In u. S. Inflation numbers. Medicine, food prices higher. Usedcar prices rising the bust since 1969. A deceleration in Core Services prices. Pandemic buying patterns have altered to the point that transportation, lodging away from home, still seeing an increase. The data is signaling little acceleration. Lapsed fiscal eight. Policy rates still years away. When you scrape beneath the Surface Company inflation data is pretty lackluster. Joe it came in pretty much right as expected across the board. You mentioned car prices. We will talk about that a little bit later. To me, the big thing is that white line. I think it offers a a lot of signal here. Unlike a lot of other lines, this one continues to be saggy. I think it is consistent with this ongoing disinflationary slump, not exactly it is the opposite of hot, whatever that is. Romaine we saw underneath that data, Something Like grocery prices actually fell in the recent month. When you talk about whether there is inflation, i guess the question is what exactly are we measuring . Joe for more, i want to bring in julia coronado. Just sort of give us your top line take of what we saw in the inflation data. Everyone expects that we are years away from the first fed hike. Nonetheless, people are trying to figure out what sort of signals we can get. It is kind of amazing how robust the debate around the inflation outlook is given the data. I think you hit all of the major points. Looking under the hood, there is a lot of disinflationary pressure. An importantch one. It is really just in the early stages of what is likely to be an ongoing descent. Climbing in some places but in most places, it is an and to the inflation. That is very normal. That is how we identify our phillips curve models. We usually do not see rent bottom until a year or two after the recession. I think these pressures will be with us. As you mentioned, they are concentrated in services where demand is the weakest. Goods like cars are surprisingly strong, stronger than normal. It is a bit of a different pattern. But, Overall Company does point to typical recessionary but torall, it does point typical recessionary dynamics. Caroline rent down 31 . Who of course has everyone had the luxury of being able to leave the city center and go somewhere more rural, was able. If we do see some change, a vaccine, relief for everyone, could we see rents stabilize much faster than we see in usual scenarios . That is a great point. A lot of the outlook will be determined by the virus, how the treatments evolve. I think that is a great and fair point. The sooner we get a vaccine and it becomes widely available, the more likely we are to resume normal or prior patterns of activity and location. The more this drags on the more those temporary moves become permanent. And the more we just sort of settle into different patterns of behavior, whether that be work from home arrangements in different locations. I have been one of the people who left new york and went to texas. More likely that those patterns become or lasting. Mind important to keep in that a lot of this will depend on the evolution of covid19. Romaine i am curious about the balance of where inflation is now, where it could be going, some of the policy prescriptions and some of the proposals on the table here. There is a general sense that the fed for the last decade have not been able to convince anybody that inflation is real. Im curious as to the risk reward, tilting us to a place that could be catastrophic. I assume you are referring to inflationary scenario, right . That is what you are thinking of . Look, i am having more conversations with our clients, investors about inflation and those types of scenarios. We are in an unusual place where the central bank is telling us and want more inflation they are setting up structures to force themselves to set policy to achieve that. Ask thefinitely fair to question. The way i approach thinking about and forecasting inflation, topdown, that sort of macro perspective, monetary policy, the business cycle. Also bottoms up. What are the sectors that drive inflation and what are they doing . That is where you get some of the Structural Forces that are going to be headwinds to inflation. Some of those are what we call , meaning thatect even in highly concentrated Retail Markets that are dominated by, say, two retailers, amazon and walmart, they still dont have pricing power. That is a disinflationary headwind that will probably be with us for a while. It take toill sustainably reverse the trend . Maybe we will get a blue wave, mega fiscal stimulus, but i could see that boosting inflation for a little bit and then the longterm trend reverses. From a global trade perspective, is there anything that would change the longterm in thisnary trajectory country . Often in the short term we focus on supply chain disruptions and relative price movements. Inget a sustained change inflation dynamics, i think you need purchasing power growth. There have to be broadbased gains in purchasing power. Andad that in the 1960s 1970s. Real wage growth, a lot of new social Insurance Programs creating a floor at the bottom of the distribution. Those are the kinds of policies i think that would be required to change the inflation dynamic. We have seen a lot of inequality. Concentration of income and wealth distribution. We would need a lot of policies that provide a broader base of purchasing power growth. Ongoing growth. You could set the minimum wage, that would give you a burst of purchasing power, but will that be sustained and ongoing . Some of the Structural Forces like inflation, are they going to change . To me, at the end of the day that is the essential ingredient. Romaine always great to get your insight. While she was speaking, we did have some breaking news on bed, bath, and beyond. The company saying they plan to selloff noncore assets, primarily including Christmas Tree shops, linens holdings, and the company says it will generate around 250 million for those sales. Willine coming up, we continue our inflation conversation by taking a deep dive into one area where inflation is on the rise. This is bloomberg. Romaine today, we are focused on consumer inflation and what it tells us about what is going on in the economy. One category that stood out to us all, used car prices, rising the most since 1969. I am assuming they are not like el camino spirit wise el caminos. Joe they are not like your car collection. Absolutely extraordinary. This has been building for a while. People have been talking about prices going up. It basically accounts for all the inflation. Joining us for more insight, and in stock, executive director insight, edmonds. Com executive director. How long is it the story is the story correct and how long do we expect this to persist . I think you also have people that are normally in the new car market, their income is fine, they are going along this pandemic at an ok rate financially, but they want to be a little bit conservative. They want to save a little money, Interest Rates are low, so they will buy that used car instead. Then you have people who have never owned vehicles, they want basic transportation. They will go into the used car market as well. You see drivers right now in the used car market that are atypical. I think you will see high used car prices for the rest of the year and probably for the short term at least. I buyne once again, myself a peloton, move to the suburbs, and get a secondhand car. I am a total cliche. I am interested. Deals at any point or are supply chains such an issue that there is never a right time to buy, just as soon as you can . Jessica we are starting to see the markets often slightly. In the summer, we saw used Vehicle Price go up. That defies all logic. As time goes on, that vehicle should go down in price. Because we are seeing increase for new car, that means more trade in, so more options for used car buyers. That will help car inventory as well. I think we will still see a fairly competitive market. I hope you got a good deal or will get a good deal soon. Theine i am curious about overall numbers then that we have been seeing for car sales both in terms of used and new. Amid all this frenzy, it did not seem like we will hit any new records, are we . Jessica no. Through the end of the third quarter, about 10 million vehicles have sold. It is down a little over 20 . That a lotws here is of the sales we are seeing are from consumers. Enterprise, hertz, not as many but youre renting cars, are getting people into dealerships. On the used car side, we have seen it take off. June was pretty much the highest month in history for used vehicles. July probably would have been as well. And markets are fairly hot somewhat like the housing market, defining what you think would be the case during a pandemic. Joe are the newcar Companies Running at capacity to take advantage of this . Jessica yes. Factories were shut down across the country in april and may. They have come back certainly with a vengeance. Of course, a lot of them are having to work out kinks because all of them have been affected. Sometimes, there are disruptions. They are trying to run particularly in demand vehicles like pickup trucks, which have been hot this year. The top three in the u. S. Are the silverado and ram. Usually see a bit of variation. For trucks, they are trying to add capacity to get to the end of the year. As the cold weather comes, demand for not only trucks but also all will drive suvs will also head. Dealers and automakers want to make the most of this time. Forline rich pickings some. Great to get you on the show. For some breaking news. One of the worlds most indebted ,evelopers, based out in asia offering prices for its shares at 16. 50. That is hong kong dollars. That is at the lower end of the spectrum. It tries to repay some debt. Joe huge name. Coming up, continuing our focus on todays u. S. Inflation report. 10year treasury yields lower. We will discuss the Market Applications next. This is bloomberg. Caroline today, we have been focused on the u. S. Inflation report this time around, we will focus on the element of the market. How they are digesting this data. You could look at perhaps the breakeven rates. Joe absolutely. Lots of interest in how the market is breaking lets take a look at 10year breakeven, sort of one measure of market anticipation of inflation. The thirtyyear not moving very much. Twoyeareen the breakeven. Fiscal stimulus in the shortterm, other factors already seeing some expected deceleration. Romaine i cannot see the access because my eyes are not that good. We are still below august highs. Definitely below the 2 plus level in 2018 when everyone thought the economy was on the long haul for improvement. On a longterm basis, that is not inflation, is it . Joe its not look like it in any of those charts. I want to bring in brian chappatta. Like a yields rallied minute before the numbers came out. We were just looking at that shortterm chart. The data suddenly looking little bit less inflationary than it had seemed over the past month or so. Absolutely. I think you look at the Bank Earnings early this morning, saw some of the loan loss provisions, which seemed good at first. In reality, jamie dimon, michael corbett, they were a little bit cautious. Dont read too much into our declining loan loss provisions. We still think the economy has a ways to go. I think that combined with a mediocre inflation reading, combined to give bond traders a reason to think that the fed is not going to be hiking anytime soon and inflation may not be at 2 anytime soon. Caroline those treasuries that are in some way inflation protected. Are going to get any sort of appetite for it . An a how to train earlier this year. I think a lot of the appetite has waned for tips, for a lot of these inflation hedges. Was they big reveal would do average inflation targeting. There is a lot of skepticism, proof you can get it over to percent. Breakevens kind of get towards 2 , 1. 8 level, even toward i think traders will say too much is priced in. Amaine how can we have reflation trade without inflation . I think the argument would be that ultimately fiscal stimulus is by its nature inflationary and that has to be the next leg of the trade. We are seeing a lot of fiscal stimulus a lot about fiscal stimulus but in reality it seems less and less likely that happens before election day. Popularsee a lot of the trades the market now flattening. Joe obviously, a not of a lot of noise. Rentsggest thing is the keep decelerating. The equivalent rent down to its lowest pace of acceleration in recent years. It is hard to bet on any sort of sustained inflation. The ideaen you look at of these big headline grabbing numbers like the 31 decline in San Francisco rents, that really hammers home what the fed has been saying all along, that the is a pandemic and crisis deflationary event, not an inflationary event. It is really a mixed bag. Inflation is a really hard indicator to pin down. That has kind of been the feds problem. 2 , it is really hard to get that broadly on a whole basket of goods. Chappatta,rian always good to get your opinions from bloomberg opinion. That is almost the end of the close of whatd you miss . Joe, tomorrow, what is the first thing you are going to look at . Joe i should have a good answer. Romaine i was trolling your twitter account today. You were trolling people all day. Joe you must have been looking at some other account. I keep it very professional, very serious. No jokes, just facts, charts, numbers. Romaine it is always a good need a good read. Caroline now we are going to bully remained in to spending a thousand dollars on a phone. Joe Bloomberg Technology is next. Romaine this is bloomberg. [ sigh ] not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. 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