>> welcome to bloomberg markets. we are looking at u.s. stocks bouncing back after the s&p 500's worst start to september since 1953. let's take a look at where things stand. look at the s&p 500. it has been a straight shot up since 11:00 a.m. sitting at a session high. financials are leading the advance. look at the mag seven, they are in recovery mode. apple a bit of a laggard for its

product launch. not much going on in treasuries. the 10 year sitting at 3.70%. there is competition from the corporate sector. there is several potential issuers to sell investment grade bonds today. minimal moves in currency. the dollar is higher against most of the g10 currencies. you could include the euro in that category. the european central bank expected to cut rates at its meeting on thursday. go back to the price action in equities check in on midday movers. after the close on friday, the close on friday, the s&p dow jones indices announced it is adding a few companies to the s&p 500. they are palantir, dell and eerie indemnity. you can see the shares gaining on anticipation passive index funds will need to buy them. these three companies will replace american, etsy and bio-rad laboratories.

index funds will need to sell the shares to realign with the s&p 500 new composition. when it comes to the fed and the economy come investors will be watching for inflation data, cpi and ppi are set to be released this week. neil. spoke about where the fed may go from here. >> the important story is i think the economy is evolving in a way the fed may not be anticipating. to the extent that is true, it creates the risk of an accident later which is something we have been arguing since june should the only reason to expect 50 and i still believe a 50 basis point rate cut as possible at the september meeting. that is our call to our clients. because of jerome powell. we can talk about waller, fed president williams. all jerome powell needs to do is get out there before his colleagues around the table and say i think we should go 50 and they will fall into place. a lot of the people on the street that have 25 basis point

rate cut calls, they would have no problem with the fed going 50 either. scarlet: clearly the debate continues over the size of this fate -- of this month's fed rate cut. so for more on the equity markets, let's bring in sophia's head of investment strategies. do you think with the cpi and ppi releases we are getting this week, we are going to get a clear idea out of the data on whether the fed goes with 50 or 25 or will it be a guessing game to the very end? >> the labor report from last friday was supposed to be the linchpin that help the market decide with that they're going to do 25 or 50 and it did not serve as that. we saw the likelihood of a for the basis point cutgo down throughout the day on friday. we are sitting in limbo again which i think means the cpi report will be more important than what we were expecting. if you look at the market

implied moves on wednesday after the cpi report, they are smaller than what we used to expect on a market move on a cpi day. this week it will matter. if the cpi data comes in cooler than expected, 50 will get priced in quickly and i do think it matters. i agree with the previous guest. i think there is a good possibility they do 50 even if the market is unsure of whether we are going to receive a larger cut. scarlet: if they go forward with 50, is the assumption the fed will need to stick with 50 basis point moves at every meeting? how do we figure out the cadence of future rate cuts moving forward? liz: i think if i were the fed, i would be thinking about this more so along the lines of what is the bigger risk. the bigger risk is doing 25 at the september meeting because there is no meeting in october. there's a lot of time between the september meeting and the november meeting which is after the election.

it don't want to run the risk of looking too far behind so we are going to get a decent amount of data between the september and november meeting. if they go 50 in september, perhaps they look reactionary to some of the day that has already happened but they can manage that message. i think it is much more difficult to manage a message of we missed it should we were behind and now we have to play catch up later on. scarlet: let's talk about equities because we know september is an unkind month to anyone who is long the u.s. stock market. that is what we got last week with the s&p 500 using 4.25%. how do you see the rest of september unfolding? liz: it seems every week in september we have some highly anticipated event. i don't feel the volatility is going to subside through the end of the month. we have cpr this week. we have the fed meeting next week. we have the jobs report last week. there is a lot going on. there is a lot of uncertainty not to mention on top of that is

this is an election year and september does tend to see volatility going into the election. in an election year the volatility tends to stretch out into early to mid october. the moves around in the gyrations we have seen in the market are here to stay for a couple more weeks. scarlet: i look at how the sectors are performing over the past one month and we have seen value sectors outperform, financials, consumer staples, even utilities up 5%. utilities up 3%. you see these as the new leaders or is this something we are going through as we are mid-rotation? liz: i see these as rate place. if you look at the one-month period of performance versus the year-to-date period, you have year to -- you have consumer staples up there. utilities fell down over the one-month period to the number five spot in sectors.

that is because utilities had benefited a lot from the ai enthusiasm and they were seen as an adjacent trade to the ai enthusiasm. as some of those companies have given some back, utilities have given some back too. the environment we are in and we are likely to stay in through fall is of have a yield curve that is marginally un-inversion at the twos and tens and we have a cutting cycle we are embarking on. it has been a long time since we have seen that. yields have fallen. short end of the curve will continue to fall meeting the two-year and shorter will continue to fall as the rate cutting cycle begins. some of the sectors that are doing well are ones you typically do see do well during what is called a bowl steepening environment where yields fall across the curve but the short end falls faster than the long end. scarlet: i'm glad you bring up the 210 spread because it is positive. it is been two trading days since it has been positive. we are seeing the three-month daniel year -- 10 year yield

curve inverted. what does that tell you in terms of where expectations are headed? liz: the un-inversion for the re-steepening of the twos tends suggest the two year yield is what tracks the fed funds expectations more closely. as we get closer to the first cut, it should not be a surprise twos tends spread did get into slightly positive territory. we are looking at three basis points. this is not remarkable but it is a big move from where we were six months ago. the three-month 10 year spread is the one the fed talks about as their most preferred spread to watch. that one is still being quite a bit inverted over 100 basis points. suggests usually to them that a recession is more likely than in a normal environment. we can bet that the fed has been watching that curve although that one continues to stay deeply inverted. it is one of those things that keeps me up at night.

scarlet: i'm sure clients ask you about as well. so fight head of investment strategy is thomas thank you for joining us today. coming up on bloomberg markets, boeing shares rallying on optimism a labor deal with the largest union could steer the company away from a strike at seattle factories. it is our stock of the hour and it is next on bloomberg. ♪

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scarlet: this is bloomberg markets. it is time for our stock of the hour and we are watching shares of boeing take off after reaching a per luminary deal with its largest labor union to avoid a strike. workers will vote on the deal later this week with most analyst optimistic it will be

approved. turning us for more is george ferguson, bloomberg intelligent senior aerospace defense and airline analyst. what would you say are the odds of this will go through because this is not a done deal and the membership could surprise us. george: i think it is better than 50% odds it will get done but we are seeing a bunch of chatter in social media are members of the union that are not happy with the agreement. the agreement between their leadership and boeing that is chad the pay increase -- that is. the pay increases 25%. boeing said with progression payments which are internal pay increases over time it is like a 33% increase. the union to come out looking for 40% so there is a bit of a gap and that may be of the reason people are disappointed. it is probably still better than 50% chance it does get approved by rank and file. scarlet: vote is scheduled by

thursday. if this does go through, does the new ceo deserve the credit or any credit? george: i think he had some influence on the negotiations but he is just in the doors so i don't think he is the big reason why this deal gets done. it comes down to economics for the union. the union under a contract that had much lower pay increases. they have seen a bunch of inflation over the last number of years. they wanted something that will get their membership whole with where prices are in the general economy. they secured an agreement to at least keep the next airplane in the puget sound if it is announced during the four years of the agreement. that was important to the membership. the economics of the deal is what is going to win the day. scarlet: eventually when this deal passes or a deal passes,

boeing is in a position to address its financials. what do you expect it to do? there been talk of a share sale. george: they want to avoid a share sale because that can dilute the existing equity and nobody is happy with that. they don't want to add more debt to the balance sheet. if they get this deal done, they can start to deliver airplanes. which will help their financial performance. they may wait a little bit as they try to spool up of the factory, get airplanes delivered, generate cash and see if they can work their way out of this. without an agreement, they cannot. my guess is if they get into a bind, they will need to go to the equity markets so they don't mess up their credit ratings too much. scarlet: george ferguson of bloomberg intelligence. looking at boeing shares

actively trading now. the volume is 80% above the 20 day average. that is why it is part of our stock of the hour today. coming up, moments away from what many people are calling apple's most important event of the year. new devices, ai integration against the backdrop of regulatory battles with the u.s. and europe. we go live to apple park in cupertino next. this is bloomberg. ♪

>> it is the count onto the market opens as we bring you the first trades across europe.

scarlet: this is bloomberg markets. we are moments away from an apple launch event where the company is expected to unveil new iphones, wearables and talk about ai. ed ludlow is at apple park in cupertino where the event will begin. this thing usually follows a script. tell us what you are expecting to happen. ed: it is highly choreographed. you had the main elements which iphone 16, four variants, 16, 16 plus, pro, promax. as mark gurman has reported, you will not have a high level hardware upgrade generations generation. with that in mind and the context apple intelligence, the ai offering is having this delayed and staggered rollout,

it comes down to the simple story apple executives tell to the average consumer. here is how we think you will use generative ai technology on your handset and why you should upgrade to the new generation of phone. scarlet: how quickly will any apple iphone user be able to use the ai apple is going to be talking about? what is the earliest anyone will have that in their hands? ed: so the timeline we understand is after the 16 handsets are unveiled today, they will start shipping at the end of this month. ios 18.1 of those out next month in october. there are specific staggered or delayed elements of it so we know openai chatgpt as an integrated facet of apple intelligence will not come until later either at the end of this year or early next. some of the inner edge -- the image generation tools have been delayed. it is a staggered approach. if you look at the initial forecast for handset shipments,

most people expect iphone sales to be flat to 1% growth while the overall market grows 6%. it is next year where the growth picks up 25 we have 4% growth because the impact of apple intelligence will be felt later. consumers need time to understand it. i don't know how i will be using ai on my phone. you talk about it every day. scarlet: that is a good point and i wonder given apple's efforts to make the vision pro a big thing at that has not partly due to the price point, is there concern at all apple intelligence and the air products plans to infuse into the new iphone will be met with a collective shrug? ed: it is interesting. the first place you look as the price point of the pro model in particular and whether they decide to raise prices to lift overall asp's. we had a shema shower on the

show earlier. the data is strong. it is in the lower income households in north america where there is pressure on the consumer. it comes down to technology. there seems to be a lot of enthusiasm from consumers for ai in the market where they have spending power but one key thing is china. apple intelligence will not be available in china in the first instance because it is not approved by regulators. there is a strange paradox where there is evidence consumers in china may upgrade anyway with the hope it comes at a later date. scarlet: appreciate you taking us through all that. ed ludlow is going to be on site when they announced the new product iterations. we are going to stay with apple because this event comes a mid of slog -- a mid a slog of regulatory battles the company has faced in the u.s. and abroad, notably europe. let's bring in angelo zeno who specializes within tech

recommendations. it is good to speak with you. apple is dominant in the smartphone industry and the latest iterations of the iphone, the airpods and apple watches is designed to keep it at the top of the pile. we know apple calls the shots with suppliers, app developers. investors don't have a problem with that. regulators are not comfortable with this. at what point do investors start feeling uncomfortable because of the regulatory scrutiny? >> thanks for having me. as far as the regulatory tilt, i don't think investors necessarily -- i don't want to say they are numb to the regulatory issues but in many respects, many of these make a cap tech companies have found ways to successfully circumvent a lot of some of the pressures that are out there. until it actually has an impact

on the bottom line, investors are going to likely continued to shy don't want to say ignore it, but they are going to put last waiting to some of the regulatory issues until it impacts the bottom line. we don't see that taking place over the next 12 to 18 months. at this point in time, it is not something we expect to have an impact on the stock. scarlet: investors are willing to look past it because it is something that will take time to unfold and even when it does, apple will have figured out a way to optimize the situation for itself. is this something you get asked from clients about ever? darker we do get asked about a lot. in terms of some of the wrigley tory pressures not only for apple but other mega caps names. typically you have a longer tail associated with these regulatory hurdles and most customers or clients, customers we deal with are willing to look past some of

those issues. scarlet: they are more concerned obviously about things like the apple launch event which is taking place today. what are you seeing or thinking about in terms of the pricing for this new iteration of the iphone 16 which would open the door to ai and enabled devices? >> for us, pricing is the biggest key. we do think most of -- what investors need to know going into this event has played itself out, the timing of certain ai capabilities. hopefully we get details out as well as pricing. we did see a price hike in terms of the device. this year what we expect them to do is be more modest in terms of the pricing hike. . we are only muttering a $100 increase in terms of the base pro device just to get close to the max price point. you have a $200 divergence. we expect them to add capabilities they had on the mac

side of things to the pro in terms of better camera capabilities and waiter memory in terms of doubling their memory content. on standard devices, they keep that unchanged because of some of the macro pressures that are out there. we think consumers are price-sensitive at this moment in time. scarlet: a lot of talk that the iphone 17 may be the bigger deal. you think that will be the case that the iphone 17 is where we should focus yet though angelo: we continue to be in the camp this will be evolutionary then cyclical in nature. we think it is an important upgrade cycle because the last time we saw a great up cycle was the iphone 12 and that was four years ago. we think this will be a good up cycle. looking for growth of 5%. the iphone 17 we think will be more impressive because some of the capabilities villa birds are going to be able to add and roll out. scarlet: good stuff.

appreciate you joining us today. the vp of equity research at cfra. i am scarlet fu. that does it for bloomberg markets. we will take you to balance of power next but keep an eye on the developments at the apple launch event. this is bloomberg. ♪ the moment i met him i knew he was my soulmate. "soulmates." 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. where do i begin with oo t our young character?tle.

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fascia, or water pooling near their foundation. you can get ahead of costly damage by protecting your home's gutters today. we're in your neighborhood and ready to help. schedule your free gutter inspection today, call 833 leaffilter, or visit leaffilter.com >> from the world of politics to the world of business. this is balance of power.

live from washington, d.c. joe: it is all apple today. tomorrow it will be all debate. welcome to the fastest show in politics as the candidates hunker down ahead of their first and possibly only debate in this campaign cycle. i'm joe mathieu alongside kailey leinz in washington where congress is returning from a six week summer recess. it is all eyes on cupertino right now. kailey: probably the west coast a little more interesting than the east coast then here in the nation's capital today although it is more crowded in d.c. now congress has made its return. it has been a lonely summer in washington. they have been gone for a long time. joe: started taking things for granted like parking and no traffic. kailey: of course they have a bit on their to do list now they have finally decided to grace their prese--