>> the fed is labor folk -- laser focused on the labor market. >> i think they have to go ahead with the 50 basis point cut. >> we will have a pretty messy payrolls. >> this should be clean, this might be the last clean one for a couple months. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> coming into friday. pull down the strike is over. good morning, good morning. on the s&p 500 up by two tents

of 1%. up by a quarter per the main event 30 minutes away paid its payrolls friday. >> thinks that risk assets to find. this would be the goldilocks nirvana. annmarie: breathing a sigh of relief. we are talking about the last week what is it going to be the following payrolls report. they are back to work after three days. >> four-day winning streak. just short of 75 on wti. the president asked a simple question.

>> he was asked would he support on iranian oil facilities strike and he said we are discussing that. the president has himself to blame for the spike in crude prices yesterday which is not great ahead of a presidential election when americans care about the price of gasoline. we have seen him do this in the past, very transparent when asked about russia's invasion of ukraine with troops on the border he said depends on minor incursions that it was cleanup on aisle six when he came to that security team. he walked back and said i don't want to negotiate in public. this is almost like a liability. >> lisa talked about this what is the commodity market mean to the bond market. crude up big time, of the bond yields moving. >> which is the reason why people are wondering they haven asset in terms of shock, question about whether this can stick, will we're discussing

that i think that would be a little bit anyways and a lot of people are trying to parse through joe biden's response yesterday to those questions. nonetheless has this market priced into much accommodation into little with respect to inflationary shocks or whether it's fiscal. >> crude up 5% just like that. equities on the s&p 500 up by 2/10 of 1% as we count you down payrolls friday. in the bond market up. the next hour looks like this will catch up with chris out of key payrolls data. seth harris the former acting labor secretary as u.s. dockworkers agree to end a three day strike and wells fargo on how low the bar is for another outsized fed rate cut. we begin with stock steady ahead of payrolls. investors looking for clues on behalf of the u.s. economy. writing this is equally the most fluid and interesting macroenvironment we've seen in

years. tech continues to see leadership relative performance with the august september moves and internals have suffered. chris joins us for more. is this so amazing for you, just assign, what is fluid about this. >> you have this intersection of the chinese, the fed cutting, giving leeway for the rest of the global central banks to do the same. we have with the saudi's did a week and a half ago so you have this intersection of the macro landscape and mix were really exciting time. >> it's not my opinion it's with the market is saying. what are they saying. chris: they'll be surprised if yields bounce for a few more weeks and we've been so ardent in this bullish bond call for much of the year. i think they've done a lot in the short. of time. tends from 475 to 360. it's not uncommon following the first cut of a cycle to see yields bounce. that's what we are in the middle

of here. i could see tends even on in line report started to trip back up towards may before 410, 415. i think that's a little bit down the road and what we've seen, we've seen rates, dollar oil really with each other. so something brewing on that front. >> to me this is fascinating and points to the fact the dollar is bouncing anything that will weaken as well but essentially will follow the trend paid you also talk about how the fundamentals are softening when you look into the charts. can you talk about what exactly is going on is this a market but kind of exhausted itself with this soft landing or vona broadening out and now suddenly you're feeling some of the last gasps of that. >> the question we get is chris do you think we will get a soft landing and i scratch my head at that because this market has traded soft landing for the last 18 months. what could have been more soft

landing then rates down and tech up. i think the appropriate question is what comes after soft landing. i think the consensus for a long time has been in the view after soft landing you ultimate get the slowdown. i am not so sure of that particularly with the chinese here we have to ask the question on the others out of the soft landing do you get some real acceleration. i wonder if you get a global real acceleration is that what rates or crude or dollar or maybe tech modest weakening of relative starting to tell us here. so certainly topical. >> i wellpoint would you say this is more than just a technical blip. >> i will say it like this. i think if you get some global real acceleration with rates i would be surprised to see tech claim the flag of leadership here when you look at the internals of tech you're down to about 60% of tech stocks in uptrends.

it begins to get tougher to consistently make money in the internal. i think just look at the character of the market the last eight to 12 weeks. people waited has. value line has, s&p 500 tech has not. just the character of the advance i think is changing in a very real way. >> the chinese stimulus is adding to this fuel and excitement in the equity markets but really in china how much is that holding back some of these u.s. stock names. >> when you look at the move in china and i say this emphatically i've only seen someone like this once or twice in my career. you look at the internals, the potency of the move is unprecedented. 90% of the hang seng minimum high this week you have to go back to late 08 early 09 remarkably in that category. so i think the equity market is saying at least be open to this being the real deal.

i think the question we ask ourselves every rally in china stocks over the last 20 years has been accompanied with bond yields rising. so if you look at the chinese 30's they have to confirm this move. they had a very big move higher in these yields the last two weeks i think that has to stick. annmarie: i also want to ask about the u.s. election. you write that your colleagues has the most exciting election of a lifetime so what are you doing out of that excitement? >> what we've seen historically is a weak market in october, the challenger tends to win. a strong market in october the incumbent tends to win. just from the markets interpretation i think the next three weeks or certainly crucial from that perspective. maybe more importantly let's look at all of this intersection between changes over the last two to three weeks. we had a very accommodative oil market maybe not so much anymore.

so, a lot of the kind of key macro variables we think impact the election have started to shift over the last two weeks. jonathan: this seems to be a take away from equities. trump sweep bullish, harris sweep bearish. chris: i think it is that simple in the near term. i would suspect it gets complicated as we move into 25. the reality is when trump won in 16 we went to -- taxes. in this case on a trump win we have to renew taxes. i think it's a very different view how the market will with trump trade if you do nothing they expire and you'll get to the second quarter and third quarter of 2025 irrespective of who is there and you will have to get this done or it will expire. the market will be a tell on what's the cyclical impulse behind that. >> how quickly do they move for tariffs and how disruptive is

that. chris: this is where i think there's distance between the consensus in the market. if you think about it in a traditional way that's going to be bearish or bearish industrials here that's not the message of the market here. i'm always in the game of what is the consensus thinking and where could they be surprised. i think there could be a surprise relative to expectations that tariffs and the second trump administration are not as punitive or as potent as talked about. >> you don't think necessarily the risk when it comes to the election lies in the bond market. >> i think if anything may be we trade rates up here over the next four to 68 weeks. and even a trump win when you start to buy bonds again. if the whole kind of impetus of a trump 2.0 is how do we take our foot off the fiscal accelerator and still manage a relatively modest or benign

economic environment that ultimate lease sounds like rates down not rates up. i'm not convinced with this kind of consensus but of trump wins we get some huge move higher in bond yields. history doesn't support that. >> just sort of an echo over the former president himself would say. what are you comfortable with in the equity market. >> i want to belong some crude. i still want to belong some industrials. i think we have to keep an eye on these financials. they are starting to we can hear a touch, that's a change of view for me. america has softened. >> what you think that is. >> i think it's a rate story but it is a change and any time there is a change from what the status quo has been there's a little bit of a shift on financials particularly on japanese ones, the european financials here. so it's up on global financials. >> japan are you throwing in the

towel? >> we've been so long for so long. i think it's time to at least beginning to back away. that is the biggest change in our work over the last several years. they had been kind of the key of any big macro call along japanese banks. i think it's a question worth discussing. >> good to see you. a question we will discuss next time. let's get june update on stories elsewhere with your bloomberg brief. >> a prolonged strike has been averted. u.s. dockworkers agreed to end a strike that paralyzed trade on the east and gulf coast. it frightened to become a factor in the presidential election. the longshoremen's association and u.s. maritime association announced the decision to extend their previous contract through to january 15th of next year. work will pickup today and the two sides will restart

negotiations for a long-term agreement which will include a pay increase of 62%. people familiar with the matter sang the european union has voted to impose tariffs as high as 45% on electric vehicles from china. the result of not been made publicly available but the european commission -- sources tell bloomberg 10 members voted in favor, germany and for others voted against. china has threatened its own tariffs on european dairy, brandy, pork and cars for elon musk emphasizing his support for donald trump once again. saying he will attend a rally trump is holding saturday in pennsylvania. it's the same location of the first assassination attempt on the former president. elon musk is already committed millions to the trump white house bid including a super pac he started that has spent $71 million mostly on canvassing and field operations to get out the vote. that's your bloomberg brief. >> up next on the program, trade

crisis averted. we speak with the former acting u.s. labor secretary from new york city this morning, good morning. ♪

i n't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars.

(clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. >> equity futures up 2/10 of 1% on the s&p 500 the payrolls report around the corner. in our survey the estimate is 150, the range is wide at the high-end, 70 k. the bond market yields higher a single basis point. under surveillance this morning trade crisis averted. here's the latest, cargo back in motion at major east and gulf coast ports as a strike comes to a close. extend the contract through the

15th. telling local media quote we are going to see -- receive a six to 1.5% increase over the next six years and have other language to protect us from automation worked out over the next few months. joe mathieu joins us from d.c. for more. let's talk about how difficult it might be to settle some ground on the language. >> this is being framed as a big win for the administration, a breakthrough in think we would be talking about necessarily this morning and the administration's fingerprints are all over this. this is about a half measure as errors would put -- set her through would say in a moment. the idea of guaranteeing no automation is the ports is just as important as the wage increases for these workers and that has yet to be hammered out so we are delaying what could be the most difficult part of this whole negotiation and in the meantime it was this time yesterday morning that the chief

of staff was on the horn with the shipping companies. they chose to divide and conquer it looks like. the labor secretary went to new jersey to meet with union leaders. it's interesting we can underscore enough that hurricane helene played in unlocking this deal. the message from the administration was ron desantis called up the national guard in florida that we have to get these ports open, and get supplies to those affected by the hurricane and that played a large role. >> we seen kamala harris try to put distance between her and joe biden. did she need to move closer to union joe? >> that's a >> -- great question. how they frame this will be interesting when she's on the stump. it is not lost on us that they delivered two separate statements last night. did you see joe biden with one saying collective bargaining works then about a minute later kamala harris out with one

saying it represents the power of collective bargaining. that sounds at they are singing from the same hymnal and goes on to say this is about parenting -- fairness print that sounds a lot like joe biden talking. >> we will build on that later. as joe mentioned joining us now seth harris the former acting u.s. secretary of labor. underfoot have you with us on the program. let's explore this more. you know what this is like. how difficult will it be to resolve the issues of language regarding automation. seth: there is no question about it is a sticky issue and it's a core of what the unions are concerned about, that is maintaining jobs for their members. my sense of the negotiation is wages was the hardest issue and the fact that they've been able to address the wages issue in what i think of is a big win for the union i think that will make it a lot easier to finish up the last few issues.

>> if that was the biggest hurdle why not just end it now. why are they punting this to january 15. seth: they wanted to get the ports open as quickly as possible and the wages issue was the thing that was going to do it. the automation issue was pretty complicated. there's already language in the contract, but the union wants more i think they'd figure out and craft language that was going to make sense with benefits issue. i think they just needed a little bit of additional time we will see how that turns out. >> 62% increase, raise the top longshoremen's wage to just over $63 per hour at the end of a new six-year contract today. do you think that will push up costs for importers and exporters. and still be inflationary to the u.s. economy. >> when you're talking about the kind of volume that comes through the east coast ports almost 50% of all imports in the

united states, from those ports. that's a lot of money and comparatively small amount of money that's going to the onshore workers is not going to have any kind of macroeconomic effect or price effect for consumers. more likely what it will do is bring down the profit level of those extremely wealthy foreign corporations and own the terminals. i expect to have a meaningful price effect for consumers. >> can you give us a sense of what you think happened but between we are so far apart we are not even coming to the table less than three days later we have a deal. >> a member of the presidents mediation team said to me that even before the deal was cut that the parties look like they are falling apart until they are not. i think the onus -- the owners here the employers here realize

this was going to go on, the ilm was very serious. the ila i don't know if they did this explicitly but it was certainly communicated clearly they had to get a wage number that was at least as good as the number that the west longshore union got which is about $60 an hour. i think everybody can understand that was going to be the floor and once that recognition was reached and let me say it was the biden administration the put those four dollars in our proposal on the table that the parties ended up agreeing to. once every buddy got to that realization getting to a deal on wages i think it became a lot easier. >> there's a question about the sticking point they won't deal with until january which is automation and i do wonder as someone who was once in a position of overseeing the entirety of the u.s. labor market and trying to be forward-looking how problematic is it that people are concerned about their jobs in terms of automation but if the u.s. does

not automate certain jobs it will fall behind and be more expensive in terms of a place to produce goods and ship them. >> i think that's a very important question. i think the best way to resolve that is in a manner that the ila and many other unions and that's collective bargaining. we saw the inversion of this same issue in the hollywood strikes were you dish -- the actors and writers were very concerned and also the theatrical stage employees were very concerned about the role of artificial intelligence in their industry and we've seen that across industries. for workers to have a meaningful voice at the table and to try and sorted out. the ports are sort of a unique case because there's only one set of east coast and gulf coast ports in the united states if you want to bring goods into the united states those companies have what is essentially an

oligopoly. and they have to do business with them so i think the competition argument isn't going to work all that well because there's just no competition in that market. >> the individual who gave the line to the current president when he was campaigning and an office that he should be the most prolabor union president in modern history. yet people asserting to wake up to the fact that the leader of this labor union makes close to $1 million a year. do you think that's going to backfire on this white house? >> that really matters only to his members who just got a minimum pay increase of $8,000 each year for the next six years. if they think he's in a pay too much over that kind of service they will have to have some kind of negotiation over the constitution but i would also point out that president daggett's salary is about 5% of the average salary at the ceos in the s&p 500. it is not a lot of funding.

who are leading large organizations are getting. not as many union leaders get that pay between -- that's between them and their members. i do not worry about it in the least. these unions are democratic organizations, they can choose who they want as leaders or they can pay their leaders what they think is the right amount of money. my sense is they got value for their dollar. >> sounds like champagne socialism for a lot of people. good to catch up. former acting u.s. secretary of labor. it's up to the union workers if they're ok with that loss. when it comes to executive compensation we don't just say shareholders are ok with it. is there a problem, a very different approach here. lisa: there is a lot going on, that's all i would say. wrapping my head around a number of these issues. especially given the fact the appearance of being part of crowd.

doesn't lend itself to a million-dollar paycheck. >> big conversation coming up later, the national economic housing director first on this program on the steel and the prospect of really closing it next month. >> she was in the room and on these calls with these negotiations. that these two parties look far apart until they are not and the west coast ports are the ones that set the floor and the bar for what the east coast was potentially can get. let's see where we are january 15 in the next few months. >> that's all i can say. it's an interesting thing. >> we will have a conversation next as well. bloomberg's craig trudell on tariffs, china ev's out of europe. ♪

it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

jonathan: final trading day of the week going into the weekend before we get there we have to get through payrolls friday. equity futures right now posited 2/10 of 1% on the s&p 500 heading towards the first weekly loss in about a month on the nasdaq 100 were positive on the session by one third of 1%. to your yields up by double digit basis points. we had some way to the move, by a single basis point into the three 70's at 37164. the little -- this is off the back of the moving -- move in crude. >> even though he's been bullish

on bonds and make something different. you're seeing strong dollar. it's just a whiff of inflation and a feeling that maybe this is something that the new trend in markets that cannot be ignored and leased in the near term. that something that goes to this question, about how the jobs market is hotter than expected will be traded by this market that's already on edge about inflation. >> wti yesterday the biggest one-day pop of the year so far. i want to get to this, sterling, a good dove, a bad hawk. this is what we see in the last when he four hours. stay with me. the pound a little bit stronger it was weaker yesterday so let's talk about governor bailey, tease up the idea of getting more aggressive. the chief economist says i don't think so. who's right? lisa: mickey bowman versus

austan goolsbee. austan goolsbee saying we are far away from neutral. you have jay powell you have that also mickey bowen coming out saying you have to worry about inflation. it just highlights how much this market is hinged on this rhetoric and a lack of knowledge of exactly what path sums monetary policy. >> maybe not in the same weight chairman powell was in the driving seat but you have to believe the governors in charge surely. >> is this is a deliberate strategy. to cool some of the appetite for the rate cuts in the markets is this a messaging tactic or free speech and muddy the waters and what we will do. >> the weakness on bailey is much bigger than the strength. cables up by one third of 1% today. session i think the market sees it in a similar way. >> inflation is coming down and that's what we've seen with jay powell versus mickey bowman.

saying you're the residence hawk. but jay powell speaks and people say he is where the committee is good ago. >> sterling 13171. the top story in the last 12 hours. u.s. stock workers agreed to a three-day strike. the longshoremen's association extending their previous contract through january 15 the two sides restarting negotiations on a long-term agreement which will include a pay increase of 62%. annmarie: this is going to end five days over the next u.s. president is inaugurated. one thing seems that harris the former labor step how difficult are on automation. the white house taking this as a win per huge sign of relief this is done and dusted ahead of this election they were worried about inflation and also a huge sigh of relief of everyone out there trying to get a handle on toilet paper and paper towels. saying costco on long island

also doubted paper towels after only three days of strikes. this idea consumers have this reaction post-pandemic i think you have to go out there and hoard because this will get a lot worse. >> if people wanted to freeze them, there is a bigger discussion to be had and i wonder if anyone can have it in terms of if the united states wants to produce more goods especially given that a lot of factories have been emptied out how much can the u.s. is a job killer, how much is this a job creator. this is a larger creation and i wonder how that will feature and some of these discussions because they understand the knee-jerk reaction but there has to be some sort of larger question about how this is framed. jonathan: there were two issues on the table. one was pay, the second was language about automation. most people said the second is much harder than the first. we haven't agreed on the second piece of this. all we've done is punk this to january 15. is it politically convenient we can have that conversation later

in the program. ultimately are we going to go back to square one in a few months time. >> how much can these have a meeting of minds when there's a fundamental fisher. of course it's political it's getting to right after the election, the question is does it mean we are going to deal with this kind of prolonged strike at that point if there really isn't some sort of agreement reached. >> the language is existential to these workers. this is about job security in the years to come. the white house continuously says they want to compete with china. china right now moves a lot of goods in and out. a lot of that is automated. >> we will deal with this in 2025. israel carrying out bombing raids near beirut. uncertainty over israel's potential retaliation against iran. putting oil on track for its biggest weekly gain since early 2023. forming these comments from president biden. >> you support israel striking

iran's oil facility sir? >> we are in discussion of that. >> annmarie, the floor is yours. >> is he being too honest and transparent or is the president of the united states being a liability not just giving them a card to use on the global stage but also some political pressure on israel basically giving us an eye into some negotiations that are potentially happening between israel and the united states especially given the fact earlier he said iranian nuclear facilities he wants to make sure our off the table. one thing is interesting with thing about the oil market the president has himself to blame. fg energy came out yesterday saying any disruptions to iranian oil supplies will likely push them above 80 on brent and in the absence of that we can quickly go below 70. the gap is so wide because they're so much supply in the market. >> regardless of knocking to try to get into present biden's head but i can say the response of

markets highlights how potentially vulnerable this market is to some sort of attack on national oil supplies. in a way that may be is >> not fully being recognized. >>market for dispense with see that strike in isolation thinking about lost iranian barrels thinking about exports across the region and compromise. retaliation would actually look like from those strikes. >> we have seen iran target u.s. allies like saudi arabia that took serious supplies off the market so the concern and people i'm talking to her less concerned about what israel does with iran they are thinking two steps ahead. what's iran going to do after that attack. >> are they can enclose the streets -- the straight of hormuz and that's the fundamental question. >> that is the number one question. krudys up, wti just short of 75 just short of 80 on brent. 7880. let's get to the latest in europe. the european union voted to

impose tariffs as high as 45% on ev's from china. 10 neighbor states voted in favor of the measurable germany and for others voted against along with 12 abstaining. kind of a shock around europe this morning. >> the one abstaining was germany. you have the situation with mercedes, astronomical number of cars to china. how do they compete now and also to the point we were hearing about yesterday how much do we end up with a trojan horse being the real issue of chinese manufacturers creating factories in europe to produce cars that ultimately sell back to china. annmarie: one week ago today i sat down with the german foreign minister. germany is at war with the tariffs and she insinuated i was wrong saying germany was not on board. yes obviously if china has tariffs on european cars we have to.

they voted no. >> crag let's talk about this, the difference within abstaining, voting for and voting against. craig: i think the automakers really made an all-out push here to get the government to sort of change its view and it does make sense when you take a step back and think about what's happened to this sector just in the last couple of weeks. we have seen a three for three mercedes bmw and volkswagen, out and in volkswagen's case it was the second profit warning they have issued in a matter of a few months so this is an industry that's under pressure, these companies have a huge presence in china that is at risk here and they are already shrinking in the chinese markets to

potentially have this additional headwind of retaliatory tariffs in reaction i think is really concerning folks. >> who should be worried. those automakers should be the light cognac makers, should be a second-tier port out of spain. who should be worried here. craig: i think all of the above and we will have a story shortly. the industry reacting to this morning's vote saying they feel abandoned by france. france being one of the member states voting for these tariffs. china has made quite clear that sector would be affected in its response to these tariffs. do we see a movement towards quotas or price controls and some sort of compromise here before it gets you know down to

the point of these tariffs actually being put into place. they are essentially here already but the companies are not being charged just yet. there is still time and that's something we've heard from some of the companies reacting to this. there is still time for a deal to be negotiated. lisa: what's happening with all the companies that could be affected in europe. german auto manufacturers leading the charge and going and wrangling up the luxury product makers to try and stave some sort of appeal. what's the timeframe? craig: the actual implementation and beginning of tariffs being charged would kick in in early november so we do have a time before that -- as is often the case in brussels we see there are many steps before anything actually goes into place. so there is a lot of elbows being wrapped and ears being

turned about just what's going to happen if the eu moves ahead with this. there are opportunities for stopping this trend before it -- train before goes off the track. >> the fact that germany voted against it is telling in terms of what will they do now. does that mean they can continue bring subsidies. are they going to do something else on the others to offset some of the pain that could be inflected on the likes of bmw. craig: i think one of the main places where companies are pushing within the car sector is on the next year we are supposed to have stricter co2 limits, into place for the manufacturers here. those already are causing a lot of consternation because of the slowdown we've seen in ev demand , a lot of companies coming out left and right and saying we

just aren't going to be able to make it next year will have to pay significant fines. we are talking billions of euros and there may be some ways out of having to pay penalties but those aren't necessarily attractive either. sending money, tesla's way, this is of course something we've seen over years now where tesla had i think maybe five years ago was assuming the rest of the industry was going to get its act together. figure out and make sure they no longer need to pay. tesla for regulatory credits. that's a business for tesla but is actually taking off. that something to watch for elon musk. he's had trouble growing this year, the regulatory credit business is looking quite nice. annmarie: i wanted to ask more on germany in the sense did you think the government was divided because i got a yes last week

when i asked if they were on board with these tariffs. craig: there's a real divide and fascinating evolution in terms of the way this has started, there was some units across member states looking at the state of their fares. a few years ago chinese imports a tiny sliver ev sales. they were on 20% of that in the market so real concern that this was not just a matter of chinese company sending ev's into europe companies like tesla, real issues in terms of even european manufacturers in europe and potentially using those imports to boost sales at the expense of local plants in europe. that's really a cause for

concern for folks in brussels and the reason we saw these tariffs coming into place, it is fascinating germany is now against these tariffs even as companies like volkswagen are really at risk as a result of chinese companies and international companies increasing their presence in china and trying to urge the fact they can make ev's much cheaper there than they could in germany. >> appreciated. >> we talk a lot about ain tech this is the most interesting industry on the planet. without a doubt. i wonder a lot of people skeptical of germany's motives here. germany just knew they would get what they wanted without offending the chinese at the same time. sat on the fence once again. lisa: it raises the question of how do they then counter any retaliation. can they continue to get away with that in terms of avoiding retaliation from china if

ultimately europe is being run together. what's the idea. bigger picture going forward of how to compete on the global scale if you don't necessarily have a countermeasure for any potential retaliation. jonathan: pork product out of the iberian peninsula is fantastic. just in case i offended anyone. a story elsewhere with your bloomberg brief. sonali: the new japanese prime minister used his first speech to parliament to emphasize his top abenomics priority which is to defeat deflation. the recently appointed leader shared he aims to raise wages and boost productivity, revive rural areas and turn japan into an investment powerhouse. he has asked ministers to support his goals by formulating an economic relief package to ease the impact of inflation. barack obama is launching a four-week campaign for kamala harris. the former plans to begin his

election push with -- with an event in pittsburgh on october 10. obama will also appear in ads and robo calls for down ballot races in the final weeks leading up to election day on november 5. the new york mets are headed to the nl ds after an electrical emanation game in milwaukee after falling behind going into the ninth inning. pete alonso blasted a go-ahead three run homer to take the lead. it could have been his last at-bat in a mets uniform with his contract expiring and instead the mets march on thanks to the biggest home run of his career. they now face off against their division rivals the philadelphia phillies. you know steve cohen is smiling somewhere. jonathan: no doubt about that. someone else who is smiling, how loud did that get? lisa: i was asleep because i work in the morning very early.

i was woken up as a result of a very excited household and there will be glued to the television screen for the rest of the next week. >> congratulations to all the mets fans. markets bracing for payrolls. >> the market starts to deteriorate, then i think the soft landing starts to come into question and that's why the 50 basis points. i think it will be a decent payroll report. >> we will catch up with michael of wells fargo. this is bloomberg. ♪ think scaling your ai pilots is hard? think again. with watsonx, you can deploy ai across any environment. above the clouds and on lots of clouds. with your secured data on prem, in real time on center court

and assisting bank tellers on the edge. watsonx helps you deploy ai wherever you need it. so you can take your business wherever it needs to go. ibm. let's create.

jonathan: equities just a little bit firmer up 2/10 of 1% on the s&p 500 bond yields a little bit higher.

38592. mohamed el-erian writes in. enjoying the mets win he will join us later this morning. >> congratulations. casa bravo is very happy for you. we can't wait to just gloat a little bit. >> to all mets fans. giving an individual shout out paid under surveillance markets pricing for payrolls. >> the market starts to deteriorate i think the soft landing story will come into question. i think it is a decent payroll. 140,000, i think that the momentum is for 25 basis points at this point. jonathan: investors are waiting septembers payrolls print in less than two hours time. the median estimate coming in at 150 k among a wide range of estimates.

michael of wells fargo writing we are accepting nonfarm payroll reports to drop slightly but unchanged unemployment rate of 4.2. our forecast for 25 basis point rate cut at the november meeting is conditional on a employment report that does not come in materially weaker than our forecast. michael that tease up the first and obvious question what is materially weaker. what number would you be looking at? michael: i think what it would be to me is to be, and below 100,000 on nonfarm payrolls inclusive of revisions. i think of it collectively if we beat by 25,000 on the headline for this month but the big negative revisions to previous months you take that into account. the higher employment rate, does it arise or anything higher than that. we have to look at the whole picture, but the way i'm thinking about it is do we stabilize. this is an example of a payroll report where a consensus number

is good news. 150 thousand 4.2% unemployment tease us up for 25 basis point in a month. >> there is a rethink of how much this ends up present given the fact we find a number of upset surprises -- upside surprises. yesterday's data the latest and yet you say under the surface there is a stalling out in the labor market reminiscent of the 2010s. what are you looking at to see that type of activity? michael: let me give you a few examples. we are in a three month moving average on nonfarm payrolls 116,000. it would be slow by the standards of the late 2010s. look at the unemployment rate which has risen of course half a point or more over the past 12 months, you look at things like the quit rate from the jobs data later this week. we are back to mid-2010s in terms of the share of people quitting their jobs.

we look at the consumer confidence index more and more people reporting jobs are hard to get. fewer and fewer people sing jobs are plentiful. you look across a broad range of the late market data, the household survey, the jobs data, a labor market surveys of households and all of them are showing a labor market at best as strong as it was in the late 2010s and at worst more of a 20 type labor market. >> we are seeing across the board just inflation expectations take up a little bit. there is a feeling maybe we've reached the trough and we will be accelerate from here. do you think that is misguided that kind of idea. >> i think we accelerate from here is probably strong but stabilize paid we've seen this downward trend in things like payrolls. that's our base case is we will level off from here. 150,000 on nonfarm payrolls, a 4.3 type employment rate.

-- unemployment rate. we are not looking for an acceleration from here to a 200 thousand plus nonfarm payroll space or 3% plus gdp growth in the next few quarters. jonathan: michael we appreciate your view. michael of wells fargo on the latest jobs report. 150 is the estimate in our survey. we've had a lot of people on the program share the sentiment that whatever the number is people are mentally adjusting it down. i don't just mean investors and mutual observers, people at the federal reserve is well-paid >> central bankers. >>i wonder how much we will end up looking more the revisions today to see whether that trend continues. if we see ongoing downward provisions it confirmed typically when you get a weakening labor market you get those negative revisions and the more that continues they keep adjusting downward. jonathan: we've played up payrolls a lot and played down cpi.

this was from bank of america, governor wallace remarks explains the rationale for 50 versus 25 should support expectations were frontloading of cuts with a dish inflation trend intact even if the labor reports surprises to the upside. cpi next week is equally as important in some people's minds. >> if people see inflation coming down as reason enough for the fed to get to neutral. then essentially the jobs market shouldn't stop them. ultimate strength is a good thing and if cpi keeps that coming in lower, go ahead. jonathan: the view of many on wall street including neil. a writing a little bit later this morning. we will catch up with evan rauf smith and speak to alan of morgan stanley who caught up with chairman powell. we talked to becky franco it's, just what is going on. that's all up next in the second

hour of bloomberg surveillance. ♪

♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

>> the fed won't have to cut as many times as the market is expecting because of the re-acceleration and growth. >> we don't disagree with market pricing that takes policy rates to below 3%. >> i think powell set up the case for 25 a couple of days ago when he spoke. >> most of that for 25 basis points this point. >> the idea the fed will deliver

to 25 basis point rate cuts i think is a problem. >> this is bloomberg surveillance with jonathan ferro , lisa abramowicz and annmarie hordern. jonathan: i knew neil would make an appearance at some point. from new york city, good morning. the second hour bloomberg surveillance starts right now. the price action looks like this. equities a little bit firmer. on the nasdaq up by little more than a quarter of 1%. the main event 90 minutes away. here's some estimates for you. the range is incredibly wide. 220 at the top end. at the low-end city going with 17. >> is good news bad news, is good news good news. everyone's rolling their eyes, joining the club. saying on the margins good news could be bad news simply because this is a market with more interested in rate cuts. bank of america coming out with goldilocks which is 125 would be

game on for risk assets. >> when you look at the analyst estimates paid 150,000 jobs is the spread. it's massive and makes you think no one knows it's going on which goes to the second point, the fact even jay powell was talking about how reliable is this data. the monthly celebration of dubious quality data that always thrills markets. whatever number you get you will have to take a grain of salt because it may come off. jonathan: they mentally adjust this number lower, alisa said it last time and was absolutely right. the focus wasn't the headline jobs number. it wasn't even wages, it was the revisions. >> all i could say is way to pour cold water on what we do every day. this is what the markets are doing every single day. so you can make a joke about how it is this fictitious number that will get revised but at the same time the fed has to make a

big decision based on this deal. jonathan: there was a payrolls report that comes early in november the could have messy for them. some good news, less messy. the three-day strike on east coast and gulf coast ports is over for now. we'll do this all over again potentially on january 15. >> looking back at october that's can look more reliable for the fed. now that we have those workers back at the docks punting this to five days before the inauguration. they had got a deal on wages 62% and seth harris under the obama administration saying they wanted to make sure they are in line beating what happened at the west coast now this language on automation they say it is potentially easy it looks like it's the more challenging one. it's existential to the labor workers. >> there are short-term and long-term decisions. short-term is wages, long term

you can talk about the u.s. and germany on this as well there is a larger key question about how are you been a deal with fundamental shifts underpinning this economy and that has to do with automation, things they produce and the west's relationship with china. all of those coming together being pushed out further and further. jonathan: the director of the national economic council under president biden will join us on the program at 8:15. here's a flavor the price action preyed equity futures firmer. crude very close to 75 up by 1.4% a four-day rally. lisa: it comes after joe biden responded to a question about whether israel could potentially strike the oil assets of iran. he said we are discussing that, i think that would be a little anyways. the 5% rally we saw yesterday,

key question is how far could this escalate. >> dissecting joe biden speak that anyway was i don't think i was supposed to be this transparent. jonathan: he was thinking out loud. a little but of a liability given how some of these negotiations are right now. annmarie: and basically his administration i think is concerned because it's an election year and you have to think amos hochstein was sitting there putting his face in his hands saying we are trying to keep a lid on oil prices ahead of the election and you said maybe iranian oil facilities or game on. >> the biggest one-day rally of crude so far. 74.77. we will catch up with priya, evan rauf smith as elon musk joints donald trump on the campaign trail. and after her conversation with fed chair jay powell early this week we begin this hour counting you down to u.s. payrolls.

the median estimate in our survey expecting a print of 150 k. a print of 150 or higher in the fed will likely cut 25 in november. payrolls around 100 k or below means 50 basis points. bad news on jobs and for risk assets and the curve should fall steeper. good morning. good to see you. i have one question on the bond market. why is so much money, so much cash into bond market funds right now? priya: great question as we had another record yesterday. i would say valuations. the fact you are still getting 4.5 to 5% on funds the yield curve is still inverted. every asset classes price for a soft landing so people are staying in cash waiting for better levels in bonds and stocks. we are seeing get inflows into bond funds people are waiting for a while. you are not getting that,

inflation is coming down. we don't have to read between the lines on the fed put we are telling you it is there. if things we can they will cut much faster and i think people who have been there might be a pent-up move because if you get that volatility we are absolute and to be in their buying if there is a risk off but i think there is a sense of everything is so well priced, let's just stay in cash it still giving me 4.5. in a year it will give you 2.5 or 3%. lisa: it comes at a time when people are looking at what's going on the oil prices taking a look at the resilience in the number of indicators yesterday we had ism services data that came in better than anyone expected surveyed by bloomberg and you have to wonder whether people are questioning this idea the fed is willing to go 50 basis points, a slew of people lining up. how much do you see this as sort of a given even though you are

seeing signs of strength and some any places. priya: i think the data is really mixed. look at the differential in consumer confidence. i think this is where the earnings report the government revisions i think they look within jobs is it really two or three sectors that's creating all the job growth. what happens with margins. there is a lot of uncertainty, the data is not giving us a clear rate picture and every markets price the soft landing so this is where i would push back the reacceleration risk seems to be off the table. i think we've got a bimodal world. between the election and geopolitical risk between payrolls frankly or the entire jobs report. we either stay in soft landing. every things priced in but can rates fall and spreads tighten. absolutely. or we go much worse. i think that's the world we are sort of wrapping.

lisa: ultimately you think that reacceleration is off the table. basically saying this head fake in oil prices is a head fake and any kind of tick up in yields is a buying opportunity because inflation is dead. priya: i think so. oil price increased supply in late additions, i think if it is geopolitical related i do not buy. if there's massive fiscal easing in china or significant easing in the u.s. it's a different question but i think oil prices are negative, bonds or diversifier for risk assets we sought the last two payroll reports. we had slightly weaker numbers. we have the market pricing in higher jumps of 50, rates fell and that's why i think if you get week numbers we will pricing 50 and the whole idea of why did the fed 50 all of those are still present today. monetary policy -- i think for

the housing market you need mortgage rates much lower. we are talking 4%, 4.5. at 6% you won't have that you not to create a positive on the housing market. when a thing about reacceleration i look it's not rates you need much lower rates. it's not really fiscal so far. this is where china becomes important. right now i would say oil prices and that's resulted in this rise in rates. if you got risk on your portfolio anyway we get a little bit nervous about these binary risks. the steepeners, only some duration given the backup it's an opportunity. annmarie: you say after the jobs report the markets will be focused on the u.s. election in the market will move in any scenario since it is not priced for any scenario. if you have a conviction that you think harris will win with a sweep or trump will win with a sweep.

how should you be pricing that? priya: it's really hard. your key point was the sweep. what happens -- i love that you bring up sweep because everyone focuses on the white house and we talk about congress, congress is very -- what happens with the housing, this is where the house is a knife edge. i'm not even sure we can trust polls but the polls are very close so and then look at all the policies we are talking about. fiscal policy absolutely needs congress. immigration, regulation there is so much out there we will have to see will we know the result on election night, i hope for all our sakes we do. but what if it is a divided government then we have to see what is priority number one and there is something on the campaign trail and then there's actually what they talk about. for the market pricing we will move in other directions there's so many unknowns around the

makeup of congress around the presidency and what policies. >> what happens when the fomc meets and we don't have an election result. priya: i think they look at financial conditions. if monetary policy is still restrictive we can debate and say maybe neutral rate is not 2.5 but 3.5. so i think they continue to cut they will try and be as apolitical as they can. look at the data, the entirety of the data, inflation is also important so we have to make both and then financial condition paid in the scenario where we don't have an election result. financial conditions will tighten. they don't want binary outcomes. in that scenario i think they tell us financial conditions continue to tighten. that's the message jonathan: we will want to hear. jonathan:where do i go?

>> i think you by bonds. i don't want to tout my book. jonathan: i had a feeling you might say it's the core plus etf. >> if you're getting investment rates, securitized high-yield bonds, i think high-quality fixed income is sort of the best place to be in right now, spreads her tight but look at the yields. higher than money market rates so money funds at five-and-a-half. and it's going to be a diversifier especially if one of these events we talk about an october surprise we have multiple contenders for the october surprise. if any of them pan out you've got that yield in the hedge. jonathan: good to see you as always. with an update on stories elsewhere this morning with your bloomberg brief. sonali: cisco has agreed to invest in cloud computing provider according to people familiar with the matter.

the transaction values the company at $23 billion. the potential secondary transaction would allow existing shareholders such as employees to tender some of their holdings. it is not yet finalized. bloomberg is reporting the 7-eleven owner is exploring a sale of its stores and supermarkets. according to people familiar with the matter the japanese retailer has poet -- puts private equity funds and entities about the sale of multiple businesses under it supermarket empire. the potential sale as part of a greater push to show focus on the retailers convenience store business. the man who predicted the double-digit returns of chinese equities now has concerns about valuations. raymond ma shared he believed there were signs the surge has gone too far for some stocks adding some lack a clear value proposition based on their likely earnings performance in

some sectors. he is not bearish on an opportunity in china says there's plenty of scope for investors to be making money. jonathan: made a ton of money in the last few weeks. tension on the campaign trail. >> i ask you to stand in truth to reject the to praise cruelty of donald trump. >> if lying, gets -- kamala gets four more years, america will be plunged into a dark age. jonathan: live on this payrolls friday morning, good morning. ♪

were you worried the wedding would be too much? nahhhh... (inner monologue) another destination wedding?? why can't they use my backyard!! with empower, we get all of our financial questions answered. so we don't have to worry. empower. what's next. the best ai assistant isn't one that knows the whole world. it's one that knows your world. a custom assistant, built on watsonx with ibm's granite models, can leverage your trusted data, be easily trained on your workflows and integrate with your apps. it can be tuned to do just what you need. because the more ai knows about your world the more it can help you do. ibm. let's create.

jonathan: payrolls dropping in the next hour. equity futures firm or by 1%.

bond market yields higher. the 10-year, 386. tension on the campaign trail. >> i ask you to stand in truth to reject the depraved cruelty of donald trump. and i ask you instead to help us elect kamala harris for president. >> if lying kamala gets four more years america will be plunged into a dark age, family finances will be permanently destroyed, your borders will be gone forever. they will that -- they already are. >> powerful allies joining kamala harris and donald trump on the campaign trail. liz cheney urging members of her own party to put patriotism over party. this as elon musk says he will attend trump's saturday rally in butler, pennsylvania. the side of the first assassination attempt on the former president. joe let's go to the polls.

how are things stacking up? joe: this race is statistically tied and pretty much every measure when you factor in margins of error. it's hard to say who's leading where. looking at the swing states that matter it's two points in either direction. we talked about their latest numbers tied in both georgia and north carolina where you are finding both candidates this week surveying some of the hurricane damage here. you have some star power at play. elon musk will be in butler. he is largely paying for donald trump's ground game right now. $71 million through super pac. i don't know if you end up speaking at these rallies over the next month. liz cheney, interesting optics. they don't agree on a single political issue to share a stage together. she told the crowd she's been a republican longer than donald trump has been spray tanning. i wonder if it brings any undecided voters fourth. jonathan: joining us around the

table, good morning paid good to see you. a lot of people came on the program since the vice presidential debate and suggested jd vance did a pretty decent job prosecuting the case and time, harris of the biden administration. is that gaining any traction in the polls? >> he did do a good job of tying them to biden. as we run out of moments that can change the trajectory of this race, there doesn't seem to be another debate whether presidential or vice presidential. whether or not kamala harris chooses to break more decisively with joe biden is one of the few remaining questions. we've done some testing that shows it's a pretty good idea to draw some contrast with the president. but in very specific ways which is to pick a high salience issue like the economy or inflation price levels are immigration and say i disagree on how we did this, how biden did this and i will do it differently rather than saying i'm young and

energetic or we got some things right. you have to get specific on something voters care about and say i would do it differently. annmarie: where does she need to inch closer to biden? >> there are things biden did that were popular. when you test ways to break with biden the most popular thing we test is her saying joe biden had to bring the country back from the depths of the pandemic, corporate america got away with a lot the last four years in terms of raising prices on hard-working americans, i would be different. that's off the charts. there are things and of course joe biden has been pretty tough on prices and he's invested in supply chains, he's done a lot but people just don't know that so you're really telling people some things that happened. the electorate wants to hear it. annmarie: the one place where she needs biden's help i want to say is the unions.

teamsters have published this internal data from rank-and-file. biden was beating trump. now the numbers are trump 58 percent, harris 31 when it comes to rank-and-file. how important is it to talk to those working-class individuals in places like erie county pennsylvania. >> it is very important. the composition of the democratic electorate has shifted where the suburbs of philadelphia probably way more on the democratic conscience in terms of who's can win this election than the industrial working class of pennsylvania and it hasn't stopped her from doing things smartly like signaling on fracking and signaling a major investment manufacturing. subsidies for small businesses and things like this. so the working-class is important. there is probably the most tension we've ever seen this election cycle between the democratic party and major national unions but is fairly contained, teamsters who have

been shaky in terms of their commitment to the democratic party for a while and the kerfuffle over the ila. >> this a number of constituents you've keyed in on and they have different issues that really in particular the need to be catered to them. when you look at the october surprise catalysts you look at the war in the middle east, you look at the hurricane and the recovery from hurricane helene. you look at the potential for a wobble in the economy. which issue do you think potentially would be most damaging to either candidate going forward? >> probably any major change in the economy, foreign is already the weakest rating that biden gets as president but voters have never really tied harris to his foreign policy. he will have to deal with it as president and affects his legacy if something changes in the middle east but not to be a nothing ever happens guy but it seems like we have a fairly well

structured election going into election day of harris up a few points, tied or trailing polls show more or less tied with a slight advantage in the sun belt states and a resistance level plus five nationally. >> there was a lot of criticism about polling in 2016. people didn't want to say they were to vote for trump and that's one of the reasons why the polls did not pick up how much support he had. is that true this time around? >> i have a sort of contrary intake which is the most prepared for where there's been polling undercounted donald trump support is polling is exactly that. the whole industry has examined are we getting these people and those people we have to make sure we get all of the trump people. the modal error, the one we are not prepared for is some pocket of support for kamala harris, we know it looks like when donald trump runs for president. we have had a lot of time to

prepare. noncollege working-class voters, all of these things that stymied accurate polling. it's largely accounted for. there could be another surprise. muslim voters in places like michigan, but we do not know what kamala harris looks like. if there's a surprise it's probably from her. jonathan: appreciate your time. evan of slingshot strategies. saying repeatedly things are -- going into the selection result a month away if we in to get a result. annmarie: it's on a knife's edge in the swing states paid i keep going back to the unions we have the dockworkers and last night the democratic party got a blow from the firefighters. they are not going to be endorsing harris. when you look at rank and file they lean towards trump at least in the teamsters would share their data. jonathan: coming up next on the program we catch up with morgan stanley wealth management as we count you down to payrolls in

just over 60 minutes time. sitting down with chairman powell early this week getting your thoughts on the biggest take away with the federal reserve chairman and we look ahead to this one in our survey here at bloomberg the median estimates 150 k the previous number is 142 going into this. equities rally just a bit on the s&p 500. bond market yields drifting higher. the main event hasn't been the economic data. it's been the commodity market crude for a third consecutive session. heading to the biggest weekly gain of the year so far pretty wti just short of 75. ♪

personalized financial advice from ameriprise can do more than help you reach your goals. i can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about.

jonathan: two hours from the opening bell and one hour from the jobs report. equities up one third of 1% on the s&p 500 headed towards potentially the first week of losses in a month. the nasdaq 100 up by .4%. the russell, up by .5%. bonds and commodities, treasuries, 2, 10, 30. yields up for the third consecutive day of two basis points, 3.8630. let's talk about the commodity market. the biggest one-day part on crude yesterday that we've seen so far this year.

brent crude just short of 80. you've been tying these markets together. "it is far less obvious that the conflict in the middle east will be traded slowly through the ins of inflationary risk. we assume the inflationary impulse will give way to safe haven demand and global growth angst." lisa: saying there has been inflation that signals a growing economy and bad economy, from some sort of geopolitical crisis , and that suppresses growth and is a flight to haven type of moment. which is why people see this as a buying opportunity. the fly in the ointment is that the economic data coming out at the same time in the united states has been better than expected. trying to unpack the two asset classes can be more difficult than it otherwise would. annmarie: looking at the supply and demand picture of oil, it is higher because of a war, conflict premium. the president of the united states did to himself yesterday

when he was basically transparent and said, yes, we are discussing that when it comes to israel targeting iranian oil facilities. jonathan: instant 5% move on crude. i'm pleased that you brought up the data. the sm services, it was one that had a print for everyone. the headline read, fantastic. the employment component, bit of a problem. same for job openings. layoffs were low, but hiring has come down. we have a problem here. that is in the data again and again. lisa: same with ism manufacturing, ism services. under the hood of the employment market, that is why people say that it's treading water and you are on a nice age to the downside. not necessarily to some kind of re-acceleration. what makes a break one way or the other? does the 50 basis point rate cut help it break to the upside? are we seeing the trough or is this the beginning? jonathan: or can we stabilize

here for a while, hopefully? lisa: it has never worked like that. jonathan: hopefully. we can share in that dream, all right? ending a three-day strike after reaching a contract extension through the middle of january. workers return to start negotiations on a long-term agreement including a pay increase of just under 62%. the pay has been addressed. one thing that hasn't and a major way is the language around automation. that is ultimately the bigger issue. annmarie: lisa, you put it earlier that it is a short-term gain but long-term it is anxiety about what these jobs will look like and they are trying to quell concerns about automation. that is the direction of travel for how these ports operate. especially look at places like china and how they are doing it. a massive sigh of relief is coming out of the white house. you do not want to have to decide on whether or not you want to be on the side of the u.s. economy or labor unions before an election.

lisa: that said, i would like to understand what master plan there is, if there is ever a master plan, but what concepts there are with respect to the balance of automation for longer-term structural sustainability with respect to manufacturing in the ports versus job creation? that is the question of when we talked about globalization, how do you keep jobs here? where is the discussion about how to bridge that gap so a lot of people don't become out of work? jonathan: we will have that discussion at 8:15. look out for that conversation on bloomberg tv later this morning. this is good news for the federal reserve. this data will be less messy now, but there are difficulties in this country including rescue crews continuing to search for survivors around the floodwaters of hurricane helene. the death toll rising to at least 215 people with more than half a dozen in north carolina and hundreds remain missing. lisa: people have lost their livelihoods. a lot of people moved to these areas and didn't even think of hurricane risk.

a real big concern that we talked about with the governor -- the congress member from tennessee, if we get another storm, even a big bout of rain, and there is another one coming, how much does that add to the complications of recovery and rebuilding in these areas? annmarie: will congress come back if they need more money in supplemental funding? the dockworkers and the hurricane is connected. it was the final push to the union to say that actually emergency materials are needed. we can't hold the economy hostage at this time when hurricane helene is one of the deadliest storms in modern history. jonathan: a difficult moment for the people of those states. that story on bloomberg tv and radio through today. the latest out of china, economists morning the stock rally could turn into a bust. china's economy is on weaker footing than it did before the pandemic with a number of vulnerabilities including the housing sector, a high local

government debt, and geopolitical tensions including around the automakers in europe, which is the latest news out of the continent. lisa: going back to the 2015 boom and bust and losses after that. i get it. that is why people say that it's a trade, not necessarily owning it. they are renting the trade but not owning it. let's see what they can do. we hear from economists saying that the bazooka could be 1.4 trillion dollars upon sales to fund stimulus. a lot of people are in wait and see mode. annmarie: they are excited, they went to the party, but are waking up to the hangover. i can't get over the youth unemployment rate in china, near 20%. that is the data we know. that is going to trickle down to the real economy. that is the question mark. jonathan: referencing the post gypsy period in the u.s. economy saying that the policy reaction did enough to stabilize markets and lift conditions but not enough to address the economic vulnerabilities and it remained

that way for a long time. he's making the suggestion that that is what we are seeing in china now. it is enough to lift markets, not enough to address the weakness in vulnerabilities in the broader economy. lisa: how may times do we say the stock market is not the economy? how many times do we say the financial markets and conditions are divorced from the economy. if that is true in the united states, think how much more so in china. jonathan: a very interesting point. the u.s. economy is all about the labor market. >> by many measures the labor market is still solid, but it has cooled. conditions have cooled considerably. we don't think that labor market conditions need to cool further from where they are. the measures we are taking now are really due to the fact that our stance is due to be recalibrated, but at a time when the economy is in solid condition. we are recalibrating policy to maintain the strength in the economy, not because of weakness in the economy.

jonathan: a familiar face on the left side of the screen. ellen, good morning. a fantastic conversation. what was the big takeaway for you? ellen: chair powell seemed very relaxed. his baseline is 25's. you heard him, the economy is on strong footing. he was easy going into the conversation that we had important data last week showing gross domestic income had such a significant upward revision where we had more spending, more income, and the savings rate got revised up. meaning we have a greater savings cushion then we thought. you pair that with the coming downward revisions we know we will get on employment, those are huge productivity numbers. that's a lot of comfort for a policymaker that may have been worried that consumer spending was going to drop off quickly or jobs would drop off quickly.

it was a pretty relaxed conversation. importantly, i wanted him to say publicly that the employment report during blackout before the november meeting will matter. that is one reason why i am only focused on the unemployment rate today. jonathan: let's get to it. hello do you think the bar is for the 25 you have penciled in to turn into a 50 in november? ellen: the bar is fairly low if the unemployment rate continues to rise. you can get a healthy employment number today. you can get a healthy employment number in november. if the unemployment rate continues to rise, because that keys off a different report, the household survey report. that is the sole measure that chair powell is watching. if that continues to rise, you have hit your threshold. you said we won't tolerate more weakness in the labor market. i don't think, especially when

rates are this high, that there is a particularly high bar to get to 50. lisa: even jay powell talked about how the rising unemployment doesn't represent a weak market, it represents an increase in the overall jobs market in terms of supply of workers. why does this become the most important indicator if he himself has said, maybe it's not measuring weakness per se, but a change in the demographics of the labor market? ellen: that has been the case for some time. he talked about the impact of immigration, greater supply into the labor market, and for some time that's been driving the unemployment rate higher and represented a better balanced labor market. we moved into balance some months ago, which means we are starting to move into an over -supply at a time when companies are slowing hiring. further rises in the unemployment rate will be for the wrong reasons. lisa: did you get a sense that

jerome powell is fundamentally more dovish than the rest of the committee? we've all been assuming that's the case and what we get from the rhetoric, but did he seem to feel he was the consensus in terms of having this predilection to cut by 50 basis points? ellen: the fundamental issue is the economy is ok, and there is not any forcing issue to cut rates. when the data is deteriorating quickly, slapping policymakers across the face, you will see how quickly consensus comes together. it seems disparate on the committee because there is no particular emergency. you are cutting in a healthy economy. it is just that rates are higher than they should be. that is what he calls this a recalibration. without an emergency driving factor, the views are all over

the place and we try to figure out, is powell driving the consensus? is he strong enough to pull consensus? is anyone in the middle with him? i think he has plenty of supporters in the sense that we could do 25 or 50. the data will tell us what we need to do. annmarie: do you buy into the narrative that businesses are holding off on hiring or firing because of the uncertainty of what next year brings? ellen: alexion uncertainty does create paralysis and decision-making. we can see that there is no turn in the economy. not a lot of turn in the housing market or labor market. people are not feeling confident to leave their jobs and look for something else.when people are separated from jobs, it is taking longer to find another job. companies have been sitting on a pretty sustainable level of payrolls. they don't need to ramp up hiring. they aren't cutting. it's a stasis.policy

uncertainty has something to do with that, but i also think that we reached a point where payrolls are lean and what companies need and there is not any particular deceleration or acceleration in the economy to drive change. annmarie: if the unemployment rate maintains at 4.2%, could we see a fed that does not cut in november? ellen: no. i don't put a 0% probability on anything. that has burned me in the past. let's say a 5% probability they don't cut in november when we have so few data points before that meeting. using powell's own word, ample room to cut, you have room to continue to drawl rates down. especially because inflation remains muted. jonathan: can i ignore inflation data next week? ellen: yeah. i'm going to say yes. jonathan: that is a new world. why is that? ellen: surprises to the upside

is the first upside surprise in a string of really solid disinflation numbers. it's one print. lisa: i will ask another question to put a bow on it. can we remain in this stasis for a long time? ellen: probably not. this is something that you said at the beginning of the segment. typically when you are in this neither here nor there. it will break up or down. given all of the global risk that you spoke about, given the alexion uncertainty that you brought up -- the election uncertainty that you brought up, it's hard to point to upside risk to the economy here. jonathan: wonderful work this week. don't take our job. thank you so much. let's get an update on stories elsewhere. here is your bloomberg brief. sonali: president biden's latest effort to lower student that

another setback in federal court. the ruling from a judge in missouri argues that the plan is an unconstitutional overreach of executive power. a coalition of senate republican-led states locked the rule from taking effect and biden's plan would have canceled debt for about 30 million borrowers. falling premarket after the ev marker cut it's for your production guidance saying that they are going through a production disruption due to a supply shortage that has become more acute in recent weeks. rivian is revising down vehicle production estimates by 10,000 units. now calling for under 50,000 new vehicles to be made. spirit airlines sinking in the premarket amid efforts to avoid bankruptcy. according to people familiar with the matter, the struggling air carrier is seeking new financing from creditors in exchange to extend its current debt. the months long negotiations haven't led to an agreement. if the airline cannot reach a deal it may be forced into

bankruptcy. the company has until october 21 of find a solution to its financing woes to maintain a key partnership with u.s. bank. that is your bloomberg brief. jonathan: next on the program, choppy waters in the workforce. >> if things are so strong, why is the unemployment rate up? one thing that is not revised is the unemployment rate. the unemployment rate has been rising despite the seemingly strong economy. jonathan: that conversation around the corner. live from new york, this is bloomberg. ♪

(♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is.

nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com jonathan: payrolls, 42 minutes away. equities up .25%. choppy waters in the workforce.

>> if things are so strong, why is the unemployment rate up? one thing that is not revised is the unemployment rate. i would point out the unemployment rate has been rising despite the seemingly strong economy. growth might not be strong enough to keep the unemployment rate from rising. if that is the case, that means the labor markets are exerting downward pressure on the wages of those already working. jonathan: the state of play, september payrolls in half an hour. the markets on edge for the next state of the labor market after this week's adp and doubtless claims. data signaled stability. "going into today's report, our data signals we are in a labor market that is treading water. we are staying afloat with steady demand when you look at the top line figures, however, there is an underlying weakness leaving some employers and workers feeling stuck." let's talk about that churn and what might be behind it. some people have pointed to

election anxiety holding employers back. what do you think it is? >> there is a host of uncertainty surrounding labor market. i listened to ellen around inflation. consumers are looking at the inflation numbers and are shopping with their wallets that are lighter every time they go to the store or the gas station. while the rest of us may don't be watching those numbers, consumers will be watching and feeling that next week. election uncertainty as part of it, but we are just seeing this treading water labor market, as i mentioned. we are not going forward because employers are concerned of, is the economy going to turn in a positive direction? . they are a little stuck. the great staycation is back again. the undercurrents we are seeing are indicating weakness in the labor market. the top of that list for me is blue-collar workers. blue-collar demand. we look at real time job demand not a look in the rearview

mirror. real-time demand for blue-collar workers is down 3.1% month over month and 4% year-to-date. when you dig into those numbers deeper, you will find it is front-line manufacturing supervisors down 19%. why is that? because employers are really watching where they are spending their money and taking note, do i need reduction or production supervisors, and making those trade-offs. that is a big area of weakness we are watching. the other is the hyper concentration of demand. overline is steady. digging in blue-collar is down. then you have a hyper concentration in a new breakout in the september numbers we are looking at around science and r&d. we are digging deep to find growth in the labor market and driving that growth are statisticians up 400% month over month. who is hiring statisticians? amazon before holiday hiring trying to get what consumers are

spending on. a couple of numbers to watch today. jonathan: that is a brilliant picture of where we are in the labor market. it reveals a bigger question we have been asking all week. where are the layoffs? why aren't they happening? becky: we are seeing companies hold on. it is like it is this staycation on both sides. they are holding onto their talent. internal mobility, as i've talked to ceos across the country, a big buzz word. instead of letting someone go, i moved them to another job and worked to keep them. it was so difficult to find talent at one point. we are seeing layoffs. they are not depressed, they are steady. you would expect them to be

higher, but the motion of the labor force -- we talk about the data, the emotions, the feelings . there is still fear it, even on the employer side, and they are holding onto workers. lisa: statisticians are the ones being hired. i think of that staff being used for different types of artificial intelligence, automation, and computer programming that a lot of people have been saying is driving efficiencies. based on the data you are seeing, are the efficiencies at the behest of job growth or are they generating a new type of job growth that will take time to show up? becky: the data would show that it's not having a negative impact on jobs today, and candidly, it's not having a positive impact. when i say that statisticians are up 400%, that is 37,000 jobs. it is a big number given that it is growing, but it is a small number. for the first time in nine months, nine consecutive months of growth and machine learning

and ai occupations, we saw a decline yet a rise in statisticians and mathematicians. why? companies are taking a step back and saying that ai is coming for sure. there is a lot of hype around it. what do i need to do now versus getting ahead of myself with ai? i need foundational data that i can organize and aggregate and pull from in a way that helps me make informed decisions. i believe that is a foundational move for the labor market and a good one for the future. we will cai grow again, make no mistake, but the first -- see ai grow again, make no mistake, but amazon and walmart --. annmarie: we are at the start of the year where holiday hiring kicks off. how is it looking now? becky: a slower start to the season. if i was on this time last year, i would tell you that we are ready for an early start to hiring and are seeing demand pickup. we are not seeing the demand pickup yet.

the estimates are about 520,000 holiday jobs, lower than last year. even in that, we are seeing it will be another brick and click holiday season. brick, increased demand for holiday supervisors. click, statisticians. we will see logistics pick up things have to get from point a to point b, but statisticians are new. we have ups, macy's, target. these companies prioritizing the candidate experience. how do i hire someone? for ups, you can apply and get a job offer in 10 minutes. an offer. not an interview, and offer. macy's takes five minutes to apply and committed to an offer in 48 hours. we are seeing a war for talent show up on speed and reflecting the candidate, which is another

reason we aren't seeing layoffs. it is because employers are still feeling like employees have a lot of power in today's labor market. jonathan: as we were talking lisa was thinking about applying. lisa: for ups driver? jonathan: because of how fast it works. lisa: i want to see the response times. stop knowingly. -- stop knowing me. i thought that that was a fascinating conversation, the idea of a step back. a lot of technological change is happening, how do we do it in a smart way? that is the paralysis before a potential positive breakout, but how long does it take before we get there? jonathan: mohamed el-erian of queens college cambridge and jeff rosenberg blackrock. the third hour bloomberg surveillance is next. the jobs report at 8:30 eastern. ♪

>> the fed is laser focused on the jobs market. >> if it is diminished they have

to go ahead with the 50 basis points cut. >> we will have a pretty messy payrolls. >> the jobs report this week should be clean, but this might be the last clean one for a couple of months. >> this is bloomberg surveillance with jonathan ferro, lisa abramowitz, and annmarie hordern. jonathan: the jobs report is around the corner. the scores look like this. up a quarter of a percent on the s&p 500. the nasdaq up by .4%. heading towards the biggest weekly loss on the s&p going back a month. the bond market yields have been creeping higher off of the move in crude. less in the commodity market, more about the labor market. the estimate in our survey is 150k, looking for unemployment to stay at 4.2%. as lisa has said, for many people on wall street it should be about revisions in america, because a lot of people are putting more weight on that than this.

lisa: it ultimately makes a big difference if you see 100 625k at the north side -- 165k, on the north side of the estimates. the question for me as if we will see revisions if it will move markets or it will be the unemployment rate. we heard from neil dutta, why is the unemployment rate going up? it will make a difference if it gets rounded up to 4.3%. annmarie: it is a hard payrolls support because of the estimates. 220 is what jeffries have than the 70 of housing on citi. -- it is an ocean of how far apart they are. we are normalizing or going below trend and that is details you want to see. jonathan: morgan stanley on the program 50 minutes ago saying, don't even look at it. not precisely her words, but that was the essence of the

argument. it's all about the jobs report. lisa: it was the same essence that we also heard that the inflation threat is dead. if you have oil and the tick up being an inflationary threat is ultimately attacks on people that will slow growth. that is the argument people are making. that said, i wonder, listening to what becky franco it's is saying, if companies are in stasis guarding a number of uncertainties, what is going on in november and technological changes, that's a different picture. jonathan: a four-day rally on crude, the biggest weekly gain so far after the biggest one-day pop we've seen so far in 2024. brent crude up another 1.3% just short of 80. annmarie: the latest surge comes from the spike in oil prices from the words of the president of the united states. asked directly, would you support an israeli attack on iranian oil facilities? we are discussing that.

crude takes off. is the president being transparent or is he potentially a liability in these negotiations because he is being so transparent? is he moving oil markets because he is saying there will be a potential more disruption out of the middle east? jonathan: if you're running for election and are worried about crude prices, that is a liability. coming up, investors await payrolls. we catch up with lael brainard and mohamed el-erian. stocks on hold ahead of the next big data point, september payrolls. "the macro backdrop in fundamentals are favorable for equities. the economy is growing at a healthy clip and the fed's easing monetary policy. we look for an additional 50

basis points of cuts this year with the potential for more if the labor market weakens." that's talk about what you are expecting and 26 minutes and of good news is still good news. >> we think that the market will react positively if we get 150 to 200 k. the unemployment rate, we know everyone is watching the unemployment rate. that is what powell is focused on. if that goes up it puts 50 basis points on the table for november, but we aren't there yet. jonathan: the data has been hard to read. lisa mentioned the ism service number. the headline is great. new orders, brilliant. when employment component, concerning. job openings higher, he sent. then you a hiring slow and the quits rate come down. slightly concerning. what are you telling your investors to do with the incoming information? should they put more weight on one versus the other? nadia: king at the data as a

whole it points to attic -- looking at the data as a whole it points to an economy that is still growing. we know that some of the employment data has been noisy, but also, you need to listen to what companies have been saying. is monetary policy restrictive? yes. we saw that in the comments in ism. but it feels like when you look at some of the revisions, specifically on the savings rate , lisa, the savings rate is higher than previously thought. the consumer has more of a cushion that people thought. consumption has been driven more by income. that still paints a pretty picture for the economy and equities. lisa: there was a further increase to money market funds because there is uncertainty. however, valuations are very high. it is not like a lot of the heat has been taken out of the market. how much do you push back against the argument that it's difficult to get bullish from

here based on valuations considering all of the potential risks we have coming forward? nadia: it is definitely something that we are cautious on. the reality is we think that near-term the market could get choppy. we are heading into the elections and we have geopolitical risks. we are in october where there could be potentially incremental information around u.s. semiconductor chips. we have been advising clients to prepare for a pickup in volatility and use hedging strategies to help mitigate some of that. that said, even though valuations are elevated, a lot of these companies are growing into that valuation multiple. looking out to next year, we think that you can get high single and double digit earnings both and that will help in terms of companies growing into that multiple. ultimately, we think with the positive economic backdrop that this is a market that could get to 6200 by the time we get to next year. choppy near-term, but year end

2025 we continue to encourage clients to use pullbacks to add to the market. lisa: how much does the 6200 prediction engine on a pre-accommodative fed, predisposed to cutting to 50 basis point increments rather than 25? nadia: that is a great question. our core view is for 50 this year and 100 next year, a quarterly cadence. if it breaks down we expect that to be accelerated, but looking at the data so far, as powell has noted, it doesn't feel like monetary policy needs to be acting at a fast pace.we expect it to be more gradual . we are not factoring in the rate cuts the market is pricing end and we think the equity markets can absorb 100 basis points year and trend back. annmarie: you say you are watching the election and give a slight edge to kamala harris. does that mean for markets the risk will be corporate earnings rather than inflation because of tariffs? nadia: when we think about the election, we assume that harris

has a 55 probability she wins, but most likely a divided congress. we are most closely concerned about a democratic sweep, because it has implications for corporate taxes. could it go to 28%? if it does, that is a drag on s&p earnings and is probably the same reaction from a market pullback standpoint. remember when trump lowered corporate tax rate several years ago? we did see the market rallied 10%. the rally did not happen until we got more details. also, even in a trump victory, tariffs could be quite disruptive to markets. annmarie: that is unilateral. when it comes to a potential democratic sweep and do think that that could be worse for the markets because of changes to the tax policy, how much drawdown could we see on the s&p 500? nadia: you could see a knee-jerk reaction days after the election, hopefully it is just

days. you could see a knee-jerk reaction of a couple of percentage points but the market will wait for details. we know the promises are made and they don't always translate into policy. the devil is in the details. the last time another synema type could push back. lisa: how much are you watching what is going on with oil prices as a potential catalyst? how do you play that at a time when it is considered a growth dampener should it persist? nadia: that is the word, persistence. we know historically, a $10 move in oil prices over three months could be 40 basis points, 50 basis points of headline inflation. in reality, core inflation is a couple of basis points. not overly concerned about that. we took a little off the table after you biden's comments and the spike in oil prices.

we are slightly positive on oil, but we think that the reality is there will be a concern about supply, excess capacity. we know that the opec excess capacity and then libya as well this week. the oil market has not tightened the sweep. we are seeing geopolitical risks. we think the oil can get above $80, but not much beyond that. lisa: we have gone through about 15 different topics. what do you do when you come in in the morning? what is the unemployment rate? what will jay powell do? how do you decide what to focus on? nadia: the risk we are watching doesn't change every day unless there is some sort of headline. lisa: which is every day. nadia: absolutely, monetary policy is important and we want to get at least 25 basis points

and we agree with ellen's comments earlier that we will get to 25 basis points. i think that the rhetoric around the election cycle and ultimately what happens in the election is also important. we have tensions in the middle east. if that escalates and there is a disruption to oil supply, that has further implications. jonathan: we will have something new to talk about next friday. thank earnings are around the corner. can we finish on financials? nadia: we are positive on financials. it is a call on lower rates, easier regulation for potential return on capital's. next week, earnings could be mixed because there is a timing mix match. the first cut has timing sensitive banks. it will take time for the timing to resolve itself, so we think that the net income interest could be under pressure in q3, but by 2025 we expect to see growth in that. we think at 20 to five the outlook for banks improves. jonathan: it is good to see you on payrolls friday.

it is good to see you. let's get an update on stories elsewhere with your bloomberg brief. sonali: a prolonged strike has been averted. u.s. dockworkers have agreed to end a three-day strike that paralyzed trade. on the u.s. east coast and gulf coast and threatened to become a factor in the presidential election. the international longshoremen's association and u.s. maritime association announced the decision to extend their previous contract through january 15. work will pick up again today and the two sides will start negotiations for a long-term agreement including a pay increase of about 62%. people familiar with the matter at telling us that the european union voted to approved tariffs as high as 45% on electric vehicles from china. the results haven't been made publicly available. the european commission can proceed with enforcing the duties. sources told bloomberg that 10 members voted in favor. germany and four others voted against. 12 abstain. china threatened its own tariffs

on european dairy, brandy, pork, and cars. waymo has announced that it will expand the fleet of robotaxis with hyundai vehicles. waymo sensors and software will be built into significant volumes at a new hyundai plant in georgia. on road testing of the hyundai ev's will start in late 2030 five. the companies are in talks for other opportunities outside of the ev supply arena. jonathan: next, a trade crisis averted. we will catch up with the national economic council director in a moment. that conversation is next.

personalized financial advice from ameriprise can do more than help you reach your goals. -you can make this work. -we can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about.

jonathan: the opening bell is

one hour 15 minutes away, futures on the s&p 500 are positive by .25%. a: 30 eastern, the jobs report is around the corner and the number we are looking for is 150k. u.s. dockworkers ended a three-day strike that temporarily halted east coast trade. union extended the contract through january 15, allowing more time for negotiations and avoiding a contentious labor and economic title ahead of the election. joining us now is the national economic council director, lael brainard. director brainard, thank you for giving your time. the first question we have is how much progress have we made ahead of january 15? you have been a big part of the conversation. can you share some of that information? lael: there is tremendous progress. the most important thing is our ports are back open, our dockworkers are back at work. american consumers won't see any effect at all. we see that the collective bargaining really works when you support it and give it a chance,

which is what the vice president and president have always done. in terms of the progress at the bargaining table, for many months the two parties had not been working together. now, they have extended the contract in order to roll up their sleeves and address the remaining issues on the table having now solved the wage peace. -- wage piece. jonathan: some would argue the remaining issue is the hardest issue, automation. trying to work out if this was about election to push this to january 15 or the patriotic thing and making sure that we could get the things that we needed to get to the disaster zones across the country following the hurricane from the ports through this country efficiently and effectively. can you share with this was really all about? lael: absolutely. on the part of the carriers, the port operators, and the dockworkers, they all wanted to get back to work.

i think it was a patriotic effort. we wanted to make sure that the hurricane supplies are moving. that consumers don't see any effects. as well as american farmers and exporters. on all sides there was a real desire to get to a solution that could carry them forward, get back to the negotiating table, get the ports open, get back to work. annmarie: what does the white house deem acceptable when it comes to the language on automation? lael: we really don't take a position on how the collective bargaining process resolves. what we care about is making sure that we support the collective bargaining process and allow the parties to come to conclusions that works for both sides. that is the role that we played, bringing the two sides together and encouraging them to find

something that they could agree on. they found agreement on wages, and agreement on extending the contract to january 15. i think what we did was support the collective bargaining process, support parties getting back to the table. the rest is up to them. annmarie: you have done a lot of work when you came into the west wing on supply chain and supply chain resiliency. how does the white house, given your work, that we could have more efficient ports, is that more important, competing with china, efficient ports or union jobs? lael: what is important is making sure that we are making all of the improvements that we can to our supply chains. as you know, we have massive investments through the bipartisan infrastructure law in our ports. we also have a supply chain counsel at the cabinet level that i run on behalf of the president. we have more data across the supply chain.

there is a flow office at the department of transportation that helps all the participants. the carriers, the operators, retailers, farmers, they have the data they need to plan ahead and mitigate. that process was on display in the wake of the baltimore bridge collapse. it was on display in the weeks leading up to this successful extension of the contract and resolution of the wage issues. annmarie: do you think that there's a chance we could get to the automated language before january 15? lael: i think that the carriers, operators, and dockworkers know that they have work to do to find acceptable outcome on that. and many other issues. but i have a lot of optimism now that they are talking to each other that they made a good-faith effort on the wage piece and that moved negotiations forward.

they had not been speaking to each other for months. our interest was getting the two parties back to the bargaining table on the basis of a fair wage. don't forget that these dockworkers, and the previous six year contract they got no wage increases at all. other years they got $1. in the meantime we had covid. we had dockworkers risking their lives to keep goods moving on behalf of american consumers and businesses. the port and carriers during these last few years had record profits. this is a deal that could give workers their fair share after a period of having very little wage again. it is a nice, important step forward. of course they have more work to do. lisa: i'm really impressed with your ability to focus with them mowing the lawn and yelling behind you. honestly, it is unfathomable.

they are always mowing the lawn. i'm wondering, director brainard, how much you see necessity for workers to have to be flexible at a time of great change? there are some technological changes that are more easily implemented if companies have the ability to figure it out as they go along. to not necessarily be beholden to contracts written in a different time. how do you argue that labor negotiations should continue with organized labor if companies need to have that suppleness at a time of great change? lael: what i would say is, when you look at the contract that you saw on the west coast ports, for instance, which was a very successful contract for workers, for all of the employers, it is a contract that resolves those issues and moves forward.

i expect that the same as possible in the context of the collective bargaining process that now has been extended into next year on the basis of a really strong wage offer. unions are more popular than they have been in decades. the president and vice president are demonstrating by their actions, this is how we enable the collective bargaining process to work. the collective bargaining process does reach fair wages for workers and a set of other really important agreements about how workers can have voice in the way that businesses organize. all of those things are on the table. we believe that we have enabled that collective bargaining process to continue in a very productive way that is good for everyone.

most importantly, getting the ports back open to get supplies to areas affected by hurricane helene. jonathan: getting to a more broader and philosophical point that perhaps we can finish on. we are all vulnerable to automation. it is somewhat easier to be prounion when union membership is so low. if it was higher we would be complaining about being vulnerable to automation. how do you suggest that the american public should deal with the increase of the use of ai and automation? should we all go on strike? lael: what is interesting there is unions have actually worked with the organizations representing employers on ai provisions. one of the first contracts to directly address artificial intelligence was the writers contract, a really great contract, which had language that used ai as an enabler to

enable writers to actually be productive, but kept the creative direction in the hands of humans. of course, i think those are the kinds of principles we have supported at the white house. we have released principles. it is important for workers to be enabled, not displaced. it is important for workers to be sitting alongside businesses in making sure that they work together on where ai should be used. jonathan: a much longer conversation for another time. i know you can't talk about the payrolls report, it is still to come. thank you for your time. your payrolls report is next. it is four minutes away.

♪ ♪

with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

jonathan: this is it too. it's why we get out of bed. good morning to you. 20 seconds away, equity futures up one third of 1% on the s&p up 4/10 on the nasdaq 100. on the russell up by six. two-year, 10 year, 30 year. yields bleeding just a little bit higher. the jobs report estimate survey 100 50,000 with the print it's mike mckee. >> worth getting out of bed, 254,000 jobs created in the month of september.

the month of august revised up to 159,000 from 142,000. we had been talking about how we were seeing revisions though the other way. the unemployment rate falls to 4.1%. he nailed that. he said that could happen prude average hourly earnings up for tenths on the month which is a surprise. the estimate was for 3/10 average hourly earnings up 4%. the labor union people have to be happy about this. the average work week goes down a ticket. so something for them to be unhappy about but the change in manufacturing payrolls down 7000. changing pirate payrolls -- private payrolls and that is certainly much higher than what we saw from adp on wednesday so overall, really strong payrolls report which is not what anybody

was really expecting. people thought in some categories but this is overall just a really strong and it will raise questions about whether we will have an issue. jonathan: some other people shouting to the screen high interest rates paid something -- some people might say it. amongst the upside surprise this is what it looks like in the equity markets so far good news is good news. up by 4/10 of 1% on the s&p 500. we will see if this sticks. up on the russell up at most one full percentage point. push this story through the bond market as you might expect. the two-year, 10 year, 30 year looks higher almost -- on the 10 year we are up by 10 basis points at 3.9478. forney change looks like this for the euro against the dollar. a break of 110. down to 109 -- 1.0976.

you've had an extra minute to take another look. what jumps out for you. michael: we were within 2/10 of a percent of getting a 4% unemployment rate. it was 4.051. that's a major move and it does suggest the labor market is a lot stronger than we anticipated , the level change in labor force wasn't that big. 150,000 but employment in the household survey up by 430,000 while unemployment fell. so we really strong household survey produces an on employment rate of 4.1% that is for all intensive purposes. >> i'm so glad john went through it because it was completely in shock sitting here with my mouth open trying to figure out how people could have gotten it so

wrong. this was a report nobody was expecting even the most optimistic and bullish members on wall street, what could be accounting for how wrong people understood this to be and the fact every single person we talked to is looking at the underbelly of the employment market says there is stasis. people aren't hiring. michael: this will raise questions about where did this growth come from and how did it slip under the radar. shout out to the folks at bloomberg economics who produced a preview piece that noted the home-based data which is a weekly report on hiring had suggested a very strong report. and that i guess people put that aside and looked at both what's been happening in recent months and the qc ew revisions that we got and just a commentary that people aren't hiring and they adjusted their formulas that

way. but this is certainly higher than anybody anticipated. 220 was the high for us. you can see why there some straight lines on those graphs right there. annmarie: saying that's what happens when the fed cuts 50 basis points. 50 clearly off the table but potentially could this mean no cut? michael: no. i would've said this going into this this is not the most important jobs report since the last one because we had one more for the next fed meeting. and now with the port strike over, that one should be much cleaner. we sill of the boeing folks on strike and administration can settle that one. we know there will be an impact from the hurricane. hurricane francine hit during the reference week for september but the bls says there was no impact on the data but there will be an impact from hurricane helene so we will be able to

look through that but that one will really set the tone for the fed because of your goodness he too much of strength, yeah maybe they back off and wait a meeting. >> let's go through this again if you're joining us welcome to the program. monster upside surprise. we are looking for 150 paid as lisa suggested the range was pretty wide. 220 was a high paid the lowest 70. it's not just that, the revisions are positive. and unemployment got very close to 4.0% once you put all that together look at the equity market picture, equities up by one half of 1%. check out the bond market for end of the yield curve print yields up, already a big week for high yields at the front end of the curve. another 17 basis point. and foreign-exchange a much stronger u.s. dollar against the euro. euro-dollar breaking 110 paid with us around the table is stephanie.

you said this guy isn't falling prey to what is this? >> it's a solid print. the previously a month ago the three-month average is 116. august historically tends to get a -- revised up. it's a labor market looks ok and probably 50 basis for people. >> does this raise the question we are systematically underestimate how much strength in the u.s. economy and where the neutral rate is because us with a conversation will go next. >> that's for sure where it's coming take it. 3% consumer spending is public and be matched by labor markets doing ok deteriorating a big way paid which is what we learned. it did not make sense when we were sitting here with consumer spending running around even above 3% with concerns in the labor market. so we are sitting here in an economy that's running pretty

solidly above trend. labor markets doing just fine and probably unlikely we get another 50 basis point cut. the economy is doing ok. it makes sense for the fed to be cutting five is too high for this but they can go at a slower pace. >> it's worth knowing a month is a long time. it was a risk of extrapolating out these numbers through the future. we could waking up on november 7 as mike mckee's suggested some real hurricane damage across this country in the united states so you don't how much is going to come up. no idea what the number looks like but just decide i'd know idea october 4. >> it's difficult to come up with a real sort of portfolio of data. the thing that stands out to me is this is across the every single data point we have gotten until now you up to find something for the doves. if you are a doll of good luck finding something. not a great bid but this is a question here of how much you're

looking at an economy were suddenly the revisions are going in the opposite direction. >> this feels like a big outlier compared to the data we've had this week particular when you look at things like job openings when you look at what's happening with the clicks rate, that number did scream the market looks like the one we've just seen this morning. >> which is why you will get a lot of people talking about what happened here in terms of the data collection given the fact we have some any questions around that and i'm sure those questions aren't going away. some 16 basis points and then some. with everyone reversing. >> let's get to the market view. jeff i want to come to you first. there's a market participant what do i do with this. >> clearly as it was just described its across-the-board a very strong report. you look at the other components , retail, professional services,

education services all significantly meet above their three meeting average. and across the earnings and the household survey, this is a very strong report. the revisions in terms of august was kind of expected. home-based data and the alternative data you had some people looking at that as well. maybe not to the extent bloomberg and anna wong david. but you certainly saw some data points that were pointing towards the potential for stronger report. this is stronger than anyone expected and as lisa said this will be the longer run debate and it's something we talk about on this program a lot, the debate about not only where policy is and how restrictive it really is, are mutual stands. but the something else that's really been missing from the fed conversation that was present in past cycles and that is the

impact of financial conditions. financial condition say this is a much easier monetary policy and you look at where growth is and it's kind of a concurrent signal but growth is running well above potential. that really tells you that this is not as tight of a fed as the market or really is the fed thinks it is. today may be another data point to that view. jonathan: financing is available, real estate prices are going up, it's not clear we need more rate cuts to the extent we accelerate and have to go in the other direction that would not be a good day. i want your early views on this and what the fed does with this one. >> for takeaways for the fed. this is not just a solid labor market but if you think these numbers at face value it's a strong labor market late in the cycle. for the economy it speaks to the

u.s. economic exceptionalism. something we see in something continuing. for the fed it means pushback much harder against pressure from the markets to put you in the single mandate, enough talk about inflation is dead. enough talk about the fed's only concerned about maximum employment it's still a concern about the dual mandate. finally for the markets, i think this is pushing back against what has been in my view and overly aggressive expectation of rate cuts by the fed. i think this will get the market closer and then we will have a debate on two things. one is where is the neutral rate and how do you think about this economy in terms of growth and employment and how are these two things coming together. so, at face value this is a

report that will cause a lot of bulk revision in analysis and in market pricing but i stress it is part of a much bigger picture of mixed data and that's why that surrounds this. lisa: when they started saying how much is this have to do with the 50 basis point rate cut it somewhat tongue-in-cheek of course but at the same time there is a real question how much of the easier financial conditions that are basically manufactured this federal reserve help boost a market that wasn't may be in need of central bank boost? >> you know my view. we've been living in a world of liquidity dominance. it had been all about liquidity. that world was reinforced by 50 basis points. we also remember the market didn't expect to 50 basis point cut based on data it expected it based on the reporting on the

thursday before the fed board meeting so there was no economic conditions that would justify 50 basis points but there was a leak to a newspaper that moved market expectations. i worry that we continue to feed this monster of liquidity dominance. and at some point we may regret it. i think because inflation will not settle at 2% or because financial stability will result from excessive risk. >> is there a chance we could have a more landing scenario. >> sure there is a chance we can have a world in which there are positive things happening on the supply side. and we can be bigger but not hotter. that is part of the distribution of the outcome. i think the soft landing is still in the 55% probability. bigger but not hotter is 15% so add them to 70 in the over 30%

probability that they will go up or because of weakness in the low income households. we end up in a recession. jonathan: you are going to stick with us. welcome it's about 8:45 eastern time this morning in new york and about 15 minutes ago we got the jobs report. 254,000 the survey was 150. talking about the revisions repeatedly. if you look at the unemployment number we've dropped back to 4.1% from 4.2%. we came very close to dropping 4.0. wage growth was hot as well paid a lot of this was unexpected. we said repeatedly the range of estimates stretching from anywhere from 70 at the low side to 220 at the high-end. near this one at 254 off the back of this report equities are positive on the s&p 500. on the nasdaq 100 up by close to one full percentage point on the russell up by 1.5.

with us on the table stephanie, there will be a lot of people in this country the don't believe these numbers. they will look at them at someone saying if you're the harris campaign with this jobs report it would be better if we wanted to. perhaps a little bit more sophisticated saying even the chairman himself is mentally marking these numbers down by 50 or 60,000 should we be doing the same thing this morning. >> if it was a weak report that would've been the initial thing. subtracting the 60,000 from revisions last year now we are in trouble. the initial reaction to this wasn't necessarily that but it should be. perhaps the conclusion shouldn't be the economy is on fire or there's no landing. it's more we are actually hitting the soft landing if you take the three month average, then if you subtract the qc then you get a return it's kind of normal. i think the market reaction will probably a bit extreme on the back of this.

last night the concerns were headed for a recession and now the concern is no landing. it's probably somewhere in between. jonathan: it's good news. >> good news is good news and i think the key going back to what mohammed said is the market had been very aggressive in terms of its pricing from the fed partly pushing into the 50, having more than 225's of the november and december price and that's always the pricing out here. when we get the cpi number next week, you may have as mohammed was suggesting a debate as opposed to a one-sided debate where we shifted completely away from inflation is the focus back to growth having a little bit more balance here will make the outlook a little bit more challenging and it thing for the bond market it's can have to reassess its pricing and terms of how aggressive it has been pricing. very aggressive from the get go here in terms of expecting the

most extreme in terms of what the fed was going to be able to deliver. hard to say whether next week you get that surprise. i don't think we are talking about inflation going back up and then inflation, that's not the point. the last mile from 2.6% inflation down to 2% may be harder than to achieve. growth and financial conditions are not as tight as the nominal rate suggests. so you don't have to necessarily be as aggressive on securing the soft landing because the inflation site is pushing back. that's what you're seeing this morning in terms of pricing. it makes the front end a bit more rational in terms of pricing in less than two 50's to the end of the year and i think that starting to be more of the story pricing out of the bond market. >> how offsides is this market. we saw this out earlier this week they idea people are saying

maybe we overplayed just how many rate cuts there would be and what kind of weakness there would be. how much does that trade the steepening curve all have to unwind as people reassess this data. >> as you pointed out, it started earlier this week. we had some better data, the labor market data has been as one-sided in terms of the fears and negativity, there is still a preponderance of the steepener view. when you're in the fed cutting cycle and we are in the beginning of the fed cutting cycle it's about how fast that will be. it's also about the terminal rate and where it ends up. but generally in that time period, the steepener market reaction is what you will get and you're starting from a flat point of the curve. the problem is the trade is timing. you need to pay some steepening to overcome the negative cost of carry and fast levered players don't have a lot of patience for that negative carry so that could potentially be what we are

seeing this morning exacerbating the moves on the headline going back to the birth death model and the bloomberg economics highlighting this may be overstated in terms of the headline impact and therefore it may be overstated in terms of the impact of the market but the overall message here is this is still normalizing labor market not necessarily normalizing to the point where the fed has to deliver consistent 50's secure that soft landing. lisa: one thing you've talked about mohammed is the data-dependent federal reserve. it seems like everyone is expecting them to cut 25 basis points. do you think they have moved to a framework that's less data dependent if the data actually suggests a labor market is doing just fine. mohammed: i think they are moving that way. it started with chairman powells jackson hole speech. it continued in his press conference and i think they are moving away from all being data

dependent to also trying to have a forward view of when the economy will settle. annmarie: does next week cpi report matter to you at all now? mohamed: it matters to me and it's in a matter even more after that. i think jeff is right. the notion this last mile would be easy, this notion that we are mission accomplished came way too early. i think we will see from core inflation why certain parts remain sticky. headline inflation will start moving up after not this month but the next month but the cpi prints still matter, a great deal to the american people. jonathan: what kind of numbers do we have to get accustomed with. are we stabilizing these levels for inflation or talking about the real risk of re-acceleration

given what's happened in the commodity market or what we seen out of china and the easing from the federal reserve that after jobs report like this something it's come prematurely. how real is that reacceleration risk. mohamed: to the extent we have an equilibrium of inflation for today's economy it would be 2.5 to 3%. if the fed had the option which it does not. if the fed had the options to set inflation targets that's where it would make sense. we will settle -- sell a suspect somewhere towards the upper end. financial conditions are extremely loose. there are two factories -- factors of credit, liquidity. there is not just the official factory which has pull -- pushed a ton of this but there's a private factory adding more and more efficient at producing more and more credit and leverage and

conditions. we are living in a world like -- where these two factories are still operating at a high level so there is a risk that will settle towards the higher end of that. lisa: i'm struck by the fact we've all been thinking about organized labor with the dockworkers strike, with the boeing strike as being at the end of labor having the leverage. is that a wrong way to look at this? especially given the fact wages went up. is it the employees have still the upper hand when it comes to demanding work and demanding to be paid? stephanie: i don't think it's a fair way to look at it. there's a clear lag from union to non--- from nonunion to union in that you get a big acceleration in nonunion wages. i think it's a catch-up from a

really big acceleration. so this is a lagging indicator. if you look at the three digits it was .369 so it was strong but if you look at the average pace you are running below 4% in which case it's not really concerning. jonathan: i'm to say this upfront. there's a lot that can still change in the next month but as things stand your best guest for november 7 federal reserve. 15, 25 or no cut at all. first you jeff rosenberg. >> i'm to go with 25. mohamed: 25. stephanie: 25. >> it seems hard to see that going about 50 given this kind of data. >> absolutely can't go 50. everyone's jaws or so on the floor of this. the politics of this for me are very interesting. this is a fantastic payroll

support ahead of the election and will do a lot for the harris campaign. michael: this is not the nfl. a couple of things that came up here that i think a really interesting is the people we are thinking the numbers might be boosted by the model which people have blamed for the qc ew revisions. that subtracted wonder 20,000 jobs from this month's total payroll so that is interesting. steve stanley also was looking at the impact of college students going back to work working in the summer. that drops the outlook for labor force and their unemployment rate fell from 7.8% to 7% so that may have some of the impact here on the unemployment. jonathan: thank you sir. just a blowout jobs report. stephanie, jeffrey and mohammed, all of you thank you.

the price action into the opening bell up by 8/10 of 1% on the s&p. faster performance on the russell. the day ahead in the week ahead look something like this. catching up with goolsby on monday. more fed speak from cash carry, bostic tuesday we will get some trade balance on wednesday fed minutes. thursday cpi and another round of jobless claims and some earnings on friday. newer sentiment and a ton of back earnings. wells fargo jp morgan taking things off. the lineup looks like this. we will catch up with katrina dudley, michael collins of pgm fixed income and greg of ey. thanks for choosing bloomberg tv. an equity market rallying hard. from new york city this morning, good morning. this was bloomberg surveillance. ♪

it's our son, he is always up in our business.

it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

>> stocks ripping higher after an upside surprise on payrolls with 30 minutes to the start of trading preyed on katie greifeld. sonali: matt miller is off today. bloomberg open interest arts right now. ♪ katie: coming up that blowout jobs report tenting expectations of another big fed rate cut next month and u.s. dockworkers ending the three day strike preyed work resumes along with negotiations on a long-term agreement. we've got it all covered with an all-star lineup ahead