> i see the economy slowing, not stalling. >> is going to be particularly strong this month. >> we have different labor market conditions from when we left. >> we should see inflation numbers moving lower and we haven't. >> it's what the economy isn't anticipating. >> this is "bloomberg surveillance." jonathan: live from new york city, good morning, good morning. coming into tuesday after snapping a four-day losing streak on the s&p 500, equities are firing on a more firm footing.

looking like this, down by 0.0 8%, one quarter of 1% on the nasdaq 100, it is debate night in pillen -- philadelphia. we need to talk the politics in europe first. apple, google. apple, losers, the eu top call fight over a 13 billion irish tax bill. google loses the fight to overturn the euro fund. it's not doing much in the premarket but this is, you're up u.s. tech. lisa: it's been going on for a while and has been going on where they have pushed back internally from europe as well with the argument being that this is an unfair and covert state subsidy. namely, how much ireland is coming into contact. but this is an example of do

first and apologize later. a lot of those companies are staying in ireland. if you hear more about the potential court proceedings and antitrust in europe, remember that this can take years to settle, it goes back to two thousand 16. that's when tim cook this total political crap and here we are in 2024 and 13 billion euros to apple now is less then it was those years ago. annmarie: absolutely and it donald trump came out saying that they hated u.s. companies and then she said she never met trump and had respect for u.s. companies, which is interesting to me. and in the google part of this, they are using a precedent that existed already, but now they have that market act where they have cemented the anti-competitive legacy and the eu has more tools even to go after big tech. jonathan: wouldn't it be great to have a sophisticated in-depth

discussion on a debate stage in philadelphia at 9 p.m. eastern time when harris and trump face off each other? we can talk about that at the ftc and with these antitrust issues, the state is set. lisa: looking [laughter] [laughter] forward to it. we obviously are going to get that, it's going to be about tone, seeming presidential, who is kamala harris after all and can trump keep himself together and present himself with a policy focus? and by the way as we have been talking about, even if they talk about policy, are they going to talk about implementing it or is it setting vibes? annmarie: it's definitely going to be style, what stood out to me was under the hood, 28 percent of likely voters said they needed to know more about harris, only 9% said they needed to know more about trump.

there is a propensity in pennsylvania for curiosity, what does she stand for. she has a moment tonight to do that. it's important, she only sat for one interview and at the moment this is the only debate they will face-off on. jonathan: what's the strategy here? is she hoping that people don't find out? annmarie: strategy is style over substance. this is why the kamala harris camp really wanted the microphones on muted. to try to goad him into a combative face-off. remember, that worked in her favor against mike pence in that debate where she said, "i'm speaking," resonating with a lot of women. she's not going to be able to have that moment with microphones muted. lisa: will there be a fly? jonathan: is that what you want to know? [laughter] lisa: emphasizing the middle class and how trump will handle that and abortion. immigration, how she handles

that and how much distance she puts between herself and to the biden camp given the fact that she was a part of it and is yet trying to have a unique voice. jonathan: main stage, 9 p.m. eastern time, look out for that. positive to negative, down by 0.14%. the bond market is not doing much either. stable going into cpi tomorrow morning and then ppi after that. lisa: there has been reset as people ratchet down the expectations for a rate cut, rate hike, rate hike, rate cut, the recent update was upgraded after the recent jobs report of 2.6% in the third quarter. you can see something similar from the fed. the point being that the people who say that the sky is falling and we are in a deep recession are getting reality checks. it's difficult to say that, yet looking forward there is quite a bit of uncertainty.

there's -- jonathan: the city cfo ure of spend evolving from discretionary to stable. you can make the case that we are not falling off of the cliff, i get it if that's the case you are trying to make. clearly the nature of spending is shifting in the united states. lisa: and how people are spending and with what money is important. yesterday you saw consumer borrowing increasing the most since 2000 22. why? people are spending by saying here's my credit card and they are not seeing -- they are not necessarily paying them, delinquencies are going up. there are signs that are warnings and the question is, we've been talking about normalization for 12 months now, or is it something more pernicious? jonathan: let's get into it. stocks still at risk of taking out those august lows on the

changing media landscape for sports with tom foley as apple launches iphone 16 with the promise of ai. u.s. stocks looking to rebound after snapping the losing streak. the academy saying that there is still risk ahead, looking to take out the august lows with a major disconnect between people believing they had capitulation as opposed to having seen actual capitulation. pete joins us now for more. good morning to you. taking out the august low seems terrible but then i look at august 5, a percent south from where we are right now doesn't sound so bad. what was it about august 5 that you would describe as capitulation? pete: a lot of people look at the vix at 8:30 in the morning and it was a calculation. nobody traded above 40. they took comfort in having the vix at 65 with everything calming down. there was never panic in the

futures market or in the trading hours. i think they will start reloading the boat in saying we are good, it's a washed up trade to capitulation but i don't think we have that as we hear this. it's already coming back close to the august lows and we have pushed through this with a 10 percent downside. it's not the march lows but there is room for further downside. jonathan: i would suggest that in japan there was actually panic, a three percent move. in the global picture we are suggesting that was a tremor and not the earthquake? pete: correct, we watched the panic overnight with futures going down but it was fairly stable and it started going down by the end of the day and then we rallied and it went further than we should have, but it was obvious that everyone felt like we had washed ourselves of the bad long and we were good but i

don't think we can rally much further until we get it. lisa: what's the catalyst? pete: positioning, people have positions long in the evolving strategies and the one thing i keep watching is mb bl, two times levered nvidia etf, it makes no sense to me. there is a huge drag on performance the way that it's set up but until we see something shake the faith of that crowd, that is when we could see the bottom. we are having a lot more questions about ai and that will be the catalyst. is the promise getting ahead of itself? lisa: so you think big tech, ongoing deterioration from the debate we saw earlier, i'm wondering what the economic backdrop is. some people might say overly bullish, overly complacent, you are saying sky is falling into

recession is imminent. is that the case? pete: no i think there's a possibility for a bumpier landing with pieces of data showing positives and negatives by industry and regional. this to me is really about valuations. when i started on wall street, first trading day they talk about options with a right to sell high and buy low, what does everyone want to do? buy options, we raised our hands, but it was depending on the price where you get paid more than that. we have moved beyond what's rational in terms of generalities that are disappointing. sadly, we talk about the broad markets with 50% of the indices looking at what these 10 companies to 20 companies do. annmarie: where do these concerns around the election

play into your bumpy landing? pete: i'm confused about what we are going to see tonight. at this point i haven't spent any time trying to figure out what either party will be with policy because i don't think we have had definition. i've been thinking about where it's going to stay the same because it will be who wins with china, a tech battle continuing and more and more protectionism around ai and the semiconductor business going back to where you were talking about it earlier in europe. europe will not be good for ai as an investment vehicle because it is about constricting constraint, rules and regulations. i think that ultimately the u.s. is going to do well but there will be friction with china. whoever wins will have to rebuild the reputation globally but where do we stand with our allies? 10-year, 20 year, 30 year commitments? i don't think anything about 't think anything about that is going to come out tonight but those are things we

have to look for as we get closer to the election. annmarie: gridlock in washington with issues like that trump team talks about, he could do that unilaterally on day one with a massive impact on china. do you think china is basically waiting to find out what happens with the election because their economy is suffering before they really have policy moves? pete: i think that everyone is on hold a little bit. everyone has a decent understanding of what trump does and doesn't do, says a lot and tends to back down. kamala, people want to see what she will be like, and will she be easier to negotiate with? right now it's a discount on everything both sides say as we are all splitting tickets and if there is something coming out where one side is going to win completely, it changes the narrative for wall street and they have to pay closer attention to the risk. jonathan: when i walk away from

listening to this conversation, lisa correctly identified tech and trade is the biggest risk. failure to demonstrate on where investment will come from, was the apple unveil the beginning of that? pete: it didn't seem to get that excitement but those earnings, oracle was up and the nasdaq futures were down this morning. it's taking more and more to get that story. the one positive thing that i will say is that walmart kind of said ai will help them with their quarter and planning. i need to see more of that and what i'm seeing right now is a lot more people struggling through using these llm's with generative ai but they keep coming back with like is it there yet and since the costs rose so quickly, the costs of data centers in electricity, the risk reward and cost-benefits are not there right now and i think that is what we will see the slowing down on. jonathan: pete, thank you, sir.

equity futures are down 1/10 of 1% s update you on these stories elsewhere. dani: the u.s. house of representatives passed legislation to blacklist chinese a bio subsidiary companies, arguing that the law addresses concerns over security that were denied by two biotech companies who said they don't pose security risks to the u.s. or any nation. the bill now goes to the senate. astrazeneca shares falling, down 4.3% over the past two days, their biggest one-day drop in seven months with the british pharmaceutical giant announcing disappointing results for the lung cancer trial that did not

significantly improve overall survival results. catherine, prince of wales, saying she was cancer free after completing -- completing nine months of chemotherapy. in a video it said she would resume duties when she is able and that she is feeling well and looking to the future. the vi her on a day out with her three children and husband, prince william. up -- jonathan: up next on the program, harris and trump facing off in philadelphia. >> in many ways, donald trump is an unserious man. lisa: lion -- >> lion kamala harris. >> i have taken on all kinds of perpetrators and i know donald trump's type. >> we have to set the record straight. jonathan: the debate, coming up a little bit later. from new york city this morning, good morning.

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live from new york city, good morning, equity futures are softer, the s&p 500 down, yield is up on the 10 year. euro-dollar right now, the call from morgan stanley is to head back to parity. we will look at that call a little bit later in the hour. under surveillance, harris and trump facing off. in many ways, donald trump is an unserious man. >> lion, kamala harris. >> he would use the immense powers of the presidency to serve the only client he has ever had, himself. >> i'm entitled to personal

attacks. i don't have respect for her. >> i took on perpetrators of all kinds. i know his type. >> i look forward to debates. we have to set the record straight. jonathan: donald trump and kamala harris taking the stage for their only schedule debate, candidates agreeing to a 90 minute event with no opening statements, no live audience, microphones muted during the other turn to speak. harris heads into the tuesday debate searching for a advantage in the states that will decide the election. evan joins us now for more. good morning, sir. let's talk about the highly specific pre-debate: you have been conducting. can you walk us through it? evan: the election is really becoming focused on the handful of voters that will decide the outcome, right? swing voters, largely

independent, six states, rustbelt and sun belt. this debate is largely about them. what do they want to hear? what do they need to hear? what does harris need to tell them to put them over the edge to make this more than just a nice action where she has clawed out of the hole that joe biden was in and reached parity with donald trump where the election could go either way? really, what these swing voters in these swing states want to hear in the polling that we just released is -- they want to hear her continue to gain ground on the economy and press her advantage on prices. donald trump still has a narrow advantage, two points overall, in these swing states on inflation and jobs, but with the independents, harris has an advantage. these critical voters are looking to hear more on the economy and on prices, specifically, mitigating

concerns on immigration where she is still down in these swing states. annmarie: looking at the pole over the weekend from "the new york times," voters are looking for a major change from biden and do you see that in the poll you are going after? evan: it's interesting, we pulled the independent voters about who represents the right kind of change. voters, independent voters in these swing states say that harris is a breath of fresh air. she is, it's undeniable. but only by seven points do they say she's the right kind of change. she's still more tied with trump on being a change candidate. that's because she hasn't yet broken in a way with the administration. she isn't a change candidate literally around who the candidate is. that slighted jan -- advantage on the right kind of changed and is very good, but she needs to do more where she can do more. annmarie: does she need to

completely break with biden to win over those voters? evan: i don't think so, he's her sitting president, her running mate in two thousand 20. there is some merit to the idea that she could draw a greater distance, particularly on immigration. there's very little downside to drawing distance. but most of the biden policy agenda when not tied to biden is popular when you pull it. how do you break with the president? you can't break with him on policy. it has to be more subtle, rhetorical. we will see what she does. you want to continue to be able to take credit for things that the administration does that is popular, like prescription drug prices, which was enormously popular, including the swing states and swing voters. lisa: how engaged are these five hundred thousand can determine the election? how much are they watching and looking for policy to understand

the candidates? evan: those voters are looking to learn and those who follow closely, journalists, practitioners, the kinds of people who wake up early to get an edge on everyone, we know about what's going to come out of their mouths. these swing voters are watching to learn and are not necessarily watching for the zingers. i discount the mics being on or off or anything like that. the voters who determine the election really care about what the candidates are saying and are looking for substance and to be educated. they have open questions about kamala harris, less so about trump, and they want answers, particularly on the economy and immigration policy and how it will be different from the status quo. another important mission is to raise the saliency of abortion rights. lisa: how do you pair those ideas during a time where there

isn't much daylight between policies, china and the u.s., other international issues between trump and harris? evan: foreign policy, part of the biden agenda and policy stuff she is tied the least two is foreign policy. she can kind of do and say whatever she wants that is politically advantageous and it's true that the vice president has very little to do with american foreign policy. short of dick cheney, it's hard to find a vice president who has. jonathan: to the independent voters, is this a person that ran in 2019, 2020? is she progressive in 2024? how do they see her? evan: she never saw the voters in 2019, never made it to iowa. as a vice president on the ticket, in a year where campaigning was different than

any other election in our lifetime. she wasn't barnstorming, media consumption was very different during covid. she is very much doing her first introduction to voters. we are now a couple of months into that introduction and things are firming up, but we did this test on what policies, what campaign promises has she made that she will try to succeed on, try to fail on, or not even try? these are all policies the campaign has pursued. on some things like child tax credit, voters really believe she will try to get it done but on things like deficit reduction, she is underwater by a couple of points. jonathan: she's not the only one. evan: exactly. there are still elements of her record -- the border, by the way, her promises to follow up and get the bipartisan border deal done, voters more or less buy that from her.

surging resources to the border, voters aren't quite sure that she means that. so, there is reassuring to do. it's less about new promises and more about assuring voters that everything she is mentioning is real and something she will try. jonathan: pushing hard later this evening? lisa: they are just going to be watching for the option because they are very focused. jonathan: is that right? thank you, evan. see you again soon. slingshot strategies. coming up next, bain capital, the co-owner of the boston celtics, that's just around the corner. from new york, this is bloomberg. ♪ new projects means new project managers. you need t. i need indeed.

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jonathan: welcome to the program. let's kick it off with the scores in the equity market, down by 0.05%, snapping a forwarding losing -- for day losing streak. talking about consumer discretion, we've got more throughout the morning. there is the equity board but let's switch things up on the bond market, up again by a single basis point at 368.52 on the 10 year -- 3.68 52 on the 10 year. a big change for u.s. monetary policy and the u.s. dollar,

let's do that now, switch the board page to tell the story, morgan stanley is speaking to the team here at bloomberg. david adams out of london runs g10 fx strategy suggesting we could drop towards parity. plenty of scope for the markets and the ecb could be cutting deeper. lisa: calling for a 7% devaluation with a cut from thursday. how much of the have to cut? we have talked about this. people thinking the fed will cut more than the ecb? really, let's see. lisa: look at the data coming out of germany compared to what's coming out of the united states. germany is doing terribly.

still talking about normalization, but in america we talk about nothing but weak. lisa: this is the problem and why ecb might have more scope to cut, they are not seeing that correct demand with credit creation at a time where people don't see optimism going forward. there is a reason that there was an adjustment to the tariffs overnight where they lowered the tariffs for incoming cars from china. they are between a rock and a hard place in terms of how you get it to bring down inflation, cheaper, feeding the green revolution while not decimating the likes of german auto manufacturers? it's an awkward dance that these people without confidence. jonathan: euro-dollar, 110, 35. a 9% increase in capital requirements for big u.s. banks, marking a dramatic retreat from the original proposal that had called for a 19% jump.

michael barth is expected to preview the changes later on today. this versus what it was, a major win for those not -- institutions across the country. lisa: a resolution to these banking sector problems being a wrong way to go, getting weaker. it's also notable, i have to point out that jay powell really wanted to see consensus and was looking for that consensus and it rhymes with other things that we hear about him keeping consensus. it's interested him -- interesting to me. annmarie: this has been a really bitter fight in washington where jay powell teed it up earlier in the summer calling for broad change not at the top level. i'm waiting for an elizabeth warren tweet to drop where she told the fed she needed it to be shored up. this is going to be a political rallying cry. jonathan: we can draft -- guess

what the draft looks like on that account, can't we? lisa: if trump gets into office, it will be unwound and never see the light of day. jonathan: apple losing a fight over a tax bill ireland as the eu tracks down on the tax fights, looking at a that broke state law giving the iphone maker and un-'s -- unfair advantage. negative by 1%. china, deep selloff worsening the crisis in the economy, at its lowest level since 2019 with equities trading at the lowest level for its fourth consecutive year with the latest level not pretty. import numbers are flat, almost unchanged. lisa: this is the fear of the deflationary spiral with what you have seen so far and my question is, will xi jinping

increase state aid or does it focus more on the nationalism? why is it a point of national pride to buy your own products in a move to these other initiatives? is it more or less dangerous for china versus adversaries with stiff competitive counterparts? jonathan: and for apple, who we will turn to this morning. directv, disney, struggling to him -- struggling to reach a deal has hundreds of thousands were blacked out with a shifting balance of power between sports and te celtics and the atlanta football club joins us. steve, good to see you. thank you for being here. let's talk about the standoff. what do you make of this current standoff between directv and disney? steve: it's part of that long series of the war in media right

now. content providers and industry leaders. we've seen this before with the weather channel, who had a big long fought battle with directv as well. content providers want the appropriate money for their content, distributors are between a rock and a hard place because distributors don't have content and want to maximize the price they can get, so that is what you are seeing now. jonathan: what do you think the future is? steve: good, sports are the most watched programs, 93 of the top 100 programs in the usa were sports events. you have to have sports events if you are a distributor to get eyeballs. jonathan: is there a future where they skipped traditional distributors and sports franchises go direct themselves? steve: it's a great question, it

will be about all a cart versus convenience of bundling. we will have to watch over the next 10 years but the good news is the content providers are in good shape no matter which way they go, because as eisner said a long time ago, content is king. lisa: there's an issue who i say -- and i say this with my son who would i just sports with access to some and not others, you would rather have a generation brought up with easily accessible sports and being able to tune in the popularity increases, or would you rather have higher fees from specific streaming sites? steve: that's the balancing act, you want both. you won't have new fans without broader distribution and if the charges are high, you will be charging more for those fanatics. there are deals now where people go on air, television, with distribution channels, it's like the movies promoting things going to cable or satellite.

so, you've got to have a good balance of both. lisa: the international scene, there is a question about the u.s. and how isolated it is. there has been this increasing international focus with respect to soccer, basketball, even baseball. how much do you see that continuing, even with direct streaming that is coming out? steve: direct streaming is going to increase that because now you can access any support from anywhere at any time and if you think about the audience for global sports, like football and basketball, it's huge, the international market, with 30% of players in the foreign markets if you want to see them. we are at the tip of the iceberg and it will grow dramatically. annmarie: could more sports teams wind up doing what the yankees did with the yes network? steve: that will help to create

regional espn's, a compelling reason if you are in new york and want to see all the u.s. -- new york teams, that's compelling. but not having that, not being able to go direct is a problem. annmarie: how hard is that if you are the smaller team trying to break in? steve: it's a little more difficult but on the others, smaller teams have really benefited from having social media clips and accessibility. it used to be that you had to be in new york, boston, l.a., because people can talk to you directly, see the market, its small teams on the rise. jonathan: you've got a footprint into major markets, europe, european football, here in america, how different things in the european market as opposed to the u.s. when it comes to sports distribution? steve: there are some similarities but they are different in the fact that you

have different countries with the coming together, it's hard to understand you've got different things of the same time with italian national team players that leave and you can go there with the champions league and each nation has a league of its own. so, you have to be facile fans to understand what you are playing for in the u.s. is more simple, the league is simple if you are going for a championship. jonathan: europeans might say that is a feature and not a bug, part of the beauty of it. steve: i think it is, i think it is, and the nba has really learned from that. adam silver was courageous in pushing that through with the amazing ratings last year. the games were early in the season and it might be like late season as a big success. jonathan: extending that

thought, do certain people think it is a bug and not a feature given that there is no franchise value? football being the biggest sport on the planet, but when you look at the biggest franchises by value, top 10, dom -- dominated by american sports teams. by our american sports teams so much better at unlocking franchise value than the european counterparts? steve: that's a great question. europe needs to move towards the american model. the league negotiates a television deals, it's all unified. you can have a unified costs structure. it's been much more difficult. soccer kind of grew up from the minor leagues to the major leagues and is a very different system. so, you have a hard time unifying it because it's different countries. in the united states there is

like one approach and if there is a strong commissioner and a smart commissioner like adam silver, they really map out how they get it to most people for the most eyeballs on it and in europe it's very fragmented. lisa: in football, private equity investment, many are looking at it as the potential for 10% ownership being available. steve: it's a misnomer to call it classic private equity. coming into by the company, trying to grow the company, building a strategic plan, the 10% investment is more like investing in gold. or maybe not bitcoin, but more like gold. it's value is never going down the list, 20 five years. it has been a double-digit return or. specific funds will be raising our rates to be put into these

clubs and if someone wants a safe investment in, say, the nba, they can go to these funds, but it's not really classic private equity. taking over football teams, it's not happening. 10% passive in what the nfl has grown in its values in the market, so that is how it has sold, its specific sports related media funds. annmarie: how fantastic are these investments if they were to see a 20% capital gains tax? steve: well, that's all on a relative basis, so it's going to be the same. inevitably taxes will go up given the deficits we have and hopefully in a thoughtful way so that it doesn't kill the economy. annmarie: as a businessman, what is a thoughtful way? steve: look at nations with a

total tax that is the same on capital gains as it is on income where you find it ranks much lower in terms of venture capital business formation. the u.s. is number one and it has contributed, the fact that if you invest in venture capital with gains, the industry has been created around that. europe and china are beyond -- behind that. it's not perfect but something between the rates helps those companies grow. jonathan: do you see contradictions round startup culture and the constant effort to think about taxing of unrealized gains? is that a high contradiction from your standpoint? steve: as you know, i think it's the contradiction of politics on all sides and it's a rough time right now where things have become polarized, you know? populists have taken over. i thought -- i hope we will get

back to the rationality where both sides can sit down and say what is the relevant tax policy where we can feel the deficit without killing the economy, compromising in the middle and knowing where we are going. jonathan: thank you, steve. let's get you an update this morning with your bloomberg brief. dani: google lost the bid to throw out a 2.6 billion dollar eu fine for using a monopoly power to crush rival shopping services. their top court backed the landmark decision around their decision around their own product listings being given higher dominance in search results where they found -- filed against apple in the irish tax bill. oracle shares the surging premarket, up eight point 5% with better-than-expected quarterly profit and ai demand supporting the cloud unit. cloud services having become their largest business, seven

percent to 13 point $3 billion. award-winning actor james earl jones has died, widely known as the iconic voice of darth vader from star wars and will fossa from the lion king. he overcame racial prejudice and a stutter on his way to winning two emmys, golden globe, two tony awards, grammy, and honorary oscar. james earl jones was 93. jonathan: dani, thank you. huge loss for the industry. up next on the program, apple. >> we are thrilled to introduce the first iphones designed from the ground up for apple intelligence with breakthrough capabilities. jonathan: you are watching bloomberg tv. ♪

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jonathan: equities unchanged on the s&p 500 and in the bond market yields are just a touch higher. looking at the low for crude, $68 and $.12. under surveillance this morning, apple diving into ai. >> we are thrilled to introduce the first iphones built from the ground up with the innovation needed to deepen the meaningful impact that they have on all of our lives. i am proud of our teams and what they have accomplished and i can't wait for you to experience these amazing products. jonathan: apple unveiling the latest products called apple intelligence, going down in the eu, losing a multibillion dollar

court fight. tom joins us now for more. big step back, we talked about this a few times in the last 24 hours, how unusual is the event compared to the events of yesteryear, launching a product and promoting features that don't really exist yet? tom: it's incredibly unusual and it could slow sales in the next three months, six months as they say to the consumer by the hardware and wait for the best feature, the software, it will be in beta next month and for many consumers you will get it next year. it's a difficult proposition for apple. jonathan: dan would say that we are waiting for and upgrading super cycle. are you doubtful? tom: i did some analysis on that

and looked at the 5g cycle, compared it to the ai upgrade cycle. i think you are going to see about half, half of the lift that you saw from the 5g. the reason that i say half and not whole is that consumers were not waiting for a iphones. if you look at 5g, iphone sales were negative and there was pent-up demand with a challenge from a regulatory standpoint. 25% of revenue comes from europe and the eu rules will make it difficult for apple to rollout intelligence there. 19% of sales come from china and those regulations will make it difficult there. it's an upgrade cycle but half of what you saw in 5g. lisa: there's a lot to unpack there, including the overlap of what doesn't doesn't, but the sleep apnea, catering to that older crowd that thought maybe i'm just speaking for myself,

that's interesting, hold on, maybe it's relevant. does it highlight where the advancements are taking place and how they don't necessarily fall within the ai sphere? tom: to your point, i thought the air pod pro as a hearing aid was an excellent move by apple. the challenge is that wearable devices are 10% of revenue, so let's say it generates an incremental one billion in pro sales because of the hearing aid feature. that's not really a meat needle mover for apple. half of their sales come from iphones. it's all about iphone right now. as an individual feature i thought the hearing it was a great offer. lisa: meanwhile there is this question about how much people are looking from a personal assistant from the apple intelligence sphere. will this phone give them that impetus? is there a larger story here going towards what peter talked about earlier? it's the hint of what ai can deliver but we are unimpressed.

tom: if we gauge ai on alexa and siri, we are tremendously unimpressed. if we engage with ai on other things, like how amazon for years has said that if you bought the book on muska on boo, ai has been quite effective for an extended amount of time. yes, when it comes to personal assistance, alexa and siri are not great poster children for artificial intelligence assistance. annmarie: if they are not able to break in and in terms of intelligence and they are rolling it out in a half-baked way, why are they doing it now? why not just wait six months or one year? tom: i think they have to. the other interesting thing was yesterday, technically this morning, this afternoon in beijing, huawei introducing a

trifold phone, the next big thing for apple, but it looks like it's not coming until late next year. when it comes to artificial intelligence, this is a great product and selling point for apple, it's just unfortunate that the software won't be available when the hardware is available. annmarie: if apple cannot break into china and huawei is already come -- coming out with something down the road, how hard is the market going to get for apple to infiltrate? tom: good news is historically this is what apple has been able to do time and again, not be the first but the best. you saw that with smart phones and ultimately i think you will see it in the flip iphone or whatever you want to call it, but yes, it is concerning that with 19% of revenue, while i is building in that urgent need for fold -- foldable's getting

traction with consumers. jonathan: apart from retail, what is apple the best that right now? tom: the best at making something work. artificial intelligence, apple intelligence, it will be something that consumers enjoy. it will be a flavor of artificial intelligence for consumers. they are their best at making something that's easy to use. i think that we will see that, but we will have to wait to see that. jonathan: thank you, tom. appreciate it. still make -- need to make the tom and dan match happen. while way -- hallway, innovating, but it feels like apple is done on that front and with innovation, feels like you need patience and to wait for it. newcomers coming into the chinese market for the next couple of quarters before we see the innovation come to market.

lisa: this will be the key question on a host of issues in china and other places as well. apple is good at holding back and perfecting. full look -- foldable phones, big debate in the household last night. do you really want to unfold your phone when you get a phone call or a text? jonathan: it's what we used to do. lisa: but do we want to go back or go forward? jonathan: i want to go forward to the next hour of "bloomberg surveillance." in here's what we have, executive director of the board of los angeles, blackrock, and a whole lot more. futures negative slightly, this is bloomberg. ♪

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>> markets overreacting right now. >> the challenge is overreacting to single points. >> you do not want to get defensive now. >> uncertainty is a factor. >> we are still pricing in a soft landing. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: good morning, good morning. bloomberg surveillance, second hour starts right now with equity futures negative point 1% on the s&p 500, just a little bit softer going into this

evening, debate night in philadelphia. harris facing off against trump in pennsylvania. lisa: the last time we got a debate from presidential candidates it was consequential so there could be fireworks out of this given there are a lot of questions around kamala harris and we have not seen these two pitted against each other and this is a very new race less than two months ahead of the election. annmarie: tonight will be critical for 500,000 people. that is who each of these individuals want to reach. those in the swing states that have yet to make up their mind and he says what they are yearning for, especially kamala harris, they want to know about policy. over the weekend we did get the policy proposals from her team on the website. she is leading on the economy. jonathan: we finally have that to have? annmarie: we finally have that. she is leading in hard on the economy. jonathan: it took a while to get

that tap. this is a debate for the whole world, including this country, china. china very much in focus we have to go back to the difficulties in that economy. we are obsessed with what the fed may or may not do. in china we have equities near a five-year low. we have the economy and what many are describing is a deflationary spiral. we have import data overnight that shows imports totally subdued and if you are a european manufacturer or a global manufacturer trying to sell into china you are facing really soft demand. lisa: this is a real problem for europe which is why you are seeing a degree of weakness and the morgan stanley call about parity on the euro. bmw saying it was cutting its forecast for the year. there was a faulty component. china very muted demand and that is one of the biggest markets for them. this will be an ongoing question.

how much is china isolated from the western world? from the u.s. more, from europe not so much. you look at trade tensions and you wonder who will be allies with whom? jonathan: a world of fence sitters you have to pick a side. lisa picking out the difficulties at bmw, we were talking about a new iphone. it will be a challenge to sell that phone. annmarie: absolutely, given what you've seen from other consumer brands in china is they are lowering prices to try to get consumers out to buy all of these goods. we talk about the election in the chinese market, i go back to the goldman note. goldman is saying china is waiting on the sidelines for a fiscal hose to use on the economy to try to drum up the drag on the economy because of the election. they do not know who they will get and how bad the policy may be when it comes to 60% tariffs

on china. lisa: you tie this together and you get peter tchir's point of view. i am looking at will not change. you think about that from a corporate executive standpoint and i keep going back to conversations we've had with executives where i asked them what is your biggest question. the number one question is tariffs. the number two question is they never mentioned china. they say they are expanding in china. this highlights that it is very important, the debate will not cut it in terms of giving clarity to any of these issues which are quite complicated and not going to be prescriptive. jonathan: we love some clarity and we will tune in and hope we get some. equity futures on the s&p 500 just about unchanged, flat and going nowhere. a welcome treat given the downdraft we saw. in the bond market yields higher by a basis point or two. look out below on crude.

the selloff resumes. 67.99 on wti. lisa: even with her cane francine barreling down in the question about whether that could disrupt some of the production. this is one of the red flags people are looking at. you can see the correlation between oil and longer-term yields which at their lowest level in the u.s. back to 2023. there is a feeling this is as much a demand story as a supply story at a time you're not seeing increases in production from saudi arabia, opec-plus, or some of the producers in the united states. jonathan: coming up we will catch up with whaley of blackrock -- with wei lee of blackrock, tom mcglocklin, and eugene sereka from the port of los angeles. wei lee of blackrock is

optimistic ai can drive returns writing we cai buildout creating opportunity across sectors. the idea has driven u.s. stock gains, making us overweight u.s. stocks overall. it is the corporate earnings side of this i think we should sit on a little bit longer. are you seeing this reach the bottom line and why are you so confident it can do so in much bigger ways? wei: we think there is more to go in the ai cycle. we are letting up on our concentration in tech and instead looking more broadly at aai broad buildout complex and ecosystem. you look at the q2 earnings. all beat expectations. you look at the overall picture, 13% earnings delivery versus the expectation of 10% in the beginning of the quarter.

consensus is pointing to a lot more broad-based earnings growth picture rather than a concentratedat we had so far. we think there is more to go for the ai theme. it is not just about the initial first phase anymore. we are broadening to other sectors like utilities, like materials, like energy, like health care because we think it is starting to play out on a broad-based way so we are overweight u.s. equities as a result in less concentrated compared to how we plaited out. jonathan: you mentioned utilities. if you have not been following this closely, utilities are up more than 20% on the s&p 500. that sector has outperformed the nasdaq. what is happening with utilities? why have we seen such a large gain and why do you think it can continue? wei: two factors.

first is around the fact that the ai buildout, the capex spend by consensus estimate, we are talking about the magnitude of capex spend comparable to the first industrial revolution, especially when we throw in other numbers around the below carbon transition. that has helped with centers well-positioned to benefit from the broader buildout. what has happened in the rates space. very meaningful repricing in rates. for sectors that are sensitive to that there has been corresponding narrative performance as well. the fed is expected to cut 250 basis points from now until the end of next year, which is what you would expect from the central bank if we are talking

about a recessionary environment, which is not what we have seen coming through in terms of the economic data releases. in terms of rate repricing, may be markets went too far and we lean against that. that also explains the relative sector performance data. lisa: i want to stay on big tech a little bit because we were talking to peter tchir and he said he could see another 10% downside to the overall index driven by these large names as people reassess how quickly some of these profitability measures will come to the fore. you had a little bit of a change in tone, recognizing people had shifted away from some of these names and were questioning the speed it would be monetized. how are you arranging? to expect a similar downdraft? is that how you are positioning, being a little more cautious right now even of long-term you are still bullish? wei: what you just talked about

is exactly why we are broadening out in terms of how we implement ai if you look at the big tech and the tech sector in particular. the cap between earnings -- the gap between earnings growth expectations versus the rest of the market is narrowing at that point still we cannot indefinitely extrapolate earnings growth that has supported the sector until now. certainly what you talked about in terms of greater scrutiny around the return on investment on some of the hyper scale capex. that also weighed on sentiment. how we look at it is not just from the individual company perspective. we look at aai, we look at the return expected. in order to fairly assess a reasonable return, we have to look at it on a broad economy

basis because there are beneficiaries of this theme. it is not concentrated within a specific tech sector within the magnificent seven, we are talking about other sectors. looking at it from a top-down aggregate economic wide basis is how to properly assess the return on the norm is amount of capex that has happened. lisa: you are talking about the economy and you mentioned how a lot of what has been going on in markets has been tied to what you think is excessive pricing and how much the fed will cut rates. how important is cpi to you tomorrow at a time where the emphasis is clearly much more on the labor market? wei: i think cpi is important to the extent that markets are split between if we will get 25 basis points or if we will get 50 basis points. cpi is the last remaining big

data point from now until the fed meeting. it is important in that regard. i agree with your observation that the market focus and fed narrative, the focus of the fed has shifted from inflation fear to growth slowed down and recession fear. cpi tomorrow is important but certainly a lot more sensitivity has been baked into labor market release compared to the cpi print. what is happening in the space of inflation? inflation has gone down a lot in the last quarter is the core service piece that has surprised to the downside, supported by slower demand, supported by slowing wage growth because of the supply shock from immigration. in the near term all of these factors have room to play out, which is why we were expecting a somewhat benign reading tomorrow. going beyond the immediate month

upcoming, we do see inflation eventually settling at a level that is higher than pre-pandemic levels because of structural constraints coming from the low carbon transition, from geopolitical fragmentation, from labor shortage from the aging population. markets are reacting as though we will have lower and friendly inflation prints, which feels about right but it has underappreciated the level to which we are all going to have to live with structurally higher inflation because of the factors i just talked about, not to mention greater fiscal spend no matter who gets in the white house next year. jonathan: are you hesitant about getting long on the long bond with all of that in mind? wei: we favor the belly of the curve rather than the long end of the curve for precisely that reason. markets are currently both underappreciated inflation

premia. it is not expecting inflation to be structurally higher than before. markets are appreciating the greater fiscal trajectory. that ratio in the u.s. is 123%. it is expected to get to 150% by the end of the decade and 200% by 2040. depending on the fiscal mix of the candidates that can be more pronounced. if that is the case investors ought to demand greater compensation for holding duration portfolio, which is why we prefer the belly of the curve rather than the long end. jonathan: $58 billion of three-year notes. $39 billion of 10-year note's. lisa:, on. -- that might be the most interesting because it is the longest and my test people's appetite over the deficit falls. jonathan: let's get you an update on stories elsewhere. here is dani burger.

dani:ng in the european trade, down nearly 7%. it cut its guidance. that is a downgrade from 8% to 10% previously. bmw set of faulty braking system from a supplier lead to a 1.5 million vehicle recall and also pointed to the slump in china as a headwind. morgan stanley says the euro will slide towards dollar parity. the strategist expects the single currency to slump by year end. the market may refocus on an ecb cutting deeper and faster than what is currently priced in. his call is the most bearish call among strategist surveyed bios. the call expects the euro to strengthen and end the year. a spacex falcon nine rocket launch -- a crew of four private astronauts are on board.

the mission aims to conduct the first fully commercial space walk. the crew capsule is intended to fly an elliptical path around earth at a maximum distance of 870 miles. that is the farthest distance since the apollo program ended in 1972. that is your brief. jonathan: pretty incredible. lisa: i spend a lot of time focusing on this. the lead pilot is jared isaacman who is a 41-year-old billionaire who founded his own company and dropped out of high school and has two young daughters. you will have this umbilical cord attached with oxygen as he does the spacewalk. you know what they are not doing? rescuing the two people stuck in space. jonathan: they are said to do that in february. lisa: they have to wait a long time. jonathan: up next, it is debate night in america. >> harris will deliver crime,

chaos, destruction and death if she is allowed to be the president. >> he plans to create a national antiabortion coordinator. >> she is lazy, she wants to have an open border. >> if you've got something to say, say it to my face. jonathan: begets the opportunity to do just that later. box -- he gets the opportunity to do just that a little bit later. box office in philadelphia. good morning. ♪

jonathan: equities a little softer but basically flat to unchanged throughout the morning. in the bond market yields higher by two basis points. 3.7192. it is debate night in america. pres. trump: if she wins your finances and your country will never recover.

v.p. harris: he intends to enact a sales tax. call it a trump tax. >> she will create crime and death if she is allowed to be the president. >> he plans to create a national antiabortion coordinator. >> she is lazy. she wants to have an open border. >> if you have something to say, say it to my face. jonathan: we are all looking ahead to tonight's debate between donald trump and kamala harris. tom mclachlan of ubs writing "protectionism is on the ballot. the choice is sharply higher tariffs under trump versus selected tariffs under harris. uncertainty about the election outcome in any specific trade policy remains high." tom joins us for more. what are you looking for this evening? tom: it will be highly contentious. what is interesting is there

were studies done about a decade ago about how people look at different debates. primary debates, you had as many as 60% of the people listening to the bates making it is it -- listening to the debates making a decision about candidates, but in the presidential race the mosys 10%. in this year -- the most is 10% and in this year i would be surprised if more than 5% were looking at this and saying they will make a choice. annmarie: is it different given how different this election is? it was supposed to be joe biden and out as kamala harris and voters are still trying to understand who she is. tom: she has been the national spotlight to some degree for 15 years but the vice president is probably the worst time -- the worst job in america. she is trying to set forth new policies under her name and separate herself from the biden administration. annmarie: regardless of if it is harris or trump you are seeing more protectionist economy? michael: one of the things --

tom: one of the things that changed his donald trump change the policy platform of the republican party which had existed for 50 years which was free trade. it is one of the few things that have a bipartisan consensus. adversarial posture towards china and some degree of protectionism. that is true in both parties. lisa: one thing you just said was in this election there probably about 5% of people left at most two might change their opinion based on this debate. what is the point? is this just entertainment? are we expected to learn anything? tom: we do not have presidential debates -- we had one in 1860 and 1960 and we did not have one again until 1976. this has not been that long we have had these debates. they have been consequential. in 1960 a change the format so the printed word was no longer

the defining characteristic, it was the imagery. if you listen to the 1960 debate on the radio, nixon won, if you watched it on tv kennedy won. this is an opportunity for harris and trump to re-present themselves in an image basis. in both cases this will be contentious. lisa: i was thinking about how many consults it will take to come up with the correct wardrobe and presentation. this is why people are doing this. the last time we had a debate it was rather consequential. tom: among the most consequential. lisa: could we see something similar after this debate? tom: we live in an era where soundbites matter. people's attention spans are very short. both candidates will think about what soundbite they want to make sure they get in there during the debate because it will be repeated for the next six weeks at nausea him in -- ad nuaseum

in seven states. you want that moment you've been trading for. you know it is going to happen. jonathan: kamala harris's policies have been described as strategically ambiguous. the campaign from donald trump seems to be confusing, to put it kindly. we understand he would like corporate taxes to 15%. or 20%. or something else. then we hear on tariffs if you're pulling away from the u.s. dollar we will slap you with a 100% tariff. it is difficult to understand where this is heading. what are you telling clients? tom: in the case of a second trump administration you can expect tariffs to be first on the agenda. think about it this way. the trump administration looks at it as a transactional isolationism. i want to negotiate with you

one-on-one. the whole multilateral engagement that represents the united nations, nato, that is not part of his schtick. we will go ahead and one on this and will use tariffs as leverage to extract what other concessions. jonathan: nafta was the target last time around, what is the target? tom: it will still be china. part of that is because there is a bipartisan consensus among politicians in washington and the electorate that adversarial posture works. china will be one, and then you will have selective arguments with european allies. jonathan: appreciate it. tom mclachlan. check out the debate at 9:00 eastern time. did you get your answers? lisa: it makes sense why there is so much focus on what they wear and the hand motions. jonathan: soundbites. don't point. lisa: then everyone was going

like this and it was like who goes like this in real life? jonathan: i'm not sure donald trump cares about this in real life. you don't do that? lisa: no. jonathan: so aggressive. coming up, bloomberg stephanie baker joins us to discuss her new book, "punishing prudent: inside the global economic -- punishing putin." from new york, this is bloomberg. ♪

♪ jonathan: welcome to the program. about 25 hours away, cpi tomorrow, ppi after that. down on the nasdaq by 1/10 of 1%. small caps, a little bit softer also after dean's yesterday. yields higher by two basis points. still that little bit of steepness in the curve, just normalizing very slowly enclosing at that level once again, this is not what we've seen. annmarie: lisa: lisa: you almost forgot about the 30 year. lisa: i think it matters because

that of the longer-term understanding of what the extra premium is for inflation as well as potentially the deficit. we keep talking about this. but at some point, we have to imagine there will be pushback. jonathan: at some point there will be. at some point they do this. let me tell you. $58 billion coming in than the afternoon. tomorrow, 10 year supply, and the day after that, that the bond market. last week was ugly, five-day losing streak, wti down almost 8%. uti 67.86. crude down to the low 70's. annmarie: i love to see where oil would be trading if opec came out and said actually we are going to let things stand and we are going to put some barrels back on the market.

it is obvious they are going to have to cut into months if they want to remain some level of floor under these prices because we are past the peak driving season, so what is left when it comes to demand? traders are seeing an oversupply. jonathan: how much of this is coming out of the difficulties we see play out almost everything the morning right now? >> when it comes to china this is a huge demand story. russell is talking about the fact that he sees gasoline uptake in china over the next few years because they are selling really cheap ev's in china. not just oil when it comes to oil used across the commodities space, but gasoline specifically. jonathan: selloff across the board. wti in the high 60's. some top stories for you, donald trump and kamala harris said to

take the debate stage at 9:00 p.m. eastern stage in pennsylvania. the candidates agreeing to a series of rules including having no live audience, microphones being muted when it is the other person's turn to speak. the face-off at 9:00 p.m. in philadelphia. >> i talked to tom mclachlan, what is the purpose of this it fewer than 5% of everybody watching is going to change their mind? we had the most consequential debate ever are giving the summer we had a face-off that led to one of the candidates leaving his post as running for office. so there's a question about what the stakes are especially because people don't fully know who kamala harris is. i think that is the key point. as much as we think we are going to learn some policy, it is really going to be about that. jonathan: amh, you know at the pulse better than i do. it must matter a great deal. annmarie: it does matter a great deal. polling showing trump just barely pulling ahead but if you

go back and look at where we are today, harris is up one point, two points. this day in 2020, biden was of more than seven points. today in 2016, clinton was up 2.7 points. that's why when i talk to people, the polling is frozen. the debate matters because potentially it can shift. this is going to be interesting for investors. jonathan: only the second time receiving harris face questions. an opportunity for donald trump to ask the question but maybe wants to ask. lisa: there are questions about what she is like when she is not scripted. the question around the microphone sort of interesting. interesting to see how some of the accusations around immigration are going to be countered by harris. it's probably going to be the most watched debate ever and i'm

looking forward to seeing the numbers. jonathan: let's leave the politics to one side and turn to the latest goldman sachs cautioning that the trading unit is on track to drop 10% from the here higher. the bank also disclosing a four hundred million dollars pretax after retreating from its consumer credit business. we heard from citi yesterday as well and pick up on these comments from the cfo. i think there were competing. the nature of stand is evolving. it is going from discretionary to a more stable spending and i just wonder how much commentary begin from the banks when earnings season commences in the next two weeks. lisa: we heard something similar among a lot of the retail executives but it is interesting to hear it coming from one of the major credit card lenders, especially when the credit card outstanding's are increasing going back to 2022. it is so difficult to know, and

this really goes to the heart s just a moment in time where people are going back to their roots and figuring out ok, what do we actually need to buy, or is this something that is a more sustained downturn, and that is something a lot of people don't have answered. jonathan: october 11 for jp morgan results, so about a month away. apple inventing the next generation of airpods and the apple watch and a splashy event from its california headquarters. tim cook touting the ai infused technology, though saying those capabilities will be gradually added to devices through software updates. the new iphone set to go on sale this friday, so get the hardware

and everything else a little bit later. lisa: bottom line is this goes to the angst of how quickly consumer goods can adapt to ai, shifting away from some of the big names that we heard saying people want to show me the money little more with ai. >> a big lunch for apple, big lunch for us. stephanie baker, punishing putin, inside the global economic war to bring down russia. pleased to say stephanie baker is with us. let's start with a quickly this came together and how much work goes into a book and how much you did in that 18 months. >> i wanted to get it out before the election but is the product of a lifetime of work. i lived in russia in the 90's, went back periodically to interview russian billionaires over the years. i wrote the book last year and about six months. jonathan: that is absolutely

phenomenal. talk about what prompted it and how different things are during this war compared to the initial invasion of crimea back in 2014. >> i really saw this as the end of an era. this unprecedented wave of sanctions against russia, much different, much harder than the sanctions imposed after the annexation of crimea in 2014. it was really the end of 30 years of integration of the russian economy with the west and there were just all these dramatic stories to tell. major global corporations had to decide do they say in russia, do they leave? like mcdonald's. deliberations in washington about how to limit putin's revenue to undercut his ability to fund the war. i tried to tell the back story, flipping from policymakers in washington, london and brussels to oligarchs with assets frozen, upended.

everything from european football up to the global oil market. it is quite sweeping. annmarie: this has a lot to do if a private and public sector. each have very different ways of how they were going to pull out and then you have unprecedented sanctions from the west. what do you think horrific from kremlin the most? was it the companies had all pulled out and changed course, or was this level of sanctions, the freezing of assets that hurt? >> i think it with the freezing of russia's central bank reserves, that decision they took within days of the invasion which was historic, really, had never been done before. the amounts of money were relatively small. with russia it was $300 billion that was parked in western financial institutions, mostly in europe. that was something that putin was not expecting and now you have this big fight over instead of just freezing the assets, can we actually seize them and use

them for ukraine? and that debate, that back-and-forth is happening as we speak right now. they are talking about china using those assets the back of a $50 billion loan for ukraine. >> can on the leadership level they took that agreement at the g7 but it still feels like the china work out actually have them do that. is that change if we get donald trump in the presidency in january? >> that's the million-dollar question. we have to go off what he said. he has said that he would end the war in a day, before he even enters the white house. he hasn't spelled out how he is going to do that, but if he is going to try to broker a cease-fire it is hard to see how he could persuade putin to stop fighting without some kind of sanctions relief. putin is desperate for some kind of sanctions relief because there are a lot of loopholes in the sanctions, but they are still costing russia hundreds of billions of dollars. lisa: what was the most surprising detail that you uncovered?

>> that is a hard question. i think it was remarkable how the west came together in a coordinated fashion. you'd never see matt. europe, u.k., the u.s. and japan acting in concert across a number of different decisions, and i think that with the most surprising thing in the sense that you never had that level of coordination before. lisa: did it feel fragile or was it something sustainable regardless of what political cycle we are in? >> i think there are always debates and fights and disagreements and you are seeing that still play out with the fight over russia's dental bank reserves because so much of the reserves are parked in europe. europe is still divided, europe is the one opposed to actually seizing the principal and using it for ukraine. the u.s., jake sullivan, biden administration has finally come out into that, but there are still debates and divisions over how to move forward.

jonathan: you described this at the start of the conversation at the end of an era. we reflected on what it felt like in 2014. initially after that i think there was a witless feeling from corporate america that they might have to step back but ultimately things would normalize again. do you get the sense that's a certain section of corporate america believe that opportunity, that opening is just down the road, that they moved on? >> that was the biggest mistake of western corporations operating in russia, they all thought it might blow over and they had spent decades building up physical assets in russia that they did not want to give up. i think a lot of them funded realized that this is not going to change, and you've seen just recently a major corporation finally deciding after 2.5 years that it was time to sell and get out. the problem is those that waited are paying a heavy price for getting out. they have to agree to a heavy discount, they have to pay 10% of the russian budget.

so is the one that got out early in the first couple of months like mcdonald's and a few others that ended up looking smart. jonathan: can i ask this question, and it is difficult to forgive me for asking, your experience with russia, the lessons that we've learned particularly for corporate america, hoping things would blow over and ultimately understanding that we are going to have to lose money, is there anywhere else in the world we are making the same mistake at the moment? >> one of the reasons i wanted to write this book is because i saw this as a grand experiment in economic warfare. he's never imposed sanctions on the country as big as russia or is integrated in the global financial system, a major oil exporter. we are still seeing that play out in the lessons learned and obviously that they lesson to be learned is how do you do this for china if china, indeed, invades taiwan or encloses a blockade. china with roughly one third of global manufacturing capacity poses huge challenges, and it would be very difficult to

impose the kind economic isolation on china that we've tried with russia. jonathan: let's hope that is a book you don't have to write. good luck with everything. the brilliant stephanie baker, punishing putin, the title of this book. inside the global economic war to bring down russia. >> bank of japan officials see little need to raise rates after a decision next week. according to people familiar, officials are still monitoring market volatility and the impact of the july hike that hike was followed by gloomy u.s. jobs data. all resulting in the yen appreciation and the biggest plunge in japanese equities in the decades. most economists expect them to wait until december or january before hiking rates again. sources say the biggest u.s. banks will see 9% increase in capital requirements, a dramatic retreat from the 19% regulators had previously planned. when the proposal was first introduced last year, banks had unleashed one of their fiercest

logging campaigns. as tropical storm francine grows, oil drillers in the gulf of mexico have halted production and started to evacuate. it is set to become a hurricane today turning toward louisiana. the forecasted path accounts for roughly one and 25 barrels of crude and 300 million cubic feet of natural gas a day. the storm is expected to eventually produce wind 100 miles per hour which would make it a category two hurricane, and that is the brief. jonathan: up next on this program, the threat of tariffs. hoping to spark an important boom. from: i want to cut taxes on americans well putting tariffs on china and foreign countries. >> he intends to enact what in effect is a national sales tax. jonathan: we will catch up with the port on the west coast in just a moment. you're watching bloomberg tv. ♪

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so you can connect with them fast. visit indeed.com/hire ♪ >> the data trading week, equity features totally unchanged, going nowhere. yield a touch higher, up a single basis point. under surveillance this morning, the threat of tariffs helping to spark an important boom. from: i want to cut taxes on americans well putting tariffs on china and foreign countries. to bring their jobs back home. >> all the while he intends to enact what in effect as a national sales tax that would raise prices on middle-class families by almost $4000 a year. >> a record-breaking summer of import volumes, stocking up as the threat of new tariffs linger any possible strike by a large

group of american dockworkers adding to the usual frenzy of preholiday ordering. the executive director joins us now for more. welcome to the program, my friend, good to catch up with you once again. let's talk about how summer went. i know it was a record-breaking july in many ways. what it august look like? >> august is going to come in even better than july we had about 939,000 containers. will be the over 950 in the month of august, including record import numbers. so the caravan of cargo continues to the reasons you mentioned, underlying economic indicators for us continue to be strong, and 3d geopolitical issues. the extended discussions around collective bargaining on the east and gulf coast reports, the drought conditions in the panama canal, which seemed to be in better shape, and the ongoing security concerns in the red sea all have more cargo pointed our way. jonathan: i know this is

difficult but will you try to disentangle that? how do you get a read on the actual underlying economy when there are so many issues ultimately lynn this volume? >> one, the american consumer continues to spend. and where most retailers in before vessels even sailed from asia, the cargo coming and now continues to replenish inventories even beyond the traditional holiday season. so that combined with manufacturing parts and components, which are steady. not great numbers, but continued to be steady, that makes up about a quarter of lisa: all the volume. lisa:you see any change in the mix of items you're getting in? john mentioned the citigroup executive at this recent comments -- conference talking about a shift to more stable away from discretionary spend. are you seeing that in what is coming through? >> not necessarily right now. a lot on the holiday goods.

toys, footwear, clothing. much of this information we will get any historical sense, about four weeks downline. but haven't really seen a big change in makes our customer base. we still have about 125,000 different importing companies that utilize for los angeles on a regular basis, and no one organization has more than a 5% share of that cargo volume. lisa: he seems in volume shifting toward l.a. as a result of strikes on the east coast, you are threatened or region. i'm just wondering how you understand what is the driving force behind this? do you think that this is something that businesses across the country are still ailing in terms of pressure to keep employees, or is there some other dynamic at play? >> as you and i have talked about before, this is complex, nuanced. number one, the american consumer is buying so that cargo keeps flowing.

but what folks are telling me directly, and this is going back almost a year and a half, there are a lot more things to consider in the supply chain when making decisions as to what gateway to use. any concerns about a protracted labor negotiation have some people in the be concerned. they started fractionally moving cargo in their allocations our way just as a hedge. the same could be said with panama canal, red sea security issues impacting the cargo that was going through the suez canal. if you take two, three, 5% of your allocation and shifted away just as a precautionary measure, if any or all of those issues start to go in a different direction, you are at least in the game on those routings and you can increase the allocations. overall, are folks trying to keep jobs? yeah, and for us it is important because every four containers that move across our docs create

job across a variety of sectors. super important to the folks in los angeles. >> what about the potential for more tariffs? >> you have to try to figure right now, is this campaign talk or will it be real policy, and the folks that i talked to this week say this could be real policy. to me that would change the landscape at a port like ours in los angeles forever. 10% tariff on all of the $3 trillion of imports, 60% on cargo originating in china, and potentially very high tariffs on cargo emanating from mexico. that looks a lot different when you start talking about that speed has always been our advantage from north asia. china's share of our business has dropped from 57% of the close of year 2022 to 43% right now. yet we've been nimble enough to hustle for that cargo and are seeing real growth out of

southeast asia. but that is with the advent of more nonstop services and introduction of nuance. we've got to continue to watch this issue because it will have an impact on traditional trade flows. those tariffs mean the real price hikes at the end of the day for the american consumer. annmarie: is it having an impact today? we see cautious importers at the holiday season, do you see cautious importers wanting to get ahead of potential policy changes? >> that is happening right now. with the most recent introductions on electric vehicles, batteries and associated parts, the only imported about 2000 chinese manufactured ev's last year. so some are trying to read into policy that would happen after january, some are trying to hedge by building inventory in little bit, but i don't think anyone right now has their thumb on exactly what will happen.

jonathan: it's always personal and specific to industry. what would you like to see from a new administration? what is your number one thing? >> the protection of american jobs and american workers is sacrosanct well of us but as we said, we are bringing in a tremendous amount of cargo that goes to the retail community, and airplay in the manufacturing sector for parts and components is equally as important. a measured approach or has been said, small yard, tall fence to protect those american interests are key while having rules based trade. jonathan: appreciated as always, my friend. executive director on a record-breaking summer and when you go for the list for the import volumes, the reason why the threat of tariffs pull forward, get ahead of it. the threat of strikes at certain points around the country. it's like issue after issue after issue. lisa: although he said it is

essentially just that consumers keep spending. i guess that is a key question, how much is this an economic tribal or economic consequence of how much money consumers are spending? how much is this something more, that people lesser of adjusting to these other geopolitical risks? jonathan: i think it is different compared to spring 2021. no complaints about that volume at all in that conversation. lisa: they seem to have worked through some of these kings, but this issue of have weekly remedy some of the supply chain issue that came to the floor during the pandemic? jonathan: live from new york city, good morning to you all. equities positive by 0.1%. coming up, we will catch up if a leibowitz of j.p. morgan asset management. from new york, the third hour of bloomberg surveillance up next.

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>> i see the economy slowing, not stalling. >> it looks like the economy is

particularly strong this month. >> we are landing in a different set of labor market conditions that is different than where we left. >> we should see the inflation numbers move lower. >> i think the economy is evolving and >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: there is a big 24 hours coming up. the third hour bloomberg surveillance starts right now with equity futures just turning positive in the last couple of minutes, up .1% on the s&p 500. a similar move on the nasdaq. the next 24 hours looks like this. this evening at 9:00 in philadelphia harris and trump facing off in the person may be only presidential debate. then tomorrow morning, it is cpi data along with jobless claims on thursday. put those things together, not much else for the federal reserve to decide based on the

data whether they go 25 450. lisa: which is the reason when chris wallace says i could be shifted to 50 basis points, is that about next week or some other time based on the fact there is not the data. that said, if we get a real downside surprise in cpi, does that give the fed the ability to cut 50 basis points without spooking the market by saying inflation is coming down quite a bit? jonathan: after that we focus on one thing, the election and early november. this is the big face-off. 9:00 in philadelphia, donald trump versus kamala harris. how conditional is that corporate tax cut from donald trump and from kamala harris we would like detail on what she will govern like compared to how she is campaigning right now. annmarie: she was not supposed to be the nominee. that is why this debate is interesting. we have the seismic shift of the past debate.

the fact that that debate meant biden was kicked off the democratic ticket, that didn't matter. on fort -- that did matter. it will be more style than substance. for harris that will be important. they have to get to these 500,000 people. it is about continuing the rhetoric with ideas people like and they pick up and attach the candidate to that idea. jonathan: i can sense a struggle trying to come up with numbers based on what we've been told so far. lori calvasina had a stab at it. basically saying that if the corporate tax rate comes down from 21% to 15% of than earnings climb percent on the s&p in their model. for kamala harris, if you go from 21% to 20%, maybe does the opposite, maybe earnings decline -- if you go from 21% to 28%,

maybe it is the opposite, maybe earnings decline. the corporate tax cut from donald trump now sends very transactional. lisa: that is the frustration we get from analyst after analyst saying look at what you have, not what you are being promised down the road, maybe. i think that is the reason why there is a question of what alexion risk looks like. what is the harris trade? what is a trump trade? markets are ignoring it. annmarie: i was looking at the lori calvasina note. she was at the economic forum where trump spoke and he put a condition on the tax cuts. what will it mean for others who are not? it is the moments where you think you know what the. it stands for and you are like actually it is changing and it is something that is attached to

it we were not configuring for and when it comes to jonathan, tax policy, it does not matter who is in the white house, it matters who controls congress. jonathan: i always think of what money manager marked out said years ago was that the biggest challenge of the trump administration was to divorce your political bias from your market views. let's divorce the politics and focus on what is good for markets and what is bad for markets. most people assume tariffs are bad for markets and most people assume tax cuts are good for markets. let's run with that. if donald trump wins and does not get a republican congress alongside him, he can only do the bad stuff, he cannot do the good stuff. work that through the logical way with kamala harris. if she wins and she does get a blue sweep, then she can do the bad stuff. i wonder, a blue sweep, is that bad for markets and if we do not get a republican sweep is that bad for markets? lisa: this is the reason people

stay away completely. you're going to the point of what is a harris trade and what is the trump trade without congress and how do you bake those through. come on with your models. we would love to see what they are. jonathan: when you work through all of those issues, don't you just ask questions later? isn't that going to be the big headwind? lisa: my head is spinning because i'm listening to all the different proposals in the if's and ands and bytes and who are the advisors. it is about feelings and vibes in the less than 5% of people. jonathan: we have a guest around the table bracing for the first question. coming up, david leibowitz of jp morgan. bloomberg's mark gurman on apples ai ready iphone and lara rhame on the 25 versus 50 cut debate. investors waiting for tomorrow

cpi report waiting for more clues about the fed decision. david leibowitz writing "we still predict the fed will kick off with a 25% basis cut but if we were to adopt the expeditious pace of easing it might do more harm than good by fueling recession fears. the data flows read -- leaves us comfortable with our appetite for risk asset." david joins us for more. what are you looking for from tonight? david: i think you hit the nail on the head. it is less about who ends up in the white house and more about the broader composition of the government. if you have a divided government under a trump scenario than tariffs or more in play than tax cuts and the reverse is true if we have harris. the overarching issue for investors is what is going on with the labor market and how concerned is the fed about the softening we have seen. jonathan: let's talk about the labor market.

how concerned are you? david: a lot of the more bearish commentary on the street has focused on the idea that labor income will deteriorate and that will undermine the consumer and lead to a slowdown in consumption and that will precipitate a downturn in the economy. we are not seeing the labor income story rollover. yes the implement rate has risen to 4.2% but wage growth is 3.8%. hours worked increased very slightly in the most recent report. we think the consumer remains well supported. the question remains how can you end up with a fly in the ointment and it comes down to corporate profits. corporate tax rates will matter when it comes to profitability in 2025. the bigger question is what is organic profit growth look like on a go forward basis it is that profit growth going to broaden out beyond the magnificent four or five or six today? lisa: i will go with you on your

pivot. is this because you're not focused on the politics or because you cannot say anything without getting slammed i one side or the other? david: i try to divorce politics from policy. when it comes to the outlook for policy it is very muddled at the current juncture. we are looking at this evening the first instance of a head-to-head between the candidates where they can pick apart with the other person is saying. we will have a lot more information in 24 hours. i think the debate will force the candidates to refocus what is important to their campaign and crystallize those ideas more than the public scene. lisa: that does relate to corporate profitability. executives have the same uncertainty and there is paralysis in terms of investing long-term. how much do you see this having an impact economically at a time where there is a bifurcated outcome when it comes to specific issues? david: there is an interesting tension in the current environment.

you can do all sorts of things with corporate taxes that make investment spending more attractive and we get the uptick in manufacturing and production everyone has been looking for for the past 18 months. on the other hand if that does not happen you have lower interest rates. the fed will deliver, the question is how much. the lack of clarity on the outlook for taxes coupled with more attractive financing costs makes the situation more challenging in the current environment until they have that clarity. unfortunately will have to wait until november to get claire to see on the policy side -- to get clarity on the policy side. we will have to wait until next wednesday to see how much the fed will ease. annmarie: are you a believer that gridlock is a winner for wall street? jonathan: gridlock means no surprises. there have been times that of the government having control -- one party having control has been additive because they be able to do things to boost the economy, but when i look at the

partisan nature today i think divided government prevents anything fully from getting done unnecessarily. annmarie: howdy put into context the idea that trump might be good for the corporate tax rate but the same time could be bad for inflation if he puts up seriously high walls of tariffs? david: the interesting thing about tariffs. as economists we do not like tariffs. tariffs are level shift, a one-time increase in price. what i think about the upside risk to inflation under a trump presidency or a harris presidency, it stems from the fact that both of them will run fiscally expansionary programs. there is more spending that comes through, there could be more dollars hitting the economy. the reality is both of the candidates are running on reflationary platforms and that creates upside risk to inflation at a time with of the upside risk has diminished. jonathan: david leibowitz of jp

morgan, thank you. this data from adobe showing online grocery prices fell 3.7%, the largest decline since the firm begin tracking the numbers a decade ago. timely going into this debate. lisa: may be to reduce the emphasis on inflation. putting the politics aside and tried to take a cue from david, it'll be interesting with the fed to see if you do get a downside surprise. it will matter a lot more if it is significant enough than people have thought. jonathan: we have a case study when it comes to policy and the federal reserve. when we were going to get the tax cuts out of the 2016 election, they had to wait to see legislative reality. not a campaign promise, but reality before they started to think about what that would mean for ruth and policy. annmarie: --

jonathan: you cannot sit policy on campaign promises and it is difficult to make investments with long time horizons based on the next four years. lisa: hence the frustration and hence the reason why when you come up these scenarios -- we should come up with a scenario but it is exhausting. jonathan: futures positive .2%. with your bloomberg brief here is dani burger. dani: u.s. small business optimism declined in august by the most in two years. in the survey 37% of firms reported deteriorating earnings, the largest share since 2010. among those 31% blend weaker sales. as a result small companies dialed back hiring plans. 13% said that 10 -- they intend to create in the three months.

donald trump and kamala harris will face off tonight in pennsylvania. the 90 minute forum kicks off at 9:00 p.m. eastern. microphones will only be turned on for candidates whose turn it is to speak. complete coverage kicks off at 8:00 eastern. aaron rodgers and the jets made their much-anticipated season debut on monday night football against the citrus is go 49ers. the 41-year-old rogers threw for 167 yards and a touchdown but did have some issues with accuracy and mobility. the 49ers pulled away by halftime and never looked back. running back jordan mason stole the show with 147 yards and a touchdown. that is your brief. jonathan: if you had directv come you did not see that come you set a notice that disney wants you to miss out on monday night football on espn and directv wants to reach a new agreement. lisa: how many cancellations were there?

how may people are going to look at that and say darn you, disney. jonathan: i am writing a letter. up next, morning calls, plus bloomberg's mark gurman on apple's latest product announcement. from new york city, this is bloomberg. ♪ we invent them, we design them, we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

jonathan: the opening bell one hour and 13 minutes away. equities positive after stepping or four days like yesterday. move in crude, down 1.4%. $67.74. lisa: how much is a read on the united states and how much is a read on the end of driving season and how much is on opec-plus and how much has to do

with china given the fact you are seeing a similar move in iron ore as well as copper? mark: we have seen it -- jonathan: we have seen it in headline after headline, muted demand out of china. we have seen it morning from bmw. lisa: as they downgrade their forecast, how much does this have to do with a consumer facing display sherry spirals and a drop off -- facing deflationary spirals and a drop off in china. it is hard to read given international brand struggling to compete against domestic brands when there is a nationalistic wave in china. jonathan: difficult to make the case that we are witnessing the end of u.s. exceptionalism threatened by policy from two individuals tonight. we have an economy in a deflationary spiral. we have company after company reporting muted demand and that economy. the things you hear about china are not things you hear about

america right now. lisa: this goes to a question around the cleanest shirt in the dirty laundry been or whatever cliche we heard and then suddenly it was american exceptionalism because of the tech prowess you saw from the u.s.. there is a question about whether the u.s. can continue with the dynamism it has versus not being as bad as the rest. the distinction is want people try to parse through. there are calls the euro-dollar can drop back towards parity. morgan stanley looking for a move to parity. that is some of the price action. piper sandler lowering its price target to alphabet from 200 to 206 and keeping an overweight rating. the analyst saying long-term investors should use recent weakness to buy shares. that is up 1.4%. mizuho keeping it up or for rating on shares of oracle and raising its price target to

$185. analysts saying the company is well-positioned to accelerate its growth pride file. -- its growth profile. morgan stanley maintaining an overweight rating on apple. saying yesterday's launch was as expected and that tension storyt well known reporters on the stock, mark gurman, bloomberg's own, joins us for more. you have covered so many of these events over the last decade. can you walk us through how different this was compared to the others you have seen? mark: this when you saw a big focus on software and services in terms of apple intelligence artificial intelligence. apple is banking on apple intelligence to sell the new iphones. there is not a lot new on an annual basis. moving from the 15 pro and the 15 pro max to the 16 pro and 16

promax, you have the new camera control button, you have a new processor which gives you better speeds. much better battery life. there is not a ton that will inspire upgrades on an annual basis. that is why apples all in on apple intelligence and pushing that as the beauty of a new ecosystem. there is what is it on an annual basis and will this bring people in you have older iphones? you will not see many upgrades from last year's models. given the pent-up demand in the last few years camille see people who have iphones twelves, for teens potentially upgrading to the -- you'll see people who have iphones 12, 14, potentially upgrading. jonathan: you've written that paragraph, bigger screens, better battery life, new palette

of colors. left cut it in china given what huawei is doing? mark: there are two ways to look at it. what is the iphone doing on a global basis and what is the situation in china? -- i will start in china. there is a new gold model i think will be popular in china. you've seen apple at a new gold iphone color options in the past like in 2013 they had a gold color option for the success of couple years after that -- for the 6s a couple years after that. that is a color the consumer in china loves. on the other hand features like apple intelligence are missing in china. given that huawei, there's lot of nationalism, they have the new trifold phone, i think apple is not in trouble in china but they are making headwinds. until apple releases a new foldable iphone, until the

pricing structure changes, until new features become available in china, things will be rocky for the company. if you take a step back and look at apple and the iphone on a global basis, while we are skeptical and we see the truth and the reality there is not a lot new come apple intelligence is delayed, these things might not be upgrade drivers if you think about it on a sensible basis, the apple brand is as strong as ever. people are is interested in apple as ever. people will still love apple and be in the ecosystem. they have the new watches as well. all things considered we are not looking for apple to tank but we are also not looking for a super cycle. all things considered everything will be stable and ok for the company heading into the holiday quarter. lisa: what is the deal with the foldable phones? will that be the next thing? mark: they have been trying foldable's for several years.

i believe samsung launched its first in 2019. the problem is they are extraordinarily expensive and they are a little buggy. you have that crease in the middle of the display. apple has been loving affordable phones for many years but they made the decision they will not release one until they are able to eliminate the crease or reduce it to an amount that makes it less noticeable. i love the samsung phone. if i was not an iphone user, the phone i would have would be a samsung full because i like being able to open it up to have the larger display. if apple were to ever release a foldable in terms of one that has a bigger display, i would be first in line. that would be exciting. right now it will take time for apple to get there. they're trying to squeeze everything they can out of the candy bar design. certainly foldable's are compelling. the pricing and the technical

problems held back those phones from exploding into the new normal. samsung has been doing everything it could to move into that direction but they are still investing heavily in their non-foldable phones which means they believe there is a market for both at there's still time before fuller just before foldables become the preeminent market cell phone. i think the market share is low single digits it will take a while to become a real thing. jonathan: i had no idea it was a candy bar design. lisa: this is a pretty fat candy bar. jonathan: appreciate it always. one of the very best on apple. mark gurman on the latest iphone release. vulnerable phones come in the future still. lisa: i am looking at different vulnerable phones and i'm thinking is it going back to the future the way we used to do it, is it like this, is it a screen? jonathan: i have seen one use case that look pretty cool.

you can speak to someone who do language they speak to you and a translator on your side. have you seen that? lisa: i have not. i want airpods that translate what the other person is saying. jonathan: we have that technology already. lisa: if you do that we do not have to learn languages. we will get dumber and our appliances will get smarter. jonathan: we will get dumber, is it the future? we will get more productive. coming up next, lara rhame of fx investment. less time learning language and more time doing other things. ♪ ♪ [suspenseful music] trains. [whoosh] ♪

trains that sense what isn't on the schedule. ♪ trains that use the power of dell ai and intel. ♪ to see hundreds of miles of tracks. ♪ [vroom] [train horn] [buzz] clearing the way, [whoosh] so you arrive exactly where you belong. the moment i met him i knew he was my soulmate. s"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. oo this is a good book title.

jonathan: 60 minutes from the opening and equities are in positive territory. drifting higher on the nasdaq come up .3%. stepping a four day slide on the s&p. let's see if we can improve things with the opening just around the corner. there is your morning movers with manus cranny. manus: date two of a powerful narrative around tech. multiple upgrades on oracle. profits up 7%. orders moved $99 billion but more importantly we can do it and keep a control on the cape x. the number the market is looking

for. that is three quarters of a billion dollars lighter than the market had anticipated. have a look at apple. you have a juxtaposition between the parting shot saying $14 billion for a levy against you, that is only about two quarters worth of macbook sales. tim cook call this political crab in 2016 when this came to pass. it is we promise you ai. have you got the patience to wait for that as a consumer on your iphone 16? i was torn of the barclays conference whether i went with solomon warning the wrong kind of volatility but i give you wells fargo. we are constantly parsing the narrative for soft landing, no demise of the consumer. that is what you get from the cfo. consumer customers doing well. deposits performing quite well

in the card charge operates will drop of the third quarter. this is the personification of soft landing. good morning. jonathan: let's pick up on that. is that just better execution from that bank where is that a real read on this economy? lisa: is a good question because when you look more positive across the injure it -- when you look more broadly across the industry you have seen charge-offs increase significantly. you have to start wondering, the top-tier banks if i cited the consumers they lend to. does that trickle down the doing with the numbers we are seeing elsewhere? jonathan: you have to wait until october 11 for numbers likes of wells fargo and jp morgan. if you are just joining us equities are positive .2% on the s&p 500, lots of developments in the last few weeks in the bond markets. a move lower at the front end of the curve. we are down a single basis point. 365 is your yield on the 10

year. we are about 3.70. traders awaiting the fed's next big data point. lara rhame writing "the payroll data did little to settle the 25 versus 50 basis point rate cut debate. i think they will go 25 but this is a close one." tell us how close and whether the cpi print could change it. lara: i am not sure cpi will be the deciding factor we are hoping it will be. markets like certainty and this is probably one of the most split decisions markets have had before a meeting. i think things like initial claims, things like retail sales could be more decided, could do more to decide this than the cpi data. jonathan: when we last spoke earlier in the summer you had one cut for this year penciled in. clearly things have changed. much of the change for you? lara: to me they have changed

because we have seen the deterioration in the labor market that looked worse and started earlier than we had understood. it was about data revisions and also about the fact that the fed has seen this opportunity, it has been a clear opportunity of lower inflation that has given them this window to move. that has taken me by surprise. i do not think the inflation but be man is totally gone. it may reemerge in the middle of next year. lisa: can you elaborate on the bill be man? not -- on the boogeyman? don't laugh at me. i am still thinking about your pitching game in the last segment. lisa: let's move on. jonathan: i had nothing to do with this. lisa: you used to think inflation would remain higher going forward that it has in the past and a lot of people saying some of the recent economic data highlights that you are seeing the lag effects in an economy

more susceptible to rates where they are. are you started to challenge the previous conception of where the neutral rate is? lara: i am looking at two big pieces of the inflation picture. one is the goods piece which has been really helpful with massive deflationary impulse right now. we have not had the classic goods cycle in this business cycle. that could very well come. think about the big series of fed rate cuts. it re-ignites the housing market , which gives us shelter inflation, and also reignites the goods cycle. one of the reasons we have seen and this is what i'm looking for in the cpi tomorrow's auto pricer's which have gone down a lot and near term show that is turning. a lot of good news on the good sector may be behind us on the inflation front. jonathan: given -- lisa: given

the fact we are still seeing good news with grocery prices etc. you think there is the same liability of the fed cuts 50 basis points or even 100 points this year, that that could reignite inflation or are you less concerned about that now that that is the policy error it might have looked like two months ago? lara: to me the inflation picture is less about near-term fed rate hikes that it is about some of the structural problems, blame it on past policy, blame it on demographics. the reality is in the middle of next year will be facing new pressure on shelter prices. there is a reason investors are going all in on multi family. we absorbed those excess units. we have seen the vacancy units down and we have stopped building apartment building. the middle of next year that will flare with higher rents or housing prices depending on how far the fed goes. to assuage markets and the

business sentiment that controls hiring, frontloaded cuts are not a bad idea. when you compare this to the mid-90's cycle you cut in succession and then they waited to see what impact their cuts would have. i am in the base case that the economy is ok. i think they have a room to do frontloaded action. seeing the real fed funds rate creep up, let's get that back down. then they have time to recalibrate in the new year, especially with new policy on board given the presidential election. annmarie: you mentioned policy because we have the debate tonight. is that more important about where 2025 goes and the future of the u.s. economy? lara: i am not sure the debate will be as impactful. i think both candidates are clearly focused on progrowth policies that are going to be inflationary in one way or another. it is another reason i think markets are under waiting the

impact of those progrowth policies in the beginning of the year. it is a very long road from what we are seeing on the debate stage, the mix of what congress will look like and what we will be able to put into practice. jonathan: what you think the bias will be ahead of that? let me to buy bonds and sell stocks? lara: i think the bond rally has gone as far as it will go. we have seen the 10 year over bought. say the fed cuts rates to 3.5%? where will the 10 year yield land? probably around 4%. i think for the equity market volatility will dominate because from here so much good economic news is priced in. we are now just relying on the super concentrated index and a lot volatility around companies that are trading at a very

leveraged basis at this point. jonathan: lara rhame of fs investments. let's continue this conversation. good morning. thanks for joining the program. let's extend the conversation. we had a big move last week of almost 30 basis points lower on the two-year. the 10 year drop close to 20 basis points in a single week. a big move lower through the summer. are we reaching the limits of the rally? >> we maintain models and we think it overshot on the downside. if you have a fed funds rate of 3.5% which is close to the natural neutral rate on the nominal side and typically post cutting cycles if you have pricing and another 50 basis points on the 10 year, anything more than that seems to be overdone. jonathan: you think we are well priced already for 200 basis

points worth of easing. jitania: on the last couple years the markets are pricing any kind of move in the market in an extreme way. we are well priced on that. what i think is important on the inflation side, a lot of our work is suggesting the next few months the pace and path of inflation will get a little more difficult in terms of the disinflationary trend. it may stabilize. you may not see consistent print down. what will happen the beginning of next year? 2004 beginning in a very high base effect because of high inflation. the beginning of next year inflation will be better and trended down. that is the part i am working with. from that perspective treasuries seem to have overdone. jonathan: they might -- lisa: they might have overdone but that does not mean the same way. you have a point about 60/40

that we will see a reversion to that balance in terms of opposite reaction to stocks. how much can you lead into that story given the fact you've have already seen this huge rally? does it still stand? jitania: it stands because the most important reason the 60/40 did so terribly in 2023 when this combination was down 17% was because the stocks and bonds correlation got positive and history suggests whenever inflation is above 2.5% stocks and bonds correlation gets positive, which is taking away the diversification benefits. now with the down below that level, that correlation will reassert its negative relationship and i think in an overall asset allocation portfolio that is a more structural long-term portfolio that gives you the benefit of having that hedge with the duration in case the outcome on

the economy is worse than the consensus soft landing. lisa: how hard of a sell on that given how scarred people were over the past few years and the questions people had around the deficit come around these other structurally higher inflation regimes people are talking about? jitania: i think the question on 60/40 was a bigger question in 2024 because 2023 was the worst outcome for that combination. at this point there is more recognition that may be a good allocation, but what people are doing and what asset owners are looking to do is think about what in that 60/40, whether it is 40 in u.s. treasuries, let's look at emerging-market debt. if the dollar is weak in interest rates are coming down the local bonds in the emerging-market world will do well. what within that 40 is an interesting question and what within that 60?

interest rate differentials and growth differentials that have worked in favor of u.s. all along now seem to be peaking in favor of the non-us. pricing in the u.s. interest rates is much more aggressive than many other markets in terms of rate cuts. how do we look at the ex-u.s. universe and the equity space is another important consideration. annmarie: what do you like within the 60 and within the 40? jitania: i will start with the u.s.. clearly we like the equal weighted index because we think concentration is extreme. peak multiples, peak earnings in some of these technology stocks within the u.s.. we like pockets of industrials, financials with the curve steepening. we like pockets of europe because there are idiosyncratic reasons but also structural

reasons. the world is industrializing. a lot of the industrial companies are in your trading at cheap multiples. we like pockets of japan because we think the path for the yen is up. we like several emerging markets like india and southeast asia that are more consistent. annmarie: you're not mentioning china? jitania: i have been a bear on china for a while. china has three problems. the excessive debt, demographic -- demographic headwind. look at what it is doing. it wanted to end consumption but has ended up falling industrial policy again, dumping goods in the world because that is the only engine for growth in terms of the export side. the domestic economy is laden with unproductive debt, which is slashing around the system without a cleanup act. that continues to be something

that may have some tactical run but not a story. jonathan: if you don't like china, how can we not like europe? jitania: europe, the consumer story in europe and the luxury brands, that has a problem. some of it is getting priced indecently with respect to current valuations. in some of the global claims today, which is whether it is defense cap acts, industrial automation capex, substitution capex. all of the european stories are linked to that. pockets of energy, materials, u.k. has a large part of metals and materials kind of company. i think scattered around it is time for active management. you need to pull the leaders.

jonathan: we have all heard these arguments and the question i go back to his valuation gap where evaluation trap. what are they doing that deserves the premium you think these companies demand? how will he attract that capital back to europe and the u.k. given how they have squandered it? jitania: in certain pockets of europe the earnings inflection is happening. it is not evaluation trap when there is a capitalist -- when there is a catalyst to unlock that value. i think when you talk about valuation, you have to think about equity valuations and currency valuations. the dollar is extended. the rate differentials and the growth differentials that have favored the dollar all along in the last few years, that is dalgaard to favor the ex u.s. universe and research suggests

nearly a third of returns on average comes from currency. taking that nuanced currency view across international markets is another big part. jonathan: if that big dollar long that has been accumulating over the last few years, essentially that is what it is. a massive dollar long at the expense of the rest of the world , if that begins to unwind there is a host of people who think that maybe you engineer moves of 10% in the chinese currency, big moves in the euro as well. do you think about at the same way and what kind of destruction with that because for the u.s. assets that money was originally in? jitania: the dollar is not an emerging-market currency. it is not a currency that is so volatile. if you plop a long term dollar price it trades in that 15% to 20% land. there will be countertrend rallies. we are at a point on the technical side where the dollar,

more weakness could get a countertrend rally on the upside. i think the balance in the u.s. with just u.s. domiciled assets, that shift should lead to assets moving away from the dollar. not something that just locates and calls for a demise of the dollar because it is still the reserve currency, it still has the exorbitant privilege. i think dollar weakness has happened, like in the 2000's decade, think we are getting to that point. jonathan: we used to come over here and chop everything in half. 50% off. as a bridge coming to america we used to come here and do everything 50% off. lisa: it was the other way around. jonathan: i was speaking to her producer jamie and our producer was -- to our producer jamie and jamie was talking about how used

to be the other way around and how expensive eating was in london. i live here. i am one of you. good to see you. thank you. let's get an update on stories elsewhere. here is dani burger. dani: huawei unveiled a $2800 phone after the iphone 16 debut. while weight is focusing on hardwick -- while weight is focusing -- huawei is focusing on hardware engineering and promises to go from a regular smartphone to a 10 inch tablet. the device and the iphone 16 are said to begin in-store sales september 20. the chairman of southwest airlines is stepping down. a major shakeup for the low-cost carrier. activist investor elliot management has been calling for strategic overhaul at southwest. the firm accused southwest of billing to modernize operations and falling behind on competitive challenges.

gary kelly will voluntarily retire from the board after the trade 25 meeting. six other members will depart the november board meeting. a private astronauts heading to space aboard the spacex falcon nine rocket to conduct the first fully commercial space walk testing spacesuit technology. the capsule is intended to apply an elliptical path around the earth at 870 miles. that is the furthest flight from the surface of the earth since the apollo program ended in 1972. that is your brief. jonathan: up next, we will set you up for the day and the week ahead and get you the preview of the big debate in philadelphia at 9:00 eastern. ♪

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jonathan: stocks positive a quarter of 1% on the s&p 500. the opening bell 38 minutes away. the agenda, the day ahead, the week ahead. at 9:00 tonight vice president harris and former president trump facing off in their first debate. wednesday the fed's next big data point is uscp i. on thursday we get cpi. then friday we get university of michigan sentiment. harrison trump meeting on the debate stage the only scheduled debate so far, a preview from mike sheppard of bloomberg's in d.c.. welcome. walk us through what we can expect today and whether we should believe this will be the first and only face-off between the two? mike: whether we see another debate will depend how things unfold on the stage tonight. if either side to seize a big

downside in doing a rematch then this will be it. we'll have to see how this unfolds. we will look at this on two levels. one will be on the substance. we will want to see kamala harris introduce yourself more to the voting public that she has only been at the top of the ticket for less than two months. even though she has been vice president for four years at a sitting u.s. senator before that , most americans do not know her as well as joe biden and certainly not as well as former president donald trump who is opposing her in the election. what we want to see from harris is how she handles being on stage with donald trump. they have never met before, let alone debated. how she interacts with the former president this meeting tonight will be very interesting and we will want to see whether she deploy some of her skills as a former prosecutor in engaging

trump during this debate. annmarie: you mentioned she needs to introduce herself. there are only eight weeks left in the election. in the swing state like pennsylvania, shortly after the debate people be able to vote early. to the campaign and the moment with not putting her policy proposals earlier? just this weekend we got the on the website for her proposals and she is only set up one interview and now they've only agreed to one debate. mike: is a crash course for her and the campaign. they had been in position to be joe biden's understudy until june 27 or the president really struggled in his debate with donald trump, which ultimately set the stage for his exit. they have been unavailing various proposals, including a tax package that came out last week that offered more detail of what she would do and offered a contrast as well with the former president. on taxes donald trump is calling

for a 15% corporate tax rate and promising individual tax cuts for retirees as well. we are also expecting other measures that would be favorable to corporations. kamala harris is offering a 20% corporate tax rate. jonathan: a pretty conditional tax rate on the trump side. a lot to work through. looking forward to the coverage through this evening and into tomorrow. bloomberg's mike sheppard in d.c. in taser patient of the president -- in anticipation of the presidential debate at 9 p.m. eastern time. mike wilson of morgan stanley, libby cantrill of pimco and david kelly of j.p. morgan asset management. i did not realize that game pigeon was a real thing. annmarie: what are you doing over the weekend? lisa: basketball. i am bad at that.

jonathan: is that what you do when you talk about politics on the show,? ♪

>> a bit of a rebound yesterday, but not a heck of a lot of movement today. 30 minutes until the start of the cash trade. >> "bloomberg open interest" starts right now. sonali: coming up, big win for the banks. regulators scale back requirements on capital for wall street firms from 19% to 9%. matt: big tech suffering a dual setback, apple and google lose in separate court