tv Bloomberg Surveillance Bloomberg September 2, 2021 8:00am-9:00am EDT
simulcast on bloomberg radio and television. the markets weather is green on the screen. we are looking at in the streets. a weather crisis of hurricane ida across this nation, across the east. jon ferro heading to write to new york city. -- heading right to new york city. jon: more than three inches in a single hour. tom: newark, new jersey, you can see it. a 90 year event. what struck me is the new york times giving perspective with more rain on a wednesday than we get in a month. jon: six to seven weeks of it in a single day. remarkable. we call these once in a century rainfalls. we seem to be doing that once every quarter.
that is what it feels like. tom: three years of bloomberg on the economy, the economics of the ocean in the study of climate change. there it was, 13 years ago, the gulf of mexico warming. that affects all of our systems. the idea of global warning -- global warming is here. lisa: and how do we deal with that? we just got the first flash flood warning for new york city ever in the history of the national weather service. the city -- how do cities and counties of the united states fortify themselves against some of the storms that are going to increase? tom: the president will travel to louisiana. where we are is equity markets refused to ease. >> the mta acting chairman and
ceo will be joining us at 8:45. we will see that in about 42 minutes. a list up.2% on the s&p 500. getting your attention, morgan stanley advising the gdp tracking number from 6.5% previously. that is quite a revision. tom: it is a good precursor to get to brian. it is a 90 day one off. when do we see that? i am not sure how they can say it is a discrete quarter slowdown. >> what they expected, a sharp slowdown. they thought it would be evenly distributed. a lot of it has come through the month of august.
the ongoing problem we have not worked through, demand is fantastic. supplies is not. we have seen that in every data point this year. september was important because we saw -- we thought these difficulties would ease and heal. september, in the eyes of so many people, it is so important. tom: payroll tweaks for tomorrow from -- brian, you see them bring down assad d august. how do you adjust and invest to the uncertainty of q3? the uncertainties of q4? >> we believe there would be a
slow down. when you think about how disastrous the session was and how quick the recovery was, it is strange investors were extrapolating that event and you heard a lot of talk about higher interest rates, a lot of talk about prolonged valley -- prolonged value rally. it happen more quickly with the delta variant. nothing structural has changed. i would expect interest rates to stay low for long and structural growth businesses to be the outperformance. jon: can i do this through the nasdaq 100?
how do you expect people to do that? what do you expect they do? >> you want to look for companies that generate true earnings growth. some are going to be in the nasdaq 100. there are going to be stock pickers who have shown an ability to select those businesses. it is about proactive managers. where do you find them? who are the companies able to take advantage of a low growth world and there are adept managers at finding those businesses. lisa: looking at this note from morgan stanley, so much has to do with supply chain disruption. if companies cannot get the goods, you cannot sell them. how much are you looking at specific spending plans to shore up supply-chain lines, to increase resiliency? >> you have seen businesses able
to do better in this environment. there is a reason earnings are strong. you have found some businesses have been able to survive this environment but take advantage. what you find out, what investors extrapolate, those concerned about sustained high inflation is the demand was going to persist forever and there was never going to be a moment when the supply side could catch up to it. what the note suggests and what prognostications suggest is some of this demand will moderate and some of this pent up is going to moderate egg gives businesses an opportunity to bring back workers and start to rebuild supplies. it may take time, but if you look at what is going on in the bond market, it is not concerned
about persistent inflation and we should take the bond market for what it is telling us. tom: i did the math. on the five largest stocks, those stocks, they are 22.9% of the index. it was beaten into me at the dining room table, don't sell your winners. how do you deal with that from an institutional basis if you are not in them or you are in them? what do you do? >> people put that number around. they point to the valuations of some of those companies. those are the companies that are generating earnings and revenues at significant multiples of what the broad market is doing. it is not as if investors are bidding up businesses that do not have sound fundamentals and
structural advantages. you want to continue to own those structurally advantaged names and you want to think about who are the next businesses that are going to emerge to be structurally advantaged in this type of opportunity. jon: things starting to move your way. looking for the move back to trend growth and a better move, a better market on the nasdaq. you talked about the s&p 500 being up. let's talk about elsewhere. emerging-market equities have not done anything. low single-digit gains in japan and china. the rest of the world has not delivered in the same way. tom: i give credit to zero hedge. gige text -- gigatechs. it is eight stocks. jon: you look at the big chinese
names. lisa: you start to wonder if it can outperform in a world that is such a spotty recovery. i wonder about the dollar. if the dollar strengthens on the heels of a tighter monetary policy, how do emerging markets outperform? jon: chairman powell, as we discussed, many people pat him on the back for achieving that. i don't think he has done it yet. a lot of people think that might be compromised, the message might be compromised. tom: i don't believe in it, but it is going to be important. can we look to next year? jon: now? tom: here is next year. a trade fair speech of the
president of china, global summit of trade and services. we are going to see a lot of this, a lot of messaging by chinese leadership. particularly their president as they go to their important party meetings. jon: to what degree do we see more than economic structure reform? the lead paragraph, china talked broadcasters to shut out effeminate styles and set a patriotic atmosphere. there seems to be a lot going on. lisa: it goes to targeting specific groups of people. you start to wonder how much the specificity this administration will have with some of their targets. jon: good morning. heard on radio, seen on tv, this
is bloomberg. ♪ > the supreme court has refused to block a texas law refusing abortions after six weeks. the legal fight goes forward. opponents say the measures will ban abortions for at least 85% of patients in texas. the remnants of ida ripped through the northeast. streets were inundated, traffic was a mess and train services was suspended. in manhattan, three inches of rain and half an hour. talking trash about the bond market. the bond king said longer-term treasury yields are so low the funds that by them belong in the
between jfk and heathrow. that was great. most of what we are going to sell is going to be in the u.s. that was great for jetblue. you can fly from countries that have much higher covid infection rates but you cannot come from countries in europe where infection rates are lower. that is not a risk-based approach. when it is going to open up, i could not tell you. it is something we continue a dialogue on with the administration. >> by christmas? >> hopefully sooner than that. i do not know. it is hard to predict how they are thinking about it. >> it is not really something they would have gone ahead with.
coming winter, demand concerns are still there, i would not rule out a month of --. for now, there is harmony in the group. jon: from new york city, good morning. your equity market up .20 percent, advancing nine points into the bond market. a bit of news to pick up on. reporting from cnn, united airlines has suspended operations in newark following the flooding overnight. that is the latest from cnn tire -- cnn. tom: the weather report from today is constructive. no pursue for tatian and may be the sun -- no precipitation and maybe the sun. jon: much better, much more
constructive today. tom: we have the jobs day. we digress. on oil it is easy to go macro and talk about supply and demand. nasdaq and the director of energy capital markets, we are thrilled for you to join us. overlay your expertise at nasdaq with the small matter of a hurricane devastating louisiana. how does your world change in the next three months? >> hurricane season and we are not out of it. they tend to be bearish for oil prices. we see crude production comes online quicker than refined. we see further storm recently,
damage seems to be contained. the problem is power. flooding has prevented the terminals and ports from coming back online. we expect that will be online in matter of weeks rather than months. this is still going to be short-term noise. some will be overshadowed that opec will put more into the market over the next month. that will take care of it. when we get the inventory data on a weekly basis, we will have a degree of noise. futures will be in a confused state. tom: let me start with abramowitz 101. how do you link equity markets into the dynamics of energy high-yield debt? tamar: i would point out the month of august has been volatile for oil prices but not as bad for energy equity.
from an equity perspective, long-term equity measures are not worried about demand. they are consolidated so far this year. the market has been good. they have been able to buy back debt and improve their value. they have been robust at announcing dividends. that suggests there will be a degree of discipline which should curtail the degree of shale production growth in the year ahead. the outlook is constructive for u.s. energy producers. lisa: as we look at storms, they have been the focus of the show. how much some of these companies have to give a nod to the changing infrastructure of the
world and the view on climate change and fossil fuel production, the fact that considerations are becoming a part of portfolios. how much are they looking to try to spend to offset carbon emissions, to invest in clean energy and diversify their streams of revenue? tamar: talking about investors wanting more cash returns from energy producers, that is the case. they want a cleaner barrel, as well. as the energy transition plays out, as concerns grow in their intensity, they will want a cleaner barrel of oil, energy will continue to need oil as part of the mix, even in a good carbonized future going forward. there is a role for energy producers but the cost of the
barrel will go up if they have to bring down the admissions profile. -- the emissions profile. jon: we have to leave it there. it is always good to hear from you. jobless claims about seven minutes away. payroll coming tomorrow. morgan stanley making headlines with third-quarter gdp tracking number of 2.9%, down from 6.5%. that is one heck of a cut. tom: she folds in the labor market, says it is on track. i look at a 2.9 percent gdp. i don't care what the timeline is. i look at the chart on claims. it is the most elegant chart i have. claims are persistently reducing
to a better outcome. jon: fourth-quarter gdp remains at six point 4%. -- 6.4%. lisa: a lot of that is stemming from auto production and sales, which slowed down. some of the slowdown had been bottoming out. you do wonder, in this kind of economy, how much a storm could disrupt things. that affected consumer sentiment. or how much it affects other peripheral demand. you do wonder how much these things matter. jon: i have morgan stanley at 725. the ranges from one million to the low end of 400,000. estimates going into payroll, we talked about it every time.
wide for that range of estimates. tom: we are moving towards a fully employed america. the raging dim a -- the raging debate is when we get there. i am sorry. i think it is one data point. jon: jobless claims are five minutes away, then it is on payrolls friday. your estimate and our survey. we will get -- the chief u.s. economist. here is your price action this thursday morning. equity futures this morning positive nine points on the s&p 500. we kick things off in september with a small day of gains on the s&p 500. bond market yields are lower.
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jonathan: jobless claims in america are about 10 seconds away. from new york city, alongside tom keene and lisa abramowicz i'm jonathan ferro. up eight or nine points on the s&p, advancing .2% on the s&p 500. bond market yields lower by about one basis point to 1.2835. 340,000 come the estimate 345,000. waiting to hear if we get some revisions. 340,000 is the print, the median estimate 345,000 come in the previous number 3000. tom: a good number. part of the trend we are seeing. we will look at the revised numbers. maybe a little late coming out.
productivity, unit labor costs stay elevated. that interests me as well at 1.3%. nevertheless, one of those inflationary impulses that gets your attention. jonathan: 340,000 is the print. your market not doing much. outside of that, your yield down almost one basis point. it talked about the dynamic of the moment. it looks for me and for many other people, demand has been pretty stellar considering. a little bit of a soft patch through august. it is all about supply. again it came up the same story that was repeated through the whole report. demand is great. you go through the comments they give you.
sales continue to be strong. persistent supply issues. business strong. a backlog of climbing supply and manpower challenges. you see that repeated every single month and it has not changed. tom: revisions out there now. they are nonevent as well. steven ricchiuto is qualified to talk about the american economy. i want to take advantage of your knowledge and go where jon ferro was going. to me the supply dynamic seems to be colored by the american automobile industry. discuss that. how are autos for you? and astrid, -- an asterik, an outlier? an important part of the american economy? steven: they are an important part of the economy.
they have been declining. the automobile industry is a pervasive product. when you consider all the components going in, whether it be glass, steel, electronic components, leather, vinyl, it is a huge supply chain evolved -- involved when you're talking about building automobiles. when you see a retail sales numbers in autos like you did yesterday afternoon of a big drop down in sales of 13.1 million units from 14.8 million units, you get the sense this is where the economy is losing some of its momentum. it is the supply chain because this is what is really happening in terms of the auto space. tom: a slow news day. that is make some news. will you reduce your q3 gdp statistic? steven: i do not get into that game of trying to find tune it once we have all of the data.
there are still a lot of moving parts. i go back to the days when a couple of people from the bureau of labor statistics were caught insider trading trying to trade on the gdp number. tom: john does that. john traits off the gdp number. steven: that it results in absently no money because they cannot figure out what the numbers were. that is the key issue. unless you know the trade and you know the inventory numbers it is hard to take down the gdp number on a key source data. lisa: that said, the direction matters. alexander downgraded the third-quarter gdp to 2.9%. david smith said this is significant because there is not necessarily a material impact on the full year gdp, but there is not a marked drop in the gdp for q4.
this is not delayed growth, this is lost growth. i wonder how much that is starting to factor into people's assessment of this recovery? steven: you are 100% correct and that is the key factor. this will not be growth reversed back. when i look at the numbers they've just put out in the bounce they are anticipating and q3, i'm not sure you will get the bounce back in q4. there a lot of people talking about pent-up demand. there is not any pent-up demand. you might see third-quarter gdp marking down the number in particular, getting people to look at their 2022 estimates and realize those numbers are much lower. we are still much lower than the consensus on 2022 numbers. we are in the 3.5% area. most are substantially higher.
that is what we think the risk is in the kind of losses in the third quarter. lisa: we are looking at a labor market that has still not recovered. the why behind it is less and less clear. what are you hoping to find out from tomorrow's jobs report to understand the trajectory of what is keeping people away from filling all of those jobs, a record number of them that need to be filled? steven: what you will be discovering is what is true about the jobs. people are looking for a specific person to fill a job. if you will be in a work from home environment -- service jobs are not work from home jobs -- but outside the service community -- you are looking for a person who is compatible, you put them in and they start working asap. when you're working from home is not easy to train people and bring them on board. the work from home environment
is one of the factors limiting the ability to find that specific worker we want because those workers are rare. in an environment where people are working at offices there is the ability to train and get people up to speed. now we have less and less of that. you have to find the unique person. it is finding a needle in a haystack. tom: what is the dynamic on service sector. we mentioned the gige text are out in standard & poor's 500. what does that mean for the services sector versus the good sector? steven: we are driving everything from a productivity standpoint. i know you look at the productivity numbers and the unit labor cost numbers and you talk about the uptick in unit labor costs numbers. increased productivity has been pushed into the economy is part of the covid environment. it is understandable you are
seeing what you're seeing is part of the growth relations portions of the economy because we are relying more and more on that technology and the work from home environment. as you look at more and more companies who say we are delaying openings and making it easier for people not to come back to the office after labor day or in october, the net result is you will demand more and more on this technology and drive the demand up for that product. it is very much with the changes of the underlying dynamic unfolding as part of the covid-19 strategy. lisa: we've been talking about mitigation efforts for some of the storms. we saw what happened with hurricane ida. in new york city, the weather system issued its first-ever flash flood emergency warning.
what is the impact on gdp, on growth, on the resumption of people back into their jobs as a result of some of the storms? steven: when we go back and look at trying to ascertain the impact of any particular storm, you can go back and look at katrina, look at sandy, those were much bigger in magnitude. i'm not arguing the suffering going on by people is not important, but the magnitude of it in terms of population of the economy involved in that are substantially greater. i do not expect to see a statistical impact at the macrolevel. at the micro level, you wind up seeing a lot of the expenses that recover from that wind up driving the economy and fill that void quickly, which is why statistically we do not see it on a quarterly basis. you see it in some of the monthly numbers not the quarterly data. jonathan: good to hear from you. don't trade gdp, the message
from steven ricchiuto. coming up on the program at 9:00, we will credit -- we will catch up with chris harvey of wells fargo. the big bear on wall street becomes the big bull and he is looking for 4825 on the s&p 500. tom: this is tough. these guys are class acts, they capitulate, they are wrong. i am watching tobias levkovich. jonathan: to see if he does the same thing. i characterized chris as the big bear on wall street. that is not how he started the year. the forecast of 3900 pushing 4000 was bullish in november. then we had the vaccine news in this market ripped. we always talk about risk. i often say some of the risks we do not talk about enough our upside risks. that has been the story of this equity market. tom: i would say in modern
business media there's too much certitude. there's is too much you got it wrong. in the old days it was simple. everyone got it wrong often. you adjusted as you went and you had humility. jonathan: chris has a ton of humility. i will talk to him about that and also why he has gone from 4800 this year to may be a down year next year. tom: his dow quote is stunning. jonathan: i will ask for his dow forecast just for you. here in new york and beyond, stay safe after the rainfall of yesterday evening. from new york city, a better day ahead for all of us. i hope. this is bloomberg. ritika: with the first word news, i'm ritika gupta. the toughest restriction on abortion in the u.s. will stay in place for now.
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a historic day for new york city. we will not waste time with the statistics, but to be very serious, eight deaths reported by the new york times. historic rain. with that note we get to the chief executive officer of the mta. where is your biggest headache at this time? >> the subway system is coming back. it is extremely resilient. we have operating service in most areas of the city. we are putting humpty dumpty back together. bravo to the crews that worked throughout the night to do it. there is a key area where the pumping is still going on for us to restore service to that important line. we think by midafternoon we will have most of the lines back to
full functioning for an evening commute. that is exciting. tom: you're telling me we will see an evening commute? janno: a lot of people elected to work remotely or stay at home today, so a little lighter than usual. we will move people on the subways and on the bus system, which performed heroically. great bus drivers rescued people. p meter railroads are little spotty. metro -- commuter railroads are little spotty. some hits on the electrical infrastructure. the long island railroad is back in action. they have most branches operating. tom: our joe bryant just reporting the death count has moved from eight to nine. lisa: the flash flood emergency
warning highlighted death could be imminent. this is the second time in two months the subway system has faced flooding like this. this is more extreme than the last time. what is the mta doing to prevent this from happening again? janno: after sandy we invested a ton in coastal resiliency. our underwater tunnels have all been rebuilt. the pumping infrastructure performed fabulously in this emergency. in the era of climate change with extreme weather events, even the higher elevations are experiencing flash flooding. the big problem is drainage and sewer infrastructure gets overwhelmed. subways are not a summary. -- are not a submarine. it will never be perfectly dry. we will start to attack higher elevations as well.
lisa: we are looking at a situation where this will become more and more frequent. is the mta funded to make some of these adjustments at the same time ridership is down at the same time the city is recovering from the pandemic and getting ridership to where we were before? janno: this has to be done in tandem with the city of new york which controls the sewers in the street-level drainage infrastructure. we have to do this in partnership. we have a $50 billion capital firm that has a lot of resiliency in our yards and some of the low-lying areas. there are things we can do in tandem. -- in tandem with the city. tom: one final question. great respect to the bus drivers particularly. you have a changing of the guard in albany. will you stay and support the new governor?
do you have any understanding of that relationship, the fractious relationship with the mta and the capital up the hudson river? janno: i've had the opportunity to meet with kathy hopeful and talk with her. we have been in touch through the night. she was a local official before she was a congresswoman. she gets emergency management. she explained that just a few days ago when she came down to the city after we had a hit on the mta operation. she is a great partner for the mta in emergency management and more broadly. we are looking forward to working with her. tom: you and all of the mta, thank you so much. he is the acting chairman and chief executive officer. we got to know kathy hochul within this pandemic. what is so important is unlike
so many people, she started in the granularity of buffalo and yuri county politics. -- and erie county politics. lisa: she was definitely a behind-the-scenes player. she was not necessarily allied with former governor cuomo. amy morris of our radio studio came out with this note this morning i thought was fascinating, showing the traffic guide is watching traffic in the new york area and watching traffic and showed a map and it is red, slow and halted. you wonder what storms like this do. how quickly we can recover it will determine how quickly a lot of things can get back up. it is a perilous moment. tom: is a 500 year storm so i'm set up for 2625. lisa: thank you. tom: the dow futures are up 100 points, because you know jon
ferro will not mention it. lisa: the jobless claims were interesting in that they came in closed expectations. remember when they were all over the map? it seems like they're getting closer each time, which means we are getting into a more normal situation. i wonder, analyst estimates are coming more within range than they have in the past. i wonder if people can get more conviction around the labor market data that is stabilizing enough to create a trajectory from tomorrow's report. tom: we change gears. bridgewater, hedge fund, associated with ray dalio, a california county is considering exiting bridgewater's efforts off of "weak returns." that is breaking. we will see if we see that more. maybe sonali basak has wisdom on
that as well. one of my favorite people, ambassador pickering at the 12:00 hour. stay with us. thank you to our technical team for making it happen today. this is bloomberg. >> i have an exclusive u.s. open update for bloomberg tv and radio from tennis channel. three major champions where the headline makers on day three at flushing meadows. sloane stephens famously lifted the trophy in new york four years ago and the 28 looks back to her best. she outplayed the teen phenom who hit 25 unforced errors and managed to generate just one point. three breaks and 11 winners, enough to put stevens into the
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right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york we begin with the big issue, counting down to payrolls. >> the payrolls report. >> one more month of nonfarm payrolls data. >> not sure what we will see tomorrow. >> the question on the wall of worry would be on the upcoming jobs report. >> we need to see progress in labor participation rates. >> we are likely to get more certainty and confidence. >> somewhere in 600,000 to 800,000.