>> in equity land, we are mostly pricing in a soft landing circumstance. >> is not a bad economy, it's a good economy. >> i don't care what they do next week, what i care about is how the markets react. >> so far it's been a good year. you could see people continue to take profits. >> for the equity market, volatility is going to dominate. from here, so much good economic news is priced in. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and and reorder in. jonathan: good morning. bloomberg surveillance starts right now. s&p 500 slightly positive, coming into thursday on a three

day winning streak. thank you, nvidia. it's a three-day rally with plenty of volatility. and ecb interest rate decision and then i 8:30, two doses of data. ppi and initial jobless claims. lisa: the question isn't whether we go 25 or 50, it's we are going to go to the five and how much can we let the equity market rip in the face of a soft landing. it seems like people have breathed a breath of fresh air. jonathan: you want to talk about nvidia? the ceo at a conference says what? things are so good, demand is so great that we have tension between our customers and our ability to supply them. lisa: people get emotional about deliveries if they can't get deliveries on time. it is visceral and goes through their core because they need

those chips so badly. nvidia shares are up more than 8%. you have 13.7% rallies this week alone. you talked about how volatile things are. this is a trillion dollar stock and you are seeing it bounce around by 8% because people get emotional. jonathan: $200 billion of market cap, just like that. should we be getting used to that? brent crude bouncing back by 1.8%. wti still in the high 60's, up by 1.9%. slowing growth and slowing growth sharply. the slowest rate of growth since the pandemic for global. that's a problem. annmarie: the iea coming out about their report. not exactly a surprise given what people have been talking about. what i find interesting is the iea was leaning into what we

heard, in china, gasoline uptick is starting to wane because people are buying ev's and they have cheap ev's. that is one of the issues that are happening -- that is happening but people are not consuming as much. jonathan: i find the compare and contrast to be quite amazing. the fact that we are having this discussion with inflation essentially where it is in europe in the united states and the growth profile of america is more robust here in america versus europe. why is there conversation about cutting 50 basis points? lisa: why are we not talking about the ecb cutting more aggressively than the federal reserve given the fact that if they had a dual mandate, they would be looking at the growth picture. they would be looking at germany and say just a second. how much of this is because they already telegraphed something

and they have to stick with it? that's the reason why today will be interesting. how much do they telegraphed going forward? they are open to taking cues from jay powell? jonathan: if they had a dual mandate, maybe we would get a different picture. you have this german influence on the central bank that is scarred by the inflation of decades ago and worried about the inflation profile. the banks -- lisa: germany has a disinflation or deflation problem. the inflation is in the peripheral regions where they are getting so much tourism that they don't want anymore. they are seeing that kind of growth. to me, i wonder how much that institutional disdain for inflation goes away given the growth picture that is quite dire. jonathan: germany has a lot of things to say. we will revisit that later. from new york city, welcome to the problem. equity futures positive by .1%

on the s&p 500. in the bond market, we talked about the rain trip on nvidia -- round-trip on nvidia, the tenure up by two basis points. lisa, what did you make of that, the bond market move in the morning and the afternoon and all over the place? lisa: i make the auctions. you can laugh but it was the auctions, they have been strong this week. yesterday, we saw a selloff in 10 year yields and you saw people rush to buy the debt at that 1:00 p.m. auction. it highlights how that can trigger some of the feeling there is this demand and there is a sense we are going back to a new normal that looks like the old normal. today, we have a $22 billion three year. jonathan: i'm referring to something mike wilson and morgan -- at morgan stanley told us. the bond investors are done with

the inflation story. what i mentioned is equity investors are -- and the federal reserve might not be. lisa: that's what i thought was interesting, you saw a re-inversion of the yield curve. this wondering of whether the fed holds off on cutting rates so aggressively, whether you could think about the inflation issue. people don't know. they are spent falling and that's what we saw yesterday with the fact you are seeing a trillion dollars stock trade like penny stock. jonathan: andrew shifted away from 50 and now looking for 25, a 25 basis point cut. here's the lineup for this hour. we will catch up with sharon bell of goldman sachs as big tech stages a big comeback. javier blas. big tech led by nvidia.

today's technology sector reflects rational exuberance, justified by strong fundamentals and earnings growth that has surpassed that of the broader market. sharon joins us for more. welcome to the program. let's talk about how it rational some of those $200 billion single stock are. what do you make of the volatility we are seeing? some massive moves from day-to-day. sharon: it shows the market is vulnerable. you have a market where some of the biggest companies are this volatile, losing and gaining on individual days. this is a reflection of the uncertainty of interest rates, policy, fiscal policy, political outcomes for the election. just a lot of uncertainty which the markets are finding difficult to price. lisa: you are in europe and the uncertainty in europe is less than what people would expected to be in terms of how big the

rate cut be at the european social bankrate later this morning, do you think there will be a time later this year that we will be talking about an outsized cut in response to outsized weakness in particular with germany? sharon: germany has been super week. i agree. the manufacturing has led to recession. i think it is clear that germany is weak. it's not just germany. other countries being stronger than germany. there are areas that have been quite sticky like services inflation. we think they need to try to go faster than that at the moment. next year, i think they might reflect that growth has clearly we can. -- weakened.

lisa: -- in a german economy that is facing every structural headwind from the auto sector to geopolitical risk? sharon: i've been asked this question a lot by our investors. the dax has done perfectly fine great it's not been a super outperformer but it has kept pace with other european indices, even though german economy has been week. the dax isn't a reflection of the german economy. the biggest companies. it's like there is a big new percent -- magnificent -- you have really big camp companies which aren't necessarily super exposed to the german economy overall. whereas some of the other manufacturers are smaller parts,

chemicals is a smaller part of the index. i think it is a reflection of different stock makeup. the cap index that has been much weaker this year, i think it is more of a reflection of the week german economic outcome. annmarie: lisa named a number of issues they are dealing with. slowing manufacturing, exposure to china and more tariffs. which one of these is what you are most concerned about for some players that you say are less exposed to the german economy but are exposed to what's going on internationally? sharon: almost every stock to some extent has some cyclicality. if growth slows that is generally bad news. that being said, with interest rates coming down, that finds and off sector as well. the market will price in at some point. i agree. i think the most worrisome thing for germany is not so much the

flat german economic performance , it's the weakness in china. and the fact that china domestic demand has been week or china exports, which is competition for the german exporters has been incredibly strong. annmarie: is germany the worst when it comes to be exposed to china across europe? -- the exposure to china across europe? sharon: definitely. there is quite a lot of china exposure generally. they have a lot of china exposure. germany has a lot of exposure. the auto companies for example, some of the other industrials. that exposure is not just in terms of week and domestic demand in china, it's all the fact -- also the fact that china

is exporting and exporting at lower prices into germany. jonathan: you wrote a brilliant know on this and i suggest people should reach out to you to get the full note. the title, german stocks are breaking free from the economy. sharon, i wondered, if the earnings profile is going to improve because of the dynamics you have listed, can you walk us through how europe and german equities are attracting flows? we are so familiar with the problem. is the money actually coming in? annmarie: do you mean are people buying european stocks? jonathan: precisely. annmarie: people have been quite cautious. i was in europe and talking about europe generally. europe has underperformed in the u.s. for a long time and underperformed u.s. equities your today as well. that being said, not as much would think given the german economic outcome we have talked about. our investors buying it? to some extent, yes.

there is a little bit more interest in europe. i think even in the u.k., where the u.k. market proved to be defensive in the big selloff that we saw in august, also european companies are buying shares. you don't necessarily need a huge amount of invested loans if companies are doing the buying for you. dividends are high across europe. cash flow is good. buying back shares and a little bit of increased interest as well. lisa: morgan stanley cut the expectation for the euro to potentially parity as a result of some of the weakness. goldman sachs recently cut the ecb terminal rate expectation to about 2%. how concerned are you about the weakness of the euro as some headwind to the call that you have? sharon: not super concerned. if you are looking at european companies, in some ways, the euro coming down should be helpful.

it means you become more competitive. if the euro comes down, that would help your become more competitive. i get your point basically saying that if you are a global investor, what would you invest if you are going to lose it on the currency? if the currency starts coming down. it's not often that it will. i think if the fall of the euro is a reflection of doom and gloom and the economy is weaker than we expect, i would say it is damaging. if it's making europe more competitive globally, i don't think it is that damaging. jonathan: sharon powell of goldman sachs. going through a list of reasons why we are so cautious in europe and around the world. manufacturing issues, problems with china, unpredictable politics. it's a reason people have not been buying europe for a long time. lisa: which brings the question

why should they start now? is the reason -- it's the reason you have had lackluster performance. how many people around this table come on and say we are looking to diversify outside of the u.s.? to where? and how much can you get ambitious and excited about the opportunities there? jonathan: germany has been outspoken in the last 24 hours. have you noticed how outspoken germany has been? annmarie: they have been very outspoken. the vw story about what is going on in terms of energy transition and the most outspoken has been what's going on with commerce bank and how potentially the unions would prefer a tie up with the french over the italian . honestly, pretty rude. jonathan: the idea in 2012 that germany could loiter over europe , to have this 12 months later in 2024, i find it unbelievable.

this quote from the labor representative, we understand each other by the with the french in terms of industrial policy. if you are in a dance party and no one is asking you to dance, you don't get to stand around and say we are waiting for someone hotter to walk into the room. nobody is coming up to you, take a look in the mirror. the german industrial problems right now are absolutely massive. it was really interesting to see, donald trump went after germany a little bit in the debate earlier this week. the germans were tweeting about it as if the security issues in germany weren't a problem and things would be ok. i don't think it is helpful to throw that snark around the stage when europe has major issues. >> it was remarkable to see a foreign office, and have a tweet about an election for their

closest ally that has sent them a lot of liquefied natural gas and is bailing them out for enslaving themselves. also, trump's point was germany was abandoning fossil fuels at a time when they should not have been because of what was going on geopolitically. lisa: i'm looking forward to your book, germany and their misplaced sense of arrogance. jonathan: europe has changed a lot in the last decade. let's get you an update on stories elsewhere with your bloomberg brief, here is dani burger. >> seven and i shares jumped. the bids would need to be significant a higher than what they propose, $14.86 a share. the fte is reporting the

japanese convenience store operator -- rafael bostick violated rules around financial disclosure and trading activity. the fed's independent inspector general said there was no evidence bostick made trades based on confidential information or acted on financial conflict of interest. the trades were handled by third parties and neither bostick nor his advisers directed specific trades. openai is in talks to raise another $6.5 billion at -- that now puts openai in the top 100 most valuable companies. openai is reportedly in talks to raise $5 billion in debt in the form of a revolving credit facility. that's your brief. jonathan: more from danny in 30 minutes time.

debating, a rematch. >> we won the debate according to every single pole. are we going to do a rematch? i just don't know. jonathan: that conversation just around the corner. good morning. ♪

♪♪

♪♪ beaches jamaica sale is now on. visit beaches.com or call 1-800-beaches. jonathan: three-day winning streak on the s&p 500. they are looking to make it day four. futures on the s&p are positive by zero point -- 0.51%. >> when a fighter gets knocked out or loses the fight, the first thing he says is we want a rematch. so, we won the debate according to every poll, every single pole. are we going to do a rematch? i just don't know. i would do in bc, i would do fox too. right now, we have to determine

whether or not we want to do it. jonathan: the numbers were massive. tuesday's debate pulled in a huge audience of more than 67 million viewers, topping the turnout for trump's debate with biden in june by over 30%. early polls picking harris as the clear winner with both candidates yet to agree on a rematch. walk us through the path forward. do we get another debate? >> that's a great question. we are looking forward to seeing how this gets answered. the debate on tuesday night really answered a lot of questions about how the two candidates would purport themselves against one another and what we see from -- we would see from kamala harris. she used a more prosecutorial approach toward trump, using his own words as president, his own actions as president and everything he has done since leaving office to try to undermine him as an opponent and

candidate. trump on the other hand came in less prepared and was on the defensive for most of the debate. that made it hard for him to do the main thing he had to do on tuesday and that was fine harris and hang the policy failures on her. for trump to decide to do another debate, he has to take a different approach going into it if that were to happen. annmarie: we know kamala harris is going to north carolina. democrats view potentially -- north kalinin potentially in play. trump is going to california. i understand why he's going there for fundraising. raisi giving a press conference in a very blue state? michael: trump is looking for any sort of media he can get at this point to make up for the struggles he had on tuesday before an audience of 67 million people. he will do that news conference in new york. he will be using the west coast

swing to visit arizona and nevada, two critical states. he will be out there looking for money, looking for that attention from the public from a wider stage. and then also visiting these swing states. keep in mind, these news conferences that the former president has given, especially since leaving office, have not yielded the same kind of viewership results that he did at the beginning of his term for president. annmarie: have we seen the impact of the taylor swift endorsement? michael: what we have noticed is the vote.gov website, which is an official that are a government platform that directs voters to voter registration links in all 50 states, there was a link on her instagram post, endorsing kamala harris. more than 300,000 queries to vote.gov. it signals the interest that

voters, swifties, she sent this out to 200 83 million followers on instagram. -- 283 million followers on instagram and we know taylor swift has an enthusiastic following. it skews young. the kids who might be going to these concerts, even if some of them might not be old enough to vote, they have parents who take them to those concerts and who have bought into the taylor swift's sheen. and also, the singles that there might be some organizational might behind it too. the swift organization has clubs and kids talk to each other and communicate to each other. it's also a voting demographic that republicans and democrats in particular are looking for. jonathan: mike is suggesting the kids are about to bully the parents. 67 million, that's a ton. that's the most-watched debate ever. these are the numbers.

84 million. the first one between trump and hillary clinton back in 2016. that was paper view. this is box office. lisa: what's interesting is this is 30% more than the people who watched biden versus trump. jonathan: let's say people are more interested now than they were a few months ago. equity futures are positive by 0.1%. we will catch up with how vr -- javier blas.

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jonathan: three-day winning streak on the essence the 500, equities positive by 01%. looking to make it -- by 0.1%. looking to make it four days. the nasdaq 100 had its best day. in video with their best day since july -- nvidia with their best day since july. lisa: people are getting emotional over the deliveries of chips. they are tense about making sure they get in the right number. this was at a goldman sachs conference out west, the nvidia ceo was talking about the emotion of getting deliveries. it points to, i don't want to say the random increase or decrease of prices but it feels like it doesn't take much for

stocks to really surge or fall dramatically. jonathan: it has chairman powell like power over financial markets. let's turn to the bond market. yesterday, the 10 year posting a game for the first time in september. that game, only up by a single basis point. the range of anywhere from four and down anywhere from four. the 10 year rate was all over the place. lisa: there is a great degree of fragility in the financial market at a time were even a benchmark rate is so uncertainty. yesterday, there was a round-trip feeling around how much the fed could cut and how much they are willing to cut and how much demand there was on the other side for longer-term bonds. the fact the auctions have gone off so well this week highlights that may be the mood has shifted and people think inflation truly is a fight that is already over.

they are willing to go into u.s. debt in a way that they were not a couple of months ago. jonathan: got into jobless claims, i think these numbers will be of interest to many of you. the number of weekly filers for unemployment benefits has stabilized recently with the four week moving average down to 230 k and the lowest since the beginning of the summer. things have stabilized in the labor market on that specific data point over the last few months. lisa: which is the reason why people have reduced the emphasis on it. we keep repeating this, not to be talking conspiracy theories but some people are respond -- wondering about the response rates. they have gone down dramatically since the pandemic. how accurate can they be at a time where people are hinged on every data point to understand the trajectory of the economy over a longer term? it's the reason why people are completely complacent. jonathan: the other thing that comes out later this morning at

8:15 eastern, and ecb rate decision. the scores look like this against the dollar, positive by 1/10 of 1%. some headlines from morgan stanley suggest we could get down. we are all but guaranteed the 25 point basis cut -- given the profile of the moment, why are we having a conversation about 50 in america and not having that conversation in europe and frankfurt, germany? lisa: how much a -- of it is a central bank versus a dual mandate and how much of it is institutional disagreement in the sense that you are not getting all countries agreeing in europe on exactly what the trajectory should be. a lot of people i curious to see if the ecb puts out something that indicates they are ready to go faster. -- are curious to see if the ecb puts out something that

indicates they are ready to go faster. jonathan: looking for fresh guidance. the news conference at 8:45 eastern time. looking for some forecasts later on this morning as well. jen-hsun huang has frustrated some customers and raised tensions. his comments coming as nvidia is up again by .6%. lisa: it makes me feel unclear how much some of these massive stocks can move on what? what did we learn? we know there is a huge demand for some of these chips. this isn't news. why should shares be up more than 13% this week? the more that there is a buy the dip moment, how much conviction can we have that we haven't seen a real reset in some of these equity markets? annmarie: he was also asked about the geopolitical concerns.

they make and assign themselves but they are manufactured by tsmc. there is no risk when you look at facebook that people are really trying to weigh in some of these geopolitical concerns. the financial times front page, talking about seal team six have , for over a year, been training on how they could help taiwan if there was a chinese invasion. jonathan: there are multiple dimensions to that line. that's one. here's another. the market ran with the idea that this was all about demand, things are great by the stock. i wonder how much of that was around how some of these chips are being supplied to certain customers and whether he was giving us insight into the relationship with customers and maybe some of the complaints being made in washington, d.c. lisa: the sense that maybe they are worried they won't be allowed to sell some of the chips or provide them this concern about getting ahead of some of the regulatory changes

to make sure that is the case. if they are going to be in the crosshairs, the bottom line is the fact demand is so strong. jonathan: some of the allegations against the company for they were giving -- where they were giving preferential treatment to some companies. if they dealt with other people, they could have the chips from them. i wonder if that's a point of tension overall. when he's talking about the relationship, what are we talking about? lisa: is he saying hey, people want our chips so badly we don't have to play these games? and they are so desperate to get them that these are the conversations we have? jonathan: and then they bought the stock. lisa is right. let's turn to the chairman urging the european union to alter its admissions targets. his comments coming as the company makes a big cost-cutting push, scrapping projections for order workers in germany. they may have to shut place there for the first time in the company's 87 year history.

mario draghi on his ecb day, warning the europeans that their own regulations are killing european companies. lisa: what was fascinating is this line we have been talking about literally for months. the germans, it feels like they are waking up. politicians have given industry targets without the necessary infrastructure being available and without considering whether customers are along for the ride. the demand is not thereby policymakers have told them you have no choice, you have to get there. jonathan: how may times have we set america innovates, china replicates and europe regulates. mario draghi wants to do something about that. lisa: does he have cooperation from germany? that's the key question. it's the curse of being a multifaceted region that has a number of independent governments. jonathan: here's the latest on space. some stellar pitches coming in the next couple of minutes or so. a spacex crew, four astronauts making history, getting ready to perform the first commercial

spacewalk. the entire process for the extra vehicular activity taking about two hours. crewmembers will exit the crew jagged -- crew dragon capsule in the next 15 minutes or so. >> i went down a rabbit hole this morning. 12 main dollars on average for a spacesuit from nasa. jonathan: is that how much? lisa: that's how much it is. three point $5 billion to include maintenance. this is a private venture. i'm curious about the scientific aspect of this. there is none. but there is a sense of does this pave the way to more commercial exploration or even, frankly, spacex showing it can rival nasa at a time where there is questions about the ability for the u.s. to support. jonathan: global oil demand growth is slowing sharply as china's economy pushes prices to

a three year low. the lowest rates since oil demand crashed during the 2020 pandemic. following this closely is a good friend of ours. javier blas. a big takeaway for us on crude in the last few days is how bearish things have become and how quickly things have become bearish. what's behind the bearish noise we hear from the south side in the last few days? -- seller's side and the buyer's side in the last few days? javier: the demand for oil is slowing down. but i think the question has been saudi arabia has oil prices too high for too long, production from the united states, canada is booming. that is overworking the market and will continue overworking the market in 2025. many of the members want to produce more. that's what's creating the big

risk in 2025 that has driven prices sharply down. lisa: the why behind it, emery mentioned it earlier, it was in part because of of take as well as what they see as a peak in oil demand coming very soon. how much is this a structural shift in the crude market? javier: i think the main driver right now is the structural shift in the chinese economy from industrialization to more service. the global economy is slowing down. everywhere, things are pointing down for 2025. ev's pave the road for sure on the markets. the international agencies said a few months ago, a few years ago that global gasoline demand,

which is effected by electric vehicles, peaked in 2019. since then, it was growing in 2023. they have revised the numbers and are projected even higher amounts for gasoline in 2024 and 2020 five. that suggests ev's are playing a role. the biggest factor is a structural change in the chinese economy. more on the service side. and then the cyclical has slowed down. lisa: this structural change in china has been going on for the better part of two to three years. why now is it suddenly affecting the supply and demand dynamic in a more aggressive and visible way? javier: i think the main reason is we have to look at the supply side. when you keep oil prices close to $100 for 2.5 years, at some

point, that supply-side overwhelms the market and that's where you get -- the demand is slowing down in china. annmarie: how does opec-plus basically fight the permian? javier: there are only two ways opec can react to the current situation. they accept that prices need to go down and they accept that new reality and they slowdown shares over time with perhaps 60-70 dollars and they are prepared for that which i think is unlikely or they have to declare a new price war. opec has two price wars over the last 10 years. to say a third time is not possible, i think it would be ridiculous. i think we need to plan for the

potential that opec decides to flood the market again. annmarie: after the last price war, i spoke with the prince about the nasty divorce. they tried to talk nice in public but behind the scenes, there is always a lot of issues that unnerved all of the members. where is the group in terms of what they envision for 2025? javier: the group is split. saudi arabia would like that opec restraints production. when you look at the numbers for production and you start counting the number of tankers, you see iraq is cheating, kazakhstan is cheating. the saudi's aren't restraining production while every other member of the organization is overproducing well above those production levels. then there are a number of opec-plus countries under

production limits. they are under american sanctions and are increasing production per not only venezuela and iran. that is overwhelming the market. jonathan: appreciate the updates. some big moves in the last few weeks. javier blas. let's get you an update on stories elsewhere with your bloomberg green. here is dani burger. >> the japanese foreign minister has declared her bid to become the country's first female prime minister. she promises to strengthen relief measures and boost wages. she is the second female candidate to make a formal run for the september 27 leadership vote. campaigning is set to start today. i want to bring us live pictures, space x is conducting the first ever commercial spacewalk. as of about 30 minutes ago, they began flowing into the crew's spacesuits. what you are seeing is jerrica

eisenman start to undo the hash, the cabin is fully depressurized. he will go out onto a tether for a tether for 15-20 minutes to conduct the spacewalk and then engineer, spacex engineer sarah gillis will follow and exit the crew dragon for a similar spacewalk. there is no air walk aboard this cabin. what they have done up to this point is let all of the air, all of the oxygen out of the entire spacecraft, turn the whole thing into an airlock and then as you can see, they are starting to open the hatch. in the meantime, all four crewmembers must wear the new suits. this entire cabin has to act as an airlock. you can see on the bottom left corner, the psi, the -- in other words, the pressurized cabin. it is at zero, which means eisenman, the one with his hand on the latch is able to start this. it's not an easy latch to open. it takes a few different

processes. you may see one of the lead engineer's lend her hand as well. that's what we are waiting for. 32 minutes in, technically into the spacewalk. it starts officially when oxygen starts flowing into their suits. at the moment, we are simply waiting for jerrica isaac men to fully open the hatch. you can see the tether. he will exit and begin dissent into space. jonathan: i have no idea how long that process takes but given he is sitting there holding the lid and waiting for this to happen, we can't leave these pictures. lisa: it's compelling. there is a real concern here, particularly because they are far away from earth. they are further away than be susceptible to some solar

flare's. they are watching the sun closely because of radiation exposure. i imagine it is nerve-racking sitting there, about to go for men have gone before but not very often. jonathan: we have seen a lot of development. some have called it a billionaire vanity project. others have talked to my how it could advance civilization. what is this? >> this is testing out the spacesuits. that is what we are seeing. these are new spacesuits. the entire cup needs to wear them because there is no oxygen currently onboard at all. i guess in some ways, it is spacex showing we can develop privately. the spaces which are so expensive -- spacesuits which are so extensive to put together for it not just the scientific advancement, it is spacex being able to flex that we can do this too. we are starting to get some more movement onto the hatch. as i explained, this is a slow

process. it's not easy to open this thing and they are being very careful with it. it's newtek from a private standpoint that they are wearing the suits. lisa: i'm doing research and i thought it was interesting, the way the suits were designed was in part by elon musk himself and by someone who has worked with hollywood to design some of the sci-fi aspects of this. how much is this a design aspect and how much is this space x trying to rival what nasa is cap more -- capable of given the complex and military-industrial complex behind it that a lot of people are wondering whether there is the incentive to continue to fund in the years ahead? >> there is an element of both. especially with spacex, there was criticism they were not advancing fast enough. even things like making spacesuits that can fit women's bodies versus women having to adapt to the spacesuits that are there. but it is a work in tandem. it is spacex and nasa together establishing these missions.

for example, when you have the rocket separation after the initial take off and come back onto the launchpad, part of the reason they did it at the time they did is that spacex is getting ready for a nasa mission. we can say this is spacex saying we can do this thing, it's not just you but it's clear it is not spacex going at it alone. they are working hand-in-hand with nasa. in doing a mission like this, the scientific research is testing at least spacesuits. and testing spacesuits privately for spacex. it's not some sort of eager grand nasa tight mission. you are looking at the control center as they get closer to doing the spacewalk. annmarie: you're saying how long this takes but how much time will they have outside this capsule in space? >> so the billionaire who punted this project will be out there for 15-20 minutes. he comes back and then sarah ellis, the lead engineer on this mission will do the same thing.

the other two people on this mission will stay in the aircraft. i find this almost heart wrenching for them. they can't go on the spacewalk they have to do all the things that set up for it because there is no oxygen on board. they are wearing the spacesuits. the process may be from here for about 40 minutes in, will take another 30 or so minutes as they go out onto that tether. jonathan: we have to do a compare and contrast. if we take what's happening right now and compare it to what's happening with boeing, there are two astronauts stranded in space right now who were meant to be there for days and will be there for months and not be back until february while spacex is doing a much better job on this front -- until february. why is spacex doing a much better job on this front than going? >> the mission is somewhat different. this thing is not very long. it's only a couple of days. they didn't bring extra fuel supplies with them.

they are not prepared for being stuck out in space. the boeing trip, not only was it supposed to be 10 days but it's been extended multiple months. there is no sort of bandwidth for them to be longer. i do hear cheering in the control room. it seems like maybe the hatch is open and they are going out. we are not seeing the hatch at the moment. you can see the hatch is now open. jeric should be shortly exiting the spacecraft at this moment. you are completely right. spacex has been able to more successfully do it and maybe it has something to do with a private backing, the fact they are taking a billionaire with them who has funded this and the money behind spacex versus boeing, which is a combo gated beast and has so many other aspects they need to pay attention to where, again, they can fly a billionaire who we are about to see exit a spacecraft. >> we are hearing the hatch is open and this marks the first time these four humans are simultaneously exposed to the vacuum of space before they go

out. it raises the question about what the ultimate goal is. how much is this going to be a commercially focused enterprise versus spacex rivaling some of the state-funded space programs to go out? >> if you could not only sell a seat for people to be able to experience weightlessness? that's what we have seen, the commercial aspects as we look through the lens of isaacm an. you go just above the surface and don't get anywhere near the moon and you can experience weightlessness. what spacex is offering is different. they are offering a potential commercial viability to do spacewalks. that's another level of space tourism. they are selling is we can do this tourism and exploration and scientific research hand-in-hand. it can all happen together at the same time. but, you get this feeling that the people that can actually be

offered this is quite a small minority. these pictures are incredible. you have to look at this and what we are seeing not just as this is great for science but almost as a commercial. look at the advertising spacex is getting saying hey, if you are a billionaire, we can provide the capability for you to come out and see this view of earth. jonathan: what you are witnessing right now, the first ever commercial spacewalk, a private mission aboard a spacex capsule. it's a four person crew. who do we see exiting the capsule, it is jeric isaacman. then we will see sarah gillis step out after him. pretty phenomenal pictures we are getting right now. >> phenomenal as they are testing out the spacesuits designed by elon musk.

there is a question about what the ultimate goal is and how much more successful spacex has been then boeing and a lot of the state-sponsored aspects in creating space aircrafts as well as paraphernalia necessary for that travel. jonathan: just a final word, dani. >> this is quite remarkable. he will be tethered. this is a big step for spacex. being able to offer this commercially and a gorgeous view of earth. jonathan: dani burger, thank you. phenomenal photos there. >> i spent a lot of time understanding what the spacesuits have to do. they have to pressurize so that your lungs don't boil over from having no pressure whatsoever in space. they need to fully insulate you from radiation. they need to protect you and then give you the oxygen to breathe because there is none in space. there are a lot of technical aspects which is why it's a hurdle to cross.

how do you make a commercial and how you get there? this is the first step in that journey. annmarie: it's impossible for any normal person to go out there unless you have billions of dollars in training. i love the point you brought up about boeing versus spacex. this is a huge feat for elon musk, who is up and tweeting about it and saying the dragon hatch is open and the cabin is that vacuum zero pressure. and the ability for this individual, a non-astronaut to grow and have this 15-20 minute spacewalk is pretty incredible. it feels like spacex is ahead of the curve. jonathan: we will monitor this and bring you live photos through the next hour. a tease of the next hour on this program. coming up next, mohammed of bloomberg opinion. a guest from cornell university and summer. in one hour and 20 minutes, we get an ecb rate decision, why they are expected to reduce

basis points by 25%. lisa: christine lagarde could be talking about potentially accelerating the rate cuts going forward, given how weak some of the growth picture has been, even though they are focused on getting inflation back to 2%. jonathan: a little bit of a lift after a three-day rally in the equity market. in the bond market, some big moves post cpi. just a touch in, checking base with what's happening with the euro against the u.s. dollar, 1.102. lisa: we will see if it stays that way given some of the dyer prognostications. jonathan: the second hour of "bloomberg surveillance" is up next. ♪

the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity

you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

♪ >> the economy is decelerating, there is a real risk of slowing behind the curve here. >> focus on the fed shifting from inflation fear to growth slowdown every session fear. >> the fed really wants to believe we are going back to that post financial crisis, pre-covid period. >> ultimately what the market

needs to see is that the fed is on a path. >> there is nothing wrong with the economy fundamentally, you shouldn't have an active policy either way. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. for our audience worldwide, a second hour of bloomberg surveillance starts right now with equity futures just about positive coming off the back of a three-day winning streak on the s&p 500. we are higher by 1/10 of 1%. the stake set as follows this morning. 8:15 eastern time, ecb rate decision widely expected to reduce interest rates by 25 basis points. 8:45, a news conference from the ecb president christine lagarde. >> i would argue that watching

initial jobless claims will be argued be more important for just this morning's actions, may be listening to what christine lagarde has to say about the forward path for interest rates given the fact they are facing a much weaker picture and that a lot of people are baking in either more rate cuts for the fed or equal. that is going to be a big risk potentially. jonathan: a reminder how small those problems actually are from space, the first ever commercial spacewalk taking place in the last 10 minutes or so. amazing pictures coming in. lisa: you're going to use that for me ever seen the morning. just remember from space, you seem really irrelevant. this is actually really important moment to understand commercial space craft and space exploration but also because there is this question of a private-public partnership at a time where that is an increasing geopolitical risk as well as just the future of energy and a host of other potential initiatives. >> looks like a perfect world. back at home we still have a lot of work to be but from here it looks like a perfect world.

jonathan: it will cash in on some of those pictures for you as they come in. equity futures on the s&p firm are hereby 1/10 of 1%. bond market yields higher by two basis points. europe, we keep going back to this question. if we've had a faint debate about going 25 or 50, given the economy they have, why are we only talking about 25 today? lisa: morgan stanley, you mentioned them earlier. just a couple days ago talking about the potential for almost parity. 102 vs. the dollar at a time when the ecb has the ability to surprise to the downside in terms of how far they can take their rates. >> align at this hour looks like this. we will catch up with mohamed el-erian with his outlook on the federal reserve as harris and trump returned to the campaign trail and simon french as the

ecb prepares to reduce interest rates once again. we begin with her top story, the latest cpi print boosting expectations for a 25 basis point cut from the fed next week. ha mundell area in writing that he sees an "anchor list paradigm -one that is crying out from the stabilization influence that usually comes or may dominate economic narrative rather than the current ping-pong one and/or forward policy guidance as opposed to this era of that dependency." fantastic to catch up with you, particularly your observation yesterday about what is developer and the bond market. what was that about? >> we saw a 20 basis points round-trip, 20 basis points. that is a lot for that maturity and we learned two things. one is that we have excessive

data point dependence. all that happened yesterday in the inflation report as people know is that monthly call came slightly higher than expected. everything else was aligned and yet removed 10 basis points up and then we discovered money on the sideline the to work quickly and that i think is the reality, that we don't have a dominant economic view, so we get swung all over. but the stabilizer right now is this technical of cash on the sideline. financial conditions are stabilizers with two very important qualifications they are volatile and they have as much perception is reality. we are going to continue with this volatile world until we restore either a dominant economic paradigm where the power of forward policy guidance. lisa: you could argue that even in the face of all this volatility, it shows how strong economic system is, that there

wasn't some significant disruption. isn't that the ultimate stress test that you don't see any massive selling? why is it more pernicious that it might seem on the surface? >> i do think the financial system has been strengthened, particularly the banks. we are in a much better place than the past so you don't get the massive balance sheet effects, the virtuous cycles good or bad that can happen from that. but don't forget that we are the benchmark for the rest of the world and we caused quite a few spillovers that the rest of the world says enough now, we had enough of this, please get your act together. lisa: i was surprised there wasn't more of a discussion, at least not out loud about with the neutral rate is. that paradigm shift you are looking for, some sort of real discussion of what this federal reserve is willing to accept in terms of inflation and benchmark rate. it sounds like they just don't agree on one. how can they come up with one if

the market can't agree on one? >> as usual you are getting in the way of my financial times op-ed tomorrow. lisa, you are absolutely right, but it is not just that we don't know what the destination is. we don't know what the journey is. we don't know what risk mitigation mindset actually means operationally, and also there is disagreement as to how quickly will fed officials go from backwards-looking, data dependence to forward leaning. so we have these disagreements both within the fomc and also between the market and what seems to be the consensus of the fed. for me it is a fascinating time but also a very confusing time. lisa: amongst all this confusion, what do you want to hear from jay powell next week? >> what i want and expect to hear is that he is going to cut by 25 basis points. beyond that, it is more but i

would like to hear than i expected to hear. i'd like to get a sense of where he thinks the neutral rate is. i'd like to get a sense of where he sees the balance of risks. the market right now has modeled the fed as a single mandate fed. fed officials tell us know, we do mandate fed, let's not forget the inflation component. i'd like to know where he is on this. annmarie: do you want to hear more dissent within? the fed >> i admire the bank of england. you had a situation where it was 6.21. that is important because that conveys the uncertainty. i think they view dissent as weakness. most of us view dissent as having really important information that have to be priced into markets. jonathan: i remember a series of votes maybe a decade ago when governor came with leaving the central bank, wanted to increase qe, and you had people voting

against him. not only more voting against and then voting with him. that's a scenario we don't see at the federal reserve. you had a warning coming into the september meeting. at the start of summer you wanted them to reduce interest rates in july about the different between going into september vs. july wasn't that great but you have one fear. one hot cpi print, they might get distracted. how distracted might they be? >> not that much because it was one element in a broadly consistent data release that certainly was very close to consensus forecast. but if we had missed on headline, if we had missed encore, if the base effects weren't as favorable as they are right now, you would have seen a total mess in the marketplace. that was my concern, that is much as they don't want to admit it, they are not just data dependent, they are single-point independent.

and that is really scary for a policy-setting. jonathan: that a certainly have the market sees it. how do you think they will look to frame this rate cut when they deliver it? will they call it a midcycle adjustment, will they say is the beginning of a journey back to neutral, whatever neutral is? >> i suspect it will be what is called a dovish 25 basis points which means this is the first of many. and we may be inclined to go even more if the labor market weakens. there was this phrase in the jackson hole speech that was really important. we don't want to see the labor market give any weaker. that is a very strong statement from the fed chair. whether everybody else is there, we don't know. lisa: let's say they do what you want and they say this is what neutral is, this is our mandate. how much of the lost control of the plot anyway, simply because

there are other factors at play? you think about fiscal coming out and potentially disrupting things, international investment that kind of forces their hand. how much do they have the ability to set the narrative with such a prescriptive tone right now? 9 >> >> -- they certainly should be incorporating fiscal and qe. qt is ongoing. they certainly should be doing that i hope that they are doing this internally, i just think they got so burned in 2021 because they did data forward- leaning view and they were completely wrong. they don't want to make another mistake. lisa: what if they say this is a victimless crime, that essentially they are getting it right and that markets are generally saying actually, powell is doing a pretty good job. why should they change it? >> we go back to the amount of

volatility we have fixed income. it has been unusual. lisa: i know, i watch it every day. >> and that has adverse effects and undermines the credibility of the u.s. at the benchmark for many others. and we are in a world in which countries are building little pipes around the u.s., we don't want to enable that process further. the second issue is we have a major reconciliation in their future. we have the treasury part of the fixed income market signaling a recession. we have a credit part of signaling a very hyper ability of a soft landing. if liquidity doesn't reconcile these things, there's going to be even more volatility in this marketplace and at some point, volatility spills back to the real economy. and the only thing keeping this real economy going right now is the labor market. jonathan: market participants to

think powell is doing a great job, they are the bullish runs. equities are still near all-time highs. if we weren't there, you would have something different to say. lisa: maybe they are data point dependent as well. jonathan: you mentioned where the bond market is and where markets are and i want to pick up on the amount of demand we've seen for some issuance. we had a guild issue last week, italian issued this week. a similar dynamic in u.s. high-grade corporate debt in america particularly lastly. lots of demand, credit spread very tight. can you reconcile with each part of the fixed income market is telling us right now on whether you can make sense of it? >> i can only reconcile it by the cash of a sideline and the fear that if you don't get into lock interest rates now, you will lose interest income in the future. so every time we have a backup in rates, people wash back in. yesterday's dynamic was

fascinating for me. the speed of the round-trip was significant. jonathan: we've seen it a few times in the last week. we are lucky to have you. right up until that ecb news conference a little bit later on this morning. equities firm or by a little more than 1/10 of 1%. here's your bloomberg brief with dani burger. dani: the family behind chanel, billionaire heiress of l'oreal has bought a stake in "the row ." people familiar say they fought a minority stake in the fashion brand. other investors are also likely to join the deal which values it at about $1 billion. it was started in 2006 by sisters mary kate and ashley olsen who shot to fame as child actresses in the late 80's in the sitcom "full house." general mills agreed to sell its north american yogurt business for $2.1 billion. the firm will sell u.s. and canadian operations including the brand yoplait to french dairy companies.

the proposed transactions are expected to close in 2025 subject to regulatory approvals. general mills will provide new details and its neck earnings report next. more turbulence could be had for boeing. the 33,000 union members are voted today on whether or not to strike when their current contract expires at midnight. one that work stoppage could negatively impact recent efforts to turn around the company. and that is your freeze. jonathan: more fromdani in 30 minutes. next on the program, returning to the campaign trail. >> people start leaving his rallies early out of exhaustion and boredom. >> people don't leave my rallies, we have the biggest rallies, the most incredible rallies in the history of politics. jonathan: talk about taking the bait. from new york city this morning.

♪

jonathan: equities right now firm or by 1/10 of one person on the s&p 500. yields a little bit higher, up a basis point. one hour from now, we will be very focused on the euro. euro-dollar right now, 110.18. ecb decision just around the corner. returning to the campaign trail. >> i'm going to actually do something really unusual and i'm going to invite you to attend one of donald trump's rallies because it is a really interesting thing to watch. people started leaving his rallies early out of exhaustion and boredom. >> she said people start leaving. people don't go to her rallies. people don't leave my rallies. we had the most incredible rallies in the history of politics because people want to take the country back. jonathan: here's the latest. kamala harris and donald trump each set to hold rallies today with trump in arizona and harris in north carolina. ed mills saying we expect a near

term bounced toward harris but the longer term unclear. we continue to expect a very close election. we're joined now for more. wonderful to have you back. we've heard from a lot of people in the past 24 hours to have suggest that a harris presidency would be good for bombs and perhaps bad for stocks. is that what your conversations with client sound like or does it down a little bit different? >> at raymond james our conversations are much more nuanced than that. we are looking at each specific policy, looking at every sector. what we've done is on every sector of the s&p 500 put out a report and fed here are the top in each of these scenarios. because as we look at stocks, we certainly could see a rally because of the extension of the tax cuts. but a pullback because of the extension of possible tariffs if trump were to win. with a harris victory, there

would be concerned, i those tax cuts going to end, but not having those are a really important intake and a lot our clients are asking for. probably one of the biggest parts of the debates are because the supreme court fundamentally altered the way in which we are going to do regulation a series cases this year, clients really want to know what can be done with executive action, what requires regulation, and what requires congress. those nuanced conversations are much more than one good, other bad. annmarie: what can be done via the executive branch solely? >> so it is tariffs. anything national security related. when we look at the text export controls, and we got a big headline yesterday, the united states government is going to allow saudi arabia to receive certain semiconductors, those are authorities that rests within the executive branch that does not require congress, that

doesn't require any -- kind of long-term regulation. trunk policies, leading up what he wants to do are some of the things that don't need congress, that don't need regulation. and those are the threats next year. the other conversation is we are looking at a fed cut here. when we are taking out all into consideration, does the uncertainty of one outcome versus another change the path of the federal reserve? another huge conversation with clients at raymond james. >> i'm intrigued by your notion of information threshold. what does that information threshold look like? >> into a really good point. if we would have gone back to 2016, you had a hillary clinton to have paid that had a 10 point plan for almost every outcome. won the debate but lost the

election. are we looking for that standard, probably not. but what we do have is a nominee that is relatively new to the american people despite the fact that she has been vice president, and when we look at the polls, it says there is about one third of undecided voters were saying that we want to know more about who kamala harris is as a candidate, how she would be different than biden. remember, the biden harris administration is pretty unpopular. voters saying we are on the wrong track so probably for information threshold, what is she the same, where she different, what is her vision, and i think voters are asking is this a candidate i can trust? is this a candidate that i want to live the next four years with as leader of our country? lisa: the conversations are having with corporate clients are pretty nuanced right now. what are corporate clients

actually doing with some of the information you are giving them, however they adjusting for potential he binary outcomes of an election where people have a lot of questions still? >> we are trying to make sure they know that this is an extremely close election. we had the market vote yesterday that they thought this had swung toward solar stocks off, massive moves in some health care names. so i think what they are doing is if there is a sense that it is moving in one direction or another, they want to thematically be there, and they are also trying to get a sense as to put the trait -- they put the trade on now even though it is imperfect information, or once we get the outcome of this election, is that going to be a sell the news event? is traditional conversations that you have. they are trying to get a sense on whether or not right now is the right time to think about m&a opportunities because that

has been completely stagnant. there are a lot of corporate decisions being made now that appear to be ready to kind of hit that starting gone as soon as they have that outcome known. >> it is your traditional hedge funds. the faster money in the conversation. what can be dumb of regulation, what can be done with executive order, the final conversation that is really interesting is what are something that happen regardless of the outcome of this election? regardless of the outcome of the election we are going to see a major change in which regulation is put on because of the supreme court. we think that as we look forward, you are highly probable to get changes to permitting for energy projects so people are still very optimistic about end, regardless of the outcome of the

election. the fed massive fiscal stimulus that has been approved by congress. 80% plus of that money that has been directly approved by congress has not yet been spent, so that digestion that has to occur regardless of the outcome of the election are good, thematic trades that we've been suggesting here. jonathan: thank you, sir. i think we got to pick up that story on the lack of, day. it would be borderline idiotic to try to take over someone else in your industry right now. to make yourself a target for the campaign for the next two months. who is going to want to do that? nobody should want to do that right now. lisa: this is essentially what you don't want, however there is a question of whether to later groundwork to get some kind of merger done now if that lina khan is no longer going to be fdf d.c. or at the naked mr. risch is going to be in the more amenable to certain tieups.

>> what we do see is people language groundwork to try to influence some campaigns to not have lina khan stay on, or someone like her in a trump administration. jonathan: paris is struggling to answer that question, i wish it had come up in the debate is little bit more. how do you touch the subject? lisa: what her vision is in terms of the competitive landscape and how to achieve that. jonathan: concepts of a plan. is going to be the . i've got concepts of a plan for this program. up next, we might catch up with -- from cornell university joining us to discuss the potential impact of the trump tariff plans. from new york, this is bloomberg.

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jonathan: three days of gains on the s&p 500, looking to make that day four. ppi and initial jobless claims. equities at the moment, just a little bit of a lift. small caps advancing half of 1%. in the bond market, two-year all over the place. plenty of reasons as to why the two year yield high, three point 66. the tenure of a single basis. >> i'm still thinking about how the more volatility there is in the u.s. rates market, the more other people create off ramps for the u.s. market to try to

use that as a benchmark. that is an idea i want to explore a little bit more. jonathan: i was about to correct mohammed, but i realized he was sitting right next to us. the beginning of the end of u.s. exceptionalism or at risk around u.s. exceptionalism, which one? >> i think a risk around u.s. exceptionalism. jonathan: and that is manifesting in what way? >> in the fact that the prophecy can for the economy, really important buffers are mostly gone, and now we are income dependent, not just income and balance sheet depended, we are income dependent. the most important element of income is labor. i cannot stress how important the labor market is right now. >> i understand it is a single mandate central bank. euro-dollar, the ecb. do you find it odd that we are not talking about bigger rate cuts when we are having that conversation about the federal reserve? >> no, i don't. first of our, it is a single

mandate. behavioral bias is clearly on the inflation side. that is how they react. thirdly, they are trying to make an area for a positive economic outcomes. lisa: you get the likes of morgan stanley talking about parity, does it actually do more to attract money to the u.s. to cut rates more aggressively at a time of uncertainty ration outlook, or does it push people away further because there isn't that clarity you were talking about about the journey and the destination by the fed? >> we saw it in a relative world, not the absolute world. if we were solving in absolute

world, capital go from europe to the u.s.. under surveillance this morning, nippon steel wanting a last-ditch effort to drum up support for its $14.1 billion takeover. sending an executive to washington for 11th hour meeting. the deal still opposed by president biden, kamala harris and donald trump all saying the company should remain american-owned. can they change that story? annmarie: potentially. but i'm looking at is when the review was over, this is under a cloud of secrecy but when it is over, it goes to biden's desk. maybe if they think this deal should actually go through and i want how josh shapiro acts on this publicly, just that he is talked about how he wants a solution to protect pennsylvania jobs, when you talk to the union, it depends whether you think you will actually protect jobs or not. maybe they just have to wait until after the election.

>> you have to wonder what the conversations are like. that is what i think these conversations are. >> i kind of agree with you, laying the groundwork for what happens afterwards. jp morgan so a new measures to ease the workloads. jp morgan limiting the workweek to 80 hours. bank of america pledging to monitor individual workloads much more closely. the move coming amid industrywide debate over whether workloads are too often unhealthy. how this works out in practice is up for debate. lisa: unhealthy needs exceeding wondered hours a week. that means 14 hours a day all days of the week, seven days a week, 14 hours a day. you're talking about things exceeding that. when is artificial intelligence going to take over some of this work? i'm serious. wasn't this supposed to go away with the advent of computers that were brilliant. jonathan: the ceiling outside of livedeal's. when this livedeal's, those days

will be longer. lisa: do you think the days are over, that we are going to actually see this and this is the last gasp of bragging rights for people who can work as long? >> i do think you get peculiar work practices simply because you've got a d.c.. i was flying back with a colleague and we landed at about 4:30 in the afternoon. in california, the day started really early. jonathan: how long was the day? >> i would get to work at about a quarter past four clock until about 6:00. but i want to tell you, we land four clock in the afternoon, i ask this person are you going home, they say no, i'm going to work. i stephen work is in the opposite direction of home and the answer is yes, but i need to be seen at work. jonathan: a very american thing that is. not european at all. the facetime thing, very american. lisa: that hasn't changed even

post-pandemic. jonathan: i think it has changed a bit. annmarie: generationally it is changing. jonathan: don't want to work, is that what you said? >> they don't want to be in the office if they don't have to be just jonathan: to be seen. thank goodness you don't work in a chinese bank. nobody is going to want to talk about this, but we should. at least three top investment bankers have been detained by chinese authorities since august, one of them who used to oversee dealmaking led the country, was arrested overseas about two weeks ago before being repatriated back to china. another state fact broker recently asked many investment bankers to hand in their passports and seek permission for all business and personal travel plans according to people familiar with the matter. never mind the workweek, imagine working under those conditions. >> they have a cap salary, cap compensation, they have to

travel with permission and with somebody else. is this just to prevent graft and to investigate practices where the state owned banks have a real clutch over which companies really could do ipo's and access to capital markets, or is this something else? jonathan: this is the latest on the banking industry. new york city renters seen rent declining in what is typically the priciest month of the year. the median down 3.5% from last year, coming in at just over $4200, the third year-over-year drop in four months, signaling a calling for the market after a year of record highs in 2023. so if you were about to negotiate with your landlord, present this data than it, and that prices are moving in the other direction. lisa: is that what happened in the pharaoh household? jonathan: no, that is what will happen. >> let's not without the champagne, but i would just say that there is more turnover. i imagine looking companies are

doing just great and there is a sense that i wonder how much this is connected to mortgage rates coming down. jonathan: wage growth is still good, make sure you ask your employer for a pay raise and nature you tell your landlord that rents need to come down. we all make a push together. >> we talk about apple and you always tell me this is deeply personal. rents, it always gets deeply personal. jonathan: it's deeply personal for everyone watching. donald trump's proposed tariffs drawing scrutiny for the potential impact on ration in the u.s. dollar. the proposals could "encourage countries to reduce their dependence on the dollar for trade payments. the irony is they are using tariffs to punish countries that use unfair trade practices or are trying to reduce the dependency on the dollar which is likely to end up hurting the u.s. economy and can tumors. professor, good to see you. >> nice to be here. jonathan: is there a better way outside of tariffs? >> depends on what you want to

accomplish. if the idea is to protect american jobs, one of which might be to improve u.s. competitiveness and productivity because that is what it is all about, what china has been very effective at doing despite all the inefficiencies in the economy is generate economies of scale, particularly in the new industries. the u.s. needs to think about how it can certainly there are some products where they can be sufficient. if you think about a broader policy the use of the dollar and so on,

i don't think those consequences are going to be positive. >> let's stay on this point and zoom out a little bit and go back to the notion that countries are looking to reduce independent on the u.s. i have this image that the u.s. is at the core of the system, it cannot be replaced at the core of the systems of other countries are building little pipes around the system. it still looks like a dollar-denominated system, but the influence is going down over time. if that is the case, if that is a correct characterization, and please fix it if it is not, at what point does this fragmentation change the way the system works? >> is going to have an effect, it is going to be difficult to shift given the dominance of the dollar. the changes are going to the at the margin at the most because these forces feed upon each other. much of the world would like to

get away from the dollar that what they are seeing is a curious phenomenon where the dollar remains very dominant in all of these engines some aspects including payments it has become slightly more dominant. while there is a great deal of fragmentation, so even the euro which has become a second-tier currency is kind of duking it out with the japanese yen, the pound, sterling. there are going to be changes in emerging markets. better payment systems of their own, better financial markets so they can more directly trade in their own currencies, but other than using the dollar, here again what we have seen is the share of the other payment currencies has come down much more than that of the dollar and the dollar is still very important. but there will be changes and that is going to reduce the efficacy of things like sanctions. so i think we will end up with a system where the dollar is still the most dominant, perhaps in the last minute is right now, and there is a lot more fragmentation which means there is no serious rival to the

dollar. >> d reject the idea that they will be some incredibly dramatic moment for the u.s. no longer have the privilege of acting recklessly, where suddenly you have this sense that people are really spooked by the volatility in benchmark rates? are you saying that will never come to pass because everybody else looks pretty bad, too? >> in a world full of logic, you are correct. given all of the u.s. has done to shoot itself in the foot, the erosion of the institution framework, from threatening to impose 100% tariffs on countries that try to reduce dependence on the dollar, sanctions and many countries that are seen as geopolitical rivals of the u.s., including making it hard for them to use their reserves. they should all be creating a move away from the dollar but in a world of turmoil, some think rated by the u.s. itself, people look for safety. and then you look for a market that is very broad, very liquid, very easy to trade in and out

of. there really isn't much out there. the u.s. has been increasing the amount of public debt and therefore increasing the debt and liquidity of that market. this circumstance is going to be pretty difficult to shift even though the world barely wants it. annmarie: so if trump wins, how do you square that? higher tariffs but he wants a weaker dollar. can he have both, no. >> that is an irony because many of the objective that trump has in mind, they are going to have essentially the opposite effect because if you impose tariffs across the board, that is going to reduce the amount you create which could almost certainly imply reducing imports, and that is going to mean that the dollar is going to rise. the financing needs will be somewhat smaller. so you could actually have an appreciation of the dollar. and when he talks about what is going to do with the dollar, you would think that this should cause people to flee away from dollar assets, but if it is a

relative world, you need to find a place to fleet to.their jonathan: -- there are plenty of reasons to use tariffs, basically say we are not seeing reciprocity, this is why we do this to you, because you do this to us. when we hear donald trump on the campaign trail he often talks about influencing the behavior of the chinese and now he is talking about doing it to everyone. it's not just about national security like it is under this administration. when you look at the two options, what is more efficient? >> sanctions that much broader advocacy in terms of making it difficult for countries that have dependence on the dollar.

tariffs to have the effect of signaling to other countries that american trade policy is going to be very different, what is interesting of course is that there are tariffs that trump would impose against china, but i think the five ministration was much more effective in its use of policies against china because he figured at what the real chokepoint was. china is trying to move in the industries that are precisely what the u.s. is counting on from revival. the new technology industry, electric vehicles, and so on. it can be much more effective, and that is where i think the biden administration was more effective than the trump administration in terms of trying to accomplish the same objective. jonathan: i know a book is in the works, so let's continue this conversation. the line i'm going to use forever now in a world full of logic, you are correct. isn't that your favorite line now? >> yeah, but we are not in a

world full of logic. this does not make sense given the fact that we are in a relative world where it doesn't work that way. jonathan: in a world full of turmoil. here's your bloomberg brief. dani: just moments ago spacex completed the world's first private spacewalk, a process which took about an hour and a half in total. during the outing, jared isaacman and spacex engineer sarah gillis exited the craft one by one. once outside they performed a series of mobility test in the newly designed spacesuits. the primary goal of the mission was to test spacex's new suits. polaris don crew confirmed they are now back in the craft which you can see. the hatch is now closed in the cabin we pressurize. now they are just doing final checks for leaks. a government shutdown can be looming. mike johnson pulled a short-term government funding bill from the house just hours before the vote would have taken place. multiple gop members said that they would vote against the

measure which included a controversial bill to bar noncitizens from voting in u.s. elections. the government will shutdown on october 1 at 12:0 one unless republicans and democrats are able to strike a deal. the nfl continues to dominate television, posting record week one viewership this past weekend. an average of 21 million viewers tuned in across all platforms, up 12% from last season. these numbers, as millions of tv viewers are unable to watch monday night for all with directv and disney still in a dispute. we two starts tonight with a thursday night matchup between the bills and the dolphins from miami. >> just got a note from andrew public this just for the gentleman to the left of me, mohammed, calling it data overdependence and setting up claims this morning, down to retail sales. could still pushed fed back toward a 50 basis point cut.

from new york city, up next on the program, rate cuts just around the corner. >> they are in danger of undermining consumer confidence. jonathan: live from new york, you are watching bloomberg tv.

♪ jonathan: equities right now firmer bike to tens of one. ecb decision about 40 minutes away, 25 minutes away. the euro and 110.17. rate cuts just around the corner. >> it's a good economy, and a don't think it calls for any drastic fed action. i'd be very happy to see 25 basis points next week. the fed must be aware that if they go aggressive here they are in danger of undermining consumer confidence and the economy is doing exactly what

they wanted to do. jonathan: the ecb kicking off a string of central bank decisions at 8:50 eastern with the fed next in line on wednesday. all economies surveyed by bloomberg expecting a 25 basis point cut from the ecb. simon french sank investors assume that some of the structural rigidities of the eurozone are reflected in slow policy inflections from the ecb. if the governing council going to do anything deliberate to alter the forward curve in september? we suspect not. simon, welcome back to the program. given the growth backdrop across europe, particularly germany, why are they going 25 today and not? -- >> and not 50? if the bank and thinking has the hardest job i would say the ecb has got the most interesting job for perhaps the most complex job because if you look at the cyclical indicators, particularly out of the eurozone's biggest economies germany and france, you would

move on from the debate on what is restricted in what is not restricted which is probably the debate meehan for the last couple of quarters and say actually, you probably need to go relatively quickly below and into accommodating monetary policy and try and front-runner fed who markets belief, and markets may be wrong, but they leave the fed is far more nimble and responding to those cyclical signs of a slowdown. >> given what you just said about the complexity, if you were madame lagarde today, what would you signal about the future, and how would that compared to what the market expects about the future? >> i think if her narrative for the last two years has been inflation fears to the upside, i think she has the vast majority if not all of the governing council on the idea that that balance of risks has shifted

back toward structurally low growth. and i would say that if she gets one message across, she would amplify the importance of not fearful equilibrium where we get a very poor allocation of capital. her predecessor, his comments, we were bringing in her ears around the structural rigidities, lack of competitive seal in the euro zone. if she does not want the governing council to be accused of reinforcing that dynamic. >> just to take a cue from the person to my right, what does that mean in terms of the pace of the journey and the destination for where the ecb rate actually is, given the fact that to not return to zero interest rate or even negative interest rate they have to do a little bit more upfront? >> i didn't dodge the question, or at least i hope i didn't. i would go faster than i expect the ecb to do and you pulled my quote as an intro. i don't expect the ecb to try to

push down the forward curve. i don't expect anything other than markets expect 25 basis points. but are we starting to talk about some of the rigidities we often talk about the euro zone economy manifesting itself the european governing council monetary policy? yes, i think we are, and therefore you are starting to talk about policy mistake not going quickly enough, which is effective in the soffit inflation picture amongst developed markets. >> if someone were to ask christine lagarde how do you look at the euro, she would say we don't target the euro, via just looking at inflation and the dynamism of the region, and everyone says uh huh, but how much is that a check on how quickly they can go? is that something that pressures them to not move over the aggressively in comparison with the federal reserve just to protect, make sure it doesn't depreciate too much? >> i think the ecb have been in

this cycle for a while. the reality is sub trend growth indicators on gdp, pmi, business confidence, consumer confidence. that suggests that we are demand efficient across the euro zone, and that requires a cyclical response. so yes, i understand the intellectual framework that she is operating on with his monetary policy has to be art of a broader return of competitiveness across the euro zone, but equally, she's facing cyclical underperformance. that requires quite an aggressive monetary policy response at this stage. >> why is the government taking money off what they say is to save the market, what is going on in the u.k.?

>> they learn the wrong lesson. they think the market needs to hear about or steer behavior killing black holes inherited or not inherited from the government. i think that the wrong lesson from years ago. and right lesson is actually about growth, but was poorly delimited that .2 years ago was a growth agenda. market needs to hear a growth agenda. taking underpayment a black hole is not a growth agenda, it is trying to address a bond market fear. jonathan: big austerity budget may be coming from this government. going to be painful, apparently. got some strong questions, no real fonts. strong questions.

ecb decision around the corner. from new york, this is bloomberg. >> five to the minute technology news whenever and wherever it happens. this is bloomberg. this is bloomberg. awkward question... is there going to be anything left... —left over? —yeah. oh, absolutely.

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think it calls for any drastic fed action. >> right now investors are on edge and so far it has been a good year so you can see some people continue to take profits. >> equity market, volatility is going to dominate because from here, so much good economic news is priced in. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: 15 minutes from the ecb r decision, 30 minutes from some important economic data going into the fed. scores into all of that look like this. equity futures just a little bit firmer. on the benchmark, the s&p 500 up by 0.2. the next 60 minutes looks like this. in: 15 eastern time, ecb rate decision. ppi and jobless claims. a news conference with the ecb president. >> it's interesting to me that

somehow in this experience we settled on the idea that the economy is fine after all and the federal reserve can cap i 25 basis points, the ecb has a bigger struggle, everything can keep on going. i do wonder woman get immaterial shift in the narrative given much how much volatility begot and given the fact that people seem to settle on this increasingly with a lot of asterisks around every single one of those points. jonathan: things could change again in the next week or so. they could dilute back up to 50 all over again and this dropped 15 minutes ago but i promise you, data overdependence, the title of this piece reads like this. upside surprise to jobless claims this morning, downside surprise on retail sales next week first the fed back toward a 50 basis point cap. that language, i know you share it. data overdependence. is that a good thing or a really bad thing? >> i think it is a really bad

thing. i'm not sure that we jobless claims number or a weak regular sales number would push into 50 at this point. i do think it refers to market to expect a high probability of 50, i don't think it pushes the fed do 50. >> ubs put this out this morning, a lot of people in the market have been really annoyed with the labor department and the massive revisions and he says these are accurate, as they measure reality, not opinions. but jobless claims do not represent everything happening in u.s. labor market. i wonder if people look at this and say this is a little more accurate. you can get the same data and you can get five different opinions in terms of what you should do with it and what the fed should do with it, which is the reason why a lot of people are calling for maybe some more visible disagreement among officials, so that you can get a sense of how their parameters might be different from one another. there are interesting

intellectual arguments to be had. nothing to see in the labor market, apparently. if that a decent read on things? >> 230 is actually an excellent number for this stage of the cycle. what is interesting is 250 or 260, or 210. making those numbers really interesting. jonathan: don't you think the labor market is guilty until proven innocent, labor market is innocent until proven guilty? that is what it feels like. they say credit conditions are bad for auto lending. >>, it's probably because jay

powell himself had the same kind of waiting in terms of they would welcome no further deterioration of the labor market. so does that mean the initial 20,000 jobless claims could potentially sway them in terms of understanding the trajectory of the market? i think that is what a lot of people are disagreeing on, how everyone is expecting this weakness. >> let's get you some price action. still just about positive, up by 2/10 of 1%. yields leaving a little but higher, of a single basis point. coming up this hour, mike shoemaker of wells fargo and whether the market is still pricing in too much easing. the ecb is likely to cap a 25 basis points. following u.s. jobless and ppi data at 8:30, we begin with the issue, slashing expectations for a half-point cut at the fed

meeting next week. cpi nearly locks in a 25 basis points cut by the fed on september 18. the markets go prices too much easing. that ultimately can deliver even more easing, however that almost certainly would require a series of downbeat economic numbers over the next three months. mike is with us for more. what are you expecting, how they is the gap between you and market pricing? >> it has come in a bit. if you look at the pricing to the end of the year, 100 basis point of using priced in. 25 next week is pretty much locked. 75 incrementally, so think about it as a 2550. i'm not convinced that 50 is done. it's moving the right direction, it is not there yet. so were the market is pricing in another 100 basis points of cut. where you see the next 12 months?

>> it's interesting. if you think about the next 12 months, the market is price for 225 basis points, 230, something like that. very much in line with historical cycles. but if you look at way out in the forwards and think about the terminal rate, markets got down about 280. so it is by no means a particularly easy response, but still above the fed long-term target for funding. so it tells me that the odds of a hard landing tip tire, but they are not terribly high just yet. >> can you reconcile what you see in what we just talked about with holy see we see in the credit market and will receive credit spreads in particular? >> incredibly has held incredibly well, in my opinion. i understand it is a bit of a lagging function but still, we've been waiting for a while. that has been exceptionally strong, very resilient so far. i think part of that in terms of

spreads, there is been so little carrie available in rate markets. the yield curve has been inverted for so long. but investors have been forth to go elsewhere to think of yield. i think that has been one thing helping spreads. >> there is this larger question about whether different markets are disagreeing with one another, where the rates market is talking about this i should -- recession and pricing in serious weakness. equity markets really point to ongoing resilience. do you see it that way? >> i think markets can look at different hues, for sure. you got investors with all sorts of different actives. but in the end, and maybe it takes a few months to happen, they've got to coalesce. is inflation still back in the box, is it not something we

should worry about too much? if the equity market tends to get much more fixated on growth, even as people priced out a 50 basis point rate cut, we had this wild ride where nvidia took over but i'm wondering whether there was any signal from their perspective. >> it did seem to us it was one big trade for quite a while so the market was locked onto nvidia, if you will. correlations were superhigh. my colleague tracks at night and today and you can see high correlations. didn't make a tremendous meta-sense. it has faded now but for 24, 40 eight hours, that was the driver. jonathan: what is the call on the fx market going into this ecb in a few minutes time? >> ecb is going to deliver not

much, frankly. we think the euro is going to weaken, so take euro-dollar down, something like that over the next month or so. jonathan: thank you. mike shoemaker of wells fargo. just want to pick up on lisa's point around the cpi pretty yesterday. reached out to anna and get some of the research because this quote jumped out to me. the continued price declines in corbyn's categories even as costs have risen suggest firms are having difficulty passing higher input prices on to consumers. that pretense further margin compression down the line with the possibility that firms are sort of to cut cost. the mix in inflation yesterday problematic. >> you look under the hood and you saw that the pop was sort of one negative surprise a little bit more highlights why this is viewed negatively, why it is too much of a good thing. >> you get a backup and yields,

we saw that repeatedly in yesterday's session. equity futures positive, the ecb decision is five minutes away. an opportunity to get you an update on stories elsewhere. here's dani burger. dani: a full takeover of commerzbank is an option after building a 9% stake. he said he was surprised the german government was cut off guard by the move that they had been aware of the already existing position when it purchased shares from the government. resistance is already building from germany's powerful unions and people familiar say commerzbank is preparing defensive options. alaska air shares higher in the premarket trade by about --. and highlighted a stronger-than-expected month of july with other airlines that can fly during the crowdstrike disruptions as well as performances in august and

september. experts are watching for signs that taylor swift's endorsement of kamala harris could energize millions of her fans to hit the polls in november. the first indication of her influence may have come from those who registered to vote at her urging. her custom link to book.gov drove more than 300,000 visits to the website as of 11 :00 a.m. wednesday according to the general services administration spokesperson. and that is your brief. jonathan: back with us again in 30 minutes. up next, ecb interest rate decision from new york city. you're watching bloomberg tv.

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ecb interest rate decision. the scores going to wallow look like this. up by two tens of 1%. closing yesterday on a three-day winning streak on the s&p 500 and looking to make it they four. on the nasdaq, our biggest day of games since the middle of august and you can thank dashed over at nvidia. that's the equity market. the bond market, we look like this. yields of a single basis point. >> not necessarily incredibly changed after yesterday's ubi print with the expectation squarely on the fed cutting rates by 25 basis points next week. jonathan: finally looking going into this decision, why they expected the ecb to cut by 25 basis wins. the euro up and basically unchanged on the session. racing for the ecb, the previous rate on the deposit rate facility with 3.75. in our survey, we are looking

for 3.50. often they are a little bit late. waiting for that decision. still waiting for that ecb rate decision. why are they so late compared to the federal reserve? >> frankly we are getting other headlines saying that they are going to keep the deposit facility rate, they're going to cut it by 25 basis points. that was the estimate. jonathan: waiting for the statement to come up on the website from the ecb as well. good to see the europeans of got their act together in frankfurt, germany. the german tenure of a single basis point. we got 3.50. the previous rate with 3.75, so some guidance from the ecb and we are looking for some forecast as well. start out what is interesting if they are talking about inflation rate, the inflation outlook really determining this, seeing the growth forecast actually as lower for every year through 2026. seeing inflation in 2026 2%, not

necessarily because they see inflation coming down. seeing next year, inflation just cutting out food and energy, coming out at 2.3%. so even though they are seeing the grout outlook -- growth outlook deteriorating, they still see inflation is stickier over the longer term than on the margins >> a meeting by meeting approach, this is what we might see from the fed next week. where we could get some real guidance about a string of interest rate reductions, the approach from the ecb very different to what we are expecting from the fomc. >> rates sufficiently restricted as long as needed, and airee different type of commentary then you heard from the fed. question around how much this really does hinge with sticky inflation and a single mandate that the central bank really has. >> on the ground in frankfurt germany, your first take this morning? >> this is exactly what was

expected by economists and markets. another cut from the ecb, the background is that you got inflation receding unless they said economic activity remains subdued in the euro area. the risks around that mounting. as you point out, the forecast really interesting here, summing it forecast for growth not just of this year, but the years ahead. this is precisely why has trimmer forecast that he sees consecutive cut meetings ahead, not just quarterly. that will be when the question is focused in the press conference. interesting that they haven't changed their inflation test, they see it returning to 2%. it will be interesting to see at the press conference whether christine lagarde emphasizes the

need to react to the growth risks more so than the inflation risks, because that would encourage traders on the outlook ahead. but i expect as the language is here in the guidance that she is going to want to keep her options open. >> this is very meeting by meeting, not necessarily some prescriptive path like the one we are hearing more from the fed or are expecting to next week. what point will you start to prioritize growth, that the ultimate neutral rate is near 2% and alternately inflation is going back to that target? >> first of all you got to agree with the neutral rate is and by no means do they agree it is at 2%. there's a whole spectrum from 2% to 3% and the likes of isabella schnabel as been saying it is going to get harder to agree on the governing council the closer and closer they get to that rate. it doesn't mean it is going to

be any easier in the near term. there are so much divergent on the governing council. don't be full by this decision that they voted for the 25 basis points. there are so much divergent and concerned about the risks ahead on where that neutral rate lies. jonathan: lizzie, thank you. frankfurt, germany. this on the outlook, staff continue to expect a rapid decline in core inflation from 2.9% this year to 2.3 in 25 and 2% in 2026. plenty of questions about why they still need to take a meeting by meeting approach and are communicating something a lot more powerful about reducing interest rates further from here. jonathan:jonathan: especially that they are cutting growth forecast every year through 2026. if they see inflation falling persistently, even slightly above or the previously thought next year, why won't they take a more aggressive approach to support growth and does that mean there can be more of a dual mandate central bank akin to what the fed does? jonathan: mohammed, your

thoughts on this decision? >> let me frame the question slightly differently. why is it that they are still worried about sticky inflation if they revised down the growth projections? i think that is the key issue. i think someone will ask madame lagarde what is it that is proving particularly sticky? jonathan: let's ask that question right now. i'm sure you heard that question. your thoughts on it, please? >> yes, ecb as expected right now and as a mention, this is the key question. why the slow approach? from the perspective the question right now is pretty much basically what we have seen in the 2019 level and so far, lagarde has always talked about

this wage with the end profit margins. yes, definitely a very key question for lagarde right now, why is this 5% inflation still being so sticky and why are they not cutting rates more aggressively? >> she ll be speaking today in the context of the report, and the report basically says that aimed at improving this, the way the economy functions, there are no productivity gains that can be sustained. >> it is more of a structured weakness. ecb cutting rates does not help german growth and i do agree with the model in that we do

need that investment, that productivity coming from europe. but we also know that that is a long process that cannot happen in one day and i think the ecb at this stage really needs to think about today just go by the survey data which are basically suggesting that wages have been reduced aggressively in 2025, 2026, or do they stick to the current data which tells you that wages are very sticky? >> what do you think would happen in markets, and then wondering about the market reaction function, what would happen in markets if christine lagarde came out and talked about a more aggressive rate cutting path, particularly at a time when the euro is baking in front of the fed and the ecb living in tandem? >> if they tell us more aggressively, yes, it rallies. possibly going closer to two, but we also know the time until the october meeting is basically

five weeks. nothing much is changing right now from ecb data perspective. i think they would have a big downside risk to growth which doesn't seem the case. so i doubt they are going to be very open about the october cut, but what is more likely it is ecb sounded more optimistic about reaching the inflation target especially given the fact that global growth is actually negative right now. especially when we look at u.s. and china. which means markets should start pressing more cuts and more aggressive cuts in 2025, and this neutral rate which is around 2%. >> how difficult is lagarde's job in the sense that inflation is quite different when you look at central europe or the periphery? >> that is the key issue for ecb. when it comes to ecb, they do have to take europe as an aggregate.

they still into look at the entire growth, which are still about stagnation. this is a tricky job. as long as financial conditions are seen across the board, which has been the case since 2020, i think the ecb will not go country by country, but look at the total target because even when you said in europe, negotiations work very differently from country to country so they cannot actually say i october they will have the right reaches for the entire area. jonathan: we got to leave it there, appreciate it. ecb rate cut of 25 basis any deposit facility. we will hear from christine lagarde in about 20 minutes. the ecb goes 25. >> hollered at stacy question, if they are downgrading growth, why is inflation such a prominent concern?

going to be one of them for an hour. >> how can you message nothingness over an hour at a time when people want real answers? jonathan: that is the promo for the news conference. breaking ppi and jobless claims. reaction from lindsay piegza and michael shaoul. this is bloomberg. ♪ ♪ introducing maximo, our new ai-enabled solar robot, designed and built in america. with max on the team, aes is transforming how solar farms are constructed. what was once strenuous is now

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jonathan: looking for the economic data to come out on time in about 20 seconds. looking for jobless claims and ppi. equity futures positive for quarter of 1%, or the nasdaq is down by .2%. in the bond market, shaping up as follows. the yield curve just a little bit lower at the front end of the curve by not even a basis point. on a 10 year yield we are at 3.6496. with your economic data let's crossover to mike mckee. mike: if you were betting on a very low jobless claims number you got it. 230,000. that is barely up from a revised to 28,000 week before.

really -- 220,000 a week before. stronger than expected for the headline. .3%, also younger than expected for the core. and .34 energy and trade. -- .3% for energy and trade. the final demand year-over-year, 1.7%. food and energy, 2.4%. and food, energy, and a trade, basically all the same as anticipated by economists. the 1.7% is the lowest for the year-over-year headline ppi since february. that is down from 2.2%. it is sort of an in-line group of economic data this morning, and they basically say to the fed, go ahead, whatever you want to do. jonathan: which is probably going to be 25. thank you, sir.

before this number the moving average on jobless claims was 230,000. the number this morning is 230,000. ppi comes in hotter than expected month over month. like cpi yesterday, the price reaction in the market, equity futures higher .1% on the s&p. the front end of the two-year up just a basis point. lisa: there were no surprises here. the idea we were talking about earlier about how this market is primed for some sort of upside surprise, initial jobless claims, status quo. that ultimately was the key number that came out, given that ppi doesn't have that same correlation with some of the key inflation metrics. jonathan: let's crossover to lindsey piegza. your thoughts on the data this morning and how this sets us up for the federal reserve next week? lindsey: coupled with

yesterday's hotter read on the cpi, this morning's read on the ppi is not enough to negate the fed's intentions to open the door for late cuts next week, but it is a reminder of the ongoing focus on inflation. as price stability is not yet met. with this lingering uncertainty, unevenness in terms of the disinflationary trend i think this underscores the fed's need to remain on a very patient, tempered approach as we do embark on this policy pathway back towards neutral. the market has seemingly removed the expectations for a larger, more aggressive if the basis point cut next week, but i would argue it was never really on the table. if the fed did take that more aggressive move i think that would send the wrong signal to investors, or investors would interpret that incorrectly as the fed may be taking an intention to rapidly reverse us back to an accommodative stance. at this point, with the economy still solid, slowing but still

solid, i think the fed's intention is simply to remove policy firming and get us back to a more neutral state in terms of policy. mohammed: let's go beyond next week. the fed has been stressing, we are a dual mandate central bank and the market has been responding, no you are not, you are a single-mandate central bank and the employment part is critical. so, now that the data has reminded us that they should remain a dual mandate central bank, how do you see the rest of the curve, in particular what is priced in all the way out to september of next year, evolve in the next few weeks? lindsey: i think investors get ahead of themselves and the downward momentum we have seen on the longer and does have some wiggle room, some room to reverse course. not necessarily push us back to earlier highs that we saw at the start of the year, but certainly gain on the 10 year, putting us

back in line with a more realistic pathway of the fed's trajectory back to neutral. i think a base case is 25 basis point cuts and not necessarily at every meeting. the fed is going to remain data-dependent, and if we see inflation stumble for back-to-back months, as we saw in yesterday and today's reading, i think they are likely and willing to skip a meeting. i do think that, again, the market's expectation for this rapid reduction back to neutral, or falling below the neutral range by next year is well beyond what the fed is realistically willing to do. lisa: one in the specifics of the inflation data gives you pause about how much inflation is coming down? in other words, what are the sticky components you worry most about? lindsey: one of the biggest worries as the housing component. we saw that in yesterday's cpi report. one of the primary drivers of that hotter than expected read.

if we continue to see the shelter component rise, or rise above expectations, given the sizable weighting that housing has, not just in the cpi, the pce, that is going to be difficult for the fed to maintain a 2% target or achieve that 2% target on a sustainable basis. housing is one of those very sticky components that we are focused in on. that being said, even when we do strip out housing and we look at one of the more narrow measures of inflation, the super court, core services excluding housing, we still see that that is a read above 4%, some more than double the fed's intended target. there are underlying components and measures that are not yet cooperating quite as much as the fed would like. as they are nearing, presumably, that first round rate cut next week. jonathan: we have to leave it there. lindsey piegza of stofe; waiting for that rate cut. michael shaoul joins us now.

morning two. the adults will not get there 50. and the achieve the same outcome by leaning heavily on the dot plot? -- can they achieve the same outcome by leaning heavily on the dot plot? michael: i think that is the way the people are really going to say, we think we should be doing more, we think we should be doing less. and then the third part of this is, which way is jay powell going to lean when he talks publicly following the meeting? is he going to be pointing toward the doves or more in the middle of the pack? mohamed: two follow-up questions immediately. even your expectations of more dispersion are we right to look at the median? second, isn't it obvious which way chair powell is going to lean? michael: i would probably say no and no. you know, it is really not clear, you know, which side is going to dominate. it is not clear who the doves are and who the hawks are.

i think powell is sensibly trying to steer a middle path between both parties, and i think he is happy to jump ship to the left or right depending on what that she is probably the most data-driven part of the fed. annemarie: do you think it is unclear what he said or how much they cut by? michael: he doesn't know what they are going to do and he's going to wait until he gets the information to tell him what they should be doing. but what the outcome is is going to be extremely unclear. lisa: we were talking about how this federal reserve does not have the overarching framework of the destination and journey that we have going forward. i wonder if as an investor you do? can you have that clarity if you do not get it for them with the sort of conviction that the fed will ultimately follow whatever it is that you are seeing that is not with any extra data that everybody else doesn't have? michael: i think the fed, all

things being equal, is going to start to cut and put us on a path of a gradual easing. the bigger question in my mind is what is happening in the underlying economy. when you see members of the fed having to describe it, using the term eauipoise, it is an audit and -- audit environment. jonathan: a thesaurus. michael: an equipoise is someone who tries too hard to make a point. [laughter] a lot of the strength we had, the overheating we have had has gone away, but it has not and by any obvious week. the labor market is -- i have not seen a labor market like this, with no real underlying growth, no real power to it, and yet absolutely no deterioration. initial claims yet again this week showed that nobody is hiring but nobody is firing. it is the way that that gets resolved that matters much more than what the fed does.

the fed is going to be responsive to that outcome. i don't think it is going to cause it. jonathan: i will attempt to be direct then. what are you buying? michael: i think precious metals come out here. i think they're the way you play the policy mistake. if the fed is too on the easy side and tries to get ahead of things, i think precious metals. jonathan: the policy mistake is them easing too much? michael: correct. jonathan: interesting. michael shaoul of ion macro management. precious metals. lisa: two arguments on why inflation is not dead and you cannot discount it, and even if the fed does that is something that is preeminent in markets. jonathan: is president lagarde going to make the same argument? michael: i'm guessing not. jonathan: here is dani burger. dani: just a quick recap of that ecb decision. they cut interest rates to three point 5%, as expected. the central bank also cut its growth forecast for everyone --

every year through 2026. it did keep its inflation outlook unchanged, and reiterated it cannot commit to a specific rate path. we are going to hear from president christine lagarde in about five minutes time. intel is wrapping up three days of meetings with chipmaker is reviewing its strategy in what has been a dismal year for the company. final decisions are not expected at the meeting itself, but eventual options include scaling back multibillion factory projects, selling off subsidiaries or even splitting intel's core operations into separate companies. shares of intel have fallen 60% year-to-date. more turbulence could be ahead for boeing. the playmaker's 33,000 union members are voting today on whether or not to strike in their current contract expires at midnight. you ceo kelli ward berg urging members not to strike, warning that a work stoppage could negatively impact recent efforts to turn around the company after a challenging several years. that is your brief.

jonathan: thank you. up next, an ecb president lagarde news conference just around the corner. from new york, you are watching bloomberg tv. ♪

jonathan: the opening bell, 9:30 eastern time. for we get there an ecb news conference with christine lagarde begins in about a minute. equities just about unchanged. lisa, the 10 year, down a basis point. ppi a bit hotter. jobless claims in-line at to hunt 30,000. lisa: i'm still thinking about what michael shaoul said.

that essentially this market is mispricing how much inflation has fallen away. especially with some of the hotter than expected prince. i'm watching breakeven rates falling to the lowest we have seen since 2020. jonathan: mahomet, what is the big takeaway for you? mohamed: my big takeaway is never insult italy. [laughter] jonathan: that is the take away from earlier in the program? any thoughts about how outspoken the germans have in in the last week or so? mohamed: i am not. jonathan: what is your opinion? annmarie: do you think draghi's plan is good? mohamed: i think draghi's report is important. and they should take it seriously. jonathan: what do you think that jumps on -- jumped out? mohamed: serious structural reforms. productivity gains are going to prove elusive. ruth is going to prove elusive. and the eu is going to have major problems if they don't get

their act together. jonathan: do you think european carpets have problems? one thing he talked about when he was addressing parliament, he talked about how we were killing european companies with regulation. do you think that message is well received by the continent? mohamed: is it correct? yes. is it well received by regulators? absolutely not. i find it fascinating, the reaction to an 80/20 ai. the u.s. does not look at the 20 as much as it should. europe completely embraces the 20 downside and forgets about the 80 upside. jonathan: this is the point draghi was making on tech. lisa: i'm laughing because you are leading to say something negative about the german reaction function. jonathan: he basically said it, european bureaucracy. lisa: he talked in much more diplomatic terms. jonathan: i wasn't going to ask questions about the difference between italian culture and why the german labor representative seems to think they have more in

common with the french banks than they do the italian banks. i wasn't going down that road. mohamed: you going down the road of ac milan should be owned by a german? jonathan: should be owned by the richest person in europe, no debate about that. i have no problem with that at all. as long as they have the pockets. as long as they have great objectives and deep pockets, should you care where they come from? lisa: i just have a question for you. does that erode some of the italian spirit of ac milan? jonathan: are we interviewing me or christine lagarde? lisa: and whether she also sees the potential for ac milan. jonathan: let's crossover to this press conference where christine lagarde kicks off things this money. from new york city, good morning. >> we are also joined by journalists to be a remote connection. so, when you take the floor out would ask you to turn on your cameras and your microphones. and with that, i would like to hand over to president lagarde.

president lagarde: thank you very much. that afternoon. so, the vice president and i welcome you today to our press conference. the governing council today decided to lower the deposit facility rates the rate through which we steer the monetary policy stance by 25 basis points. based on our updated assessment of the inflation outlook the dynamics of underlying inflation , and the strength of monetary policy transmission, it is not appropriate to take another step in moderating the degree of monetary policy restrictions. recent inflation data have come in broadly as expected. and the latest ecb staff projections confirm the previous inflation outlook. staff see headline inflation averaging two point 5% in 2024.

two point 2% in 2025, and 1.9 percent in 2026. as in the june projections. inflation is expected to rise again in the latter part of this year. partly because previous shortfalls in energy prices will drop out of the annual rates. inflation should then decline to towards our target over the second half of next year. for core inflation the projections for 2024 and 2025 have an revised up slightly. as services inflation has been higher than expected. at the same time staff continue to expect a rapid decline in core inflation from 2.9% this year to 2.3% in 2025 and 2% in 2026.

domestic inflation remains high. as wages are still rising at an elevated pace. however, labor cost pressures are moderating and profits are partially buffering the impact of higher wages on inflation. financing conditions remain restrictive and economic activity is still subdued, reflecting week private consumption and investment. staff project that the economy will grow by .8% in 2024, rising to 1.3 percent in 2025 and one point 5% in 2026. this is a slight downward revision compared with the june projections, mainly owing to weaker contribution from domestic demand over the next few quarters. we are determined to ensure that

inflation returns to our two percent medium-term target in a timely manner. we will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. we will continue to follow a data-dependent and meeting by meeting approach to determining the appropriate level and duration of restriction. in particular our interest rate decisions will be based on our assessment of inflation outlook, in light of the coming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. we are not pre-committing to a particular right path. the decisions taken today are set out in a press release available on our website.

as announced, on march 13, 2024 some changes to the operational framework for implementing monetary policy will take effect from the 18th of september. in april the spread between the interest rate and the main refinancing operations and the deposit facility rate will be set at 15 basis points. the spread between the rate and the marginal lending facility and the rate on the main refinancing operations will remain unchanged, at 25 basis points. i will outline in more details how we see the economy and inflation developing, and we will then explain our assessment of financial monetary conditions. turning to the economic activity, the economy grew by .2% in the second quarter, after

.3% in the first quarter, falling short of the latest staff projections. growth mainly from that in -- exports and government spending. private domestic demand weakened as households consumed less, firms cut down business investment, and housing investment dropped. while services supported growth, industry and construction contributed negatively. according to survey indicators, the recovery is continuing to face some headwinds. we expect recovery to strengthen over time as rising real incomes allow households to consume more. they gradually-fading effects of the strict monetary policy should support consumption and

investment. exports should also continue contributing to the recovery as global demand rises. the labor market remains resilient. the unemployment rate was broadly unchanged in july, at 6.4%. at the same time, employment growth slowed to .2% in the second quarter, from .3% in the first. recent survey indicators point to a further moderation in demand for labor, and the job vacancy rate has fallen to pre-pandemic levels. fiscal and structural policies should be aimed at making the economy more productive and competitive, which would help to raise the potential growth, and reduced price pressures in the medium-term. mario draghi's report on the

future of european competitiveness, and the report on empowering the single market, stress the urgent need for reform and provide concrete proposals to make this happen. implementing the eu's revised governance framework fully, transparently, and without delay will help governors ring down debt ratios on a sustained basis. governments should make a strong start in the direction of their medium-term plans for fiscal and structural policies. again inflation now, according to flash estimate, annual inflation dropped to 2.2% in august. from 2.6% in july. energy prices fell at an annual

rate of the percent. -- 3%. after an increase of .2% in the previous month. food price inflation went up slightly to 2.4% in august. goods inflation and services inflation moved in opposite directions. goods inflation declined to .4%, from .7% in july, while services inflation rose to 4.2% from 4%. most measures of underlying inflation were broadly unchanged in july. domestic inflation edged down only slightly to 4.4%, from 4.5 percent in june, with strong price pressures coming especially from wages. negotiated wage growth will

remain high, and volatile, over the remainder of the year, given the significant role of payments in some countries and the staggering nature of wage adjustments. at the same time, the overall growth in labor costs is moderating. the growth in compensation per employee fell further to 4.3% in the second quarter. the fourth consecutive decline. the ecb staff expected to slow markedly -- expect it to slow markedly again next year. unit labor costs grew less strongly in the second quarter, by 4.6% after 5.2% in the first quarter. staff expect unit labor cost growth to continue declining over the projection horizon, owing to lower wage growth and

recovery in productivity. finally, profits are continuing to offset some of the inflationary effects of higher labor costs. the disinflation process should be supported by receiving labor cost pressures and the past monetary policy tightening gradually feeding through to consumer prices. most measures of longer-term inflation expectations stand at around 2% and the market-based measures have fallen closer to that level since our july meeting. let's look at our risk assessment. the risks to economic growth remained tilted to the downside. lower demand for euro-area exports, owing to a weaker world economy, or an escalation in trade tensions between major

economies, would weigh on euro area growth. russia's unjustified war against ukraine and the tragic conflict in the middle east are sources of political risk. this may result in firms and households becoming less confident about the future and global trade being disrupted. growth could also be lower if the lag defect of mom -- lagged effect -- growth could be higher if inflation comes down more quickly than expected and rising confidence and real incomes commitment spending increases by more than anticipated, or if the world economy grows more strongly than expected. inflation could turn out higher than anticipated if wages or profits increase by more than expected.

upside risks to inflation also stem from the heightened geopolitical tensions, which could push energy prices and freight costs higher in the near term, and disrupt global trade. moreover, extreme weather events and the unfolding climate crisis more broadly could drive up food prices. by contrast, inflation may surprise on the downside if monetary policy dampens demand more than expected or if the economic environment in the rest of the world worsens unexpectedly. financial and monetary conditions. market interest rates have declined markedly since our delight -- our july meeting, mostly owing to lower outlook for global growth and reduced concerns about inflation pressures.