Strong Jobs Report Revives Fed Rate-Hike Bets

The countdown is on. Everything you need to get the edge at the end of the market day. This is the close. A job surprise throws a wrench in the rally heading into this holiday weekend. Live from Studio 2 at Bloomberg headquarters in New York, I'm Scarlett Fu. And I'm Christina Kino. We're kicking you off to closing bell here in the US. >> All right, with an hour to go, let's show you what's going on in equity markets. You have the S&P 500 down 4/10en of 1% giving back some of yesterday's gains as good news is bad news. That stronger than expected jobs report sending stocks and short-term bonds lower. The VIX comes down to 14. The 2-year yield, you can see up four basis points to 4.37%. Uh this tenor of course is the most sensitive to Fed policy. And dollar yen dollar is higher versus the yen today. The yen had a big big rally yesterday. So this is a little bit of a give back from yesterday's move. Christine. >> All right, Scarlet. Let's take a look at some of the equity movers today. Starting with Tesla. Those shares down more than 5%, nearly 6% at the moment because of a cyber cab launch that was less substantial and more low-key than Wall Street had expected. And on top of that, they're also now facing some investigations from regulators saying and wanting to investigate the data that Tesla used to selfcertify its vehicles. We're also taking a look at Robin Hood shares today. Down just a little bit, 1.3% at the moment. And that is because AMC CEO Adam Aron criticized Robin Hood after the platform launched a tokenized version of the theater chains shares. He called the product quote contemptable and outrageous. Also looking at Fair Isaac, we all know it as FICO. They're down 15% more than 15% at the moment. That is after Federal Housing Finance Agency director Bill Palty renewed his long-standing criticism of the costs of consumer credit scores. And finally, Ludu Lemon shares also down majorly here today. 17 and a half% here on the 8-year low for the stock after the retailer cut its fullear outlook for a second straight quarter. >> Yeah, it's a a bit of a mess over at Lululemon that the new co has to uh clean up. All right, let's go back to the economic data because the much stronger than expected August jobs report has traders increasing their bets that the Federal Reserve will raise interest rates as soon as later this month. Look at the white line. It tracks the odds of a rate hike in September. It's now sitting at 60%, largely rising since the start of the Iran war at the end of February. The blue line tracks the probability of a rate increase in December, and it's now more than one in two odds at 53%. So with that in mind, let's kick things off right now with Julie Beiel. She is portfolio manager and senior research analyst at Kane Anderson RDN Investment Management. Julie, thank you so much for speaking with us. Um, we know that rising Treasury yields is something that the government, the White House has been very focused on. This jobs report does not help out, does it? >> No, absolutely not. But I you know and I think with given all the commentary and the posturing we've heard from the Fed you know everyone was a little bit nervous about where we are ending up with inflation and you know before we had enough softness in the job market that people were concerned that might be going away. Now there are particulars about this report that make me think we need probably another month or two of data in order to really draw strong conclusions. But I think from here what's really important to recognize is that yes, the Fed is really important at the front end of the curve. But what people really care about is the tenure and beyond. And I think that's really much more a function of the longer term impacts of inflation and deficit spending. >> Absolutely. And what we're seeing when it comes to the economy, the real economy, is that there's an affordability issue and consumers are definitely being much more selective about how they spend. When you look at the decliners in stocks today, the biggest group decliner is consumer discretionary which includes retailers, homebuilders, and automakers, how do you go about looking at consumer stocks in this kind of environment? >> I think the most important thing is I feel like everyone is doing a lot of shortorthhand that says I don't want any exposure to the low-income consumer because they're the most negatively impacted by what's going on with inflation. And I think at a broad level that's true, but then why is Hermes's stock down 27% over the last 12 months and Dollar Tree is up 27% in the last 12 months? To me, that's really a function of how well each of the retailers is able to deliver actual value. It really doesn't actually matter what level of income stream. What you need is for customers to come into your store for you to execute well enough that you go in there and you can recognize, wow, that's a good that's a fair actually not even good. That's a fair price to pay for something. That's all we're really looking for. We're so value starved. So, I think it's a little bit lazy to just say I don't want exposure to the low-income consumer because we know that retail sales are broadly holding up. It's just they're being much more selective. Just ask Lulu. >> Yeah. Well, that makes a lot of sense. Of course, in this environment, Julie, I mean, a lot of consumers, whether they're high income or low income, very much focused on inflation and costs at the moment, and one of your arguments is that we have lost some of that technology-driven inflation that has previously kept a lid on prices. Where do you see the inflation story developing from here? Do you think it's going to be a structurally higher era of prices from here? I you know I think it's really hard to have any kind of strength in predicting because one of the larger inputs in terms of oil prices and what that means for transports and supply chains that is such a major question it's really hard to pin that down and what's difficult is that for decades we've really relied on technology to put a lot of downward pressure on inflation. You and I don't feel it because the iPhone price is pretty much the same or goes up. But, you know, the way that we calculate inflation is how much more bang do you get for your buck? And we do technically get a lot more bang for our buck. Although, it just feels like it's just better pictures, but that's neither here nor there. But I think the real function is that we've really relied on technology for a long time to put downward pressure on prices, and that's going away given all of the supply constraints that we have for the AI data center buildout. So, I do worry a little bit if it's going to be even harder now to hold prices down. >> Yeah. And definitely certainly a difficult task for the Federal Reserve on that very issue. Julie, I mean, given all the inputs that you've highlighted into inflation, we're talking about energy prices and also some of the technology uh driven dynamics there. Does that just make the Federal Reserve's job much harder here because they're using such a blunt tool as interest rates? >> Yeah, I think that's right. And I think that's part of what Chair Wars is trying to orient everyone towards is that that they don't actually manage interest rates by themselves. the bond market actually has a much much bigger stick to whack everyone with. And I think that that's an important distinction. You know, part of the struggle that we've all had is, you know, we really enjoyed getting the answers to the test in terms of all of the Fed forecasts and all of, you know, all of the yield curves and everything that they gave us ahead of time so that we would know where they were going, but it does pigeon hole them in a certain to a certain extent and it it reduces how data dependent they really can be in terms of having discretion to make moves. So, I understand the desire to move away from that and let the bond market do more of the talking, but I do think that that's a very big change after what we had before. It's not that easy to give that up. >> Absolutely. Um, a different era, so to speak. I want to get your thoughts on AI. Before we let you go, Julie, um, September is going to be a big month of issuance once we get past Labor Day for all kinds of companies, but in particular the big tech companies. How are you anticipating big tech to raise money in the latter half of September and what will that mean for how you hold their equity or their debt? >> I yeah, I think we have to continue to we're seeing more and more fragility entered into the AI trade in terms of the sources of funding. So before when it was cash flow, I think all of us felt just fine with letting these guys who have been molesting our privacy for years spend as much money as they want supporting the economy. It's a little bit different when we start to go into more fragile sources like debt and into equity issuance. I think there is a little bit of a concern particularly given how unevenly SpaceX has been trading on what happens when we get these massive equity issuances from either new companies or existing companies as Google did. To me, the bigger concern that I have is we don't understand a lot of the underlying economics of many of these businesses. And because so much of the Magnificent 7's revenue is tied up in two private companies with uncertain economics, we do have a certain dependence on them. And so getting that information is going to help us better understand how the whole ecosystem works. But I worry that we're not going to like what we see. >> All right, Julie. Thank you so much. Julie Be, portfolio manager and senior research analyst at Kane Anderson RDN Investment Management. Coming up on the close, the labor market firing on all cylinders in August. We'll discuss the economic implications of this surprise surge in job growth with Diane Swank, chief economist at KPMG. Plus, from one estimate B to another, the CEO of Zcaler joins us live on the heels of the cyber security company's earnings. He will reveal the two major challenges AI poses to enterprises and where the growth opportunity lies. And it's back to school season as families grapple with the rising costs of higher education. We'll bring you a conversation with Michael Stiper, president of Sunni Purchase, a public school just north of New York City. All that and more coming up. This is the close on Bloomberg. The US added 162,000 jobs in August with the unemployment rate holding steady at 4.1%. The growth in August topped all estimates in a Bloomberg survey and also bolstered the case for a rate hike by the Federal Reserve. Joining us live to discuss all this is Diane Swang, chief economist at KPMG. Di Diane, thank you so much for joining us Friday before Labor Day weekend. But we got to talk about this jobs report. I mean, big beat in terms of the headline number and then the unemployment rate staying at 4.1% revisions as well to the previous figures. A lot of noise in this data, but what is the signal for markets here? >> Well, there is a lot of noise in it, but I think underlying if you look at the three-month moving average, it's still stronger than it was. We did lose some of those Haitian temporary protected status workers, but it looks like most of those job losses occurred in June and July. So that was probably some of that weakness. We lost 75,000 jobs in leisure and hospitality in those two months and then got 65,000 back in the month of August. We also recouped the teachers that we had lost in July. Hard to seasonally adjust. They came back in the month of August as well. But at the end of the day, that 4.1% unemployment rate with a higher participation rate. Finally, it's the highest participation rate since May. That was good news. So, it was a 4.1% stable rate for the right reasons. And I think that's good as well. It's not a perfect job report underneath the hood. The good news was that the underemployment rate actually fell from 7.9 to 7.7%. But the length of unemployment for those people who don't have a job, that stigma is still there. They swelled to 1.9 million from 1.8 million in July and the duration of unemployment went up by a week for those long-term unemployed. So, you know, this is still a job market that overall is lower, low fire economy and not enough churn for people to feel good about. That said, at 4.1% that already is an unemployment rate that Kevin Moore said at Jackson Hole was what the Fed considers full employment. >> Yeah. Well, yeah, very interesting contrasts in those unemployment numbers. I want to take a look at the wage growth as well. I mean, that looked particularly contained uh in this latest set of numbers, although we are seeing pockets of labor shortages and stronger wage pressures and of course uh Fed Governor Christopher Waller pointing to inflation in general as a key signal for the Fed come September when they meet here. So, what's the takeaway there uh from the labor market in terms of the overall inflation outlook? You know, this is one of the things that was really interesting in the Beige Book and in the National Federation for Independent survey as well in the ISM manufacturing and services surveys. We're starting to see those pockets of labor shortages and they are pockets. There was even one quote in one of the surveys that said, you know, they're in Texas looking for California wages and they can't hire low-wage workers. Um, that's what happens when there's curbs on immigration. But I think it is important to understand that we saw in the leisure and hospitality sector actually as they tried to replace those workers that's where wages accelerated and that's in the service sector. So even though low and middle inome households are really feeling the pain from higher inflation and its compounding effects over five years there still are these pockets out there and that's you know boying the service sector inflation in the healthc care sector. We saw that kind of hiring slow down and then that reflects again them not being able to bid and compete in some of the low-wage areas and that's pushing up costs as well in the service sector. That's what I'm worried about and that's what hawks at the Fed are worried about is sticky service sector inflation on top of continuous shocks. We're seeing sort of the cost of transportation pick up where tariffs left off and threats of new tariffs out there. We've got a trade war with Canada coming up next week. Those are all things. It's not, you know, harder on Canada than it is on us. But at the end of the day, all of that is going into more inflation in a world where inflation's already been too high for too long. >> I appreciate your bring up the temporary protected status workers um such as those from Haiti and also, you know, these specific uh factors that we need to consider in this jobs report. I want to talk about AI, the impact of AI and whether you see it show up in terms of job creation in certain industries or in displacing workers in other industries. What are you seeing? >> Well, you know, there the in the information sector, we have seen, you know, since 2022 when chat GBT was first in uh introduced and announced, we saw declines in information technology in the technology sector. That was also the one year that the tech sector lost some of their market cap. So we saw layoffs. So correlation is not the same as causality. But the fact that the information sector, everything through publishing, streaming, all of that is affected in part by AI, but also in technology, that's where they're able to use more experienced programmers rather than the numbers of programmers. And they have um shed a lot of computer programmers in the tech sector. But outside of that, we've not really seen much. Now, that doesn't sway new graduates because the new graduate unemployment rate, the gap between that and the overall unemployment rate is high. It's more like the early 2010s and they are for better or worse scapegoating AI. I don't think AI is taking their jobs. I think it's more right now the residual of a low hire, low fire, low churn labor market. We've just never seen anything like this. You can't get your foot in the door and get a new opportunity. And that's understandable that they're frustrated. That said, 89% of new college grads now blame AI for them not getting a job. And AI uncertainty in the business sector may also be playing a ro a role, but I don't see that yet. We can't find the sort of evidence of it yet in the overall labor market. >> Diane, before we let you go, a quick question on how it is that economists got it so wrong. The print was 162,000 jobs for the month of August. That was three times the consensus estimate. The highest economist estimate in our survey was uh 125,000. Is there anything specific to the current conditions that makes it difficult for forecasters to read the labor market? >> Everything to be honest. I'm a labor economist. I've never seen anything like this. And you know, August is historically a month that is revised up and the initial report is really, really weak because the seasonals are really hard. and that didn't happen this month. Now, maybe it will be revised up even higher and we will see an even stronger 3-month moving average rate. But what I think at the end of the day is the Federal Reserve has already decided that this is full employment whether we like it or not. They're measuring to the aggregates even though individual households are suffering and that's why you see consumer attitude so weak because inflation is a tax and it is a regressive tax that is hurting too many and it's time for the Fed to deal with it. So my own preference of course is that they do actually raise rates. I know that's not easy and I know the pain is hard, but as someone I've told you this before, I'm a cancer survivor and I know you don't want and I likenflation to cancer. You don't want it to metastasize and the cure can be extremely painful, but it's better to have a cure than let it metastasize. >> Yeah, absolutely. And all eyes then on the inflation data next week. But Diane, thank you so much for your time. Have a great Labor Day weekend. That was Diane Swank, chief economist at KPMG. Coming up, Adobe and Oracle are set to report earnings next week. We will preview both of those names with Brent Threes. When we come back, this is the close on Bloomberg. Time now for our top calls and look at some of the big movers on the back of analyst recommendations. And let's begin with Lululemon. Morgan Stanley cutting its price target to $83 from 93 on the back of disappointing results from the athleisure company. The firm maintaining an underweight rating on the stock, writing, quote, "The outsized guidance cut lowered the bar meaningfully, but we don't think the reset is done." The shares now down 18%. Next up is SiriusXM. Deutsche Bank boosting its rating on the satellite radio stock to buy from hold, citing its underappreciated partnerships with Amazon and YouTube. The analyst saying these relationships should boost growth for the name, raising the price target to $45 from 31. The shares down about 2%. And last but not least is Amberella. Craig Hallum downgrading the chip company to buy from hold following its second quarter results or I should say uh downgrading it to hold from buy. The price target cut to $70 from 95 with the firm saying supply constraints around memory chips quote should have an impact on Umbrella's unit demand. And we have worries about how long this will last. The shares up 1.2% and those are some of our top calls. Now, let's stay with tech. Adobe and Oracle are set to report earnings next week with AI in focus for both companies. Let's bring in Brent, tech sector leader and software and internet research analyst over at Jeffre. And Brent, I'm going to start with Adobe um which announced yesterday naming a new CEO, an internal candidate. Anil Chakravari will become president and CEO effective December 1st. Just give us your take on this decision. Was this a good call? >> And Neil is a great leaner. I think that no one had bet on their bingo card. Everyone was betting that uh Dave Wadwani who ran threearters of the business at Adobe had been there for a long time had been CEO prior was going to be the pick. Uh so I think the streets disappointed. The stock's obviously off 6%. um he is a good leader but certainly isn't in our opinion the dynamic leader that that Wadwani uh is and so it's unfortunate that you lose a great athlete like Dave Wadwani uh to leave the company going to uh his next pursuit so I think you know the street is obviously you know they're just quite frankly bummed out uh at the decision and my personal opinion is I think the Adobe board needs an overhaul Paul, I think everyone on Wall Street feels like they could have they could have put a little more excitement into this pick. I think uh you you've seen it just repeatedly. Um you know, there's just there's a there's a lot to to be said here. It would take a long time to go through it. >> All right, Brent. And of course, we have Oracle reporting next week as well. Well, another story there is of course growth uh which could exceed already huge expectations but what does the company need to deliver on those expectations and for this AI infrastructure story to keep working? >> Oracle's massively underperforming its peers Oracle, Google, uh Amazon, all all the all the top hyperscalers. And the there's a couple fears. One is the debt. They have 130 billion in debt and 30 in cash, 30 in cash flow. So 130 3030 everyone's like the debt load's too too high. Second you know it are things with open AI good right it's the largest percent of their backlog. So if OpenAI does well that I think Oracle's stock has been tied to the success of OpenAI and obviously with Enthropic showing incredible numbers in the enterprise and there's been a lot of change recently at OpenAI and their leadership and their go to market everyone's asking you know what's going on what what's happening so you've got the open AI hangover. Uh third is you know they're transitioning from a high margin business to a lower margin business and infrastructure and what is this going to do to the business model? Um, you know, bottom line, we we like the name. There's a lot of concerns. Larry Ellison has done a great job uh through many tech cycles that we followed him in. And uh one of the great books called Soft War, which is a book about Larry and the success of Oracle. This book is 20 years old. Larry said, "I like it when people think I'm nuts because that means we're doing something right." And right now, a lot of people think think that he's nuts. They think he's nuts what he's doing in transitioning this from a really high margin business to a low margin business towards AI. And so I think there's a lot of concern. >> Yeah. >> Uh and again there are there are better executing stories. So what we've said is they're going to be among the top five building this AI infrastructure. They're just not in the top three, right? Amazon Google. >> Yeah. >> And um Microsoft are in that. >> All right, Brent, thank you so much. Brenth, a tech sector leader and software and internet research analyst at Jeffre giving us an glimpse into what we might expect from Adobe and Oracle next week. Coming up on the close, we're going to stick with tech because the CEO of Zcaler will be joining us live to break down the cyber security company's latest results. This is the close on Bloomberg. It's about 3:30 p.m. in New York. This is the countdown to the close. I'm Scarlett Fu. And I'm Christina Aino. Shares of Zcaler, they're down about 6 and a4% today, even after beating top and bottom line estimates for its fourth quarter earnings. The CEO, Jay Chowry, flagging the impact that AI is having on the cyber security sector, saying on the conference call, quote, AI is quickly becoming the largest tailwind we have ever seen. He joins us now. Jay, thank you for speaking with us today. on the close. You call AI one of the biggest opportunities in your company's history. I'd like you to just start by expanding on that because there's persistent investor fear not just about cyber security but software overall that AI will make parts of traditional software obsolete. Well, first of all, AI is the biggest opportunity because every CEO, every CIO, and many of the boards I talked to, they all want to take advantage of AI for two reasons. Productivity on one side, cost savings on the other side. What's holding them back is fear that these new AI models like Methos of World will create vulnerabilities that they could get breached. Number two, they're also worried that the application they put in place, they get hacked or hijacked. So they're looking for companies like Zscaler to protect them and that's why we have so many engagement with customers. Our our business for security for AI is growing rapidly and we're very excited for the opportunity. There's no such thing as AI is going to minimize the need for security. In fact, it's just the opposite. So does AI ultimately expand the amount of money that companies will spend on cyber security or does it consolidate that spending around fewer vendors? >> So first of all the AI sorry first the spend on cyber is growing. Absolutely it is growing. That's number one. Number two, customers look for vendors who have innovative solutions who can consolidate point products in a platform but not in a smorggas board of so many products by buying companies and not doing integration. Zcaler has always focused on offering a platform of functionality. For example, we started with zero trust for users for branches cloud workloads and now we're doing for zero trust for agents. Imagine billions of agents in enterprises. They need to communicate. They need to access information. How do you make sure they don't go rogue? Those are the problems customers talk to me about. And we got some wonderful highly differentiated solutions for that. >> Yeah. Well, one of the interesting found findings that I um saw here was the fact that more than 90% of organizations that Zcaler has assessed had AI assets exposed to the internet. What does that tell you about companies deployment of AI? Are they deploying it faster than they can secure it? >> They are deploying faster and some of them experimenting. For example, number of the assets we found was MCP servers deployed out there. They are exposed. So they want to do something. But what's even more alarming is a third of them could be exploited. They had vulnerabilities. So we are going and engaging with customers to show them what assets do they have from AI point of view. How ex how much exposure do they have and how can we hide those assets behind Zcaler zero trust exchange remember if they can't reach those assets they can't breach them. So one of the big value we bring to the table to our customers that others can't bring is hiding your applications and attack surface which gives wonderful security. Yeah, I can imagine this is great for Zcaler's business and in fact you are seeing shorter sales cycles for AI security. Do you think that this is one of those areas where companies just really cannot afford to delay their spending? >> Indeed and things are moving fast. our innovations happening fast and we're working very closely and also Zscaler traditionally has strong relationship with CIO CESOS and boards and we're helping them because the customers believe that agents could be far more dangerous the become the weaker link than users are and we want to make sure we secure the agent communication for them. Jay, I noticed that you're cutting about 3% of your workforce while saying you're reallocating resources towards AI and growth. How much of that is AI itself allowing Zcaler to operate with fewer people? >> So, first of all, restructuring and rebalance some of your resources or priorities the business is a normal course of business for us. It's not a significant change. AI is providing automation. it's playing some role in it, but it's essentially prioritizing where our investment should go. >> And is that something that you expect to maybe reverse at some point? Uh if you do indeed see revenue keep growing from here. >> So this is not reduction. This is actually reallocation. We are taking those investments and aligning with some of the AI focused priorities and some of the products we're building at a faster pace and go to market products, sorry, go to market programs we're building. >> Jay, um I want to talk about your financials for a moment. You did report results and you just closed out the year with annual recurring revenue of 25%. But you are guiding for growth of 16 to 17% for this year. Analysts say that this is a conservative forecast and a lot of uh them say that's the reason why your stock is down today. What's driving the slowdown? >> Look, we had a great performance. I mean our numbers are great from any point of view whether it's our revenue growth arr pipeline in Q4. All those are tailwinds for us for a growth of our up growth of our revenue. I'm very bullish about it and and I do believe we'll do very well in fiscal 27. >> And speaking of fiscal 2027, I know that you've also seen record margins here. Is that something that you expect to continue heading into next year? >> So our number one priority is topline growth. Number two priority is to ma manage our operating margins. We have given guidance for operating margins which is in line with what we did this year. But our number one priority is topline growth. >> You say that your number one priority is topline growth. If you back out your Red Canary acquisition, your annual recurring revenue last year was 20%. Can you continue to generate 20% growth organically or do you expect to need to make acquisitions to maintain that 20%. >> So we do not depend upon acquisitions for our revenue growth. Typically most of our acquisitions have an early stage company acquired for new innovations. We have a sizable platform zero trust everywhere from users to branches to workloads now for agents. We have an amazing business for data security. It's growing very rapidly. Security for AI is growing well and the new solution area we're launching that is a gentex ops will offer a big opportunity. We have plenty of products great customer relationships and these customers are very happy with NPS score of 80 plus. I think we have a wonderful opportunity in in front of us. >> And of course, I know that you've landed more $1 million plus deals. Uh is that something that you see continuing? And what would be the main driver for that moving forward? >> This is our customers wanting to buy more and more of our platform. It's expansion of the platform, elimination of a lot of point products and we also reduce a lot of costs while we do so. In fact, I'll mention that uh the number of customers who spend over a million dollar with us has now approached 785 customers. This this is a wonderful opportunity. Happy customers buy more. Happy customers tell others to buy more. So that's why I'm bullish about our future. >> Great philosophy there. Happy customers buy more. Thank you so much Jay for joining us. That was Zcaler CEO Jay Toddri talking about the company's latest results in the future. Coming up, shares of airlines are on the move ahead of the long weekend. We will impact catalysts in today's stock of the hour. Up next, this is the close on Bloomberg. Our stocks of the hour are airlines and shares are firming a hedge of the travel heavy long weekend. And of course, investors watching jet fuel prices, which are near their highest level in five months with President Trump hailing the US summer travel bump in a meeting with industry executives earlier this week. So, let's break down those themes with George Ferguson, who is the global head of aerospace, defense, and airline analysis at Bloomberg Intelligence. Now, George, I'm looking at the S&P 500 uh passenger airline sub index, right? That's up about 5% this year. uh a little poultry, you know, if that's going to continue through the rest of the year. It's a little bit of a poulry gain compared to years past, but how does that place the airline industry as a whole heading into the fall season? Do you think that they're still going to continue that momentum? >> Yeah, so I think that uh you know, you're seeing a little momentum today because fuel prices are falling. Uh but really, I mean, the big overhang on airlines is fuel prices, right? We're back up around uh we watched sort of the Gulf Coast jet fuel price the most. We're back up around $45 for for that. Uh the high for the year was about $5, just a little bit shy of it. So, we're pretty darn close uh to getting back to highs. We don't see an end to the Iran situation yet, which means airlines going to be sort of managing this fuel environment where they're uh sort of, you know, lurching from really high prices to to moderating prices. My guess is that we're going to, you know, we're seeing the strongest demand now because we're going through summer, vacation, travel season, and then I think as you get into the fall and winter, I think airlines going to have a hard time sort of recouping their uh, you know, the prices they need to cover that increased fuel cost. Yeah. So, I think actually the end of the year gets a little more difficult for the airlines. Uh, it's a little bounce today, but I don't think this persists. So, George, it feels like everyone's been taking their quue from Delta, which has a lot of pricing power, chasing the premium customer. Delta says it's been able to recover up to half of rising jet fuel costs through pricing because travelers are paying up for those premium seats and premium experiences. What other airlines are in a similar position? >> Yeah, I mean, as you mentioned, Delta's bestin-class, so I think United can probably do almost as well, maybe not quite as well. And then America, it's going to sort of line up third and then you get into, you know, more of the emerging uh full service carriers like Southwest and then sort of low cost, you know, JetBlue. So I think the further you go down that spectrum, the harder it is to recover uh those increased fairs. And I would note, look, Delta's telling you they can get what half back. Let's see how things get in the fall and winter if fuel prices are still here. I think there's a lot of CEOs kind of hoping that the Iran situation gets resolved, fuel prices come back down and the party's back on. But if we stay at these fuel prices, I think it's going to be uh you're going to have to see a lot less capacity in the marketplace to keep ticket prices high enough to get that profitability back up. So, I think it's kind of it's a difficult situation for airlines right now. >> All right, George, thank you so much. George Ferguson, global head of aerospace, defense, and airline analysts at Bloomberg Intelligence. and that idea that the airlines are in a good position right now because they do have the tailwind of summer fairs and of course the demand that they're seeing but things will slow down considerably as we head into the second half of this year or I should say the later part of this year getting closer to the holidays. >> Yeah. And you know we'll see if you know some of those premium offerings make up for that anticipated decrease in in some of the more budget conscious uh customers shall we say. >> Absolutely. We're going to talk about this a little more with Becky Blaine in the next hour to talk about travel during this Labor Day weekend and how to plan ahead. In the meantime, Ayako Yoshio will be joining us next as we count you down to the close. This is a close on Bloomberg. I think the real function is that we've really relied on technology for a long time to put downward pressure on prices and that's going away given all of the supply constraints that we have for the AI data center buildout. So I do worry a little bit if it's going to be even harder now to hold prices down. That was Julie Beiel of Kane Anderson RDN kicking off the show talking about technologies role in inflation and how the buildout of AI and AI infrastructure has become inflationary certainly for this economy. >> Yeah, absolutely. Scarlet, a little bit of uh the opposite of what we were expecting, right? AI making things more efficient and therefore deflationary, but I think we're still kind of in the building stages and therefore we're seeing a little bit of a price increase as a result of that whole >> maybe down the road that'll be what happens. Certainly >> a 20-year story. maybe 20-year story, a long arc. Regardless, uh let's take a look at how things are shaping up as we head into the final 10 minutes of trading here in the US. The S&P 500 giving back of some of yesterday's gain because of that stronger than expected jobs report, which um has revisited the idea of the Federal Reserve hiking rates later this month. Uh the VIX um moving up slightly, but still very much uh in that 14 range. The 2-year yield, a big move there, relatively speaking. It did get at one point um close to 4.42%. 42%. Uh this tenor is most sensitive to Fed policy and dollar is stronger versus the yen today, but for the week the yen has had a massive rally. Um a lot of that because of expectations. The Bank of Japan will be the next to hike rates as well. Now for more market analysis, we want to welcome Ayako Yoshioka. She is senior investment strategist at Wealth Enhancement Group. and Ayako, what is the conversation that you are having with your clients right now when it comes to technologies role in stoking inflation or perhaps bringing about lower prices down the road for the economy? >> Sure. Hi, Scarlet. So, you know, when it comes to technology and the whole AI buildout, we know that this time around it's a very physical uh buildout that is creating inflationary impulses in the overall economy. This is not dissimilar to what we saw in the early 90s and the mid 90s when the internet was being built out. It was just, you know, it was more fiber related. This is actually a lot of semiconductors as we know, data centers. We know that power is getting involved. There's industrial components that are involved and so it's just at a much bigger scale than what we've seen in terms of technology buildouts in the past. And that inflationary impulse to the economy is very large just because of the large amounts of money that is getting spent and put into the economy. >> And of course the amount of money that it will cost to build this out means they are looking to raise money both in the equity market and the debt market as well. We already know there's going to be a ton of issuance uh in the later part of this month into October as well. What will it look like on the equity issuance side do you think? >> Sure. I think they're going to try to keep at least from the hyperscaler perspective. I think the hyperscalers will likely not do as much in terms of the equity issuance. I think equity issuance might be more so on, you know, the anthropic IPOs of the world uh that we know is is coming in the fall. Um and then additional sort of shares that are coming on from like SpaceX. Uh that's where we're probably likely to see that AI infrastructure um and AI related equity raise come through. >> Yeah. Well, I want to bring in the debt equity or rather the debt issuance uh point that Scarlet made ya and touch a little bit more on that. I mean, that's something that we've seen has massively grown this year as we've seen hyperscalers kind of draw down on some of their cash reserves, right? And you know, that's something that's filtering across to the bond market. We've seen 30-year yields in uh the Treasury market hitting uh some of those multimonth, multi-year highs here. What are we reading from the bond markets now? Is it purely an inflation signal? Is it a fiscal signal? Or is it more of the state of just debt markets in general where you have these hyperscalers competing now with treasuries? >> Sure. I would and you know in terms of the uh what we're seeing in the bond markets, we are seeing more issuance from these hyperscalers and from tech companies that had not tapped debt markets in the past. So there is a shuffling within like the investment grade uh side of the market and you're just seeing just competition that you hadn't seen in the past. I think investment grade uh tech debt issuance is going to be at least about 8% of the overall new issuance uh this year and going into next year. Uh it's it's just an area that we haven't seen in the past and investors are getting curious as to what this is going to look like and where they should place those types of debt instruments into their portfolio. Yeah, I mean very interesting. I do you think that we get to a point where perhaps debt from Alphabet or from Amazon could potentially compete uh with treasuries in terms of investors perception as uh a risk-free asset. >> I'm not sure if we're we'll ever get there. I think you know the sovereign market continues to hold the you know uh mantle when it comes to uh you know risk-free rates. Um, but the balance sheet when you look at the federal government's balance sheet versus some of the more pristine balance sheets of a company like Microsoft, you know, they are very different. Um, but you know, the government has the ability to print money uh versus Microsoft. So, you know, it's it's just a very apples to oranges kind of situation that we're all sort of grappling with. It's just new. We haven't had to deal with it in so many years. uh just because that you know most of the time these tech companies really did operate out of their operating cash flow versus tapping the bond markets. >> Well, speaking of competition, um we're looking at the 10-year yield currently up at 4.78%. It did get above 4.8% twice this week at 5%. Does the 10-year and treasuries become competition for stocks? >> Absolutely. I think we've seen in the past that, you know, that 5% level is where there's a lot of investor demand to lock in those long-term uh rates or yields uh for a long long time. And so 5% there's been so many buyers that have stepped in whether it's insurance companies um or endowments and foundations. We do like to see that level as a attractive entry point entry point. Um but it's it is tough to compete with equities especially when earnings growth has been in the you know 20 23% range uh and equities continue to show double digit returns. Yeah. Well I I want to look forward to next week. We're going to get a bunch of inflation data and Fed Governor Waller signposting the CPI data as particularly important for the Fed's decision this month. How much stock are you going to put into that uh based on what we're going to potentially see next week? It is definitely a key area that markets are going to be paying attention to. Um, and I think the bigger issue for the Fed is if they do end up having to hike rates, is this the start of an actual hiking rate cycle or is this just a one-time adjustment to, you know, reflect this higher inflation rate that has stayed so sticky for so long, the 65 months above target that they mentioned at Jackson Hole. I think that's going to be the key. If it is just a one-time adjustment, markets will look past it. If it's the start of a hiking cycle, that's a bigger problem. >> All right, Ayako, thank you so much. Aya Yoshioka is senior investment strategist at Wealth Enhancement Group in Los Angeles. Have a great three-day weekend to you, Aya. All right, we're moving closer to the closing bell on this Friday. So, we wanted to bring in our colleague Jess Menton. She is senior equities reporter for Bloomberg News. And it feels like there was a lot of activity after the jobs report and then sometime in midday everyone just kind of drifted away and >> into the weekend the holiday weekend. Yeah. Even if you look at volume on a 30-day basis uh you know still lower obviously than we've seen over the last month too but particularly I was looking at the VIX because it's trading around 14. So that's more than 20% uh below its one-year average. And Andy Amy Woo Silverman over at RBC. So she heads derivatives there and she always gets these questions about what's going on there. So underneath the hood, we've talked so much about single stock level versus index, but she really thinks it's going to have to shift more to the macro side, which potentially maybe that happens in the next few weeks now that we're mostly past toward earning season. But again, it's tricky with seasonality because we did see seasonality buck the trend in August. So we'll see what happens in the next few weeks, especially with CPI next week. >> Yeah, I mean that VIX level very, very interesting how low it is given everything that's happening. And you know, I guess it makes sense that now we're getting more macro factors, right? We got the jobs report. We got the Fed coming up as well. We got CPI next week before that, >> right? So, you don't see it on the index level, but you see single stocks if you're looking at momentum and then also on a sector level basis. So, even though it's not showing up in the S&P and the NASDAQ, you are seeing it beneath the surface there. >> And you wonder about positioning too given that September is a historically bad month for US equities. How much people are thinking of just positioning themselves ahead of that right now? Especially once we get past the CPI report next Friday. And Doge Bank always puts out weekly data on this. They'll probably have another update after the bell when you're looking at discretionary versus systematic. Systematic being more the momentum computer type trading versus discretionary, but still you're seeing some like basically skepticism on the discretionary side, which still leaves them money to put more of that to work in the market. So, dip buying still prevailing here. >> All right, you're hearing uh the applause there at the New York Stock Exchange and over at the NASDAQ as we get ready to close out today's trading session. We are looking at uh declines here for the big US uh big cap indexes, the S&P 500, the Dow and the Nasdaq. Uh the S&P losing about 4/10en of 1%, the Dow off by half of 1%, the Nasdaq down by 310 of 1%. And interestingly, Jess, the Russell 2000 of small cap stocks up by a quarter of 1%. These guys are much more sensitive to interest rate movements than the big cap stocks are. And you would think given the good economic news means bad news for the market that they would be down even more, but they're not, >> right? The riskier corners of the market still kind of holding up better than you'd expect, especially even the nonprofitable tech stocks not down as much as you'd think right now, guys. All right, I'm going to break it down by sectors today in terms of the winners and losers. I mean, not a lot of winners really. I mean, we have infoch, of course, uh, leading those gains here, up two ten of 1%. Industrial is also uh near the top of that leaderboard up 4/10en of 1%. Everything else is either flat or down at the moment. You really get the sense that this is very much a late summer feeling in equity markets where uh perhaps a lot of uh people have already clocked off and headed off to wherever they're going to go for the long weekend here. >> No one to keep us company here. All right, Jess, what are you looking at in terms of gainers? >> So, here's what I have and then also throw in some weekly sizes scopes too for them for Samsara. IOT is the ticker on this down. If you're thinking about where that is today, actually only um this is a basically a fleet management technology provider here. So it boosted its guidance for the year's total revenue and adjusted EPS. So Evercore ISI actually has uh an outperform rating on that company and the ANR function 18 buys, six holds, and zero cells here. Uh so it's important to take a look just at that stock just basically on a daily basis still up about 4% on the day. And then Planet Labs is another one I took a close look at too. Um, if you're thinking about where that is headed at the moment, >> it changed his vine on you at the last minute. >> It did. So, PL on that is the ticker down uh just about 1%, but this is a satellite imaging service type company. And then city actually has a buy target with a price rating about uh $35 and it's lifted its low end of its full year 2027 revenue forecast there. And then of course, I wanted to talk about SanDisk because this obviously one of the best performers, the best actually in the S&P 500 this year. It's up more than 600%. Uh, and so this was a top the leaderboard of the S&P 500 as well as the NASDAQ 100 here. Up close to, if you're thinking about this, actually 12% today. So, best day since August 13th, so not that long ago. But that's also important because it's one of the best weekly gainers of this week, but actually one of the best ones was Robin Hood's gain this week. We talked about Robin Hood yesterday and the rise that it's had. We're going to talk a little bit more about that at AMC later. Uh, but that's one of the ones we've seen here that had pretty strong gains. >> I want to go back to Sam Sarah for a moment because you did you notice the ticker for Sam Sarah? >> No. What is it? >> IoT, Internet of Things. Remember when that was a big thing not so long ago? >> That was the buzz word. >> That was like the Yeah. that everyone wanted to talk about there >> and then became smart appliances. Then we moved on. >> And then also we did talk yesterday after the bell about Lululemon. So I wanted to do an update on that. Lulu is the ticker on there. So it is down 18%. So it's worst day since September of 2025. So almost the worst day of the year here roughly uh if it was tomorrow and those shares are down more than 50%. But also Heidi O'Neal is going to take the helm officially for the company soon. So it is tough when you're thinking about this athleisure wear being a little bit more expensive than its competitors, but it was a little mixed when you looked at some of the competitors here like Nike versus Under Armour, how they've kind of moved in different directions there, but they didn't have quite as much of a pain. So really it was kind of more centered toward Lulu and not as spilling over to some of the other retailers that it competes with. Lululemon has some challenges that are very specific to the company itself. Um, you know, you talked a little bit about the see-through leggings and how um that's not plaguing some of the other companies. >> No, absolutely not. I mean, it's more become synonymous with Lululemon, which is part of the problem, right? A lot of kind of doubts among consumers about the quality of their products and where it goes from here. And I'm sure that's contributing to the challenges uh that the new CEO is going to face starting next week. >> Yeah, I usually uh I haven't really personally bought tons of Lululemon. Usually I just get them discounted if they're at >> that's the way to go. >> Like TJ Maxx or Marshalls or something like that. >> TJ Maxx is the only way to go. >> Yeah, exactly. That's what I like to do. And then Guidewire is another one. Uh GWRE. This is a cloud-based platform specifically for property and casualty insurance companies. So this is actually the biggest drop on record. It was down almost 20%. So that's going back to data since 2012. And it did unfortunately it was more conservative on some of those guidance that it had. It's technically in the midcap 400 index. only has a market cap of about >> I like going outside the S&P 500. >> Yeah. So just looking beyond just the major indexes, what's some of the pain that we saw today beyond that? And then obviously we talked about FICO, Equifax 2 and Bill PTE. Obviously the criticism there is what it's tied to. everybody so focused on those types of credit scores and with FICO, but um not only was FICO one of the worst today, but also for on a weekly basis too, as well as Edison because of those things we were talking about yesterday when it comes to the ties of all of that and then also um obviously the the pressure that they had with the wildlife liability fears with Edison. >> All right. Uh in terms of decliners on the New York Stock Exchange, I have a function here on the Bloomberg. We still have more advancers than decliners here. Um, when it comes to the New York Stock Exchange, more than one stock gaining for everyone that's down, it's 1.07 for those who are keeping track. Um, which is interesting given where the major indexes are. But again, that goes back to the idea of a couple of big name tech stocks kind of influencing the overall movement of the major indexes. >> And then also looking at whenever the biggest point uh gainers and decliners, not just percent for the major indexes, because that's when you see a lot of things skewed there for those major mag seven or even the memory stocks, too. All right, let's take a quick look at what's happening in the bond market. You're seeing yields move up across the curve. Um although that's a little bit of a change because it was really the two-year yield that moved the most after the jobs report. At one point it got close to 4.42%. Right now it's up uh almost four basis points at 4.37%. The 30-year yield basically unchanged right now at 5 and a quarter% but very much still holding near its highest level since 2007. All right. One of the stories that we wanted to talk about here, and you had mentioned this earlier with Robin Hood, is um AMC and Robin Hood kind of sniping at each other right now because apparently AMC's CEO Adam Aaron uh discovered a token bearing the theater chain's name was trading on um Robin Hood's blockchain. And AMC said, "Wait a minute, we had no involvement in creating this product." And he said it was contemptable and outrageous and demanded that Robin Hood stop trading it. And this also hearkens back to the beginning of 2021 during the meme frenzy with what was going on with Robin Hood and then when they temporarily restricted the purchases of AMC and a lot of those other stocks when you think GME obviously another one that was really popular at the time. So a lot of this going back and forth and also just the tokenization and then people wanting to trade 24/7 and kind of what this means going forward for something like that. So I would imagine >> this is going to probably continue with a back and forth with between the two. >> Yeah. I mean, it's interesting though because, okay, so according to Robin Hood's website, right, it's onchain stock tokens, which is what the MCCO is disputing. Uh, they're tokenized debt securities that provide economic exposure to the underlying stocks, but do not give holders legal or beneficial rights in those companies. And they are not registered under US securities laws. So, I I can see why the AMCCO is thinking this looks a little uh contentious, shall we say. Um, but for sure. Yeah, exactly. So, but yeah, I mean, you know, I guess it's just >> in your reporting, do you talk to a lot of people who say that they want tokenized securities, tokenized versions, >> not not everyday people that you meet on the street? Definitely not. >> Because all all the companies out there who are talking about the need to tokenize are saying, "Oh, you know, ordinary people in overseas, in East Africa or somewhere else, they want to be able to trade these stocks." And I I'm wondering, do they >> I mean, the risk attached to these securities though, right? and the the knowledge required of your average investor. There's a little bit of an inongruence there and that's probably why the AMCCO was like hang on a second and before like this this is very complicated for your average retail supposed to have a round table about 24-hour trading. I think it's on September 17th so right after the Fed decision but we just have that coming up in a couple. >> Feels very much like we're in an environment where you move forward first and you ask for forgiveness later. >> Exactly. >> All right, Jess Menon. Thank you so much. just mentioned of course with our Bloomberg News equities coverage. Coming up on the Close, a conversation with Sunni Purchase President Michael Stiper as we kick off back to school season with college costs very much on the rise. This is the close on Bloomberg. The countdown is on everything you need to get the edge at the end of the market day. This is the close. >> Welcome back to the close. I'm Scarlett Fu and I'm Christina Kino. All right, Friday before Labor Day. Let's show you how markets closed out this day. It was not holiday shortened, but it felt like it. The S&P 500 losing 4/10en of 1% in line with the Dow and the Nasdaq. Consumer discretionary stocks were the big decliners after a stronger than expected jobs report uh raised concern that the Fed will need to rate uh raise interest rates later this month. The VIX moving up marginally, still at 14 and a half, well below its uh historical average. The 2-year note was the big mover. Uh the yield goes up at three basis points, four basis points to 4.37%. At one point it was at 4.42%. And the dollar recouping some of its losses versus the yen yesterday and really for this week. >> All right, let's take a look at some of the biggest movers today. Starting with Tesla. Of course, we got its cyber cab launch event on Thursday, but it was less substantial and more low-key than Wall Street was expecting. And now, of course, it's facing an investigation by regulators who wanted to look at the data that Tesla used to self-certify its vehicles. Now, taking a look at Robin Hood as well, one of the decliners today, down more than 2% at the moment. Again, we were just talking about uh this bit of a tiff between the AMC CEO and Robin Hood's uh Vlad Tanv about the AMC tokenized shares that are trading on the Robin Hood platform. So, a little bit of a an Xwar, shall we say, happening over there. Um, taking a look at FICO as well. Fair Isaac as we know it, that's down massively down more than 16% at the moment. That is because we heard from Federal Housing Finance Agency director Bill Py renewing his long-standing criticism of the costs of consumer credit scores. And finally, Ludu Lemon. A lot of challenges there in the stock reflects it. Down 17% at the moment. A big job for CEO Heidi O'Neal coming to take over next week. a lot of questions about whether it's what the future of the company is as after it's cut its fullear outlook for a second straight quarter there. >> All right, our top story this hour is closing out the summer travel season on a pricey note. Travelers are set to face higher costs and heavier traffic this Labor Day weekend according to AAA data. Average domestic airfare up 2% compared to last year while domestic hotel bookings up 9%. This as travelers face higher costs at the pump. Average gasoline prices reaching the highest level ever for September while diesel prices they climb to a record high. Becky Blaine, senior newsletter editor at the Points Guy joins us now. Okay, I'm breathless after seeing all that because that was a lot of stuff that's uh seeing higher prices. Is there anything that's cheaper when it comes to the travel sector this Labor Day year or this year? This Labor Day. >> I think it just depends on where you want to go. I mean, we're obviously seeing what you, you know, shown there is the higher gas prices, airfares up, but where we see some opportunities maybe with using your points and miles to get away if you really want to have a vacation, those tend to be pretty steady right now. And we're seeing some actual deals even as we go into the later holiday periods here in the fall also. >> Okay. Um, can you give us a sense of I mentioned domestic fairs, international fairs, and I know that Labor Day weekend is a difficult weekend to plan for international trips because you're probably only going to take a few days off, but what does it look like to book international fairs for this weekend and maybe for the rest of the year into the holiday season? >> Yeah, so international fairs are up about 12% for this particular weekend. And overall, you know, airfare according since last year is up 27%. So, I would say when you're looking if you still want to get away this weekend. If it was me, I'd be on a plane tomorrow and I would stay through Wednesday or Thursday, think about traveling on these off peak days, you know, don't travel today. Try not to travel on Monday and really give yourself an opportunity to a experience destination, but also, you know, get on those non- peak times with some of these airlines. >> All right. Well, my jam personally is staying on the road and going on a road trip instead uh for these three-day weekends. But gas is probably an issue especially this year, right? We've seen fuel prices or just oil prices generally uh climbing above thresholds that usually make consumers worried. Uh what have you seen in terms of the impact of that, Becky, in terms of you know people's appetite in general to go on a road this summer? >> Yeah, so maybe they're not traveling as far as they had planned. I mean, we personally took a long weekend and went to Boston and I could not believe between the tolls and the gas prices, how much just that cost and it was almost as much as if we had just flown. >> So, what I will say is, you know, think about where you want to go, calculate the price to get there and look at airfares, too, because could you save money just by flying? Especially if you're going to a walkable city like New York or Charleston or Savannah, somewhere like that, then you don't probably need a rental car and you can just Uber or taxi to and from the airport and save some money that way as well. >> Yeah, you probably don't have to worry about parking and and you can get some drinks over dinner. So, there you go. That's one advantage. But then, you know, getting there is one thing and then staying uh is another. And you know, talking about hotels, what's been the landscape over there? We have seen prices climbing sharply around these holiday periods, but apparently sometimes you can get last minute deals, but what's been uh the trend this holiday season for hotel prices? >> So, the trend is yes, that holiday um lodging is up year-over-year, but you know, depending on when you want to go, you could find a lastm minute deal. I mean, that can sometimes be the key to waiting to the last minute. So, procrastinators rejoice. you might actually save some money and still get to go on a great trip um as well. But, you know, I like looking at some of the online search engines to see kind of where prices are trending. And then what I'll do is I'll go to each individual website for the hotels that I'm interested also because sometimes you can save money just by booking direct having that loyalty program. They Hilton Marriott, they're all giving discounts to loyalty members if you have a credit card with one of those. Also, if you book an awards stay, some brands will give you fourth night free or fifth night free. Um, so there really are some great savings to be had, you know, especially when you're looking at points and miles and different ways that you can leverage some of these programs. >> Yeah, you just got to do the homework. I don't know about you, but I like personally to book in advance so I have something to look forward to um in the coming weeks and months. And one concern that I have about booking too far in advance is if those prices do drop later on, how do you guard against that? How do you protect against that? Especially when, you know, I'll confess that I'm more likely to pay for a basic economy fair that has some limitations when it comes to um you know, getting a price adjustment. >> So, what I would say is if this war continues and gas prices are where they're at right now, we don't see prices for airfare going down at all. Right? So, we're cautioning people book now and then monitor your pricing because you can always rebook or get a credit trip credit back into your account. Some of the services that we're using, searching for airfare, Google flights is fantastic. You can set alerts. It's free. Points path is an extension to your Google browser. Points path shows you award flight data and the price next to the Google flight price. So you can see if it's a good deal or if you should use cash, use points and set those alerts. Watch the pricing, but don't wait too long because there's usually a bump in midepptember for travel pricing as you go into that holiday season. So, if you haven't booked something, now is the time to be setting these alerts and booking. But then monitoring those prices, we love these new services we've been testing out on our staff. Junova and Payback, P AI, B- A C, they use AI. They leverage it in a way that will search these fairs for you. And if the fair drops, you've registered your flights with these programs and it will automatically take care of getting you that flight credit. Okay? It does take a percentage of what it gets you back, but then you're not having to monitor it yourself. It's kind of set it and forget it, >> right? >> So, it just depends on convenience level and you know that factor for you. If you want to just set it and forget it, try one of those services. We write about them on the points sky.com. And if you want to just do it yourself, set those Google alerts and monitor the price yourself. >> Becky, is there ever an instance when you should be booking the cheapest fair possible, the basic economy, where there's no flexibility when it comes to refunds, rescheduling um to or accumulating points uh for your loyalty program? Yeah, we'd like to say try and avoid it if if you can just because of the restrictions and the if you want a seat assignment, you have to pay on top of that, which is even more expensive than if you just booked the main economy price to begin with. That's seems to be where the airlines are are getting customers is with that cheaper price comes all of the nickel and dimming and add-ons that no one likes to to look at when they're trying that makes people really really upset at the air at the airport and you have to approach the counter later on and >> exactly >> give your best argument. Becky, thank you so much. Becky Blaine is senior newsletter editor at the point sky. Just think about going to the airport and the line of people and the expression on their faces as they're making their case to the person. >> I'm already >> the anxiety is coming up. >> All right, coming up, we're going to stick on this travel theme. Pain at the pump, gas and diesel prices driving to record levels as we kick off Labor Day weekend. We're going to have more on what is behind that. This is the close on Bloomberg. Late August into early September is back to school season. And for students headed to college, it's all about the move in day. I visited the campus of Sunni purchase just north of New York City and sat down with President Michael Stiper on their move in day. We had a wide-ranging conversation about the challenges facing higher education. >> So right now, some of the biggest issues facing higher education relates to the value proposition that students and their families are really considering when they are choosing a college and even choosing to go to college at all. >> Choosing to go to college at all. That comes up a lot. A lot of families, students in particular, are saying, "Is a four-year college degree worth it?" How do you talk them through that? >> Sure. So, for the vast majority of students, it is very worthwhile for them to complete a four-year degree. Now, a key word there is complete that four-year degree because it's essential when students start college that they finish college because students with a degree in hand, they perform better in the job market. They live longer, healthier lives, and they're engaged citizens. So we think for those reasons it's a great choice to go to college. Um but again the most important thing to do is to go to a college that fits you and a college that you will complete >> and also a big consideration is uh a college that you can afford. >> How are you seeing rising costs impact your campus your students? >> Well what I see is that more and more parents and families are considering public higher education. We see across the Sunni system increases in enrollment year over year over year. And I think that's indicative of people deciding that cost is a big consideration. And I see more students and their families talking about the cost and how Sunni purchase which has a very very affordable uh price point how that is a big part of their uh choice. And what we're able to do here is say that you don't have to choose a campus with uh an expensive price tag to get a fantastic experience. Here at Purchase, we offer a strong experience at a very affordable price tag. >> So, the rise in cost of a college education has been something that people have been grappling with for a decade now, if not more. How has that evolved during your time in leadership in higher education? >> Yeah, definitely it continues to be a challenge. Uh, at Sunni, we've kept tuition pretty flat for quite a few years, but more and more parents are looking more widely at different campus options. Um, you know, one of the things that's fantastic about American higher education is there's so many different options, so many different choices, public, private, two-year schools, four-year schools, uh, throughout the nation. And, you know, it used to be just about the most selective, the best, and now I'm seeing more parents consider different factors that play into that along with, you know, academic excellence. What is the cost? What kind of debt will my uh student be leaving with? uh what are the outcomes uh that we're expecting after that four-year degree and how can we support students while they're doing their college degree. I see all of that um being emphasized in the last few years for sure. I think a part of it that families need to consider more is how much debt their students will be leaving college with. Um, and I think that is a factor that people need to consider because a lot of students today are planning not only on just a four-year degree, but on further uh degrees, whether it's medicine or law or graduate school uh or something of that sort. So, thinking about how much debt you're leaving your four-year degree with, and here at Sunni Purchase, it's it's typically less than $25,000. um you want to keep that in mind because that will impact how uh well you could take on further cost for tuition in a degree beyond the undergraduate degree. >> What do you think will be the biggest challenge for American higher ed and for Sunni purchase over the next five years? I think really keeping uh our promise to students and ensuring that when students come to our campus, you know, we're here on movein day, these are students and families with huge expectations for what their students are going to do here and how we are able to help them transform their lives through education. So, a big challenge for me and I think a big challenge for college presidents and and and faculty and staff everywhere is making sure that we're keeping that promise to students and we're really using education uh in a manner that's going to help them uh really meet their ambitions that they have beyond their schools. >> What's the hardest question to answer from families on affordability and college? >> That's a great question. I think after my student graduates, what are their prospects? And for me, we're working really hard to ensure that the education here at Sunni Purchase is preparing students for a life beyond their four-year degree. Some of that is about career training. Some of that is about just uh getting more engaged and and more sort of energized as citizens. It's a wonderful thing to think four years ahead. Um but it's hard to give people concrete answers. I think a lot of students learn about themselves through the process of college. We are encouraging that. We want that to happen and for most of the students that turns out really really well for them in their careers. >> And that was my conversation with Sunni Purchase College President Michael Stiper. That was on their move in day. And Christine, I was trying to explain to you Sunni stands for State University of New York. It's a public school. And Sunni Purchase is a little different than other schools uh in the Sunni system because they have a really notable fine arts, performing, visual, um, and music program. They have a lot of famous alums. Uh, you've heard of Stanley >> Tucci. Josh Hartnett, um Edie Falco, Ving Reigns, Parker Posie, they all went to Sunni Purchase and because it's so close to the city. A lot of kids like to go there, especially those from out of state who want to break into the acting field, for instance. >> Yeah. Yeah. Yeah. But I suppose it makes sense then that a lot of these people uh go there specifically for for this. I mean, I guess, you know, if the college builds an identity around a program, then you know, it just kind of burn becomes a self-perpetuating cycle. >> Absolutely. I think some of the actors who went to Sunni Purchase have even talked about this Sunni purchase mafia that kind of exists because there's a little bit of a network there that you know they can watch out for each other. >> There you go. >> All right, we're going to continue the conversation on higher ed in just a moment, but just a recap here of how markets closed on this Friday. The S&P down 4/10en of 1%. Uh the VIX moving marginally higher, but 14 and a half is still very very quiet. And the 2-year yield marching higher by three basis points. All eyes are ne are on next week's CPI report on Friday. Right. >> That's right. And we see the dollar gaining versus the yen. The question is for how long? This is the close on Bloomberg. One of the clearest signs of inflation in recent years is the cost of attending college going up. A new survey from Fidelity showing 41% of parents plan to cover the entire cost of their students college bill. That's up from 37% the last time the survey was conducted in 2024. And that's in large part to give their student the advantage of graduating without too much debt. When I went to visit the Sunni purchase campus recently, I caught up with both students and parents to better understand how they're managing the rising expenses. Take a listen. >> How much did you and your parents, your family discuss finances before you made the decision to come to purchase? We had to discuss it a lot honestly just because I'm a first generation student. I get free housing being an RA. So that because of that now I don't have to pay for anything in school at all with um FAFSA and TAP. >> Did you have to take out any loans to attend school? >> For my first year I did, but once I became an RA, I didn't have to take out any more loans. So now I've been paying them back. >> I'm fortunate enough that my parents were willing to take out loans for me and I also am going into a little bit of debt, but they they were willing to set aside like as much money as possible. I got the Excelsier scholarship. So if I meaning after I graduate I have to stay in New York otherwise I'll have to pay the loan back. >> And how much is that loan? >> I think it's like $5,000. >> Out of state tuition is definitely a lot. Um so I took out some student loans um and was able to do that pretty easily. Um and I also put on like my own fundraising show like I produced my own show to um raise money to come to college. So yeah. >> How much did you raise from that? um about $3,500. Yeah. >> Is this something you're going to be doing regularly, you think? >> Um yeah, I'm planning actually on doing it every year in my hometown um since it was so successful. So, it like kind of helps me like build my own scholarship fund a little bit. >> Community college is definitely I think a really good stepping stone for students that don't know what they want to do and don't want to spend all that money. Um I think we're always pushed to like go to a four-year first, but sometimes it's better to go to a community college, get all your genads out of the way, and then transfer to a 4-year institution. I definitely thought about what I wanted to study. I knew that I I have a love for art and a love for sculpture, but I just know it wasn't feasibly possible for me to do that as a career since I am low income. Um, so that's why I chose political science and law and justice because I could go down that that law school track. Originally, it was like 30 uh 30k a year. I got it down to like $1,500. It was took a lot of time financial aid and working at the same time. It was very tough. I was being a burden to my parents being like, "Oh, we got to do this. Oh, we got to do this with the bank account. Oh, due to savings and all of that." And that was definitely very difficult to do and very stressful, but I managed to do it. You know, >> now that you're in school, there's a lot of expenses that are going to be coming up. How are you going to get through that? >> I have my own money, right? like in a checking account, you know, some of it some there's some stuff in the savings and that has some annual percentage yield, right? So, I have my parents manager another account so I won't touch it and have my money build over time and I just have like a checking account for the semester for like $400 about 18,000 or so just to live on campus. So, that's I think the tuition state tuition is about seven. So, altogether it's like 32,000 majority of that is boarding. So, that did make it was just like a wow factor to see how much it cost to board and and and the eating packages. That was another thing. Uh 3,700 and some change, you know, per semester just to be able to feed your kid. >> I'm a teacher, so very big on education. So, it's worth it to for me to, you know, spend your money on on that. So, um you have to start planning early and and try not to put yourself in too much of a hole debt-wise. But um you need to do the best you can. >> Are you planning to pay for graduate school for these girls as well? >> I'm hoping to. I'd like them to get through debtree and start their life and their career without any loans if it's if it's any way possible to do that. >> We're aware that Purchase has an excellent program. Uh and because he wanted to go for a BFA, we were acutely aware of what the return on our investment might be. Um, both of us work in the arts, so we have a pretty clear picture of how hard it is to make a living and what it takes. >> We've been saving for a while. We have an education savings program and then the balance we're paying for. So, >> has that affected your retirement plan? >> We're never going to retire. You want that? That's madness. >> Yeah. We'll still be 90 when we retire. So, >> um, no. Oh, I mean we this was one of the factors when we decided to have a kid. We were like, well, if we do this, we want to send him to college and we both work in the arts, so this is probably going to be a long haul situation. Um hopefully before we're 80, hopefully before we're 70. I don't know. We'll find out. >> A big thank you to all those students and parents who took the time to speak with us. What I was so impressed by, Christine, was that these were 18-year-old kids talking about um you know, high yield savings accounts. I don't think I knew any of that at age 18. I barely knew how to do my own laundry. I also went away to school and I did not know how to do my own laundry. And now you have college age kids talking about complicated savings account and also just kind of ways to source money for college. They were so enterprising. >> Yeah. I mean the fact that someone holds a a fundraiser performance as she calls it her own scholarship for herself. I mean very very creative and I I guess that's um it follows suit that she attends Sunni Purchase which is a creative school. All right, let's talk a little bit more about higher ed because the number of international students applying to American universities and colleges that is falling. New data released by the Common App, this is the country's most widely used college application platform, shows that foreign students applying to a US school this fall, dropped by 10%. That is the largest decline in at least a decade. Joining us now for more is Bloomberg education policy reporter Liam Knox in Washington. So Liam, the drop in international student applications is a clear sign that there will be a similar drop in enrollment. Just how reliant is the US college business model on international students? >> Well, Scarlett, it depends on the college. There are colleges where international enrollment makes up anywhere from 10 to even 40 or 50% of the student body. Um, it also depends on the program. Graduate schools are a lot more dependent on international students. A lot of private colleges are a lot more dependent. But over the past few decades, the sector as a whole has become extremely dependent on international students. Um even if they don't make up a huge portion of the student bodies, they often make up a a very sizable chunk of students who pay full tuition. They almost always pay full freight. Um and that kind of helps offset tuition costs for other students. So when you're looking at uh an economic situation where lots of colleges are struggling right now anyways that loss in international students 10% is a huge decline and uh domestic students as well might see that affect their uh their their tuition tax. >> Which specific kinds of schools are most at risk because the decline in apps from international students was not evenly distributed? >> No. and schools that have been really reliant on on again on graduate programs on M's programs on uh science and engineering programs uh where international students can make up more than half of the the the cohorts sometimes those those are at real risk and especially schools that have kind of put all their eggs in this basket over the past few uh years or or a decade or more um as domestic enrollment and demographics have just not kept up with their their constant need to keep filling seats. Um, obviously schools like Harvard, you know, the the Ivy's, MIT, they probably won't struggle. They have a very deep pool of international applicants. They'll keep enrolling, many of them. Um, it's the ones a little further down on the food chain that will see this bite into their budgets. >> Now, Liam, I'm curious how much of this emerging trend is related to broader US policy, especially when it comes to letting foreigners into the country. I mean, we've definitely seen uh international graduate enrollment already falling last year and then also now student visa issuance declining sharply. How much of this is related to this broader environment that we're seeing? >> It's extremely related. If a student is unlikely to get their visa um approved, uh they're going to be a lot less likely to apply to US colleges. We're seeing a a large chunk of of colleges have a lot of uncertainty about whether or not the international students they admitted who committed to come to their campuses are actually even going to show up in the fall. Um because you know the visa issuance has been delayed. They've had to defer uh their acceptances. And even more than that um the very nature of what the pipeline for international students to US colleges has meant for many many years is changing. Um the Trump administration has put new limits on uh uh postgraduate work visas on H you know high price tags. They're charging they're proposing to charge more than $100,000 for H-1B visas. Um these are hardships that you know a lot of international students come even for undergraduate with the idea of staying further down the road and and getting on some of these other visas and the immigration situation in general is making that prospect pretty uh pretty challenging for a lot of international families to think about seriously. >> Yeah. And I'm curious as well, you know, the assumption is that international students want to come to the US uh and go to university here because of that pre prestige of an American university education, but the decline in international student intake. What do you think it is that going to do to this perception that American education especially higher education is superior or is perceived to carry a premium? Is that something that will be diminished over time now that this development is is forthcoming? >> Well, I think it already has been. uh this idea of America as the the premier destination um you know it's obviously again places like Harvard, places like MIT, Caltech, Stanford these are these are institutions that live in the kind of the the very robust like imagine imag international imagination of opportunity and and you know uh have a lot of important symbolism that is going to continue to carry forward but coming to America as just a general selling point which a lot of colleges outside of those big brand names have relied on for a very long time to attract international students that the you know the the really the shine there is doullling quite significantly. Um lots of students are going to other countries to Japan to Germany to France to Canada um uh because it's just a more it's it's a less risky prospect and we'll see if that corrects over time but right now it certainly seems to be the way things are going. Yeah, the other countries are really making play for these international students, uh, seeing this as an opportunity. Speaking of the Trump administration, um, Harit Dylan, who is the Justice Department civil rights chief, has been very active recently. I know you've written several stories about this, Liam. Um, she is targeting Stson High School, which is an elite high school, public high school in New York. She's targeting Stanford University. She's targeting College of William and Mary. What is she looking into right now? Uh the Justice Department has really ramped up what has become the kind of uh the next phase of the Trump administration's kind of crusade against uh US higher education. Last year that was largely defined by um you know negotiations with colleges over alleged anti-semitism during student protests. Uh we had the Colombia deal and the the Harvard talks that have now dragged on for more than a year. Harmy Dylan, who is in charge of the civil rights division at the Justice Department, has kind of taken the reigns uh over the past many months of this campaign and has really been using civil rights investigations and lawsuits into alleged racial discrimination um into scholarship programs and admissions tactics that she says continue to run a foul of the Supreme Court's ruling striking down affirmative action a couple of years ago. um basically uh uh in you know saying that William and Mary uh uh Duke Law School, Yale Medical School that these places have kind of continue to flout uh the ban on race-based admissions. Um and accusations that threaten, you know, millions or even billions of dollars in crucial federal funding for these institutions and that we're going to see play out in in in battles to come. Um, Stanford is more about the influence of foreign donors at universities, which we're also seeing the DOJ take uh take take a look at at Harvard uh and elsewhere. Um, and now they're expanding into elite public uh high schools. She tells me that they're looking at not just um uh you know, Stent, but also uh looking into Bronx Science also in New York or LOL High School in San Francisco, these specialized elite public schools where admission rates can often be similar to the top private schools. >> Right. So the the common thread here is knocking these elite schools down a couple of pegs and um really focusing on the disciplinary part of um making sure that what the Supreme Court had ruled is actually being followed. Liam, thank you so much. Really appreciate you're taking the time. Bloomberg education policy reporter Liam Knox joining us from Washington. Still ahead on the close, we're going to get you set up for what you need to watch for over the next week once we get past the Labor Day holiday. This is Bloomberg. All right, let's look ahead to what we're watching for next week. After the Labor Day holiday on Monday, we skip to Tuesday and Canada's retaliatory tariffs on US goods scheduled to take effect. There's some primary elections in New Hampshire and Rhode Island. >> And then of course, Wednesday, we will see Apple unveiling new iPhones in John Turnis' first major product launch as CEO. And of course, the US Treasury beginning expanded buybacks of longerdated bonds and Republicans opened their first ever national midterm convention in Dallas with President Trump set to speak. >> That's a new thing, a midterm national convention. Yes. >> Um earnings from Oracle are due out on Thursday along with Adobe and Macy's. There's an ECB rate decision. US wholesale inflation and Bloomberg Power Players is held in New York. >> And of course, Friday, big CPI data. We're going to be waiting for that. And also Bloomer's Roma Bosik will be at Caner Fitzgerald marking the 25th anniversary of 911. >> That does it for us. Balance of powers up next in Washington. Have a great evening and