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tv   Bloomberg Surveillance  Bloomberg  December 8, 2021 7:00am-8:01am EST

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>> the fed is very focused on financial conditions. >> they are focused on the momentum paying it >> they are using alternatives as a substitute for equities. -- on the momentum. >> they are using alternatives as a substitute for equities. jonathan: is it the news you have been waiting for? good morning. this is bloomberg surveillance, live, alongside tom keene and lisa abramowicz. very close to all-time highs. citing preliminary laboratory tests. tom, that study implying that the omicron neutralized by three
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pfizer doses in those lab tests. tom: there was a market shift. we went from red and green to a solid green with a buoyant 1% move. going back and forth, thank you to wall street for tuning in every week. 129.50 on pounds sterling. jonathan: lisa, why it break of 130? more restrictions in the u.k., potentially in the next 24 hours. even as we get optimistic and encouraging news. two words. preliminary and three. it is a plumbing study. next up, you need three pfizer shots. a big push for boosters. lisa: you talked about what is
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going on in the united kingdom. they have a higher bar of how much risk they are willing to go through. the u.s. emphasizing a booster but not necessarily restricting travel. jonathan: let's take -- touch on the markets. on the nasdaq 100, up 73, advancing .4%. there is a ton to talk about in this market. yields are lower by a basis point. down a basis point. around 70 off the back of that story. tom: it really bears watching. i know it is a big deal, but this is a grind worth watching.
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jonathan: that headline, the omicron variant neutralized by three pfizer doses. lisa: it is likely to bring forward the rate hike. it is a key question. we will get the job openings survey for the month of october. we have seen the number of job openings decline. do we see an ongoing decline or do we see them ticked up as a lot of economists expect. a big issue with momentum is how much borrowing there is on the consumer side. at 1:00 p.m., the option
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following yesterday's sale. how do we reconcile the low yield at a time where we are looking at a lot of expansion and a recovery? how much will it tighten, in order to continue with this momentum? jonathan: what are the moves on the front and? -- end? lisa: the idea that any increase that we see in short-term yields will be contained, that it is too much, too quickly. the economy will not be able to stand it. jonathan: i want to turn to the sterling first. negative one third of 1%. we heard that we could get some new restrictions and of the u.k. apple up by about 2%. an all-time high yesterday.
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a joint street high. apple also up this morning. the tech giant speeding up iphone output from november to january after it declined. that headline in the last 15 minutes, omicron neutralized by three pfizer doses in lab tests. tom: altogether come the prime minister is starting the grilling in the house of commons. cannot transfer over to a u.s. that is only 60.0% vaccinated? jonathan: he has a very domestic issue as well. did he have a christmas party last year? it is not a joking matter. if you want to implement restrictions and leader himself broke them last year, who is going to follow them?
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can you imagine the pushback he will get if the prime minister has not been following the rules himself? tom: i would emphasize that all of this is summed together. what we are seeing out of the u.k., germany as well. it goes back to the mystery of the u.s. economy. jonathan: a global investor in new york. welcome. we are looking through all the noise and we keep rallying and bouncing. what do you make of the move so far? >> what has been interesting is when we look at omicron, if it turns out to be ok -- it is almost like a booster shot to the market. the backdrop is still very strong. the economic data has been surprising to the upside.
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lisa: why is the equity market not responding on the front and -- end? >> it is a little bit of a mystery, watching these different markets move has been a little confusing. the economy is strong enough to deal with these kinds of interest rate rises. this is returning to some kind of normal. we have to wonder how long it will go on for. we continue to need evidence of strong economic data. if it were to turn, that is when. tom: we mentioned the pacific rim and the raging debate over it in 2022. the supply side and the covid
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pandemic and asia. give us a brief on that. >> aside from omicron, we have been thinking that covid-19 should not be dominating the market narrative. where it will be impactful is supply chains. we have been seeing a lot of data suggesting that we are peeking out. omicron may suddenly deliver a pushback on that, but the longer term view is that supply-chain bottlenecks should become less and less of an issue. we should start to see that come down. the inflation numbers that we received, we do not expect to see that through next year. jonathan: there is a bear in this market. a little one. does that make sense to you? does that add up? >> i think it does add up
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because the bank of england has been so unclear. if there is any kind of negative news in the u.k., the bank of england can say, we are off. you can see that from the sterling's reaction. the sterling is weakening. the thing that has been in the u.k.'s favor is its control of the virus. it is ahead in vaccinations. as recently, this is a concern, the way that they are approaching this. restrictions are upsetting markets in the u.k. jonathan: can you give us some insight into transatlantic travel? how bad is it? >> four tests. tom: it is a huge deal. i am going to go to the german response of what the prime minister says about their
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urgency in the u.k. what does it mean for us? jonathan: the cost of travel. you have to pay for the ticket and the four tests. it is expensive. lisa: there are people who will come to you for a fee. it goes up as you make war tests. jonathan: it is good to see you. over in the u.k. right now, the prime minister facing a testy prime minister question time. ordering a probe into the alleged downing street christmas party. if rules were broken, there will be disciplinary action. tom: what do you make of the dv out -- the devaluation of sterling? jonathan: clearly some nervousness around rate hikes into weakness. that is the concern, or at least it has been over the last few months. facing down the prime minister,
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boris johnson. more to come. the s&p is up. tom: john, you're talking alabama football with a british accent. jonathan: one heck of a quarterback. tom: crimson tide is not for dishwashing. jonathan: i know better than that. lisa abramowicz and jonathan ferro for our audience worldwide . news out of pfizer. the omicron variant neutralized by three doses of lab debt -- tests. more to come on bloomberg. ♪ ritika: i am written the --
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ritika gupta. three doses of the vaccine can neutralize the omicron variant. pfizer is working on a vaccine designed just for omicron. it is the end of an era in germany. a new chancellor ending angela -- angela merkel's tenure. it may take months to figure out if joe biden and vladimir putin diffused the crisis over ukraine. a video call lasted for about two hours. president biden made it clear that he would not -- apple told supplies to speed up iphones through november to january.
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apple at a record high amidst optimism over its new products. several changes following for the monday through friday work week. the rest of the goals region changing their schedule. the new work week will be 4.5 days. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i admitted the . --am -- am ritika gupta. this is bloomberg. ♪
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>> president biden was direct and straightforward president
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putin. he vienna rate -- he reiterated support for sovereignty and integrity. he made it clear that we would respond with economic measures. jonathan: good morning. a two lift in this equity market. we add a little bit of weight to the rally. yields were lower and now they are a little bit higher. they say a third dose of their covid vaccine neutralizes the omicron variant. tom: a whole call on wednesday to discuss. all of this is folded in to the american foreign policy.
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have been looking at all the domestic affairs. joe mathieu joins us. joe, we have been distracted by domestic affairs. the defense department and state department do not have the ability to be distracted. >> there are parallels and there are great differences. how about starting with this meeting with vladimir putin? that is something that donald trump was very good at, laying down the law and explaining what the ramifications will be, where the redlines are. the cake is kind of in the oven here. it will be a few months before
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we figure out how this will unfold. as we stare ahead to the end of the year, they are checking their boxes. the debt ceiling is off the books now. they have addressed the situation. maybe they will not use -- worry about this. tom: how do we project power to our allies? is there a sense in washington that we have a better relationship with our allies? >> we are working on that, but it has not come terribly easily. there is a hope in washington that we can get some consensus on domestic issues. what are you guys getting done?
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he told everybody to be ready, but you cannot do it in your own backyard. as that list starts to take down, there is more credibility abroad. tom: where does doug back better check through? >> take them at their word. go back and read the memo. everything that he pointed out has actually come through in this. the keyword is inflation. a lot of democrats talking to leadership saying, if it does not pass this year, it may not pass at all next year. you will be looking at a much smaller price tag. they have not even cleared the so-called birdbath.
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we do not know what they will allow in that bill. lisa: can you elaborate on this idea of inflation having a bearing on how big this plan will be and whether it gets passed at all? >> 1.5 trillion was joe manchin's number. what happens to paid family leave? what happens to the claimant agenda? how much of that will be allowed by the parliamentarian, and how much will the house management it comes back? there is a thought that they be this is not about comprehensive legislation. they be they come back with a couple standalone's. they be there is a bill on climate. these massive bills get more attention paid to the price tag than what is in them. lisa: i want to talk about janet yellen and some comments that she made that were highly
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controversial. talking about supply chain issues and inflation rates. perhaps protectionist policies would be required to bring some of the supply chains back home. how has that been perceived in washington? how mainstream is that? >> there is a great deal of trust in janet yellen. look at the way that they followed the debt limit. i would ask you all to embrace the irony and how this all worked out. what just happened is mitch mcconnell says -- he has 10 votes to clear this threshold that will allow democrats to pass the debt ceiling with a simple majority. only in washington. jonathan: the redline. they never crossed it by doing this.
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looking forward to that and looking to the airlines, up in the market by 1.77%. the likes of american airlines rallying as well. a three dose rating can neutralize the omicron variant. tom: not back to pre-omicron 2020. jonathan: lisa, rallied off this news and rolled over, all over again. lisa: it comes down to the threshold. the u.k. put restrictions in place, even if there is some sort of positive news on the booster shot. there is a different threshold. i think you are seeing that play
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out in the markets. tom: is that the plane where you fly standing up? jonathan: i think you are thinking about what people thought about ryanair. they talked about it but they never did it. remember when you could not book your seat and you had to run across the tarmac to get your seat on a ryanair flight? you had to line up hours before the flight took off. i used to play that game. i was before take off and the first person that lined up, they started. they would get in the line and it would be 100 people long. it was always rowdy. it was terrible. i got a little bit better. tom: i'm going to stay 18 years ago at heathrow, i saw 400 people surge towards a british air into the point gate. it is totally different over there. jonathan: i'm not sure that
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happens all the time. i have not seen that at heathrow. are you saying that is what brits do? they just charge the line at heathrow? i was just thinking about ryanair flights, not british airways out of heathrow. ♪
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jonathan: here is the news in the last hour. april limit new lab study suggests a three dose rating neutralizes the omicron -- three dose vaccine neutralizes the omicron variant. we advance. we are this far away, very close to all-time highs. how does the two-year respond? we have briefed -- we have reached that level briefly. is it the extent of it? how far can the federal reserve
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take it? this might be the high the front end of the yield curve. the front and rally. the two year yield, lower. the sterling is weaker. as you pointed out, the end of may this year, 142, all the way down. now, a real debate about restrictions in the u.k. tom: i do not want to be inflammatory, but i'm sorry. it is a depreciation that cannot be ignored. jonathan: i wondered what kind of restrictions that they lead with this morning. some form of work from home, or does that change the outlook of the british economy?
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is it a big change in the news? tom: isn't it total chaos right now? jonathan: we cannot trust them based on experience. not exactly helpful, going into next week. lisa: we could raise rates or we could buy bonds and raise rates. we will see. jonathan: an unreliable boyfriend. we will talk about that another time. tom: i've been told i should be quiet. boundaries. jonathan: 139.90. let's say good morning to romaine. romaine: we saw some herbal effects here.
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we will have new travel restrictions in the u.k. you saw the u.s. travel stock actually dipping, but if you want to gauge a market sentiment , look at the screen. american airlines are up. this is pretty much the story for all u.s.-based airlines and travel. a lot of it has to do with the news that we got a little while ago about pfizer. the bad news is that the to shut dose does not do much against omicron. we will let scientists and doctors figure it out. your three biggest volume movers in the premarket. the biggest value mover yesterday belongs to the most valuable company out there. yesterday, a market gap.
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another run-up on this stock taking you to a $3 trillion market cap. they actually closed at a record high. the semiconductor index, nothing there. some of the other names, a mixed bag, but you are seeing a lot in that space. a big downgrade today. largely because of some of the costs. tom: the interview today, no other way about it. an outlier call that will lag, but the most interesting note is the head of fx research. he talks to us about a stunning development in the economy.
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you look for a lower terminal rate and you say america has the idea of poor economic health, and you suggest a yield curve. state your case. >> good morning. if you look at the market narratives at the start of the year, it has insisted on adopting this framework, focusing on fiscal policy, but i think it is a partial framework for what is going on. there is a major supply issue. if you take a step back, yes, gdp has been strong, but the outlook is still negative. indeed yet -- and yet you see huge inflation. that is telling you that the economy still has major supply issues, that the supply side is
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weak. that is what of -- is allowing the market to post such rates. it is the labor market tightness that we are talking about. the supply side is just as important as the demand side. that is a critical driver behind this pricing. already leading to some inversion. jonathan: it will stay below there for some time. >> if you take a step back and look at the debate over omicron, is it a game changer? will the trend reverse? if you look at this year, we are
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not here despite covid. we are here because of covid. the delta wave was just over and now we have the omicron wave. it is leading to inflation and week supply. people prefer to save. that is leading to market pricing, more for the fed, the curb inflating. omicron is essentially more of the same. they will be under pressure to hike rate. the dollar should be strong. i do have a slightly different opinion precisely because of all the challenges around the supply side.
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i do not think the market is as strong as people claim that it is. lisa: do you think the federal reserve has bought itself more flexibility or less flexibility heading into next year? >> the odds are high that they do support tapering. the challenge is, with the market already pricing in hikes, can you keep adding? headline inflation potentially starts even lower. we have a consensus of oil going down to 60 barrels. you could price more, but i do not think you could do the extreme scenarios that some people are suggesting.
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i think it depends on what part of the curve that you look at. some have already started inverting. if you look at futures, it is already pricing some small chance after 2023. this dynamic goes back to the weak supply-side. either the supply will have to improve and pressure will ease or it does not, and the economy is weaker. jonathan: a headline just said that he think -- george thinks that the fed is about to deliver a policy mistake. would that be ok? >> if the fed is wanting to bring down inflation, they should hike rates. the dollar will rally and that
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will get inflation down pretty sharply. the question is, how much does it need to do and how much does it need to sacrifice in the meantime? if we were to start pricing a lot more, the market would definitely move into pricing policy mistake. jonathan: fantastic, as always. a really interesting quarter. some of the work coming out of deutsche bank. tom: this is off the historic agreement. john, this is incredibly nuanced stuff. they are fascinating, the way that they frame out the many moving parts. jonathan: aggressively smart.
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lisa, they are looking for a break. lisa: there is such a huge gap between people who think we are going to return to that normal versus those who think that pumping money into the economy through modern monetary theory will cause a regime shift. we will see how long that can last. jonathan: if you are not playing along, this has been the game for the last couple of hours. they missed people with a birthday on december 9. lisa says his name rhymes. does todd pick up his trees from central park? tom: i got it just north of strawberry fields. jonathan: tomorrow, right in the surprise.
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a bloomberg opinion columnist and former fed president. this is bloomberg. she -- this is bloomberg. ♪ ritika: i am ritika gupta. during the way for the u.s. debt ceiling to be raised quickly would avert a government shutdown next week. in germany, the parliament has made it official. electing someone to be chancellor. he will replace angela merkel. they have sharply divert cash -- actively managing funds for the first time. they will exclude --
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until now, they focused on environmental, social themes. billionaire money manager. he says the stimulus artificially propped up the economy and once the fed starts raising interest rates, it will slow down economic growth. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. ♪
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>> it is getting to the point where they have to start to
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change their posture. they will raise multiple times, beginning sort of mid or earlier. the potential would be how much earlier that would happen. jonathan: the ceo of bank of america on higher interest rates. your equity market rally this morning. saving a little bit. up 38 on the nasdaq 100. it was a nice pop when they said their third dose of the covid vaccine neutralizes the omicron variant. that is one to watch. another one with a bloomberg: saying to expect more surprises next week. tom: the thundering silence that you hear is -- we love to take x fed officials and when they are
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wrong, we make piñata's of them. we are honored that he has been writing a series of intelligent essays, controversial essays for bloomberg opinion. it is not my chart of the year, but if i take it, stan fischer has always been great about the percentage rate change. these are huge percentage change shocks of this low base. is that important? >> i would argue that it is more elevated when you are close to zero. it is rather the magnitude of the move. it is still very low when inflation is running soft. jonathan: help us out with the
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extra surprise this morning. what do you expect to see beyond the forecast? what are you looking for? >> the fed is obviously changing their view. this is pretty remarkable. it is an admission that the federal reserve was wrong. what you are going to see is higher inflation for 2022, a tighter labor market and much more from the fed. last time, it was 1.8%, below what they see as neutral. this time, i think they will at least get to neutral before 2024. jonathan: what is the
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significance of that? >> it depends on how financial markets react. people have been very comfortable with the fed to see a 10-year treasury yield. ec the stock market with a whisper of its all-time high. it depends on how financial markets react to tightening. there is a little bit of a surprise and discomfort, but i think they would do more than what is currently priced in. people are staying it will only be about 1.5%. that is well below what the fed deems as neutral. lisa: when you talk about the reaction, i think about the yield curve and how it has been flattening.
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should the fed hike rates? what do you think should be a base case scenario? >> i'm not sure why the yield curve is doing what it is doing. people do not want to hold deposits at commercial banks. we might have a little bit of a bond bubble. it is a quantitative easing process and i would imagine they will go to a more normal level. an environment where it is running 5% to 6%, it is hard to explain. lisa: what does a bond bubble mean in terms of the threshold for repricing, backing away from some of their purchases?
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>> it could take a wild for it to play out. it will not be finished until march and even after that, it will be quite a bit of time before they can change their balance sheet. the effects could linger for quite some time. i think the bond market will be disturbed. it might be higher than what is priced in. tom: are we practicing monetary theory? i need to get you in trouble this morning. help me. >> i do not think so. whatever you want to do on the fiscal side, we will monetize that that. it feels like that a little bit, but the quantitative easing program was implemented because
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interest rates were at zero. the only way that they could do it was through other means. it is more resembling monetary theory than what we have done in the past, but still not there yet. jonathan: so far this year, you have been right in more ways than one. lisa, looking for a move to 250. lisa: it resets the bond market so dramatically. what did they do with a rate like that? tom: in my first question, i'm sorry but the rises will really shift and change, amending the american financial system.
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i'm not so sure. what does it do on a percentage change for the incentives within the system? jonathan: the markets can shape the events they anticipate. does that make it less likely of actually getting there? tom: you are on the edge this morning. jonathan: that was straight from george's playbook right there. does it make it less likely of getting there? tom: folks, this is a british disease. since karl popper. george had the great honor of studying -- john, you are positively -- it is just great. lisa: and the airport gate. jonathan: running across the airport, flying out to italy for
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20 pounds, 20 quid, tom. tom: what is a quid. why do you say quid instead of pound? jonathan: i do not know the history. it is just slaying, -- slang, tom.
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>> the fed always gets what they want. >> the fed cannot give the market what it wants. >> one of the biggest wagers in the market, at the moment is whether or not the fed can engineer a soft landing. >> they are more likely to be hiking into a slower economy. >> this is bloomberg surveillance. tom: good morning, everyone.


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