>> employment data is really important. >> the fed understands employment risks are going up. >> i do not think the economy will do as well as the market is pricing in. i think it is getting a little over its skis. >> that is examined about rate cuts but also this trepidation that what if that 50 basis point cut was a price cut? >> all the data from now until november will decide where the fed goes until 2025. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: let's get your week started. live from new york city this morning, good morning. for our audience worldwide, "bloomberg surveillance" starts now. s&p 500, slightly negative, just off all-time highs after a third

week of gains on the s&p 500. on the nasdaq 100, down a single 0.1%. small caps were down.4. lots of talk about in china. i want to talk about the week ahead to two standout issues pier 1 is friday, payrolls pier 1's later this afternoon, chairman powell speaks. lisa: at the nabe conference. how much does this set the tone for the rest of the week in understanding how high the threshold is to have another outsized cut? in other words, is there some sort of downsized surprised that -- or is there a consensus on this committee? annmarie: torsten's lock summing up -- current economic conditions can be best described as goldilocks, not too hot, not too cold. the risk of cutting interest rates too much too quickly that

the economy becomes too hot again. you mentioned china p and we had a deflationary china. we now have inflationary one. jonathan: payrolls on friday. 146,000 the read. jobless claims, we were looking for 222. if you look at u.s. economic data right now in the jobs market, things are still ok at a very high level. lisa: which is the reason why it is as goldilocks moment. what struck me is we have i for katie tales that are becoming more and more bifurcated. mike wilson of morgan stanley saying come over the next three to six months, equity performance, at the equity and sector level, will be determined more by market data than anything else. which is most mispriced? is it the idea of an excelling economy or one that is much weaker than possible, and which is it? jonathan: if you are at one economy specifically, it is

china. the csi 300 ripping in today's session, higher by more than 8%, a nine-day winning streak on the csi 300. higher over that period by almost 34 percentage point. seemingly nobody once to be short going into week long holidays in china. lisa: what is fascinating is that everyone believes this is a bazooka. not only are people betting on chinese equities, this is the rationale on what is underpinning this broadening out, one of the biggest broadening outs we have seen in a while, not only in china but in europe, in the u.s., in a bunch of different sectors. house would it make sense that the euro is stronger today at a pretty negative data coming out of germany and automakers rather than china? we have not even gathered how much this will stimulate the chinese consumer.

annmarie: when you look at what is going on in the real economy, the factory orders, they are still slumping. it shows how needed that stimulus was, but how effective is the big question. we have had calls storms before when it comes to the chinese economy. to your point, it is a huge sign of relief, not just for stocks but also desperately needed for the european economy. jonathan: this is the big challenge for investors with regards to china. can you get excited for the future when there are so many reasons to be inches about the present. look at what we saw from bmw, mercedes, vw last week. those stocks ripped, than it is that monday morning reality trick from volkswagen, stellantis. stellantis, vw, the second profit warning in three months. lisa: it is hard to see how to fix this page you could say stimulate china and you get more demand, but will you really get

more demand for european auto manufacturers? it sort of raises the question, how much is this a domestic story and how much is it an international story? that is something, structurally, people are trying to get their hands around, where there are national champions in china, and in germany, what are they? they are struggling with overcapacity and no profits to show for it. annmarie: this line they are walking -- i spoke to the german prime minister about this. i said, what will you do? she said, we sharpened our tone on china. will you sharpen your actions? and a time when china is stimulating and they should be leaning into selling more cars, potentially we can buy more, but they will potentially have to raise the walls. why? there concerned about overcapacity. jonathan: it is a reality check for german officials. germany essentially poised to

abandon any hope for growth in 2024 pier 1 about 2025 -- four growth in 24. what about growth in 25? -- the likes of volkswagen and stellantis trying to sell into the chinese economy. the trend has been shift towards national champions. there is a preference of chinese consumers to buy of nash -- -- to buy domestic brands. lisa: a rising tide lifts all boats, or does it? there is a feeling that it would stimulate a boost the rest of the economy that the ones, china provided. by that boost in china is not going to really spill over, and the u.s. is more immune to that. it has its own stimulus and own issues, but that is the ultimate question with europe at a time when the year is the strongest

going back to 2023. jonathan: -- after the biggest one week gain in -- since 2008. the dominant risk this week, the threat of port strikes in america crossed the east coast and around to the gulf kospi that is a real risk. annmarie: i was talking to officials about, what are the big things you are worried about leading up to the election. how do you come out and talk about it? the white house saying they will leave it up to the negotiating table. they want to see everyone go to the negotiating table. at the same time, you do not want to see an increase in inflation which potentially a prolonged port strike could reignite inflation. this is a port strike from maine to texas. lisa: people are calling this the biggest wildcard heading

into november, given the fact that a strike like this could cost the u.s. economy $4.5 billion to $7 billion a week, according to oxford economics. long-term for me is the bigger effects, if you could open ports, think about retailers, who have been struggling with the inventory booms and busts over the pandemic. how do you plan for suddenly your equipment and goods getting waylaid because you do not have workers at the ports. how do you represent the biggest union push -- jonathan: what you do, you import more in the summer, which is what we saw. lisa are record imports. westport stocks -- ports were stacked. and the amount of leverage these workers have for the next week and month, going into the election. the last thing the democrats want is for this to spill over

and become a bigger issue. just give them what they want and let's move on from this issue quickly. i think the unions have a lot of leverage. annmarie: they definitely have a lot of leverage, because no one wants to see this become a prolonged crisis. a prolonged crisis will end up in the headlines, and it could sour the politics but also the politics. president biden could say you have to go back to work, we have 80 days, this is mission-critical -- he does not believe in that the unions are saying, sounds like we have the upper hand. jonathan: look out for dani burger later on on this story. coming up, we catch up with norman roule following the assassination of hezbollah's leader. and we speak with ed mills of raymond james. and brian weinstein of morgan stanley with bonds on a five-month winning streak. let's give you an update with your bloomberg brief. here is yahaira jacquez. yahaira: japan's incoming prime

minister is reportedly considering elections in a month. shigeru ishiba could call for a vote october 27. public optimism for the new ldp leaders above 50%. ishiba says he intends to dissolve japan's lower house early in his tenure. vice presidential candidates tim walz and jd vance take the spotlight tomorrow night in a debate on cbs. the candidates will stand behind podiums in front of two moderators and without a studio audience. transportation secretary and one-time presidential hopeful pete buttigieg has been holding mark debate with -- mock debates with walz as part of his preparations. at least 84 people are dead across the southeast after hurricane helene tore through the area as a category four storm. floodwaters are threatening more

damage in georgia and south carolina. accuweather estimates the store may be one of the costliest in u.s. history, with damages totaling anywhere from $5 billion to $110 billion. president biden and vice president harris and donald trump all plan to visit the area this week. ath -- that's your bloomberg brief. jonathan: thank you. up next on the program, the middle east racing for escalation. >> they want to get their families dr. holmes in the north. we want to see that -- their families back to their homes in the north. we want to see that too. jonathan: live from new york this monday morning, good morning. ♪

jonathan: five-month winning streak, potentially poised for, on the s&p 500. equity futures just slightly negative. yields higher by two or three basis points. the 10 year, 3.7 seven. under surveillance, the middle east, bracing for escalation. >> they want to get their families back to their homes. we want to see that, too. we continue to believe all out war with hezbollah and certainly iran is not the way to do that. if you want to get those folks back home sustainably, we believe the diplomatic course is the way. jonathan: israel steps up air assault in lebanon after killing hezbollah's leader hassan nasrallah. bloomberg's joumanna bercetche joins us now from dubai. what is the latest?

joumanna: after the assassination of hassan nasrallah, there were questions about whether hezbollah would be able to regroup, and how iran would respond? the comments in the last hour from a spokesperson for the iranian foreign minister is telling, saying that iran does not want to send forces to lebanon to fight israel. if you think back to who hassan nasrallah was, he represented a very influential figure in regional politics for the better part of the last four decades. he has been at the helm of hezbollah since 1982, hezbollah being the crown jewel in iran's axis of resistance. many of his detractors within lebanon despised the fact that hezbollah had sort of chipped away at lebanon's sovereignty and put them under the iranian orbit. the fact that today, even after the killing of hezbollah and the

wiping out of several senior commanders and the critical injuries many of the middle level operatives sustained from the device that exploded last week, even with all of that, iran is saying they are not willing to get direct involved peer that is pretty significant. the other factor to take into consideration is the lebanese state. even though there has been a so-called state captured by hezbollah and other forces within lebanon the last couple years, and indeed what we have now is a caretaker government in lebanon, the prime minister this morning finally made some remarks. what he said is, number one, they're looking for a cease-fire on the border. and, number two, lebanon looks ready to implement u.n. resolution 1201, the resolution put in place after the two thousand six war that stipulated hezbollah put down their arms and retreat from the border. that is what the war objective

israel is trying boils down to. ultimately, it is about getting hezbollah away from the border. the fact the lebanese government is signaling they are willing to do that shows a step in the right direction pair the question is how hezbollah responds and how israel intends to respond to it, because airstrikes have continued overnight. jonathan: we will explore that now. bloomberg's joumanna bercetche. joining us now, former national security advisor norman roule. give us how you expect -- norman: good morning. one correction paired i was not the former national security advisor. that is a rather important position. i was just a humble intelligence officer. over the weekend, we have seen hundreds of israeli strikes. the nature of the strikes is telling. they attacked not only lebanese hezbollah targets but they have taken out major actors for the

popular front of the liberation of palestine front, and they have also taken out the lebanese hezbollah operatives who trained houthis. these are serious players and shows the depth of israel's targeting. at the same time, we have watched hezbollah regroup. it has designated a replacement to hassan nasrallah. they assigned a hard-line individual, with long ties to iran. his daughter is that has bullet representative to iran itself. nonetheless, hezbollah remains in disarray. israel's plan is really to keep it in disarray through pummeling attacks constantly throughout the day's. israel has not, however, yet achieved its goals of ending hezbollah strikes and allowing the return of its people. for this reason, these attacks will continue, by israel, until

there is a significant change in hezbollah's posture. annmarie: what i am hearing from the u.s. administration is the worst case they are preparing for, at least in terms of retaliation from iran, is akin to what we saw in april, the barrage missiles coming down on israel. could it get worse and that, in terms of the worst case from tehran? norman: tehran's options are limited. there is no public information that iran has undertaken the preliminary steps one would expect to see, to launch such a missile barrage. iran's ability to support proxies relies upon a ledge six line that has been severed that israel and as under military pressure. iran's ability to support proxies, they are all under great pressure by israel or contained by the united states or have limited capacity. as long as iran believes the umbrella defense by u.s. naval forces in the region is strong,

i think it will be reluctant to undertake a missile attack. however, iran will support diplomacy. its goal as a cease-fire that allows its proxies to survive, so they may be rebuilt by iran after the conclusion of this conflict. annmarie: does this push iran closer, potentially, wanting to even further develop their nuclear capabilities? norman: you could play this both ways. the answer could be yes, because iran sees its proxies are of minimal use as a defense and it requires something more significant. but you could also play this that iran would think, after israel's intelligence successes against hezbollah and tehran itself, now is not exact leave the time to undertake covert activity that could be interrupted by an israeli attack , assassination attempt, etc. lisa: to build on that, there were a lot of notes over the weekend talking about how this was a likely outcome of the -- outcome. will the west just allow that, or will there be a more

aggressive stance that tap that down? norman: it's not known. much depends on the position of the united states. currently, iran has been producing 60% enriched uranium here that is not sufficient for a nuclear weapon, but it is military grade. united states, europe, and israel have not responded military to that very serious development, which would be intolerable. much the pens on what happens -- much depends on what happens in the u.s. election. lisa: what do you think of the silence from leaders in the middle east in respect to the nasrallah's killing? norman: hezbollah is considered a terrorist group by much of the middle east. i am sure they are delighted with his passing. of course, they regret the loss of lebanese civilian lives, but they understand haswell at, like the houthis and hamas, all bury

their forces and that is an inevitable consequence in the conflict against iran's proxies. annmarie: is there potential now, given what we see changing and dynamic changing in the reason, that in the lame-duck session of the biden administration, it could reopen a path to israeli-saudi normalization? norman: i think that is unlikely as long as there remains an absence of a two state solution. the saudis have been clear. they are looking for a process that is irreversible, provides a finite solution of a two state solution, of a reformed palestinian authority, the removal of hamas as a political actor, and netanyahu's agreement to a two state solution seems awfully distant today. annmarie: could we dive into potentially the removal of hamas?

now that hassan nasrallah is dead -- this was a key individual for sinwar. sinwar wanted israel to have to fight on these two fronts. with him dead, does this potentially mean sinwar will deal -- change how he is dealing with the u.s. and israel via qatar in a cease-fire agreement? norman: i think that is unlikely, in part because nasrallah's success is at least as hard-line as nasrallah. sinwar is hoping that political fatigue will allow him to survive. i think his primary worry is israeli special forces closing in on him, and that will determine his posture towards any cease-fire agreement. lisa: zooming out, there was a lot of spec elation over the weekend about what this means to the alliances between iran and russia and north korea and

china. there has been sort of a loose affiliation with a number of states that do not feel connected to the u.s. and europe and those alliances. do you expect any kind of response or any kind of tightening of the ties between iran and russia and north korea and even china, especially given the oil linkage, on the heels of this, or do you think there will be fissures? norman: all three of the actors, russia, china, and iran, they seek to change the world order and remove united states and western influence from that world order. but they are economies do not fit well together. iran and russia are oil competitors. there are areas where they can and will and do cooperate, military and economic cooperation, but it is not a natural and easy fit as an alliance. you will continue to see that relationship progressed. but russia and china have shown they are really staying out of

the middle east conflicts. they are not a major player in much of the diplomacy. and, like iran, they have not been able to have much of an impact on what is happening with israel's strikes on the proxies. jonathan: always great to get your insights. norman roule, former senior u.s. intelligence official. standing out in the market, what is not happening. crude last week, down 5%. crude down.2 this week. lisa: still believing on the heels of some sort of pricing war out of saudi arabia as being of greater impetus in the market than any possible disruption right now. people are not viewing this as a potentially disruptive to oil production in any way. annmarie: also, actual supply has not been hit. sure, vessels have had to change course, because they will not go through the red sea, because basically the houthis are still running rampant in the red sea. but has actual supply been hit? no.

jonathan: wti 68, brent crude, 61. coming up, we catch up with ed mills of raymond james, with swing states seeing faster growth than the overall u.s. economy. live from new york city this morning, good morning. equity futures close to all-time highs and just about unchanged on the session so far. ♪ ♪♪ ♪♪ sandals jamaica sale is now on, visit sandals.com or call 1-800-sandals [narrator] not all multi-millionaires built their wealth the same way, you have... the fearless investor. the type a cpa. the bootstrapper. the bootmaker. yeehaw

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jonathan: three weeks of gains on the s&p 500, staring down the barrel of a fifth monthly advance. just about unchanged coming into the clothes of -- close of september. we catch up with chris harvey of wells fargo later on the program. a clear positive for some u.s. firms out of china. the s&p 500 firms with the highest percentage sales to china, 9.1% weekly return last week. annmarie: massive shock with chinese stimulus that were fulfilled with so many years of chinese authorities not coming to fruition. a question of how much are we

priced to perfection? are we going through all of the data? we've had five straight months if it holds today. not for the nasdaq, it has all been driven by the equal weight. the same time yields are lower for five straight months. could this continue? jonathan: yields up a little bit higher on the 10 year. the two-year and the 10 year really meeting in price section. it really wasn't much at all last week on the two and 10. lisa: that story that we will hear from kathy later on that

will increase volatility on the long end. some reignited inflationary reads as well as going much lower on the chance that there is weaker than expected economic data. hard to price such by a metrically opposed risks. jonathan: let's talk about a market that is quite literally on an island. biggest one-day move lower going back to the start of august. japanese yen strength off the back of a new prime minister that will come in, the nikkei was closed. it opened up monday morning and got absolutely hammered. don almost 5% to kicked off the trading week. lisa: the potential for him to support some sort of normalization. yesterday the 67-year-old talked about how he wasn't that quick to normalize policy. saying i don't think we should talk about interest rates where

we can't say for sure it has been defeated. if you start betting on policy changes, good luck to you. jonathan: their current global markets, chinese stocks entering able market. the csi 300 index jumping the most since 2008 in today's session after the biggest weekly advance we've had a massive move. lisa: how many notes did you read over the weekend? jonathan: tons. lisa: it has been really be enough. even if it's just a trade, it will do really well. i didn't hear one person say i don't know except jonathan: even if you don't like it, this was

trending global. up by 24%. they were up last week by 11%. luxury stocks in europe were up every single day advancing. is at a spot to pick your spots because it was so underweight and related to china? lisa: the idea is wealthy individuals will go to europe to buy, it seems like on the margins, a lot of businesses are going into china, you look at more retailers, you have to imagine if nothing else, we are different. annmarie: this is directly correlated to what is going on in the housing market. really specific policy descriptions. three top cities, china's

largest cities relaxing rules for homebuyers. jonathan: what do you do with them when they tell you things like this, the latest automaker slashing its outlook for the year. the report coming after volkswagen issued its second profit warning. down by almost 14%. getting absolutely hammered. ideally, in an ideal world, that is the question. lisa: when you talk about -- brands, there are specific purposes, it is not about the electric vehicle contract. to me, this ultimately goes down to a couple of different product

. china demand is weak, there is overcapacity in germany. the lineup has been lackluster for a lot of people. how do you change that without some sort of overhaul. annmarie: we have heard from european carmakers, the fact that there needs to be some sort of subsidies. the way politicians want them to get to the endgame. you go to places like china when it comes to audi, porsche absolutely hemorrhaging market share. it might be a different u.s. administration, there might be tariffs in the united states. europe will be stuck in the middle. where does that growth come from? jonathan: that will be the debate for us this week. i want to get to this. we are quite literally watching a movie script being written in

real time. the spacex crew showed carrying two people and two empty seats. lisa: i love this story that you are bringing this up because it is outrageous we are not talking every about this fact. how come we just are leaving a couple of astronauts stranded in space? jonathan: i'm shocked it's not the top story this year. lisa: it's interesting it has to be elon musk's company. why do they have to wait until early next year to bring them back? jonathan: do you have an answer for that? annmarie: i big it has something to do with when they could safely come back. annmarie: this is in the top

story because it is going on in space and that some pace -- some point they will be safe. there are two wars going on on earth. jonathan: you could turn this into a movie. elon musk, saving the day. let's get to politics. six of the seven battleground states. the data coming as recent polls show kamala harris closing the gap with donald trump on economic issues. good morning to you, sir. maybe the democrats would like to see that acceleration. >> this is something the harris campaign would absolutely welcome. the problem has been the last several years there has been a

partisanship in the conversation about how well the economy is doing. the data shows voters are showing disproportionately they feel the country is on the wrong track. certainly if we had downward revisions, it looked like the united states is on the verge of recession. this is something they would be hammering home. it really does come down to the lived experience of voters. certainly we've had a much stronger economy than most have anticipated. at the end of the day this is a close election. annmarie: what happens when we have these port closures from texas to maine? ed: we are monitoring this closely.

the president has said he's not going to invoke his authority, if there is a national security risk you have 80 days of cooling off period. i don't see this being something that lasts a really long time or disrupt supply chains. i think biden has always said he wanted to be the most prolabor president. i guess the feeling i had with conversations is this is not something he could allow to get disruptive. we saw them get involved right before the midterm elections. the longer this goes, the more impactful this is and the more likely we see federal response trying to use that 80 day cooling off period to get to a new contract. annmarie: how much will that hurt the incumbent running,

kamala harris? they have done a good job to paint donald trump as the incumbent. ed: it is all about how impactful it is. if we will get stories about people not getting shipments in time for christmas, if we will be talking about supply chains. anything that is a negative story for the economy is for donald trump to talk about he doesn't think the country is on the right track. when we talk about that voter data, 75% of the country says the country is on the wrong track. anything that ties harris to something that exacerbates that issue is a positive for donald trump. i don't think this is something president biden would allow for it to go all that long. before it happens, i don't think he wants to do anything at all that undercut the negotiating strength. it will be a story for a few

days but come election day i will be shocked if we have port closed -- closures. lisa: it should be governed at some point even though there is politicking. i keep thinking about the storms over the weekend that killed 100 people given the modern-day expectations. what do you expect from congress not only in response to the storm that might be the most expensive storm to hit the united states but also to prepare for it in advance because there are steps that could be taken and financed? ed: i think what we will look at is congress is in recess through the election. a lot of people thought we could be here the day before a government shutdown. if there is an immediate need,

they could be forced to come back. more likely it is pretty soon after the election. we will see one of the largest aid packages, there was the bridge collapsed in baltimore. i'm also looking at other pieces of legislation. there is a series of anti-china legislation that has passed the house and looking for a vehicle to move. i'm looking for pretty close to right after the election that really funds this reconstruction . what else gets added on is a big part of the conversation. a long history of predisaster mitigation efforts. the problem here is a lot of people living in the most impacted areas, i look at western north carolina, who thought living there was a hedge

against being impacted by a hurricane, especially at this level. i understand there are predisaster mitigation issues that could be taken but they are very difficult to pinpoint exactly and the need is quite vast. jonathan: ed mills with raymond james. devastating pictures. lisa: this is a first world country and we are seeing people drowning, getting hit by trees. neighborhoods are devastated. some of the areas that were typically not zones that would've been in some sort of hurricane area. you raise the question, what could you do, how do you get ahead of this? congress is on recess right now. how do we avoid pictures of this? hospitals getting flooded, this

is major infrastructure. jonathan: it is that -- annmarie: it is devastating, the pictures. governor roy cooper was doing a number of events and meetings leading up to this, they knew it was going to be bad. right now they will be dealing with emergency funding. jonathan: shocking pictures. let's get an update on stories elsewhere. let's cross over to yahaira jacquez. yahaira: aston martin shares plummeting. citing disruption in supply chain and macroeconomic weakness. mercedes-benz, all of which cut their problems in recent weeks. the union represented some

33,000 workers in the pacific northwest with talks between the two sides and further dates for talks have been scheduled. they have offered wage kutch of 30% and some enhancements to retirement benefits. the union wants to shift from 401k packages to a defined pension plan. california governor gavin newsom has vetoed what would become one of the most comprehensive policies governing the safety of artificial intelligence in the u.s.. it was accountable for harm to their products with tech firms who warned it could stall out the nation. that is your bloomberg brief. jonathan: up next on the program, bonds on a five-month winning streak. >> the fed has justification to

cut 150 basis points on the improvement in inflation alone. you will see front and yields move lower than long and yields. as they continue to deliver those rate cuts. jonathan: live from new york city this morning, you are watching bloomberg tv.

jonathan: if you are just waking up, missing out on big danes overnight in asia. the biggest one-day jump in china going all the way back to 2008. futures, 1/10 of 1%. yields higher. the 10 year, 3.77.

bonds on a five-month winning streak. >> you won't necessarily see materially higher yield just because the labor market stays around here. the fed has justification to cut basis points on the improvement in inflation alone. you will see front and yields go lower as the fed continues to deliver those rate cut. we feel like we are closer to an inflection point. jonathan: treasuries on pace for the longest monthly winning streak. morgan stanley writing the fed is now seen as ahead of the curve. the fed is better off dragging this one out from here. joins us now for more. rate cuts to the united states. are they dependent on the outcome of the u.s. election?

why aren't bond yields higher, not lower? >> i think we will get there. when the fed is easing, you buy bonds. very rare that we come from such an inverted yield curve right into the easing cycle. in the meantime, weaker data, fed easing, people buy bonds. i think it will take a little while to get there. jonathan: you think we are at the bottom of a much bigger rain? what is that rain? brian: i'm a little bit off on the low side. the funds right near three, the yield curve should be 150 basis points deep. you go a lot higher.

i don't think we have seen the highs, just short of 5%, you could see 5.5% if the fed does everything right and china easing is a big part of that story. all the things we are going to get, you could get 10-year note outside of the range much later next year. lisa: this is counter consensus compared to how hayek could be. it is not counter consensus when it comes to volatility. how do you trade around this? ed: what's amazing -- brian: what's amazing is the rally happened over five-month and now we are stuck. don't expect what i just said to happen anytime soon. people like fixed income, they like to buy bonds.

unless there is a red sweep or blue sweep, or a big outcome, i don't know how much the market is ready or. we know we will get more stimulus. there will be more spending, there will also be an economic slowdown. i think we are stuck in a bit of a range. when we get through this, we get into january or february of next year, you start to see higher rates. lisa: what i was really struck with. over the weekend spent time thinking about the idea of bifurcated tales. you have a potential weaker than expected economy and right now people aren't willing to make any kind of bet. you are say even though we are

saying friday is the most important payroll, it will not tip the tide? brian: i think we are right tales are in play. if the fed hadn't gotten 50, payroll would matter a lot. the fact that they are ahead of the curve, they could go 50 again and get a response. the curve might steepen a little bit. maybe we take out the extra ease. to change the course of what they are doing, i don't think so. we know employment is weaker than it has been, maybe not super week. it leaves me thinking, as somebody who wants to help clients make money, you will be stuck in the range little bit longer. if we overreact to one, you probably want to fade it. jonathan: does this remind you of the inverse of 2020?

we are a long way from neutral. they ended up being a lot closer to it than you realized. brian: i think it's possible. it feels like we are a long way from neutral. we didn't expect 5.5 to be necessary but it was. the economy did not fall off the cliff when we got to 5.5. i don't think neutral will be 2.8 or three. i think we are far from neutral and we won't know until it is a little bit too late. the impact will be known until the middle of next year. a lot to learn, a lot to get through. what this easing cycle looks like, it is what is on the others of that. jonathan: thanks for catching up

with us. anne-marie mentioned this, the risk with cutting interest rates too much is the economy becomes too whole again. annmarie: maybe the neutral rate is a much higher level than what people are thinking. even jerome powell with we are a long way from neutral. lisa: that is the reason 5.5% is his top yield range. jonathan: bloomberg's dani burger on the prospect of strikes in america. we will catch up with mandeep singh from bloomberg intelligence. the second hour of "bloomberg surveillance close vote up next --newburgh surveillance" up next.

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>> the employment data is really important. >> they understand deployment risks are going up. >> i do not think the economy will do as well as the market is pricing in. i think it's getting a little bit over its skis. >> there is an excitement about rate cuts and the opportunities they bring but there is also trepidation that what if that 50 basis point cut was a crisis cut. >> all the data from now till november will decide if the fed needs 50 or 25. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: anxiety about payrolls

friday just around the corner. good morning for audience worldwide the second hour of bloomberg surveillance right now. all-time highs negative 1/10 of 1%. at the nasdaq we look like this, on the russell to small caps -0.5. the week ahead full packed with jobs data. payrolls friday and really the main event of the week we are going to hear from the chairman himself. lisa: jay powell speaking at a national association of business economists with a q and day and i think that's interesting how he messages forward the idea of an outsized rate cut and how he understands the market response. i'm getting give you the view from what i saw the past couple of weeks this is what i think but in a way he will in terms of whether he calibrates some definitions. >> when he talks about the fact that fed is still data reliant. you have everyone coming on

saying the bar being high for 50 then you start looking at the recent labor data and if you basically extract 60,000, 70,000 from the payroll report is that what the fed will be looking at because the revisions have been so bad to the downside. jonathan: price target six k. jonathan: ascension -- lisa: take a step back. if he gives the sense he wants cut 50 basis points and gives the sort of rhetoric like austan goolsbee we are so far away from neutral don't worry about it. that's good to be basically soft landing nirvana won't even describe it. it will be this euphoria because you don't need the weakness to get the rate cuts. but if they say we can really calibrate it, moderate it. >> we want president xi jinping's price target. look at this again overnight. with than eight full percentage points, the biggest one-day pop going all the way back to 2008. >> they did it, they unleashed a

lot of stimulus with the promise of more completely change the tone going back to support it. housing which is something they wouldn't do what about deleveraging. there's the sort of feeling that something has changed from the messaging and action standpoint and everyone has foam oh and does not want to get away from that. annmarie: also because it's china's golden week that's about to start so they are getting it now while they can. the fear and greed indicator of the shanghai composite index for the stock most popular and china's retail investors reaching the highest since 2015 today. they are very excited in china but the execution when it comes to the fiscal measures matters for the real economy. jonathan: do you have a sound effect for that? [laughter] >> if you think about it, they were not to say anything they were talking about national champions and this idea of people not being profligate corrupt americans and getting

handouts. jonathan: houses to be lived and all that stuff. lisa: now it's to be supported so the idea. >> just like that, perfect. equities on the s&p 500 negative by 1/10 of 1%. heading towards a fifth monthly advance in the treasury market yields are lower through that just a little bit higher this morning by single basis point on the 10 year 37657. we will catch up with chris harvey of wells fargo is the chinese stock surge continues. we speak to henrietta looking ahead to tomorrow's vice presidential debate and we will catch up with dani burger as the u.s. economy braces for a labor strike across the east coast ports. we begin with a focus on china as chinese stocks enter a bull market. surging the most since 2008. closing out at nine-day winning streak going into a weeklong holiday. alibaba, baidu all delivering some major gains once again. jd up another 5%. joining us to discuss is chris

of wells fargo security. good to see you. opal walks into a china shop, your words not mine. what happens next? >> that's really hard to say. this is run pretty far. what you're seeing in the u.s. is are seeing the seeking its putting hopes of cyclicality in there and it's helping the equity market. how long will this last i'm not sure the underlying fundamentals , obviously there's a lot of shortcoming. obviously the liquidity issues are driving things higher. but it is still a really tough situation so i'm not sure they're out of the woods. >> you went through the top 10 names on the s&p but the biggest percentage of sales to china and they gained week today more than 9% last week. why did you strip tech out of that story? >> you see a lot of exposure to china but they don't really sell to china. it's a back-and-forth between the u.s. and china so what we want to do is get the exposure of who is in a cell to the

chinese consumer. who's really in a benefit by the chinese economy growing. a lot of the tech companies that's not really true so we focus and what you see with the other list is you see a lot of gambling or similar retail. and that's really what we want to focus on is if you're looking for chinese exposure those of the names you want to go after. lisa: are you in the camp of wanting to go after them? are you a foam oh guy. >> we are not so excited about international exposure. what were excited about is we think there will be a bit of a broadening out we do think the economy is a little bit stronger. and that's can help your average stock. it's can help your small cap and we are for the first time in a long time probably years of turned tactically positive on small caps today. >> so what sort of went into that? they've been rallying and outperforming for a while. the scene a little bit of turning around, why today did you make that call? yahaira: since the end of the --

chris: since the end of the first half we been negative and less negative. one of the things we saw with the rally last summer was hey, the return to street returned really important. we are looking at a presidential election. we think it's pretty much a coin toss. 50% trump, 50% harris. with small caps or can act very differently under a trump presidency. and things will be very positive for trump we have a very positive expecting in terms of heading into the election and then depending on who wins that can continue going forward so we are looking at these expected returns and probabilities saying this is a good opportunity for small caps and in addition to that we do think it's much stronger than we expect and one of the things that we cite is the atlanta fed at 3% and consensus is down. they've been a pretty good indicator we saw gdp to the upside. by 2% so we have a catalyst

here. >> you think they are doing well in gridlock. the conventional thinking has been a tossup ahead of the election. the conventional thinking has been small caps help trump trade what happens if it's kamala harris and even a blue sweep, november 5. >> it's a great question. if harris wins we will be thinking the outcome for small caps over one to three months in line returns to the market to down about 3%. the issue of harris's we don't really understand or know policy. the market is not that comfortable so we are trying to figure out how do we handicap harris and we are in a situation where your post easing cycle, the election is coming up. small caps underperform. if we combine that and said what makes sense to us is moving down to 3% situation because typically see a very positive reaction after the election a source of the reaction after the fed starts cutting and recently it's been so-so. so we combine all that and we come up with expected returns

it's just ok. so really you are behooved to really make that bet the market will start to price in this positive expected return. >> what are you hoping to learn from kamala harris from the economic plan. many would say this is a continuation of joe biden and they didn't just put out an 82 page document. chris: i do not know -- i am not looking to learn that much. one of the things the market is missing, one of the things that is a big risk is if harris wins we probably see taxes rolloff and that's not great for small caps. that won't happen initially which is why we are still thinking of a small pullback for underperformance but if we go longer-term that would be great, your point about biden and if you go back to obama biden, biden and then potentially harris you are going to likely see a situation that's a lot more beneficial to growth and growth companies because some of

their policies have been -- have held back the economy whether it's related to regulation or other issues and that's been a great environment for growth. jonathan: let's get super tactical. the next month what you think october will look like. getting that kind of policy anxiety in this market providing substantial headwind overall. >> one of the things that's confused me is typically before an election you have this kind of uncertainty and you don't usually see equities go up. and now we've had some mitigating factors we find the fed cut, china and so forth. so we do expect to see a lot more back-and-forth and when i expect to see small caps outperform. the broader market seems to be a consolidation and may downside and so that's another reason why we are looking into the situation we really haven't seen that uncertainty and there's a lot of uncertainty there. >> to john's point typically october is a difficult month. going into an election year it's even more difficult. policy anxiety has been looming

over people's minds nobody wants to act on it until there a week away from the election, why do you think this market even the small caps can sort of shake that off. >> i think they can shake that off because again we go back to where the market is, where consensus is for gdp it's down around 2%. i don't think we're in a 2% gdp market. it's not 3% but it's a lot higher. one of the things we talk about on the show is credit spreads are 90, 89, 90 basis points over. that's not showing a lot of economic stress and so when you ask where that is, i think it is the market realizing the economy is more robust than a lot of people think. annmarie: what happens days after the election if we don't know who won? chris: i don't think that will be a great situation. i think the market will have a problem with that. we expect to see volatility spike, i would expect to see the market pullback and until we get a resolution the market trades in that kind of situation.

jonathan: good to see you chris as always. wells fargo securities, i'm glad you brought up casinos. las vegas up by 22% on a single week. lisa: all of a sudden you have consumers being given cash infusions to go spend and potentially where do they like to vacation? exactly. this shows how people are able to play this with more sale -- failsafe omo trades. >> let's schedule an update on stories elsewhere with your bloomberg brief. >> german foreign minister telling in an interview the war in ukraine is weighing heavily on the country's economy. >> we have to be aware that putin's war of aggression is not only a military attack on ukraine. this is hurting everybody. the budget very much stressed to say very diplomatic because we

thought the war of aggression would never come back to the european continent. >> also telling annmarie hordern that she supports ukraine's request for long-range cruise missiles putting her at odds with german chancellor olaf scholz who has so far ruled out sending the weapon over fears of triggering russia further. in europe, stellantis shares are falling after the jeep maker slashed its profit margin forecast for the year. the carmaker saying it plans to dial back production and spend more on promotional incentives in a slowing and more competitive auto market. they are facing pressure from investors, dealers and unions hoping to claim sales -- holds declining sales. at&t is officially exiting the entertainment space according to a new filing. the telecom giant has agreed to sell its majority stake in satellite-tv service directv to private equity firm dpg. the sale will total roughly $7.6

billion in cash payments in 2029 and didn't give at&t the ability to focus on its core business which is wireless and fiber conductivity. that's your bloomberg brief. jonathan: more in about 30 minutes time. up next on the program, fighting for last-minute momentum. >> the team that has a plan is the team of trump vance. >> it is pretty obvious to us that donald trump and jd vance do not share our values in any way. >> that conversation around the corner. good morning. ♪

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>> equity futures on the s&p 500 negative by one quarter of 1% just a little bit softer moments ago.

lisa, small caps for some outperformance here into year-end. >> talking about what you see with respect to the earnings picture and kept going back to a theme that i think is a really important one because it dovetails off of what they were saying, he believes the u.s. economy is much stronger than many people believe and sees the brought expectation by economists and 2% of gdp growth completely in contrast to the atlanta fed gdp is 3% prediction. and frankly that has been on the forecasts. >> under surveillance this morning fighting for last-minute momentum. >> governor walz and i are going to affect the issues that affect the american people. i'm trying to show the candidacy, the team of substance, the team that has a plan is the team of trump vance. >> it's pretty obvious to us that donald trump and jd vance do not share our values in any way. elections have consequences.

>> here's the latest, a vp candidate jd vance and tim walz facing off tuesday in the last confirmed debate of the neck neck presidential race. both attempted to boost each other's campaigns momentum while avoiding damaging missteps just five weeks before election day. joining us to discuss is henrietta. let's talk about that word momentum. who has it right now and who doesn't. henrietta: if we look at just the numbers i had to go over this a couple times. in august the harris-walz campaign raised 287 million dollars in the trump campaign raise $85 million so if you look at the expanding electoral college map, the number of states that are now gray instead of red or blue, the momentum is plainly behind the harris camp. i think that is something she needs to grow in order to win but that's been the story since she got into the race. annmarie: something we've seen the trump campaign do is get free media.

donald trump showing up at the alabama georgia game. that is working more to his advantage. does she need to do more events like that, get out there and be more in these interview or just by the seat of the chair kind of moments. >> those campaign moments are so integral to donald trump especially in galvanizing voters, democrats are more galvanize this cycles and republicans are it looks a lot like the 2008 scenario. it's about 84% for democrats to 71% for republicans so that enthusiasm going to a football game is a great strategy. the harris team strategy is to go on very specific media outlets whether it's podcasts or specific news outlet in a specific district town in a swing state, so very micro targeted. i think the earned media is something that will come up in the debate tomorrow night, jd vance and donald trump -- jd vance in particular is the least

popular person of the four people on the ticket. tim walz is the most popular. they will try to generate the momentum and capture the attention, in the days ahead. lisa: we've seen oak -- annmarie: we seen a widening gender gap, trumps gains when it comes to the youth vote look like a mirage. where is he winning and where is he not winning? henrietta: i'm so glad you brought that up. we have to check the numbers again and again, the gender gap is 60 points. the gender gap with voters under the age of 29 is 47 points with women versus men. it is really quite stark and sort of a battle to see who wears the pants in america. the minority -- the youth vote is one where the trump gains from the entire year on the national scale are not showing up in very specific gold

standard use poles -- use poles. and they show quite clearly that any gains trump has made with young male voters particularly those on the younger end of the spectrum that sort of the 29 to 35 cohort. our being superseded by the 70% support the kamala harris gets with all the young women. so that i think is really the story of the selection is the gender gap. >> when i talked to democrats the idea is they have 2008 vibes basically obama. but when you look at the gender gap doesn't that spell 2016 vibes when hillary clinton lost? >> she is doing much better than hillary clinton was doing with female voters. the areas where there is not such a gender drop are exactly what you'd expect in the swing states. using the data out of arizona or nevada, north carolina and georgia the gender gap is not as severe as it is nationwide. so when you really want to keep your attention on the momentum

plays harris still has work to do. not just the rust belt which is not in any way safe. but also the sunbelt, nevada in particular looks a lot better than i would've anticipated just four or five months ago so she is definitely making gains there. the gender gap is smallest in the swing states. lisa: right now amid the politicking and planned debates there are two cute issues facing the united states. we have the dockworker potential strike and what that could mean in terms of disrupting trade, we will speak about that with dani burger but we are also dealing with the aftermath of one of the most damaging storms that hit the united states in a very long time pitting north carolina in particular which is a swing state. what are the responses for the candidate. that could be potentially damaging. >> the hurricanes are very close to home for me and i focus on how long it will take those districts and towns to come out of this. we are looking at months of recovery time.

that's a large swath of the trump population happens in a place where i vacation regularly. it's very red down there so i'm nervous about that. voting prospects to turn out that's good to be happening while people are literally trying to rebuild their homes getting all of that up in north carolina is way too far to the north for anyone to be comfortable with and they will be reeling with that for years. the harrison trump campaigns will start going there once it's appropriate, but certainly by the end of october to try and turn out the vote in the labor front certainly it's a major issue for lumber yards and something that the biden team has shown repeatedly they prioritize but obviously this could start tomorrow. lisa: how does biden prevent this from becoming his katrina? henrietta: having a very swift response, congress is already out of session so they will be passing an emergency appropriations package. there's a lot the president can

do before -- and continuing that effort in keeping the focus. it takes months and years to come out of these climate events so the next >> administration will have to prioritize. >>when you look at with the president has done already he's opened the floodgates for federal funding for these areas. when you look at potentially more crucial funding down the road, it will be as you said five or 10 years out that congress actually potentially put some packages together? henrietta: they will pass another spending bill in mid september and that will include i would expect substantial amounts of aid, millions of dollars of aid to the states. they physically can come in and vote. they are all on the campaign trail. the houses export nearly competitive this year. the senate has a whole spate of swing state senators that are up for reelection. so they can take those votes but they will be back in the

lame-duck and voting on appropriations package with emergency funding in december. >> always appreciate the breakdown from you. on the latest in this country. domestically things getting messier quickly. >> you have to think these are two pivotal potential events. you have a situation where you could get a strike that could take off $7.5 billion per week that it goes on to the gdp but then you think about a storm that was catastrophic we are still tabulating the missing and the dead from the storm and it was destructive in a swing state that will keep a lot of people away from the polls. you just have to wonder how this is >> can a potentially tip the scales. trying to rebuild your home really going out to vote is that top of mind in five weeks time. jonathan: coming up on the program we will catch up with dani burger in new jersey as east coast dockworkers prepare to walk off the job. the latest on the ground up next in the program. equity futures negative by 2/10 of 1% as we close out the month

of september, your bond market yields higher by a single basis point on the 10 year, on the two-year up by three. the latest out of china up and away. the csi 300 close another day before the one week holiday. the biggest one-day game going back to 2008. from new york this is bloomberg. ♪

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jonathan: two hours away from the opening bell, equity futures back by just a touch. 2/10 of 1% on the s&p. on the russell we are down 6/10 of 1%. this is child's play. check out china. csi 300 up by more than 8%. biggest one-day pop since 2008 and here are the gains, baidu, jd.com. jd up by more than 5%. lisa: it's a golden week and people have money to spend. this is basically a trade, and no one can come up with a reason to bet against. maybe some words from the chinese authorities pushing back a little bit against the gains. this to me raises a question. have we seen a market shift in the sentiment and the approach of xi jinping's administration.

to me that's really the crux of this have they moved, less ideological bent to one that's much more driven by economic support. >> investor certainly get what they want at the moment. they get the stimulus out of china. is there more to come from the federal reserve. look out for the likes of rate cut euphoria on friday if we get a real downside surprise on the jobs report. yields are up by three basis points on the 10 year on the front-end of the curve we are still south of 360. the estimate for friday the last survey 146 k the previous month 142. looking for that to stabilize at 4.2% and if you're looking for the teaser, chairman powell a little bit later this afternoon. >> it really matters whether those outsize potential cuts could, even if there is benign news even if we get the kind of labor market report that a lot of people are expecting or does he say we need to really

calibrate weather were dealing with truly slowing economy or one that has strength underneath it. that would make the difference between a turbocharged extra euphoric out of your mind market rather than one that's just tempered between the bulls and the bears. >> making the case for higher bond yields that's been the debate at the moment. i think easing out of china, easing out of america. the backdrop still arguably ok based on the topline headline jobs numbers we've been getting and ultimately we've had people ask why are volumes higher. lisa: a lot of people are straddling this idea as anne-marie mentioned that maybe we have a much stronger economy with higher neutral rate versus people like andrew citigroup calling for a 70,000 payroll sprint and the potential downside risk. it's the austan goolsbee's of the world versus -- and we are smack dab in the middle trying to figure out which way to swing. >> the tenure up 376.

under surveillance the u.s. urging israel to avoid a wider regional war as it steps up air assault in lebanon. the u.s. sending more troops to the region and putting more forces on standby. annmarie: preparing for an iranian response would be individuals i'm talking to on this side of the united states potentially expecting the worst it could be back to what happened in april in that barrage of missiles over israel but you talk to u.s. officials and they say what israel has been able to do is put hezbollah on its back. it's been 10 days pretty much decimating rank-and-file all the way to the top up and iran coming out and not looking for that regional war. looking to de-escalate at this moment. some u.s. officials would say israel would not be able to do this without the cover of the u.s. in the region and it sounds like the united states will be sending more. lisa: the u.s. is saying israel pump the brakes, don't do too much. please show restraint.

israel doesn't show more -- and then they do this. israel is like keep going. that's basically the tone that's been out there. this is the beginning of a new phase of something. what is that, what are we looking for. does it mean more nuclear acceleration in terms of production in iran. does it mean potentially rebuilding some of these proxies. it is not over and yet people are looking at this as a movie almost unfolding even though there is a number of real consequences that are potentially transformative. >> i think it's important where does this leave iranian strategy , where does it leave them. >> hezbollah was the crown jewel as was mentioned earlier of the access -- axis of resistance. of course are still individuals their but between the pagers which had rank-and-file and i'm still trying to work out if the pagers were a precursor that

nasrallah had to convene all the top brass to come out and speak in person because they were so worried about their technology being tracked and than they were able to hit him. iran is left with a lot of questions on how are they going to work within this regime entered norms point there a question of whether this pushes them more towards nuclear acceleration or pulls them back. >> lisa talked about the movie. there'll be plenty of books written on the last few weeks. lisa mentioned the story a few times as one of the biggest of elements in this country in the last few days, floods reporting more damage in the aftermath of hurricane helene. the storm killing at least 84 people after making landfall in florida and stretching across the nation south. the total damage may be between somewhere between 95 and $110 billion paid >> we've seen this before in terms of flooding. and the flooding is continuing. sort of akin to what we seen in the past. we've also have a lot of reports

of people who are missing. i'm just wondering how you deal with this with the congress that's not in session and with people who are making politics of this on both sides. how do you deal with very real humanitarian issue of getting people rescued and back in their homes and fortify some of the essential infrastructure but also longer-term how do you prevent against this at a time when it will require real investment. annmarie: over the weekend he was speaking to governor kemp, republican of georgia, governor cooper, democrat of north carolina about what the federal government can do immediately. your point on congress is very well taken. that kind of funding do they even know what to fund in that sense the most needed funding right now coming from the federal government and biden has pretty much said we will give you what you need. >> east and gulf coast ports are preparing for a shutdown as labor talks stall for a contract deadline later on today.

the longshoremen's association will post an updated statement on facebook. president biden saying he won't intervene that resolving the dispute doesn't matter for collective bargaining. dani burger joins us from a shipping port in newark, new jersey. how close are we to the strike? dsani: about stash -- dani: about 16.5 hours unless something remarkable changes. on tuesday, as the head of the longshoreman associations put it, a sleeping giant will be awakened. this is some half of trade that comes into the u.s. that will be affected 36 in total all along the east coast and the gulf. the two main sticking points they want to significant wage and benefits increase some 80% over the next six years, the current offer up the longshoremen's association is called it stingy. the other sticking point is automation. they want language written into

the contract to prevent automation like we see in the ports of asia that we see in amsterdam. they don't want that for fear of jobs lost. they have significant leverage more than they have in some time considering it is an administration friendly to labor and there is a supply demand issue. there are not enough people to do these jobs so it is leverage with -- which is ironically white these leaders want in the first place. annmarie: the administration definitely does not want to see a spike in inflation before november 5. can you give us a sense of what the timeline is for these talks. dani: the contract expires at midnight so we are talking hours away from that but there are no scheduled negotiations. everything we know about what's been offered has been happening behind closed doors and it has not been made public. from what we understand the white house has been trying to act as a mediator but this is

happening behind closed doors. the timing gets tricky because even if these are shut down for a few days that has ramifications that last week's. by some measures just one day of shock ports will take a week to clear out some days turned into weeks. if it's a weeklong strike it means months and that's when you start running into the issue of the holiday. some of these retailers have been stocking up but places like small businesses do not have the capacity to hold up inventory. this needs to be resolved in a few days in order to not have a bigger economic impact. >> do we have a sense of how many protections have been baked in whether it's may be rerouting some of the ships to the west coast ports or delaying some shipments given the stockpiles and hoping things get resolved in three weeks time. dani: so -- so, ports like where i met the head of the port workers union has been calling before to get things sped up.

they elongated hours heading in today in hopes they would be able to do it but that can only get you so far. just talking about hurricane helene especially with the southern ports there's been a lot but unable to traverse because of the hurricane. it's been ordered this bead things up. when it comes to the west coast ports there is an idea of solidarity, the head of the longshoreman associations at the west coast ports will not cooperate with diverted shipments so it's not so much of a probability and also hsbc says they can only handle some 17% coming over. at the port of montreux there also dealing with this so in terms of alternatives there are not a lot right now. jonathan: plenty more from her throughout the day on bloomberg tv and radio. continuing the conversation, i want to stay on lisa's line of questioning. we saw some tremendous volume through west coast ports through the summer. how much preparation was done ahead of time for the potential of this going down. >> i think they also have the

capacity to handle more freight. i think more sophisticated shippers have been ahead of this looming port strike which has been well telegraphed for quite some time. we could see from our perspective we cover a lot of transportation companies this could be a net benefit and providers out there. as this moves rates. they have been pretty depressed over the last two years and so this could be the final shock to the system that could move rates higher which would be a net positive for trucking companies like knight swift. >> how long can this go on before some of these workers that might be on strike lose a lot of leverage whether it's financially themselves or whether it's just in terms of the public zeitgeist for actions. >> i mean for them, the fatigue

that might happen from a strike these folks really aren't getting paid when the not working. they also have their own bills to pay so as this goes on, it could you know we can their resolve for striking. we are expecting a strike, we do not expect a strike to last more than a couple of weeks. we think of it goes on beyond a week the federal government will step in because of the impact it will have on the economy. the good news is a lot of the economic impact is really going to be delayed versus lost so that -- some of that will be lost but there are numbers here whether it's five or $6 billion a day really is a loss into the ether world. it will come back and be delayed, as the ports either work through the congestion the could be created in the west coast or the congestion in the east coast. looking forward to >> going back

to work. >>over the weekend president biden said he doesn't believe in taft-hartley. you think the federal government will get involved. how will they do it. >> i think they probably might have to enact that. that's just our view. just given the economic impact of where we are in an election year as you know gdp growth is not great, it is tepid at best and we want to keep that gdp growth positive, the longer this goes on the more it could impact that gdp growth. whether it's short-term, those numbers do matter. all of us here the cover the markets but people in washington as well. >> let's say it goes forward with that, how much work would actually get done on the east coast ports? >> that's a great point. they'll probably be working at full speed. but there will be throughput at the ports, that will be very

limited from where we understand they are very far apart on pay. from what we understand, they are also the union does not want anyone to pay for automation which could be a huge sticking point. because ports want to be more efficient i think the workers in the unions might want to focus on are the new jobs being created through these automation processes. working a crane but it's the people that are fixing the equipment that could be creating new jobs on the port. jonathan: you mention they are far apart. how far apart? what is one asking for and what is the other offering? lee: i do not have intimate knowledge of it but from what i've seen either they are looking for a $10 an hour raise,

they are offering half that. the eastern workers from an hourly basis they have less than their west coast counterparts and i think the east coast workers are looking to get to parity for the west coast. i don't know if it is an apples to apples comparison but that's what i've seen out there. in the earlier report where they talked about the union is in a position to be negotiating. we are coming up on the busiest time for freight as freight comes in ahead of the holidays and it's very important for retailers to have goods on the shelves when customers come in and want to buy it. so it's very important we felt you could see more airfreight, we haven't seen much airfreight move in and be diverted from the ocean yet but we could see that. you'll see a lot more truck

movements as freight needs to be expedited so net from where you cover the freight transportation know it's going to be a positive , a negative for the economy and a negative report workers and negative for shippers as well. jonathan: a tough month for the president potentially as well. biden between a rock and a hard place. annmarie: he said he doesn't believe in taft-hartley but we just heard from lee that this is a potential to governments and have to do so i already in my mind and thinking what the trump campaign is can a put out as a last-minute campaign ads when they want to go for the rank-and-file union workers. president biden i don't believe in taft-hartley. president biden right before the election i'm going to have to enact taft-hartley because we have to get these workers back. jonathan: let's get you an update on stories elsewhere. >> directv and dish agreed to a

deal would create the largest pay-tv provider in the u.s.. under the terms directv will acquire dish for one dollar while 39 point seven $5 billion in dish. the -- agreeing to take a haircut on the principal amount by $1.5 billion. the two sides expect to close the deal on the fourth quarter of next year pending regulatory. the wild robot premiered at the top of the domestic box office this weekend. the movie based on peter brown's best-selling books brought in a better-than-expected 35 million dollars in ticket sales. in second was warner bros. "betelgeuse betelgeuse" which has grossed $250 million in four weeks. paramount's "transformers one" came in third place. an asteroid the size of a 33 foot school bus is trapped in earth's orbit for the next two months. the strong dutch astronomer's

first part of the asteroid in 2024. the mini moon is expected for 57 days without complaining a full orbit. it won't be visible without the use of a relatively large research great telescope according to these numbers. >> up next on the program, navigating u.s. china tensions. >> we are exporting american technology which is really terrific for the united states. the world is built on american standards and nvidia is an american company and our government and the administration would like to see us succeed. jonathan: mandeep singh of bloomberg intelligence up next.

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jonathan: stock market just a little bit softer stateside. down by 0.3%, a bond yields just a little bit higher. the 10 year 7676. navigating china tensions. >> we have deferred all of the policymaking to the administration exporting american technology which is really terrific for the united states but the world is built on american standards nvidia is an american company and our government the administration would love to see us succeed. >> here's the latest, nvidia getting squeezed from both sides. in just discourage companies from purchasing invidious age 20 chips used for developing and operating ai models. the move is meant to boost china's domestic chipmakers, nvidia facing domestic pressures amid an antitrust probe. bloomberg's mandeep singh joins us now for more.

can we get into the word discouraging. what does that mean in practice? >> basically the government is telling them to be more self-sufficient in terms of their views of chips required for training these large language models and they would go out there and have them use a domestic chipmaker for training these chips. everyone realizes for the scaling laws to play out and everyone who believes making large line would models will be bigger you need bigger clusters and that's where the government sees that this is a long super cycle. you just can't be reliant on nvidia spending billions of dollars of capex on the technology that's not homegrown. jonathan: the west has been trying to restrict invidious exports into china already. i wonder how this is hurt the company going forward anyway. doesn't make a big difference to them. >> it does.

export control seems to be working for the government, not so much for nvidia who it was a 20% revenue exposure to the china market so after revenue exposure is declining and all of this suggests it will be an even lower portion of their overall revenue growth so clearly for a company that is growing exponentially everyone expects them to keep doing that kind of -- growth run rate, this is one less market for them to sell to. and for member the largest internet companies after the hyper scalars here are in china. bytedance, alibaba, these are the things training their own large language models. if nvidia can sell to them i think they are fewer buyers for the chips some of the largest hyper scalars here. clearly in the long-term it affects their growth. >> the long-term trajectory looks like china will

potentially even more for these companies to stay away. when i look at the companies, what can they get that is so similar to that semiconductor that nvidia is selling. >> look, the best point we have is what huawei has done. what you've seen his huawei shipping those smartphones, there has been some domestic adoption to the point that they have taken share from apple. and similarly you could argue huawei can create a chip for the smartphone market why can't they create a good chip for the data center market and i think with all the subsidies that huawei units are getting from the government and with their own foundry in china, they should be able to catch up. they are knocking to have the latest ship that nvidia is making but just not going to have the latest ship -- chip that nvidia is going to have. lisa: how much is the u.s.

restraining development and innovation given antitrust issues and regulation on large language models? mandeep: i look at it this way. there are open source versions of models that have been released by meta so open source is available to all. for companies that are domiciled in china they know what they need to do in terms of catching up to the latest models being released by openai or google. so, when it comes to regulations yes you can prevent china from getting access but what if they are able to get access to the latest dsl machines on the foundry side. there are all these different aspects where the geopolitical tensions come into play and i feel the export controls on the chips side are working because

chips that nvidia is shipping clearly it will hit a wall in terms of scaling. if the government is not allowing the next version of the chip into the chinese companies i think it will have an impact on their training process and the scaling i mentioned before. >> it's good to get you on. the last week with regards to china not a moment for nuance. the market worldwide ripped on that story. it's not can it benefit everyone. autos, biggest loser on the stoxx 600 over in europe today. lisa: there is a lot of divergence between now and before the pandemic between the u.s. and china and we will see that. jonathan: up next on the third hour of surveillance we will catch up with sheila of jeffries, -- the third hour of bloomberg surveillance up next. ♪

>> the employment daily is really -- data is really important. -- i do not think the market will do as well as it is pricing.

>> there is an excitement about rate cuts and the opportunities they bring, but there's is also this trepidation that, what if that 50 basis point cut was a crisis cut? >> all the data from now until february decides whether the fed goes 25 or 50. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: still close to all-time highs after a third week of gains in last week's session. if you look at the equity market story this morning, future software by one third on the nasdaq one hundred, down a half day of the rest of the small caps 0.7%. nothing like what we saw out of china last night, a gain over 8%. stateside, payrolls friday. looking for something in and around 140 thousand. chairman powell. this afternoon. annmarie: annmarie: -- -- we're still doing ok, so this is

a matter of us being far away from neutral. can you imagine? talk about, "hey, xi jinping, pass the beer." if you hear moderation, that will be more interesting because it is harder to get a read. annmarie: when it comes to moderation, you are taking 140,000 penciled in, then take that in half -- reiterating the fact that nothing matters more between now and the fed as nfp. jonathan: we get 70,000, friday, i do not think it matters what fed chair powell says today. lisa: essentially what happens with equities now it hinges on the health. . of the labor market some of these lesser indicators are actually very important. we get adp, jobless claims.

how much do people take the idea of just a less good environment as being more negative than it is positive because it will be met with outsized fed rate cuts? this is the ultimate question. is this the week where the pivot point of data -- jonathan: are we looking for a hint of goolsbee later this afternoon? lisa: if we get a hint, how much markets rally? jonathan: i think up and to the right. equity futures negative by 0.2%. yields higher by two basis points. the 10 year, three .77. coming up this hour, venu krishna of barclays. we will speak with sheila kahyaoglu of jeffries and we are previewing the payrolls report. we are looking forward to remarks from fed chair jay powell this afternoon after

stimulus from china boosted sentiment worldwide, helping send chinese stocks into a bull market. venu krishna is staying cautious, noting that our macro resorts -- research colleagues believe the impacts are likely to be limited. good to see you. venu: good. to see you. jonathan: you are not buying the happy talk. venu: i think the short term of these measures could work. but i think the issue with china is much bigger. it's structural, demographics, the property market, consumer sentiment. a host of things. domestic consumption, which is you cannot export your way out forever, which is why they are trying, even now. i think that is a question. in the short-term, it is tough, because the question is whether it is a gun or bazooka or

whatever. fine, you've been given a bazooka, but structurally come over the long-term, what changes? jonathan: how would you describe the move over the last week? venu: it is a combination. it is a big relief as well, because so far, the concern has been, in the past, they threw in a huge amount of stimulus. they are not doing that this time here the concern was they do not care that much. now, the opinion is they do care, and now they are saying this is very important, and they want to do something about it. it is a combination of the -- of all those, but i would take a step back and say structurally there are a lot of things different in the u.s. it is not the same in china. when you put all those facts together, i think it is a wait-and-see.

lisa: you are bullish on the u.s. venu: yes, i am still bullish on the u.s., although i am a little concerned at the pace with which we are going ahead. it looks too fast, too soon. but structurally, the u.s. remains at the forefront of the technology front, unparalleled. we are still the world's biggest economy. we are the world's biggest oil producer, now. and we still are the center, the leader of the global financial architecture, and the dollar still remains the reserve currency, unlikely to change. when you start putting that altogether, mainly i would state intact, because the secular shift is around technology. the shift in technology, if we take a step back, is not something new. it has been going on three to four decades now, from the pc cycle through the internet to mobile devices.

we were in the middle of a cloud transition, then ai on top of that. at the center of it is the actions coming from the u.s., and the ecosystem we have in the u.s., mainly around the valley, is unparalleled and cannot be replicated just by infusing capital. lisa: you expect losses by year-end. how much, short-term, dear check the story to have been overplayed and basically everything to face a whole lot of volatility based on potential headwinds, potential regulation, potential geopolitics, the election? venu: my based case target of 2600, we are already above that, but we have an upside case of 6100. in all fairness, a downside case of close to 5000. so multiples, which have gone to 34 times are now back to 29 times. so we feel comfortable. anything in the mid-20's to 29

is reasonable, because growth is decelerating, so, in other words, now they are looking at 16% plus growth rate to match against in the coming quarters. the excitation is that growth will decelerate to the 20% range, so pretty healthy. a ratio of 1.3%, 1.4%, which is quite full, but it is not broken. for the rest of s&p, the comps get easier. he had bad numbers, now the excitation is it goes up 15%, 16%. i think it will be less than that, but, directionally, what happened as a composition of growth has changed. and the rest of s&p fully valued, i would argue, but growing -- expected to grow, in my view, about 10%, which is not bad.

which leads me to your question, what about the levels now? you probably need to take a little bit of a breather. i do not know what the catalyst will be. maybe the election, may be geopolitics, but we have not cared about geopolitics for forever. annmarie: you have such a big gap when it comes to the downside to the upside. you say you do not know what the catalyst may be, but is there potential to the catalyst of the upside in terms of taking a breather? venu: i think they are clear. you talked job numbers now. the big shift in sentiment over the last month or two months has been this growth scare. based on historical experiences, the market is very concerned, we are, that bills the labor market as worse than it seems. the point is it is clear that --

they have not decreased. that is your downside case. if you suddenly start seeing depreciation in the labor market, which nobody is expecting, including us, but it is a real possibility, because a lot of increase, you could start testing the downside. on the other hand, they are still printing robust numbers. you saw the atlanta gdp number just came in stronger. consumer sentiment marginally increasing. if growth does accelerate, and this is a reasonable likelihood, there you have my upside case of 6100. it all depends. the one thing they care about is nfp's. that is where the action is. jonathan: so good news is good news still? venu: yes. right now, the good news is good news. we have shifted from the paradox of flipping it back. the question is good news is

good news until something breaks, so the disconnect now is between the rates market and equity market. what i would suggest is the rates market has been all over the map for the last two years. so the equity market has been more right than wrong, and so, that is an interesting situation we are in. jonathan: are you throwing shade at your colleagues on the other side of the room, that the bond level is all over the place? lisa: i heard that. is that your accusation? venu: my point is everyone looks at the rates market in a big barometer of what to expect, which is true, but you try to follow that, you will go crazy, because you would not know what to do week from week -- lisa: hold on a second. in fairness. not to defend the bond market, but to defend the bond market, equities, s&p 500, has had five

straight months of gains. it has come in tandem with two year yield, having five straight months of yield going down. u.s. and that is not directly correlated? -- you are saying that is not darkly correlated? venu: what you really care about in equities is the 10 year yield. if you look at 10 year yield, it is moving around. but -- we were hovering around 5% a few months ago. now you are again going back towards a 4% range. i'm not trying to reduce the importance of the rate market, it is important, because if the discount rate -- lisa: he is trying to bring back in his bond market colleagues. carry on. venu: but in the end, it has been all over the map. everybody in the macro market is concerned about deficits, right, so you would expect that shows up in the term premium. where is it? jonathan: some big egos on that

side of the room, as you know. [laughter] thank you. venu krishna of barclays. lisa: i would say the bond market has lost some of its premise when it comes to predictive power. you worry about the deficit, whine about the deficit, why not spohn with higher yields? jonathan: yields are up today, 10 year up by 2, the tenure of close to five. with your bloomberg green, here is yahaira jacquez. yahaira: we start with devastating floodwaters earning more damage in georgia and south carolina in the aftermath of hurricane helene. the category four storm that came ashore friday killed at least 84 people and left millions without power. accuweather estimates this store may be one of the costliest in u.s. history, with damages totaling anywhere from $95 billion to 110 billion dollars. meanwhile, vice presidential candidates tim walz and jd vance will take the spotlight tomorrow night in a debate on cbs. they will stand behind two --

behind podiums in front of two moderators but with no studio audience. vance has been prepping with republican compass meant tom emmer of minnesota while transportation secretary and one-time presidential hopeful pete buttigieg has been holding mock debates with walz as part of his preparations. ford is increasing its efforts to boost the electric vehicle sales. starting tomorrow, the automaker will offer free home chargers and cover the costs of installation for customers who purchase it ev's. the promotion will be available through the mustang and the e-transit cargo van. that's your bloomberg brief. jonathan: it is a tough, super competitive market for the likes of ford and others as well. this just dropped from peter cheer -- tchir at academy. this time, the benefits from chinese stimulus would accrue much more to china and its

companies then to the u.s. and its companies. this does not lift all boats. there has been a real preference of the chinese consumer to domestic brands. lisa: how much is that incorrect based on some of the structural shifts over the past few years? that is what peter tchir is trying to get at. jonathan: european equities, tough. stellantis and vw cuts its outlook the second time. coming up, sheila kahyaoglu of jeffries -- jefferies. this is bloomberg. ♪ you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible,

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equity futures pulling back by about 0.2% on the s&p 500. barclays downgrading procter & gamble to equal weight, expecting slower growth due to weakening sales in china. next up -- among the worst positioned for rate cuts, the stock down 1% in the premarket. finally, td cowen raising its price target on southwest. stay tuned for more on that. sticking with travel, the boeing strike continuing into the third week. sheila kahyaoglu of jeffrey's recently cutting her price target on the plane maker to 270 but maintaining a buy rating. she joins us now for the -- with the stock down another 1%. why the base case to get a

resolution to this in early october? sheila: early october means about one month. we are about 18 days in, so we would expect some sort of resolution in the next week and a half or so. the reason for that is they missed one paycheck last thursday. i think you start feeling it when you miss the second paycheck near the workers on strike are not earning anything. they get about $150 gift card to starting this week and week three, so we will see. they are sticking to it, though, and we are seeing strikes elsewhere, obviously. jonathan: they are asking for what, and what has been offered? sheila: we do not know what they're asking for, but they are getting a 30% pay raise. they get some pension benefits in there. they get that bonus back in, a sticking point in the original offer. we are unclear as to what iem is focused on in terms of the increase, but they want more than 30% over the next few years. lisa: we have been struggling to understand whether this is the last gasp of labor having leverage or whether this is

actually an ongoing theme we are seeing with respect to leverage, given what we are seeing also with the ports. what's your sense with line now and how much momentum is behind these particular strikes? sheila: i think why now is a lot of the lever force may have changed its demographics instead pandemic. you may have a younger work or switch is not as attuned to its employer, and maybe that's why. we are seeing a strike, the iem machinist group, we are seeing they put out -- they had everything the group wanted, and it was an 84% vote down. we are seeing that across aerospace and the ports. it could just be the momentum, but at some point, the reality hit here when you do not have that first month of pay, the second month, it has to hurt. lisa: the bull case for boeing has to be that the u.s. cannot let it fail, that basically,

this is not a company that is optional for the united states. what's your thesis behind having a lower price target but also a buy rating? sheila: in terms of the strike, the case is after six weeks, it becomes a moot point, because even if you get a 40% raise, the highest we have seen in the sector, which is air canada, which you could say is arguably in canada, so it is a little different employer-based, it becomes a moot point because you lose six weeks of pay. even if you get a 40% increase, you are breaking even over that time period. of course you have a higher base to go off of, but i find it hard to strike past that six week mark. we cut our estimates of 15%, and it was solely based on production coming in lower. we expected about 400 aircraft this year, 600 deliveries next year, across the entire group. so 737 max's, and we are not including one point $3 million

of cash flow yet or the month, as well as for any sort of equity raise, which we think is on the table. annmarie: given how important boeing is to the u.s. industrial base, likely why you still have this buy rating, do you expect the u.s. government to get more involved if the talks drag on more than a month? sheila: the buy rating is solely raised on the backlog, getting that free cash flow base case. it does not seem like the government is intervening in any sort of way, aside from a federal mediator. that is about as aggressive as it has gotten. we have heard no mention from the initiation about boeing, whereas the trump administration was much more involved in heavy-handed. annmarie: but this company is still too important to fail? sheila: of course. we don't have delivery of aircraft, it impact schedules, and our main hall has been long aftermarket names.

-- every 100 planes not delivered is 5% upside to market names at minimum. you keep those plane sitting there for longer, you extend the life of these existing aircraft, and it is a bullish sign for those older planes and who is servicing those. jonathan: can we talk about southwest? td cowen raise their price target, citing ambitious 2020 seven targets. you still got a cell on this name. they call it ambitious. what do you call it? sheila: it is a non-consensus call to have us selling southwest. i cannot bridge the 4 billion of incremental even the -- ebitda. i think the company's breakeven this year. to get an incremental $4 billion in 27 is robust, by any company, let alone an airline, which is actually volatile. jonathan: how big is this push

into premium right now? sheila: it is interesting. there premium is extra legroom, essentially three inches. at five feet, three inches does absolutely nothing for me, but or some, they may pay a 70% premium on the airfare, which is what -- southwest did not give us that 70%, but that is essentially what they are embedding to hit that incremental ebit target. they will get essentially 2x the fare for three inches of extra legroom. i find that hard to believe, but maybe that is all the boeing workers who striking that will pay that. lisa: it's like glamping. i wonder how much this is essentially an oversaturated market, especially if you're trying to make incremental changes that include breathing space and maybe having your bags with you. sheila: the best part about southwest's interior, when we got to sit in it last week, was the fact they have power plugs. southwest did not have power plugs. as a report customer, they totally missed out on that

customer base pair they were behind the curve. this retrofit, by the way, they expected to all 700 aircraft in the next 12 months. that is, given that tightness in the aftermarket and the maintenance shops we are seeing, i find that hard to believe. but kudos to them for laying out a strategy. i will buy some of that $4 billion but deafly not 30%. jonathan: your view on southwest kind of brutal. sheila kahyaoglu there of jefferies. lisa: how premium is premium? is it three inches, that you actually get a drink, that you get to carry a carry-on -- jonathan: a power outlet? lisa: you basically take nothings away that you can add them back for a charge. annmarie:. . how basic a power outlet. jonathan: i agree. there are still some planes that do not have power outlets. lisa: there is this is towards people when on vacation, the

girls trip out, and you want to add niceties, but there is a question whether those niceties -- annmarie: are -- annmarie: three inches? ? of legroom, versus a power outage is basic a power outage some of us always fought in the jet stream like -- ♪

jonathan: 60 minutes out from the opening bell. equity features negative across the board. the s&p near session lows. the nasdaq down around .3%. >> good morning. stellantis down 13%. dodge, jeep, ram going cash flow negative of nearly $6 billion. the issue is to clear the inventory. that is the message from the u.s. sellers. they wrote an open letter to the ceo.

you are on course for disaster in the u.s. if this bleeds through to gm, they are hemorrhaging market share. gm had the downgrade last week. morgan stanley downgrading it to underweight again. the bleeds are from stellantis across the auto sector in the united states this morning. the ever important growth of ev in china and everyone else bungling it. nvidia, a near 5% drop in the stock price over two days. why? the message from china. do not expose yourself to nvidia's chips. the first half of this year, nvidia's exposure to china was $6 billion. that is 11% of their income. i could not squeeze in aston martin. maybe the second half market

will give me my db7. jonathan: aston martin down hard. this is probably the most competitive market on the planet anywhere. chinese autos. these companies are working hard just to stand still in china and not go backwards. we are talking about a bigger pot off the back of stimulus in china with a smaller slice going to international players outside of china. lisa: essentially, this is a new china on some levels with domestic consumption being prioritized over international imports. you start to wonder even if there is a boost, what will it do to the stellantises and bmw's of the world finding it difficult to compete. jonathan: mercedes last week up like 8%. this morning, reality check.

a brutal morning for european autos. lisa: how much can they continue to lean into their china presence at the expense of higher walz to chinese vehicles coming into europe? how do they do that at a time when they are already underwater and need to find levers to pull? jonathan: the csi 300 up more than 8%. equity features down .2% on the s&p. the markets looking ahead to remarks from fed chair powell. bank of america securities expecting a printed of 150,000 with unemployment holding steady at 4.2%. good morning, sir. thank you for being here. consumers say jobs are getting harder to get.

will we see that this week? >> certainly a possibility. the jobs report will be for august and september. the number of openings have been dropping like a stone. that is not sustainable. at some point, that will start affecting the labor market. that is something we are watching carefully. right now, openings are consistent with where they were before the pandemic. jonathan: there is a missing feature, layoffs. where are they? >> they are still very low. that is why we are holding on the soft landing outlet. jobless claims have been low as well. even within the unemployment data, you can look at voluntary versus involuntary unemployment. that only accounts for a little more than half of the increase. no matter how you slice it, layoffs have been low and that gives us confidence about a soft

landing. lisa: some are saying the revisions to jobless claims and figures have been downward significantly. revisions to gp and gdi suggest were growth in the direct aftermath of the pandemic. how much are you looking at that and saying we need to rethink the strength in the economy? >> there was a big gap between gdp and gdi. the bearish view was eventually gdp get revised to gdi but what happened was gdp got revised up and gdp got revised up even more. you look at income and compensation, consumer spending were up. these are positive revisions. the first implication is

productivity growth has picked up more than expected. the other is eventually there will be a relationship between activity and the labor market. which way will it go? will activity backstop the labor market which --given the revisions? will labor collapse under a softening market? that looks less likely. lisa: that brings me to the paradox in markets. you have two tail risks diametrically opposed. this morning, he said people are underestimating growth in the economy and overestimating how low the neutral rate is. it is going to be much higher than the fed says and they do not have as long to get to neutral. do you agree based on revisions on the amount of momentum?

>> i think eventually we will know the neutral rate when we get there. lisa: come on, give us advance notice. >> it is probably higher than before the pandemic. chair powell said that as well. before the pandemic, it was low 2's. is it high 2's or even closer to 4%? it is somewhere between 2.5 and 4. we will know when we get there. lisa: in the next few hours, there will be strikes at ports. what could be the impact on the economy? >> there two things we focus on with strikes. the longer they last, the more of a drag they are. not in a linear sense but in a nonlinear sense because they start to affect supply chains.

one or two weeks is pretty painless. because gdp is a flow variable, whatever impact they have usually gets paid back when he strikes and. it will be a temporary impact. it will not show up in claims but it will show up in employment. >> what is the cut off when it can become more damaging down the line? >> it depends on how many are striking and how broad the strikes are. when we are thinking about the auto strikes, we were thinking before you go beyond four to six, it gets more painful. jonathan: do i need to cut off 60 because of revisions? >> you need to account for the fact that chair powell is cutting off something. he did not say what. maybe 40-60.

i thought this was interesting in his press conference. he said we are mentally adjusting down the jobs data we get. there was a question about whether the downward revisions that injured as of march would extend to april and beyond. she saying the fed is working on the assumption they will, which is quite dovish. you pick easily get a soft number and you know he is thinking of that being close to zero. that makes a strong case for another 50 from our perspective. lisa: if we hear the whiff of goolsbee today from chair powell, how much that that risk reigniting the growth side of the equation? >> it is a risk.

the question is how many 50's c an powell pull off? if he take the dot plot at face value, which i do not recommend, it would say they are not going to do anymore 50's. each one he pushes through, we have a strong sense he is more dovish than the rest of the committee, it will be harder. they will face more resistance. each one you do, you are telling the markets we will not stop. you are getting closer to neutral. our base case is one more 50 and then back to 25. everything is on the table. you can get two 25's if the jobs data is good. jonathan: what are you looking for? >> i think you will be noncommittal. there are two more jobs reports before the next meeting. he wants to keep his options open. it will be data dependent.

he will probably use the word "recalibration" again. if you are recalibrating, why only do one? you want to do at least one more. he will probably talk about recalibration with this optimistic message about the economy mixed with a more dovish message around we will do what it takes to accommodate the labor markets. jonathan: one cpi report and a presidential election in between the next decision. lisa: if you lays the groundwork for we are going to be more dove? jonathan: that would change things up. kathy jones joins us from, schwab -- charles schwab. are you still committed to the call that yields could edge lower? >> i think they edge lower. i think much of the moves have

already taken place, particularly further out the curve. it will be lower but more on the short end. intermediate and long-term, we have a 75-80 target. i need to see a catalyst for yields to move lower from here. jonathan: how strong you think the case is for high-yield given what china has started to talk about the past week? kathy: i do not put much stock in that. i think we have a high bar for much higher yields. i think you would need much more inflation activity to think about. you would need a significant shift in the fx market to show a significantly weaker dollar. i am not putting a lot of stock in that. we hear a lot of noise about it but it never really materializes.

lisa: there were shots fired earlier this morning when he was saying you cannot pay attention to the bond market because they are all over the place. they say they are worried about the deficit but never do anything with respect to demanding higher yields and say you could have the risk of higher growth but they bounce all over the place. do you think he is right? kathy: it has been a volatile year, a lot of shifts in the market. i would argue the bond market does not care about the deficit, does not display any concern about the deficit. you do not see a big term premium. we really have not in the past because deficits have not matter. maybe someday they will, but they have not mattered for the u.s. i think the problem and bond market is we have had a lot of mixed economic data. we have had a fed that was data dependent and not giving huge forward guidance. forward guidance is great when you are cutting to zero and there is a crisis, it is very clear.

forward guidance does not really help when the economy is rolling along, which is where we are. i would say he is partially right, that the bond market has been all over the place. but i do not know it is irrational all over the place. it is just reflecting the data as they come in. >> this might be anxiety underpinning. you reflected in your recent notes there is a risk case for higher yields than you expect based on tariffs and immigration. what about accelerating growth of the prospect we might not have as far to go to get to neutral as chair powell is saying? kathy: everybody talks about the neutral rate. no one has ever seen it. i think you have to take all of that with a grain of salt. it will move all over the place depending on the economic circumstances. i think the risk to the upside from imposing big tariffs which

gives us a onetime increase in inflation and probably weekends confidence in the u.s. in terms of policy, that would be a concern. it may have a counter effect of slowing the economy at the same time. there could be quite a bit of volatility associated with that. i do think one reason longer yields are not moving much is partly the economy has been fine and there is no reason for them to crater. but also, there is a lot of uncertainty about policy. in january, maybe we will know the composition of congress. there are huge questions about where we are going in terms of policy. jonathan: this afternoon, the fed chair is speaking at a conference in nashville. there was q&a earlier this morning. are there any blind spots left? we heard from many fed officials the past week. what is lest to discuss?

kathy: i think he will be clear that things are going well. we have a great soft landing scenario now. he will probably warn about risks ahead and say the fed is attentive to those. i do not think he will go off the road in terms of what the exit strategy might be. are you going to speed up or slow down? i think it will be more of the same. why argue with things when they are going well? lisa: it seems people are not expecting much this week. how much do you expect something to change with nonfarm payrolls friday given the fact that if you get a more negative print you could start pricing in a very different outcome for the fed and the neutral rate?

kathy: we are looking for something on the lower end of the consensus range. i think that is a reflection of the fact we have had downward revisions, significant downward revisions. they kind of move with the trend and the trend is slower. i do not think 110, 115 is out of the question. that could break us out of a range. if we got 160, 180, something like that, that would send yields back up close to 4% on the 10 year. i do not think we will see anything dramatic, probably weaker rather than stronger. jonathan: appreciate the view. kathy jones, good luck for the trading week. 145 is the estimate from our survey.

i think we are all mentally adjusting numbers lower as they come in. i know exactly what you would ask of chairman powell later this afternoon. investors putting too much weight on articles coming out in the quiet period and whether that complicates your efforts to communicate? lisa: is this something that is prescriptive for markets or you not like that? jonathan: the unofficial 13th member of the fomc. we both think it is a problem. >> it changes the catalyst of what people look to india quiet per -- in the quiet period. jonathan: if you are in the conference, stick your hand up and ask the question later this afternoon. let's get here bloomberg brief -- your bloomberg brief. >> california governor newsom

with the build to hold ai developers accountable for harm drew pearson criticism from -- drew major criticism from tech firms. he says he will consult with experts to develop workable guardrails. spacex has started its mission to bring home two astronauts stuck in orbit after technical failures. spacex has docked with the international space station carrying an american astronaut and russian cosmonaut. it had two empty seats reserved for the astronauts who will fill them when they all return to earth in february. today is the final day of baseball's regular season with three teams in the race for two national league wild-card spots. the mets and the braves will play a doubleheader after last week's games were postponed due

to hurricane helene. if they split the twin bill, both will make the postseason. if either team loses both games, they would be eliminated and the diamondbacks would get the final spot. first pitch is at 1:10 eastern. that is your bloomberg brief. jonathan: game of the weekend, alabama-georgia. did you watch that? lisa: i heard it was pretty incredible. jonathan: crimson tide looks like they will choke and then the 17-year-old who is a total beast --how is this guy 17? i have no idea. lisa: you put jonathan ferro in the united states long enough and he starts talking about u.s. college football? jonathan: college football and the atmosphere around it is the closest thing we have here to european football. lisa: is that your take? you will watch college football? jonathan: sec football, alabama-georgia, i think that is

as close as you can come to a european type rivalry in international football. lisa: welcome. jonathan: thanks for having me. you are watching "bloomberg surveillance." ♪ (♪♪) ♪ well i was raised by careful hands ♪ ♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them.

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jonathan: both of them poor freezing night water over saturday night's game. they watch the highlights of the last two minutes. welcome. lisa: i am sorry i am busy, i cannot respond. this is a really good game. jonathan: counting you down to the opening bell. here is the trading diary. remarks from fed chair powell

coming out about 2:00 eastern. tuesday, we get manufacturing and nike earnings after the bell. wednesday, private payrolls. thursday, another round of jobless claims. friday, payroll friday. mike mckee with us in the studio. michael: thank you. nice to be here on "sportscenter." jonathan: welcome. what is left to know? michael: i think he put it well when he said he will be flexible because they have a lot of reports coming out between now and the next meeting november 7. i would expect him to say the same things he has been saying. the labor market and inflation numbers are better balanced now and we are going to focus on the employment side for the time being but we think at this point we will keep our options open because we do not know exactly, we will be data dependent. lisa: we were joking he may cannot say we are going to dove.

there is a feeling he may say we are not going to be moderate about this. michael: the reinvention of verbs. [laughter] lisa: this is kind of what we notice from jackson hole. is that what we are getting? jonathan: help her out here. [laughter] michael: i do not think he will hawk either. unless you have some data that tells you things are falling apart or getting really strong again, you are not likely to see him do anything more than say we are data dependent and will make decisions when we get there. vicki bowman is giving a speech now saying she is still not convinced they need to do 50 at the next meeting, that we are uncomfortably above the 2% target now, although she does not rule it out if the labor market weakens. jonathan: that you watch the game saturday? michael: unfortunately, i did.

i was on the wrong side. it was quite a finish, instant classic. jonathan: thank you. tomorrow, here is the lineup for you. lots of thoughts, very unique, original thoughts on what is taking place in china and what will happen with certain parts of the equity market. we will speak with him. i am hoping lisa might be able to speak. stay tuned. lisa: i am going to speak. i will be so good. jonathan: is he going to dove? stay tuned to a bloomberg tv and a lot more. good luck to all of you. from new york, this was "bloomberg surveillance." ♪

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matt: we are off to a slow start, read on the boards. 30 minutes until the start of trading. katie: "bloomberg open interest" starts right now. sonali: investors are bracing for a crucial week ahead. fed chair jay powell speaks later today ahead of friday's all-important jobs report. matt: automakers seeing a run of bad news. they join issuing the latest profit warnings, partly blaming sluggish demand from china. katie: directv and dish agreed to combine any deal that would create the biggest pv