guy: friday, the eighth of september. a little bit of a refresh may be going into next week. little stabilization, maybe, not much. has the narrative changed? the countdown to the close starts right now. >> the countdown is on in europe. this is bloomberg markets european close with guy johnson and alix steel. guy: lvmh a heavyweight rising up by 2.36%. luxury beaten up recently. apparently -- buying the stock,

buying the dip, lvmh up 2.36%. alix: words are hard and i say that because it is been a long week and it seems things are slow, trading a little bit heavy and i feel like everything, all asset classes a bit tired. there are a couple things i want to point out. the best performing sector up 1.5%, higher oil prices, consumer excess savings have drained down. is he going to be its tipping point for consumers? that is the conversation which leads me to kroger. the stock is up because there offloading and selling some stores to merge. the other was the reader through from the quarter, higher end consumer spending at other stores, lower and consumers are feeling the pinch.

back to the consumer and that falls out of bet, if we lose the support, what is it due to the company?'look at dollar even. we are all -- right near a record. with the u.n. under pressure, what will be the trickle down? i've ended the board saying the same thing. guy: we also talk about tech the u.s. domain and luxury is europe's domain. health care probably a bigger story for europe with norges overtaking lvmh. the narrative story we have been developing the last hour, has that changed? i think it does apply with what is happening with the luxury sector. you take a look at lvmh the last 30 days.

maybe that is what is providing support today. you go back to your kroger story. i think it was interesting kroger is seeing that because what we got this week was there is a sign that upper and consumers begin to feel the pinch as well and i think that is a big moment. it may be disinflation story is starting to affect everybody and it may be we do not yet continuation on the service side, the strength that has existed they are. lvmh down by 4% the last 30 days . maybe cheap enough to buy. alix: what has changed? to your point apples unveiling the iphone 15th next week. is it the market where it works? this is an interesting bar chart . the largest market cap losses this year. the peak of 2023 since september 7, since yesterday's close. apple has lost 230 billion dollars.

microsoft almost $200 billion and tesla almost 130 billion dollars. the magnificent seven most responsible for the tech gains. is that a part of the narrative that has changed? guy: has a narrative changed? everyone is back off holiday. has the narrative changed? is september well enough to deliver another one? do you feel a shift in the wind? >> i do. i think rick coming to a big shift in the wind because what we have been talking about up until now, central banks and can central banks, how high are they going to hike, how long between hikes, but i think there is an important shift. we are going to talk about can they hold their nerve. every once in a while you see

these pockets of weakness in consumer, weakness in various sectors. the question is are they going to panic cut. i cannot see that happening. i think higher for longer is it. i think it is different. i do not think it is about how high we are going to go. it is much more about are they going to state know, we stay at these levels. then as you say you will have to see market straight around other things. a lot of people are -- the fed will panic next year and cut and i just do not think they do. but i think that is the discussion. alix: from your world, you've got equity market ad nauseam, has the narrative changed? >> i think we are seeing selloff in high data sectors. in europe, we have seen a bit of a change in luxury.

luxury stocks in europe traded at a 90% premium. they already flagged u.s. and china. we have seen this play out in micro data. those are the three biggest markets so it is one company but it reflects in things we have seen. we have seen luxury take a tumble as a result. it feeds into two things we are seeing. inflation rise with higher oil prices and pretty lousy economic data out of the eurozone. if all fees back into central banks. -- it all feeds back into the central banks. will the ecb hold or hike? guy: that the narrative -- has been there shifted since the beginning of september? depot investors has come back and look at the world differently? the higher for longer feels like it is getting embedded more but also the tech

selloff i think -- this is what has captivated markets the last few months. it is been called into question. >> i think from equities point of view there is been a change of this week there is more negative on tech. i think the story has been apple with negative china news like be on iphones. but apple is the biggest tech company in the world. it goes back into tech being overvalued. you saw that chart, one of the biggest selloffs. i think there is edginess going into this iphone 15 and a new product release next week and i think there is some room for tech to sell off. the u.s. version of luxury, especially as yields stay elevated and into the higher for longer but the starting to weigh on sectors. i think tech is one piece of that puzzle on things that are changing. they have been back and forth darlings. some of the haven is sell out of

the wind a right now. it seems the conclusion is yes, things have started to change. this is an unfair question but why not change again on monday? any narrative we create and price action is that in the water as two days. eddie: it keeps changing but there is a heavy focus on equities in the near term. if we do see that stock selloff continue, if we seek weakness in the tech sector, if apple launched does not go to plan, if china targets -- the focus shifts towards equities. we give back to the question of candy central banks keep their nerves. it is continuously developing situation. i think that is what it looks like late cycle. it becomes more volatile. it becomes more uncertain. whether we are headed for a

recession or not, the fact that we're are probably not talking about hiking this us in the world that just more changeable than one were you have a clear path of reit's higher -- rates higher ed of you. guy: soft landing, goldilocks alive and well or are bears back in charge? alix: i do not know and i think it goes back to the consumer. do we have higher oil prices? back into the world of what is going to support the economy which then cracks the soft landing? if either we keep it on track maybe we be ok. i think that is the uncertainty. guy: cpi next week the. -- though. what will that tell us geico cpi next week, i hope right there. you start to see it may be the narrative changing as well. is the risk at the moment -- it feels like we are in a difficult position where we get a series of central banks coming up and

the difficulties is going to be for them. canada was interesting point. if they pause, deep cuts get price next or do they pause and markets believe higher for longer? are we about to find out ? ecb looks like an interesting case and point next week. eddie: ecb situation is difficult because they are seeing slow downs in pmi's and they are exposed in china. it is risky for them. you need -- to get a soft landing you need a glide path. steady for a long period otherwise -- it's all about how the yield curve steepen's. if it steepest via the short end, we are in trouble. if it steepest via the long end, it is a much more healthy situation. it comes back to the yield curve. alix: such a good conversation. i think next week will be interesting. thank you both for staying late.

coming up, more on the question of the day. has the narrative changed again? sebastian raedler joins us next. this is boom. . --this is bloomberg. ♪ s tax with avalara, you don't have to worry about things like changing tax rates, exemption certificates or filing returns. avalarahhh ahhh ahhh ahhh

>> i think the adjustment to the narrative has been happening the past several weeks. you see this in the marketplace. the amount of repricing for future fed funds and the amount of easing the market is taken out. i think the market is shifted but shifted earlier to people except the fact that more than likely will not going to

recession but there may be too many people in soft landing camp. guy: speaking -- has the narrative changed yet again? we're back to school. are we back to different market? sebastian raedler joining us now. do you feel anything changing here? sebastian: global pmi surged at the start of the year because you have the monetary tightening everyone was focus on that a lot of fiscal support, fiscal stimulus in u.s. now drink all the. u.s. pmi back below 50, global pmi rolling over. the rate of change of global pmi just turned negative. alix: we got services ism from u.s. was very good. sebastian: it is more volatile index. the rebound has just brought it back into the line with fading

signal for bmi. they are basically given us the same signal but the pmi that drives asset prices that has driven decompression of risk premium in the market this year and it is rolling over. guy: european equities have been in a range. are we about to break out of the range? sebastian: you're right. growth momentum in europe has rolled over more quickly because you did not get the fiscal support but equities have not reacted because until now they have been supported by the compression of global risk premium. the get u.s. high credit spread. the main drivers of this is -- global growth momentum rose over, it is consistent with around 18% downturn for european equities. alix: since he is saying european market is pricing in 10% earnings per share.

what kind of earnings contraction does that apply? sebastian: i do not agree equities are pricing any contraction so far. consensus still flat earnings next year. if you get a recession in europe, a recession in u.s. will come down more and the risk premium will go wider. we have global equity risk premium. from here earnings will fade, rick's premium go wider, you get some offsetting support. overall i think very little is price off the rally we have seen. guy: what is the hundred 15 -- on the 15? sebastian: no u.s. recession and china stimulus credit spreads go to the bottom of the range, another 50 basis point tightening them 5% upside and if

risk premium so tight already, the upside -- the downside we assume higher credit spread going to 250 basis points to 650 but note every recession last 30 years at a going to 1000 basis points, that would increase the downside to 30%. alix: that would be bad for sure. going to equities. why would not be more downside than to u.s. equities versus european equities? understand downside to come but on a relative basis why don't european equities make more sense? sebastian: i think there be more downside for european equities. alix: become more relative to u.s. market? sebastian: yes because they are more cyclical. more value trade and value trades tend to -- the only think you have to adjust for, european equities underperformed by 10% the last six months, you put

this together we see equities moving lower, european equities around 15% and underperforming u.s. peers by another 3%, 4% because they are more cyclical in the environment. guy: where do i hide? sebastian: we had a client in zürich two days ago, people look at the current yield government bonds and say not to hedge of rising inflation environment but inflation fading and you have beginning growth, that typically is the macro sweet spot for treasuries. treasuries become a hedge against. we like the idea of falling bond yields which means higher bond prices and the equity sector trades which benefit from widening credit spreads on the to staples. alix: without wind up getting hurt if you want a real rollover here and consumer falls out? sebastian: staples, most of his a sector in the market because delta of the consumer spending

on necessities must by definition is low so it drives the sector in a very consistent way is risk premium. very defensive sector with risk premium tightness we have seen the sector underperforms. it thrives on a relative basis in widening risk premium environment and that is what we expect. guy: this is what we heard this week. cartier -- he did not buy your cartier, you buy your groceries. people even on upper and beginning to feel the pinch. alix: kroger backing that up on the grocery level. if we have credit spreads blowout, you cannot help but remember credit spreads go out this much, central banks let it blow out this much or will they be back -- we are not pricing in? sebastian: not much they can do. they can do some if they managed to stabilize the growth but monetary policy works with eight lakh. erase the fed fund rate and we are at the point become every

cycle that they stop hiking and everyone goes that is fine but there is a lag impact and to be number one driver of risk premium is growth momentum. all they can do is ease but that is going to come up with a lag so there will be a period were growth begins and risk premium will move higher, especially from current low starting points and we think that is the main next macro environment coming towards us. alix: your scenario is really rough. guy: alix is feeling quite depressed about this. who cuts first? european inflation problem me ecb will not be able to cut? that's to be scenario were easy cuts before the fed. is that the reality? sebastian: there's an interesting argument to be made. growth meant to weaker.

inflation is fading far more quickly and as u.s. what used to be looking at core inflation rate above 5%. we think the adjustment lower will come from the fed first, they expect they expect patent rate differentials in u.s. so to europe. we know the fed tends to be more reactive and quicker off the mark so expect everybody want to cut in the environment the fed will likely lead the pack. alix: do you buy the first to cut? sebastian: i think you buy the trough in the macro cycle. there's a lot of rate hikes you have to digest, mr. confusing for the clients, i was in asia last week and everyone is asking the same question. why is u.s. economy still so resilient and the answer is you have untimely, unusually early fiscal similars that has delayed the downturn. if you still have digest the rate hikes and losing the fiscal support, then growth momentum we

can's first and the only by the market must believe the macro cycle trough we think is so six must away from here. -- six months away from here. guy: really nice to see you. this is bloomberg. ♪ fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to handle market ups and downs without the drama. personalized advice so impressive your money never stops working for you with merrill. a bank of america company.

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that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. guy: i want to come back to this lvmh story. 28th of july, three days after the company comes out with this numbers, disappoint the markets. he starts buying the stock. he has been buying every since of lvmh.

come back and look at the dates. if he is buying from the 28th, the stock has continued to decline even the material, the magical arnault unable to support the lvmh stock. you wonder whether or not buy the dip is working for arnault this time around. alix: i think it is interesting as to why and at the same time norges the biggest company but the catalysts are so different. lvmh trading on a stronger china that failed to materialize and potentially weaker u.s. that is a weight-loss story. guy: it is amazing to see what is happening in that narrative developed quickly. you wonder in some ways that is a much more longer-term structural story in terms of what of the market is going

forward. they see 10 years of access needing to be unwound -- excess needing to be unwound. if you think you have 10 years worth to be unwound, that is epic. that is a different ballgame. alix: we talk about yields higher. people have the money to put to work or going to be also somewhat insulated. i think the jury is out on that one. maybe not $17,000 watch but may be a $5,000 one. guy: or $2000 iphone. volkswagen getting an upgrade. we talk about how it is what the take the car begin to gear. 52 weeks highs as well. i want to know whether or not european equity markets will finish in the red or the green. it makes a difference. ♪

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guy: it is quite an interesting chart. up until today that it was staying up until today we have had seven days lower. that was the longest losing streak since 2018. if we had been negative today, and we are not, we would be -- we are broken that slowly. volumes are not great. i think people are taking sign and thinking what could come next week. a little bit today. we are up -- germany is flat. i will show you the five day to

give an idea of what the week will look like. five days as you can see. we have been tracking lower. today we have at least finish in positive territory. on the week, we are down 0.8%. he saw that chart a moment ago. longer-term story europe remains in a tight range. let's talk about cyclical stocks. lvmh we are seeing a bounce in it. that stock has bounced. a difficult few days, a difficult few weeks. covestro of 8%. so -- the lantus -- is more about what is happening gain in distaste for an interesting narrative out earlier on and we probably should talk about gas prices at

some point. scientists warning it will have to reconsider where bills cars going forward with -- if europe cannot sort it a the electricity story out create the energy story has a long-term effect. companies are going to go to where energy is cheap. next week, next week will be fascinating. next week has plenty of events. european commissioner forecasts interesting on monday. what we see a downgrade of growth expectations? what is going to happen on the inflation front? u.k. labor data. you're also going to get an interesting read on the consumer next week from two big companies. they are sandwiched around christine lagarde. sales and revenue out on friday. i think those two fast fashion companies will be interesting. take a look at the top line.

look at what they are telling us about what the consumer is doing. ecb rate decision on thursday. that is the main event. the market is pricing in around 40% chance of a high versus a pause. it feels like a coin toss. alix: how do they illustrate a hawkish pause and they probably will have to downgrade or go productions for next year? it will be a communication nightmare. joining us now to break it down sreekala kochugovindan . what is the ecb going to do? >> they have a dilemma on their hand. you looking at activity data it is an irritating and probably quite a looker than they're expecting. they're already looking at contraction. very -- on the other hand if you look at the markets, still very

tight, wage growth, wage pressures and if you break down the inflation components, yes, we deceleration. prices, core services take some time to decelerate. a row dilemma for the ecb and we can see that in the communication we have had recently. the last monetary policy meeting the policy makers agree they will have to signal as the other direction whether it will be higher or lower. there is a lot of discussion within the views. we have had hawkish comments and endorsement of hikes . there is this dispersion of views. you can see that because of the data and divergence there. it will be a communication nightmare. we think they will be on hold but it is a close call. guy: if the market sees a hold,

does it see cuts coming soon? sree: i think it is going to be difficult to cut too quickly given where inflation. this is a common thing for central-bank. the next few months. as data deteriorates, they do need focus on inflation. i think it's going to be sometime before we start to see cuts from ecb or any of the major central banks. the thought it was an interesting comment from the bank of england recently when he talked about the matterhorn's the profile for rates and i think that is quite a good analogy to bear in mind. alix: i laughed because you made guy's day. i was like what is matterhorn? demographics and pictures.

-- there were graphics and pictures. how do they communicate softer inflation with softer growth but not do anything about it? how do they get to have -- have a hawkish policy? a dovish hike? sree: i think we are likely to see potentially they hold open the window for another rate cut possibly in november if they hold next week. i think that will be to hawkish signaling we could get. the focus for that would be the labor market. if we were -- there been talk about plotting inflation or wage pressures against unemployment rates. the curve and steepest of the phillips curve. in europe, the labor market, adjustment in labor market still really early stage we see turnover and perhaps we are not releasing that easing wage

pressure and service sector inflation pressures in europe. that is really the focus i think whenever we hear these high -- hawkish comments then it is that focus on core services. guy: what happens if china delivers massive stimulus? what effect does it have on the european economy? sree: i think we have seen some stimulus from china. we are not expecting 2008 style savior policy from china. i think what we are seeing at the moment china disappointing data. we have seen some tweaks around the policy edges. they have got to some structural problems there in terms of the real estate sector and that rebound people were talking about early on this year that

post zero-covid rebound we have flagged early on this year.. we are seeing that. in manufacturing sector, demand has been week. the rebound we are seeing is in travel and that is something that has spillovers. energy prices and for the region's for terrorism across different regions. we have seen in japan a pickup in gdp last quarter to two part of that was and tourism driving that recovery. it is nuanced story in china. guy: we have the energy factor is about what is happening with the australian strikes. sree kochugovindan thank you very much indeed. mountains matter. maybe we had to go to our big explainer but it is having a bank effect -- big effct.

that is. that is the mountains. this was july we had this graphic. there is the matterhorn. remember the discussion. were going to go all the way across. there are are mountains. alix: guy splaining is important sometimes. equal opportunity. i'm just saying. guy: are mountains matter. european stocks for the week. if i'm honest, quite boring. we have seen a pause. we see what next week brings. i want to get to this gas story. european gas prices jumping a little today. workers in australia beginning a partial strike. we do not get a lot of gas from

australia but people that do have to look elsewhere, japan, etc. what kind of impact that have yet that talk about it next. this is bloomberg. ♪

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guy: you're looking live at the principal room. coming up, neil ferguson and co larry culp joining bloomberg wall street week. this is a bloomberg. guess futures in europe jumping, energy workers at a key chevron site in australia beginning a partial strike. joining us for more on the story rachel morrison. it is not that europeans by a lot of gas from the australians. others do and they're going to have to look at the markets may be europeans usually shop in.

that is the, right? >> that is right. so far not that much disruption immediately but what happens is further down the line as these strikes, partial strike start to impact we see some buyers in the market seeking other supplies which create extra competition for european buyers so it is a shrinking of the global supply market which has a knock on effect for europe rather than any of these facilities directly supplying europe. alix: do you think partial strikes will work and inflicts pain on chevron but not global market which is the point? rachel: it is just think they start with partial strike and then by the 14th no agreement reached they will run back to full strikes which will be a lot more serious and i think the market would probably react more strongly to that. it does put the extra pressure on the company and we know the unions are saying chevron nowhere near where they need to

be to get a deal. this is what helps that over the line. guy: who doesn't buy from this plant? -- does buy from this plant? rachel: mainly japanese companies. it is very hard to get to parts of europe at the moment so as akin to the winter heating season here and elsewhere, though supplies from extra supply start to shrink and we will see the global imbalances and see where the strong demands are coming from. alix: can i switch turbine gears? wind options in u.k. failed to attract any bids, this was surprising because in the middle of energy transition when officer wind seems like a no-brainer, that it not happen. what is happening? rachel: it is really a blow for

the u.k. government and you case become such a huge -- u.k. a huge global market for optional wind but the price for the technology coming down over time , industry has been a warning that is no longer possible with rising supply chain caused and inflation. they knew this is going to be difficult to keep getting the price lower. no projects bid. there is another object next year so the government has time to figure out how to fix this because if not, it is going to be potential into or at lease stalling of what was a really successful industry for the u.k. guy: i was listening to become is coming from investors earlier on the. they are really annoyed by what is happening here. talk about u.k. an average market again. what is the government need to do? how does relations get fixed? what needs to happen in westminster to put this back on

track? rachel: i think the offshore wind industry was asking investors not asking for huge amount more than offered but because of the way the government had set the maximum bit it was too low and the government really needs to accept some of these calls had to increase to get the capacity -- costs has increased to get the capacity built. they knew this was coming and love it too late to do anything to change. people are saying maybe we can overhaul the whole system in which -- a quick fix is just -- to get to stop expecting technology to holding and hauling. on the other hand government might say to the market to get ppa's. from big corporates that want green power. do-it-yourself. you cannot rely on government

subsidies. there'll be an interesting debate the next few months before the next auction. alix: you have to -- de risk that part of it. thank you so much. here's a story we are watching. hong kong's thing record-breaking rainfall. this video is insane. the streets were flooded. force the stock market to stop trading on friday. i feel like a ghost to flash whether -- goes to flash whether, more extreme weather. guy: it is evidence more and more evidence from you compare and contrast the last story talk about energy transition and what we are seeing and the reality around the world. you look at this huge hurricane working his way of the east coast. a look at what is happening with the huge shift see weather in europe the last few days. extreme weather, there's evidence public out everywhere

around the world on the impact it can have. the insurance aspect is going to be interesting to see how that gets reported and what numbers we are talking about. the numbers are tossing up day by day. they are getting bigger and bigger. alix: the highway float was crazy. derisking the new technology and he had to derisk the power purchase contracts. it is a lot that needs to happen to us money coming in. guy: the last bit of it, to bring money in, you have to figure out how you retrofit the road for the new environment. alix: how do you rebuild change, adapt to what clearly is going to be a change environment we are to have to live in. alix: it is like 90 degrees weather there. guy: when we first started presenting together your like i just want to talk about the weather.

it is all about the weather. alix: it is. you converted me. it is about mountain whether. this is bloomberg. guy: guy is right. alix: guy is always right. let's put it out there. ♪

alix: stocks are higher. volume is ok but it feels like we are winding down this week where there was a lot of action. >> here is a lot of action. we have the best stretch of the bloomberg dollar index ever or the longest winning streak on a weekly basis for the dollar index. up eight weeks in a row. we have been tracking it week after week. it feels kinda stout the idea that it is been up eight consecutive weeks in a row.

this week if you take a look at what is happening on the week we are going to see that stocks are lower. s&p 500 down 1.1%, the worst week since i believe august 18 and nasdaq 100 down about the same amount. the vix at 813 handle and take a look at the next act of 100 at a 19 handle so a five point spread. that suggest there could be more volatility i had for stocks especially for big tech stocks . we're going to see the sox underperforming of the week. the chips index down 2.7% on the week. i think that is the worst week since early august so chip's getting hit little bit harder, having a lot to do with apple on the week, down a bit although on the date we have apple along with other stocks higher. we have a couple stocks lower. if you take a look at the next board, we see snowflake up the

.8%. a new bite rating -- buy rating. here is apple and a nice recovery. take a look at the video down 1% -- nvidia down 1%. alix: thank you so very much. here is the other story. i kind of like tennis. we'll misty my finals of u.s. open delayed by almost one hour -- the woman u.s. open final almost delayed by one almost our creed one protester glued his feet to the concrete floor. how do you glue your feet? the crowd was not happy. guy: i think living your feet to the concrete floor is straightforward. ungluing your feet quite hard. alix: it is like 1000 degrees in

new york so this must have made this even more unbearable. guy: i appreciate that. do not think is the other sport -- gymnastics is the other sport? alix cannot probably relate to rugby. rugby probably -- this is what a simple cell could look like or alix steel. the main event, the main sporting event of the year starts tonight. this is the biggest event of the year. americans would not be there. canadians will not be there. i think we're said about that they did not make the cut. the rugby world cup tonight. france, new zealand. these are two amazing teams and when they play, amazing things happen. i do say the french agency expecting 600,000 foreign visitors are going to make the

journey for this test run for the 2024 olympics. the key question are we going to repeat that an avoidance of a repeat of the champions league final fiasco last year. that was madrid versus liverpool. did not and will. i hope they do not have that. i would not dismiss the ball crowd -- football crowd. it is a rugby crowd tonight. it is going to be amazing. alix: alix: i can tell you having just been in france, my husband and i were saying they are not prepped for the olympics. guy: nobody is ready for the olympics. alix: the french cannot form a line. it is a mess of humans. i do not know. maybe it's because i am from new york. coming up, bloomberg "technology". this is bloomberg. ♪

>> from the heart of where innovation, money, and power collide in silicon valley and beyond, bloomberg technology with caroline hyde and ed ludlow. caroline: i am caroline hyde at bloomberg world headquarters in new york. ed: i am ed ludlow in san francisco. caroline: the u.s. opens an investigation into the chinese chips made in huawei. ed: plus with the u.s.-china ban means for apple. we discussed with two guests. caroline: we will check the pulse of the market.