♪ >> we are at inflection point becomes difficult to know are you moderating resolve for moderating and slowing down much more sharply? >> we should expect to see probably more softly in the labor market. >> there are pockets of weakness. i think the fed has to be attentive to that. >> they don't have the stimulus dollars they did a couple of years ago. >> we do think there is a risk that inflation actually picks back up again. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york city this morning, good morning. bloomberg surveillance starts right now. pulling back just a touch, down half of 1% on the s&p.

coming into september on a four-month winning streak. let's talk about payrolls. the median for friday, 165. 4.2%, down from 4.3. lisa: basically important day is going to be friday pretty much across the board. it typically does poorly in september. but clearly this week everything hinges on that with the drumbeat up to it with some of the ism services that come out thursday as well. >> here's the flavor of the question. how bad does it need to be to go 50? we think a print around the below 100 k will clearly put a 50 basis point cut on the table. lisa: this seems to be one of the key questions we heard from citigroup, that would put

125,000 jobs, 50 basis squarely on the table. the key question is whether the fed has given up the idea of a 2% inflation target, something we are going to speak with some of our guest coming up if they tacitly acknowledge that they would prefer to rescue the labor market. that opens up the door to a 50 basis point rate cut even without severe labor market pain. the question to me, is bad news bad news? bad news is bad news and good news is good news, don't get your hopes up that a 50 basis point rate cut is really going to support a market that has the balance of risks to the downside. >> a really busy couple of days on the campaign trail. according the union worker vote, a big theme. >> harris yesterday alongside joe biden. joe biden went ahead and said he's proud to be the most labor union from the president, and

she will be, too. this was him basically giving his blessing to the union voters that harris will follow in his footsteps and she came out and said u.s. steel, that company that has been the back-and-forth between the u.s. and japan, u.s. steel should remain in the domestic hands. we are nine weeks today from the u.s. election. enjoy your summer holiday, start paying attention to the polls after labor day. here we are. lisa: not to go on a rant on tuesday morning rv we really talking about policy here or is this sort of messaging? is this a vibe that i am on the same five with joe biden? joe biden never said he was opposed to this deal in the way that he was going to undermine it in itself. same question with harris. how much is this a viable company, and by the way, a competitor that tried to buy them was rejected for making an anti-competitive did because

that we control all the steel assets in the united states. jonathan: you know the last month is just about vibes. are we actually going to get in that debate a week from today? annmarie: it had better happen in right now i think both camps want to see it happen. we are pretty much frozen until that debate to see was going to take the edge. yes, you do you see her head in the swing states, but all of this is within the margin of error and it is really important that that the basic the cuddly is taking place in pennsylvania. this is going to be in must win for the democrats, something that was able to put trump over the finish line in 2016. jonathan: if you are just joining us this morning, good morning and welcome to the program. here are your scores on the equity market pulling back by 0.5%. bond market yields just a little

bit higher. foreign-exchange, lots to talk about. some yen strength out there. recommitting and reinforcing this idea that they are going to hike interest rates sometime soon. we can park the japanese story for a moment. the data this week, ism services and manufacturing, take your pick. i'm losing count. lisa: payrolls is the main event and every note over the weekend was talking about how this is going to make or break with respect to the tone in equity markets. payrolls are almost all that matters for equity markets. the true test will likely come of the august jobs report september 6. the drumbeat up to it, the data really key. ism services may be even more important along with jobless claims. ultimately this is all leading up to whether or not be billy

see true weakness because a lot of the data we got over the past weeks kind of rebutted the weakness that we saw briefly that caused a huge pickup and equity markets. can you see this rotation into small caps without that jobs report being good news, and good news is good news. jonathan: going into august 2, it wasn't just about payrolls. it was ism manufacturing and the employment subcomponent coming in really week. in many ways there is something to watch later this morning. lisa: whether it was an anomaly and whether it matters. as soon as we got that number there was an entire payment gallery of people coming out to tell us it is inaccurate for anything to trade out the manufacturing ism data and we heard that from one person after another and then other people said this is the reason the sky is falling it will be interesting to get confirmation of that and how much gets overshadowed by what happens on friday. jonathan: we will catch up with

marvin lowell of state street, terry haynes of pangea policy as harris makes a big play for union workers and neil dutta. stock kicking off september and your all-time highs as traders await the payrolls data this friday. marvin lowell writing the fed put is alive and well with pounds designed to preserve the jobs market, becoming job number one for the fed. marvin, welcome back to the program. i want to start friday and payrolls in the question we teased, how bad is that number need to be to open a door and leave it wide open for a 50 basis point cut? >> the fed clearly got concerned with the last payroll report. it was down closer to 100,000 for sure. what we are looking for is a confirmation that that is the actual trend. probably more important, it just shows how quickly the labor market can be decelerating which is really what the fed was

guarding for at jackson hole. jonathan: how different are things right now going to september 6 compared to august 2? how much is changed? >> certainly the headlines really puts the spotlight on the jobs market. i think going into the july report and the beginning of august, there was today view that we were moving toward a more balanced risk in terms of have affected looking at the markets. i think what i heard from jackson hole that we've moved away from warring about elation. certainly the pce print that we got last week showed that we didn't need to worry about as much, and the balance of risk is certainly on the downside. that's a pretty significant change. lisa: when he asks how bad to this number have to be for the federal reserve to go 50 basis points, are basically stripping out some of the scenarios where the fed could cut 50 basis

points and that can be a good thing for risk assets? >> i was never in the camp at 50 in september was a good thing. i really felt that if they were the felt he needed to go that hard, there was something that i saw that they were really worried about. i think that they would rather go a very the follicle 25 basis points. we could argue that, but really that 25 basis points going into next year. i think that is soft landing in my mind. anything more aggressive than that show that the recession risk has gotten higher. lisa: if you put that together with what you wrote here, the fed put is alive and well with job number one for the fed, it raises this question, is there a possibility that the fed is too late, and that kind of a 50 basis point set? >> it certainly is a possibility. we are not seeing it in the data that we are focused on. we do think that there is the

potential that we get a revision or we get some anomaly that kind of came out of that number. the weekly claims numbers still seem to be fairly solid. clearly, the engagement of consumer attitudes out there is one that is still somewhat supportive of the continued jobs market. so we don't necessarily see a need for the 50, but certain that the market is going to be focused on the recessionary risk that number. annmarie: would 50 look political? >> it would. unless we get a number that we can't argue, a 20 basis point increase in the unemployment rate, something like that, it's always going to be political. always one party that is happier and one that is not. i don't think you can avoid it, but 50 certainly put a spotlight on it even more. annmarie: given we are nine

weeks to the u.s. election, how focused do you think the fed is. that conversation they may have about not wanting to look political in nature. >> certainly it is something they are probably talking about. i don't think we are going to see that in the minutes, ultimately. remember that they did leave the november meeting to thursday rather than wednesday because they were worried about potential market fallout, in my view, in terms of making that movement. there certainly cognizant of what is going on in the political landscape and given how energized the selection process is, they need to be guarding against it. having said that, the data is really job one for them in terms of what they are looking at. i think that that is really the only thing dictating it. but for sure they would rather avoid any signs of being political bins process. jonathan: let's finish on dollar-yen. we are negative by 7/10 of 1% on

the session at the moment. there is a document submitted to the government by the bank of japan governor who basically reiterated that the boj is intending to lift interest rates once again. that has fueled a little bit of a further move lower in dollar-yen. when i ask you how much is changed over the last month or so, in regard to the fx market as well, have we released enough attention from foreign exchange? have we cut the link between what is developing the dollar again and what is happening in equities? >> some of that trade you are inferring did start to go back on maybe over the last couple of weeks, the amount that we had going into that last rate hike from the boj has certainly been released and now we are going to be able to traded more on the fundamentals of what is going on in japan rather than those interest rate differentials. jonathan: lisa, 140 5.89 on

dollar-yen. lisa: is this releasing enough pressure on an overweight of the dollar that we have seen pretty consistently over the past almost two years now? the faster the dollar can do at this one position unwinds us to fall slightly and slowly rather than after them further. he talked about have net foreign find best bonds and equities was a record high 2023 and has continued this year, so it is not just about positioning on some sort of long short carry trade basis. the carry trade is what everyone has been doing my pilot and the assassin as u.s. exceptional story has really been the dominant nemo over the past two years. jonathan: we've accumulated is a dollar position and see how much of that can unwind in the next few weeks. the next thing stop is friday. the estimate is something in and around 160, up from the 140 reprinted just about a month ago. equities right now -50.5% on the s&p.

google update on stories elsewhere with your bloomberg brief. >> hewlett-packard says it intends to pursue a $4 billion damages claim london against the estate of the late british tycoon mike lynch. hp wanted british, cased over autonomy. it is now waiting for a ruling on just how much is owed. lynch and his daughter from among those killed with his archery yacht sank in italy last month and a severe storm. cathay pacific has canceled almost all of scheduled flights from hong kong sing or, inspecting the engines on its planes. sources told bloomberg engineers are checking for deformed or degraded . a component failure had forced the return of a flight from hong kong to zurich on monday night. the airline says it has already found the same component failure across a number of engines. elon musk starlink has reportedly informed brazil's telecom regulator it will not comply with the order to block x

until local accounts are unfrozen. results report or the blocking based on the platform's allowance of hate messages and false information about the countries electronic voting system. muscat threatens to ceaselessly government assets unless property belonging to x and spacex is returned. and that is your brief. jonathan: more in about 30 minutes time. up next, courting the union vote. tim walz: when unions are strong, america strong. harris: we will continue to strengthen america's manufacturing sector. jonathan: a busy 24 hours of campaigning for the democrats. that conversation up next. live from new york city this morning, good morning.

jonathan: summer is over. summer is over? summer is not over. decent weather this week, get out there and enjoy the weather. we are blessed to have great weather in new york this week. lisa: is this your crusade? you want summer to be longer, you think that americans end summer too quickly. jonathan: we're not children anymore, summer isn't over because you go back to school. lisa: august is basically a vacation in europe. jonathan: for europeans you could make the case that summer might be over.

annmarie: now is the time for actually really good deals because people think summer is over in september and you can get amazing resort deals. jonathan: summer is over for the kids. ? for the adults? not on board. friday for payrolls. equity futures -5%. bond market just about unchanged. under surveillance this morning, courting the union vote. >> we know the simple truth. wall street did not build america. the middle-class built america and unions built the middle class. >> when unions are strong, america strong. >> we will continue to defend social security and medicare and pensions. we will continue to strengthen america's manufacturing sector. jonathan: they harris campaign

dining in on the union vote over labor day with events in its burden in the walkie. the only scheduled debate just a week away. terry haynes rights is now the next known unknown? that growing perception of it and makes the stakes even larger. carrie, wonderful to catch up with you once again. let's start with that labor day campaigning blitz. where are we in terms of the union vote and the union worker vote and who are they lining up behind? >> happy summer or fall, jon, depending. there's a big difference between union leadership and union rank-and-file. you didn't have to go very far outside of pittsburgh to figure that out. the line that the biden-harris people are purporting to portray, essentially, is that union leadership will help keep the rank-and-file in line, but

that makes the mistake of looking at the union movement monolithically when in fact there is a very big difference between the teachers unions and the electrical workers and the steelworkers and the teamsters. i think you have rest of the union membership or really concerned about economic issues fundamentally, and that cuts into a union majority for the democrats. annmarie: we seen that in the rank-and-file when it comes to our own polling. what does harris need to do to meet the rank-and-file voters, not just union bosses? >> she needs to talking about more about economic consequences and what she proposes to do about them. feeling the pain on economic consequences is a good and essential part. it is also the easy part when monetary policy seems to have the whip hand on solutions in a world where no politician will do anything about fiscal.

that lack of appeal, that aggressiveness, that concern about the lack up with the this -- existing administration has done is that the core of trump's appeal outside the philadelphia suburbs. annmarie: when it comes to pennsylvania, our poll has harris ahead but all of this is in the margin of error. >> very much so. i think she's right at the ship in terms of where biden was, but biden wasn't believe that far down. it is a turnout race, enthusiasm race. the entire again pennsylvania is going to be essentially two things. one is maximizing the vote in the philadelphia suburbs, and the other thing is to cut into

trump enthusiasm in the rest of the states. she's got her work cut out for her in the second part. at best right now she is tied in pennsylvania, i think. >> you put out the idea of some of the quiet voters who for the don't register in the polls, this idea that there are trump supporters that give democrats less of an advantage in certain swing states. can you explain your idea? >> the essence of the idea is that -- and i think trump works in this way, too --there are core trump supporters and there's the republican party and they are not at all the same thing. but what you need to do is get to a point where trump's view is he needs to maximize the people that are already for him. they harris idea is i've maximize the number of people in the party that are already for me, i need to kind of move to the center. pick off the undecideds.

trump is betting essentially that the enthusiasm for his core supporters washes out the broader harris appealed, but given the enthusiasm gap that exists today, which clearly is more in harris's direction, i am not sure that is a winning bet on trump's part. lisa: we were talking about this earlier and whether this is just a five in terms of harris talking the same talk that jill biden did, or is this actually going to be a policy where this deal does not going to go through even though there isn't necessarily a viable takeover candidate to infuse this company with that kind of cash. it is basically just vibes? >> it is more vibes than anything else. particularly in western pennsylvania, there's a lot of visceral pushback on the idea that u.s. steel, essentially the original steel conglomerate, is

going to be taken over by a foreign company, even one is for good as nippon steel. but there is a situation where also, where people understand in those areas in pennsylvania essentially that promises toward americanizing the industry have been made for a couple of generations now and they haven't been followed through upon. so what harris risks, frankly in pennsylvania is deepening the cynicism that already exists. jonathan: appreciate your input as always. much more industrial policy and manufacturing not just in the u.s., but around the world, just a moment. coming up on this program, vw considering factory closures in germany for the first time in its 87 year history. shocking news over the last couple of days. lisa: and how much is the beginning of something more? one analyst put this out there,

vw recognizing just how serious the situation is. we are living in a difficult geopolitical world, and europe has not won the battle. jonathan: more on that story in just a moment. welcome back from the summer. welcome to fall, apparently, in new york city. good morning. ♪ your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals

ryan t. writes, "moving is stressful. visit sandals.com can you help me take one thing off of my to do list?” ugh, moving's the worst. with xfinity, you can transfer your internet in just a few taps. just a few easy moves. did somebody say “easy moves”? ♪ ♪ oh no. no, i was talking about moving your internet. this will move the internet. ♪ ♪ ooh, ooh. -let's keep it professional. professional dancers! -ok! stay connected during your move with the best in home wifi. easily transfer your services in the xfinity app. bring on the good stuff.

♪ jonathan: putting together a three-week winning streak on the s&p 500, kicking things office morning negative by about half of 1%. on the nasdaq, negative by 0.7. on the roster, almost 1%. a fourth consecutive month of gains. for stocks and bonds alike, the front-end of the yield, the two year yield declining for a fourth straight month the two-year right now, 392 .7, up a single basis point on the session. lisa: there is really a question at how far the federal reserve can cut rates without serious pain. to me this is the ultimate question of this week which is essentially can seeing this wonderful sort of nirvana rally with bonds going down but do you

get a reality check with their only being a weakness that that would ultimately be responding to? jonathan: the worst month for dxy: all the way back to november of last year, i believe. the dollar index on the month and buy a little more than 2%. last month we have the worst month of the year but last week we had the best weekend back to april. lisa: this is the issue, and frankly for the dollar what you are dealing with is the rest of the world. the rest of the world was looking a little bit better in the federal reserve, and that was going to add to the weakness. but now the question is how fark at some of these other countries go in terms of growth and rates? that really could let the dollar weaken that much more. the ecb is a perfect example. how much can they really afford not cutting more than the federal reserve, given the weakness that they see everywhere else? i think the bank of japan is fascinating but there is a

larger story of how big the overweight the long dollar position is and how that could potentially unwind of time as people realize is not just u.s. exceptionalism story alone. jonathan: just south of that right now at 145.98 a much stronger japanese yen of the packets and comments reiterating today that he is willing to raise interest rates once again. not news, jeffrey reiterating something he's already said, this time in a document given to the government. how close are we to another rate hike at the bank of japan? >> he seems to be hinting it is fairly soon. this comes at the same time that hinges on the u.s. and how close we are to real declines in benchmark rates. it is kind of tenuous right now. i'm curious to see where the balance of risks is. right now in the balance of risks to the upside in terms of strength? where a downside in terms of dollar strength?

it feels like began strength is taking the front-end right now. jonathan: we will start with this one. benjamin netanyahu facing growing pressure to accept a cease-fire deal. hundreds of thousands of israelis taking part in labor strikes and protests across the country. deeply depressing news over the weekend, and the pressure really ramping up on the israeli media. annmarie: absolutely horrific news over the weekend but you didn't have biden leading with his nationalist already team and his negotiators working with qatar and egypt to try to get this deal done. the washington post over the weekend talk about this idea that the u.s. is going to present this take it or leave it approach, and one u.s. official speaking to the post for you keep negotiating this, this process has to be called at some point. my question is given what happened with these hostages murdered in that tunnel, does it

make cease-fire negotiations easier to access or not? i will note yesterday do have doha talks, potentially that is going to open up a pathway. lisa: there is no good answer here. there is no good answer especially because it looks like the message to the people who are guarding hostages is to shoot them or to kill them if the israeli soldiers are coming after to arrest any military way. you have a nation morning, a population suffering with the polio vaccination strike stave off mass disease that we thought we had eradicated and you have a situation we don't have a sense of who is negotiated with whom, and what is going to be behind it because some of the big players have been quiet as well as some of the others. jonathan: how close are we to a deal? annmarie: a few weeks ago saying

now or never, it has to be done. they were talking about this bridging agreement which really goes back to it biden proposed at the end of may. biden proposed that cease-fire agreement that had israel's backing. it clearly didn't have all of israel's backing because we probably could have already been there by now. they've been discussing this agreement, this idea of take it or leave it for weeks. we've seen countless trips by bill burns, anthony can, brett mcgurk. it's hard to say where we are now especially given the horrific events over the weekend. jonathan: any more headlines, we will bring them to you stateside. sunday, you've got abc on. you got espn on, and just like that, directv customers find out they don't have access. programming going dark at the start of the college football

season and ahead of the final week of the u.s. open tennis tournament after the pay-tv service and disney failed to come to terms on a new contract. this is the second year in a row that it cut off during the u.s. open. this is the issue. basically people are saying directv is really annoyed at disney get they saying essentially that you can't give people the sense that they are getting the channels and then cut off the best part of the channels at key times and say you can have access to those unless you also pay for this. it is a bait and switch. disney is saying we can do what we want, get over it. you wonder how much this is going to keep going on and what point some of these disney networks are going to just bypass some of the cable just entirely. jonathan: so who's got the leverage? lisa: i don't know the answer to that. i think that is the key question.

>> independent backer subscribers. more than 11 million directv subscribers, what are they asking? are they tennis stand, college basketball fans, or are they political junkies? this is also happening at the abc debate next week. jonathan: i would be absolutely -- yet. can i say that? lisa: go ahead. jonathan: i'm not going to bother. lisa: you are miffed. i can just say this. it ultimately comes down to how big of a sports and are you, and are you willing to pay for that sports fandom? that is what disney is willing to wager. i would sign up for something else straightaway. i would love to know what the numbers look like. we will see what that will actually look like the longer this goes on. shocking news out of germany, bloomberg reporting that volkswagen is considering closing factories in germany for the first time in its 87 year

history. the decision coming at the automaker is losing ground in the race to produce electric vehicles. the move which set up a showdown with unions across the country. welcome to the program, sir. we love your thoughts and a picture if we can take a step back. unfortunately we only have a few minutes. how did we get here? >> this is basically like a situation that unfortunately has been the making several years. the sort of structural issues that have beleaguered folks for many, many use been well documented one of the four point was really the competitiveness of the domestic german operations. and that was probably not addressed in a sufficiently aggressive and efficient way with the chinese market growing and with the company doing pretty well elsewhere, but all this has changed and pretty dramatic fashion, really. the chinese market for the struggling.

volkswagen is losing market share for several quarters already. that really puts the spotlight on their domestic german operations which have been struggling from high costs and low efficiency for many years. jonathan: scary thing for the europeans, we had a similar conversation with stellantis. for factories are operating well below capacity. the conversation we had regarding italy with that chinese manufacturers are looking for a manufacturing base in europe. if this going to be a pure shutdown, what with the germans actually be open to signing some of those factories to a chinese automaker mark >> if i'm not seeing that they would probably sell any specific assets or whole factories to a form manufacturer. but they will probably be trying to do is to sort of restructure the operations to some degree that they might be able to sort of specialized on different components, different technology. move more the software side of

things. nevertheless, the point you make is absolutely right. the competition in europe for domestic manufacturers by chinese lipase, i tesla first and foremost, that is not something that is going away. they will lead to review pretty dramatic can strategically critical decisions in order to be able to regain competitiveness on their home market. lisa: i was looking at this data yesterday and it was talking about how auto sales europe are still nearly unfit lower than pre-pandemic levels and this really has to do with vw, stellantis and renault all operating factories -- factories at some optimal levels. what kind of shutdowns could be cny is there such, i don't know, laggard demand for cars in europe? >> i think that is one point, the slow recovery in car demand since the pandemic. on the other hand, what you

mentioned, that is a super important point in that if the big issue with overcapacity in the european automotive industry. that was something that many manufacturers, not to fall to laggard, but you just mentioned stellantis, same goes for pretty much all legacy many accurate, that they've been struggling really big time to reduce this overcapacity, partly because of political pressure as well. it's of course keep the unpopular when you try to cut jobs and close down factories in market cap is specifically issue for volkswagen. any move to cut down capacity by volkswagen will definitely face some fierce resistance, and that is a quite similar situation with other manufacturers in europe as well, given the french ones that you just mentioned. the political resistance, that is quite pronounced in each and every european country.

>> the fact that workers occupy half the seats on the supervisory board. anything volkswagen wants to do potentially following in the footsteps of stellantis and cutting cost, how can they actually go about that? >> they will in some way, shape or form to find a consensus with the worker representatives, with the labor unions, and that is going to be difficult. as jonathan mentioned already, the measures that they mapped out yesterday includes an pretty painful cutbacks. but they will have to come to a compromise and having said that with all the negative headlines out there, a pretty substantial crisis, they've been there in the mid-90's. they've been there in 2005, 2006. that was something were under this really fierce competitive pressure, at the end of the day, the key stakeholders and management were able to come to an agreement to form a joint

plan forward to really move the company out of this pretty dramatic situation. jonathan: i wanted to share the words of the wcl with our audience. the economic environment has become even tougher and new players are pushing to europe. this line stood out to me. germany is falling further behind as a business location in terms of competitiveness. for such a long time, particularly in the debt crisis, germany was seen as a fashion economic stability, the thing that was trying to replicate, wanted to become as it grew older. where are we with the german economic model? how did we come to this place? to hear these words from the vw ceo, germany as a business location is falling further behind in terms of competitiveness, what if the government actually doing to tackle this? >> i think what we seem regarding the german economy is a bit of a perfect storm. multiple factors all coinciding,

basically after the energy crunch that was triggered by russia's invasion of ukraine. energy crisis shot up big time. this been a big issue in germany before, for pretty significant cost factor. the energy supply of german industry has really become a lot more expensive. feta something where regulators, or the government for the struggle to react in medicine having a pretty pronounced impact. at the same time, germany in particular has also been the struggle to reduce bureaucracy and red tape. it is incredibly difficult to found a company, establish a company and operated company. there are a lot of rules and regulations and that is something that has been criticized for a very long time, but very few people really took action to change that. and all that contributes to a really difficult market situation that now, as you mentioned, volkswagen ceo has pointed out is a pretty severe

lack of competitiveness on an international stage when you compare it to other regions in the world, the it in asia or the u.s. jonathan: we could talk all morning about this. thank you very much, sir. one, the mess we are in and two, difficult to actually clean up. lisa: it is overcapacity, a lack of demand and something structural happening and wondering how much does this dynamic of german lackluster growth and competitive disadvantage have to do with the elections we saw over the weekend, the first far-right candidate elected going back to world war ii. people are looking for change and that is sort of the struggle that the existing government has to deal with. jonathan: it's certainly going to play a much bigger part in the politics of a have to shut down factories in that country. let's get you an update on stories elsewhere this morning. >> the u.s. is laying the groundwork for new sanctions on venezuelan officials.

if they response to the nicolas maduro disputed reelection. bloomberg has a document showing that the treasury department is close to announcing 15 individual sanctions on officials accused of undermining the joe biden vote. venezuela has or the arrest of rival presidential candidate gonzalez for alleged crimes including forging a public document. bank of japan governor double down that the boj will continue to hike rates if the economy performs as expected. they submitted remarks to a government peril -- panel. front tooth out economists surveyed after last month still see the boj moving again by the end of the air. wally is the parent to launch new products at an event that takes place just hours after the apple pay view of the iphone 16 they plan to unveil the world's first commercially ready smartphone that folds twice according to the book and they with its plans. apple is launching a new family of iphone handsets and accessories on september 9. in china, huawei pushed apple out of the top five device

makers in the june quarter. jonathan: appreciate it. more again in 30 minutes. up next, pushing ahead to payrolls. >> labor market report it's going to be the big one. if we do see signs that things are slowing down too much, i think they are going to be ready to take action. jonathan: that conversation up next. the payroll just a few days away. good morning. good morning. wealth-changing question --

are you keeping as much of your investment gains as possible?

high taxes can erode returns quickly, so you need a tax-optimized portfolio. at creative planning, our money managers and specialists work together to make sure your portfolio and wealth are managed in a tax-efficient manner. it's what you keep that really matters. why not give your wealth a second look? book your free meeting today at creativeplanning.com. creative planning -- a richer way to wealth. ♪ jonathan: welcome to the program, stock system of the software. -0.5% on the s&p. yields just about unchanged. against the dollar, negative by one third of 1%. this morning we are pushing ahead to payrolls. >> the labor market report is

going to be the big one. that is going to sort of say pretty clearly it is more of a slowdown then we wanted if we do see signs that things are slowing down too much, to the point where we might have a slump, i think they are going to be ready to take action. >> investors awaiting a slew of -- beckett the path forward. he's worried about the labor market. he joins us now. welcome back to the program. i want to start you with a question it already asked, a banter that number to be friday to make your base case? >> the way the rest of the street is talking it sounds like it needs to be pretty weak. but i think that is part of the problem. you're almost talking yourself out of going 50 when the data up to this point are already consistent with 50.

i thought the fed didn't want to be data point dependent, and it seems like what they are doing right here. i don't have a good sense. another uptick in the unemployment rate, it is probably a lot. but at the same time, we tend to overweight the establishment survey to begin with anyway, so it is hard to know. we will see how it comes out. but i think even if the number does come in better because there was some factor in the last month that kind of unwinds, what is the overall slope of the data? we already know what that is. if you look at the labor differential released last week, consumer attitudes about the labor market are deteriorating, and consumers tend to spot changes in their local economies before the data. they know when the pink slip cycling out, when factories are hiring, when there are help-wanted signs in the neighborhoods. but the fact that consumers are telling you that the labor market situation is getting

worse suggests there is still probably a pipeline of weakness that is still in front of us with respect to the labor market. >> from the client to speak to, are you more likely to put more weight on the household survey and the difficulties the attic? >> is one of the benefits right now is that it is that revisions. we just got a fairly significant downward revision to the establishment survey, up to march 2024. he sort of knew that was coming, but what does that tell you about the payroll number prints in the coming week. whatever the number is, it is probably going to be weaker in reality, irrespective of whatever is published. the good thing about the household survey is that the ratio in the job survey aren't really revised. maybe there are changes to population estimates that ultimately it is those ratios. primate employment.

those ratios don't really change. there is a signal in the back of the unemployment rate has been going up for five of the last six months. it tells you there is a slackening in the labor market. lisa: there's this question about whether he gotten overly confident about the soft landing and i look back at history and there are only three soft landings for the fed has orchestrated a rate cap coming down from high rates we haven't seen a recession. that is not the case in 2008, 1981, 1970, 1960. even though it looked like a soft landing. how confident are you that this time, the soft landing and is not a head fake? >> i think part of happened in markets as we went from pricing in no risk of recession to some risk of recession and it happened very quickly which is why we got that he cap and rockets being month or so ago. i still think soft landing is the overall base case, but i do

think that the fed has a role to play. when i hear people say that maybe they should string out a bunch of 25 basis point moves between now and summer, i think that is kind of ridiculous. the fact that core inflation is running below 2%. frankly if you look at it since last summer, we've been below 2% annualized on a monthly basis. most of the time, believe it or not. to me that suggests that they are already too tight. so going 50 on the first go is not a particularly big risk, because we know they are way above neutral. getting back to neutral will take a long time. that puts the economy at risk in the process because it mean you would be running the restrictive policy stance in the interim. lisa: does this mean that if the

fed were to cut 50 basis points, and every analyst i said says probably risk assets would selloff immediately, you would be saying this is the time to go by? >> absolutely because it tells you the fed is trying to get in front of the eightball. there is nothing that the fed knows that the rest of the stone. they don't have the edge then significantly. this is more about them coming to recognize something the rest of us already do. that the unemployment rate has gone up and inflation has slowed. jonathan: neil making it easy. it is never that easy, but we appreciate your take. the fed has been caught off site a couple times. the argument that neil has been making over the last several months, if the 5.5% interest rate with the right policy for last lie, what is the right policy for this july, this august, the september? the argument, it is not 5.5%.

lisa: substantially lower. if you're going to do it, why not just do it? if you actually believe it should be substantially lower, substantially lower it. on the flipside you have to wonder why there still is inflationary pressure in areas like rent and housing and i would love to have neil back onto talk specifically about housing which he says is a red flag. if you lower rates were only going to get increasing cost and not necessarily that much more volume. jonathan: we can do that next week, september 11 cpi. coming up next, raymond james, forrester, and eagle asset management. from new york, the second hour of surveillance up next. you are watching bloomberg tv. you are watching bloomberg tv.

it's time to grow your business. create a website. how? godaddy. coding... nah. but all that writing... nope. ai, done, built. let's get to work. create a beautiful website in minutes with godaddy. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire ♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals

ryan t. writes, "moving is stressful. visit sandals.com can you help me take one thing off of my to do list?” ugh, moving's the worst. with xfinity, you can transfer your internet in just a few taps. just a few easy moves. did somebody say “easy moves”? ♪ ♪ oh no. no, i was talking about moving your internet. this will move the internet. ♪ ♪ ooh, ooh. -let's keep it professional. professional dancers! -ok! stay connected during your move with the best in home wifi. easily transfer your services in the xfinity app. bring on the good stuff.

♪ >> we don't think this is broadening at more balanced, more protection at this point in time. >> the carrying cost of human long is extremely high. it is the perfect time to monetize that volatility. >> if you get rates down, that is going to accelerate economic video. >> that is where investors are refocusing right now. how do they position for the thing that we know is coming which is a fed delivering the first rate cut? announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the second hour begins right now on a three-week

winning streak on the 500, 24 month winning streak. your scores look like this. pulling back by half of one person on the s&p 500. on the russell, on the small caps, down by 0.9. coming into a week that looks like this, ending with payrolls on friday. it begins with an important data point this morning. ism manufacturing. this was the beginning of a really big move through the end of august. ism manufacturing and the subcomponent employment spooking a lot of people. lisa: getting a sense that employment, labor market was beginning more than people previously expected. how much is the weakness that we are seeing in the peripheral data going to become the dominant force in an otherwise goldilocks type of scenario? if the reason why i read note after note of the league and with a lot of negativity september tends to be a crappy month for performance of assets but a larger question of how

leveraged is this market to a soft landing that has been elusive most times in the last couple of years? jonathan: that the case prompted this line from german pal. we do not seek or welcome further calling and labor market. the question this week, will he get some? >> when you look at some of the responsys, people are concerned now a little bit more about the labor market. when it comes to the whole fed debate, marvin lowe talked about the fact that he is one of those 25 until december, string them out, but how much does a 50 basis point cut before an election that is on a knife's edge look political? that is my big question. jonathan: we are told they are not data point dependent but that is one data point friday that we think the size of the move on september 18 is dependent on. morgan stanley around or below 100 k, 50 is on the table.

andrew thinks 120 five and unemployment dictated 4.3%. 50 is very much a go. lisa: if the fed actually trying to policy percent a message to market weakness or strength this economy those are two different things. many of these economists, the benchmark rate should be set lower than where it is right now. why string it out over time? if you think it should be lower, lower it. if they do lower it, that would send a message to markets that maybe things are worse than they previously expected and that is the reason why an analyst expects a negative event purpose assets. that is the value that is dealing with, the messaging component of the mandate along with the actual rate and was actually appropriate for this economy. jonathan: which is where if you want to believe i'm planning a drinking again, this is the game play. every time you hear the words that article from fed officials,

and and you will be drinking a lot based on the speeches we heard over the last month. lisa: although you would not be tricky if you are listening to jay powell, and that is interesting. fed chair powell would like to go all at once. interesting that we are going to get some words from the fed on friday after get the payrolls report. that i think even the fascinating because maybe they can believe message have a plan to that data size of cap. jonathan: spiked the principal at jackson home, that is what he did. the fed puts back according to emily volin and so many others. equity features negative by half of 1%. as lisa mentioned, why a run for both stocks and bonds to limit what additionally a week or month of september twice the estate of months of games. cointreau could think of month again for bonds.

yields just about unchanged on the session. coming up, raymond james is traded for massive september. kamala harris: the union vote in forrester as retailers of consumer spending. we begin with our top story, stocks here and record highs at the crucial september the fed. we cannot rule out some downside as investors digest the aggressive rate cutting cycle rates into the market, but as long as the pattern of higher find lower lows remains in place, i would continue to use downside optimistically. matt, last we spoke recently are slowing, not breaking. is this a big event friday exchange review? >> great to see you again. i think friday is going to be very informative because it was give us another glimpse into what is happening with the labor market one meeting to holding in place and this economy today. following a weaker friend from

july, that would certainly be more concerned. i don't think it is allowed cataclysm for the rest of the market because there's still a lot of pieces that fall into base, but i certainly think if you do get a very weak show of 125 or less, the fed will likely cut by 50 basis point and i think that effect can also provide positive signaling. when i look at the balance of risks, how earnings season has come in, i really think the strength of the underlying economy is underappreciated market participants i spent the past be traveling to meet with clients and a big portion of their portfolios really hasn't been leveraged to, risk. when i look at where we are right now, even if we get in the weaker of a job printed there is still a lot of opportunity to invest in higher quality asset where businesses are generating free cash flow and i expect to do well regardless of the economic environment.

lisa: a lot of people aren't in the risk market for the have a lot of room to play catch-up. the wall street journal put this article this morning's stock allocation comfortably percent of u.s. households total financial assets. you seen records going back decades. how do you square that with the idea that people are not overly invested in risk assets? >> it is a great point in that think it highlights the interest rate policy the entire asset market over the past 14 years. asset owners have done better than those who haven't and that has led to a bifurcation across the entire consumer class which is a lot worse. but what i would say to that is even though asset owners are leveraged to the overall equity market, when you look at general position with respect to cash balances and how those little relative to two or three years ago, position is still largely

drove, i would say. we look at investor sentiment in particular, investors have been fighting this rally. something has to go up. the economy is deteriorating more rapidly than we think, yet corporate earnings are good, guidance on balances positive. corporate margins are still sitting at record highs. to me that means there's a lot of opportunity for those who want to do their homework and look at the equity market and that is why i can encouraging clients to lead running market. businesses that are flowing up -- throwing off cash flow and really under-owned by the market. lisa: how receptive are investors to this message? we were just talking last week with people who said on the sidelines, it is kind of bogus because it is happily there. it is not going anywhere.

>> also forget that rates are going back down to zero. maybe back down to two .5% were 3% or wherever the neutral rate ends up landing there's always going to be a reason for some money to be sitting on the sidelines but a lot of the conversation they had with our clients are focusing on the opportunity cost of staying in cash vs what they would give up any big concern for clients right now is how am i going to match this and not take too much risk? what is really nice about the market today is there's a lot of opportunities to not reach far out on the risk spectrum where you are still getting very respectable yields heading to the end of the year, and dividend payers are largely underowned, valuations are still fair. thereafter were not very respectable rates of cash to investors and so you have a

chance for capital appreciation is well with you really haven't had a combination in a very long time. that has been well received by investors. >> we do have an election nine weeks from today. you are talking to clients. how concerned are they about november 5? >> they are very concerned. i've not had a single conversation where elections have not come up, and that is around many parts of the country the big with respect to the elections is what is not going to do with state taxes? i think there's a lot of entrenched views on one side or the other, so understanding the overall market implication i think comes more challenging what individuals have such previews. health plan market face you think is going to win.

bringing the country, companies, utilities. this plenty of the plague without being the political ms lag trying to bring the message home to investors. >> utilities government 20% in 2024. of more than cointreau in august. >> when you look at what you need to actually realize ai monetization in the data center group is being projected, we do not have enough energy in this country. what i've been able to talk to some senators and representatives in congress about what their plans are, to make sure there's power especially across the sun belt.

a trillions of dollars are going to be sent over the next three to five years in order to build up the grid. you want to find some of the companies that are able to revive those electric utilities, but also might have sustainability and growth because that is still going to be the way forward in order to provide an hour. this definitely long-term opportunity but don't chase the trade, wait for it to come to you. jonathan: certainly a popular trade. thank you, appreciate it. equity teaches right now negative by 0.6% and update on stories elsewhere. here is your bloomberg brief. >> dissatisfaction with housing cost has a record high in rich countries going to the ft, half of respondents unhappy with the inability of affordable housing in the u.s. figure is almost 60%. researchers partially plaintive

mike of construction for the affordability crisis. tesla shipment from its shanghai factory growth for a second straight month in august. luminary data shows tesla shipping over 86,000 model 3 sedans and model y suv's. that is up roughly 3% from a year ago. huawei is preparing to launch new products and then that take place just hours after apple's debut of its-16 on september 9. they plan to unveil the world's first commercially ready smartphone that for its twice according to a person familiar with the plans and china, huawei pushed apple out of the top five for the quarter. jonathan: he fully worked out whether we needed to fall twice, do we need to fully once? have we demonstrated that this is something people need? dark out there is a theory,, theories. number one, you could actually drop it would hurt the phone as

much. and the other issue of them get more screen space if you could folded out. and the third way of the third way of just looks really cool and modern. >> i wonder if it helps with butt dialing. jonathan: you still have those problems? of next on the program, it is america first. >> it is vital for our nation to maintain strong american steel companies. u.s. steel should remain american-owned and american operated. jonathan: that conversation just around the corner. my from new york city this morning, good morning.

♪ jonathan: a beautiful summer's morning in new york city. equity features negative by 0.5%. yields are unchanged on the two-year. >> it's just not accurate. i guess it is, technically. jonathan: by definition it is accurate, actually. lisa: is this your calling card for this particular cycle? jonathan: i don't care about much. make september great again. september scare is the real thing for a lot of people. the anxiety of winter being just

around the corner. this is the promo for lisa's birthday. all right. i surveillance this morning, on the campaign trail, it's america first. >> it is vital for our nation to maintain strong american steel companies, and i couldn't agree more with president biden, u.s. steel should remain american-owned and american operated. and i will always have the back of america's steelworkers. jonathan: harris aligning with byron and her opponent in opposing the proposed takeover of u.s. steel by japan's nippon steel. harris catering to the union vote over labor day weekend just one week shy of the first presidential debate that the air on a. harris is a handful he nationally, the electoral college remained extremely tight and continues to taper trump and

republican already in our view. henrietta, welcome back. you will turn to the polling it just a moment. on this issue, if there any daylight whatsoever between the candidates? >> there's no daylight between the candidates and frankly there really can't be. i have some fantastic clients asking this question a year ago, where the president of candidates going to be on the steel deal and the answer is effectively they are going to say they are against it for the duration of this election cycle. anything you can expect for none of this to be included until after the election. there's no reason to rush and there is no alternative for any presidential candidate. the alternative being accounted by one of the most american companies in the rust belt before election cycle is sort of unthinkable, so this should have been well understood and predicted many months ago if not a year ago. lisa: this time next year or

january 21 after the inauguration, if one of these individuals becomes inaugurated and backtracks, how is that going to affect them in the future? >> the regulatory agencies have the option to study the issue. whether it is doj or some of the other administration agencies. go in and say what are the cost benefits? they are going to have to go a long way toward giving the unions what they need to the point where they did unions on board. as the only way that this progresses. the burden is on the company to make sure that the unions are behind them and when that occurs, you have a situation where it is perceived, but it is never going to be have my blessing. there hadn't been enough issues to derail this or proceed in the free market we live in. annmarie: harris settlements not by too much attention to those polls. you are one individual who thinks trump has the agent swing states. pennsylvania specifically, why

do you think he has the edge even though she is doing the work and going to places like beaver county? >> pennsylvania has slowly become more and more republican leaning. part of my bias toward diane early in the year was mostly because he is scranton joe, he was raised in the state. kamala harris is deploying joe biden in that area and i think tim walz goes a long way toward speaking to that demographic, but it is an issue where receiving unions play out the strong support for harris at the democratic candidate, who has minimum-wage issues in mind and is fighting for unions. joe biden famously went on the picket line, harris has been on the picket line, but you have the members themselves of the teamsters union who are very conflicted and they personally support donald trump and his brand of politics. so i think it is a harsh disparity three people at the top of the unions and their rank-and-file members who may prefer to go any different

direction and have slowly been trending more and more red, getting close to ohio which consistently has voted for trump plus eight, plus nine, and is now plus 12. annmarie: trending bread in western pennsylvania but a very popular democratic governor. does that not favor harris? >> it does have a very popular governor and that is great and i think schapiro has been an exemplary speaker on the trail. his speech at the dnc was notable in terms of getting support the have to keep that trajectory open. the harris campaign is trying to do right now his turnout youth voters. we saw 170 8% voter registration uptake amongst black women in america in the last three weeks, or five weeks since harris has been the campaign front runner. we saw 140% increase in latino females registering to vote in the united states. so it is all about voter turnout in these high urban density areas where harris is going to try to run up the numbers on par

with 2008 with barack obama who won the state overwhelmingly. that's the trajectory they're trying to pursue. you are not going to see that translate in the polls. these new registrations are not going to be taken up in the polls because posters are not reaching those new voters. they also have a higher propensity to vote as somebody who has been on the role for years or decades. i think i could be a sleeper voter in pennsylvania and other states nationwide which is these new registrants harris has turned on the last couple of weeks. lisa: when you look at the polls, what is the main campaign issue of this cycle? >> right now, immigration and abortion. when you look at voters and they say it is the economy or inflation, those are no longer reliable data sets because they skew parts one way or the other. if you like donald trump, you think the economy is trash. if you like joe biden, you think the economy is improving, you feel good about your own personal finances, you feel good

about your state personal finances and you feel like the inflation issues coming down, which is. i think the federal reserve lower interest rates and a couple of weeks is going to be really powerful for that message as well but patterns optics in fears of recession that keep being unproven and unmerited and that is something that needs to resonate with the american voter, but they don't receive that information due to partisan leanings. as a result, the most reliable data that you can look at this ring you stand on immigration and abortion. that is what is driving the gender divide, which is outrageous, just so they this year. it really is becoming men vs. women. >> let's put abortion aside for one second. with integration, what is the daylight between people who are for much more stringent types of rules and those who would like to see a more measured approach? how much is this really dividing the public and that democrats and how much is there really

room to negotiate? >> it's interesting, there's not much of a divide. democrats have come very far to the right in the latest bill that was rejected by republicans in the early part of the at the request of donald trump assailants keep this issue friend of mine. but joe biden has introduced and signed some of the most extreme executive orders but more than halve illegal immigration since the beginning of this year. so i think that the democratic party has gone far to the right on this issue. it's really a question of whether voters are prioritizing immigration or not. everybody is pretty much in favor of increasing drones at the southern border, boots on the ground, expanding judges in the area, having a more streamlined asylum process so we can process illegal immigrants more quickly, and sit in the compelling mexico and southern border country nations to improve economic situations in their region so that they do not

have this surge of immigration. i think it is really about who talks about it in what kind of way as opposed to what functionally do we want to see. jonathan: two months to, thank you. the countdown to the u.s. election continues. coming up next, retailers looking to get a jump on holiday spending. that conversation just around the corner. ♪

when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom. when you have good metabolic health, weight loss is easy. i always thought it would be so difficult to lose weight, but with golo, it wasn't. the weight just fell off.

i have people come up to me all the time and ask me, "does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you.

jonathan: hsbc with this to say. high-frequency data have improved. we remain overweight equities. equities now -0.5% following a third week of gains on the s&p and a fourth consecutive monthly advance on the s&p 500. on the nasdaq, negative 0.7%. some of the big gains have been out of the muscle of big tech. lisa: for two straight months. the interesting thing about max is his bullishness is idiosyncratic compared to some of the other notes saying the fed put could spark a rally in junk assets such as u.s. small caps in the coming weeks and

months. stewart kaiser, that was a notable shift for him as well talking about downside risk, specially if bad news is bad news and we get the downside to rise. jonathan: mike wilson with the potential of a repeat of august 2 when we last spoke to him. something similar. bad news is bad news. lisa: which we have seen kind of bleed into markets and you see a precursor. you can see the underperformance coming. guess what, small caps, there is this fear being backed into markets maybe we have overestimated the chance of that soft landing and that might be the trade unwind. we will see. that is the argument is making. jonathan: the front end of the curve, 3.9332. four yields declining at the front end of the curve, down 30 the last month or so. a conversation about whether they go 25 or 50 friday.

this is a note this morning. if we get 4.3% and 125,000 on payrolls, the fed goes 50 for them. a drop in on a payment rate of 4.2% and i think the fed cuts 25. i don't we set this a few times now but they say they are not data dependent, the fed. lisa: when you take andrew and neil and you put it together, what i get is this more on the actual unemployment rate -- what i get is focus more on the actual unemployment rate. we are talking about the claudia sahm rule that she has drifted away from as being declarative. we get that sticking. jonathan: i wonder if the economists want to put weight on the household survey versus the establishment survey given the revisions we have seen the last 12 months. this question this morning from a viewer who turned around and said, will be put more weight on the adp report?

i don't whether people would be willing to put 60,000 or 70,000 on whatever the number is friday. lisa: that is what the revisions have done. people look at it as being more instructive than the overall survey even though it purports to not even be predictive of the survey we get on friday. all of this goes to show people doubt the data and this is one of the conundrums the federal reserve faces when they are data dependent. if this will begin different about whether 50 or 25 basis points, that might be revised out of relevance in three months what are we doing? that was sort of the point that neil was making. jonathan: what are we doing? lisa: make summer great again. jonathan: we have plenty of time to talk about this throughout the morning and the week. copper down by 2.3%. huge revision over at goldman sachs led by someone who came out with this call. the call was 15,000.

that was the target for next year. it is now a little north of 10,000. that is a big, big revision. lisa: yes. this is a question of whether it is a massive overhaul of the view more broadly or whether it is a changing of the guards at goldman, revising the overall outlook at a time when maybe the super cycle in commodities is not happening as quickly as people previously believed. china is slowing a lot. the data over the past couple of days confirm that. jonathan: weaker demand. i want to sit on crude for a beat longer. a really important development over the weekend was on the white house x account when they tweeted oil production has hit record highs under our administration. for anyone following this over the last few years, this has been the story. republicans have been able to come out and say oil production is being held back by democrats because democrats have been unwilling to come out and say that is not the case because oil production has been at record highs.

you have to think about why it is quite obvious. progressives are unhappy with some of this. what is interesting about this moment in u.s. politics particularly for the democrats, a key pillar of momentum for kamala harris has been the unwillingness of progressives to pin her down on unpopular issues on the national stage, and it is interesting to me the white house feels confident enough to come out and address this head-on and write oil production has hit record highs under our administration while we also continue to meet our transition to clean energy. will they finally start making the point a lot of people have been asking for a long time? lisa: they shored up the base. where was she this weekend? pittsburgh any trip. they are going after individuals that care about the future of the energy sector, base metals, oil and gas in this country. this is an obvious shift to the center nine weeks ahead of the election. jonathan: a huge shift for the leader of the campaign given her views four or five years ago. lisa: she has the privilege of

catering to the center because she did not have a primary and that is what we are seeing. the question is if it is representative of how she will govern if she is elected. jonathan: certainly how they are campaigning and it is a huge advantage. our top story for you in the fx market, the bank of japan will continue to raise rates based on the economic outlook. about two thirds of economists surveyed by bloomberg say the doj will be hiking again -- boj will be hiking again. lisa: how much momentum is there behind some strength in the yen? how much of an overweight is there still in the dollar have betrayed we saw for the better part of the past two years? that ultimately is what we heard from someone when he was sent by the record purchases of bonds and equities. it is not just an fx trade but an unhedged u.s. trade. is this something poised to be unwound and a little bit of

softness in the dollar? that is what he is looking for. jonathan: how painful might that be for equities? the united states laying the groundwork for new sanctions on government officials in venezuela. the treasury department is set to sanction 15 people affiliated with leader nicolas maduro, accusing them of obstructing the holding of free and fair elections. just compare and contrast where we are now to where we were 12 months ago when there was a real conversation about easing sanctions even further on venezuela and then things started to change a number of months ago. annmarie: part of that had to do with the energy story, making sure you can keep oil and gas prices in check, especially in an election year. this comes after the election authority said maduro had won, but the information set otherwise. doj puts out a press release they actually seized a plane that they said nicolas maduro has been using coming from the united states.

$13 million purchased through a shell company and smuggled. how do you smuggle a plane out of the united states? jonathan: i have the same question. the carrot versus the stick, they tried the carrot and it failed. will they start using the stick more? annmarie: that is what it looks like when they are playing the groundwork for these types of sanctions. carrot did not work. now here comes the stick. sanctions are being rolled out but they are starting to do things like seize jets. jonathan: the latest on cathay pacific airways canceling some flights. the airliner focusing on deformed or degraded few lines for the rolls-royce made engines. no other airline has come forward with similar issues. what do you make of that? lisa: i make this is a story because everyone is looking for problems with planes. how often do we talk about problems with planes since what happened with boeing? is that what we are looking for? how much of the industrial production snafus with rolls-royce and boeing are

related to left over pandemic supply chain issues in the workforce and what happened there? jonathan: let's hope it is isolated to a very specific issue. the latest on retailers looking ahead to the holidays with summer coming to a close. the companies that seem to be winning are amazon and walmart. we already know retailers are planning to promote more this fourth-quarter. welcome to the program. let's talk about back-to-school shopping first of all. how strong have things been over the last couple days? sucharita: the challenge is that the national retail federation a couple months ago predicted that it would be the second highest back-to-school season ever, but the underlying thesis, the underlying story is the numbers are not. when you are the second-highest, that means last year was the highest, this year is down from last year, so that is really not a great thing for the retail industry, and i think it really

is pointing to the shopper is just sick of the levels of inflation and they are pulling back on a lot of things, including the essential goods for their children during the holiday season. jonathan: we all know based on the calendar thanksgiving comes late, the holiday shopping season is shorter. how do they address issues like that? sucharita: promotions. that is really when it comes down to. what you have is more promotions, deeper promotions, promotions across a greater number of items, and you see that consistently over and over again and i expect that to be in big numbers this year. there was a little bit of a reprieve in the 2022 because of supply chain issues and retailers felt they could raise prices without necessarily having to discount as much. but it seems like we are back to those 2018, 2019 promotional levels. you also have amazon coming in with two promotional vehicles

annually, which is a big deal because it is pulling forward things like sales for back-to-school. it is pulling forward shopping for the holiday season because people are shopping in october, not november. lisa: you said something in your notes that really struck me. labor day is not usually a huge weekend except for maybe some back-to-school offers, but most of that shopping is a comcast before september 1. i was thinking about that yesterday when i was in amazon ordering notecards and binders and things i have been negligent about earlier. you are saying everyone is organized and shopping for it, or is everybody on amazon at the last minute trying to get all the supplies you need to provide for your kids heading to their first day of school? sucharita: there are definitely a lot of people shopping on amazon when we see amazon's numbers. that is pretty clear. but there are also a lot of people shopping at the stationery and office supply stores like staples, certainly walmart, target, costco.

they are all beneficiaries of this time period. but when we look at surveys and numbers, people actually do a lot of shopping in august. some people are very organized and get it together in july. the truth is a lot of schools are already open so it does not make sense to be for things like clothing and electronics after the school year has already started. lisa: i have to say the retail earnings were kind of all over the place, and i am wondering what your takeaway was. we were talking about a more discerning consumer and potentially some pushback with respect to inflation. do you get the sense this is one pinpoint on a downward trajectory, or is this the trough that you see with a greater propensity to spend later in the year? sucharita: well, when we look at those numbers being all over the board, really the positive numbers are walmart and amazon. and a number of other retailers have really been challenged this past year. even legal lemon, which had

historically been doing well with double-digit year-over-year growth has experienced single digits. these are sort of continues in the coal mine that the outlook for retail for the rest of 2024 may not be so strong. when will it recover? i think that as interest rates go down, which will likely be through of course the rest of this year, 2025, we may see some rebound, but the truth is that retailers do not have a lot of pricing power right now so they have to be much, much more cautious about how they are charging shoppers, and shoppers are shopping around. they are looking for everything from secondhand goods to bargains wherever they can find them. annmarie: one thing i noticed last week, they already had a halloween and costumes and lights up and it was not even labor day. is that a trend, that these holidays are being brought forward even earlier than usual? sucharita: yeah.

and it may seem like it is earlier than usual but the truth is this is a trend that has been going on for years now. it is not unusual to have the setup of halloween happening as early as late august and certainly definitely through september. retailers are dependent on seasonal items because it drives people into the store and it gets them actually there for a couple of purchases and ultimately especially if you are a mass merchant with lots of categories, you probably had the experience of walking out of the store with hundreds of dollars worth of goods. that ends up being the standard. we will likely see holiday promotions as well probably as early as september. everybody kind of things they are behind if they don't, and certainly with amazon having another prime day deal offer set in october, that is absolutely going to promote for the rest of the industry as well. jonathan: starbucks loves it.

you know that? lisa: you trying to get me excited about this? jonathan: you get excited about that? lisa: about fall and pumpkin drinks? jonathan: yes. lisa: i am not a big pumpkin latte person. i know you are a big halloween person. big. jonathan: really into it. lisa: lots of candy corn. jonathan: let me thank our guest. huge halloween kind of guy. huge, massive. lisa: you should see on his door, massive plastic skeleton kind of hanging down there with glow. jonathan: throwing out candy for kids at the end of october. lisa: you are the kind of person who hands out -- jonathan: that is who i am. lights off, don't come in. lisa: you give them three pennies and a thing of cut fruit. jonathan: yes. barry's some sliced apples -- berries, some sliced apple.

lisa: they are expensive. jonathan: they are good gifts. i did not say i am cheap. lisa: kids, stop running your teeth. jonathan: apples will do that. here is your bloomberg brief. dani: airbnb is lobbying new york to the officials to scale back local regulation that outlaws most of these short-term rentals. in a blog post this morning, airbnb said the regulars and has not stopped the rise in new york city rents. instead, it has left travelers without affordable completion priced out by record high hotel rates. it went into effect nearly a year ago and the city has yet to signal a willingness to a the log goldman sachs last is forecast for copper. the bank had been one of the biggest cheerleaders of the metal but analysts writing chinese demand will delay and expected rally. the previous target set by and analyst was 15,810. fans of oasis are looking back at anchor at ticketmaster with

prices skyrocketing for their hugely anticipated reunion tour. ticketmaster is using dynamic rates. standing tickets were average that 150 pounds initially but rose to 350 pounds after a few hours as fans rushed to the ticketing websites. that is your brief. jonathan: thank you. i know it is relative but relative to the experience of getting tickets, i think oasis fans did all right over the weekend. 350 versus 150. versus stories of thousands and thousands of dollars stateside. lisa: were you able to resell these at 10,000 or 20,000? jonathan: it has to be face value. annmarie: deutsche bank struggling according to the. jonathan: let's get our people right. up next on the program, the fed's next big catalyst. >> you know from a risk management standpoint you have to start pushing rates a little lower gradually over time.

so the direction of travel is what matters for the fed, not necessarily every single data point. jonathan: that conversation up next. you are watching bloomberg tv. ♪

(♪♪) ♪ well i was raised by careful hands ♪ ♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

jonathan: pause. yes. seconds before we come back, i was in the halloween day parade in the village once. ok. how old were you? lisa: 16. jonathan: what did you dress as? lisa: cowgirl. it doesn't matter. jonathan: do you have pictures? i want to see pictures of this. equity futures on the s&p negative by 0.5%. yields up by a single basis point on the 10-year. jp morgan still somewhat

cautious here. sentiment and position indicators look far from attractive. political and geopolitical uncertainty is elevated, and seasonals are more challenging again in september. the latest view from jp morgan. under surveillance this morning, the fed's next big catalyst. >> what you are seeing is mission accomplished on inflation, or something very close to there. and now you are worried about the un-appointment right if that continues to drift higher, you know from a risk management standpoint you have to start pushing rates lower gradually over time. the direction of travel i think is what matters to the fed, not necessarily every sickle data point. jonathan: mark is looking ahead to the friday payrolls data the estimate of our survey sitting at 165,000. the fed cut expected in two weeks. if it officials want to avoid a recession they might as well make a more meaningful cut, 50 basis point or more.

since the initial bank drop for cuts may diminish by the end of the james joins us now for more -- end-of-the-year. james caan joins us now to get do you have inflation picking back up? james: we duplicate we have a couple of things. -- we do. we have a couple of things. base effects. the seasonals are not favorable. we will get back to what i call a post-covid normal 3% to 3.25% inflation rate. we think that is where inflation settles out long-term in the new economy. lisa: you think that is important for the fed to do to keep the rally going, isn't that right? james: i do. one of the things they will have to look at is how much runway they have after the seasonals picked back up in inflation, and this is one of the most interesting times i have seen for the fed because there is such a confluence of different things. i think the real crux of it as

we are in a different economy and the core inflation rate will be more the pre-financial crisis era with the 3% to 3.25%, and the other part of what the fed has to look at as we are not getting help from the fiscal side. we are not likely to get help from the fiscal side in 2025 in terms of deficits. deficits are an inflationary impulse as well. the fed will have to settle in with a longer-term inflation rate higher than 2%. lisa: if the fed does not tacitly acknowledge or verbally acknowledge that they are going to accept an inflation rate above 2%, does not indicate to you they will be linked to the game and not cut rates enough? james: i think it means they will have to have a terminal rate higher than the market wants. the market has been cheerleading for fed cuts back to the end of last year. i think we had eight priced in as we started 2024. our base scenario has us with a 3% to 3.5% handle the suggestion that the fed is going to change

and cut in september is likely, but the extrapolation into a real aggressive sort of back to the post financial crisis normal of ultralow rates i do not think is in the offing at all. jonathan: how easy do think it will be to get the committee together and pointing in one direction when they come together i think september 17 before the decision on the 18th? james: what is interesting about the jay powell fed is there has always been a unanimous vote. i don't like that i would like to see dissent and the actual 8-4 or whatnot, but he will have to get consensus. the likelihood he can coalesce is not likely but that would be the preferred policy response at least at this point. jonathan: this is pure scenario analysis of course but how do you think the market would trade on dissent given that we are used to anything but? james: i think it would be a unique thing for this federal reserve, but it is still historic.

we have more give-and-take and more insight into some of the disparate comments within the fed. what we see instead in some of the fed speak after the meeting and surrogates, ex fed governors, doing the heavy lifting. powell is a consensus type of chairman, and i think we will see that again september 18. lisa: real quick here, how much are you betting on a steepening curve that the fed will cut rates and that will allow long-end yields to climb? james: i think that is exactly where we are going to get we are back to where we ended last year in terms of the 10 year yield. i think 10 years are overbought here. i think the inflationary backdrop be suggestive of a more positive yield curve and that may be ok. that may be helpful for the banking system and some of the funding mechanisms of the deficit, but i expect at some point when you have twos to tens

close to an inverted here. think we will see slope in the yield curve again. jonathan: only a basis point or two in it right now. thank you. with an interesting view on the end of this year, q4 inflation picking back up. lisa: yeah. this is something other people have talked about getting the interesting aspect of the view is that does not mean the fed should cut rates or cut rates significantly but the fed has to come out and say we are in a more inflationary world but we cannot torpedo the labor market as a result of the snow inflation. we just have to accept it. and that is new. jonathan: the third hour of "bloomberg surveillance" coming up. matthew of morningstar, ey, and northwestern mutual. from new york that is all coming up next. this is bloomberg. ♪

♪♪ ♪♪ ♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals [introspective music] recipes. recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪ (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place.

you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com ryan t. writes, "moving is stressful. investment objectives, can you help me take one thing off of my to do list?” ugh, moving's the worst. with xfinity, you can transfer your internet in just a few taps. just a few easy moves. did somebody say “easy moves”? ♪ ♪ oh no. no, i was talking about moving your internet.

this will move the internet. ♪ ♪ ooh, ooh. -let's keep it professional. professional dancers! -ok! stay connected during your move with the best in home wifi. easily transfer your services in the xfinity app. bring on the good stuff. on your schedule. leaffilter is a permanent gutter solution, so you never have to worry about costly damage from clogged gutters again. call us today and schedule your free inspection. to schedule your free inspection, call 833.leaf.filter today or visit leaffilter.com.

>> we got at an inflection point and it becomes difficult to know , are you moderating to a soft landing or are you moderating and slowing down sharply? >> we are expecting to see more softening in the labor market. >> on average, the consumers are fun but there are pockets of

weakness. the fed has to be attentive to that. >> the consumer is looking for value because they don't have the stimulus dollars they did a couple years ago. >> was on the horizon is the risk that inflation blips again. >> you are watching "bloomberg surveillance." jonathan: welcome to september. live from new york city, welcome to the third hour of "bloomberg surveillance." good morning to you all. let's begin with the scores on the s&p 500 negative by 0.5%. pulling back and just chipping away at a three-week winning streak on the s&p 500. on the nasdaq 100, down by 0.7%. the russell down by 0.9%. 10 a.m. eastern time, the ism manufacturing. we will get jobs throughout the week, jobless claims, adp report , august jobs report. i think pretty much everything comes this week. lisa: and it comes with this

drumbeat of a question, are we seeing true weakness in the economy or is this a strong economy that can afford a soft cutting cycle from the federal reserve? this is the key question. it is no longer about inflation. it is bad news bad news for the labor market that can really rectify some of the questions that came from the last month labor report? jonathan: what is bad news? back relative to expectations or the trend? we are looking for 165,000. it does not sound too bad. lisa: it doesn't but it is lower than the trend. the revision is 60,000 or 70,000 lower when you look back on it. at what point are we looking at the actual headline number? how much are we looking at the un-employment rate? the idea of, what kind of slack do we have in the economy? how many people are exiting the labor market? what number is good or bad if you have an employment base increasing to the degree it is? jonathan: looking for a 50 basis

point cut on september 18, and the difference between going 50 and 25 israel put 1% on on the plane and. if we stay at 4.3%, the team at citi believe they go 50. if we go down to 4.2%, they go 25. lisa: ultimately it goes down to messaging. how can the fed justify that rate cut unless they see weakness? if that scenario bears out, could that be good news for the market? it is not that big of a difference but the fed will be much more accommodative as a result i guess i am wondering and he is along that call. annmarie: if powell wants consensus, how much easier is it when you have raphael bostic over the weekend saying he is focused on getting inflation down to 2%? how much easier is it to get someone like him on board to 25 as opposed to 50 150 will look political? jonathan: on wall street we are talking about the destination.

i think the conversation we had on this program repeatedly is the fed's oxide by as much as 100 basis and maybe even more. and the federal reserve, i still hear them talking about the journey, methodical, gradual. we hear those words on repeat the last few weeks. lisa: that indicates they want to move slowly, 25, 25, 25. ultimately when we take a step back, i find it interesting we talked about the destination, gradual, methodical. to what? that is why james camp was interesting. inflation will be higher, the fed will have higher terminal rate. they will not address this because they have no agreement and no advantage to addressing it but they are all saying maybe around 3%. is it substantially higher than that if they start cutting this year? jonathan: the opening bell and about one hour and 26 minutes. advancing for four consecutive months in equities and bonds begin yields dropping other

two-year by more than 30 basis point, dropping a little less on the 10 year maturity but pulling back nevertheless. 3.9092 on the 10. in the fx market, the euro against the dollar 1.1037. coming up this hour, stocks hover near all-time highs. matthew of morningstar as directv customers are left in the dark over a disney dispute. and gregory of ey online he sees soccer economic activity -- on why he sees softer economic activity to the end of the year. kevin of charles schwab seeing basis point cut saying while the fed has made a shift in its risk management practices with labor now more important than inflation, it is hard to find crisis like data that warrant aggressive rate cuts

right now. max kettner came out over the last few days and said high-frequency data have improved. we remain overweight equities. is that sufficient reason to stay long and strong in this equity market? kevin: i think it is especially as much as the discussion has been this morning if it will be this slow and more methodical cutting cycle from the fed. historically, that tends to be more beneficial for the stock market were something more aggressive and a fast cutting cycle. it is probably somewhat obvious but if it is the latter case, it is because the fed is reacting to worst economic data or some kind of financial economic crisis that has been brewing. it is why a lot of our message regarding the cutting cycle when it eventually starts is that you want to be careful what you wish for if you are going for some thing more aggressive and if the fed has to start going by 50 at every single meeting. i think there are some unique aspects of the cycle were maybe that could be warranted given how tight policy is now and

given some of the softening trends in labor, but if everything is holding up relatively well, if you get a nice package of data this week which is looking to soothe what was so weak a month ago for this exact package of data we are getting, whether it is ism related or payroll related, i think that sort of keeps the fed in a camp that is more sympathetic to something a little slower and a little less aggressive. jonathan: you noted repeatedly the volatile shifts in leadership over the last few months. would you expect that volatility to continue or would you expect to see some durable leadership trends in the months to come? kevin: i think the volatility, it is basically looking like a reversal from what has happened and what has been the case for most of this year up until the mid july peak. we have been calling at the michael caine duck market is looking calm on the surface but paddling underneath because everything up the spectrum that was dominated by big tech and to

some extent munication services, that was keeping the indexes afloat while you have volatility and churn underneath the surface. you had significant drawdown activity from the average stock now that is starting to reversal it is tougher for the indexes like the nasdaq 100 to regain their all-time highs but you have the s&p 500 surpassing its all-time high and equal weighted financials at an all-time high. equal weighted tech struggling for an all-time high. i think it has been more interesting to look at the characteristics in the -- and the nature of the leadership ship. i think that is a healthy thing for the market but may not look as good of the spectrum and you may be to some extent pulled back a little bit or cap in terms of gains for the headline index level. gains for the index like the s&p 500 still look relatively great year-to-date but it will be a little bit harder if you don't get the mega caps names that are consuming. but down the spectrum, you have

more improvement with 80% trading above the 200 and moving average. you have more than two thirds of members outperforming the index over the past month, so i think it has been a relatively healthy improvement even though leadership shifts happen volatile and we continue to expect them to be volatile. lisa: that said, a lot of the shifts we are seeing in the duck market, and a lot of that has come with the belief in a soft landing, the belief the economy is generally moving to recovery even if you see some consumer pushback in certain sectors. what would you have to see in the labor market either on friday or beyond to really challenge the rotation into cyclicals that you are supporting? kevin: i think you need to see more of a definitive move higher in the unappointed rate, which you could argue that has been the case but for many reasons we have discussed, whether it is the triggering of the sahm rule or the on employment rates itself, a lot it has become

because of the expansion of the labor supply. immigration this time has played a particular role in that. you have not seen layoffs and other layoff like data whether claims or job cut announcements operate what has happened with the other planet rate so i don't think it is something we should ignore, but i think if you got something more definitive in terms of layoff increases plus a more much breakdown in payroll growth itself, especially in the noncyclical sectors that happen holding up payroll growth pretty much for this entire post-pandemic cycle, that would probably challenge it more and spin you into a more so-called traditional session every environment. the whole discussion about a soft landing, it is more nuanced than a soft landing or not but if you will use that term, much of the discussion you are having this morning about destination versus journey as it pertains to the fed, i view it the same with a soft landing. we are living in now if you think about the past and inflation we have had, the progress we have made on the

disinflationary front. yes, you have had rolling weakness and rolling recessions up to the surface in different sectors at different times, but that is a better way to go through a recession rather than everything falling out and the bottom calling out all at once. our base case is still that you get that kind of behavior and it just transitions out of certain sectors. you could argue we are transitioning out of the recessionary activity for manufacturing and housing but it is taking a little longer. as the fed starts to alleviate pressure from the rates and bring restrictive policy back a little bit, that probably helps those sectors. you still have relatively offsetting strength from services and labor so that is my shifts so much focus to the labor market and rightfully so but i think as long as you are continuing that dynamic, you sort of stay in a relatively healthy territory in aggregate for the economy. lisa: this seems to be the consensus. i was reading a lot of notes over the weekend that largely

agree with that view, that there is a rolling covering and this is the soft landing and what it feels like. and then it was a therapy session saying september tends to be a bad month. get prepared. it has been for the past four years in the stock market, seven years in the bond market. close your eyes. after that, there should be calmer times and maybe a buying opportunity. is that the composition you have been having with clients? kevin: september, yes, there tends to be some surprises. in particular, this quarter, this part of the year we are entering, you are entering at least from the u.s. equity perspective in a position of relative strength. i mentioned 80% of members trading above the 200 and moving average in the s&p, and i think this improvement you have seen under the surface of the markets, that is a better place to be than where we were a couple months ago where in june you got to a much weaker standpoint in the market where significant deterioration was under the surface and there were

so few members outperforming the index. you had the large caps holding every thing together. now we have reversed the dynamic and i think it is a better set up but that does not mean you cannot have surprises along the way whether it is geopolitical or domestic politics related. the overarching theme and what was important about the drawdown we had a month ago and the volatility we had was longer-term breath was basically unfazed. that is a much more important story. the fact that most of the weakness was concentrated in a couple of sectors, really just tech and communication services. if you look at the rest of the market, you were not getting the recession like signal. a lot of the behavior from individual sectors, individual industries becomes a lot more important, specially as we start to approach the coming cycle and we start to approach data that starts to look recessionary on the surface but warrants a much deeper look under the hood. jonathan: love catching up. thank you, sir. does not feel like an up 20% on

the year in the s&p. it felt that way for big tech but it does not feel that way at all in 2024. lisa: because people have been trying whole way up and saying something has been wrong and nobody can coalesce around a narrative, so is this what a soft landing like? unsatisfying rallies and unsatisfying goodness that people cannot accept? jonathan: you have to remember where we were in 2023 as well. that spring, the cycle is over. banking sector was starting to crack. the fed would have to cut. it has been very difficult to read everything post-pandemic over the last few years. lisa: which is a reason why people do not trust the data they don't have a good sense of confidence around the soft landing not to mention that the fed does not have a good track record of achieving soft landings, but there is a feeling of a lack of confidence. what is the next shoe to drop? jonathan: let's get you an update on stories elsewhere this morning with your bloomberg brief with dani burger. dani: do says it intends to

pursue a $4 billion damages claim in london against the state of the late british tycoon mike lynch. it is now waiting for a ruling on just how much is owed. lynch and his daughter were among those killed late last month and a severe storm. almost all of this goodwill flights canceled from hong kong to singapore and inspecting the engines on the planes. engineers are ticking for deformed or degraded fuel lines on the rolls-royce made engines. the failure forced the return of a fight from hong kong to zurich monday night. the airline as it already found some component failures across a number of engines. volkswagen shares are trading higher on the day, about 1.3%. the company is considering unprecedented factory closures in germany. profit margins are getting squeezed in the ev transition and in consumer slowdown.

any shutdowns in germany would be the first in the company's 87 year history. that is your bloomberg brief. jonathan: thank you. there was something like six of the thousand workers at that company and around 300,000 work in germany. that is a big headline to read the last two days. lisa: especially because it is not alone and will not be the last one. it is overcapacity in a region where auto sales have come down and this is the main industry being buffeted by everything and frankly that had been holding the german economy. jonathan: germany is not in a good place. up next, morning calls and we will catch up with matt from morningstar as directv viewers are cut off after a dispute with disney. that conversation up next. you are watching bloomberg tv. ♪

why do couples a sleep number smart bed? i need help with her snoring. sleep number does that. thank you. during our biggest sale of the year, save 50% on the sleep number limited edition smart bed shop now at a sleep number store near you.

think scaling your ai pilots is hard? think again. with watsonx, you can deploy ai across any environment. above the clouds and on lots of clouds. with your secured data on prem, in real time on center court and assisting bank tellers on the edge. watsonx helps you deploy ai wherever you need it. so you can take your business wherever it needs to go. ibm. let's create. jonathan: the opening bell one

hour and 12 minutes away. equity futures negative by 0.5%, pulling back just a touch, and bond market yields higher by almost a basis point. let's take the opportunity to get you some morning calls. isi upgrading southwest to outperform with a $35 price target. citing new revenue initiatives said to be outlined in the company's investor day on september 26. the second call from morgan stanley lowering the price target on alphabet to 190 from 205. the analyst weighing potential fallout after a judge ruled the company illegally monopolized the search market. finally, wells fargo downgrading boeing to underweight with a street low price target of 119. the key fresh flow -- offsetting production growth. down by almost 3.8% in early trading. that is what to watch in the

opening bell. directv customers losing access to abc and espn after the pay-tv service and business failed to come to terms on a new contract. matt morningstar maintains a buy rating on disney, expecting it to be resolved by the weekend, writing disney is in the stronger position as it can more easily withstand the loss of directv than directv can withstand the family of disney networks. matt joins us now for more. not the first time we have seen this. we typically see this around this time of the year. what is different about it time around? matthew: well, there is not too much different in this one. as you said, we see this pretty frequently. it seems to follow the same playbook. eventually, these things get resolved. the thing that is becoming different is that with streaming the cable bundle is going to change, so although this one may not look different from the past ones and we expect it to get resolved in the same way, we

think coming up soon there will be a bigger change to the packages the distributors, cable companies of the world get and are allowed to put out there. this might not be the one where we see the big change but we think that is coming. jonathan: let's talk about the market. what with the change look like in practice in years to come? matthew: right now, what directv is looking for is the ability to offer a skinnier bundles, basically not having to put in in this case all of the disney family of channels into their streaming packages so they can offer their customers the packages for a lower price. the network providers like disney have been resistant to that because the business model for these companies has been to get people forced essentially subscribe to all of your networks and that is the best way forward. the thing that will be different however is with streaming there are becoming other ways to see

this content other than through a pay-tv package. and that is next you're going to be even more and probably the greatest extent once espn -- the linear flagship service, the people watching only on tv right now, becomes offered to consumers also. that is the biggest thing going on with directv. the other thing that we think is a good way forward is what we have seen charter do, the cable company. they did it with disney last year and subsequently did it with paramount where they are offering a similar type of bundle, but their subscribers get the stream packages of these companies along with their cable subscriptions or pay-tv subscriptions. those are a couple of ways we think the changes will come. we expect them to happen not necessarily in this deal and not quickly. lisa: can you zoom out and give us a sense of where this

dispute, which is a couple years running now, sits in the overall shift away from cable to what purportedly should be the new future, which is we don't know what, maybe another bundle that looks a little different but something that excludes the cable companies? matthew: yeah. we think another bundle is the way to go the question is, who is it that offers it? is it the traditional pay-tv companies or the streaming companies themselves? we think the cable companies and the pay-tv distributor's are the best to do it, but as far as why it is happening, that is the point. the companies that rely on pay-tv, so that cable companies, directv. their businesses are shrinking drastically as we see more cord cutting, and they need to be able to do something different. one of the reasons we think directv is not necessarily the company that will be able to cause the biggest change is because it has less leverage in part because it relies on pay-tv

a lot more, so it is in a bad position. like the rest, the subscriber base is coming out very much and there is nothing these companies can do about it because consumers have the ability to go through streaming and prefer it in many cases. the difference with the cable companies versus directv is they rely much more on broadband revenue than pay-tv revenue, certainly for profits. and they also have bigger businesses, certainly with comcast. so they would have better bargaining power to drive that change, but ultimately what is happening is pay-tv as we knew it or cable subscriptions as we knew them -- from any they have gone away. they are changing very much. this is what this will ultimately be about this cannot be the same thing year after year where each side is trying to get the best rates for themselves in an industry that goes on. this industry is different now

and will be much more different in the future. the business model has to adjust for both sides we think, so that is what will happen, even if we don't think this deal that we expect be resolved most likely by the time that season starts which is what we often see, might not be the one to drive the major change. we expect probably be getting more in 2025 when espn becomes available for subscribers through streaming. jonathan: and then we will do it all over again and again and again. thank you. this industry keeps going around and around and we are heading back to where we started. lisa: i wonder how long before cable news channels do not have sports anymore because they are getting too expensive and at some point they will be streaming channels and proper channels and not actually offering content. jonathan: one site has leverage and the other side doesn't. disney has the leverage here. lisa: it is a content provider at a time when people want their sports. people like yourself just

subscribe somewhere else. jonathan: wouldn't you do that immediately? lisa: that is exactly. the barrier to entry is lower because you can get it on roku are your computer or wherever. jonathan: just move on and get your sportswear you can get it. coming up, a guest from ey. futures negative by half of 1%. your opening bell is about one hour and 44 minutes away. -- one hour and four minutes away. ♪

hi, i'm jason. i've lost 228 pounds on golo. so when my doctor told me i needed weight loss surgery, i knew i had to make a change. golo's helped me transition to a healthier, sustainable lifestyle. i'm so surprised just how crazy my metabolism has fired up. i have a trust in golo 'cause i know it works. golo isn't like every other program out there, and i'm living proof of it. (announcer) change your life at golo.com. that's golo.com.

jonathan: 60 minutes away from the opening bell. equity futures on the s&p negative by 0.5%. on the nasdaq 100, down by six. down by almost one full percentage point now on the russell 2000 futures. the two-year, 3.9332. after declining for four consecutive months, the longest such streak going back to the early 2020's. lisa: november 2021. the reason people are embracing this idea is the fed opened up the door to it. you said you should have a drinking game every time this a gradual or methodical, and then you pointed out you should have a drinking game every time fed chair jay powell speaks because that is essentially what the market has done and essentially what you are seeing. is this the hangover?

jonathan: we would be very drunk through the month of august for sure if you played the drinking game. let's finish on foreign exchange and talk about the other side of the trade so to speak. the dollar-yen, stronger japanese yen such of those but still stronger. and i could presented to the government reiterating the stance that they are set to raise interest rates once again. if the economy evolves the way they expect. lisa: this goes to and anxiety people have we talk about u.s. exceptionalism almost in isolation, exceptionally badism, and people are wondering if you will see the trade unwind and what that could look like. you talk about currency and through asset prices. if the u.s. is not the only game in town and japan is doing better and you are seeing the equities rebound a bit, what is to say people in japan will not bring all the money home? they are some of the biggest buyers of u.s. assets so this is the fear we are seeing underpin

the u.s. dollar. the opening salvo to a bigger story. jonathan: you so much stephen. is that how far you are taking this? lisa: i am not taking it there but some people are. jonathan: an avalanche of money and attempts and appreciation. lisa: there is a few out there. i am not think it is legitimate, but there is something to this idea there has been a lopsided trade to u.s. assets. jonathan: we talked about it week together. acumen needed a big long position at dollar assets over the last few years. vice president kamala harris joining president biden in declaring u.s. steel should remain american own. harris telling a union happy -- union happy crowd that she will have the backs of the steelworkers. there is no daylight between the two parties ultimately. lisa: both candidates saying it should remain in american hands, and investors were asking about this when you ago. nothing will happen regarding this deal until after the u.s.

election. if it goes through, whatever candidate becomes president will say regulators have to go through it and it is on them, but from an american standpoint for both of these individuals vying for the white house, you cannot go to steelworkers or pennsylvania and so you want this deal to go through, but for kamala harris it is important because she brought joe biden along and is trying to get blue-collar workers, the idea of the scranton joe voter on her side. lisa: doesn't see much the politicians will oppose it and then approve it after the election? jonathan: is that what you are expecting? lisa: essentially people are saying this is not a viable company without some sort of infusion. who else is going to do it? annmarie: what they will do is put their hands up and say regulators allow it, we will not get involved. lisa: so yes. annmarie: it won't bite either

one of them depending on who gets into the white house. jonathan: we have seen union chiefs line up. union workers, are they doing the same thing? annmarie: not all of them. since 2016, trump has been pulling away at rank-and-file voters, which is why you see kamala harris in places like beaver county can most in pennsylvania a county that 60% went to donald trump. he has been able to get in the rank-and-file voters. that is why pennsylvania is so crucial. josh shapiro says he sees it as a statistical tie which is why harris continues to go to places like pittsburgh. jonathan: let's keep you the latest on the smartphone wars. huawei preparing to launch a new phone on september 10, just hours after apple unveils its latest apple lineup are getting wobbly is expected to announce the first commercial ready smartphone that folds not once but twice. do i need it to fold at all? do i?

lisa: i love this story. our phone does not fall once, it. -- it. i's -- it folds twice. you can throw things at it, drop it. there is this argument about where screen space. we are now talk about folding instead of ai. jonathan: the state of innovation, we are going back to hardware and software. i thought this would be the moment for ai. lisa: didn't apple went on hardware, i'm making a beautiful, nice, cool? is that the huawei game plan at a time where it is hard to get an edge in the ai wars that are heating up quickly? annmarie: going hours after apple, this idea of nationalism and pride, a national giant when it comes to a smartphone maker in china. jonathan: elsewhere, markets kicking off a short-term treated week. investors looking ahead to the

august payrolls report sent to confirm or deny a september rate cut. ey remaining in the cut camp expecting a move in two weeks that will kick off 75 basis points total for the year. welcome to the program. good to see you. >> thank you. jonathan: what kind of number would stop them from cutting next month? gregory: if there were signs of accelerating and we are seeing a labor market that is strong, perhaps, but i think right now it is really a done deal in terms of the rate cut the question is the magnitude and speed of cuts going forward. jonathan: 25 versus 50. we had a few guests on the program and say something like 100,000, 125,000 would nudge that 250. where are you on that debate? gregory: i do think we have to have a payroll report that is as strong potentially as 100,000 to have basis points. i think the 50 basis point rate

cut will be dependent on an environment that is much weaker than what we are seeing right now. the fed does not want to be appearing as recalibrating monetary policy rapidly in an environment where the economy is still relatively strong. if the economy is moving at a pace of about 2%, which i think is the underlying pace of the economy right now, that is not a reason to start panicking and cutting rates very rapidly. it is a time to start recalibrating monetary policy, avoiding monetary policy being excessively restrictive, but let's not move from an inflation obsession to unemployment obsession, which is what i fear. lisa: that is what i wanted to go. if you put markets on a couch, i am serious, everyone is looking for a looking man, looking for the next shoe to drop, and why they are missing a hard landing. that is the vibe you are getting right now. you explain that? gregory: it is important to never get the nuances in terms of the economy today.

you have to focus on the broad trends across different sectors of the economy. what we are seeing now is an environment where we have real disposable income growth that is quite moderate, around 1%. gdi was also on the softer side, 1.3% growth on an annual basis in the second quarter. the income side of the economy is what has me most concerned. it is not a reason to panic but a reason to understand why consumers are going to be more prudent going forward. look at the saving rate. 2.9%, the lowest since 2022. the resources consumers have to spend are more diminished than they were a year ago, so you will see a little more caution, more judicious spending patterns from consumers, especially at the lower end of the income spectrum. that is going to lead to a slowdown in economic activity, but right now we are not seeing any signs of a retrenchment in terms of economic activity because the labor market is still holding up, and business leaders we speak to are not talking about massive layoffs. they are talking about being

more prudent in terms of their hiring and investment decisions in an environment where cost fatigue and high interest rates are still part of the picture. lisa: is there ahistorical analog that you can look at where the fed tried to get ahead of a downturn and failed? gregory: there are a number of occasions in the past where the fed has been linked to the game, as recently as tightening in the face of inflation was more persistent and expected back in 2021 and 2022, or if you go back to them prior chrysostom of the financial crisis in 2007, 2008, where the fed was late to ease monetary policy. there are a number of instances where you can point to the fed being late to recalibrate monetary policy. but i would point to just before the covid crisis. back in 2019, the fed said it was on autopilot with regards to the management of its balance sheet. then it recalibrated by implement in three consecutive 25 basis point rate cuts.

i think right now what the fed needs to communicate now that it has comedic entered its views on the state of the economy and monetary policy being slightly too restrictive, it needs to focus on the destination of travel because that will determine the journey. the pace at which it eases and recalibrate monetary policy. we do not need to slashed rates to zero. we just need to have monetary policy go from restrictive to neutral given the underlying state of the economy. jonathan: let's put some numbers on that. what is neutral? gregory: neutral is closer to 3%, but that is neutral today. knows what neutral will be in a few months time? how rapidly do things shift? if we are in an environment where we look at the last year and consider the last year, last year we were talking about the last inflation while being the most difficult. look at the conversation today. it is not about inflation anymore. we are within striking distance of the fed 2% target. one concern i have is fed policy

makers are too concerned about getting right back to that target. we are within 50 basis points of the 2% target. do you want to fight the fight to get back to 2% or do tolerate some bad around the 2% target and allow the recalibration of monetary policy given the underlying demand and underlying labor market trends are softening? jonathan: can you point to some fed officials that have given you that impression? gregory: for apparel in terms of his jackson hole statement. we do not seek further weakness in the unappointed market. we do not consider this environment an environment where we need to panic but we need to respond adequately to inflation risks, risks to the outlook. it is the type of communication we need to have. you mentioned this before i came on. problem is not all policymakers are on the same page. you are still talking a lot about gradualism being methodical. the drinking game is one that worries me quite a bit because we are in this environment where perhaps you may need to

accelerate the pace of easing. let's pay attention to the outlook. annmarie: when you look at the destination, everyone is talking about the end of the year. how does the fed look at the destination for next year when policies may be very drastic depending on who gets into the white house? i am thinking about tariffs and what that means for inflation. the fed could turn around next year and start hiking again. gregory: right now the fed is behind the curve when it comes to current economic conditions begin i think it should have been easing. we talked in the past about my perspective that the fed should have been easing from early this summer, not september. but earlier in may, june, maybe even july in terms of starting to recalibrate monetary policy. that is just catching up to the current conditions of today. i am not talking about the next three or six months. i am talking about today's economic conditions. when you talk about next year, that is another step

essentially, the fed is two steps behind when it talks about calibrating monetary policy to tomorrow's economic activity. you are absolutely right, there could be a lot of uncertainty in terms of the direction of travel of inflation in tomorrow's economy where you could have more tariffs, where you could have an environment of greater influence on the fed, where there are restrictions on immigration that could lift inflationary pressures due to under supply the labor front. those are all conditions that could materialize, but that is the unknown. the fed does not want to bank on any unknowns at this point. it wants to bank on the known unknowns. jonathan: this was smart. great to catch up. we are about 45 minutes away from the opening bell. futures are negative by 0.5%. to continue the conversation, joining us now is a guest from northwest mutual. let's extend this conversation. how off-site is this federal reserve? >> i am not for sure they are all sides yet. they see signs of labor market

weakness and i think the signs have been more pronounced the last six months so i don't think they will sit around and continue to wait and say we do not see it. because it is actually happening underneath the surface. i don't think they go fast and hard until they see sharp deterioration. one of the nightmares they have is they cut too early and they have to hike later, which could hurt people's inflation expectations because people may believe the fed does not fight infection any longer and that is where i think a lot of them are concerned in that scenario. lisa: let's just go there because it seems like the tone of the discussion, this is a one-mandate fed at this point, about the unemployment rate, not about inflation to revive. how much are you adjusting your positioning around the idea there is more upside risk and inflation right now then currently is being given credence in the markets? brent: it is something we are certainly discussing. i am not sure inflation is dead.

it has come down. last october, november, you saw inflation at similar levels to today. the fed expressed optimism and then financial markets ripped and you saw inflation come back. to me at the end of an economic cycle, the economy is highly sensitive to changes in demand expectations, and that is where i worry that the fed right now will potentially spark another inflation bout because there are things happening like the market going higher, people being overweight equities and that could bring inflation back later in the cycle year. lisa: we talked about putting the market on the couch and analyzing where the anxiety was coming from. you talk about how essential a ending is the soft landing and that is what people are hoping for, but you believe there is still another twist that is hanging out there. is that higher inflation, what you are expecting? brent: i think it is more likely

we have a recession. if you look at the labor market, right now it has fallen by zero point and percent on the undiplomatic. i know that nonfarm payrolls took a hit. you have seen the labor market we can -- weaken. i still think there is a probability you get that recession would certainly the market is not priced for. people are incredibly optimistic. something people have forgotten about his it is at its third highest level ever. to get another higher number you have to go to 1929. lots of warning signs and reasons to be cautious. most people are not right now and that is my big fear. jonathan: let's have a conversation about capital allocation decisions. how does that influence your thought on small versus large caps and when clients ask questions like i have this big position in big tech, how defensible that behave in the

downturn? what kind of thoughts are you coming down to with the team? brent: these are things that are not obvious to people because they are more economically sensitive but they have been price that way. in three to five or chance of valuation, it tends to have a better probability of providing positive returns or outcomes in that time period. they have priced in more of an economic recession. i don't think i can time the downside and get back on the upside so we are overweight they are within the context of being underweight equities as a whole and be more allocated to fixed income, which the fed will be able to cut aggressively to find the neutral rate if and when they see the actual recession. fixed income right now, and that is where we position our portfolios. jonathan: you believe the risk reward is more in mid-cap. brent: be on the next one to two

months to potentially a couple quarters, yes, long-term valuation tends to win. in this economic cycle, people shrug off valuation like in 2000. this has so many echoes of that to me. jonathan: appreciate the update. thank you. on small versus large and where we are in the markets. lisa: he is more heavily weighted to fixed income even though he things people do not necessarily appreciate the inflation risks out there. the idea that if the fed waits long enough, they can cut significantly at the same time that you see some of the more over expensive areas of the market lag behind. jonathan: who else is getting therapy this morning? offering? lisa: offering lots of therapy. you can find me. jonathan: take a seat. lisa: come on, it is true. there is another wrinkle to this story. it is true. what is it? jonathan: let's get you in a bid

on stories elsewhere with european bring brief. dani: elon musk's starlink has reportedly informed resume's telecom regulator it will not comply with the order to block x until local echoes are unfrozen. false information about the electronic system. musk has threatened to sees brazilian assets. center dot securities and jane street are on track for record annual revenue halls. the tw market-making behemothso are eating into them bank trading share. it was a rise jane street according to people familiar. 18% in equity trading revenue -- 18% jump in equity trading revenue. adrienne doing stepping down from rebel after helping create

a car that is dominant on the grid. aston martin's billionaire owner told bloomberg he is pulling out all the stops to try to sign him. >> he is clearly the most talented and gifted individual in formula one based on his track record and history in addition to being a hell of a gentleman so i would be very excited for him to join our team. dani: he is in high demand and has yet to announce his next move. that is your brief. jonathan: in venice, quite a life. thank you. i think we should mention this. ferrari, first time since 2019. lisa: we should mention this. really? jonathan: i have not posted on x and months. make that happen over the weekend. compelled to tweet. lisa: can you listen to anything anybody is saying when they have that backdrop other than fantasize what their life is like? beautiful backdrop. jonathan: up next, we will set

you up for the week ahead. a quiet life. we will catch up with michael mckee in just a moment. you are watching on bloomberg tv. ♪

jonathan: the latest this morning, 37 minutes away from the cash open. equity futures right now negative by 0.5%. looking at the bond market, yields lower by two basis points. the 10 year, 3.8824. the week ahead, your calendar shaping up as follows. 9:45 eastern, s&p global manufacturing pmi. the big one at 10:00, ism data. tomorrow, jobs and durable goods. thursday, adp employment data. another round of claims and ism services.

the main event on friday is the august payrolls report. mike mckee with us around the table. good morning. what are you looking for on friday? michael: friday is the day and we are looking to see if the forecasts are correct that we get a rebound in job growth somewhere in the 160,000 range and we see under claimant fall a tick. if that happens, people will feel better. the on-the-job support the most important thing that will happen this week is 11:00 friday morning. fed governor chris mahler speaks. john williams is giving some introductory remarks, but chris will probably set the tone for how people trade going into the fed meeting. you are getting a reaction from the guy at the fed everyone pays attention to. that is what i would watch for. lisa: if the fed does cut by 50 basis points because of a small difference in the headline jobs number or the unemployment rate, how can they argue they are not data point dependent? michael: well, according to jay

powell, they are not data point dependent, they are data dependent. the totality of the data.they would look at other numbers. remember, we get a cpi report next week that comes before the fed meeting so they would have something else to hang whatever they do on. but they have to get you to that point. what is interesting as this week i was talking to somebody here who was out last week and said i don't know if i am behind or not. nothing has happened in the economy and nothing is going to happen until friday's jobs report. because we have all these numbers that we think are important this week. but every one of them will be, here is the number, let's talk about how it affects friday, and thinking about friday. it is a little bit like all the political stuff will be about let's talk about how it affects the debate coming up next week. everybody has a lot to wait for. annmarie: marlo talked about the fact that 50 would look political. how bad does the number need to be for it to not look political?

michael: i think they will really about that. the issue will be more of what lisa was talking about, the idea that people get scared that there is something wrong with the economy. greg was making the same point. you don't want to go too far out without having something to point to to say this is why we did it. there is enough people who are probably against it at the point that they don't unless we get a surprise on friday. jonathan: very small window for fed speak. thank you. coming up tomorrow, blackrock and a ceo. looking forward to all of that. from new york city, thank you for choosing bloomberg tv, and welcome back from a long weekend stateside. this was "bloomberg surveillance ." ♪

[introspective music] recipes. recipes that are more than their ingredients. ♪ [smoke alarm] recipes written by hand and lost to time... can now be analyzed and restored using the power of dell ai. preserving memories and helping to write new ones. ♪

matt: futures pointed down but we are 20 points away from an all-time high. if that turns around it would be very interesting. katie: "bloomberg open interest" starts right now. ♪ sonali: bracing for september swings. investors looking at key economic data for clues on the fed's rate path. matt: kamala harris joints joe biden saying the company should remain domestically owned and operated. katie: citadel and jane street on record for record revenue halls as they further encroach on the big banks. let's look at where markets are trading 30 minutes until the bell.