, quite strong. >> it's all about higher-quality growth. >> i think we have that backdrop still in place. >> we have already seen signs that inflation is tapering down. >> for the last year it has always been employment, employment, employment. announcer: this is bloomberg surveillance with tom keene, jonathan ferro, lisa abramowicz. tom: good morning, everybody. we say good monday morning to you. lisa abramowicz is here. she is not virtual. kailey leinz in for jon ferro. lisa, we are not going to jackson hole. lisa: we are not. we are not going. they canceled it. this really is a symbol of where we are. i think the fact that they shifted this to a virtual

meeting rather than an in person one shows how we are retracing our steps when it comes to the pandemic, and the ramifications of the economy are significant. tom: we are getting to the markets with a nice lift this morning, a real adjustment in real yield. all of the writing over the weekend led by mohamed el-erian in the financial times -- mohamed el-erian demands that powell regain the policy initiative. lisa: the idea going forward, how exactly are they going to face off with inflation and employment at a time of incredible uncertainty, when you have a delta variant that is doing well now but you have an economic recovery that has -- the other side of it. if the balance of risks are looked at right now, it is more on the inflationary shift to the upside, or is it more on a dragged out recover? i do not know the answer. tom: kailey leinz, you see it in yield, and we are doing a data check. you see the yield nicely get up to a higher yield. it seems like a more attractive inflationary morning.

kailey: 1.27 on the 10 year, at least on the nominal yield. only -99 basis points on the real yield, each feels remarkable. inflation in the labor market -- i wonder if this friday is the friday we have to pay attention to with jay powell speaking, or next friday, the august payrolls report on september 3, if that may be a defining but as to whether or not the fed can move. tom: we have an important equity guest to get you started strong on a monday. futures up 16, dow futures up one point 66. the vix is supposed to be in like 16 or 17.5. it is 18. kailey leinz mentions the 1.20 8, 10-year, 1.89. nowhere near 2%, but we will take it. oil even lift this morning. brent back to $67 a barrel. dollar still planted come a

stronger dollar. we watched euro, 1.16 is a stronger euro, to 1.1727. i was in the rain all weekend. here is lisa. lisa: we will have him singing later in the show. it is a risk-on day today. many thought it was time to buy the dip, which is where we are right now. noticing the high-frequency data that is coming up with an increased deterioration due to the delta variant. 9:40 am, perhaps we will get a sense of the u.s. market manufacturing, services pmi data, following european data we got overnight, the u.k. in particular seeing the biggest level in six months for the pmi data over there. how much this reflects a pause versus a sustained slowdown in the economic recovery -- 10:00 a.m., we also get u.s.-july existing home sales data. how much strength we see, we are

expecting deceleration, but we are at very high levels. the housing market is still very hot in the united states, and frankly around the world. this is interesting. in washington, d.c., commerce memories are on vacation but they are not anymore as the house of embers -- congress members are on vacation, but not anymore as the house of representatives is coming back. a budget resolution hopefully getting past if nancy pelosi can wrangle democratic consensus. this is the hope -- the margins are very narrow here. we don't have a lot of room for democratic disagreement at a time when a lot of people are baking in the expectation for biden to get through this one-point trillion dollar -- this chilean dollar agenda. tom: mr. hoyer suggests not voting for 6:30 p.m.

and it is flat-out challenging. in a -- the taliban his simply said they will not extend out past august 31 and will ensure that language. a number of reports from reuters , and canada as well. the cacophony of afghanistan leads to come how does that get to pelosi, and what does it mean for the markets? bill dudley scheduled to join us, the former president of the new york fed, in a bit. right now, lori, it is a resilient market. it is a market that can break out to new highs? >> thanks for having me, tom, thanks for having me, lisa. we will get a pullback by the end of the year, so we have a target of 43.25 on the s&p. what is interesting in the price action last week, it felt like we had a growth skirmish to start the week. we saw the index falter and the fed defectors leading the charge. when that happens, the market

cannot sustain this move to the upside. what we thought toward the end of the week is that those jitters calms down a little bit, tech started working, and we started to see the stability in the index return. but markets not really climb. when you have that nervousness and the shift to high-quality, it is a very delicate balance. it did not work for most of last week. lisa: how big is this worry if we have the fed that is packing the market come if we have the greater potential for the fiscal stimulus if the slowdown does persist? doesn't policy support sort of completely cancel out slowdowns that might otherwise come up? lori: i think that's one of the reasons why over a few months we have seen a lot of nervousness in the market just sort of expressed through, i have been certain, -- i am uncertain, i am going to high-quality, not defensive. that makes the case for the

secular growers. but we are winding down some of these programs and can see the light at the end of the tunnel. the power of that bolsters markets going forward, at least having a diminished impact if you are not pulling the rug out from the market all at once. lisa: but we have seen the underperformance of small caps. can we glean any confidence in equity valuations based on the discretion that we are seeing on the part of fund managers? lori: i think that there are a couple of different questions. i think in terms of small caps, you know, i think we have seen so many worries manifest in the dramatic underperformance of small caps, at first it was the impact of -- it really did not end up coming through. but i think worries were expressed there. investors have worried about the threat of feedback that you will get on demand. now i think you mentioned the soft and high frequencies indicators. i think some of the short-term economic damage from the delta

variant -- i think that has manifest in small caps. but small caps at the end of the day have not completely collapsed. we have not seen them going to bear market territory, so there is that resilience that we will not be able to turn the owner, showing up and that data set. we essentially did that. we have been dialing down the cyclicality. i don't make a recommendation changes all that often, but if he pulled on the materials, which is our least favorite of the cyclicals -- we did actually vote with the proper tech sector. it does not include the internet stuff. we pulled overweight from the market weight, and we said going forward if we are thinking about the next 12 months or so, we want to be balanced before the defensiveness of cyclical growth and the sectors. we made that shift on the dial. lisa: i'm looking out the next three months and change and wondering if in 2020 when we

will see if i percent drop at any point in the market. what would be the catalyst for that? lori: i think we got a hint of it last week with concerns on the growth outlook, and i'm not saying that anybody is participating, we are going to have a recession or anything like that, but there has been some complacency on the economic data that investors have or deterioration on the economic data, and there is complacency about the impact of the delta variant from market participants. i think that was a wake-up call, a two of digestion that we had to have. let's zoom out a little bit and what was that reaction from the delta variant all about? it was an unanticipated bit of bad news that hit the market and really challenged investors options of what they thought going forward. i think the answer, it is probably something the market is not able to anticipate. with valuations where they are, sentiment stretched as it is, this is not a market that has a lot of room to absorb that growth as we get it. tom: the percentage changes.

when i last looked, pretty even all in all. small caps up .9% on lori calvasina's comments. lisa: we have already seen a selloff in certain sectors, a rotation out of cyclicals -- i think that is important. dividend payments have been accelerating and upgraded. they are on pace to be the second most ever this year. there's a lot of fundamental support to this. corporate executives not as worried as they health officials about the delta variant and not seeing the slowdown to the same degree. that with the slowdown in economic data, you get a model. however, it does not seem like we are heading for a crash or anything substantial when it comes to what the selloff could be. tom: on the back of the week, it seems almost like a two-part equity market. there is an equity market to pull back, and there is a group of stocks. we know the names. kailey: bifurcation, some may call it.

the average year-end target, when you look at targets on the street come is 43.35. we have been for some time where strategists see the year ending. the question is, do those strategists need to play catch up, or will he market come down? tom: we will have coverage friday for a different jackson hole. we thought we would be on the edge of that beautiful sort of swamp and field over to the grand teton's. that is not going to happen. michael mckee with important conversations, and of course chairman powell's speech. we will have complete coverage of that friday as well. coming up, david leibowitz, futures up 14. the vix, 18.70. this is bloomberg. ♪

ritika: british prime minister boris johnson will push president biden to delay the troops from afghanistan. for a more safer evacuation for the present has already said he might extend the deadline for u.s. troops leaving past the original august 31 date. in tennessee, at least 22 people were killed and dozens are still missing after record rain sent floodwaters surging through rural areas. up to 17 inches of rain fell during a 24 hour period come about 65 miles west of nashville. rescue crews are searching through destroyed homes. the storm left a trail of

l -- between new jersey and massachusetts. the world's largest -- now up 72% since july. the crypt to market has seen a rise of the trillion dollars in the last months. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i am ritika gupta. this is bloomberg. ♪

pres. biden: the evacuation of

thousands from kabul is going to be hard and painful, no matter when it started, or when we began. it would have been true if we had started a month ago or a month from now. there is no way to evacuate this many people without pain and loss and the heartbreaking images you see on television. tom: the president of the united states. we welcome all of you to "bloomberg surveillance." jon ferro is out for a rest. kailey leinz is with us this money full-time has been an extra neri we can for america foreign policy. our bloomberg washington correspondent joins us now, annmarie hordern. can you put scope and scale as to what is going on at the couple airport. you saw that we saw we would -- we saw you working nonstop this week and. are we halfway through that ordeal? a third of the way? where are we this monday afternoon in kabul? annmarie: it is incredibly hard

to judge. the situation at the airport is fluid and precarious. we heard from the president yesterday they are extending operations to make sure they can get americans securely to the airport. but for security reasons they will not detail those technical changes. what we do know is more than 30,000 people have been evacuated since august 14. what is going to be more hazardous and potentially what could be a risky operation is the extension of that deadline cast august 31, which the president acknowledged yesterday. we are seeing reports that the taliban will not have that extension. tom: art of this is the renewed geography of afghanistan -- part of this is the renewed geography of afghanistan, the northern alliance, the flag with cohesiveness in the organization evident 20 years ago, and there is a little bit of a revolt north of kabul this morning. how substantial is the follow on to the northern alliance? annmarie: 90 miles north of

kabul, you're seeing some of that resistance. i think the united states is going to have to make a tactical assessment on whether or not they are going to decide to recognize the taliban and make sure that people in afghanistan are able to get humanitarian aid and deal with the taliban, or they are going to want to continue to support groups like the northern alliance. the northern alliance has been around for decades, as you know, and i continue to believe that they will continue to want to put up a force against the taliban. but again, we should note that it is not just the northern alliance. this is a country with a lot of different groups, and it has been that way for centuries. tom: i look at this and i want to make clear here -- i am not sure what is north of kabul, the northern alliance, but it alludes to that from decades ago. annmarie: and beyond that is the international ramifications of the policy in afghanistan.

with vice president kamala harris in singapore over the weekend. annmarie, what did we learn in terms of the questions with the international response to what has been going on with afghanistan? annmarie: she wanted to answer questions about climate, about public health, about what they are doing in terms of cybersecurity, but of course she was sent a litany of questions at a press briefing about what does this mean for the u.s. and their security presence in asia, and what it means for their allies. they remained firm that they will of course be there for their allies, but you can just see that the vice president's trip to asia is completely being overshadowed by what is happening in afghanistan. lisa: there is also an issue with the domestic agenda. we've been talking about this for weeks since the unraveling of the afghanistan he leadership. we have been looking at the house coming back to washington,

and i'm sure they will come back grumpy. what are the implications for nancy pelosi as she tries to get this through. annmarie: not just lawmakers, journalists are grumpy as well. there are three parts, voting rights measures, the budget reconciliation, and there is of course a bipartisan infrastructure. tonight is just procedural votes. can speaker pelosi get all her caucus together to get through her plan tomorrow? this is where it is going to get interesting for her, because you do have nine moderate democrats yesterday evening, breaking in "the washington post," led by senator josh gottheimer, saying that we want an infrastructure bill now, talking about the famous saying that time kills all deals, and we need to move now on the bipartisan infrastructure. nancy pelosi has brought through a procedural vote on the bipartisan infrastructure, at the moderates want that turned into legislation. tomorrow will be an important

day, that could potentially extend out into the weeks. kailey: between the moderates and the progressives, who is more likely to cave? annmarie: it's a very good question. about nine of those centrists, are moderate democrats. there is nearly 100 of the aggressive caucus. kailey: what happens after this week, and when the house and senate come back to of -- from their recess for real in september? anything happen in those between weeks, or is it this week and then they will be sitting silently for a while? annmarie: i guess anything could happen. they were supposed to be on vacation and then they came back for a special session. it will also be hearings and briefings between the house intelligence committees, between the gang of eight on both sides, democrats and republicans, about what exactly went wrong in terms of the situation in kabul. if they don't get the vote and

potentially could bleed into next week as well. tom: annmarie hordern, thank you so much. an eventful week, to say the least. tell me about supply. we make a joke about it, but in august here, is high-yield ig asleep, or is there a lot of issuance going on? lisa: i feel like i'm falling asleep as we talk. this is a sleepy week. as much as it is august, i think there was an extra paul cast over -- an extra pall cast. everything is taking on diminished importance at a time of such uncertainty. you are seeing a slowdown in sales. a lot of people expect a record pace of issuance in the corporate debt world after labor day, and there's plenty of money set aside for that with some people being a little bit less aggressive with their purchases now ahead of that. do you really think that is that exciting of a week? will this be an active week for trading?

tom: well, that will be based on the news. what i will say is that it has been an interesting august to say the least. why is this week going to be any different than what we have seen so far? let's do the data check. we come into the office this morning -- yes what -- dell futures up 1.42. the vix should be a low 18 to 17 handle. the vix showing a little bit of attention, 18.70 two. maybe that will change into the trading day. 10 year yield, 1.28%. lisa? lisa: why did we call hurricane henry, henri? kailey: it's french. lisa: i know, but why. kailey: there is a cycle of names that they have to go through. henry must have been used recently. lisa: did you guys go hang out in central park i did not. tom: right now avoiding the rain

in singapore. the vice president of the united states on the uss -- it is a gunboat from long ago and far away, and now much more -- vice president harris in singapore. good morning. ♪

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>> the opening by the u.k. government was terrific. that was great. as a u.s. based carrier, most of what we are going to sell is in the u.s. the u.s. government should open up. there is no reason not to. much higher infection rates, but some are much lower. >> by christmas? >> hopefully, sooner than that.

>> good morning, everyone. features are up around 147. a real correlating change here with a return to higher yields. i'll call it stability, this morning. the chief economist and market strategy, michael, you go right at the crew. you tear them to shreds. eisai, there is a lot of labor data that shows a more employed america.

what is the crew getting wrong? >> i think they are focused on the variant. there are risks. if we do look at the highest frequency and economic data, it should show us that the economy is rolling over. we saw jobless claims hit a new post-pandemic low. so far, the pandemic -- the labor market looks unperturbed. it could change in the future, but high-frequency data market is looking good. your weekly confidence numbers that come out on thursday have held up pretty well. that is a pre-good point. the university of michigan data fell out of bed in august and

scared a lot of people. the risk with the variant is two fold. one is directed shut downs, which does not seem to be happening on a large-scale. the other is that they get scared and pulled back. that is why there was a lot of concern with that number. it has increased each week and is almost matching a post-pandemic hi. if that continues, i think that we are in pretty good shape. if not, we will have two worry more. >> the markets share the street's gloom. why? >> we have high equity prices. earnings are very high and have been doing very well.

expectations are high. still a low discount rate. very low, lower than most people thought at the beginning of the year, with high liquidity. you have to destroy one of those supports. high liquidity, high earnings, low discount rates. our issue is that discount rates should be moving up, over time. if it plays out -- it is not really playing out. we have had a little bit of a movement. they are up about 20 basis points. that will be something to keep an eye on, as we move in to potentially hear more plans about the fed. >> we should call it a zoom event. it is an interesting shift to

all remote, for a second year. what is a bigger risk? is it the potential for a more hawkish fed chair powell, or perhaps someone who raises higher expected inflation, down the line. -- down the line? quest i think powell is going to try not to make waves. it is clear that the intellectual gravity is moving towards announcing a taper this year. it is probably commencing before the year end, provided the labor market holds up. this will all be data-dependent. it will not dramatically throw

the recovery off course. we may end up waiting longer. suggesting that we are still in pretty good shape, i think what powell will end at is what we already know, that a taper will be announced by the fall. >> but high-frequency data points are you paying the most attention to? >> aside from claims that have come out, i am really watching the anatomy of this bond market. as yields move up and down, we are watching what is driving that. you also have the estimated, and against that foliage, what is happening in the metals market. we need to be on the work -- look out for, you have inflation expectations crashing. that would not be what we want to see.

so far, that is not really playing out. credit spreads have lightened some, but so far, it does not look like there is anything malignant taking place in the credit markets. >> is this a market already positioned for the taper, therefore we will get new tantrum? >> that is a good point. what is happening in the bond market does not look anything like 2013 so far. in that episode we had a surge. expectations fell pretty seriously. we had some serious upward pressure. in the run-up to the 2015 rate hike, even more severe on the commodity side. this is not playing out the same way, so far and that it has been

very well telegraphed. maybe the focus on the potential tantrum is that it simply does not play out in that fashion, this time. >> if it is not well telegraphed it does not provide a big risk. what could be the catalyst for this market? >> i think the downside catalyst would be on the valuation side. i do not think that we are going to see a big liquidity shot. the economy will stay relatively strong. you still could have upward pressure on rates. it might not come as a sudden shock, but over time, the 10 year yield will be gravitating northward. that should put downward pressure, but we are sort of

overdue with the indices. >> michael, let's go back to the university of wisconsin. let's look at the supply curve dynamics. we have a supply shock, folded into a labor market right now and all sorts of theories. d believe that a supplement to the american economy come over we will adapt, adjust and get back to normal supply did -- supply dynamics? >> i think that we are adjusting, but it does not happen overnight. the market is on the rebound now. there are occasions that are a headwind. we can see that anyone out there knows that the labor shortage is still there.

service is slow and hard to hold onto. the delta variant does not help that, but we will get through the delta variant and the economy will stay relatively open. it should ease some concerns about childcare. they will wrap up this fall. that means the labor market will continue to be on the upswing, in terms of job gains and labor force increases. >> we have people coming down, maybe some even more gloomy. what is your call? >> our call is south of the trend for next year. trend growth is only going to be about 2%.

we will be a few basis points above that, maybe beyond, depending on the timing. the labor market will continue to tighten and it means some upward pressure on interest rates from where we are now. that is above trend. >> stay dry. he was caught in the downpour of henri. in the morning, liz is very smart on twitter. almost as smart as lisa abramowicz. discuss. quest there was a story over the weekend that really highlighted this study showing that cutting

enhanced unemployment benefits did not lead to any material uptick in employment. it led to people cutting back spending to compensate for lower income. it goes straight to what mike was talking about earlier. we will see these roll off. then what? will we see people get back into the market? it matters a lot. quest everybody is on the same page. to kind of path back to normal. stay with us. this is bloomberg. ♪

quest the british prime minister will push president biden to extend the deadline. the evacuations can continue. the president has already suggested that might be necessary. vice president kamala harris is in singapore where she announced a new supply chain initiative. announcing agreements on cyber and climate. they wanted to deepen their economic ties, but talks did not cover new trade agreement. it has been just over a month and china has brought the number of local cases down to zero. using the same playbook they have in the past. meanwhile, pointing played a huge role. in germany, chancellor angela merkel is threatening to push for more sanctions against

russia, if the kremlin tries to use that new pipeline as a weapon. vladimir putin has raised stakes in rising tension. an economic lifeline for the former soviet republic. this is bloomberg. -- 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. this is bloomberg. ♪ this is bloomberg. ♪

>> to stay ahead of the virus,

we are recommending that people get boosters the week of september 20. it will start on the eight-month anniversary, following the second shot. safety is essential. we would not recommend a plan if the fda had not weighed in. the plan is contingent on that. quest he was born in england, via newfoundland, and ended up in miami, where he had superb academics. another example of an immigrant done good. right now, we will talk with a microbiologist at johns hopkins. we are thrilled to have you on today. i need to go to your wheelhouse, did differences in all of these things, these bacteria and viruses between male and female.

you are world acclaimed on that. does covid treat women different than man? >> they can. women tend to be -- we have growing bodies of literature showing us that women are mounting greater immune responses and may have more durable immunity due to the covid-19 vaccine, then men. >> how has the delta variant changed things? over the weekend, how did you settle out where the delta variant is right now? >> it is spreading. i am probably most concerned about pregnant women and children. if we start with pregnant women, there is some vaccine hesitancy being reported around the

country, around women trying to get pregnant or who are pregnant. the cdc has come out quite clearly that all available data suggests that pregnant women are at an increased risk if they become infected with covid-19. there is no indication that the covid-19 vaccine, any of the platforms that are being approved or already are approved , that they pose any safety risk for a pregnant woman or her developing fetus. quest we have questions around the efficacy of the vaccine in preventing infection and transmission. what is the latest on the likelihood of contracting the variant, if you have been fully

vaccinated? quest the likelihood is still low, that there is increased likelihood that we could become infected. it is more infectious and more readily transmissible, but the evidence suggests that we are less likely to be hospitalized or to die, which includes people who are immunocompromised. >> forgive me for interrupting, but there is a question from a public health standpoint. even if you are not going to the hospital, there is a question about booster shots and how much health perspective do they lower the curve?

>> i think it will be a combination of the booster, but also interventions like mask wearing and social distancing. i think that we are asking vaccines to do something that we have never asked them to do before. there is a distinction in preventing disease and protecting us from being hospitalized and dying versus being infected. this new level of scrutiny and need for reducing infection is really what is driving a lot of the discussion around boosters, which in the u.s., will begin more broadly and september. >> the conversation began because it seems like there are suggestions that you have waning immunity eight months out after your shot, but we have to

consider those who got their shot first, the older population. could that be a factor? >> such a fantastic observation. yes, that could be. among young -- younger, healthy adults, is not to the degree that we see in older adults or immunocompromised individuals. >> i just want to say that the reason that was a fantastic question is she is playing the southern card. she is treating me and lisa like garbage. continue. >> that was not my intention, tom. >> speak to the doctor from georgia now, please. quest my other question is, if you already had covid-19, if you tested positive, does it matter or can you continue to get it

again and again? christ it appears that the delta variant, you can get it, even if you have been infected with the initial that started the pandemic. even if you have been infected, there is some evidence that the immunity does wayne -- wane. i think boosters will be recommended, regardless of whether you have been infected, previously. >> do not be a stranger. >> really? you had to say that about me? >> lisa and i went down in flames. it is a different story.

quest we will discuss it. we have plenty of time. quest people from all over the world. the university of washington and microbiology -- it has been hugely valuable. >> kaylee is right in the middle of all of this because she is about to have a big gathering. she is leaving us tomorrow. >> she is worried about the delta variant. is it possible that it could be virtual? >> kaylee? >> i do not think so. >> do you find that people are canceling? >> we have had a few. people who are immunocompromised do not want to be in a room with a lot of people. there are indications that there is waning immunity. until we have boosters, they might be a little more uncomfortable going out into the world and interacting with other people.

quest there has been a shift with that concern. please stay with us through the morning. david lee is coming up. the futures are up 14. this is bloomberg. ♪

>> the economy will be quite strong. >> it is all about the transition to higher quality growth. >> we've got a reflationary backdrop still in place. >> we already saw inflation is tapering down. >> for the last year, it has always been employment, employment, employment. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. "bloomberg surveillance." thrilled you are with us this morning. jon ferro off. kailey leinz in for jon ferro. lisa, let's go right there. the real yield, negative one point gloom gets to lesser negative numbers. lisa: raising questions