>> they need together and think about do we want to go towards 25 or 50. >> 50 could be more of a negative signal than reassuring signal that the fed is on the case. >> that is the argument for a 50 now. quickly get us to maturity. >> if you don't think there's a recession, you probably want to cut at a more regret -- aggressive pace. >> the fed has to be careful about that. >> this is "bloomberg surveillance." jonathan: let's get the week started. good morning, good morning for

our audience worldwide. "bloomberg surveillance" starts now. coming in on a four-day losing streak on the s&p 500 following an indecisive job number on friday, hoping to leave behind the worst week of the year so far on the s&p 500. equity futures bouncing a touch. s&p 500 positive by .7%. nasdaq 100, positive .9%. the focus shifts from one side of the other to the other. cpi, ppi right around the corner. lisa: a lot of people say the employment mandate is very much front and center. if we get a softer than expected cpi print, how much does this open the door for the fed to be greater in terms of their accommodation? that is not a pressure on the table. jonathan: the fed goes into a quiet period now. there's a little bit of daylight between where investors are and where the fed speakers are. the way they look at the labor market is a little different.

for investors, they look at the market as guilty until proven innocent. for officials at the fomc, innocent until proven guilty which is why the market is saying let's go 50. market participants are looking at the fed who were telling them the base case is 25. lisa: every note i read over the week and said 25 is the base case. you look deeper, they are all saying the same thing from chris weller to seth carpenter at morgan stanley. the risks are for the downside and they need more information to prove the guiltyness of the labor market. i see some downside risk to employment that i'm watching closely. they have heightened risks. the slowdown will be more than a baseline assumes. that is the anxiety underpinning the market movements. jonathan: a decision on september 18. after september 18, the only thing is the election in early november. there's a big debate.

we are hoping we get some clarity on policy. listening to the former president trump over the weekend i have anything but clarity on policy. what is the new tariff push now? annmarie: not a ton of detail but i spoke to individuals close to the former president about what he mean to said going after individuals not using the dollar. those that have a trade surplus but lessening their dollar holdings, trying to string their holdings, i.e. china, they would use tariffs. maybe some of those individuals in the gulf. donald trump loves to use tariffs. he talked about this last week at the economic club of new york. others say trump says he will use tariffs as a way to start negotiations. maybe it is not going to be where it ends. lisa: this highlights the confusion. i'm old enough to member when he was talking about the importance of not having a dollar that is too strong. then you have the idea people moving away from the dollar which would allow it to be

weaker actual being persecuted, being tariffed 100%. which donald trump is the one who's trying to cater to the base that he's looking for? it's important to listen to the messaging. tariffs are taking the preeminence over the dollar. that might be the tone heading into some of the debates. when i talked to businesses, they care about that more than most other things. jonathan: there's a contradiction we need to work through. if you're just doing this, welcome to the program. equity futures on the s&p 500 with the bounce, up .3%. we will talk about is happening with the yield curve. twos versus 10s. another bounce we need to focus on, crude back at $68. up by 1%. on friday, five-day losing streak, closed down by almost 8% on wti crude.

lisa: the lowest level since 2021. this raises a real question at a time when you're not just seeing it in the oil space. you are seeing it in the copper, the iron or. that -- ore. that is my concern. we are seeing demand rollover from china and japan. what are the pillars holding up the economy? jonathan: commodities have had a tough time. we will catch up with joe quinlan from bank of america, congressman french hill as trump doubles down on tariffs, and nola richardson of adp. joe quinlan is bullish. the productive capacity and wealth of the u.s. keeps is bullish on u.s. assets as core holdings. joe kicks off the week with us.

what i hear from you is you are unwilling to fade u.s. exceptionalism. is that fair and ask plain white. -- explain why. joe: we are in the camp we get 25 basis point cut in september. this is the most diverse economy in the world. you are seeing demand for u.s. securities overseas. we get caught up in the moment, the cpi, the debate, the election. on the others of the election we will continue to grow. productivity will kick in and drive the u.s. economy. i would not call it exceptionalism but when you look at relatively speaking we are out in front. we see that continuing. jonathan: explain what the equity market is trailing so poorly at the moment. why the dollar has been on such a losing streak over the last few months. what back set up? -- backs that up? joe: september is rude to

investors. october will be choppy. we have some pullback here with the mega tech. a lot of clients happy in the money market. we have $6 trillion sitting there. i think the dollar weakness is in and around investors, foreign investors worrying about what you just talked about, tariffs. what is that mean for more protectionism? some of the foreign investors they own around 20% of u.s. treasuries, around 20% of equities. they have an indirect vote. some of the dollar weakness is foreign investors repositioning ahead of a u.s. more nationalist and more protectionist. lisa: we heard from people that say volatility is something you want to lean into and take advantage of. they have a bullish view on the u.s. economy and u.s. exceptionalism. if that is the case, how much conviction do you have to lean against the seasonal weakness some people say we are seeing now? joe: we have high conviction. we put out a note on friday

saying on these pullbacks between now and the election step in. buy the pullbacks. large-cap, small-cap, all styles. that is our preference and goal. we expect volatility. if investors are not affecting volatility they are missing the opportunity to add quality and rebalance the portfolio. we are leaning into the volatility. lisa: given the fact that you have chris waller coming out and saying in general they are positive but they do see risks to the downside. you are hearing similar commentary coming throughout wall street analysts. joe: i see the economy slowing, not stalling. 4.2% unemployment rate is pretty good relatively speaking. we saw female participation rates at all-time highs. college-educated workers with a four year degree or more, 2.5. we are still convinced the

consumer-let economy continues to chug along. it is slowing, not stalling. it's a head fake. the worry is around recession. maybe we will have that down the road. we do think the market has priced that in. lisa: down the road, as a next year? what pushes the u.s. into recession? joe: great question. what could push us into recession? suppose we have an election that is not settled by november 5. suppose we have a pullback following that. it will be a policy -- recession comes from policy errors. whether it is protectionism, the tariffs, immigration, overseas, geopolitical events, that is how is going to happen. recessions typically revolve around policy errors. we think the fed has done a good job. two years ago we were talking about the cpi print coming down from 9%. now we are below 3%.

we are not done. we don't believe the fed is behind the curve. processions come from policy errors. annmarie: you mentioned protectionism and how investors are worried about a more protectionist united states. does that change whether we get donald trump or kamala harris? joe: good question. we will see. we need more policy meat on the bones for investors to realize democrats or republicans. that is an ongoing issue with our clients. when you talk to the manufacturers, a lot of small businesses, they are worried about the tariffs, protectionism, trade relations. overlay that with immigration. that is a big point of contention for a lot of u.s. companies. that is there key in terms of how many cases for labor we are on. protectionism is front of mind and the costs associated with it. protectionism is typically

inflationary. now we are looking to reverse that policy. that can be upsetting to the markets. jonathan: joe quinlan on this equity market. still bullish, still long. jim bianco on with us later in line with some of that thinking we had from tossed and slogged of apollo. head fake. nothing to see here. things are ok in the labor market. lisa: he is on the landing camp where the fed does not need to do that much. a similar kind of town. when you talk about the balance of risks and you hear joe quinlan talking about the fed mistake or policy air, what is it? what is the more likely error? , going by 50 basis point or 25 basis points? moving more quickly and aggressively and allowing the market to rally or them holding back? i don't think anybody knows the answer as much as people are sounding convicted. jonathan: base on the price action in the bond market it is

clear with the bond market expects. frontloading a series of rate cuts from the fomc. lisa: that is why wednesday will be interesting. the cpi print coming out when if inflation is coming in lower, that means theoretically if you extrapolate it out it's a more restrictive fed reserve and maybe they have room to cut rates without talking about the labor market is much as the appropriate policy for this particular go around. jonathan: it feels like september 18. the next fed decision. they have not decided 25 or 50. chairman powell's speech felt like a 50 basis point rate cut speech. officials since chairman powell have not as ackley back to that up. lisa: no. 25 seems about right. they talk about a soft landing and the need not to go too far. completely hedged. chris waller came out and talked about the even balance of risks.

they don't want to allow the economy to get too hot but they are very aware of the potential for downside risks. it is a knife's edge. not data point necessarily dependent on the margins. jonathan: bonds down, yields up. equity futures up by .08%. let's get you some stories from elsewhere. dani: venezuela's opposition leader edmundo gonzalez has been given asylum in spain. venezuelan authorities say nicolas maduro was reelected to a third term in order to gonzalez's arrest. the japanese owner of 7-eleven had rejected is $39 billion initial acquisition bid. couche-tard wants to agree on a by at, the largest ever takeover

of a japanese company. boeing's starliner returned without the astronauts this weekend. the capsule left the space station at 6:04 p.m. eastern on friday night. we landed at white sands, new mexico after a six-hour flight. the astronauts were left behind. they were originally set to come home in the starliner after 10 days but will remain until february 2025 when a spacex craft will carry them home. that is your brief. jonathan: still shaking my head about the story. more from dani in 30 minutes time. lisa: she looked like she was having a good time and space. jonathan: i'm not sure when those pictures were taken. lisa: may be fun. i have always wanted to have zero gravity. jonathan: up next, donald trump, the tariff man. >> and the words of a very great but highly underrated president, william mckinley, i am a tariff

man standing on a tariff platform. jonathan: that conversation of next. from new york city good morning. ♪ ♪ at aes, our energy solutions have powered the world forward for more than 40 years. and as demand continues to scale, so do our solutions. introducing maximo - our new ai-enabled solar robot.

max makes construction faster, safer and more cost effective than ever before. and with max doing the heavy lifting, even more people can join the team. solar energy is changing the world, aes is changing the world of solar.

jonathan: live from new york city, welcome to the program. good morning to you. equity futures positive .08%, unwinding some losses from friday. yields higher as well. much lower last week on the front end of the curve. help this morning by five basis points. under surveillance, donald trump, the tariff man. >> in the words of a very great but highly underrated president william mckinley, i am a tariff man standing on a tariff platform. we will keep the u.s. dollar as the world's reserve currency. it is currently under major

siege. many countries are leaving the dollar. they are not going to leave the dollar with me. you leave the dollar, you not doing business with the united states. we will put a one hundred percent tariff on your goods. jonathan: donald trump threatening 100% tariffs on countries that shift away from the u.s. dollar. the comments coming in wisconsin. the latest polling shows the race in a dead heat with a mental beginning to shift in the former president's favor. joining us now, congressman french hill of arkansas. rep. hill: good to be with you. jonathan: can you translate that? that has been the criticism of the other side. rep. hill: i think it's president trump having a good time at a rally. back when william mckinley was president we financed the whole federal government through tariffs. that was the principal source of revenue. the biggest risk to the dollar

being the principal reserve currency of the world is our own physical situation. -- fiscal situation. we will not be supplanted by a group of countries that want to replace the dollar. the biggest risk is our own sustainable fiscal situation. jonathan: d.c. a campaign agenda to replace that on the republican side? rep. hill: i don't see it for either political party. it's been concerning to a lot of members of congress. to get our country in a sustainable fiscal situation we need to make long-term reforms to are mandatory spending programs such as veterans benefits or social security or medicare. health care costs drive a lot of that nonsustainable finance. that can only be done on a bipartisan basis. it's been attempted on and off for 40 years with really only one material change, which was ronald reagan's work with, cut a

speaker tip o'neil to reform social security back in 1983 and 1984. it is that targeted approach that we need. all we are doing is trying to lower the growth rate of those programs over a long term. we have the best economy, the best rule of law system, the best mitigation and legal court system in the world. we have the best banking and capital market system in the world. those are -- he also want global confidence and domestic confidence in a long-term fiscal situation. annmarie: are you confident the government will not shut down? we are facing shutdown on september 30. you will be back in d.c. for three weeks to hammer this out. rep. hill: i'm confident we will not have a government shutdown. we are just a few weeks away from a national election. i don't thing that benefits

anybody running for reelection. we will navigate the need for a continuing resolution to get fiscal 2025 spending moved to be on the election. in the house, 70% of funding past across the house floor -- passed across the house floor. they have not gotten across the senate floor spending but i think it we will get it done before september 30. annmarie: is this a cr that is clean? schumer put out a letter last night talking about the fact there can't be any poison pills and it. will libya clean cr that can be agreed to that is basically just funding the government? rep. hill: that might be ultimately what happens. speaker johnson has proposed we do a clean cr with three additions. one, some disaster money that is needed. two, virginia class summaries be added in. finally, the save act, a republican proposal that passed

with bipartisan support reminding states that only citizens can vote in federal elections. giving the states some guidance on how to make sure that is the case. with nearly 10 million people in the country, a huge majority of which are not citizens, audits have found some noncitizens in federal elections. it was a big issue in arkansas in the last few weeks. it came up time and time again at events i want to. people are concerned about that. speaker johnson proposes we put that bill, the save act attached to the cr. annmarie: it does not look like the senate is willing to take that up. what are you and your colleagues discussing when you look down ballot? the fact that democrats are absolutely trouncing republicans when it comes to fundraising, especially in the house. rep. hill: our candidates, both are challengers and our incumbents had excellent hard money fundraising up until the summer. they were leading their

democratic opponents across the board through the summer fundraising. the first 18 months of the cycle i think our incumbents and challengers did very well. democrats had some momentum in the last few weeks to catch up. now the rubber is hitting the road. i think we have adequate funding in the house to hold the house, pick up seats. i feel optimistic about the senate as well. lisa: you were talking about the deficit and how was your biggest concern more than countries that are looking for alternatives to the dollar. do you think this country can afford a 50% corporate tax rate given the fact already we are kind of struggling to bridge that gap? rep. hill: when we come into session in the 119th congress next year we have some real challenges. we have two big fiscal red blinking lights on the dashboard of the congress. the first, tax cuts and jobs act rates and policies are going to expire during the year.

secondly, we are coming into another congress with a $2 trillion annualized deficit forecast. congress has hard work. jason smith, our ways and means committee chair has the point on how to preserve growth in this environment and how do we set rates that reflect the growth that we need, the faster economic growth and productivity we want, fairness for small businesses but recognize we are confronting this big deficit. lisa: is it appropriate for the federal reserve to lower rates and a policy shift even if it means inflation runs hotter? rep. hill: i don't think that is the fed's job. their job is price stability, not to do that. it has in the past since 1913. we've had the fed and treasury working in cahoots to lower borrowing costs during world war ii. in a modern context the fed's mission is price level. jonathan: you have places to be

and one of those is the global financial services conference. what should be the top of the wreck agenda in the next term? for the next four years headed up by donald trump and maybe was the head of the financial services committee? rep. hill: we want access to capital. we want a very successful continuation of our capital markets. raising capital through the capital markets but also we want a banking system that has affordable credit and accessible credit. part of that is over the last decade or so since the financial crisis we have added on more regulatory costs in both the portfolio commercial banking sector and the capital markets sector that i don't believe improved safety and soundness and are a detriment to more competition in accessing capital. that is a prince will mission. jonathan: we have a lot to talk about but it's good to see you.

thank you very much. french help, congressman of arkansas. the push on the deficit and the push is something we do not hear on the campaign trail and anyway. lisa: is not popular to pay the bills at the expense of programs you really like or having to pay more. that is the challenge on both sides. at certain point the rubber meets the road. jonathan: coming up, more on that front and steven englander sang the appetite for risk can make a comeback. the fx market in just a moment. equities making a comeback, up by .3%. you are watching bloomberg tv. ♪ ♪ ♪ [suspenseful music]

trains. [whoosh] ♪ trains that use the power of dell ai and intel. clearing the way, [rumble] [whoosh] so you arrive exactly where you belong. (♪♪) ♪ well i was raised by careful hands ♪ ♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

jonathan: four day slide on the s&p 500. nasdaq 100 positive by almost one full percentage point. last week, the biggest one-week loss on the s&p 500 going back to the bank stress. switch on the board and turn the page. check out the difference between the two year and the 10 year, both up 4-5 basis point. the 10 year, 375 point 32.

the yield curve is normalizing. we close their for the first time in about two years, the friday session. lisa: what does this mean? is this actually a sign of pending doom? when a curb diss inverts or is this a sign that people believe the federal reserve will cut rates enough to stave off a recession? a lot of people leaning into the that idea. jonathan: market price is coming back down to something in the threes. suggesting you don't need a recession for that, back toward the lower ends of neutral. lisa: i could bring it back, this to me, and i was passionate about this, there is a question about whether we are seeing a fundamentally higher mutual rate

post-pandemic than we did pre-pandemic. the answer is not necessarily. people have been adjusting to that saying for many months they would want 4%, 5%. jonathan: the summary of economic projections, let's just park the bond market, look at crude. the levels we are down to now, low 70's on brent, high 60's on wti. wti had a loss of almost 8%. last week was brutal. lisa: at their lowest closing level going back to 2021, this came as they were forced to curtail their increase in production. how much of this is entirely china? we sought on the verge of disinflation.

how much is this having to do with europe? how much is this global and something that is the united states and telling if the labor market is rolling over. annmarie: opec right now deciding not to add to the balance. are they going to have to cut? you look at what the ceo had to say overnight, no one is worrying about supply in 2025 or 2026. if you're looking at that and see the united states pumping 13 million barrels a day, you are a little concerned you have to start cutting. jonathan: china is a major piece to this puzzle. outboard preparing to roll out the iphone 16 later today. the company expected to reveal major updates to the apple watch and airpods and set the stage for its new suite of ai tools.

i think this is a big one for the whole ai system, demonstrate the use case. lisa: a lot of people looking at whether apple increases the prices. typically they try to the same. if they raise prices and roll out a suite that will cook your dinner for you, you will see a curry it -- curious action of markets. the key question for me and i think everybody really wants to know, will jonathan ferro decide to upgrade? jonathan: i will give you the answer tomorrow morning. i got my phone charger to work. annmarie: there is portable chargers.

jonathan: you have a mobile charger? annmarie: power banks everywhere. lisa: how long do you have hr? is this the iphone seven? annmarie: you need to plug it in after the show. jonathan: latest story, directv filing a complaint with the fcc accusing them of failing to negotiate in good faith coming after customers lost access to abc and espn more than one week ago. some people thought it might last a few days and here we are. lisa: how do some of the antitrust regulators deal with the fact that the balance of power has shifted away from cable? how committed are people to preserving old cable the way it used to be versus the new media

and will they get involved with the actual case they have on the antitrust level? annmarie: is disney negotiating in bad faith or is the issue about giving up the rhetoric ahead of monday night football? do they want their 11 million customers, many of them in san francisco and new york be able to see the 49ers and jets? jonathan: perfect timing. the latest out of china calling to the league we -- weakest level, just 0.3 percent in august. boosting the case as week demands. go through where we are right now in financial market. the commodity market continuing to sell off. the picture is not great at the moment. we spend a lot of time, you are

not seeing a pickup in europe, germany, china. lisa: the u.s. is exceptional because it is not as bad as the rest of them. you saw iron ore slipped below $90 a ton. it will be directed in another direction. when i talk to corporate executives in the united states, a lot of them continue to talk about expansion in china, at what point does this hinge on donald trump being a tariff man or not. when you ask what is your biggest concern, everyone of them says the strength of the consumer in the u.s. and in china and what tariffs look like. jonathan: the nationalistic undertones, that one certainly with apple and that launch. after a week of unexpected

payrolls, adding fuel to the debate over the size of the first rate cut, steve englander saying cpi this week won't come in soft enough to put a 50 basis putting -- point cut. the from softening is reflected upon, we think risk appetite may well come back. welcome back to the program. let's talk about the quiet period for the federal reserve. what was your big take away from that address following friday? steve: one thing that really struck me was the comment that employment growth was much what we thought in 2018-2019. no matter how you construe any moving average, we are not there yet. we seem to be far away from

concern that we have to do anything extraordinary. overall, he seems to be a 25 basis point person. you could debate what is driving the fed, is it the weakness in the employment and the labor market, since the previous labor market release, that is the big driver of all of the rates move. is it the fact that inflation has come much closer to target. right now it is inflation coming closer to target so we could take rates down. we will pay attention to the labor market in case it turns over but it hasn't yet. they put a damper at least in terms of shifting towards the dovish stance. the answer is probably not. jonathan: he believes the labor

market is just normalizing. it is cooler but it is not cold. it has weakened but it is not week. they have all but communicated it will be a rate cut. do they see that is the beginning of normalization? what i don't hear is let's get accommodative. how do they communicate that on september 18? steve: they are at the beginning of a rate cycle. they have all said that. the way we convey that, there will be a sequence of them in the near term. what they will not do is commit to whether it is 25, 50, or more. i think the baseline is 25. i suspect that quite possibly

serving the projections. by the time you get to next year, it will be where the market is. not something that is 2.5 or two, something really dramatic. that will show up in the other projections as well. we are cutting more than in 1996 but the economy is kind of like 1996. it is doing ok working to get rates back to neutral. lisa: a lot of the market is finding out where the fed is versus relative to pricing. maybe it is not because the u.s. is doing so wonderfully but because the rest of the world isn't doing so wonderfully. how much do you think it is a liability to ignore the ecb later this week.

some of the weakness we are seeing in germany as a reason to flatten the face of some of the weakness we have seen in the dollar over the past week? steve: i think the fed is struggling with the data. undocumented immigration increases labor supply. relative to past comparisons, how do you interpret 100 20,000 jobs or 150,000 jobs versus five years ago? it also affects gdp. gdp is now mid two, that is pretty good. if you think there hasn't been a shift in supply. does that translate into 1.5 like five years ago? they are not yet ready to reject the numbers but they are trying

to sort out what these numbers mean. it makes it harder for them. there is not a good playbook for when the sharks come from the supply side. 99% of what they write is focused on the demand side. lisa: let's say the data doesn't change materially, if the fed cuts by 25 basis points, what is the difference in the market reaction from your view? steve: if the market was traded last week as if it desperately wanted to get the 15. it was almost as if it had the shakes that it needed that 15. at the end of the day 25 versus 50 does not matter much. it is quite possible we have a 50 penciled in for next year.

if they did december, january, i think the market will be just fine with it. ultimately what the market needs to see is the fed is on the cutting path, the market will be ok with it. i think in the short term, you look at what is priced in, it is 110 basis points. there is an adjustment there of doing 25's rather than doing the 50 that the market wants. the market really needs to craft to be able to deal with it. the equity market, we are seeing the rest of the world under pressure. jonathan: i remember one a 1% move on dollar-yen mean something.

what is this fx regime? how would you describe where we are? steve: i think the market waivers on the yen. we think the boj could be more aggressive than what the market is pricing in, we think they are determined to raise rates. one of the puzzles is why the market thinks doing another 10 or 20 basis points will be enough to get the boj wherever they want to go. in the short term, we saw positioning move like long yen and short dollar. the friday discussion was so abrupt in terms of shaking the market conviction that some of those positions are getting shut down and closer to neutral. this is temporary.

as the fed cuts and as the market sees convergence really manifest itself, we will see dollar weakness. the fed may not deliver in the short term with the market where they want. jonathan: maybe we will see that next week. steve, appreciate it. a weaker japanese yen this morning. here is your bloomberg brief. dani: a gunman has killed three israelis at a terminal on jordan's border. it is the first such incident since the war in gaza has began. the gunmen accessed a bridge from the jordan side and fired shots before he was killed. the victims were identified as forklift operators. boeing and its largest union say they have reached a deal to

potentially avoid a strike at the troubled u.s. aircraft maker. the offer includes a 25% wage increase and a commitment to build the next plane in seattle. it is too soon to know if workers will go along with that deal. elon musk is doubling down on donald trump. his pro-trump america pac is targeting swing state voters across digital platforms. one that youtube ad said if you set this election out ka mala and the crazies will win. it showed that it was one of the top 10 u.s. political advertisers for facebook in the week ending september 3, that is your brief. jonathan: the fed's next move. >> why do you think they need to gather in the room and do 25 or

50? given that everything in this report was better than in july. jonathan: check out that interview on bloomberg.com and in the bloomberg terminal. thinking the economy is still better than ok. from new york, this is bloomberg. ♪

jonathan: bouncing back from friday's losses, equities just about positive. yields are high too, up four basis once -- points. reversing some of friday's moves. same thing with crude, bouncing back from an ugly week. wti up to 6821 -- 68.21.

>> they need to gather in the room and think hard about do we want to go towards 25 or 50. everything in this report was better than in july. if we have stricter monetary policy, why are we still getting very good economic data including 3%? jonathan: here's the latest, a busy week of economic data. the fed's decision on september 18. cpi measure of inflation from the bureau of labor statistic is the most important indicator of the week. it might influence any fed rate cut whether it be 25 or 50. let's start with the labor market on friday and then we could shift towards cpi, are we losing dynamism in this labor market? nela: hiring rates were lower

than they were in 2019. dynamism has been the hallmark, people are willing to pick up and move to better opportunities. literally move they don't have to do anymore because there is so much remote work. you are not seeing that as much. people are staying longer on the job. it could be that firms are motivating people on the job. it is more the former, when i talked to companies around the country, they are a little surprised turnover is solo. there have been some tweaks in how they hire to adjust for how people are staying on the job longer. jonathan: is there some indication that you think we could maintain things? how do you think about that? nela: there has been a lot of talk about whether this is a

soft landing or hard landing. i think we are landing in a different set of labor market conditions, it is different from where we left. dynamism is slower, manufacturing will be a drag on unemployment, stabilizing at an elevated rate, i still think those conditions are good enough to propel consumer spending and economic growth. they are different conditions than where we left. lisa: what is the reference point? nela: it would be 2019 in my view and those months leading into the pandemic. you saw a higher hiring rates. unemployment was a bit lower. a little healthier than what we are seeing now. lisa: you talk about the labor market landing at hand. you talk about its where we are landing.

what kind of economy is it that you are describing? more not necessarily inflationary kind of fast growth environment that a lot of people have been pricing in. nela: we are seeing elevated wage growth but not wage growth that will trigger another bout of inflation. wages are stabilizing. whether you are looking at new hires or people who have been in the job for a long time or recently switched jobs. wages are stabilizing. it's not great news for the dynamism story that really propels people to turn and companies to seek out the best talent. we are not seeing that like we did in 2022. annmarie: wasn't the fiscal spending supposed to help this sector? nela: those dollars have not

really change the game in terms of manufacturing. those numbers that came out recently were lower than expected and lower than what we had been. we didn't shine the light on the manufacturing sector, this has tilted into services. you have a service sector normalizing in terms of the labor market. you add those together and you have a softer labor market. annmarie: does that mean you could see manufacturing jobs pick up next year? nela: it depends. the thing about this type of labor market is it does rely on skilled workers. talent has been hard to come by. it depends on what kind of skills are needed in these manufacturing jobs. it depends on whether we as an economy are pricing -- having the right skill sets for the right jobs.

manufacturing is also dependent on the rest of the world. that is also a question. jonathan: is official data losing credibility? nela: no, we need our data. especially when we have a fed that is data dependent. it is growing. you have private sector data like adp showing private-sector job gains have slowed. using that data is the right path forward. jonathan: i was trying to set the stage for a victory lap. lisa: that was a good job. jonathan: thank you very much. nela richardson, bloomberg tv contributor. coming up, terry haynes, and sonal desai, equity futures positive 0.7%. the second hour of "bloomberg

surveillance" is up next. ♪

clogged gutters can cause big problems fast. until now. call 833-leaffilter today for your free gutter inspection. i've had terrible flooding problems on my porch. now i understand why. right now leaffilter is offering a free inspection, on your schedule. leaffilter is a permanent gutter solution, so you never have to worry about costly damage from clogged gutters again.

call us today and schedule your free inspection. to schedule your free inspection, call 833.leaf.filter today or visit leaffilter.com. >> we are still in the soft landing cap. there's no indication the economy is decelerating at an accelerating pace. >> is a lot of reasons inflation could be stickier and the fed is focused on that. >> we do not see an environment where the economy will fall off the cliff. >> the growth data is not showing signs of a slowdown. >> still pricing in a soft landing. >> this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: this time last week we sat here and said payrolls on friday will determine the size of the federal reserve on september 18. the difference between 25 and 50 is what payrolls might be. payrolls dropped and did nothing. the belief on the margin may be cpi could settle the difference between 25 to 50. equity futures look like this, a bounce back up by three quarters of 1% following the worst week of the year so far. on the rustle up by .2. cpi later this week, ppi as well. lenny of events in between. apple iphone launch later today, a debate between harris and trump tomorrow. lisa: consumer sentiment might turn the tide. the reason why, this idea we were hopeful this jobs report

would give us clarity and it gave us none. we keep waiting for enough data that fed officials tell us determine the difference between a larger or a measured rate cut in the september 18 meeting. the reality is we are looking for sums of exit strategy from this infusion, this conflicting data and we are not getting it and what does that mean is some thing the market struggle with britain jonathan: we have a live meeting and maybe we even get some dissent on that live meeting on the fomc. perhaps that comes december 18. annmarie: i was looking back last night about that memo by raphael on september 4 not too long ago history shouts to us loosening policy preemptively is a dangerous gambit. governor christopher waller did not give us that definitive answer whether it was 25 or 50. what exactly are they going to do?

jonathan: a last big read on the labor market going into the fed meeting next week. >> i am most forgot about the ecb meeting on thursday. i think a lot of people dead. when i was thinking about the particular events this week i was thinking what else sprayed and you pointed out the ecb and actually think it might be quite interesting considering the fact everyone's written off the ecb as following the footsteps of the federal reserve. they have it a lot worse. they are facing some real economic weakness that cannot be sugarcoated the way it had in the united states. that might be one of the interesting moments we see what is the response function from inflationary pressures that haven't fully died but at the same time real weakness that's not just the u.s. but globally. >> we talked about this a million times. in germany the model is broken and there's no evidence any real sign they come up with anyone that might be successful anytime soon. europe a derivative of what's taking place in china. the equity markets near a five

year low. the commodity market start to get pulled under it as well. what you see in iron ore is how you signal the bust over in china, if you believe u.s. exceptionalism and is fading. who's replacing it because europe and china look like there in a tough place. >> lasting's people were -- people were saying bond markets are pricing in a recession in the united states. what it highlights these people expect in the fed to adjust to the normal that we see currently in terms of inflation. this has to do with the international picture. can you see that dollar weakness given the fact the u.s. economy is still the strongest in the world and continues to outperform some of the laggards. >> joe had an interesting take. is this exceptionalism or is it the fact the u.s. is the one that's out front. everyone >> else is doing so

poorly to your point. welcome to the program. >> equity futures positive by 0.7% talked a little bit about what's happening with crude last week. down 8% on wti bouncing back by .9% on crude this morning. yields higher across the curve off by four basis points, on a two-year, 369 and four basis points and the difference between the two is positive. the two-year, 10 year yield, that slope is positive and closed for the third -- first time print >> do you buy this is a negative signal or positive signal? >> once you get that statement kicking in. a deep aggressive cutting cycle for the federal reserve usually means not great things are happening in the economy. >> we've never seen that without some kind of recession. everyone saying this is quite different. how much can you lean into that because the pandemic reality is it's been distorted to a lot of the data. >> how different are things this time.

stocks looking to rebound ahead of cpi data. terry haines a pangea policy paid expectations of the trump paris debate on why current pricing of markets is to aggressive. stocks coming off their worst week since march of 2023 following friday's payrolls report. saying what's happening right now is no more than a growth scare that will pass. once again we expect the economy will surprise to the upside. our assessment of friday's employment report is it wasn't as bad as widely believed. let's go through that quote and deconstruct things. why wasn't it as bad as widely believed and where to get the confident the growth will pick up to the upside and months to come? ed: it seems as though everyone ignored the fact the average weekly hours increased by 0.3%, so we had that and payrolls were

up only 0.1, but put it together you've aggregate weekly hours on the economy and all-time record high increasing 0.4% which is a very solid increase in did suggest to me real gdp is still growing. because when you look at aggregate weekly hours they are up 1.1% so the question is how do i get the real gdp at 2.5% to 3% when aggregate hours are increasing by 1.1% and again the variable everyone is ignoring his productivity. it's been really strong since last year and i think we're in a productivity growth boom that will boost gdp. jonathan: let's compare that to what happened in the market. a lot of people got a different view. equities sold off. yields have dropped a lot preyed of those two asset classes which one do you think is too far extended. which one should be leaning the

other way? >> i think the bond yield is getting pretty close, if you look at the peak yield curve spread, i'm looking ahead already beyond this inversion we are seeing how much of an ascent are we going to get in this yield curve, it could be at least 100 to 150 basis points and so the bond market discounting a lot of rate cuts and i think that reflects how much the economy is not resilient after all and that we will finally have a recession and that's just -- it looks to me as though the economy is going to be particularly strong this month when you look at august data for personal income and personal consumption that looks like it will be a strong number as does industrial production which we are likely to see some offsets to the auto

drop we saw in july. the auto production drop significantly in july which was probably a seasonal aberration. you put that together and i think we will get some pretty good economic indicators. i think the stock market has had a carry trade as we saw in early august and that's because the bank of japan has announced they are still on course to raise interest rates and so the week employment numbers you would think the week employment numbers would make the stock market go up. because they can do 50 instead of 25 and that kind of thought, that really unwound a carry trade once again anything that's why the stock market was so weak last week. >> there's a lot to unpack therewith the carry trade. michael's at morgan stanley talking about how there's more to go in terms of the trade unwinding.

do you agree? edward: i think that view is too pessimistic. i think the carry trade got the message in august, got it on friday. a lot of it has been unwound, but i do agree if the fed goes to 50 in september 18 there will be more carry trade to unwind. you would think with a bigger than expected drop instead of 25 or 50. if that were to happen i think you get another round of carry trade in the difficult market. i think they'll go for 25. >> you were talking a couple months ago about how if the fed were to cut rates that would turbocharge equity markets to an unhealthy degree and could create a bubble. yet from the technical setup right now and outsized rate cut by the federal reserve would depress stock valuations so can you pair these two ideas?

edward: time is money. what's changed my view is i didn't see the carry trade unwind coming, however if you're looking at a chart of the nasdaq versus the yen it's pretty clear that there's been a very strong inverse relationship, a strong yen caused by this differential and monetary policies is bad for the nasdaq because it unwinds the carry trade. but the carry trade we are good to be left with so much lower interest rates and that could lead to a strong year-end rally. i think lower interest rates are still bullish for the stock market and could give us something that looks like -- by year end. annmarie: you talked about after november 5 that you'll see the

s&p 500 resume its climb to new highs but remain choppy through november 5. are you seeing new highs regardless of who is elected president? edward: the underlying assumption in my forecast on that is the big winner on november 5 will be gridlock. if we get a democratic sweep or republican sweep i will have to change my mind pretty quickly, i think the market is not going to welcome that at all. both candidates have one thing in common, and one where the other whether it's the democratic sweep or republican sweep that would provide a much bigger deficit which could unravel quickly. >> bond vigilantes make a trip over and have a trip to the u.s.? >> they could very well. how we saw them last summer

august, september, october. that was about concerns about supply with treasuries, but janet yellen came up with a clever trick getting less than the bond market. you can only play that game, i don't think it will work again if we get a sweep of one party or the other. >> drumroll supplied. lisa: two or 39 -- $22 billion of thirty-year year notes being sold on thursday. 1:00 p.m. and particularly in the longer end just in terms of how may people come out and at what point this balancing out of the yield curve gets challenged not by the front end, not by the rate cutting assumptions. we keep hearing them percolate out. >> we had a ton of credit supply

as well. let's get you up to speed on the latest elsewhere with your bloomberg brief. >> former ecb president mario draghi says the eu can be competitive -- cannot be competitive unless it commits too much larger spending britain they task them with building this report and concluded the region needs to spend as much is 800 billion euros extra a year and not seen in years, and issue regular common bonds. he said unless europe becomes more productive it won't become a leader in technology, climate responsibility nor an independent player on the world stage. kamala harris and donald trump are getting ready for the first and for now only debate tomorrow night in philadelphia. the race is airtight. the latest new york times has trump in the lead among registered voters by one percentage point. following the debate harris

plans to travel to key battleground states include north carolina on thursday. big lots has filed for bankruptcy protection. planning to sell his ongoing assets and business in a court supervised process. the retailer agreed to sell to nexus capital unless a higher bidder emerges. it has suffered from declining sales for years now. that's your bloomberg brief. jonathan: up next on the program, momentum shifting down the ballot. democrats >> -- now the rubber is hitting the road and i think we've got adequate funding in the house to hold the house and pick up steep -- seats and i feel optimistic about the senate as well. >> live from new york city, good morning.

jonathan: stocks positive this monday morning. in the bond market treasuries down, yields up on the 10, 374, 75. momentum shifting down the ballot. >> challengers and our incumbents with excellent hard money fundraising up until the summer so they were leading their democratic opponents across the board through the summer fundraising. democrats have had some momentum in the last few weeks to catch up now the rubber is hitting the road and i think we've got adequate funding in the house to hold the house and pick up seats and i feel optimistic about the senate as well. >> donald trump and kamala harris interface off in their one and only schedule debate tomorrow evening. the latest polling showing trump regaining a one-point edge over

harris nationally. the likeliest result of tuesday night's debate is harris will be perceived to win by demonstrate fitness to lead, the harris wins result would strengthen our view that harris is 60% likely to win in november. terry joins us for more. where does that advantage come from? terry: the harris or trump advantage? jonathan: the harris advantage you say she has going into tomorrow. terry: i think it's two things. both campaigns and what the candidates engage in, the idea that they will be the underdogs and come from behind. making points on those regards. i think harris needs to meet or exceed expectations and there's a lot of uncertainty about who she is, what she stands for, what she is like and that can only be answered on a large national stage.

if she does well, i think people come away with the idea she is a plausible president and that acts as a sort of magnet helping things in her direction by and large. of course there's also a lot of press rooting for her. annmarie: in the new york times poll it said more than six tips and of likely voters said the represent president should represent a major change from biden only 25% said the vice president did. if people are fed up with the biden administration why do you think she can still win? terry: the times and siena asking people of the biggest change the one they might like because there's not a lot of correlation between those two in the pulpit why do i think she can still win? firstly they aren't can. secondly because i think her theory of the case on how to win

is better than trumps. what harris has done is consolidated democrats and is reaching out to independent undecided voters using social issues and frankly trump loathing. what trump things by comparison is in a very swing states sort of strategy is if i can get 100% of my own base out, which is not all of the republicans put it's his own base. what i can do is overwhelm harris voters and enthusiasm. i do not see that happening for a bunch of reasons. not least of which is the trump space isn't the whole party, the establishment party is now pushing against him and he's not making a convincing case to undecideds. lisa: these individual -- annmarie: these individuals have never debated before pride what does she need to do to create a viral moment kind of like she did with mike pence in the vp debate given the fact that the microphones will be muted and

she can say something like excuse me i'm talking. terry: i think that's a very smart question. if i were her i wouldn't go for viral moments. if i were her i would be going for prosecuting the case, what she will say is not only will she be interested in establishing her own bona fides, turning the page, her great siren song is turning the page from the last decade which not only includes trump but biden. as well as saying the words convicted felon as much as possible and frankly pointing out that the establishment of the republican party also isn't against trump. the cumulative impact of what she wants to do is establish yourself as a safe pair of hands, as someone who can be trusted, someone who will do. annmarie: the establishment republicans have been against

trump for years now. terry: that is true, but at the same time it is only now going to start becoming apparent that for example you have the last two republican vice president's against trump, you have bush 43, the last republican president before trump not making an endorsement. you have half the trump cabinet against him. that stuff starts to weigh on people not least because the signal it sends to undecided voters, particularly those who trend republican is we give you permission to not be for this guy. lisa: you talked to a lot of clients who are trying to get clarity on policy which is a fools errand because a lot of policy we are hearing is a vibe and a lot of people say in the industries that are relevant to that it is just talk, rhetoric, how do you sort of help your clients navigate rhetoric that a lot of people, we just heard a congressman from arkansas talk about it being --

was just a starting point for negotiations on actual policy. how do you advise your clients question mark -- clients? terry: the interview and absolute top-tier member and i thought he undermined the president's case pretty subtly but effectively on a lot of those things. thirdly, by telling them that it's not about the president, it's about the president plus congress and the base case today regardless of whether trump or harris become president is you have a split republican congress. what you will end up is a lot more of the status quo and you have that a little bit in the last segment. because regardless of whether or not there is a republican or democratic sweep or a mixed congress what you will end up with is increases in fiscal deficit and that's not in a change. lisa: with tariffs that

something that can unilaterally be done by a president. it's why people are focused on whether that's a starting point for china, how do you decipher? >> i consider them a bluff a lot of reasons. one is i agree with congressman hill that the it's a guy having fun and talking. >> the last thing trump is can want to do if he wants to increase economic growth and productivity is impose tariffs way before there's a chance at a tax deal. back in 2017 you will recall that it took congress a year to come up with the 2017 tax law. if he's talking about imposing tariffs unilaterally from day one or close today one among other things what he will end up with is a negative street reaction and a negative economic reaction from most a solid year before those tax relief comes

and frankly unless it's a republican sweep which i give about 20% today, the chances for tax extension is zero. because democrats don't want it. so i doubt trump is going to tank the economy. >> thank you sir. >> if you're an investor here, with one thing that would make me nervous is how big the gap might be between how the campaigning and how they might govern. >> what are we going to get from either of them if everyone is saying it's not really what they mean. jonathan: big issue, coming up on this program apple getting ready to unveil its newest iphone plus major changes to the watch and airpods. ♪

jonathan: equities on the s&p 500 a lift here of zero point 8% on the nasdaq 100, a rally in pickup of one full percentage point after big weekly loss on a four-day slide on the s&p 500 the biggest weekly loss going back to the bank stress of march 2023. that's how bad last week was in the bond market yields were aggressively lower. now they're higher across the curve. here's the shape of the curve right now up five basis points on the two-year parade looking at 369 versus 375 and we have a yield curve that slowly and then quickly normalizing.

>> this is what people have been talking about whether it was just a carry trade unwind, we didn't necessarily feel the violent fear in markets last week. it's seemed like a light trading week and people said september usually goes down and by the way you'll have fed rate cuts so by bonds and stealth side sell stocks. >> the hope was for something more decisive but just a look at the totality for data. last week ism services was ok. jobless claims was ok. it's why people are making the case things are ok. >> the bigger question is and this is something i thought they did a fantastic job talking about how much is the fed move in response to true weakness and how much is it normalizing inflation no longer the preeminent concern. this is the reason why cpi could be bent people gave credence for simply because if inflation is

truly not a risk what is the argument for the fed to keep rates where they are given the fact that regardless of the totality of data the one message you're getting is the dynamism has gone down and you have seen a real slowdown in the labor market. jonathan: 8:30 eastern time, 60 minutes from now don't miss this conversation. a big piece and this was the quote that jumped out for us. i'm seeing wildly optimistic takes out there. almost as if they're allowing political narrative to cloud the data. saying there will be a time to be bullish i'm not sure now is the time. the fed should go 50 when they can not when they must. lisa: putting the political aspect aside. welcome. at a certain point this is what a lot of people are seeing is you are seeing deterioration in the labor market, that you cannot sugarcoat. this idea of where is the endpoint.

talking about some sort of landing but where? that is i think the difference the people are to parse through without any rate because they are pricing in. i talking about a recession, about of weakness, that's what needs to get determined. jonathan: the dollar has been weaker paid it stronger against the bulk of the g10. dollar-yen with a sizable move close to 144. i spoke about this earlier this morning, 1% moves in dollar-yen used to mean something. we are now looking at this associated with the risk bounce we see inequities. lisa: we have seen this unprecedented in fed funds futures last week. unprecedented moves in terms of probability. this is a twofold story. on one hand you have this question of how much the fed can cut rates. in japan you did see gdp revise lower.

this flies in the face of their ability to raise rates. everyone came back and said they will raise rates later this fall pretty nonetheless it challenges this idea japan can diverge and be on its tiding cycle. jonathan: under surveillance and top stories. janet yellen saying the u.s. economy has reached a soft landing even his job growth weekends. highlighting falling inflation and rising wages. saying she sees no red lights flashing for the u.s. financial system. is this janet yellen the economist or politician? annmarie: she is a labor market economist and does want to monitor downside risk in the labor economy but this is highly political going into the november election. many on the other would take criticism with the fact she's not seeing any red lights because she's also the individual that said inflation was transitory. lisa: this argument about some of the benign outlook for the

economy being political. we've heard this talking about janet yellen and even we heard about this with claudia sahm and maybe she's not saying the rule was triggered because of that. when you look at the commentary and start to analyze it piece by piece, nobody, i cannot think of one person who thinks the economy is falling into a deep recession right now. can you think of one person who's at the risk of recession is increasing. very few people are saying that. it's a question of where we land. janet yellen is completely political in every which way. but it is complicating the totality of data to talk about the political angle. it complicates what you are seeing across the board which is everyone saying things are slowing down. jonathan: asking about what it would take to be a central banker and they gave me one word. live. i often think about central bankers and think they are well aware of the ability to -- the

events but they started to talk about the labor market and the downside risk they perceive at the moment. i think they'll be a lot more worried about the future. i think janet yellen has been schooled in that. over many decades at that institution. lisa: if the federal reserve said they were worried about downside risk spring jonathan: if they think we are going into recession. lisa: do you think so? jonathan: immediately how people change their behavior. lisa: even if they cut by 100 basis points. if they said recession tomorrow and that's why we will cut rates. jonathan: if they go 50 they know something we don't know. lisa: this is an interesting discussion because i've heard a lot of people come out on both sides of the answer preyed what advantage does the federal reserve have two market participants. even the carry trade unwinding. disproportionally sees that as a bond opportunity. >> there the business of managing financial conditions. that's what they are in the

business of doing. have to be careful about what they see britain with a big dose of politics. lisa: do you think she sees more weakness? >> once again the business, i think that language is consistent with what you hear the federal reserve. consistent across every single fed official at the fomc regardless of she go 50 or 25. lisa: i would agree. there is a whitewash kind of rhetoric out of the federal reserve. jonathan: let's get to morgan stanley cutting its oil price forecast for the second time in a number of weeks. amid mounting global demand challenges but averaging $75 a barrel for the fourth quarter. 6825 on wti, last week a difficult one. annmarie: opec-plus will have to do more. there are public and have to start thinking about cutting into months time is your traders come out saying they're

oversupplied in 2025 and 2026. this feels a kicking the can down the road. how much do they want to maintain a floor on these prices especially against the behemoth of the united states print jonathan: a lot going on this week. apple gearing up for its most important event of the year where he will unveil its next generation iphone and updates to its apple watch and iphones. the event kicking off at 1:00 p.m. eastern time. joining us is mandeep. how excited should we be about this event? mandeep: it's one of the biggest events. if you look at generative ai as a theme and how apple is perceived as being missed out, i think this is where it all comes together for them or it does not. they do not have their own large language models but what they have built is apple intelligence and you want to see how is it

going to drive the refresh rates? at the end of the day whether it's airpods, watches, smartphones, you want to see them do things with their own apps. their calendar app, email app, there is so much room to deploy ai on top of their own apps and that's what you want to see britain jonathan: -- want to see happen. mandeep: the whole ecosystem, we know the market is undersupplied when it comes to nvidia gpu's. ai inferencing is how the large language models get used. right now everything if apple on the phone, that's a big deal. suddenly your inferencing goes down. i would argue in the nvidia under situation gets resolved to an extent because you can run ai on your phone and it's free. you don't have to pay as much for your copilots or chatbots because you are doing it on the

phone. it's a big deal for apple if they can showcase that. lisa: this does not come cheap for apple and we've seen how much nvidia has been it would increase their margins by how much they are charging and how much openai is being valued at based on the potential investment. can apple afford to keep the price is much level? mandeep: absolutely. you're paying upfront for the phone. so you're paying your 1000 or $1200 but you can use it for five years, you can use it the way you want, it's all free as opposed to using a copilot subscription or chatgpt subscription. lisa: a lot of people are looking for apple to increase pricing for that iphone simply because their margins are getting compressed and are turning into more of a utility than a high margin huge cash flow behemoth. at what point does it have to succumb to the margin pressure by increasing pricing for this a

real question about consumer demand and ability to pay. mandeep: apple has different tiers. there's the promax and the pro and the 16 bring they will offer you different variants. they have all these apps, they have siri. just connected with all these apps and show one assistant on the phone preyed the phone will sell itself with the tears on the margins britain annmarie: our colleague said he wants to offer a dose of reality to people like you who think it will be a super cycle. the fact he says a lot of these ai functions aren't coming out until next year and won't be offered in places like the eu or china. mandeep: apple has this event and then the ios 18 release. that's where all the functionality will be deployed. all the genai functionality on the server pretty that's what i meant when i said nvidia gpu's are used for trading in inferencing. if you are doing things on your

phone and apple just has to deploy that on a chip that it owns so it's not relying on any of the third-party vendor for that chip. if it can deploy that in the next six months everyone will be excited about that opportunity for the next 45 years. annmarie: some analysts talking about they are more excited for the ai 17 because that will be hardware. is that can be the holy grail of this when you link up the software, hardware new look and feel? mandeep: that's always been their strength, the vertical integration, the fact that they can do everything and to end and they are working on a chip that can run these ai models, they won't be of the same size as those being run on nvidia gpu's but on the phone it will be a small language model. the question is what can it do. can it enhance siri for inquiries. for doing these functionalities that everyone is using in

chatbots. >> saying if you can do this on your phone, do what on your phone? >> the simple thing is prioritize notifications on your phone so we get a lot of notifications on your phone whether it's messages, emails, can the ai and siri prioritize it? can i instruct siri to take something off my calendar and do something like an ai functionality. all of these are basic things, think of it is a very intelligent chatbot. right now you're injured interacting with that through the app. that's being deployed on the server pretty if you can do that on your phone you don't mind sharing data through the emailer calendar you have. jonathan: like a personal assistant, that's the direction of travel. thank you's irpin -- thank you sir. lisa: i remember when we first got alexa and the kids what they tried to do with it was see how

far they could go. they would ask his mini questions. tell me a joke, tell me are you married, when do you die, when were you born? maybe siri will be able to have more personality and people can have relationships with their phones. annmarie: all i keep thinking about is it sounds like him to miss a doctor appointment if i leave it up to siri. i was talking to a guest and siri picked up that i was talking her so i banned her from my phone. i don't really think it's great. >> relationships with your phone? lisa: could you imagine if somebody started talking about their phone and said it you look great today, you should just keep going with it. it could really support you. jonathan: i haven't given this much thought. let's give you an update on stories elsewhere with your bloomberg reef. >> shares dropping to their lowest since 2017.

kering hit with two sell side downgrades. barclays noting the luxury weakness in china think it looks structural. rbc struck a similar tone writing the luxury sector is increment police often ingrain it would be especially affected as it transitions to the design aesthetic. antony blinken is set to discuss the middle east and ukraine on a two-day trip to london. the secretary of state is the most senior u.s. official to visit the u.k. since the labour party came into power in july. the white house says keir starmer will be in washington later this week. the japanese owner of 7-eleven had rejected the initial $39 billion acquisition bid. they said they want to work with seven -- seven and i. that's your brief. >> french for night out. lisa: it doesn't translate.

doesn't go with the logo. >> the french-speaking mrs. faro talking over the weekend. up next on the program. >> typically when the fed cuts 50 they are cutting 50 because there's a growing deceleration of the economic data. the risk here is 50 could be more of a negative signal than a reassuring signal that the fed is on the case. >> live from new york city, good morning. ♪

what does a good investment opportunity look like? at t. rowe price we let curiosity light the way.

asking smart questions about opportunities like clean water. and what promising new treatment advances can make a new tomorrow possible. better questions. better outcomes. this is clem. clem's not a morning person. or a night person. or a...people person. but he is an "i can solve this in 4 different ways" person. and that person... is impossible to replace. you need clem. clem needs benefits. work with principal so we can help you help clem with a retirement and benefits plan that's right for him. let our expertise round out yours. jonathan: equity futures on the s&p 500 with a bounce well to what we saw last week on the s&p 500. sending the right signal.

>> typically when the fed cuts 50 they're cutting 50 because there's a growing deceleration in the economic data. this is tricky because you have a lot of focus on the labor markets in the labor market deceleration. the risk is 50 could be more the negative signal than a reassuring signal that the fed is on the case. jonathan: changing to cpi for the clues on the fed's path ahead. weaker than excited payrolls report failing to settle the debate over how aggressively the central bank would cut interest rates. saying the data does not support over 100 basis points of cuts in the next three meetings. sc rates dropping to 4% absent a recession. nonetheless it's a close call. the dovish fed could prefer to validate market expectations. good morning. 375 to four prude where to four prude where those numbers come

from. >> that comes from a view of where the neutral rate is. jonathan: you think it's higher than they do? sonal: if i look at historically and talk but the real fed funds rate it should be around 2%. that comes from a combination of 2% real and 2% inflation. by the way, it was around that level for a good 50 years before the global financial crisis so were talking about a certain amount of recency bias. jonathan: the question would be what changed now versus 2019. sonal: the obvious thing that's changed is a true return to normalcy in the post-gf seeing periods i think we went through a very extended periods where people were attributing the low rates to stagnation and upward. inflation has reverted more or less to normal.

talking about inflation, and no real risks of deflation on the horizon. and definitely balanced risks looking forward into the next multiple years in terms of inflation let's not get into the whole fiscal issue because we can go down a rabbit hole there. but it's definitely stuff which will keep pressure on inflation. economies aren't collapsing. look at how we've grown. lisa: let's put aside the deficit. it might take too much time in their other things we need to talk about. there is this concern about what you're seeing in the labor market that's more protracted weakening and we heard that she is seeing a loss of dynamism in the u.s. labor market. how do you understand that with this idea the fed is not nearly as restrictive as people think. >> there is a loss of dynamism

and the critical thing is to think about starting conditions. we started at historically tight labor market, conditions not seen in over 40 years largely fueled by everything that went on post-covid periods, but was historically tight we kind of need to see it get back to more normal conditions and most for mine are not four-point one or 4.2. lisa: when you talk about the balance of risks and this is one that i find interesting. what is the consequence for markets should the fed opt to go 50 basis points. he used to think of the fed cut disproportionately that would cause an unsustainable boom in equity valuations. he sees equity markets the initial response being negative because of the carry trade unwind. what do you think the longer influence would be? sonal: i think the risk is

twofold. right now everyone assumes the market is counting on a recession. i actually don't agree. we at 325. we've been range bound. risk assets in fixed income are not pricing in a recession. what they're pricing in his outsized fed moves which is unrealistic. if the fed goes by 50 i can see the market pushing the fed to continue 50 and it doesn't need to. there's a risk of doing it that way. does it result in another rally, maybe not at this stage. there are many other things going on. there are a lot of uncertainties. lisa: higher inflation? >> i don't think monetary policy in and of itself will trip us into higher inflation at this stage. unless they do something crazy. i do think the combination of

monetary policy and whatever happens in the first three to six months by fiscal policy, that could annmarie: you think given the fiscal policy we don't know if the fed will be on a rate cutting cycle or hiking? sonal: we are at a decent level, that's a very outside scenario. i definitely think that the market pricing of rate cuts all the way down to something like 280 i the end of next year is wildly overblown unless we seriously believe they are at risk of recession and at least fixed income markets are not pricing in a recession right now. annmarie: when you say you don't think the fed will have to hike, the peterson institute things they potentially would because o trump terrace and immigration policy. sonal: i would say there isha y7 trillion helicopter in the first three months of next year. absolutely they might be left to a situation where they might

have to hike. it's just not my base case. my base case is we are in a holding pattern. markets overreacting right now and the end point is closer to 375. i'm talking about the entire cycle. >> we've got a two-year down to 370. you mention high yield spreads in the three 20's. >> we are pretty neutral, a little bit edging into duration here and they're looking for value where we find it. but honestly spreads her incredibly tight if we really believe those recession which is why we don't believe that's what markets are playing right now. >> always one of the best, a clinic as always. a big rally we've seen in fixed income recently. lisa: i'm still thinking about her discussion and the idea 50 basis points. the rate cut that could be disproportionate to how be -- it would be perceived by markets. whether it would convey

pessimism or have a negative feel especially if they said they were worried about the market and the labor market, i still think markets would cheer. i think right now people want the big cuts and don't think the fed has an edge print jonathan: are we sufficiently restrictive or not? the lags you could argue are much longer because the post-pandemic stimulus we saw in the transferred to consumers to households. we saw a lot of that last week as well. are they just superlong or we sang rates weren't high enough? >> when people look under the hood each industry was affected differently. and it's difficult to bring it together with one overarching narrative. jonathan: in the pandemic talking about the role in recovery. coming up, jim, we catch up with david of ups, and victor york of

bnp paribas. third our bloomberg surveillance up next. ♪ new projects means new project managers. i need indeed. indeed you do. when you sponsor a job on indeed, it's easier for talented candidates to find it. which makes it easier for you to hire them. visit indeed.com/hire

the moment i met him i knew he was my soulmate.

which makes it easier for y"soulmates."hem. soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

>> the need to gather in the room we think about doing to go towards 25 or 50.

>> the risk is 50 could be more of a negative signal. >> they don't want anyone cooling the labor market so that's the argument for a 50 now quickly get us to neutral. >> 50 if you think there is a recession but if you don't you probably wanted -- >> the fed has to be careful. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: 90 minutes away from the opening bell. just around the corner, the third our bloomberg surveillance starts now. equity futures rallying 0.7% reversing some of the losses from last week. a four-day slide on the s&p 500. up by 0.8%, a very small bounce. the week ahead look something like this. dominating the concerns of economists around the world. wednesday and thursday the main two data points with jobless

claims as well into the mix ahead of next week. the federal reserve decision just around the corner. >> how much is this shifted away from inflation heading into that september 18 decision. for now it seems like everyone is putting an emphasis on jobs whether or not they are deteriorating ask some people suggest. and whether inflation really is dead. what would it take to create an sort of reignite those inflation fears we had a couple months ago. jonathan: chairman powell sounds like a single mandate central banker. do you think the rest sounds like a dual mandate central bank? >> sounds appear focusing more on the labor market which to the point about the single mandate right now this market is trading. if we get an upside surprise this will be the key test. if we get an upside surprise and cpi does the market care? >> wednesdays away from that

federal reserve decision going into this this is the line from governor waller, the line asserting to suffer but not deteriorate acknowledging policy needs to adjust but not saying we need to go 50 basis points. that's the take for many. >> talking about the rate cut arms race. how economists are coming out and whose can outpace the other when it comes to deciding what to do but considering inflation is as the fed's desire to find monetary stimulus to up an economy that's healthy and benefiting from markets as well as excessive liquidity will lead to stronger growth and more entrenched inflation summing tomorrow's is important. >>: now the decision on september 18 a photo finish. we are increasingly convinced the fed will deliver multiple large-size rate cuts is the job market continues to cool. >> at this point the fed is leaving it open and chris did a fantastic job in settling

nothing in his speech keeping the door open to a 50 basis point rate cut on september 18 which is my birthday. to celebrate my birthday i will be having fed day. but to me i'm just looking forward in trying to understand what data could tip the balance. is it sentiment survey. is it jobless claims, these are some of the aspects. jonathan: do you like your birthday? lisa: i like fed day. jonathan: we are going to have to celebrate it now. we will do that on next wednesday. lisa: people might confuse it though with celebrating rate cut. >> i think they will be pretty clear that's not what it's about. >> we will wear hats. jonathan: we can do that. equity futures on the s&p positive by 0.6%. bond yields higher by four basis points. speaking of the bond market, the yield curve two years versus 10-year.

we said this a few times this morning we are positive, twos versus tends in the first close in positive territory going all the way back to the summer 22. jonathan: -- lisa: historically when you see a renormalization of the yield curve it's typically a bad sign simply because it means the fed is cutting steeply at a time when growth is slowing down, people are betting this time is different. talking about how no one has seen recession when you will get credit market pricing. that's ultimately the question. >> just objectively just an observation it's not screaming recession pre-brent crude to finish things up, a little bit positive this morning. just short of 72 after a big week of losses last week almost 8% on wti crude. big move lower across those five days last week. we will check in with jim with

stocks looking to snap a four-day losing streak. david of ubs at of the new product launch and why he's bearish on credit markets. we begin with our top story. stocks looking to snap a four-day losing streak following the payrolls report. jim is not buying the gloom. i still do not see a broad slowdown in the economy, the labor market is showing signs of cooling but these may be measurement problems. jim let's go to the bond market first. why is everyone bullish bonds given what you just said? >> the fed is can he cut rates and lower financing costs and we are having a debate between 25 and 50 basis points. i might add when you said everyone is bullish, if you look at most of the surveys whether you talk about the global fund manager survey or the equipment of traders report. we have some record bullishness across the board and the bond market so everyone is positioned for a continued fall in interest

rates and when they get that extreme you are very close to the end of the move. jonathan: can you walk me through what you meant by measurement problems? >> when we do payrolls we look at employment in the united states we do surveys and the surveys are adjusted by population growth. the population growth in the united states has exploded higher in the last three years or so because of migration. we've gone from a .2% population growth in 2020 to 1.1% population growth and that's a gigantic move for that. so all the surveys are being adjusted by population growth and we have to ask the question as to whether or not we are measuring it correctly. if we had stable population the answer would probably be yes but under this flux of population we've seen there's a lot of questions. and i think it comes down to more in the household survey where the unemployment rate is measured less so on the payroll survey. >> you are speaking in tandem

with your know landing compatriot over at apollo who put out research over the weekend pointing to response rates declining the current population survey has gone from a 90% response rate in 2012 to a 70% response rate today. what gives you confidence that the lack of clarity we are getting speaks to bullishness and not bearishness in the labor market? >> when you look beyond the labor market and let's take a look at consumption or retail sales. retail sales has beaten the wall street estimate 25 of the last 31 months and consumption numbers are very strong especially where they were pre-pandemic. so what that says is there's a lot of spending in this economy. what's the big driver of spending, it's income. people must have a lot of income. the savings rate has been falling and that can explain some of it, but not all of it. what it does do is masks the payroll report and the household

survey are masking the jobs created but you're seeing in the retail sales and the consumption numbers because of how high and strong they are. >> we are seeing weakness when you talk to executives of retail companies are beyond they talk about how they are seeing more choice fullness. people are being more discerning in how much money they spend. where do you place that in this trajectory of know landing you see mark >> the economy -- you see? >> using the statistical term it has a wide standard deviation. you'll have quarters in their work micro less than one and quarters that grows less than three. i think what we are seeing with that among consumers and don't forget it's election season and that has a big effect on them but we are seeing probably more than normal noise you would see around them economy that's growing near or at potential.

we had some quarters late last year growing at 3% or 4%. we had a weak first quarter this year looking at low twos probably for third-quarter gdp growth. so that's kind of in the normal range of things you would see with the economy but add it all up and average it out and it looks like an economy that is not at risk of recession at this point? >> what's the biggest catalyst that could have you back off this scenario? >> probably if the inflation rate were to continue to move lower. for arguments sake i'm going to use the year-over-year cpi. in june of 23 was 3% and everyone said we are on the last mile. now it is 2.9. it's taken 14 months to go from 3% to 2.9 and it made a move towards 3.7% in the middle. there has not been much progress in terms of inflation moving lower. if you look at cleveland fed median cpi or the dallas pce

numbers, these are better core measures of inflation than food and energy. those numbers of kind of stalled out at high levels. if the economy is really slowing we should see the inflation numbers move forward and we haven't. we have seen them settle out at a late rate well above where the fed wants and we just assume they will move lower. so if they start to move lower than i would start to say there is some broad-based weakness. >> you have -- do you have concern rate cut would mean someone potentially re-acceleration? >> i'm in the camp but the new inflation rate is somewhere between 3% and 4%. i might add that's exactly what it's been for the last 14 months or so between 3% and 4%. whether or not we get a harris or trump administration after the election it looks like we're going to have spending, we might have tariffs and we are going to

see a big fiscal response out of the federal government. you add into that easing monetary policy and i could see where we could look at the second half of 25 and talking about a reacceleration. not to 9% or anything like that but solidly staying above that 3% level and being worrisome for a target of 2% that said they will get to that target of 2%. jonathan: this raises big questions about the projections we get next week in the sep. the summary of economic projections. i can show you where cpi is right now. 2.8% for 24. 2.3 for 25. can you share where you think that will be next wednesday and how high they will be revised up by the time we get to 2025. >> i don't think next wednesday those numbers for 25 and 26 will get revised much but the story with the fed is always the

two-year out number is always at 2%. and then as that two-year number becomes one year in six months is or to revise it higher. i think that will be probably more of the same when it comes to where the fed is. in june the fed did acknowledge there is a base effect in the inflation numbers meaning the seasonal factors are turning positive meaning they will push the numbers up through the second half of the year which is why back in june they up their forecast for 2024. so i don't suspect we will see a lot of movement in the 24 number probably the 26 number will stay at 2% or right on target. so that is good to be the key is whether or not the inflation rate does move down. jonathan: thank you very much, to the federal reserve decision. taking a completely different view compared to jim, i

mentioned andrew earlier but this just dropped. the message from the september jobs report was clear. be on the plummet rate is higher than the fed forecast and likely to revise higher. fed officials will need to revise up there unemployment rate projections and are likely to cut rates as least as fast as markets expect. our base case, in our base case delivering 125 basis points cuts over the remaining three fomc meetings this year. i assume that's a 50-50 ended 25. >> i wonder if they will increase the unemployment rate considering where they are and if it's above where they say they will end the year. to what degree do they speak to that weakness and how does the market respond to it? i want to sit on one thing, the idea that lower inflation, if we get a surprise to the downside on wednesday would actually challenge his view we are in the know landing economy and make him think maybe the economy is

weakening more significantly than he thinks. jonathan: equity futures still positive by one half of 1%. let's get june update with your bloomberg brief. >> china cpi came in overnight at the weakest low since 2021. calls grew for efforts to move household spending. its economy is in the midst of the longest streak since 1999. china csi 300 extended losses after the data ending the session on the verge of a five year low. morgan stanley has cut its forecast for the second time in just weeks. they had expected $80 a barrel in the fourth quarter but now the team sees an average of 75. that still higher than the current price. they have an even more bearish outlook. speaking at a conference the firm's head of oil said it could go as low as $60 relatively soon. men's tennis taking down

american taylor fritz at a star-studded u.s. open final on sunday. the rising star took the match in straight sets. the 23-year-old shook off the controversy surrounding a banned substance he was found to have taken unknowingly earlier this year. the wind marks a second grand slam title of the year. he had won the australian open in january. that's your brief. >> i think it's fair to say the men's tennis recession in this country is coming to a lisa: i should hope so. lisa: what caused the recession? jonathan: calls a recession overall of the last 20 years. this is a long story. lisa: do it in 30 seconds. jonathan: i think the birth of these professionals like federal or an djokovic completely change the game. before them you were a specialist on any given surface so we have these hardcourt players and than those who would only turn up for the french.

only turning upper wimbledon, do nothing on the other services. something changed with those three players where they were able to dominate across all sets. >> i want to know why pre-nutrition, -- jonathan: change of grass at wimbledon. lisa: genetic modification. jonathan: all of that. this is not a 32nd response. up next on the program, david of ubs ahead of apple's new product launch, this is bloomberg. ♪

♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals jonathan: live from new york city, the opening bell one hour 11 minutes away. equities up, following a four-day slide on the s&p. first up morgan stanley raising its price target on shares of costco. keeping an overweight rating, of

the firm calling costco a best in class retailer. next up, be of a upgrading jetblue to neutral from underperform and doubling its price target, saying recent trends in travel and food you will prices are a tailwind and red bush maintaining the outperform rating on apple with a price target of 285, a ives saying the launch of the ai driven iphone 16 model lineup will kick off the biggest upgrade cycle in apple's history. heard that a few times. jonathan: i'm shocked -- is this good to be different. david colors -- covers apple and as a neutral rate on the stock. david joins us now for more. welcome to the program. let's pick up on what dan ives had to say. what are you expecting from this launch and could trigger, ignite that upgrading cycle that the bulls have been looking for for a number of years? >> thanks for having me. product expectations perspective

we don't expect anything material today that has been reasonably well telegraphed in the market. we will get a new airpods generation, some new watches. but we think the product introduction to been well telegraphed. in terms of the cycle we are considerably more cautious about what the next 12 to 18 months look like and there's a couple different reasons. we think the application suite will be limited. second there some geographic limitations. this product will not be launched in china. the second and third largest markets, so net we don't subscribe to the super cycle market. >> what would you have to see to change your opinion? >> one, applications matter. you need the software community, the ecosystem to build out applications will get people excited about new devices. these devices are emails,

emojis, some writing tools. nothing that's can change day-to-day productivity. spending upwards of $1000 u.s. to buy a new device is a tough sell when quite frankly there are a lot of other prices on the marketplace that have applications that are similar. we need to see a more robust ecosystem over the next 12 to 24 months and this is the first prop -- product they launched that i can revolve -- recall that is debate version and doesn't have all the features at launch so there will be more plugged in over the next 12 months or so so it doesn't give the consumer really to grab hold of and say i need this. >> that's the reason pricing will be so interesting at a time when margins are getting compressed by how much apple is trying to invest and buy into the ai craze. how much do you want to see them increase prices at a time when consumers are being more discretionary and where there is competition that does harbor ai. >> i think we are in the minority here. if you go back two years ago

when we had rampant inflation in the u.s. and europe, you at the beginning stages of the ukraine crisis. apple raised prices in europe and the u.k. by basically 100 euros, ultimately unit sales fell from 15 to 20% on a year on year basis in that market so there is some elasticity. i think apple learned its lesson britain effectively they didn't raise prices dropping the low-end. so despite the more robust process, the more robust cam respect we don't think they will raise price because consumers see your point are price-sensitive right now and i think that would impact them. annmarie: given the fact these ai functions, the apple intelligence is kind of being unraveled here half-baked. what are you getting when you buy this iphone that you don't have on your iphone today? >> you are going to have an integration with chatgpt/openai.

it already works reasonably well in your device, what would apple has been talking about is functions like email summarization, writing tools, we will see how this plays out. i think when we talk to the company these are early days. this is the initial platform. you need to develop a community to build applications and functionality to get people involved. if you go back to the iphone 12, everyone thought the marketplaces can a drive huge sales. i live in connecticut and work in new york, it's been pretty limited. i think you need the ecosystem to drive the applications. we don't think that's over the next 12 to 18 months. annmarie: why are we not able to get these functions in the european union and china? >> the china regulator has not signed off on it paid there's a suite of considerations like

privacy and the building for regulators to have access. at launch or soon after we think apple might work with a local provider, but that effectively -- it doesn't set apple apart. europe is a tough market for apple. the eu looking at it from a host of regulations and so there is friction between apple and the eu. so net net it's not can be a widely distributed product. this devices only can be running -- it also limits the application in terms of countries where it can rollout. we will talk about what this could look like maybe a year from now but near term we think this will be solid but jonathan: come back soon. we would love to catch up with you again to hear your thoughts and talk about what's happening next and what's happening in china as well.

david of ubs, things are not good for apple based on that assessment. lisa: especially because you don't have the exit ramp of china or of europe especially given the fact, his point is important about the data, it's very rare to bring a rollout of something that is a debate launch and have people play catch up with software updates and yet here we are. >> rare is a kind of way of putting it. it's not good. lisa: having more people income, does jonathan ferro need to upgrade? jonathan: with great difficulty. unless it folds. four folds and then i'm in. game changer. ♪

♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

jonathan: live from new york city, welcome to the program as we kick off a brand-new trading week. equity futures positive by .5% off the back of four consecutive days of losses on the s&p 500 and the worst week of the year so far. the nasdaq up by .06%. manus: this time last week we were talking about record highs. boeing potentially removing some headwinds doing a deal on the docket for 33,000 mechanics and

factory workers. 25% pay rise staggered over four years. a commitment to build new airplanes in the pacific northwest. it helps remove some of the issues for the new management. joining the big club again, dell . back in the s&p 500. citi said you can get more momentum in the stock on the upside because you will see an infrastructure spend and the pc demand, the refresh cycle coming through. they will get a double uplift according to citi. tech is a focus. nvidia is something. it is driving the narrative everyday. i want to put in context. down 14% last week. you have citi saying this stock is becoming just another growth stock and its deceleration is going to have less of a profound impact on the overall trajectory

of the s&p 500. that is quite the call from citi. the debate is if it's movement in the dollar-yen or just clawing on a more solid ground as we kick off the trading for the week. jonathan: appreciate that. that 14% move on nvidia, that is $400 billion over that period. lisa: i've put out the idea it was a record swing we saw in market cap. i got so much hate mail. it's basically, of course it is. it is such a big stock. that highlights how significant these moves have been in market cap and how we shrug them off as typical in the modern world. jonathan: just like that. the numbers are ridiculous. manus, thank you for that. the traders areri p for a busy week. cpi on wednesday. thursday, ppi and another round of jobless claims. the ecb rate decision around the corner.

on friday, the university of make issue -- michigan survey. michael: i don't think we will get a lot of interest this week in terms of the numbers. we are pretty good -- not we but the economists on wall street are good at forecasting the inflation numbers. right now they are not seeing much change from last month. we are looking at .2% gain for both core. .1% on ppi final demand. that does not change much. the headline comes down a little bit what it leaves you with is the fit in the same position as they are starting the week and they can do in are they feel is necessary and nothing is going to compel them one way or another on jobless claims. the forecast is for 220 9000 after 227,000. whatever last week was, until we get some kind of change. lisa: you are like go to sleep until next monday and come back

next wednesday, get some answers. it will be an important week. we don't understand how low the threshold is. how low the bar is for the fed to have an outsized rate cut. what they are looking for in terms of weakness. where things are going to matter. is at the university of michigan survey and what 500 people say about what they feel the inflation is will be the next five to 10 years? doesn't that make it interesting? michael: to a certain extent. the composition of the inflation reports will be interesting. take out energy. the rest of it will see the breadth of inflation and if it has collapsed as jay powell said. the fed has sort of taken inflation out of the equation by saying we are there basically. it is going to keep happening. we will get down to 2%. it would take a big surprise to affect what they are going to do, for inflation to affect what they are going to do.

we hoped jobs would give us some sort of clue as to what they were going to do. it came out right in the middle. nobody really knows, which makes that really interesting. how long has it been since we had a meeting where we did not know what the fed was going to do in terms of monetary policy? how many times have i sat here and you guys sit here and we say it is what they say, not what they do. this is about what they do and what they say. lisa: you are on friday. what was your take on waller? he started speaking later and people read that a few different ways. michael: you kind of left an opening. he said we could do more if necessary. depending on the data. there ain't a lot of data between now and the fed meeting. my reading was he was saying after this september meeting, if we get data that says go 50 we will go 50. i think that is what he is

referring to. that will make november interesting. we will be talking about what they say in the summary of economic projections, the dot plot will be interesting for wall street. we will have a lot to talk about going forward. they will have started the cycle. jonathan: mike mckee, thinking. we have a live meeting on september 18 at the federal reserve. let's crossover to neil dutta. neil wrote this piece on linkedin. i want to share the quote with our audience to get your response to it. i'm seeing a lot of optimistic takes out there. almost feels like people are living a political narrative to cloud their analysis of the data. conditions are getting worse, not better. it will be time to be bullish. i'm not sure now is the time. the fed should go 50 when they can, not when they must.

the political one is interesting. what is your view on that? are you suggesting some economists and fed officials have a political narrative? neil: not fed officials but certain economists on the street are sounding like that. the same folks that told us we are at a sustainably higher run rate for employment with 200,000 because of immigration all of a sudden telling us don't worry about it. 100,000 is fine because that is what for employment looks like . lisa: this is something i have given quite a bit of thought to. are you accusing the current status quo opinion on wall street that recession is not imminent as a political construct designed to help the incumbent democratic party? neil: no, i don't think that's the accusation. there are certain quarters of people -- i don't know, maybe

they are jockeying for jobs in the administration. look, no one needs to talk to me about being optimistic. i'm one of the most optimistic people historically on the street. lisa: me too. neil: you can't help but wonder these while the optimistic takes seem a little bit out of place. this notion that, you know, this is a soft landing. this is boring. things are good. we are at full employment. at the end of the day, up is up and down is down. it is that simple. lisa: what is the base case you were talking about in terms of where people are getting it wrong? how bad you think it actually is? why do you think the fed should go 25 basis points rather than 50 basis point even though everyone on the street does not seem to think it is that bad? neil: i think things are getting worse. since powell talked about further cooling in the labor

market every single labor market indicator that has come out has been worse than expected. adp, nonfarm payroll number, job vacancies, the regional manufacturing employment indicators, highest him employment indicators, the labor differential. you can go on and on and on. we are told to say don't worry. layoffs are low, as if that is a leading indicator of the labor market to begin with, which it is not. the hiring rate has collapsed. i mentioned immigration before. look at college unemployment rates. the unemployment people with a bachelors degree. that's half a percentage point higher than it was in the same month of 2019. how does immigration explain that? i think it is a little offputting to the extent that the important story, i think the economy is evolving and away the

fed may not be anticipating. to the extent that is true i think it creates the risk of an accident later, which is something we have been arguing since june. the only reason to expect 50 -- yes, i believe 50 basis points is possible at the september meeting -- is because of jerome powell. we can talk about waller and williams. all jerome powell needs to do is get out there before his colleagues are on the table and say i think we should go 50. they will all fall in the place. a lot of people on the street that have 25 basis point rate cut calls have no problem with the fed going 50 either. annmarie: how political could it be for the fed to go 50 if jerome powell is the one almost dictating it, not a consensus building from the ground up? neil: a consensus would come around to the chairman. if they didn't go 50 and they only go 25 and that potentially fuels bets the fed will be behind the curve later and then

we are talking about larger moves after the election, how would that not be political? to me, they have full clearance to go 50 as it is. i do find this argument if they go 50 at the start it would be a panic. by that logic maybe they shouldn't go at all. show confidence in the market that -- why not do anything? annmarie: you think they should go 50. what you actually think they will do? neil: i think they will go 50 because jerome powell give them license to go 50. i think he thinks they should go 50. jonathan: the kind of communication you are expecting on september 18, do they characterize that as a midcycle adjustment, a rush to neutral? how will they frame the move? neil: i think it will go 50 essay they're willing to do more to stabilize the labor market. that is hell they will frame it.

-- how they will inflame it. inflation has been quelled and we would like to stabilize labor market conditions at our estimates of full implement. lisa: will you feel better if there is dissent on the fomc? neil: i think the consensusbuilding nature of the fed historically creates institutional bias for them to be late. a lot of central banks have more dissents. who are we really -- if you are jerome powell, to me it is like someone is dissenting, so what? some people will dissent and they have been absolutely wrong about the overall tone of the data for the last six months. if mickey gowen dissents, is that a big deal? it is like being, you know, kicked by a lesser than. it is not really worth trying to build consensus in that regard,

especially when they have been wrong about the overall slope of the data. some of these people also have been completely had faked by qubes -- headfaked by q1 inflation. what is the point of building consensus with people that have been wrong about the overall data for the last 3, 6, 9 months? jonathan: whoever dissents, you will say they are auditioning. neil dutta, a clinic as always. viktor hjort of bnp paribas here. things they should -- you are bearish on the credit market. did a lot of that resonate with you? viktor: for sure the theme we are moving away from, risk gaining a big part of credit market towards fund metals and downgrade risk and that sort of stuff. that is absolutely a theme. maybe i'm less worried about the labor market than he is, and

probably for the simple reason that i don't really see why companies need to shed labor. corporate profit margins are very high, have not rolled over and typically it is the rollover that proceeds the shedding of workers. that has not happened yet so i'm not sure why i should be too worried about layoffs. for sure, the credit market right now is very focused on the idea of high rates instead of inflation. probably more room to be surprised i more sluggish growth. jonathan: put some numbers on that. the high yield spreads in the 320s at the moment. what kind of spreader you anticipating? viktor: between now and the next couple of months, 50 basis points. you can easily test the wides of early august. i don't think it is necessary. the growth is slowing.

i think it is because we have that political event in early november. that requires a bit of risk premium. lisa: extrapolate that out. what does that risk look like? is this worry about tariffs or worry itself? how will this percolate into wider credit spreads when companies have refinanced and if you believe it, the economy has not fallen into recession? viktor: it's about uncertainty. when you look during past election cycles you often have risk-off periods into the election and then a big rally coming out of the election. they look different from one election to another. one thing you clearly see most of the time is that there is position squaring going into the election. the net longs go down from mid-september through october and into the election. that is an interesting story.

what a basically tells you is that uncertainty is a factor here. if you're going into an event, hey, why expose portfolios to something we can't quantify? let's just reduce risk and put it back on after the election. i think the story resonates with 2024 as well. you have two candidates that are very different. why should i guess whether net income is going to go up 7% or down 7% depending what corporate tax rates i get? i probably should just reduce risk and see what happens. that's exactly what will happen. that means less liquidity and a weaker market sentiment over the next couple of months. lisa: you deal with a lot of clients. i wonder how true that is for

international buyers of credit which have traditionally been some of the biggest buyers of investment grade, i'm thinking the japanese and others. viktor: we have a very interesting story which relates back to some of the stuff that happened in early august with japan. obviously, if you have a boj that is hawkish lee hiking rates and the fed which is officially cutting rates, at some point the economics for japanese investors to buy into u.s. dollar investment grade debt deteriorates. that is clearly an angle. i'm not sure it is the main angle here but we saw a test run of that risk scenario in early august. i think it can happen again. annmarie: talking about new highs for the s&p 500 after the election because of gridlock. not because of a sweep of either party. is gridlock also good for the credit market?

viktor: i think so. i think it is probably the best outcome. credit, even less than equities really hugs the lack of volatility type of environment. hi certainty, low movement. that is the idea environment -- ideal environment for the credit market. gridlock is fine but i don't think that markets necessarily anticipate gridlock ahead of the event. maybe a sweep is fairly unlikely but we add up the probabilities of a blue and red sweep, we end up around 45% or so. that means there is at least a pretty high chance they will be some extreme outcome. i think it furthers the idea that people will choose not to second-guess it and simply reduce risk ahead. that points to was volatility in credit markets.

jonathan: thank you, sir. viktor hjort bearish on the credit market. opening bell just around the corner. let's get an update on stories elsewhere. dani: brown university trusty joseph element has resigned in protest against the school's boat on divestment from companies linked to israel. keep in a trustee since 2019 and is the ceo of perceptive advisors. in version of the resignation letter he said it was morally reprehensible and rewards violence and anti-semitism at brown. brian niccol begins his tenure as starbucks's ceo today. he joined after spending four years as a poet late. starbucks -- at chipotle. starbucks shares have sort 18% -- soared 18%. long waits and labor relations as union efforts grow.

the fl is officially underway. already the super bowl and fed very has its headliner. kendrick lamar was announced as the performer for the halftime show in new orleans. he previously performed at the event back in 2022 in a line of the featured dr. dre comest knew about -- dr. dre, snoop dogg and eminem. that is your brief. jonathan: thank you. we will see you tomorrow morning. up next,apple's product launch -- apple's product launch. we will catch up with ed ludlow from cupertino, california. ♪

the future is not just going to happen. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai. ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals jonathan: 38 minutes away from the opening bell. equity futures on the s&p 500 positive by .6%. coming up, later on today, apple

unveiling the latest lineup of phones, watches and more. tomorrow, vice president harris and former president trump facing off in their first debate, and maybe only one. wednesday, the fed's next big data point. on thursday, ppi, another friend of jobless claims. on friday, consumer sentiment. joining me from apple park, ed ludlow. this is an odd one. this feels like unveiling something that doesn't exist yet and might not exist for a number of months, maybe quarters. can you walk us through how large this unveiling is? ed: that is an accurate framing. the most bullish on the street sees a super cycle where they believe tangibly the consumer is ready for artificial intelligence on device. the plan is as follows will get four variants unveiled today. they will start shipping at the

end of the month. as is well documented, the supporting software through ios 18.1, the update that gives you access to apple's artificial intelligence tool is staggered, delayed until october. there is an interesting misunderstanding. the bulls on the street see this super cycle and are excited about handset upgrades in china driven by ai. as you discussed earlier, apple was not making apple intelligence available in china pending regulatory approval. lisa: how do you unveil software? it doesn't have the same sexiness as something that full or has new corners or whatever. usually the hardware they unleash is. how are they going to make a software you cannot get until next year sexy? ed: i think the story for everyone around the world is if i'm in everyday consumer, how do

we use this technology? the beta version has given us a clue. tech summarization. it is the damage generation functionality that is delayed. a lot of that plays out on social media. it is easy to create a meme. i had dinner with a tech ceo last night. what i find interesting is apple intelligence is not going to be released in europe out of concern for some of the regulatory pressure there. in europe, the consumer is not as interested in ai. it's easy to sit in silicon valley, i have every tool under the sun installed on my phone but that is in line with what goes on here. there's a story that needs to be told. this is how you use ai daily and how it will impact either your work or personal life. jonathan: looking forward to your work and catching up tomorrow morning. look out for ed on the unveiling from apple of the iphone 16.

bloomberg's ed ludlow. ed put it perfectly. they need to demonstrate what this essentially is without just saying ai on repeat. what can you do with this that you could undo before? lisa: how did they make it appealing, the idea of this transforming your life? if they can show an easy way to make this your personal assistant, that could potentially be transformative. some of us might need organization. annmarie: but the rollout will be staggered. it feels a litmus test for the ai functionality. ed is sitting in silicon valley, everyone's excited. they can't even break into china or the european union. they are only going after american consumers. jonathan: it must be like tesla. buy the hardware and the update is coming around the corner. lisa: it will also serve your drinks. jonathan: there's a lot of similarities. lisa: you are not driving. jonathan: true. lisa: carry-on. jonathan: how is that going to work? it's an interesting point.

you got us thinking now. lisa: i'm glad. jonathan: from new york city, this is bloomberg. ♪ [introspective music] recipes. recipes that are more than their ingredients. ♪ [smoke alarm] recipes written by hand and lost to time... can now be analyzed and restored using the power of dell ai. preserving memories and helping to write new ones. ♪

the moment i met him i knew he was my soulmate. and helpi"soulmates."new ones. soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title. i'm amanda and i've struggled my whole life with my weight. i had some health issues which affected my hormones and my metabolism literally just crashed on me. i've tried everything and starving myself just didn't work. what appealed to me about golo was that it focused on losing fat weight

and maintaining my muscle. the golo plan and release has given me back my metabolism. golo has shown me how to lose the weight and keep it off. i will never gain the weight back again thanks to golo.

matt: a little bit of a bounce back today. 30 minutes until the start of trading. katie: "bloomberg open interest" starts right now. ♪ sonali: coming up, inflation ahead. futures are pointing to a partial recovery as investors brace for the cpi report on wednesday. matt: apple's most important event of the year kicks off at 1:00 p.m. eastern. we are live at cupertino as a company