>> there was a worry there might be competition. the cannabis sector seems to be holding up strong. >> i would expect u.s. assets to outperform. >> we've peaked in the u.s. when it comes to inflation now. >> it's all about the fundamentals. expectations are still rising. >> we are in the early stages of a handoff. >> this is bloomberg surveillance tom keene, jonathan ferro, and lisa abramowicz. tom: good morning good morning. from our studios in new york and on radio and television.

i had a fan stop me on the street and say why can't you say good morning like jonathan. he gets a royalty on that. it's a friday here. in limits of september 11, we will begin that coverage in the 9:00 hour. this morning, markets are interesting. it is truly a president fired up in the evening yesterday. jonathan: at 9:20, we will observe them both on bloomberg tv and radio. for the president, you mentioned the tone. it was a shift in substance. are we getting back on track? we are setting course to a better direction. how many times have we said this? september is not going to be the september people thought it was going to be three months ago. tom: the partition of the

nation. is the united kingdom partitioned, like the president outlined yesterday. jonathan: when you say divided, people think it's 50% one-way and 50% the other. let's be clear. it's not. you're looking at 70% of american adults who've gotten the shot. it's not divided along political lines. tom: i going to go with the politics. gallup is done such a great job over the years. it's about 24% of the nation saying no to this resident. lisa: the issue is it does come to health care capacity. if you have a specific node of populations not getting vaccinated, you are seeing hospital inpatients getting filled at a disproportionate pace. you're getting a shortage of doctors. that's with the president wants

to fight at a time and we are trying to get back up and running. tom: we are trying to get back up and running and the market won't cooperate. i'm going to focus on the real yield, negative 1% as you go to your taping today. it shows the challenges of americans. jonathan: on the sovereign side from the treasury, we had a ton of issuance. it's up to $75 billion in three days. look at the bond market right now. yields are up by a couple of basis points. that's where we were last friday. who can anticipate the data? a huge amount of educated individuals put in and it's almost impossible to call it. the rage is -- rate is as wide as anything. tom: that is a strategy.

are the banks minting money right now with bond and equity issuance? lisa: the answer is yes. it's one of best years ever is terms of possibility -- profitability. can we understand the consequences of being able to meant money? when it lend to these company even though you're getting nothing. it's better than less or nothing. you like it if you're a stock investor. jonathan: they are making a town of money. who's getting it? we keep gushing over what the banks are doing. tom: don't get me going. jonathan: talk to people in the banks who are working right now. talk to them about sapping. they will tell you the work from the analyst is getting pushed up in the work from management is getting pushed down. the people in the middle who are trained to do their jobs, they

are getting crushed. we are talking about pay rises for analysts. the people above them didn't do the job. tom: i am willing to say going wage and some of these major cities, london, new york, whatever is going up up up. to your point, does it percolate up to the other staff? jonathan: we can talk management right now. bank of america announced a series of senior leadership changes. in a memo to staff, a series of senior leadership changes. joining us now is. one of the leadership changes people will be staring at is the cfo. >> that's right. we know he had been the voice to investors for so long.

they have a new person who will be joining that rank. there is -- there has been a long time waiting for this announcement. now, we have five new members of bank of america management. brian moynihan says the changes are for responsible growth. moynahan wants to stick around for a while. a new set of leaders is higher up. tom: i've never seen anything like this. ken lewis lou up the bank. moynahan saved the institution. he is 61 years old. he is setting up with a new generation. what interests me is the people leaving the bank right now. the idea of them leaving.

there are some interesting exits. >> we don't have done off real leaving the bank. two new leaders stepping in two roles she previously oversaw, which are big roles. it's something of an international superstar. that's why we focus on her. she's one of the most senior women in training. based in europe, international success. she started at goldman sachs, came to bank of america. that puts a lot of spotlight. he is now becoming a direct report to brian moynihan. they are the two investment banking guys you need to watch. it's at a time of a major attrition in the industry. lisa: this is the most

significant overhaul since the financial crisis. right now, it's less clear. can you give us more insight into that? >> you are seeing these changes in line with other banks. they are searching for their next generation. the talent of tomorrow is not the same as yesterday. i pulled up their bios. you have skidmore college, a bachelors in economics. you have the university of south wales australia. they are a different set of people. you have three more women out of the five people elevated to the top. now is going to be lauren succeeding david. it's the trusted confidant. jonathan: let's talk about fresh

eyes and with industry needs. for some of these big banks, they are looking at an explosion of buy now pay later. some firms are doing something different. square his changed again. they missed it in a big way. that's not a criticism. it's not a criticism of jamie dimon. for many people, they missed it in the last 10 years. they missed what's happening elsewhere. >> you have paypal, less than $10 billion from market cap. not only did they mess it, -- tom: the shell when moynahan took it over. with great respect i say this, the boston mafia came in and took it over. within that, is a recalibration. how is this restructuring different from what jamie dimon

has orchestrated a jp morgan? >> is it so different? i don't think it is. it's kind of about time for these people to see more senior leadership decisions. the job is very interesting. bank of america was struggling to keep up with the top three when it comes to investment banking. you've seen them game a little bit of market share. they lost very significant people recently. jack mcdonnell moved over in the last couple of weeks. it was announced this week. this is a war for talent. you have people who have been at these banks that have been waiting to shine for the better part of a decade. lisa: how we talk about wages,

entry-level wages for some associates come into these banks. it is middle-management that is getting squeezed. to we have a sense of how this bank is trying to reshape itself as big tech or compete with the technology companies for new talent across all ranks? that seems to be the tone we've heard. >> technological change really has to happen at the core banking level. the lending businesses, how they think about underwriting credit to people who are not accessing it. it is so attractive to people because people feel like it's not going to botch their credit score. they are not going to get hidden fees. they feel more fairly judged. similarly, this is still a people business. people still go to bank

branches. they want to be able to get money to start new businesses. jonathan: it's great to catch up. we appreciate it. an overhaul of the management team. you mentioned the effort of brian moynihan and the job he has done. that extends to other leadership as well. jamie dimon, just to be more analytical about the moment we are in right now, do you think steadying the ship and dominated their industry stop them from seeing what was happening outside their industry? tom: there's no question. it's a great observation. it's very different from british banking. i had an interview with ken lewis in singapore. he was brilliant in the interview. it had a scope on what to do internationally. he had to come in and pick up the pieces. he came in with his team.

they got through this 15 years. i'm really taken by the size of this restructuring. this is not tentative. this is a set of new people surgically moving out a selected few. there's no question about it. this is transition planning. i'm not going to speak for when a hand. you have to give people responsibility or they walk out the door. i wonder if this is from the younger crew to say we've got to run this thing or we've got other things we can do. jonathan: no big moves off the back of the story this morning. a shakeup at senior management over it bank of america. tom: much more than i expected

to see. right now, watching all of this. on the banking industry right now, on the big banks, on the super regionals, is there value there? they are dealing with digital onslaught. do you find value in the big banks. >> are investment teams to see value in the long run for the big banks. as you know, they are tied to rates. if you see rates rise, banks will benefit. they benefit from some of the lending you talked about earlier. they are still attracted by a valuation standpoint. the secular challenges will continue. jonathan: can we talk of who they are competing with? they are competing with others

outside their industry, the traditional industry. >> they are. in the past, people worried about credit cards. they were always linked to banks. the new technology, even bitcoin itself, covers that change. i think those are things investors have to think about. i haven't had time to look into these changes at bank of america. any bank that is thinking about the future is thinking about the right thing in making changes directed toward that. lisa: this raises an issue of bold moves. do you want to see ranks making bold moves? they try to adapt to the new normal in banking. is that something you would reward? >> it depends on the individual company. when our teams are looking at

companies, they are looking at the balance sheet, what has been their growth rate? sometimes, you want to see a measured response, thinking about current conditions and the business you have at hand. you don't want to lose the customers you have with the business you have today on your way to the future. most the time, it's measured. especially for mature industries. there are times when you have to accelerate, especially at the peak of the business. the banks have gotten very far behind in technology. they have outsourced a lot of it. that is not surprising coming out of 2008, the financial crisis and the other things they had to focus on. lisa: banks are trading in a

bucket of cyclicals. people look toward the post-pandemic reality. i would love to get your sense on where we see data putting a damper on this. use other shares rally significantly and lead the charge. is this the appropriate response? >> i think what the market is recognizing, don't pick growth or value or don't pick the economy opening or back on shut down. you have to have a collection of both. the growth rate in some of these companies are the strongest of any industry. it's not surprising. there is also a lot of demand as you talked about.

the delta variant. we are at the tipping point where things are going to get her. investors are forward looking at what is going to change. jonathan: thanks for being with us. catching up with us off the bank of that -- news from bank of america, a management shakeup. equity futures look like this. a bit of a bounce covering from the previous four days. the yield is up to basis points. tom: we turn to politics now. the president had an important speech last night. it's always interesting, i would point out on a population basis, a booming arizona.

your thoughts on the speech last night? >> disappointing, but i have a view that if the goal was to bring the country together and have more people participate in vaccinations, you do it with persuasion, not isolation. my fear, if i look at it from a political standpoint, there seems to be this battle. throwing gasoline on it. if you actually look at the underlying data, under our non-vaccinated populations, the rhetoric from the speech didn't match the statistics. i think you reached that by persuasion. tom: congressman, i want to go

back to barry goldwater. conservative arizona is different than the jacksonian we see in the southeast where most of this covid disaster is going on. the difference between your conservatism and what we see in places with 14% infection, places where we have 80% of icus taken out. >> that's a brilliant question. the conservatism for my community is more what we would call libertarian it. leave me alone. let me try to prosper for my family. it's much less -- it's months less of what you would see as the southeast in other places where their version is more of a

notice live economic freedom. it's why you see some interesting diverse population associate with the republican party out west, which is not on the east coast. i have a very large republican jewish committee, something you don't see in other parts. lisa: when you talk about conservative, it's taken on a new meaning. i wonder if the conversation has changed about what it means to be financially free at a time of dominance of big companies. borrowing money is basically free for the u.s. government. >> that's also a brilliant question. there is no question. i am blessed to have a handful of economists that we have this

conversation every couple of days. what level of distortion are we in when you load up the money supply and you see what's in savings accounts with the value of money and the supply chain issues. one of my great fears in this moment is this massive entitlement based spending. we are about to create new ripples of distortion and throw massive taxes on top of it. where we see bipartisan data, productivity investments will fall sharply through the rest of the decade if democrats get their tax policy. lisa: looking at projections as a political act itself. i want to know if the conversation has shifted among conservatives to the low interest rates when we have seen

workers gain a smaller proportion of corporate profits and we see an increase in bifurcation of the haves and have-nots. >> 2018 and 2019 after the tax reform," inequality shrank at the fastest any time in the modern economy. you saw nutrition insecurity fell. it was the most prosperous couple of years we had in modern times for the working poor. if you give a darn about the working poor and income inequality, the republicans demonstrated through tax reform that creating a vibrant economy where your labor had economic value, particularly for the working poor population.

what we are going to right now and i have the distortion of covid. hopefully as we learn to live with it or beyond it, we are going back to the economy of the 70's. jonathan: do you think that was policy or just where we were at the cycle? people were left out of the workforce and started to come in and the labor market got tighter? >> if you look at the chart, you saw this fluctuation into populations we thought were never coming back into the labor market. you look at african-american women, noncollege educated males. you saw amazing numbers getting back into the labor force. last week, 800,000 dropped out of the labor pools. that is really disturbing if you're going to build an

expansive economic growth cycle which we will need and manage debt obligations. jonathan: we've got to do this again and have a longer conversation. you are very smooth. congressman, thank you. republican from arizona. from the city this morning, good morning. your s&p 500 is up 18. that's a bit of a bounce. after four days of losses. in a tight race to the week, this is basically where we were. tom: oil. brent crude is near $73 a barrel. that's been under discussed. jonathan: in just a moment, we will catch up with michael mckee on the economic data.

we will catch up with the head of u.s. rate strategy on this bond market and the un-for castable economy. that's coming up from new york. this is bloomberg. ♪

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economic data. good morning to you. i'm jonathan ferro. your equity market update, it's a bounce back from a four day losing streak. we keep bringing it up. it is one single percentage point. a little bit of economic data, let's cross over to michael mckee. michael: mixed news on the producer price index. ppi for final demand comes in 0.1 percent higher than forecast. there is again for a month over month basis. that puts us at up from 7.8%.

it will raise some eyebrows. the good news, it comes in at 0.6% higher. that is what was forecast. it was down in july. year-over-year, it goes up to 0.7%. we are looking at producer price inflation. it is real, we've got to remember it does not translate directly into consumer cost. a lot of this is being absorbed by companies even though we see higher consumer prices in many areas. jonathan: yields are up by a couple of basis response. equity futures are still elevated at 0.4%. cpi in america? michael: that's the number that's going to matter for the markets. everybody likes to watch the cbi

because it breaks down into so many categories. the forecast is declining on a year-over-year basis. the court to go down, to be unchanged, contains consumer price inflation even though producers are still paying more. thank you. that's a bit of a surprise there. tom: here's where we are. i've got one quick question. what did you clean that we are making the theory up as we go? michael: when you go to a store and they are advertising a sale and they have just raised prices and cut them back again. that's what ecb is doing. they accelerated their purchases. they didn't change the amount they were going to buy. now they are decelerating. the same amount of money goes into the economy.

tom: my head is spinning. michael mckee, thank you so much. we have important inflation data. the u.s. rates, it's wonderful to have you on it i want to go to one phrase within your good research. overwhelming demand. what is the why over mending -- overwhelming demand? >> there's a lot of cash on the sidelines. this is where we would get a spectacular amount of supply. everything was absorbed by the market. you have over a trillion dollars with the fed. there is a lot of cash that needs to be put to work. this is going to be somewhat benign.

broadly speaking, the market is very comfortable putting money to work. tom: which duration is most attractive? which has the silliest demand? >> i think you are seeing demand across the curve. the front end is a little bit distorted. broadly speaking, these things have very strong demand from investors. you see insurance companies on the long end. we saw very good domestic demand. i think a lot of cash should be the bonds as well. going forward, what is the signal from treasury yields? is it just people looking only in the next couple of days and

weeks? is it a statement about central bank policy. we are looking for a clear sign we've made potential so the fed can start tapering. in my conversation, the preoccupation is more on the inflation side. we just don't have enough clarity. the bond market is a little like a deer caught in the headlights, waiting for more before we could price higher. lisa: the fed is going to wait before raising rates and tightening policy. we got that ppi data came in in line with estimates. we've got this idea that wages are going up. when will this slowdown growth

while crimping a lot of economic activity that corporations depend on? >> that's a very good question. we don't have an update yet to make that assessment. to me, what's really concerning is the area of inflation on things like rent and medical care costs. these tend to be leading to a persistence of inflation, which is an underpriced risk. we don't have enough data to corroborate that. there are a lot of supply chain disruptions. corporations are not able to source material. we have to see more data points before we see what the impact would be. lisa: it's not been priced into the market. which market? should yields be higher?

some of the corporate bond premiums are spread and should be higher? >> i think it's in all markets. equities don't seem to be concerned about the rise in inflation. the bond market has breakeven. longer-term inflation expectations are quite high. going forward, the question is how persistent will this be? you see all of these markets react very quickly. you see that reflected in the equity market. we are not there yet. tom: give us a 10 year call. are you in the range? are you outside the range? >> we are thinking that a year from now we will be summer

between two and 225. we think the market is underpricing. the 10 year yield could rise from here on. there is a lot of pessimist him. when we get through that, i think this is from now on. tom: this is simple. we are clipping a coupon. does anyone with that call on yield managing for total return? i don't think so. >> the real risk in the bond market is the fact it are not focused on real returns. even when you look at high-yield, inflation is going to be in the context of 5%. you are not getting very strong

returns. that has to be a concern for anybody. given the fact that yields are low, this has to happen over the next year. jonathan: when does the fed have to worry? >> i would say sometime early next year if these inflation rates persist. that is going to be a concern. i think they probably end by the middle of the year. they can start raising rates if they need to. they are prepared for that scenario. they are not expressing that concern. jonathan: how they manage that message will be fascinating. what a start to the air that could be if the fed has to

change their mind on a key issue. tom: 2% plus, that changes everything, including the equity markets. we get out in front of the weekend reading. deutsche bank publishes the first reading for the weekend. it is a tour de force on a shift in the supply curve. he said everybody is getting it wrong. this is supply shock in spades. the weaker dollar, flatter curves. the fed will come to the rescue. i think -- it's buried in the notes. he makes a weaker dollar call. this is much more about the punditry and the narrative that is out there, that we fight every day. we are not trying to give an opinion. we've got to think through the different narratives. some are sloppy thinking. jonathan: guy johnson said to me

we are and idea exchange. ideas are all over the place. lisa: the consensus, this is sometimes polarized. we had a survey in the financial times. 70% of all economists believe the fed will have to be reevaluating early next year and speeding up rate hikes. this goes against what the market is pricing in. jonathan: if they have to change the message? wow. we are looking forward to that. then, we will be observing a moment of silence at three minutes past the hour on the stock exchange four. we will do that at 20 minutes past the hour. we will observe both of those on bloomberg tv and radio. from new york, this is

bloomberg. ♪ >> president biden urged the chinese president to cooperate on key issues while they fight on other topics. they spoke for 19 minutes. the president initiated the call after becoming frustrated by cabinet level meetings. the u.k. has sorted 31 terrorist attacks in the last four years. the terrorist threat to the u.k. is a real and enduring thing. the taliban takeover will embolden terrorists. the rally in metals is heating up. nickel rose to a seven-year high. demand is surging in construction and it's making it tough to get metals where it's needed. they have decided not to go

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>> right now, we are going to have an equilibrium. i think the risk around cyber is

higher. our expectations are higher. we haven't experienced the full magnitude yet. it's an area we should pay a great deal of attention to. tom: looking back 20 years, you know him recently. he was the vice chairman of the federal reserve system. chairman greenspan was out of the country and roger ferguson led the monetary response in the hours and days after september 11. wall street week tonight, a special effort by david westin. watch that as you can on radio and television. joining us now is michael mckee. michael, with all that's been written, i read ted olson in the washington post who lost his wife and this tragedy, a view that we have to look forward. how do we look forward to the

next 20 years? michael: with humility i guess. we don't know what's going to happen. in the 20 years since 9/11, the country was united after 9/11. we went into afghanistan to dislodge the terrace. we didn't realize we would stay there for 20 years and withdraw. we also had no clue something like covid was going to come along. scientist do there was a possibility. no one spent time thinking about it. you have to have a kind of humility. for our viewers, the financial crisis of 2008, a major investment house would go bankrupt. and freeze the entire world economy. tom: you more than anyone experienced this. the photo of you is iconic. i heard this as well, is new

york city resilient? i went totally against that. i thought new york city would rebound. how have you viewed the rebuilding of lower manhattan? it's been a miracle. michael: you could call it determination. you could call it real estate. new york is a place you want to be. the financial industry is very strong. a lot of changes have been made. many of the investment houses have moved to midtown. it has been remarkable. it has come back people live down there these days in a much greater number than they did before. new york has been very resilient. you could see it in the days after the attack. people gathered at union square.

people were determined to come back. lisa: it was the marking point for a seismic shift in the financial industry. there was a greater move to electronic things. it was a massive moment of disruption. when we look out 20 years from the pandemic, how will we reflect on the disruption occurring right now? michael: that's a very interesting question. we don't know how things are going to evolve. it looks like more automation coming after the pandemic. we don't know how it will change the way people go about their daily lives. it could have some lingering effects. the only model we have is 1918. there has been so much advance since then, it's hard to say it's going to compare. obviously, the biggest change is we have these vaccines, these

mrna vaccines that can be used in different places. i would expect major changes. we don't know what they are going to be yet. lisa: one of the changes is the heart of what you focus on, the role of the federal reserve which has become more entrenched in the financial system. how much is the fed it concerned about their more important role as day save the financial system again and again and again. michael: they don't want to have to be the savior of last result. they want to be the lender of last resort, set up for the banking system. the banking system has evolved in many ways. there are concerns about that. one thing they have done is grown comfortable with their qe and other tactics they view. they have included them in the toolkit. it was only raising interest

rates, at one point byman appealing the money supply. most recently, with the overnight bank lending rate, that is changed. they have a much broader toolbox to work with. they would rather beat farther away from zero. tom: thank you so much on this remembrance of 20 years ago. lisa, i look at the markets today. i kid jonathan about it. it was down 10,020 years ago. lisa: it really caused a lot of people to shift life goals and life trajectory. i think about the parallels to today in certain respects. some of the mysteries underpinning the labor data, how much people are rethinking the way they live and the financial system is in line with that. tom: i agree. what's interesting is the global

nature of the pandemic. if anything, we have underwritten reportedly horrific failure in africa with the poverty to get the vaccine there. lisa: mike noted in the aftermath of 9/11, new york was very united. that has been one of the tragedies. people have been very divided in the wake of this pandemic, with finger-pointing highlighted be speech last night where he is getting frustrated there is not rate or adoption of the vaccine. tom: we will have moments of silence in the next hour. jonathan ferro will have that on television. i should point out, balance of power has the right guest today. he had a most tragic september 11. howard was fortunate with his son to make it through it. it's an important time to speak with him and the charity that

came to pass. this is bloomberg. good morning two. futures are up 19. stay with us this next hour. ♪

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jonathan: good morning, 30 minutes to go into the opening

bell. a bounce back after four days of gains on the s&p 500, 20 on the s&p, advancing .4%. a similar move on the nasdaq. into the bond market, treasury yields with a drift higher. a basis point or two as well. yields higher but unchanged on the week. the euro-dollar setting up a fascinating december, and coming up on the program, a big debate about a vaccine pushed by this man, the president of the united states. >> i am announcing the department of labor is developing emergency rules to require all employers with 100 or more employees that together employ over 80 million workers, to ensure their workforces are fully vaccinated's or show a negative test at least once in t