>> the saddest the fed is concerned with the maximum employment. >> we will stabilize to a more modest growth rate. >> the earnings backdrop will still be quite good over the next year and we will still grow earnings comfortably. >> this is "bloomberg surveillance." tom: good morning everyone. simulcast on bloomberg radio and

bloomberg television. 832 thousand jobs created in the last three months in america. we reconsider things after that bang up jobs report. jonathan: we are back to 1.28 on tens. your view of china right now. we keep going back to this. it's so important. the number one issue has not been demand. demand has been rock solid. it's been supply and our ability to get that supply to meet the demand. do you have to delay your call of that full-service sector recovery? >> fractionally weaker over the last couple of days. relatively vaccinated areas

versus china and what i see are houses reacting. we saw citigroup go up to 2% yield and now jp morgan goes the other way. jonathan: 20 basis point cuts on tens and 30's. we are seeing some upgrades to the equity market. i think we saw 4700 ron goldman. michael purves said 4800. they believe rates can remain stable and low and earnings can remain tremendous. tom: we see the combined study on wall street, but the partition is extraordinary. selected southern state and selective northern states is just draw dropping. -- just jaw-dropping. lisa: it is -- i wanted to

highlight the way growth has been hampered helped to see long calls in stocks. it will keep rates where they are for longer. you have a fed pressure to respond which will cap how high yields and inflation can potentially the -- potentially go. a great goldilocks scenario. how long can it last? tom: i heard a blurb on the u.k. and israel. what's the pandemic doing in the united kingdom? jonathan: things started to fade. the case load is still quite elevated. the relationship between cases and deaths is nowhere near as tight as it was. that correlation is nowhere near what it was a year ago. if you want constructive news, the u.k. example is still a decent case to look at.

jonathan: we start -- tom: we start with the dow futures. the fix -- standards -- standard and poor's negative eight. what interests you? jonathan: i was planning to leave anyway. lisa will take care of the 9:00 for you. this market still really in the treasury market. i'm going to go get a beige suit. what it would take me to wear that suit. tom: oxford is over. jonathan: how do you get that elke fit?

lisa: dr. phil. [laughter] tom: help you out on radio here. jonathan: this is the fit i want to. i'm good to be late, i have to go. tom: he may go away. an important discussion on the new dynamics of the american jobs report. from where you are after that jobs report, are you walking in the office glass half full or half empty? >> glass half full. that jobs report which was strong across the board doesn't really signify the extent to which there is positive growth in the u.s.. it does market infect --

inflection point in the rally we are seeing. i think rates will move higher from here. i do think there was an inflection point with jobs being created. we are in a countdown to taper. tom: the inflection point buttresses up against a wall of money that is looking for bills, notes and bonds. how do we get an inflection point with trillions floating around? >> i think it is true that there is this huge excess savings and liquidity. as a bias towards safety. government bonds continue to be very well. they still respond to underlying fundamentals. what we can see is the u.s.

economy has strong momentum, the fed is going to respond to that and i think inflation will stay more elevated and stickier than many anticipate. in response, the fed will start to taper. private sector will have to work more. the market will then start to reprise the path of the rates as well. we will end up with higher long and yields and higher real yields as well. lisa: they have been lowering their long-term expectations were how high treasury yields can go. if the fed does react the way you are talking about, that will actually dampen growth and inflation and lower the potential of long-term yields. have you also been lowering expectations for how high they can go. >> not very much.

where do you think it's going to be the endpoint in terms of rate hikes? what will be the terminal rate. i still think that will be through this cycle somewhere around about 2% or two and a quarter percent. came into this year thinking the 10 year yield would ended around 2% quite a long way off at the moment. i still think that's ultimately where we get to for the 10 year. >> what's the equity reaction if that were to happen? david: i think it depends on the pace at which you see the adjustment to higher rates. if those rates are moving higher

because the global economy and u.s. economy is doing very well, we are going into a world where in 2022 we are also running significantly above trend. the equity market can absorb that. we will see some volatility around any sort of taper announcement. over the medium term, risk assets can absorb higher rates. tom: thank you so much. it seems to be monday to regroup. it reemphasizes your cyclical. he has an observation of the underperformance, amazon is 852 out of the russell 1000. that's really extraordinary. amazon and the last 12 months is 852 worst stock of 1000 on the

russell 1000. there's 800 51 stocks that have done better than amazon. lisa: that's kind of shocking. tom: we are seeing this in the research turn. lisa: i was looking at china over the weekend and thought it was interesting how people are reassessing the policy risk of the authorities taking a harder stance on social issues and who would be next. as a result of there being concerned about manipulating prices too high in semiconductors over in china. in a broader sense i think it's a question, we were just talking about this idea have we hit inflection point with yields. a lot of people are saying no. it takes a little bit higher but the fed cannot have the long-term trend which is still slow growth.

tom: talking about the popularity of buying price up and yields down as well. we have the 10 year yield, i'm watching up to 2%. we are not there. 1.93 on the 30 year bond. this is what we want to do it surveillance always. on the not collapse but simply the bid falling away on oil. for global wall street, must watch, must listen. this is bloomberg. ♪ ♪ >> any report in the world top climate scientists is no end to rising temperatures by 2050. this comes from the intergovernmental panel on climate change that warns the

planet will keep warning unless there are drastic plans to reduce fossil fuels. a wildfire in california is the second largest in state history. it has blackened nearly a half million acres. this prompted mass evacuations. it is one of more than a dozen major fires. the infrastructure bill has cleared its last procedural hurdle in the senate. the 550 billion dollar bill is the cornerstone of president biden's economic agenda. if the senate approved it to the measure goes to the house. u.s. infectious diseases chief anthony found she says booster shots should go to those with weakened immune systems. on nbc he said he supports vaccine mandates at local levels.

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>> this nation was founded 245 years ago. we had no national debt.

it's growing at a rate far in excess of an appropriate economy. when this party ends it will not end well. >> leon cooperman there. jonathan ferro on assignment. we welcome you on radio and tv. this is a joy for september. citigroup working with a team of very smart people and they are working on the definitive deck for petroleum that will become widely tweaked and available into september. ed morris, it is a bombshell document. you say there's going to be oversupply, that there will be many regime changes. what is the regime change in oil i need to focus on? >> there are three bits of fundamental change.

for the last decade of u.s. production was growing at a remarkable rate. 73% of the energy incremental supply. i'm tented to say ever again but really not again. that's can it change things a bit. it put opec-plus into a defensive mode, it still in a defensive mode and i think it will remain in a defensive mode. there is a second issue that is a bit of a regime change, that opec was fuller rushing because of the ability of the opec producers to say we don't have to worry about today so much. it's tomorrow that we will have our day because demand will be rising forever. and the supply will be ours.

on the supply side and demand side, that's being challenged. tom: we have observed the china has called -- with coal has got to get fixed. the u.s. has to step up some form of cogent policy. what's the most efficacious policy for the united states on climate change and linking it to your world? >> i think we are getting a head start on it. we need the government thereto create a framework. they have a framework and the bond market simply skyrocketed right after that. the paris agreement said we need $3 trillion to $5 trillion of investment. in 20 19 the bond market only gave $250 million worth of issuance sustainability bonds. this year we are on our way to $1 trillion. we need more government framework to get the

infrastructure bill we need. we need that to get hydrogen from where it's produced to where it's needed. i think that's the challenge. lisa: to dovetail into your call on oil. haven't we seen peak oil demand already or do you see that upcoming in the next few years? >> we don't think there is peak oil demand yet but there is a bit of a debate on it. for us it's a question of when. we are on track to hit 10 million barrels a day in demand by 2030. because of policies in place, not because the pandemic. because of policies put in place by china, the u.s. and europe, that will be at the most 107 million a day and we think policies are unfolding we get to 104. the elasticity of demand is

really falling much more rapidly than people thought, which puts us into getting to that peak oil demand into the early part of the next decade. lisa: the list of unknowns you layout and as we look at oil prices currently, wti on $.61. the path of change, just two months ago $100 a barrel foreseeable next few months. could we still be there or has the scenario changed? >> this scenario has not changed. we are seeing the reaction to things that might happen, we just look at the supply and demand balances, inventories are growing at a record rate. they are drawing at a higher rate. inventories are really tight. they are tighter than the price of oil is today. they've gotten a little bit

short. partly because of the discussion you had earlier. that rates will go up and growth will go down. we think prices will go up again to the mid to high 70's before we have that regime change. >> you wrote a really important widely acclaimed document on china and coal. and you said at some point this ends, give us an update right now on what seems to be the global elephant in the room in commodities? what's 2025 look like? >> the china issue has never been one of climate change, it's one of pollution. the government has to deliver

clean-air and clean water. they are going about as fast as you can go to use every means possible to electrify the country, to move off of fossil fuels but they just can't do it fast enough. that's given rise to more coal demand. that demand, has lower sulfur emission content -- is for lower sulfur emission content coal. trying to push in the post-pandemic revival has put a great stress on the growth of power generation and you can see it not only in coal, but in other fossil fuels and natural gas in particular. that will slow down as the economy changes. tom: really look forward to that important definitive take in september. i remember when ed did this

seven or eight years ago and it received a truly worldwide acclaim. i don't see it in the present statistics. lisa: right now they are sobering and the report was sobering. when you were talking about how amazon is one of the worst performing stocks in the russell 1000, i didn't believe it. i've seen them doing well year today. i took a look and there was about 2% year-to-date and it comes on the heels of that earning support. 11% through the end of july. just to show you exemplifying how that projected forward earnings matters. >> a huge mystery. certainly amazon with massive cap backs.

and a fully employed america. red and green on the screen. stay with us, this is bloomberg. ♪

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♪ tom: good morning, "bloomberg surveillance." we welcome all of you on radio and television. it is an interesting day, lisa. what is your observation on the day that we see. i see yields not moving as much as i thought they would move. lisa: that is interesting. a lot of people thought inflection point could be in the offing. it is down 1.7%. maybe it is not the inflection point. tom: we will have to see. this is a joy. it is not a joy because of an important tweet stream on buffy the cat, claudia joins us with exceptionally important toward flow. you can learn a lot. particularly on the microeconomic foundations of all of this that we talk about each

and every day. i want to go to the heart of the matter. if you raise wages, good things happen like consumption is sustained. tell us where we are in the effort to raise wages? claudia: i think we have seen a lot of encouraging progress, which is surprising. after years and years of low wage. we know it is possible. what i want to underscore is we do not have the headwinds to keep this going. we have had reopening's, vaccination starting. we had people wanting to get back outside and see families. government put money in people's pockets. that relief is running out. that low hanging fruit is running out. then, it is a big question, do we keep these wage gains? tom: how do we do it from a policy basis?

the wonderful essay today in the washington post, there is talk about labor share grabbing something from the era of ronald reagan, forward. do you buy a policy shift or not? claudia: i argue that we are seeing a change of monetary and fiscal policy. i think the fed is on its way to new framework, thinking harder about its mandate and jobs too. i am more concerned about what is happening on the hill. we are seeing an infrastructure package, which is amazing. we have had years of waiting for infrastructure week. it is happening. we have an over $20 trillion economy, $1 trillion over 10 years in our productive capacity, that is not much. what i want to see and what we learned from putting money in people's pockets is if we invest in our next generation, that is where the payoffs will come.

it is really not guaranteed that we will see that. that is what we need for long-term supportive workers. lisa: the read on how much prices for the average consumer are going up and they are going up in aspects and things people buy every day. can you give us a sense of what you think the feds response should be? it is the most ornery us for low income americans. claudia: i think the fed has been right about this from the start. we know that the factors, if you look under the hood, the factors of this extraordinary jump in prices, i don't want to underscore the pain this has caused. these are not things that are staying with us. to use motor vehicles, those prices are coming back down. we should not change course and abandon the millions of workers who are not back to work, just

because we are going to have six months of prices that moved up faster than we expected. it would be so wrong to change course on some cpi numbers. lisa: and a lot of people would agree with you. then they pair that with this increase, this diversions between the wealthiest individuals and the lowest income individuals. asset prices have been one of the most inflated areas of the economy. a lot of people say the fed's policies have widened its divide. how can you say may be so, but it is worth it? claudia: i am extremely frustrated with how much focus the fed is getting right now. we need congress to act. there are ways to address wealth and equality and the fed is not have them. there is taxes, there are transfers. the fed cannot do this alone. the idea that raising interest rates a couple of basis points is going to fix a long-standing problem in the u.s. economy, it

is ludicrous. just to think that could really move the ball, it is frightening to me that we put that much power in the fed. tom: you have always been equal opportunity. you go after conservative. -- conservatives and claudia is fearless about going after liberals as well. there is a conservative angst. they are worried about the debt and deficit. there is a conservative trust that says wait a minute. how do you respond to and inbred conservative american ethos? claudia: they are worried about the size of government. we saw massive tax cuts under trump that had incredible increases in the deficit. now, to be saying we can't raise taxes, this is not about the deficit. we should be concerned about it. you should watch these numbers. the debate is do we want to set up social programs that are going to beat wildly popular,

like the child benefit when it gets working, that is putting government more in a role where conservatives have looked to the private sector and individuals. it is not enough. tom: lisa, this is incredibly important to me. if we have a natural disaster like a pandemic, we can't get any kind of shift in our childcare policy, relative to other equivalent nations? lisa: i think a lot of people are questioning this, which goes to the fierce debate in washington. there is an agreement, even among the democrats, about how big the human infrastructure plan should be. and the pushback you talk about from the conservative stance. claudia, you raised an important point. you are frustrated with how much power people seem to have given the fed. the question is, knowing forward, do they take that power or do they actively fight against it?

with now, especially with the balance sheet, a lot of people say you don't hold a lot of power but for all intents and purposes -- purposes, you are subsidizing. that is a political act. claudia: they are taking a risk. what they are trying to do is stay out of the way of congress. we know after the great recession, too much -- responsibility was put on the fed to do it alone and get us back to full employment. the fed does not have the tools to do it alone. it knows it can play a supporting role and an important one and it has during the pandemic. jay powell has said congress, do more. they have not backed off on that narrative. i think that is what the fed understands. as long as we get both pieces, that is good. without congress and long-term investments, we will not see this sustained in a way that we could. we could do this.

lisa: one thing we talk about every week as we get the initial jobless claims is the worker mismatch. at 10:00 a.m. eastern, we will get data for the month of june. there is the question of why some any people are out of work and you have these employers saying we can't find any workers. what is the why behind this? what are we missing? claudia: i think we have to keep our eye on who is in the labor force and who is coming back. what was unprecedented in this labor market was the fact that we had millions of workers just leave jobs. in what was a very severe recession. a lot of this is parents who needed help with their kids with homeschooling or workers who were afraid of dying. we need to bring them back. saturday, there was a lot of good news.

one million jobs. a lot of that was people being recalled from temporary layoffs. we know historically, long-term unemployed are tough to get back. the longer your outcome out, the harder it is to match you back up. i think that is what we are seeing. tom: we have to leave it there. thank you so much. always interesting, linking in our actual market economics. i'm not sure where this goes. the markets will battle it out almost separate from policy. i am not sure they are immune from policy. lisa: some people would argue the reason why treasury yields were lower than they were this year is because of policy. because we are talking about a multi trillion dollar infrastructure plan and that got whittled lower and lower. and the chances are that the bipartisan bill is likely to pass.

you start talking about what is the fiscal impulse? it is smaller than we thought earlier and it is going to fade. a lot of people are going to point to that for the underperformance of certain cyclical areas. tom: the parlor games through july and august has been to recalibrate and measure that fit. jp morgan announced that today and many more to come. lisa: there is a question, someone said last week, i am forgetting the guest who said the treasury is becoming a policy tool. i love that, because that is the truth. when you have a central bank that is buying a significant proportion of the debt, it is what they do that determines very much of the levels. the question is, going forward, with their reaction function and have they migrated to turning certain corporate debts into policy tools, based on what they have done in the recent past?

i think the market is saying is you will squelch the credit cycle and keep voluntarily low -- volatility low and we will act in accordance to that. tom: a million shares of apple. lisa: is that your recommendation? tom: 10 year yield, one .27% -- 1.27%. i can't get to 2% on a 30 year bond. american oil, well under $70. lisa: we have been talking about dollar stability. we will continue that. steve had the reaction. tom: this is bloomberg. stay with us. ♪ >> the u.s. senate could pause the 50 billion -- $550 billion

in for structure package. 18 republicans joined 50 democratic senators. it is an indication of bipartisan support for the bill. the biden administration faces a reality that deal may no longer be feasible. iran is racing toward the capacity for nuclear bombs. a victory for norwegian cruise line. -- will allowed norwegian cruise line to require proof of vaccination. recent laws in florida band vaccine requirements. that has been put on hold for now. in south korea, -- the industry committee recommended he received parole after being sent back to jail for a second time

in january. he was convicted of using bribery. prices are up 50% in the past year. the drought -- the world's top producers as retail levels go up because coffee drinkers are so addicted. global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> we need to look at them in a

different light than the durability of a nerve -- normal person, which means we will almost certainly be boosting those people before we boost the general population that has been vaccinated. we should be doing that, reasonably soon. tom: in the trenches, dr. fauci on cnn over the weekend. always an interesting conversation in this heated debate in this nation on this pandemic. not only the interview of the day, but frankly the interview of the year. she is a professor of medicine -- he is a professor of medicine. his work at johns hopkins and georgetown has been noted for decades. i want to talk, dr. gaston, about the thing that comes up in every conversation. the privilege versus the right, on whether it is drunk driving, having a beer, or in this case,

on vaccination. our unvaccinated -- are unvaccinated people of a right or a privilege? which is it? >> it is certainly not a right. it is a really important question. nobody should be shaming or blaming people who are unvaccinated. that is unproductive. it's not going to change hearts and minds. you can do anything that you want to do for your own health and safety. but you don't have the right to put someone else at risk. you don't have the right to go unvaccinated or unmasked in a classroom. it is clear to me that no one has the right not to get a vaccine unless they will be hiding themselves away and not exposing others to infection. tom: the courts seem to be

siding, -- citing cruise ships, does that surprise you? dr. gostin: it doesn't. we have a conservative supreme court and judiciary. you can never be sure. but the law seems to be rock solid, basically saying that businesses, colleges, universities, cruise ships and others absolutely can require vaccinations as a condition of going to work. tom: what do you presume we will see, i will pick florida with the grim hospitalization statistics there, but there is a mantra of jacksonian states rights. how will that state deal with the battle between jacksonian states rights and courts saying

no, you have to go the other way? dr. gostin: it's going to be really rough. florida is actually one of about 12 states that have passed a law, banning proof of vaccination and banning local mask mandates. one of the things that i reflect on is that in the conservative tradition in the united states, normally we give a lot of autonomy to businesses and local governments and local health officials. states are really a bridging the rights of the private sector of universities and others to actually ensure that their workplaces are safe and secure. there is a wider freedom and that is the freedom of all of us to get the things we love. that will happen if most of us

are vaccinated. tom: thank you. he is definitive on this raging debate. it is a privilege to know that michael mckee will be asking questions at the fed meeting in september and he will do it off of the next jobs report, which follows on a three month moving average of 832,000. reset us and get us out to early september and the august labor report. can you extrapolate forward? >> we would like to. this is a unique situation and we have the delta variant, which you were talking about, which raises questions on whether people will be willing to go back to work, those who have not gone back to work. we have the question of childcare. some schools are starting up. we may see a positive impact from that. if they go to virtual school again because of delta, then you have a problem. tom: every history here means

that there is a single prescription, we need to wait for more data. the speeches today or next week, do they really matter if we are going to wait for more data? michael: i don't think anything matters to wall street except for jackson hole. i am selling the trip. i will wear a cowboy hat. what i have to tell you is we don't know if jay powell will say something important or not. wall street thinks he might. that is where the focus is going to be. then, we will come back and get the august jobs report and see where we are. tom: we come back and the data is there. how critical is cpi this week? to me, everything is transitory to get out step i step by step to more data -- step by step-by-step to more data. michael: there was 10 items that

accounted for 55% of the rise in cpi. if car rentals start to go down -- tom: are we seeing other lumber's which have come back? michael: maybe that translates into cpi. we have to wait and see. we will be looking to see if other areas go up while the others come down. the cpi is supposed to go up .5%, which is a big rise. that is half of what it went up in june. tom: the key conviction meter is grim on the -- reader is grim on the boston red sox. do people have a lot of conviction? michael: i think people are happy with the way the labor market is developing because if it slows down a little bit, the three-month average has been strong.

we see people going back to work. there are a lot of possibilities in september with schools opening and the extent of unemployment benefits. it is inflation that has people concerned. the fact that people are going back to work and making more money to do so adds to that inflation. we will watch this week's inflation data. tom: i wanted to talk about potential gdp which comes off the research of a lot of bright people. one of them is michael, a jp morgan u.s. economist. i thought it was illuminating. their bond team comes in with an adjustment of lower yields from 2% down to 1.75%. looking forward to him at 12:00 noon. real simple, dow is -74. spx is at negative five. i'm sorry, 17.11 on the vix is a

constructive number. i have green on the screen for the nasdaq as well. we are watching oil. this is bloomberg. stay with us on radio and on television. ♪

lisa: from new york city for our viewers worldwide, i am lisa

abramowicz in for jonathan ferro. "the countdown to the open" starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. lisa: we begin with the big issue. markets wagering on the fed paper timeline. >> this is a fed that wants to taper. >> this is a fed that wants to taper. >> i do not think we will see a bombshell taper announcement. >> the fed will take a read from the next jobs number. >> we will get a strong signal for taper at the fomc meeting. >> look at the numbers in september at the numbers in october. >> you probably need another one million jobs. >>