news for me get it. >> without financial stability, the fed cannot achieve its goals. >> this is a fed that is going to take it's time. measure twice and cut once. >> the taper will be announced likely this fall. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. mr. ferro often writing that book. lisa abramowicz here and kaylee -- kailey during duty this morning. it is a morning of upgrades. christopher harvey with a complex note on the macro and model of it all. he goes up single-digit return. lisa: the amazing thing is 4825

is his projection. basically, from bear to one of the biggest bulls on wall street at a time when there cannot be a fast enough upgrade. the question is what is underpinning that? we are looking at low yields, low growth and the upgrades are coming on the heels of that. tom: you correctly state that he goes from gloom to optimism, high single digits, 7-8% return. jackson hole babble is based offer earnings. lisa: it is based offer earnings, on traditional performance. new get returns like the ones we have gotten so far, it is rare to get a drawdown. it is also looking at the idea that the stock market is not the economy. companies have been able to pass on higher prices to consumers,

they have been able to consolidate market share, and are doing very well. tom: with that is the recovery in oil. jeffrey curry making a splash. brent crude and the quote right now is 69.52. kailey: ubs thinks we have another six dollars or so of upside, because they see the supply and demand picture improving over what the market had feared. to the point of upgraded calls, i am watching to see if bank of america or people go up from 3800. this is a series of strategies laying catch up to this equity market already north of 4400. more upgrades could be coming. tom: i have not done this in a while. you go to wei on the screen. it starts with the dow, as it

should. i have got one year trailing up 25%. nasdaq composite up 31%. the people that are looking for single digits, the pendulum of gloom, it has not happened. lisa: part of this is because of the stimulus payments that have fueled consumer confidence. part of it is the vaccine. i wonder much more of a lift they get after the fda approval of pfizer yesterday. we are starting to see more companies mandate vaccines. president biden would like to see more of that. you wonder how high can we go at a time when we expect to see peak growth and deceleration? tom: christopher harvey ignores that this morning. we are not going to ignore the data. one up yesterday. the vix down. it comes back to 17.30%, but a

constructive start to the week. nasdaq 100, on the 10th anniversary of steve jobs's resignation from apple, appropriately leading the way. in the yield space, 1.26 on the 10 year. sort of a stasis in bonds. that is what you get in august. i have doing this because lisa has to walk around all the wedding presents for kailey. so many. do not break the china. although many of the gifts may be virtual, because everything else seems to be virtual these days. the countdown to jackson hole. another virtual meeting, it g7

is going to meet president biden , discussing a particular afghanistan. i want to understand the push-pull in getting out by august 31. basically saying they will be consequences if you do not exit by then. u.s. home sales slide. yesterday's existing home sales data came out strong. how much do we see that continue? also, did we start to see those higher input prices crimp manufacturing? i am curious. at 1:00 p.m., tom, i am doing this for you. kicking off an active week of sales. there it was a new study that showed that international buyers accounted for the greatest proportion ever of the previous 10 year note reopening.

they're coming out in full force. the official buyers tend to concentrate on the shorter maturities. this explains why it yields have remained so low despite some of the economic growth and these upgrades that we keep seeing. tom: we see so many different opinions, so many different views on the correlation of equities, bonds, currencies, commodities. the equity market for those cautions is an absolutely thundering silence. eric friedman joins us now with u.s. bank. wealth management and cio who is kept as i on the ball. will be the sum of earnings? at what multiple do price that? what does the gloom crew get wrong? eric: the pace of revisions. that is what you are seeing. people catching up to a better operating environment. we are at 24 times this year and we think it will get to $200 on

the s&p operating level. that brings us to 50.60 for 2022. that puts us on the bullish camp. lisa: is there anyway to sense who is going to be the leadership going forward? is it big tech? eric: right now, based on market structure, big tech is really the driver. but we do think cyclicals still have a bid attached in terms of equity prices. given this gradual recovery and co. another we want to continue the course, but as we see this off-on with covid policies, that leads a wide path of recovery. if anything, we think this growth could be extended as we continue to deal with the push- pull of covid. cyclicals will continue to be a

place that people go to. lisa: how concerned are you about a hawkish jackson hole meeting, especially at a time when people are pricing in optimism? eric: we study the fed minutes quite closely. one of the things that caught our attention was the fed moved away from a supplied side focus -- supply side focus. one of the things they anchor their viewpoints on is the supply issue has hampered that normal transmission of prices. that changed a bit in their latest minutes last week. we think that if there is more of an emphasis on demand plus supply constraints on jackson hole, that could lead us to believe the fed may act more quickly. we do not think the fed will act before november or december on tapering. we think they need more information, the september or october jobs numbers.

action may come quicker if we see both supply and demand from the fed. kailey: you say fair value on the u.s. 10 year treasury yield is 1.25%. eric: it is going to be a gradual jump by the fed. if you look at the pace of change, going from one home $20 billion of net purchases a month to something less, that will nudge up that 10 year rate. if you look at the term structure of interest rates, it is still a gradual increase. most people think inflationary pressures dissipate over the next couple of years. we do think it will be a gradual migration, probably because of the fed at jackson hole. later this fall, it has to nudge up inflation expectations. we think the bond market will follow suit. tom: you were upgrade -- your

upgrade gets you out on the street. you do it differently. you are much more managing wealth money. you have an upgrade in your head on multiples? or are you staying at 23, 24 times? eric: it is one of those things if we are looking at a 10 year at 1.52, that may take our multiple down to 22. we think the terminal value of interest rates is going to be very low for a long period of time. [no audio] that keeps us getting a more elevated multiple. not because we are hoping things get better, but because we do think this is an environment where it has very benign interest rates. tom: eric friedman, thank you so

much. an extraordinary morning. will go to washington in a moment. annmarie hordern will be with us. this is exceptionally important from john hudson in the washington post. this was published eight minutes ago, where that cia director of the u.s., william j burns, director burns traveled to kabul and met with one of the taliban's factor leaders. he has been very much in the news. that is just breaking now, but show some of the discussions going on. very important. the cia traveled to kabul to meet with the taliban. a day of optimism for the market . futures up seven. this is bloomberg. ♪ ritika: vice president harris

warns that china poses a threat to countries in asia. at the same time, she reassured countries of the u.s. would not force them to choose between the world's two biggest economies. harris spoke about the vision for human rights. president biden is being pushed by allies to extend that end of august deadline for american troops to leave afghanistan. boris johnson and other g7 leaders are expected to press the president on the issue today. still, the u.k. warned the president is unlikely to change his mind. meanwhile, the taliban warned it may take action if the soldiers are not dawned by august 31. new york state now has a new governor. kathy hochul takes over after andrew cuomo resigned over a sex harassment scandal. she has to overcome the shadow of that scandal while dealing with the recovery and rising

coronavirus concerns. covid resurgence has hit airlines. southwest airlines blames the delta variant for cancellations and a in demand. meanwhile, chinese airlines are offering the fewest seats in six months. your of the only place where so-called vaccine passports are used. carriers adding more flights. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> the question is, are we on track to fulfill our objective

to bring out our people? to bring out so many of those afghans who helped us and are at risk? we believe that we are. tom: mr. sullivan, the u.s. national security advisor. seen often these last few days. it is a movable feast in afghanistan. this crisis continues. joe matthew has followed this. i cannot say enough about the effort and mr. matthew driving it forward. joe, thank you so much for joining us. john hudson changes the debate this morning. that director of the cia traveled to kabul and met with that guy. why is it such a big deal that the cia director, our most decorated diplomat, is sitting

down with a leader of the taliban? joe: it certainly tells us how the world has changed. in afghanistan, he was arrested by the cia years ago. now they are meeting in the same room. it all has to do with the deadline that is one week from today. we have thousands more to evacuate. there is not pushed to extend that deadline. orest johnson is going to ask -- apparently going to ask joe biden to do that. the virtual g7 is where this comes to ahead. can we get everybody out? we are getting better at this. 11,000 were evacuated in 12 hours yesterday. tom: joe is working a six-hour date. i do not know what it is about washington. just six hour days. joe: it is august.

tom: joe, do we know the taliban now? joe: i do not know that that is true. i do not think we know what is going on on the ground by minute. this is such a tenuous situation. we are talking about a lot of stuff that we do not necessarily know about. there is no metric or index to let as know what the score is in afghanistan. weeks, months from now, we are going to be telling stories about interactions with u.s. forces and thousands of afghanis and americans around that airport that will make your hair pearl. they're going to be writing about this for a long time. i would also revert back to what liz cheney said. the amount of risk that these forths are under, imagine what would happen if an american died? who -- imagine what would happen if we had a kidnapping or hostage situation. lisa: it is powerful that we are

discussing this and evacuating afghanistan 20 years after 9/11. there is a question of the balance of political pressure to negotiate with a terrorist organization or someone who has been previously recognized as such versus trying to enable people to get out of the nation more safely and more quickly, to have more visibility. where is this balance of pressure for president biden? joe: it depends on who you ask. jake sullivan telling the briefing room that the u.s. will leave when joe biden says so. it is not always feel like that when the taliban is saying, we've got a redline. we want to avoid skirmishes. the pentagon is dealing with a lot of different scenarios. one thing that everyone seems to agree on is the closer we get to the 31st, whether this deadline changes or not, the tension is going to rise. is not unlike some of the -- not

like some of the other debates, when you start inching up on deadlines, things happen. kailey: nancy pelosi is going to try again today to break the stalemate on president biden's agenda. what is her next step? joe: a little bit of heartburn. the irony is not lost on me that nancy pelosi is proposing something called the self- executing rule. that is the majority leader refers to mutually assured destruction in a family meeting with the democrats in the house. there was a bit of a stare down. that family meeting showed some tempers flaring. progressives are upset with this relatively small group of moderates, now 10, holding this bill essentially hostage. they say they will not vote for the bipartisan infrastructure deal if reconciliation comes

first. we added one more lawmakers that lot yesterday. ten moderates. it goes to show how little breathing room nancy closely has. -- nancy pelosi has. joe, thank you. lisa, there is the headline. iron ore rockets. it is about monetary accommodation. lisa: iron ore jumped at 10%. yesterday, they vowed to support credit as well as stabilize a monetary growth. this comes after shrinking the credit supply over the past few months. this has been a big question. we had a key rate hike from china that never happened. how much accommodation are they willing to give an economy as they try to shift the less credit focused ecosystem into something where sustainable?

the answer is they are not quite ready to ease off. there may be more investment. tom: 65 to near 70 on brent crude. kailey: a huge rebound broadly. not just iron ore. it is not just about economic growth and demand in china. it also comes from the steel producers. steel is something china is cracking down on as it tries to get to climate neutrality. china has it work cut out for it. the environmental factors that are at play is something that you have to consider with iron. i wonder how sustainable the rebound is going to be. tom: we want to reset this morning. markets up, futures up. abramowitz just sent me a note saying it is not about the equity markets, it is about bonds.

lisa, i have to go back to a couple of charts of the complete separation of credit from equities. it is absolutely stunning. in honor of the hockey stick turn in yield in price versus what is going on in the moonshot in the equity markets. lisa: you had seen a bit of weakening. eric had so much that he had changed his view. he got bearish on credit and at the same time upgraded his expectation for the s&p. it is a question of the federal reserve. it is a question of how much more they're going to backstop this market. at what point we look at credit as the indication of corporate health and balance sheet discretion versus something bigger, having to do with the monetary policy? tom: i am going to go to the ferro rule. ferro says we will get a 1.27 10

year, which gives optimism to the bulls. 35,325 on the dow. stay with us. this is bloomberg. ♪

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thank you for being with us. the markets better than good. futures up eight, advancing off of yesterday's joy. very different from last week's angst. yields, 1.27%. this is the point where we began a look back. there are those who have younger children explaining to the younger children exactly what was september 11. to many of us, it is a collective memory. everyone will pontificate. only foreign affairs gives us wonderful, expert opinion. who won the war on terror?

i cannot say enough about this. the legacy of foreign affairs. an annual prescription is the price of an overpriced martini at an overpriced restaurant. throw it at your offspring and say, read this. i am thrilled to see elliott ackerman in there. elliott ackerman makes no bones about it. we are nation preoccupied. we are nation in fatigue. how tired is america? daniel: it is appropriate in some ways that we are seeing this messy, chaotic, tragic withdrawal from afghanistan right is that 20th anniversary of 9/11 is approaching. as all of us remember, it was such a cataclysmic event for american politics and foreign

policy. it shaped the way we use our power in the world, the way we thought about the rest of the world for so long. in some ways, that seems to drop out of the foreign policy conversation in the last few years in afghanistan. what we are seeing now is a reminder of just how much it has changed the world. tom: there are so many ways to go. an essay a few days ago in time magazine, what was written in the washington post, is it an exhaustion of theory or belief? in putting this addition together -- edition together of four and a pair -- foreign affairs, does a modern foreign policy theory exist? daniel: maybe one of overreach and hubris. these goals are eventually washed back. remember back to days after 9/11

and the declaration coming from president bush but also others about the agenda in the world and the way we were going to achieve this ultimate victory over the war on terror and transform the middle east and our own society. all of those goals, so fanciful in retrospect. as we look back, we have something that in some ways would be surprising if you go back to the days before 9/11. we have not seen the kind of mass casually terrorist attack in the u.s. that most people thought would come repeatedly after 9/11. that in some ways is an achievement, but look at all the cost that has come with it. you see in elliott ackerman's s8 just how much it has affected american service members. you see in the other essay just how much it has changed american foreign policy. you look at certain achievements

in that. , but if you look at the declarations and ambitions that we had in the days after 9/11, what we have paid is staggering. lisa: there's also the question of how a concept of the war on terror has changed amid a changing world. went to the expert writers way in on that front? daniel: one of the most striking things about the afghanistan withdrawal, which runs through a lot of these essays, is this moment when the u.s. is trying to balance the war on terror and considerations that drove us into afghanistan in the first place and kept us there for 20 years. china, technology, great power competition. that is what people in the security and foreign policy world are talking about. i see in these essays but the

response to the war on terror has shaped how we think about some of these great challenges. it has passed out of the core of these foreign policy concerns in many ways. before afghanistan became headline story of the day, it has shaped the way we think about the world. lisa: as we discussed the idea of top-level officials in the u.s. meeting with taliban officials, the idea of groups previously designated as terrorist organizations, how much are we in the western world at risk from terror threats in afghanistan, where we have less visibility on the ground? daniel: there's a big question. it is one that we just do not know. bill burns, the cia director, is meeting with taliban leadership yesterday, an extraordinary meeting. he has said very specifically

that we are going to face more risk, but something that i really like is that we talked for a long time about stamping out people, stamping out terrorism. what dan dima -- biman points out is that we accept a certain degree of risk. the u.s. is not going to destroy every terrorist, but we can create enough protection said there should be defenses against the large tax we worried about -- the large attacks that we worried about in the days after 9/11. all of that ambitious rhetoric, we are settling for something more modest. kailey: i saw an essay on strategies of restraint is kind of an extension of that. 20 years after 9/11, are we

looking at a u.s. that is more restrained going forward? daniel: absolutely. it is undeniable that all parts of the global spectrum have become more attentive to limits on our power after a period in which there is broad agreement about using american power, the american military in fairly expensive ways. people all over the political spectrum are much more hesitant about using that kind of power now. we may be at -- there's always a sort of pendulum in american for policy between relatively ambitious uses of power and restraint. it may be that we are at one far extreme of the pendulum and are about to see it swing rack. what we see in afghanistan is a reminder that there are costs to restraints just like costs to ambition overreach. >> i went with the weight is great -- what the u.s. is going to look towards internally next.

january 6 and the domestic terror threat. is that going to be the next area of terrorism focus? daniel: this is an extraordinary essay by cynthia miller, stating extremism. she traces the history of some of the domestic terrorist groups that we have seen more recently, even as a threat from islamic terrorism started to recede a bit. she traces their rise. as we all know, after seeing some of the news events of the last couple years, this is the unappreciated threat that crept up on us as we were focused on terrorism coming from far away. what cynthia miller points out is that we tend to apply some of the same frameworks -- getting back to this question of how the war on terror affects how we approach things -- we apply these frameworks in schools, even though it's a very

different kind of threat. tom: tell me about our new isolationism. i find it fascinating in your book on george marshall, it was a battle of 1947. what about our 2025 isolationism? daniel: it may be more subtle. it is not purely isolationist. it is a reaction to the perceived failures and overreach of fears after 9/11 when we sow we could use the american military to go and address threats, completely stamp out terrorism and transform foreign societies. a lot of those uses, whether in afghanistan, iraq, libya, have proved to be much more difficult than people expected at the time. much bloodier, much more costly. at the same time, we are very focused on this threat from

china. in some ways, they are people in washington and national security who see the china threat is the thing that would keep us from receding into isolationism, precisely because it is a threat that is defining our foreign policy. tom: thank you so much. wonderful to begin a remembrance of september 11 with you on a tuesday in august. foreign affairs, who won the war on terror? cannot say enough about it. controversial essays to give perspective. particularly with all that is going on in afghanistan. futures of 54. lisa, which essay are you going to read first? lisa: i find it interesting the different nature of terrorism. there is domestic terrorism, cyber terrorism versus the physical brick and mortar,

explosive terrorism that we experienced in 2001. all of these changing natures amid a world where the u.s. wants to pull back its international role. tom: brent crude almost to $70 a barrel. a huge move in the last two days. the equity market, there is a bid. wells fargo goes from cautious to upper single-digit optimism. that is of interest. futures up 8. this is bloomberg. ♪ ritika: the british admit it is a longshot, but today they and other leaders will try to talk

and president biden into leaving u.s. troops in afghanistan after august 31. the u.k. defense secretary says the problem is the security risks go up as the deadline grows nearer. nancy pelosi and moderate democrats resumed work on how to advance president biden's agenda. hours of negotiation yesterday failed to break a stalemate. plus he wants to hold off passing an infrastructure bill until a much larger package is ready for consideration. at least 10 democrats want a vote on the infrastructure built now. special house committee investigating the capitol rat is seeking phone, tax, and other records. huge records are being sought. republicans have denounced the investigation is politically driven. the head of china's central bank is bound to stabilize a supply

of credit. he also says the people's bank of china will boost the amount of money supporting small businesses. new data show that those critics and economic growth slowed in july. didi has suspended plans to expand in europe. didi had considered entering the u.k., germany, and france. expansion will be put on hold for at least year. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> producing as much as we can

and focusing on the science- based monitoring of every single variant and seeing this kind of vaccine is effective against the variant. do we need a booster? tom: the gentleman from pfizer with the success of their mrna effort and the success of getting full approval from the fda. it is a movable story right now. what is so important, folks, is that we see the worry of those vaccinated becoming ill. he is a prolific leader of the literature. he joins us now from the johns hopkins center for health security. john burnham murdoch at the ft has been definitive of the graphical explanation of the complexity of the differential equations of your world.

he makes clear that it is a big deal that those have been vaccinated are getting ill, but it would be much worse if they were not vaccinated. discussed that. >> the whole purpose of the vaccine is not to be this magic force that stops every infection . what vaccines are meant to do is to make the infection that you have very light, mild, no symptoms, clinically insignificant with a very low chance of hospitalization or death. that is why the vaccines are a game changer. it removes the viruses ability to cause hospitalization and death on the large-scale. if you get the infection when you're unvaccinated, it is russian roulette. if you get the vaccine and then get infected, you have mitigated that risk almost entirely. tom: i look at the oxford study that mr. murdoch bases his work off of. they have a phrase in there that

is foreign to me. explain what viral burden is. that is something that i have not seen. dr. adalja: viral burden is another way of talking about viral load or how much viruses in your body. we know that if you are vaccinated and get infected, your viral burden is low. you might have a slight viral load, but it comes down very quickly as your immune system acts. that decreases the amount of virus that you shed or the amount of time that you shed. viral burden in a vaccinated person is smaller than in a person unvaccinated. that is why they are probably less contagious and why they do not have serious disease. before the virus is able to do its damage, the immune system hot -- halts the process. lisa: a lot of kids are not eligible. our children getting sicker from the delta variant than the previous iteration?

dr. adalja: there is no clear evidence that this is particularly worse in children. the delta variant is just so contagious that it is looking for unvaccinated individuals. you have a swath of the population that cannot be vaccinated. and you have low vaccination rates in children between 12 and 17. they are getting infected just like everybody else that is unvaccinated. we are not necessarily seeing any data that this is worse for children than any other version. children tend to still be spared from the severe consequences of disease, but more are getting infected, because you have a more contagious variant. many children are back to many of their activities, because they are not likely to get severe disease. all of this is integrating together. but some headlines are misleading, because it is more about the delta variant finding unvaccinated people irrespective of their age. lisa: president biden said he would like all companies to

mandate vaccinations among workers. how much is this the way to go to foist that burden on the private sector and not necessarily come at it from a federal mandate? dr. adalja: the president cannot make federal mandate on private workers. but what we have seen in the past, for example with influenza vaccine mandates in health care facilities, that those were effective. that increase the rate of vaccination. if you are a business owner and you want your workforce to be resilient, you want operations to continue, you want to be nimble, the best way to do that is have your workforce vaccinated. it makes sense for a lot of reasons. hopefully, more companies will make vaccination a condition of employment. as i handful doing it right after fda approval. many organizations already do it, sports, cruise ships.

all of those types of things will move people to get vaccines. but if you want vaccinated people. kailey: if we do see people coming off the sidelines now that the shot has full approval, how quickly will that make a difference in terms of the case curve? dr. adalja: it takes a while to get fully vaccinated. if you're talking about pfizer, it is two doses two weeks apart. however, we know after people get the first doses in, about a week later, we start to see significant protection. if you got vaccinated yesterday or today, you might start seeing benefits in a week or two, but we have also seen vaccination rates go up even prior to the full fda approval. that may be something that also will have an impact. we are seeing some of the curves start to come down, but not quick enough. tom: thank you so much.

a real stream of information. i put out on twitter that john murdoch's summary in the raging debate. lisa, this goes back to what we saw when i was taking the surveillance from new jersey, following from new york city, following from chevron, cvs. you are not vaccinated, do not show up for breakfast. lisa: basically, new york city saying all school teachers need to be vaccinated, staff of the new york city department of education. there is a question right now of where we are in this curve. how do we flatten the curve? you have seen that a lot of people are optimistic. yet, we are seeing an uptick over in the u.k. the push-pull of optimism versus

health of fish -- versus pessimism dividing health officials. kailey: we are starting to see them come down in places like florida and louisiana, but it is a question of whether or not they stay down, especially because the delta variant is not the only variant that we are going to see. until you get more people vaccinated, there is always a chance that that curve is going to take back in the upper direction. tom: do you think we will see an upsurge back to one million vaccinations a day? we have had a bit of that. lisa: the uptick in vaccination rate has been in the south. hardest hit places are seeing vaccinations increase. the question is how much leadership there is, who are the

anti-vaxxers that public officials are getting helped? tom: brent crude waiting for $70 a barrel and cannot get there. 1.27% on the 10 year yield. stay with us.

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>> this is not a lot of -- this is not a market that has a lot of room to absorb that news as it is. >> the expectation is that the head will signal a more dovish tone. >> this is a fed that is going to measure twice and cut once. >> the gate will likely be announced likely this fall, and by the new year they will likely be pulling the trigger on it. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. a simulcast, bloomberg radio, bloomberg television. an interesting tuesday, interesting monday, up and away after what we saw last week. futures up 10, dow futures up 66. that oil in your living room, you are killing it. brent crude moments ago, $70 a barrel. lisa: