tv Bloomberg Markets Americas Bloomberg September 2, 2021 10:00am-11:00am EDT
johnson. >> thursday the second, 20 minutes into the trading day. alix steel has been holding the fort in new york. welcome to bloomberg markets. i am coming back on a thursday, before payrolls day. alix: i do not know what it was about this last week. i felt like you were gone for a year. i feel like i have my coparent back and it feels healthy. you mentioned my soggy feet. it took me an hour and a half to get here from brooklyn. it is insane. major cities like this, we are not prepped for these extreme climate events.
crazy pictures. guy: i thought you might come in by kayak or canoe after the pictures i saw. those pictures from the subway, incredible, just that volume of water. let's draw your attention to what is happening with the infrastructure spending story and whether we are going to see hard infrastructure, soft infrastructure. the big number coming through tomorrow is payroll, but in terms of the orders coming through, it is a dip from last time. we are up and expectations -- on expectations. durable goods, -.1. transport is a little healthier. coming in pretty much in line with expectations. i do not think any of that moves the dial. i do nothing the claims data
moved the dial. john was pointing at the range of claims tomorrow, absolutely enormous. alix: and the fed really set us up for that. in the market, you are waiting in seann. it is interesting what is moving in the s&p. you have energy outperforming but also big tech. your -- yields have gone nowhere in the last few days. kind of erasing the rally we have had over the past few weeks. we are under 16 at this point. imagine what it is going to take to move the needle when it comes to jobs. let's get to the story of the day and wall street, hurricane ida and the aftermath. president biden will speak about his ministration's -- administration's response this morning. where we are, the pictures are static, but that is not even half of it. >> what ida is doing in louisiana is devastating and you see the effect reverberated
around the country, the pictures at a new york and washington. yesterday we had flood warnings. i have had personal issues at my apartment. my producer's basement is flooded. what is going on in louisiana is grim. i million people are without power and a number of businesses. we got a fact sheet from the white house outlining what the president is doing in terms of using the power of the government in the aftermath. this could be anything from money to repairs of homes, loans, and just basics like sending more water, food, having ambulances on standby. he is likely going to outline that when he speaks about this. i imagine as he visits louisiana tomorrow he is going to make a pitch for why those bills democrats are working on are needed because of infrastructure in this country especially when it comes to massive weather events that many say are going
to get worse because of climate change. guy: it does make you wonder whether republicans are going to push back and say we did the hard infrastructure. do any of the other? alix: there is money in the bipartisan infrastructure that did not make it, that had to go to things like conservation and more infrastructure and climate initiatives that will go toward hard infrastructure. this could be tricky for some republicans in states like louisiana. guy: i agree. we will bring you the comments of the president later on, in the next hour. let's stay with the biden administration and his booster plan getting resistance from the cdc panel and fda, who believe politics are getting ahead of the process of delivering shots.
joining us now, bloomberg's health reporter. >> some health experts are wary of the biden administration's plan for administering booster shots to the public on september 20. the fda has yet to make a determination on whether they are necessary. cdc advisors have not looked at that data and made their own recommendation on whether people really need a third shot of the mrna vaccine. we are starting to hear concern from people who are saying the science should come before the politics. later this month, we will hear from fda visors who are now scheduled to review data -- advisors who are now scheduled to review data on pfizer's booster shot three days before the plan to start administering booster shots to millions of americans across the country. alix: let's get back to the economic data.
initial claims have been drifting lower. we are watching these numbers closely head of the august jobs report tomorrow. peggy collins, bloomberg's managing editor of u.s. economy joins us now. give us the lay of the landscape. peggy: the jobless claims data this morning is continuing to decline and show signs of the labor market recovering. on the trade data, we did see a continued shift from goods to services in terms of demand from consumers and continued signs of supply chain bottlenecks that have been an overhang for industries and businesses around the world. in terms of what we are looking for for tomorrow, that average estimate in terms of the jobs report number tomorrow is around 700,000. there is a lot of pressure on this.
the fed has pointed to expectations that the number will come in strong, but the delta variant has put a question more than people expected a month or so ago on how strong the number will come back. guy: we have some great coverage lined up looking forward to yours too. it will be a great show. alix: i will not take hell for friday. guy: huge range in terms what we are expecting to see. coming up, we will look at whether the market should be concerned over a potential bubble and bond markets. is bad news good news tomorrow? how does it change the debate over what we are going to see from the fed? leslie falconio is joining us next. this is bloomberg. ♪ berg.
>> we have been prepping for a correction for weeks and months now and it has not played out, just as you said with the volatility being low. alix: a senior equity strategist yesterday on whether it is too soon to be bearish. for more, let's get leslie falconio. what you think it is going to take to get corrections in equities and higher yields? leslie: first, it will lead immediately to higher yields. you have to have yields that
come in rapidly. right now, we are positive on the equity market in 2021 and 2022 because we think the fed does remain accommodative. we do not think inflation will be a concern, particularly when it comes to -- the concern for us is value we think is too low. when you think about pricing in and the index flop's, this is much lower than what the fed is indicating at to 15%. the question is whether it corrects quickly. we do think right now, with it pricing in terms of rate forecasts, it has been too low. guy: the range tomorrow is around a million. you guys are up -- at the upper
end. how much of an adjustment are we going to see? leslie: we are definitely more on the higher side because a lot of the participants are coming back in and i think we will see this new claims number and we have a lot jobs parent tomorrow's number is going to have a lot around it. i think the netflix number is going to be more important. i think the market will in terms of yields rise on strength more than declines on a less than consensus number coming into where we are in terms of these headwinds, in terms of supply chain bottlenecks. we are on the higher side. alix: that is interesting. some are saying the opposite, that the risk is greater if there is a miss because it would
put the fed on hold for longer. where is the options market in relation to the scenario you just laid out? leslie: i think it is likely the fed may announce in paper -- what the fed may announce in paper does not matter in terms of market movement here in -- movement. it is the pace that matters. the market corrected for a hike. if the number is lower, they might excuse it more. recovery is just delayed but not derailed. guy: when you look at how the fed is comedic hitting now -- communicating now and when rate hikes start to kick in, do you think they are going to be able to deliver that successfully?
do you think there might be able to persuade the market these are two different things -- they are going to be able to persuade the market these are two differ things? leslie: the fed has done a good job of staying accommodative. qe is having an impact. it is not necessary as much as it was in march of 2020. we are tapering qe and then we are going to hike rates. the criteria for that is different. we do not believe we are going to have this large global wage inflation among all sectors. our view is that inflation particularly in 2022 starts to decline. i do not think you will have a situation where they have to not just push forward the hike but hike at greater velocity.
i do not think that is going to be the case. alix: so the front end is going to be more anchored and you could eventually see that steeper curve. where is the best investment case? you have to mention bill gross and his great quote talking about investment case is being garbage. immediate to long-term bond funds in trash receptacles for sure, but will stocks follow? earnings growth had better be double-digit plus. why is bill gross wrong right now? leslie: i think real yields are much too low. i do think the back end of the yield curve does rise. i think they rise going forward. in terms of the correlation with treasury, the equity market has a correction, it depends on why it is correcting. it is correcting because we had a shut down because the delta variant turns out to be more
than what we are forecasting, you could see the 10 year yield go up. right now current real yields are too low. that is why we watch closely to those parts of the curve that are benchmark off of five-year yields. when we think about how to outtake in terms of inflation going forward, fixed income looks at tips correlated to real yields and is not the place we want to be. we would rather be in credit, that does not have a lot of interest rate risk. guy: let's say you sell tips right now. leslie: depending on when you got in. alix: what do you do incorporate credit? leslie: on the corporate side, we prefer more of the -- in your
early cycle, the credit curve always flattens and you have this high yield curve. it does not take a lot in terms of a rise in rates for an entire year of incomes. that floating rate has defaulted our 12 year low. alix: really good to talk to you. thank you so much, leslie falconio. inc. you very much. coming up, the new york city dilution. you have flooded subways, swamped highways. i was stuck in a car not moving for over 30 minutes today. we are going to explore why this could impact wall street. could impact wall street. this is bloomberg. ♪
personal information. there are at least 28 investigations open targeting tech giants such as apple and google. alibaba has become the latest tech giant -- china's share the wealth. the money will be spread between 10 initiatives involving technology investment and support for small companies. that is your latest business flash. alix: let's get to the story everyone is talking about in the u.s., the remains of hurricane ida. they ripped through new york and new jersey, all across the northeast late last night, early this morning. you had water swamping highways, baseball stadiums, subway stations were flooded. i was a reporter down when hurricane sandy hit and how
prepped everybody was for it. yesterday, no one was prepared for it because it all happened so quickly. what is it like on wall street? >> the morning commute was the big issue. trains are mostly stopped. a lot of subways are not working. new jersey transit was not working. metro-north basically completely stopped. long island is working ok. that was the biggest issue getting in. they are back on track for the evening commute at least in subways but not necessarily commuter lines. that is the real issue. there are still reports about deaths from last night, a number of flooding deaths, eight in new york city and more in new jersey. we are wondering and looking for if there will be any more reports as well. guy: the picture is incredible
that we have on the screen right now and the speed of events unfolding is what seems to have caught a lot of by surprise. unfortunately, delivering lots of life. let's talk about how wall street is better prepared for such events as this. a lot people have got used to working from home. a lot of people are working from home. can they continue to work from home? does this encourage companies to continue with that as an option? kids used to get snow days. we are talking by the fact that people cannot get to work. does it matter as much anymore? shelly: new york city ended snow days because of virtual options for kids got to their detriment. for workers on wall street -- kids, to their detriment. for workers on wall street, they can do their work from home because they have had to for the last year. that is what we are seeing this morning. new york city put out an alert overnight saying do not travel
at all, no non-essential travel until friday. they lifted that in the morning and said still try not to be on the roads if you do not have to. that left a lot of people at home saying, i will just work from home today instead of trying to come in. there are people who cannot do their jobs from home. those people tried to come in. we have a number of reporters on the ground talking to people trying to get into do their jobs who have not been able to make it. alix: if you stay focused on the wall street angle, a lot of wall streeters live in new jersey or connecticut and even lower manhattan, where all the pain buildings are. -- main buildings are. is everyone going to want to move to florida now? shelly: i do not know about that, but you have to wonder if you still want a job that requires you to commute. there are a number people who were on their way home and got stuck on new jersey transit trains that stopped. they had to evacuate, figure out
their own ways home. if you are someone living in a nice house in new jersey commuting to new york city might you have to wonder, do i still want a job with a company like the wall street firms still requiring people to come in that are trying to get people to come back into the office? there are implications of what does that mean for manhattan and new york city in general as a commuter hub and the future of this hub for financials. guy: great stuff. thank you, shelly banjo, joining us on what we saw overnight. the sun is now shining, but it feels like the calm after an incredible storm. it is not as if florida does not get hit by things. the weather down there can be difficult, but i guess they are more used to it and it feels like new york -- just caught a little by surprise by what just happened. alix: our infrastructure --
subway stations cannot handle this. we are not prepped for these extreme weather events. you are right and that hurricanes tend to hit florida. there is a system for it. even though it may be terrible, you are kind of prepped for it. you know how it is going to go. here, forget it. i remember hurricane sandy and flooded subways and it happened again. guy: it makes you wonder whether business is going to push governments, local, federal -- you have to spend more on hard infrastructure. that does need to be where everybody is coming together on this. we will carry on the conversation and talk about the u.s. jobs report. this is bloomberg. ♪
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virtually zero of my respondents reported layoffs or furloughs or anything like that. they are still trying to hire like crazy. 39% of them expressed difficulty in hiring. it is not an issue of demand. we reported a 22% turnover, which compared to july was 18 percent. with wages increasing in local area, people are leaving jobs and moving for $.25 they are getting paid mor have a turn ove causing our departments to work harder. alix: that is temp youree -- tim fiore. he spoke to me yesterday. what i found so interesting about it was he found manufacturing industries were getting fatigued by the constant wage increases they had to give and turnovers upwards of 25%.
it was ping-pong going all over the place. guy: wage inflation second-round effects care. this is something industrial -- second round effects. this is something they will be worrying about your the latest shortage driving wages. we have payrolls coming up tomorrow. are we going to get a gap hein -- between enhanced unemployment benefits ending and people returning to the labor force? we are about to find out whether kids actually go back to school. there are a lot of things that are going to have an impact on the market. i wonder whether tomorrow's report is going to give information as to what is happening. alix: recently we have had some states roll off unemployment benefits and they have not seen that change in the labor market. we will have to see if going back to school full time changes
that scenario as well. let's get more details with someone smarter than me. he is the chief industry economist for bloomberg intelligence. what are you going to focus on? >> what we have to focus on tomorrow is reopening categories that have been significant drivers of activity this year getting as close to that one million per month on payroll gains. if we look at things, whether hotel bookings, restaurant bookings, airfare, we can see there has been not a rollover but activity relative to the prior couple of months. taking last month's number, one third of it was leisure and hospitality. if the delta variant is leading to a dampening of those categories, we could be in for a materially weaker number. motor vehicle sales suggests some pullback and consumer
confidence also suggests a slowdown in numbers. guy: what are we going to learn in the next report? i look at some of the effects you are talking about. i wonder what is going to happen. once their kids go back, are people going to return to the labor force? are we getting more clarity on delta again? carl: with delta, we will see some leveling out. we can see that looking at case counts in the states most affected already, but we are not going to get evidence on the two key themes you highlighted. one is school kids returning to in classroom learning, potentially freeing parents to not have to work remotely or be able to work period and also the enhanced jobless benefits, which have taken a toll on the labor supply and demand dynamic, especially in lower wage sectors
where would-be workers could collect just as much from unemployment benefits as showing up for a minimum wage job. we will not necessarily get the answer to that riddle in august, but i think in september, october we will get more of it. it is going to be a tight squeeze for the fed to rush a decision on this front, especially if we start to see hints of waning momentum. alix: before you go, is bad news going to be good news? carl: potentially if we see fading of labor market momentum. it could shift expectations of when the fed taper would happen. i know a consensus view at the moment is the statement in november and then tapering starts before year end. if we start to see a month or two where the labor market gains
look like a shadow of what we saw during the summer months, not rolling over, not recession territory, but to make that substantial further progress that the fed wants to see we need to see robust job gains, 600,000 or better over the next several months. if we are not seeing that, discussions could start to shift at the start of next year, not rushing it in december. stocks definitely respond to the news even more so. if there is a hint that the taper could be delayed, i think you will see a reaction in the stock market. guy: it could be a bumpy day tomorrow, looking forward to the coverage. what should we be expecting, what is happening in the labor market now? let's get more insight from a zip recruiter chief economist, joining us now. what are you expecting? we have seen good numbers over
the last few months, but there is a lot going on in this month's data and we do not know what is going to happen with kids going back. >> covid cases rose fourfold from mid july to mid august and we have not seen the same response we saw. unemployment claims show initial claims have fallen. it is not a wave of layoffs taking place. people are defying delta and going back to normal despite the fact that things are not quite normal. vaccines and masks are a game changer and people are taking more targeted responses to the virus, going to weddings, getting on planes, and sending kids to school. alix: i mentioned earlier about the manufacturing sector, where it seems like people are jumping quickly from job to job because pay raises are coming quickly and the turnover rate is high. can you give us perspective on
what you are noticing on that front in manufacturing or other industries? >> industries that require workers to be on-site are having trouble attracting workers. part of that is because there is an increase in availability of remote work opportunities in other industries like customer service, that many people in on-site industries are looking elsewhere and holding out for remote opportunities. it is an attractive option for workers. 55% on our site say they would prefer a remote job. employers are going to need to compete on pay to attract those workers. guy: there are some who have been using enhanced benefits that have been available. what is the gap between those
enhanced benefits falling off and those people looking to get into the labor market, getting into the labor market, and securing a role? what is the time lag between one and the other? >> the thing in the labor market always is jobseekers have different motivations. some people see benefits ending next week and started looking months ago because they did not want any gap in pay. others have managed to build up savings. they say i could stay out of work for another 4, 5 months before i need to start working. it is going to very -- vary and that is a good thing. when you have tons of people looking for work at once there are congestion effects and it is more difficult for each person to find a job because they are competing against each other. i thing we will see slower return of jobseekers.
that will probably be better for workers. they will maintain that leverage . alix: we keep hearing from ceos we talk to that there is this labor shortage. do we actually have a labor shortage or do we have a labor shortage at the wages companies are willing to pay? julia: the issue with that terminology is many think it should only be used in cases where there are structural reasons why you do not have enough workers with the right skills. for example, in a nursing where we have a limit to the number in nursing schools. there you have a shortage because it takes time to train people. when you look at pilots, the training pipeline is fairly long. there we may have a shortage for a while come until we open up
school slots. if it can be solved by a wage increase, it is a supply and demand issue, not a shortage at all. when employers offer signing bonuses, tuition assistance, and things like that, they are getting more applicants, so it does work. they also get more applicants when they offer greater flexibility's on schedule and where work is performed. this is a huge range and that captures the uncertainty that has plagued the economy since the start of the pandemic. i am optimistic about tomorrow's numbers. so many schools have opened in person and have brought back a full consummate of staff, teachers, admin staff, school bus drivers, janitors, and some
have gone further. they received so much funding from the covid relief bill many have brought on additional staff to help bridge the learning gap. we could see huge numbers there on the state and local education side and the private education side. we have all seen the huge crowds at concerts. on super court are -- zip recruiter, we have seen jobs and travel even despite the pullback with delta and reopening industries that do not yet show signs of laying people off or slowing down new hiring. alix: we love having you on for the inside track. thank you very much. coming up, down and out. california's orange county may be falling out of love with ray dalio. this is bloomberg. ♪
ritika: this is bloomberg markets. i am ritika gupta. coming up, the ceo of bm technologies. this is bloomberg. ♪ ritika: let's check in on the bloomberg first word news. a law on abortion in the u.s. will stay in place for now. the supreme court refused to block the law. maybe paramount pictures waited 35 years for top gun's sequel. the opening has been pushed back to 2022. there are concerns that the coronavirus will hurt the movie theater business.
paramount also moved the pamir of another tom cruise film to next september. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than globe bravo -- 120 crunchies. -- countries. alix: i re-watched the trailer for top gun. it looks good. that is my type of movie. guy: what is not to love? the first one was great, which is my only concern. the second one has a lot to live up to. there is a point in my life where i could deliver a lot of quotes from that movie. alix: you can still do that. guy: in a sad way, i am sure i can come along with most of life of brian. another mission impossible has been delayed as well. which is a huge shame. it does not look like we are going to be fully out of the
woods, so some opportunity to see some fun movies i think would be welcome. it looks pretty good as well. alix: always look on the bright side of life. let's get to a top story here. a california county is considering whether to drop ray dalio's hedge fund. this is great reporting by bloomberg. underperforming for 16 years. walk us through the story. >> this has been since 2005. this is over a span of time. bridgewater manages 175 million pensions, so it is not enormous but the question remains is if they are considering this are other pensions also considering this? what does this mean for other
macro managers which have faced similar troubles over the past couple years? guy: how quickly would that happen? say the pension funds decided that was the way it was going to go. how quickly could this unwind? >> fairly quickly. it takes time to get money back from hedge funds. if you are a big pension fund client, hedge funds, other asset management's do everything they can to make you happy, maybe make concessions on fees. there are a lot of things you can do to keep a client around, especially as bridgewater is one of the most famous in the world. it is a competitive time for hedge funds at a time when people are worried about the markets, looking for yield everywhere they can get it. they are focused on fees and this is not a bad time for hedge funds overall. it is a time where they are raising money. the idea that macro hedge funds
as an asset class are up 6.8% this year but equity hedge funds are up almost 12% this year makes you wonder where investors will choose to put money because they are thinking long-term but yearly performance is tilting away from a lot of macro funds. alix: is that the bottom of it or is this also still there is no alternative, hence you are going to see more pension funds, hence even more equity funds, which reinforces the cycle? sonali: in theory if you are seeing other macro performers not do well and you are doing well this is the time to step up, talk to your investors, and show them your numbers. there is an opportunity if you are outperforming in a space that is not doing well, but this has been since 2005 for bridgewater, so one year is never going to make it or break it for a hedge fund.
sometimes it does come up but performance over that big of a span of time is where questions start. guy: we heard the norwegians recently with wealth funds. how has the allocation changed? sonali: it is a great question because equities are doing so well. we had that comments today about questions over bond fund managers, the inability to not just find outperformance but also find managers who are outperforming. that is the question here. if you are a big pension fund, you are already invested a lot in fixed income. if you are paying somebody to invest in fixed income for you, they better be giving you something you do not already have. the business of money management today is interesting. divergence creates an opportunity particularly in
equity, but managers certainly are trying to raise personally. i have heard people who manage $300 billion at a time go around the country to sell their pitch. that is how competitive it is. alix: there is currently a press conference underway with new york governor kathy hochul as well as senator chuck schumer from new york and bill de blasio also speaking right there. de blasio is saying that nine new yorkers died in the storm that hit wednesday night. he said it was unlike anything we have seen before. hogle said she has spoken to president biden, whose offering assistance. currently, activities going to shift from coastal areas to some of the streets. there is limited service on subways and this should come as no surprise but chuck schumer is taking the option to say that this shows they need to past
guy: we have not talked about china yet. we should probably correct that because there are things happening there we want to pay attention to. first, the continuing onslaught against big tech. this time it is ridesharing companies that have been hit. two things caught my eye today, one of which is we are stirring to see an increase in stimulus for small and medium-sized companies and beijing wants a stock market in beijing, not shanghai or elsewhere, designed
to support small and medium-sized companies. feeling really german to me. this is what the germans have done. this is the core of german industrial strength. it looks like china wants to go down the same road. alix: which is interesting because you have seen investors move out of chinese tech companies into u.s. tech companies because of that. the broader implication is, if you are not going to have a china that is as dominant in the world as we thought and interconnected as we thought, what does that mean for global growth? what does that mean for trade? it looks like financial isolation in some ways is going to happen. guy: i think there's going to be a greater reliance on china, but it does not mean china's want to be less of a global player. it just means the accounting's by which it gets there could be different.
germany has a different model from the anglo-saxon model. it does not mean it is less of a force in the industrial world. alix: no, but it means there are going to be pockets in the economy that are not going to grow in the same way. we see manufacturing for germany is the upper former. it could be a huge game changer. there has been underperformance in some ways because of it, but as someone wrote today, do not battle beijing. i thought that was insightful. guy: what about the ecb? we are going to talk about that next. a former ecb chief economist is going to be joining us. a lot of things happening. our the hawks in control? -- this is bloomberg. ♪
europe. this is bloomberg markets: european close with guy johnson and alix steel. guy: thursday the second, 30 minutes to the close. inflation continues following a hot number. a former ecb chief economist is going to join us this hour. the european medicines agency says there is no urgent need for widespread covid-19 booster shots but authorities should prepare for them to be administered. no shots, no problem. a ceo says staff who do not want vaccine -- the vaccine can apply to work from home. let's look at where we are with equity markets.