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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. So here's the latest.

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Speaker 2: Investors are waiting a slew of jobs data this week

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Speaker 2: that could determine the fence path forward. Neil Data of

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Speaker 2: Renmeg has been saying the fedest late on cunning rates,

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Speaker 2: and he's worried about the labor market. He joins us. Now, Neil,

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Speaker 2: welcome to it. Back to the program, buddy. I want

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Speaker 2: to start with Friday and ask a question I've already

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Speaker 2: asked this morning, So I'll ask you twice. How bad

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Speaker 2: does that number need to be on Friday to open

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Speaker 2: the door for you to make it your base case.

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Speaker 2: They're going fifty.

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Speaker 3: Well the way the rest of the street is talking.

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Speaker 3: It sounds like it needs to be pretty weak. But

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Speaker 3: you know, I think that that's part of the problem, right,

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Speaker 3: because you're almost talking yourself out of going fifty when

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Speaker 3: the data up to this point are already consistent with fifty.

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Speaker 3: So I think, you know, I thought the FED didn't

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Speaker 3: want to be data point dependent, and that seems like

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Speaker 3: what they're doing right here.

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Speaker 4: So you know, I don't have a good sense.

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Speaker 3: I mean, I think if you get another uptick in

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Speaker 3: the unemployment rate, it's probably a lot. But you know,

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Speaker 3: at the same time, you know, we tend to overweight

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Speaker 3: the establishment.

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Speaker 4: Survey to begin with anyway, so it's hard to know.

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Speaker 4: You know, we'll see how it comes out.

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Speaker 3: But I think even if the number does come in better,

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Speaker 3: because you know, let's say there were some one off

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Speaker 3: factors in the last month that kind of unwine, what's

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Speaker 3: the overall slope of the data, we already know what

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Speaker 3: that is. It's weaker, right, I mean, if you look

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Speaker 3: at the Conference Boorts labor differential, which was released last week,

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Speaker 3: consumer attitudes about the labor market are deteriorating full stop,

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Speaker 3: and consumers tend to spot changes in their local economies

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Speaker 3: before the data. They know when the pink slips are

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Speaker 3: going out, they know when factories are hiring people, they

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Speaker 3: know when they're help wanted signs in their neighborhoods. But

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Speaker 3: the fact that consumers are telling you that the labor

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Speaker 3: market situation is getting worse suggests that there's still probably

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Speaker 3: a pipeline of weakness that's still in front of us

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Speaker 3: with respect to the labor market.

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Speaker 2: No, you mentioned the Establishment survey. I just wander this

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Speaker 2: Friday for you and from the clients you speak to,

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Speaker 2: are you more likely to put more weight on the

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Speaker 2: household survey given the difficulties that we've been ha ac.

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Speaker 3: Well, I think one of the benefits right now of

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Speaker 3: the Household survey relative to the Establishment Survey is that

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Speaker 3: you know it's about revisions. We just got a fairly

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Speaker 3: significant down revision to the Establishment Survey up to March

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Speaker 3: twenty twenty four. We sort of knew that was coming.

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Speaker 3: But what does that tell you about whatever the peril

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Speaker 3: number prints at in the coming week. Whatever the number is,

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Speaker 3: it's probably going to be weaker in reality, even irrespective

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Speaker 3: of whatever is published. The good thing about the household

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Speaker 3: surveys that the ratios in the job surveyed aren't really revised, right.

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Speaker 3: I mean, maybe there are changes to population estimates, but

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Speaker 3: ultimately it's those ratios, the unemployment rate, prime age employment.

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Speaker 4: Those ratios don't really change.

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Speaker 3: So I think there's a signal in the fact that

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Speaker 3: the unemployment rate has been going up for five of

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Speaker 3: the last six months. It tells you that there's a

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Speaker 3: slackening in the labor market.

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Speaker 5: Yeah.

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Speaker 6: I got to say, there's this question about whether we've

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Speaker 6: overly gotten confident about the soft landing, And I look

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Speaker 6: back at history, and there are only three soft landings

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Speaker 6: where the FED is orchestrated a rate cut coming down

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Speaker 6: from high rates, where you haven't seen a recession. That

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Speaker 6: was not the case in two thousand and eight, two

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Speaker 6: thousand and one, nineteen eighty nine, nineteen eighty one, nineteen

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Speaker 6: eighty nineteen seventy, nineteen sixty, nineteen fifty seven, even though

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Speaker 6: it looked like it was going to be a soft landing.

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Speaker 6: How confident are you that this time the soft landing

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Speaker 6: thing isn't a headfake?

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Speaker 4: Well, I still think.

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Speaker 3: I mean, I think part of what's happened in markets

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Speaker 3: is that we went from pricing in no risk of

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Speaker 3: recession to some risk or recession, and it happened very quickly,

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Speaker 3: which is why we got that sort of hig up

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Speaker 3: in markets, you know, maybe a month.

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Speaker 4: Or so ago.

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Speaker 3: I think I still think soft landing is the overall

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Speaker 3: sort of base.

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Speaker 4: Case, but I do think that the FED has a

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Speaker 4: role to play.

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Speaker 3: I mean, you know, when when I hear people saying that, well,

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Speaker 3: maybe they should string out a bunch of twenty five

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Speaker 3: basis point moves between now and the summer, I think

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Speaker 3: that's kind of ridiculous. I mean, the fact that core

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Speaker 3: inflation is running below two percent. Frankly, if you look

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Speaker 3: at it since last summer, we've been below two percent

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Speaker 3: annualized on a monthly basis most of the time, believe

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Speaker 3: it or not.

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Speaker 4: To me, that suggests that they're already too tight.

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Speaker 3: So going fifty on the first go is not a

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Speaker 3: particularly big risk because we you know that they're way

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Speaker 3: above neutral, and if you string out a bunch of

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Speaker 3: twenty fives, getting back to neutral will take a long time, okay,

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Speaker 3: And that puts the economy at risk in the process

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Speaker 3: because it'd be mean it would mean that you'd be

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Speaker 3: running a restrictive policy stance.

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Speaker 4: In the interim period.

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Speaker 6: Just quickly here, Neil, does this mean that if the

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Speaker 6: FED were to cut fifty basis points and every analyst

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Speaker 6: that I've read says that probably risk assets would sell

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Speaker 6: off immediately on the knee jerk reaction of a fifty

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Speaker 6: basis point rate cut, You'd be saying this is the time.

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Speaker 3: To go buy, absolutely, because it tells you the Fed's

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Speaker 3: trying to get in front of the eight ball. I mean,

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Speaker 3: there's nothing about the economy that the FED knows that

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Speaker 3: the rest of us don't.

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Speaker 4: They don't have an edge like that significantly.

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Speaker 3: This is more about them coming to recognize that's something

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Speaker 3: the rest of us already do, namely that the unemployment

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Speaker 3: rate's gone up and that inflation slow.

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Speaker 2: No dutsa making it easy, nod'sa of remmac Noil, It's

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Speaker 2: never that easy. But we appreciate your take, Sat, Thank

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Speaker 2: you very much. This is complex stuff.

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Speaker 4: It's difficult.

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Speaker 7: It is vital for our nation to maintain strong American

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Speaker 7: steel companies, and I couldn't agree more with President Biden.

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Speaker 7: US steel should remain American owned, an American operators, and

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Speaker 7: I will always have the back of America steel workers.

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Speaker 2: So here's the latest Kamala Harris alone with Joe Biden

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Speaker 2: and her opponent Donald Trump in opposing the proposed takeover

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Speaker 2: of US Steel by Japan's Nippon Steel. Harris catering to

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Speaker 2: the union vote over Labor Day weekend, just one week

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Speaker 2: shy of the first presidential debate set to air on ABC.

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Speaker 2: Henrota Trees, a vader partner's writing, Harris is ahead and

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Speaker 2: the polling nationally, but the electoral college remains extremely tight

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Speaker 2: and continues to favor Trump and the Republican Party in

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Speaker 2: our view, Henrotta joined us now for more. Henrietta, welcome back.

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Speaker 2: We'll turn to the polling in just a moment. I

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Speaker 2: want to start with the Steale issue. First of all,

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Speaker 2: on this issue, is there any daylight whatsoever between the

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Speaker 2: two candidates.

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Speaker 8: There's no daylight between the two candidates, and frankly, there

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Speaker 8: really can't be. I have some really fantastic clients who

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Speaker 8: were asking this question a year ago, where the presidential

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Speaker 8: good candidate is going to be on the yah X

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Speaker 8: versus Nippon Steel deal, And the answer is, effectively, they're

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Speaker 8: going to stay. They're against it for the duration of

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Speaker 8: this election cycle. If anything, you should expect for none

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Speaker 8: of this to be concluded.

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Speaker 9: Until after the election.

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Speaker 8: There's no reason for a rush, and there's no other

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Speaker 8: alternative for any presidential candidate. The alternative of saying yes,

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Speaker 8: I think demand should come in and buy one of

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Speaker 8: the most American brand companies in the Rust Belt before

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Speaker 8: an election cycle is sort of unthinkable. So this should

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Speaker 8: have been well understood and predicted many months ago, if

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Speaker 8: not a year ago.

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Speaker 10: Henrietta though this time next year or January twenty first,

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Speaker 10: after the inauguration. If one of these individuals is becomes

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Speaker 10: inaugurative and then.

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Speaker 5: Bax tracks, how is that.

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Speaker 10: Going to affect them in the future.

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Speaker 8: Well, I think what you need to think about is

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Speaker 8: that the regulatory agencies have the option to go in

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Speaker 8: and study the issue, whether it's DJ or some of

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Speaker 8: the other administration agencies, go in and say, look, what

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Speaker 8: are the cost benefits here, and then either give it

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Speaker 8: it's blessing or not. During that interim, they're going to

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Speaker 8: have to go a long way towards given the unions

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Speaker 8: what they need to the point where they get unions

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Speaker 8: on board.

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Speaker 9: That's the only way that this progresses.

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Speaker 8: So that burden and the onus is really on the

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Speaker 8: company on the pond Steel to make sure that the

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Speaker 8: unions are behind them, and once that occurs, then you

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Speaker 8: have a situation where the deal can go proceed.

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Speaker 9: But it's never going to be you have my blessing.

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Speaker 9: It's either going to be there.

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Speaker 8: Haven't had enough issues to derail this or proceed in

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Speaker 8: the free market society that we live in, Henriette.

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Speaker 10: In Pennsylvania, Kamala Harris said, let's not pay too much

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Speaker 10: attention to those polls. You were one individual that thinks

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Speaker 10: Trump has the edge when it comes to the swing

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Speaker 10: states in Pennsylvania specifically, Why do you think he has

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Speaker 10: that edge even though she is doing the work there

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Speaker 10: and going to places like Beaver County.

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Speaker 8: Pennsylvania has slowly become more and more of Republican leaning,

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Speaker 8: And a big part of my bias towards Biden in

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Speaker 8: that state early in the year was mostly because he's

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Speaker 8: scranted Joe.

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Speaker 9: He was, you know, raised in the state, and I

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Speaker 9: think that carries a lot of weight.

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Speaker 8: Kama Harris is deploying Joe Biden in that area, and

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Speaker 8: I think Tim Wallace goes a long way towards speaking

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Speaker 8: to that demographic.

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Speaker 9: But it's an.

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Speaker 8: Issue where we see the unions play out with the

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Speaker 8: top of the union structure, for example, has strong support

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Speaker 8: for Kamala Harris as the Democratic candidate who has you know,

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Speaker 8: minimum wage issues in mind and is fighting for unions.

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Speaker 9: Joe Biden famously went on the picket line. Kamala Harris

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Speaker 9: has been on the picket line.

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Speaker 8: But then you have the members themselves of you know,

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Speaker 8: the million persons strong Teamsters union, for example, who are

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Speaker 8: very conflicted and they personally support Donald Trump and his

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Speaker 8: brand of politics. So I think it's a harsh disparity

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Speaker 8: between people at the top of the unions and then

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Speaker 8: their rank and file members who may prefer about a

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Speaker 8: different direction. And it's slowly been trending more and more red,

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Speaker 8: getting closer to Ohio, which consistently has voted for Trump

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Speaker 8: plus eight plus nine and is now plus twelve in

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Speaker 8: that state, which is just right next.

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Speaker 10: Door trending read especially in western Pennsylvania. But it has

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Speaker 10: a very popular Democratic governor. Does that not favor Harris.

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Speaker 9: It does have a very popular governor and that's great.

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Speaker 8: And I think Shapiro has been an exemplary speaker on

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Speaker 8: the trail. His speech at the DNC was notable in

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Speaker 8: terms of getting support.

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Speaker 9: But you really have to just keep that trajectory open.

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Speaker 8: What the comp the Hiris campaign is trying to do

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Speaker 8: right now is turnout youth voters. We saw a one

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Speaker 8: hundred and seventy eight percent voter registration uptick amongst Black

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Speaker 8: women in America in the last three weeks or five

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Speaker 8: weeks since Kamala Harris has been the campaign front runner.

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Speaker 8: We saw a one hundred and forty eight percent increase

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Speaker 8: in Latino females registering to vote in.

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Speaker 9: The United States.

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Speaker 8: So it's all about voter turnout in these high urban

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Speaker 8: density areas where Kamala Harris is going to try to

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Speaker 8: run up the numbers and get it on par with

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Speaker 8: two thousand and eight with Barack Obama, who won the

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Speaker 8: state overwhelmingly. So that the trajectory that they're trying to pursue,

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Speaker 8: and you're not going to see that translated to the polls.

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Speaker 9: For reference, all.

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Speaker 8: These new voter registrations, those are not going to be

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Speaker 8: taken up in the polls because polsters are not reaching

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Speaker 8: those new voters. So they also have a higher propensity

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Speaker 8: to vote than somebody who's.

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Speaker 9: Been on the roles for years or decades.

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Speaker 8: So I think that there could be a sleeper voter

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Speaker 8: in Pennsylvania and other states nationwide, which is these new registrants.

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Speaker 9: That Kamala Harris has turned on in the last couple

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Speaker 9: of weeks.

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Speaker 6: When you look at the polls, Henriette, what's the main

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Speaker 6: campaign issue of this campaign cycle.

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Speaker 9: Right now? It's immigration and abortion. Those are the two

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Speaker 9: top issues.

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Speaker 8: When you look at voters and they say it's the

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Speaker 8: economy or inflation, those are no longer reliable data sets

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Speaker 8: because they skew partisan one way or the other. If

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Speaker 8: you like Donald Trump, you think the economy is trash

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Speaker 8: and we're going to a recession.

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Speaker 9: If you like Joe Biden or Kamala Harris, you think

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Speaker 9: the economy is improving.

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Speaker 8: You feel good about your own personal finances, you feel

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Speaker 8: good about your state's personal finances, and you feel like

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Speaker 8: the inflation issue is coming.

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Speaker 9: Down, which it is at two point nine percent.

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Speaker 8: I think that the Federal Reserve lowering interest rates in

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Speaker 8: a couple of weeks is going to be really powerful

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Speaker 8: for that message as well. But you keep having these

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Speaker 8: upticks and fears about recession that keep being unproven and unnarrative,

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Speaker 8: and that is something that needs to resonate with the

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Speaker 8: American voter, but they don't receive that information due to

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Speaker 8: partisan leanings. As a result, the most reliable data that

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Speaker 8: you can look at as an investor watching the polling

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Speaker 8: is where do you stand on immigration and where do

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Speaker 8: you stand on abortion? And that's really what's driving the

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Speaker 8: gender divide, which is outrageous and so big this year.

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Speaker 8: It really is becoming men versus women in this election cycle.

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Speaker 6: So let's put abortion aside for one second. With immigration,

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Speaker 6: what is the daylight between people who are for much

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Speaker 6: more stringent types of rules and those who would like

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Speaker 6: to see a more measured approach. I mean, how much

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Speaker 6: is this really dividing between Republicans and Democrats? And how

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Speaker 6: much does it really room to negotiate.

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Speaker 8: You know, it's interesting, there's not really that much of

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Speaker 8: a Democrats have come very far to the right in

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Speaker 8: their latest bill that was rejected by Republicans in the

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Speaker 8: early part of this year at the request of Donald

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Speaker 8: Trump to say, you know, let's keep this issue front

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Speaker 8: of mine.

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Speaker 9: But Joe Biden has.

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Speaker 8: Introduced and signed on the most extreme executive orders that

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Speaker 8: have more than had a legal immigration since the beginning

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Speaker 8: of this year, and we're now down to twenty twenty

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Speaker 8: levels when he took office. So I think that the

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Speaker 8: Democratic Party has gone far to the right on this issue.

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Speaker 8: It's really a question of whether voters are prioritizing immigration

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Speaker 8: or not. Everybody is pretty much in favor of increasing

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Speaker 8: drones at the southern border, boots on the ground, expanding

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Speaker 8: you know, judges in the area, having a more streamlined

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Speaker 8: asylum process so we can process illegal immigrants more quickly,

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Speaker 8: and certainly compelling Mexico and southern border country nations to

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Speaker 8: improve economic situations in their regions so that they do

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Speaker 8: not have this surge of immigration at the US Mexico border.

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Speaker 8: So I think it's really about who talks about it

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Speaker 8: in what kind of a way as opposed to what

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Speaker 8: functionally do we want to see.

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Speaker 2: Two months ago, Henritta, thank you, Henritta Trece of Vader Partners.

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Speaker 2: The comdown to the US election continues. Let's take the

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Speaker 2: opportunity to get you some morning calls. First up, ever,

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Speaker 2: Core Issi of Granning Southwest to outperform with a thirty

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Speaker 2: five dollars price target the amlyss citing new revenue initiatives

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Speaker 2: said to be outline of the company's investor day of

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Speaker 2: September twenty six. Your second call from Morgan Stanley, lowering

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Speaker 2: his price target on Alphabet to one ninety from two

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Speaker 2: to five, keeping an overweight rating the alyst weighing potential

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Speaker 2: fallout after a judge rule of the company illegally monopolized

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Speaker 2: the search market. We're down there by zero point six percent.

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Speaker 2: And finally Wells Fargo down, grounding Boeing to underweight with

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Speaker 2: a street low price target of one nineteen. The ambless

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Speaker 2: seeing the company's free cash flow peaking by twenty twenty

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Speaker 2: seven as aircraft development costs offset production growth. That's stark.

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Speaker 2: That name is down by almost three point eight percent

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Speaker 2: in early training. That's one to watch at the opening

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Speaker 2: bout Turning to streaming DirecTV customers losing access to ABC

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Speaker 2: and ESPN after the pay TV service and Disney failed

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Speaker 2: to come to terms on a new contract. Matt Delgan

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Speaker 2: of morning Star, who maintains a by rating on Disney,

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Speaker 2: expecting the blackout to be resolved by the weekend, writing,

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Speaker 2: Disney is in the stronger position as it can more

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Speaker 2: easily withstand the loss of DirecTV than DirecTV could withstand.

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Speaker 2: The family of Disney Networks. Matt joins us now for more.

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Speaker 5: Matt.

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Speaker 2: Not the first time we've seen this, and what we

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Speaker 2: do see this is typically around this time of the year.

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Speaker 2: What's different about it this time around, Well.

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Speaker 1: There's not too much different in this one. As you said,

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Speaker 1: we see this pretty frequently. It seems to follow the

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Speaker 1: same playbook, and eventually these things get resolved. The thing

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Speaker 1: that is becoming different is that with the cable bundle

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Speaker 1: is going to change. So although this one might not

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Speaker 1: look different than the past ones, and we expect it

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Speaker 1: to get resolved in the same way, we think coming

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Speaker 1: up pretty soon there is going to be a bigger

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Speaker 1: change to the pay TV packages that these distributors, the

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Speaker 1: cable companies, the directvs of the world get and are

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Speaker 1: allowed to put out there. So although this might not

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Speaker 1: be the one where we see the big change, we

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Speaker 1: do think that's coming.

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Speaker 2: So let's talk about that a little bit more. What

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Speaker 2: would that change as we look like in practice in

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Speaker 2: us to come.

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Speaker 1: Well, right now, what direct TV is looking for is

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Speaker 1: the ability to offer a skinnier bundle, basically not having

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Speaker 1: to put in in this case, all of the Disney

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Speaker 1: family of channels into their stream packages. So they can

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Speaker 1: offer their customers and packages for a lower price.

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Speaker 5: The network providers.

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Speaker 1: Like Disney have been resistant to that because the business

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Speaker 1: model for these companies has been get people forced essentially

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Speaker 1: to subscribe to all of your networks, and that's their

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Speaker 1: best way forward. The thing that's going to be different, however,

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Speaker 1: is that with streaming, there are becoming other ways to

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Speaker 1: see this content content other than through a PATV package,

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Speaker 1: and that's going to actually next year become even more

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Speaker 1: and probably the greatest extent once ESPN, the linear the

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Speaker 1: flagship service the people watch on only TV right now

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Speaker 1: becomes offered to consumers also, So that's the biggest thing

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Speaker 1: again right now it's going out with DirecTV.

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Speaker 5: The other thing that we think.

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Speaker 1: Is a good way forward is what we've seen Charter

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Speaker 1: do the cable company.

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Speaker 5: They did it with Disney last year. They subsequently did

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Speaker 5: it with.

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Speaker 1: Paramount, where they're offering a similar type of bundle, but

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Speaker 1: their subscribers get the stream.

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Speaker 5: Packages of these companies along.

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Speaker 1: With their cable subscriptions or their PATV subscriptions. So those

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Speaker 1: are the couple of ways we think the changes will

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Speaker 1: come and we expect them to happen, even if again

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Speaker 1: not necessarily in this deal and not quickly.

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Speaker 6: Can you zoom out and give us a sense of

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Speaker 6: where this dispute, which is a couple of years running,

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Speaker 6: now sits in this overall shift away from cable to

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Speaker 6: what purportedly should be the new future, which is, we

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Speaker 6: don't know what, maybe another bundle. It just looks a

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Speaker 6: little bit different, but something that excludes the cable companies.

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Speaker 1: Yeah, and that's the thing is, we do think that

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Speaker 1: another bundle is the way to go.

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Speaker 5: The question is who is it that offers it.

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Speaker 1: Is it these traditional PATV providers or do the streaming

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Speaker 1: companies do it themselves? As I mentioned with the Charter deal,

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Speaker 1: we think that the cable companies and the PayTV distributors

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Speaker 1: are the ones's best position to do it. But as

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Speaker 1: far as why it's happening, that is the point is

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Speaker 1: the companies that rely on PayTV, so the cable companies,

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Speaker 1: the directvs, their businesses are shrinking drastically as we see

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Speaker 1: more cord cutting and they need to be able to

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Speaker 1: do something different. One of the reasons we think DirecTV

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Speaker 1: isn't necessarily the company that's going to be able to

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Speaker 1: cause the biggest change is because it has less leverage,

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Speaker 1: in part because it relies on PayTV a lot more,

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Speaker 1: and so it's in a bad position. Like the rest,

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Speaker 1: It's subscriber base is coming down very much, and there's

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Speaker 1: really nothing these companies can do about it because consumers

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Speaker 1: have the ability to go through streaming and they're preferring

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Speaker 1: it in many cases. The difference though with the cable

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Speaker 1: companies versus DirecTV is that they rely much more on

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Speaker 1: broadband revenue than PayTV revenue is certainly for profits, and

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Speaker 1: they also have bigger, more diverse side businesses Otherwise, in

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Speaker 1: many cases, certainly with compact cast, so they would have

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Speaker 1: better bargaining power to drive that change. But ultimately what's

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Speaker 1: happening is PayTV as we knew it or cable subscriptions

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Speaker 1: as we knew them have I mean for many they've

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Speaker 1: gone away.

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Speaker 5: They are changing very much, and so that's what.

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Speaker 1: This ultimately will be about, is that this can't be

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Speaker 1: the same thing year after year where all each side

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Speaker 1: is trying to get the best rates for themselves in

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Speaker 1: an industry that goes on. This industry is different now

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Speaker 1: and it will be much more different in the future,

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Speaker 1: and the business model has to adjust for both sides,

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Speaker 1: we think, and so that's what will happen again, even

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Speaker 1: if we don't think this deal that we expect to

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Speaker 1: be resolved, most likely a boy the time the NFL

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Speaker 1: season serves, which is what we often see, might not

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Speaker 1: be the one to drive the major change that we

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Speaker 1: expect again, probably beginning more in twenty twenty five when

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Speaker 1: ESPN does become available for subscribers through streaming.

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Speaker 2: And then was all over again and again and again. Matt,

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Speaker 2: Thank you, sir Matt Delaghan and bones style just keeps

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Speaker 2: going random, random ramp. This is the Bloomberg Surveillance Podcast,

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Speaker 2: bringing you the best in markets, economics, antient politics. You

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Speaker 2: can watch the show live on Bloomberg TV weekday mornings

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Speaker 2: from six am to nine am Eastern. Subscribe to the

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Speaker 2: podcast on Apple, Spotify, or anywhere else you listen, and

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Speaker 2: as always on the Bloomberg Terminal and the Plume Dog

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Speaker 2: bits this out.

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Speaker 1: Yeah,