>> what is going to be first to say that the growth is turning into a fear or a recession fear? the labor market. >> i am seeing a loosening in the labor market. >> the risk is the unemployment may rise a little bit from here. >> we had an inflection point in the labor market where you will see more weakness on the unemployment rate. >> you could have two things be true, we have a good labor market and it is weakening. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. dani: things will look a little

different this morning. good morning from the new york city studio for our audience worldwide. this is "bloomberg surveillance." the fourth of july holiday ins with stocks at an all-time high. dani burger taking the reins with manus cranny with jon, lisa and annmarie on a beach somewhere enjoying the rest of the holiday. the rest of us it should be made clear we did not draw the short straw. we get the privilege of walking everyone not only to the weekend but to jobs day. mannus: debating if it will be a step down for the sitting president in the united states, a regime change in the united kingdom, and of course we will see if we are really at some kind of tilt or inflection point on this jobs report. as mary daly said, we are coming closer to that moment in time. dani: the lowest estimate is goldman sachs at 140,000 but you hit the nail on the head. it's the idea of an inflection

point. you can hear that in the language that people are using to talk about this jobs day about what they care about. we previously would have talked about wages. how hot will they come in and what will it mean for inflation? now it is about the unemployment rate. the last jobs data surprised us as being 4.1%. that is what would be needed to trigger the sahm rule. mannus: the geo mandate will rise in its importance and the three office of the job gains over the past year have been health care, government, leisure, and hospitality. immigration numbers have gone into shoring up those sectors, especially in leisure and hospitality. the whisper number, 185 on the bloomberg terminal at the moment. suddenly, you will hear this as the left tail risk that was recession that no one talked

about will morph into a narrative around the soft landing. this is something we have discussed with our guests last week.what is a soft landing ? if services are low, what will that do with the momentum from the bond traders because they have been whiplash for the last seven days? dani: will it do anything to the equity market? 33 all-time highs on the equity market. into the jobs day today, we are looking at basically unchanged for s&p 500 futures, .01% higher. the euro versus the dollar, the dollar weakness calm after u.k. politics. the 10 year yield is down 1.5 basis points and this is what you were hitting on that's fascinating. the bond market has been captivated by politics. the idea of do we need to price in a trump? the ism data through that into disarray. the weakest services data that we've seen since the heart of the pandemic. maybe we need to back off. perhaps yields should be lower.

with the uncertainty of this weekend with george biden speaking with george stephanopoulos on abc trying to defend himself, it is any guess where we land. mannus: he has to do a lot in that interview to shift the narrative because trump is ahead on the polls and people are saying that kamala harris should be handed the baton. we did this pivot from being politics that drove the steepening to the data that reinvigorated the bond bulls. the question is, what do they need to see from this jobs data to take through 425? we are in a classic trading bandwidth. what is it that breaks for 25 with momentum? we have had various people say pickup duration on the spike in yields, but don't forget the whiplash they felt from the steepeners last week is something that today we have to be more cautious about. dani: there is an asymmetric

risk because the high-frequency data showed some of that softening. this is a market that's prepared to see more softness.what happens if we get another soft job sprint? perhaps the haven is the u.k. labour trounces tories which is probably the most successful political party in the last 150 years, losing grip on their power in the u.k. mannus: losing grip, but essentially not wiped off the political face. they will be the main opposition. what is interesting is there has been a monumental swing by the general electric to the reform party -- general electorate to the reform party. many will recognize nigel faraj is being an ally of donald trump. labor has the majority in the house of commons but it is wide and thin. dani: the reason that this is so interesting is the idea of how

big of a mandate does labour have at this moment if it is that thin of a majority? ricky sunak had been out campaigning saying, don't hand them a blank check. tilting towards the liz truss idea that if you hand them a blank check it could upset the bond market. no one wants to be the prime minister that is eventually kicked out because of the bond market. so they didn't need this trouncing to be more conservative in their outlook for fiscal policy because they don't want a repeat of liz truss. mannus: they have been clear about their borrowing requirements and there have been fiscal rules in the united kingdom that handcuff labor government. what will they do with the fiscal framework? will they change the fiscal framework and sell it to the gilt market that we will borrow for very focused investment? the former chair was with francine and that was the point that he made. labour has a target of 2.5%

growth, something difficult to obtain. the gilt market likes it. for now, the u.k. is a bastian, a mini haven in a european dislocated picture. dani: what a world. who would have thought we would talk about u.k. stability? coming up peter oppenheimer of goldman sachs with stocks rising and hitting new records. and eurasia group as pressure mounts for president biden to end his reelection bid? and expecting a cooling u.s. labor market? global stocks trading at all-time highs ahead of the u.s. payrolls report due edit: 30 a.m. eastern. a string of softer economic readings for the fed to cut rates in september. peter, it is great to speak with you this morning. what are you expecting from this jobs data and will it matter for equity markets? peter: first, our economists are

forecasting 190,000. that is below the consensus and below the three-month average that has been just under 250,000 and reflects the cooling you've been discussing. it matters because alongside some of the other macro data in the u.s., you are seeing a macro softening broadly reflected in our macro surprises index that has turned negative. to some degree, that raises the expectations that rates could be cut earlier. i don't think it is necessarily should be interpreted that way. if the economy is weakening that will raise concerns that earnings might be a little weaker moving forwards. of course, equities are running hot at all-time highs and the

market is extremely concentrated. i think this data will be important and closely watched by the market. dani: you make an important point that the market will judge this as bad news is good news, but it is not necessarily good news. if we get weaker data what looks is priced? -- looks mispriced? what needs to adjust to a softer economic environment? peter: i think the points to emphasize is how concentrated the market has been. the biggest 5 large tech stocks have given 60% or more to the market gains in the s&p just this year. huge differences in the returns. of course, the valuations of those companies relative to the rest of the market. the rest of the market is reflecting more broadly the overall economic conditions and a softening will lessen

expectations about what can be more broadly achieved. the hope would be rate cuts would be more forthcoming. we think inflation will moderate because as you were discussing earlier on top of this is a political dynamic and focus on the deficit, which is rising, not just in the u.s. but in other places, and that is putting upward pressure on the longer end of the yield curve which had not been impacted on the cost of capital. it is more of a tricky mix moving forward relative to what we've seen over the last six to eight months. remember, global equities from the october trough last year as you started to get more optimism about rate cuts and soft landing, have gone up 30%. from that base things get trickier. we are looking at flatter markets with more differentiation over the next few months. mannus: it is a little more differentiation, but when i look

at the top end of the market, the mag seven, 23% of the free cash flow, 60% of capex, 200 billion dollar ai hyper scaler program to come. you have dividends and buybacks. the theme is something different , fundamentally different to perhaps what we experienced in the past. do you think that it's time to remain fully invested at the top end of the market or time to lighten up given those kinds of numbers going forward? it will be difficult to step back from major exposure to that mag 7? peter: it is an these companies are phenomenally powerful. we have argued that they are not reflecting a rational exuberance and not in a bubble. the valuations are considerably lower than the equivalent in the late 1990's or the japanese bubble in the late 1980's.

but nonetheless sales of the big five tech stocks have gone up to about eight times compared to about three times for the rest of the market. while these are fundamentally very strong, of course with this degree of concentration there is more risk in the market for any potential disappointment for the second quarter. the strategy we've had is more diversification across asset classes, regions, and styles. we like quality strong balance sheet high-margin growth stocks which included large tech and health care, for example, but alongside that looking at value parts of the market where you are actually seeing very good compounding cash flow and dividend payments. it has been an interesting year of mixes, with super large u.s. tech doing well, and at the same time for example european bank

performance doing well this year. these are really at the opposite end of the growth value axis. a mix we haven't seen for a long time. i think it speaks to greater differentiation and more diversification as being a crucial strategy that investors should follow. mannus: let's step to the dark side and talk about diversification in the u.k. i think someone said that it is starmergeddon. the market seem to be taking it in stride with no shocks at the moment. you can't equities are higher. from the global flow of money, does the u.k. offer an alternative, a new, different alternative underlay labor relative to the past eight years? let's say the imagery of keir starmer, do you think the flow will change diversification, sir? peter: i do. it partly reflects a good opportunity from a value

perspective. the u.k. index, the ftse 100, which doesn't have large cap tech in it and for that reason has been an underperformer has a good mix of cash generative value sectors like banks and health care, energy, for example, sectors we like. the free cash flow yield being generated in the u.k. markets is over 6%, pretty much the highest in the world. the pe is around 11 and a half times what it is in the u.s.. from a valuation perspective it looks quite interesting. in addition, the political outcome here is extraordinarily powerful mandate, because you have a very large majority in a government that has preset its fiscal rules and there isn't the

same sort of concern about a significant shock in the bond market. that big majority, and therefore the prospect of a stable relatively central fiscal mandate looks unusual at the moment in the world we are in given what is happening in other countries. that, in addition to the valuation attraction, brings down the risk premium and we are seeing in flues coming in more interest in u.k. assets dani: we will spare you from talking about u.s. politics. think for joining and enjoy your weekend. u.k. stocks up a quarter of 1%. here is your bloomberg brief. yahaira: hamas broadly agreeing to the framework of a cease-fire proposal with israel according to a senior u.s. official.

the framework may provide the basis for an agreement that would lead to the release of sick, wounded, female, and older male hostages. israel is sending negotiators to qatar to try to finalize an agreement with u.s. officials set to take part. the progress comes as israel weathered a rocket attack from hezbollah militants across the lebanese border, raising fears of a full-blown regional conflict. hurricane beryl is approaching the mexican yucatan peninsula with storm warnings in effect along the mayan riviera with alerts from the port to cancun. hurricane beryl has already left a trail of destruction through the caribbean, the earliest a storm reached category 5 signaling an early start and likely active hurricane season as warmer ocean waters fuel tropical systems. dani: next, biden not backing down. >> the president was clear that he is in this to win this. the president is our nominee.

the president is our party leader. the president has told us, and was very clear, that he is in this to win this. dani: you are watching "bloomberg surveillance." ♪

dani: good morning, this friday dominated by politics and eco-data. under surveillance, biden not backing down. >> we are all looking for the path to win. a path to victory in november is the number one priority and is the number one priority for the president. >> i feel very confident. >> the president was very clear that he is in this to win this. the president is our nominee. the president is our party leader. the president has told us, and was clear back there, that he is in this to win this. dani: top democratic governors

rallying behind joe biden ahead of his interview with george stephanopoulos on abc. the first major interview since last week's for debate performance with calls growing for biden to end his reelection campaign. we are joined now from washington. tyler, what is the team biden strategy at this point to regain the trust of americans who watched that debate performance? tyler: the biden campaign is outlining how it plans to reach out to battleground state voters for the month of july, including nearly $50 million media blitz where the campaign says it will do strategic investments for ad buys in key events like the olympics and even the rnc slated to kick off in over a week. the campaign went on to describe what they are calling an aggressive and-person campaign schedule over the next month for president biden and vice

president harris kicking off tonight and madison, wisconsin ahead of the interview with abc news. he will then go to philadelphia over the weekend. both of these two are critical battleground states. as you alluded, all of these appearances will be highly scrutinized on the campaign trail and in washington, particularly as president biden gets ready to welcome nearly 32 nato member countries to washington, d.c. as the annual nato summit kicks off. we are expecting him to hold a press conference later next week where he will no doubt face questions about his viability as a candidate. dani: a busy weekend and weeks to come. writing, joe biden's inability to tame the story about his cognitive decline has proctored eurasia group to increase the odds that he will exit the race from 15% to 25%. john, good morning.

you heard from tyler, the strategy of team biden is to get him out as much as you can, put him in front of different interviews. have him do q&a's, give him a grueling schedule, is it enough? john: biden has not looked good for a while in public appearances and the debate is one of many reports of what we are hearing that happens behind the scenes. at the g7 meeting with congressional leaders, a lot of signs that he is losing a step. his appearance at the fourth of july at the white house was fine but it didn't seem like a politician of the top of his game. the stakes will be incredibly high for biden. even if he gets through this, he has to go through another three to four months of campaigning where he has to be publicly making the case that he is vigorous enough to last for another four years. if he doesn't he will be in big

trouble and probably hand of election back to former president trump. mannus: what is the smart, political, graceful way out of this? is it going head-to-head with trump? 48% to trump and 42% to biden. is the smart, graceful way now to try to find a graceful exit? he doesn't sound like a president ready to do that. no one is pushing me out. john: every day that he doesn't exit the race the anger if and when he does at him is going to be higher and higher and higher. he should move quickly to preserve his legacy if he is going to step aside. it might be the way that he blew everyone away at the state of the union until the next incident happens. if he drops out he will have to do it soon. democrats will likely replace them with the vice president. that could happen at any moment.

the momentum loss they will face from him staying in is not thrilling to voters. the sooner he does this the better off he is and his legacy is. mannus: if he chooses to go or is forced to go or advise to go by his family, you think it is the inner court that will drive him to make this decision to exit rather than the democratic party. how much of a poisoned chalice is it for anyone to take this other than, the -- other than harris? she is the obvious candidate because for everyone else this is a poisoned chalice? john: i don't think you're better off taking someone with no name recognition who hasn't been tested on the campaign trail. someone like gretchen whitmer who has a promising career in ahead of her or gavin newsom, this would have been his moment to run in the normal cycle if

biden dropped out earlie, losing to donald trump in 2024 is not exactly a way to set that up. they probably start off as a disadvantage because no one knows who they are. harris can step into the race and mop up the mess, cleanup on aisle biden. if she wins, fantastic. if she loses you can't blame her, she can always come back in 2028. the personal incentives of many of these people, harris has the least to from being the nominee. dani: the strategy from donald trump has been to stay quiet, or relatively quiet, and let the democratic party implode. if biden steps down can trump still afford to do that and make this a referendum on a chaotic credit party? -- chaotic democratic party? john: he has not really been

drawing attention to himself the way that he would have been 2016. he let biden be the main character of the election which is what he needs to do to win. if harris comes in he will have to define her as too progressive, as party to the inflation we have been experiencing, basically biden part two. you expect him to be out there more vigorously trying to define her in that situation. dani: coming up, the latest from london as labour emerges with a landslide victory in the u.k. what physical agenda will they present to the public? are the risks over? we will discuss on bloomberg surveillance. ♪

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dani: two hours until your job stated hits the tape. in the meantime, equities trading again at all-time highs. only a little bit higher, but if we do that, we will be at our 34th record of the year. meanwhile, nasdaq futures, tech takes the reins while russell 2000 futures falls by 0.2%. bonds under pressure. they were under pressure after the politics, then they get a bid thanks to ism data. down about two basis points across the curve.

under surveillance of this morning, pressure mounting on president joe biden to end his reelection bid. a growing number of donors say they will not back the campaign unless biden bows out. disney's heir also called for a change. it is not just some of these democratic donors, it is congress people themselves. yet another house democrat came out against biden as nominee, seth moulton, saying when your strategy is not working, is it really the right decision to double down? manus: there are some very obvious facts about his acuity at the moment. he has got this interview this evening on abc. can he do something to materially change the narrative, engage with the abc presenter, george stephanopoulos? we just had a conversation with eurasia, and they said the 25% probability of him stepping down

looks low. in terms of driving the narrative -- that will be by an inner circle, by the real inner advisors. and not necessarily that democrat core, who may sign a letter asking him to step down. dani: the biden campaign has been focusing on his mental acuity, saying they can prove this is a one-off. but the economist is running with a front page saying it is not the issue of his rental acuity. instead, it is the operation by his campaign to deny what tens of millions of americans saw, that it is essentially about the campaign gone wrong. it is that the campaign essentially lied to the american people, saying you may have seen him stumbling, but that is not president biden, that is what they layout is a real error. how can you fix that by just having a good interview or going out on the campaign stump a lot? manus: again, the trump campaign has been -- the previous debate

was very obvious, there were rules and regulations in terms of interjections, but trump comes out again and asks for a head-to-head, no holds barred, one to one, mounting that pressure that that is the forum they want to try and challenge biden to step in again here that is everything the democrats do not want to pay they do not want an open ended, no holds barred discussion for biden to step into. dani: before we can get into that, we had to get into that economic data. under surveillance, the u.s. market is expected to show more signs of cooling with the june payrolls report we went about two hours. the median estimate expects 90,000 jobs added for the month of june here that is a drop from the georgia 72,000 added from may. it is a step down, but the concentration is on the unemployment figure at 4% pure that was the real rub in last month's. if we get there, it would

trigger the salt rule. manus: and it suddenly raises the dual mandate. powell talked about the jobs narrative when he was in portugal a little bit earlier this week with all of the central bankers. he talks about the tipping point in the job market, but what level of unemployment? what level of unemployment do you need to see before the end of the year to invoke two rate cuts? and it is that jobs report, which will drive more than the inflation report, that will drive the linkage for cuts. dani: it gets more interesting with the hindsight of the fed's minutes. they made it clear the bar to cut is really high, some of them talking about even raising rates. they even talked about the politics, the fear of that. that june meeting was at a time when the atlanta fed was something at 3.1%. gdp now at 5.3%. it is not saying they are

getting ready to cut, but they are getting louder and more bold, so what happens when you have weak jobs data? manus: i think it reinvigorate the bond bulls, who almost were off a leash and running given they got this politics. dated trump's politics in the first three days of this week, -- data trumps politics in the first three days of this week. to go, wow, services, the biggest drop in four years, suddenly the narrative shifts to a soft landing. double soft. dani: meanwhile, keir starmer is set to become the next u.k. primus or after labour's landslide election victory. the result brings to an end 14 years of conservative rule. starmer is excited to speak and just under an hour, where bloomberg's tom mackenzie is

now. it has been a busy for the four hours for you. tell us what sort of mandate labour now has in their hand to rule? tom: you talk about a landslide victory. that is absolutely what we now have for this incoming labour government. what we do not have is the super majority that many of the polls route -- predicted. it was the best result for this labour party, but it did not best blair. it looks like this labour government will have 411 or thereabouts. they do have a significant mandate on the back of this, and it is a marked turnaround from the events of 2019 when the labour party had their worst election outcome since the 1930's. but on some levels, this is a thin consensus as comes through in terms of the majority of this labour party, and they are constrained by the fiscal constraints that faces this country.

the first 100 days will be crucial, so watching for that. there future prime minister, keir starmer, will be speaking behind me at 10 downing street in about 30 minutes. rishi sunak left downing street for the first time and said he has respect for keir starmer. he also apologized to his team. manus: there's not much time for british politicians between victory and the -- they go within 24 hours, out the door with your bags. one thing of concern is global markets. it is 6:30 a.m. in new york, the fifth of july. here we are, the flow of money paid right now, sterling looks healthy. gilt has not convulsed, aka liz truss -- what is it starmer has to

deliver? tom: stamer and his incoming chancellor of the exchequer have emphasized growth is their priority. he wants growth to get up to 2.5%. for many, that seems a stretch, to say the least. look for him to reiterate that view. make no mistake pay this is an interventionist manifesto. they want a british energy company. they want more building of homes. they are going to be focused on renewables. they will be spending a little bit more around the edges. they will not be overspending care that is the commitment they have made, given where we are in debt to gdp levels. so far, the pound is up seven straight days. the markets are reassured. jeffries is putting out a note there is stability with this majority for labour. longer-term, jeffries pointing out that is a risk on a given

that, underneath the surface, you have seen big gains for the right-wing reform party, the green party, and the liberal democrats, so the rewiring of the electoral system could pose risks down the line. manus: and this is the big risk to starmer-geddon, it could be one and done. there is a rise to the right. nigel faraj, for our viewers, a confident and -- confidants and close to donald trump. it really is a shift and mandate for the british people, not necessarily to labour but away from labour and onto the right. tom: absolutely. this is an awkward coalition in many ways for keir starmer, because he has taken seats in the south, retaken seat in the north of the country, constituents will have very different demands of him. and you point out nigel farage. a big win for him. labour came in and took 34%,

just 34% of total votes. the gains for reform, the green party, and a very big night for the liberal democrats. farage came out and said we are targeting labour next, and i think that is really consequential. what is also consequential is how the conservative party reforms. rishi sunak says he will remain leader until there is a transition. you can imagine a horsetrading from who will take over. about what kind of conservative party do we get on the back of this? is it a centrist one or does it move to the right? is there a coalition between those parties? that is something to watch going forward. this is a majority and a sweep for the labour party, but it is built on thin foundations. dani: i know you're getting rained on, so i will make this. looking at the result today, is there forever a check on the prime minister, living with the

ghost of liz truss and the blowup of the gilt market? tom: that has to remain, doesn't it, particularly in this environment. bank of america says fund flows are coming back into the market. the boe could come through with a cut in august. that would be a nice upside surprise, a gift, maybe, for keir starmer as he takes over. but yes, there will be, embedded in the u.k. asset story, the shock that came through from liz truss, who, by the way, lost her seat as well. the move in the gilt market will constrain the politics of the new government. the fiscal wiggle room is a narrow. the markets, for now qamar taking reassurance from the fact this is a dashing light the markets, for now, are taking reassurance from the -- we look at to the first 100 days, but also the autumn statement. the investors i've been speaking to saying that, for them, is

key. will they match the rhetoric with reality in the autumn statement? dani: we don't want you pulling a rishi sunak and getting drenched outside 10 downing street. so talking about the more conservative approach, the small "c," is some of the downside priced in, but is some of that upside priced in? a government that may be does not move away from brexit but is more friendly towards trading partners? is there an element of that we have yet she it, so from here on out, it could be an upward surprise? manus: we just had that position with peter oppenheim are from goldman sachs. he talks a little bit about more surety. labour had been pretty clear about what the fiscal agenda is and how they intend to get there. this is about selling to the gilt market that you are

borrowing for investment, not or -- in that context, the gilt market may not convulsed the weight liz truss was selling a version of fiscal largess or gross. this is a different version. that growth at 2.5% is somewhat of a fantasy. dani: would you be as call that the island of stability? manus: the island of stability. no longer the basketcase post brexit. dani: let's get you an update with sores elsewhere. with that in your bloomberg brief is yahaira jacquez. yahaira: the owner of saks fifth avenue is acquiring neiman marcus group for $2.65 billion in a deal that will unite america's two largest high end department chains. amazon and salesforce will help associate the deal. according to a statement, the tech companies will take minority stakes in a new company called saks global. hudson's bay will also finance

the deal with $2 billion raised from investors and affiliates of apollo global management are providing $1.5 billion. gold is headed for back weekly gains on expectations the fed will trim interest rates before year end. spot gold traded above --after rising more than 1% this week. silver also adding a boost, advancing back towards $31 an ounce. bitcoin sinking for a fourth consecutive trading session, falling to the lowest since february, trading around $54,300 earlier, though it has recovered some of those losses. bitcoin hit an all-time peak of almost 74,000 back in march as it saw strong demand after etf's for the token were approved. but inflows have since faded, taking bitcoin lower and dragging the rest of the digital

asset market with it. that's your bloomberg brief. dani: a tough market for the bitcoin bills. up next, in search of a soft landing. >> the data that matters the most is unemployment, the labor market in general. that is the spine of economic cycle. unless we see the job market picking up again, it still looks to be an economy losing speed. dani: we start your payrolls count down here that is next. this is "bloomberg surveillance ." ♪

dani: less than two hours away from your jobs data. 190,000 is the estimate. the equity market stacks up as this. s&p futures basically unchanged. the euro versus the dollar, again, little change there, but some strength coming through from the euro with the stability

of european politics with the national rally getting a smaller share in the polls. meanwhile, u.s. 10 year yield down to basis points. -- 2 basis points. i found this interesting, talking about the equity market reaching yet another all-time high. they dropped their coverage of the s&p 500, saying talking about the s&p to communicate investment insights to institutional investors has become an exercise in futility. you can feel the couple frustration of people trying to divine where this market goes next when the error is can -- increasingly thin. manus: -- last week, she was nervous about her race to 1500. and the flow show, a lot of people have said have gone to hamptons. [laughter] we're here holding the fort.

it is about liquidity in this market. is it time to reassess how nervous are you? but if someone is actually cutting their coverage in terms of making calls, that just shows you the air is getting thin, and the question is what is the oxygen that gives you the next lift higher? dani: or you could be a bear that straight up leaves. no bears, only people have committed themselves to working the day after the holiday. speaking of which, under surveillance this morning, in search of a soft landing. >> the data that matters the most is unemployment, the labor market in general. that is the spine of economic cycle. oddly speaking, this data has been telling us or a while that things are softening, things are normalizing. unless we see the jobs market picking up again, it still looks to be an economy that is losing speed. dani: the u.s. payrolls report due out in just under two hours. the median estimate in our

survey calling for 190,000 jobs added in the month of june. sarah house of wells fargo writing we look for nfp gains to downshift to about 150,000 monthly place over the next 12 months amid a smaller contribution from recent industry standouts and diminishing appetite for employers to hire more broadly. she is also not in the hamptons today. sarah joins us now. great to speak with you. what will be your focus heading into this jobs report? sarah: yes, i think the overall rate of payroll gains, given that, is still for, all of its over seven of the strength of the jobs market, is still probably the best measure of hiring we have. but also interested in what is happening with the unemployment rate. we have seen that move up from 3.4% in april to 4% today, and i think that is one of the clear indications we are seeing conditions in the labor market soften.

so i think it will be key to see what that does today and whether we maybe get a little bit of a dip back to 3.9% as we expect, or if we continue to see it at 4% or maybe even higher, emphasizing that deterioration in the jobs market. dani: you have also, after this high-frequency data we have had, revised down your call. it was at 200. 185 now. is 185 enough to cement a september cut? what does the job stated need to look like? sarah: of course, all fed officials will tell you it is about the totality of the data, so not just what is happening with the labor market but what is happening with inflation, but i think a number around 185,000 would be a clear indication you have, seeing the rate of hiring step down. over the past 12 months, we have averaged about 230,000, so over the past three months, it is even stronger than that, so i think that would be an

indication the jobs market is cooling, and while inflation may still remain the fed's number one concern, they are having to grow increasingly watchful of what is happening in the jobs market to make sure they do not overshoot on the downside and do not get any untoward weakening in the labor market. manus: obviously, government has been a huge alpha here. health care, leisure and hospitality and hospitality has been a big driver. do you think this be the last of the summer wind, one last hurrah with our wealth, our dissipation in savings post covid. is it the swansong for the jobs report on those three big pillars that have driven growth in jobs? sarah: so i think we will continue to see some outsized rings in those three sectors you mentioned. so health care, there is still a lot of secular demand there. we still see state and local balance sheets, about 90% of

government hiring is still in relatively good shape. leisure and hospitality is still below its pre-covid trend, so i think they're still a little room for those industries to provide some outsized support, but is getting harder for those three to put up the gains we have seen over the past year, which have led to them putting up to combine almost two thirds of job growth. i think when you layer that on with the broad weakening in demand we are seeing in other side is, it does point to a downshift in overall hiring in the coming months, which will be important or how much consumers can keep spending from here, if we are not seeing the same sort of labor market earnings. manus: with consumer politics, more and more so, we have had the left tail shock from the biden debate. one of the big issues in economics is if there is not

just a trump in the white house but a republican sweep -- adam posen was with us last week, and he talked about serious risk of massive removal of immigrants from this country come anywhere from 1.5 million to 7.5 million. so as you cast forward to 2025, are you more concerned about supply shock to the implement scenario or demand shock -- to the employment scenario or demand shock? sarah: i think we do see the prospect of, if we were to get a republican sweep, that that is likely to be more stimulative in terms of the fiscal stance in terms of what happens with the extension of the tax cuts and jobs act, that i think we would see those extended. when you layer on, perhaps, a more restrictive immigration policy, between that more stimulative fiscal policy but

the research and in immigration, it does point to a little more inflation pressure, so it makes the fed's balancing act between what is happening in the overall labor market and with its inflation mandate can make that particularly tricky. dani: it is a really hard economy to understand. saks fifth avenue and numerous markets are -- yet this weekend, a record number of people are taking to the roads and skies to travel to what becomes your northstar in this environment for understanding the consumer? sarah: we are looking at a lot of dramatist -- parameters -- barometers. so look at what is happening in terms of the overall savings rate and how much consumers are spending relative to the income they are bringing in. but as they see some of the tailwinds from the fiscal support we saw through covid, the credit channel dry up, that

it does come down to the labor market in terms of how much consumers can keep spending. that downshift in growth we are exiting terms of payrolls -- expecting in terms of payrolls -- that will limit your overall growth in terms of the aggregate income weighing on demand and the fed's battle against inflation as you see demand sees up a little bit more. dani: data hits in about an hour and half's time. sarah house of wells fargo. you see that story, saks with avenue and neiman marcus. amazon is taking a stake. manus: it shows you the tightness we are beginning to see in retail, how frequency data -- i believe in it. dani: we will see if the jobs

data -- manus: i got a new card. dani: no spending right now. we have jobs data. coming up, priya misra -- ♪

>> we could start to see a continuation of softer momentum. >> the unemployment rate is inching higher. that should potentially be setting off alarm bells at the federal reserve. >> unless we see the jobs market picking up again, it still looks to be an economy losing speed. >> we could see payroll as high as 250. >> if we get this gradual decline in labor market

pressure, i think that is quite a good outcome. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. manus: from new york city for our audience worldwide, good morning. it is "bloomberg surveillance." i'm manus cranny alongside dani burger. not your usual lineup. dani, it is a fascinating time to come into work on the fifth of july, just from the political side, but from the jobs side. this is the day that may be the dual mandate really rises in ascendance in terms of the numbers we are expecting. incrementally, people are coming down at the moment. dani: i think it is after a weak ism data, the weakest for services since the pandemic that really emphasizes the importance of this labor market data. you get a real sense we get this weakening in the economy, but so far, it has been in the high frequency data, dare i say the

tier two and three data. they should be our northstar, something to say is this enough to cement any sort of rate cut? manus: it will be interesting to see whether on employment ask about the 4% level. for the consumer, how much they have in terms of their spending power and real wages. the bond market hard some moves running into your shortened trading day wednesday. you are looking at record after record. the nasdaq made another all-time high. the euro-dollar trades at 1.08, it looks as if the dollar slightly why the back foot at the moment, and 10 year yields. this is the incredibly important pricing point for all growth startups -- growth stocks. what does it take for the bundles to be reinvigorated? -- you will need a heck of a

soft number to take you down to 4.25. in crude traits at 83.80 at the moment. it really is what does it take for the bond bolster be reignited? dani: i am also interested in what difference does it make to this equity market, and equity market led by really thin air, piper stanford dropping their coverage entirely of s&p 500 is telling here the fact they say, for our clients, giving a price target for the s&p is an exercise in futility. if you look at this market, it has been trading some of this economic weakness, so if we get a weak number, does it continue? manus: the growth native at the top is respondent on its own. it is responsible for the free cash flow, it has evidence, buybacks, everything you did not have in the year 2000. but in terms of yield, breaking that 4.25 area, everybody's

focus in terms of the market, you will need a softer number, and you will need that narrative to the -- to shift to opening the door to a september rate cut and trying to reaffirm two rate cuts for this arc it 2024. dani: you have had a little bit of it. so i can't help but wonder if the risks are asymmetric to a harder data, that potentially this is a market unprepared for what we got last week, data rolling in higher than we expected. because we did look at jolts. so we are entering this period of confusion, this push or pull of what do we fear more, fear of the economy or higher deficits? manus: the fear of the economy are becoming evermore oppressive. services dropping to the highest level in four years. manufacturing under pressure, services under pressure. goldman sachs earlier, peter oppenheimer saying the macro backdrop is softening, it is a question of whether that very left, left tail risk -- whether

that rises. not necessarily a full-blown recession, the double soft. dani: let's be honest. the employment picture typically does not move in a linear fashion, and that is what has been doing here that is the fear, if we get a bigger tick up in inflation, even going to 4.1%, is this the start of a nonlinear move? manus: and we will get to whether this is the put up or shut up weekend for the president of the united states of america? he has a big interview on abc today. the headwinds for biting remaining on the ticket coming up, as traders await the latest report. jordan fabian as the president heads into this make or break weekend. and pooja kumra of td

securities after the labour win for the u.k. jpmorgan's priya misra writes, our high-frequency measures suggest a slowing in pace to 175,000 to 200,000, but i think that is priced into all markets. i think the risks are skewed to the downside. priya joins us now. very good morning thanks for working the fifth of july. the risks are skewed to the downside. the question is how substantial a slowdown do you think we are going to see over the next six months? priya: i would argue end of cycles are always tricky. it is hard to sometimes disentangle the signal from the noise. no question the economy is slowing. are we slowing their trend, which would be that 150,000 to 200,000 payrolls?

recessions tend to be nonlinear. i think we are slowing to trend, but can it worsen? it can absolutely worsen. there are some signs -- ism data --we're at that inflection point, which is why this number is important. if we see a number 150,000 or below -- we should also think about what is breakeven? historically, we would think 150,000 is breakeven. but maybe 200,000 is the new breakeven. if we actually grow at 150,000, maybe that is the nonlinear slowing. i think we are still optimistic the self lending works, but that tail risk, as we think about the risk of soft landing, soft landing is all about management. there is the risk of re-acceleration -- i think that has been put away. if we see a slowing, even 150 thousand, which five years ago i would say 103,000 is fine, i would get a lot more nervous

things are slowing down. there are cracks in the economy and the low end consumers. is that strong enough companies are starting to pull back hiring? i would say i am nervously optimistic, but that level of nervousness is higher today, the highest the last few years. manus: should the fed to be positively nervous in that case? the clarion call that will come up is there behind the curve. if it is a soft number, that is what is going to happen. priya: i think the fed is, as much as they can, telling us they are nervous. they have been singularly focused on inflation. what we have heard in the last few months, and heard again from chair powell this week, are the risks are more balanced. if the labor market is so strong and inflation is still -- we are at 2.6% on pce. maybe they argue that is close to 2%. by that is still above their

target. the unemployment rate is still 4%. why are the risks balanced? i think the fed is looking at these cracks, that the economy is bifurcated, there are parts of the economy that has weakness, and what if there's enough to offset strength elsewhere? but i think the fed is somewhat of a cheerleader for the economy. they cannot come out and say we are nervous about the labor market. they will let the data speak. to your point about rate cuts, i think the fed is telling us, unless inflation really surprises to the upside next week, and we have a big cpi report coming, they are ready to cut their are telling us they have two paths. they either cut soft landing cuts, 2%, 3% cuts. but if things get worse, they will cut a lot more. dani: so you think the fedput is alive and well? if it is, is that also a problem?

essentially what they are saying is we are here to support this market, a hot equity market that has been giving people this wealth effect as we continue to hit new highs. priya: the put for rates, the put for risk assets depends on the lack of what we have learned in the cycle is the lag is invariable, so the fed can actually cut a little fast. does that really stop the economy? it may stop risk assets, but it will take a while. the unemployment risk rate starts to rise -- it takes a while for these rate cuts to feed through into the economy. so i think people are maybe a little complacent that if the fed cuts and the economy is in recession, that is fine. it may take a while, so they may have to be patient. on financial conditions, i do not think the fed really looks at financial conditions in absolute. if the economy is weakening, they will be fine is in financial conditions, because that is what they should do to

try to stock the economy to a better level. dani: we have seen things like the fed minutes that there are still committee members talking about if inflation surprises to the upside, they are willing to hike. the language is there. even if powell does want to cut and some of the other dovish policymakers want to cut, will they be able to with the presence of these hawkish members still clamoring we are not there yet? priya: the way they can finish that message is say all we are doing is normalizing, not easing. the fact that inflation -- that is a 200 basis point increase in real rates. the way they can try and square that cycle is the are normalizing, not easing. if the economy deteriorates past, the hawkish members will say to be we should easily bid or normalize really fast. --

political uncertainty, credibility, that is a big question. all of this talk around the fed and political dependence is making them harder to cut, but they have been consistent, as long as inflation does not surge. manus: the language is harmonized inflation has dropped that technically we are in a tight bound in rates. priya misra from jpmorgan, our guest. we will catch up on politics. we have update stories for the rest of the morning. here is bloomberg's yahaira jacquez. yahaira: we start in france, where marine le pen is dismissing projections that cheryl her far right national rally party is set to fall well short of an absolute majority in the country's legislative election, surveys showing it is on course to win 190 to 250 of the 577 seats in the national assembly sunday gave that is well below the 289 that would

enable them to push through their agenda. le pen staying defiant, telling a tv channel in france they have serious chances of getting an absolute majority. in the u.k., rishi sunak saying he will resign as leader of the conservative party once secession arrangements -- succession arrangements have been finalized. sunak said i am sorry. the british people i've delivered a sobering verdict. the outgoing prime minister congratulated keir starmer on labour's landslide victory. manus: thank you. up next, president biden's make or break weekend. >> i think the race has changed under mentally since thursday net, absolutely. we want to see if you will stay in the race before we make any additional call. we were telling clients yesterday on a call without there were three weeks.

i think they have five or six days to make a decision. manus: that is up next. we are into the punch zone on biden remaining on the ticket. you are watching "surveillance." good morning from new york. ♪

manus: it is "bloomberg surveillance." let's give you a quick snapshot of this market as we are counting down to the nonfarm payrolls number, 190,000 is the consensus. seeing a whisper number coming in lower than that. still have pot stocks at 33

record highs, the euro-dollar trading flat at the moment. and treasuries. yields down by two basis points. is it a softer jobs report that tickets to the lower bound of 4.25 and breaks through? under surveillance this morning, president biden's make or break weekend. >> the race has changed fundamentally since thursday night. we want to see if you will say in the race before we make any additional call from here. if biden steps aside, they will try to generic so kamala, the vice president, lots of the nomination. we were telling clients without there were three weeks for the biden-harris -- we were telling clients we thought there were three weeks for the bargain-harris campaign. now for five days. manus: president biden is preparing for an interview tonight with abc, his first

major appearance since last week's poor debate performance. a new wall street journal poll shows donald trump lead over biden is growing, 48-42. jordan fabian is with us from bloomberg news. eurasia thinks a 25% probability for biden to drop out is being generous at this stage. how pivotal will this weekend or this interview be in terms of making that decision for biden? jordan: i think it is huge. the american people want to see whether joe biden still has what it takes to be commander in chief, not just until the end of this year but another where years. so far biden's reassurances have mostly come behind closed doors, so this interview is a chance for him to speak directly to the public without notes. this is an interview -- he has to speak off-the-cuff and really

reassure people he is up to the task. it is huge. he also has there's battleground state stops in wisconsin and also sunday in pennsylvania that is the chance for him to get out in front of those voters who will make the decision in november. manus: the political narrative is kamala harris, the vice president, is the obvious person to go to. she is the right person to do this, because this is a politically poisoned chalice, and why would any potential suitor names out there want this? jordan: right. you look at other names being floated out there like governor of california, gavin newsom, illinois governor jb pritzker -- these are all governors with national profiles, people democratic circle cs having political talents. the problem is, if you were to pass over the first black, fema

le, asian vice president in favor of those three white ovens, it is could do more to demoralize. and access to fundraising, replacing names on the ballot, making sure the delegates are sold on this plan. those are all easier in the eyes of democratic insiders going to kamala harris then someone outside the administration. dani: can't help but wonder, when you are driving a car off a cliff, they are risks swerving right or left. is there a risk this creates infighting and chaos and feuding in the democratic party? in other words, is there damage already done that simply putting a new candidate at the top of the ticket will not fix? jordan: absolutely.

replacing joe biden would be a hail mary pass at this point for the democratic party paid you cannot understate the damage feet and did to his candidacy with that performance in thursday's debate. and to your point, replacing not only a major party presidential nominee but an incumbent president at this stage in an election is unprecedented in modern u.s. history. it would be incredibly disruptive, even though the are a lot of voices saying the party should rally around kamala harris if joe biden were to step down. a lot of people would say that is not a good idea and point to her flubs in the past, her inability to gain traction as vice president. that is not what you want, -- especially against someone like donald trump. dani: but donald trump's big has been joe biden's age -- not necessarily his age, because they are close in age, but his cognitive ability.

if biden was are placed by someone younger, what does team trump do, because this is their big argument, bringing to voters saying look how much more donald trump is than his opponent? jordan: right. they would certainly have to pivot their strategy. he was caught on this hot mike disparaging kamala harris, so if she were to be the pick, i would imagine he will dig into whatever personal foibles that person has and put it out there. -- it would also change the dynamic of the race, introduce some new face, and also remove that question of age from the equation. manus: that's looks the moment trump is relatively speaking, playing the relatively quiet

game. right now, all they got to do is stand back and watch the democrats tear one another apart in terms of what happens next internally about the ticket. thank you very much. jordan fabian there. our guest this morning is priya misra of jpmorgan. she is still with us around the desk. the bond market went from data to politics like that, and there was such a virulent steepening on the prospect not just of a trap in the white house but a republican sweep. that invoke the wrath of the bond vigilantes. the steepening you have seen, is there a sense of exhaustion with that, or is there more that to, as this political race comes forward? priya: i do like steepness. if the problem of a republican sweep goes down, there could be knee-jerk flattening, because we

have steepened a lot. the reason for the steepening is twofold. the market is pricing in some fed cuts, absolutely the end point is still 3.7. you heard from president williams. there is a view the fed will cut it, even in a soft landing, to 3%. there is room for the front end to rally. once the fed starts a cut, we start focusing on how much they will cut? right now, there is this probability they will not cut. as the cutting cycle starts, there is room on the front end. there is a supply question, and that premium could move higher, but you could see the long end could stay there in a republican sweep. the front end is all about macro fundamentals, how much is the economy slowing care the long end is more about supply, is this inflationary? the fed might be in a really tough spot.

what if the combination -- i think steepeners are the weight to trade market. dani: when it comes to duration, what are the thing i find fascinating is either candidate -- like we just realize, all, after the debate. if that is the case, is it not already priced in? is that risk there of more supply breaks into the picture? regardless of whether it is trump or biden or someone else, it is a challenging deficit and challenging growth of deficit going forward. priya: we have this unsustainable debt trajectory, but here is where congress comes extremely important. in a republican sweep or democratic sweep, you can still say both will mean more deficits. what happens in divided government?

if you have congress different from the white house, trying to get big fiscal policy done, or even the extension of the tax cuts, all of that comes into question. markets wind it hard -- these are all binary risks. we are all focused on the white house. we have to look at every house as well as senate race to try and figure out is this a sweep or a divided government? manus: and that will come down to the fiscal mandate. this could all be shredded by monday. we just do not know who will be on this ticket. but it sounds as if the president will stick with it. thank you very much. priya misra of jpmorgan. coming up, pooja kumra of td securities. you're watching "bloomberg surveillance" live from new york city. ♪

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jonathan: -- manus: it is "bloomberg surveillance." the incoming new u.k. prime minister has taken a short ride from buckingham palace down along the mile and back into downing street. he arrived just a few moments ago at the rear entrance of the seat of power. labor exceeded with a stunning majority. he has a mandate, a mandate that

is possibly just a little bit thin. he's got to bring the country with him fiscally. he has got challenges. >> keir starmer, the thing that rishi sunak was don't give them a blank check. it doesn't matter how much of a share they want, they don't have a blank check. to your point, they have a bond market in the u.k. that is clear, they can give them a check. you talk about this well, the fact that they don't have fiscal legal room. the incoming investment doesn't look great. there's week public infrastructure. he simply can't throw money at the problem, given the deficit. the growth that we will get, that's why chancellor reeves said that this is the most challenging outlay handoff since world war ii. manus: many people thought that it would take keir starmer and this version of the labour party

10 years to get back to power. that has happened a lot more quickly and expedited a lot more aggressively, as this was a vote against the tories. and it was a vote for reform led by nigel faraj. again, this was a much, much contested election around inflation and taxation, the burden of taxation being so aggressive on the middle class. these contentious issues, the promise of brexit, this is a conservative tory party that took you into the brexit referendum and in many ways those immigration promises, fiscal promises, freedom and growth promises simply have not been delivered. dani: it's not just that. stepping back to look across the world, it's the year of anti-incumbency. save for the u.k. and mexico, it's a world that is moving more

to the right, more protectionist . this is fascinating. the mix of a labour government that does not want to do away with brexit, but might want to open themselves up to europe and more trading powers, but less friendly as we watch things shake out in france. how do those things play against each other? manus: europe has their own particular formal problems to deal with. they have lurched to the right, not just in france, but also in germany. this is perhaps underreported. there was a demonstrative shift to the right in the united kingdom. the reform party, the reform party headed by nigel faraj, close confident of nigel faraj in the previous campaigns, and whether that friendship remains is to be debated, but it has been that, it has been that move by the electorate to nigel faraj that is demonstrable.

labor took 40% of the total vote. it's a broad mandate in the house of commons supported by a small narrative from the populace of the united kingdom. pooja kumra is our guest this morning of td securities. here we are, looking at significant change about to hit the united kingdom. for the moment, the markets seem steady on their feet. will that honeymoon endure? pooja: when it comes to -- yes, as you said, labor right now, it's the easy part of the election. it was expected that labor would get the win. a long time after brexit, we were looking at the phase of political instability like we haven't seen. again, as we mentioned, on that side they were coming

growth started to improve in the u.k.. generally ensure -- interest expenditures are going out, but labor to labor right now they have a strong wind. manus: 60% probability that the bank of england goes in august, that may well be ahead of the fed to. this will be critically important, their fiscal plan in the united kingdom is for a budget later in the first quarter, 2025. you would say the flow of money, and we heard this from goldman sachs, the flow from international parts into the gilt market has supported the win, the labor administration will be supportive with rate cuts. how supportive? pooja: totally. this left is different from the left of france right now. they are not going to actually do the trusts thing again.

they won't change much in terms of fiscal and the bottom statement. i think right now they are in a nice position, given the fact that you have so much turmoil with litter cult uncertainty in france and the u.s. where it is trump and biden. from the fiscal perspective cross market wise, we like holding on to that cross market asis. dani: you make a good point and it isn't just france, it is election upsets across the globe as the world moves more to the right and potentially becomes more protectionist and isolated. what does it mean for the market to grapple with that? we have been trading idiosyncratic stories between nations. it matters for the peso, for french bonds, what happens when globalism and the engine of growth takes a backseat?

pooja: that is definitely the scary part, it's inflationary and it is something that we might see going forward and that is especially for europe as they created a strong integration that is at risk as we head towards the sunday elections. dani: as we head towards sunday elections, again this market is treating it like any or miss. the spreads are wider but they came in because you don't have the marine le pen party securing a majority. is it the all clear for you as well? pooja: we are going through these elections a bit complacent. at this stage they are viewing the hung parliament as positive given the fact that no decisions will be made given the fact that there will not be a clear majority, but i do feel it isn't good for france with the deficits. they won't know lower, but i don't see them improving, given the fact that the options right

now are either to be a hung parliament with a majority or a hung parliament with a severe bring down rate, heading into a technocratic government, definitely negative growth and not good for france. even though it was a boon spread, the general is contained and i don't think we are getting back to the 45 level we saw ahead of the snap elections. manus: in terms of stepping back for a moment, i think that dan : framed it well early on, discontent with the status quo in many democracies, not just the united kingdom, not just in france and germany, there is also a discontent here in the united states of america with the status quo. we are seeing that in the polls at the moment. from the global capital flow, and this is what i'm curious to understand, there's a suggestion that with a new form of government of taxation in the

united kingdom and potentially in france, you might see material dislocation of global wealth flow from the u.k. and from france. how might that play out on the stage of global investing? do all roads ultimately lead back to the united states of america? pooja: i think that there will be -- there is already a shift of flow happening since the covid crisis, where all countries became fed independent and that happened during the ukraine crisis. i'm not picking up a big major shift, but that's what we are going into and i agree with your point. the u.k. is still a market basically owned by nondomestic when i talk about the fixed income space. as long as we are able to show that kind of stability, i see a lot of flow coming into the u.k. for sure. manus: live pictures there, this is keir starmer and his wife,

they just arrived to the front doors of downing street. he is walking along, greeting the crowds. this is very reminiscent of 1997 when they arrived at downing street, where they had that traditional process. greeting the guests. keir starmer has a heckuva job in front of him. sterling, giving him grace and favor, excuse the pun, grace and favor apartments with the chancellor at number 11. he's got a young family. seven days in a row, the longest winning streak in four years. grace and favor for the moment? dani: yes but how do they revive growth where the fiscal drag weighs heavily on the u.k. and the investment isn't coming in. peter talked about the idea that you can't get info because the u.k. becomes a place of stability, but is it enough?

this labour government moves towards the center and cannot spend what they want to because they live with the ghost of liz truss. manus: there will become -- commentary around that, i'm sure. dani: first by minister to do so. manus: yes, the former chancellor of the exchequer held onto his seat. the fiscal framework, this is worth touching on, the promise from keir starmer here with his wife, the fiscal framework, if he can change the fiscal framework, which is about saying to the gilt market -- i want to borrow more. i've been clear with you, 9 billion points. if i'm going to borrow for growth, is that something that that market will absorb easily rather than the perhaps reckless proposition as it was assumed by liz truss? dani: and i love this, petey martin said the market knows a difference between borrowing

lots of money in a suit and borrowing a lot of money in a clown outfit. i will leave that up to you to assume who she's talking about. this market is trusting that keir starmer knows what this means. i was talking to someone from sigmund global last week, who said to me that they understand the bond market can push them out. france understands they can be pushed out of this presidency. which is exactly why some of this language has been more moderate and tamed, trying to reinsure -- reassure the investor base. no one wants to be that prime minister or president bullied out by a bond a vigilante. manus: maybe they all went to italy for a quick chat with miss maloney. the panic was that giorgia meloni would incite a widening of the spreads. the prime minister of the united kingdom, keir starmer, about to address the nation and the world.

>> thank you. good afternoon. i have just returned from buckingham palace, where i accepted an invitation from his majesty, the king, to form the next government of this great nation. [applause] i want to thank first british asian prime minister of our country, the extra effort that that will have required should not be underestimated by anyone. we pay tribute to that today. and we also recognize the dedication and hard work that he brought to his leadership. for change and national renewal and a return to politics for

public service. the gap between sacrifices made by people in the service they received from politicians grow this big. it leads to a weariness in the heart of a nation. a draining away of the hope, the spirit, the belief in a better future. that we need to move forward together. now, this wound, this lack of trust, can only be healed by actions, not words. i know that. but we can make a start today with the simple acknowledgment that public service is a privilege. that your government should treat every single person in this country with respect.

if you voted labor yesterday, we will carry the responsibility of your trust as we rebuild our country. but whether you voted labor or not, in fact, especially if you did not, i say to you directly, my government will serve you. politics can be a force for good . we will show that. we have changed the labour party, returned it to service. that is how we were governed -- we will govern, country first, party second. yet if i am honest, service is merely a precondition of hope. it is surely clear to everyone that our country needs a bigger reset. a rediscovery of who we are.

because no matter how fierce the storms of history, one of the great strengths of this nation has always been our ability to navigate away to calm her waters. and yet this depends upon politicians. particularly those who stand for stability and moderation, as i do. recognizing when we must change course. for too long, we have turned a blind eye as millions slid into greater insecurity. nurses, builders, drivers, carers, people doing the right thing, working harder every day, recognized at moments like this before, yet as soon the cameras stop rolling, their lives are ignored. i want to say very clearly to those people -- not this time.

changing a country is not like flicking a switch. the world is now a more volatile place. this will take a while. but have no doubt, the work of change begins immediately. have no doubt, we will rebuild britain. with wealth created in every community. the nhs, back on its feet, facing the future. secure borders, safer streets, everyone treated with dignity and respect at work. the opportunity of clean british power cutting your energy bills for good. brick by brick, we will rebuild the infrastructure of opportunity, the world-class schools and colleges. the affordable homes that i know are the ingredients of hope for working people. the security, the working class -- security for working-class

families like mine, security they can build their lives around. because if i asked you now whether you believe that britain will be better for your children , i know too many of you would say no. so, my government will fight every day until you believe again. from now on, you have a government unburdened by doctrine, guided only by the determination to serve your interests. to defy quietly those who have written our country off. you have given us a clear mandate and we will use it to deliver change. to restore service and respect to politics. end the era of noisy performance. tread more lightly on your lives and unite our country.

four nations standing together again, as we have so often in our past, the challenges of an insecure world, committed to a calm and patient rebuilding. so, with respect and humility, i invite you all to join this government of service in the mission of national renewal. our work is urgent. we begin it today. thank you very much. [applause] manus: keir starmer there and his wife standing in the crowds there. they are outside number 10 downing street. this is tradition. the incoming prime minister makes a speech to the nation, sometimes setting the agenda. talking about two of the most

important agenda issues labor campaigned on, the national health service, making it better. tories had introduced a toxic policy. it was talk with -- toxic for labor. he talked about all of the issues that he campaigned on. be calm, be patient, this is about rebuilding britain. dani: brick by brick, rebuilding the infrastructure of opportunity. in that same breath he talked about the importance of rebuilding the infrastructure of schools and homes. this comes back to what you and i were talking about, does he have the fiscal headspace to do that kind of spending? you could look at their budget and see that ab they don't. who i think that's why you heard more about the language of patients.

rachel reeves said something similar. they have this path laid out, but they cannot jump into it. they have to take their time. they don't have this full room -- fiscal room to spend. manus: we have two guests this morning talking about the appeal of u.k. assets relative to france and the rest of europe. 10 year bond yields are up, on a run for seven days in a row into this. keir starmergeddon, taking the markets. it's the longest winning streak on sterling or years. we are in a disinflationary for employment. the u.s. jobs report hits in just under an hour. sarah wolfe joins us with her outlook. we have had a couple of conversations, sarah, good

morning to you, about the jobs report. the whisper numbers are a bit lower than 190. are there fissures in the strength of the u.s. job market that are apparent to you? good morning -- sarah: good morning. there are two things we should be watching showing that demand for labor is coming down and supply is waning and both of those could be weighing on the labor market report this morning. it's a pretty notable slowdown from 230,000 last month. looking at the supply numbers, immigration flow has been stepping down notably since march. so, that is going to start to feed into weaker hospitality and construction jobs and on the demand side they can see that eights are coming down, convincingly moving higher. both of those things show us the labor market is still strong, but not nearly as tight as it used to be.

you could say that it is in balance with two-sided risk. manus: the expectation on that is a 4% unemployment rate at the moment. do you think we will be going into accelerated unemployment and if so, what kind of speed? sarah: we have 4% unchanged and because of the factors weighing in on the upside and downside, if you have a supply driven side with more coming down, it could push the unemployment rate lower, even with a week payroll. if it is demand driven with labor supplies rising, it could be pushed higher. there are two-sided risks that we need to watch with the details of the household survey, and more broadly we are expecting 4.2%. it's one of the things that will push the fed to cut three times this year.

dani: michael reed thinks the labor market is going to remain tight because of a generational thing. baby boomers will start retiring and that is why we are going to have a tight labor market. what do you think of that? sarah: it's true if you look at the medium and long-term horizon but there has been a demographic headwind on the labor first -- labor force for five years now. but the wildcard is immigration. for context, right now the nativeborn population is only growing by .2% on the year where the immigration population lifted growth to 1.5%, having massive tailwinds offsetting headwinds. that will be a huge wildcard going into the november elections.

dani: it's a fog and in that, if you take immigration together with the tariffs that trump wants to pursue, it would result in an economic environment where the fed would have to hike a total of 130 basis. about five hikes. what is your concern? do you share it? five hikes from the fed would be remarkable as we got a glimmer of that hiking cycle. >> we have a different view in a republican sweep scenario that resulted in tighter immigration policy and tariffs. it's complicated. you have weaker growth coming out of a negative supply shock and weaker growth because of demand construction caused by higher tariffs. in that way they get stickier. our view is that the negative hit to growth could cause an

easier fed policy of 2000 25 with an inflationary component coming later. so, we have a bit of an opposite take on that outlook in terms of risk to growth. manus: we will take that contrarian view. it is certainly want to put in the mix. as you say, tariffs could weaken the demand. we are counting down to the jobs report and we will see what the unemployment wages are. it's interesting, isn't it, that contrarian take. dani: again, it's the fog of 2025. good luck trying to trade the bond market in a day and a year like this. manus: jeff rosenberg, blackrock, along with the team from bloomberg, ira jersey, joining us to break down the jobs reports, right here on "bloomberg surveillance."

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>> what's the key trigger going to be for the growth turning into a growth scare or a recession fear? the labor market. >> what i see in the data is

loosening. >> the risk is that unemployment might rise a little bit from here. >> there could have been an inflection point where you see more weakness on the unemployment rate. >> you can have two things that are true. a good labor market that is getting weaker. >> this is "bloomberg surveillance." dani: 30 minutes until your jobs report. 190 is the estimate. from our audience worldwide, good morning, this is "bloomberg surveillance," we are taking over the show, dani burger and manus cranny. it's a busy day, everyone else has a well-deserved break. we have jobs data to grapple with. the question is -- how weak does it look to not only make the fed cut and blocked that in, but to move the bond market? manus: the bond market has been

slapped around. political curve steepeners that went ballistic and then the data going into this, the native -- the net -- the narrative shifts again. they were emboldened and then slapped. what is it that takes them to 425? the unemployment rate adding steady and taking higher question mark incrementally a number of calls have gone to the left-hand side of this number with calls as low as 160. dani: can i just say, manus, this is so silly. we don't know what 2025 is going to look like. we don't even know who the democratic candidate is going to be. how can you price in trump now? sarah wolf said that for her that it could mean weaker growth. therefore, you have a fed that cuts more. on the others, you have this argument that they will have to

hike five more times. it's a fog. how can you trade on anything other than economic data right now? manus: maybe this bond market i for cates itself into two sections by rolling into 2025 with more clarity. you might have a fed already engaged with two rate cuts under their belt. what will be the scale of the cutting in this cycle? going back to the conversation we had with alan pozen, he talked about a massive wholesale removal of immigrants from this country. giving you super steroid stagflation, not what the fed wants to deal with. dani: today's estimate, 190. some of the calls were varying widely. jp morgan, 200, morgan stanley, 210. let's show you how the market stacks up. we had 33 record highs for the

equity market. can today be the 34th? unchanged at this moment. s&p 500 futures might be determined by today's jobs data. euro versus the dollar, unchanged. stability coming in from europe and the french election with a national rally that had a smaller majority. the 10-year yield was whipped around by the politics and the data, down another three. that is where you stand this morning. getting you to the lineup, coming up, nadia lavelle of ubs on why she is expecting modest equity gains. then we speak to former fed governor randy croson are. and then, jeff rosenberg reacting to today's jobs data. we begin with that, top story, payroll is due out in just under 30 minutes.

nadia saying that this economic data is pointing to a soft landing. and we remain constructive on the outlook for equities while the bar is heading higher into the second quarter for earnings season and for the s&p 500, expect more modest gains. nadia, thank you for taking a break from your holiday to join us. tell us, it's one thing to know how the data is going to come in, another to know how the equity market is going to act. will bad news be good news for u.s. stocks? we think so, as long as it shows that the job market isn't falling off a cliff. it is the last shoe to drop if there is significant weakness ahead. anything that slightly under 200 k should be enough for the market but the general sense is that we remain positive on equities with the second half

likely to be tougher. economic data has been surprising more on the downside with that second-quarter economic growth pointing to below trend growth in line with q1. the same is happening in equities and what needs to drive from here is that valuation expanding. so, we do think that growth will continue to work. particularly quality growth, it will continue to work from here. for the market to get broader, we need to see that economic growth accelerating with the fed cutting by the time we get to september. my understanding from you is that we are not going to get that not -- dani: my understanding is that we are not going to get that, but that maybe you don't need earnings to show up even that strongly, just

the promise of future earnings. can that narrative continue? or will it run out of steam? nadia: we do need earnings to show up, and it has been, which is why these companies are so higher with the economically sensitive areas of the market showing up here. is a fed cut needed for the market to continue to hit new highs? obviously, no, you noted that earlier in the show. we are 33 times on a new record high powered by ai trade. but to have a more sustained rally and the rest of the market, you need to growth to show up to drive it and broaden out in areas like small-cap that are more economically sensitive. manus: nadia, good morning to you. when we look at this top end of the u.s. equity market, the mag seven, the second half of the year for me is going to be about show intel.

it's going to be about delivery of ai, monetization of ai, how much of that has been proven to you and how important is that for you to remain fully committed to the top end of the mag seven in the u.s.? nadia: it's important, but we think the market will be patient and give them the benefit of the doubt. we are still in the early stages of the buildout of the ai foundation and we have focused on the enabling area of ai, semi conductors in particular. there has been a massive amount of investment in the space with the ai shifting the industry to something typically more structural and cyclical. at the same time, you are seeing a bit of a recovery in the cyclical markets. think about the smart flow with pc and it's an industry that can

see industry growth on top of what's expected for this year. i think we are also with fintech, we are looking at hardware being ok, starting to cai implementation that is still early but it could drive sort of that recovery upgrade cycle within areas of the market. so far this year you have seen software a lot with monetization coming through, but we think that that is attractive. we have been advising clients with this multitrillion dollar opportunity to really add to the entire value stock. tech overall, including ai trade, when you think about it in this environment, strong free cash flow generation helps to drive growth. is valuation cheap? no, but we think that these companies with their growth expectations can grow into

valuation multiples. manus: i want to get a sense from you about where you are with the consumer. paul donovan almost immortalized the phrase of the u.s. consumer getting more stretched. if unemployment incrementally rises, it's not an all-out recession, but it drifts higher. the consumer will become more squeezed. how do you position for the backend squeeze? nadia: this is one of the reasons we are less positive on consumer discretionary's in that sector. it's not necessarily that we are negative on the consumer, but more on the discretionary goods that remain challenged, particularly the high ticket items. so, the consumer, yes, is pulling back and pushing back a bit on price increases. discounts across that space, look at the fast food wars

picking up but at the same time, the consumer is still cruising, traveling, trending towards travel and leisure with money to spend. they are just being more selective and looking for value within the broader economy, which is where i think selectivity is key. manus: we have also just been discussing the right-hand tail risk of multiple fed rate hikes in the event of more aggressive inflation going into 2025. it's not just one economist saying that to it. multiple people have come on board with this narrative that 2025 could leave fed hands tied. when you stand back to talk about inflation, preparing for higher inflation regimes, generally how do you prepare for that. is that commodity exposure? is it tipped? in what way do you reflect the

hedge? nadia: our view is that we expect inflation to moderate. there are concerns going into 2025 depending on the outcome of the election, we know that trump has been pointing towards higher tariffs across the board with inflationary concern, but in general we think it would one that we continue to like is on the moderating size, especially the oil price. we also like gold and have been advising clients to add to it against inflation with general political risk. we are not in the camp of raising retail rates aggressively and we think that the bed will be on a cut in cycle by 2025. these things take time to work for the system, even if we have a red sweep, it's more like a

2026 2027 event. the concern is for 2025 it's potentially a slowdown in growth. >> sarah wolfe update on that this morning. >> gold is headed for back-to-back weekly gains on expectations that the fed will trim interest rates before the end of the year. spot gold was over 263 dollars per ounce after rising by more than 1% this week. silver, getting a boost from the upswing, bouncing back to $31 per ounce. in the u.k., rishi sunak saying that he will resign as leader of

the conservative party once the concession arrangements have been made. this after he stepped down following his party's crushing election defeat. he said that he was sorry and that the british people had delivered a sobering verdict and i take responsibility for the loss. the outgoing prime minister, keir starmer, congratulating him on the landslide victory. western leaders are gathering in washington, d.c. to contend with geopolitical issues and major elections. joe biden is at an inflection point following his disastrous debate performance. emmanuel macron will just be emerging after a decisive second round of national voting. keir starmer, whose labour party just swept the u.k. elections, will have an opportunity to reset the special relationship between britain and the u.s.

dani: thanks, this week is heavy in politics. counting you down to the june payroll report, randy croson or joins us here on "bloomberg surveillance." ♪

dani: less than 15 minutes until jobs data hits the tape. in the meantime, coming off of record highs for the equity market. can it continue? slightly weaker s&p 500 futures this morning and the euro showing strength after stability in europe and another round of french elections coming this weekend. the 10-year yield is down, 432 is where we stand. nymex crude is little changed.

the payrolls report is just moments away. the median estimate calls for 190,000 jobs added in june. unemployment is expected to hold steady. the lowest call is goldman sachs, 140,000. randy croson or joins us now. what are you focusing on for this report? --randy kroszner joins us now. what are you focusing on? randy: in particular, wage growth. the fed has made it clear that until they are confident that inflation is going to be coming down in a sustained, systematic way, they ain't cutting rates. if wage growth continues to be around 4% or kicks up, it will be difficult for the fed to move inflation down to the 2% target. manus: mary daly says that we are near to the point where a benign outcome could be less likely. in her eyes, with an inflection

point, do you think that we are at a tipping point, moving beyond benign, where it could become more malignant? randy: she's exactly right. when i think about the fed management, with the risk of interest rates going too high for too long, bringing interest down, that could mean a slowdown in the labor market. risks that are declared all clear. late 70's, early 80's, zooming up to double-digit levels. manus: are they right to use extreme caution rather than rolling the dice? randy: extreme caution, maybe

not, but caution makes sense. the costs were enormous in the late 70's, early 80's. they don't want to get into that situation again. a lot about whether the economy will power on or not. there is a reasonable likelihood of substantial slowdown at the end of the year. real interest rates are positive, but only about a year ago. it was lags for monetary policy and we will start to see that in the next quarter or so. the numbers today are obviously very important. dani: someone like a neal dunn a or mohamed el-erian caution over cutting rates and if they wait too long, if they do that they may have to see that. why should the bias be with a high bar to cut rates?

why not go ahead and cut rates if we are starting to see some inkling of a kind of slowdown? randy: well, people have been looking for that kind of inkling of a slowdown for a bit and so have i. you know, the myth -- labor market has continued to be reasonably robust. the overall economy has continued to be reasonably robust in the u.s. i understand their caution. i would be leaning towards looking very carefully at these numbers and next month's numbers to think about whether september would be the time for starting to cut. but i don't think the labor market is soft and sufficient enough to say they should be doing it. dani: it's so fascinating, you can look at so many different things and build your own narrative. america is strange like that, we have the burden of too much data. it's a good thing to some degree, but you have two luxury fire powers, coming together,

merging, sex if the avenue and neiman marcus, with record numbers of people traveling this weekend, willing to pay for that. what becomes your guiding northstar when the data is in, often, opposition to itself? randy: it's easy for pundits to say they should've done this or that. but exactly what you are saying, the data are not painting a clear picture. sometimes they do, but it can be a complex mosaic where you put the pieces together and you build a pretty picture out of it and sometimes it is more like a picasso, where it is hard to know where the different parts of the image are. i think they are sympathy -- sympathetic to being cautious because there are high costs to wearing all clear when they

should. as the data gets more clear, 10 minutes or so, then they can make some clearer judgment -- clear judgment. right now i understand why you're hanging tough it's not 1999, everyone tells me, and it is not, 2008, so everyone tells me, with the regional bank crisis being a mere bagatelle. the scale, i'm curious, that is what will define and what does substantial mean? >> we will see the -- appointment rate will move above 4% and some people think that the fed is so powerful, they

don't have absolute control, the and think of all the political risks collars shocks john, is this no tie friday? mike: it is no tie friday. the no tie friday dani: folks agreed. dani:what signal is this giving? what are you looking out for? mike: i'm looking for surprise.

it's happened for a number of different months. 180,000 was the consensus forecast. the whisper number was worse. people thought we would get 168000 and instead we got 272,000, like where did that come from and why did we miss so much? do we get a surprise like that this time? the forecast is pretty much the same as last time. whisper number, 185 and looking for smaller than the economist number. what does the actual come out to be? and if the unemployment rate should rise a lot, we would have to go to 4.4%, then you get a rule trigger with a freak out. dani: exactly. stay close with us. manus, it's this curiosity, what do you care about more? wages, payroll, or unemployment? manus: the fed seems to be

tilting away from inflation and these reports matter more now. it's the scale of slowdown that comes and if it is less than 190, it's good for the bond bulls. dani: but what if it's hot wages? [laughter] we are here to panic after this july 4 holiday. we will have your june payroll report for you, coming up. jeff rosenberg will be here with us to react. we will be revisiting randy kroszner, as we debate. rbc is at the highest, 237. that's just minutes away on "bloomberg surveillance." ♪

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dani: seconds until the job state appeared here are the markets. the s&p 500 basically unchanged. nasdaq takes the reins as the russell to have the -- russell 2000 falls. let's check the bond market. we are buying bonds ahead of the print. 4.31 is where you stand on the 10 year yield. 4.49 on the 30 year yield. the data starting to come in and geared mike mckee joins us. mike: we have the drama. 206,000 jobs created in the month of june, much higher than

the 190 anticipated. we talked before the data came out about potential surprises. the unemployment rate is another surprise, rising to 4.1% from 4%. the forecast was only for 4%. interesting number for the two month net payroll provision. down $111,000. on the one hand we get stronger growth and two prior months, a significant drop. put it together, you have a slug economy story. hourly earnings, no change in hours worked. 34.3. the labor force participation rate, 62.6, up from the prior month and 7.4% for the u6 number, the underemployment

number as they like to call it. let me take a quick look at the number of people who were reported hired in the household survey. 116,000 plus so it is lower than the establishment survey but we don't have that big gap that we saw last month. dani: let me show you how the markets are stacking up. it is the unemployment number at 4.1% and the revisions we appear to be trading on. a rally that is thin and fragile. we are going back and forth. at one point it was small caps up precipitously. having a hard time of what to make of this. in the bond market the direction is more clear. it is a bond market where yields are falling over the concern that mike was talking about, the concern of economic weakness, unemployment at 4.1% yields, down six basis points for the 10 year yield, 4.29.

30 year yields, 4.47. this is a market that is treating this like an economic slowdown. stocks are not sure what to make of it. this is a bond market that looks at unemployment at 4.1% and says the fed needs to cut? mike: the fed has a reaction function for this. the markets have an overreaction function. the narrative will be that this is a sign of a slowing economy. we saw this big revision down in the march -- april and may numbers, revised down by 57,000. may revised down by 54,000. significant numbers. the pace of job creation has slowed even though this month is higher, there is a good chance it will be revised down as well. unemployment climbing faster than the fed expected. they said we would be at 4.1% by the end of the year.

we are here now. not triggering the rule but is showing a slowdown. that becomes the question the fed will have to decide as they try to put together the picasso that randy kroszner was talking about. is this the slowdown they wanted or is this a sign of the economy being in trouble? on a slow trading day with not a lot of volume, it is going to look more like panic-type situation, slowdown. overall it gives you the impression that we are where the fed expects us to be. manus: will this endorse the mary daly view, the power view we heard from him talking about things being balanced? these are not insignificant revisions. 111,000 in april and may. do you think this is toward the tipping point in the jobs market? randy kroszner is expecting a

substantial slowdown. this is the foothills of substantial slowdown. mike: that is what we have to find out. you would say that if the number is weaker this month than it is but at 206 that is a rebound of two prior months. does that get revised down? the fed will have to look at that when we get july payroll numbers. they will not have them for the next meeting. nobody expects them to move anyway. it is going to be a conundrum for them. i would say it underlines what daly and jay powell were saying. dani: it is interesting to have this tension between the headline number and a higher unemployment rate. 4.1%. if you are just joining us, that is where it came in. 206,000. the estimate was for 190,000. mike will stay close with us. keep digging through the numbers. joining is jeffrey rosenberg and

randy kroszner is still with us. jeff, let me start with you. what was your first take on these figures? jeffrey: it was your first take. the revisions and the unemployment rate figure that the markets are focused on today. this is supportive to the story of slowdown in the labor markets that jay powell is looking for. you can see that in the bond market reaction. this keeps september on the table. the other story here and the market reactions to the revisions, there is a bigger story, a beautiful turn of phrase by manus, the foothills of revisions. there is a big story that there are revisions coming, that the establishment survey is overstated. you do get the benchmark revisions. there is an expectation here that you are seeing an overstatement and that is fed

into the market narrative with the revision number that you highlighted earlier. dani: randy, would you agree with that, a slowdown potentially confirmed? randy: obviously that is something that i'm looking for. as we were describing before, we have the different pieces of the picasso. it is hard to put the image together right now. this is very much consistent with the fed's focus and the focus on the labor market, watching it carefully. this is consistent with the slow cooling of the labor market that they want but i think it will be difficult to just say we can stop the cooling whenever we want with a couple of rate cuts because with long and variable lags, it will be hard to do that at the right time. just as jeff said, the fed will

not move at the end of this month but september is live. they will get a couple more labor market reports before that meeting. that will be a key thing. with -- wage inflation has not come down. it has been in the same range they were expecting. if that drops significantly, that would give them the ok to go ahead. now they will be cautious. manus: randy, good morning. will this come down to the part of the curve where the jobs are lost? forgive me for being so brutal, but the quality of jobs lost in this next unemployment cycle, that will be critically important, isn't it? randy: we will certainly be looking at the types of jobs. depending on whether you lose jobs at the higher pay or lower pay will affect the average wage , the so-called compensation

affect. they will be looking at that. they will be looking at pockets of weakness in certain areas that are sensitive. they will be looking not just at overall numbers but digging deep into where they see monetary policy having an effect. dani: when you look deep into those numbers, jeff, you mentioned wage growth 0.3%, there is still growth. the ism services number we got earlier in the week, prices paid are higher. if i wanted to argue why the fed should hold, i could make an argument. wages and prices are still high. it is too soon to move. is it an error toerr on that side and say we need to continue to hold where things are until those factors come back online? jeffrey: you are pointing out the part of the labor market that has been -- shown the least progress in terms of showing the normalization. whether it is wages we are

seeing today, atlanta fed wage tracker, our own private estimates through scraping jobs posting data, they all point to a similar story which is slow down and normalization, the pace has not kept up. we have normalized to a precode tight level of labor market conditions and -- pre-covid type level of labor market conditions. that keeps the fed wary of moving too quickly. it is the price stated next week that will be more determining. they will be ok with wages stabilizing. as long as you are seeing the broader wage pressures continue to normalize, and certainly not a repeat of the first three months of this year, that will be the backdrop for the fed to open up the door towards slow

normalization, maybe 25 basis point cuts. dani: we just moments ago got the jobs figures. 200-6000 is where we landed. the estimate was for 190,000. the revision for april and may down by 111,000. unemployment rate 4.1%. mike mckee is with us digging through the numbers. what are some other takeaways? randy: there is a lot that addresses how serious a slowdown is. the unemployment rate goes up because we saw a large rise in the labor force, 277,000. what is interesting is we have seen a decline in immigration. people have been giving immigration a lot of credit for the jobs numbers and in this case, the decline did not translate into fewer people coming into the labor force but it pushed up the unemployment

rate by a little bit. it was 4.054, just barely rounding up to 4.1%. if you check out the household survey, the numbers are almost example the same. 116,000. what really stands out is a very weak performance for service providing industries and manufacturing. manufacturing lost 8000. for service industries, only 117,000 jobs created and most of that was in the healthcare field that we normally see adding a lot of jobs. instead the big number is government, 70,000. the loss of service sector jobs suggests that maybe we will see some inflation come down in the service industries because labor costs are the biggest issue there. it may mean that the government

hiring may be a seasonal adjustment problem and it could end up being revised lower. at this point it is definitely a picasso. a lot of different things in here that tell you the economy has slowed but where we go from here will be the interesting question. manus: there are a couple of other numbers coming through that various colleagues are pointing out. temporary help is dying 48,900 in june, that is the most since 2021. the time that it takes you to get a job, the median time it takes to get a job has gone from 8.9 weeks to 9.8 weeks. these are idiosyncratic. the messages will be in the revisions and the unlimited numbers. that temporary help, that is quite a flashing number, especially given services dropping so significantly. mike: temporary help is usually

thought of as the canary in the coal mine. if you will be adding workers, you go to temp workers first. in this case, not the case. the interesting counterpoint's average weekly hours did not change and you would expect that to go down if companies were seeing business slow. that is something to keep an eye on. we have a pretty good idea about taking longer to get a job because the continuing claims numbers have been going up. that is what it has been telling us. it is interesting to see that maybe this canary is cheating -- cheeping a little bit. dani: a tweet coming from the canary. jeffrey rosenberg is still with us. i want to touch him but mike was talking about, particularly the services sector being weak. this is the part we have been worried about, service inflation

not coming back in. does this report give us more confidence? is it enough to submit september for the fed -- cement september for the fed? jeffrey: probably not enough. the conversation was just on that big drop in temp help. the three month average is just a little bit below that. it is one of the highlights. some other industry highlights there. you have a big offset in government that mike talked about. there are some crosscurrents there. there is a pretty strong construction number that could be seasonal or weather affected. the seasonals that mike mentioned are tricky especially around the government data given that education flows in and out. there are some crosscurrents that make it a little tricky. when you are looking at those details, it is hard to say that that cements it. what will cement it is another

round of data and what we see in terms of inflation data next week and next month. i think that will be the case. as long as we will see in trains -- trends toward a slowdown, broader measures of labor markets normalizing, that will be enough. not enough to say that today but when we get to september, that will be there. as jay powell said, any surprise slow down in acceleration, the earlier conversation around perhaps there is a bigger revision and benchmark revision that tells us that establishments as a survey that has been much more overstated. perhaps that will cement in that environment where inflation is continuing to deliver this pace toward 2%. it is too early to say that is the read today. as you can see, the yield reactions are moving toward

raising the probability of a move in september appeared -- in september. manus: we were talking about the reinvigoration and reincarnation of the fed. when you look at the market reaction function today, yields are nowhere. the bond bowls have been handed -- the bond bulls have been handed a fig leaf. does it embolden you and cause you to be more anxious about credit? jeffrey: i would say on the fed put, it is a big deal. while we are talking about policy, what we have not spent a lot of time talking about, the fomc and the fed and powell, is talking about the impact of financial conditions. the proposal and the way in which the fed has been treating its response function to

inflation, if inflation surprises little bit stronger, they will hold rates. if it returns to trend, they will cut rates. it is an asymmetric response function but it is very market friendly and it brings back a bit of the fed put. that has led to much easier financial conditions. when you look at financial conditions relative to interest rates, you see a huge disconnect. policy is much easier than what the interest rate would otherwise imply. that is good for risk-taking. does it embolden duration? you have to be careful when you talk about duration in a portfolio, about where you hold the duration in terms of maturity. earlier this week we saw. a big bear steepening. we have fiscal policy challenges in the back end. i think it emboldens the part of duration that the fed has the greatest interest -- influence over and that is the front of the curve and may be moving out to the front belly of the curve.

the back end of the curve and that traditional way in which people have thought about using the longest end of duration as a portfolio hedge, we have to rethink that in an environment of substantial changes to fiscal policy. manus: that is substantial change even if it is biden or another democrat in the white house, there will still be a continual cushion -- continuation of some of the trump tax cuts. if it is trump, then the coupon sizes will rise. the theory of the policy that he proposes is for some very inflationary. is it next year that the bond market is really tested in terms of its appetite to take inventory on? jeffrey: part of it is the pressure between treasury and the fed, how much treasury has been able to hold the coupon issuance back from the bond market by keeping these bills issuance high.

that time period of when starts to be impacted in the back end of the curve, it is a function of the expected path of fiscal policy. two, it is a function of the treasury issuance pattern. three, it will be a function of where demand falls in terms of global investors and more importantly, global private investors because that is the other piece of what is substantially different here, exiting the era of qe into an air of qt. i know we are normalizing that as well. there is more reliance on the private markets to fund those increasing debt and deficits. when it starts to hit and we saw this last year in the quarterly funding announcement and when you get a change in that coupon issuance that we know under current trajectories will eventually have to happen. manus: a lot of nervousness going into next year as well. jeffrey rosenberg with the very

latest on his first take on those jobs. dani gets a short reprieve from jobs day friday. she will turn up in the 9:00 a.m. show. no rest for the wicked. dani: before i go, i want to give a shout out to kelly from jp morgan. the jobs data that is increasingly hard to call with each month. manus: send him a doughnut. there is a tray of doughnuts out there for everybody looking at this jobs report. dani will be here at 9:00 a.m. and take you through the market open in terms of how those equity markets react. joining me now is ira jersey of bloomberg intelligence. good to see you. the bond market genuflect nicely. two revisions coming through in may and april. the bulls are emboldened.

good morning. ira: that is exactly what has happened. a little bit of a rally in the bond market on the back of those revisions also the slightly higher on employment rate, that is a headline grabbing thing. as mike engined -- mentioned earlier, it was incredibly small. it was all about rounding to get us to the 4.1. the bond market is thinking that the fed will cut this year. the question is by how much. what i have been focused on looking at is what is happening next year. the market has priced in another half interest rate cut for 25 so you see things like 2025 fed funds and so for futures where most of the rally, the biggest rally in the market has come from and that is why you see two year notes better by about seven basis points today. manus: a little bit better vision in the slowdown. a little bit more than 11,000 on

each. that raises the possibility of another revision to this number when it comes through. the question is unemployment rising to 4.1%, the numbers also a little bit on the shaky grind. does it cement 50 basis points for 2025 -- 2024? michael: it certainly makes it a little more likely. the way we are watching this for equities is there are a few ways. on the unemployment side, that is a good indicator of forward earnings growth for the s&p 500. with on a plummet rising more than estimated, possibly slower earnings growth on that side. keep in mind, the stock consistence -- consensus is up 13%. if you put that into our model which does include unemployment

rate, that is down to 5.5%. on the other side is the right side. if it does submit 50 basis points -- cement 50 basis points, it does give us a little leeway. manus: i know that if mohamed el-erian was here with jonathan i, they would be a -- there would be a handwringing going on. he is always accused the fed of being behind. does this embolden that narrative that they need to be more forward thinking as this small slowdown begins? ira: i don't think that is the case at all. everyone is mixed. there is a clear sign there is slowing of the economy and that the fed will have to cut earlier and that september seems

appropriate and some others who are noting that the labor market still seems reasonably tight. our work suggests that anything above 100,000 in terms of of payrolls is not a bad number. if you go back, we are looking at this in a microcosm of post-covid. if you go back to the early 2000 or even the 90's, that's fine. it is. still higher than replacement. . we would still at 175,000 jobs created, still enough jobs that the economy should remain stable. that means the fed could stay on hold little bit longer. manus: thank you very much, ira jersey. michael, westward. -- last word. the bottom line is the consumer will get more squeezed again. is that where the pressure

comes? michael: breath will increase with the earnings growth picture evening out away toward some of the other sectors. consumer discretionary is at the bottom of some of our models. it is a place where we have been seeing issues with valuations and earnings. definitely toward the bottom. manus: thank you so much for being with us. that is our own team in-house of michael casper and ira jersey. normal surveillance will resume on monday. the jobs report is clear. 190,000 is what we were expecting. 206,000 was delivered with significant revisions. unemployment rising to 4.1%. at 9:15 a.m. the open will get together with the acting labor secretary julie sue.

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>> from new york city for our worldwide, i am dani burger. fourth of july ends abruptly for jobs friday. the numbers ascend the market for a ride and end up right back where we started. is it holiday trading or was it priced in? the countdown to the open starts right now. dani: we begin with the big issue, jobs numbers climbing past estimates. >> it is the revisions and the unemployment rate figure that the markets