>> aggregate profits look great. really a couple of sectors driving it. >> some of that negative correlation to equities is coming back. >> our view is that a soft landing backdrop is good for a broad swath of companies. >> i think this is more of a momentum flush. the low volatility period is behind us. announcer: this is bloomberg

"surveillance." >> this was a week to remember. this was a good week. welcome back. stocks headed for a seventh day of gains. we have seen the biggest six-day rally in stocks. s&p 2% below the all time high reached last month. that is what we're seeing now. this is bloomberg "surveillance." john should be back on monday. that's what we're expecting. to me, what it highlights is how far we have come from the turmoil and uncertainty of last week. david: so true. 8% higher than from the lows. we're 2% away from all-time highs. bond markets on the other hand, maybe i get hate for this. swinging from one extreme to the rest. at least for now, it seem like

equities are on the strength of the economy. bond markets were too downpour. >> frankly this is an environment where suddenly you can have equity returns coming in strong. retail sales coming in at the hottest level going back to september 2023 and the fed is still expected to cut rates. has the difference creating this. >> take a deep breath everyone. within days the market has been pricing if hard landings to a soft landing. you still see this propensity from the u.s. consumer to spend. what they are spending on changing a little bit. what i'm interested to see how the university of michigan comes in today. where is the sentiment now for the american consumer? >> and for the federal reserve?

will they come through what this market is hoping and expecting from them? here is what's on deck for the federal reserve next week is jackson hole. that will be maybe a time for real policy prognostications. we also get a jobs report september 6. september 11, c.p.i. september 18 the fed decision. so far the rhetoric from the federal reserve officials dani to me has highlighted, even the hawks are becoming doves. >> i think alberta is a good example of this. he was new to the fed of course. he was really hawkish two months ago saying he needed quarters of good data. now with just another month of good data he sounds different. we might be nearing the time to adjust policy. it is not cover thes flying out and we're definitely going to cut but it is notable for him. >> this is maybe when doves fly.

ann ma rhode island, you're marie, you're headed to thed.n.. >> the political rhetoric coming out of both camps is drilling on the issues americans care about and have been caring about more month, the economy. you saw that yesterday when trump was trying to stay on message. a lot of people have asked him to on his campaign. he struggled a little bit. he stood in front of groceries. democrats are trying to show, yes, the inflation rate is coming down. the rate of inflation is slowing. the fact is american consumers are not feeling it because prices have not dropped. the d.n. scrrvetion going to be about affordability as well. we'll see that with kamala harris kicking off her economic policy. and housing. >> we have housing data.

in markets you can see potentially a seventh straight day of gains as potentially people look for this ongoing sun kissed august holiday as jim put it. just the s&p close to flat. the euro-dollar meandering south of that 110 place. yields, dani, you were mentioning this. they might have been trading on their own universe but it looks like it is fine in terms of expected rate cuts. whether they will be proven to be right. we shall see. coming up, equities rally on a stronger u.s. consumer. josh wingrove and vice president captain kamala marries plans to reveal her economic agenda. let's begin with our top story. u.s. stocks looking to extend a six-day rally after economic data and earnings from wal-mart eased fires of an incoming

recession. john of oppenheimer doubling down on his bullish equities call. as the u.s. central banks bank moves toward easier policy, effortsst are being met. thank you so much for being with us. i want to get a sense from you what you make of this incredible rally. >> you know, what we have seen here, i think is a lot of people mistrusting the fed, jumping to conclusions on a lot of things and getting the gist of actually perhaps the fed chair is talking the talk and walking the walk. we think we have got a good situation here. things are indeed getting better. even if some things remain poorer or worse in terms of whether it is geo-political stuff or questions as to the outcome of the election in november or guess the fact that

not every company is producing these great results inning a regats. we see the s&p 500 delivering so far for the second quarter. >> you said in the past this is not a federal reserve that needs to cut rates. do you still think they are going to cut rates closer to 100 basis points? do you think that is necessary given the strength? >> i think you know, the strength is more resilience rather than a robust nature. there is a big difference in the meaning of those words. i think the fed at this point is likely to do a down payment in september of 25 ahead of the elections and i don't think it risks questioning of its independence politically by doing that. i think it recognizes the fact that we are seeing a slowing in the growth of inflation, very clearly, towards their 2% target

but not yet there but they are considering now the fed chair as you mentioned a little bit earlier has really mentioned it is not just about inflation. it is about considering the unemployment number and that full employment goal. i'm up to 25bips now september and possible two 25bips one in september and one in december after the election. >> you can see that the path there leads to diverging ports which you knows among companies even within the same sector. the consumer sector is the poster child for this you can have mcdonald's with poor earn education and wal-mart with robust earnings. what do you think of a this, individual stocks and buying an entire sector? >> when it comes to investing in modern times we like an alphabetta approach. you have to be like a kid. you have to know your alpha

president is beta. it is the old adage of you know, you want to be -- you have to hedge whether you're in the right pew whether you're in the right church or not. you have to allow for the fact that you get these lifts sometimes carried by a few names in the sector. on the other hand the sectors really is the individual performance that matters but consumer discretionary, the big thing about that is worst performing sector at one point coming into this and now better retail numbers all of a sudden remind people that the u.s. consumer is not to be pushed turned bus. >> it has been even with the resilience of the u.s., you're looking to get meaningful exposure to international equities too. this is something so many people

have called for. go abroad. it is a trade that keeps getting smacked in the face every time we see data like yesterday about the strength of the u.s. what makes it a playable equity strategy now? >> we have to think you know, you want meaningful exposure to the international developed markets as well as to the emerging markets and within the emerging markets recognize that a huge transition moving away from one country's centric supply chain is a big deal and will benefit a lot of other countries around the world but a reck nation the international investment for a u.s. investor unhedged in terms of currency is likely not to perform all that well until the dollar gets off its high perch. it is on a high perch because we're doing better than its peer economies around the world at this point and also the world remains a very uncertain place

which causes people to hide the dollar. >> do you see a comeback of the carry trade? >> pardon? >> do you see a comeback over the carry trade? >> it sure looks like it. if you look at the bloomberg today, it looks like the hedgies are going back into its very quickly. on the weaker yen. we have to think probably with not as much enthusiasm as they have gone into that trade earlier and probably looking to make an exit. it adds to the potential for volatility in the year going forward. >> i also have to ask you something you mention earlier. you think the fed should go 25 by a spoiptses partially because that would shield them from political blowback. are you saying 50 basis points would look political? >> no. i'm saying it looks unnecessary at this point. but 25 shows that they recognize the lag effect in terms of change in monetary policy or a

move towards change in monetary policy. so 25 looks like the most prudent to us with keeping in the pocket, other 25 potential in november and even another one in december as needed. >> what are you going to be paying more attention to next week to wrap this up? jackson hole or the d.n.c.? >> you know, i think it will be both. i'm going to be watching both to see what the mess j is for the news out of the d.n.c. and jackson hole is always good to get a view of the fed and what they are thinking and the latest reaction by the markets. the big thing is here, the second quarter earnings season, which is winding down, really coming close to the end of it, will fade into the rear view mirror and then it is what have you done for me lately? it will be very dependent upon data and upon things coming out

of what people are talking about that they are going to do if elected. >> thank you so much as always. wonderful to have you. i hope you can take vacation after this sun kissed holiday in august. let's get you updated on the stories. >> the largest u.s. maker of chip making equipment delivered an in-line sales forecast where third quarter results topped analyst estimates. artificial intelligence was fueling demand. investors had been hoping for a bigger payoff so shares are falling nearly 3% in the premarket. bloomberg has learned that an heir is closer to making an offer for paramount global. he is weighing an offer for the controlling company of pair mounts and paramount itself. they had agreed to merge with

sky dance back in scwul july. typhoon edging closer to china's main island. carriers including japan airline and a.n.a. have canceled around 90 flights impacting more than 50,000 passengers. they are warning people to stay indoors. >> up next, harris making her policy pitch. >> no senior should have to choose between either filling their prescription or paying their rent. together with joe biden, our president, we finally addressed the long standing issue. >> i have an incredible partner. the progress we have made. she is going to make one hell of a president. >> you're watching bloomberg "surveillance." ♪

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lisa: we will be swimming with the moose over in jackson hole to see if they have insights into monetary policy. we are looking at a market that is poised for a seventh straight day of gains although actually giving up some of that. it has been the biggest six-day rally going back to 2022 at a time and dani, you nailed this. the real question about whether the bond market is sending a different message or paving the way for this goldilocks.

dani: some peeke people can look at 50 basis points. that just gets us back to normal. after a day like yesterday when everything came up roses, everything was strong, the market has to do some serious reprice ising. given that, you can say if the labor market comes in strong with that data, maybe the bond market will have to do this all over again. lisa: we will not be focused on this next week. we will very much be focused on politics. >> everyone should live with security, stability. no senior should have to choose between filling their prescription or paying their rent. we finally addressed the long standing issue for years was one of the biggest challenges on this subject. >> i have an incredible partner. the progress we made.

she is going to make one hell of a president. lisa: vice president kamala harris set to roll out details today in north carolina. harris will reportedly propose offering $250,000 to first time homeowners and a federal ban on food and grocery gauging. there are have been some questions around a number of her policies. i want to start with price gauging. it fete flat when it was rolled out by joe biden. now there are questions on where she is looking to address price gauging where grocery stores are capping and lowering their prices. >> yeah, first of all, good morning. i don't like this moose talk. you bring the biggest canadian you can find in. continuity here. she is rhetorically hammering on this. there is two ways to look at

this. number one, harris was an attorney general in california. she has that built into her bones. we're seeing that with her call to go after price fix. she is signaling with the f.t.c. and other agencies are going to be as beefy as they have been under joe biden. that is a big signal. and is in fact maybe one of the biggest signals she is sending here. harris is saying she will use the leefers of government if she wants to to crack down on what she sees as abuse or pursued cases of alleged abuse. that is a big one. more broadly, people have been begging joe bide on the talk about grocery prices and inflation more succinctly for month. harris is pivoting to that with this pitch saying we put a lot of blame on that. it has effect of transferring the blame away from the administration.

the government policy has fueled the situation in the u.s. kind of gets a good bang for her buck going after this. voters simply are not blaming her as much for the economy as they did biden. she gets the benefit to some incum bancy. dani: the "washington post" says when your opponents calls you a communist, maybe don't impose price controls. doesn't this make her more vulnerable to republican attacks? >> it may. the republican attacks are probably coming anyway when you alluded to trump's press conference yesterday with the groceries lined up on either side of him. this is what they are going to hit her on regardless. democrats are thinking we have to do something about it. they have been going after this for years.

this is one of the weird moments where joe biden might be standing on stage saying we're already doing this as she pledges to do something. for instance in the meat packing sector. that is one the biden administration has been going after saying the concentration has helped drive price increase and essentially profits rather than passing on savings or moderation to consumers. i think on the broader question, will kamala harris go after grocery chains for individual pricing? c.c. that might be a bridge a little too far. but i think clearly if you for instance grocers trying to merge or just looking at how far you can push prices without triggering some sort of federal action, harris is trying to send a signal here. everyone you talk to around her says it has shaped her thinking on things. >> she talked about expansion of a program that joe biden

unveiled. anyone that that is a first-time home buyer can get $25,000 to help them purchase that first home. is this all rhetoric? she cannot do that unless she has a democratic house and senate along with her come january 20. >> the short answer is yes. absolutely, it is rhetoric, for sure. but we are going into a tax -- year. the winners of this election, the presidency and the houses of congress are going to get to rewrite the tax code. no one is going to sit there with the trump tax codes expiring because they will be hit with a tax increase. everyone expects everything kamala is rolling out now is essentially her starting position. she is talking about the housing funding that would of course be reliant on some sort of spending grem be it on the tax deal or otherwise.

i'm not expecting like, you know, -- as one source said don't expect an a.b. point plan. i would not look for the fine point necessarily. this is her starting point. this is where they think they are coming from. one thing is politicians make a lot of spending pledges in election campaigns. beneath trump nor harris is talking about it or what they will do about it. we'll watch today whether she nods to that. that will be one of the big questions. does either party actually really think this is an issue or do they think the boring path is sustainable as it is or could stand a little more send thing with revenue on the other side that of course republican lawmakers tepid not to be in favor of. dani: you mentioned interrupt's press conference yesterday. he had this point where he was asked about this, both his team said stop doing these attacks to

kamala harris. he said i'm entitled to do do those perm attacks. what does that tell us about where this campaign is going? >> yesterday was a good display of his campaign. on the one hand what he wants to talk about and then what he richts on when they let donald trump cook. the latter is what we saw with that remark and saw it earlier in the week talking about the economy but i don't think has the most important issue. they are trying to keep him on message. republicans around him and just republicans generally think the path to the presidency and success in the congressional races is hammering inflation over and over and over. this has been the case in so many other countries where incumbents are falling like flies over this question, people are so mad about the grocery prices. but with trump, it is a package deal. if you want trump, you're going

to get all the crumbs with it. he gives them fodder. has the tension now. trump is clearly grappling with the message and some staff changes in his campaign or at least additions, not a signal how he thinks things are going well. >> thank you so much as always for being with us. to that piece you mentioned, the op-ed in the "washington post." showed grocery prices in july were up 1% from last year. annual prices have hovered around that issue for the last eight months. >> the issue is prices are coming down. it is going to take a few years for psychology to have an effect. >> coming up, harvest could lead to lower food prices. coming up next

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lisa: what a week it has been. six straight days of gains including the biggest rally in that time of -- going back to november of 2002. welcome back, giving up on the gains, but nothing dramatic ending the week. light on data after a number of one to three punches pointed to resilience in the economy, there is still a path for the fed to cut rates. s&p futures are lower.

nasdaq futures marginally higher. the russell 2000, and maybe we talk about it more than the weight should suggest in terms of how big the companies are, but dani it highlights how it seems to be a perfect backdrop for even the weaker companies out there. dani: so true. it's this idea that the economy is holding up, the consumer is doing well, and we are still going to get cuts. you talked about this before, a perfect storm in a fairytale character economy where we are expecting cuts. it's great for companies like small caps. lisa: something that we should not mention? goldilocks? dani: i feel like we talk about her a lot. [laughter] lisa: taking a look at what's going on with respect to the bond market, you can see that complacency around cutting rates. more significantly if the economy is resilient, two-year yield's are above 4%, four point

05%. 10-year yield's, 30 year yields. taking a look at this, and marie, you mentioned this so let's go there, taking a look at what is going on with the yen, there's more strength, but yesterday there was a good deal of weakness, people piling back into that carry trade. getting to that right now under surveillance, traders are hopping back in according to a t fx global markets, shorts against the yen are climbing, getting weaker alongside a rise in u.s. stocks thanks to easing recession fears. frying pan to the fire? annmarie: the question is whether or not you will see another boj hike. one portfolio manager put it that people have short memories and that's what it feels like. we are talking about the unwinding of this, we were talking about that last week and a people are piling back in. dani: mark mccormack talked

about fx markets being serial monogamous. the thing that we are concentrating on now is strong u.s. data. what happens when the next boj decision rules around? the deputy governor when he said that they wouldn't hike, it was because markets were not home. they are calm by a lot of measures, this would allow them to hike again if they could. what happens to the carry trade's that just reloaded thanks to strong eco-data? it's this thing we were talking about where it takes more than just one or two pickup days to unwind what we've seen in the markets. this is again the reason why on monday we were talking about potential volatility coming down the pike and it turns out that none of that transpired this week, even in the face of narrative shifting data. to me this is the question, how much have we really changed from last week versus becoming just as vulnerable as we were then with a significant portion of

the overweight carry trade's in clay? dani: maybe it's a idea that we are resilient and can put on those trades and as long as you are not looking at it on the days of volatility, you will be fine. maybe this makes us even more complacent in some ways. lisa: especially if we get the full throttle fed put that people are expecting next week. we are focusing on politics. donald trump taking questions from the media, looking to defend his economic record. the news conference came ahead of kamala harris's speech on economic policy today. trump adding that he feels entitled to personal attacks against harris. without getting into all the personal attacks, there's a real question about strategy right now and if this is playing with his base, if it is garnering some sort of enthusiasm to voters or if this is just a president who wants -- a former president who wants to go it alone with his advisors wringing

their hands. annmarie: josh put it well, it's the whole trump package. the economic message with rhetoric as well. he tried to stick to the script and then he went into the insults. that will work for the base but what you continuously hear from the advisors who are even on the airwaves on fox news talking about the fact that they want to stick to two things, the economy and immigration, that is how they can expand past the base. if you can't do that, it will get more challenging. dani: i'm sure that there is frustration that they gave him such low hanging fruit with price gouging, stoking demand in the housing market. they could turn around and say -- this is what we told you to be worried about, communists to the point of the op-ed, but we are not getting that message. lisa: i'm curious, what further shakeups could happen in the trunk campaign when it is clear that there is concern and a

couple of new advisors coming in. annmarie: they even brought back people. trump asked about this yesterday where he said he thought his team was doing great. to josh's point, when you are shaking up the campaign, it can potentially feel like messages are not landing. lisa: meanwhile, investors looking to lower food prices and on the political front this is one of the hot button issues. but this might be an area of easing concerns. the commodity index is at ace -- is that a four year low as prices drop on the prospect of a bumper harvest. kona hague joins us now. thanks for being with us. i want to start with the reality of the data on the ground with food inflation as price gouging starts to become a political hot potato. how much has food inflation come down even without a bumper crop

season? kona: they have come down. we have come a long way since the ukraine invasion when prices reached historically high levels. naturally because ukraine was a massive exporter of grain. what happened is you saw those exact high prices lead to encouragement around the world for farmers to plant more and that is what we see now, bumper harvests in crops in brazil, the usa, europe, and now we are at a comfortable amount of supply where prices are finally coming down. lisa: we are seeing the likes of kroger pledging $1 billion in price cuts to appease regulators in that tie up with albertson's. i'm just wondering how much this is just smoothing political

concerns and how much this is what we can expect from other companies as well, given the bumper crops of moving towards other dynamics. kona: so, there is definitely the price at the farm level. but then you have the entire supply chain. freight remains pretty elevated. and then you have the manufacturing costs at the refineries with wages. by the time they get to the retail level, some of those big costs adoptions have disappeared a bit. that is fight at the retail level, yes it has come down from two years ago but it will be pretty sticky at these levels and it won't be easy to bring further down from these levels. for the average person who is buying bread or pasta, what used to be half the price only four years ago still feels pretty elevated.

so, there is a psychological impact as well. it's not coming down fast enough, it will stay at these levels as it is being passed down now. dani: hence proposals from harris to stop price gouging. i'm wondering, policy like that, how does it affect the policy side of the chain? kona: yeah, the entire supply chain is going to have to take another hit. farmers are incentivized to always produce maximum yield, maximum acreage, as long as the costs of production is not being hit. so, i think they will always try to produce the most. so, buyers would then have to give them a decent level of compensation. and then the shippers and all of that. who is going to take the hit? you cannot afford the farmers to take a hit, you will just wind up with a lower crop the following year and it gives you

a cycle of low crops. it is a tricky one. it's simple to say in theory, but in the supply around who is taking the hit, to me it's not clear cut. definitely farmers will not be happy if they take any cut because today the average u.s. farmer is up against the costs of production. dani: chinese demand in terms of the consumer has been continually week. they have having issues stimulating perp -- stimulating purchases. when we look at the changing taste and stimulated demand, how does that work into soft commodities at the moment? kona: china for the last two decades was accounting for one third of all of that demand. the latest fao forecast suggested the percentage increase is now less than one quarter.

so, that's a huge decline. why? the chinese population is decelerating, slowing, not enough youth, meaning that consumption for meat, grains, restaurants, beverages, it's all slowing at an alarming rate. the other reason they are still growing is because they are so big in terms of absolute population but that growth is slowing. we cannot rely on china the way we did in the past. they are very keen on proteins, to the extent that these grains get fed to animals, that will continue to grow, but now we have to look at sort of south asia and southeast asia for more demand growth. i think that china is there and continues to mop up any grains that they can achieve levels, but i don't think we can rely on them as much as we have seen in the past. annmarie: american farmers were

in the middle of the trump trade war and now he's talking about imports on china if elected, tariffs, with likely retaliation from beijing. how much could that undermine american crops? kona: that's a huge, huge topic. to a certain extent, the fact that china bought a fair amount this year is in anticipation of the tariffs coming. they are definitely stockpiling. doing the right thing by buying a cheap, fronting the fact that there are potential tariffs ahead. they will be looking to buy what they can now. they will be switching to other opportunities like brazil or russia, eventually, for their food needs. for the u.s. farmer, that is a question and an issue and i think they will have to diversify and look for alternative outlets, because china is not going to be economically profitable at those

tariff levels, they will have to look for alternatives for sure. lisa: kona haque, thank you for being with us, have a wonderful weekend. i will say that we are going to be focusing on politics next week but also jackson hole and the latest from the fed. bill dudley just put out a piece on bloomberg opinion where he talked about five questions he would like to see addressed in the fed chair jay powell speech, including should trade policy be more preemptive and try to get ahead of cycles? should the inflation target be higher? you might be disappointed that we won't get answers to those questions but particularly around preemptive monetary policy, that is what people are betting on. dani: it's also a criticism that people have had of the fed that they are just being reactive. we are all hopeful that the fed will do this, preemptive cuts is

better than reacting to things but that's the flavor you have gotten from recent fed speak. goolsby said something along those lines. but it has been data dependent, often meaning that you are reacting to data that is backward looking. lisa: some of these questions will be key. we probably won't get answers, but we will keep asking them. for some answers, here is your bloomberg brief. >> sales has grown half of 1% after a revised drop from june. summer discounts and the euro football tournament help to drive spending. things are before where they work when the pandemic started in early of 2020. more on the kroger story, they are planning to cut grocery prices by $1 billion in their mergers with albertson's, double what they had previously

pledged. they had agreed to acquire their rival in october of 2022. the merger is an effort by kroger to compete against the likes of amazon and walmart. resorts world las vegas has been accused of catering to individuals with ties to organized crime. the gaming control board in nevada filed a complaint alleging that the property welcomed certain people with suspected or actual ties to illegal bookmaking and histories of felony convictions. resorts world is owned by fenty group. lisa: up next, swing state economics. >> i'm expecting and hoping to hear that her agenda around the economy is going to give us that opportunity and that she understands that america is the land of opportunity and gives the people the chance to do the most. lisa: that's coming up heading into the dnc.

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lisa: trying to make it a seventh straight day of gains after the biggest rally going back to november of 2022. good morning, welcome back. a very different morning from a week ago when we were looking at turmoil we hadn't seen since the height of pandemic. that's gone, right now it is calm across the board, particularly as people reassess how geopolitical risks will weigh in. heading over to the dnc, swing state economics. >> i'm expecting to hear that her agenda around the economy is about opportunity. giving everyone a chance to do the most. that is exactly what drives this

economy and what makes our capitalistic economy so strong. at the same time i expect her to continue the policies of the biden harris administration. lisa: she's expected to pick her agenda in north carolina this afternoon ahead of the dnc. state street global markets, a race to the bottom when it relates to fiscal irresponsibility, difficult to see how there isn't a floor under the long end of the curve regardless. noel joins us again. thank you for being with us. i want to start there. it only gets reprised when there are other types of drama in the market. why is it not just a convenient bogeyman when people don't seem to have any worries? >> i feel like right now the

market is certainly focused on different elements that are coming all at once. the main focus or concern is that both candidates seem to be ready to embrace or add to the fiscal spending tab. that is what i think most people will be focused on and spending and ion. from what we have experienced it seems people are more focused on the belly of the curve. we will certainly get a risk premium baked in as we approach the election. annmarie: today kamala harris is going to be talking about $25,000 as a new homebuyer, commerce with trump tax cuts back and play, his words, lower

craw -- lower-class middle-class upper-class tax cuts across the board. is anyone in these parties serious about ratcheting back fiscal spending? noel: i don't think so. we are at a very different starting point and this is what i think markets and investors are thinking about. we have seen it with the activity and a lot of the risk is going to get baked in after labor day where we can expect volatility. lisa: are you expecting -- annmarie: are you expecting a liz trus moment? noel: we are still the reserve currency of the world. i think we still have very deep

capital markets. however, i do think we have to expect to get volatility leading into november. dani: it's remarkable that with everything you are saying, 10 year yields are still below 4%. what is fair value to incorporate the fear of rising deficits in the u.s.? noel: to me i think their value is higher than 4%. right now, i think you have got the juxtaposition of fiscal concerns with what is going on with central banks. there was, up until i would say yesterday when we got retail sales, there was concern that the u.s. economy was starting to roll over. as we have seen, the labor market is still tight, the u.s. economy is still relatively strong. you have that environment augmented with fiscal spending and i think that is how you get above 4% and stay there. dani: people have pointed to the

idea that there will be less fiscal rope -- less fiscal support. bank of america puts it as a 5% drop year-over-year. how are you thinking about the fiscal impulse at this moment? noel: keep in mind the cbo projections with the factored in lapse of the trump tax cuts. trump obviously wants to keep a. , but the democrats, you know, they say 400,000 or below are going to keep those tax cuts. they both seem to be on consensus in terms of note taxes on tips, another tab. you can start to see it add up like before, kamala harris talking about $25,000 tax credit. i know she wants to extend the tax credit. all of that is adding up.

it's definitely going to cause volatility. dani: are you base -- lisa: are you basically recommending to state street clients not to go with bonds? noel: i would be skeptical going into the long side of the curve right now. i think it is probably more secure to be on the short end. yeah, the fed may cut rates, however given how like i mentioned before, the economy is pretty strong, the fed can only go so far. lisa: how far would long and yields have to back up? noel: it would have to get to 5% for me to feel comfortable recommending long end at this stage. lisa: entirely because of political concerns? having to do specifically with deficit? noel: it does, it's completely the fiscal situation we find ourselves in and it will be

exacerbated regardless of who wins. lisa: how much? noel: it's mixed. some clients are all in because their perspective is that global central banks are cutting rates, that's a good environment to go into bonds. but some are starting to get concerned about some of the proposals getting floated around . i think that they were caught off guard a little bit when kamala embraced the note taxes on tips. that was something new. now the thinking is -- what else could come to the four? what else could be reintroduced here? what she lays out later today, what she emphasizes during the dnc will be critical. lisa: noel dixon of state street, thank you for being with us. very interesting and this time as we head into the dnc. seems like the biggest volatility could come from the bond market and not the stock

market. annmarie: remember, we are talking also about tax cuts being a huge issue in 2025. we are also on a fiscal cliff again, facing a debt ceiling debate next year. the composition of congress could change the path of that. lisa: i can hear the voice of steve eisman in my head. the deficit, the deficit, they been wrong every time. how often do we hear this? dani: to your point, making bond auctions great again. something like a failed auction might force us to pay attention but maybe till then we just need to see what the makeup of congress is in terms of what's proposed for now. lisa: i love it. 20 auction coming next week, a 30 year tips auction coming next week, otherwise we have to wait a while. coming up next, katerina, wendi, john bolton, and when he sees

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>> the fed has a real opportunity to sort of shift the narrative. my read of the current data is this enough good going on to offset one of weakness is. >> unemployment accelerates higher if you're not careful. >> just given the combination of data we are seeing on inflation.

and also on the employment questions. >> we are hearing all of these cut talks and it's overly optimistic looking for 50 basis points per meeting through the end of the year. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. lisa: volatility melting. this is bloomberg surveillance. john returns on monday. today marks the transition point for earnings and data to the fed and politics. let's go to the fed first we have jackson hole coming up next week which might be a time for them to indicate some sort of shift in policy. honestly we get the data that's going to be in -- so important. how much are you looking to jackson hole versus the jobs report versus cpi? dani: jobs report probably the most important. in the meantime you have this

two weeks that still summary you don't have a lot of data and instead you have jackson hole. that could act as a catalyst. if anything it feels like fed officials are coalescing around this idea to bill dudley's point is often disappointing but they want to be preemptive that the risks have shifted and the greater risk is going not soon enough versus cutting too soon. >> how different a couple years makes. we are resounding through a lot of economists minds still to this point and we haven't seen that kind of pain. to that point of preemptive nests, that is the challenge in markets that are welcoming the sunshine and roses of a resilient economy and the federal reserve that can cut but was 100 basis points still. >> that's why you can get something that would be unimaginable a year ago. and small-cap stocks rallying and they continue to rally this morning and that something you would usually say the bond market is backing off of cuts.

surely that has to be bad for small caps. we are pricing in as thin needle being threaded. we get rate cuts but it's an environment where economic growth is not good enough. lisa: it shifts to the political front. talking about why it matters. as to the bond market when suddenly all the proposals we are hearing about the economy include more spending more tax cuts not necessarily fiscal discipline. annmarie: not from either side of the aisle paid we will get a lot of that today when we get kamala harris speaking today. she will talk about those americans and saying i can't get on the housing ladder. yesterday was about inflation and grocery bills. $25,000 is the proposal. it can be done unless you get congress on board. this comes after we got data yesterday confidence among u.s. homebuilder slip in the fourth straight month. this deferral mindset that uc

consumers and americans in because they are waiting for the fed to cut interest rates. >> for markets this question of how much politics matter and you hear different things from different people. it shouldn't matter and won't matter. i just wonder we are actually going to see that volatility we have seen that volatility what would it take to really spur some of these auction issues or some kind of real sense that maybe this time it's different. dani: you can look at in under 4% 10 year yield and be a bit confused by it. because the data is not heading off of the cliff and we have this huge fiscal spend likely to come from whoever is the president. as for what it takes so far we have been taught you can keep buying at auctions and load up on duration and everything will be ok. you we have that pavlovian urge to keep buying it and nothing is telling us maybe you need something like last auction we saw under 4% wasn't appealing. you have that plus deficit. it's trying to find this real

mix of hoping someone pays attention. >> right now from paying attention and 3.8 7% on the 10 year yield not north of 4% once again even though bill dixon was talking to potential 5% threshold that would entice him to buy you are seeing yields lower today after yesterday's data as well as this general feeling that the federal reserve can keep cutting rates. the s&p looks like a lot a time eking out a seventh day of gains after the biggest six-day rally going back to 2022. we are just about 2% away from record highs on the s&p. right now what you are seeing in the currency space is quite interesting. a question about whether the dollar is strengthened on the heels of what's expected to be a weakening cycle with a resilient economy or whether we will see ongoing dollar weakness akin to what we saw in the past weekend a half. coming up katerina of morgan stanley with stocks on course

for their strongest week of the year. ambassador john bolton as temperatures simmer in the east and winnie of credit suisse -- credit sites. looking for a seven-day of gains following u.s. data. the fed might be behind the curve and it's not priced into print equity multiples. the data will determine the ultimate direction of the policy and the markets, the soft landing is still the most likely scenario. katerina do you think there is a tension between what bond markets and stock markets are telling us? katerina: absolutely. when we look in the larger scheme of things and what this fear has been. we went from being solely focused on fed and rates and inflation and now it is all about the earnings in the economic slowdown in volatility. it's very confusing for investors.

there tend to be to have sometimes a bit of her short-term memory. if anything last couple of weeks showed how volatile stock market can be going into this election stretch. and this is where we have to pay attention to earnings data forward-looking outlook and making sure that there are portfolios appropriately reflecting our views. lisa: companies really through that time we have to wait until the beginning of september to get data again on the economic front. given a lot of the information is in front of us and we have already to really analyze, how do you recommend playing some of the volatility that could come up? katerina: it is very clear both consumer behavior and corporate earnings are affected by this high interest rate environment. while we are thrilled to see the cpi data, down, we know this is

also something that will pretty drastically affect the pricing power for companies so while we look at the earnings data that's in front of us looks to be quite positive. as we look ahead at the second part of the year we are not quite as optimistic. we are expect a slowdown in while we believe the soft landing is the most likely outcome it is also something that coincides with expectations with further rate cuts. this is where federal reserve needs to make a decision on timing and of course the extent. >> usually this is been used in the context about consumer facing companies. the consumer we are increasingly learning is not falling apart but feels stretched. how does that work with staples? this sector you want to buy because it is a cyclical but at the same time these consumer companies may be feeling the pain from margins. >> absolutely.

that's a very big part of this equation. we also have to look at it in the context of this defensive play. would really change the rules a bit is this disproportional presence of the big tech exposure and most of the portfolios. what we tell our clients is they have to look at the consumer staples. and the defensive plays and make sure that they have appropriate presence in areas of the market with the financials and health care and industrials. and in spite the margins and expenses the area that they will be most affected by is consumer very -- just group -- discretionary. we think that they're going to be part of the economy that will be affected by this higher expenses and by this environment. >> if we made a lot of noise about tech being overly expensive i wonder if it makes sense to talk about safety stocks being too expensive. walmart trades at the price to

earnings. that's more than meta and amazon. is the price to safety, does it matter at this moment or in downturns do you stop caring about evaluations? katerina: we never should stop caring about valuations. you make an excellent point that we have to look at the broad context. that's why the balance in the portfolios is probably one of the most important aspects. we want to make sure we don't lose track of the exposure we have in one area versus another. that's precisely because of this the stockpicking versus the broad index investing. another might be better positioned competitively in terms of the pricing power advantage just forward-looking outlook. this is where we might be looking at two very similar

companies that favor one versus another. annmarie: your volatility surrounding elections, this historically dissipates but this is very unconventional this election cycle. how are you thinking about that volatility given the fact we have seen a number of twists and turns in the election cycle and it's only august? katerina: it seems like it started so much earlier. even though this election seems to be just so emotionally charged, if you look back historically going into the election generally we can expect heightened volatility. so what we tell our clients is to go into it with full expectations be ready to buy on dips. take a note of the policies that might be brought forward by each of the candidates not to make any drastic changes we think it does make sense to do that prior to knowing the outcome. we think it is time to

definitely position ourselves for the next four years would be once we know the outcome. >> has this been top of mind for your clients but is it the first thing they ask you about. >> this is the most we get. it's about the outlook the next couple of months but also portfolio positioning going forward. and how you come out of the next couple of years the growth is so disproportionally located in certain sectors. when you look at weeks like today where you have this wonderful earnings in the market seems to be recovering, investors are getting a little bit of relief after the correction we saw a few weeks ago this is the opportunity to rebalance and the opportunity to take profits and to go into some of the defensive underrepresented sectors. that should be well balanced. lisa: so many people say politics doesn't really matter, to clients ask you, it's all was

the first thing clients ask you. thank you for being with us. i will say earlier this morning we heard from austan goolsbee on npr talking about how the economy is strong and if the economy and you see the employment turn quickly, it can go to this question of whether the fed should act preemptively. >> employment it's like the hold underwater that once you let go kind of shoots up higher. people keep looking at all these different signals over session saying they need to act preemptively because we see things like labor market weakness. let the yield curve starting to on invert. and therefore the fed needs to act. part of the problem is. i think it's a really good point there've only been nine recession since the 1990's. that's not enough data to have statistical significance in what usually happens into a recession so using these past indicators but i think we can say this time might be different because it is always different. we haven't had this updated.

>> to say her particular eponymous rule is important to consider but not actually rule. right now let's get to an update on stories this morning. >> israel has begun talks with international mediators about a proposed cause to the war in gaza. qatar is hosting to work on a three state proposal. it aims to halt the fighting, freeing hostages held by hamas in exchange for palestinian prisoners and transfer more aid to the ravaged gaza strip. hamas rep senators are not joining the talks. a new financial disclosure from donald trump shows $513 million in income from his u.s. resort and presidential properties. that includes his well-known mar-a-lago clubs. the filings also revealed tens of millions of dollars of liabilities and debts linked to his legal troubles. severally trump has raised about

$635 million since launching his presidential campaign. hurricane nest oh has escalated to a category two storm as it heads to bermuda. it's expected to become an even stronger category three hurricane by this afternoon. the track shows ernesto passed into the west of the island but it could unleash heavy rain and flash floods on the territory and cause power outages. that's your bloomberg brief. >> the inflation plane game. >> paris has just declared tackling inflation -- harris has declared tackling inflation will be a day one priority for her. day one really for her was 3.5 years ago, where has she been. and why hasn't she done it. >> that's coming up next, this is bloomberg surveillance. ♪

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>> we got the data, we got the sense of what's going on with companies and it's also over the past six days which has been the biggest six-day rally going back to november of 2022 struggling to make it a day seven with the decline of 1/10 of 1%. the yields are lower. even though stocks are quiet, a bond yields continue to decline even on the heels of a resilient u.s. economy. under surveillance the inflation plane game. >> if she wins your finances in your country will never recover. the radical left person wants to put price controls all over the place which will end up driving up your prices. harris has just declared tackling inflation will be a day one priority. for her. it's going to be day one. but day one really for kamala

was three years ago, where has she been and why hasn't she done it? lisa: donald trump returning to pennsylvania as he aims to regain ground in the presidential race. his allies reportedly urging them to emphasize policy issues and hit the harris campaign on the economy. the latest polling from real clear politics shows harris holding a one point lead ahead of next week's democratic national convention. joining us is wendy at brown university. great to see you. it's been too long. i want to start with what we've seen out of both proposals. we have a sense of what the trump economic proposal actually looks like? wendy: trump was president of the united states and presided over the economy that was doing well until the covid pandemic. so in some ways trump has less pressure to sort of really delineate what he will do next since voters right now seem to fondly recall the state economy

under his presidency. the pressure is on kamala harris and even though i heard she wanted to impose price controls, that was new to me. the other line of where she is been is going to be effective. that is a very big concern to consumers right now and if she's taking the biden mantle she has to take inflation with it. >> she's taking inflation with it and trying to put the blame somewhere else. i think that was all point to the price controls. it's the corporations fault. she can come out today and talk about housing, a 20 $5,000 for first-time homebuyers. present biden talked about this in his state of the union. will that land with voters even though she cannot unilaterally do that. >> i think it's a pretty out there proposal on the broader campaign that it don't get helps them with independent voters. it's really this balance. a lot of people have mortgages, have already bought houses and

those are a lot of suburban voters they need. this is the constant balance for the democrats. getting their base out, young people who say they can't afford to buy a home tackling student loan debt and also making sure to bring those independent voters back into the democratic fold and that's the balance. i don't think that proposal will do anything to make that worse. >> she also has to balance how much she campaigns with joe biden given the fact americans blame him for what they perceive as higher inflation. we know the rate has come down. how does she do that? wendy: in 2020 a friend of mine said this is big -- good grandpa versus bad grandpa. i don't see the great liability in showing up with him once in a while particularly in places where he is popular. it says i'm respecting joe biden to the base that still likes joe biden.

you are right, i don't think it should be the most frequent part of her appearances with the campaign. there is still a slice of the democratic base that likes joe biden. i still think it's a plus for them to keep doing it just for little while longer. dani: you described her housing policy is out there. i wonder what you think of the nuts and bolts impact to have 3 million new housing units and try to encourage that. even $25,000 to first-time homebuyers. if she was able to pass that i wonder what you think the economic impact of such a policy would be? wendy: it can continue to blowhole in the deficit a machine plans to cut. this is something she will have to explain an independent voters do not want to see a major explosion of the debt or an expansion of the federal government spending. this is really a problem. how are you going to pay for it? that is a big question and

saying you will raise taxes on the wealthy or corporations, that does not usually work that well for democrats but they may need to rethink walking that back. it's also the case not everybody wants housing in their back yard. we have seen that in liberal blue states. so you may want to build all that new housing but where is it going to go and how effective can you be. dani: for now the markets are not concerned. should they -- does the market have the ability to impact fiscal policy, the bond yields make a harris trump administration teams her mind on some spending plans. wendy: it's a turnout enthusiasm gained -- game. i don't think that slice of it, the republicans or democrats is going to base their voting decision on the deficit. i do not see a lot of impact there. let's are member congress is

full of a lot of people like to bring home money to their districts so tackling the deficit is a multidimensional and complex problem with a lot of other political actors who do not want to go back and say i cut your spending. lisa: there was a time when one party, particularly republicans, were considered the business friendly party. the more populous types of policies coming out of both parties, i'm wondering with the economic plans we are hearing do you hear one party catering to business more than another. wendy: as you all well know and talk about all the time, the economy and business is so globally intertwined, so different from when bill clinton ran in 1992. now it is a very different ballgame. policies that benefit corporations or benefit workers or consumers because it is so globally interdependent. that to me is the problem with

being corporate friendly, donald trump wants to slap tariffs on a lot of things may help some industries but curb others. the democrats raising on corporations how do you do that without producing layoffs. i think the complexity of the global economy makes it difficult for them to have a uniform or consistent message on this point. lisa: wonderful insight as always, really appreciated. the idea of what kind of economic proposals we are hearing is hard enough to pin down let alone the potential consequences. annmarie: if you look at the reporting with a harris campaign is trying to do is have these brought ideas, these opportunities and change but very skim on the details. >> it seems lisa: like that's why they're not sure lisa: what to do with this. bond markets are sure which is

essentially does a lot of spending and not a lot of cost-cutting parade u.s. treasury spent 860 $1 billion in net interest over the last 12 months, double two years earlier and it would be $100 billion more if you added in some fed interest payments and it set to double again. annmarie: perhaps -- dani: perhaps it is if we have an election and you have a democrat in the oval office and a unified democrat congress may be when we get worried and say these proposals may be thin on details but could get past. lisa: the 10 year option comes in and dissed disruptive. and it's not the base of primary dealers to push it off. -- cushion it off. coming up next, the former u.s. ambassador to the united nations john bolton on tensions in the middle east. ♪♪ this isbloomberg. -- this is bloomberg. ♪

lisa: what a wild ride. we just had the biggest six-day winning streak going back to november 2022 after the biggest spike in volatility since the height of the pandemic. this is bloomberg surveillance. we are struggling to eke out a seventh straight day of gains. s&p futures lower about .1%. about 2% away from all-time

highs reached last month. nasdaq be entering. that outperformer -- nasdaq meandering. dani: goldilocks potentially. i will say her name out loud. you do have not as big of fit cuts as we wanted and an economy that is doing well. i go back to what lisa shalett said yesterday. there are companies that are not good in the russell 2000. how many people are trying to make a macro player. buying up the index level without realizing the quality of companies have been declining year-over-year. lisa: in the meantime this does come down to what happens with the fed. do they allow this cycle to continue? we did get this piece from bill dudley. right now we are seeing yields continuing quiet after yesterday rising on the two-year.

the biggest potential selloff with yields piping. now down about five basis points. 10-year gilts also lower. 30 year yields lower. yesterday we saw a surge because of the resilient economy. at the same time you are hearing austin goolsby talking about the idea they want to get ahead of any downturn. that is what bill dudley is talking about. in jackson hole will we hear the federal reserve shift to have a more preemptive policy stance. annmarie: if the fed is ready to cut in september jackson hole is the moment for jay powell to insinuate that. at your dani talked about the fact that he thinks the fed needs to go one and done. he said the debate is 25 basis points. lisa: and the question will mean what does this mean for the foreign exchange currency mechanism. people were bailing out of the weekend carry trade.

they appeared to be going back into it. maybe you do see a dollar continue to strengthen on robust growth. today it is not cooperating. that is seeing a bit of a decline. under surveillance, vice president kamala harris will propose offering $25,000 to first-time homeowners as part of her economic policy rollout. more than one million homebuyers who have a two year history of on-time rent payments would be eligible for the benefit. a question about the feasibility of this getting past. she needs -- annmarie: she needs congressional support to get this passed and this is an economic pipedream at the moment but it does play the concerns we are seeing with voters. not just higher grocery prices but the idea that the blame is not just us or the economics of the time, it is price gouging for corporations. push back on that. if you look the inflation report

yesterday, what was the biggest component? housing. mortgage rates are high right now. they are trying to tap into that. i think it is very slim on the details. lisa: what you think happens to prices if you give people more money to spend? kroger planning to lower grocery prices by $1 billion if its merger with albertson materialized in a bid to appease regulators. that doubles the company's previous commitment of $500 million in cuts. on one hand you have the question of antitrust. on the other you have a question about how high inflation has or has not been in the food space. a report on wednesday showing grocery prices in july were up only 1% from a year earlier. dani: there is a funny conversation online where people are saying might grocery bills have doubled and people say no they have not, they are slowly growing.

this is so high in voters minds. your proposals from kamala harris to stop price gouging. generally think that kamala harris will let this merger go through. even if they are proposing they will flash $1 billion in costs, it is so difficult to track. it is hard to keep grocery stores honest on pledges like this. lisa: it is very difficult to know exactly what the rhetoric will be now versus the actual policy considering the fact that potentially it might be more amenable. this is the reason you have had frozen m&a markets with a lot of companies skeptical of spending real money on a deal that may or may not transpire. meanwhile gaza peace talks underway in the middle east between israel and international mediators. axios reporting some progress was made on the first day of discussion, citing u.s. officials. this says israel braces for a possible attack from iran.

joining us is ambassador john bolton, former ambassador to the u.n.. thank you for being with us. i want to start with what you think of the recent talks underway and why you think iran has not retaliated yet. amb. bolton: with respect to the talks the administration is saying making progress. they've been saying making progress for four or five months. i think there are still enormous gaps between the israeli position and the hamas position. i'm not saying a miracle cannot happen. it happens in the least from time to time. i would not look for it. i think iran has hesitated to retaliate for the killing of the hamas leader -- they need to strike back very strongly. they have been humiliated by what israel did, killing this terrorist leader in their capital in a secure compound with a bomb planted two months

before. it shows nobody in iran essay from israel including the supreme leader. on the other hand, the iranian leaders are also intimidated by netanyahu and israel. i think this time they are worried the u.s. will not be able to pressure israel into a limited response as israel did after the 320 drone and missile assault on israel from iran's territory months ago. iran is more intimidated by israel than it is by the biden administration. they have a difficult position. how strong response to make to restore their own damaged credibility versus their fear of what israel would do to them. annmarie: in april when the 300 missiles were flying over it was because of u.s. defense israel was able to fend them off. given your level of intel regarding iran, how can they retaliate but also try to not strike this cycle of endless

retaliations back-and-forth? amb. bolton: let's come back to the april attack. wall street journal and cbs reported that of the 120 ballistic missiles iran fired at israel, 60 never made it within range to be shot down. they blew up on the launchpad or crash before they got close enough, which speaks to the quality of iran's ballistic missile force. if there had been 120 rather than 60 ballistic missiles, i do not think it would been such a good performance. the cycle at work is caused by iran. this is not a war between palestinians or gazans and israel. this is a war by iran against israel, what they call the ring of fire strategy. as long as the current regime in iran is in power seeking nuclear weapons, arming, training,

giving intelligence to multiple terrorist groups threatening not only israel but the gulf arab states, there will be conflict. what is driving israel and the gulf arabs close together they all see iran as the main strategic threat and they think the eyed states is feckless. annmarie: do you agree -- and they think the united states is feckless. annmarie: if they do make a deal do you think iran could use that as an offramp to not retaliate? amb. bolton: they may want to use it but i think it would be a big blow to iran's prestige. they are not stepping up to take responsibility for what happened to hamas after the october 7 attack. they also not been able to persuade hezbollah to use its unbelievably large arsenal of missiles against israel. as i say it is the fear of is

really intonation that has the iranians intimidated. dani: if iran does do some sort of large attack, one of the -- what is the ability of the u.s. and its allies to rein in netanyahu's response. amb. bolton: i am sure the biden administration will want to rein them in. they have been afraid of this issue and the war in ukraine dominating the news in the united states because it shows a world in chaos two to three and a half years of american weakness. what they would like to see is this go away until after election day even though biden is no longer running himself. the lesson to be learned is the prospect of a forceful israeli response if israel comes back at them shows a strong posture towards these rogue states is the way to go. iran has a lot to fear from israel.

it should have a lot to fear from the united states but at the moment it does not. dani: a lot of times when we are talking about this retaliation, even if iran would like to do that, the question always comes, what is the likelihood mistakes are made. mistakes are made that escalate things further. now there are thoughts and will not just be iran but hezbollah. is the bar for mistakes higher by involving proxies in the retaliation to the retaliation to the retaliation? amb. bolton: you have to look at the strategical picture. there is a war by iran against israel on five fronts. hezbollah, gaza, the suez canal, one of the most important shipping channels closed since october. the militia in attack in syria that have been attacking

american positions, and iran itself. the question is how they dial-up one or the other. israel does fear hezbollah as our personal -- does fear hezbollah's arsenal. estimates are they have between 120000 and 150,000 missiles, which would be enough to overwhelm israel's air defenses. this leads to the question if they think is about to happen might not israel strike first? it is not mistakes, it is the fact that leadership in iran is determined to destroy the little satan. annmarie: yesterday we heard from former president trump who set i'm not looking to be bad to iran, we are going to be friendly, maybe not, but i hope we will be friendly. you know it trump's policy toward iran would look like? amb. bolton: he has no idea what

it would look like. people who look at what happened in the first term and believe it will be the same in the second term are mistaken. it is always possible. trump almost met with iran's then foreign minister at the g7 summit in 2019. emmanuel macron had him in a villa come almost persuaded trump to do it. the attraction to donald trump of making a deal with anybody is hard to quantify. it goes off the charts. it could be the same way in a second term. that is why there is pressure on israelis if they do something to do it now rather than wait for the uncertainty of the american election. lisa: ambassador john bolton, thanks for taking the time today. here is your bloomberg brief.

yahaira: bayer errors are rising after the german company scored a legal win surrounding a weedkiller. a customer had sued about its warning label. bayer has insisted the product is safe. an appeals court found that case supersedes state law and needs further legal review. the ruling is a much-needed win for the company which has seen shares fall 49% and more than 70% since acquiring monsanto in texas -- in 2018. texas instruments will become the latest tech company to get a boost from the biden administration. the chipmakers that receive $1.6 billion in chips act grants and $3 billion in loans. the funding will help pay for one semiconductor factory in utah and two in texas which will be built through the end of the decade. u.s. officials have allocated most of the funding with more than a dozen rewards.

citibank is being accused of failing to properly compensate its bankers for meal breaks, rest breaks, and pre-shiftwork. the case accuses the company of violating the federal fair labor energy standards act, as well as the labor laws of at least 48 u.s. states and washington dc. they are seeking unpaid wages and punitive damage. according to the complaint, citibank begin failing to pay bankers for all hours worked as early as 2018. that is your bloomberg brief. lisa:, the resilient consumer. >> coming in and seeing a positive credit in retail sales suggests the consumer is resilient and assigned that some of the things we endured last week and some of the volatility is still not that clear of the narrative. dani: that is coming up next -- lisa: that is coming up next.

if you don't have a clear sense from the ping-pong we have been playing, don't worry, it'll probably change next week. this is bloomberg surveillance. ♪

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lisa: remember the stress of last week? neither do i. a come in markets after the biggest six-day rally back to 2022. yields go lower even with the prospect of resilient u.s. economy. preemptive federal reserve rate cuts coming squarely into focus. 10 year yields 87%. it all comes down to -- 10-year gilts 3.87% -- 10 year yields 3.87%. >> it suggests the consumer is resilient and is assigned some of the things we endured last week and some of the volatility is not that clear of a narrative.

we have seen a massive shift from focus on inflation to focus on the economy and that is where every data point seems to matter to the market. lisa: and whipsawed in turn. traders paring back bets for a supersized september rate cuts. now expecting fewer than 100 points this year. when he sees her writing this -- winnie cesar writing this. we were encouraged to see the repricing of expectations as the jumbo cuts priced immediately after the july jobs report were overdone." before getting into the details, i wonder whether you endorse this idea of a preemptive rate cutting cycle that can stave off weakness that is currently nowhere in the pricing and in credit or in stocks? winnie: good morning. we have been saying the fed should try to be more proactive

in this rate cutting cycle. it is something they tried to do in 2019 with an insurance rate cut to continue the expansion in the economy. we did hear chair powell discuss that topic explicitly at the last fed meeting. there is much stickier inflation in the pipeline in this cycle than there has been in recent memory and that does put the fed in a challenging position. we think the proactive rate cut probably makes sense at this point. lisa: this makes an important different for high-yield credit because these are the company's most attend to the russell 2000 in credit land and they are the companies that have higher yields and will be more susceptible to a weaker economy as well as borrowing costs going down. how do you see the success of the fed's ability to preempt

some kind of weakness. how do you see how it is being priced in markets and whether that reflects reality? winnie: right now within the corporate credit market there is a significant dispersion across valuation. you have tight spreads and i would say objectively good yields for a lot of the double be and single be universe -- the bb and single b universe. investors are taking a closer look at these more leveraged capital structures that have higher vulnerability to economic deceleration amid elevated borrowing costs in saying these are probably not sustainable over the long-term, which means we think there is going to be a default rate that is above the pandemic low for may be an extended amount of time as some of those defaults work through

the system. it does not mean high-yield is a necessarily bad place to be right now. dani: there is criticism that you do not see the risks reflected because of an imbalance. there is so much depend compared to what supply us -- they're so much demand compared to what supply is. is risk distorted? winnie: risk is not distorted by technicals have been driving valuations. that is just the supply and demand balance. right now with fixed income yields of 5% or seven and a half percent -- or 7.5%, those are typically attractive places to get involved in corporate credit and that is pushing a lot of capital into credit. at the same time fundamentals have been good enough for credit. we have seen some erosion and deterioration of the leverage coming down, but in general the

numbers are still ok. no one is expecting a downgrade cycle fibular balancing that and seeing the technicals being so strong and we are pretty ok with where demand are. dani: what supply, most of it has been refinancing. what level of fed cuts do need to see to reawaken deal activity? winnie: it is interesting because we have seen a lot of deal activity but the bulk of it has gone to refinancing. there are a number of other factors weighing on the broader m&a environment outside of just the interest rate side of thing. if we had more certainty about the regulatory environment in the next political regime, what the economic outlook was.

his growth going to slow down or are we gorgeous day at 2%? also relief on the borrowing cost side of things. a lot of companies would be more willing to pursue pretty transformative acquisitions. we are just not ready for it yet. lisa: when we talk about easing financial conditions and easing monetary policy, hasn't it effectively already been eased for a lot of these companies? if the fed cuts by 100 basis points, even that much, will that change the backdrop for companies already enjoying rates that price that in proactively? winnie: this is an interesting nuance within the financial condition conversation. borrowing costs are still elevated across the world corporate credit soap was to --

when soon new issue yields price -- we have not been in a decade given how low yields got in the post-great financial crisis and covid era. there's been a significant repricing of the cost of debt which i would argue is more tight financial conditions. execution has been strong. companies have not had to worry about going to market and not actually having people buy it. often times companies will should and have access to the capitals market as a constructive sign overall. the financial conditions and easing. lisa: how much will the fed effect change by actually engaging with rate cuts versus just confirmed what already has been baited to markets?

winnie cisar, thank you so much for being with us. i am looking at the bloomberg financial conditions and you can see it getting easier over time and not tighter, which highlights how it raises a question about how effective the fed is with actual policy. dani: you can even argue that the last policy conference and having powell sam so confident was enough to inject -- you see that in mortgage rates with the most people coming back for mortgage applications, surging 17%. you can see pockets of easing starting to play out and then you couple that with people calling for 50 basis points of cuts. lisa: especially because we are already pricing that in. that is what the market already has baked in the cake. in the next hour, dale kroc of wells fargo and we look back at

walmart and bloomberg and other earnings. betsy stephenson and ed yardeni of your denny research. -- of yardeni research. this is bloomberg. ♪ [spenseful music] trains. [whoosh] ♪ trains that use the power of dell ai and intel. clearing the way,

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>> aggregate profits look great.

it is a couple of sectors that are driving it. >> sentiment did get a little bit dented. >> some of that negative correlation to equities is coming back. >> our view is a soft landing backdrop is good for a broad swath of companies. >> this is more of an unwind than a flush. the low volatility period is behind us. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. lisa: last week was armageddon, this week was goldilocks. onto next week which will just come up in a couple days. welcome back. in reordering, dani burger -- annmarie hordern, dani burger, jonathan ferro will be back on monday. a real question as the focus goes not just to the economic data in the earnings but the federal reserve symposium in jackson hole and politics.

dani: we have a dearth of things for the next weeks so that has to be. it is still the late-summer trading markets. it is a market that keep swinging back and forth between extremes and one of the most successfully traded markets has been to fade those extremes fade the 100 basis points of priced -- this raises the issue of the volatility introduced by politics. i love that we ask people about politics, they say we do not like to talk about politics. they say we think markets trait independently. then they say is the number one question from their clients. annmarie: this strategy from our guests is look through it, but when your client is asking about this is the number one issue and they want to prepare themselves. i think what is interesting about this week is because inflation seems to be they are

getting it a little more under control. inflation is the big driver for the selection. we have seen that in the policies both sides are trying to come out and talk about -- that is how close food inflation and things like that will be tracking these voters. lisa: walmart had a fine time in terms of the food aisles in its stores and that is part of the issue, part of the tension right now. whether bonds and stocks are sending the same message. bond markets are allowing for an aggressive path to the fed. at the same time this dock markets are expecting resilience to continue. how important is next week's discussion on the preemptive actions of the central bank that wants to avoid the traditional hard landing that happens all most every time there is a rate hiking cycle of this time. dani: it'll make a difference in 25 versus 50.

if you're going 50 it is because something is wrong. if it is preemptive 25 makes sense on that point. the bond market keeps over during this. it is like schrodinger's recession and the bond market thinks the cat is dead and every time we look inside the box it is alive. the fed can say we are not going because we are following up a prayer -- falling off a cliff, we go to prevent that. lisa: right now we are looking at markets that are mildly negative, basically range bound, trying to find direction after having the head spinning experience of the past two weeks. s&p futures still 2% away from all-time highs. you have euro strength. this to be is one of the more interesting stories. have we started to see the euro breakout for the dollar more consistently weaken versus other

conservancy's -- versus other currencies? the trend goes counter to what 70 of said with the u.s. economy being exceptional. 10 year yields lower today. how much to people who talk about politics bring up the deficit discussion. so many people say it will never come to markets until it does. this hour, dale cronk with wells fargo with their stocks on track. betsy stephenson on what recent data means come and ed yardeni on why he is still in the one and done september rate camp. an increasingly out of consensus call as the market prices and four rate cuts through the end of this year. let's begin with the top story, the goldilocks scenario on the table. strong retail and labor data indicating economic strength.

wells fargo saying "the u.s. economy is slowing in the fed should be cutting interest rates. they should have cut in july. the burden of proof is on the markets and -- to prove itself." if you read this before last week? >> i actually wrote it yesterday morning. outside of markets vicious reaction last week this if you double-click below the surface there is disconnect. the yield curve is disconnected. some of the consumer data is disconnected. retail sales yesterday up 1%. almost .6 was auto. the rest is food and beverage which we all have to consume every day. it was not some big element that showed the consumer is spending crazily on this. i think there is disconnect in the manufacturing data and the housing data. where the national association

of homebuilders yesterday that came in at 39. anything below 50 means there outlook is for. homebuilder stocks were going crazy. they were sitting new basic all-time highs. you have these disconnects that the markets have to reconcile themselves with. let's talk about the bond market. give parts of the bond market suggesting this is an economy that is robust. how do you understand and reconcile some of these discrepancies? darrell: you put it well earlier. i wake up in the first thing i look at is the two year treasury , followed by the japanese yen. those are the two elements. the two year treasury at 4% to 4.25% does not sync with night interest rate cuts between now and next year. the math does not work.

you have 100 basis points priced in for this year alone, much less what we will do in 2025. we are right back in this camp of who is right and who is wrong. or are we going to get nine interest rate cuts? we have seen this moving before, we do not believe it at the beginning of this year on the six interest rate cuts. we do not believe it at the beginning of 2023 when the fed funds futures priced in three interest rate cuts for the back half of 2023. third time is a charm. i did up believe the seven to nine. that is the reason why we are cutting aggressively. it is not because we are soft landing this thing. dani: i wonder what you make of duration and the level of the 10 year. we are having this discussion

where you are living in the time that the soft landing seems probable, at least for now. you are not falling off a cliff. in the meantime you've policy proposals coming from candidates that indicate a lot of spending you have fears of options. it -- you have fears of auctions. yet you have a 10 year below 4%. does that make sense? darrell: i do not think that makes sense. just last week on volatility we had been crowded on the short side of the curve in our exposure. we took that positioning and we bulleted it, not barbells. we took money out of the long side in the short side and put it in the middle. you have to take exposure in duration the fed will cut interest rates, which we believe they will. you fade the idea they will cut as aggressively and what this

does -- annmarie: is the bond market just ignoring all of these pond -- all of these policy proposals? darrell: for the time. if you take my neutral rate on the 10 year of 3.80 and regardless of the candidate, the two things that are certainties post november are bigger federal budgets and fiscal spending and more tariffs. those are the things you can bank on, regardless of whether you get harris or trump. both of those putting upward bias into interest rates, all else equal. you'll see these fights in yields on a daily basis that we have not seen in may the careers of a lot of bond traders and the people who manage money. it may be the new norm.

volatility may exist in the fixed income markets but not as much in the equity markets as we keep the carry trade and we drive the vix down from 65 to 15 and we push the yen weaker again. dani: it sure feels like we are seeing a lot of once in career events in the last two weeks, one of them being the yen. what does it tell you when you wake up on a day like yesterday after the u.s. data and you see dollar-yen up 1.33% after just a week ago we saw this huge appreciation in the yen, that we can get that firepower back with dollar-yen? darrell: last week was all about vicious unwinds of the yen carry and the shortfall leveraged trade. they are putting it right on this week and putting it on with a vengeance and it is coming from the buyers. they are shorting the yen and they are shorting involved -- they are shorting volatility and

the vix. it is coming from all sources, the hedge fund community, institutions, buyback programs. now that we are getting to the end of q2 companies are using any weakness to aggressively step in with their buyback programs. it is coming from all corners and until you change that and you couple it with seasonal low liquidity it creates these outsize -- these outsized woes. lisa: you said volatility exist in the bond market more than the stock market. has it affected the way you are positioned stocks become the haven trade and bonds become a haven game, the daily grind's with the daytrading of stock? darrell: some of the worst performing returns at the asset level were in the fixed income markets this year. barclays, which is your, domestic indices is one of the few indices that has not set an all-time high.

everything else is pushing all-time highs across the board and the barclays has not given you much over the last few years. people get enamored with the idea i can our gift for percent or 5% or 6%, but when you get to a total return it is pretty anemic and pretty bad. it has push people to equities as there is no other alternative. they just keep going back to that as a way to get exposure until you cannot. lisa: is that how you're arranging things? staying away from big risks in bonds? darrell: we are more balanced. we used last week's weakness when the russell came all the way down to 2000, 10% correction. we bought high-yield because we thought at 3.85 on high-yield spread that is the widest of the year. we got a chance to take a bike -- to chance a bite out of how ye -- to take a bite out of

high-yield. we are slightly overweight equities but nothing where you push risk budgets or positioning out to extremes. i think that would be a mistake at this point. lisa: we can get into why. darrell cronk, thank you for being with us. let's get you no on stories elsewhere. yahaira: kroger is planning to slash grocery prices by $1 billion if its merger with albertson's goes through. that is double what it previously pledged to cut it albertson's stores. kroger agreed to rev -- it is an effort by kroger to compete with amazon and walmart. resort world las vegas has been accused of catering to individuals with ties to organized crime. the nevada gaming control board has filed a complaint alleging

the property welcomed people with suspected or actual ties to illegal bookmaking and histories of federal felony commissions. bloomberg has learned seagram air is close to making an offer for paramount global, setting up a potential bidding war for the entertainment company. sources say bronfman is weighing a bid for the company as well as paramount itself. bronfman's group is framing his deal as a better choice for investors. lisa: up next, the morning calls plus more insight into the consumer with earnings from target and macy's ahead. we got walmart and that was a boon for the consumer. that is coming up next. this is bloomberg surveillance. ♪

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j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. lisa: the bulk of the earnings are over although we do have a few key ones coming up. time for the morning calls. williams trading at double. analysts saying the athletic giant is on the right path after rehiring longtime executive tom petty to focus on retail partnerships. jp morgan raising its price target on bj's wholesale to $76, keeping underweight rating. the analyst noting forecasts are unchanged. second quarter estimates will get a boost from gas profitability. bank of america raising its price target on walmart to $85.

analysts highlighting strong second-quarter earnings and profit streams helping to offset mixed sales headwinds. the big box retailer seeing its grocery and health and wellness categories outpacing other general merchandise as walmart lifts its accent -- investors waiting to see what next week's retail results bring. joining us to talk about those results as well as what we have seen so far is jennifer of bloomberg intelligence. the key question heading into next week with target and others, there is an issue of how much walmart speaks to consumer resilient and how much walmart is a story unto itself. jennifer: that is an excellent point. walmart has its own dynamics. when we look forward to target next week, one of the things to keep in mind is a year ago in second-quarter is when they had the backlash from the boycotts consumers had from their pride merchandise a year ago.

they have easier comparison so that is a great set up for target. they still spew to more discretionary spending. it'll be interesting to see how well they have attracted consumers to buy more of those essentials through price reductions and advertising. lisa: what you make of whether the consumer is strong or weak? you have retail sales that highlighted the fastest pace of expansion going back almost a year. at the same time darrell cronk was talking about how the bulk of that was in auto sectors. we are seeing a lot more pushback in desire for value. where are we in this? jennifer: across-the-board the consumer is not getting worse, but they're not getting better as fast as most people would like. that is reinforcing that search for value. with regards to current spending , we are in the middle of back-to-school so we are seeing consumer spending more for school supplies and things they need to get their kids back to school and back to college.

that could extend longer throughout this current quarter than most people expect. as people buy things closer to when they need them versus talking up ahead of time. dani: i was interested by what the walmart ceo had to say in their call. he said they use ai to approve pieces in the catalog and said without ai they would've needed 100 times the work worse they have to get the work done in the same amount of time. it is been easy to make fun of all of these missed attempts to use ai for these consumer companies but is walmart onto something? are these companies fighting away to adopt ai for efficiency? jennifer: this is a great example of where generative ai can be a real boon for a business. when you think about walmart trying to catch amazon, it is technology like generative ai that will allow them to close that gap were quickly instead of having to hire labor and people and going through the arduous

process of cataloging things, ai can unleash potential there. this is a great example where it has been used in a thoughtful manner and it is a way that has helped them accelerate their business. annmarie: see inflation still biting some individuals, especially when you look at home depot, the report, people deferring big projects. there is a lot of talk from washington, this blame game. you see anything close to price gouging? jennifer: on food and groceries we have seen prices down a little bit. one of the things walmart did talk about is about half of their suppliers are engaging in trying to lower prices. cap are saying they might want to pass small price increases. it is a hot topic and we are hearing from the campaign trail that prices need to come down.

the unfortunate thing is it is not as simple as that. we have costs that carry through an entire supply chain. there will be scrutiny on the food manufacturers on the staples side. how retailers can help control those costs to make things as affordable as possible for consumers. lisa: retail sales came in yesterday at the fastest pace in more than a year. walmart earnings were incredibly robust relative to expectations. when we have been speaking to one travel executive after another about high -- about how in the higher income brackets people keep spending. how much are we seeing any deterioration whatsoever in higher income bracket spending at a time where that has been one of the big drivers of overall consumer appetite when you look at aggregate numbers, although maybe not just the average rank-and-file households. jennifer: we are not seeing

deterioration in the higher income spending. we are seeing instead a slight shift in where and how they are spending. i think they are being more thoughtful about their expenditures but that is not necessarily changing what they are spending. we see people prioritizing travel. those things will continue. that should add resiliency to the overall consumer spending. we are not seeing much of a pullback on the high income side. lisa: jennifer is with bloomberg intelligence and that sounds consistent with what we have heard from cruise liners as well as luxury resorts and hotels. this will be one of the key challenges for the federal reserve next week. how do you deal with the fact that you have lower income consumers that are higher stretched and feeling the effects of high rates at the same time overall consumer

spending has not follow off, because of the ability of higher income consumers to spend. annmarie: we continue to hear about this bifurcated economy. that is the inflation side of the mandate and the jobsite of the mandate. a difficult moment for the fed because the higher end consumer is spending they are spending a lot more on all of these items, even if they are trading in once in a while for some deals. lisa: this speaks to the question that bill dudley rose which is interesting to me. should the inflation target be higher? will they allow a wider band in terms of inflation to allow for equalizing on the bottom line. it because a tricky push full. inflation is the lowest tax on individuals and at the other end high rates are the highest tax on the low income segment. dani: it comes back to the

reason you are doing it is a preemptive rate cut which bill dudley argues -- which bill dudley argues for. even if upper income households are spending a lot there are pockets of weakness you can point to. you might have really good retail sales but take-home pay was lower last month and at some point it has to stop. it cannot just keep happening indefinitely as people spend all their savings. lisa: what can keep happening is an incredible amount of volatility. this week we are to the daily -- this week we are dealing with potential goldilocks. it left the s&p more than 6% higher. coming up next, housing starts data. former labor department sheep upon a stevens alongside ed yardeni -- former labor department betsy stevens alongside ed yardeni. this is bloomberg. ♪

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lisa: the week pretty calm, very positive, everyone getting ready before they go back after labor day. a bit of a decline softening after the six-day rally. s&p lower by .6% ahead of the fed symposium in jackson hole. we are getting housing data.

michael mckee is here. what have we got? michael: housing starts followed by 6.8%. the forecast was for a 1.5% decline. last month, they grew by 3%. starts down 4%. the forecast was for 2%. it looks like builders are not confident in their ability to sell these houses or get them built, if you look at the charts for the number of houses under construction. they have come down at a time when they are having trouble finding construction workers. that may be part of it. also, affordability is difficult. it is not a good housing situation. this.w annmarie is this is more of a political issue because everybody is upset they cannot buy health.

-- by houses. lisa: especially if there is no entry point to the housing market. you are seeing some declines ahead of the open. it does seem like maybe on a quiet summer friday people are trading on anything. it does raise the question about how much of this does reflect the housing market stuck in two difficult places. on one hand, it is getting more costly to build houses with less optimism. on the other, affordability is low considering how high rates are. michael: the fed will be lowering interest rates. that will help with mortgage rates. mortgage will not go down to the 2's or 3's anymore.

the mortgage people did a survey that said people will not start refinancing taking new mortgages until we get to 5% or below. that will take a while. the primary issue is we do not have enough houses to buy and there are not enough being built. from a political standpoint, the candidates want to talk about ways to get more houses built. that will be the major issue. dani: previously when mortgage rates came down, you did see housing prices come down because there was enough supply. the supply picture is not there. realistically, how do you do that when housing builders do not want to build houses because they are not sure the demand will be there? michael: it is difficult. they know the demand will be there. it is a question of when the demand is there. if the builders do not want to

be stuck with inventory, they did that the last couple of years because they went into the covid era building a lot of houses. all of a sudden, people wanted to move and they built more houses and people stopped building because covid went away. in a couple of years, there is a lot of property coming online. not a lot but enough -- not enough but a lot coming online. that depresses prices. annmarie: is it surprising because everyone is expecting the fed to cut rates? should it be moving in a better direction? michael: you could argue that. at this point, people are not seeing it. rates have come down quite a bit. 6.5 percent down from 7% and still moving lower. there is a slight move toward refinancing.

there are not a lot of people that have rates that high that they can refinance. we are living through the consequences of having low rates for so long. mortgage rates went down so far that everybody refinanced or got new mortgages at very low rates. why do you want to move? that clogs up the housing market. lisa: thank you. we will be with you next week at the fed symposium. joining us now is betsey stevenson. wonderful to see you. thanks for being with us. we are going to get into what we can expect for jackson hole next week. i would love your reaction to the housing conundrum percolating into policy proposals. putting aside what has been proposed, what do you think is the appropriate policy reaction to create a more even playing field in the housing market?

betsey: i think there are a couple of things that need to be done. we have to get housing built faster. that will mean cutting through red tape. and everybody wants to make sure only certain kinds of housing goes up around them. you have communities that really slow down the process of building housing. we need to speed that up. we need to make it easier and cheaper. we need to make sure there are incentives in the system for building affordable housing. we are looking for making sure there are policies in place that are trying to put their thumb on the scale to give builders the incentive to build something that is affordable. a third thing we have to address is what i call mortgage

portability. we have people locked into mortgages under 4%. we will not see that a long time. they are baby boomers stuck in big houses that need to downsize but they cannot afford to downsize because they would give up unaffordable mortgage. we need to make it where they can take the mortgage to a new house. if we do not address the mortgage lock, we will be stuck for a long time. lisa: are you hearing anything concrete about this? betsey: the idea of mortgage portability is not something i am hearing concretely coming from any of the campaigns. what you will hear more about from vice president harris are the ways to incentivize the billing of more housing and

making sure housing is not becoming more of an investment commodity by big corporations that buy up lots of housing and push prices up. that is one of the concerns you have seen out of the biden-harris administration and how that affects affordability for everyday americans. at the end of the day, what you asked about, what do we do about mortgages, that has got to be part of it because the fed will not cut rates enough that you will be able to go back to locked in mortgages that many people, including myself, have with a 30-year mortgage blocked under that. i know people that should downsize and have done the math and would literally pay more to buy a house that costs half as much because it would change

their mortgage rate. that is a policy issue i would like to see addressed by vice president harris at some point. dani: the conversation or proposal we are likely to hear today is to try to get 3 million new homes and want to the market. i know the likelihood of that coming to fruition is one conversation. how successful will that be at achieving some of the things you are talking about without creating distortions in the market? betsey: you know, there are a lot of families that do not have the same money, the down payment necessary to make a purchase. it has become harder to come up with the down payment because you spend your 20's and 30's paying student loan debt. and then you might want to have kids and you have the high cost of daycare.

when and how are you supposed to save up to put a down payment down? economists would say we hand out more money to a housing market with thick supply. you know who gets that money? the people who owned the houses. if you are going to do a policy like that, it is essential it gets paired with expanding supply. otherwise, all the money gets captured by people who already own the housing. i do think there are reasonable policies to try to expand the supply of housing. i hear people say you have to get all of this passed, you have to get the red tape cut some of the red tape is not at the federal level. most of it is at the local

level. how do we get local communities to do that? new zealand had one of the highest housing price crises. it is very confusing. new zealand has plenty of land. why are the houses so expensive? they cut the red tape substantially and saw housing prices come down. it is possible to do it. building more housing is always the answer. it always works. the question is, can we get those incentives into the system, passed into law, and make sure that we get the expansion necessary to get what they are claiming we will get which is more housing and cheaper housing. annmarie: the biden-harris world want to be viewed as the competent camp.

why are they not talking about things that you are talking about like cutting red tape? betsey: i think they are talking about cutting red tape. junk fees with a big issue for the biden administration. that was close to vice president harris' heart. that is not government red tape but it is a different form of red tape. somewhere in the fine print it says it is another $40 for this hotel room because we did not tell you about the extra fee or for this flight, for all sorts of things. i think they understand that americans want simplicity and simplicity requires cutting red tape. it requires eliminating junk fees and making sure the market is operating fairly.

on price gouging, when i first saw that, we all roll our eyes and say we cannot fix prices. at the same time, telling businesses they need to slow their roll and do not need to be jumping prices at one time is not necessarily bad. with the limits on rate or rent increases, it makes a lot of sense. you might literally find yourself on the street because, how do you come up with that kind of money that quickly? no one needs to raise rent that fast. we have a lot of forward-looking. we are learning about the economy. we can form expectations about what is coming and make a good plan that allows slope price increases. price gouging has always been

against the law. what you are hearing is, can we do a better job of enforcing it? i do agree there are trade-offs. when we say if you are a hardware store with shovels stocked and a big snow storm is coming in and you triple the price, you get it but it is a jerk move. at the same time, somebody decides i want a second shovel in case one of my kids wants to help and buys the shovel because the price did not go up. those are the trade-offs. i think they are saying we have leaned too hard on price gouging and let's try to get some balance back in the market. lisa: betsey stevenson, thank you for taking the time. it is important to get a sense of where we are now in terms of the economic strength heading

into jackson hole next week. joining us now is ed yardeni of yardeni research. how much is the fed going to respond to the weaker side or strength and resilience and not meeting them to have to cut too far? ed: between now and the next meeting in september, we will get the unemployment number. we will get that in early september for august. it will reverse some of the weakness in july which i think to a large extent was weather-related. that will be one reason for the fed to not do 50 but to a 25-point cut. we will get more inflation numbers between now and that meeting. they should continue to confirm inflation has moderated. i think it points to 25 basis

points. >> just doing 50 means you get closer to that. it is not like an emergency cut to get back to not being so restrictive. ed: i am not a big fan of the neutral rate because it is a fantasy. no one knows what it is. you cannot measure it or see it. there are people who use this is to go models to try to estimate it. it always seems to be changing. i think we just have to see how the economy is responding and where interest rates actually are. i think the fed has normalized interest rates where they are currently. the economy is performing fine. there are clearly pockets of weakness, i call them ruling

recessions, but overall, the economy has grown by 2%. in the second quarter, it grew by over 3% which is a normal earth rate. -- normal growth rates. you can get a stock market melt-up and the consequences is we might be following with a stock market meltdown. i do not think we need those excessive moves triggered by the fed being trigger happy in terms of lowering rates. annmarie: would that mean rates are deteriorating faster than people are expecting? ed: absolutely. a week ago, there was talk about

50 or 75 basis points. that would have worsened the crisis because a lot of that was the unwinding r.v. carry trade when -- of the carry trade. the japanese economy is looking strong and they go back to raising rates. we could get another carry trade that was scary last week. central bankers have to be careful with the power they have. lisa: you coined the phrase roaring 20's. you have been bullish on equities for a long time. are you getting more cautious ahead of threading a needle that may not being threaded in the right way? ed: a few weeks ago, i raised my

number for the s&p 500 to 5800 by the end of the year. i still feel comfortable with that. i do not want to see us significantly exceed that. multiples are quite high. we have achieved a lot of what i expected. we still have a presidential election ahead. we still have a lot of geopolitical risks. will prices are down this morning. -- oil are down this morning. lisa: do you think we can see the 5800 achieved even with bond markets selling off? currently it is much more getting priced in. ed: that is right. i think the trade-off is going

to be the reason for the bond yield coming down of late, until recently, the perception was the economy is weak. i think we will see it is doing fine in the coming weeks. i do not have a problem with the bond market continuing to beat between 3.5% and 4% for a wild. i think the economy can withstand 4.5%. lisa: thank you so much. coming up, setting you up for the week ahead. this is bloomberg. ♪

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lisa: we are counting you down to the opening bell for the last trading day of the week. here is the trading diary for the day and the week ahead. around 1:00, fedspeak with ed goolsbee. kamala harris focusing on her economic agenda. this is when it begins for the democratic national chicago on monday. wednesday, we will get earnings before the opening bell. fed minutes coming out at 2:00. thursday, the jackson hole symposium kicks off, plus another round of jobless claims. pmi's also on friday with jay powell delivering key remarks. what are you most focused on? dani: it has to be jackson hole. i'm interested in what everyone

around jay powell says. we are seeing committee members say the time is right, the risk is waiting too late. the conversation we had with steve earlier this week, because it is september heading into an election, they cannot be seen as political. they need to have everyone in agreement that now is the time to cut. lisa: i guess jackson hole is what you will be watching? annmarie: i will be in chicago. i will see what jay powell says. it is going to be potentially seen through a political lens whether they go 25, 50, or cut at all in september. we have already heard that from former president trump that they should not cut ahead of the election. it is really what happens after the dnc.

there will be a tremendous amount of excitement and momentum as they coordinate kamala harris -- coronate kamala harris as the democratic candidate. what happens after when we have to see her answer questions with details? lisa: at what point can we take any policies as anything serious if they are all trying to pander to a particular constituent? annmarie: fiscal policy is going to expand whether or not we have a republican or democrat. that will only matter when we know the composition of congress. also, tariffs, some level of tariffs will be in play. lisa: i am watching how volatile

are bond markets how much are we looking at an asset class that has volatility that has been traditionally steady? dani: how vulnerable are we that we are loaded back into bonds? what happens when we start to believe there will be a lot of spending? lisa: coming up on monday, our guests. have a wonderful weekend. we will see you next week. this was "bloomberg surveillance." ♪

>> coco gauff leveled the match but collapsed at the end of the set. don't forget, live coverage daily at 11:00 eastern. ♪

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matt: stocks have turned around to the downside. i am matt miller. katie: i'm katie greifeld. "bloomberg open interest" starts right now. matt: stocks are on course for their best week of the year. but a weak reading on the housing