Jonathan for our audience worldwide, this is bloomberg surveillance. Your equity for our audience worldwide, this is bloomberg surveillance. Your equity market 0. 3 . Jackson how starts from now, a week from today starts from nowa week from today chairman powell speak. Lisa how much will he lean into the section. We will have highwe will have hg but not raise rates higher in the short term. Cuts are not in the threshold. Jonathan 5 5 world, on this d market we start with consensus behind the move of the past month. Consensus behind the move of the past month. Lisa now it is time to buy and save but still, this to me is the ultimate question. Will the fed not raise further but raise further but they will hold them straight for a longer time . Aside good or bad news . It has driven of concerns about inflation and deficit. About inflation and deficit. Jonathan and then you have china, what a week for the second biggest economy. Theyve been delivering fixes with currency. Based on the reporting they have intervened in the fx market. Mainland exchange has Investment Funds not be net sellers of equity. Dont sell, intervened and were trying to say. Lisa there were reports of state official visiting peoples homes who have not gotten money back and Wealth Management funds. And either way, either way, they is, you are not seeing the market react they want. Its not working to stave off the concerns or the selloff. What do they havewhat do they ho something bigger and can see the market while the mind of its own . Jonathan they have a gdp target of around 5 . Here is thehere is the reality,. That is their focus now, for next yearhere is the reality, 4. That is their focus now, for next year of for handle as well. Lisa it is not this years long term. Where will theynasdaq. We are opposed for a third week of losses, the law longest so far. Yields are down by five points. Its refreshing, i love it. Apple shares are down more than 11 this month. When you take a look under the hood and where the losses are being driven is significant. We get a continuation of earnings, estee lauder the drip drip of the earnings season. It comes to had with nvidia next week. Significant giving the 200 in the run up on the name. How much is this behind the decline the ai trade has gotten there is a 3 00 p. M. Press conference with President Biden trying to shore up leadership, the alliance and land of china. How much do they want to point the bear . Around 4 15 p. M. This is gaining a new importance. We get the latest read on commercial Bank Deposits. You can see Bank Deposits have been coming off but bank of america pointed out we have seen record inflow into cash. Almost 1 trillion. When does this created an issue for banks . In terms of deposits exiting the company . Jonathan we have surpassed 2020. How much is this about return on capital. Lisa is this cash on the sidelines or as an active class that will not come back why would you go into a stocks when there is a time around how much you can get a return. If you get a 5 yield in the cash market . If you see if lightning yield curve whats being affected . Jonathan people are talking about a sweet soft and they said the equity markets where the only place to be what about that now . Do you remember that . Jens, what a week from the market. State owned banks had been requested to intervene even anymore. From your perspective and you follow this. What capacity do they have to intervene in the fx market . Jens its about capacity and what they want to do with that capacity . If you look at the Central Bank Balance sheet they have 3 trillion in reserves that they could in theory use. Since they lost one trillion in 2015, 2016 balance of payment crisis they had they been reluctant to use as reserves. We have an unusual situation they need to interview not through the Balance Sheet but to tell the banks to do it for them. They have capacity to. But that is more in the hundreds of billions as opposed to trillions. Theyve been using that this week. I dont think they will be coming into trillion dollars during this episode. It is something they can talk about but i dont think they have an incredible amount of money that they are willing to use to hold the currency at a specific level. They are very keen to make and not a one way back that they are fighting the fundamental trend that will be hard for them to contain and i will give you two data points. They have had an impact on the currency but every day, the equity market, interestrate market, its a weaker economy. Twoyear is going down every day. This week has been an incredible story of divergence between global bond deals going dramatically higher in chinese yields going down. It is not the usual situation and it will make it hard to draw a line in the said. Jonathan on the upside here, what levels are you thinking about . Jens if we think about where this breakout in the currency start it was around 725 we almost got there, back there overnight as they manipulated the market. That is a fair word to use. I dont think we will go much lower than that. They have their warning shot this week and if the dollar stay strong we will have upward pressure and they will not allow it to crash. They have to think a couple of months ago it will be extremely hard to hold it at this level and increasingly expensive and these fixing singles that they send every year. We are based in new york, at 915 in the evening. How do you read that if they are not backing it up was Central Bank Currency . Its only for so long those fixing signals will be taken seriously. They have been taken seriously up until now but they will have to back it up with action and we have seen some action this week but i dont think the amount they are doing is huge. Thats relevant to that debate about how we will have a spiral where they come and have to sell foreign bonds to intervene. Yields go up globally. The flow into the bond market is not that big. Its a psychological game at this point. There is an element of them telling different players locally what to do. You mentioned in your intro that they said a vespa box the cell equity. Thats insane. The currency market the players that are buyers of fx have been told to chill out. Dont bide now, we wanted to stay stymied. Lisa you dont see the probability of mass liquidating you think this selloff we are seeing in the u. S. Bond market is unrelated to everything in china . Is there interconnectedness . Jens the trillion dollar question, that is a one million trillion dollar question. When you analyze the price action we have had in the u. S. Bond market over the last six weeks when weve had this big move highend yields. We can talk about inflation. It is not inflation driving the bond market, we have the cpi prince, even measures in this market behaving ok. The fixed downgrade played a role but things like a couple of days. What is going on we have the japanese yield curve in the long end and that has removed an acre in global yields. The second thing is u. S. Economic data that has surprised a lot of people to the upside. We have this change in thinking more people save may be the economy can handle 5 rates for a while. If you had asked them to use ago they said the economy cant handle a 1 , the 2 hike. There is a question going on here looking into 2024, what is a sustainable level of Interest Rate and growth and is a correct that the economy can handle 5 for a same. Of time in the market is booming in that direction but thats a big part of whats happening in the bond market. Lisa if the fed signals is willing to pause and not hike rates, will that be a good thing or a bad thing for long bonds . Jens clearly, if you have a central bank perceived to be behind, not doing enough to get inflation target then you can have a problematic steepening of the yield curve with risk premium coming in. But what is ironic about this move that it is happening in the time when u. S. Inflation indicators have been well behaved and when Inflation Expectations have been very stable. Its a different dynamic. I dont think its a confidence game with the feds but maybe what the fed signals about this growth level that seeps into the concept is relevant around the meeting jackson hole. Jonathan get some rest there. We will get you up to speed on bloomberg outlooks. Net income 9. 7 5 billion to 10 billion, the previous range was 9. 25 29. 5. Lisa we have seen a lot of investment. They cite strong order books and positive industry fundamentals for giving them this booze. When did we start to see the industrial sector rebound after seeing ahead is a direct aftermath of the pandemic . Not what people expected they expected services to come down. Jonathan the sectors rebounded, we will have a conversation with edouard yardeni. From new york city, good morning. 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 wake up, achievers. Youre making the most of every hour of your life. we did it 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 50 on the sleep Number Limited Edition smart bed. Plus, free Home Delivery when you add a base. Shop now only at sleep number. We need households to start spending and this is been a problem with the chinese economy going way back. They have the highest level of savings in china and they can seem to unlock it. They probably need to get confidence in the private sector which is been on the sidelines. Jonathan crash of confidence weve heard it all we. Live from new york city, good morning this week. A moving a step closer to the weekend. Here is price action. Equities negative 0. 5 . Fx market not giving me much but getting comfortable with the 108 handle. Crude unchanged at 80. 36. Its a week for china with the pushback in the fx market. A fix or manage currency, we are strong overnight. Theyve asked Investment Firms not to be net sellers of equity based on the reporting the state owned banks of been asked to intervene strongly in the fx market and it seems is difficult right now to get a floor under confidence. Lisa if you look at the partners of the stay open eggs and developers that are struggling with the fault you have a housing problem, confidence problem, people are not getting their money back and starting to protest. How did they tempt out about social unrest when its clear there is a transition. Jonathan it is wonderful to have you with us on this program. We have heard this that what we have is the crisis of confidence. What could a policymaker do to address that. And a cola anna intervention to try this upstart Economic Growth one of the things that is needed there is a deeper lexus to do that and we dont even know if it would actually make a different that is ultimately needed because this is about Consumer Confidence in chinese domestic population is about Business Confidence among foreign investment. The companies they are trying to attract and maintain the business of. I dont think stimulus is whats needed fundamentally what needed is the certainty that the Central Government is actually prioritizing Economic Growth and not letting it be compromised by other national priorities. Lisa there has been ongoing decoupling with the chinese and u. S. Economy. Not as extreme as people imagine but it is real. How much is the u. S. Want to see that stop . How much do they not want to lean into that decoupling at a time where china once or press the pause button and keep that fundamental International Investment in the nation . Anna it depends on who youre talking about when you say the u. S. The Biden Administration has been clear they would like to continue to have strong economic relations with china. They just want the protect National Security related things. The reality is there are policies coming out of both the administration and congress that do not just touch on those hightech National Security fundamental things. There are policies that are human rights related, democracy related that have an effect on the specter of goods and services. A big question that businesses are asking about sourcing from china, what is in between underwear hightech semiconductors that is clearly allowed and will continue to be allowed for engagement commercially with china and the answer is not clear yet. Lisa during conversations with corporations trying to bridge this gap, where is their conviction . If they do not have conviction how much do you fear they will accelerate to get out of china so they dont anger anyone in the communist Chinese Party . Anna they need more reassurances from the communist party and leadership in china the new round of policies that they have seen rolled out in the midst of encouragement of foreign investment. Things like the amendments to the espionage log. Things like the raids, targeted ones on Business Intelligence firms. They are not coming for them that they will continue to operate and do the business they have been doing for many years, decades in china. On the west side, they need clearer guidance about what is National Security and not . What is state territory for industry a what is not . Where is the business encouraged . In those cases, they get to the to the way. Jonathan if you asked the treasury that question is state department you get two different answers . Anna they have different jobs. I think its fair to say that the Treasury Department is interested in the business realities and how it impacts the u. S. And global economies overall in the state departments primary job is safety. Those are not the only consideration. Sympathetic to the fact that this is a complex thing for any administration to try to navigate and made more complex by the fact that is not the administration is also congress, where heading into an Election Year and politics plays a role. Jonathan it is not getting any easier. Anna asked jen, thank you for your time today. A crisis of confidence. Lisa within china and outside of china about the policies or remain a place that could enable business partnerships. You asked the right question, is there a contradiction within this administration about chinese policy and the answer is yes. How as a company can you make a plan based on the u. S. And game out the friction that will be between u. S. And china . Its completely in bisque he was. Jonathan you derisk or diversified . Apple for example a little lesson china. Lisa thats what were talking about. Starting to move things out of there and at what point do they try to bring people back or to peter tchirs point, compete and say we will sell our products and compete with america, the United States, and africa, latin america. Youre looking at the Shifting Sands and it will have an impact. Jonathan prices direct, quality takes a long time to build a reputation. Lisa if i were a cynic speaking in an unsecured manner people would argue that there were questions around the safety of intellectual property of the companys forest to share all of their information with chinese counterparts so they are capable of making products. There has not been investment at the University Level to create intellectual capacity to come up with new products. Jonathan fortunately are not censored, welcome to america. You might go to black in china but you could say that here. Lisa i dont think were on air in china. Right now we are looking forward to understanding about contagion into the u. S. Market to a degree. I wonder where that will change given the Property Market . Jonathan equities down by zero point 1 . A threeday slide, is significant one but no drama in the equity market. A lot more over in europe and elsewhere. In the bond market, some strengthen the bond market on the 10year treasury yield, succession we added 20 basis points through the curve. The 10year is 4. 21 92. We anticipate chairman powell in jackson hole, wyoming. Lisa i am very curious about the Economic Outlook of the time where inflation is the side. This is a pivot point. Jonathan from new york city, this is bloomberg. With your hearing, if you start having a little trouble, youre concerned that its going to cost you money. To this day i only paid what i had to pay for the device. When i go back everything is covered. Theres so much youre missing by not having hearing aids. Well find you a hearing aid that fits your lifestyle and budget at one of our over fifteen hundred locations. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. Jonathan threeday losing streak on the s p 500 trying to prevent a four. Your equity market is slightly negative down by 0. 2 . Some weakness there this month. Negative by 0. 3 . Bond market, people are buying treasuries. 4. 2192. The 10 year yield is the highest closing yield we have seen going back to late 2007 on the 30 year. Have not seen levels like this is 2011. Lisa its curious weve seen this selloff even with big Investment Firm saying its a great time to lock in deals where they are. The bond flows confirm that. They have seen record inflows into bond funds this year. Where is that money going . Where is the money thats causing yields to go higher. Jonathan 13 consecutive days close at 4 . Lucky for the bond ghouls . This one will hurt. Lisa youre still young, yields can come down. People saying this is just a blip in a sleepy august month is not normal coming to fruition on uncertain catalysts. Next week, will jackson hole lean into this and save these market moves are what weve been waitin