tv Bloomberg Surveillance Bloomberg November 4, 2021 7:00am-8:01am EDT
reserve has done an outstanding job in pre-signaling. >> the fed is not trying to kill the expansion. they are trying to expand it. >> they know the impact on the equity market. >> the market has its own definition of transitory. the fed owns the transit dish -- the definition of transitory. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the t word is banned for the next hour. 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. your equity market up seven, a little more than 0.1%. for all the anxiety around the fed, all-time highs in this equity market. tom: we made substantial for the progress yesterday to a great bull market. it was led by the small caps and
the nasdaq. the idea here of growthiness, of economic growth being a more confident outcome in 2022. jonathan: the fed chair is holding your hand. the very fact they have reduced qe and we are hardly talking about it is mission accomplished. tom: and as we mentioned, it is about the marginal change. i did the quick math. so did everyone else. these are marginal tweaks here to do the taper and then to reset the rate debate which is tangible to december 15. jonathan: here's the pushback from steve englander of standard chartered. the t word. lisa: he is saying transitory. i have been banned from saying it. i think they did have interesting language that was touting the t word in some nuance, and the idea they are trying to move away from that. to this point that you are
talking about, they didn't say how much they were tapering in january, february, march. is there a chance they could accelerate the end of their bond purchases? jonathan: maybe they will have to. who makes that decision? we still don't know who is running the central bank. he was asked about yesterday. the chairman didn't want to go there. what does next year look like in the economy? no idea. how does the fed respond to it? i have no idea who the chairman of the fed will be. tom: i go back to the single headline we saw, i don't have it memorized, but the supply, demand imbalances. that is the ambiguity out there between one set saying worry, and others saying the booming demand is a worry. that is the microeconomic tension the phd's have to deal with it. jonathan: this year has been humbling for the equity market bears. equity market up seven points, a little more than 0.1% on the s&p. let's look through the price
action -- let's whip through the price action. euro-dollar, $1.1546. some dollar strength out there going into the bank of england an hour away. lisa: interestingly, you are seeing some pound weakness even though the bank is expected to raise rates. that is being priced into the market. i am interested to see how they message this, how they talk about potential slowing growth, the potential of feeling hamstrung by a lack of immigration at a time when the price increases are really crimping growth. id: -- at eight: 30 am, initial jobless claims expected to come in at the lowest rate post-pandemic, as well as nonfarm productivity. we will see many fewer jobless filings in addition to higher price increases in wages, as well as perhaps a fall in productivity. this is not what the fed wants
to see. are we seeing evidence of a tighter labor market? today, opec+ will discuss output targets. president biden and other leaders saying pump more, and if you can't pump more i day headline level, make up for those who cannot meet their targets. do anything to bring down the price when we are trying to send a message of growth and not necessarily higher prices. jonathan: thank you very much. sebastien page joining us now, head of multi-asset at t. rowe price. "rising rates are like coffee, and gilts, and wine -- coffee, egg yolks, and wine. it is not clear whether they are good or bad for you." expand on that. sebastien: i think right now we are moving towards inflation is the risk for markets. it has probably taken the number one spot relative to covid which is still probably number two,
but our study that goes back to 1979, where we looked at nine different pivots where the fed starts hiking, also added 2013 where has just started tapering, and we found that moment and 12 months after which basically gives you 18 twelve-month observations, 17 of those saw positive stock returns, and the average stock return was 15%. so there's a lot of talk about don't fear the taper. i think we don't necessarily fear rising rates. why is that? because the fed is typically comfortable only raising rates when things go well. if things don't go well, you get a more dovish fed. tom: this is so important, with the academic bent you bring to this. how much is governor brainard,
chairman powell, and all the rest of the ilk, how much are they affected by miscues or miss guess -- or misguesses like 1994? sebastien: it is clear that they are, and the fed does not want to stress the markets. what you heard yesterday was the fed doing a pretty good job keeping markets calm about tapering. don't fear the taper again. i think the key about the discussion, we could crank up the taper, we could play back even, and we are not going to be forced to raise rates. so this idea that we are not on autopilot is what is fundamentally keeping the markets calm, and at some point we are just kicking the can down the road, and we can at some point face a conflict between fighting inflation and keeping
unemployment down, so imagine that. that is the tail risk. tom: take us back to t. rowe price and the initial heritage of the shop, which is small-cap. we have small-cap glory going on. on an asset allocation bet, is t. rowe price saying wait to small-cap because you are waiting on a certain growthine ss? sebastien: we are slightly overweight small caps at the moment. our tactical asset allocation is looking ahead six to 18 months, which is a world where hopefully , there is likely less covid, and we are thinking that the recovery has been kind of delayed with delta, but not derailed. we have actually sold 1%, which is not a lot of our stock exposure relative to strategic targets, but we have added risk back into the portfolio by playing the recovery trade,
which includes a long position in small caps. small caps are the asset class of choice in a growth environment. we are going to face less growth. we all agree on that, and we all kind of worry about the deceleration, but 4% growth next year, that is still a very high number, the second highest in over a decade. so we are still in the recovery, and this is where small caps tend to be the asset class of choice. lisa: how concerned are you about distortions that go beyond broad-based monetary policy affecting the asset pricing of everything? we are talking small caps, specifically avis, for example. they mentioned electric cars. their stock rises more than 100% in one day. bed, bath & beyond, something similar. you see these pockets of irrational trading on an increasing basis that accounts for a significant portion of this index. how do you as a sophisticated investor operate around this?
sebastien: it comes down to stockpicking, and in particular in small caps, you need to know what you are doing as you are picking stocks as opposed to getting index exposure. but you bring up a very important point. we are top $25 trillion of liquidity into the markets. over a one year basis, we have topped 6% of capital market. the highest we went during the great financial crisis was 3%. this creates speculation. you raised the question of speculation and they small-cap space. there are pockets of speculation everywhere, and there are microbubbles, and those microbubbles will pop, and the markets will keep doing ok. someone opened an account on shiba inu, a spoof coin on a spoof coin, on dogecoin. they had $8,000 in that account. a year and a half later, that account, it is anonymous, is
worth $5.7 billion. so yes, there is speculation and markets. there is froth. you've got to be careful and focus on stockpicking especially in small caps. jonathan: sebastien page, thank you very much. tom: it is matt miller. [laughter] jonathan: good to see you. thank you. in every bull market, you will see a casino somewhere. it doesn't mean the whole thing is las vegas. i think you have to be conscious of that. not everything is 1999. not everything is 2007. everything is different. it always is. tom: and right now is a new kind of globalization and a new kind of technology overlay, but particularly in the macro, we focus back on important dates. 1994, the bank of japan, 2002, 2003, and frankly, a few others that bring the humility you have talked about this morning. you are a humble guy. jonathan: i try to be, tom.
i learned from the best. [laughter] thank you. it always ends. it doesn't always end in the some way. lisa: besides my incredible humility, i want to talk about the idea of microbubbles popping that never becomes systemic anymore. no one ever talks about systemic bubbles. to me, that is the seachange. jonathan: here's the line from seb page. either you keep getting upside or the fed will surprise. it is a win-win. i don't have an opinion on the market. i try to keep my judgment reserved and stay balanced on an equity market at all-time highs. equity futures up seven, advancing a little more than 0.1 percent. from new york city, this is bloomberg. ♪ ritika: with the first word
news, i'm ritika gupta. federal reserve chair jerome powell is doubling down on the central bank'new policy framework just he central bank' -- the central bank's new policy framework. that policymakers announced they will start slowing their $120 billion monthly asset purchases. speaker nancy pelosi is pushing the house towards a vote on president biden's economic agenda, but a few key issues are still unresolved, such as family leave, immigration, and rolling back limits to state and local tax deductions. a measure still doesn't have the full support of senate democrats. in new jersey, phil murphy has become the second democrat in more than four decades to win a term as governor. the narrow margin found democrats already reeling from a loss in virginia. murphy lead in polls by as much as 11%. he ended up winning by one percentage point. investors have turned their focus to an opec+ meeting on
policy today. they are expected to stick to their planned gradual output hikes, despite calls to pump more oil. the head of the united nations food assistance arm has renewed his call to use renewed wealth to alleviate hunger. he posted a summary of a plan to show the world's richest person how that can be accomplished. 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. i'm ritika gupta. this is bloomberg. ♪
chain bottlenecks will abate and job growth will improve. if a response is called for, we will not hesitate. so what i will tell you is we are watching carefully to see whether the economy evolves in line with our expectations, and policy will adapt appropriately. jonathan: that second third quarter line i think is important. we will talk about that in just a moment. chairman powell there of the federal reserve. your equity market shaping up as follows get up seven on the s&p. all-time highs staring down the bottle -- staring down the barrel of the fed. maybe it was mission successful, so far at least. crewed up by 1.37 -- crude up by 1.37 percent. just a bit of a bounce back this
morning. tom: we are above $80 on wti. brent crude up 1.4%. don't you agree it is worth watching? jonathan: opec+ is worth watching. lisa pointed that out earlier in the show. will they fold? will they change course? tom: who is the most important person in washington right now? he is a ringer from louisiana. he comes into the congressional baseball game and is definitively the best player to ever play there against a bunch of old men who can barely get around the base, not that i would know any thing about that. his name is cedric richmond, the congressman from louisiana, and his current mailing address is 1600 pennsylvania avenue, where he has to salvage the democratic party for president biden. josh wingrove with us this morning. what does the cumbersome and say -- the congressman say about the
president's politics? josh: never waste a good crisis. they are trying to take the results from tuesday and use them to fuel the push to get that last mile that they want. recall the bipartisan infrastructure package, which president biden likes a lot. he likes to talk about getting stuff done on a bipartisan basis, being held hostage by the social programs favored by progressives in the house. he is still caught between it, and says only one hand, if we get this, we will have better luck in 2022. don't worry about these headwinds signaled on tuesday. on the other, say and even if we had it, i don't know if it what it -- if it would have made a difference in virginia. essentially, virginia is not my fault, but maybe if we get the bill, things will be better. tom: how does the president,
cedric richmond, speaker pelosi get pragmatic with the left of the democratic party? josh: i think there are signs that the left flank is moving towards being willing to take the deal in front of them. the big warning sign right now is on timing. how speaker pelosi once votes this week in the house, but you got senator manchin now saying that these elections mean we should take time, study more, wait for a cbo score, for instance. so that vote might really delay. the question is, can pelosi convince the house to vote now, even though the final vote in the senate on the reconciliation package might be weeks or months down the line. that is really the open question right now. biden i think hasn't wanted to rattle the cage too much, but historically, midterm elections are bruising for the president's party. democrats know this from under
obama. they got clobbered in 2010. which means now is their window to do something, and that is why we are seeing the urgency that they have because if they lose the house, you can expect very little to move in the final two years of his first term. lisa: is there a larger message about inflation becoming a big topic for the first time in decades in the united states? josh: absolutely. one of the things driving the churn we saw in virginia and new jersey is rural areas, the democratic votes just collapsing. these are republican areas, but the democrats usually held their own. this sort of blue-collar, lunch pail democrat is increasingly extinct. that is where joe biden really built his career. they have to figure out how to reach out to these folks. the cost of gas and everything is a political problem, and they don't know what to do about it.
powell's remarks about things easing off would be music to joe biden's ears, but if it is q2, q3, heading into those midterm elections, it will be a political problem for democrats, no doubt. lisa: we've heard president biden pushing opec+ to pump more oil. i wonder how much desperation there is, whether he is prepared to release oil and really support the shale complex little bit more to get that price down. josh: they are not looking keen on that would be my answer. the domestic politics of cracking up oil production are dicey. one of the first move he did as president was killing a pipeline proposal from a lovely country to the north i am very familiar with, canada. so he really does not want to be seen to drill, so that is why he
wants opec to do it. that is a strange position, so if that is the position we are in, they have held open the door to other measures, but really have not hinted too strongly that they are going to go down that road, hoping opec will do it for them. jonathan: it is outright misleading to blame this all on opec+. you just mentioned the pipeline. it was one of the first decisions this administers you made. is anyone in washing asking these questions -- in washington asking these questions? is anyone actually holding the at ministry should to account when they say things like this? josh: you know, we try. we do our best. joking aside, i think energy is probably a back burner issue right now even the talks that are going on in washington, but i think it is going to be more and more an issue. we haven't had briefings in a couple of weeks because of the president's travel and the health issue the press secretary is having with her covid case,
and of course we wish her and her family a speedy recovery. this has been an issue that they have wanted to not really talk about. they want to talk about what they are doing in this build back better ill to help people get checks in their mailbox, the child tax credit extension, that sort of thing. in the meantime, people going to the gas pump every week have been seeing their bottom line strained, so biden is a julie being forced to address this. so i think the heat will go up on some of the domestic policy questions. are you willing to wiggle on this? remember, he was asked at the final press conference in europe , you are at a climate conference. isn't the price a good thing if you are trying to reduce behavior? he really waved that question off. he doesn't want to go down that road either because you start arguing that high gas prices are good in america, good luck politically. jonathan: josh wingrove always
♪ jonathan: five-day winning streak on the s&p 500 coming into thursday. here equity market once again with a lift. we advance seven points on the s&p 500. on the nasdaq, eight a winning streak -- a today winning streak. up another 0.3%. lift again on the russell, up 0.25%. across the board through the equity market. let's get to the bond market. we opened up the thursday after the last decision at around 24 basis points. i don't think there was pushback from chairman powell yesterday. saying, here's our base case, here's the risk around it. this market still pricing in heights next year. didn't price in the last 24
hours. we go from 24 basis points the day after the last meeting to 46. the story hasn't changed much. tom: off the countdown clock, chairman powell yesterday was great. he was so good, and with your humility, it is great we institute the surveillance data check countdown. lisa, don't you think this is constructive that we have this? lisa: terrific. jonathan: can you sense the humility every time we do this? when i go to speak and it offends you so much you jump in all the time, just let that sink in. are we counting up or counting down? switch up the board and get to crude, or the pound, or whatever it is. it is sterling. surprise, surprise. [laughter] is it over? tom: stretch, jon. stretch. [laughter] jonathan: let's get you some movers with romaine.
romaine: good morning, guys. let's start off with some of the big movers of the day. qualcomm moving higher, the biggest upside surprise we have seen so far out of their earnings season, at least among some of these larger cap companies. the expectations were pretty low because of supply chain disruptions. qualcomm says it really managed that pretty deftly primarily by farming out a lot of its production among multiple manufacturers. also said it has less of a reliance on the apple iphone and a little more diversification with regard to android products and non-smartphone products as well. those shares up about 8.5%. roku blames its big revenue miss on supply chain disruptions. those shares down 7.5% here. etsy, which is supposed to be a big beneficiary of some of these supply chain issues, missed pretty big here. the third quarter numbers were ok, but fourth quarter guidance was a big disappointment. this is a company where you have sellers and merchants
disassociated from that traditional supply chain. last year they had a doubling in sales. that is not going to happen this year. shares only fractionally lower on the day. i think the stock of the day is one that is not reporting earnings, and that is tesla. this is a stock that hit a record high yesterday, up another 2% in the premarket. it is only 55% run over the last two weeks alone. it has become a good broader of risk sentiment, a barometer for clean energy, a barometer for a lot of things going on out there. this is kind of become the risk canary in the coal mine. despite the big run-up in tesla, it is not the best performer in the s&p 500 this year. it is not even the best performing car company this year. that belongs to ford, up another 1% on the day here because of that lineup of ev's. the stock has actually doubled here so far on the year.
the best-performing stock is the s&p 500 -- stock in the s&p 500 this year's moderna. those earnings just came out a few minutes ago. shares down 11% right now. the company revising lower its guidance for covid-19, basically it's only product. a lot of concerns over whether it will get a contract for booster shots and whether the technology underpinning that vaccine can actually be used for any other business model other than covid-19 shots. tom: romaine bostick, thank you so much, from "the close" this afternoon. we have been focusing on inflation across all of the different themes of global wall street. honored to have adam posen here with us earlier, and many others as well. carter chaudhry has a heritage from the trade division. what is so important here about place and -- about inflation betting is the bet made with
inflation derivative products. jonathan: i am pleased you brought some of this up. let's start with the broader theme to start this morning. inflation expectations didn't shift yesterday, lisa. the market has now established what it things about inflation and what it thinks the fed will have to do. a lot of people define german powell's news conference yesterday as a success because there was not much disruption in markets. it is really the market response that defines that success. equities all-time highs, yields didn't move much. ok. to me, it is still a market pricing and hikes next year and a federal reserve split on just doing one next year. the federal reserve is saying here is our base case. i think the base case of market participants, there is still a spread there between where the fed is and where markets are priced. lisa: what i find fascinating is that markets are convinced this is something more than the keyword, -- the t-word.
the fed is convinced the other way, and that divergence continues, and the fed is allowing that divergence to continue by saying we could be wrong. tom: you two are better at this than i am, but i see the real yield stunning, -0.99%. there is a residual as defined by the real yield. there's breakevens, there's tips , and the rest of it, and these are all being bought on the inflation bet. is that bet overextended? jonathan: more recently, the story has been an inflation story, for sure. what we have done over the last months, the last two months, his price in tighter monetary policy potentially, and i use the word tighter loosely. to be more accurate, we are pricing in hikes, but ultimately, financial conditions are still loose. all-time highs, record highs. tom: cargo chaudhry -- garga
chaudhry joins us out. what is the speculation that you see? garga: good morning. great to be here. when we think about what has been happening in the inflation markets over the last few months , i think the market has been, especially the front end of the inflation curb, has been pricing in for a fear of inflation that is going to be with us for a period of time, which is longer than just short-lived, as chair powell described yesterday. we are definitely seeing a lot of interest in the front-end of inflation linked bond market. i would say we are looking at shorter dated tips and etf, getting a lot of inflows. tom: this is critical. i don't think there's enough talk about this in the media. do you look at it as an excess in speculative, or is it normal markets with liquidity? gargi: it is absolutely normal
markets. i think the markets are pricing in inflation, which is going to be with us for some time. i would not call this speculative at all. investors are across the spectrum, and they are looking for ways to preserve their portfolio against a higher inflationary regime. one way to do that within the bond market space is doing so with inflation linked bonds, so not speculative. this is definitely a hedge in their portfolio for higher inflation. and by the way, the view is that inflation will be with us for longer than initially estimated, especially by the fed. lisa: to tom's very good point, is there an element of people hedging, and not necessarily saying that we think inflation will be at this rate, but we are earning so much from the s&p, from nasdaq, that we might as well cast aside a couple of basis points to bet that this could potentially happen?
is the market expectation as accurate as it has been in the past? gargi: if you look at the 10 year inflation linked market or breakeven market, it is only up 2.5%. if we think about our expectation for where core inflation could go in the medium-term, so let's say in the next three to five years, i think paying for something at 2.5 percent seems still quite reasonable. it is not as cheap as it was about a year ago, but it seems very reasonable if we believe we are in a world where we can get somewhat higher inflation, somewhere between 2.5% to 2.7% in the medium-term. it still feels quite reasonable, and i think that is what investors are paying up for. to your point, obviously equity markets have done very well, but investors won't move away wholesale from bonds. so one way to have some positive right downing oprah polio, which tips have given them this year
-- right down in your portfolio, which tips have given them this year. there are always concerns in the market. i think even looking at treasury yields right now, even after the fed meeting yesterday, sitting at 1.5% on the 10 year treasury and a little below 2% on the long bond, i feel like that is something, if you are overweight a lot of treasuries, i think that is a little bit concerning. i do think, with the fundamentals of the u.s. economy becoming stronger as we go into the fourth quarter, i think that is something that is probably going to be priced higher modestly, so that is definitely an area of the market where we think investors should move away from nominal duration into real duration. but outside of that, equity markets, given where real rates are, i knew you were talking about this earlier, we still remain quite pro-risk at this
point in time. so what we recommend clients do is really barbell value basket with their quality basket. jonathan: you are fiercely intelligent, and i knew we had some technical issues before we got you on. could we reestablish that at some point down the line and maybe have a longer conversation? let's make that happen. khaki chaudhry -- gargi chauduri there of blackrock. tom: we go back to 1987, where there was a huge misrepresentation or underestimation of some of the bets being made. we've got to be vigilant about that. what is the speculation right now? jonathan: is it a hedge or a conviction trade, which i think is what lisa was getting at, as well? just here to balance things out, you know? you're both so humble, it is overwhelming. coming up, steve chiavarone of federated on this equity market. this is bloomberg. ♪ ritika: with the first word
news, i'm ritika gupta. resident bided says his party's election defeat -- president biden says his party's election defeat in virginia shows the urgency to pass his economic agenda. the president said, "we should produce for the american people." house speaker nancy pelosi is pushing lawmakers to take a vote on the biden plan. shares of moderna are falling. the company lowered its estimate for 2021 coronavirus vaccine sales. plus, it missed estimates for quarterly revenue and profit. it is in a race to lock in orders for shots next year. in new jersey, phil murphy has become the first democrat in more than four decades to win a second term as governor. he survived by a narrow margin that stunned democrats reeling from a loss in virginia. he was leading in polls by as much as 11% over the republican.
he ended up winning by one percentage point. the u.k. has rounded up about 20 nations to pledge to stop funding for and fossil fuel projects, but the deal has a couple of key holdouts, china and japan. a statement will be unveiled today at the climate talks in glasgow. it marks a further tightening of the flow of money from public develop and banks to oil, gas, and coal. the world's largest personal computer major aged rivals in a market showing signs of cooling. lenovo says it expects global semiconductor shortages to last until the middle of next year. 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. i'm ritika gupta. this is bloomberg. ♪
there is no way that we have engaged in the scale of asset purchases in the pandemic where there is going to be a policy which ultimately is going to be perfect and not because some sort of interruption to asset prices or something else that would be destabilizing. jonathan: so far, so good. scott minerd is not alone, the guggenheim ceo come on what happens when the fed pulled back. you equity market, all-time highs on the s&p 500. equity futures up another six, advancing a little more than 0.1%. five-day winning streak on the s&p into thursday, eight on the nasdaq. we just keep grinding higher. yields in three basis points on tens area caught up with bob michele of jp morgan asset management. i asked him, is tapering tightening or not? he said there will be a debate.
even when we are expanding the balance sheet and all of that stuff, bob's message is simple. you will feel the move from 1.20% down to zero. tom: when you plan the show, i love that you selected scott minerd there. what was so important within his caution is there was a point where he said he is fully risk on. i think to a lot of our viewers and listeners, that is important. here is a guy with all of the caution radar up, yet he is in the game. jonathan: keep dancing. isn't that what we talked about yesterday? you are right, the prospect of a policy -- the prospect of a policy mistake, when you hear some say those things, you have to ask them, if that is going to happen which are you going to do tomorrow? the answer you get is they will stick with this equity market for the time being. tom: speaking of this equity market, and there is no alternative, tina wilson joins us now. tell us about a group today which i guess i shouldn't be
surprised is up 200%. david: we are talking about the staffing companies. you see so much in terms of how the job market is difficult for companies in terms of their ability to hire. it has been great for these staffing companies, something that sean darby at jefferies is pointing out in a report this week, so it punted me to take a look at the group broadly. we are talking larger, smaller, midsized companies. if you look at an index that tracks them, it has tripled since march of last year, while the s&p 500 has doubled over the same period. it has been one of the best performers in the s&p 1500 index. tom: these are true small caps. you are the only one in the building who has experienced a small cap boom. would you say, in all the reading you see from jefferies and others, that people are calling for continued strength
in small caps? david: in terms of where they are now, you look at the russell 2000, it hasn't kept up with the s&p 500 this year. so there is room for recovery arguably by that standard, but yes, strategists are certainly pointing to the smaller companies lately as a potential strong part of the market, given the fact that they really haven't performed all that well, and if the economy is able to sustain its growth to the point where it doesn't need support from the fed, you figure it would benefit companies across the board if smaller companies have more to gain from that scenario. lisa: i am glad you focused on the staffing firms. the reason why is that equities discount future growth. we are not just looking at staffing shortages now. what kind of growth are we discounting in these shares given the gains? what does it imply in terms of how long these staffing shortages are likely to last? david: it tells you business is going to be good for a while.
if you look at what the national federation of independent business puts out, and terms of their monthly surveys, for companies to hire, it gives it a sense that what we are seeing now is going to be relatively long-lasting. so that works to the benefit of companies that help businesses fill those jobs, and that is where you find the staffing and employment businesses. we have seen the benefits already, so darby would certainly argue there is more to come. lisa: this kind of goes in the face of what we heard from jay powell yesterday, where he was talking about how the labor market has a lot more slack than a lot of people seem to perceive. is this basically a contradiction to that? people on the equity side of things saying it is pretty tight, it is going to stay that way for a while, and the shift for labor is going to remain? david: certainly it suggests that a body in motion remains in motion to get a sense of how difficult it is for companies to find workers.
you can talk about slack all you want, but when you see numbers like what you see out of the nfib, it is clear that on the ground, companies are having issues in terms of finding workers. we will get a real sense in the next few weeks because you have all of this holiday hiring going on at the likes of amazon and fedex and ups and retailers, so that will be another flashpoint arguably in terms of companies' ability to hire workers. jonathan: looking forward to the coverage. dave wilson, our stoxx editor. all-time highs in the equity market, up about five or six basis points. seven minutes from now, a bank of england rate decision. tom: to our american audience, so what? jonathan: if you still consider the central bank and the u.k. to be a major central bank, they may be hiking. tom: you are actually saying there's a probability they will hike rates in this environment? jonathan: i'm going off the
words of the chief economist of the bank of england, who called this a live meeting. the market, in terms of rate pricing, has been pricing it in. it is a nine vote mpc. do we get a 5-4? tom: do we know where governor bailey is? jonathan: he has flirted with the idea that we need to tighten monetary policy as well. i use the word flirtation deliberately because in the past, this bank of england has been what is considered to be an unreliable boyfriend. fleck sibyl to the idea of doing things come up -- flexible to the idea of doing things, but not really. lisa: we've heard that perhaps the bank of england has a very different picture that it is facing than the federal reserve area basically, adam posen saying the federal reserve should not hike rates at this point, seeming to say it is different for the bank of england because of brexit. jonathan: but also consider a 6%
handle expected next year for gdp, pretty robust growth. tom: did you say 6% inflation adjusted gdp? jonathan: gdp. tom: and to be clear, that is remarkably different than what we sense in the united states. jonathan: a pickup in growth in the u.k.. the problem is i think a lot of people think they may be responding to this prematurely because it might happen with inflation down the road, what might happen with the currency, trying to establish some credibility with the fx market. what would interest me is what happens at about 8:01, about six minutes from now. if we get a decision to hike interest rates, how does sterling respond? does sterling rally or selloff off the back of that? tom: do you look at euro sterling, or do you look at cable, sterling dollar? jonathan: with a personal bias, i am looking at cable. lisa: looking for an entry
>> i think the narrative on inflation is a little bit confused. >> you're on your comparisons are difficult to do because we are emerging from this extraordinary period. >> the second derivative is telling you perhaps the peak in inflation is over. >> our viewpoint is that it is a glass half-full environment. >> this is an economy that is still primed for growth. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. the federal reserve yesterday, there was no dissent. at the bank of