tv Bloomberg Surveillance Bloomberg October 8, 2021 6:00am-7:00am EDT
coming back into the labor market. >> you have to have a catastrophic payrolls figure. >> tapering, not tightening. >> it does not need to be a knockout. >> this is bloomberg surveillance. jonathan: it is payrolls friday. good morning it, good morning. this is bloomberg surveillance on tv and radio. i'm jonathan ferro. or equity markets are unchanged on the s&p 500. tom: it's a big deal. i shifted. as you know, you frame it from that statistic. it's just a number. what if we come in a little bit below it? jonathan: for that question, what does it take the greenline on?
tom: or to move the markets. jonathan: i've heard 200 k is the number. thereabouts. tom: 1.5 nine, yields of ramped up since the last time you and i were together. jonathan: that was creepy. tom: it's friday. stay with us. lisa: if you look at the 10 year, that's interesting. the two-year is the highest since march 2020. the idea here is people are bringing forward the expectation for a taper because of what you said. 200,000 is the threshold for them to change tactics. do we get a flattening it? jonathan: i've got no idea. you are troubled today. let's start with the equity markets. 159 .95 is the session high. yields are up a couple of basis
points. they are just off session highs at the moment. the euro-dollar, one hunt 15.68. wti crude, staring down 80. lisa: i would love to talk about that, the u.s. reversed their call to release emergency reserves. you saw the prices climb up. what is going to be the breaking point? today, we are focusing on the september payrolls report. 500,000 is the estimate. you have bloomberg estimates coming up with 550,000. this is moving the markets. you already see the two year yield at the highest level going back to march 2020. how does the fed parse out and start tapering. can they do that? the labor secretary joins us on
bloomberg television. wages stay high at a time when wages are increasing at an increasing pace. how does he dovetail the strength we are seeing? tom: i would ask the former mayor of boston with the red sox are doing. lisa: i'm sure the interviewer will take a lot of time talking about the red sox. joe biden is going to discuss the jobs report from the white house. how much will he talk about the debt ceiling, kicking the can down the road. are we creating a serious problem for ourselves? jonathan: i'm wondering if i should just let tom do it. tom: i think the gentleman -- we've got jobs day, we've got a lot to talk about.
the gentleman from dorchester will have an opinion. jonathan: randy, help me read the fed to leaves. what do you think the number needs to be to get it done? >> go cubs. lisa: thank you. jonathan: carry-on. >> i think unless it's a disastrous number, they are on a clear path. what we are looking for is what's happening with wages. we had that low print, the number of jobs create a. that's not because there wasn't a lot of demand. it's because supply was tight. people are being picky about choosing their jobs. it could mean a strong job market. lisa: when do we have enough data to extrapolate a trendline?
it seems like everyone is saying it is too early to tell. when won't it be? >> that's a great question. we always look in the rearview mirror. it is so obvious. it's hard to see. that's the nature of the data. you get a lot of information. it takes a while to really understand it. when you put together, it's not just anecdotal evidence. there is a lot of strength in the labor market. we don't see people quitting in such numbers unless they are confident about the market. you see wages going up. those are signs that a relatively low print could be consistent with a strong liquor -- labor market. tom: he wants beat me to death at jackson hole over the need to aggregate and have a holistic
set of data. it looks like we have to america's of employed and unemployed. you look at the data, do you look at our labor economy as to discrete economies. >> i think we were getting toward one economy before the pandemic. you saw unemployment rates coming down. then you've seen this. we have to look to see if we are getting closer. i think we are starting to get some signs of getting back to the labor market. it's not back to the way it was pre-pandemic. jonathan: does the labor market have time on its side? >> wage pressures are high. market expectations have moved up recently.
let's hold on. this is temporary. we are going to take back what we've been saying. lisa: the you think it's a mistake for the fed to parse out and separate taper from raising rates? >> i think it makes sense to separate them out, to take that first step of reducing the pace of increasing the assets and then hopefully stopping the increase in the balance sheet. i think that's a reasonable sequence. the economy and the pandemic was doing quite well. tom: what does a nation do wouldn't has a negative wage and flushed -- a negative wage
adjusted wage? what do we do when we have negative wages? how do we behave? >> we are starting to have more wage growth, although inflation has been very high over the last two months. it's very important. i think the way to assure that is make sure we have a good investment climate. you only get real wage growth when you have good investment so workers can work with great capital equipment and technology so they can be very productive. jonathan: the former fed governor on this jobs day. let's frame jobs day friday.
we've got a range on payroll from 750 down to zero. she's going to be joining us later this morning at the very end of the spectrum, on the opposite end of the spectrum. it's always going to be this morning. we've got zero and we've got 700 k later this morning. tom: last night, it may have been this morning, she makes very clear under the data, morgan stanley is more enthusiastic about their caution. that gives her a good belief. jonathan: this is the call from morgan stanley. despite the gain it we expect a small down tick to 5.1%. it's that piece of it that is the source for a lot of the
calls through next year. lisa: how sticky will it be if we have a tight labor market? people who are out of the labor market are not going to come back. if we do not, if this something that is more sustainable with wage pressures easing, that should increase. we should get more people coming in. tom: here's the anecdote. i live in this walkup. the asking rents are up 8%. jonathan: we've seen that across manhattan. you're building may be losing money. we know it's not a walkup. tom: there is that inflation. it goes into the weekly and monthly wage. jonathan: what you think you're going through your building is what people are experiencing nationwide. equity futures are unchanged.
we are at dow futures, unchanged. we had a little look at 160 earlier in the session. just off those levels right now, 79 on debbie ti. that is a turnaround. we've got 0.9%. euro-dollar advancing to 115.67. from york city, payroll is just around the corner. your median estimate is 500 k. tom keene started the weekend at yesterday. he is with us this morning though. this is bloomberg. ♪ >> the u.s. is one step closer to investing -- defaulting it.
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for the government play that helps smooth out the supply chain issues. these will continue in the years ahead. we are wasting no time. the secretary of transportation there. jonathan: good morning. this is bloomberg surveillance, your equity market unchanged, treading water going into the payrolls report. 500 k is the estimate. the fed decision it, what will it take? most people think it's around 200 plus. yields are higher by a couple of basis points. foreign-exchange euro is stronger. to round things out, we keep writing higher. we are getting closer to that 80. tom: $80 on west texas intermediate is an emotional number.
i really want to focus here on what we saw yesterday in the markets which drove the vix nicely under 20. it's just one session, the bears were humbled yesterday. there were a lot of bears out there. jonathan: we can talk to lisa about that in a moment. it feels like we kicked the can down on the debt ceiling. maybe the supply-side issues are starting to fade. they are not getting worse. lisa: you are trying to get me to be bullish. tom: we are failing. lisa: some shipping costs are coming down remarkably from china to los angeles dropping 40%. is this good news? in the short term, yes. why? we will have to look at it. jonathan: can you find the product that can be made to put on ships? that's the debate right now.
tom: it doesn't matter what my opinion is. we need to listen to guests battle about this. there is a wide set, a huge debate. jonathan: they come around to the same thing. the supply-side of the economy world wide, will it heal? the see that? tom: emily wilkins is with us to see if joe biden will heal. it's a three-day weekend. i think i am working monday. i can't remember. lisa: i will be there with you. tom: what is the nature of president biden's unpopularity? he is really not doing well. we used to hang on every word of this. what is the nature and the character of the biden unpopularity?
emily: i think washington is aware of his unpopularity. we sought start to fall around the time they did the withdrawal from afghanistan it was highly criticized. we have seen concerns with prices going up. that's been another aspect. the narrative out of washington for so much of the last month has been kicked the can down the road, not able to get things done. president biden is banking on being able to get vaccines, we saw him address that yesterday in chicago. being able to pass this big spending package. there are many negotiations going on within the democratic party trying to figure out to get to a topline number and decide how much certain policies need to be funded. lisa: you mentioned the idea of pushing back the debt ceiling
debate. they've been kicking a lot of cans down the road. how politically perilous is this date as we are talking about the debt ceiling? emily: we are not surprised at a december date. december 3 is generous. christmas eve tends to be when things get done in washington under a great deal of pressure. we are looking at a very busy agenda. the debt limit debate, they do have more time. if you listen to what mitch mcconnell is saying, he hasn't shifted. they are not going to support the debt limit. democrats don't want to use the conciliation process. that is going to require them to give a number of how much they are going to raise the debt limit. that is something they are worried will appear in campaign ads. lisa: why can't they just keep
kicking the can down the road until the midterm election and figured out after that? >> it's a possibility. i don't have a crystal ball with me. i can never say no to certain things. they don't want this to be something that hangs over their heads. you see pressure from the biden administration. they don't want this to be an issue they are dealing with. they just want to get something done. they want to figure out the path forward. jonathan: emily, thank you. the line in the sand for the debt ceiling is december third. let me bring in the stat of the morning. the tale of the tape. 999 global rate cuts since lehman, 56 rate hikes, the most
since 2011. i don't know who had to work this out. asset processes, $800 million every hour. this is shrinking to fewer than 100 million. that's just a rate of change for the balance sheet. lisa: what matters more? the rate of change or the contract should? is it not expanding anymore? this is a key differential given the fact that it only affects equities. others disagree. jonathan: stock and flow is going to be the conversation. tom: it's like a bathtub. what i would look out here and i would go stiglitz on the the belief here to unleash the
positive is growth will stay above the interest rate. that's the great assumption. at some point, that may change and that's the fear of it. jonathan: that's the median. tom: for many others, 1.5-2. that's where things get tricky when you get back to trent. jonathan: -- a little bit is enough. that's the story for us going into next year. getting back to trend growth? lisa: is there too much debt to handle trend growth without additional support? this is a key question. each era of financial easing has led to it. jonathan: it is payrolls friday.
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jonathan: it is payroll friday. this is "bloomberg surveillance." best week of gains going back to the end of august. equity futures up .5%. dead flat on the nasdaq. you know how today goes. payrolls friday. the headline number. is that reasonably good? it needs to be reasonably good, like green, to taper. let's get to the bond market. 159.95. higher session on 10's today. 158.90 right now.
up two basis points. 4%. that is the bond market story. euro-dollar. something like this. positive about ointment percent. -- .1%. it is more about european weakness than it is strength. if you're a bloomberg subscriber, have a look at the surprise indexes for europe and the united states. europe is now deeply negative. america is about to come back a little bit. tom: you have some nice stuff there. i want to go to this idea of substantial further progress and substantial further reasonably good. i'm admitting that right now. substantial further reasonably good. we are getting down to behavior economics for what is supposed to be normal. jonathan: hold our hand until
november 3 when they say let's go. what will happen is this. if we get a break at 200,000 on payroll, you will have an avalanche of fed speak to prepare us for what will come november 3. tom: thomas koster joins us and is looking for a markdown consensus at think tank wealth management. he mentioned the zero statistic. thomas, your research note. explained that we week -- the weakness of the american service sector. thomas: this weakness is temporary. most of the reopening authority has taken place. we have seen some softness in services. travel activity is plateauing. restaurant bookings are plateauing as well. we saw last month temporary health jobs were softening. i think there is a temporary
pause in the services sector that could be reflected in the payroll report. i don't think it is something more durable or worrying. tom: one over the square root of n. are you able to come up with a standard error overset impossible to do given the natural disaster of this pandemic? thomas: it is difficult to do. we have a lot of uncertainties. one is how many teachers come back. we had a hurricane in september. there is a lot of volatility other. the data is divergent. if you look at services, it is plateauing. maybe the truth is between those surveys. i will go with the bottom view. maybe we have a bit of a pause
in services activities. jonathan: you are at zero. does that derail the fed on november 3? thomas: yeah, and i think that is the key question. i don't think it will derail the fed. wage growth is as important as the payroll report and wage growth is quite strong. they will worry about potential inflationary risks coming from a solid labor market. jonathan: when you speak to the strategists and investors, how do they think markets will respond to a zero print? thomas: i think there is some relief the federal reserve will not tighten policy too quickly or aggressively. the federal reserve will highlight some of the fragility's in the u.s. economy. 2022 be more complicated than 2021 from a growth perspective. the fed, when they balance growth and inflation, they will
put a lot of emphasis on growth. the federal reserve will be market friendly. lisa: this example fights the contradiction in the market. you predict a zero print. ellen is seeing fewer wage gains than you are any goes at t -- to the tightness of the labor market. doesn't indicate a tightening in the labor market that is beyond what people expect? thomas: i think a labor market is tight. it has changed a lot from the structural basis during the pandemic. i think a lot of people have retired from the labor market. that means there is not much slack. i would be a zero k print as a temporary factor. the overall picture is one of tightness in the labor market.
a bit of a sluggishness in the labor market could be good news. we don't what the market to overheat either. lisa: this creates a conundrum for the federal reserve because they see a lot of people not coming back and wage growth going fast. how tagged can they -- tight can they make monetary policy given 70 people are left out? -- so many people are left out? thomas: there is a surge in energy prices. we are seeing tight they were markets. and consumers with a lot of cash. some central banks are fighting yesterday's war. in europe, the bank of england wants to tighten because of shortages of fuel. i don't think rate hikes will bring back some lori drivers in the u.k. that is the key question and why the federal reserve will be on the others the spectrum and will want to see stronger growth
before hiking interest rates. tom: really good ground with william dudley, former head of the new york fed. he was with us a few days ago and said the same thing. the fed is fighting the last war. what is the war the fed should fight in 2022? thomas: in the debate there is increasing talk about taking into account financial services risks, the market liquidity as well. those characteristics should probably play more of a role in tomorrow's fed policy, including the sharp increase in debt we see at the private level and the public level. jonathan: there's a difference between em and dm central banks. dm central banks can look through things like inflationary episodes driven by a fuel shortage. em central banks can't. they have to hike to anchor
their currency to make sure inflation expectations don't run away. do you think dm central banks might need to get used to a different set of circumstances? there is something bridgewater brought up. maybe central banks and policymakers should stop getting what they want all the time. what do you make of that? thomas: regarding the bank of england, the pound is dropping on the back -- the more hawkish they get, the more the pound is dropping. they may be starting to do a policy mistake by hiking the rate. you are right. the orthodoxy is more with emerging markets, because most are having -- tightening the budgets, tightening monetary policy. that does not suffice. you need growth. the good news is growth is coming mostly from the u.s. to some degree. in europe.
also, technology is mostly in europe and the u.s.. jonathan: if we get anywhere close to zero, this is what is going to happen. they will call you at about 8:35 eastern time to pick up the phone. if we get nowhere near it, we don't talk to you again. tom: jon. we are calling it 8:31:30. lisa: people still talk to you if it is not zero. someone has got to be. jonathan: thomas, thank you, sir. tom: pray conversation. jonathan: looking for zero, tom. tom: i did what are the stupid fools one-time. -- pools. i have never done it since. jonathan: why did we stop doing that? tom: it's stupid. lisa: he got crossed every time.
-- crushed every time. tom: 200,000. 400,000 divided by 150 million. i'm doing math or radio. jonathan: i'm going to help you now. lisa: there is a debate underpinning this company pitches a patient rate. -- underpinning this, the differential between the bearish view and thomas's more bullish view has to do on the tightness of the labor market. i find that fascinating. jonathan: the unknown. equity futures this morning up 4 on the s&p. deals up a basis point at 158.38 . there is your market board. crude approaching $80.
$79 a barrel. tom: did you see me this weekend apple picking? jonathan: is that what you are up to? lisa: just driving. tom: i would go up near the acorn market. i would go apple picking. jonathan: you get an uber out there? tom: you apple pick. jonathan: why, just out of interest did you bring that up? tom: i think it is what you do in october in america. do they apple pick in england? jonathan: i'm sure someone picks apples in england. i used to have apple trees in my backyard. braydon. -- we are done. payroll friday. would you believe it is payrolls friday based on the cover so far? sometimes yes and some of the time no. this is bloomberg. ♪
ritika: in the battle to avert a first-ever federal default, the senate kicked the can down the road. they voted to raise the debt limit through early december. the house is inspected and passed the measure of net week. that will set up another fight in two months. u.s. nuclear power summary was submerged in the end of pacific region -- indo pacific region. 11 sailors suffered minor injuries. the navy says the submarine is a safe and stable condition. china claims almost all for south china sea has its own. it is rippling around the world. everything from toyota factories and apple iphones and australian sheep farmers. they could hurt the global economy struggling to emerge on the pandemic. it is a sign of a shortage of
workers in the u.k. wage growth strongest and sometime. the pool dropped edit the sharpest rate in 24 years. it i ringing alarm bells at the beginning would. 37% of storefronts were vacant and the retail corridor's near grand central and midtown east the end of september, roughly double the historical rate. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪
work for the forget about -- the federal government or not, be vaccinated or face termination. i'm calling on employers to act. my messages require employees to get vaccinated. jonathan: the president of the united states. good morning. payrolls friday. equity futures now positive three or four points. nasdaq futures unchanged. yield time basis points a little below 160. crude positive, up 5.7%. -- up by .7%. tom, that's the setup. going into jobs one hour and 42 minutes away. tom: we will have the market reaction for you. you have to go back to the yield
market. are you doing the real yield today? jonathan: 1:00 p.m. eastern time. i will be there live on bloomberg. tom: have thomas on if you got it right or wrong. jonathan: i think we are having jp morgan with a bit of coverage. mohamed el-erian joining us at 9:00 eastern time, alongside anastasia amarosa. tom: we are focused on october. it is always glorious to have a columbus day weekend across the nation. there is an anticipation that children will be vaccinated. andrew joins us from johns hopkins you diversity. how will i change will be vaccinated the five to 12? >> right now children represent the largest population that doesn't have a lot of immunity to covid-19.
vaccinating that population is one of the final steps we need to really put in place immunity across all age groups which will make an impact in terms of the number of cases of covid-19 we have. fda has a busy week coming up with vaccinations for five to 11-year-olds, boosters for other age groups, and so it will be an interesting couple of weeks to tell with the rest of the fall and early winter will be like in terms of our covid-19 vaccination campaign. tom: people like you are in the line of fire here. i can see a 15-year-old with parents that say don't get vaccinated just going out and doing it themselves. i don't know how that works. what to do with kids in the family battles over vaccinated and unvaccinated? dr. pekosz: it comes down to communication with the parents. i have said this many times.
it starts with the fact that we have a safe and effective vaccine. particularly for children, the vaccine has been dosed different late to make sure we reduce the adverse events while maintaining the immunity. the data that will come out will show a good safety signature and a good efficacy signature and that population. as always, it starts with communication. we have to talk to parents and make sure the parents understand the safety and efficacy of these vaccines, and the potential benefit. lisa: my younger son had to go to the doctor recently. they did not even testing for covid. is that appropriate? is it ok for us to stop tracking this and treated like other common illnesses? dr. pekosz: i think we are getting there. i personally think we need to do more in the short term in terms of monitoring for covid-19 and testing. we are seeing the vaccine
shift to more mild symptoms, a symptom vatican factions. that's a good -- aand thematic infections. we need to keep track of this virus in a better way. i would feel like for the next three months we need to push our vaccine -- our testing to other levels. that may involve at home testing and antigen testing, which will bring another layer of testing and monitoring to this outbreak. lisa: one thing we do well is track british travel. united kingdom east entry rules for 47 countries and territories subject to the tightest covid-19 restrictions. what has changed scientifically to allow them to do so now? dr. pekosz: i think you have good testing. you have vaccination utilized as a prerequisite for travel. you can monitor people who are
traveling much more carefully and accurately than we could have 12 months ago. all those things for the place allows us to open up the economy and open of these things like travel. it's important to make sure everybody understands this comes with monitoring, with testing, with vaccination. these are other layers of protection built into the system that allow us to do things like open of travel. tom: scripps research published research of good. charts -- dot charts that calculate the needless deaths in florida and texas from unvaccinated. the numbers are jaw-dropping. basically one third of vietnam. 6000 and 16,000. how does a pro like you deal with that? dr. pekosz: it is one of the
major things i think when we look back in three or four years at this pandemic, i really hope we look back with that lens of here are the things we could have done, we could have limited early, that could have saved lives and we focus on the reasons why they were dip limited well. some of them early on where administrative bureaucratic things they got in the way. for the most part it really falls into -- i will be honest -- baseless, semi-political arguments that are preventing the effective use of all the tools we have right now that will save lives. and the inability for many to understand about how much -- how many lives can be saved by effective use of vaccines and social distancing mechanisms. it is one of the major things that needs to be addressed going forward for future pandemics. not to be a downer herbut there will be future pandemics. we need to learn from this one and be more effective and prepare for the next one.
jonathan: let's hope the next one is nothing like this one. on the path forward, there is a hope in this country the data is trending in the right direction now. tom: no question about it. the deaths in florida. these are good studies. 39% of vietnam. that is what these two states have contributed. i was not aware of that. lisa: it's important for us to be tracking this on jobs day. this is the -- the health emergency. how much is the debating allowing them to job markets to normalize in a more consistent way? that is the unknown. the pandemic is easing. for the jobs follow the same path? tom: what do you see in europe? you are wired into the united kingdom. jonathan: a similar situation. tighter labor markets, which is picking up. job openings in america a little
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>> the labor market is tightening. >> there are not that many people coming back into the labor market. >> you would have to have a pretty catastrophic payrolls figure for the fed to change the timeline. >> tapering is not tightening. >> you need you see a reasonably good report. does not need to be a knockout. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the payrolls report 90 minutes away. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. payrolls just around the corner. tom: unchanged from the last payrolls report ago?