Transcripts For BLOOMBERG Bloomberg 20240703

Good morning for our audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz, im jonathan ferro. Just about positive on the s p 500. Tom not your father strike. When i saw it, they nailed it about the 10 00 p. M. Stock. This is an original strike going back over to uaw history, back to 1958. Into real challenges before world war ii. It is an original strike, a selective strike, that is what is new. Jonathan gm said they offered unprecedented package. From ford, the union made little movement. Rambo, we have not heard from this white house, have we . We are waiting for a statement from the president. Lisa hit the he did speak with the leaders and auto manufacturers. What did he tell them at a time where his policy is contradictory . In one hand hes pushing for electric pickles and a lot of the vehicles are pushing back on yet they are helping some of the auto manufacturing with those. On the other hand, it is it is the most prounion in history. Tom i learned a lot from labor experts. We have a scheduled guest to come up with us with his experience as a child in michigan. He used to go on strike against all of chrysler. All of studebaker. We had studebaker. The answer is this is different. You get a map out, there are three states involved, three models and i will talk about that with greg. It is unusual for you, me, lisa, and the president. Jonathan so thomas, you indicated is three plants, several workers. Lets talk about what is affected, ford f1 50 chevy silverado, run pickups. Tom they can do this but they have destroyed spread out the strike payments. I was going to use this now, the bronco, colorado, wrangler strike. Am i up to speed . Matt miller is our expert on this colorado pickup truck. I have no clue. Jonathan the bronco is cool. Tom big time cool. We saw it six weeks ago and they cant make him fast enough. Jonathan now theyre not making him at all. If you are tuning in, led to price action. Futures on the s p 500 positive by. 1 . In the bond market, the data in america is pretty decent, yields higher by three basis points, 4. 32 on a 10 year. Epicenter everything we discussed yesterday, retail sales, pbi, ecb, the downgrade on the airlines, 19 crude in america. Wti positive hereby. 3 . Tom 94 60 three cent intraday brent crude, they have beaten them over the head about extrapolating out to 100 per barrel. It is moving fast and your debt on, it colors every conversation including gm and the red sox. Jonathan the ecb conversation too. The euro like this, 1. 06 on eurodollar, currently 1. 0664. And potentially heading toward a ninth week of weakness. Weakness against the u. S. Dollar. Lisa the longest potential streak of weakness since the joint currency was created. Raising the speculation of whether these Higher Oil Prices are good thing or bad thing in terms of disinflationary and stagflationary. 830 a. M. , september empire manufactured data followed by 9 00 a. M. Industrial production. It is getting really messy but if we start to see a plateauing, does it mean anything . Especially after you see input price increase and on the heels of a strike. It is a messy moment, 10 00 a. M. Adding to the moment. A Consumer Sentiment survey which both of you love and hinge on and determine the sentiment going forward. How much will this reflect what we are seeing with respect to higher oil . Tom the rate of change of oil prices, i was doing the math and the blur, i can remember the numbers from july or june. Jonathan its always amazing how spot crude prices or where gases right now can shape perceptions of where inflation will be. No doubt we might get a sense of that later. Lisa and how much people are willing to spend. At 10 00, we hear from the france economy minister with bloombergs maria tadeo. This comes as eu financial ministers meet in spain. Christine lagarde will be there, the eu commissioner, the span economy minister, this will be awkward because they disagree. Heard from the german finance minister, this is a good thing. Tom what will come from this meeting . Lisa they will talk about what the regions need and countries need to foster growth at a time of stack legionary headwinds and a controversial rate hike yesterday among some of those officials. We already heard the pushback. Jonathan calvino already complained. Tom she was with us, i loved when she was here. They are really living between Climate Change and inflation of the agricultural complex known as spain. Spain is getting hammered. Jonathan big time. Many parts of europe, germany for that matter. Lets get back to our big story. Strikes, craig joins us from london. Crag, we have them all three simultaneously at the same time. I will point to this breakdown . How big is the difference between gm still at this, ford, and uaw . Craig i think the writing seems to have been on the wall. We have, for weeks, none the union and the three companies are far apart. In terms of negotiations, i thing on both sides you have complaining and sort of allegations that neither side is budging or going anywhere close to the other direction. I would not necessarily cast this as a sort of breakdown, a sudden realization that we are not going to be able to do this because we have not come anywhere close to these companies and this union being able to come to agreements on new contracts. Tom what is the imagery here or message from bracco, colorado, wrangler. Those are all cool cars were 23yearolds. Is that the message . Craig yeah, i think it is both. These are cool cars, profitable cars, trucks and suvs that these companies count on for serious revenue and profit. That being said, that you would the uaw has arrows in its quiver to sort of use imagery here, they have the f150 pickups, silverados, the rams as mentioned earlier. And just generally they have quite a few plans to add to these three facilities that they are walking out from. It is interesting to see the companies not know what is next. The union is talking about keeping these companies on their toes and i think the union is being strategic about striking everyone of these companies but also doing it in a selective fashion, meaning they could draw this out and not to pleat their strike fund too quickly. Jonathan an index the government tom an index the government uses. Craig trudell, windows the union run out of strike funds . Craig that will depend on how much additional pressure they want to exert. Tom give me a day, christmas . [laughter] craig what we saw in gm is months long a few years back so i do think this is absolutely the case that the union could drag us out for weeks, potentially months. Whether we see the union be able to reach an agreement with one of the companies and go back to pattern bargaining like we have been used to it in the past, unfortunately the unfortunate answer is we have no idea what the Union Strategy is and that is very much their intent at this point. Lisa do you get a sense of what the line in the sand is at this point of what will get it done . Craig i honestly dont have any clue of what could possibly get us to a point where either side is talking about we feel like we are closer, and the problem is there is so much going into these negotiations. We dont just have a simple issue of one side wanting a certain amount per hour and another side wanting a higher or lower wage than that. We are talking about costs of living adjustment, talking about representation of battery factory workers or whether or not those stay nonunion. We are talking about pensions. So there is so much going into these negotiations. They are so complex and multifaceted that it is difficult to game out what is it that will sort of get the union comfortable with what these companies are willing to offer. Jonathan stay close, we got a lot to talk about. Wheres the most prounion president in the history of this country . Tom hes gotta get up and get his wheaties this morning but can you imagine conversations of how to explain to this that this is not the strike Young Joe Biden new or young tom keene new. Jonathan he has to come outside, doesnt he . He cant sit on the fence. Tom that is an important question. Very importantly, Annmarie Hordern and joe mathieu have the former Vice President of indiana tonight. You wonder how does mike pence down the fence . Does he talk to the uaw in indianapolis here . They are not on strike abba maybe they will be. Jonathan sure. Tom do these guys stay on the fence given the strike . Jonathan i think everyone is after the vote. The global macro director joins us now. Only at your thoughts on the strike and a question we have asked continuously the last couple weeks whether you view this as a hot labor market, whether this is something we will see more of in years to come. Good morning. That is the big question. As the labor versus capital pendulum swung for real, and i think there are good reasons to think maybe it has because the last couple decades favored capital holders, high input lowinflation, low Interest Rates, arbitrage around the world. Perhaps that trend is ending and we see what we see speaks to the issue of whether inflation has become a structural phenomenon or whether it was a passing thing that happened during covid. If we are going to head to an inflation era of lets say 4 instead of 2 , and all of the assumptions we make in the markets investing as you know is making realtime decisions with imperfect information, all of those assumptions need to be questioned, including when the fed will pivot, if it will pivot at all, whether it is done tightening, whether the market is correct and pricing in 2. 2 5 inflation as far as the eye can see, what that does to the churn rhenium and if the churn premium, which is negative flips to positive, we could be a five handle in the 10year. There are all kinds of snowball effects on whether we are in a new inflation era. Tom the heart of the matter to me is a 63,000 gm colorado buys in pickup, it is not what you and i lived the rich kid its had a 9,000 57 chevy. This is about the partition in america of the haves and havenots. They are building cars for what . 15 of america . Jurrien yeah, it speaks to perhaps the end of this very long period of what we call the great moderation and obviously the wealthy quality or inequality is part of that same mechanism and a lot of smart people have written a lot of good reports about it but if that trend of great moderation is reversing, that really changes a lot of the assumptions we make as investors, so including the valuation level in the s p 500. Maybe you are heading into not a bear market but a period of valuation headwinds. Jonathan true. You will stick with us, fantastic to have you with us. Jurrien timmer of the tell it he of fidelity investments. Is this another story that screams higher for longer . Tom higher for longer it will disrupt everything and comes back on growth in europe. All the babble we do about rates and that comes back to Economic Growth. Jonathan every time. Tom there was a headline yesterday that lagarde wanted to ignore and same thing here. What does the strike due to our u. S. Gdp . Jonathan sarah hahn in the next , craig and jerry and Jurrien Timmer is sticking with us. Stuck at burning man for two weeks. Equity futures on the s p, positive here. Tom should i go to burning man . Jonathan no. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Into it is still a tight labor market. You are not creating jobs at the pace you are. But there is no sign of flip that switch that switch being flipped and workers stop being laid off. I think powell power is in the hand of the worker not the manager. Im not worried about an organic slowdown in the u. S. Economy. Theres no sign of demand falling off a cliff. Jonathan power in the hands of the worker. Fast testing to catch up with him. We have strikes on the big three, live fantastic to catch up with him. We have strikes on the big three. Fortis down by 1. 7 , gm down by 1. 5 , still lent to says positive. Tom its not american, it is chrysler. Jonathan takei, 12,700 workers across three plans. For now it is limited. This is about how long it goes on for and whether it spreads. Tom i want to learn about this. Limited to win . Friday . Next week . Jonathan we dont know. Tom we dont know, we are making it up as we go. Some feel sensitive about this. I believe in community or self expression. Jonathan where are you taking this . Tom the mail is coming in. Someone name annemarie in washington emails and said what would you where at burning man . I wear this everywhere. Jonathan you would wear a bow tie . Tom i took three suitcases to asia and never again. This is the uniform. Jonathan just a bowtie or other close . [laughter] lisa what you china to say . Jonathan im just trying to figure it out. Tom what is the appropriate mud boot . Lisa you think i have been to burning man . I dont know. You wouldnt need a mud boot normally. Jonathan i can now see you at burning man. Lisa i think that would be burning man. I think that would be cool. [laughter] tom bring jurrien jonathan in here. Do you think tom would fit at burning man . Jurrien if he knows how to cook, he would fit into our company day. Jonathan do you know how to cook . Tom no. Boil water. [laughter] jonathan sit tight. We will go through by briefly. On s p 500, shaping up on what follows, features positive by. 1 . I want to look at the euro, positive by 0. 2 on 6. 66. For the euro right now, what a tough position. The ecb did not want to come into a pause but it sounded like a pause. The complains they are getting so far this morning, yuri talked about the pushback from spain moments ago on bloombergtv. This is from matteo salvini, the deputy Prime Minister had this to say. The ecb, which does not care about the economic difficulties of families and businesses, is increasing the cost of money. Lagarde is living en masse. A certain part of italy, this is the message coming out. Tom the certain divide of italy, like the 50 states of america, what the lesson we have learned, it is not the 50 states of america. The europeans each have their story, the key single word i saw yesterday going back to it is transmission. These dynamics transmit through the American Economic experiment, way different than three europe. Jonathan they transmit through the Banking System . Tom yeah. Jonathan much more profound and pronounced way. Jurrien timmer is with us, macro director of fidelity investments. Can we get a flavor from the ecb or is the ecb on its own planet perhaps as others pointed out come on mars . Jurrien i think the fed will do what we all expect it to, pause and basically indicate they are data dependent, and the question is when will it pivot if ever. The market has been consistently incorrect in expecting imminent pivot. History shows when the fed stops tightening, it usually starts easing quickly after that. So maybe the forward curve is just a math project based on history but the big question is the stock market has been playing the soft landing scenario. That certainly is panning out in terms of the economy, earnings looks like it has bottomed in the second quarter, but part of that scenario was an imminent pivot back to a three handle and i think the news we are seeing about the strikes, inflation in general, core pce, remaining sticky above 4 and what we saw in the ecb is a higher for longer narrative is going to persist even if the fed is indeed done tightening rates. That is something that the market really is not priced for. Jonathan lets talk about the price of energy, 90 crude, does that disrupt the soft landing hopes and dreams . Jurrien its good. Obviously American Consumers are spending less on energy than they used to, a few decades ago. On certainly core inflation measures, it will have a limited impact but the base effects of the inflation data from the last for years, that ran out months ago, so we have likely seen the most of the improvement, and i think the fact that core pce will remain at a four handle, even though the tips market is pretty steadfast on predicting 2. 25 as far as the eye can see, i think is deftly a disconnect between the market and reality and certainly one of the assumptions i think we will need to look at because it will reverberate to many other aspects. Rstar at inflation and policy at three point five. Maybe neutral is five instead of 3. 5 in which case the fed is not even that restrictive yet. Theres a lot of theres a Chain Reaction there once you start questioning the assumptions we have in the market today. Lisa so you are not buying this idea we use the end of rate hikes in the ecb and fed . Likely to be more . Jurrien we may be at the end of rate hikes but the question is how restrictive is the fed. If you look at the tips market and the fed is 5. 25 to 5. 5, inflation is very restrictive and if you look at rstar, and. 2 5 , you add 2. 5 percent inflation, the fed is restrictive. That these were assumptions and that is one of the challenges we have is that we are all making Investment Decisions based on assumptions about whether a shirt and regime will persist or it will reverse and it does all come down to inflation. When we look around us, to me, it looks like it will be harder to get from fortitude than nine to four. Jonathan your final thoughts on what we should do as investors, parking cash, hide, take my 5 . What should i do . Jurrien i think this is becoming a more tactical market which i hate to say it because i tend to not believe in tactical trading, i am more of a longterm person. I think some variation of the 60 40, whether it is moving cash or tips remains a good idea. The bond market for instance, 4. 3 . If we go to 3 , that is a 10 return, going from 4 to 5 , that is a 1 negative return so the risk reward in the bond market, even if bond yields have not finished rising, remains compelling in the 60 40 portfolio. Im still there comic still constructive, but when i look at all of the factors we are discussing and i look at where we are going to be the secular bull market, my guess is maybe we are in the twilight phase of the secular bull and we will start seeing valuation headwinds instead of tailwinds per that does not mean the market goes down, it just means price action has to be completely carried by earnings rather than pe expansion. Jonathan always thoughtful, thank you. Jurrien timmer of fidelity investments. Multiple expansion through the year so far. These yields are not going anywhere, basically what we see the last month. Still in and around 5 . The tenure at 4. 32. A lot of people lining up to say this move is unsustainable and here we are, another month staring down the barrel of the same numbers on a two year tenure 10 year and 30 year. Tom singular statistics that agree with that. Swiss franc, euro swiss, does not indicate fear out there. I got a single bullet, 93 94, brent crude, that is movement. I dont know how that changes the debate other than in Slower Growth environment that helps. Jonathan it can change but the 30 year is back in the 40s. Jonathan the change has been the u. S. Economy has been stood lisa the changes the u. S. Economy has withstood some of these higher prices and lets see if i can keep chugging on. Jonathan decent with what is happened to gas prices. No sharing of cap Capital Economics. From new york, this is bloomberg. A beach house, a treehouse, honestly i dont care find the perfect Vacation Rental for you booking. Com, booking. Yeah. aidyl hi, im aidyl, and i lost 90 pounds on golo. Booking. I struggled with weight loss and weight gain my entire life. With all the yoyo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. In one year, ive lost five sizes, and im on my way to lose another three. With golo, i can do it. announcer change your life at golo. Com. Thats golo. Com. Jonathan elon musk and tesla must be feeling good this morning. Competition from them, you have the big three trying to make this big tv transition, union work is going on strike. Tom 94 per barrel. Jonathan they are in a good spot. Equity futures positive by 0. 1 . A little lift on the nasdaq, little move lower, down by 0. 1 percent on the nasdaq. Headed toward weaker gains on the s p 500 and the nasdaq as well. We will catch that, nice day off the back of the data in america, the russell up again by 0. 1 . Tom very cute of you to bring that up because it was a massive short cover in small caps. This goes to my questions for the week of what is the bet on the market . Too many people telling me the bet is up, the bet is complacency but i dont buy it. I think there are a lot of people out there that in the gloom and yesterday they went there was a lot of gloom there, dow up 300 points. Jonathan the reality is resilience. You see the bond market too, in and around 5 on the twoyear, twoyear at another three basis points, the 5. 04 on a 10 year for 32 up three basis points and in the four 40s on a 30 year yield of three basis points. 44 143. The good stuff happening in america. The focal stuff happening in europe which means one thing, the euro is weaker, dollar is stronger, eurodollar heading towards a ninth consecutive week of Dollar Strength in and euro weakness. 1. 0663. The toxic mix, it is 94 brent, a weaker euro, that is a problem for lagarde talking up the sluggish economy. Lisa which is the reason she is getting pushback and now she deals with political blowback from other ministers in the region and you understand how europe is not the u. S. When it comes to lots of different states. It is a different picture in europe and this, to me, is the question. Is this about the u. S. Withstanding Higher Oil Prices in stronger position than what we see in europe . Jonathan without a doubt. Can you mentioned cap can you imagine how much worse it would be if we didnt have record output for crude in america . 18 Million Barrels per day in america. Tom the whole political thing, maybe annemarie and joe will talk to Vice President pence tonight about the Strategic Petroleum reserve and that but you are right, there has been a successful Energy Policy in america, shock based on technology. Jonathan despite this government or because of this government . Tom that is a question for bramwell, not me. Lisa we will catch up with annemarie this morning. The United Auto Workers strike at each of detroits big three carmakers after the deadline for a new labor deal passed overnight. The strike heading points in michigan, missouri, higher with the uaw looking to cut production of profitable vehicles while minimizing the impact on their strike fund. We have talked a lot about the logistics involved here, the strategy involved here on behalf of uaw to keep this a surprise and ultimately to make sure they have something in their back pocket. Lisa you have to wonder whether this prolongs things or whether this is pushing out the deadline a bit. If you weaken the ramifications of the strike, the outset, does that mean you are saying the deadline is maybe the next time we ratchet it up or are you saying we are hunkering down for 825 million strike fund to make sure lasts as long as possible with each of the members deceiving 500 a week . Jonathan f150 you have to imagine is the last piece to move. Lisa to me, i was looking at the list of things and it is cool and what is not. Cars are going after the profitable buds are not the f150 and are not like the silverado and are not like the ram pickup and you have to wonder tom but does that say what detroit and dearborn have become, which is purveyors of 80,000 pickup trucks . Jonathan yes. Tom is that really what it says . Jonathan and leaning harder into the direction. Tom exactly. My first ceo interviewed at bloomberg was economics at Duke University and it was simple, he said we had to give it a building small cars. It is that simple. That is where joe biden is in the strike. Jonathan more on this and maybe we hear from joe biden out of the white house later this morning. Lets talk about the ecb. Governing Council Member sing further rate increases as unlikely after the Central Bank Raised Interest rates for a 10th straight meeting yesterday. Writing to the best of our knowledge, no further Interest Rate hikes are expected in the next coming months. Interest rates have already reach high enough to ask be expected to bring inflation back to closer to percent in the euro area over the next two years. This comes after the more hawkish policy makers at the ecb could push for another rate increase in december after if wages keep rising and inflation proves a stickier than expected. Its obvious there is a split at the ecb. President lagarde talked about it in the meeting yesterday in the News Conference. One thing we did not talk about, everything going on and the mix of all that there was a rate cut in china. Good news for chinas economy overnight with Industrial Production and retail sales growth jumping almost 5 last month from a year prior on the back of recent government measures to spore more household spending. Weakness in the property market, Property Investments slipped a. 8 from january to august. We have retail sales downgraded to airline outlooks, the ecb taking pick take your pick. What we did not talk about was china and the fact it is easing. Lisa which to me is a good thing. Some of this was expected. The fact chinese on prices dropped more than before they started stimulus is not exactly auspicious. Some of the investment was down. My question is for europe, we are not seeing the necessary we see a boost in the euro, may be on the heels of data but does this does this used her oil prices more than outlook of europe . Tom you have been great on this, talking about the demand microeconomics of oil. Next week, Kristin Christian maylek joining us. Jonathan out of london next week. President lagarde talked about this in the News Conference, stuck in a worst of places, talking about china, about Energy Prices, theyve gotta talk about a weaker growth profile, the prospect of higher inflation sticking around for longer. For all of the wrong reasons, they had to hike Interest Rates yesterday. Tom Michael Spence, theres a book out right now, this is Michael Spence territory talking about the conversions of everything that is going on and what it means for growth that we live and try to live each day. For a brief on this, neil sharon joins us, chief economist at Capital Economics. Let me get the ask oprah spreadsheet out of the way. Did you adjust your spreadsheet off of lagarde yesterday . Neil we did not. We have been saying since march this year we thought the ecb rates ecb rates would fall to 4 . Looks like we got to 4 and looks like this is the peak, the big question is does it come back down from there . I dont think that is a story to ride the back of next year. Tom Michael Spence and i had the privilege once of talking, my great privilege to talk to professor spence, he was a student of john hicks, which that arches back over 80 years of economics, even 100 years early economics out to Michael Spence now. The fact is everybody likes to talk finance, Interest Rates, and the rest but goes back to the highest curve and real economy. What did you learn yesterday about a fractious ecb and how they will address a growth slowdown . Neil you are right, you alluded to it earlier in your discussion that the ecb stuck between a rock and a hard place. It has inflation coming down, slowly slower than what it would like. 90 plus on oil prices and european net energy importer, european Natural Gas Prices also up. On the other hand, the economy is struggling, not just the eurozone economy as a whole, but the German Economy is, manufacturing in particular. Weighing these two things is difficult for the european policy are now. I think the judgment is that they probably have done enough when you consider Monetary Policy, that is the other unknown here, but really they are in the dark. Lisa which raises a question on whether the end of rate hikes is a positive or negative. We almost ice i relief when people got more comfortable with the idea to be Central Banks are done and we are entering in the period of the great pause. Is that a bullish thing i now given everything you said, particularly with germany . Neil on the face of it it could be a bullish pause, and the flipside of that, the reason the Central Banks are pausing, most Central Banks i think are done hiking now. We have yet to see the full effects of the previous tightening come through to the economy and i think we see more evidence of that over the next three to six months and the economy weakens, that means corporate earnings will weekend, equity markets. It will be a bullish story for 2024, the back end of 2020 four once inflation is more under control and Central Banks are starting to unwind that tightening and cutting rates. Second half of next year, pretty good for the equity market but we have a challenging few months to get there before we get there. Lisa a snarky commentator that watches the so show semithis message. The u. S. Innovates, china imitates, and europe regulates. There has been this concerned the regulation and late to the game questioning and job owning of europe will leave it behind and off technological advances people will say will get us out of whatever model we are in. What is your view on that . If youre going to be permanently left behind as a result of hemming and hawing and not really having conviction behind some of the latest technology . Neil good question. I think the first one to make is point to make is we have done a lot of work in economics, a major report was released on this. We think ai should be a generalpurpose technology. That is because gpts are transformative in terms of productivity and Economic Growth. The u. S. Is undoubtedly paving the way and will continue to lead the way not just in innovation but importantly defusing that through the economies. It is not just innovating technology, building it, we have to get it into the economy. The u. S. On every measure is leading the way on that. I do not think it is so simple as saying the u. S. Innovates, china is somewhere in the middle and europe is behind. China is doing a lot of the innovation but the diffusion of this technology in particular the ability of its economy to adapt to some of the challenges is much more limited than the u. S. So it is an area where the u. S. Is going to need europe and also going to lead china. Tom the day the Capital Economics First Published it was about thought pieces. Transient notes you are like ive gotta read this. Where are we a year from now . Give me the Capital Economics note you will write year end about where we will be three and four quarters out. Do you assume diminished nominal gdp globally . Neil i think we are going to get i think what is happening is the next six months will be pretty challenging for the growth economy. China is not a cyclical downturn or deflationary bus but it is weaker structural growth and that is something the Global Economy will get use to. The u. S. Will flirt with recession the next six months or so, europe if it is not not already in refresh and will fall into a recession so we will go through the cyclical sector. Then what does the next regime look like . How rigorous is the recovery . I suspect once we get these new technologies through ai, i suspect Something Like mediumterm bearishness, particularly in the u. S. But perhaps in europe is overdone. China has structural problems but i could see a future where Economic Growth in the mediumterm is a bit better than consensus expects. Jonathan a better future, we welcome that. Neil shearing with a better tone into the weekend. Triple digit crude is already here. Bloomberg opinion is joining us next. Heres the lead paragraph in the column, and the world of crude, there is no such thing as the price, there are dozens of different measures, one for each variety of crude and the Financial Market focuses on two, brent and west texas intermedia. They suggest a price around 90 and what we see on the screens right now but from the perspective of saudi arabia, oil is already touching 100 per barrel. That conversation up next. Tom i made a chart years ago and was picked up by the ftn used by the imf and it is off the series, talking saudi light. I call it the Daniel Yergin chart because it goes back to his magisterial prize, it is oil. Back to the time of nixon and before nixon. Not 1938 when the americans showed up to discover oil, for the saudis, for the saudi family, but it is the important series. This is how they got the pro and looking at the proseries. Jonathan it is deep stuff and the politics have been fascinating ultimately the saudi arabia has allowed to charge a premium for its crude because the europeans have to back away from the crude supply to buy russia and here we are, triple digit crude. Lisa and india is importing the cheap oil from russia. Then refining it. This is sort of the moment we are in where europe keeps Jonathan Jonathan taking the hits. Big time. It is getting more and more painful. Wti, 90. Javier blas coming up next. From new york city, 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. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan Wealth Management. The saudis have been cautious about episodes and certainly i think they will become cautious again if prices through 100 per barrel because as we saw last year, natural gas, if prices get out of whack and you can lose demand, you have to be careful what you wish for if prices move too fast you get consumption. Jonathan they are moving up fast, the head of Global Commodities there of derivative or research at bank of america joining us earlier. 94 w 94 brent, wti 90. A new high for 2023 on wti, 90 and six he sends. 90. 60. Crude getting closer and closer to triple digits. According to javier blas, we are there. Tom a little while ago, bloomberg hydrocarbons and the leadership has been javier blas writing for Bloomberg Opinion and the awardwinning book, the world for sale. He joins us now. I want to get away from Market Economics and talk about the culture and fabric that you wrote about in the world for sale. If you interpolate out 100 saudi light, what does it do to the royal family, what does this do to the fabric and culture of saudi arabia. Arabia . Javier what it does for the oil families, they become immediately popular. You sought on the g20 a few days ago in india or President Biden was shaking hands with mohammad bin salman, the crown prince. Using the own words of the u. S. President , he wanted to make mohammad bin salman on pariah in economics and now he is taking hands, 100 dollars transforms the saudi royal family into a must need, Everyone Needs to do because 100 per oil will have an application when Central Banks decide whether they have enough for inflation. Tom President Biden is going to speak of an auto strike today. He and i remember when there were a lot of vw rabbit diesels sold in america and detroit was hammered. The 1986 app and opec was broken, the price plunged, is there any ability to break opec, opecplus, to break the saudis in 2024 . Javier i dont think so. Opec and opecplus, this joint agreement between the saudis a strong and the saudis have absolute control of the market right now. On the app side and on the downside, they have demonstrated they have the ability to push Prices Higher than many have anticipated and they can do the other way down. A few years ago, they are willing and capable of sometimes crashing the market as needed to force the collapse of u. S. Domestic Oil Production so i think they are driving this. Lisa how much does the price of crude operate on a lag . Maybe i have been tied up too much in Monetary Policy but this idea that if saudi arabia is cutting production at a time where we are heading into a bigger consumption period, whether it is the holidays or heating, you will see a rapid spike in prices as inventories get depleted much faster. How much is that a concern . Javier there is a concern and certainly the saudis have to cut production to bring the price where it is today but lets not forget that production from unexpected sources have increased significantly this year. We were not expecting a increase in production from iran. Iran is the secondlargest source of Incremental Oil supply into the market. Only behind the usa industry. The saudis have cut production to accommodate in some ways iran and making sure the price remains as high. Looking at the demand side, it is record high demand above covid levels, demand in china looks robust, it is not as it was in previous years but this is still doing well. Gasoline in particular. Elsewhere, the demand is perhaps not expected, nothing to write home but is healthy, nothing to panic. Lisa at this point there are hopes during the g20 you would hear about a meeting between President Biden and mohammad bin salman to give a sense of his theyre going to be pressure on riyadh to maybe ease off of the cuts, increase production . There was a handshake, not much else. Have we gleaned anything from what happened in the meeting . Javier nothing for that meeting and it is surprising how the white house silent the white house has been with these cuts. And the fact we are back to 100 levels of gasoline and decent prices diesel prices in particular, prices climbing rapidly in the white house has not set appear about what the saudis are up to. In the past, you will have press secretaries denouncing them and i think the main reason is all of the political move ring maneuvering into bloomberg he between the United States, saudi arabia, and israel for a diplomatic deal and to me that is why banking has been relatively silent on 100 oil. Jonathan how small is their Strategic Petroleum reserve in america now . Javier we used a lot last year, we have not gone back, the white house keep saying we will buy but it is not happening and, by the way, looking at the time like a various mock trade but has the best oil trade made, you sell at high levels in 2022, bite back in 2023 and lower levels, wti is more or less what it was a year ago when we were selling. That trade is often a potentially as i make a big profit, the white house is losing money. If it needs to buy back. So far theres no indication the department of energy or white house will reveal the petroleum reserve. All changes made are very small. Jonathan from your perspective, how vulnerable is this country to a price shock, a supply shock . Given production in america is close to alltime highs and the spr is so low . Javier it is more robust than 20 years ago because it has more domestic production. That is what we found out and we think at the time President Biden has been in the white house, u. S. Production has continued to climb to an alltime high but if we were to have to do something similar to 20, we have one final into that to be used. We use a lot and theres is not much left. Tom help me get ready for next week, we have chris convey of jp morgan and in his magisterial study a year ago of over 100 oil was based on emerging market demand. In your study of this and the resources you have, is there a resiliency in growth to emerging Barrels Per Day . Javier there is a steal. If we look oil demand in china and india as well as asia, they are consuming a lot more oil. They consume a fraction of what europe and the United States do on a per capita basis. Yes those countries will perhaps technology and not use as many gas or diesel cars as we have used in the west because they moved to electrified but you see whether population is going, where Economic Growth is going and that is asia, africa, latin america, and there will be more need for energy. A lot of the energy is going to remain. Jonathan this was great. Fantastic column on bloomberg today. Javier blas a Bloomberg Opinion on triple digit crude out of riyadh. Sarah hunt will join us in about six minutes time around this table in new york. She is constructive on energy stocks, looking forward to her thoughts on this. Later on, an interview you dont want to miss with amh and joe mathieu, the former Vice President mike pence, that is just around the corner. Tom they will frame the sow. This is a guy from south of indianapolis, a triangle of indianapolis, cincinnati, and louisville he is indiana throughout and also he is had trouble raising money. It is fascinating that this guy this visible and successful in the republican is going around. Jonathan the perfect opportunity to talk about uaw and the strike. This targeted strike at the moment. And the choir, the silence coming out of washington, d. C. This morning. They like to sleep. I understand they wake up [laughter] i know those things. Tom it starts at 8 30. Jonathan you would have expected Immediate Reaction for something so precedented as this. Lisa saying what . Jonathan . Thats the question lisa this is the difficulty, what to they say . They stand behind the auto manufacturers . Jonathan what were the most prounion president in the history of this country say if he were as prounion as that . Tom he would say this is a modern strike, a Surgical Strike, three factors, three automobiles, and as Craig Trudell says, it could morph into the strike they are coachable talking about. Lisa theres no good way he could respond to this. Theres no way he can avoid serious criticism because on one hand he has framed himself as the most prounion. On the other he has talked about build back better, talked about the whole new energy sphere. It does not work. There is nothing good he can bring together these two ideas. Lisa loselose jonathan loselose so just stay silent like tk. Tom thats what i do every day. Jonathan lets see with this president has to say. Sarah hunt joining us next on this energy market. Amh in the next hour as well live from washington, d. C. With Energy Prices at new highs for 2023. Oh, oh, oh. Ill be the judge of that. Oh, thats nice. Oh searchable, verified reviews. Thats better than the ham, and ive never said that. Booking. Com booking. Yeah so, youve got the power of xfinity at home. Now take it outside with xfinity mobile. Booking. Com 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. You really shouldnt walk out the front door without it. Switch today at xfinitymobile. Com. The context around your being growth changed. There is acrosstheboard weakness in the euro area to a lesser or greater extent. It does linger into next year. I think its harder to see higher inflation if growth is weakening in the euro area. The fed so far has done a good job. I think the ecb is not quite there yet. Announcer this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. Jonathan the worst that rock to detroit, we will strike all three in the big three had ones. From new york city, good morning for our audience worldwide, this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz. Slightly positive on s p 500 by 0. 1 percent. It is our top story, strikes in america. Tom its gotta be a top story but a different strike, bramhall mailed this, saying Pay Attention to 10 00 p. M. And she is right. I was watching twitter or whatever and afterthought came in late partying and i am up watching and the whole thing, there it was, a hyper Surgical Strike, a strike i have never seen, a strike joe biden has never seen. Jonathan 12,700 workers across three plants. Lisa there are three ways to interpret this. Number one, this is digging in heels for a prolonged strike where you can allow for 800 when he 5 billion strike fund to last. Number two, this is the beginning, though it is probably pushing out the deadline and you will negotiate or something in between. The difficult part for me is what is the redline . What are they looking for . We have seen quite a few concessions. Jonathan its not the f150, not the silverado, not ram pickups but that is in the back pocket if they want to ask late this further. Tom but are these cool cars . The bronco, jim colorado, this to lantus wrangler. I cannot believe im saying that. It doesnt work. And theres another issue which i mentioned in the last hour. Bring it up if you would on radio, my childhood. A 1968 1969 ford bronco. This was my you heaved. This is all we drove at home. Im serious. Joe bidens auto company made a 2100 bronco. The one only you could style an orb bramo, 71,000. It is like a 41,000 jonathan you can push it up. Tom these are expensive cars. Joe biden once this to be about america. Is it or is it about building fancy cars . Jonathan it is increasingly expensive to own one, that is per share at a time where inflation is a problem in this country. And maybe in our future a labor market that is softer. This labor market is still strong. What will the message be for this white house later on today . When you come out and say one of the most prounion president in history of this country, do you have any choice, any choice whatsoever, then just to back the uaw and go against the big three . Tom go against is the key phrase. What you think . Will he go against mary barras, go against dearborn that did not go bankrupt . . Is he going to go into the french . Lisa theres one playbook to come out and say i trust both sides to negotiate in good faith. Its important for workers to have rights, also important to have a viable auto manufacturing sector. Im keeping in close contact and lets let cooler heads prevail and that is what we will hear and he will be on the phone and say figured out, guys, please. Jonathan thats not the statement, the words coming from the most prounion president in the history of this country. I dont think you get to put out the statement and go to campaign trail and say those things. Tom not mentioning the emotion. Jonathan hes a politician, he can do whatever he wants. [laughter] tom is this about a 32 hour workweek . Which is completely unamerican. Jonathan i think it is about all of the above and the rights that were lost during the financial crisis. The feeling that over the last decade or so a lot of workers have been left behind. Tom yes. Jonathan this is a want in the Generation Opportunity to take a first step. A First Step Towards doing something about that. Theres a greater feeling this is not it, that once youre done with it it is over, this is the start of a process. Tom Craig Trudell was fabulous on it. I lived on the edge with delco but the union effort and automobiles of our childhood gave us the middle class. I dont know if coventry was that way in england but here they had america a prosperous middle class. Jonathan premarket is doing ok so far. Equity features amasa p positive by 0. 1 . Deals unchanged, higher by three basis points at 4. 32. Crude is sleeping 90 screaming 90. 51. Lisa its a light day of data. We get september and per Empire Manufacturing data. It has been busy but may be a read on how things are playing out there. 10 00 a. M. , a read on how much those Higher Oil Prices that you are mentioning effective sentiment. At 10 05 a. M. , do not miss this, maria tadeo interviewing the france economy minister after a discussion already with nadia covino of spain. There is dissent among the finance ministers of europe meeting alongside Christine Lagarde about whether it was a good or bad idea to hike yesterday. Jonathan 25 basis points, divided a split on the governing council and euro are potentially 4 9 straight week against the dollar. Tom did you get out of your arm shares at one dollar 66 . Jonathan i wish i had. A pop yesterday. We will touch on that in to any five minutes. Sarah hunt with us, from saxon woods. Wonderful to see you. Give us one good reason to buy gm, ford, still lantus, with this going on . Sarah i think thats a difficult question. You will see stocks are going lower in premarket, it will depend on how long this takes to work through. I think there are a lot of things on the table, job security as part of it for the union and i think the real question for those three is i do you continue to be competitive globally when you have got these issues at home and issues with Higher Oil Prices. Because the cards are more expensive not only to buy but to fuel too. I think there are problems in the auto sector and i think for those three in particular, this is not a great time for them to be facing this action. Tom the emotion here of a president today goes down to the manufacturing multiplier. Heres or my you to her it was simple, a manufacturing job was better than being a tv anchor because it was more productive for america. Is there a manufacturing multiplier still in this nation . Sarah i think there is definitely a manufacturing multiplier and i think the targets strikes show you how when you changed manufacturing to each point is a different thing and gets it to the ultimate end assembly that i can strike anywhere and have a big effect on the giant network in a small way. There is definitely a problem there. The question about manufacturing or trying to reshore manufacturing, this is the big labor question of whether i reshore manufacturing, what will happen to prices . Globally, we are setting ourselves up between energy situations and bringing production back home to have higher prices across the board. I think there is a longer big tail here to some discussions that are not just about individual microsituations. Lisa but i i solve it all, cree programs to the things we need. This is the hope to keep pricing down. Why would you not just hedge your bets and youre going into energy, stronger to tack, and forget the rest of it . Sarah we have been positive on energy and that has not been the best thing to be all year but i think it is finally starting to come around, almost too quickly because oil prices have risen so quickly it is almost an issue but that is part of the problem for the general populace is if i am going to do this with ai, if it is going to save me from productivity standpoint, how will i have job security . That is part of the tension now, especially with automakers. Lisa why do you say almost too quickly . Sarah because it does have demand destruction issues. When oil prices shoot up, you see demand destruction. Part of the reason oil prices have gone up is because saudis are taking oil off of the market. And at a time or be essentially depleted our spr. There is not a lot of backstop in terms of access productivity reduction of oil. Especially the u. S. At record highs for production. I think that movement higher is not the stocks have not, because they dont believe it. From an investment standpoint you are not getting the benefit of Higher Oil Prices but you are seeing them on a Consumer Problem as a Consumer Problem. Jonathan 35 move since june, quite a move. You see these multinationals, big Oil Integrated companies, leaning harder into fossil fuels. Theres a conversation about where bp is going in europe, what are the u. S. Players doing in energy . Sarah i think everyone of them is trying to find a way to be relevant in fossil fuels but also look towards a future where fossil fuels play a smaller part. The question is the timing on that. I said before i think the tail is longer than people want it to be in terms of what countries are trying to legislate and what people would like to see about the truth of the matter is you do need fossil fuels and you are going to need them for a longer period of time. The earlier discussion about emerging markets, they will not be able to transition to electric quickly. The infrastructure is not even there so if they grow bigger, their demand for oil will be going up. Tom airlines flat on their back. A postpandemic tend disaster in terms of shareholder return. I have exxon with 3 dividend, generous i guess, but the fiveyear Dividend Growth rate is on acceptable. Are they going to get are they going to become like a point throw cash back . Sarah i wouldnt want to open on exxon specifically. Several stocks have gotten dividend for shareholders and that is something they have been told by wall street and investors that they want. They dont want them to spend this money on production when oil prices are not as high as they were right now but they would like to see return of capital. I think there has been change in the way Capital Allocation has looked at is looked at. Jonathan doesnt matter who is in the white house when it comes to energy patch . We talk about present bite it in former President Donald Trump. Crude is most alltime highs and that is happening with this antifossil fuel tone coming out of the white house. Does it make a difference what they have to say . Sarah it makes a difference when it comes to permitting and production that you dont have yet. If you are looking at an area where we have been able to extract more oil out of fields already there with Technology Changes and that is where productivity comes in, it matters less. When it comes to looking at new areas to be able to explore or drill, then it starts to make a difference on the edges. Jonathan good to see you. Sarah hunt of alpine saxon woods construction on energy for a lot of the year and the market starting to come your way. Quicker way over the last couple months. If you are tuning in, plus the talk about in this market including this move in crude. We are in the 90s on wti, highs of 2023, 90 in about and about . 50 from brent crude, 94 per barrel, a by. 3 . In the equity market, positive by 0. 13 . In the next hour, 50 minutes from now, our next guest. Down in washington dc, amh, our chief washington correspondent on the latest in detroit and what we may or may not hear from this white house later on. Tom and what she will hear from Vice President pence tonight with joe mathieu, an important conversation not only in politics but the uaw of indiana and north detroit. Jonathan what do you want to hear from the former vp later on . Tom i would like to know how he will find the ability to support the other selected republican candidates because he cannot raise money. Bob dole was a distinguished world war ii veteran and he did run for president front bob dole never connected with the greater american populists and that is where pence is. Jonathan the field is big and the spread between the former president and rest is getting bigger, not smaller. Lisa if you look at who is gaining popularity, it is ramaswamy, who is even more trump which is amazing. Some of the controversy. Tom do. What does this guide doing . Lisa its jonathan its the smart move to going tiktok. Tom i think its an embarrassment. Were running for president. [laughter] lisa im here to have your back. The only idea to gain popularity is to out trump trump, that seems to be the concept here. Tom i have never been in it what i walked by the situation where we looked at the glass and marines ready to shoot you. Have you seen the guy in the situation room at the white house . Jonathan headline across the bloomberg, the president to deliver remarks on the uaw and automakers negotiations later on today. Looking for a time and hopefully i will find one for you. Coming up shortly, and marie down in washington, d. C. From new york, this is bloomberg. From day one we told these companies with all respect they dry things out and that is one thing we didnt want to do. We dont want to be here. We want a fair agreement, we won fair economic and social justice for members. That is what this is about. They had decades of record profits. When it is profitable, it is all there but when the workers ask for their fair share, it seems the world. Jonathan the president of the uaw joining the picket line in michigan, the latest from the white house moments ago, President Biden will deliver remarks on the Contract Negotiation between the United Auto Workers and Auto Companies. As Auto Companies in the premarket, gm, ford, still lent this, doing ok. Its a targeted strike so far across three plans. For a little more than 12,000 workers. Tom too important of a conversation in one of the most important treatments was jonathan ferros repetitive conversations with a guy missing in this administration. That is martin walsh, Union Representative boston massachusetts, former secretary of labor and boy is he missed this morning. Jonathan and does not have an official replacement. Theres a lot to hear from this administration and hope league to get answers from this position later on today. Tom henry joins us. Just a cut to the chase, what will the president say this morning . How is he briefed by his cabinet and administration . You expect from the president what we heard from him a month ago when there was one month left on this contract and he called for a Just Transition and that the Auto Companies make sure they are paying a good, living wage for Union Workers to be able to support a family. He is going to be walking this fine line of making sure he is still of course wanting to have this policy goal of electrifying the grid and support for ev manufacturing but at the same time wanting to make sure he is seen as a president fighting for labor inside of the government tom is this strike government. Tom has this strike grabbed the nation . I dont believe that he will go into a political ballet on ev and great transmission saying oklahoma and texas. In the old days, there had been no other story except the strike and potential violence of the strike. Is that not true this morning . You are right. What you see from sean fain, the stand up and strike is reminiscent of the sitdown strike of the 1930s. Which many would have said was the strike turned around the world which totally took on just the United States but the world by surprise on what was going on in manufacturing plants like gm. So what you see sean do is hark back to this time in the 1930s, trying to really revolutionize and revamp what the uaw is today. At the same time we see him trying to make sure he is protecting the strikers fund by targeting these plans. But this is going to be top of the agenda for the president. Not just for the fact that he continuously says he wants to be the most prolabor president in history but also for the fact that this could mean a recession in michigan. Michigan trump one, he was the first republican to win since the 1980s erie that it flipped to biden. This is a key state for the democrats november next year. Jonathan can you give us a sense of how deep the pockets of uaw are . This is targeted, 12,700 workers across three plans. Just to give you 90 of how far this could go, how big this might be. We spoke to seth harris last night who used to be an aid to President Biden when it comes to labor. He is the individual that helped him coin the term that we continuously repeat from the president that he wants to be the most prounion in history. He said he thinks this could last weeks not days. Potentially that is the kind of money the uaw has right now. That is why they are doing this targeted strike, they dont want to make sure they burn all their cash at once. They also want to make sure they could support their workers because they will be paying out of the uaw strike fund to support the workers. So what he thinks is this will last for weeks. That will be challenging for the president in washington, d. C. Because this might end up being coupled with a government shutdown. The u. S. Government runs out of funding september 30 and anna wong of Bloomberg Economics says if you put together how that Higher Oil Prices, strikes in michigan, and other states that have these plants but really michigan, alongside a shutdown, the u. S. Government, that could mean the difference of a recession or not. Lisa at the crosshairs of this debate and what i hope to hear from President Biden is something about the electric co. Policy he has because this is at the crux of some of the concerns by the union. Just to give you a sense, most of the ev factories are not unionized and typically electric vehicles and their parts require fewer workers which means fewer unionized members and fewer jobs. How much can he back away from what he has put out there in terms of the move away from traditional auto making . He cant back away from it, right . There is money flowing out the doors from washington from federal spending and grants and tax rebates if you move to the electric vehicle industry. And it is not just the fact that an ev requires less individuals, the plants are also, for the most part, opened up in the south in right to work states where it is illegal to unionize in the uaw wants to make sure they are part of that transition which is why at the end of august you saw from the Energy Department a press release about more money and federal spending that will go toward traditional auto plants that can retrofit for the ev future. This, to me, seemed like an all of branch on the Biden Administration to the uaw to make sure they know they are not left behind. As they say, this is the crux of the matter. There is traditional issues at play, pensions, worklife balance, higher wages, retirement, but there is also this tension of bidens two competing policy goals, greener economy on the top of labor unions. Lisa why has the Republican Party been so quiet on this . Why cant they come out and take a strong sense one way or another at a time where the rust belt and unionized members are becoming swing voters . There is two things, one, not everyone is staying silent. Former President Donald Trump has been asking the uaw for weeks for their endorsement. This is a group that endorsed biden. Sean fain said they will not endorse former President Trump next year but at the same time, at this moment, they held up endorsing anyone. They are irked by what they are seeing coming out of washington in terms of policy goals and sean fain said so much in less than. Polite words the former president has been trying to get their endorsement. When you talk to pollsters, even if you see the top brass of labor unions side with the democrats and leadership, you need to look at the rankandfile and where they are working. Look at the exit polls of 2016, how many individuals flipped from union households, from obama to trump, and did not vote for hillary clinton. These are key states. So you will probably start to hear more republicans come out and speak about this but they need to be careful as well because it is the rankandfile voters they want. Jonathan amh, you will be speaking to the former vp, mike pence come on balance of john matthew. What will the focus of that be . Theres a lot to speak to the former vp about but he has already weighed in on what is going on with uaw and he comes from indiana where there are a ton of manufacturing plants that are tied to the automotive industry. So he is going to have an on the ground sense of what this could mean and what he had said about uaw says if he was president of the United States he would be sitting people down. This is not just one more contract dispute between autoworkers and the big three of this country. He said is the failed policy Biden Administration. I think he will take a lighter tone than the former president what will be on trumps side in a sense that they think this is an ev glut and the autoworkers should be siding with republicans come november. Jonathan thank you. Looking forward to the conversation on balance of power with the former Vice President sitting down with annemarie. Comments from mary barra of gm later on this morning. These are the headlines, they think the strike can be resolved quickly, did not have to be here. They are evaluating production changes and we have talked to many members of the white house. The latest from gm this morning. Tom thats the beginning of the communication and i will see im sure we will see more from ford and still lantus chrysler as well. The president. Jonathan he will address the nation, autoworkers, and destroy later on today. From new york city, good morning. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Jonathan heading towards a week of games on the s p 500. We are up all the week so far from thursday. Equity futures this morning on the s p positive by 0. 1 . The nasdaq is down by 0. 1 . Bond market yields higher. Driven to some extent by what is happening in the commodity market. Up to basis points on the twoyear yield and up by 3 basis points on the 10year yield. Lisa a what happened to all the buyers . People said yields would come in softer. There is a question behind this. Is it really Inflation Expectations or is there something going on behind this when the real yield is climbing to the highest it has been sense tom if we go to friday and the weekend and pop over two, that is a huge deal. Jonathan the data is better in america. In europe, Christine Lagarde in News Conference yesterday was very sluggish. The euro is just about reclaiming 1. 0 seven, positive by 07, positive by 0. 1 . The euro is just a touch stronger. At the moment, we would be looking at 1. 06. On my screen, i still have 1. 0656. Tom when you round it up. That is the difference between the four digits. Jonathan just about positive on the session but down on the week intently for a ninth consecutive week. The move in crude is where the story is at. Wti and brent crude. Wti at 90. 65. Brent crude at mu highs at 94 a barrel at new highs at 94 a barrel. Lisa a this will feed into oil but not enough for growth. This is why europe is jonathan a very toxic brew. The United Auto Workers of starting an unprecedented strike. The president saying the strategy will Keep Companies guessing and will give our National Negotiators ask them leverage and flexibility in bargaining and, if we need to go all out, we will. Everything is on the table. Even said to address the strike later today. They are not sure what they will say about this yet. Tom i am wondering if he is capable of stripping away the mythology he grew up with because the strike i saw last night is not the mythology of the American Labor economy. It is a new phenomenon. Jonathan the think it is a coincidence that tesla is having its best week of the summer going back to june . Lisa a i would guess not and also that tesla has been rocking on all sides of matter what happened. This is the crux of the issue. The electric vehicle makers and the ones that are not unionized will cash in on this. That is the role risk for gm, ford and still interest and stellantis. Tom i see a lot of teslas on the street. Jonathan our next story is from arm, climbing 25 in its debut. The company is selling 95. 5 million shares. Do you think it is accurate to say they raised money off the back of this ipo . [laughter] lisa a yes. Basically it was a fun race but also a marketing tool. To put numbers on it, they could have priced at 52 a share. They priced it at 51. The sun came out and said they dont want to price it the extra dollar because they wanted a big boom. They left 100 billion on the table because of that. Tom this is Good Research how these ipos work. There has been a lots of Good Research on this. They will be the first earnings call. That is when it starts. Jonathan to lisas point, they want us to talk about arm and not wework. Disney is announcing it will fall tens of millions of subscribers short at its last publicly stated 2024 target for the disney plus franchise. This according to people familiar with the matter. Bob iger said they will no longer provide scriber forecasts. Subscriber forecasts. It is not going well. Tom creative bob iger is the one to help out financial disney. I am fascinated. What was it . Rumor or speculation of shipping out abc . Jonathan reporting encouraged by the man himself, i would suggest. Tom i have told this to paul sweeney who is expert on this. I am baffled by it. I dont know what they do. I look at home at what its used in this eplus does not get used. Lisa a but how old are your kids . Tom thats the point. Can you run a streaming channel off eightyearolds . [laughter] lisa a the is a good question. A lot of people would say, yes you can, given the option during the pandemic. People are saying, whether disney plus disney is trying to kitchen sink it. Throwing out the door so they can start over. Jonathan as parents say, yes, you can. Just a bit of feet back. Tom i am good with constructive feedback. Joining us now, we are watching from the white house to see when the president will speak, as andre gallo. He has the smartest bond no of the week. He knows one of the efficacious things to do in bonds is look at the bloomberg total return index and see that for all talk about creditors and spreads, bonds have gone nowhere. Rj gallo hypothesizes bonds are not that. I looked at the chart off your note and i was thunderstruck how the blended price of bonds is not advanced. Is it still able run depression . Gallo in the note you are talking about, i made the point that when we started the year, we felt it would be in favor of bonds. It has fallen short. The treasury is up by zero. It has been disappointing. I would also note glasses half full. Looking forward, we are much more optimistic that the time for fixed income is sort of made to low singledigit positive returns acting as a positive diversifier in your portfolio which is back. With yields at their highest to the last 12 to 15 years, we value has been extorted been restored. Legacy fixed income will be a good move over the next 12 to 24 months. Tom when do i get back to the regression line a had for 30 years . The bill growth, great moderation, price up, up. How many years will it take to recover from what we have seen the last two years . Gallo i hate to say it but i think the zero lower bound prevent presents a bond to anything we saw over the 20 years leading to the pandemic. If anything, we believe it is possible that yields are higher postpandemic than they were the decade plus prior. It will be interesting to see if the fed goes there with this inching up in the dot plots, closer to or higher. You can see the market is there. The market believes yields are higher. In that sense, it will be a wild before we see big price returns from fixed income highquality investment. Instead, we are looking for oscillating market around a higher equilibrium which will still provide a nice return in balance for your portfolio but is not to the doubledigit price returns anytime soon. Lisa a is this driven by inflation or Something Else . Or whether it is a budget deficit that speaks investors or a changing regime in japan . Gallo there has been a number of factors that have shifted us to what is a higher equilibrium yield environment. The budget deficits are part of it. Sovereign debt has exploded. We have a lot of debt to rollover, and structural imbalances no one wants to deal with in the u. S. On the favorable side, and lots of talk about ai and technological invasion innovation. You have higher potential growth rates and higher equilibrium yield. That is a positive thing that could put more people to work. Of course, you have to talk about displacement. Who gets jobs and who loses them . You may have pushed back against international innovation. A push back against a global trade that helped push yields prior to the pandemic. Now you are talking about on shoring. That is a big change. I think it will live yields higher. An mpeg2 might not be as strong as it was in prior 15 that might not be as strong as it was in the prior 15 years. Lisa a does the thing in detroit factor into your bond rates and the growth and your inflation picture . Gallo it does and cuts in two ways. These workers are looking for raises. No surprise. We dealt with the highest inflation in two in several years. If you stop there, you think strikes have to be inflationary, but you have to consider the nearterm impact of a strike is less production and less economic activity. If this extends to more plans, the Economic Impact only grows. Ultimately, this idea of empowered labor across the country is very predictable at point in time like this. It is challenging for the white house. From an economic standpoint, i am focusing on the growth headwind this will produce in the near term. It is not the case every dollar raises that autoworkers wont give back on the job. That will simply pass through 1412 higher prices one for one to jonathan to higher prices. Jonathan do i want to squeeze powerful labor we see from should i avoid the automakers purely because of the evidence of market power . Should i avoid those industries . Gallo it is clearly a professional story in these industries. The autoworkers will not be able to price one for one the races there will get. The raises they will get. This is not my main area of expertise. On the fixed income side, we have been cautious on Investment Grade and high yield because we think a broadbased bargain margin compression is a story out there. I would focus on that or a broader macro perspective. Jonathan thank you. Rj gallo of federated hermes. Equity futures are positive by 0. 1 . Lauren goodwin joining us in 45 minutes. These are really important questions. How we think about some of these issues. Not just margins broadly but the viability of some of these industries. Helane becker on the program yesterday talked about the prospect of one of the big airlines feeling because they could not address these issues in a way that was profitable for them. Tom i was wrong years ago. I used to believe in of our versification believe in diversification. Peter lynch called it Something Else. In terms of sectors, you are 100 right. The way you make money is by not losing it in value traps sectors. Lisa a the concept of diversification is changing. It is more subjective some negotiations and those that are new work. It is almost the new and old economies. Jonathan the revenge of market power. Geetha run cannot the geetha will b. That is next. This is bloomberg. J. P. Morgan Wealth Management knows its easy to get lost in investment research. Get help with j. P morgan personal advisors. Hey, david ready to get started . Work with advisors who create a plan with you, and help you find the right investments. So great getting to know you, lets take a look at your new investment plan. Ok, great this should have you moving in the right direction. Thanks jen. Get ongoing advice; and manage your investments in the chase mobile app. 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, he overspent on spending and was chasing subscribers and not profitability. It takes time to turn that around after buying hulu. The communication out of disease since bob iger has come back has been very little. They basically threw out a ton of ideas and hes the market without delivering on what the story is actually going to. Jonathan Michael Nathan see, the citi analyst nathanson, the citi analyst. Disney falls tens of millions of subscriptions sort of his last publicly stated 2024 target. Equity futures still positive by zero point on s p. 10year yield dropping a few basis points to 4. 32. In the fx market, the euro is positive 1. 0658. Coming off how bad things look in the ecb in the euro side. Tom time is wrong. That is a new one. This eplus disney plus analysts of crows. It is a pixar movie. Lisa a it didnt do that well. Tom seth rosen wrote in and said tom, you are wrong. The eightyearold cohort is still watching this eplus watching disney plus. We seriously still dont know when the president will speak right . Jonathan im not sure if the president knows what time it will be. Tom the impractical issues bob iger faces. Geetha ranganathan from bloomberg intelligence. This is about fancy companies flying in fancy mckinsey people, the strategist to save the day. What would strategists say this morning to mr. Iger . Lets pick on mckenzie. Kinsey media shows up. What do they say to the leader of disney . Geetha good morning. Thank you for having me. I already have a lot of things going on at disney. You have the streaming business losing subscribers but the narrative shifted away from prescribers to profitability, so somehow bob iger has to show the business will be profitable sooner rather than later. Netflix already set the template in the market. There is a blueprint so they have to figure out how to get there. More importantly for disney, they have to show the market they have a plan for their linear tv networks. They have been in the news a lot over the past few days whether it was dispute with charter and more recently, these news reports about them looking to dispose of some efforts and multiple tiers emerging. As soon as mr. Iger can clarify the narrative, it will become much better. Tom with the Michael Nathanson, earlier, he has for 10 years talked about cord cutting. They were correct. I believe he would say it happened faster than bought. His bob iger listing to the public . Is he listening to seth rogen . Seth rosen . Geetha he is in has been forced to. The data is staring you in the face. There is no way to sugarcoat the industry is losing subscribers. We have lost roughly 25 million to 30 million subscribers over the past few years. Bob iger said they are willing to take the steps. He said the linear tv business is no longer cord to disney. If you look at their profile for 2023, out of what they generated, 75 comes from parks. They really know where they have to focus. I highly it has to be on the parts and profitability, and reducing losses in the streaming business and keeping the linear tv business in cruise control. Lisa a seems like stock investors are getting the message. You are seeing a 0. 9 pop in disney shares from the open. It does seem like the message, especially not getting subscribers for disney plus. It does not necessarily emphasize growth. And the news about abc. Does this mean they will not invest in content and are hoping to save money . Geetha that is a good point. They initially projected around 30 million in costs for 2023 but they have taken that down to 27 billion. There has been some reduction largely in part to the strikes. Even going forward, i think they will take a really disciplined approach. Bob iger openly said they will not relight projects f, right, and Center Weather for the phone or tv business the film or tv business. They have not performed that well on the content front. You brought up elementals. That is a good point. This is one of the bestperforming studios in the history of films, so it has been a little disappointment. I think he is looking to revamp constant franchises right now. Lisa a at the same time, espn is long considered a contender for sale after it was at a dispute with cable. Is that still for sale . Is that the tumor out there . Or will they focus on banding and fortifying on expanding and fortifying . Geetha i think it is the latter. They will look to keep espn. There are trying to get rid of the rest of the linear portfolio. They have a lots of opportunity with espn and are already paying 9 billion every year in sports content costs. This is a huge business and there is a lot of potential. Tom the heart of the matter is what you lead with. Everybody needs to be netflix. Disney plus picks up the australian animation bluey which is a blue healer and his sister Banco Popular sister bingo healer. Cannot deliver margins . Geetha i taycan but will take time. Netflix achieved over a period of 10 to 13 years. Just a few years ago, we were criticizing them for burning cash. It has taken a wild. Disney plus needs to take a look at the netflix playbook. By 2025 or 20, i think we will see the business generates the business generate good margins. I think it is achievable but a lot needs be done. Jonathan let bshares love my emails. The price of hulu is nowhere. Does the us with as and fully with as will this eplus with ads and hulu with ads will increase. 89 by nine cents. Lisa a that is 1000 a year or more. Tom that is ridiculous. Jonathan can they raise prices anymore . Geetha it will be tough but the recent deal they did with charter suggests they are willing to rebuttal every thing. I know it sounds almost silly and ironic but there will be the great cable rebundling. Charter was the first step. I think we will see many more of these deals happen. Jonathan thank you. Geetha ranganathan of bloomberg intelligence. Tom we are so backed to where we this is the one discussion i said to paul sweeney where the pros like Geetha Ranganathan and Michael Nathanson and rich greenfield and the others, the confidence in their voices that they will succeed to get the income statement where it is supposed to be . I wish i could get there. It is the one thing i cannot get across the canyon. The nathanson canyon. Lisa a i am glad you mentioned Michael Nathanson because he said the new model for cable is the old model which is bundling. Tom what are you going to do at 90 a month . Jonathan what are we paying for . Peacock, paramount . Then you have netflix. I gave of apple tv . Tom are you paying around 200 a month . Jonathan it is expensive. If you want to watch all the sports and what all these Different Things. It adds up. Lisa a it is a used car. It is a mess. Jonathan barry knapp joins us next. Equity futures just about unchanged. From new york, good morning. When people come, they say theyve tried lots of diets, nothings worked or theyve lost the same 10, 20, 50 pounds over and over again. They need a real solution. Ive always fought with 510 pounds all the time. Eating all these Different Things and nothings ever working. Ive done the diets, all the diets. Before golo, i was barely eating but the weight wasnt going anywhere. The secret to losing weight and keeping it off is managing insulin and glucose. Golo takes a systematic approach to eating that focuses on optimizing insulin levels. We tackle the cause of weight gain, not just the symptom. When you have good metabolic health, weight loss is easy. I always thought it would be so difficult to lose weight, but with golo, it wasnt. The weight just fell off. I have people come up to me all the time and ask me, does it really work . And all i have to say is, here i am. It works. My advice for everyone is to go with golo. It will release your fat and it will release you. It is not that the u. S. Is a warming, but it is not falling into recession. Can the u. S. Recession be worse than the european recession . That is possible. Less hawkish policy can see more games. I am not worried about an organic so down. There is no sign of it falling off the cliff. Announcer this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. Tom jonathan ferro, tom keene, and lisa abramowicz. It is america with an auto strike. The president will speak. And suddenly at 94 a barrel in oil. Jonathan muted price action for the big three in premarket this morning, and a limited walkout across three plants. 12,700 people. Even will address the nation, detroit, and autoworkers later today. What does he say when he also says, leading into this, that he is the most prounion president the country has ever seen . Tom the downside is not to go back to the mythology of flint, michigan buick city at 80,000 to 40,000 employees. This is a contained labor action but could go larger. Jonathan it is not just this industry but the airlines as well. Ets some of these companies dont know what that the ta ea is some of these companies dont know what to do with the labor contracts. Tom that goes back to what we would list what we witnessed yesterday in the chaos of the ecb. Suddenly having discussions among a more normal yield environment that goes back to the 90s. It is a different bond market now than five or six years ago. Lisa a this conversation highlights how confusing this is because you are seeing crosswinds of both Technological Advancements and changes in restoring coming to a more inflationary management while the economy is decelerating. How do you put those together and get any conviction . Yes, yields are higher. You have bob morgan at jp asset saying tom i have not talked to Annmarie Hordern and joe mathieu get, but is it easy for the president to do a photo of at the white house next week and gather everyone . To put the head of gm at one end of the room and the head of ford motors . Jonathan that makes sense. Sitting on the same fence. The guy that tries to unite everyone. But has he painted himself into a corner . Can you play both sides . Can you be on both sides and try to help everyone . Tom someone had a great quote on this yesterday. Floor of the union even in these three states of bronco, colorado and wrangler. That is really what the president s speech is today. Jonathan you mentioned energy. Energy is at the epicenter of everything we are talking about, the transition from fossil fuels to easy. How much that will cost. It is at the epicenter of the upgrade to the nation outlook. The downgrade to the outlook from delta, american and Spirit Airlines this week. Prize last month is crude back in the 90s. Lisa a we just heard from sarah hunt that it was maybe even to fast from Oil Investment because it creates demand destruction. Which companies are Strong Enough at a time of waiting demand of the strongest energies and which is easy to sustain their growth . Jonathan just about positive by 0. 05 on the s p ive hundred. The wti is 90. 50 this morning. Tom look for the article on twitter that says the saudis work out or saudi arab light to 100 a barrel. Barry knapp joins us. He drove a vw rabbit a few years ago. What does the overall stock market do with a jumble in reality of 94 per barrel oil . Barry the Oil Situation is fascinating. One thing i wrote about last week is somehow started to explore a little. For five decades, the correlation of the price of oil with the dollar was negative. The dollar was the single biggest contributor to our current deficit that pushed us off the gold standard. If you think about decades when the dollar was decidedly weaker, the 1970s and to thousands, it was a consequence of writing these deficits. So flipped the deficits on his head and the dollar is now a petrol currency. I have described it as such. That in and of itself has big impact on the u. S. And europe. Where i am going with that is, as oil goes up and the dollar goes up as a consequence, because we still run massive goods deficits, you get a big offset in import prices. We will see that number this morning. That tightens financial conditions. The increase of the dollar as it goes up. Because asia is so vulnerable, china and japan are vulnerable to Higher Oil Prices, which makes them beller settlers them better sellers. But the opposite is true in europe. They run current account surpluses and are short on oil. Financial conditions loose and as the price of crude oil goes up, meaning more chance for energy price pass through. But for the u. S. , a higher price of oil is no reason for the fed to read bond and tighten policy. They will get big offsets. This change in the correlation of oil is a big deal for these global relationships. Jonathan give me the fx call. Parity on the euro . Is that the call . Barry essentially. As i met with clients in new york, the one thing that scares people on the back end of the treasury market releasing i had a target that we would go to 4. 25 or 4. 5 percent on the 10year yield. I think we would be a hundred basis points higher if the fed did not own a third of the market. Roughly where we were preglobal financial crisis. Given their holdings, i think we are in the range of fair value but people are concerned. I think it will be yield curve control and the japanese going big abng big bang and saying we are done with this. The big concern is if things get unruly with china and they left the rfb go to eight. Jonathan gave bv fx call. We are rocking now. What are you thinking about . Barry i think they are in the range of fair value and need to stabilize. The growth value looks likely to deteriorate so i am somewhat sympathetic to michaels to bob micheles view. But then we have this oil currency pressure on asia and swims that does create serious Downside Risk in rate on asia that does create serious Downside Risk on rates. We will have some weakening in the Growth Outlook but the fed ending and starting to price in cuts next year it is in the fed funds curve but not in things like the spread of mortgages to treasuries. There is room for further rally through the rest of the year but the rest of my call is the back end of the treasury markets as another impulsive move of 25 to the basis points higher. Lisa a i want to build on the idea of parity. You see the s p 500 going to 800 but this come to 4500, but this comes at the end of yields up. Is that good for us . Barry i think there are real risks to risk. The real risk off appetite comes with rope asian currencies, not so much the euro. The eurodollar is so big. If it went straight to parity next week, that would be Something Else. But the probability of having that big of an impulsive move in the dollar euro is big. I dont think this is a risk off mood. Lisa a you mentioned if china sells the rest of its treasuries, you can see yields rise further, regardless of the reason why. If we do get a material shipped higher in longerterm deals, divorced from fed policy, what does this do in terms of crazy if he loop in a time when 10 years ago, he said the market was so distorted from rates. Are we finally going to see the transmission mechanism . Barry i think you are going where my brain was when you were asking the question. I have been describing the macro situation as an unstable librium. If you think about the and the duration of the investment credit index, the household sector has largely turned out there debt. The nbs has never been longer the mbs has never been longer. Most of the household sectors rise for a time that go through nonfinancial corporate sectors but the Banking System is not. The reason the highyield index is falling is we have a tremendous amount of commercial real estate loans to role in 2024 and 2025. It is often said that the yield curve can signal recession or cause one. We have only had this deep of a yield curve three times in our history. This is an existential threat to small banks. You look at Bank Holdings and the weekly fha data and you see holdings of treasuries plunging. This is sell what you can, not what you have to. I remember distinctly because 15 years ago today was the death of lehman brothers, where i had worked for quite some time. Jonathan i cant believe it has been that long. This is one of those conversations that will go home and listen to later. Fantastic to see you. Barry knapp of ironsides macro economics. S p 500 is posited by zero. Lauren goodwin joining us in 20 minutes. Right on cue, buried you mentioned the effective rate at 3. 60. That is amazing. Going down but then inching higher to around. 60. This is where the effective rate is. We know where Mortgage Rates are. If you go get one today, this is the average rate at the moment. Tom it was very important and hugely nonlinear. It is going and the ramifications of it continues to move higher to the tension barry said at the curve. It is not linear. Jonathan only around a 10 are paying around 6 or something. This will take a long time to see the 3. 60 shipped higher towards seven. Even maybe seven soon to come. Tom the only way to work out is to get a substantially shorter yield. Jonathan this is great. There is a strike in detroit for the victory and we are waiting to hear from president of the united days. From new york city, this is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. From day one, we told these companies that we do not expect to delay and drive things out. We did not want to be here. We want fair economic and social justice for our members. They have had decades of record profits. Then they are profitable, it is all theirs. When workers asked for their fair share, it is the end of the world. Jonathan that is the president of the auto workers union. We will see all three on strike for the first time in history. Equity futures on the s p just about unchanged. Yields a little higher by four basis points. 4. 32 on the 10year yield. In the premarket, ford, gm and stellantis still pretty muted for much of the morning. Tom it should be. It is a Surgical Strike. Bramo nailed this yesterday. She said it would be different around noon. It is three different strikes across three different states. It is like a mini strike compared to the teamsters one. Jonathan there is only so much money so if you want this to last long and hit hard, you have to do this strategically. 12,700 workers. If you want to up the disruption tom we have a read on this . Like they go to to ford f1 for me . Jonathan it is the unpredictable side that gives the more leverage. Tom how does the president spin this . You will have a script obviously. Jonathan he will have a perfect statement to bring both sides together. The problem is, once you have gone around saying you are the most prounion president in the history of the country and get away with saying what any traditional president will say about this one. Lisa a may be that is why we have not heard anything yet. We know there will be a statement but is it because they do not know yet for their still writing . Jonathan he has a range of options lined up. We dont have an understanding of what either. Tom part of the mythology of course is going back to the fo odies as Annmarie Hordern mentioned earlier. The uaw has a heritage and history. To decatur street in new orleans, the concrete liens the pecan pralines. Bearing gifts this morning is these. They are for bramo. Not sallys. Jonathan you have to have the accent. Tom i dont have a southern accent. It is a calorie count on radio. [laughter] Henrietta Treyz joins us here. Encyclopedic on washington 10. Very important, this is a president who has to come up with a new statement for a president on labor of rest labor unrest. What does that sound like . Henrietta i think you are right. This administration has their entire term gone through this. They have a huge success rate so i think there is a lot of, maybe not surprised, but there is a different circumstance now that they are actually striking. I assume it is devcon one of their. [laughter] jonathan lets dig into this. He already cut off the Railroad Workers from striking. He cannot do that with this. Even though they did that, they still went around saying they were the most prounion of all. I am not sure how you can be prounion without giving people the right to strike. Shouldnt you be supporting them . Henrietta there is a number of democratic lawmakers in the senate and house that will join the right. You have a situation where the white house is going to try to get the strike to conclude but you have part of the white house going to strike with them. It is a twosided videotape. Lisa a what about republicans . Where are they coming in or where it should they be coming in to try to front on both sides because this is no longer a oneparty issue with unions . Henrietta it is not. President trump when he was in office was successful with taking union vote away from the Democratic Party which is a material shift they have to worry about for the future. When you see trump comment on this, it is deflected and moving away from electric vehicles. We are antielectric vehicles which is a big part of this, but we just subsidized the electric vehicle industry substantially whether through the chips act or ira. That is at the heart of this debate because they be less workers for those vehicles. Lisa a does it look less likely that if the auto manufacturers run into pushback and their financial situation weekend substantially at any future bail off is off the table the way it was in back of the day in the back of the day . Henrietta not to bring it in but mitt romney is retiring so [laughter] that is terrible. I dont think there will be another bailout. I dont think that is something the administration or america is prepared for. You passed a lot of spending bills. Tom 2020, union vote. Jill biden 57 and trump at 40 joe biden 57 and trump at 40 . Joe biden did better than hillary clinton. Where are we now . Does joe biden still have the Union Majority . Henrietta when you look at the union vote and all voting turnout, there are other issues bigger than just union issues. He those tires on and which union is supportive of which administration. I think they stay but donald trump is has a stranglehold on those parties so i am not sure his voters are leaving. Jonathan i am not sure we can have a viable Auto Industry in the United States or europe without tariffs. I am not sure it is viable given what is happening with china, the idea they are able to make vehicles at much lower costs. Europe is already complaining. Isnt that the direction we are traveling . Europe will slap tariffs and say if you want to sell here, produce it here . Henrietta absolutely. That is on the cards. For the foreseeable future in this administration or if donald trump wins. Jonathan have we thought through what ev creation will look like and for governments . Europe, china, and the United States . Henrietta i do not think so. You are seeing a lot regulations come out on clean energy. Not just solar but hydrogen. One of the things i hear most frequently is, we just do not have the experts to analyze the. We are working on this. We know secretary raimondo is rolling out people to address how the money will look out and where it should go. And how slowly to roll in these changes. With the eu or mexico. What are those about . They are all connected but it is slow going. The industry is very keen on getting the details. Jonathan theyre going to be talking about this for a while. Great to see you. Henrietta treyz. Thank you for the trees. Coming up, Mohamed Elerian of college cambridge. Then jim beyonca of beyonca research. A couple weeks ago, he said energy would be at the epicenter of everything we talked about. Energy at the center of everything. Uaw shaking up detroit but not the market. More on this. From new york, this is bloomberg. Bloomberg surveillance, there is a strike in america. We have images right now, it is the coal blue sky outside of detroit michigan and these are images of the Michigan Assembly plant. This is where they built the broncos and this is part of the fabric the president will talk about. Lisa this is why it is such a fraud moment. A uaw strike would affect up to 3 gdp. Tom Michael Mckee drops by. Did we have Economic Data today . Mike the takeaway petroleum is flat. The oil story continues. Manufacturing comes up 1. 9 from 19. Its a tertiary indicator. Tom Michael Mccabe has a lot of experience with labor. The president speaks to the nation today it is not eisenhower in 1950s detroit. Mike the autoworkers with the big three, Union Membership is way down. I went back and looked at 1998 gm strike, is similar to this and that they struck a couple of plants it was about as many people as the uaw, 180,000 people went on strike and there wasnt much of an impact in the Third Quarter of 1998, the Industrial Production of cars fell and we saw the number of autoworkers stall but then it came right back up again and cars were sold in gdp was unchanged. Tom she is the engineer from the automotive institute. She was weaned on the manufacturing multiple. So youll meet diane swung, said they believe in the manufacturing multiple of america . Mike as manufacturing grows it as more value to the economy. So much of what we do is Service Industry oriented and manufacturing are actually making something. Thats the whole thing about the strike. Workers want a piece of the pie. They gave up so much when they went into bankruptcy but its about who will make the products of the future . Will it be the guy who grew up in lansing or will it be the guy who program the computer to make the car . Lisa the time thinking about wage growth of what this means for inflation, how much of a signal is labor inflation is become entrenched and how much does the signal a desperation at the end of the cycle . Mike we have seen unions get large pay settlements and we saw the knock on effect when airfare went up because the pilots got big contracts. Does not have a longterm impact on inflation . You dont want to see automakers raise their prices and then the automakers have to ask for more money. Right now, the fed is not thinking it will be a major impact on the economy. Tom thank you so much. We saw Economic Data yesterday. Out of the west coast as Economics Program and not talked about enough. Is the university of Southern California and a spectacular program. You are the gloomiest rain cloud to come in into usc. Where is our hard landing . Lauren the economy never reacts the same way in every cycle and when the fed raises Interest Rates you see interestrate sensitives sectors navigate first and then manufacturing and then the labor market. Thats exactly the way the economic dominos of fell this time around. Tom at new york life, is old, quiet money wrapped around and at actuarial assumption. Now that we have a real rate, and the new interestrate world do we need to lower our expected return because our economics or new economics . Lauren yes in some areas and in others. In forwardlooking equity returns, i do think its challenging to expect a seven, 8 return. We thought it over the past couple of years but we see stronger yields and structural changes in the economy in terms of being constructive for portfolio construction. Lisa youre getting yields for the first time in a long time. How much can you capitalize on that . I love this idea, cash is not of riskless asset. Why is it is screaming by for you right now in 10year and 30 year treasuries added time when there is a debate about yields going higher . Lauren Interest Rates could go up for a lot of reasons and why they go up is just as important as how they go up. It has been a function of supply and demand factors and not because Inflation Expectations have changed or the general fund rate has changed. That suggests that rates will be volatile going forward. I am not as big of a fan as adding duration although i love hearing about taking from cash and adding to bonds. With exposure wed like a neutral position and adding longer duration and municipal where the curve is less of a challenge. Lisa what does a hard landing mean . That there will be a lot of distress, the playoffs. Hard to see why anyone would get excited about Corporate Credit, equities and municipal areas get challenged with tax revenues. Lauren the yield helps compensate for the risk. And Corporate Credit and publicly traded credit, Government Programs help companies to short bond sheets at a rate different from previous economic cycles. From a price perspective, you can harvest coupon in the meantime. Tom thats what they say at big insurance companies, harvesting coupons. Lauren you could still clip them in the background. Tom store them through the winter. Lisa as shared talking this makes sense in the longer term but what a wild card when people are not clear what the drivers are . Is it a bullish signal on demand or bearish signal for supply. How much do oil prices throw off your investment calls . Lauren i think its a bullish signal of cyclicality, higher Energy Prices although many would say is headline inflation and not part inflation. We all pay for oil whether we go to the pump or through pti and through the way they work their way into the real economy. Higher Energy Prices are why we saw a rate hike from the ecb and the fed will be paying attention to that. Tom so look out longterm, the imf announcement of a fiveyear slow down, what is your runway on real gdp in america on 2028 . Is it up 3 or sub 2 . Lauren i suspect we may see higher than 2 gdp growth on a five10 year horizon and that has everything to do with an investment from the public and private sector with respect to the Green Energy Transition and respect to the digital transformation. Tom there she goes with the usc optimism. Going to citigroup from ucla . We believe it at that. She is with new york life investments. My head was spinning yesterday and i dont think is spending less today. What is going on . Lisa there are cross winds in the uaw strike five eyes the moment were in. We have change in policy and workers with renewed power and clout saying we have not kept up. Where is our profits at the same time year coming off with big profits . You put these things together it makes it confusing. Tom i like the word confusing there. 5161, its a little soggy here in the last hour. Lisa they were looking for a win, thus the biggest take away. The manufacturing ipo, which shares being sold and they were underpriced based on market valuation they came in at 51, i dont want to go to 52 just yet. If he had gone up it wouldve been 100 million in valuation they couldve looked. Tom the International Relations we do when the president is speaking later today. We will catch up with david westin here in about an hour. We will delve into cloud with mary barra. Joe biden is going to go out and talk to the people in michigan and mary barra is worried about ai. Lisa how do you worry about new Technology Tethered to an old economy . Tom we will have to see it is 8 43 on a friday. Stay with us, Mandeep Singh is 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. Oh, booking. Com somewhere, anywhere. I just want to lie motionless in a chair booking. Com, booking. Yeah we have a unique Business Model that gives us the abilityr products. Relevant to our confidence outlook we are very confident. Lisa this is not instacart, this is not one of the companies that has a speculative Business Model. It cant a good recognition and nasdaqs first day of trading yesterday. Do you want to go over what weve been talking about through the movement weve seen in stocks . Weve been talking all morning about the uaw strike in the damage it could do to the top three. The stock price is not moved that much. Its coming back from the lows earlier. Forward is probably being punished the most down 1. 11 . Im not sure we can read into any of this. Whether theyre doing less damage with his Surgical Strike or they are in it for the long haul. Tom i think the team did a great job overnight, we knew this was coming to an extent. The voices are away from the voices of hysteria and the leadership of the president will set the tone and we will see if we go from the focused attention of these three small factories. Lisa we dont understand the anger level at a time of transition where is this existential angst about what kind of future there is. I want to bring you a couple of names were looking at. We have been talking about today in terms of whether it will be tough to sell to the next start and they dont want to give any estimates from disney plus. Shares getting a bit of a pop may be off turmoil elsewhere. We wanted to focus on arm with an ipo that debuted yesterday. They have a 20 pop. Tom every single grant that i look at, two years, it is painful. Theres an obligatory pop everybody went through the lots and thats great. What will you listen for in the first Conference Call from the chief financial a of arm. Mandeep the biggest royalty is 8 10, they talked about raising royalties. As long that 30 billion is growing, i dont see them expanding into chip design. Thats when you start competing with your customers. I dont see that happening. Tom these guys are in us like Texas Instruments analog. What you do with an ipo you are regaling about the revenue and the loan. Mandeep it said 95 growth margin business. They have to invest a lot of r d to develop the core and r d intensity is close to 45 but it can generate free cash flow. But how big can it get . If you look at the last 10 years, it has been 10 . If you see nvidia, with revenue at almost 50 billion that just goes to show arm does not have the pricing power. Lisa will there be a fundraising effort . Mandeep this was an attempt to go to the Public Market because this is an Important Company and they dont have the pricing power. They are trying to garner attention to say we are an important part of these trends. Everyone is based off arm at the core. Lisa he avoided pricing a dollar richer because he wanted that 45 pop and he wanted all the hype around it. Mandeep he wanted excitement and this is a great story when it comes to the investments made. I think an ipo pop is good for the company overall, the sentiment. But any time you see a rating at 20 times the sale price, if you have diminished the growth. Tom we will wait for the Apple Earnings announcement, is there a single headline that comes out of china and everyone goes iphone 15 models and tmobile paid for all of it. They quickly see fourlife we delays. Lisa i preordered this morning and all the handwringing around if people will not buy while apple shares are up on this news as people realize the demand. Tom its like Charlie Brown with the football. Mandeep when it comes to cycles, apple has a stronghold. Tom they have a three nanometer chip, they have some new razzledazzle. Its titanium, its got this, its got that. Does tim cook know this headline will come out . Mandeep they are very confident in their products cycle so even if people said it did not look like a big upgrade, it turns out it is. Lisa are we getting over our skis with concerns about geopolitical tensions impacting demand . This goes to arm and apple. Mandeep there is the soft china demand and the government banning iphones but the bigger question is supply chain diversification. Can they do that successfully and at the same level theyve done over the past five years. Lisa restricting iphone uses state owned enterprises in china will impact the iphone . Tom they were neutral at 180 per share. Its a debate, i have been through this cycle 10 times. There is a 45 week delay for the toy. Mandeep and thats why they raise the prices of the pro macs because thats where you see the demand. The upgrade happens seamlessly and thats what you get with the pro mac. Tom these guys, they are the nerdiest of the nerds. Theyre huge. Lisa thats what you say about me. Tom to me, it will be extraordinary. We will thread the needle to inform you on this strike. Three automobiles the bronco, the wrangler, david westin with his work and heritage of living in detroit. David westin with ceo mary barra. Its an interview during all of this labor tension with the head of gm. What do you need to know . 94 a barrel for brent crude. Good morning. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Live from new york city this morning, good morning, good morning, equity futures going back a little bit on the s p 500. 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, coming up, uaw hitting the big three would strikes. Automakers conveying their extreme disappointment as we wait to hear from a pro union president. Strikes in america are the big issue