started to change their signaling. >> the fed is going to have trouble decoupling tapering from rate hikes. >> we've had massive amount of inflation in this era of easy monetary policy. >> you've seen inflation expectations pickup. they are still at levels that are overall consistent with the fed's target. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market bouncing back again. we've seen this movie before. up to 12 on the s&p, advancing 0.3%. we've got to get things off this morning with another downside surprise out of china. tom: the news flow is extraordinary this morning. we are going to cram it into three hours of radio and television. i believe ferro will move it forward in clock hour. china is truly front and center.

this is about tough economic data, and my litmus papers, the 30 year u.s. bond coming in nicely under 1.3%. jonathan: 2.5% against an estimate of 7%. tom: leland miller will say, can we trust the data? i think it is the trend of the data, and the trend is below 6% gdp, and that is a new china, never mind the overlay of everg rand and all of it. jonathan: we certainly taken some heat of this federal reserve going into next week. lisa: you are talking about cpi yesterday. i think one aspect that equity investors are focused on is the fact that ppi, prices of the inputs a lot of companies are using, arising much more quickly than consumer prices. this goes directly to the margin question and directly to the

momentum in the economy. jonathan: i know gina martin adams is doing some work on that. we need to talk about the goals -- the technicals. you pointed out to me that we are sitting right on top of that 50 day moving average for the s&p. tom: i am not a big believer in this. i hate the death cross or get i hate the golden cross. i don't do much moving average study. but the fact is it is pretty elegant. we are coming down not within a correction and testing some of these levels. jonathan: let's set the stage for you. equity futures up 12 on the s&p, advancing about 0.3%. microsoft out with a $60 billion buyback. in the context of its market cap, that is not a big one, but maybe that bails out the 50 day moving average for this s&p. tom: amazon is hiring more people than god. i looked at the warehouse yesterday, the median income in

allentown, they are going in median wage. jonathan: yields in a basis point. euro-dollar stronger, $1.1824, advancing a couple of tenths of 1%. lisa: 8:30 a.m., the first read on september activity, september empire manufacturing survey coming out yet expect to continue to slow down -- coming up. expect it to continue to slow down. they have been able to charge pretty significant prices, even as their import prices have somewhat slowed down in terms of the pace of increases. meanwhile, at 10:30 a.m., we get eia crude oil inventory imports. the reason i find this interesting is because we have seen direct correlation to how much oil prices have risen their , now the highest going back to early august, with inventories getting depleted.

is it simply a supply story if opec+ doesn't ramp up supplies that quickly? certain shale production has been taken off-line, gulf of mexico production taken off-line. ursula von der leyen will address european parliament get the european commission president will talk about the response to the covid pandemic, as well as the road ahead. i find it interesting from a trade perspective, given the relationship with china, given the relationship with the united states. later today on this show, at 7:15 am, we are lucky to have valdis dombrovskis to talk about the trade aspect, the head of the trade negotiations for the european commission. jonathan: have you ever heard of this weed green index? dusty sweet green index backs the -- the sweet green index? let's get to it now. charles kantor of neuberger berman come -- neuberger

berman, senior portfolio manager and author of the sweet green index. what's going on, charles? charles: lots of people coming back online. it feels good to get some vibrancy back into midtown, and folks are coming slowly back to work, and kids are going back to school. so hopefully it is returned to normal slowly. tom: i look where we are right now in the sequence of interviews i've done with thinkers who keep going back to the dreaded t word, technology. you and your team are expert at this, the overlay of technology, microsoft, amazon, whole foods. but unseen as well. tell us about the unseen technology that makes you a bull owning stocks. charles: i think it goes to

quality of businesses, and sometimes references forward thinking. i think your amazon example where you represent -- where you mention the hiring, i think those that are forward thinking, a lot of businesses out there are struggling tremendously with labor. they are blaming to some degree the stimulus, which references the fact that people are getting paid not to work. as that gets killed back, i think folks remind themselves that it is really about competitive positioning and the lack of forward thinking, and the places that really attract and reward the best talent. all of that technology investing is happening in some of the best businesses that have come out of covid as winners and will remain winners because they are forward thinking. the covid experience for many businesses i think has revealed weaknesses in investment

decisions where there have been supply chain in culture, and labor-management, and those seems come from many years ago. lisa: how do you take thesis that basically people are getting exposed by covid, even if they are hiding behind it, and decide what to buy and what to short? charles: for us, i think we would all like to keep it simple and focus on the macro, focus on is it growth versus value, but as stock pickers and people that love understanding the wants and fundamentals, we just don't think you can paint this environment with one brush. value simply means it trades at a discount to the market. revenues are strong. the reality is in this environment, you are going to be paying a lot of attention to the middle of the income statement because i think businesses will continue to suffer gross margin

degradation to forces driven by supply chain costs and management. so we will continue to stay leading businesses. many of them are sitting in technology, but many are in other industries as well. i think where the caution is is to pay attention to the details. revenue growth has been fantastic as they -- fantastic because of a generational shift, but as that settles into next year, i think it is going to be a focus back on who has the pricing power, who can hire the best labor, and who has much more diversified supply chains that can manage the global interconnected environment. for us, it is going to be about the companies. it hasn't really been because of the flood of money in government

stimulus and the like. but at the end of the day, it is quality of business that wins out. let's get -- jonathan: let's get an example of this right now. who is getting it done? what are your favorite longs? charles: i think the technology space, we are big believers in amazon and adobe because of their scale. you find them in businesses that would include microsoft and workday, and others that are maybe not as obvious. for us, the longs don't really change much. they continue to compound. they continue to take market share. microsoft is an example that yes, $40 billion doesn't really matter, but it is a signal that they have more capital than they

know what to do with, and like many companies, balance sheets are fantastic. for us, i have been very cautious on consumer facing businesses that are going to face tremendous labor and supply chain issues into christmas, as well as industrials that will not have the pricing power necessary to manage supply chains. jonathan: really important conversation. we appreciate your time to kick things off this money. as always, charles kantor of neuberger berman. you have been talking about it and talking about it, the company's getting it done right now. it sums a lot like what charles just told us. tom: i get the hate mail, and the answer is i am getting a lot of hate mail on a technology team. i think it permeates from mr. kantor. it is what technology is winning and food, what technology is winning in industrial supplies.

jonathan: what does that $60 billion buyback at microsoft tell you? tom: it tells me use of cash. at the end of the day, your eye to table. it may be virtual. it may be real. what do you do with free cash flow when there's only so made decisions you can make? jonathan: what did he say? they've got more money than they know what to do with, and that is a good sign. lisa: just buying back shares speaks to the lack of visibility going forward. jonathan: up to 12 on the s&p 500, bouncing back 0.3%. we seem to have the highs in the early part of day, and then we fade. that was the story in the early part of the day. tom: are you talking about me? i fade in the middle of the day? i don't fade, i have a nap. jonathan: a beautiful morning in new york city. good morning. this is bloomberg. ♪

ritika: with the first word news, i'm ritika gupta. voters in california have overwhelmingly rejected an attempt to recall governor gavin newsom. about 2/3 of voters answered no to whether he should be removed from office. it is a major win for democratic leaders, who characterized the move as a power grab by pro-trump leaders. -- by pro-trump factions. last week during a phone call, president biden suggested the possibility of a face-to-face meeting with china's xi jinping, but xi continues to avoid leaving the country, even for major meetings. during the pandemic, he hasn't left china and more than 600 days area the u.s. justice department has asked for an emergency -- of the restrictive

antiabortion law in texas. it is likely to be the first step of a battle that reaches all the way to the supreme court. the bill bans abortion after six weeks of pregnancy. h&m reported third-quarter sales missed estimates the chain faces -- estimates. the chain faces restrictions in asia. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪ i'm ritika gupta. this is bloomberg. ♪

♪ >> we've been seeing this steady drift of ip and production

racing for the lowest tax jurisdictions around the world. there is nothing economically efficient about that. so i think that the core values the president has put forward is reversed the negative impacts of the trump tax cuts and get this corporate tax reform right so that we are encouraging more incentives to invest here directly. jonathan: brandy's of the white house national economic -- brian deese of the white house national economic council. tom: i actually had to read this one twice because it makes no sense soever. i don't know how you affect the mystic tax law -- affect domestic tax law to change global tax flows of many different units, many different countries. it doesn't make sense. jonathan: you need alice to come with you. tom: exactly -- allies to come with you. jonathan: exactly. lisa: nobody can get on the same page with this.

president biden is facing opposition every way he looks within his own party based on how much people view corporate tax rates as potentially detrimental to business. jonathan: i'm just going to whip through the price action quickly. the dow advancing 0.2%. i'm coming around to this, just for you. lisa: no you are not. [laughter] tom: i'm going to make him an american. jonathan: euro firmer, euro-dollar $1.1824. tom: emily wilkins with us now on washington. we will look for some clarity today with bloomberg government. republicans, democrats, independents, even gavin newsom wants to know, how dead on arrival is this tax proposal? how do you measure the dead on arrival of what the biden administration, chairman neil, and the rest are trying to do?

emily: i think it depends on what you mean by dead on arrival. i think most people didn't believe exactly what president biden put forward as a tax proposal was going to be the thing that wound up back on his desk as something for him to sign into law. there was always going to be debate among moderate democrats who might want it to look a little bit different. always going to be a question of what was going to happen was inflation, with unemployment, with the economy. we are seeing these big sticking points coming out. the house ways and means chairman saying there were not enough votes in the democratic caucus to pass what president biden wants to happen. tom: do they change the tax bill, or do they lower the ask of $3.5 trillion? emily: i think they are looking at doing both right now. if they can't pass what president biden wants, they have to find another way to do it, whether that is in regards to having some loopholes -- i know

a big concern was that inheritance asset. it has to do with farmers who say we have a lot of land to pass down to our kids, but they will not have a lot of money to pay taxes to come with that. that is one giant sticking point that is there. it has already been made very clear in washington that this reconciliation, the final number is not going to be 3.5 trillion dollars. how much less is the question that has yet to be determined. lisa: let's go back to that brian deese quote, where he was saying that it is advantageous for the country -- it is disadvantageous for a country to have the highest tax rate around. this is really a concern about how to tea this up. where does president biden sit on this? emily: the democrats and i think the white house as well have been looking at some of these tax proposals. if you look at polling, it is actually pretty popular among the democratic party to be

raising taxes on the wealthy and corporations. that is something that motivates part of the democratic base. but the big thing is you can't lose those more moderate democrats, those more moderate areas of the country that have these concerns about the larger economics and inflation. how do you balance that? that is what we are seeing is the house starts to put together the details of this reconciliation plan. we are already seeing roadblocks in different committees, not just on taxes, but also one drug pricing. democrats are really under crunch time now to get this together. there's a soft deadline today of getting things to the budget committee so they can put them together in a larger package. it is not clear if this soft deadline is going to be met, however. lisa: we got that cpi print yesterday. the spin cycle was in great force after that. tell us how they are pushing the conversation forward when you've got a lot of economists looking

under the hood at things like rent, which frankly, didn't understand how they came up with the rent component for the cpi. if they look at the non-transitory components which showed faster inflation, how is this being spun? emily: there are definitely size of relief among democrats that inflation is not as high as initially expected. but at the same point, you can't just look at one month and say it was lower than expected, we are out of the woods. they will be looking at the next month and the next month and the next month as well. this is really a longer-term proposition. some democrats look at the inflation numbers, they look at the employment numbers, and they say ok, that is that, but these things we are pushing come of the childcare, the elder care, climate change, those shouldn't necessarily rest on whether we are experiencing inflation or unemployment. these are simply things the

american people should have and deserve, and we want to make sure we are getting them for the american people regardless of what these monthly economic indicators are saying. jonathan: emily, good to hear from you. tom, we have been doing this for a long time. how do you capture, accurately capture the cost of living in this country? other countries, too. the cost of living, the cost of housing, the cost of rent. tom: we saw the u.s. housing data, and it went down due to a lot of unemployment, but capturing the numbers, this goes back to 1947, when modern economics invented the aggregate, the data. one thing i hear from michael mckee, every pro, diane swonk and others, is that these agencies are trying the best they can at this impossible task.

looking forward to hearing from william lee of the milken institute. tom: i take real issue with the gloom people. unfortunately, they are only making 50% margin at the ebitda line. $16 billion up in cash from operations. money coming in, $5 billion up in the mining they are spending, which leaves them -- the money they are spending, which leaves them with a free cash flow build of $15 billion per year. just this year, they are going to bring in $60 billion of free cash flow. they are up to their eyeballs in success. jonathan: a $2.25 trillion market cap over at microsoft. just absolutely remarkable. may be bailing out the technical support of the 50 day moving average on the s&p because we have a lift in the s&p market. tom: i'm sure that was their plan. jonathan: futures up 11 points on the s&p.

we advanced 0.2%. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. this wednesday -- we advanced 0.2%. alongside tom keene and lisa abramowicz, i'm jonathan ferro. tom: aoc should have worn a buyback dress. jonathan: do you want to go there again? tom: no, i don't. jonathan: from new york, this is bloomberg. ♪

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tom: coming into wednesday morning. equity features abound. we have seen this movie before. you fade towards the low as the day progresses. features up 11, up .25%. that is the equity market position. here is the bond story. the take away, just the idea that we could fold into a downside surprise, just removing some of the heat. we can talk about that. i have seen some real debate that needs to take place.

this morning, down another basis point. down two basis points. 183 -- 1.8391 now. talked a little bit about the data out of china. let's talk about this game. this is ever grand. a little bit of trouble. we had down a little bit more than 5%. almost right on the 52-week low. the 52 week-that name. that is how quickly things have changed, and now we are talking about china. they will not make that repayment on september 20. this is where the domino starts to fall a little more. tom, who is holding the bag?

tom: we do not know but the heritage of bloomberg surveillance with a focus on china over the last decade, people like william lee of the milken institute. his heritage is in citigroup. dr. lee, thank you so much for joining us today. i know you have not visited the ghost towns of empty property. explain how in any nation you could have microeconomic incentives that allows for miles and miles of skyscrapers that leads to the collapse of ever grand. >> the development said -- people really do not have a way of saving. buying property is really one of the most important things that chinese families do. right now, but we are seeing

with the potential collapse of ever grand is the policy facing lawmakers. is it too big to fail? what we will see is the potential for beijing to step in to take on some of that debt to ensure that their property is safe. that is critical to boost consumer demand. tom: my working numbers is 200 to $300 billion. who is counting? how do they do that? do they just print more renminbi? >> this is a municipal problem. the question is -- they cannot support, because they are already overextended. that is very beijing comes in. that is where the slate of hand will be taken place.

there will be a lot of smoke coming out of this affair. they do not need beijing to come in. beijing -- for the last several years, they developed capital markets in china so that there are other avenues. it is -- one of the biggest risks facing china right now -- the slowdown in china is being hit by a confluence of events. the ciccone in ways of handling covid -- the draconian ways of handling covid. number three is this crackdown on -- not just information gathering, but trying to restore -- improving the welfare of the common for and doing it at the

expense of the people at the very top. that disincentive is something that china will have to deal with the it because there has been a lot of debt and a lot of innovations that have gone to waste. jonathan: a lot of people do not take notice of what is going on right now. the majority of them have been in china. is this something to be worried about? >> the shocking part that most people in the western world are forgetting is that china is so critical to our supply lines. you said that the data has eased some of the pressure, but the china slowdown, to the extent that it is on the demand side will help with that.

if the supply chain remains impaired, we will prolong the pressures that we see. i think that the fed will have to contend with or tell the market that the inflation prices that we see today are supply-side oriented and not subject to monetary policy. that is something that has not gotten across. if it really spills over to their supply-side, that will cause problems for the fed. >> are you saying that the main note of contagion is the supply chain disruption that we have seen getting worse? >> absolutely. we are obsessed with the ratio in the u.s. and the spread of covid and how it is peaking in the u.s., but it has not done so in the rest of the world, especially asia. china has had to crack down severely to maintain its zero

covid policy. they will crack down on economic activity. because their health policies have not been able to do so. i should not say inflation. it is something that they have to deal with now. lisa: we are seeing those increase in producer prices. they increase much faster than companies are able to pass along to consumers. how does this manifest itself in economic growth? >> it has not quite gotten there yet.

the retail prices have gone up. they are managing to contain inflation prices within the domestic supply chain. a lot of it is coming out of the margins. the high profit and earnings show us that there is a lot. as long as they are able to make investment, they have room to grow their margins. it is a race between the two. can they maintain the investment ? the biden administration is spearheading the charge. now we threaten the goose that laid the golden egg that are going to give us an offset to the higher prices that we are

seeing. tom: i would be remiss if i did not ask you -- the general was calling chinese counterparts -- an extraordinary statement out of her new book. your words? >> our back channels have always been something. president biden talked about how many hours he spent with president xi jinping. look what happened and he asked for a meeting with him in this bachelet. president xi jinping turned his back on him. our ability to have relationships is focused on domestic economy and it is turning inward. their attempt to turn inward is

removing one of the big locomotives. jonathan: lucky to catch up with you, as always. the president suggested the possibility of an in person meeting during a phone call last week, but the chinese president declined to commit to one and did not even acknowledge the question. tom: it has to be a big change. i do not think anybody should be surprised that it will continue, with discussion and diplomacy. jonathan: this number out of china. it is not just a scale of the slowdown. it is the fact that they find it so difficult.

we saw that with payrolls. i think the bank had 2.5%. where are we now? we still cannot get our hands around where the economy is going. tom: i was in shanghai and all i can tell you is that the labor model in china is the only thing that they worry about. they always go back to keeping people employed. jonathan: futures advancing. we need to have a little chat. 71.44. from new york city, this is bloomberg. ♪

christ democrats -- >> 67% of votes voted no. the recall attempt was accused of being a power grab. the president has announced plans to impose a vaccine requirement for roughly 100 million workers. in the u.k., job recruiters -- they say the shortage of workers is helping the recovery from the pandemic. the pandemic and brexit have dried up some of the work. -- some of the workers.

they are desperate for more staff. [indiscernible] china has ever grand is one step closer to one of the countries against -- the struggling -- they are said to be talking with banks about loan extensions. 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. ♪ 20 countries. this is bloomberg. ♪

>> harm reduction, something we

did with hiv -- that is the way that we will approach of the celt. voluntary means trying to give people the tools to make that a risk calculation. there will be a baseline of cases, but just trying to keep our hospitals from going into crisis. jonathan: from new york city this morning. i am jonathan ferro. your equity markets are shaping up as follows. almost 20%. the euro-dollar advancing .25%. what is happening in the energy market? crude is 7145 -- 71.45. up 1.43% on the session. tom: it is a nice trend. the bloomberg commodity index is

really good math. jonathan: what about power prices? they are becoming a real issue. tom: i think it has been underreported. you are leading the good life. johnny hasn't been there recently, but i have loved going out with you on that. but around the north sea, up near yorkshire, there is no wind. jonathan: it is a big problem with power. this key converter that brings this cable out of france into the u.k. has been shut down as well. some real problems with power. it leads to that conversation about prices. a lot of people are starting to file. tom: it is shocking how we take it for granted. lisa: remember the blackout?

that became a serious crisis for everyone. people are dealing with inflation in a way that they have not for years. tom: what was terrible is that i got so wet. i hurt, the way you had me doing that. unfortunately, we have to move from the reality of the great unraveling. from new zealand to singapore in the last 24 hours. now we come to the reality. the direction is not good. we are up to 1800 deaths. what direction do you observe on this pandemic, nationally and globally?

>> nationally, it is positive, but we are seeing a plateau of the peak. the deaths are still going up, but there is a lag as the pandemic itself plateaus. globally, there are hot pockets, areas that have maintained control. other countries are seeing surges and trying to adapt appropriately. it is problematic. tom: you are in emergency medicine. what did the people you know in emergency medicine observe now that is different than a year ago or 16 months ago? >> unfortunately, a lack of difference from 16 months ago. there is a difference in patients, but we have a shortage

of resources. i was working overnight last week and my hospitals are fooled. many are on diversion. that is where we have no more capacity, please find somewhere else. the challenge that we will face is the cases continue to be a recent high. we are about to face a flu surge as well. position -- physicians everywhere are concerned that we do not have the resources to adequately care for all of the patients. lisa: how prepared are we for another pandemic? >> as prepared as we could be. we have optimized the health system level as much as possible. we have stockpiles of ppe and a

number of ventilators. a critical shortage of health care workers and nurses though. we are running at max capacity. do not know how you go beyond maximum capacity. lisa: president biden talked about getting a plan together to combat more effectively, the next pandemic. researchers were talking about other covid infections that they attract -- tracking around the world. how much of a concern is this year term versus something that will happen every -- once every 100 years. >> i wish it was once every hundred years, but it will be more frequent. some have higher transmissibility than covid, but we do not know how that plays out. we also do not know if the newer variants are more severe or have

milder symptoms, which is what i am praying for. jonathan: one more bank delaying its return to office plans by another two weeks this time. early november now. tom: dinner conversation last night. it is company to company. within whatever company, dealing with the cultural aspects of this. i'm not sure if it is suit and tie is this policy. i think it is cultural. jonathan: this is the third time that they have to do -- that they have had to do this in the last few weeks. lisa: what we are looking at is a prolonged work from home scenario. jonathan: what is the new september? what is it?

somewhere in 2022? tom: i am looking at auckland and singapore. singapore is tangible. lisa: that is a different threshold. the answer probably is that there is no september and the way that people saw. it will be a drip. how they account for that will be just as difficult. jonathan: do we need a catalyst to show that there is no normal? do we need one again to regenerate those kinds of return? just purely from a market perspective. >> what would it look like? it is just the drip. fewer infections and it is exhausting. tom: it is my deep suntan from all the days i took off in

august. jonathan: letting us know that he has dry skin. would you like me to suggest a moisturizing? lisa: [laughter] ♪

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>> they have the pedal to the metal, and inflation is down the list of words. >> the fed has started to change their signaling. >> the fed will have trouble decoupling tapering from rate hikes. >> we've had a massive amount of inflation in this era. >> you've seen inflation expectations pick up but they are still at levels overall consistent with the bench target. >> this is "bloomberg surveillance," with tom, jonathan ferro, and lisa abramowicz. jonathan: from new york city and worldwide, good morning. alongside tom keene and lisa abramowicz, i am jonathan ferro. equity markets fading a bit, up six on the s&p, up a little more than 1/10 of 1%. the downside surprise in china. tom: