Transcripts For BLOOMBERG Bloomberg 20240704

Joining us now is the close markets the Global Market strategist at nova scotia nov esco. Where are you now on that call given that a lot of people are starting to say, it is a bull market and we may have to live with that and perhaps we can look elsewhere. Are you looking elsewhere are you looking elsewhere . The market is broadening and moving into value valuable parts of the market so it is not just the very narrow market that you saw in march or may, you are getting a sign from markets that this is healthier and there is more participants and so far, the earnings for the Value Oriented Companies have been good . Jon is he getting less bad or is the outlook for the markets improving . Things are moderating and that is what you would expect in this part of the cycle but what involved but a lot of investors missed is that the market priced this last year. 11 months ago, we were down ninth 9 in 13 months so that was a market that had already assessed what was likely to be a weak economic environment because of all of the type all of the tightening but the economy has been more resilient. Many people worry about the valuations on the broad market but that is a handful of names and you think about this broadening out the names that have not bid up are starting to participate more. Tom you have to participate boat i would suggest you have to extend your timeline. Where is the new terminal value . It used to be five years but if i buy apple or all these fancy stocks, do i have to extend out my terminal value to justify acquisition of those shares . Some of those names are trading at quite elevated valuation so you want to be a little bit cloth cautious in the near term but if you are thinking about the structural themes that these companies are taking advantage of, those are longterm story so you think about the ai trade. You get a bit of euphoria around that. We saw that in the late 90s with names around the internet but if you pick the right names over the multimillion cash was i year period, you did well. It is about looking at the true fundamentals. Tom are you tilting active management or passive management at this time . Brian it is both. In an environment where you are seeing a broadening out, you should see more opportunity in active management and what you would expect as you move into the next phase. When you think about a new market cycle, a recovery phase, that is when smaller caps do well and international does well. A lot of those places, that is where investors can take advantage of action. I see money going into money markets. Yields start to come down over time so there is reinvestment risk. I would advise investors to look further out from duration or communities or corporate bonds. Lisa dont fight the momentum. You say we heard from someone over the weekend, dont fight consensus in december and august. When does momentum start stop working . Jon brian you will see the tightening starting to find its way into the economy and the economy will roll over a bit. Whether we call it a recession or a slowdown remains to be seen but markets go through these phases and this is a market that is feeling like a recovery. It is probably not the recovery trade or the next cycle so you will probably give back some of this in early 2024 as the economy starts to roll over but what that means is the fed pboc pivots. That is when the new cycle emerges so this is a recovery trade and we are likely to see a pullback in early 2024 with the economy but when the fed shift stance, you tend to do well in markets . Lisa how do you not by the market . Brian i was part of what i was talking with jonathan about with the fomo story. We use we have such we have Tactical Strategies that will take where you are in the regime but if you are looking out even from here over the next few years, you should be invested in risk assets. I use 1980 one as an example and i set it on the show that you have a nice rally wants inflation had peaked in march of 1980. Market role the market rolled over with the recession and you never went through the bottom and if you invested when inflation had peaked in eight 1980, you were very happy in 1982 and beyond. It is focused on what tends to move markets most. End of inflation and end of tightening tends to be good for risk assets. Jon the rate hiking cycle in em started nine months before the tightening cycle started in dm. Others will follow later this year. We have an easing posture coming out of china. What are the opportunities out of emerging markets . Brian you want to lean into where policymakers are providing support to the economy and this is an interesting environment. Investors didnt love em the prior decade because they struggle to get out of the Global Financial crisis. Even what you saw in the developed world, but japan on with japan on friday, this is a different environment where the fed could be contemplating easing by next year and the major developed markets are tightening with which tends to portend a weaker dollar versus Major Trading partners. That starts to unlock some of the value that exists outside the u. S. And investors have not been there. They have avoided it but it is a better backdrop for International Investing in we have seen in a while because every Time International participated in the last cycle, the u. S. Raise rates or started a trade war or we got a pandemic which ended up abruptly stopping any type of participation with international markets. Jon brian levitt of invesco. Frontloaded in all these rate hikes and now they can pause. And maybe other places. Tom i agree with that and the issue here is the degrees of freedom they have and the emerging markets have much less wiggle room than the major banks so when they have to act, they have to protect the different dynamics in their system. Jon i dont know how to describe what is happening in china. I get the language is shifting. I am waiting for the followthrough, are you . Lisa very much so. That accurately describes what we got, no details about directing supporting consumers and no details on how they plan to ignite Housing Market thats facing high leverage, lack of people in said homes and the fact they have built up so they dont have that stimulus letter lever. You buy that china is facing japanese last decade . Jon they had the best week in 2023. Tom i would say the chinese inflation is an interesting commodity. It can be usually discordant distorted domestically. It looks like there could be disinflation or deflation. Jon break lineup this morning. Great lineup this morning. Pushing ahead to the main events of the week, big earnings on thursday after the close with apple and amazon. Those two names along combined make of about 70 of the nasdaq 100. Basically. Those two names make up a massive stock and they report on thursday and on friday, get used to this, 200,000, a ton of estimates that payrolls come up at 200 k. Lisa it is still selling. N the table . 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Tom at a quiet moment and i thought about something you two have brought up which is, i think it is weird how we have 100 agreement on the fed on these boats. Votes. I dont think it is healthy. Do they dissent at the ecb, i dont know but the 110, we all agree. Jon if you get from pushback some pushback, it comes from the office space. The best part of 20 years. Lisa the strategic ambiguity we hear is covering from disagreement in theory. From the fed. Maybe november, that is when you get the fishers fsiiures fissures. In a the bond market, yields climbing a little bit higher by three basis points. We have talked about the fed and we will talk about the ecb, euros on gdp data europes own gdp data decreased a quarter a couple quarters. They eurodollar, 1. 1035. We will go to the red bars. We stagger into august of 2023 and it is the republican debate. She is familiar with the electoral process. Have you ever seen anything like this . We have someone with various legal challenges dominating a party, 54 trump. The governor of florida, 17 and everyone else is barely a heartbeat. Does trump on the party . It it looks like he owns the party and he is being treated like the incumbent president. If you are the opposition, you have to go after trump directly. Ron desantis runs around but he has to go right at trump and some of the comments they have solicited in the fall were trump is a fighter. That is what they want to see from other candidates. The other warning sign for the party at is that there are republicans that are willing to drop the rules. If if trump claims it is rigged, he can undermine the nomination system. Tom jimmy carter, the governor of georgia comeau walked down the stairs of a airplane and shook someones hand and we all said, who is this kind . Who is the jimmy carter this time around of the 2 , we percent pat scott, who is the jimmy carter . Brian right now, it is tim scott. He has a lot of qualities that would appeal to the base. If they could get themselves out of some colts of personality of trump and out of the avenging his loss in 2020, he has a lot of appeal among evangelicals and christian voters in the south end can peel away some portion of that africanamerican base just as george bush peeled away some of the latino and africanamerican base and that is someone you should Pay Attention to, and a trump, tim scott ticket would be eight interesting dilemma for the Democratic Party. Lisa will heard, formerly of texas, representative came out and did that in iowa and he was booed. What makes you think it will be received by the voters . Wendy who is going to these rallies and who is going to vote six months from now and do you set the stage of saying, i can fight just as hard for what you are what i am believe in and im willing to take your boots. Boos. The other problem for ron desantis is that it will scare voters. The house, this helps, generating trump fans going out the door for bowling voting is good. They lost in 2022 mainly because a trumpendorsed candidates and the same pace fate awaits them in 2024. Lisa we will get disclosures from former President Trumps campaign. The expectation is millions tens of millions of dollars have been spent on legal bills were trump as well as his associates. Will this be a problem for the donors or has this been understood that this is the fight there trying to get behind as part of the fight he is launching for president . Wendy this is a watching technical question for people who care about Campaign Rules but trump has made no bones about soliciting money for him. It is not about the Republican Party. No one will be surprised and the donors dont seem to care. They are in it for him, they are not defecting from him. The majority of voters have defected. Some sliced the Republican Party and for the general election, it is a tremendous problem facing the Republican Party. The voters in the Republican Party dont care how trump spends the money. Jon can we talk about the voters in the Democratic Party and how they might view the president s handling of the situation with his son. There are allegations about his business dealings. What have you heard on that recently . Wendy democrats face an enthusiasm gap. It is getting a little bit better. His polling is higher. Things are better than people thought they might be in some of the policies he enacted are showing with voters so he has a mental. He has momentum. The plea deal that fell apart in the end, that is an advantage for joe biden. People were skeptical of that deal and it could be a liability for him among them credit voters dont get the sale the same deal from prosecutors. If there is any punishment that people view as legitimate, that helps joe biden. Politically. Jon we will catch up with Annmarie Hordern on some of these issues will stop issues. To follow politics in america, you need a law degree. Tom absolutely and that is the first real conversation we had on a horse race and that shows you how the doldrums of the summers are changing. We are talking horse race with the professor. It is a whole new world. Jon in closing the gap with the former president. And closing the gap with the former president. Tom can we just do this like the british system like july 2024 jon they left to complain about this. 18 months of runway and tracking it out. Lisa that is why everyone talks about it. To your point about some of the challenges to the former president and also the president , there is a question, if trump does not have the enthusiasm, does joe biden and how is he consolidated . If these he has challenges that raises questions, i dont know about the legal system. Jon Annmarie Hordern has thoughts. Tom the yankees come out last place yankees. Probably thoughts on that as well. The red sox did not get it done. Jon they are doing better than the yankees. Tom weinberg on payrolls this friday and the latest data out of the make of japan up next. Out of the bank of japan up next. The chase ink business premier card is made for sam who makes, everyday products, designed smarter. Genius like 2. 5 cash back on purchases of 5,000 or more, so sam can make smart ideas, a brilliant reality chase for business. Make more of whats yours. Hi, im jason and ive lost 202 pounds on golo. So the first time i ever seen a golo advertisement, chase for business. I said, yeah, whatever. Theres no way this works like this. And threw it to the side. A couple weeks later, i seen it again after getting not so pleasant news from my physician. I was 424 pounds, and my doctor was recommending weight loss surgery. To avoid the surgery, i had to make a change. So i decided to go with golo and its changed my life. When i first started golo and taking release, my cravings, they went away. And i was so surprised. You feel that your body is working and functioning the way it should be and you feel energized. Golo has improved my life in so many ways. Im able to stand and actually make dinner. Im able to clean my house. Im able to do just simple tasks that a lot of people call simple, but when youre extremely heavy theyre not so simple. Golo is real and when you take release and follow the plan, it works. Jon pushing ahead to earnings on thursday from big tech and on friday, the payroll support around the quarter payroll report around the quarter. Slightly firmer by 0. 0, 7 and building on the gains of last week. Again of about 1 over the previous five sessions and the nasdaq 500 nasdaq 100. Google as well. Next up apple and amazon. In the bond market, the two year yield up four basis points. Some stability on the front end of the curve. Yields are higher by a single basis points, the 10year of five 3. 9787. We can talk about the bojs role in that. The euro 1. 1038. A bit of strength on the euro. We talk about the eurozone in 60 seconds. The bank of japan surprising markets, and announcing an unscheduled bond purchase operation with yields spiking to a nine year high. Confusing because the move comes days after the bank tweaked yield curve control. Tom i put this out on twitter when i was on my sabbatical. The greek islands are incredible and the answer is Stanley Fisher is good is this and you take the first derivative. It is a change of. 45. It is. 05 and the initial move divided by. 45, the percentage change of the move is shocking. I dont care what anyone says, that is sealed up, price down that is sealed up, price is yield up, price down. It is about one basis in the treasury market it is not one basis point in the treasury market. Is there a level they did not like . Lisa a lot of people are suspecting it is the speed of the move and they want it to be controlled. Some people are doing the calculations. It would be a loss of about 4. 5 if they were to move up to the 1 target on the 10 year. Are we heading toward that kind of issue or is this going to be 0. 6 line in the sand . Jon did you see the minutes from the bank of japan . We should avoid deploying our at the earliest time possible, this was the governor talking about getting inflation back to target. The date of that quote, april 2013. We have the full minutes from the meeting that took place 10 years ago and they were talking about a two year time horizon to get back inflation to where they want it to be over eight sustainable period and they are not there in their own mind. Lisa it is a problem when you are looking at data on the central bank that is the time capsule that is not giving you anything in real terms. If they like to move slowly, some massive move in yields isnt going to help anything but the question is was this a departure and a shift toward yield curve abandonment or was this a slight tweak to give some strategic ambiguity in markets . Jon we have to talk about the latest out of china, more data and effort into the recovery and losing steam and this time the data from july, from beijing, promises of more measures to boost consumption. That is falling short of the 50 market that separates consumption from contraction. The nonpmi is easy. Easing. The data in china is looking sluggish. Tom just do something and is the answer within the fiction that is there economics. The issue is beijing will come to the rescue and what form will they come in and the answer is deflation that is the short answer and history says they will do it. They will have to act to provide societal stability. Jon their data is problematic. It is a return to growth but inflation is an issue. Second quarter gdp advancing by 4. 3 . That pretty much sums up the the growth. Across cpi, for july coming above estimates. Bloomberg pointing out the core cpi surpassing headline inflation for the First Time Since 2021. Lisa especially given the fact that Energy Prices have been inflecting upward so if you get a big boost from the fact that Energy Prices have come down, that can change at a time when the underlying wages and other forces are pushing things upwards. Does at what point does the ecb reversed the dovish tone and lean into rate hikes . Christine lagarde saying a pause is not just a pause. They can go again. Tom this is under surveillance and this is great economics around the world and the only thing under surveillance is kane has got one foot in germany. They are arguing about value. Jon daniel leavy, who once the club, i understand there is have a we can meeting going in the weekend and the meeting got rescheduled. Tom is that the same quality of league . Jon i would not say it is. The premier league is the elites of european football. They are not and that is the issue and if he is going to leave, you think he would go to a club like that instead of across town rival where he would be hated by fans. Four going up to somewhere like manchester or liverpool. This is his last big chance of getting a contract. Tom you look at the mess, you can probably understand as well. On what we have done with surveillance and looking at the pacific rim, the chief economist joins us. He is deep in financial crisis on the international basis and his notes on china and japan have been definitive. Why has not the yen moved abruptly off the verbiage and action of the bank of japan . Good morning. The currency isnt going to move on a dime. They only moved on friday and the change in policy sets of different forces in the economy. It is not just about Interest Rate differentials but if you are an investor in japan, you are looking at almost an assured loss on longterm and if you need to have longterm assets to offset longterm liabilities, you have to look abroad. This tightening of monetary conditions or the allowance of bond yields to rise, drives money are broad makes the yen cheaper. I think we have to expect a mixed pattern for the yen moving forward. Tom what is your scope and scale on yen move . Are you looking, ¥150 or 132 and yen . I am not going to take a longterm Term Position yet because i am not sure what the bank of japan is up to. We saw the widening of the band, it is is it a technical adjusted adjustment to improve trading conditions for people who have to be in the market or is it the first step in an actual tightening of monetary conditions . It is not clear. We do the calculations that show if we had the bond market fully adjusted, the increase in the band, they hit in portfolios, the economy would be for. 5 of the gdp and that is our map and we have a huge profit on the nikkei, if we were to call the end of the fiscal year today and if all that bond yield headwind reviews, that is a oneshot deal and i think that someone is hoping to take advantage of that and hoping the stock market would continue its rally and offset losses on the bond market and give him steps towards normalization. If it is have a percentage point, there is no impact on the yen. And there is no basis to look for a major move. Lisa we talked about china and how much willingness there will be for the peoples bank of japan of china that is focusing on outright deflation. Do you think they can come up with something to avoid protracted deflation over a sustained period of time . Carl chinas inflation has been nothing to talk about for a long time. We have been talking about 2 inflation. We are at a low end of a distribution but we are not in a deflationary range. The signs of deflation are not there in china. The monetary aggregates are growing and not as fast as they would like them to go and wages are going up. I am not scared about deflation in china. But concerns the more is the deep recession what concerns me more is the deep recession in china that might have impacts on this ability of the regime and monetary policy. China, unlike the western economy, doesnt respond to Interest Rate cuts and the normal kinds of Consumer Spending or depressing policies we have seen on the western world because most of their growth is driven by investment. Most of it is planned by the state. The problem with their Growth Engine is that they have run out of lucrative investment projects and that is causing the growth rates to slow down on a secular basis. By switching the source of growth from investment to consumption. That requires a careful mix of policies. Lisa how likely do you think it is that there is a deeper recession within china . Carl i think recession is probably not the right word. We would call it a growth recession where growth does not occur fast enough to absorb people who want to come from the farms into the city and to generate the increases of income people want to see. That is the scenario we are looking at in china, some part of growth. We will see growth this year around 3 , is our forecast. That is short of what they want which is in the 6 range. Jon thank you. Carl weinberg of highfrequency economics on china and what is developing at the moment. We are describing this as an easing posture. The excitement last year following the meetings, the top body of officials in china, policymaking officials led by xi jinping. It wasnt included this time around so there was a feeling from china watchers that we are stepping back from that and maybe do some things to help people buy more homes. These are the little nuances. If youre waiting for cold, blunt stimulus to supercharge the economy, i dont know if it will happen or not. An observation of where we are currently, it is not happening yet. Tom i did a panel with bnp paribas in china 15 years ago and i had no understanding of how the entire entire discussion in china is property. That is the avenue for the masses to try in husband savings. Lisa this is the reason why they dont want to lean into that lever. They are worried about a bubble and they want to create an more even and develop market in the economy that emphasizes the middle class. They cannot do that if they continue to inflate housing that is not occupied in a significant way. Tom jonathan amberson did legendary work on this and he is and this is an generalization a generalization. A third of the country is vacant. Jon you are right to describe the problem. We are at the end of july, think about where we were eight months ago before the start of 2023 where we were talking about china being the place where the boom would come from. It is that disappointing that we are going into q4 about the prospect of stimulus out of china. That is where the disappointment has been. Your equity mark on the s p 500 positive. From new york, good morning. The first time your sales reached 100k with godaddy was also the first time your profits left you speechless. At the counter or on the go, save 20 with the lowest transaction fees and keep more of what you make. Start saving today at godaddy. Com the chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. Advancing flight for future generations. Welcome to a new era of flight. You do think we do think we will see improvement on the inflation story but not significant enough improvement that will allow Central Banks to say mission accomplished. The issue is on the roadside. We think those excess savings are spent. Jon the rate cuts are here but not coming from the fed and ecb. Theyre coming from latin america. That was tony rodriguez. July 31, your equity markets shaping up on the s p, equities with a lift by 0. 08 . A quiet start. In the bond market yields, little bit higher by three basis points. The meeting estimate in our survey, 200,000. Do you remember the days where every month it was 200,000 . Tom lets reframe this. 150 was the run rate. Jon this was prepandemic. Tom there were some modeling about what potential gdp is and the nonfirm payrolls would be 125 and the bold would say 190 90. In this employed america, 200 shock is a low number. What if it comes in at 250, what does that they do . The fed do . Jon we are facing the process prospect of it being no mans land. They want to slow this down. Tom is damien here for emerging markets . Jon lets start with em . 50 basis points more than expected. These were the original from voters front loaders. Hungry has been cutting. Cpi has came in lower than expected. The big story overnight is china and the fact that she is trying to pull whatever lever he canceled feel growth. All of these measures are not having an impact even though you see equities up over the last week on light volumes and foreign funds are buying five days in a row. Tom who are listeners and viewers, should they be studying and should they consider being in em and International Equities and bonds as a general statement . Seeing that here today, probably waiting for better entry levels. There is juice in the fact that a lot of countries have not announced their easing cycle so that is really a good time to go into these economies to receive fixed income but when they start to move, that is a bad time and when you dont want to move that. We are seeing that. Tom which country should be studying . You mentioned china. Is there a unique opportunity that we need to read in on . Is indonesia and india because they did hike rates but there is no sign that is that growth is coming up office so they are not using as quickly as latin america and eastern europe. All of the expert growth we are seeing or whatever exports we are seeing out of china, youre not going to the u. S. And europe, we are not going we are going to lisa how much of this will shift to a commodity story as you see oil prices post their biggest monthly gain going back more than a year and you see this across the commodity complex . Damien oil, it is anyones guess. Interest Interest Rates are real. It is all about carrie and the reach for carrie and right now, if you look at china, it is negative carry. It would disincentivize not only foreigners from investing in china but also chinese culprits who have dollars part off shore from bringing it on sure. Then again funded carry trade has funded a lot of the rice returns, the gains we are seeing on paper out of her emerging markets, and that gets pulled out from our feet, it is anyones guess as to what the negative feedback loop. Lisa there is a lot to incurred there including what the bank of japan is doing but doubling down on this Interest Rate story, you are saying when they start cutting, it is assigned that it is over. People say in the developed world, when they start cutting it is time to pile in. Why is it so different in be developing world . Damien it is getting out in front of the news and when it hits, it is time to sell and that is historically the case. It is a different cycle now so there may be juice left. We are talking rates around 13. 75 so there is a lot of room to cut rates back to levels we saw during covid. There could be a lot of carrie gains. We have a lot of duration supply coming into the u. S. We have seen a lot of supply come in but it is in bills. To see duration come in, lets see if it causes the affect all these prognosticators have been waiting for and you dont want to associate the fact that u. S. Liquidity is critical to the broader emergingmarket. Jon em is fascinating, the argentina easing in miami. Want to talk about that . Damien he wont play on turf. Some you have jon there are still rounds in the country that have already list that have artificial turf. Damien it is bad for the knees. Lionel messis career is on the line atlanta fc, they have the falcons blame their. I was reading some article that said they cannot get the, less turf the mls earth up. At the end of the day, they will not play. Am i going to get in trouble . Jon you did. [laughter] tom ticket sales damien ticket sales are up huge across the board but he may not be claimed . Tom damien is a real student. What have you learned by what mr. Cohen has met . Spent . What have you learned about the disappointment . Damien it is hard to predict and pitching is everything. It is hard to get good pictures. Look at the yankees, their bullpen is in disarray. If you look at stephen cohen, he is trying to do the right things but he cannot buy your way into the championship. You have to develop your farm system. Jon he is finding out the hard way over in the u. K. When it comes to the premier league. You try to do that with chelsea he tried to do that with chelsea. You cannot make it happen overnight. Tom the french football player. I loved him in the world cup. Jon he is one of the top strikers alongside another one. Psg faced a real risk, they lose him for nothing next summer. They dont want that to happen and there is a suspicion that he has a precontract agreement with real madrid. Damien it is not the 333 million. Jon do you think that will change sports . Damien i think it already is. Jon if you are a player and you can earn that kind of money damien how can you say no . Jon mbappe reportedly said no but you get the idea that this will upend damien you think about what other sports are subject to that disruption i think about College Sports in the u. S. Who is to stop from departing. For some who is to stop some deeppocketed investor now they do. I think charlotte College Sports, and Major League Baseball is another. If you want to pay the luxury tax, you can just buy players. Jon who is the most vulnerable to that . Damien Major League Baseball is open to that and College Sports not nfl, they have the cap and not passable. They have a cap there. Jon tennis, you by the top 20 . Damien i hadnt thought about that. Jon you going all over the place. Lisa what is this . [laughter] tom we should have damien come in through august. Damien can i talk about property on Bloomberg Business and sports . Jon we are running out of time. [laughter] lisa watch it. Jon every market slightly positive on the s p 500. Coming up next, our guest. This is bloomberg. My cpa told me i wouldnt qualify for the erc tax refund, so i called innovation refunds. Their team of independent tax attorneys will work with your cpa to determine if your company is eligible. [whip sound] take the first step to see if your Small Business qualifies. jennifer the reason why golo customers have such long term success is because we focus ono see if real foods in the right balance so you get the results you want. 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The fed is at a tenuous point they need to make sure inflation does not reignite. It is really one where the Economic Data has deteriorated you start to worry about the downside. The economy is strong but there is the risk that the fed may have to hike more to get the slowing they need. This is bloomberg surveillance. Jonathan live from new york city, good morning, good morning. This is bloomberg surveillance on tv and radio. Im Jonathan Ferro. S p 500 slightly positive on the by 1 . 1 . We need to look back a little bit to what has happened with japan with the yield curve control on friday. They let it go all the way to 1 while the japanese bond yield is back on the market today. Tom yes it was 14226 on the yen. I would go back to earnings as Economic Data with microsoft looks back a week and february they said omg we are all going to die and microsoft said that it is terrible, we are all going to die. Jonathan those two names are up 50 so far year to date. They surprised to the upside. This economy in many ways has surprise to the upside. Lisa so heres the tension point. Is this every acceleration of inflation or what . Jonathan the consensus view right now is hopes and dreams of a soft landing and soft landing data. That is the hope in the dream of equity market currently. Tom im looking at the gdp numbers, lets remind ourselves 2. 5 gdp is a solid number. I wonder if we will have a solid august, a solid september. And neal dunn a this week was defining this. Jonathan it is much better than a recession where a lot of people thought we would be right now. Lisa i wonder how much people are suggesting on the soft landing but the convention is momentum. From an investing standpoint, this doesnt matter. They said make hay while the sun still shines lets go it may not last. Jonathan citigroup is a great example of that. On equity trading stuart keiser says we are in a sweet spot. Tom your today it is just not apple. The nasdaq composite of 37 . Dow jones trailing up 7 as well. These are good numbers. I did not see that much rationalization this week it seemed off. Jonathan give them a chance to run through. Tom that is fair. Jonathan where are your notes this morning . S p 500 is up by. 1 . In the 10 year 397. 3. 97. Lisa we will focus on the fed senior loan officer survey this week at 2 00 p. M. The fed was saying that this is shown tightening in credit conditions, to what degree will it matter again . We have the jolts data tuesday, adp wednesday i love that nobody cares about adp until it comes out and then they love it. They we have jobs report. And we are at a flat line on unemployment. Neel kashkari said with innovation it seems unrealistic that we will get inflation lower without a take up in unemployment. For earnings, it is amazon and apple on thursday which is the index but theres 160 Nine Companies generally of the s p 500 reporting. How much of this will be the main story after delivering the information . Jonathan unreal. Joining us to talk about this is the chief equity strategist if you have not been able to follow his advice it was constructive for the year ahead with a price target of 4400 on the s p 500. And more recently, you have given the flat from here. Is constructed through much of the year and as people start to get on board and call for a sweet start in the summer. You get a flatline line. Explain why. Barry hey jonathan, good to see you again. Crest classic recession was never in the cards for the first half. You will not have a recession because that is the largest policy experiment suits world war ii. That was an easy call. Going forward, the two things we are watching closely on the economic front our productivity it will drive your core pce inflation and oil, we are still wrapped up in geopolitics. We think it is a big risk in the next 12 months. I did not hear any people talking about it. Tom i go to mario in his work on autos a million years ago in media. You own capital goods use ap things you say things have fallen on your foot and hurt you. Tell us about roper and the world years ago i know it is underpriced, when does it pop . Barry when i look at various Economic Indicators we been big fans of pmi manufacturing. I would take that over not the under on the next three points. That is good for the industrials which i mentioned for 25 years. The financials also fit into the value category. Also basic materials and i would throw in energy. Energy services really are cheap on cash flow they are indispensable as far as the eye can see. When you look at the cyclical value in total it should outperform the cyclical growth in tech. I think the market is a few points overvalued because of the pe ratio. Unrealistic expectations regarding Financial Conditions Index which do not justify the price target ratio we have right now. Tom if i miss the banister bull market how do i begin to invest now . Barry we did as i mentioned the sectors. We have etfs for all of those as well as industry level two industry etfs. Lack rock they do a great job with that. And i say you go along people waited cap in the s p in the second half, i like that diamond is over the q so dow over the nasdaq 100 and the second half. I would buy protective puts around september or october because i think that will be a turn as Unemployment Rate takes up, we get close to the trigger point of a modified move over 33 basis point increase. That would signal a recession and we could be on the horizon. Lisa what about the people who say all of the macro call stuff is not working, do not fight the consensus in december and august. Brian lovett saying make hay while the sun still shines. Going with the momentum. In august not a lot will push against that including the data. Barry if you do you can use of forward pe or trailing pe, we are fond of using cape pe which is trailing in our calculations. Overlaying with the Goldman Sachs financial conditions which is a well constructed fci, if you do that for the powell era in 2017 the market has two turns or two multiples overvalued. We have some downside on the momentum trade which you reference. What we are doing is more tactical trading in the back half after participating in the macro trade in the first half. Jonathan wonderful call so far this year. It is great to catch up with you barry of stiefel thank you for joining us. Calling this market has been so difficult, lisa was tweeting over the weekend about housing. I noticed that i was reading this over the weekend and i came up with this stat over for over from redfin. 910 nine out of 10 have a Mortgage Rate below 6 . Then the lower have 34 and that is why not many people are moving. Lisa this is why prices remain high even though Interest Rates are high because so few people are paying that. Youd extrapolate this in the corporate world and some data coming out this morning, shows that most companies are paying low rates tied to the low rate world. How interestrate sensitive is this economy that we are looking at . Tom the debt will be reissued. They will not do it in the same day, but does it reaffirm Share Buyback after doing a mega bond deal . That is what they do with the higher Interest Rate environment. Stove for set up says know what you own. Knowing what you own in october last year is easy. Doom and gloom that was easy money, but right here right now know what we want. Jonathan last year was easy money . Tom no, but if you believe in the here is the rumor if you believe in maximum bramwell it is easier. Now it is the second leg install jonathan if youre just joining the Program Welcome to the program. S p 500 up by. 1 . And we talk about the equity market when we come up next. We speak with Michael Purves. And never mind the borrowers in the u. K. The regulator getting very frustrated with british bank not passing this. They may be hearing up to force them to and im not sure how they will but the latest on that throughout the program. Tom while i was on sabbatical i was not looking, but the public asset is voting for higher yield. Lisa that will force them to pass the savings on. Jonathan there are some threats. Lisa ok i am sorry what is this . We tell people know wage increase for you but we make the bank pay money. [indiscernible] tom do they have money market funds in england . Jonathan they have something similar. Tom i dont know. Jonathan there are 5. 5 trillion. Tom it is huge. Lisa and people are worrying how stimulative it is with people getting money off of their money at a time where they are not paying a higher Interest Rate. Tom Investment Management conversation coming up in about 15 minutes. Equity market up five point 1 on the s p 500. From new york. This is bloomberg. The chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. This is ge aerospace, advancing flight for future generations. Welcome to a new era of flight. The economy continues to surprise how resilient it is. We are making Good Progress and we are staying on it. If we need to hike and raise rates further from here we will do so but we will let the data guide us and not prejudge the outcome. We know shocks could hit but right now the base Case Scenario seems that we will have a slowing economy and avoid a recession. I hope that is true. Jonathan that is the bank of minneapolis president speaking on the ecb. He thinks the hope is somewhat unrealistic but the line we have heard many times if we need to hike we will do so but we will at the data guide us and not prejudge the outcome. That is pretty much a copy and paste from the fed to any fed speaker we have this week. Lisa and it does not leave us with more clarity. Jonathan they want to provide less clarity. Isnt that the approach . Lisa a lot of people say the data will not show a slow or reacceleration of the data until it is too late for the fed to respond to it. Are they basically saying we will not make a call and we will be late one way or the other. Figure that one out for us, tom. Tom i think it is going to be a mess with the Economic Data coming out. What people want to focus on in the doldrums of the summer is that this as is an exceptionally business busy week. We are smarter at 9 a. M. Friday they we are now. Jonathan payrolls come out on friday. S p 500 with yields a little higher by a couple basis points. The oil market biggest monthly gain potential he sensed early last year. Tom lisa we are looking at potentially adding to that data with the biggest oil market going back for years. Jonathan brent crude. Tom 86 a barrel i think that is a quiet story. It is under the radar. Right now under the radar we speak with summer president ial correspondent whether it is various president s in marthas vineyard, there is something about the president going away for president biden. I hope i am pronouncing this correctly it is a beach in delaware he has a delaware state fair to look at and his i signaling on the boardwalk bicycling on the boardwalk to look at. Describe where he is with the move on the summer white house . Kailey we hope he is safe on their because we have seen him fall when he is in rehobeth. And that is where he remains for the week. And then hes looking at kicking up 2024 campaign week. He will go to some states like arizona and utah. This is a summer lull, but that is in regard to his summer schedule i do not think it is a lull with what is going on behind the scenes of his with his family. One of the friends of hunter biden goes behind the doors with the close hearing that is happening. The Republican Party will look at this in terms of what the individual can say about Hunter Bidens business dealings whether it was with china or ukraine and what republicans want to show. They want to show there is a smoking gun that will link this to the president. Tom we try to have a balanced approach for the founder. For our international audience, the news cycle in america is polarized by the travails of the president s son. How focused is the president on this day to day . Is your reporting off context . Is this a president riveted by the travails of his son or is it being handled from a distance . Annmarie like any human being, something happening with your child will weigh on you, but obviously i think the president tries to viz. Is me projecting i do not actually know how he feels about this issue. I know that he does not like to speak about his family especially hunter biden in this way over the public. But the president has acknowledged for the his seven child grandchild living in arkansas. And he really likes to put things in boxes with family and presidency. But i imagine as a parent this weighs on them as well. Lisa with former President Trump legal issues, some say if you can whether a republican nomination he will not win the general election. There is question around the enthusiasm dividing can bring and donald trump. And will he win if they are paired against each other . There will be pushback given concerns about his age and unresolved russians around how his tenure would go. Annmarie two things. I and Many Americans think that both individuals are too old. You see that come out now given with last week with senator Mitch Mcconnell or diane feinstein. There is a growing call nikki haley talked about it over the weekend again at the iowa dinner that there is a growing call of a new generation of leaders. That weighs on biden at the moment because he is the acting president of the United States. It is not a for sure conclusion that if it would be a rematch of 2020, biden versus trump, that biden would win. I dont think anyone today could project who will win in the upcoming race. The poll showed that biden would have a lead on trump but it is too far out at this time. In 2015, the top two candidates in the gop horserace was jeb bush and the former governor of wisconsin. Scott walker. Trump was at 1 . Chris christie another current challenger of his now was at 6 . It is too early on so we have not had our first residential debate to speculate. But we see within the Republican Party, at the moment it is massively trump. The polls at the first of the race show that. One line stood out to me in the poll that when individuals are ask about trump and desantis as the top two candidates trump is crushing desantis in the poll. They say people like desantis but people love mr. Trump. Lisa there was a propose competency test for a proposed elected official in the u. S. They say that would be nice but it would not pass muster constitutionally. They found legally it would not fly is that correct . Annmarie theres been a lot of talk about this given the polls with americans. Most americans want to see upper age limits, but the fact is they also say that if there is a candidate that is very wise even if they are older and they can do the job and they are fit to do the job, they should be able to. It is hard to get through congress, but at the moment it is used at a as a big talking point with what is happening in washington. You see scary and worry moments of elected officials struggling right in front of the public in front of a camera. Thats why this is been a major discussion. Whether it will turn into legislation remains to be seen. Jonathan there was a victory lap for labor off of the back of the deal with ups and teamsters. We talk about one of the oldest and biggest trucking is this, yellow, going out of business do we have a response from the white house on that . Annmarie not yet. The press secretary will brief today and i imagine that will be one of the top russians to her alongside everything going on with the Biden Administration and his family. Jonathan 30,000 jobs i believe. It is a big deal. Thank you, and annmarie. 30,000 of those team members. Lisa teamsters had been negotiating with them and they cannot come to a resolution they said they would not even come to the table which is a key russian at a time where yellow said they offered them races that they did not negotiate on. Jonathan the more i read about the company the more i believe it was just a yellow [indiscernible] tom you have to be careful on this. Jonathan maybe not a signal about the broad economy right now. S p 500 for up put in percent right now. We speak with our next guest coming up next. This is bloomberg. The first time you connected your godaddy website 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 hi, im lauren, i lost 67 pounds in 12 months on golo. we did it golo and the release has been phenomenal in my life. Its all natural. Its not something that gives you the jitters. It makes you go through your days with energy, and youre not tired anymore, and your anxiety, everything is gone. Its definitely worth trying. It is an amazing product. Jonathan of weeks of gains on the s p 500 last week looking to add them to the earnings thursday from apple and amazon. In the futures are positive right now by percent. On the nasdaq up by. 08 . Positive right now by. 1 percent. On the nasdaq up by. 08 . Lets turn to the bond market. Twoyear, 10 year, 30 year shaping up as follows. The twoyear this morning unchanged. At four point 8766. 4. 8766. He is what Everyone Wants him to be. They are datadependent. For the ecb what it difficult for them in the fx market. The euro is stronger 11032 1. 1032. Core cpi above headline cpi for the First Time Since 2021. Lisa this is a big concern with energy they thought this fueled the gdp gains but there is a potential slowdown in china with Energy Prices going up at a time where core inflation driven by wages and services driven sectors are climbing. Can we put that together . Jonathan plenty of difficulty to follow the boj the surprising market. There is a schedule on purchase operation to do something about the drift to higher yield. The bank announced it was buying 1 billion of bonds and that comes days after the bank had yield curve control. Did it move too quickly . Tom it was all yield analysis. They refused to talk about price because they do not want to talk about price. Answer is yield up and price down. An hour ago someone mentioned, they have to take a loss in the closed systems with the bank of japan. Somebody somewhere has to take a loss. That is a great unspoken right now. Jonathan you have to imagine that you would get to a point where yield starts to ship so hide the domestic rings the money home. So in places like france and europe, this could happen in the market to some extent. Lisa thats why was not surprised there was a bigger not a bigger reaction to the adjustment i the bank of japan. But that is them stepping in at 06 to buy bond. We do not know the extent of what they are doing and how far they are willing to let things normalize. Jonathan a return to growth has secondquarter gdp advancing 0. 3 percent after stagnating in the previous two quarters. It is not great right now for the ecb because the Growth Profile has core cpi at 5. 5 . They have a lot of work to do and they do not want to commit to it. We talked about lack of clarity from the fed reserve. This quote could be from anyone on the fed. It will not necessarily be defended definitive in september. Lisa making a hawkish pause because we may have to go up again. It is tougher later. We have to interpret the data and give Forward Guidance if the trend is sticky inflation. Tom what is interesting about this is where is their amazon and apple . They dont exist. We are seeing a lack of innovation. This was an wonderful french, productivity. There is no google, apple, we know the story the economist and bluebird rights it beautifully. The spirit of the place and not only the equity market but the nominal gdp. Tom i went to italy and they seemed like they were doing ok. Let me turn to this story, the u. K. Financial conduct authority doing what they call robust action for that do not transfer benefits of consumers. Barclays, natwest, and hsbc have been looking back at the rate hikes from january to may. It is been 51 fixed term deposit. This is where the bulk of savings are going in and put in your money and take it back when you want. Lisa has it been that in the u. S. . If you have a deposit account you are probably still getting zero in the United States. Tom cant british people go to any money market . Jonathan there is very little incentive to pass it through, but ultimately the regulator wants to do something about it. I am waiting to see how much teeth this has and we will see. Tom i would like to talk to a watchdog this morning. We will do that in a moment we have someone joining us with one of the toughest jobs, our guest from bny mellon. He had to do the gradebook book on Financial Stability. What is the Financial Stability in america looking like . Its better been 2008 but that does not say much, does it . It is helpful that the Balance Sheet with households and corporate have been much improved since covid. The effect but we are seeing from that improvement is really on the consumer. We been able to withstand a lot of curveballs in the American Economy the last couple weeks. People have been predicting a recession for a couple years now. We have not seen it yet. We just now turn this into mentor the expectation for a soft landing. I would say even though the labor market is in looking strong there are still risks out there. Tom commercial real estate or the loan business, theres a lot of question. With you and bny mellon the longest dividend is like 1630 they been doing the dividend since the pilgrims hit the rock. And the answer is there are worries out there. Can they intrude in the prosperity of america . Sonia i think the bigger the exposure of actors in the economy the higher the risk. You look at office space in major metropolis is not coming back for the first see of all future. There are other elements like multifamily mixeduse spaces that are doing better. Lisa a lot of people are questioning why we see disinflation. This is a natural yearoveryear calm coming back to the normal prepandemic. Then you have an along saying that disinflation data is not the death of the phillips curve it is because there were yield crack sin the economies long after supply chains were downgraded. It is a downgrade from demand. Do you agree . Sonia theres a lot to add on that because we see a strong labor market. We have to ask ourselves why is that the case . The correlation between Core Services is overtime relatively strong. We have real cracks that will put us in a recession next year or is it a stabilization with high levels of activity. It is difficult to say. What we see in the market is people are reacting to the pieces of data that confirm a soft landing and ignoring the part of the data that may point to a more significant deceleration. Lisa the reason is the employment market remaining strong. From your vantage point, how soon will we see the softening in the labor market to know quickly enough for the fed to adjust. In other words, in their data dependency when will they get the data that is true to get that met that decision . Sonia it is difficult because we see a big difference coming down between job openings and people looking for jobs. As long as that continues to narrow without people losing jobs across industries, i think we are safe enough, but it could change over time and it is difficult to look at the data that is somewhat backward looking such as payrolls and see signs of wind that may be coming. Jonathan we have research recently was doing student loan repayments coming back. And we have apollo releasing numbers. There are 45 Million People with Student Loans average monthly student loan payment is around 200. He said resuming student loan payments in october will subtract about 100 billion a year. Does that move the dial for Household Spending . Sonia on its own i would be loath to say that it will but on the background of the generally slowing economy it may be. I think the higher rate environment is hurting consumers already, but as long as the job market stay strong it has less than an impact than it did on corporates to refinance for the higher environment. Jonathan you go through the research about which households younger versus older will benefit. Lisa this raises the question of the instagram crew. Those that travel to certain places to get an Instagram Photo area and they are not doing that so much. Jonathan what about jay j. Crew at the moment . Lisa i dont know. Why are you asking me . Jonathan i thought you were interested in cruises. Lisa no, i did not go on a cruise and i was not in alaska and not on a cruise. Tom i thought one of her interns told me that. Jonathan you said it was a cruise. [laughter] lisa do you take me for a cruiser . Im sorry, but no offense. [laughter] jonathan that is perfect. [laughter] i am so offended, sonia this is great. Lisa [laughter] jonathan if youre just tuning in welcome to the program on the equity market we are positive by. 12 percent. Coming up at 8 30 chief economist from Moody Analytics coming to catch up with us. And zac brown the ceo of mclaren meeting with tk joining us next. Tom this is a really interesting gentleman. He is somebody that is the driver in the game he has actually done it. He has two young kids at mclaren. And he has to manage them on a daily basis. This is not 42 this week or perez and the belgian guy in red bull. This is somebody running to kids right now. Lisa i know nothing about f1 in this. I have to look at netflix to understand what they talk about every day. But moving on, i am curious as an american who raced in the sport bringing it to this country. What is the difference for how f1 will change to adapt . Tom there is a tweet out with the fixation that they have of going to the backend end of the race. He put out a tweet jonathan [laughter] it drives me nuts. Tom the british guys are doing great. Jonathan there is a difference between what people watch on netflix and what happens actually. Lisa i dont understand fully. [laughter] jonathan they stir up a lot of drama that does not exist may be on the program. It is all content, isnt it . Equities positive. Mclaren racing up next. This is bloomberg. Chase for business. Make more of whats yours. Wake up, achievers. Youre making the most of every hour of your life. Chase for business. Except the hours that youre sleeping. So why do we leave so much Untapped Potential on the table . This is a next level bed, for a next level you. My circadian rhythm is kicking your circadian rhythms butt its not a competition. I know, but im still winning so it is a competition. Save up to 500 on the new sleep number® smart bed. Plus, 60 month financing on most smart beds. Shop now only at sleep number®. This is ge vernova, helping generate and move the energy that our world needs. Welcome to a new era of energy. Jonathan i thought this would be the sport for you because it captures your interest in one thing. Tom they used to throw pencils at me because i have no interest in f1. The Netflix Series is what got me going. There is a british guy mary to one of the spice girls. Jonathan im sorry, what . Are you talking about Christian Horner . Lisa [laughter] tom i didnt even know what mclaren was. But the interesting thing is that it is the only sport where you look at the managers and executives with the same way you look at the drivers. Jonathan this is great. Tom am i doing good . Jonathan yes. Tom this is someone that has been doing this from a young age and has rate great amount of americano in him. This is a renaissance man running things. And you told me mclaren was special. Jonathan it is very special opportunity to catch up with that ground. Zach brown. You had this success in hungary and in the u. K. As well. Can you cash the red bulls this year and get a window . Zach and get a win . Zach we are getting closer. I would think a win is possible in the second half of the season. That is our goal. Jonathan what is it about the set up of the car where you think you have made progress and where can we see that a little more . Zak its pretty much in aerodynamics game. You have to have great drivers which we have. But it is an aerospace aerodynamic game. We started that in austria. I think have some of the weaker tracks. In austin, japan, we should be strong. There was a slow point that we do not like and who likes low anyway . That is where we need to roof and we have more developments coming. And we have a development race. Tom i watched every minute of belgium. At lap 31 or 33 zach brown was talking to a kid quietly who had gone out of the race early as well. Oscar p. R. Tsay he was 22. At 14 he was basically a professional. That is all these kids do. What were you saying to oscar at lap 33 after he bombed out of the belgian race . Zak i told him to not worry about it. He was having a great saturday and season. These guys feel like they let themselves and the team down. They need to know we are all in this together we win together and is together. And they had a difficult race with the arrow set up. At that moment lando was going backwards until we got him strategically in a better place. He probably was not missing having too much fun being a little lighthearted and that these things happen and that he has done a fantastic job all year. Tom explain to our american audience and someone like me, what does mclaren mean in the job like racing . Zak he was a ledge and he is all about innovation. He was a driver who was a designer. We are very proud to wear the papaya colors which is his colors back in the day. That was done and that was so he could stand out on television in the blackandwhite days. He is an inspiration to us. He is a racer, innovator, designer and team owner. With the second most Successful Team in history. That is something we are very proud of and we also have a triple crown which is the 24 hours and 8500 and the Monaco Grand Prix and we hope to do that again in the future. Lisa as you try to plow further into the u. S. I am one of the people that is becoming one of the adopters. Where is the distinction and overlap between formula one and nascar . How competitive is it at a time where we have a colts nascar following cult nascar following in the u. S. . Zak they are different and probably have the same similarities between a spell and basketball. They are radically different as far as the type of racing a little bit of a demographic. Formula one is very global and nascar is a domestic sport. I think all other sports help each other. I think there is room for both including indy car is much more like formula one. It is awesome to see how big formula one has gotten in america as weekly as it has. As quickly as it has. And i think the miami grand prix and the soon to come vegas grand prix will be off the charts. Lisa a lot of a purist may feel that netflix inaccurately reflects the drama. As an american who then in a sport that is dominated by european presence, how does this work have to change to become as popular in the u. S. . Zak i think it is changing a lot of credit to liberty requiring the sport acquiring the sport 56 years ago and netflix. That probably would not have happened with ubs ownership because the industry and sport would not have wanted the cameras on the inside of the sport. It was not an inclusive sport. I think now we are digitally savvy embrace the fan. We are all about the fan and things like netflix that are showing people about the great sport. Ive seen the comments which are a little bit disappointing because i think they are a bit inaccurate in the sin that we are capturing a great sport and when netflix puts together the content they will pick and cool because they are trying to illustrate wayne. We as the racers we will see, for instance that was a clip of our pit crew from monaco but they are showing us in italy. But that is not change the narrative. But i think we are a little too close to it. Formula one is about all the details and we get wound up with the details are in accurate. Jonathan tell me how most agreements have developed over the past couple years. Lets say we want to put emerge surveillance on the side of a car, what is the talk about now compared to several years ago . Zak make me an offer. Jonathan how much of that has the price increased . Zak it has gone out to fold in the past five years. The exposure has gone up fourfold. So it is all a value for money, but the demand we look at our partners. Google, cisco, dell, Goldman Sachs Fees Companies were not considering formula one five years ago and now you have the worlds greatest Companies Joining those that were already there. It has been an unbelievable commercial success. Tom i believe we can piece together 5,000 to get bloomberg surveillance on the side of the car. Lisa [laughter] tom you go from belgium till never lends. Will your car each week and different for netherlands or do you take a real european holiday . Zak no, a bit of both, but everything is about advanced planning. We will have two bit on our car in holland, but those have already been developed. The shutdown is for the technical team. It is mandatory. We cannot even send an email. So we will spend time with my indycar team because you cannot keep me away from a racetrack but it is very genuine you cannot touch the racecar for two weeks and cannot even communicate about the racecar. That is all planned in so our development is already ready. Jonathan im having that written into my contract right now. I love it. Lisa [laughter] jonathan thank you and we appreciate it. Good luck the rest of the season. Recent success for mclaren. We hope they do better and better. Area cool, more on the market of next. Very cool. More on the market next. This is bloomberg. I think this goes higher for longer and im talking about equity markets right now. The data continues to come in pretty good. Theres been tremendous momentum with the consumer. We think savings are basically spent. Just from price fidelity price stability. This is bloomberg surveillance. Tom good morning, everyone. On radio and on television, staggering into august is what we do and we stagger tomorrow to the ism data. Weve got earnings, economics and all that and we start tomorrow with that first indicator. Jonathan you make us sound drunk going into the data tomorrow, staggering into it. Its a big week to pick up the month of august tomorrow. Tom its a big week to do the data and i think the earnings story and the great gloom miss guess we got an earnings is part of the Economic Data. Apple and amazon way to ism. Jonathan we would typically say the market is not the economy and we pick out the tech names with double digit gains and say they are not representative of the economy but the economy has been doing much better than expected. And there are several stories outside of big tech which speak to the resilience of Discretionary Spending in america. We looked at cruise lines this morning. Tom maybe its two americas. West west texas intermediate is higher. Lisa a lot of people are wondering why it didnt happen sooner given that everybody is traveling more. Demand is better. The actual consumption of gas and oil has gone to some new records. Is not necessarily an economy or world moving away from fossil fuels or people slowing down. Why isnt it even higher at the time when people say the supply demand balance is out of whack. Tom i have a paper in pure review, the tao of tang. What was interesting is the bank of japan. 142. 22 but the bank of japan has acted. Jonathan they havent dropped yield curve control, just going to tolerate a breach of the. 5 ceiling theyve had for well and pledged to come in at 1 every day they need to and then they came in it. 6 . We are still asking the same questions from friday. Do they care about pace were levels and if they shift in policy to make the easing more sustainable . Is it a genuine step toward tightening and the fact that we are sitting here figuring it out speaks to the ambiguity we been talking about the last couple of days. Its by design at the moment its not having negative consequences for now. It starts to induce villa dez volatility because a market is providing clarity that would got a different story. Lisa is this strategic ambiguity that the bank of japan is executing only possible because we are also getting strategic ambiguity from the ecb and the Federal Reserve . Tom where does strategic ambiguity come from . Was it friday . Was it bank of japan . Jonathan and bank of america. Lisa the idea here is that they are not looking to provide nonguidance. They dont want guidance, they want the markets to go on their own according to the data not driven by an expectation of policy. Tom my strategic ambiguity is that the red sox could not get it done not once but twice against the San Francisco giants. How far are these equity indices away from the alltime high . The spx is up 5 and the dow was up in the nasdaq is up 5 as well. We are getting there. Jonathan some people still call it a bear market. Equity futures right now were posited by zero point 1 on the s p 500. There is the lift in crude. 81 and . 40 on wti crude. The data out of europe, gdp has some growth in europe right now. Cpi is still a problem and core inflation in the euro zone is 5. 5 . The ecb is still unsure about what they will do in september. Tom we launch into august with the most important view of the day. This meant writes a piercing direct no, Michael Purves joins us now. Congratulations on being in the market and saying your participating. You bounce off 74 and a big pop and 75, nobody in january, 76 was ready for the second leg. How you frame the second leg of this bull market . I think it will come down to rotation. Big tech is done a lot of the impressive lifting here. They blazed the path forward and had the most aggressive be expansion, maybe too much. You look at the nvidia earnings which have been bottoms up doubled over the last quarter and steal some thunder from what will become a late summer climb. Im not sure the ai excitement, i think we will go into more of a show me type of mentality on a lot of the ai narrative. The rest of the market, balancing cyclicals, its been a tough thing to own because we are supposed to get this recession at some point. That said, the valuation is night and day. The spread of valuations between the cyclical indices in the big tech. Tom what do you acquire this morning on a sector basis . One of your guests earlier stole my thunder. Energy and industrials look really very compelling. There is structural stories there. With regard to some of the big sort of second wave of Capital Expenditures is happening in the United States. Part of the esg story is tied to industrialization andre localization and on the energy companies, you look at crude rallying, its up 12 off the recent lows without the benefit of the weakening dollar or a surge in china. I think that speaks to the fact that maybe we dont get the 120 oil that was thrown around a year ago. If there is a higher floor and a more stable floor, and i think there is given the new era of supply considerations from the big energy companies, you will see those are cheap stocks. Lisa we are talking about the details of tweaking around the edges. A number of guests have said the data is confusing. They say dont fight momentum. Its almost august, do you adhere to that . And the number of years ive been doing this, ive never been more intellectually torn. You look at some of these charts and it could be sugar futures or whatever, its a chart that looks incredible. You dont want to get short on the chart and then you step back and you think of we are looking at 2024. Ive been very nonbearish on the economy coming into this year. Still, you will see im of the view that we are going into a different higher nominal gdp world for a lot of reasons. All that said, nominal gdp will come in in 2024 and as that happens, you will see some earnings deflate. Ill think it will be negative but we will go into a four or 5 earnings growth. Is that enough to justify 20 times on the s p 500 . Lisa are you involved in phone mode . Fomo . Im not recommending bearish trades now except on a couple of individual specific stocks. Nvidia is cracking but i wouldnt go short the qs just yet. Im not bullish on the vix either. I think there are many reasons to think the vix will stay in the sub 14 range for some time. Tom you studied the asian index. How do you interpret the bank of japan dynamics of the last number of days . Let me bring that back to the u. S. Treasury market first. If you look at where it was a yearandahalf ago when it was 17 trillion of negative yield in debt, live from europe and from japan, teh bunds are in a different place today and jgbs are starting to wake up. I think that will reinforce rate volatility into the u. S. I think that will reinforce a higher floor and meet the u. S. Treasury yields. Its inevitable and i dont think its a sudden process. Back in august of 2015, the chinese shock devaluation. Thats what got the vix relation with the adxy so tight but i dont think thats happening this time around. I think it slower moving and it speaks to this higher nominal world we are going into. Jonathan where did that go . Other than vulnerable bond markets where there is a bigger presence of the japanesebased investor, do you think they may face a little bit of pain as they bring money home . Im looking more through the u. S. Centric lens. Im not worry about malaysia but from a flow point of view, i think its going to be nothing sharp and sudden. I think it will mean that we are edging up on 4 on the 10 year and people wouldnt have thought we would be there. I think we were we are going to stay there longer. If you look at the futures, forget about the next 12 months. Look at years three, 4, 5, those are lifting higher to a new place and i think thats a little bit of a tell that we are going into a higher floor for treasuries. For all this talk about headlines crashing in the u. S. , it has been coming in quickly but if you look at the last three spikes of 6 cpi over the last 50 years, we never got to 2 after those spikes. Thats something we have to watch closely. Jonathan good to see you as always, Michael Purves from capital advisors. Welcome to the program and the lift on the s p 500 going into big earnings and big data it and equity very futures are up by zero point 1 . 18 minutes from now, we will catch up with mark zandi from moodys before payrolls friday. The estimates at the moment, the medium is 200 k. If you break it down in our survey, lets take the top two ranked economists over the last couple of years. Stephen gallagher is looking for 190 and Stephen Stanley is looking for 270. Those of the top two economists on the street when it comes to forecasting payrolls, looking for something in and around two or higher . Tom all i know is i will not look at petey at adp. I still dont see the correlation. Jonathan you said that last time and then boom. Tom weve been so wrong on this. I will take a three month moving average and its fully employed america. When it goes, i believe it will go quickly. Jonathan claims are not breaking out, they are breaking down. Lisa this is the reason why jolts might be interesting. They said earlier this can move quickly. When will we start to see this lagging indicator show weakness that everyone is waiting for. Neel kashkari said i personally dont think thats realistic we will get a decline in inflation without some sort of pain and labor market. There is going to be a cost to the labor market. Jonathan little bit later, we get the loan officer Opinion Survey and no one is talking about it. Three months ago, thats all anybody was talking about. From new york city, good morning. The chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. This is ge aerospace, advancing flight for future generations. Welcome to a new era of flight. I think everythings on the table with the boj. We know the trajectory is comprehensive about using the yen and markets and in particular Global Markets will have to react. Jonathan jeff hughes, those comments coming after the bank of japan tweeted what they called yield curve control. They basically have a target rate and a ceiling and they told us the ceiling wasnt really a ceiling and they would tolerate some kind of breach, coming up 1 every day if they need to. They came into the market today at 6 to make sense of that. You have a weaker japanese yen. The broader story in the market is a lift to equities to kickoff the trading week this monday morning. Equity futures are up by 0. 15 on the s p 500 and yields are just about unchanged up a single basis point on the 10 year. That still rally and crew that hasnt gotten a ton of attention relative to the monthly move so far, 81. 47. Tom lets do the work right now. You can do this on the bluebird terminal on the bloomberg terminal take brent crude and we are writing the real up to standard deviations. I didnt realize how low we got in june and we are enjoying 86 per barrel right now. That extrapolation, we are on the plane to jackson hole at 90 barrel perhaps. Thats where we are. Right now, we are going to have the correct question for you to be briefed in august on the pacific rim and whats going on in japan. The global head of currency strategy at Brown Brothers harriman is with us. Thoughts on the ramifications 12 times 12 time zones away. Let me start with china, what does it mean for china if eventually in japan, i have yield up price down . Its not what china has to think about but around the world, they have to get accustomed to sopping up japanese funds. You go chasing it in emerging markets and china. We are in that pivot point where all of a sudden japanese rates will start going up. If it rises as quickly as many would hope, they are taking it cautiously. Not a huge jump in yields in a turnaround and capital flows but at the margin, i think we will see more japanese funds, home and be more domestically focused as yields ride but its a multiyear process. Tom we have to think of the immediacy of 86 brent crude on the pacific rim. I was away friday and we had j polaski on. Are you thumbs up on the pacific rim . I know there is oil demand. The interlinking parts of the pacific rim, do you see it constructively with optimism in 2024 . Lets bring it back to the china question. We had week official chinese pmi readings overnight for july. That continues a multimonth trend. In december, china reopened but since then, nothing but disappointment. We had some pronouncements here and there but nothing concrete. It was all very vague. They are saying the right things but when all is said and done, the economy is slow in china and has ripple effects. Japan, germany, asiapacific region has a break and fundamentals but always been dependent on this giant export machine out of china. As china turns inward, they dont go into the global export machine it once was. They will have slow growth in emerging asia and japan as well. I oil prices dont help and most of the region imports oil. Thats bad for inflation numbers. Im constructive on the emerging markets but im much more cautious on asia at this point because of china. Lisa how difficult is it to have conviction and a trade on chinese currency but even more so the japanese yen given the confusing rhetoric out of the bank of japan and the fact that they will put their thumb on the scale in some way we dont know at every single daily trading session . You hit the nail on the head. For the last three or four weeks, you heard from banks and thursday afternoon, we get this story from the japanese newswire that they are discussing controls. It cut people off guard with a big move in the markets in the afternoon. It was really a very puzzling move. They kept the yield curve and they made a moving target in terms of the upper limit. Its a halfhearted attempt i think to do something. I think they squandered a lot of credibility for a lot of nothing. The yen is down that tells me the markets dont believe the bank of japan. My old professor at columbia used to talk about called impossible trending. You cannot have free capital flows and control Interest Rates in exchange rate. The bank of japan is trying to dual three. I think it will hurt the currency rate. I more convinced that we should buy dollaryen. Lisa that might fuel some of your bets on latin american currencies as well. A lot of those bets have carry trades financed by the yen. How fragile are some of these latin american traits based on what happens from japan . How much as the weaker yen fueled a mass influx of capital into latin america . Very much so, it affects highyielding currencies. Last week and we had a couple of surprises in emerging markets. Chile delivered a dovish surprise and at the Tipping Point for emerging market currencies, we had market rates going up. All of a sudden, you have the emerging markets trying to cut rates. The emerging market has to have a risk factor built in. A lot of these markets will test that. If chile continues to cut rates aggressively, they will come under pressure. The high yield ors have been the higher currencies. Its because of the carry trade and the fundamentals but as that cushion falls, i think it will get worse. I expect policymakers to way this tradeoff between growth at the expense of a weaker currency. That will feed into the inflation loop. A lot of moving parts all over the world. Im very disappointed that bank of japan is an outlier in terms of not communicating well with markets. The fed and the ecb and everyone was trying to keep markets calm and have them know whats coming or what they think is coming and for the bank of japans message friday, it was shocking and im not sure it was worth it jonathan does that just an experience at a central bank . Weve seen moments like that from Jerome Powell and christine lagarde. I have a model to go off of. There was a surprise in september. They are repeating the pattern. Its growing pains but you are seeing lessons where you must be clear and concise. Jonathan thank you, sir. Tom that was brilliant. Buried in there was the thin columbia take on his advisor robert mudell, the idea of the impossible trinity that japan or any country faces when they make longterm strategic thats. Bets. This method is not compute. It just doesnt work. Jonathan i will step away and go to the studio. And 35 minutes, jim beyonca beyonca bianco. Lack of indication from bank of japan, this is bloomberg. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com i dont want you to move. With a partner im gonna miss you so much. You realize well have internet waiting for us at the new place, right . Oh, we know. We just like making a scene. Transferring your services has never been easier. Get connected on the day of your move with the xfinity app. Can i sleep over at your new place . Can katie sleep over tonight . Sure, honey this generation is so dramatic move with the xfinity 10g network. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Tom bloomberg surveillance, Lisa Abramowicz and tom keene with Jonathan Ferro on assignment. By the time we get to the 9 a. M. Breakfast at bloomberg, its pretty fancy. Jonathan ferro is getting ready for the next hour and we welcome all of you with mark zandy coming up with an important conversation. On the American Economy. Right now, the king of whisper data Michael Mckee is here and a very busy week. What is the whisper number that matters this week . Is it mike mike jobs or Something Else . We dont do whispers on a lot of Different Things the jobs will probably be the most important thing of the week. Im looking at the whisper number now. Isn we do tomorrow and the whisper number is 47 to people think we will have a week number but the number for jobs is 194 at the moment. A little bit lighter but we will get a lot of data this week that will influence what all those late arriving forecast will be. Tom where will we be at 9 a. M. Friday given the compendium of data starting with jolts to adp. What do you guess we will feel it 9 00 a. M. . Mike we will feel glad the week is over because its a very busy week for Economic Data. The underlying feeling has to be that we will see a little bit of a slowdown in terms of job creation but not Much Movement overall in the jobs numbers. The Unemployment Rate is not expected to change and we are basically thinking that things have slowed down but they are not falling off a cliff. We will get some interest with the senior loan officer survey this afternoon. Tom thats a big deal . Mike it becomes a big deal when it fits into the narrative. Tom lisa made a big deal of it. Mike four years, i couldnt get you guys on i couldnt get you guys to get me on to talk about it. Jay powell thinks the bank issues will be behind us so i dont think we will see a whole lot in their. You have ism tomorrow, adp and jobless claims thursday. All that will feed into what we get for the july jobs report in terms of the forecast. Tom august 1, dusting off the cowboy boots for jackson hole, has it changed . Mike i dont think its changed in the last couple of weeks but certainly in the past year. We know what the fed will do which is we dont know what the fed will do. Theyve made it clear they are ambiguous and they could go higher or lower. It would depend on the date and jay powell gave us a list of all the numbers they will be watching, couple of cpis and job reports before we get to the next fed meeting. Any meeting like this, anyone week like this will not make a big difference in terms of what the market thinks the fed will do. They will be watching other things. For those who will risk it and not be here this week, bloomberg tv 105 in the hamptons, you can continue to watch surveillance and we will give you the numbers. Tom thats sonali basak tv out there. Mark zandi is that name you may not know from moodys. He codified optimism in the depths of the 2008 recession, the great financial crisis. Is written a couple of books on it but he said in early 2008, we will come out of this and be resilient and we will move forward. Dr. Zandi joins us now from moodys analytics. Do you have the optimism you had them now . Can you look to the future and see in america of productivity and real gdp gain . Yeah, i can. Whats the Warren Buffett adage dont that against the American Economy. Thats pretty accurate. It goes up and down and all around but cutting through all the ups and downs, the economy is resilient and i think their prospects are good long run. Tom almost to the point of New York University on technology and growth, the Technology Miracle we have in america now with stocks and the ai and all that, how do you Overlay Technology now as an optimistic force for america . Thats key to driving the productivity gains. Technology innovation, entrepreneurism is what makes the American Economy exceptional and makes it tick. If you look at the data, productivity growth has been pretty pedestrian. 1. 5 per annum over the past six years. Thats down from the 2 growth we got between world war ii and the financial crisis. We need more innovation and more entrepreneurs and we need more business formation. Bring it on, we need the ai magic to watch over the economy and get the productivity number of. The demographics. Are difficult. I am a bloomberg and i will age out and folks like me will age out. Immigration is not going to save the day. We will get stronger growth numbers. We need to see the productivity gains and that innovation. Tom hes not going to age out. Hes in philadelphia doing the cruise down the river thing. Not me, tom. Lisa a lot of people are talking about how it will be difficult to track some of the data and follow it because backward looking. What are you looking for for the forwardlooking indicator . Is at the scene loan officer Opinion Survey or the ism surveys we get later in the week . I think my favorite nearterm indicator of where we will be over the next 69 months is consumer confidence. At the end of the day, in the context of this debate, recession is a loss of faith, consumers lose faith they will hold onto their jobs and they pack it in and stop spending and businesses lose faith they can sell whatever they produce and we get into this self reinforcing cycle. Historically, when confidence starts to move south in a big way and consistent, not too soon thereafter we go into recession. We had some data points last week from the university of michigan and they looked pretty good. Confidence improves so its hard to say what the world looks like year from now but i can stay from a high level of confidence through the end of this year, we will remain recession free. Lisa if thats the case, whats that say of the ability of the central bank of the United States to affect some sort of change in the Economic Conditions . Are we looking at a u. S. Economy thats pretty insensitive to Interest Rate increases . Maybe we will have a higher terminal rate because it can keep chugging along. Im not worried about that. The key here is inflation and inflation is coming in and a pretty graceful way. All the trendlines look pretty good. Some of the forecasts i feel confident in like this. I think inflation will come in and vehicle prices will decline we know the cost of growth and services will slow. We know electricity prices will come in so i think inflation is coming in pretty nicely to the degree the Federal Reserve doesnt have to do anything. Theyve done all they need to do and we are at the terminal rate and we are good. I would leave things alone and let the economy do its thing i think we will be fine. Tom if we make the assumption this is a fed that is more data dependent than ever, if they are whats called expost, what is the price of the damage . What is the risk we have if its a fed that has act after the fact . What choice do they have . They have to focus on the data they have. They got to forecast but its obviously very dependent on the data that they have. Im not sure what the alternative is from their perspective. They got to look at a lot of Different Things and they do and have to weigh them. At the end of the day, they are tied to the data like everyone else. Life is very difficult for them at points like this because the data is based on surveys. The quality of the results we are getting has fallen as hard to tease out the signal from the noise so it makes it more difficult for them to get it right. At the end of the day, they are slaves to the data. Theyve got to be beholden to what the data says. Lisa are you saying that inflation is going back to where was prepandemic and most of the inbased and inflation is pandemic distortions . I think the supply shocks were pretty massive. They conflated because they came at roughly the same time. They caused Inflation Expectations to jump. Thats when inflation really metastasized. You got into the Wage Structure and wages driving prices, the whole wage price dynamic. Its those to supply shocks that are at the root of the high inflation as though supply shocks fade from view. They are still there. Vehicle prices, thats supply chain related and japan and germany cannot produce because of supply chain issues but as they fade away, inflation should come back reasonably. There is some room for the fed to slow down the economy. It doesnt want to see unemployment go lower but the heavy lifting here on inflation is about getting to the other side. Tom whats your 12 months forward gdp number . I think it will be around 1. 5 percent, just below trend. I expect the Unemployment Rate to take a little bit higher but well above normal. Tom thank you so much. You mentioned moodys in the spread, the industrial spread, give me an update on spreads . Lisa theyre going down and the extra premium of owning risk over benchmark treasuries has gone down. Even as defaults pick up, they are not expected to go up too much. They have already financial they are not paying higher rates and are in good shape. Tom right now, we see the Standard Poors 500 up 0. 2 . Lisa its interesting what mark was saying about the forwardlooking indicators being surveys that call 100 people or 1000 people and get an indication where they are at. How much can we get an actual rate of accuracy . Is this the best data we have . Tom thats textbook mark zandy. Have you ever been called . Lisa no. Tom what do you think of real gdp, ive never been called. Lisa a lot of surveys are more politically inclined and say that people feel the inflation story more than they feel Strong Economy story. Its a split sentiment feel we are looking at right now. You see the Housing Market remains strong. Ive been watching that a particular at a time when this was supposed to be the first one to fall and it hasnt. It has actually bottomed. Tom i think so many have been so wrong in the last seven months. John was brilliant about this two years ago. Hes trying to get out to march already one to make his annual review. Now hes getting it to june 30 or dare i say september 30 two get a view on the year. There is no other way to put a Committee Just not there. Lisa have you gotten out of triple leverage . Tom i will watch apple and amazon this week. My Financial Advisors are like 10 shares were 12 shares . I havent made the first purchase. Lisa you just cant do it . Tom look at the yield on getting, 15 gross . Its pretty good. Lisa there you go, thats your pitch. Tom 10. 30 5 , money in the bank, good morning. The chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. This is ge aerospace, advancing flight for future generations. Welcome to a new era of flight. Tom we say good morning bloomberg surveillance. Getting ready for the 9 00 hour. There is a little bit of a bid. We are waiting for data in economics and earnings particularly on thursday but to me, there is some oomph to the market. Lisa people are trying to get back in love with things that were beaten up during the pandemic. Wayfair had a high share price of 345 dollars and . 47 in 2021. It is at 70 . 55 but its up 7. 5 because it was paper sandler saying on the cusp of driving sustain profitability. Tom have you ever done wayfair . Lisa i havent. Tom i just dont get it. Lisa its a furniture shipping company where people find are fixing up their homes again. You are still seeing gains ahead of the thursday earnings. Tom we will have to see an apple and amazon are front and center. This is a joy, her name is Allison Schrager and she worked to columbia where she took her phd but over the years, shes been one of the most acute students of american behavioral economists. She has a little book which is a glorious book and an economist walks into a brothel and im blushing and they try to understand risk. What you need to know on the book cover, she goes to the heart of the matter with a bell curve which is tough to see. It bell curve which is the High School Class height of your curve in this the artificial world we live in and there is more going on with that. She joins us this morning. You start with Peter Bernstein and i was honored he wrote an afterword and wrote the book on risk uncertainty. You lead with the wonderful work of Peter Bernstein. How do you extend against the gods when an economist broke walks into a brother. It was a beautiful book because it shows a Risk Management really changed our relationship with risk and became something that didnt just happen to us. It was something we could measure and try to manage and control. I dont know if i could extend what he did but my goal of the book was to popularize it further. Its an intense read and it did for economics what it did for applied micro. They dish it highlights the study of risk and Risk Management. Give us the one anecdote within your book that explains how naive we are about risk and uncertainty . I think my favorite story i realized i need to report these things myself because i didnt have the Research Career that steve levitt did to my favorite was probably going to a big Risk Management conference where i saw in a windowless conference room, menon shorts and tank tops and we had a sophisticated conversation about the role in technology and risk about how we develop these new Risk Mitigation technologies with options for swaps or anything and that gives us the ability to feel like reducing risk but often introduces new rates new risks or encourages other risks. Lisa is there a question around how accurate some of these risk measuring devices are in markets that have gotten thoroughly divorced from the tshirt and shorts of going out to make sure you dont wipe out and then die . One of the challenges and at another chapter that was timely was about how difficult it is to predict which movies will be successful. All these models rely on data and if the world changed postpandemic, do we have data thats useful. Risk is a measurement of uncertainty and uncertainty is we have no idea what will happen. Risk is the informed guess of what will happen out of our guesses become less accurate, they could lead us astray sometimes. Lisa a lot of people have come on the show and said there are a lot of risks out there but right now, its looking better every time youve tried to bet against the momentum, you gotten your face ripped off. At what point do you ignore the feeling there is risk out there and lean into it . Where does this leave us in todays moment . I am in efficient markets person and i right in the book about the time i worked at dfa which got me working with many experts and thats part of the Risk Management sciences is accepting efficient markets. It says you cannot predict the market. All the data you have is what you have and its not perfect. Dont think you can time things but hope you can manage the risks you have. Tom in your book, a lot of people watching and listening look at the investment world as a war. How do you take war risk and uncertainty and bring it over to not losing money in the market . That chapter is about uncertainty and the only real head you have on it against uncertainty is liquidity which comes at a huge cost. That would be the equivalent of keeping your money in cash. In terms of our military, keeping a flexible military that can go with punches is incredibly expensive which is why we tend to fall back on that. You have to think about how much does flexibility and certainty matter to you and how much do you need because there are tradeoffs . Lisa there is a question about how much the broader wall street economist makes it into the room or the board room of these industries and companies youre talking about. Weve been talking about building and redundancies to avoid supply chain disruptions. How much is that the Risk Mitigation kind of technique that the increasing number of industries are turning to or are they looking to Financial Instruments and other kinds of cheaper and more efficient ways . Im working on a new book and one of the things i didnt talk about was risk reward. In finance, its the central truth of taking more risk and getting more reward but you risk more loss. The economy i think is suffering from forgetting that. When we talk about d risking the economy are having more redundancies are re, people forget that comes with a serious cost. There could be higher inflation in the future, it could mean less dynamic economy. It might mean less risk around particular shocks around the pandemic but it could introduce nuance or have Slower Growth in the future. Lisa has financial is asian of a lot of Industries Like oil, has it distorted the ability to measure risk and reward as efficiently as it used to . I would expect it would make it easier because we have more data and more instruments with is a risk. On the one hand, it could better also might make it easier to measure risk. Tom page five, you died into in research the moonlight bunny ranch . Thats the brothelnomics . Yes. Tom what can you tell us about an economist like you walking into a brothel. It wasnt what i expected when i started my career. I got invited there its a story about negotiation skills and it turns out they have a rather sensitive Negotiation Training Program which was helpful. Tom below the break and tell Jonathan Ferro hes not going on at 9 00 a. M. I was talking to all the women about what they charge for different services. Like any other industry, there is a premium on risk. Certainly, thats how services are largely priced and even insects work. Even in sex work. Tom the control room just said thats enough, tom, thank you. Allison schrager with a wonderful example of the economy. You can read the book. Im honored to say i did the first interview on freakonomics and nobody knew how big that book would be. Lisa i think thats fascinating. Everybody in their life measures risk and reward in different ways. When you talk about whether its sex work for writing a 40 foot wave, its more visceral. Tom i will put this out on twitter and she talks about the great Peter Bernstein. Green on the screen and a modest lift to the market on a quiet monday. This week, more than entertaining. This is bloomberg, good morning. Good night hey corporate types. Would you stop calling each other rock stars . Youre a rock star. You are a rock star. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. Back in the day, sneaker drops meant getting online to wait in line. Now with xfinity mobile. We get the Fastest Mobile Service and can get the freshest kicks asap. I got this. Save hundreds a year over tmobile, at t and verizon with the best price for two lines of unlimited. Nice job, little sis they grow up so fast. Im a fan. From xfinity. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . Mom can see your search history. Thats what i thought. Introducing the next generation 10g network. Only from xfinity. Good morning, good morning. The s p 500, can we make it four weeks . Payrolls on friday and some tech earnings later this week. The countdown to the open starts right now. Announcer everything you need to get set for the start of u. S. Trading. This is bloomberg the open. Jonathan live from new york. Coming up, tech heavyweights reporting earnings this week. The u. S. Payrolls report just around the corner and first into the hiking cycle, first out. We begin with a big issue. Strategic ambiguity. Strategic am