>> the amount of growth we have had coming out of the recovery has been accelerated. >> the stock market will and higher than it is today but we are in a time where -- >> the stimulus will start to wane, and that will be the 2022 story. >> this is "bloomberg surveillance." with john keene, jonathan ferro

and lisa abramowicz. tom: good morning, as we get to the week. everybody is working for the weekend, and the theme i have noticed in the last five days is the underestimation of the american consumer. jonathan: is it wednesday yet? we are wondering what comes next, and i think it grips everyone, what is next in the cycle, in this market? can we get that second run of the cyclical stocks? tom: michael mckee of bloomberg, i am sorry the american sumer reported this week constructively. jonathan: i mentioned this a couple of times, that against

the u.s. consumer at your peril. big downside surprise over in china and upside surprise in the united states, what do they have in common? we are starting to get a read. in september, struggling to gauge whether -- where the economy is at any given data point. tom: you and i see it here in new york, i assume it is across the nation, rents higher. lisa: if you look at any other survey, you are talking about 10%, 15% increases in rent in various cities across the nation. i think this says the american

consumer wants to buy stuff, however the prices are going up, and the prices of what they want to buy is going up, and some of it is supply chain constraints. some of it is because this is a time when there is a mismatch with services. tom: it will be interesting to see. we have a whole set of things to talk about to set up this hour. john, you mentioned the joke of getting to the weekend. jonathan: we still have not settled the fiscal side of things. axios reporting the president is struggling to convince joe manchin to come around to his point of view. we've been talking about the range of outcomes. they are incredibly wide with her monetary policy and fiscal policy as well. tom: maybe they should've had the beer that obama had years

ago, a big timber porter to keep everybody same. i went to go through the data quickly. daniel juergen will be with us later. jonathan: into the fx market, positive, some strength for that euro, and futures are a little softer. tom: on friday, mark howard joined us, and he will have a wonderful view across the caution i've seen from the french bank. mark, how does your team measure our economic growth right now? mark: i think we see a pullback

in q3 and perhaps not as rosy a q4 as some others that you have coded, but certainly a very above trend growth outlook for 2022, which will support calls for taper and ultimately higher rates in 2023. jonathan: let's build on that. which you agree with fibria celulose take -- reacceleration? mark: i think it is a reframing. it is not just higher rent, it is actually availability which is holding back jobs and the ability of firms to hire people because there just isn't affordable housing for people to migrate to go to those jobs. i think that is an example. the consumer is robust and will stay supportive, but there are issues affecting consumer

demand, whether it is availability of cars or homes or also higher prices due to input costs from all of these shortages. lisa: you are expecting more volatility and you are looking at that as a potential buying opportunity. how are you remaining nimble heading into this increasing uncertainty? mark: the outlook that i just framed, it is important and what we hear from clients all the time. you do not want to let go of good assets and risk not being able to repurchase whether it is equities or high-yield bonds or other products, it is important to add some hedges. greg would tell you there are certainly hedges that we like articulate rent some of the sectors that have been robust, and you can use a variety of structures to achieve that.

same in the etf market. i think it is being thoughtful about where you see dispersion, and the equities or pullbacks in the fixed income markets, and putting on technical hedges. lisa: this dovetails perfectly into the fact that today is quadruple bewitching day. we are seeing a rolling over of all of these derivatives contracts when people are turning increasingly to these derivatives in order to hedge, to become noble. do you expect that today will matter? mark: it certainly matters. it has driven some activity in the run-up for sure. it matters. i do not think it will create a flurry of activity or surprises, but it is a focal point for clients. tom: act two hedging back -- b

ack to hedging, a million years ago, you guys know the pacific realm with the french heritage, how do you hedge em? through currency, through stability, or are you hedging a soup of greek letters? mark: you've have spoke with my good friend george, so there are a variety of ways, currencies have historically been the most efficient and the cleanest way to hedge these exposures. there are also some indices that you can use to deploy and commodities. many em economies are commodity driven, and so for example you have seen the natural gas go

through the roof and you have seen iron or fall. you can have specific hedges on those commodities that can help protect your exposures. jonathan: enjoy your weekend. it is the road to wednesday, september 22. tom: let's talk about that, maybe they will pull a davos? this is a roadshow. jonathan: let's go to switzerland. let's bring lisa this time. lisa will experience the two very different experiences that you and i have. lisa: did not hear about someone slipping on ice, and there was a

bar -- [laughter] lisa: moving forward -- jonathan: we have gone nowhere since janet yellen spoke. tom: the data is just deadly. what do you do? jonathan: not much going on until we get to wednesday. lisa: we have gotten data that is somewhat predictive, but some would say you have to look past that to the next trend. it is a market of fate, not actuality. jonathan: a market of faith, your s&p down seven. every equity market is a market of faith. lisa: i just do not understand what this bond market is

reflected. what is the saying right now wish to mark tom: the first chart of the week, this is over for standards deviations, that is all you got to know. we are in uncharted territory. jonathan: what was that voice? lisa: what, who me? jonathan: next on the show is da niel yergen. looking forward to that. we are down seven on the s&p. the beautiful city of lending -- london for our audience on tv. this is bloomberg. ♪ ritika: the fed will hit next

week that it is moving towards scaling back. a formal announcement come in november. china is trying to ease market anxiety caused by a debt crisis. the people's bank of china has injected short-term cash into the financial system. north korea, another sign kim jong-un is moving with his atomic weapons program according to reports based on satellite imagery. jp morgan will take the first step in a plan to expand its consumer business overseas. chase will have about 600 employees and there are roughly 19,000 in this unit which centers on investment banks. finance firms have struggled to

reach young customers and they may now have a new solution. this claims to be making a half million dollars a year and get some of the pay in equities. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> for a long time this economy has worked great for those at the top.

while ordinary hard-working americans, the people that built this country has been cut out of the deal. i have said this from the time i announced i was going to run, this is a moment for great change, and this is our moment to get working people back into the economy. jonathan: from new york city this morning, good morning, alongside tom keene and lisa abramowicz. i jonathan ferro . to the equity market, we are down five points on the s&p. there has been a story to this week where the highs of the session have come early and then we sold them at the open. we will see what happens around the opening bell. in the fx market -- i assume you are on radio too. the euro is stronger by a 10th

of 1%. in the commodities, we are down. very excited to catch up with daniel yergin later this hour. tom: we will get you out front of the sunday talk shows. henrietta, good morning. i want to know the path after this failed meeting, and it does not matter that it is the senator from west virginia, but how do you get from the convenient numbers $2.9 trillion or 1.9 trillion, or dare i even guesstimate $900 billion, how do they do this and save face? henrietta: i think you start with the understanding that in

the beginning it was the six tree and dollars number and now it is 3.5, and at the end of the day, if it is 1.5, it was nearly as big as the covid relief bill, and it is a tremendous sum of money. i think with the progressives have to keep in mind is this is still a tremendous sum of money focused on the middle and lower income communities in the united states, on children and families, eldercare, segments that are not discussed with any kind of frequency like tax cuts are generally. i think it is all about the messaging but less about more -- less about the topline. tom: it seems to me what you just described includes a lot of gop america. henrietta: absolutely. that is where you see these states where you have huge medicare and medicaid

recipients, numbers of unemployed, where the numbers are very high with covid and still need relief. i think it is a disconnect between the physical location of where the recipients are and who votes for it. obviously there are a lot of tremendous populations on the coast, and that is why they focus not just on the test cuts for families but also like the salt deduction and preserving some of the tax cuts that are trying to enact. lisa: you said this is still a big mat, however spread out over how many years and offset by tax increase, from an economic perspective, with offset taxes, what is the economic boost to the u.s. gdp? henrietta: i think the baseline assumption is that it will be paid for in part by itself, so

just immediately the feedback that they will incorporate would be somewhere in the range of $600 billion. when we look at other studies that of been generated, it is definitely in the 1.5 chilean dollar range of economic feedback, so there will be feedback. this is not pure infrastructure, so these are tax cuts that are delivered directly through the code. you will see that immediately, the earned income tax credit being expanded. it is all very plug and play. they are not trying to create new ways to get you money. lisa: do you think this narrative has been somewhat lost? some analysts talk about the tax hikes and that would have a pretty negative, fake asian on market action.

is that appropriate? are do you think this could offset that for some of these companies? henrietta: i don't think the tax hikes will be anywhere near the magnitude -- you don't have to look very far to find at least one if not seven senators who will not vote for this spending. if that gets struck down, a good chunk of deficit financing any really are looking at tax hikes. as i said, you can find that in the cash -- couch cushion. just making sure people paid what they, this section on expenses, you got another 178 billion dollars. you really do not have to dig deep to offset the cost of the

smaller bill and i think that is where the disconnect lies. jonathan: thank you, one of the best, i think. i know you agree. we keep going back to this, the what next on the cycle do we accelerated, the what next on the market. the what next down in d.c., this really opens things up that we could do something big down in washington. tom: again, gonzalez walking away. read his wikipedia, he is like presidential candidate timber 25 years ago and he is walking away. jonathan: you been on top of this literally since the election ended and we started to look ahead to the midterms, the closer we get to midterms, the closer we get the harder it gets

, is that fair to say? tom: yeah. i don't know if it is october or january, i don't know, but my major issue this weekend is the three of us have to decide our strategic plan to be financial influencers. this is something i have been studying. jonathan: i saw that story in the bloomberg this morning. some of them are making some really decent money. are you going to charge for content? tom: i don't know. do i do a cooking show? jonathan: i think you have to tell people why the best path forward is to stay in cash. every single meal that you prepare, you just finish by saying stay in cash. tom: that is good. i love it. jonathan: i don't know if you

need any qualifications to make that investment advice. tom: which pub are we going to? jonathan: from new york, this is bloomberg. ♪

jonathan: live from new york city for our audience worldwide, heard on radio and see on tv, i am jonathan ferro. rounding out the week with a marginal week of gains into friday morning. equity futures down three points. negative almost .1%. into the weekend, the focus on wednesday the 22nd a fed decision. the focus almost exclusively on the united states with fed policy front and center. have to talk a little bit more about china. looking forward to catching up with whaley -- with wei li of blackrock. jay pelosky as well. one of the quietest rallies in global equities come out of one country, japan.

the nikkei is up more than 10% since the back end of august. tom: i am glad you mentioned jay pelosky. i would mention a few other select ones. charles cantor was hugely optimistic on technology and what they are doing. right now the american economy we need to stagger to the fed meeting. neil dutta joins us. have you adjusted your q3 guesstimate for q3 or q4? neil: we have taken down q3 a little bit but i have bumped up q4. more momentum going into the fourth quarter. whether that is in inventory rebuilding or consumer spending to the extent that delta variant is a cause of any weakness in consumption. we know that is beginning to turn around somewhat. we are seeing things like travel bookings picked up, traffic

pickup. michael: -- tom: what did you get out of retail sales? i was overwhelmed by amazon like nonretail sales. i looked at all of the good news of american nonretail store consumption. what did you see ex challenges in automobiles? neil: even if you take non-store retailers out the number is solid. from a macro perspective, despite the spread of coronavirus, retail sales beat. that is the main takeaway. it stands to reason as these things come under more control that there is more room for consumer spending, particularly -- remember food and drinking places tend to speak for restaurants was flat in august. i would not of been on that

going forward. jonathan: you touched on the heart of something i think we need to talk about a lot more. the potential for re-acceleration through q4 and potentially pushing that out through 2022. can you focus on the numbers? neil: i think we are probably hitting a dead spot in the economy in august and september so that means 3% or three per five -- 43.5% growth in q3 but i think we will see something closer to 6% in the fourth quarter and that would give us a nice kick into 2022. for early 2022 we could see something close to 5%. i think people understand -- underestimate the extent to which -- particular because manufacturing wages -- i think next year, you mentioned what you are seeing and the markets.

i think next year will be a year of more synchronized global growth. when we have disparate outcomes globally because of coronavirus, you are seeing parts of a should go back into lockdown, i do not think they'll be as prevalent next year. we have more synchronized global growth that always helps manufacturing. i think that will tempt a lot of air out of the dollar. we know that the fed will be tapering. whether that happens in november or december. what is less appreciated is the fact that the fed's response function is likely to move in a more dovish direction next year as the biden administration impacts the fed with more dovish people. jonathan: that is not on enough people's radar right now, that conversation neil is having at the moment, this idea we could get a five handle next year. go to the efc function on the bloomberg. the consensus view is 4.2%.

then we talk about the synchronization we do not get this year. we came into this year looking for it. tom: no one wants to hear this, but i believe in the human condition at the number one thing i'm always seeing within inherent optimism is corporations adapt and adjust. canadian national, tci is going after canadian national. they were adjusting. jonathan: you mentioned the inventory built. can you put numbers to help understand how important that is as contribution to gdp for the next 12 months? neil: inventories over long periods of time do not contribute much to gdp. the net contribution works out to wash. but in the short run it contributes to cyclical swings to growth. you can see 3% or 4% in one quarter. i think it could be pre-significant. one thing is the ism customer

inventories index. what they are doing is asking manufacturing survey purchasing managers are inventory levels too low or too high? basically there is a record in terms of people telling you it is low. i think it will be quite substantial. the recovery can be fairly rapid if supply chains normalize later this year, which should be a good baseline as the rest of the world exits the current covid lockdowns. i think the proximate cause of a lot of the issues is covid. lisa: you got to that issue, the supply chain disruptions and how quickly that will be healed. a key issue as we talk about input price inflation. this is something a lot of people are watching. the idea if people need to rebuild their inventories companies need to at the costs go up can they pass the cost along to consumers that are showing increasing concern about

the higher consumer price? where you see that gap affecting margins? a lot of people look out to pick margins and contracting margins for s&p companies going forward. neil: margins will contract because margins are already at a record level. there is really only one way for them to go at this point. there is a big difference between a margin driven by weaker productivity and one driven by stronger labor power, things like that. that is largely the composition of this market space. i think it is more favorable than people are making it out to be. we have seen as a defeat increase in inflation. it is important to remember when we talk about stops and the companies in them, the inputs for some of these companies are also outputs for other companies and that drive stronger revenues.

many of which are expanded into capital markets. lisa: the reason why was bringing this up as i thought the most interesting chart of the week was gina martin adams pointing out the difference between ppi and the increase versus cpi and that gap has widened out to the most in years. this has been predictive of margins going forward and is sending a negative signal. what would you say to that in terms of a predictive feature? neil: i would say historically -- this will get technical. you are looking at different universes of companies. the ppi index is measuring the pricing power from a manufacturer or wholesaler. you are looking at a different universe of companies. it is not a one to one thing. when you live it up against profit margins it does not work that well historically. the margins will come down.

i do not necessarily think that is the death knell for equity markets. they are at very high levels. i sympathize with the idea inflation will be stickier for longer. i do not think that is going to be something that is catastrophic. jonathan: i said you hate that word that is being thrown around, stagflation, in a period like the one we might be going into. neil: we are not stagnated. one of the reasons why inflation is firm is because demand is firm. it is important to remember how covid affects the economy. the most obvious is no one is going out to eat, no one is looking to travel. that is sort of a first-order effect. looking under the hoods is what happens is people stay-at-home

order. that exacerbates the supply chain issues. then it says everyone has to quarantine -- then if everyone has to quarantine because cases are spreading, that exacerbates the employment side. you have supply moving down. what is going to happen when covid comes down? the opposite will happen. people will spend more of their dollars toward services and less on goods. that would give supply chain's opportunities to catch up and production will accelerate. as i said, i think covid is the story. to lisa's point, maybe that is a reason to look outside the u.s.. jonathan: have to leave it there. good to catch up. neil dutta of renaissance macro. i will be catching up with jay pelosky in just a moment. tom: how is he with you and not

with us? stealing one of our guests. jonathan: i'm pretty sure jay first came on the open. jay pelosky agrees with neil dutta on this and is looking to international, is looking for this more synchronized reopening in asia and he likes what he sees in japan. i said it the start of the segment, the rally in the nikkei has not cot many headlines at all. -- has not caught many headlines at all. tom: we see in emerging markets and china and all the angst over evergrande. jonathan: it feels like saturday. tom: i think barton biggs introduced me to jay pelosky. jonathan: how far back are we going? tom: way back. back when the red sox won. lisa: i think it was straightforward. jonathan: very straightfaced this wording.

-- very straightfaced this morning. it is ok. lisa, enjoy your birthday. happy birthday. futures down three. this is bloomberg. ritika: with the first word news, i'm ritika gupta. president biden is trying to speed up efforts to cut down greenhouse gases. he will hold a virtual discussion of climate change with world leaders who is concerned commitments are language between -- before a crucial united nations summit. china has applied to join the asia-pacific trade agreement. the u.s. once pushed it as an way to isolate beijing. donald trump pulled out of the deal. a number of american lawmakers have expressed concerns about china's efforts to join. officials in berlin have repeatedly warned the kremlin to stop attacks that have

intensified in the run-up to the german election. it suggests russian operatives are trying to disrupt or influence the vote. the german election is seen as wide-open. moscow has repeatedly denied medley and other people's election. paris has become one of the hottest cities in europe to finance -- everyone is beeping up operations. wages are rising. since brexit u.s. firms that used london as a gateway to single markets have used -- have moved to the continent. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> i would be surprised if you see $100 this year.

the demand is strong. tom: the iea managing the oil message. lisa abramowicz and i've paused to redo my book of the year last year. we do that with the new map. i cannot say enough about it. actually better than it was when daniel yergin first released it, with a really important appendix on the south china sea. daniel yergin, congratulations with ias. i cannot say enough about "the new map." i want you to comment on the entrepreneurial global reach of elon musk. i am blown away by space-x and the idea of putting four civilians up there.

how is a guy like you from the prize to the new map frame elon musk? daniel: thank you, tom. he ranks as one of the greatest technocratic entrepreneurs. so much of this is about technologically and doing two things, space-x and tesla. tesla has transformed the automobile industry. the shift towards electric vehicles and opening the aerospace tourism is amazing. it is more market driven. he is a unique figure. tom: does the bloom crew you fought against for decades misjudge the commanding heights of modern technology? daniel: they tend to

underestimate how rapidly things can change. they percolate along out of sight for 10 or 15 years when people work on things and then suddenly it becomes apparent. just to take energy, shale was 20 years in the making. it took 40 years for solar to come down in cost. when it happens it brings big changes. that is some of what we are seeing today. jonathan: there is a question -- lisa: there is a question of whether the death of shale or peach shale has been overstated. a lot of people think that is what we've been seeing in terms of the lack of getting oil pricing back online. do you think people have underestimated how quickly it could get brought back? daniel: this is an example where you see how markets and companies adapt. you have seen a stabilization of scale. the u.s. is still the strongest producer of oil and gas.

the nature of the industry has changed. the second shale revolution is about returning cash to investors. this was a few years ago. now there is modulation and in general a kind of caution about rushing into new investments, but at a time when you are seeing strong demand, either at the end of this year or early next year we will see world oil demand higher than 2019. lisa: how does this undermine this pledge to get to net zero? daniel: the pledge to net zero is one of the themes in the epilogue of this new map, the embrace of net zero, carbon by 2050. some are trying to push it to 2030. some save you try too hard you have a serious macro economic shock. the direction is clear. how you get there in a world

that is still 80% fossil fuels, the roadmap is not clear. the answers be not rhetoric or powerpoint, but technology. tom: i will not mince words. the appendix to the new map is the read of the weekend. by the book. read the book in the next week, but this weekend read the appendix as daniel yergin gets out in front on the south china sea. you go back in our history. you lectured at the war college. the idea of seapower as a projection. how do submarines project in the south china sea. daniel: this is at the heart of the whole issue. this is about the contest of the south china sea. is it an open waterway or is it chinese territory? yesterday they talk about a cold war mentality. you are seeing -- in many ways

biden has broken with trump but not on china policy. he is trying to mobilize a consortium of countries and these nuclear submarines are about the question of three passes through the south china sea and the fact of this growing polarization between china. you see it in technology, you see it in trade, and you see it militarily. lisa: does this prompt locate -- does this complicate the conversation on getting 30% green globally, -- daniel: china is 30% of the emissions. at the end of the obama administration china adopted this 2060 goal of zero carbon and it is reverberating throughout china. the chinese have said you cannot compartmentalize this. the u.s. is saying we can compartmentalize it, but china

says we have to deal with the other questions as well. i do not think it can be separated from everything else that is happening. tom: this is like the miss america pageant except we are doing it with daniel yergin. i will announce my book of the year next week. let's have miss america come out one last time on last year's book of the year. daniel yergin, the new map, my book of the year last year. it is a tour de force and onto the must lead -- the must-read of where we are right now. the appendix on the south china sea. professor juergen -- professor yergin, thank you very much i cannot say enough about the book. lisa: i want to say, i think miss america is a misnomer. i think we have to have a bloomberg surveillance book prints. we should have a new name. tom: i talked to our

editor-in-chief about this. it is a question of time and the crunch of doing it. what do we do? i get emails all over the world on the books to read. lisa: do take up all of them and read the last sentence? tom: i do that to some. i have levels of speed read. my book of the year i will announce next week is cover to cover. lisa: a hint. tom: robert kaplan, not one but two books. on the south china sea. marco polo's return and asia's cauldron. he goes all around the country along the south china sea. lisa: this is the area everybody is watching. when it comes to markets as well, down drift in the day will tom: we got through this without a data check. lisa: i'm trying to bring it back to the data and not comment

on south china sea policy. yields. tom: lisa is looking at yields. futures are negative five. stay with us through the day on radio and television. this is bloomberg. ♪

jonathan: good morning, good morning. a quiet end to a quiet week. negative four point. the countdown to the open starts

right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york, we begin with the big issue. in uncomfortable consensus. >> i would not be shocked if we have a correction. >> near-term, big wall of worry. >> we will see a midcycle correction. >> markets are bad it midcycle slowdowns. >> the 2% or 3% correction should pop up. >> there are a lot of risks. >> a lot of strategists have come out articulating pullback concerns. >> the catalyst will be rate negative earnings revision. >>