Breaking about 7 . This leads us to the pause problem. Data continues to come in strong. Inflation, retail, initial production. From new york, i am alix steel with guy johnson. Welcome to Bloomberg Markets. The Industrial Production beats also. Guy take your pick. Things are strong at the moment. Here is the kicker. The market thought last month a soft landing was going to be a good thing. The market is reappraising the view that a soft landing is a good thing. A soft landing comes with higher rates. The whole idea you can have a soft landing and rates would get cut significantly is enough to appease the market. The market is coming to the conclusion, there i say it, a soft landing may not be a good thing. Alix financial conditions have loosened a bit and that makes the feds job tougher and puts more pressure on jackson hole. Does the narrative need to change this top financial conditions from loosening so much . Guy i think its an interesting one. What does jay powell do a jackson hole . I think it will be interesting. Kashkari was pretty hawkish when he spoke yesterday. How many are in the kashkari camp . What is clear is if the data is not Strong Enough to justify further hikes, is it Strong Enough to keep the fed on hold . The market is coming to grips with it. Is a fairly straightforward one. Is a pause possible given the data . Does the fed have more to do . Does the bank of england have more to do . We look at the wage data out of the u. K. And on cpi. Both are strong and point to the bank of england having to do more. Other Central Banks in the same hot water. Was mccormick joining us now to discuss. What you think of the question and the answer . Gets a good question and that is the question the market has to ask itself. I agree with what you said a moment ago. The idea of a soft landing means financial conditions are going to be tighter for longer than the risk asset market. We are expecting prior to this string of decent data. Will the fed cut at all in 2024 . If not, some of the easing of financial conditions equity markets and credit markets were thinking about is going to go away. We have to reprice for that. Alix why would the fed cut anyway . Is it because we are in a recession or to normalize policy . Those will be different things. Liz, what do you think . Liz i think a pause is possible. What youre pointing to, the big question is what comes after that . The market is still not buying the fed moves in september. Who knows . The focus is how long do they pause. Like you are asking about, can they cut if we have a soft landing . Whats interesting is ive heard people say of course they can cut to fine tune. They dont want to get more restrictive. They dont want financial conditions easing more. That will be the pause problem. Thats the big problem for the fed looking forward. Could they adjust policy without shooting themselves in the foot getting the stock market higher . What if inflation bubbles up again . I think next year is becoming the big problem for them. That is why the market is slowly pulling out those cuts. They are not getting religion on this. Maybe we are offbase on that. Guy do you think the fed has a handle on whats happening with the economy . This is the root cause of the problem here. There is significant uncertainty. They talk about being data dependent. The data is all over the place. Dont you have to err on the side of caution, and what does that look like . Liz we hope the fed has an idea of the state of the economy. I totally agree. That is why Neel Kashkaris comment yesterday, yes, he sounded hawkish. He did say we need a little bit of time to get more data. Hes like anybody else saying we need to gather data to get full clarity. They are grappling in the dark. The fed is just like the rest of us. They have to go from one data point to the other and put it all together. In that sense they are just like any other economist or trader in anyone of us. Any one of us. What is the benefit of getting ahead of things . Alix its ahead scratcher when you look at the housing data. Theres one place we saw a downdraft and housing. Then you had stabilization. Then you had reacceleration. I blinked three times when i saw the 30year fix over 7 . Guy are you going to get a reacceleration . It doesnt seem logical. I hope there is a mismatch in terms of the data versus when rates were lower. Rates have accelerated significantly. The current number is north of 7 . It was not back then. I think there is a duration issue there. I think there was another factor as well which is our rates going to be higher for longer for other factors . Then you are rolling in the physical side of the equation. Fiscal side of the equation. Looking at the debt Interest Payments the United States will have to be dealing with. They are enormous. That will keep rates higher for longer. You have to factor in all these other elements, which are going to mean policy will be tighter for quite some time. The fed has to consider that many things about what it does next. There are other forces at work. Not just the fed. Alix to that point, and that goes to the housing thing because thats a structural issue. We dont have enough homes. The fed will have to push against, which means higher for longer. The biggest mispriced . . Annmarie one of the biggest ira one is in the front end of the breakeven curve. We are still pricing a benign outcome. I do think inflation is probably going to be somewhat higher than what the market is pricing for. Theres an opportunity there. To go back to what you guys were talking about with housing and inflation measures and the economy, we have to keep in mind that fed policy is only becoming restrictive in the last three months. We have only seen in the recent past the real fed funds rate is positive now. It was not earlier this year. You talk about long and variable. How long will it take for the Housing Market to collapse . That can take much longer this time than it has other cycles. In particular, debt loads and maturities are longer. You dont have things like commercial paper that companies are using the finance acquisitions over the last couple of years. All that has been turned down. Same thing with mortgages. People who dont have to move wont and will still have low interest rates. A and variable lag will be longer than its been in the past cycles. Guy liz, i listened to ira and i 100 agree with them. Im wondering if there is a point coming where companies i feel this is maybe a subject we will spend more time talking about companies that put off raising money because either the Balance Sheets r. O. K. Or they think conditions are going to improve and at some point are going to have to do that. People can turn out there mortgages for much longer, but companies are going to have to refinance. Im wondering if rates stay like they are now whether or not we will hit that maturity or hit that problem sooner than we think. Liz its interesting. Katie kaminski was in our offices monday on the radio and i talked to her. She brought that up on her own. Yeah, you have these companies that have not had to refinance. It is coming soon. She thinks rates are going much higher. She said that as part of it. The slowdown will have to come. People have been holding off. They will have to refinance and that will hit them like a ton of bricks. Not just homeowners for mortgages at 7 . Some auto loans are alike 8 . At like a percent. I think at like 8 . The lags might take a while. The fed is being cautious and they dont want to crumble things. I think slowly it will bleed further, these higher rates we are talking about. Alix it is less data and more the lag. Great conversation. Liz mccormick, ira jersey, thank you very much. Coming up, is a pause possible given the data variable lag . Carol schleif at bmo Family Office joins us next. Im not ready to say we are done. In terms of cutting rates, i think we are a long way away from cutting rates. Core inflation is still around 4 , twice of what our target is. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh this resilient economic backdrop. Very resilient. The economy surprised to the upside. The labor market has held up well. There is more money and household pockets. Inflation has been palling pretty noticeably. It removes a sense of urgency for the fed to normalize policy quickly. The fed will have to be more aggressive, raising rates higher and keeping rates higher for longer. Higher for longer. We are not certain the last hike is behind us. One more hike that is likely. Does this resilient backdrop leave the fed in a position where the bar for rate cuts is very high . We have to watch out how the data plays out. Try to take advantage when bad news becomes bad news. The downturn potentially and eventually will come. It is premature for fomc members to go out and talk about cutting interest rates. The soft landing scenario is a worstcase scenario. Alix perfectly lays out the issue going on with the markets right now. Encapsulates the data we have seen on some of the guests on bloomberg television. That brings us to the question of the day. Is a pause possible given the data joining us is Carol Schleif at bmo Family Office. What you think . Carol i think a pause is probable. The Biggest Issue we are trying to grapple with is the fed and the economy looking like the last 10 years, it is more likely to look like the economy had 10 to 15 years before that where you had real rates that were not negative. Interest rates were not negative. It is getting adjusted to those rates. We are worried about the Housing Market and the fact that the average Mortgage Rate went up 7 . You look at what drove us into the great financial crisis and the Mortgage Rates up 6. 5 . Guy do you think Financial Markets have yet adjusted to that scenario that you are laying out . Does the stock market feel like its adjusted to that . Does the bond market . Carol it feels like parts of the bond market are trying to adjust. We have seen the 10year climb above 4 . We think the equilibrium rate is more like 4. 5 . The 10year treasury over the next year or so. The market needs to adjust to a more normalized level and maybe it is 2. 5 . The fed is focused on 2 . The normalized rates over a long time are actually doable, workable with resilient consumers. We have also had resilient businesses that are rightsizing their businesses and focusing on profitability. They are bringing employment down and maximizing the cash. They are rethinking things. We are getting back to a different kind of economy. The economic models in the last decade dont work in this economy. Alix right. The question is, where is the biggest mispriced in all of that . It sounds a good boatload of money sitting on the sidelines to help those companies that are in distress. What kind of distress cycle will they be . Carol you have distressed cycles certainly in some segments. Commercial real estate is starting to find its bottom. You start getting assets going in portfolios sold from one distressed credit operator who already has raised billions in cash from investors. You have a lot of stuff going. We need to see more of that. Maybe it takes a year or two to see some of those floors reached and a suggested new prices. Use of Mortgage Rates touch 7 and they came back. You saw a lot of people out there. As you pointed out, we have not only a deficit of housing but also a demographic theres a lot of people that need homes. Guy i read your notes with interest this morning. You talk about the need for a diversified portfolio. The question i am increasingly getting is, do government bonds act as ballast against the equity market . We increasingly see them moving in the same direction. I am wondering how i diversify the world where bonds dont play that role of ballast equities. To equities. Carol how are you defining diversity . You need diversity in the portfolio in the Asset Classes and the income streams. If you could lock up a 4. 5 return for eight to 10 years in this environment, thats probably reasonable place to be. We do see disinflationary trends continuing but not going back to 0 . Having that piece of it you have to understand client by client individually. Are they more upset by nearterm swings in the markets, at which point we will probably err with a higher cash level. Can you tolerate that, look at the longterm swings. We have a lot of charts that show on average 80 of the oneyour returns in the equity markets are up. In the five and 10your returns, substantially higher than that but it takes a lot of shortterms to gets along terms. Alix what i find interesting is we have a shakeout. The s p closed below is 50day moving average. No followthrough selling. There is still cash interested in putting stuff to work at the right level. Guy yeah. Its also august. We can talk about that in september. Carol, if you see opportunities what kind of it dip would you buy . There are lots of people out there that have money market account. What does an opportunity look like for you right now . Carol i think the opportunity is any sort of we tend to keep people fully invested along the lines of being fully invested. We will not pull them out. We will move from the top to the bottom end of ranges. Really Strong Performance from various segments. We will be doing managers have outperformed and had a really solid performance, we are looking for money to work in areas that might not of performed as well. It is always that sort of issue. Enticing people out of that comfy cash and getting them to invest is a challenge right now. We do think once you get to a point where the curve starts to normalize, if the disinflation comes through, you see i continued softening the economy. People are going to be in a scramble to try to either extend the yield curve, buy equities will most likely will already have moved. We try to keep people invested and moving along the sides of the ranges. Guy i like the idea of comfy cash. That sound like a nice way of putting it. Carol schleif, thank you a much indeed at bmo Family Office. Lets look at the car sector. I want to talk about a vietnamese ev maker vinfast. It was something of a firstday performance. We will talk about the latest competitor in the ev race. This is bloomberg. Alix 22 past 7 00 on the west coast. We want to get to the start up. We cover all the tech stories from the bay and beyond. Its a beautiful morning. Bloomberg Technology Coast ed ludlow joins us. It super grows here in new york. Lets get to vinfast. The stock is down 25 . It ipod yesterday there was back but a huge run up. At one point his valuation was higher than gm and ford. What . Ed is the best forming scac of the year. Spac of the year. The market cap that is close yesterday equivalent to about 85 billion. It is not just a market cap greater than gm and ford. The market cap would have been greater than ford and rivian combined. We are talking about it on the startup. In the u. S. , california is prewas the only state that vinfast is selling its evs into and is had a rough start. They sold about 1000 here in the u. S. Almost all of them were recalled straightaway. It has been absolutely destroyed by the trade publications whose reviews of the vehicle is basically pointing out they were not manufacturing production standards. They had a lot of problems with them. The Investor Community seemed to have no problem buying in yesterday. One more quick part and sorry to drag on. The founder controls 99 of the shares. Despite the crazy movement, i dont think theres a lot of people out there in the market in terms of shares outstanding getting rich off this. Guy ed, are these the kind of cars joe biden wants to see an american street . Ed great question. Currently they are built in vietnam and imported into the United States. To be fair do vinfast, they broke ground on a North Carolina factory last month. They have big ambitions. They are a real company that makes evs in vietnam. They are not a domestic nameplate. I dont know the inside white house answer, but they are now u. S. Listed as well which is an interesting dynamic. Alix it feels like the answer would be yes. But they have a lot to do to get there in terms of building a factory, breaking ground, getting material. These are long rows at this point. Ed think about chinese nameplates. Byd has commercial vehicles here but had not bothered with the consumer car. Or nio. It is difficult to get a chinese nameplate or manufactured car and bring into the United States, especially in the context of the inflation reduction act. Guy why is tesla cutting prices again so soon in china . This seems pretty peripatetic. Alix peripatetic . Wow. Ed beautiful word. For the Third Straight day the news is in china they had a prescott equivalent to 10,000. 24 hours ago in the u. S. A new base price for the snx which was 10,000 lower. Musk has been transparent they will sacrifice the bottom line to protect growth. 50 annual growth rate is with a target. Shares are only. 6 lower but down for the fourth straight session. Down whether tway percent since the Earnings Call in july when musk warned this would happen. Guy you are constantly in motion. Great stuff as ever. Looking forward to the show later with caroline. We will talk target 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 its an amazing thing start today at godaddy. Com when you show generosity of spirit to someone. And you want people to be saved and to have a better life, then you dont stop. The idea that we have saved five million peoples lives, its overwhelming. Its everything. Alix we are an hour into the trading session. Not a lot happening. Individual stock movers, sure, but we broke below the 50day yesterday. Abigail is tracking the moves. Abigail the floor has not fallen out. Not really going anywhere. S p 500 up just fractionally, although given the fact we had that selloff yesterday that we had, it was sleepy in some ways but nonetheless there could be potential for the downside. Investors hanging in there. Relative to the movers beneath the surface, quite a few of them as alix alluded to. Progressive corp. Up 8. 2 . Investors relieved the quarter was really pretty decent. The guide ok. Apple is the top point boost the less, looked, up. 2 . The last time i looked, up. 2 . That Payment Company that works with banks down 8. 4 . Kind of the opposite of progressive. Not a great quarter or the guide in particular in question. Amazon the biggest point drag, down. 7 . The s p 500 this month is shaping up to be what august does for stocks, a down month. S p 500 down 3. 2 . This is been such a big rally year, this is the worst month now of the year. We are in just the middle of the week. If the laws holds loss holds, it would be the first three down week slide for the s p 500. Lets see how the week progresses. I believe a macro contributor to this guide, take a look at this. When i put this together i was starting the Bloomberg Index of 3 . Really pretty amazing. The 10year yield backing up 36 basis points. Stocks and risk assets not liking this. August is seasonally a tough time. Alix thanks a lot. Abigail doolittle joining us there. Some individual stocks really getting a boost. One is target. Shares jumping. Prop again overshadowing it cuts to growth forecast, which is surprising. Tjx doing well. Interesting retail earnings out before the bell. The expedition for tjx, the parent of tj, marshalls, home goods, pretty obvious. Seeing much higher outlook for the year. Target was a little bit of a trickier story. If we dive into the details, i will show you whats happening. Earningspershare coming in well ahead of analyst expectations. They came in at 1. 80 per share rather than the 1. 40 per share. Holding up over the last couple of quarters. What was more pressured was the revenue and sales. We saw the company downgrade its outlook for sales in the longterm but did come in a little higher on the eps number. What analysts have been saying is this is about the margins. We saw some strength in the margins. It will be a pretty tough call. You look at whats happening with walmart, costco. Those are two Top Competitors of target. Target shares down substantially. Maybe some of the rally is it is off the worst close since 2020. With cosco at near record highs, walmart hitting record highs early this week we are looking at some tough comps for target overall. We will see where consumers end up shopping and then a couple of quarters. Guy thank you, simone. Lets talk about the retail story. Anjee solanki, Colliers National director for u. S. Retail joining us now. What is your take away from target in particular today . What have we learned . Anjee it is interesting to see. The margins are definitely much stronger. Roughly at 380 compared to prior years. What is causing that . Number one, Inventory Management. They have efficiencies in that space. They also have fewer markdowns. In prior years there was this inventory forward hoard that forced target to have more markdowns compared to this year. That has helped them quite a bit. Alix it feels like they may have finally gotten rid of all the negativity surrounding antiwoke backlash and antipride, etc. I feel like a lot of retailers are sorta struggling to manage that part. Anjee it is still there. It has not disappeared. They will continue to struggle a little bit. However, they are a recognizable brand and should come back as it relates to that. Some of the challenges they faced unfortunately. We have to remember target is known for its discretionary or unplanned purchases. As we start to look at how the consumer is shopping, they are focused on being very budget conscious right now. How do we stretch that dollar . When we think about target and the comments made from walmart being successful, cosco being successful, two things to keep in mind. Targets grocery in terms of the percentage of sales is only 22 . Walmart is roughly 55 . When you, those against one another you can see why sales are stronger at the cosco level, at the walmart level from grocery spence perspectives. People spend more groceries than in may on or discretionary items. On apparel or discretionary items. Guy is that your impression as well . Anjee they are resilient. Think about what we went through the last for years. I do not want to go back in thing about that. People have realized that we do need to be mindful in our spend but lets not hold back. Lets enjoy life. Lets balance it up between what we are doing in our daytoday. The resiliency is going to continue. Alix does tjx tell us that there are a lot of issues . T jacks has to do well and people dont want to pay off her stuff. Anjee tjx has a couple of good efficiencies as well. They also have a stabilized Inventory Management program. They have a great assortment of products. You can go in there and knowing people are going back to not just backtoschool but back to the office, they want to refresh. If they can refresh knowing they can spend less and still have some savings, they will go to tjx. There is the value mindset but i dont think the value mindset differentiates between different income levels. We have seen middleincome level, low income levels and even high income levels will shop tjx, target, etc. The consumer mindset, the consumer themselves are not as, you know, exclusive to certain brands. Guy it is interesting to see what is happening here and peoples acceptance of all these different options. What does this tell us Going Forward about what the holidays are going to look like . Can we extrapolate your quite positive comments about the consumer into the back half of the year . Anjee in the last half of the year we will continue to see a little bit of a slowdown and cautiousness. We had inflation that was increasing. So were the prices. We saw that in sales numbers. We will see a little bit of that but i think the consumer is going to be spending, but spending as a relates to more family oriented events. You will seafood spend increase. In the apparel sector i think it will be somewhat stagnant. In the home sector, definitely not in the furniture side but you will see some spend in tabletop accessories come etc. There will be a continuation. Maybe a moderate 2 to 3 but we are forecasting sales growth compared to prior years will be roughly right 4 to 5 . Alix what is going to make me not get it t. J. Maxx or home goods and get the supercool santa claus glasses . Anjee exactly. We all need a few of those in our closet. Alix so what cracks it . Anjee we like fun, cute Little Things and we have our home decorated and feel that spirit of excitement. Alix nothing is going to crack me is what you are saying. Fair enough. We appreciate it. Really interesting to see how long all this can continue. Anjee solanki of colliers, think youre much. Guy sorry, what are we talking a here . Small christmas glasses . Alix the good home goods and they go to the section with the cool christmas plates or random placemats. Lets have santa goblets. Im not saying i have santa goblets but you can get them at home goods. [laughter] you dont think you want santa goblets for your big ham . Guy asante goblet. Ive never a santa goblet. I feel like im missing out. Alix i dont have one but i want one. That is my point. You can buy those things on the cheap and there you go. One stock we are watching his life sciences. A huge pop yesterday. A big drug briefly when it comes to alzheimers. This is bloomberg. Oh, booking. Com somewhere, anywhere. I just want to lie motionless in a chair booking. Com, booking. Yeah fabulous surroundings. But everyones looking at their phones for Financial Insights from merrill. Is he hailing a ride to the concert hall . No. Hes making sure his portfolio and retirement plans work in harmony. They want to adopt a child and build a new home. So theyre talking numbers with their merrill adviser. Shes not researching her next role. Shes learning how to handle market ups and downs without the drama. Personalized advice so impressive your money never stops working for you with merrill. A bank of america company. Alix coming up, the deputy treasury secretary joins us at 5 00 p. M. , new york time. This is bloomberg. One stock we are watching is dizzy on a life sciences. They are way up this week. They got approval from the fda for phase two trials of its alzheimers drug. Dr. Howard weiner is the chairman of the Scientific Advisory board. He joins us now. Thank you for joining us. Can you walk us through what this phase two trial means and the success of it . Dr. Weiner we just got approval from the fda to do a trial in patients with alzheimers. We have a drug which dampens inflammation in the brain. We have been using it in multiple sclerosis and have had positive results. We can see the decreased inflammation in the brain. We believe this will also work on alzheimers. We applied to the fda. They agreed as well. We had approval and are now going to begin screening patients to treat them with this it is like a nasal spray with no side effects for patients with alzheimers. Guy i have a ton of questions. Lets start by talking about how long is the trial going to last . When do you think you will see a result from it . Is this something you can do relatively quickly . You have a lot of science already behind the product. Dr. Weiner we spoke yesterday to our unit. We are starting to screen patients this fall. I think we will treat the first patients at the beginning of the year and we should have results in the fall of 2024, initial results. Alix you mentioned inflammation. What else can this potentially be used for . You mentioned msn alzheimers. Kenneth ms and alzheimers. Dr. Weiner the information we are talking about is inflammation in the brain. A cell in the brain that causes the information is called a micro glial cell. We can image that with a brain scan. Because the cell in the brain is involved in ms and alzheimers and parkinsons and als, even long covid, it could apply to all those diseases. We have a way to measure it. Tiziana has been supporting it, wasnt happy about and trials are going in advance. We are ready to start on alzheimers. Guy is this going to be a standalone . Im assuming you will test it standalone but can it work in conjunction with some of the other alzheimer therapies that have been talked about at the moment and being tested at the moment . Dr. Weiner absolutely. We will test it alone because it works on micro glial cells. It has three components. The drugs that are approved are monoclonal antibodies given interviews he is intravenously. This is a different approach. It can be given with the drugs. Some of the side effects this could dampen. Alix why do you think the medical community is making so much breakthrough right now with alzheimers . What changed in the last two years that enabled all this to be possible . Dr. Weiner thats a good question. The breakthrough is understanding the biology that drives it and being able to measure it. The biology is amyloid. An antiamyloid drug worked. Theres something called toa and people are trying that. And it was micro glial inflammation. For the first time we can see in the brain. It decreases the micro glial. I would say the reason we have the breakthrough is because we understand the disease better and we can measure it. Guy what is a win here . Any progress is Good Progress but what would look like a win here . I understand it is targeted at mild to moderate cases. What could what potentially could the drug do . I wondering how high our expectations should be. Dr. Weiner you always hope for the best. I think a win is slowing down progression. People with alzheimers can improve their cognition. In some ms patients we treated , some are walking better and have less fatigue. Some of their neurological symptoms are reversed. A win would be not only slowing progression but actually improvement in cognition. We will be testing that. Alix that would be huge. Thats an understatement. Going back to the long covid theory, i suffer from long covid. My whole life revolves around reducing my inflammation. I recovered well but a lot of the reasons you dont people coming back to the workforce is because of longterm illness. Part of that is long covid. If there is something to treat that it would be a huge boost for the labor market. Guy sorry, doctor. Jump in. Dr. Weiner the micro glial cells are activated in long covid. We treated Covid Patients with it and help their lungs. I think it will help long covid. We are getting ready. We have not asked for permission yet but we are getting ready to treat some long Covid Patients through the micro glial pet scans. I think there is a chance that will be helpful. That is on the books. Guy fantastic to speak with you. Congratulations on the news you are moving into phase two treating alzheimers. We look forward to positive news coming. When it comes, we hope it comes in please come back and see us. We would be delighted to talk to you about that again. Dr. Howard weiner. Dr. Weiner as a physician nothing is to be more exciting nothing is more excited than to have something we can treat patients with. Guy the Market Reaction reflecting that as well yesterday. Thank you much. Setbacks for solomon. We are going to talk about why the cfo of Goldman Sachs is under great pressure and why his deputy maybe needs to pick a side. That is next. This is bloomberg. Alix time for wall street beat. What is buzzing on the role of wall street and around the world. We are looking at the future of David Solomon and his potential successor. Joining us as sonali basak. This is the only thing bond traders are talking about. The article you wrote is so great and outlines the difficulties facing leadership at coleman. Sonali the fishers have been paid attention to for months over a Goldman Sachs. Part of the reason is there have been a lot of leaks about David Solomon, a lot of concerns and griping about his personality. We have seen it happen but it did not matter. Performance was so good the last couple of years. The pressure started about this year. Over the weekend we saw the new York Magazine story outlining almost of issues around a host of issues around Goldman Sachs and personalities. It draws attention to john waldron, is number two. They have been colleagues for three decades. One of his most trusted debbies. They cannot be more different people. David solomon who has this more abrasive, brash style, more highflying. The private jets is something people refer to a lot here. Then there is john waldron. Hes described as bluecollar. Hes midwestern, lowkey, father of six. Hes working 24 7 all the time. That personality has made him very likable. He is so close to david that what you are seeing is partners asking him to pick a side. Do you choose your loyalty to david or start to break apart a little bit and there is no sign of that right now. You watch him closely. He has quite the game face. Guy how is gary . Cohen room number debt Goldman Sachs sonali this is one of the big questions. If you dont push hard to make change or its like the classic wall street coup. This has happened time and time again. Jamie dimon lost his job over it. This is not what you are seeing a Goldman Sachs. You are seeing john being loyal. If you are keeping the number two, is always a bridesmaid in everbright . If youre gary cohen, you never make it to the top. John is only 54 years old and has been considered for a lot of other ceo jobs. Carlisle, for example. The question is, why hasnt he left . Hes always been the clear successor to david. Hes been a key part of the Strategy Change in the strategy fixing you are seeing in the consumer business. This year is a real test of the two of them in terms of how they navigate both morale and these difficult business decisions. Alix does he like being the guy to have to execute the strategy know he likes . Sonali if you watch the way hes been doing it, he doesnt put emotion around it. Hes very focused on the facts. The way hes been doing it is piece by piece. He had a Television Interview with us. He has a plan. He focuses on getting rid of that consumer business and doubling down on asset and wealth. You have seen him consistently execute, execute, execute. Where we in the process . We are halfway through the Third Quarter and theres a lot of pressure into the end of this quarter to clean up that consumer business so this quarter is cleaner than the last couple of quarters you have seen over a Goldman Sachs. Guy massive story today. Sonali, thank you very much indeed for sharing the details with us. Lets talk about where we are in the markets. We are mid august but the pace is picking up. A little bit more exciting out there. You dont see that necessarily in the stoxx 600. 455, the moving average number. 453. Keep an eye on that. The 200 is holding up a keep an eye on it. A boost first thing this morning. Punchy cpi numbers. The last five out of six on cpi out of the u. K. Have surprised to the upside. Today was no exception. The call looks strong. Services looks strong. We are gradually moving in the right direction but gradually is the op divert. Marks and spencer is about to go back into the ftse 100. It is being pushed higher and higher and higher. Up another 4 today. I think the review is in two weeks time. We will talk about the u. K. Story next. This is bloomberg. Hi, im lauren, i lost 67 pounds in 12 months on golo. 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. Guy wednesday, 16th of august. There are really key levels trying to develop hearing we will talk about that in a moment. At the headline level, nothing really to see. In bonds and forms exchange, tons going on. Countdown to the close starts right now. Announcer the countdown is on in europe. This is Bloomberg Markets european close with guy johnson and alix steel