treasuries. >> there is a buyers strike in the treasury market. >> the 10 year needs to stabilize. >> the fact that 10 year yields is higher i think is consistent with what the fed is trying to achieve. announcer: this is bloomberg "surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: what a month it has been for the bond market. live from new york city, good

morning. this is bloomberg "surveillance." equity market trying to stage a recovery this morning. decent day of gains on the s&p 500. pushing ahead to payrolls friday. jobless claims later this morning. tom: it is really germane to the debate forward for the fed and fed to speakers. mary daly with bramo today. at the economic club of new york. we have massive distant version is still going on. it is calmer. jonathan: looking ahead to the fed to speak, barkin, barr, daly.

they start to talk about what is going in the bond market? lisa: the kind of have to created there is an interesting story on the margins the bond so the end the discussion for a soft landing because you're in condition tightened dramatically on the long and. do they lean into this? usually you see bonds rally only long end as people expect downturn and for fed rate cuts. tom: michael barr today. this is about the banks. it is about october 13 with jp morgan trust outcome assume jp morgan made the right decision. their market strategy is unreal. they're going to do market strategy. they go to get the bond market right again. there's other banks out there. this is what people are looking

for, some sort of circuit breaker to cause a renewed rally in bonds and thus the question. if there is not a desiccant record, you end up in higher yield environment that is different from any think gotten used to the past couple of decades. jonathan: outside of bonds, what is the market telling you about the economy? discretionary sucks. is at that tell you outside of bonds, the market is starting to think about that we can is in a way it had not a couple months back at the -- couple months back? lisa: absolutely. you're right but that is kind of by design. it is* a future, not a bug so we end up seeing it accelerate and in a unfairly way that is when the fed will care the not it is what they have been trying to get the market to obey to. tom: bloomberg index going to a negative statistic. super restrictive. jonathan: it the objective right

now. equity futures slightly negative. yields come in a couple basis points. 4.7144 on the 10 year. crude, oil having a rough 24 hours. 82.5 on wti. lisa: that is when the biggest mysteries when you say look outside of bonds. we're looking at economic data. what confirm the weakness -- will it confirm the weakness? continue to go down so we shall see. to date we have fed speak. cleveland fed president, richmond fed president, mary daly at noon the economic club of new york and fed vice chair for supervision of michael barr at 12:15 a.m. i'm curious about what michael barr has to say but more so is there a theme that starts to develop between all the fed speakers and how they are looking at some of the

moves we have seen in longer-term bonds and today in the eu this is an interesting moment for aid to ukraine, the european china tension. leaders meeting in granada, spain talking about ukraine aid, curious to hear what they have to say about u.s. also migration. this is the first meeting since the bloc announced is probe into chinese electric vehicles. tom: biden is also looking at ukraine with greater focus. jonathan: regard to get a speech on ukraine -- we are going to get a speech on ukraine aren't we. sarah hunt joins us. crude was dreadful yesterday. i know things are looking a bit better on the stock outside of things. a gasoline demand assault a recent read. what do you make of recent moves? sarah: if crude prices rise quickly than gasoline prices come up and you have a backing

down in demand and i think part of the demand numbers and gasoline and the parallel to the bond market which all of a sudden the market is going if we have it recession, crude prices may be too high. part of the reasons they are high is because saudi's have taken some of them off the market. i think that the supply side stay restrictive and they'll be the longer-term story. you're going to have these moves. the stoxx have not caught up to the higher prices incurred. they're still some room in there but it is going to be a volatile trade. tom: i'm calling this never ever thursday because i look at bond charts that i never ever thought about. mathematically it is truly regional territory. how do equity participants react to never ever things in bond market? sarah: i think it is problematic

for equity markets you having convulsive moves in the bond market and i think part of the issue with equities has always been if rates stay higher, what are we discounting cash flows at? you got the stability of earnings and a lot of cash on their balance sheet but i think the question of what everybody else is going to do and how it will impact people's balance sheets from corporations in europe breaking down and issuing bonds at higher rates may would have one year ago. are people accepting that and if so, that will take the money out of the statement because they will pay higher prices. some of that will impact the earnings for next year and that is what i still do not believe reflected through next year. tom: the heart and soul of this q4 into next year, you go with a diversified, virtual index fund, or are you active and to a less diversification approach? sarah: i think active.

more narrow. also looking at where you might think there may be vulnerability and indexes cannot do because they're going to rebalance the way they rebalance. there are some places that will continue to be vulnerable. lisa: do you think the bond selloff coherent with the other moves we in the market? sarah: it is hard on the short-term moves to figure out if it is technical problem. where are these moves coming from and i think it is difficult to parse that out and say how it interacts but i think large positioning changes and windows happens it is not always easy to see. questions about whether the boj was intervening because the yen went through. i'm not really sure on those very short-term moves but longer-term they will start to make more sense. you've had correlations that are different the last couple of years then normal. make more sense is a relative term. lisa: if yields stay at levels

we are seeing right now, if there something fundamental behind this or structural when it comes to price-sensitive buyers, how much does that change the equation for you, in the equity spare? aside from the specific bets, is there a rethink with the other ways we have had to equities? sarah: i think guessing that for the last two years. since the fed started raising rates the question has been were is bonds. i'm now putting them back in a portfolio. you talk about price erosion from the lows -- when 10 year were sitting at 20 basis points, the fact we are up at levels over four, i think people looking at it that the whole time, but the problem is the prices have been coming down. people have lost money in bonds in ways they had not last several decades. i think there is absolutely room for fixed income in people's

portfolios. they're putting it back but that was traditionally where you had participation anyway. i think high can resubmit that something people to get more seriously especially as the ratio looks higher -- higher rates something people would get more seriously especially as the ratio looks higher. jonathan: average fed funds going back to these 70's. average is 4.93. is anything on a longer bond close to 5% streaming by base or can you tell me things are going to be markedly different the next couple of decades? sarah: you could look at some of those numbers and say we should have hired recently long end but i think about what that is going to cost governments, i have to wonder whether or not they keep rates that high and i'm not sure we can control it belonged --

the long end but going back to what we should think as normalize is difficult given we have this massive amount of government balance sheet. jonathan: what is normal? the last 10 years? sarah: that is going to be i think the biggest issues plank out going forward. is the more normal what happened after the great financial crisis and now we have the love a balance sheets for governments, do we stay here and every time we have a problem we attitude them? is that break something eventually? do we go back to something before that? i did not know what the answer is and i think part of that tension will play out going forward in bond and equity markets because it had an effect on the equity markets. jonathan: you can feel the tension at the moment because to get yields people have been wanting for a long time and it is the refusal to jump in. lisa: people do not understand it. they do not understand how much is behind it and whether it is the new normal. new normal can be higher. why buy bonds if we are seeing

4.7% of the 10 year but it could go to 5%, 6%. jonathan: 4.71 on the 10 year. the two year, we are down about three basis points, still north of 5%. if you're just running in, -- joining us, welcome to the program. yields a little bit lower by a couple of basis points. 4.7144 on u.s. 10 year. the dollar showing some weakness here. keep going back to the commodity market. september it last year i yesterday session, we are down another 18% this morning to $82.70 after we heard on the triple digit crude moves. here we are back down. tom: maybe it is a discussion of

global gdp and where demand spins off. i do not know. i cannot emphasize enough how original a place we are in shifting, you had the bloomberg article on price analysis of bonds. there is no other story this morning. lisa: just to pick up on the crew the story. the idea we got this massive decline in price, how quickly narrative chips and how exhausting it is. one way people are talking about runaway growth. all of a sudden oil prices to the moon and all of a sudden they are sinking like a rock and people are saying things are cooling down, rates having restrictive policy. this is narrative r oulette. tom: six trading days that going well over standard deviations.

jonathan: sarah, thank you. sarah hunt of alpine saxon woods . coming up, amh in washington weighing in on the recent drama in the nation's capital. peter tchir coming up at about 8:00 a.m. eastern time. all that still to come. good morning. ♪

♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines. was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com >> my mission is to ensure the house of representatives run better. if kevin mccarthy passed a budget and follow the law to move spending bills, regardless of what is going on, he would be the speaker today. it was his unwillingness to do that started it into the agreement he made in january to become speaker that led us to this moment. jonathan: condiment matt gaetz speaking to bloomberg -- condiment matt gaetz speaking to bloomberg on balance of power. jobless claims later this morning. tomorrow payrolls friday. price action looks like this. equities trying to state a recovery and turn positive. we are negative by 0.2% after a nice day of gains on the s&p. the bond market rally continues.

10 year 4.72. fed speak of this morning. kashkari, barkin, barr. looking ahead to bank earnings in two fridays. mary daly later at the economic club of new york with lisa abramowicz. bloomberg tv and bloomberg radio. tom: it would be an important conversation. to review this, these troubled banks was on the daily watch. lisa: the oversight to the svb situation. we are at a moment where it goes beyond the banks. it goes to the question of at what point is rate, at these levels, unsustainable for an economy built under a low rate regime. i think that is what everyone is grappling with including fed officials. tom: annmarie hordern and joe

mathieu with their important conversation last night of the congressman from florida matt gaetz. you are at the capital. kent matt gaetz get a drink at the capital grille? what is the reaction of washington to what he has wrought? annmarie: if you want to know, where matt gaetz hangs out is the old trump hotel. it is no longer owned by the chung family business -- trump family business but this individual is not a like amounts's conference at the moment and your hearing voices say they would like to expel congressman matt gaetz come

of the driving force behind the motion to vacate. there is a lot of buyer and fury within the -- fire and fure within the republican party and your hearing this will not be wrapped up. they think this will be a long drawn out process. the battle lines are drawn and they have such a slim majority. you can see it is difficult for the heart right flank and centrist to get together behind one name. tom: i think it is interesting. 4% of republicans -- 96% of republicans do not believe in all of this. does 96% of republicans, do they have a favorite for speaker? annmarie: it does look like it's either going to be the top two contenders. house majority leader steve scalise. an individual that is a fighter.

he survived a shooting, and assassination, undergoing treatment for cancer but he says he's ready and then there is jim jordan. this is someone who is a big fan of donald trump. he's house judiciary chairman. he was a backer of kevin mccarthy. he said to us before the vote, i'm going to support kevin. i do not want this job but with kevin mccarthy out of the job and out of this speakership chair, it does look like jim jordan now says he will go for it. the issue is somewhat like jim jordan, what is it look like for condiment wall or in the hudson valeant district, that biden one won by 10 points? it is why when it when you're out to next election, it is why it is difficult for the centrist and the moderates. we should note, congressman matt gaetz yesterday at one of the brink of the rule, which is not a real role but something

the public is like to live by and he says it is issue what he is a bit concerned with ukraine because majority do not report any public -- republican side. lisa: does matt gaetz have the support of his constituents? annmarie: he's in deep red district. what he has been doing off of this is fundraising. i'm not sure how much money he has been making. but he was fundraising off of asking the speaker. he says he is bridging, since back to washington. -- bringing common sense back to washington. he continued to talk about so -- 12 preparation bills. he is in a deep red district that he has some's support but is on shaky ground.

new york times did a dive into how he is a little controversy back home -- controversial back home. lisa: how much consensus there is, aside from people called the fringes, and yet yesterday patrick mchenry reportedly kicked house speaker nancy pelosi out of the office to put kevin mccarthy merritt's house role in the space. this is big to a real animosity that is going to make it difficult for anything to get done and congress to get back up and running? annmarie: the need to elect a new speaker. there is debate about how much an interim speaker has. with a potentially a government shutdown come in november. when you look at policy being kicked out, is that just -- nancy pelosi being kicked outcome is it retribution? it is a hideaway office within the

capital. i think it was quite telling speaker mccarthy when he had the q&a with reporter, he said he gave this motion to vacate. one individual can ask the speaker come he said he gave that to the far right as part of the conversations because he said nancy pelosi said to him i will always have your bike, i want to protect the institution. jonathan: consequences of all of this. do you since the president is softening on certain issues regarding what security and doing so in exchange to get ukraine aid? annmarie: we note the president wants to start building 20 miles of a wall a part of that border of texas and mexico. we should note today we have secretary blinken, mayorkas, merrick garland in mexico talking about fentanyl, there was talk about guns that they will talk about guns.

mayor adams is also making a trip to the border this week and you have the letter from governor of illinois sending to the president saying more needs to be done about what is going on at the southern border. jonathan: massive campaign issue potentially for next year. annmarie: 100%. jonathan:amh on the latest in washington dc. it is not just about ukraine aid come it is about pressure within his own party, from his own democratic colleagues in blue states and blue cities. tom: the governor of texas has got to say i guess i jumpstarted the debate but the answer is you mentioned earlier, mayor adams of new york in parts of central and south america, talking it up. lisa, i thought you had a great point they. it is front and center. lisa: my problem with it is just i do not know that there's any

kind of ability to come to a consensus about actual, rational immigration policy that would need to be changed to create a situation. it is going back to some classic, hot button issues that are -- lizzy: i think america is not on the same page of the politicians. i think america has a whole another view. jonathan: kelsey berro of jp morgan joining us very shortly. 10 year 4.72. from new york, this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. we have been able to reach over 100 million people impacted and affected, and at risk of hiv. the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: great guest coming up on the bond market. equity futures and s&p looking like this. pulling back by 0.15% on the s&p , following the biggest one-day rally on the s&p going back to mid september. a rally yesterday triggered, inspired by a downside surprise and adp. we see that changes with jobless claims later and payroll on friday. 10 year 4.72. to had a look at 5%, we are back down to 4.86. were up a single basis point.

how quickly things havehow quicn the space of a trading session. in foreign exchange, the euro showing weakness against the stronger dollar. 1.0519. on surveillance this morning, chicago fed president austan goolsbee saying the timing of the bond selloff something of a puzzle given no major change in the fed latest projection. he said he is confident the u.s. is on the pad to the mother of all -- path to the mother of all soft landings. bramo will be sitting down with mary daly. andrew hollenhorst of safety, and officials were not -- of citi, fed officials will not push back. lisa: they're not going to push back if it confirms the higher for longer thesis. they want this. it is going to affect the policy. the mother of all soft landings, we cannot let that go.

it is the irony of the moment. how do you reach of perfect equilibrium and create create ta and romance surrounded that you normally get with a crash, a selloff? tom: some of that is the language of goolsbee. the word puzzle is that we do not have a theory on this. there is in a boo -- not a book that can explain this to him. we are at, on this thursday, never ever. jonathan: so little confidence about what has driven the mood of the last month on the 10 year, 13 year. crude all over the place. biggest one-day loss over a year. most of september last year. andrew hollenhorst writing bond markets signaling economic

weakness and u.s. gasoline demand continues to lag, collapsing prices likely inform the opec-plus decision to stay the course on output cuts to year end. that is interesting interpretation of what is happening on fixed income. lisa: i would agree and i also think it speaks to the fact we do not understand what is driving a lot of market. narrative table tennis. i've been into that because it highlights create a different narrative around the oil market depending on who you talk to how you frame it. it feels like depending on the day, the price action we get a different one. jonathan: bond signaling economic weakness? typically what you expect for a bond market signaling weakness would be may be full steepener. rally at the front end. maybe a rally at a long and. -- end. it is not what we have seen. lisa: it is really signaling

strength however some people could argue finally the bond vigilantes pushing back against a fiscal instability feeling in u.s. economy that could speak to a weakness going forward that i can tell tom -- tom: i disagree. there was a complexity here where there's a stabilized drift functioning. like a rock, the rock dropped. the freefall we are in now is simply like in equity, the bid went away. i would not overthink it. the bid went away. jonathan: that kinda sums it up. president biden sent his dog away, commander. the second german shepherd he has had to relocate following

biting incidents involving white house personnel. commander is gone. tom: what took so long. i have dogs like this. what took so long? that is my only question the. jonathan: do we know where commander has gone? tom: a northern road. jonathan: stop it. [laughter] lisa: you asked for this. it is are you. tom: in rome, just before old forge. jonathan: commander is at a safe home if there any children listening. tom: for global wall street,

were going to freeze time. from bob michele and kelsey berro at j.p. morgan and were going to ask you to look at baseball question. explain without addressing your bank, your business, jamie dimon would say -- the decisions be made of my bond losses, i have to market to market versus i can heist them somewhere else. kelsey: we've been talking about the losses in the bond market, i think it is important to put into context, the majority of the pain was last year. u.s. down 13 percent but more recently we have seen the backup in yields and pain that is coming. i think the reason why distress in the banks less acute this time around then in march is

because of the btfb program. etfp fed to put in place in march and i think if there is one thing that was crucial to turning the markets around at a point we were stress, very uncertain about how things will go in the future, the program was important because banks can pledge the treasury securities and even though they have a price in the marketplace of $70 or $80 the committee pledged at par. there's been a civilization factor that was not there during the march crisis. jonathan: are we saying these are advised -- unrealized losses get greater, the matter less? kelsey: they are muttering less now but there is still stress. even though the facilities is in place, people music it, 108 million in the facility, this

going to be pressure on margins. it is not only about the mark to market losses about about the fact the interest margins are under pressure. as an investor in financials you need to be very cautious about where you are investing, understanding the portfolios and balance sheet of the banks you are investing in. be aware of the game changer that was the way the fed reacted in march. jonathan: are the banks ability to finance curtailed by the dynamics we are talking about? kelsey: yes, if you look at the data, what you're going to see is credit has been contracting in the economy. cni lending it is negative. if you look at senior loan officer survey, it is showing there is tightness in credit conditions. this is exactly what the fed wanted.

they want to engineer tighter financial conditions. i disagree with the quote from goolsbee that he does not know where it is coming from. i think it stems from the september fomc meeting and the dot plot. they still show botched next year but what they showed -- show cuts next year but they show a real policy rate that goes up next year. that is a hawkish message and the market is still trying to digest that. lisa: if you're talking game theory, this is the idea, it sounds like the fed is trying to signal hawkishness, engineer the landing so they can reverse course and cut rates. how do you respond to people, including what we heard, there is a structural change in the bond market were some of the long-standing price sensitive buyers are no longer there? kelsey: there has been a big repricing and i think it is why

you need to look at this not just from an emotional perspective, not just from the ping pong narrative but also logical perspective. what do valuations look like? what are the guard most of the evaluation? look at the five-year real yield it is around 2.3%. that is the same or the average rate the five-year five-year real yield was from 2003 to 2007. we already reprice not just to precode levels but the pre-gofc levels. it is already happened. lisa: i know you have been bullish on treasuries and talking about going back down to 3%. have you reconsidered the call especially in light of the structural changes? we can talk about inflation but treasury auction sizes will increase on average 23% in 2000 24.

we have evidence the central banks around the world no longer buying -- that central buyers are no longer buying. kelsey: the technical matter particularly in shorter-term horizons but we think the fundamentals and valuations are going to weigh over the technicals in medium-term. inflation, three-month run rate on core is 2.1%. we are at the target. were not in the 1970's in terms of economic growth environment or inflation environment. i think there has been a buyer strike. tom: they're fighting the last war, that is what you are saying? do you agree they're fighting the last war? kelsey: yes, their party inflation i think is clearly coming down. i understand why they're going to wait until it is painfully

obvious. but in my mind that only just reinforces the risk that hard landing should be more of a higher probability then soft landing because the fed is telling you we are not going to stop until it is painfully obvious the economy cannot handle it. the housing market, the mortgage application data, it cannot handle it. we think the economy is not going to be able to handle these rates but the fed will be the last to admit that. jonathan: 10 year 4.72. if you are just tuning in, welcome to the program. on the s&p 500 futures going to the opening bell, look like this. -0.01%. it sounds like -- kelsey: i would say we see value in bonds. regarding look back over a

longer term horizon, were going to say this is not an attractive entry point. he have to be respectful of the technicals. the been buying on the back. we pause when things got is orderly when he broke to 450 because we want to be aware of what's going on. valuations are attractive. it is a good entry point for yield investors. jonathan: have you seen enough in credit yet? kelsey: not enough particularly in high yield. it feels perfectly price for the soft landing. if that is all you're looking at, high-yield at 8%, that is very compelling, especially versus historic equity market returns. if you're just looking at it on a spread basis, that spread market is telling you 80%, 90% probability of soft landing. no cushion for downside risk. the market is never never land.

we think we can never have a recession, never see growth slow, never see inflation come back to target and i would challenge those ideas. jonathan: soft landing, hopes and dreams. tom: that was a clinic on so many different runs. jonathan: it is good to see you. later, we get jobless claims data in the next hour. the data -- the data around the corner. going into parables tomorrow. live from new york city, good morning. ♪

endless hardie® siding colors. textures and styles. it's possible. with james hardie™. ♪ (captivating music) ♪ (♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪) >> i'm frustrated beyond words. there is this obstacle to governance. we have our disagreements, we differ on issues but what is happening in the house is just total chaos. will be moving ahead with the 12 appropriation bills. with the do our job -- we have

to do our job and were just going to let the house do its part but we have to move ahead. jonathan: senator blumenthal of connecticut speaking to bloomberg yesterday. from new york city, welcome to the program. s&p 500 about unchanged. 0.01% negative. yields lower michael barr basis points. 4.71 -- euros lower by couple of basis points. 4.71 the 10 year. the adp report downside surprise, the appetite for payrolls tomorrow. jobless claims later this morning so i know they read on u.s. labor market. tom: one quarter of tom keene is an island north of norway and they came over from northern europe and they went to the

midwest. they went from western ohio, western michigan, up to fargo. it was a hold germanic and dutch exit. the accents are different until the 19th century. huge and i use of english and our next guest is a real republican from a conservative dutch part of this united states. jonathan: i thought you were saying i am one quarter of tom keene. [laughter] jonathan: bramo, that is ru de. bill huizenga joins us now. we think we have seen for the last 36 hours and i thought of you, people of new greenish identify as a 4% of gdp. we went from lincoln, southwest of your family's heritage, how

do you get back to control of the party, control the narrative? rep. huizenga: that is a great question. i happen to see former speaker gingrich last night at a dinner. it is interesting. i have the comment, you play senator blumenthal quote and yes, the house is a bit of a mess right now but i would point out those who live in glass senate should not throw stones. they have not done anything when it comes to the appropriation bills. until this year and it was only when the house the and -- threatened and pushed the notion we needed to pass the bills that they actually passed anything out of committees. i'm glad to see people are realizing these massive, christmas tree on the bus --

omnibus bills are horrible way to move forward. we have a mess in the house. we cannot do anything until we pick a speaker. hopefully that come sooner than later. tom: maybe we ought to have some successful small business people in congress. you are one of them. you are the gravel of michigan. boating things and that. how do we take advantage in this crisis of a beleaguered small business? i think it is been ignored for weeks. rep. huizenga: you got to stop pushing that. whether it is at local level -- stop questioning that. where that is on the state or local level, i know what can happen on the regulatory level. we also know the inflation impact has been massive.

i think cathy he was on prior to me talking about the soft landing, hard landing situation. a lot of us would argue the fed was late to the table as he started to move the interest rates up. we have been paying a massive price for that on the way down. we got to stop this tax and regulatory crushing plus the rhetoric. small businesses drives the economy in so many places. in michigan, we are watching uaw strikes and those things. we got to make sure small businesses -- tom: the news flow we have had. small business in new york city getting crushed. lisa: there is a concern here being pushed and pulled on both side of inflation, tight labor market, and higher rates. you cannot borrow cheaply but congressman, i would love your sense. kelsey berro

was talking about how a hard landing looks more likely. a lot of people and i would guess might be a benefit to the u.s. fiscal profile because that would lead to lower interest expensive's. people are looking at the fact there is a leader in the house editor beating a part of the move in the treasury market and that same dysfunction in congress is allowing yields to keep climbing as fiscal profile of this nation is called into question. how important is it to you to make sure there is at least a functioning, a discussion among representatives? rep. huizenga: we have to have that. i believe a number of my colleagues, some chasing cameras, others actual policy issues. they thought they would be able to move this process along more effectively and faster by shutting down the government. my experience in 2013, 2018 that is not the case.

that was bad tactics on that part but how do we restore confidence, that is a key think. we have to get unified and quit the circular firing squad in the house of representatives. we have long-term issues we have to address. i have a bill that would call for a debt commission, fiscal commission that is going to look at all the various trust funds. it will be something that could not be amended. it would be forced to have a vote taken in the house and the senate. it allows us to address that 70% of all the federal spending that happens on autopilot. i do not touch it is a member of the house. the senators do not touch it. the white house does not do anything with it. if we do not wrestle that dragon down to the ground and have an open and honest conversation with the american people, we're going to be in real trouble if we see any of those bond rates continue to go up. we are knocking on the door of $8 billion alone in interest. lisa: how much of an obstacle is

the former president trump to getting rid discussion like this would forward considering the fact he was one of the people pushing for a shut down, pushing for to make it not happen? do not pay the bills until you get what you want. rep. huizenga: it is not helpful. i think that is a r -- eroneous strategy. getting back to the long issue, president biden and president biden said you cannot look at the massive drivers of our automatic spending, there is a mistake as well. i'm glad to see we had this bipartisan bill. seven republican , seven democrats to set up his commission. that does not matter what the politics is trying to dictate out of there on either side of the aisle. the realities are what we have to deal with as policy makers

and i hope my colleagues will step up and actually be policymakers . jonathan: thank you for your insight. congressman bill huizenga michigan. tom: he's a small businessman in congress. it is not enough of these. he ran a successful business. jonathan: would nice to get his thoughts on where he stands with the current strikes. tom: he's a bit distant from that. the bottom line is it is a part of the republican party completely overwhelmed by what we have seen from the former president, matt gaetz and his conversation with the balance of power. jonathan: what did he say? if you are an glass senate, do not throw stones?

that was a decent line. peter tchir coming up of academy securities. tom: we would do better if the house of representatives had the physicality of the house of commons where they really go at it. jonathan: i would like to see the president a bit more engaged as well. equities about unchanged on the s&p 500. peter tchir of academy coming up later. on the bond market, fixed income the epicenter of our world. 10 year 4.71. jobless claims around the corner, in the next hour. equities going absolutely nowhere. from new york, this is bloomberg. ♪

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>> there's a bar at which the fed would come in and do something to stabilize markets. that's higher because of inflation. >> this is bloomberg surveillance. >> good morning. jonathan ferro, lisa abramowicz, tom keene. quite a day. i did not buy it for a moment. i see some history being made. the important thing is the conversation forward from fed officials and i will suggest also from bank management. >> what a difference a day makes. what a difference an adp report makes. downside surprise. jobless claims in 29 minutes and i think we know the game plan. bad news is good news.

treasuries start to rally and equities get some relief. >> hail mary recovery. in those conversations to open this arrow -- this hour, how about kelsey barrow? lights out. what if we don't get price up, you'll down that shield down -- up, yield down? >> fed today. lisa will catch up. looking forward to it. you will hear from people. this from andrew hobbyhorse. fed officials one pushback. are they embracing? goolsby says he's puzzled. he says that on a podcast. i'm puzzled about why he's puzzled by that. >> it is not in the mystery

books at the university of chicago. when i say something mathematical like log convexity, under control. your world has not been. >> interesting that kelsey barrow nodded to that. she said it feels like there's another freight train involved. that's where the buyer strike comes into play. what that freight train is is yet to be determined. that speaks to the puzzle. structural implications? or is this the buyers don't want to get in the way of something that's essentially a falling knife? >> we will do this quickly because our next guest is too important. we will try to's bleak in english so you can understand the tension. >> equities just about positive.

s&p 500 turning positive moments ago. yields lower by a couple basis points. thinking about 4.90 on the 10 year. we are down by a couple basis points this morning on a 10 year maturity. two year, down two. so rates were a problem. treasuries have started to rally. the dollar was dominant, starting to weaken. crude had exploded over the summer and is pulling. >> i missed that. >> gasoline demand yesterday, latest figures showed weakness. we were worried about inventories. maybe they are starting to build again. that is the news. >> we will dive into this. you have some smart questions. joining us, peter cheer -- tchir . he has enjoyed these moves before.

bank of america, before they blew it up, bob cinch in foreign exchange experienced -- exchange, experienced, and a guy, david goldman. he told him look at the tranches. you nailed this in your note. everyone is looking at worry, distress. the david goldman tranche is the quality stuff up here. you write about previously deemed safe assets. how close are we to those better tranches of credit being previously deemed safe assets? >> yeah. i have looked at this world of you have high yields and ig. treasuries have been that safe asset. it feels like something is cracking. we will be ok. we will get the 10-year back below 4.40 because we will see a drop lower in yields, but i think something has cracked. for the first time in my

lifetime, people are questioning the trajectory of treasuries. that's concerning because every financial bubble we have had has always been a safe asset breaks, never a risky asset. we have had a whiff of that. >> it's a test, as always for developed markets. something negative happened. we got a soft adp report. isn't that a decent stress test to understand, if things do go south, this still works? >> there are ebbs and flows. people got bearish. people are trying to buy treasuries. people were reluctant. we had a bit of that capitulation. as weak data comes, we will see yields lower. then we will get to thinking what is a long-term trade? that's probably higher yields. >> there's a limit to how much bonds can rally, yields can fall. >> i think yes. there's this overlying fear that

d.c. no longer cares about that trajectory. it is problematic. if you look at the u.s. as a creditor, we don't seem to care about the dead and don't even necessarily want to pay the debt -- the debt and don't even necessarily want to pay the debt. >> you said the longer-term trade is higher yields. how much higher and what are we talking about at a time when you say something has cracked, that the selloff has something damaging inherent in it? >> no one can figure out why we keep moving lighter every day. yields keep going higher. there are a lot of things in motion. china is no longer buying treasuries. you have the supply issue. the only thing it will prevent treasuries from breaking about 5% or higher is d.c. getting its act together, starting to before budgets, something that resembles fiscal responsibility. if we don't get that, people are losing faith, and that's problematic. >> when you say that we will get a drift lower and when people

start to understand that they will go higher again, is there not a self-limiting feature? you said something cracked in terms of where we were going. are we going to get some sort of bigger financial accident? >> i don't think we get an accident necessarily. it depends on how rapid it is. i don't think we get back to 4%. i think it's a six month to one year long election. then you go rapidly above 5.5%. the reason i am concerned about safe assets is twofold. people own them in their portfolios because they were never worried about losses. if you start worrying about losses, that causes forced selling. what does the banking system own a lot of? when you see this never ending push higher, you see some forced selling there. we are not there yet but that is

the trigger we have to -- we have a sniff of this time around. we had a housing bubble. it broke a bit in early 2007. the ultimate problem did not hit until 2008. >> you are making me want to go hide under a rock. what on earth do i own if that is your outlook? >> i am bullish. i think oil was overdone. i think we are going to get this relief trade. yields start drifting back to 4.4%. so we have to suck out that kind of pessimism. >> are you saying there's a bubble in treasuries that's going to burst with catastrophic implications? >> i don't know if it will or not but that is in the awareness of everyone. d.c. can fix this. everyone is kind of grimacing because no one believes they will get their act together. that is the hope, but something

comes through and d.c. starts going back to the days where you run a deficit when times are tough but not other times. >> people listening might sit down with a financial advisor and they give them the same spiel. we will split this 60/40 and they go on to explain why. doesn't that go out the window? >> you have to be careful. what looks overdone, what does not? the two years seems safe but there's no value in it. at 4.4%, the 10 year, you know. expose yourself to equity risk. start making sure those exposures -- where you want to be in the world. continue to look at emerging markets. you see a lot of trends that are beneficial for emerging markets. >> there is a claim --

christopher whalen. he had a note last night that goes to the heart of walking away and fixed income, the whalen silence. you have a piece to sell and you go on the phone and there is nobody on the other side of the transaction. how close are we to the whalen silence? >> we had whiffs of that. that is all we have had so far. across assets, look at what's going on with oil. we have gone to this electronic trading. i think there is this perception of liquidity and depth. so the ability for markets for moving quickly because we have this fake liquidity because everyone is scrambling. the reality is moves push-ups quickly. >> bottle it. >> a big what if. a lot of worries for people listening to some of this. buy risk in the short-term. >> this reminds me of when i was

trading in 2007. you would go from 60 basis points to 68. then you traded around 68. those are the moves we have been getting in these markets. you get these gap moves. >> is this a one-day option thing? >> people are pushing on that. it is the opposite of portfolio insurance. it is used to drive markets, push trades. everyone forgets it can be used on the downside as easily as on the upside. these are not like some other trades. this is the ability to push direction. i think they can lean on markets down as easily as up. >> always walk away from our conversations with sons to think about. peter tchir. s&p 500 almost totally unchanged. negative by 0.02%.

later, someone from barclays reacting to the jobless claims data. that has been rock solid. the previous read was 204,000. the estimate this morning, 210. i believe the four week average is the lowest since february. one thing that stands out last week, i don't buy into the idea that services was weak. there were some indices that were softer but still in the 50's. >> and still higher than expected. i am wondering -- i am trying to wrap my head around some of the things peter tchir was talking about with respect to a potential bubble in the safest assets. what is the real economy does not ever notice? what if it corrects itself quickly enough that the lag effects don't take effect? this is how unused to the environment we are in now people are. >> i don't know if i should buy

stocks or hide. one or the other. >> we used to have conversations. we might as well have been sitting on boxes. >> find those. >> it was fun. >> kevin joining us shortly. from new york city, your equity market just about negative on the s&p. no drama. tons of drama in the bond market. the 10-year yield lower by one basis point. jobless claims 20 minutes away. ♪

an ever-changing landscape comes with challenges. from our vantage point, we see opportunities. as a top-ten real estate manager, we harness the power of a 360° perspective, delivering local insights and global expertise across public and private equity and debt. our experienced team and vast network uncover compelling opportunities giving our clients an exclusive advantage. principal asset management. actively invested. ♪ (captivating music) ♪ (♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪) >> we have been spooked by the clients of 5%. i think they are joining the crowd in terms of selling. we are seeing an oversold market. >> a man who has seen it all, bill gross, speaking with others yesterday, talking about a bond market seeing moves, treasuries lower, yields higher. we back away from levels. the 10-year yield down, 4.71. the 30 year breached that level yesterday. it's come back down. your 30 year 4.6%. >> we are watching. the spread has not given up this inversion. i expected it to be down.

it is not a correlated,. it is not a confirming. maybe we see that with good data in 12 minutes. >> claims and payrolls. >> we will keep you abreast of that and try to give you the best conversation we can. kevin joining us. what's important about our senior analyst for bloomberg, he has a wooden market -- mark in his garage about the number of times he's put the screw down. the real thing in the auto. i have been dying to ask you, and it's in the zeitgeist, when are we done buying $100,000 electric vehicles that way the size of a hummer h2? when does that end? >> i think soon. i looked at it and the production launch -- you are

going to get as an inflection point is if the automakers don't start to see real demand and real profitability in that drivetrain type, i think you will start to see, by 2025, beyond that, plans start to shift to something more practical, and we have been saying that might be the plug-in hybrid making a reemergence with battery technology. maybe that is a 50 to 100 mile range electric with the range extending internal combustion or hybrid engine. you are talking about 400 miles of range without the anxiety of where to charge or the charging infrastructure that is not ready. >> i have more questions on this but i believe -- lisa, there's a strike still going on? it has been buried by the news. there's no other way to put it. what is new on the uaw strike?

>> from my view, i think what you will get is a big number for the uaw, but not a whole lot else, and i think that's probably what the issues are. the automakers can the -- automakers cannot hide their profitability. everybody sees it,'at the same time -- sees it, but at the same time, with fewer units. so i think the manufacturers are saying we can give you a share of those profits but we cannot guarantee we will be growing. i think what a big number is, whether 30% or somewhere in the ballpark, it also enables the union to go and show that contract to some of the nonunion to say look what we did for our membership because at the end of

the day, if the uaw wants to increase its member base, they cannot keep going back to gm, word and stellantis -- gm, ford and stellantis. you will have to go knock on some other doors. i think a backhanded way the legacy automakers can do it is to say here is your big number but we have got to have the flexibility to get out of some capacity going forward but show this to some of those other plants and see what they say. >> we are getting some sense from the manufacturers of how much the strikes have been costing them. general motors said it's already cost them about $200 million since the strike began. we heard from ford talking about the f-150 deliveries plunging on the heels of shuttering factories. i'm wondering at what point we can expect this to proceed price rises in some of the cars they

deliver with the justification that we have to compensate for these cost. >> that production is not necessarily all lost. it will shift to the next quarter or into 2024 but it is exactly that. and it did not really start with production disruptions during the pandemic. the automakers have been moving to this smaller model, you know, more trucks, higher transaction prices, fewer units, so it's not so much about scale anymore, and this is another part of that. there's inventory on the ground, probably not enough, but ultimately all it does is firm up prices, and the increased cost, although maybe the labor portion is minimal after the contract, but at the end of the day, is going to remove affordability from the consumer because automakers will have to continue to keep supply and demand tight to be profitable so

that will hurt the consumer. >> i was reading about something that's becoming the biggest electrical vehicle maker in china and how they grew up first out of imitating toyota and becoming so efficient that even toyota was trying to understand how they were doing it. how does the u.s. compete with china without tariffs, without some other guards between the industries, if there's a different playing field? >> it is going to be difficult. look, though. the macroeconomic, the government influence varies region by region, you now, so the subsidies that you have, back in the day, that is one company that was getting well over $1 billion in subsidies for -- from the government, over $1000 per vehicle. it will be difficult to keep them out. the other thing that will keep them out is if we are going to a

rush of chinese ev's they will go to the dealer network where we have this perception now that the direct sales model, what tesla does, is the way to go. i think those companies will achieve immediate distribution scale by going to the dealer base and saying will you sell our product as opposed to trying to deliver it directly to the consumer, which has issues with when you get paid for those vehicles. you cannot book that revenue until you deliver them but if you deliver it to the dealership you can. so you have instant scale in terms of distribution. so it could happen quickly although there are still hurdles to get over for china -- for chinese small manufacturers. >> what are the odds of some of these manufacturers don't get this transition done? they throw in the towel and say this is not going to happen? >> yeah.

that is not a binary bad of bankruptcy or not or you exist or not. >> absolutely . >> there is a scenario where legacy automakers or global automakers leave that drivetrain business to the niche manufacturers, tesla. and it's a smaller part of the market. certainly here, but maybe in other countries, and what you can get, and toyota has been saying this, there needs to be options. internal combustion will work in some regions for some people. so will plug-in and gas hybrids. maybe hydrogen is an option. i think if it's about climate, there needs to be options. if it's about capitalism -- >> precisely. if it's about climate comments on about massive suvs that happen to be electric. let's face it. >> so it's not about climate. >> precisely. kevin tynan, thank you.

if it was about climate, it would not be about that at all. >> right. >> we are on the same page. >> lisa mentioned this and this goes to the u.k.. a headline. byadadl to supply electric buses for coventry. china is out front. we are playing catch-up. >> big time. next hour, john feeney, chris mullaney. don't miss that. marc coming up.

.. ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines. hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, styles and textures. i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works. >> bloomberg surveillance. lisa looking at the bid on bonds we are seconds before the economic data. bonds up? price up? yield down? >> if there is a disappointment, say, an increase in jobless claims, that is the expectation, that there will be a firming of the bid, but how big does the surprise have to be? >> ancient data. mckee will discuss that but clearly everyone claiming the focus on claims. michael mckee, thumbs up, thumbs down. >> i guess, at this point, it would be thumbs down, because the numbers don't move. 207,000 jobless claims filed last week.

this is not what we were expecting. without the autoworkers might start to show up in these numbers. 204,000 was the initially reported number in the prior week. the continuing claims numbers are lower, at least compared with the previous issue, 1,664,000 compared to 1,670,000. so it's interesting to see that what we are getting here is a still tight labor market even that we have people on strike who make others eligible for jobless claims. we thought they would go up and that did not really happen. trade balance comes in lower than it had been expected to be and lower than the previous month, down from a higher number, and that will be something that contributes to third-quarter growth as well. these are august numbers. so the revisions are in for

jobless claims, only up 1000 last week to 205, so 207 is hardly any change at all, and it looks at this point that the labor market is not getting a break and your bond trader friends are not either. >> we will get a check. important. lisa, i went to the 10 year real yield. 2.41%. not out to new highs in the new inflation-adjusted yield but close. in my right, price down -- am i right, price down, yield up? >> yeah. we are watching the 10 year yield and across the curve but it goes to something a guest said earlier that the curve is moving in tandem but these are shifts they give you a sense of how jumpy everyone is trying to understand where the economy is,

what narrative will prevail, what's driving the market. >> as john mentioned through the morning, it's been calming in the market calming in the market. -- is this data that will unc alm the fed? >> they expected employment to come down from its initial june forecast. so they will not be surprised. the story would seem to be, if the bond market wants to propose a recession is imminent, that people want to hold onto workers. and that is the story we have been seeing with these numbers. we did see michigan and ohio jobless claims rise among the largest increases with over 1000 each but that is not a whole lot. >> a question on adp because a lot of people dismiss it as irrelevant. i'm curious whether people have changed their expectations for

tomorrow's print based on what we have seen. >> this is fascinating. the adp number would suggest perhaps a weak number because they have come in above private sector hiring for the last five months, but the whisper number has gone up. the bloomberg survey sees 170,000 jobs created and the whisper number is 180 at this point, so the market seems to think we will get a stronger-than-expected number. >> that is tomorrow. >> i know. jobs days usually kind of -- >> super bowl. michael with us tomorrow. we will go beneath the data. there's a book. it's 800 plus pages. everyone owns it. no one has ever read it, i should say, except he lived it. michael woodford 20 years ago, in 2003, wrote a definitive book

called interest and prices. the chief u.s. economist for barclays had the toughest job in academics. he was the assistant to michael woodford. you had to read interest and prices. you had to teach it. is this economy -- are these dynamics identified by the oiler functions -- the euler functions, the dynamics of that textbook, is this economy and that textbook? >> i think this textbook and the model developed there is really central to understanding what's going on in the economy. >> in what way now? >> a lot of what is affecting the economy and the way monetary policy affects the economy in particular is communication, what the fed is intending to do in the future. this book in particular develops

a whole theory and understanding of how communication, the forward guidance the fed puts out, is transmitted through the bond markets, long-term rates, and how is transmitted through the economy. >> because of time and i have to go simply to this end of the word optimal figures into this thinking. what is the optimal fed communication strategy now to get to a constructive outcome? >> optimal policy would be one where policy is indicating a tight policy stance until it's clear that we are returning to 2% inflation. >> to build on what kelsey barrow was saying, is that what you are saying as well, that the fed will need to say -- to see a hard landing to make a shift? >> i think the fed will be slow cutting rates.

they have indicated clearly they want to maintain rates elevated for a long time to be sure and confident inflation is returning back to the 2% target. so i think a mild slowdown in the economy might not lead them as they have in the past to cut rates abruptly. now, if we have a hard landing or a deep recession, than of course we would -- course they would respond to that. >> how likely is a hard landing or more punitive recession given where we have seen yields go and how much we have seen the long end move? >> there's huge momentum in the economy. we have seen the latest data on consumption, initial claims, showing the labor market is tight, the consumer is strong, and that's providing momentum to the demand in the economy. with yields moving up as they have in recent weeks, i think that is pressing on the brakes, slowing down the economy, but this is coming in tandem with stronger data as well, so i

don't expected this point a hard landing. we expect a bumpy landing so we are more pessimistic than barclays. >> when he reviewed the book, he called it an immediate classic. he went to pre-world war ii and said the intellectual lift here was profound. that is great. he wrote a small monograph. olivier wrote there's other factors out there. do you have barclays see other factors like technology halts different sets of international systems that make traditional economics nonoperative? >> from a conceptual standpoint, i don't think things have changed dramatically. i think from the reality we are income of the factors have changed. technology shows some promise.

it is yet to be seen when it will show up in higher productivity. it will probably take a long time to see that. >> you are at the swish national bank disch you were at the swiss national bank -- you were at the swiss national bank. we are moving to a freefall in bonds at the last number of days number of days. ? >> with aj and our great strategist -- our rate strategist, we are talking about that and the expectation that the fed will remain tight for 2024. we don't expect any rate cuts anytime before september. then we expect rates, over the longer-term, to not return back to 0.5%, probably more elevated,

closer to 1%. you had about 2% inflation and you are easily at 3% nominal rates. some term premium added to that and it looks like 4.6 or 4.7%. >> layoffs are not happening even as you see these pressures building on both sides. >> i think the labor market is still tight. the jolts data we got shows the jobs openings are elevated, over 9 million. i think there is pressure on the part of the workers to raise wages, to push firms to accept higher wages, and we see our

estimates of underlying growth running around 4.3%, which we think is higher than what is consistent with 2% inflation. >> so do you see that hourly wage gain to be something we could see in perpetuity and that would lead to a higher inflation rate or does that have to come down? >> this is something that will come down as the fed tries to bring inflation down. we will need to engineer some slowdown in the economy. when that takes place, we will see firms hiring fewer workers. we will see the hiring rate come down, the job openings rate come down, and people will no longer be able to press for that. >> stay with us. this is too important of a conversation. we have to look at the markets moving off of what we saw with the benevolent claims report. could we revisit 5% on the 30 year? >> given how quickly and how

volatile these markets have been, who knows? i am seeing more material increases in yield price down as people digest some of the data. the fact that that we keep getting stronger than expected labor market data offset some of the gloom and doom people have regarding what higher yields can do to the economy. >> near the 20 level. number of days ago,. two basis points away from a new high. the s&p 500 is -17 points, down .4%. >> we are speaking with marc giannoni of barclays about the strength in the economy despite what we have experienced with respect to rates, which raises the question of what is the breaking point. is this something that is sustainable despite the way we have arranged the balance sheets? >> asking mary daly at the economic club of new york. this is important. take the mathematics of modern

science, what you did with market princeton and all the mumbo-jumbo we have been talking about. bring it over to a standard structure of the real economy. if we stay higher for longer, as you submit, what happens to the zombie companies developed over the last 16 years? >> well, a lot of companies will need to readjust to a reality of higher rates, and they are going to try to stay in place for as long as they can, and at some point we will see more failures. we will see more restructuring taking place in the economy. that is -- i would say that is the standard transmission mechanism of monetary policy. when you keep rates higher and try to slow demand, eventually the labor market falls and firms have to shrink. >> now that i have been here, do

i have to read interest and prices? >> of course. >> of course. marc giannoni as with barclays. we are talking fancy economics. no one watching is reading michael woodford. they are looking at these markets. >> they are trying to understand how sustainable they are and what does that mean in terms of the capital structure and cost going forward? >> under 30 basis points. this inversion continues. this is bloomberg. good morning. [speaking another language] ♪

to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ >> the dots at the september meeting had 12 of 19 participates indicating that. if even some of this increase word to state, i think the fed could be done.

lisa: that was richard clara to speaking about how his view would have changed view would have changed -- view would have changed. tom: i have richard clarida to in a panel. we are doing a one-on-one in october. i cannot wait to talk to him about the market outcomes if we get a clara to new level of interest rates. lisa: the pressure on whether to allow the economy to go along even if it means a two point something inflation rate. i want to talk about the bank stocks because you were talking about them and how they have been underperforming. to give you a sense of the degree of underperformance, jp morgan shares down more than 8%, citibank 13%, bank of america 7%, and goldman sachs down almost down -- down almost 13%.

is this simply a profitability question or is this something more fundamental that has to do with business slowing down and potential risk in some of the most stalwart types of assets? that is something we have been talking about and you have been talking aggressively about the implication for banks if you have such a massive selloff in one of their ballasts, treasuries. tom: it is there and to your point is it a real analysis? are we going to make money or not? allison williams has been brilliant on this among others but i am different. not to be inflammatory, but just identify price. bloomberg with a wonder -- wonderful article today that is price space, not yield based. lisa: in march, you had banks show real risk tied to risk-free assets, but then there was this

fed facility that stepped in and how much that staved off any distress from these losses. joining us, sridhar natarajan, who covers all things banking at bloomberg, and has dug deep into the structure. i want to start with in your conversations with these bankers are they indicating any stress that's making them truly concerned about another crisis? sridhar: they are extremely cautious. no one will talk of stress but they are cautious. what if i told you the list of banksy put up are actually some of the better performing banks this year -- of banks you put up are actually some of the better performing banks this year? we had a look at some of those names. the short interest is higher today in them than in march. march was a tough time for many of these banks. you talked about the phrase narrative roulette in markets. i would argue, when it comes to banks, others been relative hibernation.

they were facing severe problems. the fed stepped in with a solution but the problems did not go away. it's becoming increasingly clear that with ever whimper -- that with every whimper and howell in the markets, the fable not come to the aid of the banks. we have analysts saying treasury markets need to stabilize. what would cause them to do that? an indication of the cooling of economic growth, which is not good for banks. lisa: i take your hibernation concept. at the same time, how much of the price declines have been -- i don't want to say justified, but understood through the lens of m&a activities coming down, loan activities coming down, the actual loans they have, delinquencies going up, and portfolios and treasuries losing value.

does that justify the moves without any kind of massive collapse that would warrant rescue? sridhar: the large banks, the big banks, are impacted by windows capital markets return. it is not so much about them coming down. that's been the case. but at this point, we are starting to hope these shoots will blossom into something more. that is getting pushed out. what's happening in washington is not helping. the challenges for the regional banks are real and remain. they still have the deposit caused pressure. they are still stuck with the we did plain to me this. you cannot tell me they can loans they made when rates were cover this up. sridhar: jamie dimon is a good at rock-bottom levels with no name to talk about because the easy way to get out of them. tom: james diamond will go back challenge -- and i will take you one step next to jamie dimon and to his house, his abode, and he will not dial sridhar natarajan to say let's do that interview i've been asking for. he will call ashley bacon, most important person on the planet,

the chief risk officer at jp morgan. that's brian moynihan. r, down another 22% this year. jon: sridhar natarajan put this out yesterday. what is the problem with bank of america? sridhar: jp morgan, the number one bank in the country, is now double the size of bank of america. they put a lotwhen treasuries sg into losses but rapidity at whis have risen, where the yield space is actually a negative for the foreseeable future for some of these banks? sridhar: it certainly feels that way. let's look at what can griffin said a few weeks ago when he talked about this idea that it takes about two or three years for rates to work their way through the real economy. the rate hike cycle started in

marc in their segment, they are not necessarily seeing the signs of stress is the use 250 years ago, but there's undoubtedly stress developing in the consumer economy, loans, lending, and that lunch? >> they want to go out and find the right opportunitishops and y

to grab a share of the market and they will be successful because they have a lot of capital to put to work and time on their side. >> 1987. i was instructed on what portfolio insurance was. it was an ugly afternoon. i remember people literally in tears on the trading floor. there's a shadow out there that we don't see coming. i don't meanas what's visible i, which is activity is not picking up. the big ballast for the consumer banks is their investment bank and we are not seeing a lot of activity there. everyone is seeing -- saying

uncertain for the consumer economy. all i am saying is, when you don't have one side of the firm fine -- firing on all cylinders and no sign the wall street operations will do it for them, there's no narrative toversion . >> typically that is when trouble inches. sridhar natarajan, thank you. as we see the moves in the market, this has been one of the? -- one of the conversation

with the president of the san francisco fed. this is timely. mary daly is one of my favorite people ino and mary daly. thank you to our team for a great conversation today. ♪

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to get set for the start of u.s. training. this is bloomberg "the open" with jonathan ferro.

gy market is the discipline from corporations forced by shareholders. energy is interesting. the other variable that is key is what happens to utilities? that area is tied to the bond market. it is also seeing multi-years of support at current levels. those are key variables to pay attention to. we would still be involved in tech. health care long-term makes sense. we would pay close attention to energy with a fundamental underpinning. utilities are levels that investor should pay attention to. lisa: what part of the cycle do you think that we are in economically speaking? if you aren't going to lean into bonds but potentially utilities and other areas at a moment when tech maybe needs to be trimmed? eric: we think we are in the part of the cycle when there will be a gradual slowdown. we are not calling for a recession. we think that that call is

premature given the strength that we've seen not only in the u.s. but also some modest improvement elsewhere. even in places like germany. these are not necessarily areas that we think will be prolonged in a slump. this is a shallow slowdown point that we think of the cycle. there will be opportunities to get involved and invested. this is the part where it is not the end of the credit cycle. this is a bit of a midpoint bump. that is the spot that we think is a decent place to rotate out of some of the winners and think about some of the sectors that have been a bit more on the line. lisa: appreciate the update. u.s. bank asset management. let's look at energy right now. crude, and brent pulling back. 83 now on wti. a little look in the last month at 95 all the way to the low 80's. negative this morning by

1.6%. gasoline demand has taken a hit. we talked about stock powers in the other direction. have we hit a demand soft spot that is starting to play out negatively in commodity markets? lisa: i can't answer that question. it's a good question given a lot of people are saying that demand may not kick in until higher in the price point because of inflation. gasoline prices have been coming down in the u.s. if you think about these pressures, it this coming off of this inflationary good news?yesterday's move. tom: i'm looking at exxon with a 70% return per year, totally unacceptable. they have pre-pandemic 27 gajillion. i think that is free cash flow growth. are they a bank?

is this game of thrones? what jonathan: are we doing. the record high the last couple of weeks on exxon. tom: they are not playing conventional securities analysis. they are in their own lala land. jonathan: the biggest one-day drop since last september. lower by close to 6%. -5.7% yesterday at the close. someone who likes energy stocks. we will check in with sarah hunt. and an interview with congressman matt gaetz. the future of the house in washington, d.c. everything is rudderless in the nation's capital. good morning. ♪

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>> i am for both of them right now. i am eager to hear their plans and their vision, but if the house goes from the stewardship of kevin mccarthy to either the stewardship of jim jordan or steve scalise, that is going to come to the delight of many conservatives. jonathan: congressman matt gaetz of florida speaking with anne-marie on balance of power yesterday. catch the full exchange on bloomberg.com and the bloomberg terminal. trying to balance off session

lows, the bond market selloff reversing yesterday after a downside surprise on the atp report. we have payrolls tomorrow, jobless claims later this morning. the yields are lower on the two-year by couple of basis points, a little north of 5% on . tom: it is fragile. i still don't have a good quote yet. 2.39%. i get that it is calmer, but it has a jitter to it. jonathan: this week has been about the data. to some extent. we can argue to what extent, but to some extent. back to back double digit gains on the 10 year yield and then things turned around on a softer adp report which speaks to where we are at the moment. tom: if we get back near zero, different in yield between the 10-year and the 2, are we at a tipping point?

when do we go, yay, victory? lisa: the recent aspect of the recent price action, it is a price sensitivity. a new price sensitivity of the buyers and treasury markets. the insensitive price buyers are kind of backing away. i think that is the big change. tom: we will digress. right now we are thrilled to bring you one of the voices, something we are trying to do in this u.s. hysteria, get deeply experienced voices not of calm but maybe of possible reason. the head of u.s. america. doctor, thank you for coming from london to cs this morning. what a mess. we have gone over the history lesson. forget about it. let's move forward.

i will talk to anne-marie about this. 4% of republicans gummed up the works. >> it is a very strong powerful minority that has strong incentives to increase their own popularity and visibility and fundraising by pulling apart at the seams any effort to do what congress has always done, which is to forge deals that make governance possible. tom: my question is, what percent of the gop is many conservatives? that to me is the mystery. jonathan: an important question framing matters. it might get different answers if you're asking congress or if you asking voters. who is matt gaetz more closely aligned with, his own party, people who vote, or his colleagues in washington, d.c.? eric: it is no longer a party.

that's the republicans are the democrats are a unified party is the fringe of the party. if you look at public opinion, the american public want their government to stay open. they still support funding for ukraine. they want some border security. will we get people in congress to do what they've always done, override this vocal minority on the far right of the republican party and do deals?we are seeing some senators try to do that like schumer and mcconnell talking about ukraine aid. will they have the ability and the existing rules? we are in uncharted territory. lisa: the democratic playbook seems to be to allow the republicans to have their fight and shoot themselves in the foot, back away, and take the high ground. do you think that they will bear

responsibility for the kicking out of kevin mccarthy by not backing him? >> a number of people have come out and said that the democrats by voting with have contributed to the problem. whether the american public reads it that way is less likely. when it comes to where do you pay the price, you pay at the ballot box. the vote is not taken collectively it is taken on the base of individuals and their individual constituencies. will those people pay the price? it is hard to see that happening. lisa: president biden has made comments that he has other avenues to get funding to ukraine outside of going through congress. do you have any sense of how deep those pockets are and what that funding possibly is? >> the first thing is there will be a significant and important public relations campaign to drum up support. president biden has said that he will make a speech.

he is looking into existing funds to see what can be transferred. we have also seen yesterday this reporting that president biden decided that he will support the border wall. he has lifted state restrictions in texas to make it possible to allow some of the border wall to go forward. that is a sign that this is a president that will be thinking about that compromise. a lot of the compromise that will be on the table when it gets to keeping the border going will be about order security and ukraine. tom: you are the chatham house voice, transatlantic, and you have thought about it. where are the leaders meeting? jonathan: granada, spain. tom: people on fragile boats

crossing th mediterranean and here crossing the rio grande. do you see any indication that the democrats will wake up? leslie: would president biden said yesterday, this is clearly a president who is looking and understanding that a lot of the electoral pressure -- if you look at the issues that americans care about, migration is high. it will play more and more as we move into primary season. i think that they will be increased sensitivity from the democrats. tom: it is not the bronx. what is he going to do down there? jonathan: we spoke with the governor -- leslie: i think this is a tricky

calculation. there is a timing question. to your question about europe, the same thing. we had the conservative party conference in the u.k.. we have seen those point to the far right on migration. there is a desire by others to be more moderate. as the far right becomes more powerful and the numbers become more visible and significant, whether it is the mediterranean or the southern border, liberals will become more sensitized and take it seriously. i would point to the announcement from president biden the idea that he will commit to something that he said that he wouldn't, which is allowing progress on the border wall, is a significant development. jonathan: what does that tell you? is this a far right issue? leslie: this is an issue that the far right has been effective putting in the public domain. there are a number of issues. it is a grab bag of issues. not to under emphasize any of them, but what gains traction is

about who manages to mobilize and bring them up front in the media and elsewhere. it is an issue that has been significantly understated. there is a question of, is it an issue and what is the policy to deal with it? jonathan: appreciate the opinion. tom: she should move to new york. jonathan: maybe she likes london. tom: chatham house west. jonathan: ok. are we done? good. data on the fx market coming up shortly. big moves in the fx market. dollar dominance has been a story of the last couple of months. dollar strength against a weaker euro. can we make it week 12? that conversation, next. ♪

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jonathan: equities on the s&p 500 should cup as follows, we are pulling back by a quarter of 1%. best day of gains is made some timber and s&p since -- since mid september on the s&p. bond's rallying. yields lower.

4.7144 on the 10 year. to see the 30 year briefly yesterday reached 5%, all the way back down to 4.86 this morning. lisa: it is unclear what is behind this but it does feel like the one takeaway, is not a riproaring rally. they're not coming in -- there still is this reticent to embrace any kind of stability in the market. jonathan: the absence of predictable bias from the demand-side. it is a very different story. you cannot depend on the central banks. can you depend on china? can you depend on the forint ability? some people might say it in the chair and say there is a buyer's strike, but i think the way it was framed was a little bit more sophisticated. lisa: these to be a price incentive by your base and that included places

like china, japan, and a lot of investors. people are waking up to price and becoming more sensitive to that even in some the institutions. that is the change and a structural. tom: this goes to our guest comments. i do not want to show the charge because it has too many lines. people will drop their coffee cup but the bottom line in some of the charts, a look at the japanese chart today, really sophisticated chart. back 32 years. we've never seen the move ever bottom to top in standard deviation and i believe it was the 10 year piece in japan. it is a five standard deviation traipse to a higher yield in japan. jonathan: 30 year bond tumbled 50% u.s.

that is how bad the price destruction has been. tom: we opened with the medicate of which i'm going to guess it is worse or -- united kingdom and. i'm going to guess it is worser. jonathan: the dollar showing a bit of weakness. we're positive on the currency pair by 0.1%. this morning, initial jobless at 8:30 a.m.. our survey expecting a print of 200,000 claims. u.s. companies adding the fewer jobs is the start of 2021 last month pointing to a slowing in labor demand u.s. parl report for septembe do tomorrow. we spoke with ellen on the -- andrew hollenhorst. lisa: as can run direction for the fed, the right direction for

people who are in the labor market but this is the tension. adp does not matter until it does yesterday it confirmed the hope and the dream of margins, were going to get an ongoing disinflation. if you get confirmation of that today in the initial jobless claims, do we see more conviction in the rally? do we see greater conviction ahead of tomorrow's print? tom: i get it. would you say of the opening? -- but did you say at the opening of the show? nasdaq up. [laughter] it is theater. it is a monday pop -- one day pop. the bond carnage is just -- a wonderful article on sovereign carnage. jonathan: government shutdown next month looking more likely

as the fallout of kevin mccarthy removal of house speaker continues. the house needing to find resolution on kise -- keep measures been able to do so into a speaker is chosen. matt gaetz saying he's backing a bids from steve scalise engine jordan to replace mccarthy. what is next? lisa: honestly, shut down. tom: people are predicting a shutdown. lisa: jim jordan probably does not have the mainstream of those, maybe steve scalise but to get coalition given the animosity within the party, let alone generally in the house, we are heading for a shutdown. jonathan: the story the last 24 hours, nothing else matters. walmart saying demand from people taking ozempic. the retailer ceo saying we do see a slight change compared to

the total population. we see a slight pullback as the overall basket, less units. slightly less calories. what a change. the fundamentals the shift we can see in the economy. tom: i need someone to tell me qualified in medicine. i just --jonathan: shaped around obesity epidemic in the country. we talk about our allies earlier this week which could save on fuel. it is no joke. a look at walmart and some of the companies. some of these companies are going to have to adapt to this. lisa: you have companies that sell food that might not be completely healthy seeing how they can offset the decline in sales of said calories because people are eating less.

it creates a fraud, medical moment for the social discourse. and a pr move. tom: we have to inform our people. lisa does a half marathon every day when she leaves the office. lisa: where are we going with this? tom: she runs a half marathon four days a week when she leaves the office. jonathan: we will catch up on the story in about 10 minutes time. tom: expert on foreign exchange into the bond market, it is the 10th anniversary of his truly important book on the euro, the fall of the euro. jens nordvig runs his own shop at exante data . you call it a bond carnage. how do you think that up to the

dollar on foreign-exchange? jens: when we have the bond market in dramatic way you want to go and see what is behind it. is it inflation expectations going up? is it to do with better growth or is it something else? on this occasion, we can rule out inflation expectations. we have had stable inflation expectations the less couple of months. realize inflation has come down. it is an issue. is it something with the growth that is better? or is it really supply? if i look at what is going on on the yield curve we can see the last couple of weeks the big moves driven by the long end. that does not smell like growth. if it is just growth getting better will have tightening in price. the other thing if you look around the world and growth indicators. look at what is going on with copper.

copper at 11 month low. it is typically viewed as a basic growth indicator. it is not flashing bullish. we have the situation where u.s. yield curve shifting dramatically higher in real yields, not totally clear it is growth related. it to do with pricing of the curve like maybe two inverted in the first place. that real yield increase has been boosting the dollar in all across this but it is not just the yield curve. it is also because these higher yields started to spread into credit, starting to spread into risk assets. we are having a big risk reduction wave the last couple of weeks. it is not a total panic. but it is broad-based. tom: i took dxy.as a proxy i figured out dxy got a really pop to get back to the intentions of the early 1980's.

do you rank dollar and a peak or can dollar extended stronger to the tension points? jens: we are focused on the day and night is this growth outperformer's you have had in the u.s. and also, core inflation, service inflation staying more sticky than other places. what is keeping the fed in this hawkish mode? as long as the fed is more hawkish than the of the central banks, it is going to be hard for the delicate turn weaker. global growth is pretty soft. it is to keep the dollar strong but the level of the dollar is very elevated. we're getting close to the peak dollar levels we had last year. the question is can we forecast them. keep in mind, last year we had a full-blown energy crisis in your. that is what took the euro below parity.

that is the same this point in time. for the euro breaking to new lows will be hard. at the moment, it is really about where the fed stays in hawkish mode. think about the price action yesterday. the yield curve is very much correlated, long end and short end. when you have week data points, whole yield curve rally parties. it is looking incredibly hard all the time to find some kind of signals the u.s. economy is turning and the fed can change. financial conditions in united states have more dramatically tightened the last three or four weeks. the fed has not talk about it yet. one way we can get a ship in yield curve is the fed actually says financial conditions tighten substantially and that's going to impact our policy. they have not beenwe need huge k

assets to get the bond market to rally. are you saying we are closer to that already? jens: if you look at the size of the move we have had in the last month, this is what the bigger ones. we have not had anything like this since 13 months ago when we had the big risk off it was still remembers. the fed is reluctant to say something about it too early because in a way to have been surprised bond yields so low and lower than the two year. but now the curve has flattened dramatically. credit on the move. i do not think we need much more financial conditions. the fed will say something about it and it is a new situation we have not had

46-9 months, it releases the silicon valley bank shut . jonathan: thank you as always. on the fed on whether they weigh in on this. later today, daly with bramo. i know where you're going with this conversation. mary daly on the bond market. are they willing to talk about it or will they take the line which i am puzzled by it? li: i am puzzled and watching but not necessarily changing his outlook or guidance as a result. at one point, does this change the view of the fomc when it comes to raising rates again, but also what the threshold is the cut rates going forward? tom: before this carnage, j.p.

morgan was 15% greater market cap than bank of america. it is now 100%. lisa: is it an issue of stability or profitability? it is an important point. tom: mr. barr is about stability. jonathan: earnings two fridays away. coming up, why ozempic might be changing. from new york city, good morning. ♪ to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

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