expensive market in over 100 years. >> we are in a period where it is a little high. >> monetary fiscal stimulus will start to wane. that will be the 2022 story. >> deflation comes at 4% next year. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jon: good morning. this is "bloomberg surveillance" life. alongside tom keene and lisa abramowicz, i am jonathan ferro. prepare for wednesday. tom: i am going to listen to the weekend. it is my book of the year. we spoke to a professor. all of the debt that is out there, i am starting the book. jon: you are fired up.

tom: jon they are doing an exclusive deal. i am fired up. jon: it really is operation get to the weekend. lisa: literally, we were just making our weekend plans. what is going to change right now? jon: you are taking the day off, clearly you do not think it is. the projections from the federal reserve. tom: what do you think? jon: we caught up with, he said all it would take would be a change in the probabilities. pretty much everyone is forecasting no change with the ecb. tom: i look at three moving average studies and when the

three averages come to a point, that describes stasis. we are not there yet, jon, but give it a week or two. jon: it is the story of the bond market. good morning to you all. we will try to make it a little more exciting as the show progresses. yields pretty much where they were last friday and the friday before that. equity futures down. a little bit of a lift in the euro. lisa: it has not been the most exciting week. this looming credibility crisis among policymakers. it all depends on policy. that is what we are looking at. this goes with respect to monetary and fiscal policy makers. the fda panel is meeting about

vaccine boosters, whether to recommend everyone get vaccine boosters. pfizer says, everyone get vaccine boosters, we also make them. some scientific advisors from the fda resigned because they did not think that was enough evidence to support that. kailey leinz said it is quadruple witching day for markets. the second-biggest ever trading day for single stock contracts. it is supposed to be a tremendous day. does it matter the direction of price? it is debatable. at 10:00 a.m., university of michigan survey comes out. this metric is the one year expectation by consumers, it has been going up dramatically. the previous reading was the highest since 2008.

how much does that climb? how much does the three to five year projection and the 10 year projection increase? the sad, frankly, is having a hard time. -- the fed, frankly, is having a hard time. tom: i have not done this study. this is a serious question. the sum of the balance sheet of the fed. i have not done that work recently. jon: it will stay that way for a long time. let's get to our first guest, marvin barth. let's start right here. a headline for moments ago from the ecb, the inflation outlook is about to be higher. from where you are sitting, talk

about the market for us. marvin: good morning. this is a problem that all central bankers are facing right now, how to deal with what they see as transitory inflation. we talked about that the last time on this program. the ecb might have to adjust policy earlier than markets anticipate. we are talking about an economy with a low potential growth rate. prospects are not particularly positive. you will have to see a lot more evidence for them to have to move toward -- we continue to look for the euro to be the weakest among the g10 currencies. we are forecasting it to continue with slide toward 1.15 next year. jon: our politics a part of that? marvin: let's remember that europe still does suffer from a

fiscal background. there was a lot of positivity around that last year. there is still a long way to go. we have a big election coming up the weekend after this what in germany. the first three party coalition in germany history. we have no idea what that coalition will look like, that is still a huge source of uncertainty. you will not have a very strong government in the biggest economy in europe. that will delay. it will set the precedent for potential bad outcomes in the french election next year. tom: you have a brilliant figure in your latest research note that describes how far, far, far

behind e.m. is with vaccination. this is really serious medicine. are they so far behind that the 2022-2023 call is to buy into the great unvaccinated continents? marvin: you could have been the call earlier this year, it did not happen. at this point, we are seeing the global economy reach an inflection point. we are expecting a positive outlook, but it will not be with the same that we had before. we have talked about this before on previous episodes. this emerging markets idea. automation is moving the world away from globalization and toward localization. that is not a good thing for emerging markets. covid has accelerated the process.

it is hard to get that excited about emerging markets at this stage. i agree with you, there will be some benefit that will come from their convergence in covid vaccination rates. lisa: we were talking about my activity at 4:30 p.m. every thursday, which is to look at the federal reserve balance sheet. every developed market bank. at what point will this factor into fx trading in a meaningful and traditional way, the more money you print, the weaker your currency. marvin: this is one of my favorite topics. who actually creates money. it is not central banks. you don't have any money with the central bank. neither do i. those are reserves. only banks have them. what we need for actual money creation is for banks to actually create money. there is not money demand for it. when that happens, i will worry more about it.

jon: marvin barth, good to catch up with you. going into the weekend and coming of the weekend, the focus is on a federal decision next week. the summary of economic projections which no doubt the federal reserve chair will tell you not to look at. tom: i will say more than in recent years, september and december are combined meanings. i remember was september was a nonevent. jon: we had a survey out this morning, the wonderful steve matthews with a team in d.c., suggesting november is the one to watch. november could be decision day at the federal reserve. tom: november 3, you are right, early november and then six weeks later they squeeze in

december 15. i made a mistake because i am already to the weekend. what is great about this, there was a guy in a car -- and thank you so much for listening on bloomberg radio. [laughter] tom: thank you, al. he is househunting in mayfair. do you know what mayfair starts at? jon: it depends on what house you would like. tom: al said i misspelled weekend in the banner. jon: what were you trying to spell? tom: i am going to do the weekend and then go back -- i like the idea that people are listening in london and in asia. jon: down 11 on the s&p.

-.25%. let's go through it together. the 10 year today, if i look at the 10 year friday, where were we? 134. every friday in september so far. lisa: this is why i watch at 4:30 p.m. on thursday. they bought almost $400 million of u.s. bonds. you think about where the stabilization comes from. i don't know. it could be one place to look. jon: futures down 10. this was one heck of an a block. from new york, this is bloomberg. ♪

ritika: with a first word news, i am ritika gupta. a formal announcement will come in november. interest rates near zero through 2022. market anxiety caused by a debt crisis. the people's bank of china has injected money into the financial system. the most since february. another sign kim jong-un is removing constraints from his weapons program. the report said it has been expanded in recent weeks. down .9% from july.

supply disruptions in the u.k. are taking a toll. invesco is a major player. it could become a behemoth. discussions indicate passive investing is the future. 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. i am ritika gupta. this is bloomberg. ♪

>> there is no regional divide separating the interest of our

atlantic and pacific partners. this partnership with australia and the united kingdom is a signal we are committed to working with our allies and partners, including in europe. we look forward to cooperation with nato, the european union and others in this endeavor. france is a vital partner. jon: that was the u.s. secretary of state. from new york city, good morning. alongside tom and lisa abramowicz, i am jonathan ferro. -.2% on the s&p 500. bonds go nowhere. yields are doing nothing. in the fx market, the euro doing something. 1.1781. the president failing to persuade on a $3.5 trillion

spending bill, but talks ongoing. tom: there is an article that really speaks to the tension of the moment. there are a lot of distractions. we are going to manage the message into next week on the infrastructure bill and your taxes moving higher. joe manchin tells biden to go you nowhere. my take is he is not that alone. >> she also is not comfortable with $3.5 trillion. we do not know what her number is but there is reporting she is keeping her own spreadsheets. there are back channels between house moderates between these two senators. potentially, they are going to coalesce on what they agree on

to try to push something through. what they are saying is biden was unable to convince joe manchin of $3.5 trillion. this was not just a speech to the american people, it was to the president's own party. tom: you are so drinking the kool-aid talking about back channels. the back channels of three congresspeople, i am focused on murphy, but this coalition, is it that going to be the story on the sunday talk shows? the house has some moderates that are not happy? annmarie: the house does have moderates that are not happy. at the end of the day, it does not mean progressives like all of it, but it would to a budget and it will be the senate to do the markups. when you look at the moderates in the house, there is still no agreement yet over when this

will happen, where it will be in legislation in terms of salt taxes. there are a lot of differences of opinion in the senate when it comes to moderate progressives, especially on taxes. this will be a big topic for the sunday show because the president is trying to drive home $3.5 trillion worth of spending to get everything done he wants to get onto reinvent the economy. tom: lisa, call me on back channels, please. lisa: i will send it through the tubes. tom talks about the back channels and makes some noise. i don't want to know what that was. but i do want to ask you, annmarie, about the likelihood the $550 billion bipartisan infrastructure bill could get torpedoed in this push and pull of the $3.5 trillion plan that

joe manchin wants to see down to $1.5 trillion. annmarie: what is so interesting about bipartisan infrastructure is the timing. this is what i am waiting to see. speaker pelosi had promised to bring up to the house moderates that by september 27, she promised a vote on bipartisan infrastructure. the idea is that would mean reconciliation was ready by september 27. nobody is thinking that is happening. the leadership of the democratic party has promised a two prong approach. if they cannot get reconciliation, to they make sure they get bipartisan infrastructure? every politician wants to go home and tout to their constituents. lisa: the message from the administration has been, i don't know what to call it, inconsistent, if not downright

confusing. annmarie: there is the washington post opinion section that called it the hamilton routine, to boost or not to boost. they want the boosters and they are ready for to happen. they still do not have fda approval. the biden administration has constantly said they will follow the science. you saw a medical journal where two fda member said there is not enough data on the boosters. that meeting is happening at 8:30 and we will get some guidance in the afternoon. whether or not the committee agrees on boosters or not does not mean the fda follows it, but they usually do. the administration is almost ahead of the fda. do not even have fda approval and the administration's right to go with the third dose by next week. jon: the biden administration -- america was back. the united states government vaccine protection before

getting support from allies, particularly from europe. the europeans opened up travel, the u.s. did not reciprocate. and now more recently, we have this spat with france, with the french saying they were not informed about what was about to happen. they said america was back, you can't always believe them. annmarie: i don't think they believe them completely given everything you just outlined. right now, it is hitting hard for macron in the french government. they feel blindsided. even here in washington, there is supposed to be a gala that commemorates the 248th year of the battle of the chesapeake, i will have tom keene brief you about that during the commercial break. they feel blind sided. the french should not be surprised. scott morrison, the australian

prime minister, when he was in paris, he said submarines are not efficient enough, they are too expensive. the french said they were not put on notice. they found out days before that this was announced. they feel completely left out. last night, macron and merkel were dining in paris. this is part of the discussion. this is another event that you can add to the european's list with a nine states. it will be one of the agenda items when they meet in rome. jon: some of the issues, speaking to the european government. expectations higher, and are they being met? i would say the answer is no. tom: we don't have the time to go into it. i am not surprised by what biden did. he reached back across decades

and reaffirmed the american presence in the south pacific. jon: equity futures down on the s&p, down .3%. tom: we will talk on surveillance back channels. jon: what is a back channel?

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jon: good morning. this is "bloomberg surveillance ." down 13 on the s&p, about .3%. the russell down nine or 10 points. 133.45 on 10's. you get the story. stability. every friday in september, the 22nd meeting of the federal reserve. 187.9 3 -- 1.8793. the euro dollar, 1.1785.

there is one story people are finding fascinating in europe. the chief economist gave them an inflation forecast outside of the published inflation forecast, which -- the ecb hated the story so much, they came out and said the story was not true. 1.1785, that is a stronger euro. it was suggested all would take was a change in the probability, 0%, no hikes in the ecb, to 10% might be enough. is that enough? lisa: i thought that was well done. jon: thank you, lisa. i appreciate the support. tom: that was overwhelming.

jon: back to you. tom: thank you. very good. we welcome all of you on radio and television. this is an important conversation, not to be taken lightly with the silliness. this could go back to when jon and i interviewed bob prince and we struggled with being at the zero. margaret patel has seen it all. listen carefully as she discusses this odd quiet. the quiet to me signal something. the artificial of negative yields. we have japan in true gridlock with fixed income. link together this odd economics to the quiet in the bond market. margaret: on the one hand, you have really all of the central banks for many decades now

pushing down toward zero interest rates and very much 22 keep them there. on the other hand, you have inflation suddenly appearing for the first time in over a decade. it seems undeniable and it seems it is becoming more widespread. before the fed needs to act and do something. tom: the fed will need to act and do something. are you predicting they are? a lot of people will go with an ancient term, we will see price down, yield up. are you managing for that outcome? margaret: only in the sense that in my fixed income holdings, i have gravitated to better quality. they will not be as bad impacted if we have a move up in treasury rates. lisa: is the quiet because there is nothing going on, or simply because right now the bond purchases are overwhelming? margaret: we have the fed

meeting, we also have the quiet before the budget resolution to raise the debt level. that is a hurdle. nothing will happen before then. most people are expecting the fed to do something in the way of tapering. we all know they will do it, so it should be priced in the marketplace. when they begin to do something, it will be interesting to see if the market has a surprise. lisa: what i'm trying to ask is what is the direct effect on the markets of the $120 million monthly bond purchases by the federal reserve? is there a direct reaction that will change directly when they start to reduce that amount? margaret: if they reduce the amount of mortgage purchases, that would be the most important factor. i think the fed's actions -- have kept mortgage rates,

artificially low. if they stop buying as many mortgages, with that cause mortgage rate financing for homeowners to actually go up? that would not be what the fed would want to see, but they may not have a choice. that would be something to watch, and how the bank reacts. lisa: one thing we have been talking about has been the incredible divergence in the potential views for the economic outlook going forward, and how that is one aspect. tell them where the prices are. it is unclear. how do you look at this dramatic uncertainty and economic outlooks going forward when it comes to a market called? margaret: it looks as if the economy is on solid ground and looks as if all sectors are really moving. the only problem is higher prices for inputs and a shortage of labor, and those are not really bad problems to have.

corporations and consumers are not overleveraged. it looks like the economy is in great shape. how does it react to when the fed begins to tip each and do something for tapering? tom: i don't know if you read her literature, i was thunderstruck by the wells fargo equity team on modeling together an earnings call with multiple compression, the relative optimism if anyone could look out that far. do you share that confidence that we see off your equity desk? margaret: i don't know if i have the confidence, but i also believe that. we should see price earnings ratio status same, even though earnings are rising. that would leave the market

still able to move ahead for those companies that have sustainable earnings. the market should move up even if it is more modest and widespread, not just a handful of stocks. tom: is microsoft a one-off or do you see continued use of cash for share buyback above options? margaret: companies have way more cash than they can deploy. it depends on what kind of a tax bill, will that change their behavior? will they buy dividends? we will have to see how they react but they have a lot of cash to do whatever they want. lisa: when you came on the show earlier, you said we have seen the death of the credit cycle as we know it. i wonder, if that is the case, why not invest in the riskiest debt securities and then make a call -- thinking they will be supported by these low yield policies for the foreseeable

future? margaret: i think the riskiest part to the market with very little premium pricing to go wrong. if there is a hiccup in the economy, that is the sector that will be impacted. we have had a tremendous amount of financing from the bottom tier, particularly in the loan market, private equity market. tom: could you play e.m. now? we do not talk crumble on friday, but go ahead. margaret: i think there is more recent to be cautious. we have seen china's growth decelerate. we have seen some cracks in the financial system, with large we -- that is negative for all emerging markets. that is an area i am still cautious of. i think the u.s. still looks

like the best place. also, continental europe does not look bad. they should have 2% or 3% real growth. jon: great to catch up with you. one story we have not mentioned this morning, a wall street journal report yesterday evening, tom keene, state street and invesco might combine. invesco is still digesting oppenheimer. here we are having talks about state street and invesco. market leader's vanguard, market leader's blackrock, that is 1 and 2, and then you potentially have 3 and 4. tom: i do not get it. it is just one opinion. this is an active manager, a generalization, buying a passive manager as a generalization and there are three ways this can go, i'm not going to go into it right now, but what is so

important is citigroup estimates what we call the net clean is state street is .5%, five basis points. it is amazing to see invesco at 38 basis points and passive business at five basis points. jon: you see how the marketing would work. that would be quite strong. tom: it would be a synergy play, i get that. what is fascinating, including from morgan stanley, you have an active manager invesco with oppenheimer, active manager, they are going to go after passive money, which is making barely anything. why do that, will be the question. lisa: when there are no fees, what do you do? you maximize scale.

what is the -- $9 trillion? there is no other game. tom: i totally agree. citigroup says they go from 38 basis points down to 15, with the five basis point acquisition. maybe it is desperation. standard life? lisa: killing it. [laughter] tom: it is like the weekend. jon: this is not the coverage i was expecting. what do you think the administration would think of this? we have to get bigger so we can offer something to customers with a lower price. that goes against some of the thinking i have heard down in d.c., tom, over the last couple of months. tom: we said good morning to everyone on the buy side that uses bloomberg terminal's.

it is tough out there. jon: futures down 13 on the s&p. -.3%. from new york, this is bloomberg. ♪ ritika: with the first word news, i am ritika gupta. president biden was unable to convince joe manchin to back his $3.5 trillion spending bill. the opposition to the size of the budget package could jeopardize the bipartisan infrastructure bill. president biden is trying to speed up efforts to cut down greenhouse gases. he will host a virtual discussion on climate change with virtual leaders. the white house unveiled a new goal in reducing methane emissions. donald trump later pulled out of

the deal. a number of american lawmakers have expressed about china's efforts to join. the kremlin has been warned to stop cyberattacks that intensified in run out's to the german election. russian operatives are said to be trying to influence the vote. 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. i am ritika gupta. this is bloomberg. ♪

>> certainly as we had indoors as the weather is getting cooler, that raises the

possibility we could see a surge of cases that had not seen them in the previous week. i am less worried about the northeast compared to the southeast, which has really been hammered by the virus. jon: from the johns hopkins center, good. alongside tom keene and lisa abramowicz, i am jonathan ferro. looking ahead to september 22, the federal reserve's decision and news conference in focus. we go nowhere on treasuries. in the equity market, -12, we are down .3% on the s&p. in the fx market, the euro showing a bit of strength. 1.1779. tom: american oil, brent crude. the idea we are nearing 2000

deaths per day. i want to migrate into the weekend about what i am reading on the back channel. we are beginning to see covid-19 patients have to pick up their medical costs. this is basically a free ride for very sick people for 1.5 years. how has your world changed because patients have to look at paying for this horrific illness? andrew: it is too far on the back end to make a big difference. what we want to do is focus on the population that has not gotten the shot yet, that is driving -- tom: that is still topic 1. andrew: it still is. we have to be more creative on how we address that. we cannot be distracted from the main goal. we will not get case numbers

under control until we vaccinate more people. jon: is flu season already on your radar? andrew p.: absolutely. we have been watching influenza cases. there is more activity than we have seen in the last few years. we are worried that without public health interventions like we had last fall, we will see a surge in fluke cases. that will complicate covid-19 diagnostics. it is a disease that might target younger populations more because we have not seen flu in a few years. it is a complicating issue we are keeping an eye on while we stay focused on covid-19. lisa: while we are focused on trying to get more people vaccinate, the pope was urging everyone to get a covid vaccine and the white house mayday call to nicki minaj after her twitter post that we would not read because it was not fit for morning television. is this a way to get more people vaccinated? andrew p.: we have to go out

there and aggressively go after the misinformation and lack of information and find better ways to communicate to those pockets of population that are probably willing to take the vaccine, but need to step back and see the noise on both sides and are unclear on both sides. the science is clear, the safety and efficacy is clear, we have to get better at getting the messages delivered quickly to the right populations. lisa: when you are talking about all the things that are clear, to your point, there are a lot of things that are unclear, the booster issue. do you think this debate is premature and muddies the water, or is it important for us to focus on this because it will be an important tool? andrew p.: when it comes to boosters, one thing that is clear is the data on boosters say that boosters are safe and

boosters do increase the amount of protective antibodies you have in your system. no doubt about the safety and efficacy of the booster. what is really in question is the need and priority of individuals to get a booster. boosters are going to help reduce severe disease. if we focus on populations that are vaccinated but starting to see more severe disease, the over 65 population is one of those, boosters make it reasonable for that population. boosters will not help reduce the number of cases in this country because that is driven not by vaccinated people, but unvaccinated people. tom: the 50 yard line with rutgers people, 107,000 people at michigan, bloomberg will be at ann arbor. had you put unvaccinated in a bowl.

is that the social constraint to limit this silliness? andrew p.: this is where we need to get back, a few weeks ago, the biden administration proposed their plan to re-up their efforts against the pandemic. things like vaccine mandates, particularly for these events that are not essential, but are something many people would like to go to, is a great approach. if you not only offered vaccines at these events, but you said you needed to be vaccinated before you entered, you might see people move forward and get that vaccine and realize that is a step to get back to normalcy. tom: jon ferro, the way this works is dr. pekosz sits at the 50 yard line and gives the vaccine. jon: what happens at the 50 yard line? tom: that is football.

american football. jon: i hear people who have not had a vaccine said the following, if you're vaccine is so good, why do you care if i have had might or not? what do you say to them? andrew p.: it goes to thinking 2, 3, 4 months down the line. if we let the virus continue to replicate, we will get more variants emerging, and some of those variants might be able to evade that vaccine immunity that is doing such a good job so far. that is the long-term goal. we want to reduce human suffering. as a society, we want to reduce the number of variants the come out, that is why we need to vaccinate people. jon: we have not gotten to a position where it is about individual risk tolerance? andrew p.: absolutely not. when you look at other countries that have been on the forefront of vaccination, they have all gotten to much higher levels of their population being

vaccinated, and that is where you start to see some of the greater benefits to the unvaccinated, and society in general. we are not close to that level yet, and the more we let these variants emerge, the harder it will need to get to that level. jon: we appreciate you. that was a conversation killer. what happens on the 50 yard line? [laughter] jon: nobody knows. tom: what you brought up was the heart of the matter. the fearless of the delta variant -- the -- we are nowhere near where we need to be. jon: the hope we would be to this position where it was about individual risk tolerance. lisa: kids that are not able to get vaccinated yet. in addition to new variants. i love the tom keene was the one

to pull us back onto the rails. jon: that was special. tom: talking on the back channels. [laughter] jon: down 1/3 on the s&p. this is bloomberg. ♪

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>> the amount of growth we have had coming out of this recovery. >> we are arguably the most expensive market in well over 100 years. >> the stock market will be higher than it is today but we are in a period where risk is high. >> monetary fiscal stimulus will start to wane. that is a 2022 story. >> inflation will be at 4% next year. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jon: from new york city, good morning, good morning. this is "bloomberg surveillance ." alongside tom keene and lisa abramowicz, i am jonathan ferro. going into saturday, sunday, monday, tuesday, wednesday, said