>> there is a lot of opportunity for those who want to do their homework and look in the equity market. >> there are opportunities in things that are not so obvious. >> the income side of the economy is what has me concerned. it is not a reason to panic but a reason to understand why consumers will be more prudent. >> the outlook for retail may not be so strong. >> service activity, more improvement and that is healthy for the market. capex -- announcer: this is "bloomberg surveillance" with jonathan ferro, annmarie hordern and lisa abramowicz. jonathan: good morning. your trading day starts right now for our audience worldwide, this is "bloomberg surveillance" and your scores are shaping up as follows. on the s&p down by 0.3%. on the nasdaq, down by 0.4%.

coming into wednesday attempting to shake off an ugly start to september following the biggest one-day loss since the early august route. the name to watch this morning in premarket is nvidia, trading softer down by 0.8%. it had its worst day since april, down by just short of 10% in yesterday's session, a loss of almost $280 billion in market cap, the biggest loss ever in the history of this market, bigger than chevron, pepsi, mcdonald's and wells fargo and almost the size of netflix. getting worse this morning. dani: things are getting worse. the stock was dealt another blow from bloomberg's reporting about the doj. first they sent questionnaires to companies like nvidia and now they are sending legally binding requests, a.k.a., subpoenas, another step to launching a formal complaint.

when you look at the market share of nvidia and how much it controls, it is about 70% to 95% for the market for ai chips. jonathan: this spooked a lot of people yesterday. what was the selloff really about? here is the tank from bank of america. the shock reminded us markets can remain fragile. certainly fragile yesterday. the stronger for put and i bubble potential only raise risks. coming through today, this is your lineup. we will get the jobs job opening later. then the base book later in the afternoon. on friday, anxiety is building around the jobs report come just a few days away. the median estimate still around 160 and a lot of guests on this program in the last couple of days signaling that anything around 100 could tee up a 50 basis point cut. dani: how does the market read

that? is at the fact that the market says the fed is behind the curve or is the fed signaling to the market that bad news is bad news and we are doing this because we see economic conditions worsening? jonathan: equity futures right now a little lighter. here are the scores in the bond market. treasury yields on a 10 year, down two basis points. on the two year, down three basis points. the euro is just a little bit stronger. euro-dollar 1.1053. coming up we will catch up with russ koesterich of blackrock. lorenzo simonelli on his outlook for energy markets and kate mcshane on the health of the u.s. consumer. traders kicking off september with a sense of deja vu after stocks posted the biggest one-day decline since the august 5 selloff. russ koesterich laying out two reasons for yesterday's weakness.

a, a reversal of friday's late day melt-up and b, investors positioning for what is viewed as likely to be a more volatile fall. russ, how difficult was it to explain yesterday's price action? russ: good morning. i think it was pretty difficult. you could point to a couple of fundamental things. we had a soft ice imprint -- ism print. it was not that bad. you had this melt-up on friday. people were repositioning. you had some positions that we know were somewhat crowded. it was more of a technical adjustment than any major shift in the movement -- the fundamentals. jonathan: do you think things are lining up for an august 5 repeat? russ: we already had a bit of it on yesterday. it goes back to the comment from a moment ago. we are back in a world where bad

news is good news and bad news is now bad news. the ism number is not terrible but it was soft. we saw the new orders component move down further. what is the economy is softening more than we think, more than the fed thought and what does that imply for the market and particularly for between 25 earnings which are somewhat aggressive? dani: we heard from the chair of the ism yesterday who said we would not see things change until december or january. people are waiting about interest rate reductions. there are concerns about the u.s. election. could this potentially be a self-fulfilling prophecy when it comes to the manufacturing sector? russ: the economy overall, you have these moments where sentiment does drive actual economic behavior. it goes to a few questions around uncertainty. what is the fed going to do? the other big question is what

is the u.s. consumer going to do. our view is they are in decent shape. the labor market is relatively healthy. balance sheets are better than 10 or 20 years ago. we are not expecting a collapse. there is no doubt that the consumer is slowing. we are seeing pockets of pain in the low income groups and that's having an effect on behavior and that is another thing that people are watching closely to see how this feedback loop takes effect. dani: what about the fact that we have an uptick in prices? are you concerned about inflation re-excel rating? russ: not particularly. there are pockets where inflation has been slow to decelerate. we have seen that in the u.s.. we see it in europe on the service side. but in general, prices are heading lower. when you think of the input costs, if you look over the last few days and weeks we have seen commodity prices pull back significantly. whether we are talking about iron ore on softer china data or

oil, the biggest issue is not in put prices. what people will be watching his demand. jonathan: let's talk about allocation. we have called that out a few times. it felt like we were pulling back a touch and reducing the overweight in tech. where else have you been pulling back? russ: we have been reducing risks generally. we have been pulling back our overweight in equities. most of that has been on the technology side. we have also reduced our underway to duration. we are still a little underweight along the curve but relative to where we were 3, 6, 12 months ago, we are much closer to benchmark than in some time. that reflects the fact that we have seen an improvement in inflation and the dramatic shift in the fed's reaction function. jonathan: can we talk about the foreign-exchange? dollar-yen around 1.45. a breakdown in yesterday's session. the boj is keen on hiking interest rates. do you think we have reduced the

link between what happens in foreign-exchange and the relationship with risk assets particularly in the united states? russ: i think you did clear out a lot of that trade but it is one of those things where it is not important until it is. the swiss franc might be the funding trade. what it does go to is less about the dollar-yen. there are some very interesting dynamics there with the boj looking to normalize policy at the same time most central bank are looking to ease. the bigger question is where is there still crowding. we know that there is crowding in some of the ai things. there is crowding in some of these currency markets. when you start to see this pullback in risk asset, where else do you start to see these little explosions that conditional to markets? dani: when we see the pullback intake analogy -- in technology and i, should individuals buy these moments? russ: it depends on the name.

these themes are going to work long term. if you have a five to 10 year horizon and you are seeing pullbacks that are 10%, 20%. at one point early in the summer the semiconductor index was down 25%, 30%. that probably created opportunity. if you can have a long-term perspective and you are thinking about what are the things that will generate earnings growth, cash flow growth over the next five to 10 years, we will see opportunities later this fall as you take advantage of the volatility. jonathan: let's discuss where else there is crowding particularly foreign-exchange. you mentioned the carry trade. the focus on the carry trade is the biggest story which is the exceptionalism of u.s. assets and the u.s. economy. how much have we accumulated in a very large dollar overweight over the last several years that needs to be unwound beyond just

development in dollar-yen? russ: i am not sure i would agree with that. the dollar has obviously had a very strong run for a long period of time but that did reflect economic fundamentals. it did reflect u.s. exceptionalism or a differential in growth. obviously it reflected a fed that was engaged in the most aggressive tightening campaign in 40 years to bring inflation down. if you look at the long-term outlook and you think about many of the companies that have been outperforming and why the s&p 500 was such a strong performer, a lot of it was based on the underlying fundamentals of not only the u.s. economy but the u.s. corporate sector. i don't think i would describe that as a bubble. jonathan: do not think that period of exceptionalism has come to a close -- do you not think that that period of u.s. exceptionalism has come to a close? russ: it is the ability of the u.s. economy to be resilient, the high-quality of many of

these were leading companies, i do not think it has come to a close. many of those trades have become crowded. you may not want to chase at these levels but the underlying fundamentals are still solid. jonathan: russ koesterich, of blackrock, appreciate your time. trying to make sense of what is difficult to make sense of. welcome to the program. a lot to talk about. the biggest one-day loss on the s&p 500 since the early august throughout -- route. future still lower by 0.75%. here is your bloomberg brief with dani burger. dani: cathay pacific is canceling more flights from thursday to saturday. it is still exciting a fleet of engines. at least 15 planes need engine fuel lines replaced. at least 90 flights have been canceled in total. earlier this week a part failure forcing an aircraft bound for zurich to return to hong kong. nvidia facing a new subpoena

from the doj, part of a growing antitrust probe. people familiar telling bloomberg the legally binding request with the government one step closer to launching a formal complaint. antitrust officials are concerned that nvidia is making it harder for customers to switch to other suppliers. at the same time, penalizing buyers who do not exclusively use its ai chips. before the announcement nvidia shifted $279 billion in the wider equity route, the most ever for a single stock. sticking with nvidia, the ceo 's wealth tumbled, it sunk about $10 billion. it now stands at $94.9 billion as of tuesday. that is the biggest single day drop for him since the bloomberg billionaire index started tracking his wealth in 2016. that is your brief. jonathan: thank you. more from dani burger in 30 minutes. breaking news from the wall street journal sitting down with

the u.s. steel chief executive. the company will close still meals -- steel mills if it's planned collapses. the ceo saying that the nearly $3 billion that they pledged to invest in the pittsburgh companies is critical to keeping them competitive and maintaining workers jobs. there is a fly in the ointment this campaign season. annmarie: exactly. if you are hearing this, you need to change her policy position. he goes on to say we should remind people this is someone trying to remain out of the spotlight. we would not do that if the deal falls through. i do not have the money. they need this cash injection in order to maintain those factories and those people's jobs. jonathan: more in a moment. up next, tax policy on the table. >> is donald trump were reelected -- if donald trump were reelected, he intends to give more tax cuts to big corporations.

he wants to impose a national sales tax on everyday products and basic necessities. jonathan: some of that conversation next. live from new york city, good morning. ♪

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jonathan: america getting back to work. selling stocks and buying bonds. equity futures -0.4%. yields a little bit lower down by one basis point. the 10 year, 3.8139. tax policy under surveillance and on the table. >> if donald trump were reelected, he intends to give more tax cuts to billionaires and big corporations. [booing] he intends to cut social security and medicare. [booing] he wants to impose a national sales tax on everyday products and basic necessities. jonathan: kamala harris preparing to invade a second wave of proposals in new hampshire this afternoon. campaign officials say the new policy will increase the small business test induction for start up costs from $5,000 to $50,000 with the election just over two months away.

robert casey is saying we still feel confident in our harris win base case. she benefits from two distinct trends, asymmetric turnout and asymmetric incumbency. rob joins us for more. translate the last line of that. asymmetric turnout and asymmetric incumbency. robert: asymmetric turnout is democrats will return out. the question is how does kamla -- kamala harris get the fringe voter. we think abortion will drive turnout significantly especially for democratic women in states like arizona and nevada where abortion is on the ballot. the economy is an important factor although harris is not being tagged as much as biden did. we do not think polling shows the board will drive turnout in november.

jonathan: asymmetric incumbency. how sustainable is this? robert: asymmetric incumbency is sustainable. harris gets to fly around on your fourth two, -- fly around on air force two. to the extent that they are blaming biden, she gets all of the polls without the cons. annmarie: how has trump that able to identify her and tether her to biden? robert: the trump campaign has struggled to tag harris with any tagline. when harris got on the ticket, the trump campaign's seems to have been preparing for months but it does not seem they have a great plan. it is not seen that trump has found the attack line that will work against harris. maybe he will during the september 10 debate but otherwise we have not seen it. annmarie: i know you are looking at the polls and seeing harris slightly above trump but that's where we were in 2016 with hillary clinton. why do you think this is different? robert: that is a fair point.

we get asked a lot which direction of poland will be wrong. in 2016 we underestimate a trump. the underestimated joe biden -- they underestimated joe biden. that was the case in 2016. we are hearing from trump voters. most were voting for trump are proud to be voting for trump. the former president and hopefully future president in their mind. but we don't know, nobody knows where the polling will be this year. at this to late september, the polls will be as accurate as they will. we will be within three to five points hopefully. directionally speaking we don't know whether it will go left or right this time around. jonathan: do you think this might come down to pennsylvania? i love your thoughts on this story from the wall street journal speaking to the u.s. steel ceo saying that the company will close steel mills and likely move headquarters out of pittsburgh if the planned collapses. that was months ago. does this story change things?

robert: this story might change things. we think harris's easy path to victory is flew the blue wall -- through the blue wall. she has to would make georgia and either arizona or nevada. if she can win michigan, pennsylvania and wisconsin, it is essentially over. it is an interesting story. i think harris and biden have been cut out. they want to retain u.s. ownership and the news today throws a wrench in the plan and the policy proposal on the campaign trail. i do not think harris will pull a 180. at this point it is too late given what she said recently. maybe there is an opportunity for harris to take a step back and say what is best for voters and workers in pennsylvania is the deal. jonathan: how much state intervention could we see? this story has only just come out but where is this going in this country? if we are not going to allow foreign competition to buy the domestic champions, and that

will be the domestic of travel for the next four years and maybe the next decade or so, as the government's role in the marketplace -- what is the government's role in the marketplace going to be? robert: that will be the direction of travel. in a harris presidency there is a little bit of nuance and that is hoping we can continue to collaborate with allies, japan included, and allow them to have access to the u.s. market just as they allow us access to the japanese market. it is a major intervention under trump. it is a minor intervention under harris with an eye toward strengthening nato, strengthening the nato of the south china sea. there is more balance between economic intervention and defense collaboration. annmarie: japanese auto companies are in the united states and they employ thousands of americans. is this idiosyncratic because it is such a namebrand of american nostalgia? robert: it is idiosyncratic.

japan is one of our greatest allies. it does not make sense from a national defense security perspective that we will prevent them from participating in a key industry. u.s. steel is a major brand in this country. it is labeled u.s. steel for a reason. that makes it very hard on the campaign trail for harris, just like for trump, to support a deal. this is a policy that is influenced more by the election and the importance of pennsylvania and still workers in particular than any sort of straight ahead conducive policy. annmarie: can we talk about pennsylvania to put it all together? the pennsylvania state legislature says republicans are registering more. new registrations are coming form -- coming from republicans, democrats. what gives you the confidence that harris can win that state? robert: it is interesting. this is not the case for allstate. if you register for a pennsylvania driver's license, you are automatically registered

for vote. it is not like they are showing up to the dmv to register to vote proactively. if you are getting your drivers license or renewing your drivers license, you are getting register to vote. immigrants have a lead in voter registration in pennsylvania. -- democrats have a lead in voter education in pennsylvania. it is not as the republicans are pulling well. if voter registration was the thing that decided every election, none of us would be talking about it. it really goes back to the question of who will turnout in november. jonathan: i wanted to squeeze this one out a few from goldman sachs, we estimate if trump wins, the hit to growth from tighter immigration policy will out late the positive fiscal impulse. they say this about a potential harris administration. new spending and expanding middle tax credits will spread higher basement due to corporate tax rates. it sounds less bad under harris.

it is too early to make these kind of calls about the future and the impact on growth? robert: the election-year trade is incredibly difficult but as we look at two to four years, harris is not going to implement the tariffs that trump would although i think democrats will keep spending on things like the child tax credit. also continuing extending most of the trump tax cuts for essentially anyone making $400,000 or less. that is 80% of the country. trump will have a hard time bringing down spending to the extent that some republicans would like. they are incredible concerned about the potential impact of tariffs. jonathan: good to see you. let's do this again. robert casey of signum global advisors. this story dropping months ago, from the wall street journal. the u.s. steel ceo saying the company will close steel mills and move headquarters if it's

plan collapses. this one just ramping up in the last couple of days. annmarie: the debate will be in pennsylvania so this has to be one of the key questions especially if u.s. steel will rally employees to say we need this deal to keep our jobs. jonathan: once again, a key campaign issue. coming up, lorenzo simonelli, on the global energy outlook. this is bloomberg. 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.

jonathan: live from new york, welcome back. yesterday the biggest one-day slide on the s&p 500 going back to august 5. we were member august 5. a difficult morning. equity futures pulling back by 0.4% on the nasdaq 100, down by 0.6. the small caps and the russell down by 0.75%. let's get to the bond market. two year, 3.8343. yields dropping by two or three basis points ahead of the payrolls report on friday. our survey continues to build but the median estimate for payrolls on friday still about 1.65. that is up from 1.14. looking for unemployment to drop to 1.2%. andrew hallman horse so jesting that if we come in at 4.3%,

around 125 on headline payrolls, the fed 50. that is the call from citibank this morning. that is the bond market. let's go to foreign exchange. dollar-yen was the epicenter of what we saw yesterday inequities. 145 on dollar-yen. a stronger japanese yen. just only that we cut the link between foreign exchange and risk assets, it felt like it reinforced itself. it would be a stretch to point to any one thing is the reason why we had the move we had yesterday morning into the afternoon. annmarie: it was almost a perfect storm and people are brushing off the ism and others say the ism is important in terms of the manufacturing sector. then you had nvidia. there are two notes talking about this idea that ai will not be a light switch. it will not be quarters. it will be years in terms of where we could potentially see that growth. of course there have been a lot of commodities impacting the

market as well, this concern around china and weakening demand. jonathan: you mentioned nvidia. let's get the update. one of our top stories in the last 12 hours. the u.s. justice department sent subpoenas to nvidia as it seeks evidence that the chipmaker by antitrust laws. officials are concerned nvidia makes it hard to switch to other suppliers and penalizes buyers that do not exclusively use its ai chips. the stock is down by another 1% in the premarket after dropping by almost 10% yesterday. this coming after the close. more pain. annmarie: this was the final blow for nvidia yesterday as we saw shares falling. what they estimate sums up why the doj has these concerns. nvidia controls between 70% and 95% of the market for ai chips used for training and deploying models like openai, gpt. the doj is concerned with some of its acquisitions recently,

making it harder for these are the companies to compete -- these other companies to compete. jonathan: the stock is down 1%. lisa's not here so i will use her phrase, the toxic brew. services activity expanding less than expected in office -- august. the data adding to a picture of an economy at risk of stalling and fueling this move lower we have seen in commodities. goldman is the latest to cut its outlook, cutting it by 5000 for next year. annmarie: when it comes to copper, bloomberg tv caught up with jeff curry formally of goldman sachs. he told us months ago this was the best rate he had ever seen in his career. now he says there is a floor and ceiling to copper because of the noise from china when it comes to tariffs and the ev space and the property market which has been a huge drag on the economy. jonathan: it is crude as well.

oil continued to fall after a meltdown almost 5% in yesterday's session. demand concerns while a libyan official predicted the crisis that has shattered half the country's output. wti up by almost 0.2%. baker hughes ceo lorenzo simonelli with a better than expected earnings report earlier this summer. the company is seeing high demand for its services and equipment in international markets. joining us is lorenzo. good morning. lorenzo: great to be with you. jonathan: let's talk about the outlook. you raised at the midpoint of the outlook. competitors did not. a similar story was this better compared to what is happening domestically. what defines what is emerging right now? lorenzo: if you look at baker hughes, the strength of our portfolio is much better.

if you look at the results we posted in second quarter and the increased guidance, it is based on that total portfolio capability that we have that extends into rotating equipment, compression and industrial sectors as well. if you look at the international markets, they are going to continue to grow. we have said at the beginning of the year we would see high single digit growth in the international markets. we retain that view as we go into the second half. as we go into 2025, the growth will still be there and it is driven by the demand internationally. when you look at exports from saudi arabia, a lot of that goes to other countries. very little comes into north america or goes into the developed marketplace. it really is a developing market aspect in the growing population and demand for energy globally is increasing. jonathan: can you talk to us about the headwinds domestically

and where they are coming from? is it on the back of consolidation or lower prices? what is driving it? lorenzo: it is the aspects of consolidation that have taken place. there is efficiency that you are seeing within the production which has enabled production to stay relatively flat and increasing in some cases. domestically, we continue to see weakness as we look at the second half of 2024. in 2025 looking at north america to be flat-ish. the gas market might be increasing somewhat. north america is really the operators and being very pragmatic with their balance sheet and capital discipline is the name of the game. annmarie: you need a lot less capital now to produce more oil than in the past. you think it is going to be flat. some of the numbers we have run see 13.9 million barrels per day coming from north america and 14 million barrels in 2025. is that an accurate trajectory? lorenzo: if you look at that

13.9 and 14, you are looking at a very slight difference. it is driven by the efficiency. it very transactional in north america. it is early to call right now. we will continue to monitor. baker hughes is much more focused on the production side and also the chemical side. what we are seeing is really a focus on existing wells and also improving recovery rates from existing wells and that is where the mature asset solutions that we provide actually have a huge opportunity. it is actually important to remember, 70% of the world's production comes from mature wealth and that is a well that has been in operation for 25 years or has 50% of its reserve depleted. if you are able to increase the reserve recovery by 1%, you will add two to three years of their production required globally. so there is a big focus on

capital discipline and maximizing the recovery rates from the mature assets available. annmarie: you also mentioned gas. can we talk about local five natural gas? yesterday we saw the energy department go ahead with an export license because the biden moratorium on the export license the courts have pushed back. is that a sign we could see more come online? lorenzo: very pleased that the license was given and congratulations to the team there. if you look at the global expectation, the moratorium ceases in 2025. if you look at the lng demand, it is expected to increase. we have protected but 2030 we need -- by 2030 we need an installed capacity and the u.s. can contribute to that. that being said, you are never sure until it is done and international projects are continuing to go forward. the lng will be available and

hopefully the united states participates as it has put tear-gas to export -- plenty of gas to export. jonathan: the burden that will emerge on the energy grid in this country, every day we talk about nvidia and capex spend from major tech players, spending money and throwing money at data centers. can you walk us through the scale of demand you are expecting to see and what you are hearing from some of these tilling providers and some of these tech firms -- from some of these utility providers and some of these tech firms? how big is the growth opportunity for you? lorenzo: it is a great growth opportunity. it is not just about today. it is a long-term trend. generative ai, the consumption of electricity by data centers is expected to double by 2026. that is going by 2% -- from 2%

to 4% of electricity usage. that is the same amount of electricity that japan uses on an annual basis. from an installed capacity perspective, is a significant increase. what we have is a challenge, stability and also i live in houston. today i have power outages on a continual basis. we need off grid solutions and that is where distributed power comes in. that is where opportunities for modular capabilities of gas turbines that are packaged, smaller, off grid and they provide the stability to the data centers for ongoing operations because the other important aspect is intermittency is important because a data center cannot go down. so you need to have that consistency of power generation. jonathan: what does growth look like in this area and what will it look like in the years to come for you specifically? lorenzo: if you look at the industrial gas turbines we

provide, significant opportunity. just look at the ratio of the increase on the electricity utilization from 2% to 4%. we are looking and working with hyper scalars, looking at the ecosystem and we are looking at the opportunity of many gas turbines being sold into this market. jonathan: what is the overall contribution to your overall revenue mix from the next several years? we see the big rally in utility companies in line with the rally we have seen in ai firms. if you think about the changing characteristics of your stock, i need to know what the contribution from that area would be to the overall top line? what will that look like? lorenzo: this could be from 500 megawatts to 1.5 gigawatts. that is what we are looking at from a scaling perspective. from a dollar perspective, it will range based on 500 million to potentially larger and it will be over a series of years as we go forward. we look at it as a major new area that we can focus on.

we have participated before and we have played in distributed power generation and we look at this as a growth for baker hughes. annmarie: a big concern has always been these cyberattacks like the one recently with halliburton. have you seen any impact? lorenzo: we have not seen any impact. we are very vigilant. cybersecurity is a big concern for everybody. we are all taking the measures accordingly with the controls in place. we are very much vigilant on a daily basis. annmarie: what does that look like, being vigilant? ? is it having the proper systems in place? is there a lot of communication with the u.s. government? lorenzo: there is definitely communication that takes place across the sector. there is also trade associations to discuss it. from a standpoint of vigilance, it means making sure we are doing our own testing on our own systems, making sure we are putting in the controls and patching with the new security available and also doing our own

fishing exercises. we have a team and we test our own systems. i also said we can never be too careful. you have to stay vigilant and prepared. jonathan: you have a busy day ahead. before we let you go, the time horizon of this market. can we reflect on yesterday's price action? what is going on in crude and energy markets? is there concern from your side about demand in china? lorenzo: you will always have volatility on a daily basis. it is something we deal with in the business world. at the same time leading a company, you have to focus on the fundamentals and the fundamentals of the long-term trajectory to make the right investment decisions. that is what we are doing at baker hughes. if you look at the macro tailwinds, it is undeniable that energy demand has continued to increase. as you look at the population and the development of nations,

you look at developed nations that are now seeing that they don't have enough energy as well. we look at the macro aspect and we are definitely seeing positive tailwinds. jonathan: do you feel like the idea toward fossil fuels have shifted? do you think government's have had a reality check? lorenzo: i think there is an understanding that it is not just about an energy transition. it is also about energy expansion. it is not just about fuel type. it is about reducing emissions. that is where gas plays a key role because it's abundant, available. you need affordable, secure, reliable energy. jonathan: lorenzo, appreciate it. lorenzo simonelli, the baker hughes ceo. let's get an update on stories elsewhere with dani burger. dani: u.s. steel says it will likely close mills and move its headquarters out of pittsburgh if a plan to sell to japan collapses. the wall street journal

reporting that the ceo says the nearly $3 billion pledged to invest will be critical for remaining competitive and maintaining jobs. lawmakers from both sides of the aisle including presidential candidate kamala harris and donald trump oppose the takeover. a former top aide to new york governor cuomo has been arrested on federal charges of acting as a foreign agent for china in exchange for millions of dollars. the indictment names lend a and her husband who was accused of money laundering. the u.s. alleges that they acted on behalf of china blocking taiwanese representative from state access. the phillies 76ers are being courted by the state of new jersey to relocate across the delaware river. governor phil murphy is pledging to offer government incentives and make land available near the waterfront for a mixed-use complex. there have been discussions about moving the 76ers from their current home to a new arena in center city but those

talks have stalled. that is your brief. jonathan: thank you. more from dani burger in 30 minutes. coming up next, retail caution. >> i do think that as interest rates are -- go down which will likely be through the rest of this year and 2025, we may see some rebound but the truth is retailers do not have a lot of pricing power right now. jonathan: that conversation on the other side. we will catch up with lisa in a moment. from new york city, this is bloomberg. ♪ 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.

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jonathan: the price action this morning, softer by 0.4%. nothing like the losses from yesterday. the rally continues. use lower by one basis point. the 10 year, 3.8196.

retail caution. >> i do think that as interest rates go down which will likely be through the rest of this year and 2025, we may see some rebound but retailers do not have a lot of pricing power right now so they have to be much more cautious about how they are charging shoppers and shoppers are shopping around, looking at secondhand goods and bargains. jonathan: goldman sachs is hosting its annual global retelling conference with businesses focusing on consumer trends. kate mcshane saying the following, "we have seen concerns around the health of the u.s. consumer and more value seeking spending behavior however our economists continue to see a resilient consumer and believe the concerns around weakness in consumer spending are likely overdone." alongside kate is lisa abramowicz. lisa, good morning.

lisa: good morning. frankly this is the key question for so many on wall street and main street. how resilient is the consumer? at what point are we talking about actual weakness versus it is competitive out there? kate mcshane joining us. thank you for being with us. how much weakness is there? do you give credence to this story that the consumer is fragile? kate: good morning. when it comes to the consumer, what we continue to see is a somewhat steady consumer. what we have heard from most of the companies we cover is not much has changed with the consumer over the last six month. they are employed, wagers are growing but they are being choice for and part of the reasons is there has been a lot of inflation. their money does not go quite as far. you are seeing choices between consumables and discretionary. you are seeing choices between services and goods. that is what is differentiating

some of the different performances you are seeing coming out of the second quarter. lisa: how do you square this idea that we keep hearing this and yet margins are expanding? kate: yes. there is some growth so there is leverage in some of these models. at the same time you have seen costs dissipate especially on the freight side of things. there have been some improvement in margins as costs have come down on freight. lisa: it is more of that story and not so much that ai is creating this incredible efficiency that is overwhelming any potential losses in pricing power. kate: not yet. we are hearing more about ai just like we are across the other industries but it is much more nascent and more about efficiencies with regard to getting more efficient with how they catalog online with their e-commerce and may be freeing up some tasking for their labor but there is not anything of scale yet that we have seen that is revolutionizing what is

happening with margins and retail. lisa: to be clear, when people say the increased productivity stems from the idea of ai making inroads, not really seeing that quite yet? kate: i do not believe so. it is being talked about but i don't think it is being touted as one of the bigger drivers of why margins are better year-over-year. lisa: when people talk about a more choiceful consumer, how much are they talking about a stagnant pool and greater competition and thinking about higher income individuals and the holy grail has been to get a chunk of that? kate: they are speaking about the higher income individuals with the choiceful consumer. it is that services versus goods. part of what we saw during the pandemic was a heightened demand for goods, things, home goods, consumer electronics. as soon as the world opened up,

we went back to services. we have not quite seen that pivot back to discretionary goods. it was only on target and walmart's conference calls that they have been seeing stabilization in goods. it is that choiceful-ness. lisa: you have been at goldman sachs. before that you were at citigroup. how is this time different in terms of the tenor of certainty or lack thereof in terms of the economic cycle, the interest rate cycle and the technological overlays that you are seeing? kate: the cyclicality is always the name of the game. year-over-year we will be in different cycles. certainly right now you're discussing the health of the consumer because of the interest rate environment we are in, because of what has happened over the last five years. what is so different about the conference this year and what companies will be talking about

is we are entering year five post-covid and most of the companies have benefited in a significant way during covid when everyone was shut in and needed to be entertained or needed to buy food. we should be entering a period in 2025 where it is more normal for consumer behavior. we will be focused on asking in addition to the macro and what the expectation is for the health of the consumer, what their behavior looks like in 2025. lisa: what are you seeing? kate: we are still seeing the choiceful consumer but we are seeing more discretionary in goods. you will see more normalization of the consumer balancing choices between goods and consumables and services. lisa: how much do you see the most powerful companies consolidating their market share in a way we have not seen in the past? i am thinking of walmart and amazon. kate: we think that is an

element happening across retail to the haves and have-nots. part of the phenomenon is that the scale and the one-stop shopping is really appealing to the consumer. if we take walmart as an example, it is not just the value they are offering the consumer, the discount in prices, the rollbacks, but it is the convenience. it is the fulfillment optionality with delivery or click and collect or buy online and pick up in store. lisa: what is the biggest anxiety at this conference for the executives and companies here? kate: it is figuring out the consumer. that is probably one. tariffs is another. there is a big question mark as to what that looks like postelection. it could be costly and retailers will have to figure out what to do with their pricing as a result. lisa: kate mcshane, thank you for being with us, u.s. retailing analyst at goldman sachs. we will be speaking to a host of ceos in the next few hours.

jonathan: lisa, thank you. fantastic coverage still ahead with lisa abramowicz. lisa will be speaking to martin hoffman and mark mora and the walmart senior vice president for marketplace and walmart fulfillment services. coming up next, drew matus of metlife, and roger hallam of vanguard. futures pulling back by 0.4% on the s&p 500, adding tsa's losses. from new york, this is bloomberg.

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. >> i think the strength of the underlying economies are underappreciated. >> there are lots of reasons to be cautious, and most people aren't right now. >> this is bloomberg surveillance. jonathan: with said it early this morning, sense of deja vu. feels like the start of august. futures down again after the biggest one-day loss since

august 5 on the s&p 500. nasdaq 100, down by 0.8. on the wrestle, small caps off by half of 1% -- by half percent. later, we will get the beige book. then off to tomorrow, numbers for jobless claims. adp report and ism services print. the big one on friday, payrolls report, survey in and around 160 over the next couple days. expectation for unemployment to pull back from 4.3% to 4.2%. in this market, where do you begin and where do you end? prude eating hammered in the last 24 hours --crude getting hammered in the last 24 hours. lisa: they are discussing a possible delay to this potential output hike, increasing supply,

adding more supply that many thought they were going to go through with, and that is because, potentially some will say, the price is dropping too much, but also oil barrels from libya potentially coming into the market. a central banker is saying there is a political agreement, potential to see more barrels come to the market. if libya adds more barrels, why does opec need to cut, especially with growth concerns surrounding china? jonathan: seven dollars 40 47 since on brent current -- currently. $71 $.50 on wti crude. reality checks for governments on the others of the atlantic. from the u.s. steel chief executive of the wall street journal, just earlier, saying the company would close steel mills and likely move out of pittsburgh.

and it is not just coming on this side of the atlantic. a check also coming in germany. vw making news over the weekend. the potential factory closure in germany for the first time in this 87-year history. the amount of overcapacity right now, 500,000 cars, the equivalent of around two plots. they need to increase productivity and reduce cuts. they have two plants too many. lisa: when it comes to germany, a big issue with vw is that almost half of their workforces in germany. if you are thinking about closing factories, these politicians will have to deal with intentionally a huge labor issue. with germany, the issues have been outsourcing their energy to russia. they can no longer do that. and trying to gain market share in china. now china has big competitors,

which is why the eu is trying to put up the tariffs. u.s. steel, with the ceo has said, individuals trying to distance themselves publicly from this because of how political it is. he is saying we're are going to have to close plants. we're going to potentially lose jobs here in pennsylvania for an apartment swing state -- state if we do not get a cash infusion. harris administration was talking about u.s. steel infusing equipment with a daunting competitor, saying they need to survive and need this infusion from japan. jonathan: if you want to protect from foreign competition, europe, putting up the walls. foreign acquisition here, not allowing the sale to new ponce steel to go through. the burden on the state becomes even larger. it provides the kind of state aid that would be required to keep these companies functioning.

isn't that the direction of travel here ultimately? i am interested to see how the campaign will change. it was becoming a nonissue. biden has said new ponce still cannot do the deal. when u.s. steel says this, what is going on? >> they may have to recalibrate a little bit. this is why i think the debate now is even more important about policy. taking place in pennsylvania, this has to be one of the first questions. do you change your nine -- your mind when you have been on the record saying it needs to remain an american hands at the ceo is coming out, that will be rallying workers today in pittsburgh, saying we cannot function without this deal going through? jonathan: that debate a week away. welcome to the program. equity futures negative by .5%. s&p 500. bonds, rally continues.

10-year 3.81%. coming up, we will catch up with drew mattis of metlife, mandeep singh of bloomberg intelligence, and roger hallam of vanguard ahead of a critical week of u.s. jobs data. stocks coming up the back of the biggest one-day drop since the august 5 rout. a slew of jobs data this week. jobs this morning and ending with the payrolls report on friday. drew matus of metlife joins us now. let's start with the credibility of the u.s. economic data. do you put more weight on some of the date of this week versus others? >> sure, the beige book would go above jolts because we know that is what people are feeling. because of the low response rates and potential for revisions, jolts used to be a

data series only economists paid attention to end there was a good reason for it, but now that it has kind of gone mainstream, was not quite ready for prime time, and you are having this problem across a slew of data, including in the payroll report we will get on friday. we have to be really cautious about overreacting on individual bets. i saw a compilation of people talking about the economy before the show started, and one of them had it right, it is about the direction of travel, which is towards a weaker economy. we should not be surprised by this. this is what the fed wanted to achieve when they took rates higher. how much pain are they willing to tolerate is the question now, before they actually act, and when they do act, how fester they act? jonathan: can we work through payrolls on friday? how would you navigate that report? you suggest more weight on

household survey versus the establishment survey. how will you navigate those reports on friday? >> i will not be looking at the payroll numbers. i will be looking at unemployment. does not matter if it is a supply phenomenon or a demand phenomenon. people's ability to get higher wages or for goods down, more people per jobs, not enough jobs for the people who want them, so you will put downward pressure on wages there. so you just look at unemployment, simple, not the detail. you can also see how many people -- how many hours people are working, which is quite important. even when the economy is quite strong and a good amount of payroll growth, if you look at the number of hours people are being asked to work, we see weekly wages have not been keeping up with inflation. so a lot of americans who feel like they are falling behind

are, in fact, falling behind, because even though their average hourly wages are going higher, the number of hours are going down. so in my mind, you want to watch the hours worked. if that keeps moving lower, as it has been, that will eventually lead to job cuts because people will realize they cannot spread the number of hours of work they have among the existing stock of employees they have, and they will reduce the number of employees. >> how hard is it to read the jobs reports now given the fact that we know about normal revisions, really massive revisions, when it comes to the u.s. job market? >> that is why it is important to look at everything holistically. you do not just look at payrolls, you want to look at ism employment numbers, you want a sense for where the entire economy is going. you do not really want to fixate or put too much weight on any individual one of them because of the potential for revisions or data quality issues.

frankly, working as a u.s. economist for a long time, data quality was never an issue before. post-covid, data quality is increasingly an issue. you have to be aware of it and make sure that we are adapting to a new data quality environment where revisions are larger, creating the potential for more volatility in the markets. and we have to not just look at one thing but we have to look at the quality of the data. >> at the data quality is not as good as it used to be, do you need to look at what executives are saying, what is in earnings reports? is that more important? >> earnings reports are a great way to get a sense of things. they are not exactly perfect because when you find is that sometimes people blame things on the economy and reality is it is not the economy. i do think you want to look at those types of reports, want to look at things like the beige book.

they have been doing the beige book for a long time, they know the people they are talking to, the conversations with contacts. it can lead to great insights in terms of the direction the economy is heading. i do not think anyone is confused about the direction the economy is heading. it is clearly slowly down -- slowing down. no one is saying it is accelerating the question is the speed of the deceleration. are we slamming on the brakes or is it tapping? how fast does the fed have to move? jonathan: i would love your thoughts on the next few weeks. from the people we have been speaking to, i mentioned the view from citi early this morning, they think 125 on payrolls, 4.3% on unemployment, which is where we are. they think that is sufficient to go 50. when it comes to federal officials, i do not see the viewing it like that at all. i hear things like methodical,

gradual, and reluctance to go big until they see something much more damaging. >> i agree with you, jonathan. i think if they were going to make a large move, they would have moved in july. they would have started at a slower pace in july. perhaps maybe we can hope they have learned that if you miss the bus, you cannot run after and tried to climb on it while it is moving. same with hikes. a lot of the dislocations in the markets we are singing -- seeing, so if you miss you window, we cannot catch up. the economy is not that simple. two 25 basis points cut over a time span versus a 50 basis point cut are two very different events and will have very different effects on where the market will price in cuts over the next year. if you ratify mark -- if you gratify market excitations of 50

now, it will ratify our expectations across the next year or so. but if you go to 25 and say we're just calibrating here, the market will have a very different response and maybe one that will allow you to seek out a few more and get policy and to appoint that is a little more in line with the sustainable growth. jonathan: drew matus of metlife, thank you. economic data this week raising questions about the credibility of some of these records and forecasting with the fed will do on september 18. futures on smp negative by 0.4%. let's take the opportunity to update news elsewhere with the bloomberg brief. dani: the pullback in oil is not continuing this morning, higher by about 1% for nymex crude, saying 4.3% yesterday to the lowest level of the year. economic data from china and the

u.s. fueled demand fears. on the supply side, a libyan official said it is closer to a deal that will restore the country' is crude flows. opec-plus is discussing a possible delay between oil output increase the had been planned for october. according to officials involved in the talks. plans to announce a major plan investment in mexico on hold, according to people familiar. china's top ev won't -- maker will not make a decision until after the u.s. election. three locations for car production facilities in mexico, but they stopped actively looking for now. tesla delayed plans for a factory in mexico also. shares of dollar tree plunging nearly 12% in the premarket trade. they reported second-quarter earnings that fell well short of estimates. the company forecasted full-year net sales below prior forecasts. the ceo says we are encouraged

by the continuous progress we are making despite immense pressures from a challenging macroenvironment. that is your brief. jonathan: some of the reports, language out of the discount retailers, really not good over the last few weeks. up next, the beltway versus big tech. >> i view this as more of the scarier headline than the reality. it is part -- nvidia as part of the club that is part of that pressure, beltway versus big tech. jonathan: that conversation up next. life from new york this morning, good morning. ♪

jonathan: a snapshot of the price action. we can look at one single name. cross asset, futures -0.5%. bonds still rallying, risk aversion continues, down two basis points on the 10-year. dollar tree cutting its outlook on consumer spending. down by more than 12%. think about what we heard from dollar general and the last ceo p this was the ceo from the last week or so, and we ago. inflation has continued to negatively impact each household

with more than 60% claiming they have had to sacrifice on purchasing basic necessities. a shocking name headline coming out of that name in the last week on low income shoppers. dollar tree down this morning by 12%. lisa: a lot of these stores actually were the ones that were able to do well in times of economic stress, especially for individuals on the lower income scale. the issues of competition right now for places like aldie coming from the united states and walmart. jonathan: more to come on the conversation. beltway versus big tech this morning. >> i view this as more of the scarier headline than the reality. and also in the context of what is happening in big tech, nvidia is part of the club that is part of the pressure, beltway versus big tech. we are not too concerned about this for nvidia. we may actually look at what has happened here from execution,

the reason they have dominated is because execution and they have been so far ahead. jonathan: nvidia, $275 billion rout, biggest loss ever for u.s. stock. doj slam such it maker with an antitrust related subpoena over its marketplace domination. joining us to discuss this is bloomberg's mandeep singh. what have they done wrong? >> in this case, what doj is investigating is how they haven't distributed chips for the customers. in -- how they have distributed chips for the customers. nvidia, in an undersupplied market, how are they distributing the chips is a good question. i think some of the focus is simply because their largest customers are the hyper scalars. so nvidia could patel checked

could potentially tell them to buy more. things like that, there nothing clear, but nvidia is clearly trying to go this way, but the deal has not closed now with the acquisition. intentionally, they may have to make -- potentially, they may have to make some remedies. jonathan: what are the alternatives? if they could not go to nvidia? >> that is the thing. potentially, customers could go to amb, which has a small gpu business. there is a preference for nvidia's chips, which are more undersupplied than any other chips. question is, how is nvidia deciding who the customers are that should be getting the allocation? let's say that make 20 million ships in a year, how are those

getting distributed? i think that is where the question comes into play. c nvidia ask them to overbuy those chips? nothing is clear, but because the market is so undersupplied, the question is natural, how is nvidia working with its customers that is concentrated? >> there has been nvidia's note strategy -- can you explain what that entails? >> nvidia clearly has the i.t. when it comes to the gpu's, and they have a software layer that everyone talks about, how it makes their cluster better than some competitors. now they are trying to move up the stack with the large model. they have been doing things way ahead of competition. that is why others are lagging. because they have been at least 12 to 24 months ahead in this

market. that shows up, even though they guided conservatively for the next quarter, according to historical standards, still, the ramp of the data center business have been -- has been nothing short of phenomenal. >> customers want nvidia chips, but intel seems to be somewhat backed by the u.s. government. $20 billion grant. what is going on there? >> when it comes to chip design, i think until can make those chips and have those manufactured elsewhere since i do not have the manufacturing capacity here. but with the u.s. government is giving them subsidies for is to build the favs here, and we know that will take time. that is where intel still has to prove their execution is still working. i think those are two separate things. nvidia outsources all the production, and everyone in the gpu space right now is going to tsmc for that.

>> before we saw the doj news yesterday, the stock was already falling. what do you think was the catalyst for that? what was driving this? wax valuation paired we talk about it during earnings. you really need to see the estimates going higher. if the estimates are going sideways, that is not enough to sustain these multiples. nvidia was trading at over 35 times forward p/e. that at those valuations, you better see your estimates keep going higher. the way they guided was a little conservative on the black site, delays, now this antitrust. these are incremental -- on the blackwell side, delays, now this antitrust. jonathan: seeing a stock this size move like this, 200 $80 billion of market cap in a single day -- >> the way nvidia has grown its market cap, nothing short of

phenomenal, where they came from $1 trillion to $3 trillion, there was not a lot of time in between. with these 1, 2-day moves, their sharp moves. still not that big. a $3 trillion market cap company, you would expect it to be more stable like a microsoft or apple. but the revenue, it is the biggest risk for nvidia. it is not a recurring revenue business. some would argue that you have to refresh your chips everywhere and upgrade your data center or you will become a recurring revenue business over time. jonathan: does that make you nervous? >> absolutely. even if they execute phenomenal evaluations from here, 50% plus growth going forward supplies them now. everyone expects this year they will grow their data center revenue. what about going forward? the gross margin, risk, everyone

talked about how the gross margin -- margin has peaked for nvidia, and for good reason. they had some backlog delays per they need the distribution. in the gross margins aren't compress income estimates are not going up. jonathan: mandeep singh of bloomberg intelligence, coming up next, we will catch up with the israel minister of strategic affairs. that conversation up next. ♪

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♪ jonathan: what will start the month of timber, that's for sure. for on the s&p, down by 0.7 on the nasdaq event will start that look like this yesterday. the worst day since august fit on the nasdaq 100. the worst day since july 24. late july and early august, a message. thes -- a messy periods for this market. two-year, tenure, 30-year 30 year shaping up as follows. down a couple of basis points there as well. anywhere from one to three basis points lower. if you missed the rally, it's going to be a little dangerous to chases now.

the probability of the job market stabilizing here or deteriorating fast, that is the debate for the rest of the certainly the debate right now going into payrolls. the commodity market and what is happening in crude, we are up by 6/10 of 1%. we were up by more than one. new story out in the last couple of hours. amh signaling that maybe opec is backing away from its supply decision. annmarie: doesn't look like they might do that now. you thought prices have a little bit of a scare. part of that has to do with concerns coming out of china but also especially opec wanting to tenderly make a u-turn, we might see more barrows come from lydia. if libyan oil barrels come to the market there is really no need for opec to bring bottles to the market especially if they want to keep a floor under this market, the price. jonathan: kamala harris said to

propose a $50,000 tax benefit to boost new small businesses, increasing the current production tenfold. a lofty goal of $25 million. it's another effort to try to signal that they are still going to be the party for corporate america at a time and we are not sure which party is what. annmarie: and it feels like what we saw recently from joe biden in on the campaign trail, she's trying to feel like she can move toward the center. they have the progressives at the moment lined up behind them. she wants to say we offer big business but this all comes down to the tax fight for 2025. we were going to hear a lot of people almost feel like they are throwing policy spaghetti at the wall. this is all going to happen depending on the composition of congress. also we should note they come out with things, the harris campaign, talking about price gouging.

then you have the economic policy advisor come on this program and what it back saying this is just about regulation we don't think it is their fault. but what do you see in the last 24 hours? ads in swing states sagan's corporate greed, they are driving of your cost and that is their responsibility. jonathan: let's focus on pennsylvania and was three right here and how difficult it is going to be to navigate this in the months to come. the u.s. ceo telling the wall street journal the company would likely closed steel mills and movement headquarters out of pittsburgh if the sale to nippon steel collapses. both presidential nominees coming out against the deal, the topic raising questions and tensions in the crucial swing state of pennsylvania. annmarie: with this new information i want to know whether or not we are going to see a reversal regarding this transaction. donald trump is going to be giving economics each year in new york tomorrow. will he talk about this?

the editorial board this morning escaping on both of these campaigns. they say sign of the rotten political times that they all agree on the dumbest economic idea of the presidential campaign so far, opposing this acquisition. they say because this is the money needed to make sure you have a robust steel industry and a growing u.s. steel in pennsylvania. jonathan: let's get to the latest on the middle east this morning. the justice department charging six senior hamas leaders with terrorism and can proceed to kill americans days after six hostages were killed in gaza. charges include counseling to the october 7 assault on israel as well as a string of other attacks going back more than a decade. attorney general merrick garland setting the death of a 23-year-old israeli american in a statement joining us now to discuss the state of this more in the future is israel's minister of strategic affairs. welcome back the program.

i think we are all very focused on where we are interested in we would like to start the conversation there and reporting just moments ago that prime minister netanyahu sent the cheese to tow law to inform them that israel is prepared to fully withdraw from the corner between egypt and gaza in a second phase. can you confirm whether that reporting is accurate or not? >> just to explain to your viewers what we're talking about because there has been so much reporting, understand that israel currently occupies this four-door between egypt and gaza. and at court or when it was left open and when israeli forces were not there was used as a direct for all of the arms coming into gaza. that is how they got armed. the arms did not come from israel, they came from that border. israel took over the philadelphia corridor in the

last two or three months and also the rafah crossing and that has blocked all the arms and weapons from going into hamas. phase one of that deal, israel has made clear in the prime minister may clear in a televised press conference couple days ago, and i'm sure you speak of before impressed soon as well, that israel is not going to withdraw from that line. we won't withdraw if that quarter because if we do that you are going to see those weapons come back. phase one, what it calls for us to have negotiations over the conditions over a permanent cease-fire. and once you concluded those negotiations, in order to get the phase two and a permanent cease-fire, that is when you can discuss long-term security arrangements on the philadelphia quarter. i think that report is a little bit misleading thinking that israel is going to leave but it is true that israel is committed to actually negotiating this deal. we thinning committee when the president for for a proposal

based on a may 27 document, a proposal in speech at the end of may. israel said yes, a mosque said no. hamas has not been interested in moving ahead to close the deal. frankly they were interested in an escalation in the region. they want iran to attack israel and i think now they are hoping that somehow israel's government will make compromise that it was not fair to make before and i can assure you in the wake of the horrific execution of six hostages including an american, israel is not going to make concessions in the wake of that. we send people to sit with negotiators to try to get that deal done and i hope we can do it. we are working to try to push that deal forward. jonathan: we are very focused on accuracy here at bloomberg. you said that was slightly misleading. can we confirm the aspect of it

that was misleading and whether any second phase, netanyahu has sent the cheated a lot to inform the qatari pm that a second phase yorba linda only withdraw from that corridor? >> i cannot talk about the arrangements in a certain phase because we haven't even negotiated about who is going to be there, how long it is going to take. until we have an actual, practical solution on the ground for the philadelphia corridor, israel forces cannot leave. we had egyptian president and they announced that the policy was to stop the smuggling that go into gaza. what happened on the ground was a different matter. a highway of weapons came into gaza. so the question is not necessarily egyptian policy at the top levels, it is what is happening on the ground what are you going to do on the ground to prevent the border from being a supply route for reference to

hamas. jonathan: let me just interject because i would love some clarity from you on this. minister, just quickly. if you can trust egypt to mediate the talks, why can't you trust that to secure the border? isn't that a content -- contradiction we need to reconcile? >> guitar is also mediator of the toxin has been financing hamas for a long time and frankly financing the muslim brotherhood all over the world and promoting a lot of hamas propaganda which is antisemitic, anti-american. i don't think those two are necessarily going hand-in-hand. the fact is for the last 20 years since israel left, a move that was applauded by the whole world, we left that border between egypt and gaza, we have not had a solution on the ground. i'm not questioning the intentions of the egyptians, i'm questioning the results. october 7 could not have

happened without that border being open. israel now has close to that end until we have an actual, practical solution on the ground that is working after 20 years of earlier, israel cannot be that line. jonathan: i need to follow-up on one other aspect of this, the division that may be emerging in the israeli government. another report, and by all means if this didn't happen, you can tell me, but her defense minister told the security cabinet the following. " the fact that we prioritize this quarter at the cost of life of hostages is immoral and disgrace. >> i'm not going to get into private conversations of security cabinets. i would just tell you the security cabinet of which i am a member, there are 10 of us in the cabinet. eight of us voted to support the prime minister's position, one voted to abstain and one to oppose the native. clear position that israel was not going to leave that four-door and that is a position that is, in my view, supported

by the overwhelming majority of the israeli people. i believe it is wrong to say it is either staying in the quarter were saving the hostages, it is not true. the united states is working diligently to try to resolve the other mediators and with us. hopefully we can get there but it is clear that in phase one, israel will stay on the line until we have a practical solution on the ground that we can convince the people of israel that what happened on october 7 will not happen again. that hamas will not be rearmed. they will not have the opportunity to do again and again october 7, which is what they are saying. that is what they intend to do. please cut off the supply lines of weapons, we are not going to open that supply line without having a solution on the ground that works. annmarie: minister, can we go back to the states one agreement? if you weeks ago secretary blinken was in israel and he said there is a very constructive meeting he had been netanyahu and can firm that israel supports that proposal.

then just this week president biden said netanyahu was not doing enough. how do you manage what is coming out of the u.s.? what exactly does the u.s. want to see from israel and why is israel not complying? >> i think just the facts are, as i said, there was a proposal put forward in may, israel said yes, how wasn't interested in talks. they added around two dozen changes to that proposal, then there was another bridging proposal in august, the one that secretary of state blinken was referring to. hamas said no to that and the reason they said no at that time to any offer on the table with they wanted hezbollah and iran to attack us and create a regional or. that is what they wanted to do on october 7 and in the last several weeks. my hope would be hopefully that the potential of your regional escalation is in the rearview mirror and we can get down and see if we can finish these talks. last thing that israel is going

to do is in the wake of the exit six hostages is to make sessions that it would not have made before. that is not going to happen. all the israeli security cabinet was united that hamas is going to pay a heavy price for that decision as if we don't do that, not only isn't going to be dangerous for a hostage field, but they are going to start coming hostages thinking that if you can hostages, you get concessions. we are trying to be on the same page of the americans. i think we've been there for the last couple of months. when the u.s. and israel show no daylight between them, and when all the pressures directed where it should be, on hamas, i think the chances of getting to a deal go way off, and i hope we can get there in the next couple of weeks. annmarie: is it your understanding that right now with the u.s. is putting on the table in these conversations is take it or leave it? >> i don't know. the bridging proposal that was put forward on august 16 was a fine bridging proposal so i don't know if this will be a

final bridging proposals and then a final final final proposal. they might be talking about specifics and details because this is a kind of framework agreement and there is still a lot of things to be negotiated. the problem in the negotiation is not just the philadelphia four-door. maybe a half dozen things have to be closed in order to get to a deal. right now we have not seen, and they want to repeat this again, at no point has hamas agreed to any deal on the table. they projected everything. we had one movement in early july where they understood that there's not going to be an end of the war as an entry ticket into a deal. there will be a temporary cease-fire of six weeks and then during that temporary cease-fire we are going to have to negotiate what would be the conditions of a permanent cease-fire. the philadelphia corridor and had blocked weapons from going into gaza is an important part of that. we are willing to get into that first stage of the deal. hamas made that change. i don't know if they still agree

to that but on the other issues, there are still pretty significant gaps that have to be closed and the u.s. is trying to do that. i will tell you that the justice department decision yesterday was a very good decision to put pressure on hamas. hopefully the other people internationally and regionally will put as much pressure as possible because israel's government wants to get to a deal. believe me, israel's government wants a deal. what we are not willing to go is go to a deal that is going to endanger the security of 10 million israelis we hope we can get there as soon as possible. annmarie: you are saying you want to get to a deal to just this morning your national security administer -- minister said i'm acting to halt negotiations with thomas. is that not accurate? >> that's not the position of the government or the prime minister of israel. we have different views, different government ministers. the prime minister encourages people to say exactly what they think in all these meetings but then you come to a vote in the prime minister's position, which

is we are going to get to a deal, we want to get to a deal, we have a red lines, but we want to get to that deal to bring those hostages back up into this point. on october 7, there were 250 hostages taken. 110 of them or so have been alive. and i tell you that the execution of these six hostages was got wrenching for all the people of israel. no matter where they are on the political spectrum, you probably may have had them on the show, but they have done in raising awareness about the plight of the hostages in their dignified and heroic struggle for their release, it was a major blow. and a lot of israelis are angry and i understand that. i think that the anger has to be directed against hamas in order for us to get to a deal and yes, there will be people who vote against the deal. i believe some of my colleagues in the government will vote against the deal but the over --

overwhelming majority of the government and the country backs the position and wants to get to a deal. jonathan: just a quick question, with the prime minister be attending the human general assembly later this month in new york ? >> i believe he will not with what happens in our region and the middle east, you never know. hopefully we can make that happen and he will have a chance just as he addressed the american people in the congress a couple of months ago to address the world about how we move forward in this region and how we can move from this catastrophe on october 7 and toward a different future for israelis, palestinians and everyone in the region. jonathan: please let the prime minister known the love the opportunity to sit down with them later on this month. let's get you an update on stories elsewhere just briefly. dani: goldman sachs economists are cautioning that the u.s. gdp will take a hit in a second trump presidency. the researchers led by alec

phillips wants tighter immigration policy and think it would outweigh the positive fiscal impulse. should be the harris win with a democratic sweep, goldman said they would be a slight boost to gdp growth extender to spending an middle income tax credits, slightly offsetting the impact of higher corporate tax rates. elon musk's internet provider starlink is reversing course saying it will comply with brazil's top court ordered automation access to x. the change follows a judicial order which froze darling's bank accounts. and the demand to aspirational luxury is forcing swiss watchmaker for financially. there the first brands to confirm they are using state assistance so when a group's ceo called a "small watch crisis," under the government the swiss state pays up to 80%. that is your bloomberg brief.

jonathan: up next, looking for a soft landing. >> the fact that core inflation is running below 2%, to me that suggests that they are already too tight. going 50 on the first go is not a particularly big risk. jonathan: you're are watching bloomberg tv. ♪

♪ jonathan: stocks lower, bonds rallying, yields down. under surveillance this morning, looking for a soft landing. >> 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. >> treasury yields extending to clients, traders bracing for more volatility with fresh data head including jobs at 10:00 a.m. eastern time we think the pricing of near-term rate cuts is a little too aggressive however we acknowledge that the bar for more rapid pace of using should further labor market softening become evident, is low. roger joins us now for more. welcome to the program, sir. just how difficult is it to invest in this moment given the risk in either direction? >> i think when you look at the trend in data we received last week, the economy still has a pretty reasonable momentum, gdp growing at 3% in the second quarter, july spending data. but then policies and restrictive territory and when we look forward into next year,

you do see the economy is likely to slow. potentially approaching stalled speed around the middle of the year. it looks good now, but we do see slowing going forward. i think the fed acknowledges that as well. the fed starts to ease in a 25 per basis point clip. but we have inflation now close to target and the labor market much looser than it was. >> just how low is the bar? what numbers are we talking about aunt doesn't just come down to that one print? >> i think just that one print. two into the question, if we saw job gains below 100,000, i think

a case be reasonably high. with inflation back at trent and a labor market that has come back, it looks like the policy is in the wrong place, to the fed's right to get started. if the risks are increasing that we could see more material slowdown in growth for the labor market, i think the fed could easily get more grace -- aggressive this year. jonathan: when we begin to think about normal, what kind of numbers do you associate with normal to mark -- with normal? >> we actually think the neutral rate is higher, somewhere between three and 3.5. 200 basis point of using we have takes policy toward where we think, around the neutral level. anymore adverse economic outcome, that trough in the policy rate, we think it is

still materially further. typically the fed takes the fed funds rate negative. down to 3, 3 .5 would be neutral. more adverse economic outcomes, rates can still fall further than that. >> your base case, more cuts on the way next year. how do you consider cuts next year, given if we might have higher inflation, higher tariffs, every difficulty game out? >> the policy for the next year becomes a lot more uncertain. real policy rate of 3%, i think it's going to be difficult for the fed to avoid contemplating going 50 at some point over the next year if we do get some growth. obviously we get ups and downs in growth. it seems likely will get a period where we get a trend of weaker data and the fed at that point will have to make a serious decision whether the risk/reward are actually picking up the pace of easing is favorable. we saw that in prior easing

cycles. downside economic development. that is a typical autumn for a fed easing cycle. >> thank you, sir. if you want to see the price action currently, still pulling back by 0.4% following the biggest one-day loss going all the way back to august 5, which was not a great time for the market. coming up, we will catch up with lori of state street, martin hoffman and mark maurer and amanda lynam of black rock. this is bloomberg.

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♪ >> there's a lot of opportunity for those who want to do their homework and look in the equity market. >> they are more economically sensitive. >> the income side of the economy is what has been most concerned. it's not a reason to panic but it is a reason to understand what consumers are going to be more prudent. >> the outlook may not be so

strong. >> you had started to see more improvement and i think that is a healthy thing from the market. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the third hour of "bloomberg serveillance" starts right now. let's kick it off with the scores on the s&p 500 negative by 0.4%. on the nasdaq we are down by 0.7. on the russell, by 0.5. adding to yesterday's losses. biggest one-day drop since july 24. survey around one under 60,000 jobs for the month of august. later on today we get job openings, that comes at 10:00 a.m. eastern time. more signs of consumer weakness earlier on today.

consumer difficulties, the stock getting absolutely hammered and anne-marie, we saw exactly the same thing with dollar general about a week ago.this consumer is struggling jonathan: to maintain higher inflation. >> also interesting is that these stores are the ones that are supposed to do well in this environment, and why aren't they? look at the mass competition coming in from places like walmart. places like aldi. they are offering price cutting and they are a real competitor now, and that is clearly weighing on these companies. jonathan: mentioned in the previous hour as well, dollar tree has its own difficulties down 11% but certainly seeing the same story. dollar general in the last week in what i think was maybe the quote of august from corporate america on low income shoppers, inflation has continued to negatively impacting households with more than 60% claiming they had to sacrifice on purchasing basic necessities. we talk about the inflation

story being mission accomplished, measured america is anything but. you can see it in the numbers repeatedly. annmarie: that is what raphael bostic continues to say. his concern has always been cutting and then seeing they didn't kill the inflation dragon and they need to hike again. he doesn't want to do this whipsaw which is why it is interesting when people come on and say potentially we would get 50. how do you get some of my raphael bostic to 50 when he still has concerns about inflationary pressures? jonathan: using words like methodical on repeat. -50.4. just to touch base, the rally continues. yields lower once again. down about two basis point on the session. the euro not doing much. crude bouncing by 0.8 percent, $70.88. brent crude running as well. just a story the drop in the last few hours. a conversation around whether

opec have to pull back on this increase in supply that was due to happen later this year. >> because they probably want to protect prices and they now are going to have potentially a deal in place for the western, eastern government of libya. so why does opec have to add? they are also basically fighting the united states. fighting more than 30 million barrels a day from the u.s. >> coming up this hour, lori of state street has the global tech selloff continues. lisa is at the goldman sachs retail conference, catching up with the on holding co-ceos at the footwear brand ramps up international expansion, and walmart senior vp on a new e-commerce lineup. all of that still to come to the next 55 minutes or so. another month begins with another selloff. stocks posting as traders brace more economic data.

in the u.s., economic activity has proven resilient, but we are seeing meaningful signs of a slowdown. we are watching for signs with more concerning deterioration. welcome back to the program, let's start with your quote. meaningful signs of a slowdown. where do you see those currently? >> certainly we saw some of that in the labor market reports and the underlying weakness we are seeing coming through is something that has been concerning, but we've been on the hunt for a while to get started with rate cutting. we actually think that rates at the current levels are too restrictive given the slowdown in activity that we have seen this year. jonathan: are you leaning back out of u.s. equities? what are you doing with exposure to u.s. stocks? >> we have definitely pared our exposure to stocks. china has been slowing, the eurozone looks to be challenged at this point in time. so we do maintain a slight overweight to equities but it is

much more concentrated in large-cap u.s. in particular with a little bit of french exposure in em where we think valuations but pretty attractive. jonathan: where is the rest of the world right now? we are having this the conversation around the story of the federal reserve and the same time trying to work out with rope bridges can rebalance as well because growth differentials have been very wide, as you know. do you think we can close the gap in the months to, or do europe and china have their own difficulties? >> it is very idiosyncratic. certainly in europe we think there is room for them to cut further. the problem is that you have a lot more pressure from the geopolitical risks that are burdening europe. some of the more procyclical sectors are more represented in europe. that is an area we've been quite cautious on despite the fact that it looked over to you look at the u.s. and there are still a lot of tailwinds, we think the

consumer is a bit challenged, but there are places like government spending and you do still have a lot of the key industries and technologies that are dominant here in the u.s. annmarie: when you say the consumers challenged, do you mean across the board or are you just seeing this in the lower end? >> primarily in the lower end. we've seen things like stock market valuations and housing increases for the benefit disproportionately the upper end, but some of the things that are starting to concern us are broader scale layoffs. we are starting to see announcements of companies that are employing largely white-collar, relatively higher compensated employees. that's an area we are going to be watching very carefully because of this point in time, it doesn't mean they could become so. annmarie: we know that that is now focused on the later portion of the dual mandate. if a basis point cut is

warranted. we think the fed is more likely to cut 25. what do they need to see friday to move to 50? >> i think there's very little that could move them to 50 in september despite the fact that we think that is warranted. they can signal it all along that they are going to be very data dependent. they've been signaling all along that they are going to be measured. they definitely have the inflation demand in their sights still, so i think it is more likely that we see a 25 basis points cut, but a bit more forward guidance around how they are seeing this evolve, and what might cause indirectly more aggressive. annmarie: when it comes to the data on friday, do you take it with a grain of salt given the massive revisions we recently saw? >> that is the big story we've been talking about all year. the fact that at the time when central bankers are focused so much on the coincident data, data has been very volatile.

we saw that in the labor reports that came out that actually lead to market weakness in august. it is sort of a conundrum right now, but they have committed to that. the fact that they are broadening out things like labor markets instead of not just inflation is very healthy from that standpoint. >> it's difficult, we've asked this question already a few times whether we should just ignore headline payrolls or subtract 60,000 to 70,000. i even had a question yesterday whether we should place more weight on the adp because maybe that gives us a better read of guest saying jobs opening focused on the beige book. how much weight do put on one report vs. the other this week? >> you have to look much more broadly because it is not even just the headline number. what are we seeing in terms of hours worked, for example? we are also hearing more and more that employers are getting

into the pricing power, that they don't necessarily have to pay up. it is not just about the headline number, but look at the detail, see what else is out there, where there might actually be weakness. jonathan: thank you, big week ahead. let's cross over to dani burger. >> global cars is walking back its target to go fully electric by 2040. volvo will aim for 90% to 100 percent of sales to be a mix of both fully electric and hybrid cars the end of the decade. the company said still plans to become a fully electric car company long-term. dick's sporting goods deliver better than estimated second-quarter results for sales and earnings. the report does suggest the sporting goods store is sidestepping widespread consumer caution that hurt other company chains. the company expects comparable store sales, two .5% to 3.5%, up

from a previous forecast tapping out at 3%. nvidia's ceo humbled the most ever after chip stocks yesterday. his net worth slumped about $10 billion to $94.9 billion on tuesday, the biggest single day drop for him since the bloomberg index began tracking his wealth in 2016. the plunge followed a 9.5% drop in shares from the chipmaker cofounded. and that is your brief. jonathan: thank you. up next on the program, the morning calls, plus martin-and marc maurer is the brand looks to continue gaining market share in the footwear space. we will cross over to lisa at the conference in just a moment. ♪

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♪ jonathan: one hour 16 minutes away from the cash open, futures pulling back, yelled lower. time now for some morning calls. first off, a $43 price target. driving more upside in 2025. consensus estimate is they've got to be better on portions. terrible protein portions. annmarie: a little bit of a scoop. they need to update up. >> that's probably why. barclays down people wait with a price target. stop down by another 2.9%.

a $90 price target, following the u.s. presidential election which will benefit the company's business. nasdaq is up by about 1%. let's head back to lisa on the ground, the goldman sachs global conference with the consumer very much in focus this morning. lisa: honestly to me, the big question for every money on wall street is just what is the state of u.s. consumer? the state of the u.s. consumer is very strong, at least based on ongoing demand, but there's real question about market share and how do you grow a company this month with 70% gain in the shares at a time in the likes of nike are seeing a decline of 24%. joining us now i the co-ceos and godfather of each other's children. i want to start with this question of how do you sort of establish yourself in the category that is highly

competitive where you are also seeing declines elsewhere? >> submission of the company is to ignite a spirit of movement. we broke out into many other categories like tennis, like outdoors, but also lifestyle. and we want to be the most premium performance sportswear brand. we live five for section performance and design, so we speak to a customer that wants to win the mirrors on -- marathon, the everyday runner, and the one who loves to move. rowing in the premium category is very strong. your question on the consumer demand, we had an amazing summer, we had so many highlights from paris to the lodge with zendaya in over a billion dollar in sales in the first half of the year with 30% growth, so we couldn't be happier. lisa: roger federer join with you in 2018, owning 3% of the

company. .21, it is kind of a slow start. what catalyzed the search that we have seen so far this year? >> i don't think we had a slow start. we grew consistently by 70% over the last couple of years including the ipo and they think since the ipl we've been very focused on executing on our strategy, which was who wanted to increase the footprint that we had in the u.s., it was important to start to get into retail, we wanted to grow apparel. it was important for us to continue to gain share in asia and in china and that think we executed on all of these points, and we knew we needed to transition from a face of hyper growth and three-phase of more durable growth. this is more in the 25%-30% range, and this is exactly the journey we are on this is what is happening this year. the nice thing is we are at the size now where we are winning a lot of incremental new consumers

and we can give them access to our products, to our footwear, on the journey we are on. lisa: you are a zurich-based company for the bulk of the growth has been in the u.s., north and south america. how do you see that evolving over time? is that the biggest growth area going forward torres china the biggest growth area kumar >> the u.s. is our most important market and we make about 65% of sales at the same time, asia is the fastest-growing markets including china, japan, australia. soy think being born in switzerland we became a global company very early on. this helps us because we have so many pillars of growth all around the world that we can execute on. i think that is a unique position. lisa: i talked about nike and they kind of grew up in tandem with michael jordan and his star power. you've not corrupt, but you rode

in tandem with roger federer. now you are bringing on zendaya. she is not a sports star. what does this represent about the shift in how you are trying to target specific influencers in a world that some people are saying the very entry is not lower, but different in terms of potential disruptors based on social media? >> the senate in the very beginning, we are about igniting spirit through movement. for us the question was how can we credibly tap into many different communities and excite them to move? and roger is absolutely essential to tapping into the tennis community, to start to build tennis together. and also make the company known to more and more people because obviously the awareness that he has and how he was helping to reach a larger audience. within they are, we spotted her wearing the product. she was wearing the product moving. she wasn't wearing the product just standing around so it was

very important for her that more people can get access to movement and that she can shave a little bit the messaging that is happening there and product that these people are wearing. so that really allowed us to start to work with her on apparel collections, footwear collections. she has her own apparel line, we can see more of that. so that allows her to bring now that collection to her community. this is also you saw in the air tennis video. roger couldn't play air tennis by himself, nor could the diet do that. -- zendaya do that. for us to bring characters and individuals together is a huge dream and we are very happy we can bring that to the world. lisa: one thing that i have been talking about people with this morning if the question of direct to consumer which was a focus of nike, and i hate to keep mentioning them but this is another parallel but some people are drawing, the need to do both.

the idea to emphasize stores but also direct to consumer and also website. how do you navigate that? >> we absolutely believe in the power of the distribution network. there are so a super important partner for us, and because that combination of our own direct to consumer challenge, they allow us to reach much more customers in a short amount of time. a few years ago we started to build our own detail network in new york. now we have 25 stores outside of china, same amount in china. that is performing incredibly well for us as well, including superhigh apparel shares. apparel up as an important category. so we really see that this combination of being able to connect more closer with the

customers is a very important combination and success factor. lisa: you talk about china. there's a lot of concern with the landscape is going to look like for non-chinese companies in the mainland, particularly as we don't believe nowhere leadership is going and where the moods are going and where tariffs are going. how are you navigating that anytime you're are trying to expand? >> for us it is about bringing the experience of movement of the consumer. we have a largely local team, there's very few people in china scaling the brand. we are focusing on building stores in china, focusing on having the right product available and is working out. so we are growing very strongly in china, we are very happy. it is together with japan are fastest-growing market and i think the on story and what we filled in the auto market shows that in china, we are still very much behind on an adoption curve

from the market penetration and we still feel there is so much to grow and half consumer demand is exactly working out in china isn't even that important because we are positive on how we can look at the near future and how we can navigate more political topics. lisa: who do you see as your biggest competitor right now? >> we've almost created the market that we are in today. i think for us it is much more opening up more market opportunities. we also open up new price points , so we focus on herself. in paris, we announced light spray which we think of the potential to really revolutionize the running industry, how a product looks, however product is manufactured,

and how you come up to the next level of sustainability. so we are focused on ourselves. >> do you guys go for runs in the morning together? >> a lot. not so much together actually because he is way faster. not so much together, but running and movement is a very important part of our culture so i think it really helps us to move while we are thinking through problems and helps us to probably come up with better solutions. it is not just us doing it, it is a big part of the company is doing. we also did a run this morning with many of the investors at 6:00 a.m., so we were helping them to have a good start to the day. lisa: real quick, what is your sense going forward of the biggest problem would be for this year as you think through it every morning in your runs? >> the fun part of our job is to be able to scale and think about what is the right speed for the company, what do we need to do next to bring the company to the next level? sometimes it still feels like we

are acting in a 500 million company but we want to be a 3.5 billion company and that is the fun part. this is also be told the team about. embrace the challenge, embrace the uncertainty. everything is a little bit chaotic but i think that makes up the fun. lisa: really appreciate it. as i was eating my bagel i came in this morning and saw them all gathered together after their run and it felt very different. jonathan: are you trying to get invited on a run with the team? lisa: maybe, i don't know. it might have been better. jonathan: looking forward to the coverage in the later. lisa joining us again in about 20 minutes when she will catch up with an executive from walmart. look out for that. stephanie ross of wolf research and demand a of black rock still to come. and later, the walmart senior vp

. from new york city, this is bloomberg. ♪

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♪ jonathan: 60 minutes away from the opening bell, equities pulling back by 0.4%. and the nasdaq, down by 0.7. on the russell, down by 0.5. it's almost like a repeat of a month ago. the nervousness kicked in again yesterday. i don't think you can point to any one thing for a reason for the selloff, the magnitude of the move lower that we got across the s&p 500. but it continues this morning. the rally continues in treasuries. yields lower by almost a basis point. we give just a little bit of that up. just a classic risk off move in yesterday's session. the only thing stronger against the dollar, begin. we are negative by 0.2%.

under surveillance this morning, some top stories for you, nvidia suffering a record $279 billion, the biggest loss of value ever for u.s. stock thanks to fresh worries of the ai frenzy. this at the doj slaps the chipmaker with an antitrust subpoena over its market dominance. annmarie: we know the company was given a questionnaire, but now it is a subpoena. that's out -- set that the show down at the doj, except closer to a formal complaint on nvidia. basically they have too much market share, but we talked to mandeep singh. where else with customer supposed to go? jonathan: we will hear more about those complaints, no doubt of the next several weeks or so. the con steel will report --

appoint a majority american board. extending an olive branch to u.s. lawmakers who have opposed the deal including both donald trump and kamala harris. u.s. steel saying if it does not go through they might have to shut plant and they might have to move out of pittsburgh. >> the debate is next week, it is going to be in pennsylvania. what does every single political analyst come on this show mc? that is going to be the be-all, end-all. yet tora bora this morning takes no qualms going after everyone on the right, left and says a politician with the u.s. national interest in mind would celebrate the nippon steel deal with u.s. manufacturing which is what the ceo is saying. he is saying if i don't get this cash infusion i'm going to close factories and lose jobs. jonathan: how will they respond to that? pennsylvania is a big state in this election but it is also hosting the debate between harris and trump.

housework, traders also keeping an eye on data including jobless claims in august payroll. stephanie anticipating 170 5000 jobs added last month and for unemployment to come in line at 4.2%. stephanie, i'm pleased to say, is with us. welcome back, congratulations on your baby girl. looking forward to more conversations with you in the future. let's talk about payrolls first. payrolls on friday, the median estimate survey around $165,000. we've already heard from chairman powell in jackson hole that he does not welcome any interior ration of the jobs market. what is further calling, how would we define that on friday? >> i think it would be in the payrolls print. i think that would be the unemployment rate potentially rising of the 4%. again, not our call, but if we see more signs of softness, the

base case is that a lot of the softness we saw in the month of july was driven by hurricane beryl. our payrolls print will be above 150,000, which we kind of view as trend. so we will have to reassess our view on the labor market, but arctic -- base case is that the print should come in pretty solid. jonathan: why shouldn't i just chop off 60,000, 70,000 off that number on friday? >> i think the revisions might be a little bit overstated. we initially had the numbers that came in, and then it was revised down because of unemployment insurance record and it's actually possible the revisions will be white as large when we get the final numbers because immigration has been playing a role here and it's possible it's not going to count for unemployment insurance. and a lot of noise to say i wouldn't necessarily chop off. maybe you can chop off 30,000 to 40,000 within you are still

looking at a labor market that is growing jobs and an economy that is doing ok. consumer spending is growing about 3% in real terms. annmarie: slowing but not slow. it also like to get your take on yesterday with the ism manufacturing. a fifth consecutive reading show the manufacturing sector is in a sustained contraction. do you foresee that the end of the year? >> the ism has been weak for a long time, it hasn't been a great measure of what is happening in terms of the broader economy. and measures of sentiment which is effectively what a pmi's is, asking purchasing managers how is this month versus last month, same with consumer confidence. so i wouldn't necessarily take that as an indication of where actual broad growth is for the economy. that said, the manufacturing sector has been hurt and we see a cyclical slowdown in a lot of parts of rate-sensitive aspects of the economy.

we might see that for the next quarter or so but we should start to see a rebound in the manufacturing sector. i wouldn't necessarily anticipate that in q3, i think q4 and heading into next year. they mentioned this in the report yesterday, there might be some hesitation to invest just because we don't know what the political landscape will be especially from a tax perspective, but the base case is you will start to see a rebound in the manufacturing sector and the cyclical part of the economy will start to pick up. annmarie: are part of the economy just on hold until after november 5? >> i think that's fair. there have been some questions whether the consumers are waiting to see the result of the election. i don't think so. the consumer is continuing to spend in real terms, certainly goods spending has picked up a little bit, services spending has been solid. i think it is fair to say on the capital spending side that a lot

of companies are just in hold mode and when they see the result of the election, they will be able to start investing again and they will have a greater sense in terms of what the investing landscape will be. jonathan: good to have you back. the brilliant stephanie roth. with us around the table, amanda line of blackrock. let's get to this credit market. how sensitive has this credit market into the growth scare of the last four weeks? >> incredible sensitive. you can see it both in the widening from the early part of august and the very swift snapback. but that shows you the credit market is sensitive to the growth backdrop especially high-yield and average loan issuers on the credit market, not just the cost of capital and interest rate environment. starting trading yesterday morning, we had retraced the entirely -- entirety of the early august widening, almost a record day of new issue supply, so spreads of gapped out in the wider than that.

but we are seeing widening get bought by investors. the key for credit investors is that one, yes, the forward path of monetary policy matters but the reason kind that rate cut really matter. two, we don't need lee strong growth in credit to remain resilient, we kind of just need trend or slightly above trend. there is a wide chasm between a recessionary outcome and the current pace of above or slightly above trend growth and we live in the space between. jonathan: how symmetrical with the widening versus the tightening beneath the surface? >> a kind of higher beta cyclical sector led the tightening but it wasn't uniform. this has been almost a low-quality rally in that high-yield and leverage loans have been outperforming their investment great peers over the past few months. so for all of the talk about

concerns about downside risks, i think investors are making the calculus that we are entering that pretty attractive only healed and therefore the outcome for corporate credit investors can be quite resilient. jonathan: what are you personally advocating for? >> this been a couple asset allocation shifts that have been super relevant. for most of this year, that equation is very clearly in favor of leverage loans because of the rate backdrop. i think it has shifted more neutral. two, the reason volatility has shown us how quickly the market can change. that is especially true for the borrowers who may have found that they were locked out of the market even for a short time. more interest on private capital, something that is not at the whim of the public market volatility. and i still like moving down in quality. one of the key developments since the pandemic is the cliff between downgrading from ig tech high-yield isn't as severe as we would have thought several

months ago. if you can own firms that have a strong incentive to stay investment grade and even if they do all the high-yield will length these and bought, i actually like that. within ig, moving down and probably makes a lot of sense. high-yield, i would not go all the way down in quality. annmarie: when using a corporate credit reaction to the cuts is more important, normalization for easiness, that scenario is not reflected right now in valuations. what would it take for that scenario to be reflected? >> you are exactly right. that is nowhere near even the post-financial crisis average. so what we are baking and at the moment is truly a pretty benign outcome for credit. as stephanie mentioned, you would need to see deterioration in the labor market, the growth backdrop it is consistent with the weakness that we saw in july, such that attended spooks credit investors that growth is not even off trend, but actually meaningfully below. that is the critical factor.

but the longest we have trend growth, companies have shown the ability to navigate this cost of capital environment. really it is an extreme downside risk to growth. the important thing for investors as there is a lot of room for spreads to widen in such a scenario where we are kind of nearing not recessionary levels, but a sharp slowdown. you could see spreads go up to 550, 600. 0 jonathan: you've got your finger on the pulse of this market. how sensitive with this market beta stronger than expected data vs. weaker than expected data? >> stronger-than-expected data is almost praised and at the moment. i realize that gdp can be revised and third quarters tracking a 2%, but we have resilient growth all year and i think the consumer has a surprise to the upside in terms of spending. jonathan: this quickly, the amount of supply in the last 24 hours, companies bringing data

market. funding operating from a position of strength, weakness, or stress? >> a position of proactivity. capital management has not slowed. companies i think are being proactive in terms of capital management and the balance sheet that they move toward later in the year. jonathan: good to see. amanda with the latest in the credit market ahead of the jobs number on friday and the federal reserve decision on september, a meeting starts in september. let's give you an update on your stories elsewhere. >> ignores from them is offered to by the department chain. any statement filed moments ago the family would offer $23 per share, 0.8% premium to tuesday's close. the u.s. department store chain has been suffering as consumers increasingly by direct or online. dealmaking has been seen as one of the potential solutions to the industry's woes. nordstrom earnings last month were better than expected last month thanks to its discount rack chain.

u.s. mortgage rates fell to the lowest level since april 2023. according to data released by the mortgage bankers association last week that a contract rate on a 30 year fixed mortgage throughout the .43%, if it can decline. home purchase application 03.3%. in the u.s. open semifinals, it will be an all-american face-off in the men's tournament after alexander -- taylor fritz upset alexander's care of. fritz's head to his first ever semifinal where he will take on francis t off of -- tiafoe. in the women's tournament, settling cap -- sabalenka will be taking on emma navarro for a spot in the finals. jonathan: i imagine no one can afford it. just ridiculous. annmarie: you also need to check whether or not get a car into

the u.s. open to take home. jonathan: that is a very different thing we can talk about another time. it is personal. goldman sachs global retailing conference with lisa standing by with walmart senior the. as of next. this is bloomberg. ♪

♪ jonathan: 40 formats away from the cash open, equities pulling back by one third of 1%. 3.83. let's head back to lisa now at the goldman sachs global return conference lisa: hey, this is a conversation i've been looking forward to for quite a while. essentially that they are getting bigger and walmart and amazon are very much dominating

the landscape in terms of sales and accumulating market share. a part of that has been the e-commerce site as well as some of the new businesses that walmart has been charting into. he among them is the u.s. marketplace as well as of course fulfillment, the idea of getting packages out. the person who heads both of those is here with us right now in new york city from the west coast. actually, from bensenville. i'm curious. we see e-commerce fulfillment, walmart really transform itself in terms of fluid tears to and how it caters to them. how big could hold e-commerce really get? >> first of all, thank you for having me. i would say we fairly started. e-commerce is all about working backwards from customers which we've been doing for six decades. that has just been about three years, more sellers for more markets to be able to bring the initial stop for our customers will receive his customers what

options, they want convenient and they want low price. when you think about expending more categories, or services, last week he just announced premium unique to marketplace. that is one of the top performing categories of beauty. collectibles. last week we announced the expansion of preowned. so if you have kids like me you would want to have the option of high quality, lower cost i've had that they can break, which they did, so i can save money this been somewhere else. what we do is help people save money, live better. the more we see our customer numbers increasing with more often buying more items. lisa: when i think walmart, i don't think of kendrick lamar, air jordan's, and some of the stoxx offering the coming out. we often talk about having consumer is trading down when it comes to walmart and they actually are looking for deals. that's not really accurate. it's much more that walmart is

catering to different customers, correct? >> i think you put it amply. it is about us serving a much wider customer base. the broad assortment, we see that our customers are looking for a variety of items it could be a rare collectible item they are searching for, it could be premium beauty, it could be a refurbished dyson, for example. we sell all of those different items. a good example, the kendrick lamar shoes. we see a lot of people going after coveted current culture items. stock acts, they sell speakers, collectibles. this is the first destination they come to. now is a customer of walmart, you can buy a grocery, a fresh food, any assortment you want. luxury fashion items. lisa: there's this sense that

you get is lower cost fulfillment, a lower cost distribution for participating with walmart. what is the vision for that distribution, just going to a store and picking it up? that there will be a walmart fleet similar to what we see with amazon and fedex? >> much more than that. -a seller as well on the platforms. fulfillment is one of the most challenging aspects for any business, the a small business or a large brand. we have become incredibly good at it. incredible supply chain operations team. our low-cost, and to end network that powers our sellers in the same supply chain that we build. it offers prices that are typically 50% lower than market and basically is end to end so we have our sellers back. our sellers have actually asked us to extend that service to

their own business think about and serving non-walmart site and customers. we announced last week that this month they can actually do that. another aspect, can you help us think the items? we get it from asia, put it in the right fulfillment centers, fulfill it. we are doing in end to end one-stop shop for our sellers to use. lisa: amazon has been accused of prioritizing their own brands and sort of downplaying some of the customers, one reason why you heard a lot of pushback and lina khan pushing back on that. how does walmart distinguish itself on that front, tried to get ahead of that? >> walmart is in a category of its own. we are more than a marketplace. building all of the connectors of a marketplace, fulfillment ads and only challenge. this no other retailer with the broad reach that we have for the digital and physical integration that we have, and when you think

about it, 90% of america, it is a really strong advantage that nobody else offers. on our marketplace, sellers can ship to supercenters that have auto care centers. you can ship the tire, we will install it for you. second, you can walk into more thousand -- 4000 walmart stores for any item. third, we had merchants last week we were talking to sellers and the line goes out the door. we seem really strong brands coming for marketplace, list their entire assortment and if they are performing for the well, we put them in stores. last but not least, we would believe in working together so we are building the platform for sellers to serve customers with sellers. lisa: how big do you see the marketplace getting?

how big just in general do you see e-commerce as a proportion of overall business? >> the biggest opportunity in retail. we are a few years old, you only open to new a few years ago. they're getting more and more brands. it is all customer demand. every morning we wake up we think about what our customers looking for, you want to make sure those items are on the platform. premium beauty is attracting more brands. collectibles. lisa: there's a sense going forwardout how you plan to arrange with certain geopolitical concerns with respect to regions. are there certain regions that you see this expanding in more than others? >> we are in about 19 countries but think about marketplace. u.s., canada, mexico and chile. sellers make it easy to reach our customer base.

these sellers are not able to sell into all these countries and a single click. what we educate them on if this is the intimate assortment of what customers want, and we expose their assortment --. in works on behalf of the customer. when you want into a walmart store, there is an associate or a manager to help me find the item that you need they will get you what you want. think about search as an online store manager. we work on their behalf to get you those items. jonathan: how are you deploying ai in this? that is sort of the hot topic. >> ai broadens our ecosystem. what we do is if you are listing an item, we make. we help you figure out the right image, the right content, the right category structure we help you with intel on the price could be in the market. there is no one vertical, it is

embedded in the dna of the company. jonathan: in 10 years to you think walmart is going to be a platform, and advertising media company, big-box store or all of the above? >> i think it is going to be, if it is, the first place to shop for our customers. if you have the right items, our customers coming more frequently, and they can find different ways of delivering it. lisa: don't be a stranger, thank you so much for being with us. i look forward to talking with you more at this does evolve. this to me is fascinating. just how walmart and other companies have really been expanding into a very new market and this really gives you a sense from my sneakerhead son and how much they are. jonathan: we knew this was personal. looking forward to having you back in the later tomorrow morning. look out for more conversations throughout the day on bloomberg tv and bloomberg radio.

coming up tomorrow, looking forward to having lisa back because we've got quite a format coming up. the calendar looks like this. data coming at 10:00 a.m. mr. tyler -- eastern time. we will get the adp employment report plus another round of jobless claims and on friday, it is the main event, it is payrolls friday. a pretty soft start of the month of september. down a quarter of 1% on the s&p 500, pulling back in touch going into tomorrow. john stoltzfus oppenheimer, columbia fred neil and kathy jones charles schwab this is bloomberg.

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matt: we are down again after the biggest drop in live trading since august 5 yesterday. i matt miller. katie: "bloomberg open interest" starts right now. ♪ sonali: coming up, chips are down. a global fight from risk assets continues as nvidia suffers a record route. matt: intel's money troubles may soon be a political liability. details on what this means for america's so-called chipmaking renaissance was to katie: going private. the nordstrom family offers to buy its department store chain for nearly $4 billion. all that and more coming up. let's look at where markets are trading after a brutal start to september yesterday.