>> welcome to bloomberg markets. we are seeing stocks get hit after scott -- after a cautious outlook from some of wall street's biggest banks. of course you start with stocks. they did start the day mixed but have turned lower. i mentioned financials. we have energy helping lead the declines. the nasdaq giving up early gains down 3/10 of 1%. it is the outperformer in that it is falling less than the

other main indexes. treasuries are firmer. that is pushing yields down. 10 year yield at 3.65%. that is a 15 month low. take a look at oil. brent crude off by almost 4% falling below $70 a barrel on oversupply fears after opec trimmed its forecast for demand growth for the second time in two months. . the headline numbers for stocks are indicating a lot of red. we went to zero in on a lot of -- on a couple of individual movers starting with financials. abigail: jp morgan is the worst performer for the s&p 500 down 7%. the worst day going back to 2020. you can see this plunge under the two day chart dropping on president daniel pinto saying analyst investors are too optimistic about next year's net interest income. the estimate currently at 80 pump -- $89.5 billion. he is saying that is too high. this is interesting because we have so many mixed tells from

consumers on the retail space. the fact one of the biggest if not the biggest when he center bank of the world is saying analysts are too optimistic about next year and the consumer gdp is two thirds of gdp. there is something to think about. maybe a little bit of economic softness ahead. also having to do with the idea yields are moving lower. citigroup goldman sachs trading lower in sympathy. financial down 18.4%. the worst day for that stock since 2020. this has to do with the presentation of barclays the company made saying they are seeing lots of auto loan delinquencies. credit conditions are tough. credit card delinquencies already multiyear high and you can see this is weighing on capital one financial. to be clear, led financial, financial loans on cars. vehicle loans but that the overall credit card complex is called. the bank sector in world of pain. let's turn to one bright spot.

oracle up 12%. very good quarter. record profits. record sales. the sales grew 7% on a year-over-year basis. hey i demand helping out. microsoft seems to be going around for the ride. other big tech names such as apple and alphabet -- i don't know about alphabet but elf -- but up will not doing so well. microsoft going along with the ai demand. oracle having one of its stays in sometime. scarlet: investors liking the news about oracle and partnerships with some of those hyper scalars. thank you so much abigail duel or -- abigail doolittle with our movers at midday. investors eyeing inflation as a dampening factor with some of them saying higher prices have structural staying power. take a listen to what our guests said earlier today. >> 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, coming from geopolitical fragmentation, coming out of the labor shortage from aging population. markets currently reacting as though we are going to have a lower inflation print which feels about right. it is under appreciating the level to which we are going to have to leave structural inflation. scarlet: for more on what markets are pricing in ahead of tomorrow's cpi print, let's bring in the bmo capital markets senior -- investors have gotten comfortable with this narrative inflation has moderated and is approaching the fed's 2% target. it is no longer the risk it once was for investors. do you see any reason for tomorrow's cpi print to stray or challenge the narrative? >> good afternoon. thanks for having me. there is a chance. we are looking for inflation to

continue moderating for the fifth month in a row pit there is a chance we could see stickiness on the rent side or airlines. i think it would take a lot more than just one month of sticky inflation to change the narrative of what the fed is planning to do. we continue to look for the 25 basis point rate cut next week. we will be -- what will be more interesting is to hear how dovish the fed chair is going to be during the press conference. certainly longer-term, your previous guest, i would completely agree. there is upward pressure keeping prices elevated. even though the pace of inflation growth has slowed, price levels are still very high. there are number of factors that will continue to keep them elevated. what we want to see which is what we have been seeing is cooling inflation growth overall. four months in a row it is going to take more than one month to change that narrative. scarlet: the key question for

inflation as it has been for the past couple months is whether the slowdown in cpi is sustainable. what you look at to help answer that question? >> we look at lots of factors. i think it is going to go back to the consumer given the huge role the consumer plays in driving the u.s. economy. as long -- we have been sleeting -- we have been seeing lower demand. still growing but at a slower rate. that is going to help control and of course wages. that is going to help decide whether any the consumers mind they can keep spending or put it away for a rainy day which is never a bad thing. that is the biggest thing to look at. there is commodities as well and having oil off by a few dollars. would help the inflation story if there is staying power. what we look for in terms of broader u.s. growth, we go back to the u.s. consumer job demand and wage growth to see how that

is going to drive consumer spending going forward. scarlet: makes a lot of sense. i wonder how you fold in the anecdotal. what the big banks are saying today and yesterday with jpmorgan chase seeing shares declined because resident daniel pinto says analysts are being far too optimistic in projecting next year's expenses and net interest income. this may be specific to the banking sector but what does it tell you overall about the health of the corporate sector and how that feeds into the strength of the economy? >> the corporate sector, there has been slower business investment. this is partly because of slower demand worldwide. you are seeing more protectionist plays playing out around the world. some hesitation in more business investment and borrowing ahead of the coming elections in november. until we see that come and go, i don't think we are going to start seeing or continue to see weakness on the corporate side

in terms of the investment side given uncertainty overall. and of course slower demand in general to is definitely some truth to that. scarlet: the fed has a dual mandate. it has to manage inflation and maximize employment. inflation was priority number one for the hiking cycle. you can argue employment will be the bigger priority when the cutting cycle begins. i'm curious to hear from you how much does tomorrow's cpi print and maybe the following days ppi print answer the question of whether the fed will go with 25 basis points or 50 basis points in its decision to cut. >> i'm probably going to jinx it but i'm wondering to myself how important is the inflationary report. it is part of the fed's dual mandate. it helps less these days given we have seen four consecutive months of that are inflation data which is giving the fed the confidence and comfort to start cutting rates which everyone believes is going to happen next

week. the focus is on the labor market. whether it is going to determine 25 or 50, i don't think it is going to do that either. it is going to take more than one month of a change in inflation. like an uptrend to change the narrative. it is going to make the fed a lot more uncomfortable and less confident for them to change. given again what we have seen so far in terms of slower employment growth, slower economic activity. we are still seeing consumer spending as we saw from the july report. gently tapping on the brakes. we are not slamming on the brakes. everything should be pointing to a 25 basis point rate cut. i don't think one cpi report is going to change that narrative. scarlet: a quick question for you before we say goodbye. the first presidential debate takes place tonight. debatable whether we will earn anything new when it comes to policy proposals. i'm curious as an economist what you will be listening for that could help you figure out some

of your forecasts. >> very curious to see how hawkish they are going to be on the tariff front. no matter. what party takes over the oval office or congress, we are going to see protectionism or tariffs continue to be amped up. so how aggressive each party will be, i will be looking -- i will be listening for carefully. i'm curious to see what their stance is on the u.s. dollar. at one point we are hearing calls for a weaker dollar. recently we are hearing calls for a stronger dollar. curious how they are going to be talking about that topic. of course, taxation. lower taxes for every industry, every state or are we going to be specific on who we are targeting or which interest rates we are targeting? taxation, tariffs. that is what i'm thinking about. scarlet: appreciate your time. bmo capital market senior economist. one reason when i look at markets in the price action is

needed is election risk. today as we mentioned marks the first time americans will see vice president harris and for -- and former president trump side-by-side in debate. let's go to david gura who is on the ground at the debate venue in philadelphia. is not the first -- it is not just the first debate between harris and trump. it is also the fact the two have never met and spoken to each other before. is that right? david: that is correct. there's a lot of drama inherent. how are these two candidates going to interact with one another, talk to one another, what is that moment going to be like from the get-go? we will see where we go from there. i'm so that it to what jennifer lee was telling you. that wish that we are going to get a lot of policy specifics. talk about taxes, tariffs. all manner of economic issues we have heard these candidates talking about in recent weeks. color me skeptical we are going to get detail. the economy is going to be something that is talked about in broader macro way during the course of the debate which is supposed to last 90 minutes.

it is going to be similar in format to what we saw in atlanta in june. the composition of the debate stage has changed since then. her former president trump against feist president harris -- against vice president harris. microphones will be muted when the other candidate is speaking. they will not be the opportunity for spontaneous exchanges we have seen in past debates. will be looking to y for any signs of drama. the theatricality or the drama of the moment on the stage. scarlet: the rules from the atlanta debate carry over into this one. we are not going to get a lot of specifics i think it is safe to say they are going to be looking to connect more with potential voters than anything else. who has the momentum here? when you talk to people in philadelphia, what is the word? david: that is a great question. this is a suppressed campaign. we have not seen the kind of ebbs and flows of momentum we would see during a regular campaign. the likes we have seen before. right out of the gate, or

numbers improved compared to president biden. there was not a boost after the democrat national convention. we have seen signs there could be stalling in support for her campaign in the most recent polls. most notably in the siena college poll. that was not unexpected. within the margin of error. again, it seems to be there is a stalling or narrowing in support for vice president harris. that is something she had her campaign are paying attention to. they perhaps more than the trump campaign are cognizant of this opportunity to introduce herself or reintroduce herself to the american people. you look at the time siena college poll and there are some of the americans in this country, more than a quarter of respondents who say they don't know who she is or what she stands for. what our policies would be. if this is the only presidential debate we have between now and election day, it is a crucially important moment for her to talk to those voters and allay some of their if not fears, their anxieties about who she is and what she stands for. scarlet: for now this is the only one schedule between now

and election day. what about a potential vice presidential debate between jd vance and tim walz? david: that is scheduled to take place october 1 in new york city. that will be interesting to watch as well. we have both these candidates who have not appeared on the debate stage at this level before. neither has run for higher office. they are new running mates. it will be interesting to see how they play off of one another. i will say we continue to watch them day in and day out doing hard work and a lot of travel across this country. the expectation is after this debate concludes tonight, both jd vance and tim walz will be traveling across the country to many of these swing states to play up their particular candidates. will be seeing a lot more of them in the run-up to the debate which is scheduled to take place october 1. scarlet: thank you so much. david gura joining us from philadelphia. be sure to turn into our debate coverage. that begins 8:00 p.m. new york time. coming up, jp morgan shares dropping the most since 2020

after one key company executive downplays wall street executive expectations for their earnings. it is our stock of the hour next. this is bloomberg. ♪ the beginning, i would choose snhu all over again. if you're on the fence about getting your degree at snhu, you can do it. at snhu, having the support that i had, really helped me understand what i can accomplish. after i graduated, i started a new job. my degree has has opened new doors that i truly didn't know existed. all it takes is one simple step, and it can change your life. start your future today at snhu.edu at aes, our energy solutions have powered the world forward for more than 40 years. and as demand continues to scale, so do our solutions. introducing maximo - our new ai-enabled solar robot. max makes construction faster, safer and more cost effective than ever before.

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scarlet: this is bloomberg markets. it is time for the stock of the hour. we are watching jp morgan diving as the firm tempers expectations for its revenue outlook. you look at the shares. they are down the most in four years and leading bank stocks lower after president daniel pinto made comments had an industry conference. let's bring in bloomberg's senior reporter. what did daniel pinto who is the president of jpmorgan chase say about the estimates for results? >> he made the point about how

the analyst expectations especially for net interest income is a bit too high. he pointed out the estimates, the expense estimates and it does appear the stock has taken a dive following those comments down about 7%, the most since june of 2020. i would say jp morgan executives must be amused. for a while they have been talking about how they have been over earning from nii. we know the fed is going to start cutting rates. it is likely to start coming down. analysts will tell you every time jp morgan has been putting l.a. target for the last couple of years, they have been meeting it and beating it so maybe the expectation optimism was not misplaced. pinto has said it probably is misplaced. it needs to be revised lower. scarlet:scarlet: there was this game of setting the bar low and beating it. goldman sachs made remarks yesterday that did not set the tone very kindly for today. sridhar: the mood music out of this conference is downbeat.

goldman sachs and morgan stanley talked about the investment making side of the business. it is good in terms of conversations but not necessarily in terms of revenue realization. morgan stanley said m&a and ip revenue through the end of the year would remain below historical trendlines. the market is impatient for that revival to land and turn into real revenue. we talked about trading not being as great as last year. on the consumer side, you have heard commentary from citi and allied financial that gives some reason for pause and that is being reflected in the bank stocks today. scarlet: investors in patient? how could that be? thank you as always. coming up, we are going to take a look at the auto sector because bmw has cut guidance and dealerships across the u.s. are offering lower leases because of slowing ev demand. this is limber. ♪ -- this is bloomberg. ♪

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scarlet: this is bloomberg markets. let's turn to the auto sector. bmw warning a recall affecting one way 5 million vehicles due to faulty raking systems will cut its profit this year. the german automaker sees earnings significantly lower than the 17.1 billion euros it printed a year ago. is forecasting its operating margin should be as low as 6%. shares plunging 11% in european trading. in the u.s., car dealers are lowering prices to move ev's off their lots before year end. mainly through leases. by one measure, leases accounted for a record 32% of ev transactions in the u.s. through the first quarter well above the industrywide share of 19%. jessica caldwell, head of inset -- head of insights at edmonds joins us. leases were popular in the zero interest rate environment a couple years ago. they lost some of their appeal in the higher for longer rate we

are in. why are leases for ev so popular? jessica: there are two things happening with ev's. . you can get the ira credit rolled into your ev. that makes that payment lower. the incentives are there. these vehicles are not moving. leases is one way you could get consumers to feel more comfortable with the technology. they know they don't have to own it forever. ev leases are the best deal right now in the new vehicle market. scarlet: ev leases on average caught -- cost $88 a month then a new ev loan. . you mention it has a combination of weak demand and too much supply, but which is the bigger driver? as a going to be weak demand or too much supply for what we are seeing now? jessica: right now, it is weak demand. supply issue is going to work itself out. i will have window of six months to a year and production is going to koch -- to catch up with demand. automakers have been cutting back production. we are not going to have an

overstock of ev's forever. it is that low demand that is pushing things through. we know production and inventory will change over time. scarlet: the $7,500 tax credit you referred to. is that a permanent tax credit or that expire as well? jessica: that is the federal ira tax credit. it is a bit tricky. because if you purchase and ev, if you are not leasing. it, it will not apply. there are a limited number of vehicles. there are income requirements on the buyer. if you lease it, it is a loophole because it is not technically a retail customer. you can apply the $7,500 to most ev's. if you think about a three-year payment, that helps and cuts into the ev's. we see ev's with msrp's in the 40's with the same lease payment of internal combustion engine vehicles that are in the $20,000 range. it is apples to oranges in the payment. scarlet: doesn't this mean in two to three years dealers are going to have a flood of used ev's coming back to their lots they will have to get rid of? jessica: that is the issue.

so automakers are taking the risk on this. one thing is we know there is interest on the lower-priced ev side. . ev's because the value has not been great. they have been a great deal so far. we have seen more demand on the used vehicle side because they feel like i if this new car with new technology for almost the same price as something that does not have the new technology. they will do better on the use side because there is demand of people who want something cheaper but it is going to be hard to mitigate that. all the vehicles coming off lease and what the prices are. automakers know that they will be taking a cut, a profitability cut on the. scarlet: they are going to figure that problem out later on. it will be interesting to see how many of those leases will into purchases down the road. thank you as always. jessica caldwell is head of insights at edmonds. i'm scarlet fu.

that does it for bloomberg markets this hour. . we are keeping an eye on what is going on in the uppity mark -- the equity markets. the s&p 500 is down 2/10 of 1%. the dow industrial losing two thirds of 1%. yields come down quite a bit. the 10 year yield at 3.65%. this is bloomberg. ♪ and intel. clearing the way, [rumble] [whoosh] so you arrive exactly where you belong. the moment i met him i knew he was my soulmate. so yo"soulmates."ctly 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.

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live in -- live from washington, d.c.. joe: it could be the most important day of the campaign. debate day for kamala harris and donald trump. will the festa show in politics as we count onto the face-off tonight. 9:00 p.m. eastern. we prepare for special coverage here on bloomberg tv and radio. a big question about whether we will hear any details on any actual policy tonight. kailey: certainly questions about that. the question is what we will get in response. the answers from these candidates who are meeting tonight for the first time. they never actually have met in person as they prepare to make history on the debate stage in philadelphia this evening. what we have learned over what has been an incredible presidential campaign unlike what we have learned --