By 0. 2 percent on the s p 500 following the biggest we of gains on the s p. Happy talk begins in september with goldman cutting the recession chances to 15 after week of decent data to keep this fed on the sidelines. Jonathan Good Research over the weekend and goldman leads the way with that lesser call on recession. It buttresses against a china basically in policy chaos. To the global town, im unsure of where we go other than Jerome Powell has a spirited leadership on Economic Growth. Jonathan later, as good as it gets. Tom hes still bullish. It is as good as it gets in the nuance here is that we peel away and maybe we get lesser and then he goes to a soft landing but i dont know what that means. Soft landing bramo comes back from her sabbatical. Jonathan she returns less bearish from vacation. Lisa first of all, nobody is very happy the summer is over. There is this feeling of what are we heading toward. Jonathan its in the 90s in new york city this week. Lisa are you going to wear white pants . Jonathan i wear them anyway. Lisa its been said there is a lot of people that a complex economy can be explained with half answers and armchair quarterbacking. And she is right. You have both sides hunkering down for what may happen at a time when we are on the precipice of understanding the rate hikes. Tom weve had a spectacular summer and summer comes later in new york. Its summer and its 33 celsius. It doesnt translate in earlymorning speak. Jonathan its going to be hot in new york city. Tom its still summer. Jonathan its hard to embrace fall. Tom september is terrible. Jonathan a big decision for Christine Lagarde. Going into last week, the data it needs to tell them why they need to hike. But they failed to do that based on every piece of data last week. The our fed is on the sidelines unless you get a blowout labor number. Tom all of this is the transatlantic disparity there and it for into a stock market thats resilient. This is like new years. In america the day after labor day is just like january 3. Jonathan equity futures on the s p 500 are just slightly negative down by 0. 2 and yields are higher by four basis points on the 10 year. Yields aggressively lower on the front end through the last week. Its on the back of Economic Data in the United States. Lisa its amazing to see 20 basis points plunging on the heels of some of that. This week will be quiet but there are interesting things coming up. Wednesday at 10 a. M. , ism services in the u. S. For the month of august. Im curious to see whether we see a rollover at all above the 50 mark which is above recession even as we seek a contraction europe. We also get the fed beige book and will see the effects of beyonce and taylor swift and the barbie movie. Throughout the week, tons of central bank speak. Christine lagarde is being today, andrew bailey, on and on and the fed speakers John Williams speaking. There are tbill auctions coming up throughout the week. A lot of what will be interpreted in the price action of the central bankers. Thursday is under the radar and that is the striking action that could potentially happen around the world with whats going on in detroit next week. This week, chevrons lng workers in australia have threatened to stop work if they dont get an agreement it will affect prices for china and some of the other asian nations but also in europe. Tom how does that affect europe . Its australias so how does lng in europe in australia affect europe . Lisa it will create a pricing were because you are reducing supply. Even though there are wellstocked countries now, later on, it could elevate prices. We seem price pops in the heels of this. It points that stagflation is happening in your. Jonathan the stealth rally in crude, the Energy Market is just not on the radar. Brent yesterday is getting closer to the 90s. Tom we heavily covered this on friday when both of you were not here. 88. 41 of brent crude. Jonathan we thought we might get a long weekend. Good to see you. Do you think this rally has likes . Im going to hold onto my white pants and summer as long as the weather will allow me. I think the rally does have legs. This argument over recession or not and whether we are headed there, its hanging like the sword of damocles over folks and keeping people from being tactical. If you look at the fed cycle, you have a fed that was hiking, they are either on pause or close to it, markets rip when feds pause. Each of the last time the fed has been on pause, youve seen the s p 500 hit an alltime high and i thinks that and i think thats the path of least resistance this time around. You pointed to the oil market and you dont have Energy Prices rallying year to date highs on the verge of rolling over in the economy. It doesnt mean that rate hikes wont bite but we are just not there yet. I think the rally and economic strength has likes for the time being. Tom you add huge value in Asset Allocation. Its a great Marketing Tool but you really deliver. Go through the process right now of how you would reallocate a typical investor whos been in the market and maybe they are up a little but they are not up a lot. The first thing you do in the biggest value we can had now is keeping for folks from getting seduced by 5 yields in cash. Thats been a stalwart last year. Its an attractive yield but looking at the fed pauses, on average, you will see 10 year yields fall 3 quarters of a percent which hasnt started yet. Equity market returns, we think we are in a time where inflation is moderating and growth is resilient. Could storm clouds form nine months away but until you think the fed is on the verge of cutting we think we are at least nine months away from that, we think there is better returns to be had in equities and bonds relative to cash. Lisa how long can the u. S. Economy and stock market diverge from the rest of the world . You see europe facing stagflation. The u. S. Keeps chugging along but in isolation . Is that plausible . When growth is most scarce, growth gets the best premium. If you were looking for growth, you are looking at the u. S. In u. S. Growth stocks that are producing their own growth. Over the last decade and what you are seeing now is when Economic Growth is subdued and the rest of the world is softer, people flock for the growth and you find it in the u. S. Tech is 18. 5 more tech in the s p 500 than any other developed market index. Thats where you have to go for growth and thats why you see the valuations where they are. Jonathan growth has not been scarce in the United States. This rally has been built on upside surprises. Now we are sitting here suggesting that when growth starts to disappoint, we can carry on rallying. Can you make sense of that . I think it is a matter of degrees. Growth is starting to moderate in the u. S. And you see the surprise index rollover and all of last week was a set of softer prince. Its moderating it apace where no one is spooked by it. Its a soft moderation allowing folks to at least believe for the time being that this is softening consistent with a soft landing, if you will. The pace becomes more important. Bad news is good news when its just a little bit bad. If it starts to deteriorate too quickly, everyone gets worried. I wouldnt call it goldilocks come its moderating at apace people are comfortable with. Its tempering as opposed to mineshaft. Lisa are you pushing back against the fact that the market has to broaden out . It has to broaden out. I talked about the exception of u. S. Growth but what you will see is where we had weakness last year, the most severe is outside tech was in some of the economically sensitive cyclicals were valuations are not as stretched. If you are really pricing out Recession Risk like oldman did this morning, there is Energy Stocks and materials and materials and work cyclical areas where i think you could get some reevaluation higher. Tom in the second leg of a bull market, do you imply we broaden out from the seven or eight wonder stocks . You talked about Asset Allocation and in the equity market, thats our big bets. We are under cap large cap growth and underweight Everything Else in the expectation it will broaden out. Tom you said you dont like cash, 60 40 . What you see is on the fixed income side, given the storm clouds come you dont want to be heroic so you lengthen duration. We are underweight credit. The idea broadening on the equity side and overweight equities. If you are in a position where you are 10, 15, 20 cash, you need to start working that down because there is better returns and equities in the short run and at the storm clouds do materialize, you want traditional fixed income. Jonathan do your clients worry about nasty politics on the horizon . We are starting to get those questions. We do a good reelection dashboard. It looks good for the incumbent but there is a lot of uncertainty in utero in the idea that you may have one of the parties nominees on trial the day before or after tuesday. Jonathan do you realize how messy this could be . It so far out that folks dont know how to price it in. Tom the wall street journal poll released in the last 12 hours i think jonathan brutal. Tom brutal but weve had these fractious times in american politics but other than alien sedition in 1802, we have not added more uncertainty, the polls are shocking. Jonathan 73 of voters said biden is too old to seek reelection. Two thirds of democrats said he was too old to run again. The possibility is that we dont know the nominee of either party at this point. That adds another level of uncertainty. This is going to be something into the back half of this year, the last quarter and that your becomes a bigger issue. We will see. You have totally different views on the markets and how to run the economy and a ton of candidate uncertainty. It could be fuzzy next year. Jonathan fuzzy, very diplomatic. Steve, thank you for being with us. Tom i wonder what the market is betting on. I cannot get a handle on the gloom level now. Lisa was gone for three weeks but i just cant get a handle on the equity market right now. Jonathan the data is calling, its just not freezing cold. Would you say tempering . Tom 33 celsius. People have no idea what celsius is. From new york city, good morning. 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. And your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com i was told my Small Business wouldnt qualify for an erc tax refund. You should get a Second Opinion from Innovation Refunds at no upfront cost. Sometimes you need a Second Opinion. All these walls gotta go ah ah ah id love a Second Opinion. Take the first step to see if your Small Business qualifies. For a lot of politicians in this country who dont know how to say the word union, they talk about labor they but they dont say union. I am proud to say union. Let me tell you what we are celebrating, we are celebrating good paying jobs, jobs you can raise a family on, union jobs area jonathan President Biden at a labor day rally in philadelphia over the weekend. This is how you have your cake and eat it too. You can talk about unions but union participation is the lowest its been in history. Tom its away from public service, the people working for the greater american bureaucracy are unions. How many people outside it are in unions . Jonathan they made the point of how much worse things would be in this economy if Union Workers were as high as it was in the 70s. You can go on the campaign trail and say you love unions at the same time, membership is so low. If it was high, you would have a different point of view. Tom if you go to europe, its not like america over there. That makes for a lot of rigidities within the United Kingdom. Jonathan similar trend in europe. Tom we begin with when is the next debate . Jonathan the 27th. Tom you nailed that. Same crew . Same motley crew . Stuart will kill it. Wendy schiller is with us now. Truly one of our most popular guests. We get huge response when shes on. Lets go to the images we saw on radio, the president doing what he does with his baseball cap on, harkening to a union he knew in eastern pennsylvania long ago and far away. Dont they vote for trump now . There is mixed voting in terms of unions. The teamsters lien a little bit more republican in their voting but a lot of other private unions physically on the local lever level because they believe democrats will spend on infrastructure which means jobs for them. It depends on the local balance as to where the jobs are. About 7 of the private sector is unionized but Public Sector is still in the 30s in terms of unionization and that can matter in key swing states when republicans go after unions and labor. That could cost them votes so biden is skirting the line. Public labor unions are very public as well for elections. Tom do you see a rejuvenation of unions moving from that 7 higher or is that Wishful Thinking on the part of union types . There seems to be a concern and strategic effort for unions to branch out to like college campuses, unionizing graduate students. Thats a group that is still really ripe for the picking in terms of votes. Its a group the democrats need more than the republicans to get out the door. Every time you have a new Union Agreement or new people coming into the unions fear, thats a guaranteed vote because unions are excellent at getting out there base to vote. Lisa it seems like yesterdays speech highlighted the Union Membership it also highlighted the fact that there has been more union action recently. This is also what biden said we are turning things around because of you and the last guy who is here was shipping jobs to china now we are bringing jobs home from china. How much is biden trying to galvanize his campaign by going after president that he will be the person he is facing off against . He has not done enough yet and to show biden out on the trail, he can walk and talk and hes clear and energetic. Given the most recent polling that has people doubting his agent capability, the more he can get out and show he is still vibrant, the more he can mitigate those kinds of concerns. I think thats an important part of this strategy. You think about some of the most recent polling about trumps Job Performance in office, its relatively positive. The covid aftereffect that some people argue because trump the presidency, that seems to be diminishing for trump. After the indictments, there could be a rosier glow on how Trump Presidency went. Thats a real concern for the democrats. Biden has to remind people of what that administration was like in white they rejected him in 2020. Lisa does biden have a chance if hes not facing off against the former president . Thats the existential question. You have to believe that the negatives associate with trump in swing states some of the swing states have swung more to democrats in recent elections. When you think about that, that is their issue. Would they do better if nikki haley was on the ticket or ron desantis . Im not sure if ramaswamy is the guide to go through. He is like trump lights. If they didnt have the liability of trump, would they be polling more strongly on independents than they are now . Tom there was an article on the nations deficit. Ive lost track of the billions and trillions. Is the debt a concern to an academic like you or is it the usual debt angst and not understanding the massive size and scale of america . I think the parties are seriously worrying about the debt. I think solving the debt limit crisis as we saw was something to both parties understood they had to finish and get done but you will see this rhetoric in the next four weeks. The republicans will claim we spent too much money and they will want big cuts and biden will have to hold the line which may lead to a Government Shutdown a couple of days after the second republican debate. That hurts biden in many ways because he is the incumbent and the income it is supposed to run the government smoothly. If you have another union strike like the autoworkers strike, that creates uncertainty among voters about the Biden Administration. Jonathan Wendy Schiller of brown university, thank you for the latest on that. Tom buried in the jeff stein article in the post is the tax cuts of i believe 2017. I cant remember but they are identified as the trump tax cuts. There is a point within the distractions of Legal Proceedings where you are going to get a raging debate into 2024 on sustaining those tax cuts. Thats not on the radar yet but it will be. Jonathan you mentioned the debate on september 27. Will the former president show up to that . Tom it depends on his legal troubles. Jonathan i think people feel the same way about that. Lisa what happens when he starts to campaign more aggressively rather than being the defective frontrunner . Does he have to . Given the wall street journal poll, does the concern about age , what are the concerns about joe biden running . Jonathan thats the man he wants to face. Tom absolutely, the distraction of the first lady with covid, i was thunderstruck by the rekindling on a sleepy Labor Day Weekend of a president who is 80. This is the weekend where 80 came into the zeitgeist. Jonathan even last weekend. All of this is building. Coming up, simon french will look at the economy. Painting a pi