tv Bloomberg Markets Bloomberg September 6, 2024 12:30pm-1:01pm EDT
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>> welcome to bloomberg markets. stocks sink and treasuries rally on a jobs report one fed official says requires action. here is the market fallout from the weaker than expected jobs report. start with the s&p 500 down for a fourth day and on course for its worst week since march of 2023. this is a broad-based selloff. seeing it across sectors but egg
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tech is leading losses. the magnificent seven with all seven members lower. treasuries have rallied every day this week. the yield on the short end which is ultrasensitive to fed policy or what the fed might you falling as much as 15 basis points. the 10 year yield down about one basis point. the 210 cried -- let's get back to the equities side and bring in abigail doolittle who has been looking at big movers. maybe you go: we have this decline for the s&p 500 but on the week we are down 4%. going back to march of 2023. the nasdaq 100 down more than that. it has everything to do with the selloff and tech but chips in particular. nvidia is the biggest drag, down 5% on the day. down 30% from its recent peak so in a bear market.
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the stock went too far too fast. the recent quarter guide not quite enough. broadcom the same deal. not up as much as nvidia but the guidance and you can see that the results in particular of broadcom last night or today taking down super micro computer and intel's plan to divest some portion of mobile not helping their shares. it is not just technology. all 11 sectors of the s&p 500 are in the red. apple, tesla, google. we have the banks down the most. wells fargo down the better part of 5%. bank of america week, jp morgan, citigroup weak as yields go in. that it's there lending business. in one of these areas where there is nowhere to hide. when we connect this with the s&p 500 and we take a look at what is happening on top of the hood, we are going to see this nice uptrend out of last year's lows but we have been in this congestion.
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this is called a double top. it is lower. those buyers were less enthusiastic than those buyers. as around 200. the target closer to 4600. as long as the haven yen continues to strengthen, that moves investors out of risk assets and that is a big piece of why we have the selling action. scarlet: great reminder to keep and i on the other asset classes including the japanese yen. let's go back to the jobs report because the numbers are fueling debate over fed rate cuts later this month and for the months to come. take a listen. >> this report is better than in july. >> we think the economy is definitely slowing. >> this economy is not slowing down in the way markets are anticipating. >> when we think about september, we think 25 basis is quite reasonable. >> it is hard to say which way they go. the market is pushing for 50. >> 25 is the right number given
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everything in this report was better than in july. >> i don't think this report is definitive on the 25 versus 50. >> it does not look like it is restrictive. if it is restrictive, the report would be weaker. >> the fed need to adjust policy back to normal levels and the question is how quick do they want to do that. scarlet: a sampling of the voices we have posted on bloomberg about the jobs report. let's bring in the chief u.s. economist at pg and fixed income. it is always a pleasure to speak with you. we got from our guests and i think about what the fed governor said. he said it no longer wears patients. it requires action. is it action in the form of 50 basis points or's action in the form of 50 basis points this month and more in the coming months? >> always good to be with you. i inc. the fed is teeing up 25 for september.
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i -- and this report does not scream go 50. i think they should go 50 but they are not. they should go 50 because they should have already been cutting rates. this is not the report that is going to bring them to that. this is a 25 basis point kind of report. i love reading with all of the commentary from the other economists. at the end of the day, job growth has slowed down to it was -- has slowed down. it was an improvement relative to what we saw last month. that was not a good report. the problem for me with everyone sort of trying to say it was a good report come about report, the problem is this. this is the most lagging of economic indicators we get. if this report did screen go 50, the real risk is a recession would be upon us.
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use this report with a ton of caution because it lags in the most profound way. you are going to get 25 and the fed would be pleased if they can continue to go 25 over the next several meetings. that is our call at this point. scarlet: i like that distinction you made about how this data point should be viewed with a great deal of caution. one thing about the jobs picture is layoffs have remained subdued. that has prevented a recession. along cannot stay the case? if the fed starts cutting aggressively can remove straight from tepid growth to normal job growth while avoiding job contractions? tom: i think it is a smart question. what we have to do is break down labor into two distinct categories. when is the firing side of the equation and the other is the hiring side of the equation. there is not a lot of firing taking place right now. the hiring side of the equation
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is slowing down. it has been slowing down for a number of months. it is interesting. this debate on 50 or 25 as it relates to this conversation. i would argue the fed is being given a gift. i think in the context of policy that is pretty restrictive, it would to me would argue for going 50, getting to neutral faster than letting this spread out over the course of the next year or so. scarlet: markets are lurching from data point to data point so i wonder to what extent the next couple data points which are cpi and ppi next week, how expectations are set up for those reports given what we saw today. tom: this ad reality is cpi is a lagging indicator too. we can go through that another day. right now as we look ahead, the
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path is pretty clear for the fed to go 25 clips over the september meeting and we have the november meeting and the december meeting. taking that into the coming year. when i think about monetary policy, monetary policy is calibrated framing fully higher inflation rate. that no longer is the case. between 2.5 and 3%, that to me is -- really drives home the idea you do not need policy calibrated at 550 any longer. it is time to get back down to neutral. this is what the fed has been arguing straight through. i think this is the word of caution should never one is trying to make a case for why the rise in the unemployment rate has not been -- why it has been more benign than it might otherwise seem. but the problem is people don't know -- all they know is the unemployment rate is up. if you look at the relation between the employment rate and
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consumption, wednesday and employment rate rises, consumption tends to slow. that would be a sound argument for the fed continuing to cut rates into next year. scarlet: fantastic insight. always appreciate your joining us. chief u.s. economist at pgm fixed income. deftly puts a spotlight on some sectors that have been hiring fewer workers than others since the pandemic. for more on what has been happening with hospitality, i want to bring in the cofounder and partner at catch hospitality group. thanks for coming in today. >> thank you for having us. scarlet: there is a clear trend of softness in the labor market. companies are not hiring as much but they are not firing a lot of people either and letting people go. what are you seeing in your businesses specifically and in the industry at large? > the jobs report said there were 40,000 new jobs and i think that sounds good at is not because you are seven point 5%
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down to pre-pandemic rates. even though there are jobs that are had, does not mean you're getting a big improvement of where you were pre-pandemic and the bigger challenge is 60% of all restaurants are understaffed so the jobs being taken are people who did not want jobs in the beginning should now those folks are take the jobs they could not take before because they need to make a living. you are not seeing a true picture of what is happening. what we have learned and we learned it six month ago, 12 months ago. in urban markets, people are not working five days a week in an office and that is a big problem. you are going to have lower revenue. when you have lower revenue, you have to look at what you need to do so you need to watched your labor costs, your food cost and make every decision you can that did not -- that is not affect the guest experience to lower your cost. rent is not going any lower. all of the laborers are up so there is not much you can do. scarlet: you have to be hyper focused on your cost and be ruthless about where you spend your money. you mention people in hospitality have to do more with less people.
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those jobs that we have lost, those are gone permanently. they are not coming back. eugene: we have learned how to operate better and that is a gift of the pandemic and continues today. we do not see it coming back any other way. in urban markets or blue state markets where you have legislation making it a challenge to operate, 2011 of the wages in california, we have to learn how to do more with less and that is a big statement we use throughout the organization should scarlet: making do with less, i'm curious what that looks like in this landscape because you mention how cities and urban centers and not getting as many people in during the week. the way people dine out is different. let more people looking to eat on their own in restaurants. that affects what it looks like in terms of your turnover. helped weekly you can -- how quickly you can turn over your tables. is that a good or bad thing for your restaurants? eugene: we don't have enough people going out in the early, the late and the mid-. you are having primetime dining,
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that is fine. everyone is doing a great job. it is the 5:80 and 10:00 p.m. and covid has change the culture of dining out. any large restaurant coming have less density, you're going to have less revenue. you're going to have to do the same amount of work with less people and that is the simple way to do it. scarlet: how do you innovate around that to encourage more people to come in earlier or later? is that something you can directly effect -- directly affect? eugene: for us we have to focus on the longevity of the brand, keeping a great product. i don't think it is a happy hour so people are going to come. you have to meet the guests where they are and it is not about a marketing strategy that is going to change that. scarlet: what does this mean for your expansion plans? eugene:eugene: we are helping the economy so we are opening a new restaurant on monday called the corner store in soho. we are opening in dallas in november and scottsdale in february so we are doing our part to grow and we are think about quality products are always going to be available and
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people are always going to want them and that is never going to change. scarlet: you have to be a lot more tricky to go about your process -- about hiring in your process. cofounder and partner at catch hospitality. coming up, apple is set to debut new generation products on monday. big with our internal analyst about what it would take for the launch to land well with investors. this is bloomberg. ♪
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with bloomberg intelligence joins us with more. this is the widely anticipated ai enabled iphone 16 that could launch a massive refresh cycle after three years of pretty flat sales. unit sales at least. you caution that is not going to happen right away. >> we have done some work on this thing. mark gurman has done a phenomenal job of talking about when these features are going to come out. ai features will take some time to roll out. it will take at least a year in terms of some of them will be near-term. they will be in the u.s. first. we have to figure out how it goes globally. it is not going to be things are going to be available, all the features. second, the fun factor is not going to be that different than last year's model. you're not seeing a big surprise. the iphone 17 is a big upgrade. if you take a look at that plus the apple intelligence, we think
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the concept is the same but it gets pushed out by 12 months. scarlet: i fixate on the timeline here because now is when investors are assessing which suppliers will get a boost. given what you said about the staggered refresh cycle, what names would you pay attention to? >> i would still go back to apple and say for the last three and have come four years, they have not seen a big jump in unit shipments. we will see some shipment jump that is for the natural progressions of people going back and refreshing. we should see at least a five cent jump. -- 5% jump. it could peak revenue seven or 8% which is a very big deal because it has not happened in a long while. scarlet: talk about specific companies you would pay attention to in the supply chain among customers, among carriers. what jumps out at you?
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>> carriers analyst john butler thinks at&t is well-positioned in this area. there are display companies in asia that benefit from this. the number one thing in our view is what it does to apple services business because that is an area we are going to see a higher icloud usage, higher applecare. it is probably the most important event for apple in a year. we think there is going to be a lot of enthusiasm. new airpods and new i watches. this is an area where we think could also get a bump. scarlet: it is a good reminder of that service is part of the business which is much higher margin and more predictable. thank you as always. coming up, the crypto industry bracing for a new administration in washington. we are talking with the ceo of tether to get his perspective.
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likes of one-time candidate rfk jr. let's get insight from someone in the center of the digital money industry. the ceo of tether holdings. thank you for joining us. i know you are based in europe but tether knows no boundaries. i'm curious how you are thinking about the election in november. how big a deal do you think it is for the crip oh industry >> the election will be very important for the crypto industry. we have seen candidates looking at the current state of crypto currency support in the u.s. i must say the cryptocurrency in the u.s. has not been well supported until currently. we have seen actions against very important companies. being european, being italian, i see the u.s. as being the
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predominant country when it comes to innovation. when i grew up in my youth, i have seen the u.s. being the country bringing forward the technological innovation, the movies. you would see that very clearly and it feels weird the u.s. is not taking the same opportunity in leading one of the most revolutionizing technologies in the world. scarlet: we know that both candidates have talked up their intent is the crip oh industry. one -- the crypto industry. from where you sit, where -- what is the bigger priority? reducing government regulation on the street like what trump is proposing or preventing safeguards angles of the road like kamala harris is proposing? paolo: i think a mix of both is very important. you want to have good regulations supporting these powerful technologies. as the company that invented the stable point market and technology, we think that it is
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very important for both sides to understand how powerful it is and how important it could be for u.s. economy. tether has -- is crossing $100 billion in treasuries in our reserves. what we were able to achieve through our technology is centralizing the access to ownership. we are seeing countries like china and others selling u.s. debt. we are proving after 10 years we were able to build 150 million user bases of new holders of u.s. debt. this requires proper regulations to ensure safety of the product. scarlet: i have to ask you about the new synthetic dollar backed by gold on your alloy by tether you introduced in june. . what prompted this and who is this currency aimed at?
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paolo: it is very important for us to research new ways of providing confidence to our user base and approve technology based on production. until 1991, the u.s. dollar was backed by gold. we often hear about dangerous -- the interest of our customers to have an option id. we think it is the most digital used dollar across the world. we see also the opportunity to provide an option for others who want to see a more transparent backing of a synthetic dollar. gold is the best asset to make that happen because it is much less volatile than bitcoin. gold is a better choice.
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scarlet: i appreciate you joining us. the chief executive officer of tether holdings joining us from switzerland. that does it from bloomberg markets this hour. keep it here with the u.s. equity market in decline led by technology. . yields moving down as well as investors anticipate fed rate cuts later this month. this is bloomberg. ♪ ( ♪♪ ) because this game is for everyone. ryan t. writes, "moving is stressful. can you help me take one thing off of my to do list?” ugh, moving's the worst. with xfinity, you can transfer your internet in just a few taps. just a few easy moves. did somebody say “easy moves”? ♪ ♪ oh no. no, i was talking about moving your internet. this will move the internet. ♪ ♪ ooh, ooh. -let's keep it professional. professional dancers! -ok! stay connected during your move with the best in home wifi. easily transfer your services in the xfinity app. bring on the good stuff.
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power. live from washington dc. joe: jobs day. august data bringing fresh concerns about the economy as the presidential candidates framed their proposals. welcome to the friday edition. tuesday night in philly they might have to do some explaining. kailey: kamala harris, it may not be looking as strong now as we consider the softer payroll print but also the downward revisions of jobs. joe: questions about what the fed will do.
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