Transcripts For BLOOMBERG Bloomberg 20240703

Over 30 . The u. S. Keeps spending, income in spending is priced to see the smallest monthly rise since 2020. Nike and carnival jumped after earnings. Welcome to bloomberg markets. That was a picture near my house in brooklyn. Guy i hear its raining in new york. Alix he will mock me but this is serious rain. We were talking about getting home because brooklyn is completely getting decimated now. There are no trains running anywhere so this is near my house and this is not the worst of it. You look at cobble hill and go on us, its rough going. Gawanus. I might have to walk home which will take me three or four hours. Guy you have shoes that are perfect for this weather. Alix has a lot of shoes under desk but im not sure they would be appropriate for this kind of weather. This keeps happening see you think about the last few months, you guys have had smoke, storms, all kinds of weather to deal with. Are you with me that the weather is important and somethings going on here. Guy alix yes, im with you that weather is important. We are going to have to retrofit buildings in a different way. You are not prepped for snow but we are but we are not prepped for this kind of rain so what do you do with windows when you have wildfires . Thats something every building in every city will have to manage. Guy we are one step ahead, we have many words for rain so we have at least embrace the rain. It is part of our lives and we have all kinds of words to be specific about the kind of rain. You guys just to rain but maybe thats the lesson you have to learn. This takes us to our question of the day. Q3 was a rough ride but is there a storm coming for q4 . Youve got all kinds of things going down, i think the Government Shutdown could be a feature of the landscape and that something we will factor in but it will be hard to factored in particular if we dont have data and then theres the issue of the uaw. How will that impact the u. S. Economy . We bring together the allstar team thats still in the office. Lets start off with the macro and figure out how things will develop from here. Q4 looks difficult and q3 was a bumpy ride. The massive pickup was something nobody expected but q4 looks like we could be flying blind. Mike absolutely, if the government shuts down we have no government data. We just got some privatesector data. The university of Michigan Sentiment comes in. Improve Consumer Sentiment improved. The Current Conditions improved and expectations fell a little bit on the one year and five year inflation goal thats up. We saw a big decline in the pce Inflation Numbers today. That was suggest that all things being equal, the fed may be able to hold off in november. If they dont have the data because it cannot be released or collected, what do they do . They probably hold up because they dont know what to do. Alix speaking of rain, the governor of new york declared a state of emergency for new york city. Just pointing that out. Guy youve got to stay. I can go home but you cant. Guy alix to the point of the turbulence in the third quarter, what are we in for for the Fourth Quarter . Abigail seasonally, the Fourth Quarter is usually better. Speaking of october, there have been some smart people who have made the comparison of 1987. There has also been comparison is between sp y and 1987. We talked about the fact that this is the last time we had rate superhigh. They were higher but is the trajectory of rates going higher with stocks going higher, the idea that something will break. We saw something along those lines back in march with regional banks. We have larry fink and bill ackman saying the 10 year will go above 10 . I think the 10 year yield will go above 6 . The s p 500, the monthly chart is not so good so there could be pressure ahead. Guy are we going to get a santa claus rally . Abigail i like to think about the different possibilities. Can we see some serious selling in october and november may be the idea that something breaks. We may not have data or we may have data and we have the upcoming earnings season and the fed november 1. They seem to be sticking with their trajectory of higher for longer. Think back to 2018 or 2011 where theres a big crash and then there is a big ounce off a bit so we could see a big move down and still have the santa claus rally relative to the Government Shutdown. Last one was 2018 on december 20 two until january of 2019, 35 days. Over that time, things were up about 10 and that was accompanied by the first jay powell pivot. Alix this is a drastically different situation than the time around but the data continues to hold up and it doesnt make sense when you are dealing with a 5 10 year. It feels really reacted to that in equities. Mike part of the problem is we dont know what will happen because the data has been impacted by the pandemic. Its hard to see this follows any pattern. From 1997, i go back to that and jim bullard was talking to me the other day and he said back in the 1990s, we had 6 10 year yields and we had unemployment up around 56 and we had gdp of five or 6 . So we can grow at those yields. People just arent used to it. His view was that one of the problems is an infrastructure in the bond market built since the great financial prices for zero rates but now that the fed is getting out of the idea of pushing down along rates, its not going to be a surprise that rates go up and the economy will adapt to that. I dont know how fast. Most people in economics think we will not have a recession. Guy the uaw how big an impact potentially could that strike have . Mike it could certainly have a big effect on the Fourth Quarter. There could be a lack of cars as inventories run down. That would bring down retail sales and bring down the ability of the carmakers to make money. If the strike goes on, it will only expand given the way they are running it and that means more and more people have less and less in their paychecks or working for these companies and then it spreads maybe to the suppliers. We have a Consumer Spending problem. It could be an issue if they dont get it settled soon. Alix we also have a lot of fiscal expansion based on the green energy transmission. Abigail i misspoke, it was 1987. Mike that changes everything. Abigail its through trajectory of the rates, not just the level. Alix it looks like the uaw will strike at more assembly plants. Ford was exempt because of the progress they were making. We will bring you any headlines as they cross. The stock of forte is down by 0. 6 . We appreciate you setting us up. Thank you both very much. Coming up come more on the question of the day is a q4 storm coming . Our next guest made it in despite the weather. This is bloomberg. Fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Alix we want to take you to the News Conference with House Speaker Kevin Mccarthy, speaking on capitol hill about senator dianne feinstein. Trailblazing of the first woman elected mayor, coming from a Different Party inspired women from both sides of the aisle to seek elected office and have the voice their voices are. My deepest condolences to her family, her constituents and her staff. Last night, the house did something nobody thought we could do. A number of questions i could take, the number of weeks about doing appropriation bills. I told you dont give up on us because we are not giving up on the american people. We have s3 appropriation bills. My biggest question is, i dont understand why the democrats voted against funding the government. In all, we have four appropriation bills done. There is 12 overall to get done. Its the Discretionary Spending every year the government is supposed to do. We have now passed more than 70 of the Discretionary Spending on appropriations. Need i remind you how much has the Senate Passed . Zero. Not one appropriation bill has passed the senate. Weve done what many have said was impossible. When i became speaker, i said we will change washington and we did that by keeping our commitment to restoring regular order. Bills that passed committee in june and july have been open for amendments for months. s we struggled with number of members were not allowed to, but i never gave up. 440 amendments were considered on the floor this week. For those who are historians, were the first republican majority to pass the state and foreign bill to regular order since 2006. My entire political career as a member of congress, republicans have never been able to do what they did last night. As we continue to get conservative wins and return to regular order, we actually need a stopgap measure to allow the house to continue to finish its work, to make sure our military gets paid, make sure our Border Agents get paid as we finish the job we are supposed to do. Another reason for the stopgap is to address President Bidens historic failure on the southern border. This is how bad things have gotten under President Bidens watch. In five days, theres been more than 50,000 illegal border crossings. Put that in perspective, just five days. Thats more than twice as much of the average for the entire month. In the last administration. A wide open policy hurts america. We have heard it from Democratic Leaders across the country. Alix thats House Speaker Kevin Mccarthy on capitol hill as we inched toward a shut down. It feels like the conversation has gone from will we shut down to them how long will be will we be shut down . Guy at some point, this will become a market event and its a question of when that comes. Could it be the moment where moodys turns around and downgrades the United States . Im wondering when the market pays attention. The inevitability of a shut down is now certain. Its how the market reacts that i dont understand yet. Alix and where the budget gets cut from and when certain agencies get impacted. We have a state of emergency in new york city because of floods and how that could go on but any new issues or depending how long it gets, people are receiving payments from another disaster from before might not get those payments is readily. Those Little Details become more evident as we go through the next couple of weeks which brings us to the question of the day is this storm for the Fourth Quarter coming . It was a rough third quarter. We are hearing that the uaw auto strikes will expand. Lets bring inann berry, what are we thinking, fourthquarter storm . I dont think so. I think the storm clouds will gather in q4. We see the data coming in thats getting more pessimistic but i dont think it will crack. Guy well done for making it in. I would not have missed coming to the studio with alex. If you look at what moves the market so far, its been action that has real data that shows the effect of some of the Monetary Policy causes. Weve not seen that more clearly than on the Monetary Policy side. A couple of things will have to come in to fruition. We will see Consumer Spending where Student Loans are getting repaid again. We will see whether another rate hike happens and what the impact is on the u. S. Demand. We will really see whether the labor market cracks. That will come through i think reaction comes in q1. Alix putting all of this into contest, do you agree with larry fink that we could see 5 on the 10 year . I think we could. There are been so many surprises and markets havent reacted to the historical causes. There is data and lags have been longer than anticipated so i think anythings possible at this moment. Guy it sounds like you are saying we have time to prepare for the storm. How should we prepare for the storm in our portfolios . We have some time and its really holding cash to valuations. We are starting to see it in pockets of the public market. We are seeing it more profoundly finally in the private market. Having cash, clipping that cuba now and waiting to move in when valuations break is what you should be doing. Alix where in the equity market you are being appropriately compensated for taking on this uncertain risk . I think there are Certain Software companies, certain business Processing Companies that are pretty wellpositioned to take it vantage to take advantage of a softening in the u. S. Economy. I came in earlier this year and at a weaker outlook. If you look at the macro trend, the white spaces still there and its a decent margin of the existing customer opportunities. I liked it earlier this year and i like it more now. Thats an example. Guy how do you play the consumers story . Upper and consumers have thus far been resilient from any notion of a downtrend. We are seeing trading down elsewhere. What would be the catalyst to finally see that upper end consumer come under serious pressure . You talk about maybe asset prices cracking but if the stock market cracks, does the high end consumer crack . I will have more insight in two weeks because i will speak i will go to dubai to speak to some of the heads of the Biggest Department stores in the world. One data point i think is interesting is use of the ceo of valentino say we are now seeing Luxury Consumer starting to get more conservative in their spending. If you go back and look at history, in every downturn, even the top end consumer has become more valueoriented. We know the middle income consumer is getting a lot tougher and reprioritizing the spend. Retailers historically have benefited from that, walmart being the number one and target is an example. Looking towards more valueoriented retail is a position to take market share higher. Alix i will go on this trip with ann to dubai. Then i can report back to you. We keep waiting for the consumer to tank and then you get the Consumer Spending in income numbers and they are still strong and pce prices are rolling over. Guy there is a whole bunch of things going on. The upper end consumer seems relatively resilient. They still have savings. Thats the top 20 . Elsewhere, the labor market is Still Holding in their. If you have competency will keep your job, your willing to take on maybe a little bit of leverage and that is consistent with some of the data in terms of borrowing. Maybe thats the narrative we are looking at. Maybe it ultimately comes back to the labor market. If that were to correct, that upends the whole theory. Alix i understand luxury is one thing but do you go by walmart . Is it dollar tree or t. J. Maxx . How do you play the safety and that . Walmart is fascinating. You have suffered through my talking about walmart. You have been so patient. We know that it tends to get its share of traffic in these downturns and they have actively going out to expand their offering. They have announced they are expanding to pet services to get their fashion offering to be more broadly palatable. A 2. 7 billion revenue stream from walmart comes from datadriven ads. Walmart is mining its own data pools to try and build an added data business. Ive been looking for these places more resilient with respect to the consumer but that reinvesting behind the future is retail media. Guy great to catch up and i hope you get home safely, thank you for joining us in the studio. Definitely walking. Thank you indeed. I understand that mayor adams and the governor will be holding a virtual briefing on the rain at 11 00 a. M. And we bring you the details of that. This is bloomberg. 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. Alix for everyone watching, the mta says Service Across networks are disrupted due to rainfall in new york. Thats code for the subways not in good shape. Especially if you live in brooklyn and we are waiting for 11 00 a. M. When you have the new york city mayor and the governor of new york doing a remote press conference for an update. These are pictures from about three hours ago. This is near my neighborhood and its a lot worse particularly in different areas of oakland. Of brooklyn. Guy you dont live at the top of the building . Alix i dont. My light fixtures were leaking in my daughters school, the bottom floor is flooding. This is not a good thing. We will talk more about spending coming up next. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. 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It will release your fat and it will release you. 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. Volume holding up considering the news. Im getting nervous about how to make it home. Investors are pretty happy. Nasdaq 100 up 1. 9 . Same thing in august. It was on pace to be the worst month. Not so much. August is still the worst for the s p this year. These are the worst sectors. Brutal. Down 5 . Real estate, the dividends look less attractive. Industrials and tech the mix, energy outperformed on the month. Incredible. Huge move higher, 1. 4 over this time, 3 , right now 4. 5 . Larry fink saying we could go above 5 . You could make the case it will make the opposite move to the upside. That could equal 6 which reminds me of jamie dimon. Yields higher for longer. Nike up 8 . Inventories coming in better. Guy yeah. Maybe they are getting through this inventory issue. Whats happening with nikes earnings and consumer strength . Overweight rating on nike, 124 to 119, great to see you. Are they getting to grips . Is the worst of it behind . The worst is behind. This quarter last year stock was in a similar range. The new news at that point was that they had a load of inventory that came onto the market may to september. They talked about selling five quarters worth within four quarters. Spring, summer, fall, winter. The clock started ticking. They were trying to get rid of it. Theres another word for stuffing. Now we are on the other side. Its part of the cycle of purging. Alix a year ago, it was inventory. Now the consumer could get pinched. Student loan repayments, etc. Topline problem . Adrienne correct. Transfer the risk from Company Execution on the back of supply chain with vietnam production, working through controllable factors they got a handle on the things they can control. Cost coming down, inventories better. Markdowns. We shifted to macro risk in the u. S. And greater china. When there is macro out of control of the company, the things they can control below topline are driving visibility on earnings. Those of the companies to be in. Outperformer zervos in control. Guy how does nike fit . The macro risk crisis, these businesses have to deal with it. Who stacks up . Adrienne go with great balance sheets, a legacy of innovation and are bit. The wallet tightens consumers. They now spend at the top two. Sometimes they get more of the wallet share. You are taking out anything that is mediocre to you. Go with the guys with power, with a 4 billion demand creation share budget, within p l, that dwarfs competitors. Alix personal spending and income today. Income still up, spending still up. Do you believe these numbers . Is this capturing . Adrienne look at fails momentum. The redbook index. Last year, 9000 stores. They are now up 3. 5 . Weve seen the consumer pullback. Savings depletion, etc. Yet, they are still capable of generating singledigit sales growth. History, thats the range. Everyones worried about the cliff. Fourth quarter, student loan, ongoing macro factors. Keep in mind, wage growth is outstripping. People are unemployed. That is huge. Titan spending, you dont get rid of spending if you still have a job. Guy how do people spend . Do we see a shift in how people spend . More online . Less . How does that affect friends . Brands . Adrienne we did a report on what can we learn from the gse . Consumption was clamped. Mom and dad stop spending. Sorry alix. [laughter] they are not necessarily kids and teens need base discretionary. We see a bigger ticket. Reward yourselves with smaller vacations. Apparel fits in that. Footwear. Some 100 transactions. Theres a Movement Toward value. We talked about walmart. Value means price paid for quality of receipt. These offerings are kicking into gear. If you want to put new money to work today, you are going to ross. Thats where the consumer feels good about spending less and getting more. Alix i keep telling guy i am on a budget and he doesnt believe me. [laughter] i am your update person. Nypd saying the b, w and g lines are suspended. Massive delays. 1, 2, 3, 4, 5, 6, delays. When you get the headline, you know its going to be bad. Guy you probably have permission to go get a pair of boots. Thats ok. Break the budget today. Alix thank you. Guy wellingtons. Alix walking from the Brooklyn Bridge home will be a little swimming. Guy they will have soggy feet. Alix thats off the f train. That is a nightmare. Encapsulating a lot of highways. Look at that. Guy these are incredible. Alix seriously. Guy i take the weather seriously. Thats a lot of weather. This has been a year of a lot of weather. Fires, now this. Speaks to something. Alix a changing climate. It speaks to have a climate, if it is more volatile, youre not prepped in certain areas. You are prepped for something changing. Maybe you put solar panels on your house. Maybe it is not as sunny anymore. Stuff like that. Is that a stroller . Oh my gosh. I feel like guy incredible pictures. Is it going to stop raining . Alix anecdotally my husband said the rain lightened up. He is not a weather person. It is supposed to rain through saturday. Guy it comes with a lag. This works with a lag. Flash floods, build up. Alix its been raining for five days before this. How to absorb it is even harder. Coming up, the feds Interest Rates on etfs. This is bloomberg. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. If you start having a little trouble, youre concerned that its going to cost you money. To this day i only paid what i had to pay for the device. When i go back everything is covered. Theres so much youre missing by not having hearing aids. well find you a hearing aid that fits your lifestyle and budget. Unlock your riskfree trial during our limitedtime sounds of autumn event. Call 1800miracle to book your appointment today. If youre trying to get a view of the whole organizational Financial Health and youre trying to do that through multiple systems, that makes it very, very cumbersome. Its not just tech, its not just people. Its how they Work Together to provide that experience to the customer. As a finance organization that is what you want to do. Alix jamie dimon joins monday. 10 a. M. New york time, 3 p. M. London this is bloomberg. Alix tumultuous third quarter, the longest dated bond etf is seeing the longest drawdown on record. Emily . Emily this is blackrocks 20 year etf. Record drawdown from 2020. Investors are allocating. Over 2 million of flows into this fund. The other day it had its biggest day since july. Duration addicts. Rates are going higher. Guy ok. Emily people are still flowing. Guy our people shorting it are people shorting it . Emily pretty good. Some of those inflows are due to investors creating shares to lend them out to short. A lot of people still allocating long bond. Alix if you are long, why not buy it . You are not doing it for appreciation. Versus a hedge fund manager. Emily some investors need to get bond allocation despite the fact they see price action fall. The third year on pace for bonds to drop. Beginning of the year was supposed to be the year of the bond. People were going to get that income and they would play the diversification role. A lot of managers said we are adding bonds now. Theyve been crushed again. Guy great stuff. One of those stories you see in slow motion. Dianne feinstein, longestserving female u. S. Senator has sadly died at 90. Kailey leinz is on capitol hill. This is one of those moments when you think about the history of women on capitol hill and how it started. She was there. She was the second female in the senate. Incredible. Kailey she was elected 1992, the year of the woman. Women like her arrived. She served more than 30 years. Flags at half mast on the capital behind me, same in the surrounding buildings. Everyone reflects on the legacy. She was powerful. The chair of the intelligence committee, also on the judiciary committee. She was upfront on National Security and gun control. She offered the assault weapons ban of 1994. Her passing these questions. This is now a seat vacant. She was supposed to serve until january 25 and it will now leave Governor Newsom to appoint someone in the interim. There is a primary battle for her seat between three democratic members of congress. The governor said he would appoint a black woman to the seat. For now, everyone reflecting on the senators legacy. Alix President Biden will be speaking. What do we expect . Kailey likely, the president will honor that legacy. White house sent out a statement earlier talking about what the senator accomplished, a trailblazer for women, in the senate and congress. This is one of the longestserving senators in u. S. History. The last vote she cast was yesterday morning to advance a bill to keep the u. S. Government open. Guy thank you. Kailey leinz with the sad news from capitol hill. We will check the events. We lurch toward what appears to be the inevitable shutdown. When does that become real . Monday morning . More on what is happening with wall street. Downsizing plans front and center, more next. This is bloomberg. In many areas you may need a recession to break out labor demand. This will impact the u. S. You still have a vibrant economy, the u. S. , the curve of the infrastructure act, the chips act, huge implications. That will be creating jobs. It may create more work for the fed. 52025, the u. S. Economy may be entering a recession. I dont see it near term. Alix wall street beat, citi downsizing. What do we know . Guest two weeks ago, jane fraser laid out what is supposed to be the biggest restructuring in the last two decades. You have her trying to convince investors in this will be putting the company on a path toward better returns. They have lagged behind their rivals. They have until the end of november to come up with firm plans. Guy she said the other day you are on or off the train. A bunch of people have been pushed off. Are we seeing more people feeling that same fate . Headcount . Jennifer what this movie is about is getting rid of the layers of management citigroup has long had. Shes trying to reduce bureaucracy. Move folks out of the way that were coming up time. Gumming up time. Shes removed 35 management committees. Its more about removing key people that have sucked up executive time and mind share. That is what they are about. We will see. Shes been hesitant to share numbers. They promised those numbers will come in the Fourth Quarter. Alix the sec whatsapp probe and settlement with brokerages. The rules keep changing. Jennifer today we had another 80 million. 1 million in fines. You will see regulators crackdown. This is ensuring folks following the rules, making sure they are using devices that can be monitored. Alix the rules keep changing. Its confusing. All of a sudden, the golf course is restricted. Jennifer these banks are going to their employees. You are right. We had a pandemic. That changed the game on what is expected and social norms. That is what they are coming up against alix exactly. Guy great stuff. Thank you. Golf, its not going well for the americans. This afternoon more even stevens. The europeans taking a surprising lead. Alix sports. Guy sports yeah. We can talk about the weather. I am happy to talk about either. [laughter] ive got to go to markets briefly. Stoxx 600 up. Terrible week, terrible month, terrible quarter. Stocks have held up well. A bit of a bond pickup. Yesterday bonds battered at the longer end. Today, some of that coming back. Some evidence we are seeing eurozone inflation falling. That trend is starting to kick in. Today doesnt speak to the narrative weve been watching the last few weeks, as we enter the Fourth Quarter. You can talk about the weather again now. Alix the uaw will expand the strike for ford and gm. So lantus will be spared. Ford has a briefing today at 1 p. M. For updates. The top of the hour, new york mayor and Governor Holding a News Conference on the state of the weather here. A state of emergency declared. A lot of subway lines are shut or barely working. Amtrak, laguardia suspending service out of terminal a until further notice. Its a real mess. The global cio of Deutsche Bank coming up. This is bloomberg. 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. Guy friday, 29, september. Today we get a bounce as we come to the end of the quarter. On the week, we are still down. Announcer the countdown in europe. This is the european close. Guy