A bounce to start your Tuesday morning. I'm Dani Burger. Bloomberg Open Interest starts right now.
Coming up, market uncertainty claims another IPO. Aura postpones its public debut. Anthropic flags catastrophic risk as OpenAI scraps its latest model release. Goldman Sachs may be closer to anointing John Waldron as its next CEO.
Some of the stocks on the move. AMD having a decent morning, up nearly 1%. It's moving on an $8 billion deal to acquire the AI startup World Labs. The deal adds World Labs' AI models and teams to AMD as they compete with NVIDIA beyond just chips.
There is Meta, another day moving higher. They have announced new Muse capabilities to help small businesses access tools like Intuit. Jefferies down 1%, overshadowed by a sharp drop in asset management revenue and a weaker showing in fixed income. We start with the companies that are soon to be public.
That report that Anthropic's technology poses 'catastrophic or existential risk to humanity' in the prospectus for its IPO. Anthony Hughes, this was a big question posed by a banking team. I see Jenny on the corner who's been asking her team to ask different executives about this. They put this in the S-1. What's the impact of the risk being we might pose harm to humanity?
Usually with IPOs the risk factors are very all-encompassing and cover a range of possibilities. As we approach IPOs we assume maybe there is a low probability they will happen. Unusual risk factors affect the company but in this case it is a risk factor for everyone, all of us. It's a little different.
Maybe a little unsettling. This, we expected the filing to happen sooner and it didn't. The latest victim being Oura. What does it tell us that you have these anticipated IPOs and stocks are 1.5% away from all-time highs, but a company like Oura is delaying?
Oura had its own issues. People are worried that Apple might take away their business. It's a good company. The numbers are good now. People who have been on the open market have experience of Pelotons and GoPros and Fitbits, these consumer hardware names that can be pretty boom and bust. While the numbers look good now, they will be harder going forward. There was concern about the lockup and they were selling a lot of stock. I think it was bad timing and they should not have gone ahead with the IPO while interest rates are rising. It makes these companies that are unseasoned and companies that are proving themselves in public markets are higher risk. People are shying away and the exception is Anthropic. The bankers seem to be reasonably confident it will come in November and people will chase that for performance as opposed to these other IPOs that are smaller and people see there is a risk with these things. What was the point of going public in the first place? Anthropic is its own case here.
Anthony, thank you for joining us. That is Anthony Hughes. OpenAI is holding back a version of its Astra model which establishes stronger safeguards for artificial intelligence. Ed Ludlow joins us from San Francisco. It is a call some executives have made and we need to slow down while we figure out safety. What do we know about this delay from OpenAI and its release?
The release of GPT-6.1 Astra has been scrapped. They went through internal evaluation and testing of the model to see how it works and how it behaved. The result was that the model was 'not staying within scope or of authorization.' It would not do what OpenAI had given it permission to do. On safety grounds they will not release it. Last week a separate model, not GPT-6.1 Astra, they paused training because of some concerns about how the model behaved, including breaking out of a testing environment and getting access to a third-party platform, the latest of several incidents. The timing is interesting because OpenAI has Developers Day today where they typically announce software products and it tends to move markets and impact other software names in the equity space. It's interesting. It is all OpenAI trying to get it all under control.
You had a really good scoop yesterday on Fei-Fei Li, the pioneer and visionary being bought by AMD. Why is AMD buying World Labs?
A lot of people did not have this on the bingo card. AMD is getting a team of researchers in the field of frontier models. They are getting Fei-Fei Li. She is joining as Chief Scientist and Executive Vice President and they get access to the work that World Labs has done. There is an overhanging question, why has AMD done this? A point of emphasis from Lisa Su was hardware.
What is becoming more clear is that the interaction between the hardware, software, the systems and the model layer are such that the more you understand end to end, the better system you are going to build. That is why we are acquiring World Labs, they have access to the world-class talent that Fei-Fei has brought together.
It's the business of selling models through a library, not as far as NVIDIA has taken it but if you get insight into how the field is going, you can tailor your compute, future generations of it, to be better at running AI. That is probably the driving force of what Lisa Su wanted to do with this acquisition.
Fantastic reporting. That is Ed Ludlow. On Wall Street, Goldman Sachs's John Waldron could get his shot at CEO sooner rather than later. The board has discussed a plan where Waldron succeeds Stephen Solomon as early as next year. Joining us now is finance editor Jenny Surane. We can talk about the personalities but what do you make of the timing that they are discussing?
It is definitely interesting. Not such a surprise given we had last year where Goldman gave him many millions of reasons to stay with a big incentive package that took place over multiple years. This is just another sign that he is the heir apparent. It is more apparent now and perhaps sooner than what some on the street were thinking.
How do their personalities differ? Maybe he was awkward. He had to have dinner parties with nametags. The board is concerned about some of these things. What does John Waldron bring to the table as a potential CEO?
He's been in the wings for so long he's not an unknown character. He's had a lot of experience meeting with staff. He's leading the work they are doing on GS 3.0, which gets him in the weeds with a lot of the different business units. He's definitely a face that looks outside, whether it's at clients, investors. He's been groomed for a while for the next job. He's definitely not an unknown character in that sense to all the stakeholders across the firm.
What about he would be leading the bank that David Solomon finds himself in now? There has been talk from both Goldman and from Bank of America maybe that does not get a repeat, but at the same time trying to grasp AI and what that means for the staff.
I think that's the big question and what will be the biggest challenge for the next leader. How the technology reshapes the entire way their workforce does their daily work. We will probably see him and Solomon spending more time on that.
The obvious contrast is JP Morgan. How is that conversation shaping up as we see a bank eyeing another transition?
They also have a really deep bench and lots of names investors are very familiar with. These are big, enormous companies with always lots going on. Always lots of efforts to recruit away their best talents. You see the banks constantly compete and make sure the talent they have groomed from the earliest stages can stick with them through when the next CEO takes the role.
And the generous pay packets. Thank you for joining us. Let's get a check on your markets this morning. We rebound after losses yesterday that were led by higher oil prices and higher yields. You can see the obvious mover. Oil is down by 2%, trading at $100 a barrel. 10-year is at 5.22%. The Nasdaq outperforms. Let's get a look at individual movers with Norah Mulinda.
CarMax is climbing after a beat and sales expectations as people turn towards used cars. CarMax planning to restart its share buybacks. Shares higher by about 5.9% in the premarket trade. A big vote of confidence for Summit Therapeutics, AstraZeneca unveiling $2 billion in the developer. They are working together on a new treatment that analysts say is further along than what rivals are developing now. Shares are higher by 22%. Some new competition for FICO. Federal Housing Chief Bill Pulte said mortgage pricing is getting simplified. The new structure brings Advantage which is a direct competitor to FICO. Those are the morning movers.
We will catch up with you later. Shares of Jefferies drop as bad bets hit its asset management business. That is coming up next on Bloomberg Open Interest.
Let's get some high interest stories, a look at what's making headlines around the world. The fight between the U.S. and Canada is escalating. Washington is blocking certain products from Canada, including alcohol, dairy products, motor vehicle imports, replacing 50% tariffs. The restrictions took effect today and is based on where goods are produced, leaving some American-made brands made in Canada also affected. Morgan Stanley is launching a digital asset lab to test stablecoins, tokenized assets and decentralized finance. They say the secure environment will let teams experiment without risking core systems. In banking, Jefferies Asset Management's revenue plunged in the third quarter to $85.6 million. It was way down by soured investments tied to Radiant World. It overshadowed record results. The firm remains optimistic about business heading into next year. Joining us now is Neil Sipes. It was only a small portion of their earnings but can we talk about this asset management division. Why has it been dogged quarter after quarter on bets gone wrong?
This is a continuation of the drag that started developing last year around First Brands. This is contained within the Point Bonita fund, of which Jefferies has a 5.9% equity stake in. A lot of the headlines we have seen generated around First Brands, most recently around Radiant World are largely contained to their earnings events through their ownership stake in the fund. Now they are sort of shifting a little bit away from this asset management business, which is a small percentage of earnings and revenue for Jefferies. They are shrinking some of the capital they are investing in the funds. We think that will refocus in the investment bank and move past this business. Until then we will see declines in revenue and that will keep investors looking at it.
Was that really only the dark point in the report? Shares are down in the premarket. Is that maybe headline-driven? This is a small portion in an otherwise bright set of earnings.
I think it is less of the asset management business and more of the mix of revenue we saw in the third quarter where generally the beat was equities-driven. That is typically viewed as a non-recurring business. We are in a hot market for equities trading. We have seen that across the big banks. That could persist as long as markets and the environment remain conducive. You had misses across the underlying debt underwriting business -- across the underwriting business. A little bit of the mix and other sticking point we see with Jefferies is the compensation ratio. When you see such increases in the investment bank on the revenue side, we are not seeing the commensurate decline in compensation ratios. A lot of that has to do with the fact that Jefferies has beefed up the size of its franchise in the past couple of years. We are not seeing the same magnitude of margin increases we are seeing across the street.
How are these banks talking about the M&A environment? We have seen Oura delay their IPOs and others delayed. Are they confident in projecting what the deal advisory or underwriting business will look like?
There were some constructive comments from management moving into 2027. We have seen the headlines read the sizable IPOs that are coming over the next 12 to 18 months. Certainly, debt has been hot, particularly on the large-cap side of things and up into the mega caps. What we are waiting for is the private equity backlog to unlock. That's been a story we have heard about a lot, particularly in the third quarter. They highlighted it was a driver of the record results. I think there's a lot more to go in that middle-market space. A lot of that will depend on private equity and ultimately where markets go from here.
Very strong in M&A and trading. Bank of America was the first out of the gate at the Barclays Financial Conference to say it will look flat to only slightly higher. How big of a disappointment is that?
They did give an uneven guidance. The broader story is equities continue to be strong. Investment banking building but there are things happening on the macro front. Little hiccups here and there. We have had an increase in interest rates. All that can perhaps cause a short-term pause and reassess and look at things. Does that shift expectations? Does that change the capital markets expectations moving forward? We are pretty optimistic moving forward so perhaps a little bit of a blip in terms of unevenness. The broader take is strength continues.
Thank you so much for joining. Neil Sipes of Bloomberg Intelligence. We'll step up next, Gabriela Santos discusses selling economic data in market uncertainty. This is Bloomberg Open Interest.
I'm wondering whether the unwind of the yield curve trade is a big problem. It might be the revenge of the bond vigilantes now that they are liberated and free to express an opinion. Now you have to refinance at these yields. That is concerning.
Ed Yardeni on the freedom of bond vigilantes. Let's bring in Gabriela Santos from JP Morgan Asset Management. Great to see you. Yields about 5.22% for the 10-year yield this morning, near multi-decade highs or the highest in about 16 years. Ed Yardeni does not think the worst is over but you think maybe some of the selling is overdone.
It does seem a bit overdone. If you think about what the drivers have been behind this rapid 50 basis point move higher in the curve, it seems to be a bit of a combination of factors. What it does not seem to be is inflation expectations. Those have barely moved but there's been a big move higher in real yields. Probably a combination of more resilient data, more hawkish Fed speak, and demand for capital coming from sovereigns and corporates. If we think about the economy not being quite as strong as the PMI signaled last week, the Fed not needing to hike as much as is priced in, and if we think about the demand for capital being understood, it seems we are closer to a ceiling than we were before and hopefully the important thing for the market is the volatility to stabilize a little bit in yields, and then they look really attractive at 5% or above.
The PMIs might be showing more strength than the economy actually has. It traded on data that usually passes without so much of a notice. Why is that overstating the economic strength of the economy?
The S&P PMIs have been predictors of cyclical economies. They have a tight fit with Eurozone GDP growth for example, but have not historically had that fit for actual U.S. economic growth. They have been more of a secondary or tertiary economic data point. It fed into this discussion about how much the Fed does or does not need to hike into a pretty resilient economy. If we look beneath the surface of the economy, you are seeing pockets of strength in AI related capex but not outside of that, if you look at structures or housing which are already interest rate sensitive and have been reacting to higher rates. If you look at the consumer, an upturn here in the middle of the year but very much led by upper income. With some of the tax stimulus tailwind fading as the year goes on. We see an economy that is resilient with pockets of strength but that is likely to normalize and grow closer to trend. Something closer to 2%, not the five handle the Atlanta Fed has for the third quarter.
A lot of people argue stocks can hold up because yields are moving higher because it is a strong economy. If it is trending closer to normal, what does that say about the direction for assets from here?
You are seeing a different dynamic beneath the surface of the equity market. You have 430 stocks in the S&P 500 down close to 20% from all-time highs this year. It is especially in more interest rate sensitive cyclical sectors. They have been reacting already to higher rates and into a resilient and not booming cyclical economic picture. The other place I would look to for this change are small caps which earlier this year we would argue were outperforming because it was a more speculative, higher beta AI related trade. That with higher rates and unprofitable companies starts to fizzle out. It is more large-cap high-quality we are focused on.
We will get into more of that after the opening bell. Gabriela Santos sticking around. You are watching Bloomberg Open Interest.
Let's get your trading day started. I'm Dani Burger. Stocks moving higher after falling yesterday but just barely. Nasdaq up 0.4% as the Dow Jones goes a lot of nowhere. Yields are more tame, as is the price of oil. Bloom Energy ringing the bell at the New York Stock Exchange. Their stock is more than doubled, up some 200% year-to-date so they have plenty to be excited about. Down at the Nasdaq less to be excited about. MongoDB, the CEO ringing the opening bell. The CEO has been the CEO for less than 24 hours. Yesterday the CEO got hired away by Meta to lead AI assistant initiative. They are happy but a bit of a shakeup there. AMD moving in on an $8 billion deal that will acquire the startup led by Fei-Fei Li, World Labs. Adds their AI models and research team. AMD could look to compete beyond just chips. Meta announcing new Muse capabilities, continuing to lean on the success of the AI agent. Jefferies, a strong quarter, but that was overshadowed by a sharp drop in asset management revenue and a weaker showing in fixed income. Shares are down one and a third of a percent. Let's bring it back to Gabriela Santos from JP Morgan Asset Management. You were mentioning before the break that small caps have had this huge run-up but have stalled out because the AI trade embedded in them. How do you prevent those types of traps? A value trap. It has come back when you're really just riding AI exposure.
We have to be careful with your traditional factor and style buckets, and size buckets. An interesting factor that was overlooked in the first half of the year was momentum versus quality. It was all about momentum. The higher beta AI the better and that is where small caps fit in. Momentum was outperforming quality by 34 percentage points at the peak in late June. This has gone way too far and it really retraced and got as low as eight percentage points in late July. Don't overlook quality. It is not just because something is tied to AI that is necessarily a good investment. Much healthier plays. The second is traditional style exposure. Value has outperformed growth by 15 percentage points. It is up 22 versus growth's six. That has nothing to do with your cyclical sectors. It is all about semis. We all know they did amazing. Then the weight came down and then they had to come back. Our discussion with investors, you have to be careful when you think about the AI theme and ways to play within the AI theme that is a lot more nuanced and outside the AI theme. That is getting harder and harder.
You have been warning about AI tantrums, the risk of overexposure. A 20% momentum unwind in July was particularly painful for a lot of hedge funds. That exacerbated the problem. How do you look for the unwinds? Are there triggers that might arise this AI tension again?
We do look at the spread of momentum versus quality. We look at leverage that is building beneath the surface. That was a big thing leading into the momentum unwind in July. Number three, how the different AI related industries are behaving. When you get a big run-up in something like semis at the expense of those doing the investing in the picks and shovels, the hyperscalers, something is unbalanced. You can't have semis out-earning their customers by that much to be sustainable. It does look like a healthier place. More of a return of quality. More of a focus within the buckets. Different quality companies doing well. You have days where they are doing well together and you have less leverage. But this stuff can arise again a month or two from now. It doesn't matter if you're bearish or bullish on AI. You have to think carefully about the portfolio construction.
What do you think of the banking sector? There are a lot of weights on this. IPOs being postponed. Concerned that trading will not be as robust as past quarters. What do you do with financials right now?
We were more optimistic going into the summer. We did think they had been a bit unloved. The outlook more recently has become a bit less favorable. By no measure are we bearish. You still see a deregulatory wave after 15 years plus of regulation. It is a lot more nuanced. It's about execution. That is for two major reasons which you referenced, where we are in the monetary policy cycle. It is no longer cuts. It is now hikes. You can see more pressure on deposits. The second thing is that perhaps as our CEO alluded to.
That speaks to an interesting moment where these individual stocks have very low correlation right now. Everyone is marching to the beat of their own drums. It feels like we should not be that way because of the macro risk in oil, rates, continued tariff pressure. All these things would have stocks moving in more lockstep. What catalyst could trigger that or is this the new normal? Are correlations remaining low and you be especially careful on individual names?
We think correlation remains low and dispersion and active managers stays high. That's because not too much of the real economic factors, because stocks are paying a lot more attention to actual secular stories and AI being the major one. To me, the big change is how quickly that story is evolving. We are talking about safety and what that means for imprints versus training. We are talking about the actual monetization of AI agents. That is why you continue to see the churn beneath the surface of the market and repricing constantly of winners and losers. It is more about the secular themes versus the cyclical one.
Thank you so much for joining. Gabriela Santos of JP Morgan Asset Management. Let's check your equity market. We are higher but only 157 stocks are up. That's enough of the market to be higher by 0.03%. Meta up 1.5% on the success of Muse. NVIDIA and Broadcom are doing well. Semis having a good day. On the downside, Apple down 1.2%. Oura delaying their IPO, concerned about the market environment. Maybe Apple is the reason, the competition. Energy prices are lower so Exxon and Chevron falling. Looking at where the various sectors stand, energy one of the worst performers. Down 1.5%. Oil falls this morning. Communication services moving higher thanks to Meta. Industrials also performing well this morning. Coming up on the show, former SEC Chair Gary Gensler discusses the AI regulation debate and the risk it brings to the financial system. That is next. This is Bloomberg Open Interest.
Let's get you some top calls. Here is Norah Mulinda. First out, Pepsi can't seem to catch a break. A second downgrade this week with JP Morgan says the U.S. turnaround has stalled. Performance of the North American salty Frito-Lay snacks is lackluster. Netflix being upgraded to buy. They think they may have had simply a pull this year, and the Olympics and World Cup may have contributed to the weaker engagement. Over to the grocery cart, MoffettNathanson is upgrading Kroger to buy from hold. Those are your top calls.
Thank you very much. We will catch up with you in the next hour. AI assistants could put the financial system at risk if users shift money from banks to higher-yielding accounts. Torsten Slok says banks could lose a large share of cheap deposits they rely on to make loans. Let's get reaction from former SEC Chair Gary Gensler, now a professor at MIT's Sloan. Wonderful to see you this morning. When you were previously at MIT the first time around, you wrote a paper that machine learning, deep learning posed a risk to the financial system. What say you now in the year of our Lord 2026 when AI is even more advanced?
So good to be with you and your viewers. They are real risks and I put them in three categories. One is we are in the midst of a big AI trade. At some point this capital expenditure boom will be retrenched and we will know at some point in time, as Warren Buffett said, who's been swimming with their trunks off. We will have valuation change and so forth. Number two, and it's a big concern and big debate right now about safety. AI has capabilities where it can go on the internet and find vulnerabilities. It can replicate itself to have thousands of agents going out. It knows how to deceive and jump guardrails. That's a real challenge as well. The one we wrote about six years ago is whether financial firms, banks, brokers, dealers, the like use AI in a similar way that they are herding, all going off a cliff at the same time. That is what we were writing about six years ago. I'm still an optimist. I think this is transforming the world of finance and more broadly our economy.
It's a hard needle to thread. Yes, there are huge opportunities but there's a slim chance that quite catastrophic things happen. I wonder what you make of the argument of a potential bank run. This is something Torsten Slok is saying. The idea of consumer inertia. That AI could pull money from lower yielding accounts to the higher ones and harm the banking system. The way it functions. Do you think on the surface less predatory things like that can turn into something that exposes fragility in the system?
It could be good for savers and depositors. We have about $20 trillion of deposits in banking. Most of that is at low rates. I am pro-saver, pro-investor if AI helps that. You are right. It could expose some fragility of the system if it happened fast. If it happens slowly over time, banks will have to change their business model and depositors would get better rates.
How do we assess risk? I would like your take on this. Anthropic's filing has been reported. A significant portion of the filing is dedicated to the potential for AI to do harm. They say it resists shutdown, preserves itself, conceals or manipulates information. What do you make of a company that is soon to go public that that language is contained in their filing?
It may well be because their CEO Dario Amodei just wrote publicly that he sees these risks, his lawyer said make sure it's in there because that is what you do in this securities market. You disclose material risks so investors can make decisions. Let's get to the risk. The risks are real. I think the challenge is, what do we do about it? Especially because of this U.S.-China competition. It is not so simple we could say let's put guardrails on all these AI models. The Chinese build open-weight models and folks want to use them because they are lower-priced. As it relates to Anthropic, they have a real risk. How do they get revenues? Reuters reported this morning that same S-1 shows they are losing a considerable amount of money, even in the first six months of this year.
And they have a concentration in customers. If that's the situation for these economies that is powering the economy, the U.S. deficit is climbing alongside higher energy costs. Bond yields are at multi-decade highs. Does that lead us to a tension where we are more likely to see a financial accident?
It's a matter of when we see a retrenchment. The boom, we are spending 2.5% of our gross domestic product on this AI build. That was twice in relation to the economy on the internet build in the 1990s. They plan to at some point. Firms like NVIDIA and the chip companies lose some of their pricing power, some of their growth. You expose where the debt in the system is. I think that on top of our U.S. fiscal situation, the war in Iran that does not have a clear path forward -- and I'm saying that politely. Right now there's a lot of risk in this capital market.
What is the logical conclusion of that? If there is retrenchment risk, what could that look like?
That's the question. The timing is when. The next 18 months or 30 or 40 months? That is the when, and then how deeply. I think it is more of a soft adjustment. A soft, that could be like the internet boom went to a bust. The stock market was off considerably back in the 2001, 2002 period. I mean like the railroads in the 1870s. We overspent on housing in 2006 and 2007. Those lead to more calamitous retrenchment. What I say optimistic, I mean relative to some very deeper retrenchments.
I would love to press you on if you're optimistic. Yesterday the SEC issued a warning on a topic you worked on as chair and it was around disclosure on private market assets. You need to be careful with things like boilerplate valuation disclosures. We need to do what the regulations say and make sure these things are disclosed. Assets are being held longer. Private equity is having a harder time. As all that is happening, does this industry lack transparency? Is there more that needs to be done?
If you are talking about private equity and private credit, most of the holdings in those big fields and they are multi-trillion dollar fields are held by pension funds, sovereign wealth funds, high net worth families. That is a little different level of disclosure. I would say for the investing public, the broad investing public, there are risks and you need that disclosure. That is a critical point that I hope the SEC is pursuing. Again, there is a lot of holdings both in private credit and private equity that are getting a little old. The question is, what are the valuations? What are their mark-to-markets? Are they being adjusted for the risk that might be there, either in the markets or from AI?
Instead of having more rules around things like disclosures and transparency they are trying to open up access to retail investors, things like running the term of what an accredited investor is. Is that an issue at a time when they are dealing with aging assets?
I like the basic mechanism that we've had for 90 years. Investors get to decide what risks they take but just as you mentioned it, Anthropic, they have to lay out all those risks, the facts, the figures and the like. The challenge of bringing the general public into these illiquid assets with less disclosure is that it's breaking the basic bargain. Give all the facts, the figures, the risks and that investors decide. I don't think that is really what is happening when you say let's have retail investors investing in some of these private equity and private credit funds.
Thank you so much for joining us. That is former SEC Chair Gary Gensler who is now co-host of the Power and Consequences podcast. Coming up, Meredith Whitney on rising volatility bond yields. This is Bloomberg Open Interest.
Some breaking news from the Wall Street Journal. Sources say Piper Sandler has been holding talks to buy Perella Weinberg, the investment bank. Piper Sandler going after the advisory firm. Perella Weinberg has been underperforming. I reported earlier this year they cut about 10% of their staff. The combination of the two would create a much larger investment bank on the case of Piper Sandler. Perella Weinberg has been dogged by the rebound of M&A, which they have somewhat been able to capture. They are more of a mid-sized M&A advisor which is not as robust when it comes to sponsor-backed M&A private equity. The Wall Street Journal reporting Piper Sandler has been holding talks or had held talks to buy Perella Weinberg, jumping on the news as Piper Sandler moves lower. Coming up, Meredith Whitney will join me in studio. Plus, the CEO of Lightspeed who will be sharing a report on how AI is changing how we shop. Then Citi's head of enterprise services talks about the housing push. In a few minutes time economic data hits the tape. We look at consumer confidence and JOLTS. That is just after this break. You are watching Bloomberg.
81.9 for September, that is down from a revised 88.6. The present situation, 109.3. Expectations falls to 63.6 from 68.2. The other number that is out right now, JOLTS job openings. 7,079,000. The JOLTS quit level is 1.9%. That is unchanged. It does not suggest people are having a whole lot more confidence, but not a lot less either.
It's actually lower than the prior month of 1.702 million. The one thing you can say is that gasoline prices are weighing on Americans here. Central Illinois right now, $4.59 a gallon, Dani. You can imagine that people here are not thrilled either.
How does this set us up for the other big data point of the week, the jobs report on Friday?
One of the things people look at is the jobs easy to get, hard to get in the consumer confidence numbers. Jobs plentiful fell to 23.6% from 24.5%. Not so plentiful, 55.2 to 54.5. Jobs hard to get increases, 20.3 to 21.9. Looking forward, there are fewer people saying there will be more jobs in six months. There are more people saying there will be fewer jobs. People think incomes are going to drop. The people who say incomes are going to increase, 17.9, down from 19%. Decrease, 15.4 from 14.5. Those are relatively large movements, and it shows that Americans are not happy about the state of the economy.
Mike, thank you very much. That is Michael McKee. Bond yields pare some of their losses, but we are back to high yields again. The 10-year just up under two basis points, 30-year up. Joining us is Meredith Whitney. Always a joy to see you. Last time we spoke over the summer you were concerned about what the economy would look like heading into the fourth quarter. In the meantime, we have gotten strong economic data that has brought his view that the Fed is going to have to continue to hike, and maybe they do so in October. Are you still worried that this is a Fed that is hiking as something looks like it is going to crack underneath the surface?
I think the economy is fragile, to be sure. I'm not sure what the Fed will do. I don't have high conviction of what the Fed will do in October. The persistency of inflation for consumers is really, really painful. There's an Iran war cost indicator that is put up by Brown University, and it measures a nine million dollars increase per household in terms of increased expense, which is really straining the lower end of the consumer. The lower end of the consumer is constrained. The higher end is starting to show strain. In terms of what they are doing, we know the lower-end consumer has been making choices, spending less on groceries to fill up their tank of gas. It is moving upwards into higher-income consumers as well. I just don't think -- it frustrates me that everyone refers to the consumer as resilient, but they are not looking at the underbelly of what is moving. I estimate that two-thirds of consumers households are living paycheck-to-paycheck. I would say 40% of consumers are barely living paycheck-to-paycheck. That is moving higher. That is a January number.
