Transcripts For BLOOMBERG Bloomberg 20240703

Surveillance, on tv and radio, alongside tom keene, and lisa abramowicz. I am jonathan ferro. The equity market on the s p up by 0. 5 . I think we can call this a month to forget. Tom in and a quarter to forget as well. The same tensions we have seen off the week. I will go back to something we said months and months ago. The acclaimed black swan quantitative finance expert, taleb, said the gravity has returned to the market. It was a great september. Jonathan it could stronger in the market. What a range we have seen. The high yesterday 4. 6 861 on the 10year yield. This morning, 4. 54. I am not sure what that is based on. Lisa a maybe we got softer than expected inflation out of europe and very little in japan that did little for the market. I am curious how much we are looking at out of the market. Suddenly bond markets are what issuing showing the volatility normally associated with different asset classes. Tom i dont know what we had in the hd block. I am certain in the first block on monday, we have kawa of ubs. He said ideal volatility is now in first and second derivatives across all the asset classes. That is why you see some tension. You see dani burger with laurence fink. A bit of tension. There is a lot of tension around. Jonathan oliver chen of cala of kawa. Tom what to buy that will not shrink . Jonathan i will do that again. Some. Uaw later this morning. Government shutdown looming. What is your focus on uaw or washington dc . Lisa a i am focused on uaw because it always it seems there will be a role certainty on a Government Shutdown. I think you how entrenched our wage pressures and how much for Companies Keep passing to workers versus taking for themselves . This is something broadening and we are seeing pressure build. Larry fink mentioned this. He said Corporate Executives and officials have not done a good job explaining how entrenched inflation is becoming in the economy. Jonathan based on us, it comes from 40 down to 36 and then down to 30 . We are positive by 0. 4 on the s p. Down on month on the s p 500. Not just in the equities in treasuries. The 10year yield is lower by three basis points at 4. 54. Lisa a what i am watching today may be the last slew of data before the Government Shutdown. 8 30 a. M. , personal income and spending. I am curious about core pce which will come out the favored measure by the fed for inflation. It is expected to come in but upward revision is expected from previous months. 10 00 a. M. , u. S. Consumer sentiment survey. I note i am looking right now at the expectations of five to 10 years forward for inflation. If you look to markets, it has gotten sticky at the point something. 2. 4, 2. 5. Ahead of the 12 new deadline for strike expansion, a question about whether they will go after stellantis and gm, or whether they have gone to ford. They merge progress with a 30 wage increase. Jonathan the Facebook Live event is around four hours away. Julian with us around the table. Chief equity and corporate strategist. Fantastic to catch up with you. Its tough about the pullback in the equity market. Is it time to buy . It is. You hits on two very important games. The first with tension and the wall of worry that was almost nonexistent in july as ai was leading us to the new world and then suddenly started getting rebuilt at the top is now slowly rebuilt. How do we know that . If you look at the market yesterday, there was a very noticeable change when the uaw came out and lowered their offer, making the bid offer spread 21 to 30, as opposed to the original 40. That is when bond yields turned lower and stocks turned higher. We think there is a lot more to go. Jonathan so this equity call you are making is essentially a bond market calling . Julian how can it be otherwise when you look at the action the last year and a half. Two are correlated. Tom we have people Walking Around the world, starting economics. Lets get back to common sense. You work for the most famous marketing economist in the world. Edward s hyman invented the game. I want to get from him to Julian Emanuel. Julian eds call this inflation has been very consistent. What is interesting is it is very where very rare that you have seen Oil Prices Ratchet the way they have whereas copper prices have been getting lower. That tells you what is going on is more geopolitical than an entrenching an inflation drenched economy. When you look long term, the reason the markets is likely on better footing in the orth quarter is because in the Fourth Quarter is because earnings will continue to grow. Tom tell me about the character . Ever hyman is looking at pickup trucks and more. He knows what taylor swift will have at the pickup game. Take his research and bring it to nominal gdp and topline growth. Julian it is interesting because now there is a reason to watch the jets game live for the first time in years because taylor swift may or may not be there. The fact is, part of why the environment has been so difficult is because the economy is so incredibly diverse. When you look at ed and oscars surveys, we have seen the trucking survey telling us we should have been in a recession the last nine months. But because the manufacturing side is somewhat smaller than he actually sighed and the the airline side, and we know how much airline prices have gone up, the economy and diversity will likely get us through so even if we get a down term, it is mild. Lisa a i never took you for a swiftie. What are you buying if there is a bifurcation in the markets in Different Industries and they are going through her sessions at different times . Julian we think you need to be really thematic and really focused. The energy story will continue to play out. This is geopolitics more than anything but geopolitics would keep the oil price elevated, we think certainly until next november. The only sector that basically is pricing in a recession is health care which is actually immune to geopolitics and Interest Rate gyrations. It is a good secular story. What we like with generative ai is not just the arms merchants or stocks we thought the arm to the internet in the 90s. It is companies that have been front foot forward in terms of implementing generative ai and we are going to pay close attention to earnings Conference Calls in the month of october to be who is doing what and what kind of ideas they have in terms of implementation. Those stocks will outperform longterm. Lisa a as you look at where volatility heading into a potentially fraud election cycle, how much does this make you favor bonds . Typically you have to adjust for a higher risk premium in the higher instruments. Our bonds less volatile . Julian they certainly have not been the last year and a half. Again, we know the fed is likely about to pause. Maybe there is one more hype left and qt will continue to run in the background one more hike left and qt will continue to run in the background. It comes back to this idea that when you look at the energy complex, it is off by itself. So therefore the case for a becomes more interesting to us. Jonathan two of the most impactful quotes came from bank of america, ceo ryan moynahan. We will not have a recession. The cfo talking about spending more yearoveryear. Julian you did see the consumption number ease a bit yesterday. Frankly, when we look at the weekly jobless claims number, it is the thing we are focused on and it is very strong. Heres the thing. We know there are some things building in the background that have traditionally 70 years been pretty good indicators of recession. Leis, loan officer survey, the yield curve, etc. It does not mean the yield curve is not important. Tom the value to growth ratio is essentially at a record low. Values have never underperformed growth like they have recently. Do you stay with growths were buy the value trap . Julian you have to be very targeted. Tom targeted with what . Help me out, Free Cash Flow . Julian it is a different story. There is a valuation hedge in areas like energy which are throwing out insane amounts of Free Cash Flow. And health care, which does right regulation, continues despite regulation, continues to be an issue because of demographic tailwinds. Anything associated with generative ai is likely to be a company also throwing off good cash flow. Jonathan are you going to the jets game this weekend . Julian no, my Minnesota Vikings have made a catastrophe jonathan have we confirmed whether taylor swift is attending . Tom were working the phones all day with taylors people. For those of you not up to speed on this . I am the only one not up to speed. Scarlet brief to me. The jets versus the cheeks. I am not really up to speed. I think it will be like 70 to 20. Will taylor swift show up in support of one of the cec . [laughter] jonathan do you want to talk the money side . German jersey sales have exploded. Even without confirmation. Even if they are not together. Just constructing some kind of relationship for pr purposes, they may want to sell more jerseys. Lisa a are you skeptical of the actual love between these two . Jonathan i am not saying that, im just saying that if they were constructing for pr. Lisa a have you seen all these means on twitter like the pr person for the other side just sitting back. Tom send in your notes to jonathan and lisette. Should we set up a countdown clock for a taylor swift appearance on our 3 00 a. M. Conference call . Jonathan if this doesnt work out, can you imagine the hate mail he will get . Lisa a it depends on how they dont work out. In the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. I know sunday is football day. It is the weekend. Sometimes we get there and play through, we get to over time and get it done. I have had conversations as early as this morning with democratic senators. I think there is an opportunity here. We know we need to keep the government funded. Jonathan House Speaker Kevin Mccarthy going into the weekend with the deadline around the corner. Closing out the week and the month and a quarter. For equity market looks like this. Attempting to bounce to the close of the month. Equities up by zero on the s p 500. Just think the euros has done it this week. It is having a look at one point 06. A stronger euro, a weaker dollar. Positive by 0. 45 . Tons of about in japan. There has been a feeling that maybe they are letting the go in the bond market to try to put a lid on this move. Rossman at Deutsche Bank was talking about that. Are they more concerned about what is happening in the bond market in exchange . Lisa a and how concerned are they . How committed . The intervention in the bond market was 2 billion worth and did basically nothing in curtailing some of the biggest move upward and the highest rates we have in 20 years and 30 years. Not clear with this commitment is. Is this the beginning of something more durable or just Something Like slow down. Jonathan it is like a warning shot but it is like a water pistol. Not much going on. Tom reporting out of tokyo that was phenomenal, really worldclass. You wonder where it goes. I am looking at knockout effects across asia. I understand the dollaryen and the euroyen but just interested in the yen and indonesian of apia rupia. A busted theory from japan. None of this is in the textbooks. Darth em i agree. They have life to go. Clearly they have some appetite to slow this down the lets see how far this can go. Tom 2. 6 percent. Still tension in the air on a friday. Brown university has something cool. One is the center for economics. They unveiled a new perfect building on 25 georgia st that looks like it is a building on a film set. Wendy schiller from the american politics and policy. An extra on the Founding Fathers. Let me cut to the chase. Will the Founding Fathers with the Founding Fathers have sucked shutdown the government . Wendy no. Hamilton in particular would not want to because he believed in the government being for economic stability and grounding. The American Public has a less voracious appetite for setting the government down then dated down than they did 10 years ago. In 2017 and 2018, doubled from caved on this. Then during the 2020 and 2022 elections, they have not been stellar. You are seeing more concerned vocally about a shut down then you have in previous writing times about shut down for public and. With the freedom caucus, they will win if they shut the government down for a couple days. They get more bolstering buddy and then if they open it back up within a week, it does more damage some damage but they get more muscle. But it also helps President Biden. You waste money with a shut down and then get more money and then President Biden benefits. Tom from southeastern wisconsin, between chicago and milwaukee, removed from the politics of grievance. How do we get out of this loop of woe is me grievance within the gop party . How do we extract ourselves from where we are to a better civics . Wendy honestly, this is where individual figures in american politics matter. Donald trump matters because he is running and has a lead now in the primary. His whole problem ticks politics is grievance. In 2016, he ran on National Grievance with too much crime, we are unhappy, and kept saying, i can fix it. s entire political start is grievance his entire political start is grievance. You cannot read our politics of grievance. It will just stay here until 2024. Tom i need lisa a in general, we talk about 2024 and an article said there is a loophole that gives the chief executive, the president , some discretion over how painful shutdown will be. Is there any incentive for people to make it more painful or less painful in terms of allowing passports to be processed in keeping some National Parks open . Wendy that is a fantastic question. If the election was not a year away, he would have some incentive to inflict pain usually in areas that tend to be more of the candominated. But since some people say they will go to the National Park and the president ruins it, then they will blame President Biden. He does not have the kind of power that last president s had. Given that people are dividing the blame right now for whether government is working or not. Lisa a chris newsom of california, seems to be governor newsom, keeps coming out and acting as the defender of President Biden, even as people wonder if he is about to run. What do you make of him being one of the biggest mouthpieces for the Democratic Party . Wendy i am not sure gavin newsom does President Biden favors. We can all put money down that california will be democratic in 2024. It is unclear how he helps because california is more liberal than michigan, wisconsin, and pennsylvania. I am not sure if it helps but it does help himself a case President Biden falters or there is some semblance he will not run. I think he is trying to do right by the Democratic Party but also keep his name out there. He thinks it is a winwin. I am not positive it is for joe biden. I think they are annoyed. To be . You do not need anyone else putting out the message of the medic party, particularly the of the Democratic Party, particularly the leader of a state that is always blue. We will see but i think there are people of the Democratic Party who say we have to have a plan b and need to have some set of people we can turn to in case joe biden falters or decides not to run. Jonathan is your base case so that he will run . Wendy i think if he is walking, breathing, and talking that he is running. I dont think there is any case that is steps away. I wish everyone good health. But i think he believes he is the only one who can be donald trump because he already has, and because he has enough experience of doing good things for government. Jonathan wendy schiller. Thank you for the update. A sneak peak of 2024. Tom she is so blunt. If they are walking, talking, breathing, than those are the requirements. Wendy schiller may what is the most definitive civics textbooks in america. She owes like half of newport off the royalties. Jonathan newport is nice. Tom it is. The black pearl. Jonathan totally. Tom the landing. Jonathan you should do a vacation show. I would love to see a travel show. Adam ruskin of Deutsche Bank coming up shortly. I dont want you to move. Im gonna miss you so much. You realize well have internet waiting for us at the new place, right . Oh, we know. We just like making a scene. Transferring your services has never been easier. Get connected on the day of your move with the xfinity app. Can i sleep over at your new place . Can katie sleep over tonight . Sure, honey this generation is so dramatic move with the xfinity 10g network. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Jonathan just waking up. You want the cup update . Euro sports. Youre crushing it. On that later. Tom i am glad you are bringing this up. Jonathan s p 500, futures up by 0. 5 . The nasdaq up by zero point 7 . Were up on the session but down on the month. It has been a difficult quarter. The russell 2000 up by 0. 6 . Tom they summed it up within correlations that it is better than good off wednesday and thursday but that is at 6 30 wall street time. Where are we going to be at 12 00 noon or at 4 00 p. M. For the closed . Jonathan 2year yield, 10year yield, 30year yield, things are settling down. You have lost close to 4. 70 on the 10year yield. The twoyear yield is just in and around 5 , 5. 037. Interesting for Julian Emanuel of evercore. To lead reports out of uaw that they would take maybe a 30 pay raise instead of 36 or 40 . He thinks just closing that spread could contribute to more firmness in the market. I dont know where you stand on that. Tom i am not standing on anything right now. There are so many narratives and crosscurrents. I look at this and say that i will read and think about the optionality people like adam ruskin are giving us. Lisa a it just shows the volatility. If the uaw shifts its stance and this moves the entire multitrillion dollar bond market, this raises a question of where we are in terms of lesion expecting to. Tom tom was heated yesterday. Wages are ebbing and we are getting disinflationary tendencies. Why dont we go to our esteemed guest. Jonathan i want to look at exchanges. The euro is poised for the 11th week of a weakness against the u. S. Dollar. Lets see if we can turn that around. On the euro against the dollar at 1. 0 611 1. 0611. Lisa a have we reached a level where it is poised to strengthen . That is a key question at a time when we have seen inflation data come in favorably for the euro. This really highlights where we are at the difficulty for the ecb. Tom into the weekend, a massive weaken rating. Jordan Rochester Cross questioning whether we need to begin framing euro parity . Jonathan he text me earlier and the question was parity at 1. 10. And leaning toward the idea that perhaps we belong closer to parity than we do at 1. 10. We are less than 48 hours away from a possible Government Shutdown. House Speaker Mccarthy trying to get House Republicans to improve a shortterm resolution to avoid one. White house staff is bracing for furloughs. Most services would pause. Lisa a the key question is how long it could last and whether Kevin Mccarthy has the role of house eager when it is finished. That is bigger question. What is his leadership like at a time when his party is not one that can be led given how he got to the position and how people are not looking to him for influence but are looking to herd cats . Jonathan is it that binary . Set down ors new speaker . Lisa a i dont think so but there is an issue where if he brings to the floor a boat, that could a vote, that could potentially push out some of his people. These are the mechanics that people say it will set down but the question is how long. Jonathan another deadline today. The uaw saying the strike against the big three automakers will expand unless something is made. According to our reporter today at bloomberg, the workers are ready to accept a 30 pay raise, down from the initial 40 claim. So we are closing the gap. Tom i wonder the other items. I think the facebook call is important and 12 noon is important and their strategy is original. But it is not just about pay but getting back to some form of precollapse in 2007. Jonathan step one. Maybe more tension on the horizon. Nike shares rising after the Company Reported earnings that beat estimates. Also recording a drop in the stockpile of inventory. The stock seems to like this news. We are up by close to 8 in the premarket on nike. 96. 61 after terrible news elsewhere with dicks sporting goods, footlocker with direct to consumer, it be maybe better. Lisa a and you see knock on effects with adidas and other shares. Jonathan i heard that and i love it. [laughter] lisa a i actually am shifting. I am not quite to petrol or aluminium but i get it. There is a question of whether this goes to a stickier inflation call. I know, i am so offbrand. Jonathan when we were kids in the u. K. , we used to call nike a s nyke. I did that for a few decades until i moved here. But it is nighkey. Tom joining us now is adam ruskin from Deutsche Bank. He has an incredible noise incredible note out. I love what you say about the good and bad of where we are within this market turmoil. There is a whole feeling on a friday. You are american and will persevere and get through this. Describe how america is different given the bond instability we see . Adam there is plenty of good. A lot relates to longerterm growth factors. The u. S. Is very competitive in a range of Different Industries, new and old. Geopolitics is very helpful as well in the Defense Industry and semiconductors. Those are just two industries. On the negative side, that is not focused all that much until very recently with what is going on in the Public Sector deficit. Cyclically adjusted, general deficit is 6 or 7 as far as the eye can see and is not sustainable for any country other than perhaps the u. S. Tom with the Vladimir Putin invasion, david was front on this. In america, we have what olivia cook calls the biden stimulus. We dont need that crutch anymore. How are we going to get the physical support that your calling david folk are talks about . Alan hopefully we will not be the fiscal support to extend what you are seeing on the other accept her side but it does have aim your image on the private sector side. The deficit on the Public Sector side is offset to align the surplus on the private sector side. This is usually for something flashing red, particularly for foreign exchange, but it has not been at the point in time. The problem you see is more about the financing of the Public Sector deficit. You are seeing this disconcerted movement in the bond market that is reflective of that. The fact the fed is doing qt and effect china and japan are not necessarily buying, all the burden is falling on the household sector. Which directly only holds around 10 of our standing treasuries. That is a unique circumstance and it is training liquidity from the aching sector as it shifts from deposits into treasuries and is exacerbating the banking sector. Jonathan i wanted to bring in the head of hsbc. He made the point that it is not just the deficit by a deficit when we have an expansion and not take traction. How vital is that point . Alan i think that is why we cyclically addressed that specifically address these things. You might have good sector data right now but when you cyclically adjust, it allows for outputs to get a better sense of the trend. I think that is the keep home the key point. The general deficit of 6 to 7 is reasonable. Lisa a is there any chance you could see a weakening cycle in the dollar following the incredible strength we have seen the past few months simply because the backdrop is deteriorating and some data is coming up better than expected, even china on the peripheries . Alan on the side, from the financing side, it is initially well bond yields are backing up, quite positive for the dollar. It can be very positive for the dollar with just em and commodity currencies. When you get too much of a good thing in foreignexchange terms and bond yields back up more than the fed would want, you can get into the situation where the fed has essentially lost control on the back of the curve in the economy is slowing, then they have to cut rates much more aggressively. When you reach that point where the yield curve is starting to steepen sharply, and the front end date is leading the sharpening, that would be a major dollar negative. That is a story that could be around for the second half of 2024, isoray for 2023. Not a story for 2023. Lisa a what we are seeing seems a little on board and not good for fed officials are watching it. Alan not yet. You are seeing this until the fed officials are not talking about excessive financial conditions tightening. At this point in time, they recognize that was not sufficient tightening for financial conditions, led by a very well behaved bond market. We are seeing the beginnings of an unraveling and have to watch this closely because the financial element is a unique phase which depends on the household sector. Jonathan a word on the boj and what is happening in the aob market the job market. Alan i think they are straddling a fine market. I dont think they want the dollaryen match above 1. 50. I do not think it is a firm line in the sand. I think they have used the bond market and effectively allowed yields to go up to protect the 150 level. If i could look at contradiction right now, i think the tendency over time is for the 10year yield to drift up, it just has to drift up slowly in terms of what the boj is signaling. Jonathan thank you this morning. Great article on the boj yesterday. Alan ruskin. Making the point yesterday that maybe the japanese authorities are tolerating highyield to try to play cap on what is happening in the fx market. As he pointed out there, this delicate dance and to appointed forces with yields higher in the japanese Government Bond market but also this weakness in the foreign exchange. It is a difficult moment. Tom lets go back to principles off of matt winklers wonderful work, our editorinchief americans who just did some great work in japan on how disinflation has benefited the japanese people. They decided to compute inflation into the system. They overshot thank created too much inflation, not like england, but too much. The other thing that is critical with alan ruskin alluded to and you did, is the rate of control of the yield curve. He does not control 10 years right now. Jonathan trying to change something about that. Coming up on crude, 90 six dollars on brent and 92 on wti. Fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. You really think we need another right move to bring down inflation . Too early for me to know. I think there are a wide range of possible outcomes. You could argue for a resurgence based on the numbers we have been seeing or you could argue for a downturn or you could argue for a return to the precovid economy. Jonathan thomas barkin, the richmond fed president sitting down with bloombergs Michael Mckee. The range of outcomes we still see on the fomc is phenomenal. They tell us the soft landing is not the baseline but still the objective. But you go through these outcomes. But he repeat what he said. You could argue on a resurgence based on the numbers we have been seeing, you could argue for a downturn, and you could argue for a pre a return to precovid economy. I think all of those are in sight. Tom there is optionality they have forward. Because we are america, unlike other central banks, we have larger degrees of freedom to wiggle around depending on what the date is. Thomas barkin will wait to see with the day is. Jonathan when they see these outcomes, what do you do . You just wait, dont you . Tom i am on a work half today about people blathering on about estimating and forecasting what the economy is. Everyone will publish this week. Capon over at bank of america. Everyone will publish and i really care what they think because they are working 24 7. Lisa a at a certain point, you have to come up with a base case. It based cases are so wide that you can drive a truck through it, it raises lessons about volatility and why they are not being priced in so much. They have actually declined a lot. You are feeling it a little on the margins but at certain point, it is something people have to press. Jonathan i am not sure they have a base case right now and if they do, they are not sharing it with us. Last week screamed soft landing. If they think we can get to 2 with unemployment not climbing much more, than good. I am not sure he wanted to talk about the Media Projections at the Federal Reserve based on what we saw last wednesday. Tom one thing we learned at jackson hole was they drive out west. You need a beverage, you go to the milliondollar cowboy bar which is an 80 mile trip there and back. It is not like new york. A gallon of gas matters. Right now, i is going up. We have west texas intermediate crude at 92 and brent crude at 96 per barrel. Joining us is stephen short, principal of the stephen schork, principal of the schork group. How diesely is diesel . Lets go to the worldwide diesels upset. Why is diesel, that goes into my ancient vw rabbit, topsyturvy . Stephen it is the least market margin for refineries. Our goal is to always maximize the amount of gasoline being produced. So distillates or diesel fuel always comes in second place. With the taxation policy, there is a market under strain. Right now, we are going into the demand peaks season for diesel fuel. You have demand in us angeles, Southern California with all that comes into the ports. Those goods have to be shipped to sales to get ready for the christmas season. He also have the harvest in the midwest for there is a tremendous amount of demand. Supplies are just really low. Low supplies, high demand, so there is only one way for prices to go. Tom do you just assume a gallon of gas catches up with where brent crude is . Stephen absolutely. And what is scary as we are now consuming winter grade gasoline which has a higher vapor pressure and is cheaper to manufacture, yet prices are at record highs for this time of the year at the pump. With the situation we are seeing in crude oil surprise at the nymex delivery hub in oklahoma, we have very low supplies and there will be a tremendous strain on the market. There already is. We are seeing a tremendous amount of premium called backwardation. There is a clear signal the market is undersupplied, there is too much demand, and we need prices to go even higher to even out. Jonathan you are saying this is almost like the opposite of what we saw during the pandemic . Stephen absolutely. That was a situation where you cannot put any more barrels of crude oil into the delivery hub and owners had to pay to get that out. Right now, we have a situation where over the past two months, oil has been slashed in half. Now we only have 21 Million Barrels in those tanks and capacity is closer to 80 Million Barrels. We are only 2 million or 3 Million Barrels from what is called tank bottoms which is the sludge at the bottom. We are now plumbing the drugs which is a concern because there is already issues with regard to the quality of that oil. If we do not have that quality sitting in the tank or we are draining what is left, then surveys and incentives take even more arrows out, then it gets to an issue of quality over quantity and we will have neither which is sending a tremendous report for the market and making a case for Oil Prices Going above 100 a barrel through the end of this month and by the end of this year. Jonathan help me to translate this. When we saw the data out of cushing earlier this week and heard the phrase operational lows, is that what you described . Stephen absolutely. With any tank, you can train it to the bottom because there is basic sediment in water which flows to the bottom and sits there. You have to have a level of oil above that. Operational levels or the sales line is something to call it. Once we get down to the sales line, and we are pushing against it right now, we dont have enough oil in the tank. Tom i look at where we are and all the microanalysis we do. Do we have an Energy Policy wrapped around the short report . Eight pages of this delay. All this romantic oil, petroleum stuff. Do we have an Energy Policy arching over the schork report . Stephen i have been trying to search for an Energy Policy the last two years but unfortunately i dont have a lot of confidence in the policy we are seeing. The head of department of energy does not even know how much oil we sing. This is not where their priorities are so we do not have an oil an Energy Policy. It is better to own oil. We know where it is and we are using the strategic reelection petroleum reserve. We have brought that reserve of 250 Million Barrels of oil but gasoline prices today are 21 higher than when we started training. There is no policy when you do not encourage Domestic Production and go to saudi arabia and venezuela and asked them to increase production, yet we have what we have. There is no policy and theyre making it up as they go along. Jonathan there is one number that contradicts that, well. 9 Million Barrels of production in america. How are we having problems with that happening . Stephen it is not necessarily about oil. Do not put crude oil and to cars. We put gasoline into our cars. He put diesel into our trunks. The problem is not oil but our ability to refine that oil to what we need. We do not have that capacity to make enough gasoline and distillate fuel. To your point, the industry is doing everything it can right now. 12. 9 Million Barrels with prices going to go up. Refiners are running at over 91 capacity which is very seasonal high for this time of year. We are turning out an above normal 1. 1 million gallons forever 1. 1 gallons every gallon consumed. The industry is doing everything it can to get to the market demand is outpacing the capacity to make more gasoline and diesel. So we have to import it and when you imports, you have to pay transportation. Tom he is encyclopedic. It is mine flowing mind blowing. Jonathan will post this online. Stephen schork from schork group. Equities up. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Bond yields are being panned because the fed is talking tough and the market realizes that. We are bracing for a higher for lumbar environment with a higher cost of capital. It is the end of free money and we wonder whether that is a good thing. When you see this kind of volatility, it is the concentration of risk that will cause something to break. Announcer this is bloomberg surveillance, with tom keene, zahra than pharaoh, and lisa abramowicz. Jonathan good morning good morning. This is bloomberg surveillance with tom keene, lisa abramowicz, and i am jonathan ferro. S p futures up 0. 5 . Q4 around the corner. Tom it will be a massive reading this weekend as we straighten out q4 and into 2024. Economists of the week, Ellen Zentner at Morgan Stanley nailed the gdp revision which goes to the uncertainty this morning about great, what is real gdp going to be, as nominal gdp going to be, and what does this mean for the markets . Jonathan the problem is this is a recession that never was. Lisa a how can we get inflation back to target . That really is the focus of the markets as you mentioned ryan morning hands,s brian monahans comments earlier this week. We are hearing from companies trying to start changing their growth and Pricing Power so what point do we get the disinflation if we do not get there . If tom if you take three month annualized, there is a vector that screams disinflation. To your point, the win is a victory. Jonathan to be have a slowdown in the labor market with claim still around 200 k and unemployment . Tom we all read different things, how many people will come out and reaffirm recession this weekend . I am guessing not that many. Jonathan that is what they have been doing, pushing it out to next year, q1, q2. You have Government Shutdown deadline looming over the weekend. It are this morning, the uaw. The good news is if you want to see a deal, that is spread between detroits big three, gm and stellantis. Three automakers are somewhere around the percent. Now we understand at bloomberg they are 30. You have to imagine given that cap that there is a end in sight. Lisa a this question of how much Pricing Power and how much maneuvering does labor have in terms of power to get higher wages . And if the uaw will go down to 30 , does that indicate a softening of the stance . They can be broader and indicate how much wage increases we can see. Tom francisco of the dreaded new york that new york mets. In the strike, are we going to get 30 raise and 30 hours a week . Jonathan i am not sure that 30 hours of the week will be coming but if it arrives, i am on board. We will catch up with the uaw strike potential later this morning. The potential for this to broaden and deepen at the looming shutdown over the weekend. Equities up, hired by 0. 5 . Equity futures pushing higher. Bonds are moving by two or three basis points to around 4. 54 on the 10year yield. Lisa a we have a data dump that may be one of the last before the Government Shutdown. At 8 30 am, we get pce and core inflation. This is what Bloomberg Economics is looking for even as we do see as tom was talking about the inflationary push in the data for august. 10 00 am, the university of Michigan Survey sentiment survey. In the futures markets, you are seeing inflation over the longerterm remain sticky. Near 2. 5 , not the 2 the fed is targeting. There is a lack of belief that the fed has the conviction to inflict the pain to get back to target. Tom lisa nails it when you go out five years and guesstimate five years out. That is an amazing chart. Lisa a we see this with respect to wages. Which brings us to the Facebook Live announcement and the uaw giving some points ahead of the 12 00 noon deadline for a potential strike expression strike expansion. Tom i think michigan looks good. I just dont think they can jonathan is it georgia versus michigan this weekend . Tom no, but like the new years eve rose bowl. I dont think michigan gets it against georgia. Jonathan the cio of ubs Global Wealth Management Joins us right now. It has been too long. Something someone actually likes. Energy stocks. What do you like about Energy Stocks right now . Mark we think they have not seen the earnings catch up with these higher prices. Tom has been on fire this morning and was just asking a lot of people, does the u. S. Have an Energy Policy . I would say i dont know the answer but it sure looks saudi arabia does. We think there could be some persistence in these higher prices. Tom i look at the persistence in oil prices that has saudi arabia out to 102 or more. Why is this time different than the last time . Mark there are a couple factors along the energy names. One is geopolitics and Energy Stocks can be a little bit of a hedge on a worsening of the crisis. Then, the other thing is the coordination of saudi arabia and pushing on the u. S. Into next years elections. When you step away from the evaluations around the energy names, you also have geopolitical hedges. Tom because of time, i want to go to china. Ubs has a franchise back to John Anderson eight years ago where you go beneath the cities and deeper into china. Take us to where ubs is right now on china domestic economic stability. Mark i think this is something the antiteam are looking at very closely. We are seeing some signs of Consumer Confidence just starting to return a little. The support for the economist measures are not all done. But we are seeing some small signs that selectively we want to be overweight in chinese equities at this point. Lisa a can you build on this based on your call for oil . Any idea you could be going along on chinese equities . Does this come in tandem with inflation . Or is this a call for specific geopolitical pressures when it comes to china that are independent of Global Growth reseller 80 read accelerating . Mark when we look at things here in the u. S. , we see inflation calling into the economy slowing. But this idea that anything like every session is late 2024 at the earliest. In this environment, we think stocks can do better and also bonds candy better. Riskadjusted, we would prefer bonds. Within that allocation, that is where we get into selective overweight. Energy is one. We take notes that emerging markets of which china is a part of is trading attractively. But we would prefer india in global allocation over china. Lisa a you prefer bonds. How overweight are you . How much have you been buying over the past couple days as we yields going to highest levels over 2007 echo over 2007 . Mark we are not trying to be a hero. Because we see gains on both sides, we are closer to benchmarks that i think higher grade bonds of five to 10 years should benefit. We should see yields come down as the growth slows and inflation comes down. This should overpower some things i think we saw this week had to do with some sales in the channel. Jonathan can we talk about what this bond market move means for specific sectors . Over the last quarter, we have had a move of more than 70 basis points are the u. S. 10year yield and banks are negative, not higher. Can you tell us whether higher rates or yields hurt or help financials in america . Mark the anecdotal evidence over the past six months is that these very rapid moves cause disturbances in the system. It is not just levels. I think it is some concern about the rapidity of the moves. Over time, you are going to get different financials able to reprice and thenii reprice and the nii at different rates. One thing that will be shown is the super rate banks sorry, can you still hear miyako hear me . Jonathan you drop for a second. Mark one thing that will be shown is the super rank banks versus the Smaller Banks which have strong deposits. Jonathan thank you. Mark haefele of ubs Global Wealth management. That last part was a difficult moment. Tom it is the number one thing im thinking at the moment. Real estate and tangible assets into the idea of what the banks do when they bring it in short and leave it out long. It is the heart of the matter. The index is not pretty. Forget about the big guys pontificating thus we will have a recession or will not. Bankers are sweating bullets. Jonathan the stress of spring and struggling to get off the map for many of these names in the financial sector. Just look over the last quarter. Lisa a especially because the overflows have fallen off the cliffs. Customers will not get mergers and acquisitions if they volatility. Tom citibank is out. He is looking at ni looking at nikke. Today in brussels says shut up, jonathan set up, tom, jonathan is correct. Jonathan equities here, positive by 0. 5 . Yields lower by a couple basis points. 4. 5486 as we close out the month. If you had to payrolls. You can get us into data and look to the earnings. Jp morgan kicking things off on october 18. Lisa a maybe we can get the data. This might not come through because of the shutdown down a lot of people say is expected. It is hard to know where the balance of risk is. At is like because the market is so incredibly balanced tom last time around, 187,000. My first look at the surveys are 187,000. That those numbers get revised . Jonathan they get revised. The fourweek average i think was now february lows. Tom what do you think . October 6 is jobs day. Lisa a right now, we are seeing the jobs market remain strong. Here is my question. Do you get enough to bring the market into this feeling . The fed will get inflation back to 2 because right now, that conviction has left the building. Jonathan we need to talk about deadlines. Uaw later this morning, a shutdown risk in washington. Bloombergs and mariko dorn is coming up. Equity features posited by 0. 5 . This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. They should have been there at the first debate. No one is entitled the nomination of their party and donald trump continues to campaign as though he were the incumbent president. But think about this. He is campaigning as an incumbent but has less than 50 support of republicans which means half of republicans are looking somewhere else. He owes it to our party to step forward and answer questions. Jonathan former Vice President mike pence speaking to the matthew and Annmarie Hordern in washington, d. C. Balance of power three a phenomenal job of catching up. We will catch up with every horde doran Annmarie Hordern in a moment. Later this morning, a Facebook Live event for the uaw president ahead of the noon eastern deadline for the potential of further strikes. Trying to finish this month, we can quarter in about a place. Equities positive by 0. 5 . Trade rallying after going off a month and a quarter. Back to 4. 5527 on the twoyear yield. Tom if we go back and look at the vix, which is a relative volatility not of the Dow Jones Industrial average. It has gone from 18 to a glorious 16. 6. Crisis over . Maybe but we cannot see it. Jonathan we sent to julian, if you are making an equities call, are you essentially making a bond market call . He said yes. Tom in my right that he has reaffirmed 4600 . Lisa a 4400 4500 by year end. Tom Annmarie Hordern is our work washington correspondent. She demanded we have a shutdown clock. It is nice that it dovetails with jets, cheese, and taylor swift. They are about the same time. Annmarie to us which may be in new york this week. Tom maybe we will see taylor get it done preshut down. We dovetail this morning at 10 00 a. M. With these two issues cross. Happens . Annmarie we will hear shawn fain with the Facebook Live updating workers about where things go with the big three. Potentially, we will see an expansion if he is unhappy with three giants. And also at 10 00 a. M. , Kevin Mccarthy will have his News Conference and we will see an update on where they stand in terms of the Government Shutdown. We didnt get a message this morning of a stopgap measure to keep government funded after the deadline which now is less than 48 hours away. Included is something that he can potentially get his caucus to close around. A cut in federal spending, a soon a change in affairs will not be included. It goes through october 31. Even if Kevin Mccarthy cannot have can pass this, it is dead on arrival in the senate. Tom jonathan and lisa want to ask sane and normal questions. It is irresponsible to model a 30 reduction in the nominal budget or inflationadjusted budget. Who is leading that madness . Annmarie this is the far right of the republican party, the conservatives who are still upset with Kevin Mccarthy. Tom why cant the gentleman from bakersfield just say, grow up, no . Annmarie i am sure he has. If you look at some reporting of what happened in meeting the obligations had amongst themselves, there were some pretty interesting words. A frequent bloomberg surveillance viewer apparently sent to matt gaetz, which is causing a lot of this i think we caught him the flamethrower in one of our stories. He told him to explicit word off. Tom and didnt understand that. Can you help me . Jonathan yeah, you are to repeat . Annmarie i think you know what i mean. He will be on balance of power today. So you can find out. Jonathan i look forward to that. Is this a choice between a shutdown or a new speaker . Annmarie potentially but also potentially both. The washington report saying there is a far right contingency to oust Kevin Mccarthy. We have known they have wanted to do this. It took him 15 rounds to get the gavel so this has always been lingering over his head throughout negotiations, whether or not it is a current one about fiscal spending and keeping the government open or a prior deal he struck with the senate and white house. The issue is, can they coalesce around anyone else . Washington post is talking about the whip. He has to hear the far out the far right out. They all have to go through his door and explain what is going on and why they need to get on board. They think they potentially have more of a chance of getting their conservative agenda through. But Speaker Mccarthy has to put forward more of a vanilla, clean resolution that we are seeing take place in the senate you could potentially see a motion to vacate. All of this can happen while the government is shut down. Prepare yourself for the chaos from washington dc next week. Lisa a there has been a discussion about Washington Post policy and discussion in the Democratic Party. Is there anything in this issue in particular that speaks to an actual policy change down the line that you foresee or hear as a bipartisan issue . Annmarie right now, it is not in terms of a bipartisan issue. You are seeing what lawmakers are talking about on the republican side. A lot are saying they do not want more supplemental aid for rain especially if that for ukraine, especially if they do not have enough funding or provisions for asylumseekers. The border has become a huge issue and they are trying to put this on the white house, and looking at states like new york. Talking about the fact the government of new york is asking the white house for help. But with the provisions republicans are talking about, they dont have democratic support. Jonathan what time later this afternoon . Annmarie in the 5 00 p. M. Hour, as long as she does not have to cancel. He is sent to come on. Even the fact his frustrations have no eat out to the public class now eked out to the public press. Jonathan what was the take away from Vice President pence in the interview . Annmarie he is trying to distinguish himself against his former running mate and boss, donald trump, when it comes to tariffs. He seems very annoyed about this 10 tariff wall the Trump Campaign is talking about and wants to enact. What you are hearing from Vp Mike Pence is, this is going to be a major tax on the middle class. Yes, he was on board for the tariffs for china because china is an adversary. Thats a 10 tariff on everything coming to the u. S. Is a major killer for the middle class of americans. Jonathan great work as always. Amh on the latest from washington and a looming Government Shutdown. Clearly what you see from president ial candidates in the republican party, trying to draw the candidates into some kind of discussion or debate and it is not happening. He saw this coming from governor chris christie, looking into the barrel, trying to get donald trump to come join them. I dont see them happening anytime soon. Lisa a he is winning by not showing up, so why would you change . Tom i agree. Tom bomer, house whip. Legit hockey player. Went to a small school in boston. The real deal. Jonathan coming up, highfrequency economics. Equities higher. This is bloomberg. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . 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Two days of gains on the s p 500. That is what friday is all about. Tom after the september, we are having bloody mary. Jonathan whereupon the session on the s p. In the bond market, the move you expect, treasuries rallying, equities rallying in tandem. On the 10 year yield down about one basis point. Came close to 470 in yesterdays session on 10 year maturity. On the 30 year, 4. 70. Pulling back i touched a touch there. Tom mike wilson cautious. Billion less cautious, both participating in the market. That was a major reaffirmation of what we are doing here. Jonathan Common Ground around the energy story. You heard that as well. For mike wilson. See the fx market, you can make a weaker on the euro, 11 weeks of euro weaknesss against the dollar strength. This morning, reclaiming briefly 1. 0 six, backing away. A little bit of guinness strength in the mix as well yen strength in the mix as well. House speaker Kevin Mccarthy struggling to get heartland republicans to approve a shortterm continuing resolution to avoid a shutdown. White house staff told to brace forth furloughs and treasuries said most irs services would pause. We are getting closer are we . Lisa are you excited to keep talking about it until then . All of these deals did not look like they are gaining any traction. The take away economically depends on how long it goes on. Another unknown among the sea of unknowns leading to a wide range of potential outcomes. Jonathan this is the deadline where we could get some action. That a deadline looming for uaw extractors will expand unless progress is made. Shawn fain expected to give an update on Facebook Live coming a bit of a weekly tradition at 10 00 a. M. Eastern time. According to out reporting, the workers are ready to accept percent pay raise, down from the initial 40 . The spread is closing unlike the Government Shutdown talk. I have no idea how widely spread is. Lisa it does seem there are changes around the edges. We do not know what else is in there. I do not think i go as far same 30 hour work week but may certain types of products. Tom battery ev . Lisa the key issue for uaw is how do they bring in the workers. How do they say to the electric vehicle Battery Manufacturers and workers, it is worth it to come work for us . Tom when do they run out of cars . Jonathan what cars . We have not seen a big strike at the f150. And you have the feeling that is the one they have in their pocket escalate things to go after that. I have been looking forward to talking about the story. Europe making a perfect start in look to gain the trophy sweeping the opening matches to go 40 over the u. S. For the First Time Ever with the u. S. Team failing to hold a lead in any of the opening matches. Europe needs to win 10. 5 over many 24 matches. Tom i believe it was a great number who took my breath away with his power. Im an amateur on this. But my two minute takeaway, this really means something to europe and it does not float the vote of the american consciousness. Jonathan lets park the greg norman stuff because that goes further. 1999 work line. Walk us through the atmosphere. Tom a huge turn out but it was not the ryder cup, green coat diplomacy. Jonathan went out of the window. Tom you come to the pandemic and i think in wisconsin 2021 the last time around and to the americans do the Americans Care like europeans do, i am asking. Lisa im going to ask john a tom question. In u. K. , how do you view golf . Is it the same kind of country club since of business meeting o n the green . Or more public courses people go out. Jonathan it is everything. Tom your son goes the saying angers golf camp. Foes to saying angers golf camp. Jonathan this is huge to europe. Tom how many people who is talking ryder cup this weekend . Masters, yes. Lisa but also new york city how many people are talking about im just saying. Jonathan you go to the country called this weekend and will be on the television, they care about this. Thats the latest. It is a very happy, pleasant start for the europeans in italy this morning. Tom off of the festivities yesterday, real debate, mike mckee was good on the revisions to Gross Domestic Product and gross domestic income per year recapitulate with Rubeela Farooqi, senior Vice President revision math. What are you think of the revisions . Do they indicate a slower American Economy . Was it a misguess statistically . Rubeela there is a lot of speculation that gdp was going to be revised down by substantially but we are still seen as positive growth, momentum in the economy. What stood out to us was the downward revision secondquarter spending. Our estimates are based on the strong and the Second Quarter and that is extending into the first month of the Third Quarter. We are waiting to see the breakdown. How much downward revision were going to see and what that means for the Third Quarter see growth in growth. I would not be surprising to see downward revisions to the estimates at the trajectory is slower than thinking. Tom nobody in Market Economics look at yield like carl kleinberg and Rubeela Farooqi. This year of september we have how do you fold it into your Economic Analysis . Patrick rubeela thelonger how your for longer, that supplyside of what is happening in the bond market. All of these things flow into that outlook. It happens from this point on, i think that is important because of the growth trajectory is weaker that his implications for inflation, implications for the fed, implications for the higher for longer message. We continue to think the fed is at a peak. We continue to think the fed will cut Interest Rates next year, not because impending recession, because we are going to see more policy stance as inflation rate continues to come down the prewe continue to see that coming down substantially to a second handled by secondquarter if not earlier. Lisa two pillars of the economy people are looking at. One is the jobs market which seems to be strong. The other is the consumer and Consumer Spending and on the margins come youre starting to see weakness. What are you seeing their that gives you the conviction the fed is at a peak and we are going to see more Material Weakness . Rubeela we are looking at the job market. We are seeing some slowing on the demand side and job growth, some slowing in job openings. It is about depends on demand for travel, entertainment. We want to subscribe to the view that demand is not going to go on forever. Were entering that period where demands for the services the fed is worried about, that is going to start slowing down must eventually. People are looking at our backdrop where job growth is slowing, wage growth is slowing. Job growth is positive but there are things like Student Loan Repayment resumption. Those things are going to slow down the path of spending and growth. We still do not think that means recession. We think it is positive growth. Just at a slower pace which will bring down inflation and give the fed room in terms of what they need to do going further out. Lisa how much personal income spending dated were going to get . Are these data points so volatile you have to look past it and look at series of Credit Card Spend more aggressively than the other official data . Rubeela the data is subject to revision, but we have nothing better. The High Frequency on Credit Card Spending, look at it, but these are the things that we did to gdp. These are the things we look at it. What we are saying is revisions, and you will is really important annual revisions is really important but we are seeing growth is still positive. Consumer and labor market is something we are focused on. We do not have any signal. Look at jobless claims, positive job growth, the unemployment rate. Were not getting any since the u. S. Economy is on the verge of dipping into recession or contraction or a slowdown that will be concerning. Jonathan Rubeela Farooqi of High Frequency looking ahead to some of the data. Sneak peek payrolls friday, the estimate so far in our survey 170,000 doubt line from andre 7000. The estimate at the moment by 7 down from 3. 8 on unemployment with the fed sitting there north of 5 . Tom claims fourweek moving average, you have to be kidding me. Jonathan close to 200,000. Tom not real. Jonathan s p 500 positive here by 0. 4 . It yields lower by a couple of basis points. 4. 5 five on the u. S. 10 year. Coming up, he worked the citi has done has been absolutely phenomenal. Led by Andrew Hollenhorst and veronica clark. Veronica clark catches up with us at 8 30. Tom do you reaffirm a fed rate increases . How do you do that in this milieu . Lisa they just put out a note and i can tell you the latest. There is this building the drivers of this feeling the jarvis of this conceptions is broadening. Youre seeing a broadening out which does leave the conversation with wages. If people are anymore and earning more on a relative basis then inflation is coming in, that turbochargers do spending to create a stickier tom they suggesting better consumption . Lisa theyre suggesting the economy is hotter than expected and it will lead to stronger Inflationary Pressure and more predigital upward moves by the Federal Reserve. Jonathan looking for one more hike in november. Matt miller writes in all inventory, they have 60 days of inventory on average of the automakers. This is what he said. The f150 estate line in the sand is the line in the sand. I wonder whether there will be a willing to cross that line. I was not clear if one was on the knotty steps are not of uaw ford was on the step or not of uaw. The latest on uaw negotiations next. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. The feds ability to influence the economy, the fed depends to some extent on influencing the publics view of current and future economic, one of our goals is to implement spending and Investment Decisions today and in the months ahead, that will only be the case with people understand generally what we are saying what it means for their own finances. Jonathan are forgot chairman powell is spoken yesterday speaking at a town hall. We have something new to say, i guess is not to say it regardless of who he sang it and front of. Equity market going into the weekend doing better the last couple of days. Two day winning streak, looking to make it three. Yields lower by one basis point at 4. 56. Crude a bit higher. We breached 95 briefly yesterday on wti. Tom american oil hit 95 yesterday. Jonathan briefly. Tom just a market and interesting friday and we are focused on the countdown clock at 10 00 a. M. Maybe we get an adjustment in michigan. A huge response the last time he was on. Joining us Patrick Anderson of michigan, founder chief executive officer Anderson Economic Group. Our delete the greatest student arguably the greatest student of how detroit became detroit. The hope and prayer of what detroit will become. Thank you for joining. We are talking before the segment of the chaos of the industry. Gm cannot build a muscle car so they had to go to australia to build pontiac ga because they did not have the knowledge do it in detroit. How chaotic are the Manufacturing Processes of these Auto Companies be very silent within the strike . Patrick they will roll running before the strike. What you saw what detroit was low inventories. They were highly profitable. The only chaotic portion was the big investment in these were both forward and General Motors were losing ford and General Motors are losing too billion per year which works out in some cases to 50,000 a copy for electric vehicle. That was the only difficulty in detroit before they strike. Tom if they are profitable, why can they not give some of that to their valued labor . Patrick they can. If you look at the Anderson Economic Group review of this, we said the autoworkers like everyone else are suffering from inflation. They did not create the inflation. Yet they expect theyre going to get wage increases and that is what the automakers have offered. The Sticking Point, i would not call it just a Sticking Point because it is more than a point, uaw demands are now for more than wage increase. They include things that represent bankruptcy risk for the automakers such as a return notorious jobs bank and having a defined benefit pension, which were two other things that led to gm and chryslers bankruptcy a decade ago. Lisa what is the Ripple Effect of what we have seen from the strikes . Youve been doing incredible work trying to quantify it. Where are we . Patrick first week cost was 1. 6 billion most of which was wages. A fraction of that was the automakers, a lot of it were uaw and over nine uaw suppliers. The second week estimate were going to have it on monday but i can tell you is it to be bigger than 1. 6 billion because strikes more expensive over time, not less expensive. What happened is he first week as you can expect some inventory to be stopped. Pretty much everyone in the industry, dealers, suppliers, manufacturers, anticipated some kind of strike for at least one automaker. They were ready for a few days. Were they ready for two weeks . Three weeks . Were they ready for shawn fain . The answer is no. They were not ready for the kind of disciplined, focused strategy uaw president has brought forward. It is not to say demands are reasonable, but the leader of this is not the big three, it is the president of the uaw. Lisa they have inventory so there is a question whether this will lead to higher priced cars. Do you have a sense of how quickly the inventory is coming down . At what point a racist cost on the near term auto purchases . Does it raise the cost on the near term auto purchases . Patrick inventories much smaller. What you have is higher prices already. Prices have moderated a bit before the strike. The uaw strategy which is surprising but again, shawn fain and uaw leaning, setting the terms of this, including hitting parts of facilities. Strategically picking a simply plants. Assembly plants. Are we going to stay with the plants we have . You mentioned the f150. Ford assembly has not been hit much. We estimate we lost 25,000 Production Units the first 10 days almost all of which were profitable vehicles that would have been sold. They lost a lot of production already and they will lose more. Tom in the time we have, we are moving to things that have fewer parties, ev vehicles that are simpler made. On a unit basis, some form of anderson productivity basis, does everybody understand theres going to be fewer warm bodies making these things . Patrick this is a subtext of this particular bargaining session. It is the wildcard out there. Until just recently, it was not even mentioned except in hushed tones in the second or third 10 minute session of investor call. A big issue in this is are we going to continue as taxpayers to subsidize a plant producing vehicles that require fewer labor hours, and wages that are less, in plants there are joint ventures with Chinese Companies or south Korean Companies or other companies. And actually substitute that for profitable vehicles that consumers want. That is something we outline before the strike is a serious issue and it is at this point unresolved. Jonathan have you got an answer to that . Patrick i do not know what is going to happened and the fact that President Biden came to the Assembly Line and said they should get at least 40 increase. This said nothing about whether we will continue as taxpayers to subsidize the battery plants and pay for the conversion. That is the word apartment of energy uses. We pay for conversion of plants making vehicles now sold profitably to electric vehicles that are growing, but growing slowly. There is not a base case out here that works. Jonathan being a so to a highhanded consumer as well. Does it complicate the effort . Patrick absolutely. I have a battery electric vehicle in my garage, but fortunately i have another car i can drive and the fact is 72 according to our assessment of these electric vehicles are luxury cars, which is typically fine. When you have government policy and taxpayer money and contracts and internal subsidies and regulations that are pushing for 40 or 60 of the vehicles to be primarily favored by wealthier people in metropolitan areas, we have a serious problem as an industry and as a society. That is an unresolved issue for which there is no base case for success. Jonathan patrick, it was wonderful to get your insight. Patrick anderson of Anderson Economic Group on the tensions out there on current policy. Tom he is one of these think tank guys. Hes not looking at the news at 10 00 a. M. Come his a commitment where we 10 years out he is looking at where we 10 years out. On the chemistry of batteries, not fancy physics dynamic, on the chemistry of batteries, are we in the game versus the chinese . Jonathan matt miller writing in s the chinese hope we flinch on chinese production, the fingers crossed do you stop u. S. Investment in battery production. The chinese in certain circumstances leading on this effort, that is the latest on michigan and more later. Equity futures on the s p 500 higher. From new york city, this is bloomberg. So, youve got the power of xfinity at home. Now take it outside with xfinity mobile. Like speed . Its the Fastest Mobile Service around. With the best price for two lines of unlimited. Only 30 bucks a line per month. Thats hundreds in savings a year when you wave bye to the other guys. All on the most reliable 5g network nationwide. 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Since starting golo and release, i have dropped seven pant sizes and ive kept it off. Golo is real, our customers are real, and our Success Stories are real. Why not give it a try . It takes a long time for the feds actions to work through. The markets are very impatient. We do not see the economy falling off the cliff. The market is going to feel that out and when it does we think equities again. The market is moving maybe theres going to be a recession. This is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. Tom good morning. Im radio and television, on a friday, to read onto the weekend october and may be read into 2024. We survived the week. Vix. But globally the tension is still there. Jonathan we have to sit on this quarter. Third quarter in nevis eight, the treasury market, yields higher more than 70 basis points. I give a shout out to, christian of lafayette who at the start of the year said he thinks the pain trade is higher equities, halfway through the year he says he thinks the new pain trade is high yield and much more high yield has been the story the last couple of months. Tom we start with equities. Julian getting colleges and cautious. Our bond and stocks correlated . Lisa they have been. This is going to be a concern Going Forward because where you diversify and we heard this earlier this week, what if it is the dollar . Will at the dollar, we saw that the in a world where it bond and stocks trading in tandem . Tom every conversation, whatever the belief is, we are data dependent. We have a seattle slew of data. Personal income spending. Pce deflator. Chairman powell says that is important that we have michigan over georgia. The five to ten year inflation call from university of michigan that is a crystal ball. Jonathan jobless claims at 200,000. Unemployment is still with 83 handle. This year so far the recession that never was. We are talking about headwind for the consumer going into q4. Higher rates. Higher energy prices, Student Loan Repayments resuming and a lot more out there as well. Can we stand up to the latest negative story for 2023 . Tom in this hour citigroup and you said citigroup says there is some form of better consumer in out there pushing against what john just said. Lisa a broadening out. You are seeing a reacceleration in certain durable goods, just items, rather than services. Take the uaw as a preeminent example and conversation we just had, they are feeling the Inflationary Pressures. There demanding wage increases along with other things. Youre seeing weber pushback. Does that draw additional customer push because they have the additional income coming in from their wages, not from stemless payments and not from savings . Tom we stagger into october. I not figure out where to go for halloween. I think im going as gamma. Jonathan a barrel of oil . Tom no, that was a couple years ago. We got to stagger through october and i believe there is a fed meeting out there somewhere, theyre going to wear Halloween Costumes at the meeting. What data are they going to have . Jobs. Inflation. Anymore . Jonathan can we explain why lisa is going out to may be. If you get the government should dump them he did not get the jobs data shut down, he did not get a jobs data. Based on what we heard from bank of america saying no recession, how can you have one when Consumer Spending is up 4 yearoveryear . That is a strong powerful pushback from Brian Moynihan and company at bank of america. Tom Brian Moynihan always goes by concise his economic prism and one think i was say and this came up a couple of times, we heard it three times per year people are looking at what we are doing with our charge cards. What we are doing with auto loans and basically it is going to come as a spike and it is going down, it is a cliff. Lisa people are probably more and it is one warning sign people are looking at. They are spending but credit card outstanding that is going up significantly. It is one thing to watch in a soup of uncertainty we have percolating out the data factory. Tom the vix under 18, under 17. Jonathan the data factories. What are you on about . [laughter] you can have that one. It is a mostly weekend. Alm ost the weekend. Bramo is feeling kind. Equities up by 0. 4 of s p. Yields lower by a couple of basis points. 4. 68 down to about 4. 55. Quite a range for the euro as well. Had a look at 1. 04. Back down to about 1. 05. Crude briefly entered yesterday session at 95 on wti. Wti right now 93, were positive by 1. 4 . Tom what about the advisors out there . The advice youre getting as you recalibrate in the Fourth Quarter and into 2024 . Dana dauria and they are in the absolute crux of this invite to be diversified within your financial instruments. Welcome to the show. Help me with 60 40. What are advisors doing as they calibrate 60 40 forward . Dana i think advisors are thrilled about 60 40. 99 diversification benefit we would like in the short run coming yields increasing dramatically and we also experiencing through september Getting Better the last couple of days, but all september tough september for stocks. When you are an advisor and the business you have with the clients, that 60 40 this year with the yield youre able to get, it is still reflecting back on what we have been through the last several years. Theyre pretty happy with the 60 40. Tom i look at what bonds have done. Like an advisor im going to the biggest blended fund which is the vanguard total market bond fund. I really did not understand the carnage. If you go back 30 years you got the great moderation, up you go and im sorry, we are off a cliff and bmd has gone through to new lows as well. When do we see bonds get a bid . Dana i do not know it is not surprising what is happening in the bond market. You look at what the yield curve inversion has been and what we are seeing inflation as well as the fact that the stock market the past year pricing in this going to be a soft landing. We not looking at recession. It is not shocking to me that 10 year yields increasing. We are seeing markets, which had been doing great, stock markets, pricing in already, 10 year appeared to be catching, saying maybe it was a little much. There are surplus how the markets come together. Is it really that surprising we are 10 year are given were twoyear are . Delete minted bulls we have had the last few months even the fed saying we think we are going to stick the landing, there is no recession here. Lisa im curious about the sentiment in your clients at a time when we see a cell of, 60 40 has been punished, how much are people running versus saying this to great buying opportunity . Every debt viable. Dip buyable. Dana advisors on the platform not support tactical. Theyre going to look at the allocation of the client and say what is a long call. Theyre going to rebalance but i think for a lot of advisors is mi rebalancing to the risk tolerance of the client. It is not so much do i see an opportunity to take my client assets and buy it. It is more about my positioning the clients for the potential recession still comes come potential we have or a militant allocation go more riskier which would happen in a market where stocks, the first half of the year were doing phenomenally well and outpacing. For advisors it is about saying what is the overall posture of the client. Am i prepping them well . The advice i give a lot. There is a lot to be happy about the economy. We are nowhere near where we thought we thought will be second half of this year. If you talk to people the first half of the year, everybody was like prepare yourselves. Some economists we get information from a lot of different places, Asset Managers on the platform, some of them are pushing that call out. We are saying is going to happen. Weed for 2024. Some are not saying just wait for 2024. For advisors, it is mi positioned well in case of potential drop because we know people for the losses a lot more than they feel the gains. Jonathan it has been the story of the last year. Dana, thank you for joining us. That bond market, equity market move has been painful. Equities down, bonds down. Tom that is a snapshot into what wellmeaning advisors are trying to do with the diversification and they are overwhelmed. Should be on microsoft . Jonathan we sit in on of these individuals they say 60 40. They will walk you through us what you should do that and ultimately it has not worked. Lisa history has broken this year and how do they readjust given the fact there a new paradigm at least for now and could potentially continue. Jonathan equities trying to do something, trying to bounce after the last couple of days, adding to the move, s p of 0. 5 . Yields coming up a little bit as well. Treasuries rallying, equities rallying. Yields lower. Veronica clark a citi coming up in about 17 minutes. They look for another rate hike from the Federal Reserve in november and looking out to 2020 four for potentially every acceleration in inflation as well. On the politics of gallup on the looming Government Shutdown, always a fantastic guest on to gauge where Public Opinion is lying and where it is shifting to. Tom in the arc of gallup, we are honored to have them on to give us actual polling substance versus the frenzy. Lisa how is it being received . We talk about whether youre going to get a shutdown, whether we are not. Everyone everyone sick of the topic but here we are with a hundred thousand people who may not be paid starting monday so there is a question but how it will poll. 800,000 government workers. Jonathan this it is amazing the congressman, congresswoman still get paid. The fact that they still get paid during the shutdown, the government is remarkable to me. From new york, this is bloomberg. Welcome to ameriprise. Im sam morrison. My brother max recommended you. So my best friend sophie says youve been a huge help. At ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. Our neighbors, the garcias, love working with you. Because the advice we give is personalized, hey, john reese, jr. Hows your father doing . To help reach your goals with confidence. My sister has told me so much about you. Thats why its more than advice worth listening to. Its advice worth talking about. Ameriprise financial. My opinion we have 10 year rates at 5 or higher. Because of this inflation. The structural inflation is unlike anything and i think Business Leaders and politicians are not providing the foundation to help explain this. We have not seen inflation like this in over 30 years. Jonathan bring the exchange of air brillant exchange there. Bloomberg brief takes place at 5 00 a. M. Eastern time if youre up early for that one. A live in the equity market lift in the equity market. The euro has quite a ride of this week, still poised for an 11th week of weakness on the euro against the stronger dollar. Tom euro yen. 1. 5813. A combined effort euro and ian both week against the resilient dollar. Jonathan boj move overnight interesting to see. Simile based on action alone, a pure observation, more concerned about the move in yields moving too quickly. Tom multiple interventions does not work. Yen supposed to be 1. 47 . Jonathan there are two opposing forces. They want support for the currency after lower yields to come up more will attempt to what you are seeing elsewhere. Tom i think first week in november it is teams of a. It is Team Surveillance tokoyo. We can be there. One of the few original parts of the hotel love from the frank lloyd era is the bar. It is dark and gloomy. Steve would need to bring in lights. Jonathan bramo has not mentioned anything so i do not know she is on board. Lisa broadcasting from the bar. Carry on. Tom an important conversation. I can remember my grandfather talking about in 1936 oops fdr won. No one except George Gallup note that. The tradition continues with careful polling of america. Mohamed younis editorinchief of gallop this morning on our distrust of washington. The 17 reality for you is our popularity of our Congress People quit is never been that low, has it . Mohamed we are at rock bottom now. 17 of people approve of the job congress is doing. The Data Collected as the shutdown sped up. Lisa mentioned history has been broken it. In this part of our conversation come history is repeating itself. Weve had 10 major shutdown since reagan, the longest under clinton, obama, and trump. Theres not a lot new here. One of the things people are expressing in our poll is this question of what is the most important problem facing the country. The most frequent response is poor government and poor leadership but when you add up all the issues that congress is primarily responsible for, 40 of people of the country are mentioning major role of congress as the most important problem facing us today. Lisa yes, this is history rhyming but on another level of people do not like it, why did they keep voting for the same Congress Members . Mohamed people are much more positive on their own Congress Representative than they are at the body at large. There is a bit of a partisanship , 22 percent, slightly higher democrats. Looked republicans at a 9 of approval from congress. Murray asked about the ability to trust and confidence in congress have solve domestic problems, 56 of americans say they have no trust in this congress to do so. Lisa how do you understand the adversity opposed to have been perhaps body reliability in the past number of years. I wonder what you claim to this idea, the divergence of overall perception versus the tangible would you vote for this one person. Our post getting less accurate in terms of truly measuring are polls getting less accurate in terms of truly measuring what people want . Mohamed theyre not. Lots of the missed polls have been at the state level. When you do a responsible representative poll despite the low response rates, on National Issues and onto the plane to vote for, they tend to remain very accurate. Our history of our casting elections, we did not do that anymore, but we still test methodology of the pole by asking those questions and we find them to continue to know where people are voting. Tom bryant died for the advent of what George Gallup did and some people would say his movement died with him. Tell us about the trump movement. Tell us about what gallop studies about a republican party, gop of grievance. Does it have legs out years . Mohamed yes and the grievance far predates trump. One of the really interesting things about President Trump is that early on in his president ial campaign, a lot of democrats were showing up to his rallies. Many of these things he speaks to and people like bernie speak to are primarily a popular view in this country as you saw with the numbers we just mentioned. Corruption really high in u. S. Trust in National Institutions are at an anemic low and that goes from the Supreme Court to congress to the fbi, pretty much across the board. The grievances are there and they will most likely outpace President Trumps history and maybe life path. Tom now who is the american silent majority . Mohamed that is a tough question to answer. I think one way i would answer the question is the american silent majority are people who see themselves working harder in their own lives than their elected leaders are working to solve the problems they think facing the country. Candidates who speak to those frustrations will have the most powerful messages presented. The other thing republicans are down on base government and we see that all over our polls. When the biggest partisan splits is the perception that federal government has too much power. 51 percent difference between democrats and republicans. Republicans speak to that issue will absolutely have more clapping going on for them than those that brush across it. Lisa polls more accurate or same apices as the past. Would you make of this poll by the abc news and Washington Post outlets that showed former President Trump up by nine Percentage Points in a matter between him and President Biden. Mohamed it has gotten a lot of criticism. Even though polls are accurate, it is important to see all the data that is out there so what we do is look at a poll like that and others that use similar methodology and where a poll is an outlier, it is a reason for concern. That poll tends to be an outlier compared to other similarly situated methodology polls to ask that question. I would take that pole with the growing assault. With a grain of salt President Trumps staying power is there. People are still seeing him as essentially the front runner for the republican party. Jonathan at the moment does not seem to need to attend the way at all. Looking ahead to the opening bell, 35 minutes from now. This is a ke dan suzuki. Later on this week, thank you very much for the committees feedback the last week to the conversation with daniel leavy. The play that out over the weekend saturday, sunday, 130 p. M. Eastern time. Tom you will be at totts li verpool. Jonathan is that right . What time is that game . Are we competing with the coverage on abc . Tom yes we are competing. I think liverpool give you some tickets. Jonathan what he suggested are you suggesting . Tom we should do more coverage on football. Jonathan some people would like us to talk about it less. We should figure that out as well. Futures up. This is bloomberg. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Nice footwork. Its possible. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to use predictive monitoring to address operations issues . We can help with that. Can we provide health care virtually anywhere . We can help with that, too. Is it possible to survey foot traffic across all of our locations . Yeah absolutely. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Tom bloomberg surveillance. Its one of data today. Lisa this is one of the big mysteries, how long can the consumer keep spending at a time when savings are upset simply shrinking. Tom the fed now restrictive or accommodative. Is it peasant pivot point october . Lisa the fed will show some of the good news people are looking for. Tom a lot of granularity. Important data to gauge gdp. Michael mckee joins us now. Michael the pce deflator month over month up. 4 , double what we saw last month but less than anticipated on a yearoveryear basis, 3. 5 , up from 3 . The court up only 8. 1 the core of only. 8 . 1 . We are getting revisions because yesterday the revised gdp affects the pce. Core deflator up. 1 . Yearoveryear up 3. 9 . The prior month was up 4. 3 . A bigger drop even though the prior month was revised. Some progress from the fed. The headline number, 3. 4 in july up to 3. 5 in august. Other numbers out now, trade balance 83 point 83 . Inventory down. 5 . 1 . Retail inventory up 1. 1 . All of those numbers will get factored into a maybe higher gdp number. Tom the market likes what it sees. Futures up. The yields, 10year gilts comes 4. 54 . I did a triangulation of the past 10 days of the 10 year yield and the critical point is 4. 51 . We are not there yet. Lisa i am glad to go to the technical aspect of this. The data does not offer conclusive kinds of messages. What stands out to me is this is your soft landing beautiful scenario. Consumers are still spending albeit a slower pace. Is this enough to get the fed back down to 2 . The market on the margins feeling more comfortable. Tom the 10 year up. Standard deviations in the yield we have seen is 4. 50 . We are not there but we have broken down nicely on the two standard deviations to a lower yield. Michael spending and income are up. 4 for the month has been noted. Spending numbers down from. 9 . Cool off a little which would take something away from gdp. Mostly it is spending on gasoline is the biggest category as gas prices up. The biggest for the current income rise is compensation. People making more money than they had than had been making. The savings rate comes in at 3. 9 , which is down a little bit from the prior month. It fits into the narration of do we see people trying to spend their savings to keep up their spending . Lisa looking at data points that will have to be included in the series maps out over time so the fed can come to some sort of projection. Are we going to get the next point . In the jobs report . Michael we will find out today as a matter of practical timing, something will have to shut down on monday because they cant legislatively get things through Congress Even if they made an agreement. It takes a couple days to get everybody back to work and get back on track. It is not clear whether next friday we would get the jobs report. If we go into next week he would not get the jobs report. But the more worrisome is you would not get the cpi and cpe because the fed is concerned. Cpi is the 14th and pce comes out the 27th of september. Tom you fly down to washington and go to the bureau of labor and there is no one there . Michael we will have pictures of me knocking on the door. There will be people working there but not the people who release the data and all of them are not getting paid. We should mention that if the shutdown goes into next week, fat bear week will not take place. The park rangers up in alaska cant run the fat bear campus. Tom the bear camps. Michael if you get to vote on the fattest bear as a go into hibernation. This is a huge deal on the internet. Tom we will have to look that up. Michael mckee with news from alaska. They have led the way to a higher rate regime. Veronica clark from citigroup. What are you writing this week we need a surveillance out front look. What are you going to publish for monday . Veronica we have had a lot of data. Gdp revisions yesterday. Overall it doesnt change the picture that much. We have had some slowing in inflation but revisions higher. There is not that much to change. Inflation is still high. Not much to change from the fed which we heard is higher for longer. Lisa when you look at Credit Card Spending, many people are saying anecdotally you are seeing a decrease in activity and that people are being more frugal and discretionary with income. How much do you reject that in your thesis that you are seeing a reseller ration in certain areas that could fuel inflation . Veronica cnet in goods spending. People are shifting spending back toward services as things are reopening. You are seeing that in goods spending. People are shifting spending back toward services as things are reopening. Maybe things are shifting relative to the patterns of the last year. Growth is not just supported by a Services Consumption anymore but much more fraud than that. It is goods and investments. Lisa you listen to all of these people saying consumers are slowing but not that much and you are seeing the economy slow but not that much and you will get this inflation will lead to a perfect soft landing. What is your main pushback about why inflation will remain sticky and why it will remain a persistent problem. Veronica it comes down to looking at the different components and drivers of it and in goods, those prices are ticking up again. From supply chains correcting and Commodity Prices falling, was have reached an end. A lot of that will come from components like shelters and home prices fell in 2022. Rices rising again. A lot of reasons to believe we are not slowing enough. Lisa when you talk about the fed policy through the long end of the yield curve, how much has the yield moved higher going back to 2007 creating greater pressure to knock inflation down more versus actually being sustainable and something we see over a longer period of time . Veronica the yields are tightening financial conditions helping slow things down. We see the transmission of higher rates didnt flow through with the normal 46 quarter lag. Corporations have trimmed down debts people are sensitive to higher rates. I think you can still expect some slowing at some point. Inc. That higher for longer but we didnt see it in the growth forecast. Tom which measurement of disinflation do you and andrew use . Is it three month annualized because it was beaten into me as a child or another gradient of disinflation . Veronica the like a three month annualized is a good way to look at the current trend. There has been a lot of focus on the core nonshelter Services Like recreation or transportation that are tied to tight labor markets and strong wage growth. We look at those. In the end, the most important is what the fed will be targeting which is core inflation and all of those components do matter. Tom thank you so much. The 10 year yield on the cusp of 4. 53 and four basis points. A sigh of relief after friday. Lisa a sigh of relief to what level . If you said it to 4. 5 5 on a 10 year treasury a week ago, people would say that is not much of a sigh of relief. Tom will have to see. We will see up 1 on the nasdaq 115,000 level. The standard at 31 points. We are up. 7 . Lisa we are looking at fairly muted reactions to this data. U. S. Core pce prices posted smallest monthly rise since late 2020. This might be a breath of fresh air, good news which is why maybe you are seeing this sigh of relief you are talking about this friday after a tough week. Tom has been a tough week but the importance, staying with Bloomberg News radio and television here. In an hour and 15 minutes the world changes. We hear the speaker of the house and we hear, am i correct, uaw on facebook. Lisa two separate stories but related to the angst we are at right now, political wrangling and also people will demand more at a time when inflation is challenging. I think it is interesting when you look at the granularity of the data that real personal spending surprise to the upside. Despite what you are seeing with perhaps a couple of years inflation outpacing wage increase you are still seeing people spend. Tom it is like a broken record. The 10 year coming to portland 6 , certainly pulling back the 10 year coming to certainly pulling back. Bitcoin, 27,000. We only do that for matthew miller. Lisa that helps for the auto story. Tom the vix down, a good architect. S p futures up 31. This is bloomberg surveillance. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Based on your goals, whatever they may be. All that planning has paid off. Looks like you can make this work. We can make this work. And the feeling of confidence that comes from our advice . I can make this work. That seems to be universal. I can make this work. I can make this work. No wonder more than 9 out of 10 clients are likely to recommend us. Because advice worth listening to is advice worth talking about. Ameriprise financial. We are at very low supplies. Tremendous strain on the market. We are seeing it at the front end of the curve. A true medicine amount of cash the clear market is on supplied and too much land. Prices will higher to even out and bring the market back into equilibrium. Lisa Stephen Shore principal of the sure group, interesting on that dynamic earlier this morning. I am watching this morning the Consumer Discretionary stocks after a tumultuous quarter we get the sense this is the area that has been most beaten up, weight maybe not, nike shares up 10 after reporting they have been working down inventories. You can see the commensurate move in exporting goods in under armour, those shares of more than 2 . Suddenly getting back control over rising power. I wonder when you take a step back whether you are seeing Consumer Discretionary clearing out the angst and able to pass along higher prices more aggressively to consumers. It speaks to a different moment than this sort of soft landing and feeling real weakness. Tom my head is spinning. I want to speak to Michelle Myers and see what the credit cards are speaking. Futures up. Up on the nasdaq, 15,000. On luxury, oliver chen, a study. I will wear this and wearing my dior. Breakfast at cosco, not as romantic as rectus activities. Is luxury dead . Oliver it is not dead. Even at cosco you can get great diamonds and fine line. Consumers are looking for retailers with low prices and retailers that can charge a lot. Luxury and value continue to work. Consumer spending, three point 8 unemployment, money on the sidelines. Lenny of spending power, rapid shifts. Inventories are in plenty of spending power, rapid shifts. Inventories are in supply. Tom it happens in the news business, a death in washington. We deserve to have a long conversation with you in a bit. She was the mayor of San Francisco for 10 years and no one expected 30 years plus in the United States senate. Dianne feinstein of San Francisco has died. An important moment. It has been a story for 2023. She provided Democratic Party leadership for over early years in washington. Annmarie hordern provides perspective. Your thoughts on the passing of dianne feinstein. Annmarie it is a very sad day for individuals in washington getting this news and nbc reporting this, she wasnt absolute trailblazer she was an absolute trailblazer, she was the longest serving woman in the senate. A number of accolades we can talk about, she really was driving home legislation, guncontrol laws in the 1990s for gay rights for the lgbtq plume lgbtq community, sad day for everyone in washington. Lisa was this expected, not just because of her age but deteriorating health . Annmarie she is 90 years old. We know she had about with shingles and came back to congress. When you see her, she had been wheeled around in the halls of congress in a wheelchair. It has been a sad state of affairs for the senator. A lot of attention has been put on her because of her age. And there was a moment over the summer where she was told how to vote she seemed confused and was told to vote just a on this. That is why she was a focus but she was still showing up to work everyday with a lot of help and care but was still working as a senator from california. But she wasnt 90 years old and had a Difficult Health situation she was dealing with. Lisa when you talk about her legacy and generations she led through, what is the ultimate legacy she will leave behind and who takes the helm from california to pick up where she left off . Annmarie it will be big shoes to fill given all of the glass ceilings that senator feinstein continuously broke, not just being the first female mayor of San Francisco, the first female to lead the judiciary committee. She was a trailblazer for women and also key legislation, especially when it came to gay rights and lgbtq and guncontrol legislation. These are things she was very passionate about. Governor gavin newsom said he would make an interim choice if she wanted to vacate her seat during there were discussions of whether or not she was going to come back to the senate when she was dealing with health concerns. I imagine that is what you would expect from the governor of california at some point. There will be whispers of that talk today but everyone today will want to make sure they are doing justice for the legacy of this individual. Tom George Skelton in the Los Angeles Times with race and dignity it speaks of what the governor of california needs to do. There is a legacy here and with lincoln and i believe it was fdr and that President Biden would suggest to the governor that the Vice President would be an appropriate new senator for california. Not today, i agree, but in the coming days, that has to be topic one, right . Annmarie there are a lot of individuals who potentially would like to see that actually and potentially to see biden look elsewhere for a running mate for the upcoming election. That is rumors and speculation and something i cannot speak to with facts, especially at this moment. Tom at this moment, what i find fascinating is a set of conservatives had an immense respect for Dianne Feinsteins permanent liberal trajectory. It was remarkable to me how the conservatives respected the month after month effort she made for liberal politics. Who are those people on capitol hill . How has senator mcconnell responded to this passing . Annmarie i think senator mcconnell will come out with a heartfelt message about senator feinstein. Even they dont agree of the time and it agrees to policy, she was also known to want to work in a bipartisan manner and she has. I think she has is greatly respected on the right, even if you didnt agree with some of the policies she wanted to enact in congress. This is someone who definitely wanted to work with almost feels like in another time of how politics work and she did reach across the aisle. Tom this is really important for another time. Dianne feinstein dead at 90. You will say to oliver chen that boyd we want to have you back and we are sorry we had to interrupt that conversation. Is it short squeeze friday . We will be following throughout the day of the longest serving congresswoman. We are also looking at a rally trying to make up for some of the losses and carnage over the last quarter. The most interesting aspect is bonds and stocks moving in tandem. This feels like it is a move in tandem as the market resets. Tom real yield which we have completely lost perspective on, the 10 year yield 2. 16 . Brent crude into the weekend, 96 a barrel. We will be watching a gallon of gas into october and into 2024. Doll or stronger of the large set of Economic Data that Michael Mckee gave us. Look for our conversation on the yen sunday evening new york times. We leave you with the senator from california, dianne feinstein. Feins announcer enough with the calorie counting, carb cutting, diet fatigue, and stress. Just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy. Release works with your body, not against it, so you can put dieting behind you and go live your life. Head to golo. Com now to join the over 2 Million People who have found the right way to lose weight and get healthier with golo. Jonathan lets get you to the weekend and wrap up this month and this quarter. Live from new york this morning, good morning, good morning, your equity market positive by 0. 2 . The countdown to the open starts right now. Everything you need to get set for the start of u. S. Trading. This is bloomberg, the open with jonathan ferro. Jonathan live from new york, a difficult month on a high, the government inching toward a shut