>> stroke is going to -- growth is going to be strong, just not as strong as the first half. >> we could potentially see some bumping us. >> we are still seeing very high and potentially concerning inflation. >> we are heading into a transition that will ultimately create a stronger dollar. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: live from new york city, good morning good morning. this is bloomberg surveillance, alongside tom keene and lisa abramowicz. tom: on a monday, to get out front of the friday jobs report is a big deal. many people want one million jobs to be created, and that talks about a recovering economy. jonathan: we are still in a land

-- where nobody seems to have a real clue with any confidence of what this labor market is going to look like. tom: i think in the labor market that is true and we get a lot of economic data on the mystery of the q3. there is no mystery to the equity market. look at the adjustments we are beginning to see. moving from 4300 to 4700. a resilient bowl about the jobs report as well. jonathan: six months of gains on the s&p 500. quite a run. lisa: just because people have been questioning it doesn't mean aiken and, especially with incredibly low yields. there is a question about margin pressures. some people saying margin pressures have been overblown with a lot of companies able to pass along pricing increases in the focus is on wage increases.

jonathan: futures are looking ok this morning. price action is shaping up as follows, 25 points on the s&p. looking out to where the bond market, yields going nowhere. euro-dollar approaching 119 again. lisa: it is really active, thrilling. i am very curious to hear about tom's characterizations of the market this morning. it is a really busy week. today, not as much. 10:00, we get u.s. manufacturing data. the focus will be on prices. how much are they rising and how much price pressures are crimping manufacturers. a record pace of hiring, trying to meet demand. how much more focus is going to be on this area as the reopening gets delayed? the u.s. surgeon general is planning to blunt -- is planning to join bloomberg television.

i wonder what the guidance is in terms of the vaccine and the delta variant. we heard anthony found she coming out and talking about how it is really bad but he does not expect another wave of lockdowns . what is the threshold of pain that we are looking for? what is the criteria to decide how strict to get with respect to masking or lockdowns? today, senators are set to begin the process on the infrastructure bill that did get solidified yesterday in terms of language. $550 billion. there does seem to be bipartisan support. how does house speaker nancy pelosi say she is not going to bring this to a vote in the house, unless there is some sort of action on the senate's part with respect to the $3.5 trillion plan going to reconciliation. jonathan: we will head to d.c. in about 10 minutes time. this federal reserve governor

quote, data in hand for september when consumption, school and work patterns should be settling into a post-pandemic normal. let's bring in the city chief economist on that line. september is the call of the fed. how important is that? >> really important. ps -- she is sending a clear signal that she is not willing to support changes the policy before she sees september data. that is different than what we heard from chair powell, who left things more open and flexible, watching jobs reports. but for brainerd, it is going to be what happens in september, unemployment benefits coming off. how much does that allow the shortage of workers -- tom: what is your q4 estimate? do you have an actual statistic or are you like governor brainerd, just waiting for data?

>> all economists are waiting to see how the data comes in. it is interesting that we have the emphasis on the jobs numbers. of course we should all be watching the labor market. that is part of the fed's dual mandate. the issue we have is not a lack of demand for workers or in the economy. the issues that we saw is the lack of supply and it is strange to me to see fed officials talking about whether policy should be more or less dovish, based on the jobs numbers that we get we get uighurs jet -- we get weaker jobs numbers, probably due to a supply issue not a demand issue. that is not an issue that monetary policy can address. lisa: what should they be watching then? andrew: prices above all else, goods and services. that is where we are seeing this inflationary pressure. it is not just about used cars,

it is a broader array of issues, as well as wages. upward pressure on lower end of the spectrum, certainly good news for those workers but does it become an issue where those wage increases are getting higher inflation? tom: jon, -- make clear the supply constraint is endemic to retail and she says it goes right back to vietnam, that vietnam can't get the stuff to us. jonathan: you can pick up the data in china as well. downside surprise across the board. export orders are really disappointing. lisa: when you talk about supply chain, and the staffers on shipping container ships and the fact that you have people getting sick and not going out. you think and you hear in an

increasing number of economist reports that it doesn't seem to be taking longer -- that it does seem to be taking longer than people thought to work through this. jonathan: my preference would be to get to a decision in september and start sometime after that. my main goal would be to get it done by the end of the first quarter, just unwind the whole thing. andrew, do you think president bullard could win people over in the fomc? andrew: i don't think they will be as aggressive as bullard is suggesting. i think we are seeing a fed that is moving faster and further to pull back on these purchases and if you look at what is happening with the economy, with prices and inflation, this is all moving faster than fed officials expected. we had fomc rhetoric that was trying to set up portals to pulling back asset purchases and you are just getting through

those milestones a lot faster than anyone was expecting. tom: andrew, from an economist standpoint, what do big negative real yields signal? is it about the nominal yield, the inflation expectation or the residual to actual real yield? andrew: the idea of a negative real yield was always a puzzle because negative real yield is essentially saying if you have any ideas or productive projects, it is more productive the negative -- more productive than negative. negative real yield is telling you something about the equilibrium rate in the economy and the equilibrium rate of growth. if those negative levels of real yields are telling us about a growth concern, then that would be something i would take a lot

more seriously. i think what we are seeing now is just a shortage of safe assets, may some continuing concerns over what is going on with the public health scenario. a lot of these things will be your -- will be resolved over the next year. it is puzzling to see them here. lisa: i would love to get your take on the infrastructure bill. how much of an impact will the $550 billion plan have an economic -- have an impact on economic growth and inflation? andrew: it is very different than what we saw around fiscal stimulus that was targeted and very large. this would be $500 billion in new spending over an eight year or 10 year period. it is not really a game changer in terms of the total amount of stimulus coming into the economy. in terms of the market, i would just say we are getting a lot of development from infrastructure

but i don't know that it is really shifting the base case. there is the market case that we will get new spending for reconciliation and we will get higher taxes as well. i don't think the market has anything to respond to yet. jonathan: what is the guest for friday? andrew: we are near the top end of the range. we think we have 1.1 5 million jobs. part of that has to do with seasonal adjustments. we think this is really still a very strong demand side of the job market. jonathan: andrew hall and horst -- andrew hollenhorst, citi chief economist. tom: remember the last time we did this? jonathan: it seemed pretty decent over the last couple of months. we have had some robust jobs growth. tom: labor force participation, i would suggest on the way to

that, we have terrific sets of earnings. look at the way the market opens up this morning. small-cap up 1%. it is a nice move, and i like the equity adjustment i'm seeing. people are moving their earnings guesstimates up. jonathan: outside of equities, looking at -- even with that weaker data out of china. lisa: there is a growing number of analysts who take a look at the china strategy, especially with the tit-for-tat between the u.s. and china. people looking outside the areas at stock contagion. jonathan: the dollar is weaker across the board. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i am jonathan ferro, kicking things off with futures up. from new york city, this is bloomberg. ♪

ritika: with the "first word news," = i a -- i am ritika gupta. negotiators finished the bill yesterday, a crucial step towards eventual passage. mitt romney says neither side got everything they wanted after the senate vote. final congressional action would not take place until the house returns next month from a recess. the u.s. has formally blamed iran for a deadly attack on an israeli tanker. anthony blinken says there will be a quote, appropriate response. u.s. navy experts say they believe the ship was struck by a drone, killing two crewmembers. iran has denied response ability. north korea warns that upcoming u.s.-south korea drills could jeopardize talks between the koreas, less than a week after both sides announced

communications would resume. kim jong-un's sister said the plan to hold allied exercises undermined efforts to restore ties. the biggest acquisition ever for square, led by twitter founder jack dorsey, paying $29 billion for an australian by now, pay later company. simone biles will return to competition at the tokyo olympics. the american gymnastics star withdrew from most of her events because of mental health issues. she will compete in the balance being final tomorrow. 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 am ritika gupta. this is bloomberg. ♪

>> by this evening, hopefully we

can start the process. we should finish up by thursday, i hope. >> you think it will pass? >> i do. when you see chuck schumer and mitch mcconnell voting for the same thing, it is something beautiful. jonathan: senator joe manchin speaking to cnn over the weekend. good morning, alongside tom keene and lisa abramowicz, i am jonathan ferro. into the bond market, yields unchanged on the session so far. the euro is stronger and the dollar is weaker against everything. here is the line. when you see chuck schumer and you see mitch mcconnell voting for the same thing, it is unbelievable. tom: it is. it is extraordinary, and this is

how the laundry is cleaned in america. emily wilkins joins us right now in the heat of this battle. it is just a vignette into what happens today. does a congressman from iowa say if i don't get this, i won't vote for it? what actually happens now, as the sausage gets made? emily: right now you have a lot of senators who are not within that negotiating group, looking at the 2700 and two pages -- 2702 pages. the magic number is 60. ideally from majority leader chuck schumer, he will have all 50 democrats on board and then an additional 10 republicans. a lot of people are saying this is infrastructure week, that this is a big week because it looks like the senate is about to pass this package. i would say we are still in the middle of and for stricter summer because even if the senate does manage to pass this

bipartisan for stricter package, something that there could still be a lot of roadblocks on, depending on what publicans want to do with amendments, it still needs to get through the house. the house says they need that 3.5 doubt -- that $3.5 trillion reconciliation package. tom: are the bills actually attached or are they separate? emily: it depends on how you want to message on that. technically they are two separate bills but if you look at how the messaging around them has been, democrats say there is no way they're going to vote for this bipartisan for stricter plan if there is not that other package with other priorities in it. with that threat of a no vote from progressive democrats, these two bills have to move together. that is how you see speaker pelosi talking about them. chuck schumer has to be more careful because he doesn't want to lose republicans who don't want the packages to be tied together.

this is a messaging battle when you get down to it, as far as whether the bills are connected or not. lisa: maybe this is just semantics as well but i saw that the house speaker would like to see some sort of senate action on the $3.5 trillion plan that is going to go through reconciliation. is that just simply taking it up? how significant does this have to be, in order to get some of the progressives to sign onto the infrastructure plan? emily: progressive democrats have told me they want to see the senate passed that reconciliation package. that also means passing that budget resolution which is not done but the senate passing that package, getting that to the house and then the house voting on that bipartisan infrastructure plan and reconciliation plan very close to each other. the concern with progressive democrats is if they just vote on that bipartisan infrastructure plan, there is not going to be enough pressure on moderate democrats to make

some agreements and get through that reconciliation package. lisa: there is one aspect of the 2702 pages that is getting some higher by the senate finance chair. it is basically an extension of -- what do we know about this topic and how much of a sticking point is this? emily: this is a solution that emerge the other week as a way to potentially pay for this legislation and the pay for has been the sticking point throughout this process. we're going to be looking into and learning more about what exactly this provision does, and taxes on cryptocurrency. i think at this point, there might be some concerns about how wide reaching or not the tax is, but i think it is a debate we are going to be hearing more of come of this week and senators will have a chance to look at the bill and talk to their counting points -- their

counterpoints in the negotiating. tom: i look where we are on infrastructure, and i want to know what happens today. you've got 2000 plus bills. dissenters know that a certain bridge is going to be selected or not? emily: that is why the text is so important. that is why when we talked senators about if they will support infrastructure, the first thing they say is we need the text. we are 12 hours from this big package being released. when senators come back to d.c. for that critical vote, reporters will be there saying what do you think and what are you hearing and this is the point where if answers have a small issue, we will be hearing about it because it is a matter of needing all of the democrats and 10 republicans on board. things can be very delicate when it comes to negotiations and getting people on board.

jonathan: emily wilkins, thank you, our bloomberg government reporter. lisa, how many of them do you think actually read this? did you see the stack of paper being carried around? did you see the photos? it is ridiculous. lisa: it is ridiculous and it was something that was assembled in days. some of the specifics are very important, particularly from a market standpoint. jonathan: what were some of your highlights? lisa: this is what people in the market are going to be doing. there is something having to do with energy provisions, subsidizing everything from nuclear power plants the carbon capture and storage. people are going to be looking at that kind of stuff. also low-cost internet access, transportation. you have to look at the energy, the concept of where this money is going to be flowing. that is the specifics. which regions are getting more? these are the things people want to know. jonathan: i have the confidence you have that they will be

moving -- that they will be reading through this. get the violins out for people at goldman. first year analyst that goldman will now earn at least $110,000. the second year will be paid $125,000. first year associates will go to $150,000. lisa: honestly, people say this is wall street and cry because they're learnings -- earnings a little coming out of school. how much did you earn? jonathan: can i reveal that? i think it was about $20,000 sterling. i'm not sure if i should be disclosing this, but i've just -- but i just have. lisa: it seems like a lot for an entry-level job, specific to wall street, but it's not, it is pretty much across the board. salaries are going up across the board. jonathan: i'm getting a message from my manager in 3, 2, 1.

we have to make up for the early years guys. from new york, this is bloomberg. ♪

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you get too far out of alignment with what is actually happening in the economy and then you have your back more strongly then you wed like and possibly causing disruption in the economy. i think the risk management here is that if inflation does come back down in 2022, we are in a great position for that. we are exactly positioned for that, but if it does not, we are not in such a great position. i think for that reason, we want

to have flexibility. >> live from new york city for our audience worldwide, good monday morning to you. 6 months of gains into august, the s&p advancing another 6/10 of 1%. small-cap is up a little more than 1%. we are positive on the nasdaq 1%. not the story over the last 30 days or so. you see the difference in the performance of small caps and the nasdaq 100 up on the month. a lot about performance through the first half of july the middle of the month. we switch out the born again then to get to the bond market. right now 120 288.

19064 we come into a brand-new trading month with very little consensus about what went right or wrong here. people need to get on the same page and explain. tom: with a five-year negative i want to -- five-year negative real yield, i want to go back to that last board you showed. can you get out front on that and figure out august? jonathan: the swing might be wider than that. the question is simple -- what do you want to hold until year-end? when people answer that question it tells you a lot about what they think about the world and the data they are expecting on the macro side. tom: to get beyond what will happen the first week of august or friday, someone who is expert

at that is howard ward, trying to get out beyond the first quarter with good belly fund -- gabelli funds. 12 months trailing -- a sophisticate like howard ward knows that is -- how do you get out to your measurement of growthiness out two here's -- years? howard: the stimulus combined with the fascination have combined to give us a very strong recovery. gdp growth this year could be 7% or a percent. we have not seen growth of that magnitude since 1951 when harry truman was president.

earnings expectations, which were high two months ago when i was last on your show, people were expecting earnings of $122 on the s&p. that number is now $193. i think. it is too low by at least 10%, which means the 2023 -- excuse me, the 2022 expectation is too low. that is around $212 so we have several years of continued good earnings growth ahead of us i believe. in real estate they say location, location, location and with stocks i would say earnings, earnings, earnings.

tom: you provided worldwide leadership on rationalizing these nasdaq stocks out further. state the case now for earning those glorified revenue builders out 2 years, 5 years, 10 years? howard: inflation expectations while they are higher than they -- we would like because of the delta variant being introduced interest rates have gone down. earning estimates have gone up. when you look at the economic growth as strong as it is this year it is probably more like 4% next year. we are already in an economy that has seen peak growth and is beginning to slow. slowing growth is generally a good environment for growth stocks. when you get beyond next year,

we are going back to gdp growth with 2%. slow growth whether it is slowing or slope is a good environment -- slow is a good environment for growth stocks. lisa: we always talk about stocks as one entity, but we saw a recent divergence and earnings. the likes of alphabet seeing avenue picking --- ad revenue picking up. how long do you expect this bifurcation to continue between the haves and the have-nots in the growth world ? howard: you have companies like amazon that are growing free cash flow. bank stocks in general are among the biggest free cash flow generators of all. the market in the last 2 months

in particular has been rewarding free cash flow more than anything else. the third quarter is awarding positive revisions. last year it was sales growth. all of the bank stocks, including netflix, they were free cash flow last year, but they will get on a permanent trajectory of free cash flow growth next year. these are wonderful places to go. in the case of amazon, the company is up against monster comparisons and amazon has become amazon because it just is us -- jeff bezos' willingness to sacrifice short-term gain for long-term gain. that has been a successful formula ended is continuing to show the way for amazon's future

growth. they remain the leader in e-commerce, web services, and they have a rapidly growing digital ad business, which puts them up there as number three behind google and facebook. stop and so many of these other software and semiconductor companies are generating this. lisa: as i hear howard talk, i think about the case for buying stocks that look expensive. jonathan: -- tom: that has been the howard ward mantra for years. growth is the new value. what is the value trap after that 2023? what is the trap you see? howard: i think the market got very excited about the potential for earnings growth. i am not saying that is going away.

it is simply that stocks like caterpillar should be an obvious beneficiary of the infrastructure package and also benefiting from the reopening trade and booming housing market construction, i get the market -- as we saw what this most recent batch of earnings, whether it is amazon or some of the others, the market has discounted significant earnings growth. my perspective is, it is still not where it should be. earnings expectations are still too low for the market overall. when you look at some of the cyclical fervor is going to come down, and to some of that reopening trade and hospitality might be put on hold. i would be careful with the number of stocks, whether they are transportation or hotels.

while i do not think we are going back to a countrywide lockdown,, on a regional basis, on a state-by-state basis, that is not so certain. this is a problem. the risk has risen because of the failure of more people to vaccinate. the tv personalities and politicians that have disc ouraged the vaccines are costing us lives and do need to be held accountable. jonathan: we will continue the conversation about the pandemic with johns hopkins. the deal of the morning is actually down under, square by yang -- buying afterpay for $29 billion.

what do i think? afterpay is worth over $100 million. tom: you think they's big tech companies ought to buy the square. jonathan: credit space is $25 billion swiss. tom: this is the growthiness howard was talking about. jonathan: square is getting bigger. lisa: it is interesting to see where they are getting bigger. it challenges the big bank bread and butter of how they make money, which is buy now pay later. this is the new model of credit, taking out the credit card. square paid a hefty price. this does threaten the preeminence of wall street. jonathan: wall street earns --

it is a great set up for them, isn't it? square is getting ahead of this, the new generation, the way they spend money. tom: it is flipped on its head. there is no question about it. i see a top to bottom in retail. it is a complete new world for the banks. jonathan: square down for percent in the premarket. deal -- 4% in the premarket. deal of the morning, square buys after pay for $29 billion. up 23%. this is bloomberg. ♪ >> i'm ritika gupta.

the u.s. senate is on the verge of giving president biden a big win. lawmakers are heading towards passing a $550 billion infrastructure bill. it would be the largest infusion of spending on public works and decades. the bill would still need to be passed by the house, which will not take it up until next month. the spread of the delta variant could slow the labor market's recovery. it could keep some americans from looking for work. the u.s. is about one third of the way back to where the economy was in january. securityand exchanges committee increase the requirement for chinese companies that want to list in the u.s.. that came after the -- hsbc has

released a loan provisions a book to during the early stages of the pandemic. these quarterly earnings easily beat estimates. it will pay an interim dividend. last month the bank of england removed shares on cash payouts. one of the last big banks to raise pay for junior bankers -- goldman's own analyst revealed their own crushing workloads. powered by more than one -- i'm ritika gupta. this is bloomberg. ♪

♪ >> we are looking, not i believe

to lockdown, but to some pain and suffering in the future because we are seeing cases go up, which is the reason we keep saying over and over again, a solution to this is get vaccinated, and this would not be happening. jonathan: dr. anthony fauci there speaking to abc over the weekend. i'm jonathan ferro. this is the monday morning price action on the s&p. six months of gains. we advance half of 1%, yields unchanged on the 10 year. surprising to see the aussie on top. a stronger aussie in the mix, even on the back out of weaker than expected data out of china. the euro dollar advancing some one .5%. i want to work out how the

dollar trade lines up with the bond market. tom: on friday and the jobs report, -- right now, what did you do this weekend? which beverage of choice did you have? what fancy restaurant did you go to? joshua sharfstein is expert in the doing of medicine, one of our leading experts on this pandemic. he was in south baltimore getting 76 vaccinations done. dr. sharfstein joins us this morning. describe the fear of people getting vaccinated this weekend, dr. sharfstein. what is the character of their reticence and their courage to get vaccinated?

joshua: a lot of the people who came this weekend had heard about the delta variant. they knew people who got sick. they were there. they came early. there was a huge surge early, and then there are people who you could tell were reluctant. i would ask them, " what made you change your mind?" they don't give an argument. they give a person. they say, " my wife, my husband, my girlfriend." we have to hope may be people will listen. tom: how do we jumpstart this? i would say an incentive would

be baltimore orioles tickets, but maybe that would keep people away! joshua: never know -- you never know. this is behavioral economic, what would make people change their mind? it is obviously a standard -- combination of incentives and standards. here in maryland all the hospitals are requiring vaccinations for people who can get it. it is a combination of things that i think will move the needle. i do think the delta variant, the surgeon hospitalizations, the surge -- the surge in hospitalizations is having an impact here. lisa: let's talk about the

science of the delta variant, what the vaccinated individuals can count on in terms of protection. we got a study out of israel saying half of all diagnosed cases of covid are in the vaccinated. how protected are you from transmitting the virus if you are inoculated? joshua: the best way to think about the vaccine is that it is an umbrella. it is like an umbrella -- and it is not raining that hard and you are not outside for too long, you will stay dry. if you are outside for a long time, it is a really bad rainstorm, you could still get wet. when people are exposed to an enormous amount of the delta variant, they can still get sick. it is likely to be a mild sickness, but if they are inside without a mask at a bar, it is

possible. you will see more victims the more delta variant is out there. israel is hard because so many people are vaccinated so you would expect more breakthrough vaccinations among the vaccinated. it really depends upon that it intensity of their exposure. someone is wearing a mask to the grocery store, i still think very little risk. lisa: my kids might be heading back and one of them might not yet be eligible for vaccination. joshua: it is a question right now because my understanding is that the fda have asked for larger studies. how quickly those can get enrolled and the answers can come. they are looking for a couple months of safe data like they were be. i expect -- they were before.

i expect it will be until the fall. jonathan: echoing some of those concerns, " i was optimistic the fall would be a strong labor market with americans coming back to work. if people are nervous about the delta variant that could slow the labor market recovery. that would put some emphasis again on the september data, which you would have to wait until october to get." lisa: the federal reserve will announce tapering. i wonder if september is the right data point, if people are concerned about spreading the delta variant to unvaccinated children at home, how this changes the equation. jonathan: from page -- front

page, " of the 40 countries covered by oec data, the smallest proportion since the data -- these housing markets worldwide are on fire. tom: they switch out info equity markets. where are you going to put your money? you look at the housing markets, they are pretty stable. clear back to year-over-year gains we saw in 2006. anyone with a collective memory was going " how long can that keep up?" jonathan: the equity market advanced at two points. -- vance 22 points -- advanced 22 points. the dollar is weak this morning.

what do you want to get on the euro? tom: i'm going to buy the dip. jonathan: i'm jonathan ferro. good monday morning. this is bloomberg. ♪

>> we are looking for a pretty significant deceleration as we go into 2022. >> is going to be strong, does not as strong as the first have. >> i think you could potentially see some more bumpy nest. -- more bumpiness. >> you could get some very high inflation readings in the near term. >> i think it will ultimately create a stronger dollar. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: that's get the week started. 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. your equity market advancing 14 points, up 0.3%, pushing ahead to payrolls friday. tom: into august and into that jobs report, it is a linkage of our economic leaf