tv Bloomberg Surveillance Bloomberg October 5, 2021 8:00am-9:00am EDT
♪ >> the market seems to be buying into the fed's inflation dismissal. >> it is clear inflation is going to remain elevated and that will be an issue. >> i don't think interest rates are the cause of the uncertainty or risk in the equity market. >> for the economy it is important but for the market it is about earnings. >> there is plenty of demand across the board. that issue is can that demand be fulfilled? announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning. on radio and television,
interesting tuesday to say the least. we stagger to the jobs report friday but before that pepsico readjusted. revenues are going to be better than good. john, the mystery of what begins october 13. jonathan: onto jp morgan's earnings and we kick things off with apple. remarkable moment and a big question -- can you meet demand with supply? we so that with nike, fedex and others. it is the key question going into earnings season. damage of the index level five points on the s&p. amazon, apple, facebook much greater. double or triple that. tom: 11% on apple as well and we are looking at this drawdown. that is a fancy word for people with bowties. it is a loss and some losses are tangible. jonathan: buy the dip? how has that worked out? tom: they had a big year the
year before. jonathan: they did. but it is so easy to sit here and say, buy the dip. people, programs like this and then you hesitate. tom: lisa, to me it is extraordinary how the president continues to manage the message to his democratic party. lisa: will it be positive or negative for markets? rbc talked about how on the balance people see this potential negative to the s&p because they are starting to build in higher tax rates, more than any fiscal boost. i find that interesting given the fact something will pass. tom: it is the uncertainty that is out there but the other uncertainty is corporations have to react to it like they are reacting to everything else. what you see in bond issuance before we see the fiscal ballet? lisa: record amount of investment grade issuance.
what else are they doing? what can they invest in when they cannot get enough goods for people to meet the demand? to me, the key question heading into earnings season, particularly with banks, is how willing is the consumer willing to spend? how determined are they despite the headwinds? tom: we are a little distracted with the red sox-yankee game but this is really important. [laughter] if you could earnings season out of the way the first week of november -- jonathan: if you can tell me if the supply issues persist into next year, we could answer important questions. nominee people can answer that. tom: quick question before we get to our guest we have not mentioned fantasia, ev ergrande and the rest of china. jonathan: this is the snowball. you start to get the jitters,
the credit markets seizes up. these companies start to have problems. who wants to put a deposit down on a house in china? a house that might not be built for several years. you want to take that risk? property prices rollover. what happens to developers? this does, the snowball down the hill. lisa: sounds gloomy. jonathan: hard to stop. growth will have to decelerate. that is what we have got to discuss. tom: we are up 160 on the dow, s&p up 20 points. the vix at 22.16. what do you see? jonathan: is that too gloomy? lisa: i thought you did a great job. [laughter] jonathan: we have got to talk about crude. $78.62, up by one full dollar. that is the highest since 2014. saw that yesterday and again today. tom: breaking out right now brent crude $82.48.
can i go longer on that? jonathan: please do. tom: we have got some curvature. omar aguilar joins us now, charles schwab head of investment. i love what you say about the development of new walls of worry. for you does that mean go long? omar: that actually means we have to entertain clients on the behavioral asset of the market. there will always be concerns. you can always find a gloomy scenario at any given time. it is true it is a little more difficult to think about the positives when you had a bad month like september and the whole discussion about inflation, gridlock in washington, about supply chain disruption, labor market. it is very easy to continue to build that wall of worry and
usually that information gets in the hands of investors and consumers. jonathan: talk to me about the 10 presentation of extrapolating last week's price action. how do we avoid that? omar: it is a very natural bias and one of those called cognitive biases. it is very well studied in literature. basically you extrapolate your experience over the recent information and you think that is what it is going to continue going forward. that happens in the bull market. that propels bull markets if you think about it, that is the whole idea if you are missing out. but it also works on the downside with people that have bad experience -- you were talking earlier this significant negative returns we saw in individual names -- people extrapolate that and immediately get emotional bias to kick in which gives them doubt on how to make decisions. it is one of those biases that has risen the most, especially
during the pandemic and in the process of getting out of the pandemic. lisa: that's behavioral finance of investor. what about of the consumer as they look at higher prices and say, you know what? maybe i don't want to buy a washing machine because it costs twice as much as it did two years ago. maybe now is not the time to buy a house. how much does this ingrain itself into the economic moment and create a slowdown in consumer spending despite robust savings? omar: we did see already slow in consumer spending after the big push and demand at the beginning of the summer. the consumer spending slowdown happened even before we actually got into the full -- there is hesitation on consumers to think about what may happen going forward. there is another very interesting behavioral finance bias called endowment effect.
once you got a lot of cash holding on it is hard for people to start thinking about it. the good news is the consumers have the leverage. during these process of accumulating extra savings they have de-levered themselves where they are not worried about higher interest rates as they were three or five years ago. with that in mind, that assumes, with a little bit of pressure on wage growth and a little bit more on drawing down savings, the potential for consumer is not as strong as people expected but the holiday season into next year is expected to be positive. lisa: how important, given what you just said, our bank earnings and their view into consumer borrowing, credit card lending, in order to determine what the appetite is for consumer spending? omar: it is important. banks are in the framework we are talking about and related to what the shape of the curve is
as well as with the demand is for extra credit and just the level of interest rate. the process is definitely not a strong as they were in the beginning of this year but certainly they are well-positioned for going forward because we do expect there is going to be a significant amount of extra demand for credit, especially as investors and consumers start to balance how much they have to draw from their credit and how much interest rate they can use credit for. jonathan: we hear a lot about the bar but i want to talk one side of it, cyclical's, energy, banks. we had a massive moving energy the last month or so. not just the underlying commodity. i want to understand what you do with that position. is this something you sit on or you looking to move into banks? banks that have not kept up with what is happening with energy equities. omar: couple of things on this.
the first thing is we are getting into the process of moving into that midcycle. in a way, the announcement about the tapering extended that recovery cycle where cyclicals outperform. we did get a break in the summer because of delta but we continue to see that cyclical position and we think there is another quarter. you can still go around those things where we have supply -demand disruptions that will help energy, help industrials, help financials. we always encourage our investors to rebalance their strategy and this is an interesting time. and negative month like september allows them to be proactive, especially in low harvesting. this is one of the things that is most important in wealth management. jonathan: thank you, sir. omar agee, head of investment -- omar agee lahr, charles schwab
oamr aguilar, charles schwab head of investment. markets when they say 60% off, 10% off you run away but when it comes to any other market, like shopping for you, people gravitate toward it. lisa: are you shopping online? jonathan: just got the email on my work account. 60% off everything. lisa: are you going to buy it? jonathan: it gets some people excited, that's the point. when it comes to market people second guess themselves and goes back to something i said, easy money has never been made. tom: the famous phrase of the gentleman from tennessee, sir john templeton, he would say, shares are on sale. jonathan: shares are on sale. tech is on sale. lisa: are they? tom: there you go. [laughter] lisa: if you look at facebook for example, the shares are up
dramatically on the year. amazon not so much. apple only up 5%. but if you take a look, once your starting point? we had such a huge rally earlier in the year. tom: that is classic. classic abramowitz. we have got to go with that. [laughter] the pendulum of are they. jonathan: zuckerberg should appear before congress. that whistleblower down in d.c. today. that one has got legs. that story is not over for sure. tom keene, a lisa abramowicz, jonathan ferro this morning. yields higher this morning and crude rallying up 1.28%. heard on radio, seen on tv for our audience worldwide this is bloomberg. ♪ bloomberg. ♪
economic interests. and that means taking all steps necessary to protect ourselves against the waves of damage lifted over the years through unfair competition. jonathan: u.s. trade representative from new york city. tom keene, lisa abramowicz, jonathan ferro this morning. 19 points higher on the s&p. on the nasdaq bouncing back 61, up 4/10 of 1%. yields higher up one basis point. there it is. highest since 2014 on crude through $76, $77, $78. tom: $82.36. a lot of topics and not enough time. damian sassower, credit strategist. explain to the public the
depth of the market. how would people are there? damian: i don't know but this is the only market we have now that will give us any proxy about what is going on in china because the market is closed. they hedge exposure to china and it is a very deep and liquid market. quite frankly, you see china spreads up 10% overnight. that tells us everything we need to know about the first official default in china, that a fantasia the property of developer. there is not a five day grace period. they put the company on default about an hour ago. and we are also starting to hear from evergrande where we could have another win. tom: how do you judge the size of fantasia's problems or the parts of evergrande problems.
there seems to be a smaller amount of money and yet, pros like you are concerned. damian: $35 million of debt for evergrande and only $6 million of debt versus $13 billion for fantasia. fantasia focused on the upper markets and evergrande on the lower tier. at the end of the day they are part of the property sector and big issues of the dollar bond. if you know what is going on in china, yield a 15%. that is what investors are looking at. jonathan: i want to talk about policy response to this. you know how this can snowball and how quickly. the credit mark seizes up the property market follows, the credit markets eases up and he keeps rolling. i want to understand the circuit breaker for that in china. what is it? damian: short on country garden bonds because that is the way it goes. fantasia then evergrande the country garden. i happen to believe that is not going to happen.
i don't think it is going to be so sporadic where the entire sector goes down and property prices collapse overnight. it could happen it is just not my base case. i think you will have pain throughout the sector a lot of big issuers -- we had a small issuer seneca going to default overnight. the market is focused and you are absolutely right. what is the spill over to housel? to their savings? everything is pointing lower and we will see more especially if you look at the manufacturing sentiment. this below for is in financial markets as well. we have gone back on fourth or a number of weeks. this spill into other currencies within em, where are you looking at the moment? damian: i came prepared for this one. there are three emerging-market currencies that are positive. the taiwan dollar, forget about that. the other are the communist
currencies which have the best staying power. you can look at carried differentials and say that may have something to do with it or you can look at sentiment and technicals. for me, it says everything you need to know. those countries can manage current state -- currency stability better than the mexican peso and south african rand. want to talk about mining prices , the best is the rand versus the dollar because metals are not rebounding the way they should. gold is falling here in the u.s. lisa: this is a lot. let us dig through this and separate out these issues. i want to go to the point of shorting the rand, the fallout into certain metals. liz saunders put out a chart today showing the impact of real estate related activities on china's gdp is close to 30% versus 17% in the united states.
much bigger factor in the overall economy which is the second-biggest in the world. what is the potential trickle out affect the echo speaking to your point about the rand, as it percolates out regardless of whether this becomes a full-blown crisis? damian: as goes china so does the rest of the market. you're going to see developed market, growth differentials and that is the first default. the second will be inflation impulse which is much stronger in emerging markets. eight of 20 of the emerging markets have hiked since may. more to come this week with peru. we add romania to that and the third is being built back into the u.s. treasury yield. right in your wheelhouse. as we see the steepening of the u.s. curve we will see the same in emerging markets. bad for their funding come about for economy and they have to make a decision. do we raise rates to stem off
inflation and potentially choke domestic growth? that is is the decision they have to make every day. i wish i were sure cable. [laughter] jonathan: damian sassower, chief emerging-market. tom: he is not on here to yap about china. damon, red sox game. damian: low end away. we remember the iron boone homerun. i would be lying if i did not say i was a yankee fan but if i were betting money, i would be betting on the yankees also. tom: god. [laughter] jonathan: you encouraged it, dom. it is damian sassower. [laughter] tom: full disclosure, john, i had the pleasure of interviewing one bucky dent one day, one of
his great charities, and bucky f. dent is a class act. jonathan: futures this money up 18. tom: damian sassower on the other hand no. [laughter] jonathan: he can tell you later what the f stands for. the dollar showing a little bit of strength. -2/10 of 1%. let's sit on this one. $70.50 massive rally. we are up another 1%. tom: we are not ready for 85. we can frame it another strategies but the realization -- i did the gas chart. a gallon of gas in america $3.20. when he gets to $3.58 how does america react? jonathan: i have grown up in the
jonathan: live from new york city for our audience worldwide on tv and on radio, alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures bouncing back .4% on the s&p. bond yields higher by one basis point. we keep going back to this group move, the highest since late 2014. up another 1%. summing things up is kit jukes at socgen. markets are moody, depressed, and sensitive to the shortening amount of daylight in the northern hemisphere. tom, does that resonate with you? tom: i thought it had a real red sox tinge to it. jonathan: moody, depressed, sensitive to the shortening men of daylight. i get sensitive to the shortening men of daylight. i'm a sensitive kind of guy.
tom: i can feel that. jonathan: darker and darker. record trade deficit. lisa wants to get serious. lisa: sorry to jump in. this is fascinating because the tray discussions are ramping up between the u.s. and china. the u.s. wants goods and people are not getting them fast enough. we are importing more than we are exporting. this has a lot to do with china. jonathan: ahead of talks with china on several levels. can they achieve something the previous administration did not with a different approach? tom: no. maybe i will be surprised. jonathan: cannot to bins the chinese communist party to change? tom: their access is different than anybody's in washington. jonathan: it is something the communist party is doing or is it about the structure of the american economy? tom: it is about differences.
lisa: the issue is what is the u.s. want to accomplish. given the business opportunities companies are looking for for the u.s. into china, what is the u.s. government look to do? tom: we will see. what will do right now, we try to have every guest be a red sox fan. we have massively succeeded with megan greene, the only guest i know who has red sox and we welcome her as the global chief economist at kroll institute. the news is so important. i will avoid the baseball right now. the makeup of this trade deficit, is it an export differential or any import differential that gets us to this record statistic? megan: as lisa highlighted it is a bit of both and it is
interesting it is happening as these talks are kicking off between the u.s. and china. china has not held up its end of the bargain in terms of the trade deal we had struck. they have not bought nearly the amount in value terms of goods they had promised. that seemed forgivable in the throes of a global pandemic that originated in china. they had massive shutdowns. the best thing about the pandemic might've been there was an excuse for china not holding up its end of the deal. that excuse has waned. now the u.s. would like china to hit the target. it is a big question of how they will get there. tom: that will take forever. the equation is i + g + x minus m.
is it enough to change the gdp megan:? i do not think we will strike something that fundamentally makes it different in terms of growth. most of the growth is coming through the reopening. the biggest impediment is not how much china is buying our stuff. the real impediment will be supply shops globally. that will be the biggest drag on growth in the second half of this year. lisa: those things go together. there is a question of the fact that we do have this trade mismatch in china is perhaps in a better negotiating position with the u.s. simply because the u.s. wants to import all this stuff immediately. how much does this give a sense supply chains may last longer than people are expecting? megan: even without this trade dynamic between the u.s. and china, the supply disruptions will be a problem for the next six months, possibly longer.
they should be eased up in the second half of next year. it feeds into this question about inflation and how much you think inflation is sustainable versus temporary. also we economists are not good at defining what temporary or transitory and sustained are. if you are inflation to wane in the next three months you will be disappointed. if you're happy to sit through the next year and expect prices to be higher because of supply chain disruptions and you think that is a one-off quirk of the pandemic, you might see inflation down in the second half of next year. jonathan: -- lisa: is also a shift in the chinese economy towards a push towards a higher wage and bettering the middle class. i wonder how much we were importing disinflation, importing deflation from china with cheaply made goods? is that reversing at the shift
for xi jinping changes? megan: that was the case. the iron curtain fell at the bamboo curtain fell and we added millions of workers to the global workforce and chinese workers were cheap. that has not been the case for a long time. wages have been rising. now we have work coming out of vietnam and malaysia, wages are rising. the question is where do we go next if we are looking for cheap labor? what is to machines. there has been a ton of automation that should ease some of the upward pressure on wages, and secondly there are other parts of the world with cheap labor. if that will continue to be the model, to offshore any production with cheap labor, and i do not think that is going to be the model, if that is what we are looking for, sub-saharan africa, north africa, the middle east, a lot of room for that trend to run. i did not by the fact we are
running out of cheap workers. i think we are restructuring the economy through a new industrial policy that is accepted by both sides of the political spectrum. it means we are not going for the cheapest products made in the cheapest places. we are trying to onshore some of that work. tom: let me ask you a harvard question. is a fancy academic question. how is our total factor productivity look right now? megan: we do not know exactly because that data comes out with a bit of a lag. we know it has increased. for the developed world it was 1% for the last decade. in the past couple of years it has increased to 2%. in the u.s. it was 3% more recently. we know anecdotally a lot of firms have taken the opportunity to digital ties and automate -- to digitize and automate a lot of things which should boost
productivity and it should boost productivity going forward. there's a ton of legislation aimed at infrastructure spending and investment in capital. that's good to new to boost productivity. the good thing about productivity growth is you can have wage growth. if you have productivity growth as well it does not need to be inflationary. lisa: that might mean the participation rate continues to go down, at least the downward trend we have seen. is that what you are predicting? people be paid more in the labor market but there will be a higher portion of people currently out of the labor market? megan: this gets down to the question of whether robots are taking our jobs were not. i say in previous periods where we had a bunch of innovation and everyone was worried we would all be automated out of work, it did not happen. we generated jobs we cannot wrap our heads around. when we built highways and cars no one thought of all the rest stops that would generate jobs.
there may be an equivalent this time around. there will be structurally lower labor force participation rate for the while, in part because certain industries are not coming back. as a result of the shutdown and the transformation of our economy through this pandemic there is going to be a lot of rigidity in terms of reskilling workers for sectors that are coming back. i do not know a country that does a good job with that. that is something we should be focused on. jonathan: did we do the baseball thing? have we done that yet? red sox, do you go tonight to fenway? megan: i do not have tickets. if any viewers want to give them to me i would be grateful to receive them. lisa: public service announcement. jonathan: perhaps she should go with tom. tom: i think amory may be going.
-- i think and reorder and maybe going. she said -- i think annemarie maybe going. $1300. three rows back from third-base. jonathan: megan, any predictions? megan: i think the red sox will win. it is not because i refer them. tom: that was convincing jonathan: megan greene. i think they're going to win because the best people root for them. what we think about that? tom: i think our ratings went down 8%. lisa: as a mets fan we can commiserate because we have a common nemesis. what else is she going to say? jonathan: she is really into the data and the statistics. i was expecting a little bit more than what we got. coming up, we'll catch up with
the cfo of pepsico. good they have been better? tom: i feel good about the red sox because of mookie betts. jonathan: i am done. up 19 on the s&p. tom: join me to go on the 9:00 to do a red sox brief? jonathan: right at the end? lisa: you guys came in at the same time today. jonathan: we went out last night. we came straight in. tom: went to a private club, changed -- jonathan: change ties, same shirt as yesterday. tom: i would not get too close, lisa. jonathan: what you think the show is been about? equity futures up. from new york, this is bloomberg.
ritika: with the first word news, i'm ritika gupta. shares of facebook are rebounding today after that global service outage yesterday sent the stop falling. the company blames it on a problem with its network configuration. the issue took down facebook's core social network plus instagram and whatsapp. chuck schumer plans about this week on legislation to suspend the debt ceiling. republicans have vowed to block it. that raises questions about whether congress can avert a federal default later this month. mitch mcconnell says democrats can use it on their own time using the reconciliation process , which would require a simple majority vote. three u.s. banking powerhouses -- goldman sachs, j.p. morgan chase, and morgan stanley captured almost 46% of the global market for trading stocks and bonds in the first half of 2021, an increase of almost 6%
from the same period in 2019. european banks such as deutsche bank and hsbc have given up ground. bitcoin rallied above the $50,000 threshold. it happened as bank of america strategist said crypto is too large to ignore. is that there could be more opportunity than this cap dips expect. robinhood -- the skeptics expect. robinhood is allowing users to request a callback for any questions on stock options or cryptocurrency. robinhood has been increasing its staff after a series of high-profile incidents. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪
financial markets have great difficulty pricing where they are. tom: interest rates. a little bit off the interest rate story with the yield not moving. rounded up 1.50% on the 10 year yield. i would note the real yield has come to a greater negative yield , -.92. it is a tangible move in the huge range, the tightness of the market we have seen in the last number of days. all they we have been following oil. brent crude is 88.66. breaking up 1%. maybe that will be the story. lisa abramowicz and tom keene. barry ritholtz joins with bloomberg at pinon about the time and freshman cap -- with bloomberg opinion about the time and freshman college when you realize you can have a line and then you have the rate of change in the second derivative, the
rate of change of the rate of change shows you gradually then suddenly. that is the heartbeat of physics in physics is linked to investment. you write about gradually then suddenly. barry: that is right. pulling a line from hemingway the sun also rises, how did you go broke, gradually and suddenly. that is how the world changes. lots of things that are beneath our notice until suddenly there is no escaping them. that is as true for finance as it is for technology. things change slowly and all of the sudden it is a new world, it is a different experience. tom: i remember the winds of war, he so calculated, 1939 was gradually and suddenly. what does 2022 look like for
investors to move gradually and then suddenly? barry: what normally happens during a cycle, and i enjoyed listening to your prior guest talk about how opaque this cycle has been. that seems to be the nature of these large financial crises or exogenous shops like a pandemic. it partly operates as a reset, but it also accelerates what came before. it is hard to tell, are we in the middle of the cycle, are we late in the cycle? i understand the issue of being opaque. what we have seen gradually happen is what happens every cycle. markets begin a secular bull market relatively inexpensive, and towards the end of that run come anywhere from 10 years to 20 years, they end up increasingly not cheap, they end up expensive. what we've seen over the last decade is home prices have gone up, stock prices have gone up, bond prices have gone up,
there's so much capital sloshing around. people have been warning about expected returns incorrectly for decades, or that warning has not borne fruit. we will now be entering the phase where i think we should ratchet down our expectations about earnings, revenue, growth, and performance in the market. lisa: how much are we looking at. are we enjoying blockbuster returns? barry: we have had low rates. that means the cost of capital and the cost of borrowing is very inexpensive. there are of signs that is turned to creep up. you know i am in the transitory inflation camp, although there has been a reset in a lot of input costs and the annual rate of gains of the second derivative tom was talking about is likely to be modest, but
modest from higher levels. whether it is wages or cost of basic goods, especially a lot of metals, and i mean -- i'm not even talking about rare earth. all sorts of inputs that going to manufactured goods. all of these things will cost a little bit more even if they will not continue the second derivative. that will take a little bit off of profits and that is why i cannot tell you with the markets will do next year, but i can say with a high degree of confidence do not expect 2022 to be as powerful a move upwards as 2020 or even most of 2021. lisa: let's say a client comes to you and says what do i expect in terms of returns and you say gradually and then suddenly and they say what are you talking about? over the next decade are you looking at an s&p that has a 5% return on an annualized basis?
will we be not growing at all? is this a little bit lower and you will not see the big ups and downs because you have a fed that has everyone's back? barry: the expectation that eventually we will begin to see normalization of rates, which was beginning until we have a pandemic, moving back towards, i do not even know what normal rates are. 2.5%, is that normal fed funds rate? here's what the next 10 to 20 years we should expect. we build in a 4% inflation number, which is wildly overestimated so the worst an aerial happens and we are comfortable that is ok. i would rather not give a specific number that is guaranteed to be wrong. i would rather give a range. over the past couple of years people have been talking about forget 8% to 10%, look at 16% to
8%, and we have seen 14% a year. i do not expect that going on. i would expect is back in single-digit gains for the s&p for the next couple of years. gmo and other shops that are much more bearish are looking for negative returns. we have gone a long time without a real correction, a long time -- other than the pandemic crash -- without a real bear market. it would not surprise me to see a couple of years in the next decade that run negative numbers will stop i'm hard-pressed to see a decade -- run negative numbers. i'm hard-pressed to see a decade. i am much more optimistic than that. tom: thank you so much. barry ritholtz writing on gradually becoming suddenly. on a monthly chart of the pandemic lull of may 2020, we have moved 6.2 standard deviations. there is a fancy way you do that
on the bloomberg. that is a huge move. i did not even look at the four standard deviation up move. i guess it is near 100. we had a big move on oil. lisa: this is one of the most fascinating stories of the year if not the most fascinating, the idea we are having shortages and we're not seeing production ramp-up at a time the world is trying to de-carbonized. how much is this the prediction -- the friction between the desire for carbon neutral world and the lack of infrastructure to achieve it without disrupting day-to-day lives. tom: two notes recently on this. i wonder if we say how much does politics play into that diminish supply coming up? lisa: opec-plus did not increase production. they could have increased production. it is a tricky balance heading into next year's election. tom: we will move it through the
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>> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york, we begin with the big issue. transitory for longer. >> the transitory stuff. >> transitory. >> transitory is mons turning took orders -- >> the market seems to be buying into the fence inflation dismissal rhetoric. >> inflation is hot. >> inflation is above the fed target rate. >> it is very unlikely they can get to their target. >> it is still transitory but definitelylo