mike mckee sitting down with loretta mester. we would like to welcome our viewers and listeners worldwide to bloomberg as jay powell's speech this morning, as guy mentioned, a very short speech. eight minutes 38 seconds. it was six pages long. his previous speeches have been 15, 16 pages long. in a very direct message -- stayed the course. we want to welcome cleveland fed president loretta mester. you were in the room. did he give, from your perspective, the way you look at markets, that he give the message that you felt needed to be given? loretta: i think there was a very strong message, and i'm certainly allying with that. this is not a sure campaign. it is going to take time and more fed attention to get inflation on a trajectory down to our 2% goal. we are all in and we are going to be resolute. i thought the passage was strong and right. mike: from your point of view what does that mean? loretta: resolute means this is not a quick fix. you're going to have to bring rates up and continue doing that until we see compelling e

mester takes issue with some of that quote, i do not anticipate the fed cutting the fed fund rate target next year rates will remain elevated for, quote, some time." quote, it is far to say that inflation has peaked let alone on a sustainable downward path to 2%. said rates may have to go up by -- above 4% early next year and stay there for a while. >> i was holding up three fingers because i was going to tell you the three things you need to do to risk manage. first, let me address the economic condition question, okay whether or not you believe right now we're in the midst of an economic contraction, there will be one coming. there has to be one coming that is the only way you can combat inflation you could say you've got the strongest economy that we've had in the united states in the last 100 years. it doesn't matter. going forward, the trajectory has to be down that's the only way that you're able to effect demand. therefore, attempt to pull down inflation. >> obviously however, there are -- however, it's not a foregone conclusion that you'll have a recession until it is. right? i t

victim is the kids. >> what touched more anything this it's the is to treat you. >> that was mark mester reporting. police have not confirmed publicly yet whether alcohol or drugs were factors here. but a friend of the suspect told our sister station ktla, but the driver might have been impaired after a fight with her boyfriend. >> coming up next, moscow says it's ready to negotiate a prisoner swap for brittney griner. we'll have the latest on the fight to try to bring the wnba star home. >> in international news, palestinian officials say israeli airstrikes on gaza have killed at least 10 people. israel claims that one of the people killed was a senior islamic leader. the 10 people killed include a 5 year-old girl. a 23 year-old woman. 55 other people were injured, at least one residential building was hit palestine responded by firing rockets into israel. hours later, israel says it had been responding to an imminent threat from the islamic after one of its members was arrested this week. >> developing tonight, reuters is reporting the biden administration is readying another 1 billion

reporter mark mester has the story. >> the uc board of regents meeting on the ucl a campus wednesdaying the pac 12 football conference for the big 12. slow best ucl. a and usc announced plans this year to move conferences in 2024. the jump according to the impact report could cost the conference 150 million dollars between all teams as they won't be playing in the southern california media market. uc berkeley faces a potential loss of 10 million dollars. >> i want to take a moment to thank governor newsom for his council on this issue. and i agree with him that the public nature of this issue, transparency is vital regions. members also discussing the impact the move would have on campuses and student athletes. >> i hope we spend as much time a student athlete's success, academic success as we have been in this conversation. >> about the big 10 in the future. >> and that was mark mester reporting for us tonight. >> and now kron 4 sports. >> it's one of my favorite days of the year on the nba calendar schedule released day, we get to map out the upcoming season. who plays to win? who

then, mester will join to discuss policy at an event in pittsburgh. if you look at some of the flow that we have had from bullard, don't get too excited. tesla host their annual meeting and elon musk will manus: it is "bloomberg daybreak: europe." we are ahead of alibaba's earnings. they have sold about a third of their stake -- softbank has sold about a third of their stake of alibaba. >> that is a concern in some of the tech valuations in financial stability. there are reports that we have seen sale of derivatives raising $22 billion in cash which will help softbank's balance issue. analysts say it is more of an approach, then having a shot reaction -- a shock reaction. let's split the board. we are expecting to see a quarterly decline. we have had regulatory crackdown, u.s.-cina -- u.s.-china relations weighing heavily. they still see the stock as a by and undervalued. manus: certainly, goldman-s are shifting their view as well. you have alibaba boosting broader equity, you look at imagery from cctv about military exercises over taiwan. it does not

shana, a moment ago loretta mester made comments that knocked stuffing out of the market.eels like they're cleanup in aisle powell. neel kashkari is trying to clean up his comments to make us more worried. what do you think the fed is worried about now with the economic data that is coming out? >> the fed is seeing that the economy is holding up quite well. yes there is some weakness in manufacturing but we are seeing but positive increases in durable goods orders, personal income was better than expected, retail sales remain relatively strong so the consumer is still spending. yes as ed pointed out earlier they're spending more on services than goods but they are spending and so the fed is saying that the demand is still higher than they would like it to be and they want people to be aware that they don't want to do, i think this is what some of these fed presidents are trying to warn, what they did in the '70s, with this constant raising and cutting rates which just led to great volatility and it never really addressed inflation. charles: right. >> i think they want to s

and now mester >> how does the potency look on the fed-speak?ormally does >> it is what i was -- my first look, jon, was not at the two-year, but at the ten-year. if you would call that up in the back -- i didn't tell you about this -- but there was also an impact on the ten-year it's in that zone, jon, the five and ten-year note which are indicative of the kind of rates that business does business at the two-year, there is some funding at that level. as you know, most businesses fund in that five and ten-year zone that is where we are seeing some potency. it's so down, jon. i think it was touching 3.5% if you go way back on that chart. the fed has a lot to make up it's seeing financial conditions ease, that's antithey cal to what the fed is trying to do here despite this bump today, it still has a gathering problem of easing financial conditions. >> makes sense i would like to claim i -- in and out something i think about often, so good to know, adding to my bank of balances. >> your tech company is funded zero >> that's right. steve liesman, t

mester's comments coming on the've mary daly, take a listen. >> are you almost done >> nowhere near asone. we've gotten off to a good start. let's remember the last numbers on inflation, 9.1%, those are far too high most importantly, go any grocery store. i went to do shopping for a lot of different things over the weekend, and people are still struggling with the high prices they're paying and the rises prices you know, the number of people who can't afford this week what they paid for with ease six months ago just means our work is far from done. >> okay. so how high will rates need to go according to st. louis fed president james bullard, a voting member t feds fund rate will likely hit between 3.75% and 4% by the end of the year. it currently, by the way, sits between 2.25% and 2.5% that's the current range let's tie all this together. we have malcolm ethridge with us you heard what we played, the quotes still out there is it still a worry, top of mind for wall street. >> good morning, dom i think the last month of earnings and earnings season being less disappointing than expected

cleveland's loretta mester -- >> contessa brewer back to the broader market in the red today, starting in the green. had a 1% gain for a brief moment, currently below 3980 our next guest likes enterprise related plays. joining us megan shew. it's great to have you your point is investors getting warned about a lot of stuff. jackson hole, seasonality, ut. your advice is to not get too defensive. why? >> thanks for having me, carl. we have fully invested, but definitely a little more cautious in our diversified portfolio, we're holding excess cash levels today. that speaks to the amount of uncertainty in the environment getting too defensive could be a big mistake. we could see a nice rally through the june to august period as a reminder why you don't want to be too much on the sidelines. we think inflation is set to slow i think it was misguided for investors to be expecting too much in the way of rate cuts in 2023 we're getting some of that priced out of the market post jackson hole i think that's a good thing. i think there could be vulnerability if there's a little volatility certain

thing about this september meeting is there are two jobs reports, one of which comes tomorrow and mesterveryone will be watching that closely. there are two cpi reports and one comes next week and one before the meeting in september. there's a lot for the fed to put into its models to figure out where it wants to go with rates and any guidance at all and what we have is this meeting to meeting situation and that's why i need to pop on here with any comment made by a fed official >> it's like parents where the kids don't listen. steve liesman, thank you >> the fed is going to be watching that jobs data that seef steve just mentioned and the tech hiring will begin to crop up with job seekers and new data from recruiter.com shows i.t. is no longer the industry after a four-month streak moving off of the way down to fifth place. joining me now with the industries that have pulled ahead and where the jobs are is recruiter.com evan sohn. does this mean that the workers who are looking for jobs are finding them, it seems like? >> thanks, jon, for having me on the segment. again, the recruiter.c

we get the fed speaker loretta mester speaking at 12:00 p.m we he get the tesla annual shareholder meetingke shack and doordash reporting today. >>> and right now, there are moves happening in bonds that jeffrey kleintop says a are interesting and concerning he looked at the treasury data for the last couple of years 48% of all yield curves, bond maturity that you can think of, 48% were inverted. the blue line. that goes up rece rece recessionary periods that number is now at 50% suggesting growing signals of recession. maybe not what you are thinking. jeff joins us now. i'm looking at the graphic and i saw the note and tweet it looks more like an ekg of the morning news anchor when the alarm goes off what are we looking at here? >> often when market forecasters talk about the yield the yield spread with the 2/10 year i like to look at all. there are 91 yield spreads looking at the spread of shorter treasury to the active longer maturity treasury. rather than picking one spread, look at the entire curve which tells us more how the whole curve is inverted. more than half of the yield curve

time, the fed's mester will discuss economic policy.the tesla annual meeting where must is likely to face questions surrounding his acquisition of twitter. investors are weighing the tiny supply increase from opec-plus against, weaker u.s. gasoline demand,, adding just hundred thousand barrels a day. president biden's visit to saudi arabia has yielded little. joining us now is paul wallace, covering middle east energy and commodities. i guess it is better than nothing, how badly do you think the opec-plus decision will go down in the u.s.? >> hi, francine. yes, that is how the american government is portraying it, better than nothing. their argument was that opec+ and before their diplomatic efforts was sent to increase production by nothing over the rest of the year, so they say this is something. they say they don't really care about the added barrels, they are much more interested in the price of oil. the white house special envoy for energy says since officials have put pressure on opec to raise production, prices have come down and

jonathan: that was loretta mester of the cleveland fed.as speaking with the washington post, pushing back against these dovish expectations after chairman tells news conference. communication failure or interpretation failure? one or the other. you should not get to your yields moving the way they have. tom: or the five-year. jonathan: the nasdaq up .4. yields creeping up higher a few basis points. crude reverses losses, gaining by .9%. that meeting has just started, according to a delegate. the opec ministerial meeting has started. set a stopwatch. tom: maybe it will last as long as kriti gupta's chart that she is showing us now. >> you were talking about the two year yield and five year yield. yesterday's move in the 10-year yield was the second-largest since we saw the covid crash in 2020. it only rivals when the bond market was pricing in 75 basis points ahead of the june fomc meeting. that repricing is crucial, what you are seeing in this particular index. this measures bond volatility which has been on an uptrend since 2020, close to

the san francisco fed president, loretta mester, and charlie evans all hinted the fed still has a way to go on reaching price stability. with consumer prices rising 9.1% in june, mr. says slower growth may be necessary to control inflation. >> we don't talk about recession per se. it is, are we growing below or above trend. and my forecast for this year is we will be going -- growing low trend that is necessary in order to get price increases, inflation, under control. yvonne: the u.s. is moving ahead with a plan that could slash the time traders have to report bond transactions to one minute from 15. two key financial regulators are jointly asking for comments on the proposal, in an initial step that also includes the securities exchange commission. gary gensler said the reduction could bring more transparency to the market. a study in israel shows hospital workers who got a fourth dose of pfizer's vaccine were far less likely to get covid. health-care workers who got the fourth shot in january showed a 7% rate of breakthrough infections compared with 20% of those with three doses. t

indicator is a yawning gully of about 33 points right now in part because middle ear spacer and -- mester and daily made it clear the fed will continue on the rate hike rampage. earnings having an affect and dows lagging because caterpillar down 5% after reporting a second quarter revenue miss, the heavy machinery maker cited higher material cost and weaker foreign markets and said north american sales spiked 20% during the quarter. investors don't care. they're driving that stock down but look at uber. uber stock is doing doughnuts. up about 18.5% after reporting positive quarterly cash flow for the first time ever. and uber also upped its q3 operating profit as people are hailing more ubers and ordering food deliveries at a hot pace. bitcoin, hot or not? depends on the headline. earlier it was higher. bitcoin in the red, then the green. now it's down just slightly about half a percent at the moment to 22,887. we're watching this because bitcoin billionaire and founder sam bankman-freed appears to be resolute in propping up and supporting the cryptosecurity players even the ones on the e

about this devastating miscarriage that his wife chrissy teigen went through well into the second tri-mester talk about it. >> having gone through that situation with my wife essentially anyone who would have a miscarriage after all that trauma, after all that pain, after all those tears we went through to then have the local da or a local law enforcement do an investigation and make sure the miscarriage was approved by the state and not just a regular run-of-the-mill abortion, to have the government involved in that conversation in any way is so offensive to me. it's nasty. it's evil. >> such an interesting perspective. >> that's what drove a whole bunch of people to the polls in kansas this week. yes, you know, he was talking obviously about the dobbs decision from his very personal perspective of the experience he went through, and that's of course why i like doing this podcast, because everyone has a story and often the stories are surprising and those stories shape their thinking and their point of view and this is an example of that. of course, john legend is far more than a musician,

. >> president mester says inflation is not tamed do you agree or have we seen the worst of it at the very least? >> i think we're continuing to see signs that inflation likely has peaked just most recently we did get the pce numbers out and it is showing that inflation is starting to come down if you look at the total number or the core pce and we're seeing the figures come down as the cpe over the previous months the question is is it coming down enough that the fed will reduce interest rates and that's what the markets are so focused on right now we had a nice month where the fed was fantastic and now that's coming back into focus again and the every little data point when we get the jobs report out is what the markets will be looking for and every detail indicating what they'll be doing later this month and the rest of the year and we'll see choppy trading between now and then >> i asked a guest yesterday, and i'd like to ask you, if i might, immediately it would seem that the market over the past several days has been reacting to chair powell's speech on friday where he basically

offering hints here and there, but we heard from cleveland federal reserve bank president loretta mester and sees interest rates rising higher before the fed eases off echoing chairman powell they'll remain high for some time. she's talking 4%. that's a little bit different and a little more bearish than we've heard from other fed members. so will the uncertainty calm down next month's trading? or is it going to be choppy seas until the fed makes it official? that call will come on septembe. let's ask our writer as we've got fidelities john gagliardi and teddy. teddy, volatility is the name of the name and you've been sitting in cash, are you considering getting back into the market? >> i will say this, cheryl, every time we stuck a couple toes in the water, we've gotten burned. the answer is i think cash is still king. the best trade we've made probably since last march, july aside has been the three or six month treasury. it's just very difficult, you know, we had a good month in july in the first couple of weeks or august were pretty good, as soon as we existed earnings reporting peri

. >> that was mark mester reporting for us and police have not confirmed whether alcohol or drugs were factors in the crash, but a friend of the suspect told our sister station ktla, the driver may have been impaired after a fight with her boyfriend. an update this afternoon on last night's las vegas strip shooting. a suspect is now in police custody. that shooting reported 8.30 last night at the mirage hotel. investigators say an argument broke out inside of a hotel room between several family members. that's when the suspect opened fire. 3 people were shot and one of them died. the other 2 victims remain in critical condition. the suspect is being held on murder charges. next. at the bottom of the hour, the fbi director says crime in america is a growing concern. >> details on the agency's plans for public safety. plus, what's being done about the border and terror threats? and speaking of crime, a manhunt for a thief goes viral as police search for a suspect who looks a lot like a famous actor. can you guess what it is? and a new study from uc davis highlights the dangers of wildfir

lor loretta mester, nowhere near done, and the icing on the cake, jim buller today still want rates to go to 3.75 to 4 this year, i think we'll probably be higher for longer. lo and behold, stocks are up i want to know from you, why has the market been able to brush off this hawkish fed speak this week because there's been a lot of it. >> yeah. 4% that's a kind of daunting number and you listen to that, 4? woo are at 3.75% if you're in the midpoint of the range meaning a lot of wood has been chopped. there is more wood to chop. >> it's a tree >> no, it's not a tree >> stay with me and let me fully flush this out for you again, dance with me for a second. >> gotcha. >> 25 at 3.50 on the upper end of the range maybe you need to go further in 2023, but here's what i'm saying to you, okay you've heard me say this before. inflation does show signs of peaking and don't throw rotten fruit at tv and gas futures were what they were on march 1st and take a look at inventory levels and they'll have an effect on crisis and if inflation is coming down and at the end of this year you're going to be

peak to reiterate what powell has been really pounding the table on, it's a series of lower readings mesters has talked about several months of lower readings it's not just looking back, we're lower than the month before but i also think a basis for the rally was about a day before the s&p low in mid-june, you had the peak in the 10-year. from around 3.5, you went down to 2.5 i think that that was a huge tailwind behind stocks the thing that makes me more nervous in some of the all the macro stuff we've been talking about is with this rally has some frothy sentiment again. i think part of the reason why we're seeing weakness today, even if you don't have some fundamental driver to point to, is we maybe have gotten a little over our skis from a sentiment perspective. so from a trading standpoint, i'd say watch the sentiment data i think that has a tendency to be a bigger needle mover and helps to explain some countertrend moves that might not otherwise be explained by either the macro environment or some particular set of data points. >> or you could just watch gamestop, which is still positi

this morning cleveland federal reserve president loretta mester reiterated the mission.ates have to move to 4% by early next year and must stay there. she took out any sort of hopes there would be a rate cut in 2023. so far, so far no reaction though from the, from the markets, right? i want you to take a look at this. stock market is getting hammered, no doubt about that. the cme fed watch is still not taking the fed seriously. sure we see it at the next meeting, a big chance there will be a 75 basis-point hike. this will be a new level. then in november another 50 basis points. good. i mean the fed wants to see this. look after another 25 basis-point hike, it doesn't move. this is going all the way to the summer of 2003. the federal reserve wants a lot more fear than this. what are they going to do to make it happen? it is sort of bewildering in some ways. here is the thing for stock markets. we're so used to the fed coming to the rescue. especially when there is a bear market, right? the fed doesn't drop nukes, they print money. take a look at this. this is what happe

very top of the show and at risk of misremembering if you will who exactly said this, i think it was mester most recently or the one who suggested she wanted to see what i think she called clear evidence that inflation had at least peaked or was coming down and it was going to take a while for her to see that i'm wondering what in fed speak terms that really means. the most recent read was obviously better than the others how many do we need to see before they take their foot fully off the gas? you know where i'm getting at? >> i do. so we asked esther george actually volunteered this yesterday. she wants to see three months in a row of good data i think there is a question as to whether that is good month-to-month data which i guess would involve the year-to-year rate coming down. and i think what that means, and this is where it gets actually interesting for the market is this notion that the market had priced in which is that the fed would reach a peak level and then start to cut, which is the way the fed rate outlook is priced right now then you had guys like harker tell me this morning

loretta mester says the central bank will meet to raise its benchmark rate above 4% by next year.expect to be lowered for the rest of the year. also told the dayton chamber of commerce future hikes will remain data-dependent and she expects inflation to drop to 5% or 6% this year. >> the size of rate increases at any particular fomc meeting and to the peak funds rate will depend on the inflation outlook, which depends on the assessment of how average demand and supply are coming back into better balance and price pressures reduce. vonnie: a new report says u.s. companies added the fewest jobs in august since early 2021. -- research into the toots says business payrolls rose 132 thousand. figures are based on payroll transactions with -- of more than 25 million workers. -- officially monthly jobs report friday will show private payrolls climbed by 300,000. the opec coalition tightened its outlook this year. members struggled to reach targets. the alliance's technical committee/forecast is by less than half to 400,000 barrels a day. next year, it sees a deficit of 300,000 barrels a

lisa: loretta mester expecting unemployment to climb to 4%.ers make is that there is still so much room for people to come back to the labor market, participation rate, productivity could go up, that it could create a soft landing that elise gould was talking about. but what happens if it doesn't happen? some are saying it is more likely that we do not get this goldilocks should area. jonathan: you sound bullish. lisa: i am trying to be balanced. these are the arguments that people are making. jonathan: i am not sure what tom is up to. are you balanced? lisa: that is a loaded question. tom: i just did a survey for you to get you up to vermont for the leaves of october. they are sold out. completely. everything is off. no place to stay, jon. jonathan: they sold out of hotels. tom: seriously. woodstock, vermont was redone by john rockefeller decades ago. he was the first want to put the power lines below the street. you drive into the town and it looks like a dickens novel. lisa: i am just imagining us going on an apple picking trip, tom reading