alix: 30 minutes into the u.s. trading day. payrolls, 260 3000 new jobs. the unemployment rate dropped to 3.5%. risk pulls back. stocks and bonds under pressure.

good news for the economy may be bad news for risk assets. samsung reporting results within hours. from new york, i'm kriti gupta. it is fascinating to see the equity reaction. in the last numbers we saw a knee-jerk reaction where it numbers ended up flat on the day because of the jobs story. we are seeing a stronger indication that good news bad news for risk. guy: we are heading into the cpi report but the initial knee-jerk is to sell stocks. it feels like a hot number. you have unemployment down, participation down. those are indications this is a labor market that is not easing up in any meaningful way. it is stronger than expected jobs report.

this is what we have been hearing from our guests. >> it is moving in the right direction. today was solid. you have an economy that is still operating at a good level and you have to keep going. guy: the question of the day, 75 basis points, should we assume that as the next move from the fed? we do have cpi next week. joining us to discuss this is michael mckee. and the great pleasure of being joined by anna wong. what is the sum to five basis points number? anna: 75 basis points hike in november is pretty much sealed deal given how strong the labor reckitt is an that the

participation rate is going down, -- labor market is that the participation rate is going down. kriti: doesn't seem that drastic of a different spirit why is the market reacting so aggressively. michael: the drop was unexpected. it is interesting because you had a big gain in employment and a big drop in unemployment, a swing of 500,000 workers between the two. i have been trying to figure out what is going on is that what we are seeing is companies are trying to backfill employees, vacancies they have had for a while, they be fewer but still trying to fill vacancies but holding on to workers because it has been so hard to find them

they are not letting people go that may be the reason we so that kind of swing in the unplanned rate go down. guy: how are you thinking about this? that's this change anything about your expectation for how the labor market is evolving? anna: i think the labor market is showing cracks what we do see layoffs happening in some sectors that hired robustly during the pandemic. you are seeing transportation, wall street and tech jobs showing. over time that will spill over to the rest of the economy. you have less tech workers, less need for accountants, this will happen eventually. what is driving today's report is really the contraction of the

labor force that we see dropping out of the labor force during as long as labor force is not increasing, this will make the fed's job harder and it is easy for the unplanned rate to drop. kriti: the labor force participation rate, a couple months ago the idea that more and more entering the labor force, the women in particular, was a good thing. do we still want that or do we want labor force her to broadly to decline to create more slack? what is the next step for the ideal market question mark anna: in the ideal you want to see labor forces continue to prepend an level and you want the people to find a job so that there will be less labor shortage.

i think in a not ideal world, what you have is those people willing to come back in perhaps in the fall when we have another out of covid with women living to take care of family members. in that could let the labor shortage continue and that would put pressure. guy: does this tell us anything about the cpi for next week? michael: not really, the two do not line up very well. there is some suggestion there's labor force pressure still out there. still a shortage of labor available to companies but suggesting -- not suggesting we will see inflation come down quickly. they are operating independently , which the fed wants to see, but still high. kriti: talk about the other

nitty-gritty pieces of this report. you talked about the unemployment rate, labor force participation. is there any other metric the market should be watching for when it comes to the numbers. has to be some other indication when it comes to the jobs market. michael: the numbers are interesting to watch, but something like the unemployment claims will be a lagging indicator in a world were companies want to hang onto workers as long as they can and participation isn't rising. i think what wall street wants to watch is average hourly earnings and the other measures of wages, because that is the ultimate problem for the fed if wages -- wage increases get to embedded in the economy. one interesting aspect of today's report is the two biggest categories of job gains

were in health care workers and leisure and hospitality, especially bars and restaurants. it suggests that jobs people didn't necessarily want to come back to our friend the getting filled and those are the lower paying jobs. -- back to our now getting filled and those are the lower paying jobs. guy: does this help us in any way clarified the surprising drop we saw in the jobs openings data earlier this week? i have been thinking about that number in trying to understand what is happening. are we moving past speculative parts of the labor market story? companies were out there looking to have extra workers and now withdrawing those nice to have

positions but they are not laying people off at this point but hanging on to workers what does today's number do to help us clarify the jobs number? anna: the jobs opening numbers were interesting because it showed a lot of job openings are vanishing. today's job report confirmed that the jobs opening numbers does have some foretelling abilities and what will happen in the labor market in the next couple of months. we look at the sectoral changes and found that it is quite similar to the pattern in the sectoral jobs posting change from the jobs data and high-frequency data. we are seeing in today's report that wall street is laying off people.

warehouse workers are being laid off. i think that what today's report tells me is that job openings are vanishing will eventually lead to layoffs rising in those sectors. kriti: something we will keep an eye on. we thank you both for your time and insight. coming up, stephanie ross at jp morgan -- roth at jp morgan. this is bloomberg. ♪

>> i'd like to reach a point where it is moderately restricted. >> i see us raising to a level we believe is restrictive enough. >> somewhere between 4% and 4.5% and then hold at that level. >> had to four point 5% and 4.75% by next year. >> hold until we see inflation get close to 2%. >> you have to understand the limitation of your data and your models but you still need to use

them to base your policy decisions on. >> i anticipate additional rate hikes into early next year. kriti: the fed president saying they expect the hikes to keep coming. the question of the day, is 75 basis points the next decision. joining us now is stephanie roth from ap morgan. thank you for joining us. is 75 basis points the stronger than expected jobs report? stephanie: it is certainly tilted in that direction. we have to wait to see what happens with cpi next week. with the labor force participation ticking down, that is not what they wanted to see. we saw uniformly fed president talking about hawkish narrative and this feeds into that. guy: in terms of where this

leaves us, does this tell us that the labor market is slowing but slowing relatively slowly and how does that change the long-term trajectory of rate hikes? the question is 75 for the next meeting. but if we keep going with these kinds of numbers and the labor market slows, how hard will the fed have to hit it? stephanie: i think slowing slowly is the way to put it. we are still too high for with the fed is looking to achieve. we have gone well above the natural growth in the labor force and we will continue tightening labor market. the 263 is still too hot for what the fed looking to achieve and they will keep pushing and the risk is they go to much. they expect on a planet will rise to 4.4%.

it has only happened with recessions leading after that. on average it has gone on 2.5 percentage points after that. so the odds of a soft landing turn fairly low. we are expecting a recession in the middle part of next year. kriti: it is the key phrase, the slower slowing. i'm curious about why you see this being thought of as a hot number when the number really came up 8000 higher. why is that considered a hot number if you look in the historical basis or pre-covid around 190,000 200,000 is normal

stephanie: there are two things are the number heading into the print that it would miss an parts of it that jobs came in softer and we got the manufacturing soft. heading into the report, he saw the market rallying and the expectations were that it would come in on the weaker side even though expectations were for 255. 263 was barely in line with expectations but still too hot given where we are in the cycle where the fed is looking to go. the labor growth is between 50000 and 75 per thousand -- 50,000 and 75,000. guy: a lot of people are concerned a financial

instability will knock the fed off course, that it will not be able to control the labor market and bring inflation down. what are your thoughts on that? how determined is the bed looking for financial instability -- stability and how much instability would knock it off course? stephanie: they will look at financial conditions in a serious way. they're not looking to ease at this point. if we see any easing in financial conditions that is going in the opposite direction. it depends to some extent what type of financial conditions we are seeing and will take financial conditions very seriously. if we see instability coming with market that is weakening significant, it kind of depends on how things play out.

it is prioritizing the inflation side or the employment side. kriti: does that mean things like quantitative tightening will still ramp up at the current pace given that some of these outline liquidity is becoming a concern. your chris wallace making comments about the market yesterday, comparing the market of treasury liquidity to pumpkin sales on halloween versus november 1. i am curious if you share that sentiment and how the federal reserve should approach it? stephanie: liquidity is poor and that is a concern for the fed, but they will continue quantitative tightening. they want to continue to tamp down the balance sheet. as of now, it is not overly

concerning but that is something the fed is absolutely looking at. guy: great catching up. thank you for joining us. john williams the new york fed has been speaking in that we bring you a taste of what he has been saying. the rate hike case and how high rates go hinges on the data. the fed needs to raise rates to around 4.5% over time. i'm wondering how the first line and second line fit together. that is a very specific target if you are data dependent. the fed is focused on getting inflation down to 2% and sees it coming down significantly next year. u.s. growth is slowing but expected to be positive in 2023. we will not get that recessionary story some are predicting for the u.s.. up next, speaking about etf's.

hitting highs after the present move toward decriminalizing marijuana. details to follow. this is bloomberg. ♪

critical: -- ritika: settling claims by bond insurers by mortgage backed securities for $1.8 billion. the bank says it makes backs 3.2 the third quarter. a show of financial strength for credit suisse after worried

about liquidity. in turmoil weeks at the announcement of a major strategic review. shares have lost more than half their value this year. and a relationship with kanye west taken under view, growing acrimony between west and his closest corporate partner about managing. when estimate makes up of eight percent of sales. kriti: the biggest etf investors jumping 30% after president biden took his first major steps toward decriminalizing marijuana. we saw a massive move in stocks walk us through the etf side of it. katie: this is an area that has been left for dead. it did have a moment of sun and

2020 but years of falling at the congressional level to get the drink criminalization. -- the decriminalization. this etf is interesting because it invests in multistate operators. if he think about the cannabis etf's that have been around longer, they have a lot of exposure to canada. it is 42% canadian companies. so there is a peer way to get exposure. it jumped over 30%. some of that is coming off today but a lot of enthusiasm in this space. guy: not all hs are created equal and will react differently. what kind of news should we be looking -- not all etf's are created equal and will react

differently. what kind of news should we be looking for? katie: it depends on how long the review takes there is optimism but we have been here before and it seemed assets window. it will be important to watch any timeline. the news we got yesterday from the president came to light in the day to impact, you're not seeing the same enthusiasm reflected. that will be interesting to watch, as well as what the options look like around the space usually 30%, you will get some interesting options as well. guy: thank you very much. you can catch the latest etf news at 1:00. a fantastic show. we are going to talk about chip

makers as recession looms. the nasdaq down by 2.5%. we will talk to joanne feeney about her take on what is happening and how serious is the story. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind.

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kriti: abigail doolittle is tracking the moves. abigail: good news is bad news and that is the jobs report. the s&p 500 down 1.9%, the nasdaq 100 down 2.6%. the chip index down 3.8%, even off of growth. yields are higher, stocks down and valuation becomes more expensive. stocks may be down three days in

a row but the first up week in weeks. the second up week in eight weeks. you can see along stretch of lagging in the bear market. we have the best up week in a month for the s&p 500. this year, most of the weeks are to the downside. we have possible m&a action. cvs health heaven its worst day since november 2020 on the news they are an exclusive talks to abide cano health to expand, something they have been doing over the last couple of years. there are some hurdles but investors taking it seriously with cano up. continued weakness in the chip good this is amd, the stock year to date, a couple more months to

go, down more than 55%. sales missing by $1 billion. apparently there is a demand issue that we have been hearing about this for a while and chips are a leading tell on the economy they are in everything we use. the stock is down 40% on the year and could get longer. what does that mean for the market? probably not the broader market. guy: thank you very much. amd releasing and we will get the full numbers. you also got negative news with warning signs that a tech downturn may be longer effects on the economy than feared. it is joanne feeney at advisors capitol management.

how should we read this story? what is your perspective? joanne: we had a hit when nvidia had the negative outlook sometime ago. we are seeing the slowdown on the consumer side. that could spread to corporate and that maybe what is being read into amd's miss the reported last night. we know the consumer spent a lot and corporations spent a lot when they had to get people working at home. we have been looking for that decline. what does this say about the other side of the businesses, both for nvidia and the data center expansion and that sort of thing? there is concern that could be slowing. there is a concern that companies could put off some investments.

kriti: what does it mean for the stock itself, this was the ultimate macro had and you bought commodities and chip stocks and were set for the supply chain crunch story. those are still a part of the economic outlook and yet you are seeing the chips sector make a turnaround. walk us through the investment case or lack thereof for the actual stocks. joanne feeney in both cases, trading at high multiples. they have come down and we have added them for clients in a more progressive strategy. the outlook for the longer-term investor shouldn't be what is going to happen this year. the down tide -- downside is on

the consumer side. the server-side is the most expensive. even if there is a pause, we know that data usage is driving up which requires faster connect -- connections and chips. these puppies have a good growth outlook and we will have consumers cyclicals onto that long-term trend. at these levels, it becomes a very attractive opportunity for the longer-term investor and they should take advantage of it. guy: how should we be thinking about the geopolitical overlay on this? taiwan remains a consistent -- a concern. you have those in washington pushing through fairly aggressive export. if you think about how this will reposition the sector and stocks long-term, what should we be thinking about? joanne: the geopolitical

concerns are new wants to the ship and investing strategy. in the past when we were trying to get the semiconductor industry to new york, they told us they have a lot of factors to consider when choosing a location for a plant. that always included geopolitical risk as well as seismic risk, water supply, grid supply, etc. now we are seeing governments getting involved, with the china-taiwan tensions being the driver of that. we will see more diversification in plants and excess capacity, but for companies, that will be offset by the subsidies and will decrease -- decrease the depreciation cost. it is going to take time, just as it did in the state of new york, years required to build the infrastructure. we always -- already have a lot of infrastructure in arizona,

portland, washington state and with intel moving into ohio and in upstate new york. we actually have a good start in this country. it will not take as long as some people by thing to bring more manufacturing capacity. kriti: that capacity will still take years and years, a 10 year timeframe before that becomes fully operational and able to produce at capacity to make up for the output. i'm curious about what happens in the meantime, in the shorter and middle term how do we make up for the loss? joanne: it really hinges on if the worst case scenario happens, if china invades taiwan.

that is clearly the risk that could disrupt supply. the arizona plant will be up and running in two years and even then, that is just one relative to what they have in taiwan. intel will have that up and running in ohio. if we have a disruption like an attack in taiwan, that will be destructive to the economy, well beyond the chips sector. guy: as we see the stocks come down, where will the value as we work our way through the process of restoring some of this chip production? is it the intel's, amd's -- where am i going to see the maximum value as an investor? joanne: i think the additional capacity could potentially lower

the cost of chips because you will have more supply, assuming there is no invasion of taiwan. chip prices should be softer, whether it is auto, industry, they could get better cost into the products. other beneficiary will be the equipment companies. they will have to end up shipping more products. the chip companies themselves stand to gain because of greater assuredness and their availability of manufacturing. it gives the chipmakers more opportunities to diversify their manufacturing and that is ultimately a good thing. for investors, those chip stocks will be driven by the end market

demand versus where supply is being manufactured. data centers, internet looks really strong over a multi-period. guy: really useful and a lot of perspective. thank you very much indeed for joining us. we have a few headlines coming out. the events taking place at the eu meeting taking place in prague running behind schedule. as it relates to the gas price cap the eu is trying to finalize. the plans to propose several price cap plans. they don't know which one will work but they need to finalize that. the summit will take place at the end of the month. at the moment they are struggling. and we are not getting the details.

there is real concern that if we get a cap, you will see supply going up. lots of plans being talked about. clearly they are struggling to finalize. we will get to the jobs number, certainly an upbeat number for the economy but not so good for the markets. the unplanned rate is coming down there and we are seeing a fairly solid job get. tom gimbel is going to join us and us his perspective. that is next on bloomberg. ♪

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ritika: you are looking at a shot of the printable room. a senior analyst joining us. this is bloomberg. ♪

keeping you up-to-date, here is the first word. the piece cries awarded from ukraine, russia and belarus -- peace prize awarded to those from ukraine, russia, and belarus. president biden worried about threats to tactical nuclear weapons are real and could lead to "an armageddon." he said the u.s. is trying to figure out the russian leader and his nuclear threats. the u.s. labor market appears to be resilient. 263,000 jobs in september, slightly more than expected pit on a planet rates dropped to

3.5%. average hourly earnings rose. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm critical group the -- ritika gupta. kriti: there is one area of provement he wants to see. >> people are still looking for work. we would like to see the participation rate higher. we will have to see what is happening there. kriti: joining us is tom gimbel, the founder of a staffing and recruiting company. i want to start with the story of wage growth. as you are looking to perhaps hire more people, what wages to the have against them in this inflationary environment? tom: wage growth went up 5% and

we see positive upward mobility in that area. what you see when interest rates are going up, the money isn't free for companies. when you see companies leading the way and overpaying salaries and i know there will be hate coming on that one, but when wages increase exponentially in a short period of time, you have to say there is some overpaying and that was coming from tech companies, venture backed companies that had profit and revenue and they were overpaying for talent. what we have seen is as the interest rates have risen, the companies of the first ones that have done layoffs. there are two areas that affect wages. -- of wages that are affected. white-collar salaries and hourly workers for blue-collar and for service jobs. we have seen that to the increase in minimum wage, that

number in the mid-to high teens is here to say. you will not see legislation reverse it and white colored salaries will level off. guy: you have seen the labor market report today from the government. is that consistent with what you are seeing, labor market slowing but only slowly? tom: when you say it is slowing, i think we will have a self-fulfilling prophecy we added over a quarter of a million jobs. unemployment at three point 5%. the participation rate is the only negative which has been for a long time. average hourly earnings have increased. i'm trying to figure out what the problem is. if we were in the perceived end of a bull market, people would be saying things are good, don't worry about it because the fed is raising interest rates and people are scared that interest rates will rise again. now with interest rates going up

and things get too bumpy, they have a lever to pull down to fast-forward the economy. this is exactly how it is supposed to work and we should be thank for we added a quarter of a million jobs and that worried about it. kriti: bulk us to the demographic changes you are -- walk us through the demographic changes. if some people are returning to work, i am curious as to where that is. tom: will be talk about people reentering the workforce, it tends to be women, mom to stay home with kids and had a lot of her covid -- a lot of hangover covid. if the kid isn't allowed to go to school, what do i do? as that covid wanes, as the alarming factor of it wanes and arming able to function at a more normal rate when covid

exists, we are seeing more moms reenter the workforce. guy: yet we are not seeing that. today's data describes women leaving the labor force, not joining p why is that happening? -- joining. why is that happening? tom: inflation is going up and things are costing more and more people want to enter with jobs they want. we have an entitlement society that we live in and the problem is that people want what they want, when they want, where they wanted. as it sets and the wages regress on the white-collar side that comes from layoffs starting to permit eight, -- starting in the white collar sector. they need a reality check that the market is shifting.

you will have to commute for your job and be near the office and go in occasionally. as we see, money isn't free anymore and that is why we are seeing the fluctuations in the market. we will find out that people reenter at a faster pace that we have seen before and we will see that happen. the problem will be is will companies hire at the same pace when people realize the jobs aren't as plentiful? that is the challenge we face great it was the same in 2002, 2 thousand nine and 2010 and it will be the same in 2023. kriti: -- 2009 and 2010 and it will be the same in 2023. kriti: we know that the idea of mental health and flexible work

hours and non-quantifiable benefits are being added to some of these job descriptions. i am curious how that makes it challenging to predict what is next in the jobs market. tom: i think this is where the big disconnect is when the economy is great, all of those things go into play. when the economy is terrible, things go out the window a little bit. remote work, when the economy is great and unemployment is low, people can work from wherever they want. when you see it layoffs and things get hairy, it won't be about remote work, it will be about finding a job. where were the mental health questions for people in 2018 and 2019. that became a hot button during covid when there was a pandemic and people couldn't socialize and now it has lingered on. i think mental health is real and accurate, but to say that the employers of the problem with it and and overloaded workforce is causing mental

stress is ignoring the fact that there was a global pandemic, people were worried about getting sick and leaving their house and has nothing to do with burnout. the big challenge we are facing is remote work doesn't lead to burnout. doing your job and getting rewarded for it financially is what affects our lives. we have been looking for excuses and we are now in this entitled generation societally, and now it is time to get back to work and noticed that things haven't changed. guy: we are definitely not back to where we were before. it will be interesting to see how incrementally that changes. tom: were people unhappy in 2018 and 2019 when it was bigger? do people want to be happy and have a great economy and be

challenged and work from home? it can't have your cake and eat it too. guy: great to catch up. this is bloomberg. ♪

guy: the german chancellor delivering his press conference in prague, flagging some of the risk the gas cap story. talking about the story if we are doing this in europe it has to be coordinated with asian customers. fear is if europe put a cap asians will pay more. that is the fear around the cap story. the european markets, stocks down .9%. euro-dollar flat. the big story, credit suisse up by 6%, nearly 6.25%.

will talk about the european story. the global chief economist will join us. this is bloomberg. ♪

guy: it's a tough day for european equities. we will deal with details next. >> this is bloomberg markets european close. guy: