it's this tussle now between the doves and the more hawkish-leaning members at the fomc. when it comes to their analysis of what did they make of this hot data of late. we have had hot retail sales and industrial production beating estimates. that led the market to believe perhaps these upside risks to inflation that most numbers saw could be even higher at the moment. lizzy: talk us through the market reaction, the treasury and dollar moves. >> in the late treasury session, the steepening continued. we saw new cycle highs for the 10-year yield, and new cycle highs for the 30-year yield. rates priced in for next year, those cuts priced next year for the fed continually get priced out little by little. the pressure also continues in the yield space overnight. there is still substantial pressure on treasury yields in the asia session, causing issues for the jgb market, we had a 20-your auction in japan that was considerably weak. this global yield pressure is continuing. we're seeing global government yields at 15-year highs. this is a trying to keep your eye on. it has cau

we are still waiting to hear a dovish shift from fomc members. we did not necessarily get that last week after that inflation report where maybe a lot of market participants expected to hear directly from fed members calling for a pause in september. we did not get that from mary daly. she said the fed has work to do. even from the other doves, bostick being another one who did not explicitly say he is in the camp in september but perhaps this week, we hear more fed chat and a bit more direction on where they are going in september. as you know, the market is very much thinking the fed is on pause from here. there's only two basis points priced into that late september fed hike. lizzy: thanks for joining me for that morning round table. you can get a roundup of the stories you need to know to get your day going in today's edition of the daybreak newsletter. the lead on the ecb's latest survey results. they have china's property rose as well but that -- rows as well. economists reckon it will deliver one last hike next month despite signs of infla

that's primarily because the data flow since the july fomc has been strong. we had a strong retail sales print and financial conditions had been easing further so we think he will reiterate the fact that the job is not done, they cannot declare premature victory, and they will see this through. that will be heard from the market is a slight change in tone. will he generate a major rate selloff like he last year at jackson hole where he was unambiguously hawkish? no, we don't think that's his intention. he will probably sound less balanced and be slightly more hawkish than recent fed rhetoric. katie: we have just a week to wait. it will be exciting and i enjoyed this with both of you. thank you both so much. up next, it the auction block in debt issuance gets a lift from crane manufacturer, that's next. this is real yield on bloomberg. ♪ katie: we kick things up in europe and it was another day with zero sales to close out the week. that's eight consecutive fridays with no deals and four straight weeks for market wide volume failing to break 5 million euros. t

we still have more data before the next fomc meeting.t treasury yields to their lowest levels in more than a week and stocks absolutely loved. they had their best day since june yesterday. now, u.s. futures are pointing to in even higher opening. nasdaq futures up 0.1%. it's not everyday that we marked the crypto moves, but we will today because yesterday's were remarkable. grayscale, the world's biggest bitcoin fund, had its best day since 2021. the shares up 17% after a u.s. court ruling potentially paved the way for grayscale to convert into an etf, in exchange traded fund. if this is approved, it could be historic -- a historic move to make bitcoin more mainstream. we will have more expert analysis coming up later. let's get over to, well, we can actually bring you some of the latest economic data. this is out of germany. it is state inflation data for north rhine-westphalia. we get the national inflation rent at 1:00 -- inflation print at 1:00 p.m. north rhine-westphalia is the most populous state in germany, the biggest regional ec

>> first of all, there was really nothing new that he said in the july fomc meeting. in fact, i was disappointed because what's happened in the market, as we all know, is that yields have risen, real yields have risen, real growth has risen, and the reason that real growth has risen is because productivity has been so strong. he didn't address any of that. he seems almost stuck in that mode, real growth is higher, that means more workers, more pressure on wages, we might have to go higher, and that's not the story. the story is we are getting a real growth higher because we are getting productivity higher. in fact, the labor market is slowing down. i mean, expectations for next friday are, what, about 160, you know, less than half what we had last year. so in some ways i don't think he really addressed what the market has been seeing over the last few weeks. i think some people got a little bit nextous at the beginning. the market sold off. now, nothing new, we will gain back what we worried back yesterday. >> i have to be honest with you. i heard -- and i don't know.

jpmorgan went out with a call the fomc may not need to wait for inflation before they start to cut ratesthey may not need to see 2% because they're a little more concerned about wage growth being less robust. to your point a lot of things we're dealing with there, but it always centers around jay powell and the fed. are they done in your mind? >> i don't know that they're done. so uuub feels it this is the last rate hike. both the data on the jobs side and inflation side seem to be showing a trend. seems like inflation is cooling, it is going back to a level where the fed wants it to be but one or two data points do not make a trend. we need to look between now and the next fed meeting what we're seeing. the jobs numbers, although they seem to be capitulating a little we have 3.4, 3.5 unemployment number again. they cannot make the employment market do what they need it to do. which means they have to focus on wage growth because if people are getting more and more money every day that is going to continue to spur inflation. so i think they're going to take a look at that. at the same ti

in terms of the fomc minutes, they bear out what you were expecting, hawkishness.is something that will not be so good for equities. what is the message? will this be a blockade? how will this play out? >> thank you for the opportunity to be with you on this you. -- the show. if you read them meeting minutes, they said inflation is high and we will probably need to raise rates. there was also confusion. they said we still need to watch how it will affect the overall economy. there was confirmation the fed is data focused. july retail above expectation. second quarter gdp above expectation. ppi above expectation. all of this together with high valuation in the stock market. today rates were rising. it does not usually happen that way. kathleen: bonds are selling off. maybe they were anticipating what larry summers just said. suggesting yields could go over 5%. what will bat mean for stock investors? >> that is a great .2. bonds offer great yield. the markets are little freaked out by the fed. we believe the fed is done, that they are pausing and it will be higher fo

let's talk about these fomc minutes as well.traders have been betting that the fed will keep rates higher for longer. which members commentary are you most interested in then? look, the minutes are kept quite vague over who says what, but we'll be looking for any hints about growing optimism that a soft landing is there and available for the fed to hit later this year. we've seen some members be more optimistic. even powell himself a bit more optimistic, will be looking for clues on that. and then, you know, any clues that they were already encouraged by the progress of disinflation. obviously, these this fed meeting came before that soft cpi print we got a few weeks ago. but we'll be looking very closely on if they were already encouraged by the progress they had seen before. all right. thanks to bloomberg's valerie title, you can get a roundup of the stories that you need to know to get your day going. in today's edition of daybreak, the newsletter they lead on chinese shadow banks. one bank in particular missing payments on d

the fomc minutes looks like tighter policy from here in jobless claims numbers showing a healthy labor market. the bloomberg dollar index took a breather today after five sessions of gains but stayed above the 200-day moving average on the only sector that gained ground today on the s&p 500 was energy with crude prices above $80 per barrel but now in the asian session pressure despite optimism over tighter supplies around the world. take a look at the bond space at this global bond selloff that continued through the u.s. session but more of a mix finish as we had the u.k. 10-year g ilts raveling to that high in bond yields around the u.s. higher. the 10-year yield at a high, the two-year since a 2011 hi, and when you look at the 30 year real yield tips at that level for the first time since 2011. the two-year level under pressure heading towards up level, so we will see this trend as it continues into the asian session. annabelle: yeah, the moves have been swift and sharp at this weekend now the one standing out is the kiwi 10 year yield about that 5% mark yesterday for the first time

we will have more inflation and jobs data before the next fomc meeting, but we know the fed is probably on pause for september in hiking again if that is necessary, so the essential thing to take away from this is that policy is shifting toward managing risks amid substantial uncertainty. she did not also say what it would take for the fed to lower rates. a lot of people were looking for that, because the summary of economic projections does have the fed, the fomc lowering rates at some point in 2024. the fact that he did not go there, never mentioned anything about it, did not give any hints, some people are calling that a little hawkish in the sense that he did not go there, but the senses also that he did not want traders to take any kind of hint and then run with it and be an obstacle to what the fed is trying to do. haidi: such a finely balanced narrative. when it comes to the boj, did we hear from governor a way to -- udea giving hints? >> he said there will not be a policy change until something changes. he underscored the fact that the bank of japan is pretty sure that inflation

fed will not promise rate cuts were now, so that will support the dollar headed into the september fomc. david: what does positioning look like? who knows what jay powell is going to say. we can guess what he is not going to say. he will not say rate cuts are around the corner. i was the market positioned? >> positioning as a resting, because if you look at the data from last week, we saw there was a drug in -- drop in net dollar longs. that is problematic, because if jay powell stays hawkish given there is more headroom, that will post the dollar higher than the september fomc. that is a problem for jennifer's, because they went to stabilize the currency, but if the dollar strengthens from here, that is a problem, because people were saying before this rate cut, the fact that they are actually delivering a larger than expected rate cut tells you how urgent china needs to support the economy. david: very quickly, why have we not seen anything from the bank of japan? >> actually, yesterday when i was looking at the dollar yen above 146, i was concerned. this is a level where they stepped

we'll go through the fomc minutes and get her analysis next. ♪.ut you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. ♪. charles: we're trading a little over half an hour, giving market time to digest the minutes. now we go to lauren simonetti for real details. lauren. >> reporter: charles, so, yes, there is some discord in the committee. after the committee voted unanimously to raise rates a quarter point to the 23-year high weeks ago, the committee said this, a couple participants indicated they favored leaving the target range unchanged. so they preferred holding steady even though they didn't vote that way. the committee noting up side risks to inflation. they say it is critical to return to the 2% goal. right now inflation is running at a 3.2% pace. there are three meetings left this year. the next decision comes september 20th. the fed also said there is significant probability of a recession at the end of 2024 with a softening of the labo

the fact that all of the voting members on the fomc a week ago we learned from the fomc minutes fromssion. i think that's a powerful statement. i think you just touched on a key point and that is that money, all these retail investors have been saying gosh, i can't be invested if there's a recession, that money's going to come back in and you have the speculative net short position among the pros, the highest it's ever been n have to cover. it's almost a double whammy. maria: august has not started the way the year did in terms of gains. we'll see if there's been a pivot. we're in the middle of second quarter earnings. we have a busy day this morning as well. cvs, kraft hines, yum brands reporting before the opening bell this morning. after the close we have pay pal, spirit airlines after the close and we're looking ahead to apple and amazon, they'll be out tomorrow. kevin, this is going to set the tone, apple and amazon. let's be clear. apple is a $3 trillion company. largest market value. there's not a lot of wiggle room there in terms of disappointments. what are you expecting? >>

then the fomc minutes, euro housing, eurozone gdp and u.s.ore a round of jobless claims thursday. then cpi from the eurozone and japan friday. before we get there, and take 2 p.m. new york time, we have bill gross me and romaine bostick to talk about the fed, bonds, and whatever else comes to mind so do not go anywhere. that does it for us. same time, same place. bloomberg real yield and this is bloomberg. thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh so, you've got the power of xfinity at home. now take it outside with xfinity mobile. ahhhhhh like speed? it's the fastest mobile service around. with the best price for two lines of unlimited. only $30 bucks a line per month. that's hundreds in savings a year when you wave bye to the other guys. no wonder xfinity mobile is one of the fastest growing mob

even with the dovish tones as a voting member of the fomc, the philadelphia president says -- the u.sto a soft landing and he said all the right things there with dovish tones coming in for the doubt. tom: the inflation report is into days and we will get another one before the fed meeting and they are slaves to the data. part of it was the data out of china today which was shocking. jerome powell is central banker to the world. jonathan: whether he wants to be or not. tom: let's dive in with expertise, you did what you good to steal the research of prudential. he was written worldwide and across this nation on boring stuff like trucking and railroads and logistics. he is the senior logistics analyst for bloomberg intelligence. i want to conflate the bankruptcy in yellow with what we see at you yes. given these -- at ups. can they raise and sustain revenues by raising rates? >> that's what they will have to do. they do have pricing power. there are two main competitors, fed x and the u.s. postal service and some smaller players. they have the ability to raise rates and not only that b

when you look at the fomc minute s from july they were already striking a hawkish tone.on has come down since then, but at the same time most economic indicators have been good. gdp blowout compared with what was anticipated as you are discussing. the world looks fantastic right now. no recession yet. i think chair powell was empowered to continue with the tone he is that all along -- he has had all along. he will say we will look at the data and we are not done until we have the right data. matt: is the growth we are looking at right now concerning because it means inflation could be reinvigorated? will this boom be a problem leading to more rate hikes or a bust? dana: it could. you do not want to say growth is a bad thing. who would predict that? if you look at the beginning of the year, pretty much everyone was saying expect a recession in the second half. and it's not that i think we are past that necessarily. to a certain extent that can be pushed out a bit, but the economy has been fasting. the fed mandate on inflation and unemployment may hold longer. whether we g

in the minutes of the fomc latest meeting when they're published later this week. if you look at the two day chart on us stocks, tech had its best day in two weeks yesterday as traders weighed the prospect of a soft landing for the us economy. us futures now pointing to a higher open ing. and meanwhile out of china this morning we've had a horrible data dump which both explains and somewhat cancels out the surprise rate cut in terms of supporting stocks. but doubles pressure on the yuan. so let's get more on the asia market. reaction now with bloomberg's tanya chen. she's in hong kong. tanya is there any good news? amid all this doom and gloom? hey, good morning, lizzy. yeah, so as you can see right there on the board, just now that you were showing, chinese equities are obviously wanting to a little bit more out of the pboc as you mentioned, the pboc unexpectedly cut their benchmark medium term lending facility rate today by 15 basis points. that's the biggest move since 2020. we're also looking to see if they will make those similar cuts in their loan prime rate

want to note, the staff produces its own forecast which is independent of the forecasts which we as fomc participants produce. having an independent staff forecast as well as the individual participant forecast, is really the strength of our process. there's just a lot of i think constructive diversity of opinion that helps us make -- informs our deliberations, helps us make, i hope, better decisions. reporter: is the reason for optimism that inflation has come down and you still have a strong labor market? does that add to the optimism? chairman powell: i would not use the word optimism about this yet, i would say there is a pathway. yes, that is a good way to think about it. we have seen so far the beginnings of this information without -- beginnings of disinflation without any cost to the labor market. that is a good thing. host: federal reserve chairman jay powell there, last wednesday. a lot of economic jargon as always in those press conferences. what did you take away from that guest: that the fed staff, as the chairman said, doesn't forecast a recession. that is good. there are a

gargi: at the last fomc it was not an exciting meeting but there was one paragraph around we won't beaising rates until inflation comes down to 2%. he opened up this window where he talked about we may see rates below neutral at some point and he doesn't often do this but pointed to the forecasted side, we don't put much weight on it but look at the forecast where they talk about cutting rates for the second half of 2024. in answer to your question will depend on disinflation and what that looks like next summer? if there still at 2.5% or lower than that, anywhere near that i think they can. especially if unemployment rate start edging up. the economy has retained job growth, i think they can. if not, it will be tough. alix: what did you do with the auction today, the 10 year, did you buy it? gargi: that's not the area you want to own, you want to see the three year option. own through the belly of the curve, 3-5 something like an iei with duration of four years. guy: summer of love, summer fun, summer of disinflation. they all go together. gargi pal chaudhuri great check out. thank y

there is a range of views on the fomc. that is one.ers believe maybe we are done and should talk about the length of time spent the 5.5% interest rates in a federal reserve. bostic indicating also speaking to david westin into the weekend, ultimately, that period of time once we get to that peak rate will be a long time. tom: i'm going to go back to the herons and what we did with bloomberg surveillance. who are these people? what are this -- what are their pedigrees, etc.? goolsby came out with -- over to chicago, our best microeconomic foundation. bostic, the same way. bowman was an intern for bob dole. she is a george bush accolade. she is an attorney. that statement she did is boilerplate. it could be written by any number of phd's they are. you have got to know who is talking to who. bostic, you lean forward and listen to. jonathan: she is worth listening to. tom: the view? yes, there is no question about that. the view is their no question. jonathan: lisa, you got things to say? lisa: i've got lots of things to say. a lot of peop

it sets us up for the fed fomc minutes this week. showing us how divided, how many people want to pause again, how many people were ready to hike. furthermore, jackson hole, the symposium, the kansas city fed. that is a week from this friday. it is where jay powell that everybody will give a big speech. everybody is waiting to see the direction he gives on these issues. paul: let's talk about china. concerns are rising over deflation there. what is the government proposing there? kathleen: lending numbers. lending is not just how much banks are willing to put out there, it is how much people and businesses want to borrow. when lending falls you think the recovery is not much recovery. we could be in need of more aggressive help then we have gotten so far. overall, the loans came in about 346 million you want -- yuan in july and were expected at 780 billion. we see the new loan figure missed by more than 50% the expected figure. the total aggregate financial shrink is it reflecting a big ball of debt and interest to do that is not bei

given that we just had the fomc minutes last week telling us that a risk to inflation is still tiltedownside. essentially what it tells us is that we could see the need for further rate hikes and also the question of how long the rates are going to stay elevated for. so any clues as to what can come out of that will be watched very closely but in terms of the market reaction, what we actually do typically, this chart looking at the one week return for the s&p 500 after the fed chair speak and you couldn't see going back to the year 2000, the vast majority of cases, the s&p 500 has continued to rise to that is sort of a bullish indicator toward the end of the week, paul. paul: thanks. they are seeing a modest increase in customer stress while inflationary pressures are causing expenses to rise off the extremely in -- off the australian lender. let's bring in adam haigh. what do you know about these inflationary pressures and how they are affecting westpac? adam: this is impacting staff costs. the pressure they are seeing in the labor market just means they are having to continue to lif

i think at the time of the of the global financial crisis, there was not a single member of the fomc who had any practical banking or commercial experience whatsoever. it's extraordinary. three one last question. okay. most most of your comments have been directed. the impact of interest rates on private sector. and i'm you could comment more on their effect government policy. for instance when stephen minchin no fool he was secretary of the treasury during the entirety of the trump administration, he said it didn't matter how much the government borrowed and spent because interest rates were near zero. yes, well, i mean, i did mentioned in passing that i thought that the low interest rates had destroyed every balance sheet starting with the governments and, you know, when appeared free, then the government's, you know, when went on, you know, spending spree. so government debt and same in true britain they roughly doubled that debt to gdp ratios while at the same time the cost of borrowing of funding of debt service actually remain stable or actually slightly declined. and this prob

our july meeting and i expect additional increases will likely be needed to lower inflation to the fomc'snce that inflation is on a consistent and meaningful downward path as i consider whether fed further increases in the funds rate will be needed and how long the funds rate will need to remain at sufficiently restrictive levels. alix: governor michelle bowman speaking today. that's the macro backdrop and then we also wind up having earnings. the trade supposed to be a little bit of equities prayed still selling the bond market. do earnings prove u.s. exceptionalism. that's the starting point with the former chief strategist at bridgewater. short term to u.s. exceptionalism? >> tight labor markets, in crumbs -- incomes are growing faster. best supporting earnings and dominating even though the fed is continuing to lower liquidity. they are not done yet. so for now i think the consumer is creating that u.s. exceptionalism and not eliminating the fed. when does the consumer pull and how much. guy: standing over here in london we watched your conversations over there regarding a soft landin

. >> dataflow since the july fomc has been strong. >> they can declare premature victory. >> i don'think we are going to hear a big change in narrative. >> reiterate that they can stay higher for longer. >> skews slightly more hawkish. >> keep the optionality open. >> there's nothing else we can say at the moment until we get more data. >> those are some of the guests we've had speaking on what to expect. a lot to happen until that happens. what shapes markets this week. joining us now is sarah, cleo capital managing director. what's going to move. what's the big thing this week? sarah: i think this is about arm. another week of ai. but i think that the rumors swan filing that supposed to become public i think they will do it if they do it this week. because if nvidia does not, and where we want them to they certainly don't want that muddying the waters. beginning that will jumpstart could the ipo window be back open. >> do you think the answer to that is yes and how hard will it be for nvidia to clear that bar? >> if you are a banker looking at your 2023 bonus you are praying to the

he will be a voting member of the fomc in 2025. he's a nebraska native, he began his career in 1981 as a field examiner based in the ftse in kansas city and he follows a trend at the kansas city fed because esther george and her predecessor or bank examiners, and 1989 he became president of american national and oman moved on to mutual of omaha, the insurance company as per german and ceo. he has been running a family-owned bank in dallas, graduated from the university of nebraska, has a business administration degree, he is not an economist. he will take office august when he first, two or three days before the kansas city fed's annual jackson hole symposium begins. so he will be there in time to give the welcoming address. sonali: very interesting timing. if you look at the type of tone he might take, you mentioned he will be a voting member eerie what is it mean in terms of the hawkish or dovish stance he might take relative to esther george? michael: it is too early to tell. the kansas city fed is an unusual bank that likes to

this week the fomc minutes from the july meeting. how strongly were the two sides diverged between pausing or hiking the key rate again. how much was it a majority leaning towards another hike? that would be more towards our september move and jackson hole, the big annual meeting span sold -- sponsored by the kansas city federal reserve bank is next week. j pal on friday gives their chairs opening remarks, that the chair does every year. when the chair wants to come in the chair can use the meeting to send a strong signal on where the fed is and where they are going. last year chair powell underscored we are not done with rate hikes. i am paraphrasing. this is what people are bracing for now. to get more clues especially after mixed readings on inflation. economics and policy editor kathleen hayes there. let's turn to china where the economic recovery is being weighted down by a worsening property slump. pressures are mounting on the pboc to ease monetary policy. july's activity data is due tuesday and likely to show little sign of a

. >> it is premature for fomc members to go out and talk about cutting interest rates. >> the soft landingcenario is a worst-case scenario. alix: perfectly lays out the issue going on with the markets right now. encapsulates the data we have seen on some of the guests on bloomberg television. that brings us to the question of the day. is a pause possible given the data/ joining us is carol schleif at bmo family office. what you think? carol: i think a pause is probable. the biggest issue we are trying to grapple with is the fed and the economy looking like the last 10 years, it is more likely to look like the economy had 10 to 15 years before that where you had real rates that were not negative. interest rates were not negative. it is getting adjusted to those rates. we are worried about the housing market and the fact that the average mortgage rate went up 7%. you look at what drove us into the great financial crisis and the mortgage rates up 6.5%. guy: do you think financial markets have yet adjusted to that scenario that you are laying out? does the stock market feel like it's adjusted

when you look back at the omc -- the july fomc meeting, if there was one headline, it was the committeeas willing to be patient and resolute. what does that mean? if patient implies some kind of monetary policy, let's be patient, versus resolute, core inflation is not low enough. you will continue to hear about a committee divided. a lot of the incoming data would support a pause if you look at everything the fed has pointed to this far, whether eci, wages, job openings, core inflation. we are seeing some progress but you look at the atlanta fed gdp tracker at 5.8%. while it probably won't be that high, we are looking at above trend growth. i think that stymied the plans of some committee members. and where is that new fill rate given this inflation environment in the long run? guy: i have not heard you say the word "cut." is that within the vocabulary at the moment? should it be? the market things it does come next year. what if it does not? meera: it is very much in line with how the fed is seeing rates progress. last year, the difference between fed and market expectations on rates h

we are in the middle of the longest spell we have, waiting for next month's fomc meeting and what the decision will be there, excitations obviously that there's going to be a pause, but you know, if we are looking at this idea of recession fears being pushed back for longer, rates going to be held higher for longer? we have all these fed officials who have been telling us for weeks this idea of looking at the data for clues on how exactly they should move on future decisions. i would say that, yes, anything jay powell says at this meeting that is historically this really critical meeting for these fed officials is going to be important for helping divine what to expect not just at the next decision but also help us understand that calculus behind how the fed is thinking going forward. lizzy: a crucial meeting historically but even more so given the point we are at in the cycle. we have had the fed minutes and more eco-data. what investors -- what are investors going to be listening out for and how will it matter to treasuries? david: you think basically there is this big gap between t

. >> the fomc held a secret meeting today, and they raised rates. it's true.t happened today is that rates got more restricted. the inflation rate came down, and the real funds rate went up today. obviously they didn't have a secret meeting, but here's what happened this is the plan the fed has in place. i guess you can call it a slow boil i'll let david address the equity aspect of that. but say inflation continues on this trajectory. guys, i want to show you where we're at on a three-month average annual basis these are very good numbers. 3% on the core 1.9% on the headline these are great numbers. if they continue like this, and continue downward trajectory, the fed is going to be increasingly restrictive over time this will help in this inflation fight. it's like pouring additional water on that fire to make sure that it's out. and the fed seems to have the market convinced that it will be in this high range for a while i get, david, the first rate cut built in, in march or april of next year, where it's 50% or higher for several months, they have the mark

some point they will probably have to lower interest rates next year which by the way is what the fomcas been forecasting in its summary of economic projections in the june summary. charles: great stuff. can't wait. the plot thickens as always. ed, thank you very much, appreciate it. >> sure thank you. charles: coming up my takeaway, america at the crossroads. listen we got here for a reason, pulling ourselves up by the bootstraps. do we want to stay to that or uncle sam pave the way for us? that is what is at stake. bullish sentiment has really come down a lot. i want to take a look at this. last time aii survey went out 535%. not long ago it was this. richard bernstein advisors, deputy cio, chairman of the investment committee, dan suzuki. dan, let me get this right, retail being less bullish right now is sort of better for the markets in your opinion? >> it is. you want to be a little bit contrarian with respect to sentiment. the other contrary to the retail sentiment side if you look at actual measures of positioning everybody and their brother, their mother, their cousin has capit

if you look at the sep and the statements of the projections of the whole fomc, there is a patience that'sved in it. >> reporter: austan, thanks for joining us today. austan goolsbee. scott, we're on the golden path. there's a path. >> we might be. >> lastly, to your last question, there-in lies the greatest risk, does the fed have the patience to let what they've done work its way through even before the reads themselves say you're at 2%, or do they push it too far? it matters to everybody watching. >> reporter: i'm not going to answer for the fed, but i will point out historically the fed had an awful lot of patience and ran below it for quite some time. perhaps there should be an equal amount of patience depending on what they call the sacrifice ratio, what do you have to give up to get there? the idea of raising rates on the front end. i'm talking with an expert who knows more about this than i do right next to me here, but if you're patient you don't have to give up so much. >> well, they did a lot and they did a lot quickly and haven't begin up, to your earlier question and point, al

even though the dots they put up at the last fomc when they put up dots were calling for three rate cutsell contradict that, that would be a very dangerous day. charles: u.s. banking system, madison just had a chart here, credit card delinquencies for the 100 biggest banks, 2%. for the rest of them, 7%. we know there is bifurcation within the industry. some banks have greater exposure to come mesh hal real estate. all sudden the kre and others are pulling back mightily. what do you make of it? >> they're all worried about the fed pressing its boot harder and harder on the banking system and the economy. already since silicon valley bank failed the entire banking system in more than five months has only generated 30 billion-dollars in new loans. over a typical fire month in history, 150 billion. growing economy is a growing boy. banks we need to give us credit. the fed is making it so banks can't do that. as you say the commercial real estate business we need to have access to credit to roll over loans already there. we are playing with fire, my friend. charles: political observation i wi

. >> well, what i would expect him to be -- to do is we are firm the fomc's commitment to the 2% inflationt, and with that reaffirmed, i think you will talk about leaving rates where they are, but he will watch the data, especially the september cpi numbers, that would have a big impact later on what they would do in that month. i think they are going to be focused on making sure inflation gets down to 2%, not 3%, as some people would like. i think he would wish that. shery: for our viewers across asia, how concerned are fed policymakers at this point about the china economic slowdown and whether that could have an impact on where policymaking goes from here? >> i think people in the u.s. are aware of what's going on in china, and they are paying attention to it. and they know that we still have -- the u.s. still has a pretty strong economic relationship through them. however, now that we've said that, we will still focus on the u.s. situation, which is to bring inflation numbers down and to focus on that and not get too tied up in the dollar issues and so forth that might be more importan

is anything really different from the fomc minutes versus what we've heard recently? >> well, i think we've got a little bit more disagreement among fed officials. so, at the july meeting, remember, they hiked by a quarter point, right and they thought more hikes would be needed. a minority emerged suggesting the case was not so clear, and even two participants, we learned in the minutes today, thought the fed should not have hiked at all the minutes said -- here's the sort of juxtaposition of two different ideas. a number of participants judged that risks to the achievement of the committee's goals have become balanced. most see kill sant upside risks to inflation, which could require further tightening of monetary policy. that was what moved the markets. the minutes have been more balanced, but i think it's too early to sound the all-clear on rate hikes you have cpi, of course, came in below expectations after the meeting. payroll growth did cool again, that was after the meeting remaining above trend. it was retail sales and industrial production today above expect

"the fomc warning more rate hikes could be necessary let's bring in richard clarida welcome back it's you >> good to be here >> all right, so, they're concerned about inflation remaining sticky, if not ticking back up, and possibly having to raise rates even more. what are your own expectations how many more hikes do you think are in the cards >> well, i do think the powell fed is data dependent right now, but i've also thought, and after reading the minutes today, continue to think that the risks are that we do get in one more hike this fall at the june meeting, the sep dots indicated that most folks thought that a july hike and one more would be required, and i'm leaning in that direction now. they could get data that is sufficiently positive for them, that they could be done, but these minutes read like a committee that is worried not just about the baseline but about the risk, and as your quote indicated, the risk are to the upside on inflation. >> wow so, i mean, one more is -- i was wondering whether you were going to suggest that even more than one was potentially necessary. th

my concern with the fomc we want we want to see more data.hat happens in terms of markets that pushes the probability of rate hiking. that would involve the volatility in the markets. tom: with respect done on the labor markets of the decades. labor markets of the decades. will we be surprised every jobs day where guys like you don't really have a don't really have a handle on accountability of the surveys? jay: we look at our model and thethe bands around that. in some sense you are throwing a dart and it gets magnified in terms of pandemic. that is what put the volatility in those underlying numbers that you're using to project. that academic stuff starts to fade away. at the end of the day, it's a bit of a guessing game as a release of the labor market. game as a release of the labor market. kailey: headline figures on payrolls and the other components of the labor market, the pressure on wages. we spoke with you earlier on what we are seeing in type of strike activity in the power of labor and pushing for higher compensation. how should w

so, i think later this month with -- starting with the fomc minutes and jackson hole, and then at thethe month we get the inflation data, the pce, maybe that's when markets stay rt start to feel better but you're right, maybe it could be deeper. >> your call was based on the trend in inflation, which continued in the week that you made the call. it was based on the inflation numbers that were coming that week, which were friendly. >> yes. >> and you still -- but the economy, meantime, has been much stronger than most people thought and now it is going to be no landing or soft landing or people are thinking the narrative change but do you still feel that inflation is going to show a downward trend and pce, .2%? >> that's right. i think core inflation is -- which came in at .16% last month, that is still reflecting elevated housing number. shelters running at close to 8%. that's going to start to cool. and there is a lot more downside in used car prices and then core services, which is the rest of that piece, it is actually been cooling because that was kind of pushed up by vehicle insu

jonathan: it is getting difficult to find a consensus in the fomc.ts the upside risk to inflation which could require further tightening of managing policy. everything came out yesterday, the fed minutes and economic data provides fuel to the bond market selloff. lisa: that's true and we will hear more from jackson hole next week. you have to wonder if it is self-fulfilling. two dominic konstam's point, it has a self-limiting factor that causes buyers to come in, especially given the bond houses who see this as a buying opportunity to lock in yields. where are those convictions now? where is the mass buying and newly domestic market? jonathan: it is a beat and a raise. adjusted eps for second quarter, 184, and the outlook it's a lift, as well. the new range for the full year, 630 stage 6.36 to 6.46. lisa: we will parse through this to understand what degree is for the grocery side of things from staples versus discretionary, looking at gas, sales were up 3.6% versus the estimate of four percent. again, just confirming this fact that people have money

really, the fomc is aware of these estimates. they make future policy decisions. tom: that london school of economics, you have to look at the phillips curve. you tripped over the beverage curve i am sure in the way to the lunchroom. does that theory work? are you flying blind? or can you and determine have a theory? pooja: i think these frameworks are still useful. to the extent that we still have a phillips curve, yes, it is not dead, is a lot of people make it out to be. but we are looking at the data, at the beverage curve to see where we are moving. looks like we have shifted lower. that is a move in the right direction, but the broader point is maybe there is more room for policy to become restrictive. we should not celebrate so early about disinflation. that is something we learned on friday as well after the hot ppi data. there is more room for problems. tom: and jackson hole, hope there is a paper on this. ricky is the only one who knows what the papers are and he will not tell me. but do you a brigade into a summed amer

it is all about the july fomc minutes. >> we had some trade numbers out of japan, an unexpected deficity. we are counting down to the open. what are we anticipating? >> numbers coming out, concern around china about economy. we have the open now for japan, south korea and australia. we are starting -- watching the yields in particular. a reflection of what came out from the meeting minutes indicating fed officials see inflation risk on the horizon. there is a chance there are further rate hikes to come. the question not necessarily about how much i we go but how long rates will be elevated. that is really playing out in the japanese currency this morning. pass the level where the japanese government officials first intervened in september of last year. still the debate about intervention starting to intensify. something back could put further pressure on the japanese yen are the numbers that came out. exports, the contraction we saw. the question is around the trade balance, big contraction there. let's take a look at korea. the kospi coming online. the move in tech stocks played out th

and on top of that, just before the fomc meeting angela, the market was very long the euro, and i thinkme, there is a thrashing of positions. but it will depend on what they say on friday, and that will be the direction of euro-dollar over the next three we. shery: kelvin tay, regional cio at ubs wealth management. thank you. you can get a roundup of all the stories you need to know to get your day going in today's edition of daybreak bloomberg subscribers, go to dayb . you can customize your settings. this is bloomberg. ♪ if you're trying to get a view of the ole organizational financial health and you're trying to do that through multiple systems, that makes it very, very cumbersome. ♪ it's not just tech, it's not just people. it's how they work together to provide that experience to the customer. as a finance organization that is what you want to do. ♪ 76% of 23andme health customers surveyed reported taking healthier actions. as a finance organization that is what you want to do. because they know health isn't just a future state. health happens now. start your dna-powered healt

because we've had some really soft inflation readings for some time and only recently have fomc membersta dependent, acknowledging inflation is softer. i think markets are unconvinced because if you look at fed fund futures there's many expecting a hike in november. i think the probability now is at 48%. i think that's going to get towards zero if we get the soft inflation we expect. i think that's why things week is critical. >> a lot of people read last week and the events of jackson hole being more hawkish, having a hawkish bias. you disagree with that? >> i'm not at jackson hole and i can only go off what i'm adding and from powell's speech, but to me there's a huge anchoring bias at the start of this year, the majority of economists and pundits are hawkish and read everything as if it's a hawkish statement. i kind of looked at jackson hole and i thought it was actually a real validation if inflation comes in soft, the fed is going to change its view. to me, that's a risk on interpretation, but you're right a lot of people saw that and are staying hawkish. >> risk on where? the reas

i would be looking at those as well as fomc minutes.: about an hour back, the pboc came in with a sizable, sizable fixed relative to estimates. certainly with the dollar story it is not surprising they are coming in at that level with a reference rate. i'm wondering whether we should expect policymakers in china to continue at least to try to anchor the currency with the dollar strength you mentioned. david: i think the fix will keep coming in stronger. they are trying to anchor it but it is tough. you are seeing broad dollar strength. so it is not just the yuan weakness. it is dollar strength across the board. they are trying to anchor it, but if you have these -- certainly if you have more risk off coming on, that is dollar positive. u.s. yields are pushing higher dollar positive. it is tough to limit the yuan weakness. again, it is in line with its other peers. the pboc will try its best but the end of the day, if u.s. yields push higher and risk sentiment deteriorates, it is this risks skewed toward further dollar weakness and that

that's kind of -- those are the incremental steps you would imagine the fomc is going to want to see. >> right. and i'm sitting in jim's chair so i can play him. are we going to see slackening in terms of wage inflation? and/or as a result of weaker employment numbers, will we start to see that truly calm down. there had been a bit of a trend. you follow it more closely than i did, but we come back to the wageflation and how much that matters and how much it figures into what the fed is thinking about. >> cramer was very much hawkish on job hopping and what that was doing to incremental wages on the new hire front. we certainly had data in the last couple weeks from zip recruiter and the journal pointing out new jobs are paying less than they were a year ago. interesting piece on bloomberg this morning looking at the prospect of discounts at retail going into back-to-school and the holiday. commentary out of whirlpool, foot locker, certainly, and you had the fed chair who did talk about some of the progress that's been made so far on friday. take a listen. >> although inflation has mo

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