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tv   Bloomberg Surveillance  Bloomberg  October 22, 2021 7:00am-8:00am EDT

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>> we do see some encouraging signs the economy is re-accelerating. >> wage growth has not kept up with inflation. >> can you offset the rising input costs and what -- >> >> and pass it on to the end consumer? it's not just the u.s. but everywhere. >> inflation is not transitory and i think it will be persistent. >> this is bloomberg surveillance. jonathan: getting into the weekend, from new york city, good morning, this is bloomberg surveillance live on tv and radio. your equity market is positive 1/10 of 1%. his record high for -- ever -- after record high at the moment. tom: we will have an important
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interview in a moment. what's important is the earnings lift, is it about america or about better earnings globally? jonathan: or is there a big disconnect? tom: higher yields indicate prosperity up to a certain point. jonathan: american express, third-quarter earnings with -- were announced. kayley: with the credit card companies, that indicates stronger consumer spending but american express has business related spending. by and large, it's looking good. the average beat is 13% less.
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the beats are to the upside and people are questioning coming into earnings systems. jonathan: we will discuss snapchat later but let's run the price action. the all-time high at a closing yesterday's session but we are up almost three right now. phenomenal -- phenomenal yield on the bond. tom: there is a lot of good work this morning with a killer chart on breakevens. they are relatively higher. jonathan: higher inflation expectations in this bond market. kayley: the breakeven rate is
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driving the yield. oil is really helped out by the global energy crunch and that will be on the agenda again for the european council summit as they meet in brussels to talk about the power crunch and how do they navigate the impact on consumers and their push to do better on climate change? it's hard to have those issues come together given that renewable energy hasn't provided a backstop in this energy crisis. we will also get preliminary pmi and how the supply chain issues show up in manufacturing. the event of the day, 11 a.m. eastern time, we will have fed chairman jerome powell on a panel. the topic is post-pandemic policy and the challenges it
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presents. when the market is pulling forward hike expectations, how do policymakers navigate that? the boe is looking more hawkish. jonathan: this market is just starting to push back over the last couple of weeks. tom: all of our conversations are different but i love the holistic 60,000 foot view our guest will give you distilled down to what i do monday in the marke jonathan:. jonathan:let's start a little rotter. why is it difficult for you to be bearish with the market at all-time highs? >> is an earnings story. corporate start telling this debt demand is really strong and global growth is accelerating and that's clear. inflation is a focus but the
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market has priced in a good amount of that. you mentioned inflation breakeven and that has come up a lot and we've seen a repricing of central bank policy. a couple of hikes next year and a couple more for 2023 the markets are adjusting so i think we will get through this. i look about where you talk about europe and japan outstripping american earnings. let's go back to the s&p 500 whiz -- which is multinational. can you give us a new s&p number and of 2022? as an investor on the sell side, i don't have to give point estimates but i try not to look
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so far ahead to the end of next year. i'm trying to figure out the next month or so. we will see how the economy and earnings layout and the second half of next year. i think it might get trickier as we returned back to trend growth. over the next few quarters, we are still going to see a really nice pickup in the u.s. economy but the global economy. vaccinations will go to emerging markets and there is a strong fiscal impulse in europe and japan. the near term trend i think is still quite right. tom: i'm looking up coca-cola. coca-cola is like north america is half their sales.
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the spx is a multinational index that benefits from this optimism. >> i completely agree. u.s. stocks will do very well in this environment. the sensitivity of the european index or japan's index to global growth is even stronger. revenues are an even bigger share of those companies in those indexes. if you want to play the global economy, the s&p 500 will do great but japan will do even better. kayley: china is a huge heavyweight in the growth story is going in the other direction. how do you think about threats revolving around china? >> those are real and that's probably the biggest area of
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uncertainty. we see that this is a medium to long-term -- long-term story, china's readjustment away from investment and toward the consumer. there are concerns about tech regulation but we can see that china right now has two steps forward and one step back in terms of their policy. they are allowing the property sector to slow but in the last day or so, they say maybe we don't want to do too much too fast. this is a multiyear crackdown on capital markets and slow down and growth most of we will be talking a lot about china slowdown for years but we can have some confidence that they will not be doing too much too quick that it will damage the
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economy too much right now. jonathan: the federal reserve is fanning officials from buying individual stocks. i know you got nervous. thank you very much. the federal reserve in the last 24 hours and top officials from buying individual stocks and bonds and limiting active trading after the scandal of the last several months. should that apply to congress as well? why should the federal reserve have a higher bar? tom: the issue is the word trade. the real issue is the moving in and moving out of stuff. if they own 8000 shares of apple like you do and they hold it, is that un-american? if they are trading it, that's a
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different story. jonathan: it will be interesting to see how jerome powell will be criticized for this? kayley: does it make progressives more open to the idea of a second term for the chairman? did jerome powell make it easy for the renomination to push room jonathan:? i think senator warren has decided on her position. tom:liones will instruct. she's got 50 yard line tickets. coca cola, equity, geo go, it's
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all there in the bloomberg terminal and i have no idea, north american revenues are one third, two thirds of folks revenues are abroad stop coca-cola has got to do well. jonathan: why are you shocked about that? tom: i am not shocked what kayley makes it easy to do our jobs. kayley: it's not me, is the power of the bloomberg. jonathan: lisa is back on monday. she will be talking seven year auction. from new york city on radio and tv, the sun is coming up so can it get much better than that? tom: if the sun comes up, the red sox wins.
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jonathan: this is bloomberg. ♪ leigh-ann: president biden does not think there is an of democratic votes to cross a deal for his democratic agenda but he believes he will get an agreement on the overall package. he made the comments during a cnn townhome. a white house official says he was comparing the tax rate in reese's and not other potential provisions to raise federal revenue. the steepest one kit -- one-day increase. there were 100 and 16 debts read corded in germany. german officials expressed optimism that they would not need additional virus restrictions because at least 66% of the population has been fully vaccinated step intel executives say profitability will suffer during the next few
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years because of increased spending on the manufacturing technology. if the fourth quarter comes in as a project, sales will decline 3% from one year earlier. earnings-per-share could fall 40%. shares of snapchat tumbles after the owner warns that changes to the apple data collection is weighing on advertising spending. they are tempering their fourth quarter earnings forecast and its expected revenue of 1.20 one billion in the final three months of the year is less than analysts were projecting. this is bloomberg. ♪
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jonathan: live from new york city on tv and radio, this is bloomberg surveillance. all-time highs in the equity market. yields up a couple of bases points and near highs for the year on twos and fives in the bond market. we need to talk about foreign policy and the president of the united states and his big issue is taiwan. >> china, russia and the rest of the world knows we have the most powerful military in. the history of the world don't worry about whether they will be more powerful but you do have to worry about whether or not they will engage in activities that will put them in a position where they make a serious mistake. jonathan: the president was asked if he would defend taiwan and he said yes. tom: i have the memory of misses
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chang kai-shek coming into the u.s. all sorts of great scholarship on that and all i can say is the sensitivities here are extraordinary. we had secretary chao at the milken conference and she from taiwan visibly shakes when i talked to her about this. jonathan: this is the quotation from the president. i don't want a cold war from the president. we will not change any of our views. tom: the delicacies here and the chill from both parties are extraordinary. one theme that's out there is the idea of the president unilaterally bringing back tpp just to shakeup the chinese.
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jonathan: then there is the whole tax issue. after that town hall last night, i don't know if anyone has any idea. tom: do you think anne-marie knows? it's total chaos, george bush senior's career went down text policy. is the president's career going to go down in flames because of this present tax argument? >> i cannot tell you that but it's confusing. the president said yesterday that he doesn't have the votes to raise corporate and personal income taxes. what we learned about congress is that kyrsten sinema rep with richard neal, the head of the healthways and committee was there seems to be a little bit of a workaround and she wants to path -- she wants a path
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forward. she says this has got to ask and she is on board with renewables and child tax credit expansion. the question i woke up 2 -- this is what senator warren said to me yesterday, can you imagine the democrats of the white house, the house, the senate and the trump era tax cuts and live through it all? tom: i'm sorry, they have the house, the senate barely. jonathan: and that's the issue right now. it doesn't matter what your position is. they do not have the majority that they act like they have. they do not have the mandate they wished they did have. when we are talking about $3 trillion bills, these are not raging majorities or a landslide
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victory. that's the issue right here. they are acting like they have a mandate but as tom points out, these are narrow margins. >> this is why this might not be the ronald reagan moment for the progressives. the president said that yesterday. it's one of the most telling moments of that debate at the town hall when he said if you have a set of 50 senators representing democrats, everyone is a resident and this is at the heart of how hard this moment is for him. he has to make sure it's tolerable for senator manchinsyne and senatorma but not lose those on the left to want medicare expansion like senator bernie sanders. if you have slim majorities, you have to make sure everyone gets something stop is very hard which is why you see this bill continually gets slimmed down. kayley: there are major domestic
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implications especially when we think about the midterms. when it comes to the u.s. reclaiming leadership on a local scale, october 31 is not just the economics sped line -- deadline but what can the president do if he can't do anything at home? >> he said he wants these two bills voted on before he is -- heads off to europe. it's a difficult position. the united states is trying to control. we have heard john kerry talking to china, talking to india, talking to saudi arabia and zillow. many of these economies are a slave to commodities and how do you get them to sign up when the united states cannot deliver? even the pledge the president made at the yuan about giving
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more money to developing nations. it's to get them to move toward a healthier, renewable environment and a environment to test and environmentally friendly economy. he needs to have the backing of congress and there is ill a big hole about what they will do about the clean a lesser trip -- electricity grid. senator manchin from west virginia will not sign up for this. jonathan: can you explain how they confused you with aoc yesterday? >> i got into an uber and i had amassed. amh and they said i had similar swag. i also live in the bronx that she represents. tom: it's glasgow.
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get with the script. >> i said that. tom: glas-go not glasgow. jonathan: thank you very much. we will not confuse you with ao sweetie. what is the aoc swag? is it a kind of walk? tom: the democratic party has reverted back to the democratic party of my childhood. pre-clinton, pre-obama, every day it is fractious and every day it's a mess. this is normal in american history what we are seeing now jonathan: step jonathan: making a sausages messy. this goes back to grover cleveland. harry truman knew this. this is the way it is.
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jonathan: the reading list for the weekend. lisa will be back with us monday. your bond market is 167 and equity market is up one 10th of 1% step we have all-time highs. ♪ this is bloomberg . ♪
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jonathan: friday going into the weekend, welcome to your wall. -- welcome to you all. the small caps are doing nicely, up 4/10 of 1%. the four snapshot today it will be a struggle. -- for snapchat today it will be a struggle. they do not want more demand. can you imagine saying that corporate executives? snapchat have told us after the close yesterday that the app is going to get hit because
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companies do not want to spend on advertising. they cannot meet demand. i don't know how many people thought that the supply chain story would hit the likes of snapchat. tom: i have heard this among others in the digital space far more knowledgeable than i am. apple is making the rules. this is a huge deal. apple is standing out for the individual's rights to take this garbage in. jonathan: october 28 is when we hear from apple. this october is going quick, isn't it? yesterday, they closed north of 170. 177 intraday.
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your 30 year, 2.1%. back to about 46 basis points. jonathan: -- tom: you are out front on this. breaking through 0.40 was a big deal and now we are at zero point 46 -- 0.46. jonathan: the market doesn't think so anymore, tom. the transitory was captured by the bond market. that has changed. tom: this is a joy. he is out of bulletproof mathematics and colgate university with parchment from harvard as well.
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we love talking to edward al-hussainy. you have a brilliant mathiness. this is a little inside baseball. with all of the movement, the terminal value will not rise. talk about how far out your terminal value is, and discuss why it will not go higher. lisa: what markets -- ed: what markets are pricing in right now is a hiking cycle starting next year. if you look at the end of '23, that value has remained relatively unchanged. the curve is flattening out at the front end. from the fed's perspective, the terminal rate is not rising.
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that gives them less room to hike. tom: jon ferro will speak to a professor from cambridge here in a bit. discuss the distinction. ed: the market is fading the fed's strategy. they are bringing it forward far before we have any evidence on the table that we will achieve that max employment bogey by the middle of next year and that the inflation story is becoming entrenched. this is counter to what they told us at the last foc meeting. this is aggressive push back by the market against the feds. inflation is significantly
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higher today. the market is. did that for some reason why not break down inflation in the future. jonathan: let's talk about how we resolve that. every theory needs a test in the real world. a test would be year end turning into '22. where is the test? we cannot keep sitting here using the t word. ed: the test is towards the end of next year. it is a three-part test, the fed. it is maximum employment, which remains important. that okie is difficult to meet in the coming months -- bogey is
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difficult to meet in the coming months. and inflation is likely to stay a little above 2% in the future. the first half of next year. lisa: it has been one month since the last fed rate decision when wayside yields down at 100 already. now we are north of 160. -- when we saw yields down at 100. now -- when we saw yields down at 130. now we are north of 160. ed: the story has become less
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pessimistic that we different -- definitely saw -- we're looking at a better growth rate for next year. the interesting move has been at the front end. if we continue. if the fed does not put the brakes on this, the current looks wacky. this is the opposite of what the fed was trying to achieve. more room for extending hiking cycle and fewer ads that we get to zero over the next five to 10 years -- on that we get to 0 -- -dds -- odds that we get to zero over the next five to 10 years. lisa: how do you differentiate
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relative to guilds in the boe? ed: we are ready for the hiking cycle to start next month. that meeting is live. it is a strange environment where in the u.k. we will continue and yet to be paid is close to -- is considering tightening monetary policy. that is not a strategy the fed will adopt. you have at the same time in the you pay the lingering impacts of brexit. supply chain issues play a role in the supply chain story. in the u.k. it is on steroids. in the u.k. the hiking cycle is
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set to start. those two things are unlikely to coexist. jonathan: the financial times suggested we do not need take on a terry policy but ultimately -- tight monetary policy. can you reconcile that with the u.k.? ed: you will get those same things from qe stepping down next year. there is an according -- organic slow down that is likely to happen in the economy as well. we are beginning to see that negative impacts of fiscal policy. it is a huge question of how much is going to be taken away.
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can we pricing what inflation will be in the next decade? that is a very high number. jonathan: we always love catching up with you. if you expect the central banks to hike interest rates, it is hard to reconcile the higher rates being priced at the front end with higher inflation expectations being priced further out. how do you price these two things simultaneously? tom: there is the fiscal overlay but what i do not understand, is the basic idea is the artificiality of where we are, how do you do serious fed
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analysis? jonathan: what is normal anymore? we have had 10 years of exceptionally low interest rates. what is normal anymore? tom: i just don't get it. lisa: going all the way back to 2004 when those investment attorneys were reintroduced, are seeing it in the five-year expectation. transitory does not tell me -- jonathan: we'll yield a little bit later, 1:00 p.m. eastern time. mike collins, franklin templeton. tom: i don't want to talk to them. jonathan: this is bloomberg.
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♪ >> i'm leigh-ann gerrans. president biden says the u.s. has a commitment to protect high one. the president said that he -- protect taiwan. the president said that the u.s. would not change its views. china has made an interest payment headed tomorrow's deadline. they wired a payment that gives evergrande time to pay suppliers. vaccinated travelers will soon be able to enter thailand without warren teaming.
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they are among 46 countries -- quarantining. they are among 46 countries to join the no quarantine list. china is expanding its booster shot program to those participating in the upcoming winter olympics games in beijing. at risk groups involve those working at the facilities associated with the game. global news, 24 hours a day on air and on bloomberg cryptic. this -- bloomberg take. this is -- bloomberg take. -- bloomberg -- bloomberg q
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uicktake. this is bloomberg. ♪
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♪ >> i think inflation will be in the first half of 2022 and it
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will moderate as we work towards the second half of 2022. the are in a once into decades inflationary -- we are in a once in 2 decades its/mary pressure and we have stepped up -- inflationary pressure and we have stepped up. jonathan: lisa abramowicz is back with us on monday. seven days of gains -- will it become eight? down a couple of basis points. up 9/10 of 1%. tom: we will get some news flow on the this friday.
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david wilson right now on a friday, what do you have to reset us properly? david: i will be talking about spacs. clearly that particular deal has gotten people's attention. there surging again today. -- they are surging again today. the chart looks at what we have seen in recent history because there is this index spac. it tracks the blank check companies that have not found a company to buy yet into the company that comes out of the
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deals like we work that just went public yesterday. since highs in february this index is down 44%. a gain of 13.5 percent for the russell 3000 shows you how out of favor specs into the companies they have been buying our lately. tom: you have decades of experience. have you seen anything like this before? david: i can't say that i have. spacs have been around but they have become especially popular. tom: where is the transparency? do we know what we are by? --we are buying? >> every time i think meme
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traders have gone into hibernation, they prove me wrong. david: you could make that argument when you look at this deal. it is not like other transactions where you have a business operating. in this case we are talking about speculation. we have this social media site that former president trump is going to set up that it won't even be operating until the first quarter of next year. it will be quite a run in terms of how things unfold and do any of the things being pushed beyond the social media site ever happened? jonathan: can we talk about adam
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neumann celebrating the so-called listing of we work? softbank put in 17 point whatever billion into we work. what is the worth of that company? david: it closed yesterday at 9.3. jonathan: can you imagine what softbank leadership is thinking? " imagine that you gave me $100 and i torched 50 dollars of it and then i said 'look at this $50 i made'!"
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jonathan: where is gensler -- tom: where is gensler?! david: this was a company that was publicly held. we work is still losing money soho knows what happens to about $50 -- so who knows what happens to that $50 down the line? jonathan: i am sitting in the cheap seats here. i have never seen anything like this where someone loses $17 billion from softbank. tom: there is always a silly
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season. the average account size of robinhood versus the other discount brokers, it is like -- it is ridiculous. jonathan: would you be celebrating? tom: it is foreign to what i know. jonathan: that was fun, wasn't it? can we give a shout out to twitter? what music was playing? if you go on twitter and find this video, it has a great song track. " where are your masks?"
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it was early 2019! isn't that sad now? the knee-jerk reaction is " where is your mask?" tom: " was that on the mx?" jonathan: wouldn't it be nice to have those days back? tom: i'm optimistic. jonathan: kailey leinz with us today, tom keene, jonathan ferro. i'm looking forward to more of that production down the road. tom: you are so sensitive this
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morning. jonathan: the question i get the most often is " do you actually like each other?" that is pure love! this is bloomberg. ♪
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>> we see some really encouraging news that the economy is rick salary. >> it is not keeping up with inflation. >> it is gross margin expansion. >> margin input cost that are being passed on to the input consumer. >> we have inflation that is on the move. it is everywhere. >> inflation is not transitory. it is persistent. >> this is bloomberg surveillance with tom keene, lisa abramowicz, and jonathan ferro. tom: good morning.

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