. >> i'm kathleen hays. the top stories this hour. >> u.s. stocks hit a record. a cyclicals leading the gain ahead of a crucial jobs report. haidi: foreign investors.

rishaad: kathleen hays is here with a look at some of the key takeaways. this time, it is a hawkish fed tilt. kathleen: i would say so. on the tabor side, not a huge surprise. from not talking about, talking about, thinking about, something was going to happen. jay powell said it can happen at the next meeting that they would start. did not give a date. he also said this. >> we also discussed the appropriate pace of tapering asset purchases once economic conditions satisfy the criteria laid out in the committee's guidance. while no decision was made, it was viewed as long as the recovery remains on track, a gradual tapering process that ncludes around the middle of next year is likely to be appropriate. kathleen: the inflation criteria has been neither a target staying higher. they don't need a gang buster report, just another solid report to move. everything since the updating, the expected rate hike path, in from the left side of the screen, there is a total of nine rate hikes. however, it is a move up from seven the month before, three the quarter before

kathleen hays -- kept on shopping. kathleen hays is here. kathleen: economists will say never bet against the american consumer. the american consumer was showing weakness in august. let's take a look at this chart, turning weakness into surprising strength. this was for a big drop. the consensus view of -0.7 came plus 0.7 so that right there was the good news. and in fact, if you look at another chart where we take out auto sales which were week, gasoline sales which fell mainly because gasoline prices were lower during part of august, you see that the number was 2.0%, a decent number, and remember, auto sales are not weak mainly because people don't want to buy them. at least that's what we are hearing. it's because prices have surged, new car prices are up. used cars are in short supply. that is the demand signal. 10 of 13 retail sales categories rose in this report and its true that july was revised sharply lower, so the number, this lower base. to put the two numbers together, it is kind of flat. the year-over-year number has stabilized

we are joined by kathleen hays and macro strategist at mellon. thleen: he has held several roles in washington, where you helped craft policy statements. when jay powell says tapering could start as soon as the next meeting, is not the same as saying, we are tapering in early november? >> no. they first and outs and action. i took the idea that tapering would soon be warranted meaning that they would devote the november meeting to lay out details. powell has repeatedly said we will get a lot of specifics before we start. we haven't gotten those yet. i think they will donate that november meeting and then maybe start in december. slowing asset purchases? it will be done by the middle of next year. kathleen: half of the group is saying we see the first great height by the second half -- the first rate hike by the second half of next year and some of them thinks there will be two. >> i don't think it is a group. i think it is a set of a pretty assertive purchases. i think what he did was to tell his committee we are not in a rush, we will learn more

david: kathleen hays, our economic and policy editor joins us. taper or isn't it? kathleen: at the press conference after the ecb, european central bank put out its policy decision and said they would slow down the rate of bond purchases, christine lagarde, in her first prepared remarks said this about what they are doing and why. >> favorable financing conditions can be maintained with a moderately lower pace of asset purchases under the pandemic emergency purchase program done in the previous two quarters. the lady isn't tapering. because what we are doing is recalibrating, which i will remind you is the pandemic emergency purchase program. kathleen: she went out of her way to say not tapering, when she was asked by reporters, if this was the beginning of tapering, she did say they will have a moderately lower rate of purchases. it is going to be a target now, a range from $60 billion to $70 billion of bonds and month. they will still get the program growing through march of 2022 for longer. i think that's why she said it is not the beginning of some sort of remov

kathleen hays is here with a recap. it seems to be a win for the transitory camp, but a small one. kathleen: a small one indeed. were happy to see it continuing to move higher in a steady move, the consumer price index has started to pull back just a bit, especially when you look at the monthly numbers. those are the gold bars along the bottom. a lot lower than the 0.9% increase in june. in fact it's the smallest advance in seven-month. but the turquoise line move down year-over-year but it is about 5% for three months now, that's pretty high. in terms of the reopening, prices eased for things like used cars, prices shot up when people bought houses in the suburbs and suddenly need to buy a car. airfare and car rentals all look better. there's a lot of talk about taper and how things look but less pressure, a lot of people are speculating and president biden has not decided if he will reappoint jay powell. haidi: so were looking at that call rating, still pretty high. kathleen: it is interesting, but you can look at things that are even more basic than that and see why they are sayi

let's bring in kathleen hays, our global economics and policy editor. e's with us out of new york. why is this one significant in that sense? kathleen: people are waiting to see how much the delta variant might be eating away at the economy, how much labor shortages some people have been looking at as a deterrent to jobs growing faster, how much those are in play. what is interesting about the past few months is that the two previous increases were pretty close to one million. the yellow line shows the forecast for 725,000 in the latest month. in any kind of "normal" time instead of a massive pandemic rebound, that would be a huge number. it is not quite as big as the two previous months, and after the adp private jobs report showed a way lower number than forecast, people are thinking that could portend something like that for the august number. i want to throw in a couple of things to flesh this out. the national federation of independent business, 240,000 small businesses across the country -- they have a monthly survey, and the latest one shows that

kathleen hays is here with a preview. jay powell himself still bets on transitory inflation. at can we expect? kathleen: this is at the core of what the fed is saying, we are going to taper carefully and slowly and not russian to rate hikes because the consensus view, not 100%, the consensus says prices spikes will start cooling off. instead what we are looking at is an inflation rate, we get this report on tuesday, it is expected to remain above 5% for the third straight month, that is the turquoise line. those old and yellow bars are showing a little bit of easing off on a monthly basis. we are looking for 0.4% for the month of august versus 0.5 in july, but 5.3 for the turquoise line is not much less than the 5.4 in july. the fed's transitory inflation camp still says the base effects will say when inflation fell, we stopped comparing it to negative numbers and it will look better. we think the reopening driven things, like airlines and car prices, that will pull back because reopening will continue. but what is on the other side of the argument? let's go to this one, infla

kathleen hays always does a good interview. danielle: seriously. it is continually climbing and even a taper is not going to reduce that. they are going to add to it at a slower pace. do we ever reduce the fed balance sheet? is it necessary? danielle: that is a good question because that was an experiment that ended up being a failed experiment. the quantitative tightening, and to the fed credit the only major bank trying to pull back and tighten strategy and reduce the size of the balance sheet after the crisis, but that did not succeed. right now we are just talking about tapering but to bring back word we have not heard, what about reinvestment and holding the balance sheet at a steady state? that became a subject of debate in and of itself, to say nothing of raising interest rate itself. there are a lot of moving pieces and these markets, as was on monday, are very vulnerable to any excuse for a selloff at this point. matt: danielle, thank you very much. danielle dimartino booth, ceo and chief strategist for quill intelligence and also bloomber

global economics editor kathleen hays here with the numbers. is this all basically a negotiating strategy? kathleen: it sure looks that way. democrats in the house got so much attention, they got the ear of everybody. they want to spend big, but there are moderates in the house , too, and this is what they are trying to bring together, this revised corporate tax proposal. they want to raise the corporate tax rate from 21% to 20 six point. . percent not quite as much as joe biden wanted, 28%. capital gains, 20% will go after 25%. joe biden was looking for 39.6%. it is far less than that, though it is estimated to raise more than $2 trillion. it is a $3.5 trillion plan. you have to pay for it somehow. that is what moderate democrats are talking about. some of them are in swing districts. if you look ahead to the midterms, a swing district, libya have a powerful republican challenger if i am a swing democrat, i have to appeal to them, too. . in the senate, there is joe manchin, pounding the table saying, we already past $5 trillion with the stimulu

kathleen hays is here with a recap. let's get started with what was in the report that supported the transitory count. kathleen: look at the latest numbers we got. the concern is transitory, if it persists, a little relief. especially if you look at the monthly changes. you can see the latest monthly increase for august of 0.3%. lower than the forecast for 0.4%, 0.5%, much lower than 0.9% jump in june. so you can see some progress. it is the turquoise line shooting up at a year-over-year rate. it is used from 5.4% to 5.3%, but it is still very high. above 5% year-over-year for the third time in aro. the reopening linked prices that shot up so much, like used cars, buying a house in the suburbs, everyone wants lunch, those prices. double-digit increases, car revenues shot up, all of those things. after the federal reserve meeting next week, people are saying at the very least, jay powell, his reporters -- could explain they have not announced tapering, talked about it, where glad to see inflation ease, still watching it c

kathleen hays is here with the latest. janet yellen warning of dire consequences if the debt ceiling is not raised. kathleen: you cannot just stop paying your bills and not expect markets around the world to react. let's take a look at what janet yellen said today in an op-ed in the wall street journal. she notes u.s. government has always paid its bill but the consensus on both sides of the aisle is failing to raise the debt limit would produce widespread economic catastrophe. here is the doomsday scenario she paints. a default is what this would be if you stopped paying your bills on things like social security payments, all things people depend on. it could precipitate a historic finance crisis. the u.s. would get downgraded by moody's and all the credit ratings. rate might -- rates might spike. all kinds of turmoil. all of this could lead this recovery to turn into recession. with all this dire consequences, wire is there any doubt? we know congress is set to vote on this bill next week raising the debt ceiling to 28 tr

haidi: kathleen hays there.ie quinn with the first word headlines. >> japan's factory production dropped more than expected as the pandemic continues to disrupt global supply chains. electronic many factoring, down 2.3% from july. economists had forecast a 2.5% drop a wood retail sales also fell more than expected. down 4.1% from july. the u.s. sca may authorize posters of modernist covid-19 vaccine after pfizer's was approved earlier. the timing of the announcement was unclear but it will come as a u.s. recovery from the latest coronavirus wave is taking hold. cases are dropping and poised to start dropping in the vast majority of cases. new zealand will offer these us to as many as 106 to 5000 migrants. delays in processing residency applications during the covid endemic threatened an exit is of skilled foreigners. -- an exodus of skilled foreigners. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn

let's bring in kathleen hays. norway hiked its key rate while the pbo we said you have two economic stories going on, and yet, one conclusion. time to withdraw the stimulus. why now? kathleen: it is a similar story and somewhat different, absolutely, because in norway, this oil-rich country has had plenty of resources to help push back against the impact of a pandemic. the economy is in a nice recovery now, and the head of the norway central bank gave this explanation earlier today of why they moved. >> given the normalization of the economy, it is appropriate to staunch the gradual normalization from a very low level, so we made the first step today and increased it with 25 basis points. kathleen: it has the distinction of being the first g10 nation to hike its key rate in this post-pandemic -- almost post-pandemic era, but remember they are following the bank of korea and rbnz, who are moving ahead of a lot of other central banks. bank of england, very interesting because is it's all about inflation. look at this

let us bring in kathleen hays with the preview. kathleen, jay powell betting on transitory inflation. what will prove him wrong? kathleen: there are couple things that will prove him wrong. this view of temporary inflation is the big reason for the fed to go through -- not go towards tapering or rate hikes too quickly. it is an important issue. the start with a terminal chart looking at the monthly inflation numbers and the year-over-year numbers. those yellow gold bars on the bottom showed that last month, the monthly number was only 0.5% in july. both bars don't look quite as big. look at that turquoise blue line at the top. 5.4% year-over-year in july. the forecast is for a small decrease. if that's where it comes, that will be the third month in a row or the year-over-year cpi has been over 5%. point number one would be the fed sank those are base effects. they will start to fade. those reopening prices will jump like airline tickets yet out those will come down. the first answer is that those temporary reopening things are gett

kathleen hays is here with a recap. if the ecb is not tapering, what exactly is it doing? kathleen: recalibrating. on the policy statement released by the european central bank the day after its meeting, christine lagarde and her official statement, the beginning of the press conference, said the economy is doing better and we don't need to support it quite as much. here is what she said. kathleen: favorable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase program. than in the previous two quarters. kathleen: let's move on to the qme. -- q&a. is this the beginning of tapering? here is what met on the guard said. >> -- madam lagarde said. >> what it is doing is recalibrating. the pandemic emergency purchase program. kathleen: fair enough. that recalibration, they were purchasing 80 billion euros worth of bonds under the emergency program a month and that will be targeted between 60 billion and 70 billion, giving them some flexibility. the recovery is advanced enough that they can be maintained. s

who better to explain than our global economics and policy editor kathleen hays.this is a big meeting because we been waiting to know are you ready to taper, and it is taper -- temporary and how about the dots? are they going to hike rates? they are tapering inflation, the taper expectation survey said 67% what they are going to signal at the end of this meeting is the taper is going to start in november. and they will give us more details as well. two camps, one says transitory, the transitory team. they say we don't need to go fast, don't worry about rate hikes quickly because inflation is subsiding as the post-pandemic stresses ease. the other team, the hawks are saying how long can you call inflation that stays at 4% or higher year-over-year temporary? it looks persistent, we think it's time to announce the taper now, get it done by early next year in case we need to hike rates by the middle or second half of next year. dots. every three months the fed updates its view of rove, unemployment, inflation, and they say here is what we think the course of the rig i

haidi: let us bring in kathleen hays and our next guest, director of the mpa program and economic program management at columbia, patricia mosser. kailey: -- kathleen: jay powell said the taper could end by the middle of next year. at the same time, the dot plot, the interest rate forecast showed that nine now see the first rate hike by the second half of next year. is the fed tilting more hawkish? patricia: i think they are. that seems pretty obvious. i think they were concerned at the slowdown in growth over the summer. they have been encouraged. i think they started to signal this a little earlier than what perhaps the market consensus was. there were signals at the last f1 see meeting that the taper could be moved into this year or early 2023, and it was forecast to be much later. the next meeting seems likely and in the q&a chair powell was clear that in his opinion it would take a mediocre jobs report to discourage him from that view. he described where the labor market was. which he took in his definition to be substantial progress. in getting back to full employment. the timing se

kathleen hays, bloomberg's economic and policy editor.vonne: and we look at allegations that the current head of the imf when she worked at the world bank pressured economists to boost china's ranking among global markets. this is bloomberg. ♪ yvonne: the imf managing director has been called out by her former employer, the world bank, for applying pressure to boost china's ranking in a report of global economies while she was ceo there. rishaad: let's get to bloomberg's imf and world rank reporter, eric martin. this is quite a revelation. if it is proven to be true, where does it leave her? eric: absolutely. in the last few minutes, the last hour or so, we have seen the first statement that i have seen suggesting this could be an existential threat to her continuance as managing director of the imf. there republican congressman from arkansas, member of the house financial services committee, who says this alarming report raises serious questions about her motivations during her time at the world bank, and if the allegations are approved,

rishaad: kathleen hays. a quick look at markets. relief coming through from evergrande.likely to get a correction on the nikkei. this is bloomberg. sophie: -- ♪ it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. >> from the heart of where innovation, money and power collide in silicon valley and beyond, this is bloomberg technology with emily chang. emily: i'm emily chang san francisco and this is bloomberg knology. airbnb says not just a travel recovery but a travel revolution is happening. in that business and leisure travel will be forever changed. plus, it i

kathleen hays is here with a recap. what is the message from the latest report? kathleen: stimulus checks being gone, delta variant out, people will not go out and shop. they did in august. let's take a look at this chart. i decline of -0.7 was expected. the rebound of 0.7%. you can see how they year-over-year level of retail sales has leveled out at 15% but it panels in on a decline,. it's take a look at this chart that shows the real sweet spot but when you take out week auto prices and weaker gasoline prices, what you get is a jump of 2% in retail sales for the month. remember auto sales are not weak because there is demand. there is plenty of demand but people cannot get cars. chip shortages are part of it and the prices surged so much that people moved to the severance and then hurricanes and everyone wants a car. that is why they have been week. it does not look like demand is moving. 10 demand categories posting gains. active school shopping for example. if kids go back to school, you have to buy more stuff. it is true the july sales figure was revised lowe

kathleen hays is here with a recap. if they are not tapering, what is it doing? anchor: very good question. they put this in their official statement today. of course, she was asked about this at the press conference. people were expecting tapering. the economy is doing better but listen to what she said. >> favorable financing conditions can be maintained with a moderately lower case of net asset purchases under the pandemic emergency purchasing program then in the previous two quarters. it is not tapering. what we are doing is recalibrating cap, which is the pandemic emergency purchased program. -- pepp. anchor: they will maintain the program overall part 185 trillion bonds says on the table through march 22. the recovery is doing better. it does not -- need as much help. it is a threat to global recovery and europe. it is interesting that lady is not tapering as a turn of phrase from pocket thatcher when she said the lady is not turning. paul: let us move to central bank on your side of the atlantic. two federal reserve presidents are selling their investments

let's bring in kathleen hays, our economic and policy editor. what kind of picture is this painting to you now? >> it certainly seems to be painting a picture that in a variety of ways, the resurgence of the virus is not quite as bad as it has been in the past, led by the delta variant, that this is taken out of all kinds of indicators, certainly all cons of the economy, business aspects, and this is the question -- at the same time, inflation is spiking up and putting stimulus at risk. let's take a look at some of this. we have the pmi of just below 50, but i think we have to remember that 24 hours ago, when we got the official big government pmi and services plunged over 50 to 47, that is what really got people's attention. if china is slowing down and getting hit again -- though some people say it is particular -- particularly china, not the people's manufacturing side. of course, we have australian second-quarter gdp coming in stronger than expected. they are having more cases, but they have and putting up with this for a long time. it does

. >> i'm kathleen hays. the top stories this hour. >> u.s. stocks hit a record.eading the gain ahead of a crucial jobs report. haidi: foreign investors.

. >> i'm kathleen hays. the top stories this hour. >> u.s. stocks hit a record. a cyclicals leading the gain ahead of a crucial jobs report. haidi: foreign investors. the stock exchange, and further putting up of the economy. >> hsbc's ceo betting on china's middle classes. he tells us it is too big of an opportunity to miss, despite beijing's crackdown. haidi: southeast asia's second-highest vendor is going on a hiring spree. we hear from the ceo in our first in person interview since taking the top job. >> take a look at how the wall street trading day went. the s&p 500 hitting another record. was not a big move. it continues to move higher. energy industrial shares, which had been laggard, were among the biggest gainers. consumer discretionary and communication services were at the bottom of the list. consumer discretionary not doing as well today. to the bond market, flat as a pancake. anchored around 1.30%. wait to see the jobs report. stronger than expected number. volatility in the bond market. in terms of crude oil, closing under seven dollars a barrel. a

i am kathleen hays in new york. sophie: i am sophie kamaruddin in hong kong.k at the major markets opening across asia, our top stories, looking ahead to u.s. jobs numbers and xi jinping's promise of a new beijing stock exchange. singapore becomes the first asian hub to allow spac listings but a lower minimum market cap. and ocbc guesses -- gets set for an hiring spree in china. plus, another exclusive. the hsbc ceo tells us why he is betting on china's middle-class class is despite beijing's crackdown. let's get you a check on the friday markets. sophie: this friday morning we are seeing upside for japanese stocks as the nikkei continues to move ahead, above 28,000, even as we are seeing fast retailing shares move lower by about 1% on the back of retail numbers dropping 39% for the month. upside for japanese stocks. goldman seeing and improving outlook. anxiety over global cyclical risks, they say that is overdone. checking on the open in south korea. we're going to be gauging reaction to the government extending the virus groups for four weeks. we have the k