Bloomberg Surveillance 07/08/2022 Abe Assassinated
>> INFLATION. IT HAS BEEN CLEAR BY THE FED THAT IS THEIR TARGET. >> THEY ARE LIKELY GONE TOO FAR. >> MY VIEW IS THAT THE FED THINKS U.S. MIGHT NOT BE IN A RECESSION,
MIGHT BE ON THE COST OF A RECESSION. >> NOT BE LOOKING AT THE RECESSION OF THE EARLY 1980'S. >> THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN: GOOD MORNING. THIS IS BLOOMBERG SURVEILLANCE. FUTURES DOWN BY .3% ON THE S&P. WE HAVE TO BEGIN WITH
HEARTBREAKING NEWS OUT OF JAPAN. TOM: I CAN SEE THE PRIME MINISTER AS WE SPEAK, SHATTERED OFF MY FEET. WE WILL GO TO -- AND A MOMENT. I'M HOPING TO SPEAK WITH ROBERT FELDMAN OF MORGAN STANLEY.
THIS IS A TRAGIC LOSS FOR THE DOMESTIC PEOPLE OF JAPAN. MY FIRST MESSAGE THIS MORNING, THIS IS NOT ABOUT THAT ACCLAIMED PHRASE, ABENOMICS. THIS IS A FAN -- FAMILY THAT SPANS JAPAN FROM A RECOVERY OUT OF WORLD WAR II. JONATHAN: JAPAN'S PRIME MINISTER SINGH THIS EARLIER, IT IS ABOUT -- A BARBARIC ACT THAT TOOK PLACE DURING AN ELECTION, IT IS FORGIVABLE. TOM: WHEN YOU LOOK AT WHAT HE ACCOMPLISHED, IT GOES TO DOMESTIC POLITICS, HIS GRANDFATHER WAS A CLASS A WAR CRIMINAL OF THE UNITED STATES OF AMERICA, BECAME PRIME MINISTER OF JAPAN IN THE 1950'S. THE GRANDSON FOLLOWED ON TO AMEND AND SOFTEN THE HARSH, MILITARISTIC RHETORIC OF THE ALTAR RIGHT OF JAPAN. HE PRAYED ASH PAID THAT PRICE
THIS MORNING. JONATHAN: YOU CAUGHT UP WITH -- THIS MORNING. KAILEY: THE IDEA THAT ABENOMICS IS GOING TO LIVE ON.
YOU SEE THE CONTINUATION OF THESE ECONOMIC POLICIES IN JAPAN. POLICY IN JAPAN STILL EASY, STILL TRYING TO STIMULATE AN ECONOMY THAT HAS STRUGGLED WITH THE IDEA OF DEFLATION AND STAGNATION. ABE, DURING HIS TIME AS PRIME MINISTER, THAT WAS ONE OF HIS PRIMARY GOALS. JONATHAN: WE WANT TO STAY ON TOP OF THE LATEST NEWS. IF YOU ARE JUST WAKING UP AND LOOKING FOR PRICE ACTION, I WILL WHIP THROUGH THAT. FUTURES NEGATIVE POINT 3% ON THE S&P 500.
ON THE NASDAQ 100, DOWN .4%. STORY OF THE WEEK SO FAR IS FOUR DAYS OF GAINS ON THE S&P 500. WE HAD A FOURTH YESTERDAY, THE LONGEST RUNNING STREAK SINCE MARCH. YIELDS IN AT 297.50.
ALL OF THAT GOING INTO PAYROLLS A FEW HOURS AWAY. KAILEY: BEFORE WE CAN GET THERE, WE ARE GOING TO HEAR FROM ANOTHER CENTRAL BANKER IN EUROPE, CHRISTINE LAGARDE WILL BE SPEAKING AT THE FRENCH DAVOS AT 7:55 A.M. EASTERN TIME. I'M INTERESTED IN WHAT SHE HAS TO SAY ABOUT THE JULY MEETING, 20 FIVE BASIS POINTS THE CASE SHE WANTS TO MAKE? WHAT DOES SHE HAVE TO SAY ABOUT A EURO AT ITS WEAKEST LEVEL SINCE 2002? WE FIND OURSELVES ON PARITY WATCH WITH EURO-DOLLAR TRADING AT 124.
268,000 PAYROLLS ADDED IN THE MONTH OF JUNE IS WHAT WE ARE EXPECTING TO SEE, AND AN UNEMPLOYMENT RATE OF 3.6%, WAGE GROWTH THAT 5.6% ON A YEAR ON YEAR. THE QUESTION IS GOING TO BE, IS THERE ANYTHING IN THESE NUMBERS THAT ALTERS THE CASE FOR THE FED? THE FOCUS IS ON INFLATION, LESS ON THE LABOR MARKET. IS THAT THE MESSAGE WILL HERE POST JOBS AT 11:00 A.M. EASTERN TIME FROM JOHN WILLIAMS, WHO WILL BE SPEAKING AFTER WE HEARD FROM WALLER AND BULLARD YESTERDAY, MAKING THE CASE FOR ANOTHER 75 BASIS POINT MOVE, PLAYING DOWN THE RISK FOR RECESSION? JONATHAN: TALKING ABOUT THE POTENTIAL FOR A SOFT LANDING, AS WELL. LOOKING AHEAD TO THIS PAYROLLS
PRINT, ANDREW HALLMAN HEARTH HAVE LED THE WAY TO A HAWKISH FED. THIS IS WHAT THEY HAVE TO SAY, 290 FATE -- 290K K -- PRICED BACK HERE, A CONFIDENT PACE OF THAT HIKES INTO 2023. TOM: MANY OTHERS. DO WE HAVE A STRONG ECONOMY, AS CHAIRMAN POWELL TALKED ABOUT? MY PHRASE IS, GO BENEATH THE HEADLINE DATA. MAYBE THIS IS THE JOB REPORT
WHERE THE HEADLINE DATA MATTERS. JONATHAN: STARTING TO SEE POCKETS OF WEAKNESS. ELSEWHERE, PERHAPS, WE HAVE THAT WEEK ISM LAST WEEK. LOOKING AT THE COMPONENT OF IT, LOOKING AT THE EMPLOYMENT COMPONENT THAT WITHIN THAT DATA POINT, THEY TALKED ABOUT A SUPPLY-SIDE STORY, NOT SO MUCH ABOUT DEMAND. ARE WE STIFF IN A SUPPLIES CONSTRAINED ECONOMY? TOM: I THINK THERE IS GOING TO BE A LOT OF ACTIVITY OVER THE WEEKEND. I KNOW YOU ARE SLIDING INTO THE
WEEKEND ALREADY AFTER RETURNING FROM WASHINGTON. MANY OTHERS ARE NOT. THEY ARE GOING TO WORK THROUGH THE WEEKEND TO RECALIBRATE OFF OF THIS JOBS REPORT. IT IS A CALIBRATION OF THE SUPPLY SHOCK, AND THE DEMAND MYSTERY. JONATHAN: WHAT DO YOU MAKE OF THE BOND MARKET MOVE? SAT AT 3% AGAIN, IS A CURVE IN VERSION OUT THERE? TOM: I'M GOING TO STEAL A PHRASE FROM --, THE AMBIGUITY ISN'T EASY. THE AMBIGUITY ON THE BLOOMBERG SCREEN IS EXTRAORDINARY. DOLLAR STRENGTH IS BEING A
RESILIENT FEATURE THIS WEEK. JONATHAN: LOOKING FORWARD TO THAT JOBS PRINT. WE BEGIN WITH A TOP STORY OUT OF TOKYO, JAPAN.
WE CATCH UP WITH CHIEF ASIA ECONOMICS CORRESPONDENT. LET'S BEGIN WITH THE SAD NEWS OUT OF JAPAN, THE DEATH OF THE FORMER JAPANESE PRIME MINISTER, SHINZO ABE. WHAT HAPPENED? >> IT IS COMPLETELY SHOCKING NEWS. IT HAS BEEN DESCRIBED AS ONE OF THOSE DAYS THAT WILL LIVE IN THE JAPANESE COMMUNITY AND LONG TIME. THE DETAILS ARE SCARCE.
HE WAS ATTACKED BY SOMEBODY AND DIED BY THE GUNSHOT WOUND HE RECEIVED. HE PIONEERED THE POLICY AND ECONOMICS, HUGE GOVERNMENT SPENDING, HUGE CENTRAL-BANK SUPPORT AND HAS CREDIT FOR AT LEAST REVIVING THE JAPANESE STOCK MARKET AND STING GROWTH BEFORE THE PANDEMIC CAME ALONG. ON THE GLOBAL STAGE, HE PUT JAPAN BACK ON THE GLOBAL STAGE. HE WAS SEEN AS THE -- A FOREIGN POLICY HOT.
HE TRIED TO AMEND TIES TO CHINA WHILE BOOSTING SPENDING ON JAPAN'S MILITARY, -- RESTRICT SPENDING ON JAPAN'S MILITARY. THIS WILL NOT UNDERSTATE THE SHOCK FOR JAPAN'S DOMESTIC POLITICS AND JAPAN'S PEOPLE, AND THE GLOBAL STAGE. TOM: I AM SEEING ON MY FEET IN THE BLOOMBERG HEADQUARTERS IN NEW YORK, MR. KISHIDA FINISHING HIS REMARKS IN TOKYO. ALL OF THE ARK OF THE POLITICAL DYNASTY OF THE ABE FAMILY GOES BACK TO 1945 IN AN ARCH DEBATE IN JAPAN ABOUT HOW TO REASSERT ANY FORM OF MILITARY PRESENCE. ABE HAD THE COURAGE TO HOLD OFF THE ALTAR NATIONALISTS. DID HE PAY FOR THIS MORNING?
ENDA: HE TRIED TO STRIKE A BALANCE IN HIS POLICY, DEFENSE AND FOREIGN POLICY. LIKE YOU MENTIONED, ON THE ONE HAND, HE HAD A DEAL WITH CALLS AT HOME TO BOLSTER JAPAN'S HAWKISH POLICY TO GIVE THE MINISTRY A BIGGER ROLE. HE WAS ALSO CREDITED WITH MENDING RELATIONS WITH CHINA. THOSE RELATIONS WITH CHINA HAVE COME A LONG WAY UNTIL THE HONG KONG ISSUE. THEN, THE PANDEMIC. A LOT OF WHAT ABE WAS TRYING TO DO WAS FOCUSED ON THE GLOBAL STAGE, LEAVING THE ECONOMY ON A MIXED LEGACY. THE BIG TAKEAWAY FOR ABE WILL BE HAWKISH POLICY ON THE GLOBAL STAGE.
HE WAS ESPECIALLY VOCAL ABOUT CHINA'S ROLE, JAPAN'S ROLE. HE DID STRIKE A BALANCING ACT. THERE ARE DIFFERENT FACTIONS IN JAPAN, HE LED A DETERMINED FACTION. I THINK HIS LEGACY WILL BE ONE THAT --. KAILEY: HIS ASSASSINATION COMES DAYS BEFORE THE ELECTION IS TO TAKE PLACE ON SUNDAY. PRIME MINISTER KISHIDA SAYING THAT HE HAS INSTRUCTED THE CABINET TO ENSURE FREE AND FAIR ELECTIONS. THEY WILL TAKE SECURITY
PRECAUTIONS FOR THE ELECTION. HOW COULD HIS DEATH TODAY INFLUENCE THE RESULTS OF THOSE VOTES ON SUNDAY? ENDA: THE FIRST POINT IS THAT THE GOVERNMENT IS GOING TO GO AHEAD WITH THE ELECTION. THIS HAS BEEN AN ATTACK ON DEMOCRACY FOR JAPAN, AND ESPECIALLY SHOCKING GIVEN THE LOW LEVEL OF GUN VIOLENCE IN THAT COUNTRY. THAT IS A POWERFUL SIGNAL THE
GOVERNMENT IS SENDING, THEY WILL GO AHEAD WITH THE RESULTS. IT IS DIFFICULT TO KNOW HOW IT WOULD PERMEATE IN TERMS OF HAVING PEOPLE VOTE. SECURITY ON THE GROUNDS FOR ABE AND THIS DISASTER.
LOOKING AT THE INITIAL TAKEAWAYS OF HIS LEGACY TODAY, A LOT OF PEOPLE ARE FOCUSING ON THE POSITIVES. THE POSITIVES IN TERMS OF WHAT HE TRIED TO ACHIEVE FOR THE ECONOMY. HE TRIED TO GET WOMEN BACK IN THE WORKFORCE. ON THE GLOBAL STAGE, HE BOLSTERED JAPAN'S SIDE AND DID BIG TRADE DEALS. TRIED AND HOLSTERED THE
MILITARY STANDARD ON THE GLOBAL STAGE. AT THIS STAGE, JAPAN IS REELING FROM THE LOSS OF WHAT IS CLEARLY A POLITICAL GIANT FOR THE COUNTRY. JONATHAN: THE WORD I HAVE HEARD SEVERAL TIMES THIS MORNING WAS HOPE.
IT WAS HOPE, HOPE THIS TIME AROUND THAT COULD BREAK OUT OF SEVERAL DECADES OF STAGNATION. TOM: THE POLARITY HERE IS, HE WAS CLEAR THAT HE WAS SCARRED FOREVER BY THE IMPRISONMENT OF HIS GRANDFATHER. THIS IS A GUY THAT WAS STRIDENT THAT JAPAN HAD TO REENGAGE MILITARILY. AT THE SAME TIME, THIS IS A GUY
THAT HAD THE COURAGE TO ADDRESS LIBERALITY IN JAPANESE SOCIETY, AND A PARTY THAT WAS HUGELY CONSERVATIVE. JONATHAN: A SPECIAL THANKS TO ENDA ON THE LATEST. THE TEAM IN ASIA DID A FANTASTIC JOB ON LETTING US REALIZE HOW RARE THIS IS. IN ALL OF JAPAN IN 2021, A GUN RELATED INCIDENTS. TOM: OVER THE YEARS, SIX FORMER JAPANESE PRIME MINISTER'S ASSASSINATED. JONATHAN: WAKING UP TO THE SAD NEWS THAT FORMER JAPANESE PRIME MINISTER SHINZO ABE HAS DIED.
RITIKA: FORMER JAPANESE PRIME MINISTER ABE HAS DIED AFTER BEEN SHOT AFTER A CAMPAIGN EVENT. IT IS STUNNING NEWS IN A ENVIRONMENT WHERE GUNS ARE RARE. THE SUSPECT WAS ARRESTED. HE WAS JAPAN'S LONGEST-SERVING
PRIME MINISTER AND WAS BEST KNOWN FOR HIS SHOCK ERA P CALLED ABEN -- SHOCK THERAPY CALLED ABE NOMICS. BORIS JOHNSON ANNOUNCING HE PLANS TO RESIGN. THE CONSERVATIVE PARTY WANTS TO SPEED UP THE PROCESS TO CHOOSE HIS SUCCESSOR BY THE END OF THE SUMMER. THE EUROPEAN CENTRAL BANK'S THIRD MAJOR CLIMATE STRESS TEST HITTING A $71 BILLION, THAT ADDS UP CREDIT AND MARKET LOSSES FROM INCREASING NATURAL DISASTERS AND SWEEPING CHANGES ACROSS INDUSTRIES. WE SPOKE WITH ECB VICE CHAIR. >> WHAT WE HAVE SEEN IS A DISORDERLY SCENARIO, IT IS MORE RISKY FOR BANKS THAN IF THERE WERE TO BE A ORDERLY SCENARIO. THIS COMES AS A STRESS TEST THAT WE ARE -- TODAY.
THIS IS A LEARNING EXERCISE, A PIONEERING EXERCISE. IT CAME OUT OF THE BROADER FINANCIAL SECTOR MACRO SECTOR, THE ECB DID LAST YEAR. RITIKA: THE ECB FOUND 60% OF -- DO NOT HAVE A CLIMATE STRESS TEST. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON "BLOOMBERG QUICKTAKE." POWERED BY MORE THAN 2,700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM RITIKA GUPTA. THIS IS BLOOMBERG.
♪ >> WE'VE GOT A GOOD CHANCE AT A SOFT LANDING GOING FORWARD. THERE ARE ALWAYS RISKS. OR, A SHOT WE CANNOT EVEN THINK ABOUT THAT WILL HIT US. THAT COULD HAPPEN. WE ARE ALWAYS COGNIZANT OF RISK. I THINK THE BASE CASE IS FOR A SOFT LANDING AT THIS POINT. JONATHAN: THAT WAS JAMES BULLARD GOING INTO POTENTIALLY ANOTHER FED MEETING AT THE END OF THIS MONTH WITH A 75 BASIS POINT RATE HIKE. GOOD MORNING.
COUNTING YOU DOWN TO PAYROLLS FRIDAY, TWO HOURS AWAY. FUTURES NEGATIVE .1% ON THE S&P. WE ARE ON PARITY WATCH ON EURO-DOLLAR, A BREAK OF 101 EARLIER IN THE SESSION. 101.32. I WAS LOOKING AT THE CHART ON THE DOLLAR INDEX, HEAVY WEIGHTING THE EURO HAS IN THAT INDEX. IT IS UP ALMOST 10% AHEAD OF Q1. TOM:
WHAT IS IMPORTANT IS HOW LONELY THE EURO IS THIS MORNING. I LOOK AT OTHER CURRENCY PAIRS AND TRIANGULATION'S, THIS IS DISTINCTLY A EURO STORE. JONATHAN: TWO PROBLEMS, THE WITNESS AND GROWTH, AND IF YOU ASK ANYONE THIS MORNING WHAT IS GOING TO HAPPEN TO THE EURO ON THE ECONOMY, IT IS HARD TO FIND ANYONE CONSTRUCTIVE ABOUT THE PATH AHEAD. TOM: FRAGMENTATION SITTING ON THE RUNWAY AT A NATIONAL AIRPORT. FRAGMENTATION. JONATHAN:
IS THAT WHAT YOU ARE CALLING IT? I HEAR THE ECB HAS A NAME, THEY ARE FRAGMENTATION. TOM: DO THEY HAVE A POLICY AT? JONATHAN: THEY HAVE A POLICY, -- THAT IS THE QUESTION TOM. TOM: WE ARE CONTINUING TO FOLLOW EVENTS IN JAPAN. RIGHT NOW, AT THIS MOMENT OF AMERICAN JOB ECONOMIES, CHIEF INVESTMENT STRATEGIST AND CHIEF ECONOMIST, CITY GLOBAL WEALTH.
WHAT DO YOUR TROOPS THINK WIDENING OF THIS JOB REPORT? I CANNOT FRAME IT. TO ME, IT IS MASSIVELY AMBIGUOUS. AM I RIGHT? >> IT IS A TRANSITION PERIOD. YOU TALK ABOUT PEOPLE, HOW COULD THE ECONOMY WE CAN WIN EMPLOYMENT IS STRONG? IF YOU LOOK AT -- PAYROLLS, THE LEAD TIME IT HAS GIVEN US BEFORE RECESSIONS ON AVERAGE SINCE WORLD WAR II IS ZERO MONTHS. LITERALLY, IT IS A COINCIDENT
INDICATOR. TAKE A LOOK AT THE COMPONENTS OF THE IMPACTS OF LEADING ECONOMIC INDICATORS. HE WILL NOT FIND IT IN THERE. TOM: YOUR CLAIM THAT IT IS
SYNTHESIZING THE MARKETS INTO EQUITIES. HELP OUR VIEWERS TODAY. ARNON -- PAYROLLS ADJUSTED? WHAT IS A SOFT, NONFARM PAYROLLS NUMBER. IS IT SUB 200,000? IS IT SUB 300,000? STEVEN: WE WERE BELOW 200,000 ALREADY, I WOULD CONSIDER THAT SOFT, I WOULD CONSIDER THAT ON THE WAY TO A CONVINCING SLOWDOWN. AGAIN, WHERE WE ARE WHERE THERE IS A LOT OF PRODUCTION NEED, CATCH UP IN THE ECONOMY, REGARDLESS OF WHAT HAPPENED TO FIRSTHAND GDP GAINS, WE HAVE HAD CONSUMER SPENDING IN THE FIRST HALF OF THE YEAR AFTER DOWNWARD REVISIONS LOOKS TO BE A 1.5% PACE. DO YOU NEED 300,000 TO 400,000 JOBS PER MONTH WHEN CORE DEMAND IN THE ECONOMY IS DECELERATING? THIS IS BEFORE THE EFFECTS OF 300 BASIS POINT HIGHS AND MORTGAGE RATES OVER 12 MONTHS, BEFORE THE FORTHCOMING TIGHTENING OF MONETARY POLICY MIGHT HAVE BEEN. WE LOOK INTO 2023, FINANCIAL
MARKETS ARE SUPPOSED TO BE TELLING US WHERE THE ECONOMY IS GOING, NOT WHERE THEY ARE NOW. IT LOOKS LIKE IT IS GOING TO BE A WEAKER PERIOD FOR EMPLOYMENT, AND COULD BE CONSIDERED WEAKER IN 2023. JONATHAN: WHAT DO YOU MAKE OF THIS RALLY AND THE GERMAN ECB INDEX? THE SELLOFF IN ENERGY OVER THE LAST MONTH OR SO? HOW DO YOU KNOW WHEN SOMETHING IS THE REAL DEAL OR NOT? STEVEN: WE HAVE BEEN IN THIS PERIOD WERE WE HAVE BEEN FOCUSED ON INTEREST RATE RISK, THE BOOMING, SIMPLE CONDITIONS, HIGHER INFLATION. RATE RISK HAS BEEN DRIVING MARKETS.
WE HAVE TO TRANSITION AND SAY, WE'VE GOT RATE RISK MORE THAN PRICE. WE HAVE TO TAKE A LOOK AT THE TRANSITION TO CREDIT RISK. THINK ABOUT THE EQUITY MARKET. SOME OF THE UNDERPERFORMANCE OF CYCLICALS, PERHAPS COMMODITIES MORE SUBJECT TO INTERNATIONAL EVENTS. INDUSTRIAL CYCLICALS, COMPANIES THAT TAKE A LOT OF CREDIT RISK AND THE CONSUMER MIGHT NOT BE THERE FOR THEM, THEY ARE STARTING TO UNDERPERFORM SOME. MAYBE SOME OF THE TECH
COMPANIES THAT HAVE BOND LIKE BALANCE SHEETS, AND PROBABLY CAN WHETHER ANY KIND OF BUMP IN THE ECONOMY OVER A YEAR OR TWO, THEY ARE STARTING TO LOOK LIKE THEY ARE TRANSITIONING TO A PERIOD WITH MORE STABILITY. IT IS EARLY FOR THAT, BUT I THINK IT IS DEFINITELY THE PATH WE ARE ON. TRANSITIONING FROM RATE RISK TO CREDIT RISK. KAILEY:
WHAT ABOUT AWNINGS RISK? STEVEN: IT WON'T NECESSARILY BE THE QUARTER WE FINISHED, BUT WHERE WE ARE GOING AHEAD. IF WE CAN AVOID A SELF REINFORCING DOWNTURN, YOU HAVE TO REMEMBER THAT WE HAD 47% EARNINGS GROWTH LAST YEAR. PROFITS ARE HIGH IN THE U.S. MARKET. IF YOU HAVE A SLOWDOWN, IT IS GOING TO TAKE SOMETHING OUT, EVEN IF THE ECONOMY IS IN A RECESSION. IF YOU THINK ABOUT THE PROBABILITY-WEIGHTED SCENARIOS, IT LOOKS LIKE WE ARE GOING TO HAVE A EARNINGS DROP NEXT YEAR.
I DO NOT THINK THAT IS GOING TO BE REFLECTED SO MUCH IN THE SECOND QUARTER EPF, IT IS GOING TO BE A QUARTER -- SURPRISES. THE LOOK BACKWARDS IS NOT REALLY THAT RELEVANT. THE ONE THING I WILL NOT WORRY ABOUT IT IS DOWNWARDS EARNINGS ESTIMATE REVISIONS. THE NUMBERS ARE NOT PLAUSIBLE. WE KNOW STOCK PRICES PREDICT DOWNWARDS EARNINGS ESTIMATES. JONATHAN: GREAT TO CATCH UP, AS ALWAYS.
CPI NEXT WEEK ON THE 13TH. ON THE 14TH, YOU HEAR FROM JP MORNING -- MORGAN. DOES ANYONE HAVE VISIBILITY ABOUT WHAT THIS YEAR MIGHT BRING? TOM: I WOULD LINK THESE TOGETHER. I'M GOING TO BE HONEST. THE INFLATION REPORT NEXT WEEK
IS ARGUABLY MORE IMPORTANT. THE INFLATION REPORT FOLDS INTO THE EARNINGS REALITY, AND THAT GUIDANCE ABOUT, WHAT DO THEY DO AT THE REVENUE LINE? JONATHAN: THE SURVEY OF BLOOMBERG, 8.8 PERCENT ON HEADLINE YEAR-OVER-YEAR IS THE CURRENT ESTIMATE. WHEN WE GET MORE, WE WILL GIVE YOU A BETTER PICTURE.
THAT IS WHERE THINGS STAND AT THE MOMENT. TOM: WE GO DOUBLE DIGITS IN SPAIN, WE ARE DOING THIS EVERY DAY. WE ARE BEEN NUMBED BY IT AS A STATISTICAL EXERCISE. OUR PEOPLE LISTENING AND WATCHING, ARE LIVING FOR PERCENT INFLATION. OR, 12% INFLATION, WHATEVER IT MAY BE. JONATHAN: THIS CAME FROM BANK OF AMERICA. FOR THE LOWER INCOME COHORT WHO EARN LOWER THAN $50,000 A YEAR, GAS PRICES ROSE TO ALMOST 10% OF TOTAL WEEKLY SPEND.
THAT NUMBER IS GOING TO BE HIGHER. TOM: UNITED NATIONS DOING GREAT WORK ON THIS, FROM HYDROCARBONS TO FOOD. IN SOUTHEAST ASIA, PERCENT OF INCOME ON RICE. JONATHAN: FUTURES UNCHANGED ON THE S&P 500. ON NASDAQ, DOWN .2%. WE ARE ON PARITY WATCH ON EURO-DOLLAR. EURO-DOLLAR, 101.37. JONATHAN: LIVE FROM YOUR CITY, IT IS PAYROLL FRIDAY. WE HAVE A RALLY ON THE S&P 500,
FOR STRAIGHT DAYS OF GAINS. THAT EQUALS THE LONGEST WINNING STREAK OF THE YEAR SO FAR. LAST TIME WAS IN MARCH. THE S&P UP BY 0.05%. THAT IS GOING INTO THE JOBS REPORT LATER. THE NASDAQ IS UP ALMOST 5% ON
THE WEEK SO FAR. THAT SHIFT INTO TECH IS SOMETHING THEY'VE PICKED UP ON IT. HOW MUCH DO YOU WANT TO GET BEHIND THAT MOVE? THAT'S THE QUESTION WE HAVE TO ASK. TOM: IS THERE A REAL BID TO THE MARKET? IS IT SHORT RECOVERY? IF YOU'RE SHORT, YOU'VE GOT TO BUY SHARES. JONATHAN: IT'S THAT BEAR MARKET RALLY PEOPLE THINK IT IS.
YIELDS ARE CREEPING HIGHER THROUGH THE WEEK. NORTH OF 3% RIGHT NOW, COMING IN DOWN A BASIS POINT. CITIBANK IS LOOKING FOR ENOUGH OF A NUMBER, AROUND 290 FOR THEM. THEY COULD GO ANOTHER 75 BASIS
POINTS. THIS CONVERSATION IS STILL GOING ON WITH THE ECB WHO HAS NOT MADE THE MOVE YET. THIS IS WET -- WHAT EURO-DOLLAR LOOKS LIKE. EURO-DOLLAR BROKE 101. WE ARE ON PARITY WATCH. THIS IS MORE THAN A 10% MOVE. TOM: IT'S THE WAY IT BROKE, THE
WEAKER EURO DOWN NEAR. WE ARE WATCHING THAT CAREFULLY. ON RADIO AND TELEVISION, WE WELCOME YOU. THE ASSASSINATION OF THE FORMER PRIME MINISTER OF JAPAN, WE MONITOR THAT STORY OF A SHOCKED JAPAN.
JOINING US WITH SOME GREAT ACUITY IS BLOOMBERG ECONOMICS, SHE HAD THE COURAGE TO GO BELOW PAYROLLS OFF THE PRIOR 390,000. WE GO DEEPER RIGHT NOW. I WANT TO TALK ABOUT THE PANDEMIC. WE WERE FOCUSED ON BARS.
I WAS FOCUSED ON BARS AND RESTAURANTS. HELP US NOW WITH THE MIX, THE MOVEMENTS WITHIN OUR ECONOMY. >> THAT'S GOING TO BE IMPORTANT TO WATCH APART FROM THE OVERALL HEADLINE NUMBER. WHAT IS HAPPENING BENEATH, WE WILL BE WATCHING THE DIFFUSION INDEX, WHICH SHOWS HOW BROAD-BASED GAINS ARE. THAT IS IMPORTANT. PEOPLE CAN STILL FIND JOBS, EVEN IF THEY GET LAID OFF FROM THE INDUSTRIES THAT ARE EXPERIENCING SOME EFFECTS FROM INTEREST RATES. TOM: THE GREAT SHIFT IS SUPPOSED TO
BE GOODS ENTHUSIASM OVER TO SERVICES ENTHUSIASM. WHAT WILL WE LEARN ABOUT THAT HOPE? >> WE WILL LEARN THAT AMERICANS ARE STILL ENTHUSIASTIC ABOUT GOING ON VACATION. THIS IS THE INDUSTRY. TOM: CAN YOU HELP ME HERE? YOU JUST GOT BACK FROM SOME FUN TRIP TO DISNEYLAND. PICK IT UP.
YOU ARE TANNED AND RESTED. JONATHAN: WE TALKED YESTERDAY ABOUT GETTING AWAY FROM THE HEADLINE NUMBERS AND TRY TO DISCUSS THE DISPARITY. WHEN WE HAVE MARKET PARTICIPANTS SAYING THE CONSUMER IS STRONG IN AMERICA, WHAT DO YOU SEE AWAY FROM THE HEADLINES? >> SERVICES SPENDING IS STILL GROWING. IT IS GROWING IN REAL TERMS. THIS IS THE KEY FOCUS FOR ME TO WATCH. DURABLE GOODS, SPENDING IS GOING DOWN IT. WE SAW A DECLINE IN MAY.
WHAT IS KEY TO ME IS WHETHER WE SEE A ROTATION FROM GOODS SPENDING AND ANECDOTALLY I DO SEE THAT. IF THAT CONTINUES, WE WILL CONTINUE TO SEE SERVICES HIRING IT. THAT WILL DRIVE THE ECONOMY GOING FORWARD. SEEING THE EMPLOYMENT NUMBERS ARE BELOW PRE-PANDEMIC LEVELS IN ANDREA'S -- INDUSTRIES SUCH AS HEALTH CARE, THOSE STILL HAVE A CHANCE TO GROW FURTHER. KAILEY: I'M WONDERING WHAT THIS MEANS FOR THE FEDERAL DESERVE, SPECIFICALLY WHEN IT COMES TO THE DECISION IN JULY. I WAS TALKING TO PIMCO EARLIER. THEY DON'T THINK THE JOBS REPORT MAKES MUCH DIFFERENCE.
>> I WOULD AGREE WITH THAT. IT WILL FACTOR INTO THE DECISION IN JULY. WHAT IS REALLY IMPORTANT IS WHAT HAPPENS TO THE CPI NUMBERS NEXT WEEK AND WHAT HAPPENS TO SENTIMENT AND INFLATION. ALL OF THESE THINGS WILL FACTOR IN. AS LONG AS WE HAVE POSITIVE JOB GROWTH, HEALTHY ECONOMY, DECELERATING WAGES, THAT'S NOT GOING TO MAKE MUCH CHANGE AT THE END OF JULY. KAILEY: ALL YOU NEED IS POSITIVE JOBS GROWTH, EVEN IF IT IS SUB 200,000? >> SUB 100 WOULD BE PROBLEMATIC. KAILEY:
GIVEN THAT THE FED IS FOCUSED ON INFLATION, THEY ARE FOCUSED ON WAGES. ARE WE OUT OF THE CONCERN IN WHICH WE SEE A WAGE PRICE SPIRAL? HAS THAT BEEN PUSHED TO THE SIDE? >> I THINK SO. THINGS I LOOK AT OUR THE RATE AT WHICH PEOPLE SWITCH JOBS. THIS IS A LEADING INDICATOR. IT LEADS GROWTH IN WAGES BY A FEW MONTHS.
WE HAVE SEEN THAT RATE GOING DOWN. THAT MEANS PEOPLE CAN DEMAND LESS OF A PAY RISE -- RAISE. THOSE WHO STAY IN THEIR CURRENT JOB CANNOT REALLY ASK FOR MUCH MORE AS WELL. TOM: THIS IS SOMETHING WE ENJOYED FLUNKING, THE ARCH PLUG-IN IS ALWAYS THE INCLUDES THE HAS HIM -- ENTHUSIASM TO HIRE? >> COMPANIES ARE WORRIED ABOUT WAGES NOW.
THEY ARE LOOKING AT INTEREST RATES. TOM: THIS IS KEY, DO THEY RAISE PRICES? >> THEY DO. THAT'S HOW WE GET INFLATION. THE FAT POINT, WHAT WE SEE HIS INTEREST RATES RISING. WE SEE DEMAND SLOWING. A LOT OF PEOPLE ARE TALKING
ABOUT RECESSION. COMPANIES ARE GETTING WORRIED ABOUT WAGE INCREASES. THEY MAY NOT GO THERE. THEY MAY NOT RAISE PRICES AFTER THAT. TOM: OK. THANK YOU.
WE GREATLY APPRECIATE THAT. WE ARE RUNNING GREEN ON THE SCREEN RIGHT NOW. HOW DOES THIS FOLD INTO THE MARKET? I HAVE TROUBLE FIGURING OUT WHERE WE ARE IN THIS REPORT? AM I RIGHT? IT'S NOT ALL DOOM AND GLOOM. IT'S IN BETWEEN. JONATHAN: A LOT OF PEOPLE ARE HINTING THAT THE NEXT MOVE. TOM:
I THINK IT'S INFLATION NEXT WEEK. JONATHAN: IT'S BECAUSE THE LABOR MARKET DATA WILL REMAIN ROBUST AND THEY CAN REMAIN COMMITTED TO BRINGING DOWN INFLATION. THE ISSUE I THINK WE ALL HAVE WITH THAT IS IF YOU CONCENTRATE ON INFLATION AND ASSUME THE LABOR MARKET WILL BE OK, ULTIMATELY IT WON'T BE AND THAT WILL BE TOO LATE. I THINK THAT'S THE WORRY A LOT OF PEOPLE HAVE LOOKING FORWARD, WHEN WE ASKED THE QUESTION WHAT WILL BE THE THING THAT MAKES THEM PAUSE, IT WILL BE THE THING THAT WILL BE THE NAIL IN THE COFFIN OF THE ECONOMY AND THE CYCLE. >> DEPENDING ON WHAT HAPPENS TO THE LABOR MARKET, YOU DON'T WATCH WHAT'S HAPPENING TO PAYROLL.
YOU LOOK AT THINGS LIKE JOBLESS CLAIMS, THINGS LIKE PEOPLE WHO WORK PART-TIME TIME FOR ECONOMIC REASONS. YOU LOOK AT THESE THINGS VERY CAREFULLY AHEAD OF TIME. ULTIMATELY, IF THINGS ARE GOING TO START SLOW DOWN, THE FED WILL BACK OFF.
THIS IS WHAT WE ARE GOING TO SEE? KAILEY: WHAT RATE IS THAT? >> WHAT IS REALLY INTERESTING AND THE LATEST SUMMARY OF ECONOMIC PROJECTIONS IS SEVERAL PARTICIPANTS PENCILED IN THE UNEMPLOYMENT RATE ABOUT 0.5 PERCENTAGE POINTS HIGHER THAN WE CURRENTLY ARE. THAT IS TELLING US IMPLICITLY THAT THEY ARE THINKING MAY BE A HARD LANDING IS THERE. THAT IS AN INTERESTING ONE. WHEN WE SEE AN INCREASE IN THE
EMPLOYMENT RATE OF 0.5%, WE SHOULD BE WORRIED. JONATHAN: LOOKING AHEAD TO PAYROLLS COMING OUT AT 8:30 P.M. EASTERN TIME, IF YOU'RE JUST TUNING IN, WE WOKE UP TO THE SAD NEWS OUT OF TOKYO. THE FORMER JAPANESE PRIME
MINISTER HAS DIED. THE LONGEST SERVING PRIME MINISTER WE SHOT WHILE CAMPAIGNING IN JAPAN. THE CURRENT PRIME MINISTER SAID IT CAMPAIGNING WILL CONTINUE. A KEY FIGURE IN THE EFFORT OF SHINZO ABE WAS THE GOVERNOR. THE GOVERNOR HAD A COUPLE OF HEADLINES. HE WOULD LIKE TO CONVEY CONDOLENCES.
HE ACHIEVED MANY RESULTS TOWARD ENDING DEFLATION. HE PAID TRIBUTE TO HIS DEDICATION TO THE ECONOMY. WE WERE MEANT TO THE THREE ARROWS IN 2012.
THE GOVERNOR IS A KEY PART OF THAT SECOND ARROW. TOM: FROM TREASURY OVER TO THE CENTRAL BANK DUTIES, THIS IS SOMETHING VERY IMPORTANT. THE WATCH AT THE FT HAVE A BOOK CALLED BENDING ADVERSITY. THE ARCH THEME OF THE BOOK WAS OUR CLICHE OF JAPAN ON ITS BACK DUE TO DEFLATION AND DISINFLATION. HE SAID THAT WASN'T TRUE UNDER SHINZO ABE.
THERE WAS POINT INDUSTRY, BUOYANT PUBLIC SERVICES WITH THEIR OWN DEBATES. WE UNDERESTIMATE JAPAN IT. JAPAN IS AN GENERATIONAL SHOCK. JONATHAN: WITHOUT A DOUBT ABOUT IT. WE WILL SHARE HEADLINES WITH YOU. WE ARE LOOKING AHEAD AT THE MARKET, FOCUSED ON PAYROLLS
FRIDAY. WE ARE LOOKING AT SOMETHING CLOSE TO 260,000. EQUITY FUTURES ARE UNCHANGED. IN THE GRAND SCHEME OF THINGS THIS YEAR, THAT'S NOT A BIG MOVE. YIELDS ARE 298. THERE VERY MUCH ON PARITY WATCH. WE HAVE A LITTLE BIT OF EURO WEAKNESS IN DOLLAR STRENGTH OUT THERE. FROM NEW YORK, THIS IS BLOOMBERG.
♪ >> KEEPING YOU UP-TO-DATE, THE FORMER PRIME MINISTER HAS BEEN SHOT AND KILLED WHILE SPEAKING AT A CAMPAIGN RALLY. THE ATTACK SHOCKED THE COUNTRY WHERE POLITICAL VIOLENCE AND GUNS ARE RARE. ACCORDING TO A BROADCASTER, HE INTENDED TO KILL SHINZO ABE BECAUSE HE WAS FRUSTRATED WITH HIM. HE WAS THE LONGEST SERVING PRIME MINISTER IN JAPANESE HISTORY. THE CONSERVATIVE PARTY ONCE TO SPEED UP BORIS JOHNSON'S EXIT. HE WOULD BE A CARETAKER LEADER
FOR THREE MONTHS WHILE CONSERVATIVES PICK A NEW LEADER. THEY ARE DRAWING UP PLANS TO DRAW HIS -- CHOOSE A SUCCESSOR BY THE END OF THE SUMMER. JOE BIDEN COULD ROLL BACK ON CHINESE GOODS. IT'S BEEN A WEAPON AGAINST INFLATION.
THE FORMER PRESIDENT HAS FOUND GUILTY IN THE BLOOD TESTING STARTED. THE VERDICT CAME AFTER HIS EX-GIRLFRIEND WAS CONVICTED OF DEFRAUDING INVESTORS IN THE COMPANY. THEY COULD GET 20 YEARS IN PRISON. A STUNNING RECOVERY IN CHINA, THE ELECTRIC CARMAKER HAD A RECORD NUMBER OF DELIVERIES AFTER THE LIFTING OF COVID RESTRICTIONS. TESLA DELIVERED 79,000 VEHICLES LAST MONTH, A100 45% INCREASE IN MAY. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG TWITTER TAKE -- QUICKTAKE.
THIS IS BLOOMBERG. ♪ >> I AM IN SUPPORT OF DOING ANOTHER 75 BASIS POINT HIKE IN JULY, PROBABLY 50 IN SEPTEMBER AND AFTER THAT WE CAN DEBATE WHETHER TO GO BACK ONTO THE 25'S. INFLATION DOESN'T SEEM TO BE COMING DOWN. JONATHAN: THE FEDERAL RESERVE COMMITTED TO DOING MORE.
FROM YORK CITY, MORNING. FUTURES ARE DOWN 0.05%. LEASE IT WILL TAKE A WEEK OFF AND THERE IS SO MUCH TO TALK ABOUT. THE YIELD IS UNCHANGED ON THE
10 YEAR. WE ARE VERY MUCH ON PARITY WATCH. TOM: I HEARD THAT YOU AND I, WE DID MENTION CRETE CVS. JONATHAN: SHE IS LOOKING AT SOME OF THE BANKS OVER IN EUROPE. THIS IS JUSTIN FROM BANK OF AMERICA, -- JUST IN FROM BANK OF AMERICA.
THAT LAST POINT IS SOMETHING WE NEED TO BUILD ON IT THROUGH THE SHOW. IS THIS THE REAL DEAL? TOM: THIS IS THE WAY IT WORKS. IF YOU HAVE RECESSION SLOWDOWN IT, THEY BECOME MORE VALUABLE. THAT'S ONE OF THE NORMAL
DYNAMICS WITH BANK OF AMERICA. WE WILL CELEBRATE SURVIVING JULY 4 WEEKEND WITH THE REST OF AMERICA AND THE GLOBAL ECONOMY. THE AIRLINE BUSINESS IS BOOMING. SHE OWNS THE HIGH GROUND AND
JOINS US THIS MORNING. I WANT TO LOOK INTO EARNINGS. WITH ALL OF THIS CHAOS AND THE AIRLINES FULL, ARE THEY BRINGING ANYTHING DOWN TO MAKE WHAT WE CALL AIRLINE PROFIT? >> YES. WE THINK MOST OF THE AIRLINES WILL BE PROFITABLE. A COUPLE OF THEM WILL REPORT LOSSES. IN OUR EARNINGS PREVIEW WHICH WE PUBLISHED YESTERDAY, WE THINK THERE ARE POSITIVE SURPRISES AHEAD IT, EVEN WITH THE FLIGHT CANCELLATIONS THEY EXPERIENCED MEMORIAL DAY WEEKEND AND OVER FATHER'S DAY WEEKEND. THE DELAYS LAST WEEKEND WERE SMALLER THAN THE NUMBER OF DELAYS WE SAW.
THE AIRLINES ARE CUTTING CAPACITY, WHICH HAS THE EFFECT GIVEN THE DEMAND IS STILL VERY STRONG. IT HAS THE EFFECT OF RAISING TICKET PRICES. THEY ARE RECOVERING 70% OF THE COST OF FUEL. AS WE GO THROUGH THE YEAR, WE ARE GETTING MORE CONCERNED WITH WAGE INFLATION. THE CONTRACT THAT UNITED PILOTS MAY VOTE ON PROVIDED FOR A 15% INCREASE. AMERICAN OFFERED A 17% INCREASE. WE SEE SIGNIFICANT RAISE
INFLATION. -- WAGE INFLATION. THAT WILL NOT ABATE IT. -- ABADE. JONATHAN: THAT'S WHAT I WANT TO TALK ABOUT. THE PRICE TOLERANCE JUST SEEMS TO BE UNLIMITED. IS IT THERE IN THE BACK HALF OF
THIS YEAR? >> I DON'T THINK IT WILL BE FRANKLY. WE ARE WORRIED ABOUT THAT BECAUSE CONSUMERS, YOU TALK ABOUT IT ON THE SHOW, CONSUMERS HAVE A LOT OF PRESSURE. THEY'VE GOT HIGHER PRICES WHEN THEY FILL UP THEIR CARD TO GET TO WORK. THEY HAVE COOLING THEIR HOME GOING UP, HEATING THEIR HOME IS GOING TO GO UP. A LOT OF PEOPLE REALLY WANTED TO TRAVEL THIS SUMMER, THEY HAVE A TRAVELED FOR A COUPLE OF YEARS. THEY JUST WANT TO GET OUT AND ABOUT.
THROUGH THE YEAR, AFTER PEOPLE START RETURNING TO THE OFFICE AGAIN, IT IS SO MUCH MORE CROWDED IN THE CITY THAN IT WAS THREE MONTHS AGO. I THINK WE ARE GOING TO SEE PRESSURE ON TRAFFIC GROWTH AS WE HEAD INTO THE HOLIDAY SEASON. KAILEY: HOW DOES AN AIRLINE MAKE DECISIONS? I THINK ABOUT THE RETAILERS WHO STRUGGLED TO GET SUPPLY. NOW THEY HAVE TOO MUCH INVENTORY.
WILL AIRLINES TRY TO GET MORE PILOTS AND FLIGHT ATTENDANTS, IT SOON AS THEY GET ALL OF THAT THE DEMAND IS GONE AND THEY ARE OVERSTAFFED? >> WE WORRY ABOUT THAT. THE PILOT ISSUE IS GOING TO BE WITH US FOR ANOTHER TWO YEARS. I AM NOT SO WORRIED ABOUT THEM. I'M NOT WORRIED ABOUT THE FOOTAGE. FOCUS ON THE CAPACITY. DURING THE PANDEMIC, THE INDUSTRY RETIRED 800 PLANES. THOSE ARE NEVER COMING BACK. THERE ARE DELIVERY DELAYS ON THE AIRCRAFT.
I WAS READING AN ARTICLE THAT THE MANUFACTURERS CAN'T GET ENOUGH ENGINES. THE ENGINE MANUFACTURERS ARE HAVING TROUBLE KEEPING UP WITH SUPPLY. AS YOU REPORTED LAST WEEK, YOU SAW THAT THE AIRLINES CUT CAPACITY FOR THE SUMMER MONTHS. THAT WILL LIKELY CONTINUE. THAT IS THEIR BIG WEAPON, KEEPING A LID ON HOW MUCH CAPACITY CAN GO UP. WE PUBLISHED YESTERDAY THE NUMBER OF EMPLOYEES. WE ARE BACK TO 2019 LEVELS, THEY ARE JUST IN THE WRONG PLACES.
EVERYBODY WENT -- THINK ABOUT PRE-PANDEMIC, EVERYBODY WAS GOING TO CHICAGO, NEW YORK, SAN FRANCISCO. NOW EVERYBODY IS GOING TO LEISURE DESTINATIONS. YOU SEE THAT SHIFT. PEOPLE ARE MISPLACED. JONATHAN: SHE HASN'T HAD A VACATION YET.
TOM: THE FED IS FRONT LOADING. JONATHAN: HE WENT TO PARIS EARLIER IN THE YEAR. TOM, YOU CAN'T JUST FLIP THE SWITCH. THERE'S NOT A BUTTON. YOU SIT THERE AND SAY WE WILL HAVE SOME OF THAT AND IT ARRIVES TOMORROW. IT TAKES A LONG TIME. TOM: WITH THE PANDEMIC, WE UNDERESTIMATE THE LOGISTICS AND PROCESSES. WHAT DOES IT TAKE TO GET A
RUSTY PILOT BACK IN THE AIR QUESTION. -- AIR? JONATHAN: WHAT WOULD IT TAKE TO GET A NEW PILOT UP IN THE AIR? HOW LONG DOES THAT TAKE? TOM: IT INVOLVES COMPETITION. BRITISH AIRLINES IS COMING TO TERMS IN THE LAST COUPLE OF HOURS. JONATHAN: TO ENGINEER THE COMPANY TO HAVE THE RIGHT CAPACITY AT THE RIGHT TIME IN THE FUTURE, IT'S A TREMENDOUSLY DIFFICULT THING TO DO. THROUGHOUT MANY INDUSTRIES AS WELL. RETAILERS, LOOK AT THEM.
THEY ARE LOOKING AT CAPACITY THEY SHOULD'VE HAD LAST YEAR AND IT'S IN THE WRONG PLACE THIS YEAR. TOM: JAMIE DIMON IS ELOQUENT ABOUT THIS IN HIS ANNUAL LETTER, TALKING ABOUT THE HARD WORK OF DOING THE PROCESS OF BUSINESS. IT'S LIKE WHAT WE HAVE TO DO WITH THE STAFF AT BLOOMBERG SURVEILLANCE. WITH THE TEAM THAT WE HAVE, THE INTERNS WE HAVE, IT'S REALLY HARD WORK TO PROCESS AT ALL. THE ONLY THING I CAN DO IS SAY FOOD HELPS THE TROOPS. I DID NOTICE INFLATION, THEY ARE PRICING THEN 840 54 HOT DOG.
-- 845 FOUR HOT DOG. WE SHOULD DO AN INTERVIEW AT BEN'S CHILI BOWL. JONATHAN: I WILL REACH OUT TO THE TEAM TO MAKE THAT HAPPEN. FROM NEW YORK, THIS IS
BLOOMBERG. >> INFLATION, IT'S BEEN CLEAR THAT IS THEIR TARGET. >> THEY ARE LIKELY GOING TO FAR. >> THAT IS REALLY GOING TO COST THE ECONOMY.
>> THE FED RIGHT NOT BE IN RECESSION. >> WE ARE NOT LOOKING AT THE VOLCKER RECESSION. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO, LISA ABRAMOWICZ. JONATHAN: GOOD MORNING, GOOD MORNING. THIS IS BLOOMBERG ON THIS PAYROLLS FRIDAY. ALONG SIGN TOM KEENE IT, WE ARE
TOGETHER WITH KAILEY LEINZ. THE MARKET IS DOWN 0.2% ON THE S&P. WE HAVE TO BEGIN WITH THE SHOCKING NEWS OUT OF JAPAN. TOM: THAT IS NOT WHAT THIS IS ABOUT, THIS IS DOMESTIC SADNESS OF JAPAN. THIS IS A HUGELY DOMESTIC STORY OF MR. SHEN SAY ABE -- SHINZO
ABE. HE WAS SHOT. THIS WAS SUDDEN ANIMATED. HE DIED VERY RAPIDLY. JONATHAN: THE SUSPECT USED WHAT APPEARED TO BE HOMEMADE WEAPON. IT GOES WITHOUT SAYING THAT
THESE KILLINGS ARE INCREDIBLY RARE IN JAPAN. THIS KIND OF GUN VIOLENCE IS TRULY SHOCKING. THE TEAM IS BREAKING DOWN THE DATA.
IN JAPAN IT, THEN ALL OF JAPAN, 10 GUN RELATED INCIDENTS. 10. THAT'S THE NUMBER FOR LAST YEAR. TOM: THAT IS THE SOCIETY. I'M GOING TO SAY THE ASSASSINATION OF PUBLIC FIGURES IN FORMER PRIME MINISTER'S IS COMMON. OUT OF WORLD WAR I, I SHOULD SAY OUT OF THE JAPANESE WAR, IT HAS BEEN ALL TOO COMMON.
I DON'T THINK PEOPLE ARE SHOCKED HERE BY THIS VIOLENCE OF A POLITICAL FIGURE. WHAT IS SHOCKING WITHIN THE POLARIZATION IS HOW HE WON FOR SO LONG. HE WAS THE LONGEST-SERVING PRIME MINISTER. JONATHAN: TRIBUTES HAVE BEEN POURING IN. THE ONE THAT JUMPED OUT WAS A
TRIBUTE TO CAME FROM THE GOVERNOR. KAILEY: INDIVIDUALS WHO WORKED SO CLOSELY TOGETHER ON ECONOMIC POLICY, IN 2012, HE WANTED TO GET OUT OF THE STAGNATION, WANTED TO GET OUT OF DEFLATION. HE USED POLICY MECHANISMS TO DO THAT. THAT LEGACY IS LASTING. POLICY AND JAPAN IS EASY.
GROWTH IS STIMULATING. THEY ARE BUYING BONDS WHEN GLOBAL MARKETS ARE DOING THE OPPOSITE. JONATHAN: ANYTHING IT, WE WILL BRING IT TO YOU RIGHT HERE ON TV AND RADIO. WE WANT TO START WITH PRICE ACTION. THIS IS HOW WE TRADE GOING IN. WE ARE DOWN 0.2% ON THE S&P. FRIDAY, A REALLY NICE RALLY,
FOUR DAYS OF GAINS ON THE S&P. ON THE NASDAQ, WE JUST RIPPED. HERE WE GO ON THE EURO-DOLLAR, MY EYES WILL BE ON THAT CHART. KAILEY: WE'VE GOT A BREAK OF 101 EARLIER. HOW IS CHRISTINE LAGARDE GOING TO ADDRESS THAT WHEN SHE SPEAKS AT THE ECONOMIC FORM LATER TODAY? THAT IS LESS THAN AN HOUR THAN WE GET THOSE REMARKS.
HOW ARE THEY TRYING TO EXIT NEGATIVE RATES AT A TIME IN WHICH THE EUROPEAN ECONOMY SLOWING DOWN? THEY ARE PLANNING TO HIKE INTO WEAKNESS. THE BIG EVENT IS THE PAYROLLS REPORT WHICH YOU WERE JUST DISCUSSING. 260,000 IS THE ESTIMATE. DOES THAT MEAN ANYTHING TO THE FEDERAL RESERVE WHO IS SO FOCUSED ON INFLATION. WE WILL GET REAL-TIME REACTIONS
FROM ONE MEMBER OF THE FED. JOHN WILLIAMS WILL BE SPEAKING. TO WHAT EXTENT DOES HE ECHO CHRISTOPHER WALLER YESTERDAY? THEY ARE PLAYING DOWN THE RISK OF RECESSION AS THEY TALK ABOUT GOING ANOTHER 75 BASIS POINTS THIS MONTH. JONATHAN: LOOKING AHEAD, ANOTHER ONE NEXT WEEK ON JULY 13, PAYROLLS ARE JUST AROUND THE CORNER. TOM: WHAT ARE YOU LOOKING AT? I WILL LET YOU TELL ME. I DON'T GO BENEATH THE HEADLINE DATA, I STAY WITH THE HEADLINE DATA BECAUSE THAT'S WHERE JEROME POWELL IS GOING TO BE. JONATHAN: THE HEAD OF GLOBAL RATES, IS THIS LABOR MARKET DATA GOING TO KEEP THE LIGHT GREEN FOR THE FED TO GO 75 AT THE END OF THE MONTH? >> WE THINK SO. THE LABOR MARKET IS SLOWING.
WE ARE LOOKING FOR 350,000. THE FED WANTS THE ECONOMY TO SLOW. ALL THE RECESSION TALK IS PREMATURE RIGHT NOW. INFLATION IS STILL A PROBLEM. THEY ARE EMPHASIZING INFLATION RIGHT NOW.
I WOULD SAY THE GREEN LIGHT FOR 75 IS DONE. THE NEXT MEETING, WE EXPECT 50 BASIS POINT HIKES. I DON'T THINK THE FED WILL CHANGE THEIR VIEW.
THEY WANT IT TO SLOW. TOM: WE ARE THE ONLY TWO ON THE PLANET, WE LOOKED AT FIXED INCOME THEORY. WHAT IS THE ATTRIBUTE THAT HELPS YOU DETERMINE YOUR TERMINAL RATE GAS? IS IT A FINANCE ATTRIBUTE? IS IT AN ECONOMIC ATTRIBUTE? >> I'M GLAD YOU BRING THAT UP. WHERE THE FED ENDS UP IS AN ECONOMIC ATTRIBUTE. IT'S NOT JUST THE ECONOMIC VIEW. WHEN YOU TALK ABOUT FINANCE, THAT CURVE HAS BEEN FLATTENING. I THINK IT'S GOING TO CONTINUE TO FLATTEN.
THIS IS ALL ABOUT THE DOMINANT RATE AS YOU HIGHLIGHT. THE LONG END IS ABOUT FUTURE RATE, WHAT IS THE ECONOMY DOING? I'M A LOT MORE CONSTRUCTIVE ON THE LONG AND. THE FRONT AND UNTIL INFLATION GETS CLOSER TO 9%, I THINK THAT FRONT END IS GOING TO STRUGGLE TO PRICE IN LOWER RATES. THE FED IS ON A MISSION TO GET INFLATION TO DO THE SAME. KAILEY:
HOW MUCH MORE DEEPLY INVERTED COULD THE YIELD CURVE GET? >> WE ARE LOOKING AT -50, PERHAPS EVEN MORE. THE PROBLEM IS GROWTH IS GOING TO SLOW DOWN AND WE WILL BE WATCHING THE FED IT, WHETHER THEY BLINKED. I DO THINK INFLATION WILL ALLOW THEM TO BLINK. THIS IS RIGHT AFTER. IT'S A LITTLE BIT OPTIMISTIC ON
THE MARKET FRONT. INFLATION IS NOT GOING TO COLLAPSE IN A MONTH. THE FED GETS CLOSER TO NEUTRAL BY EARLY NEXT YEAR. THERE IS GOING TO BE AWAITING TIME WHEN WE WAIT FOR THEM TO EASE POLICY. THEY ARE GOING TO SAY WE HAVE
TO BE PATIENT, WE HAVE TO SEE INFLATION COME DOWN. THAT'S WHEN THE CURVE INVERTS EVEN MORE AND WE PENCIL IN LESS GROWTH. KAILEY: THERE IS A LOT OF THAT THE BOND MARKET HAS TO CONSIDER. THE VOLATILITY IN THE BOND MARKET CONTINUES TO ASTOUND ME. WE CAUGHT UP EARLIER THIS WEEK
AND THE 10 YEAR WAS TRADING NEAR THAT 3% LEVEL. YOU SAID IT WAS A TODDLER HAVING TANTRUMS. HOW DO YOU MAKE SENSE OF THE RATES? >> I'M GLAD YOU BROUGHT IT UP. IT IS GIVING ME HIGH BLOOD PRESSURE. THE MARKET IS MOVING AROUND BECAUSE OF UNCERTAINTY. WE'VE GOT UNCERTAINTY ON GROWTH. THERE IS ALSO MARKET STRUCTURE ISSUES. THERE HAS BEEN A LOT OF
REGULATORY PRESSURES. ON THE PREVIOUS ISSUES AND POLICY, THEY WERE JUST MUCH LIGHTER. WE HAVE HIGH-FREQUENCY TRADING ANOTHER INVESTORS THAT TEND TO SLOW DOWN WHEN VOLATILITY IS HIGH. I THINK THAT IS WHY WE SEE SMALLER FLOWS HAVING OUTSIDE -- OUTSIZED REACTIONS. YOU HAVE TO THINK ABOUT RESIZING TRADE AND HAVING WHITE STOCK. WE HAVE NOTICED THIS MOVE.
WE ARE AT THE HIGHEST LEVEL. THE ONLY OTHER YEAR WAS 2008. WE KNOW WHAT HAPPENED IN 2008. THAT'S NOT GOING TO GO AWAY. WE WILL HAVE PRETTY LARGE MOVES UNTIL WE SEE CLEAR SIGNS FROM THE DATA. JONATHAN: IT'S AWESOME TO CATCH UP. THE CLINIC FROM YOU AS ALWAYS. IT'S DIFFICULT TO PREDICT WITH THE FED IS GOING TO DO LATER THIS YEAR.
IT SPEAKS TO THE VOLATILITY. EVEN IF YOU BELIEVE THEY BLINK, THEY HAVE TO RESPOND TO WEAKER DATA, THEY CAN'T SAY THAT OUT LOUD. IF THEY DO, FINANCIAL CONDITIONS WILL EASE AND EQUITY MARKETS WILL RALLY. THAT WILL GO AGAINST THEIR GOAL
OF BRINGING DOWN INFLATION. THIS IS A DIFFICULT ONE FROM THE COMMUNICATION SIDE. TOM: IT IS NEXT TO IMPOSSIBLE. LIKE OUR CONVERSATION AT YESTERDAY, THEY ARE PIGEONHOLED INTO SCRIPTS. THEY DON'T WORK IN THE ORIGINAL TERRITORY WE ARE IN. IT IS ORIGINAL TERRITORY. I KNOW IT'S A CLICHE. WHETHER IT'S JEROME POWELL OR WHOEVER NEXT SPEAKER IS, THEY ARE MAKING UP AS THEY GO AROUND THAT BALLET. WHAT'S GOING ON?
WE NEED TO HEAR THAT FROM THE FED. >> IF THEY WERE TRANSPARENT, IMAGINE WHAT VOLATILITY WOULD LOOK LIKE THEN. TOM: WE NEED TO THANK BILL DUDLEY AS AN EXAMPLE OF SOMEBODY WHO IS TALKING STRAIGHT. JONATHAN:
WE ARE COUNTING YOU DOWN TO PAYROLLS FRIDAY, ONE HOUR AND 20 MINUTES AWAY. THE YIELDS ARE TO 97 ON THE 10 YEAR. FROM NEW YORK, THIS IS BLOOMBERG.
♪ >> KEEPING YOU UP-TO-DATE WITH NEWS AROUND THE WORLD, THE FORMER JAPANESE PRIME MINISTER HAS DIED AFTER BEING SHOT AT A CAMPAIGN EVENT. IT IS STUNNING NEWS IN A COUNTRY WHERE POLITICAL VIOLENCE AND GUNS ARE RARE. A SUSPECT HAS BEEN ARRESTED. HE WAS 67 AND WAS BEST KNOWN FOR HIS SHOCK THERAPY TO REVIVE THE ECONOMY. BORIS JOHNSON IS STILL IN NUMBER 10 DOWNING STREET AFTER ANNOUNCING HE PLANS TO RESIGN. THE RULING CONSERVATIVE PARTY WANTS TO SPEED UP THE CONTEST TO CHOOSE HIS SUCCESSOR BY THE END OF THE SUMMER. HE FLOATED A THREE-MONTH
TIMETABLE YESTERDAY. THIS MONTH, GOVERNOR CHRISTOPHER WALLER AND THE ST. LOUIS FED PRESIDENT SAID THEY NEED TO CURB INFLATION AS THE ECONOMY IS HEADED TOWARD RECESSION. ANOTHER REPORT ON WHETHER ELON MUSK'S ACQUISITION OF TWITTER WILL GO THROUGH. THE DEAL MAY FALL APART OVER HIS DOUBTS ABOUT THEY ARE REPORTING THE NUMBER OF SPAMBOTS ON THE SERVICE. TWITTER CONTINUES TO SHARE INFORMATION. THE WIFE OF JOHN PAULSON HAS
ACCUSED HIM OF CREATING A SERIES OF TRUSTS TO HIDE ALIENS OF DOLLARS FROM HER IN THEIR DIVORCE. SHE SUED HIM IN NEW YORK, ASKING FOR $1 BILLION IN DAMAGES. PAULSON HAS A NET WORTH OF 4.6 BILLION DOLLARS. GLOBAL NEWS 24 HOURS A DAY ON BLOOMBERG AND BLOOMBERG QUICKTAKE, THIS IS BLOOMBERG.
>> THERE'S NO QUESTION THAT IF YOU LOOK AT WHAT THE CHINESE ECONOMY AND THE NONMARKET PRACTICES THAT CHINESE LEADERSHIP ARE UNDERTAKING IT, THERE ARE SECTORS OF THE ECONOMY WITH A ARE ENGAGED IN UNACCEPTABLE ACTIVITIES. WE HAVE OTHER TOOLS TO MAKE SURE WE ARE PROTECTING KEY SECTORS OF THE AMERICAN ECONOMY. JONATHAN: CATCHING UP WITH THIS AT BLOOMBERG HEADQUARTERS, THAT WAS YESTERDAY. I'M JONATHAN FERRO. WE ARE TOGETHER WITH KAILEY LEINZ. FUTURES ARE DOWN 0.1%. THE NASDAQ IS DOWN 0.5%.
EURO-DOLLAR IS 101 .40. JUST TO PICK UP ON THE WORDS ON CHINA, REMOVING SOME OF THESE TARIFFS, THE LATEST REPORTING FROM THE TEAM, THE PRESIDENT WILL MEET WITH HIS ADVISERS TODAY ON POSSIBLE REDUCTIONS IN TARIFFS ON CHINESE GOODS. THAT MEETING IS TAKING PLACE LATER. TOM: THE SIZE OF THOSE REDUCTIONS, WE ARE REALLY LOOKING AT -- WE'RE LOOKING AT SMALL NUDGES. JONATHAN: FOCUS ON THE SIZE AND WHERE. THAT'S GOING TO BE INTERESTING.
WHAT DO THEY REMOVE? WHAT IS THE REDUCTION? DO THEY DOUBLE DOWN TO MAKE THIS MORE PALATABLE AT HOME? THIS ADMINISTRATION IS ACCUSING THE CHINESE OF CONDUCTING GENOCIDE, THAT'S A VERY BIG ACCUSATION. TO REMOVE TARIFFS ON THAT GOVERNMENT IS GOING TO BE A BIG DEAL. TOM: I WANT TO THANK THE WHITE HOUSE FOR ATTENDANCE YESTERDAY. WELCOME ON A MOST UNUSUAL JOBS DAY.
JEFF ROSENBERG IS ONE OF OUR GUESTS SCHEDULED TO BE WITH US. AN ASSASSINATION IN JAPAN. TOBIAS HARRIS WILL JOIN US IN A BIT, HE IS AN EXPERT ON THE REACH OF SHINZO ABE AND HIS DOMESTIC POLITICS. ON THE INTERNATIONAL POLITICS IN THE LEGACY, EMILY JOINS US WITH BLOOMBERG GOVERNMENT. THE MOST STUNNING IMAGE FROM THE G7, I CAN'T REMEMBER WHICH, IT WAS BIDEN WITH SOUTH KOREA AND JAPAN.
THAT STARTED WITH SHINZO ABE. HE SAID JAPAN IT NEEDS TO REACH OUT. EMILY: THIS IS NEWS THAT YOU'VE ALREADY HEARD IT. THE SECRETARY OF STATE
RESPONDED. HE HAS DEEP SADNESS ABOUT THIS. HE IS PRAISING WHAT SHINZO ABE WAS READY -- ABLE TO DO. DONALD TRUMP ALSO PRAISED HIM FOR HIS RELATIONSHIP.
THIS IS A SHOCK. THE PRESIDENT IS GOING TO TALK ABOUT ABORTION ACCESS, I WOULD EXPECT HIM TO MENTION SHINZO ABE AND HIS LEGACY. TOM: IT IS NOT TOUCHED BY WORLD WAR II IN THE AFTERMATH OF THAT, ACROSS THE DYNASTY OF THE SHINZO ABE FAMILY, HE WAS TRYING TO DRAG JAPAN INTO MORE ASSERTIVE MILITARY. EXPLAIN TO US WITH THE WHITE HOUSE DESIRES IN THE PACIFIC FROM JAPAN. EMILY: THEY'VE BEEN FOCUSED ON WORKING WITH ALLIES IN THAT REGION.
A COUNTERWEIGHT TO CHINA AND THEIR INFLUENCE IN THE AREA, WHEN PRESIDENT BIDEN WAS MAKING HIS FIRST TRIPS OVERSEAS, HE VISITED SOUTH KOREA AND JAPAN. HE SEES THEM AS KEY ALLIES IN THAT AREA OF THE WORLD. HE SAYS -- SEES THAT AS INCREDIBLY CRITICAL. THEY ARE TRYING TO FIGURE A PATH FORWARD ON TRADE AND THESE TARIFFS. KAILEY: YOU TALK ABOUT THE DESIRE TO COUNTER CHINA AND THE TENSIONS THAT EXIST. THE WHITE HOUSE IS ACCUSED CHINA OF GENOCIDE.
THEY ARE LOOKING AT E-ZINE IT TARIFFS. IS THIS JUST FOR OPTICS? HOW DOES THAT PLAY IF YOU'RE GOING EASIER ON CHINA IN SOME SENSE? EMILY: IT'S A GOOD QUESTION. THE THING DRIVING THE BIDEN ADMINISTRATION ARE THE HIGH INFLATION PRICES, THE FEAR OF A RECESSION AND TRYING TO PROVIDE RELIEF. YOU NOTED THAT THIS WAS AN INCREMENTAL THING.
ANY REDUCTION IN TARIFFS WOULD ONLY BE A DROP IN THE BUCKET. YOU ARE HEARING CONCERNS FROM DEMOCRATS ON THE CAMPAIGN TRAIL, TIM RYAN IS RUNNING FOR SENATE IN OHIO. HE URGED THE ADMINISTRATION TO NOT RELIEVE THESE TARIFFS. THEY COULD HARM AMERICAN WORKERS. IT'S FASCINATING TO SEE THIS SPLIT SCREEN.
YOU'VE GOT THESE DISCUSSIONS GOING ON AT THE WHITE HOUSE. YOU'VE GOT DEMOCRATS AND REPUBLICANS IN CONGRESS WORKING ON LEGISLATION THAT WOULD BOLSTER U.S. COMPETITIVENESS AGAINST CHINA. IT'S AN INTERESTING DANCE RIGHT NOW, TRYING TO FIGURE OUT WHETHER TO ROLL OFF -- BACK THESE TARIFFS. THIS IS SOMETHING THAT A LOT OF
OFFICIALS IN WASHINGTON ARE KEEPING A CLOSE EYE ON. KAILEY: THE CLOCK IS TICKING. YOU ARE IN MICHIGAN TO COVER THE PRIMARIES, HOW MUCH TIME DOES THIS ADMINISTRATION HAVE LEFT TO DO SOMETHING TO CHANGE THE MINDS OF VOTERS? EMILY: NOT MUCH TIME AT ALL. KEEP IN MIND THAT A NUMBER OF
THESE VOTERS -- THERE IS A LOT OF EARLY VOTING. THE WINDOW THE DEMOCRATS HAVE TO CHANGE THE NARRATIVE HERE IS SLIPPING AWAY. I'VE TALKED WITH BOTH WHO HAVE SAID THEY ARE CONCERNED ABOUT GAS PRICES AND THE PRICES GO UP AT THE GROCERY STORE. THERE ARE OTHER ISSUES IN THE
MIX. SO HAVE -- THOSE HAVE REMAINED AT THE TOP OF THE LIST. JONATHAN: THANK YOU ON THE LATEST IN WASHINGTON. THE STORY IS UNLIKELY TO CHANGE NEXT WEEK ACCORDING TO FORECASTS. WE GET THE CPI TREND ON WEDNESDAY. THE ESTIMATES SO FAR, THE
MEDIAN IS 8.8. MORGAN STANLEY, 8.8. THOSE ARE THE NUMBERS FROM BIG NAMES. THEY ARE LOOKING AT 9%. TOM: PEOPLE ARE WORRIED ABOUT CORE INFLATION. THE ANSWER IS WERE NOT LIVING CORE INFLATION, WE ARE LIVING TOP LINE INFLATION. IT'S DOUBLE-DIGIT. LET'S BE CLEAR, YOU TAKE 40 PIECES LIKE DAVID ROSEN DOES, HOW MANY ARE ABOVE 8%. JONATHAN: I WILL REMEMBER THAT BASIS
POINT FROM BANK OF AMERICA, FOR THE LOWER INCOME COHORT, GAS PRICES ROSE TO 9.8 PERCENT OF TOTAL MONTHLY SPEND. THEY ARE LIVING INFLATION IN A BIG WAY. JONATHAN: ONE HOUR AWAY FROM PAYROLLS, THE MARKET LOOKS LIKE THIS. EQUITY IS DOWN 0.1%. THE NASDAQ IS DOWN 0.40%. JUST FOUR DAYS, THAT'S HOW BAD IT'S BEEN THIS YEAR SO FAR.
THE NASDAQ IS UP 5% ON THE WEEK THIS WEEK. BANK OF AMERICA HAS A NOTE THIS MORNING SAME THE NEW SUMMER CONSENSUS, THE LATEST NARRATIVE FOR SECOND HALF RECESSION, FOR HIM TURNING TECH LEMONS INTO LEMONADE. HOW CREDIBLE IS THIS? TOM: WE ARE FOLLOWING THIS TICK BY TICK. ARE WE EXHAUSTED BY HOW THE
NARRATIVE CHANGES ON A TWO DAY BASIS? JONATHAN: I'M EXHAUSTED. CHAIRMAN POWELL IS RESPONSIBLE FOR SOME OF THIS. THE DIFFERENCE BETWEEN A 50 BASIS POINT HIKE AND A 75 POINT, IT'S PROBLEMATIC AREA TOM: I TAKE YOUR POINT. WE ARE GOING TO RECALIBRATE, WE ARE GOING TO RECALIBRATE AT 8:30 A.M. JONATHAN: IF WE GET TO 290, THEY THINK RECESSION TALKS TAKE A BACKSEAT. WE DID KEEP HIKING INTEREST RATES.
THIS IS WHAT IT LOOKS LIKE, PRIYA IS LOOKING FOR 50 BASIS POINTS OF INVERSION. THAT IS A WHILE. THE FED NEEDS TO KEEP HIKING AS LONG AS INFLATION IS ELEVATED GOING INTO NEXT WEEK. WE ARE LOOKING AT EIGHT .8% IN OUR SURVEY FOR -- 8.8% IN OUR SURVEY FOR CPI. WE ARE LOOKING AT PARITY IN THE EURO-DOLLAR. TOM: I THINK TWITTER BROKE DOWN AS WELL. IN THE BLUR OF NEWS TODAY,
TWITTER IS LIKE EURO PARITY. STOCK HAS GONE THROUGH PARITY. JONATHAN: THE WASHINGTON POST STORY SUGGESTS THE ACQUISITION WAS BREAKING DOWN. AM I HERE TO FILL IN THE GAPS? TOM: CUT ME SOME SLACK. JONATHAN: LET'S TAKE A BE. SOMEONE IS JOIN US RIGHT NOW THANKFULLY. THAT SOMEONE IS HERE.
>> LET'S STICK WITH THE PUTTER STORY. THE DEAL IS IN SERIOUS JEOPARDY. ELON MUSK WILL MAKE REMARKS AT A SUN VALLEY CONFERENCE SATURDAY. SOME OF THE HEAVYWEIGHTS WILL PUSH AMONG WHAT THE DEAL LOOKS LIKE AND THE TIMELINE. THE STOCK IS DOWN 4%. TESLA IS NOT MOVING. IT'S MOVING POSITIVE IN REVERSE.
WE KNOW THERE IS THAT INVERSE RELATIONSHIP. DOES HE SPLIT ATTENTION? THOSE SHARES ARE ABOUT FLAT. IN TERMS OF DEAL NEWS, THIS IS UP ALMOST 2% THIS MORNING. WARREN BUFFETT BUYING THOSE SHARES WHEN IT DROPS BELOW $50.
HE IS HOPPING INTO THAT MARKET. IT LOOKS LIKE HE HAS HOPPED INTO THAT. THAT IS PUSHING THE STOCK UP. WE HAVE SOME SPECIFIC NEWS WITH THE FUNDAMENTALS. GAMESTOP, YOU'VE HAD A COMPLETE TURNAROUND IN THE STORY. GAMESTOP WAS HIGHER BY A LOT BECAUSE OF A STOCK SPLIT IN THE LAST 24 HOURS. THEY FIRED THE CFO.
THEY ANNOUNCED WIDESPREAD LAYOFFS. SHARES ARE DOWN 5.5%. LEVI STRAUSS, DENHAM NEVER GOES OUT OF STYLE. KAILEY: SKINNY JEANS DO. >> I WONDER IF TOM HAS THOSE 70'S BELLBOTTOMS. JONATHAN: YOU CAN STAY FOR A WHILE IF YOU WANT.
>> LEVI STRAUSS IS UP 4%. LEVI'S IS COMING OUT ON TOP. TOM: I WILL HAVE TO TAKE A ROAD TRIP TO BROOKLYN AND UNLOADED 501(C). -- 501'S. THANK YOU FOR REMINDING ME OF RETAIL TRAVAILS. MATTHEW JOINS US, HE'S BEEN BRILLIANT AT DEUTSCHE BANC, WAY OUT IN FRONT OF THE BEIJING RECESSES. AT 830 1 A.M., WILL I KNOW IF THE AMERICAN LABOR ECONOMY IS
FINALLY BROKEN IN A DIFFERENT DIRECTION? MATTHEW: THANKS SO MUCH FOR HAVING ME. WE ARE EXPECTING 225,000 JOBS. WE EXPECT THE RATE TO FALL TO 3.5%. THE MARKET IS FOCUSED ON GETTING RECESSIONARY SIGNALS. WE'VE GOTTEN EVIDENCE THAT THE ECONOMY IS NOT SLOWING AS FAST AS ANTICIPATED.
WE DO GET EVIDENCE OF THAT. TAKING A STEP BACK, YOU HAVE AN ECONOMY THAT SHOWING A CLEAR SLOWING. THE LABOR MARKET IS SHOWING MIXED SIGNALS. WE HAVE THE ISM SURVEY LOOKING AT NEGATIVE.
THE PMI IS LOOKING POSITIVE. JOBLESS CLAIMS ARE NEAR RECORD LOWS. WE ARE LOOKING FOR BETTER SIGNALS ABOUT THE NEAR-TERM TRAJECTORY. WE THINK TODAY WILL BE A SOLID
REPORT. TOM: HOW DO YOU LINK IT TO THE INFLATION REPORT? HOW DO YOU STAGGER FROM THIS LABOR REPORT TO THE CPI REPORT? MATTHEW: THINKING ABOUT THE FED TRAJECTORY, WHAT THE FED NEEDS IN ORDER TO BACK DOWN FROM THE HAWKISH NEST, THEY NEED CLEAR EVIDENCE THAT THE LABOR MARKET IS TURNING. I DON'T THINK YOU GET THAT TODAY. THEY WILL NEED EVIDENCE THAT INFLATION IS SLOWING.
WE EXPECT MONTH-TO-MONTH FOR CORE CPI. THOSE TWO DATA POINTS TOGETHER WHEN THE FED RELEASES THEIR NEW EXPECTATIONS INDEX LATER THIS MONTH, THOSE THINGS KEEP THEM ON TRACK. JONATHAN: WHEN THIS DATA POURS OUT SLOWLY, I'VE BEEN WAITING FOR SOMETHING THAT HASN'T DEVELOPED RID WE GET THIS STRONG HEADLINE PRINT. WAGES DON'T ACCELERATE, WHAT DO
YOU MAKE OF THAT? THAT'S BEEN THE STORY. MATTHEW: WE'VE BEEN THEM SURPRISED -- BEEN SURPRISED BY THE UNEMPLOYMENT RATE. WE SEE MORE WEAKNESS ON THE HOUSEHOLD SURVEY FRONT.
YOU'VE SEEN LABOR FORCE PARTICIPATION, THAT BRINGS SOME UPLIFT ON THE UNEMPLOYMENT RATE AND PREVENTS IT FROM DECLINING. THAT'S BEEN AN IMPORTANT ELEMENT. YOU STILL HAVE THE LABOR MARKET THAT LOOKS TIGHT ON ALL METRICS. JOB OPENINGS ARE REALLY HIGH. THE VACANCY YIELD, THIS IS NEAR A RECORD LOW LEVEL. THE LABOR MARKET STILL LOOKS VERY TIGHT DESPITE WHAT YOU MENTION FROM AN UNEMPLOYMENT RATE PERSPECTIVE. KAILEY:
WHAT IS YOUR ASSESSMENT OF HOW PARTICIPATION MAY PICK UP IN LIGHT OF THE INFLATIONARY PRESSURES THE CONSUMER IS FACING AS THEY DRAW SAVINGS DOWN. THAT WILL DRAW MORE PEOPLE BACK INTO THE LABOR MARKET. SHOULDN'T THAT HAVE AN IMPACT ON THE RATE ULTIMATELY? MATTHEW: IT SHOULD. WHEN YOU LOOK AT THE MARGINS
FROM WHERE WE CAN GET PARTICIPATION BACK, 25-44 HAS RECOVERED MOST IF NOT ALL OF THE PRE-COVID LEVELS WE'VE SEEN. THAT AREA REMAINS DEPRESSED. WE CAN SEE PEOPLE COME BACK. THE BIGGER PICTURE HAS BEEN THE WORKFORCE. WHEN YOU LOOK AT THE PRIME AGE WORKERS, WE ARE 2 MILLION BELOW THE 2019 TREND. THAT IS A SOURCE OF TIGHTNESS
IN THE LABOR MARKET. IT DOESN'T SEEM LIKE IT'S GOING AWAY ANYTIME SOON. JONATHAN: GO THROUGH THE RECENT CALLS. WE WERE THE FIRST TO NAVIGATE A RECESSION IN AMERICA.
HOW MUCH HAVE YOU PULLED THAT IN? WHAT DOES THAT MEAN FOR YOUR BEST CASE FOR THE FED? MATTHEW: HE PULLED THAT INTO THE MIDDLE OF NEXT YEAR. WE ARE CALLING FOR TECHNICAL RECESSION IN THE FIRST HALF OF THIS YEAR. WE HAD A NEGATIVE Q1 GDP GROWTH. WE ARE EXPECTING THE ECONOMY TO
OZ BACK IN THE SECOND HALF OF THE YEAR, AVOID A MORE CONVENTIONAL RECESSION AND FALL INTO IT NEXT YEAR. IF THAT IS THE STORY, THE FED IS MOVING MORE HAWKISH LATE, RAISING RATES MORE. VERY CLEARLY, THEY ARE SKEWED TOWARD THE A TOMMY -- ECONOMY DETERIORATING. IF THAT HAPPENS, IT PUTS THE FED IN A BIND. YOU HAVE INFLATION ABOVE 4% AND THE LABOR MARKET WEAKENING. THAT COULD STOP BEFORE WE GET
TO THE 4% TERMINAL RATE. JONATHAN: MATT, JUST WONDERFUL. A BEAUTIFUL VIEW AT DEUTSCHE BANK HQ. FROM THE SITUATION MATT DESCRIBED IT, LET'S BE CLEAR ABOUT THAT. IF YOU HAVE ECONOMIC GROWTH ROLLING OVER AND YOU HAVE INFLATION STILL AROUND 4% AND THE FED IS WORKING OUT WHAT TO DO AND UNEMPLOYMENT IS RISING, WHERE DO WE GO IN THAT WORLD? TOM: WITH SLOWER DECLINE IN INFLATION, YOU GET A MORE ROBUST GDP. I DO TAKE YOUR POINT. THE IDEA OF ALL BOATS RISING, I DON'T THINK SO. JONATHAN: A TECHNICAL RECESSION THIS YEAR, LOOKING FOR THAT MORE COMPLETE PROCESSION HERE WITH UNEMPLOYMENT CLIMBING, THE MORE CONVENTIONAL VIEW. IN BETWEEN, YOU COULD HAVE A
FED PUSHING RATES TO 4%. NOTHING SOUNDS GOOD FOR EQUITIES. THAT'S WHAT EQUITIES HAVE BEEN STRUGGLING WITH. KAILEY: IT SOUNDS LIKE THEIR WORST NIGHTMARE. HIS THE FED OWING TO BLINK AT SOME POINT? THERE HAS BEEN AN ASSUMPTION THAT MAYBE THEY WILL AND THAT HIS GIVEN A BOOST. WHAT WE'VE BEEN HEARING'S THEY ARE FOCUSED ON INFLATION AND THEY ARE GOING TO KEEP GOING. JONATHAN:
PUSHING FORWARD TO PAYROLLS FRIDAY, THAT IS 50 MINUTES AWAY, LESS THAN THAT. WE ARE LOOKING FOR TO 68. THAT IS FROM OUR BLOOMBERG -- 268. THAT IS FROM OUR BLOOMBERG SURVEY. THIS IS BLOOMBERG. >> KEEPING UP-TO-DATE WITH NEWS, IN JAPAN THE FORMER PRIME MINISTER HAS BEEN SHOT AND KILLED WHILE SPEAKING AT A CAMPAIGN RALLY. THE ATTACK SHOCKED THE COUNTRY WHERE GUNS AND POLITICAL VIOLENCE ARE RARE. THE MENTAL POLICE HE INTENDED TO KILL HIM BECAUSE HE WAS FRUSTRATED WITH HIM. SHINZO ABE WAS THE
LONGEST-SERVING PRIME MINISTER IN JAPAN HISTORY. THE CONSERVATIVE PARTY WANTS TO SPEED UP BORIS JOHNSON'S EXIT FROM NUMBER 10 DOWNING STREET AREA HE COULD BE A CARETAKER LEADER FOR THREE MONTHS WHILE THE CONSERVATIVES PICK A NEW LEADER. THEY ARE DRAWING UP PLANS TO CHOOSE A SUCCESSOR BY THE END OF THE SUMMER. PRESIDENT BIDEN WILL MEET WITH ADVISORS ABOUT ROLLING BACK TARIFFS ON CHINESE GOODS. IT IS A POTENTIAL WEAPON AGAINST INFLATION. DONALD TRUMP HAD TARIFFS ON
CHINESE IMPORTS. GREG ABBOTT HAS ORDERED THE NATIONAL GUARD TO APPREHEND MIGRANTS WHO ARE ILLEGALLY ENTERING FROM MEXICO. ABBOTT IS A REPUBLICAN. HE MADE THE DECISION BECAUSE PRESIDENT BIDEN REFUSES TO ENFORCE IMMIGRATION LAWS. THIS DOESN'T GIVE US CONFIDENCE. GAMESTOP IS FALLING AFTER THEY FIRED THE CFO AND PLANS TO CUT JOBS.
GAME STOCK GROWTH HAS SLOWED AS GAMERS ARE GOING TO DIGITAL DOWNLOADS. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. >> YOU HAVE THE LONGEST POSTWAR SERVING PRIME MINISTER, HE BROUGHT MORE ATTENTION TO JAPAN GLOBALLY. HE FORMED GOOD RELATIONSHIPS WITH INTERNATIONAL PARTNERS.
THAT ELEMENT OF HIS POLICY AND LEGACY IS SOMETHING PEOPLE IN JAPAN UNIVERSALLY ARE PROUD OF. JONATHAN: WAKING UP TO THE SHOCKING NEWS OF THE FORMER JAPANESE PRIME MINISTER HAS DIED. HE WAS SHOT WHILE CAMPAIGNING. MUCH MORE TO COME ON THAT STORY. LISA WILL BE BACK WITH US NEXT WEEK. PAYROLLS IS 42 MINUTES WAY. EQUITIES LOOK LIKE THIS. WE ARE NEGATIVE ON THE S&P. YIELDS ARE COMING IN A COUPLE OF BASIS IN'S -- POINTS.
WE REMAIN ON PARITY WATCH ON EURO-DOLLAR. A LOT OF PEOPLE ARE PUBLISHING PAYROLLS. DEUTSCHE BANK IS ONE OF THEM. STRONG DATABLE UNDERSCORE
THOUGHTS OF THE 3% 10 YEAR YIELD. INSUFFICIENT FOR A RECESSION AND BRING UNEMPLOYMENT BACK DOWN. TOM: IT'S IMPORTANT THAT BLOOMBERG SURVEILLANCE SPEAKS TO THOSE STEEPED IN EXPERIENCE. I THINK OF ROBERT FELDMAN AT MORGAN STANLEY OR DAVID PILLING.
ALSO ON THAT LIST IS TOBIAS HARRIS. HE IS THE SENIOR FELLOW AT THE CENTER FOR AMERICAN PROGRESS. WE ARE THRILLED THAT HE COULD JOIN US THIS MORNING. THIS IS SOMETHING WHO TOOK WHAT HE DID, DRAG RURAL JAPAN INTO A MODERN URBAN HISTORY. A MODERN IMMEDIACY. SHINZO ABE SAID WE HAVE TO GO FURTHER, WE HAVE TO GO BEYOND THE LEGACY OF WORLD WAR II. WAS HE SUCCESSFUL? TOLD BIAS:
IN A BROAD SENSE, THERE IS NO GOING BACK TO WHAT JAPAN WAS LIKE BEFORE SHINZO ABE RETURNED. HE WAS VERY MUCH A SUCCESS. HE WAS FOND OF MISSES THATCHER'S LINE THAT THERE IS NO ALTERNATIVE. THAT IS WHAT JAPAN HAS NOW. YOU HAVE AN ECONOMIC POLICY, HE LAID A BLUEPRINT FOR HIS SUCCESSORS. TOM: YOU WROTE THE ARCH MOMENT OF JAPAN, WHICH IS MALAISE.
THEIR VOTER TURNOUT IS LOW COMPARED TO RECENT HISTORY. HOW DOES ANYBODY IN JAPAN BRING A NEW SPIRIT TO POLITICAL JAPAN? TOBIAS: THERE WILL BE A LOT OF QUESTIONS ABOUT JAPANESE DEMOCRACY AFTER TODAY'S EVENTS. IT IS SHOCKING. EVERYONE IS TRYING TO THINK THROUGH WHAT IT MEANS. THE ASSASSINATION IS A REFLECTION OF ONE OF THE BEST THINGS ABOUT JAPANESE DEMOCRACY, HOW ACCESSIBLE OFFICIALS ARE TO THE PUBLIC. CAMPAIGNS USE THE INTERNET MORE THAN THEY USED TO, BUT THEY ARE STILL BASED LARGELY ON POLITICIANS INTERACTING WITH VOTERS DIRECTLY. THERE IS CONCERN, DOES THIS MEAN THE END OF THAT? ARE YOU GOING TO HAVE THAT ACCESSIBILITY? I HOPE NOT.
IT WAS A STRENGTH THAT FOLKERS -- VOTERS HAD ACCESS TO THE REPRESENTATIVES. TOM: HE WAS AN ARCH CONSERVATIVES AND THERE WAS GREAT LIBERAL SOCIAL POLICY. HE TRIED TO DRAG HIS GROUP TO THE CENTER.
IS THERE A POLITICAL CENTER IN JAPAN IT? TOBIAS: I DON'T KNOW IF IT SO MUCH THE CENTER. FUNDAMENTALLY, HE WANTED HIS COUNTRY TO BE STRONG. HE WOULD DO WHAT IT WOULD TAKE TO DO THAT. IF THAT MEANT GLOBALIZING JAPAN IT, OPENING JAPAN TO THE WORLD, WELCOMING TOURISM AND OPENING JAPAN TO TRADE, HE WAS GOING TO DO THAT, EVEN IF YOU LOOK AT TRADITIONAL CONSERVATIVES AND RURAL JAPAN IT, EVEN IF A MEANT -- IT MEANT TAKING THOSE ON, HE WAS WILLING TO DO THAT. HE WASN'T A REFORMER, HE DID RECOGNIZE THAT JAPAN HAD TO OPEN TO FOREIGN INFLUENCES MORE THAN IT HAD IN THE PAST. TOM: EXPLAIN TO US HOW THE RESPONSE
WILL BE FROM THE EMPEROR AND HIS FAMILY? IT IS SUCH A UNIQUE RELATIONSHIP. HOW WILL THE EMPEROR RESPOND TO THE ASSASSINATION? TOBIAS: OF COURSE, THERE WERE PLENTY OF MOMENTS WITH THE CURRENT EMPEROR, BETWEEN SHINZO ABE AND THE FORMER EMPEROR. WHAT IT COMES DOWN TO, IN MOMENTS LIKE THIS THAT ARE SHOCKING AND TRAGIC FOR THE NATION, THE IMPERIAL HOUSEHOLD STEPS UP AND SERVES AS VOICE TO THOSE FEELINGS OF THE NATION. I WOULD EXPECT AS MUCH FROM THE EMPEROR. I DON'T THINK THERE WILL BE A MOMENT OF POLITICAL TENSION. THE EMPEROR SPEAKS ON BEHALF OF THE PUBLIC. KAILEY:
YOU WERE TALKING ABOUT HOW HE LOOKED GLOBALLY. HE WAS A UNIQUE FIGURE IN JAPANESE POLITICS AND THAT HE DID HAVE THAT GLOBAL RECOGNITION. PEOPLE KNEW WHO HE WAS. WHERE DOES JAPAN STAND IN TERMS OF GLOBAL POLITICS IN HIS ABSENCE? TOBIAS: HE WAS PROBABLY THE MOST POWERFUL FIGURE IN JAPANESE POLITICS UP TO THE MOMENT HE DIED, MORE POWERFUL THEN THE PRIME MINISTER. HE WAS PUSHING FOR MORE DEFENSE SPENDING. IT'S HARD TO SEE WHO WILL FILL HIS SHOES IN TERMS OF MAKING THAT CASE.
THERE IS SOME UNCERTAINTY WHAT WE WILL GET. THERE WILL BE PRESSURE TO CONTINUE THE AGENDA AND FULFILL SHINZO ABE'S VISION. HE IS GOING TO HAVE TO STEP UP IN THE MOMENT AND CONTINUE TO LIVE UP TO THE BLUEPRINT SHINZO ABE OUTLINED. JONATHAN: THANK YOU FOR BEING WITH US THIS MORNING. JUST HORRIFIC, DEEPLY DEEPLY SHOCKING WAKING UP TO THIS NEWS.
TOM: MOVING AWAY FROM THE ASSASSINATION TO OUR RELATIONSHIP FROM A DISTANCE, THERE IS A CONTINUED UNDERESTIMATION OF THE SIZE, THE DEPTH, THE ECONOMIC REACH OF JAPAN WITHIN THE PACIFIC RIM AND ASIA. THIS IS FAIRLY RECENT. THERE IS A BELIEF JAPAN IS FLAT ON THEIR BACK WITHOUT SHINZO ABE. THAT IS SIMPLY NOT TRUE. JONATHAN: HE SAID HIS LEGACY WAS VERY MUCH STILL ALIVE. THE MODERN-DAY ARCHITECT OF
MODERN-DAY JAPAN. WE'VE SEEN THIS PLAY OUT BEYOND JAPAN. TOM: THE INDO PACIFIC REACH OF TH
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