tv Bloomberg Surveillance Bloomberg September 23, 2021 6:00am-7:00am EDT
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consistently believes in the market and puts money into it, i think it will continue to move higher. >> everyone is wondering why u.s. equities are hanging in there, it is about constraints. >> the fed is usually constable hiking rates only if the economy is doing well. >> 100 days from now, i think we are in a better position. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jon: baby step toward tapering. from new york city for our audience, good morning. this is "bloomberg surveillance" live on tv and radio alongside tom keene and lisa abramowicz. i'm jonathan ferro. your equity market up .75% on the s&p adding to yesterday's gains come up 32 on the s&p 500. is it a baby step or major step toward the next move? tom: it was a major press conference. i was surprised it was not a snooze fest. he moved forward and you see it in the market reaction. the first thing i went to as you
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i know you did is the spread market. it describes the fed division between clarity short-term and a complete mystery out to 2004. jon: that's the big question. this morning a steeper but the big question is what happens after they have taper this. tom: exactly. jon: mid to next year, let's get it done. then what? tom: i don't know, we will talk to experts on this. miley question to michael mckee is simple, how far is the mark -- how far is the market call. jon: are you surprised on how much german powell advance the story? lisa: diane swonk nailed it, she said he is is among hawks and is a dove. i think that is a dissonance you see with the dot on the flex. his rhetoric, as he moves forward ts tapering but that does not indicate hikes. a lot of people clearly on the fomc disagree. jon: did you watch the fed
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special? that is what happened. tom: we are killing ourselves putting in an eight hour day and you are at home watching us work. jon: that is a compliment. lisa took a day off and she still tuned in. that means a lot. your price action this thursday morning, shaping up as follows on the s&p 500. we advance, it is a lift, advancing 32 points. yields where the lift too. we will spend a bit of time on this later. the bond market, flight yesterday, the whole curve shifting hire -- higher. and we are positive here bring positive .3%. lisa: i'm watching the norwegian krone had because the norwegian central bank become the -- became the most 10 traded currencies to raise interest rates. they lifted off of zero.
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we will see what the bank governor here on bloomberg television at 7:15 a.m. are we seeing a successful and graceful exit to emergency policies by central banks? are we seeing that effectively as we get to more hawkish rhetoric from the central banks? that has yet to be seen because of the yield curve flattening that we see on the long end. however, this does seem to be sort of a tantrum list process. 8:30 a.m., jobless claims, it is for 320000 and i am curious to see if we can get there. people are also looking for job creation which we will not see but because of the september 6 expiration of the enhanced on employment benefits. today, this i think a lot of people are focused on, evergrande has the interest payment on dollar denominated bonds due in 2022. it is unclear whether they will make it. china policy makers as reported by bloomberg have said please make it because there is a concern otherwise that people will view this as uninvestable
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sector. what does that in terms of policy support? they are not supporting paying up for this bond support so far. if you want the background of the ever ground affect -- evergrand -- evergrande affect, that will be tonight. jon: i prefer matt miller's name for special coverage. i think china has decided haven't they? tom: beijing, we are starting to see whispers of that. what i saw last night is about what i would think you are going to see, we are going to friday and what did they do between friday and monday morning their time? jon: no idea. from your perspective, is this a catalyst for something bigger or a symptom of something broader? tom: it is a massive symptom of whatever -- i have been in 12 to 15 years ago we had [indiscernible] great work there on the china disaster real estate, the whole thing.
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it is one part that but also one part this domestic management that president xi is trying to affect. jon: let's get to the hsbc securities had and head of u.s. affects strategy. great to have you back. let's start right here. >> big business car. -- card. jon: did the new fed sound like old fed in yesterday's news conference? >> i think you brought up a great point at the top which is we seem to have a bit of clarity on tapering. november feels like a kickoff and we finished middle to next year but to next year but beyond that, personally i was respond -- i was surprised we did not get more of a reaction from the market from the dollar coming out at 1.75%. the markets seem to'-- seemed to say may be, and they don't believe the fed can quite get there, and now, once we -- we will get taper out of the way, we know what the deal is and put much do already so the focus has
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to be on rates. we just don't have clarity there and it is weird, the lack of reaction where i thought it should have been much more like a bid for the dollar. lisa: the concern here is the dots might not matter, especially if these nonvoting members or people that could be removed and replaced by president biden. what you say when people look at the dots and say they do not reflect the main core of the fed? daragh: there will be a collective judgment across the fed, a range of opinions. at this point in time, the more hawkish dove might be reflect people off of the votes. nonetheless, there is a core of people on the fed who viewed the economy differently to the dove. even yesterday, chair powell, who might be amongst dove, he said we are all but done meeting the taper requirements. so if you have the
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2024, i do not think it is such an imagination stretch to say what could be perceived as hawkish now by that point in the calendar, that might seen as the center ground in the debate. lisa: what do you see going forward of what could cause a market reaction to the fact the fed is starting to exit from some of the most extreme accommodation of the post-pandemic era? daragh: i do not think we will get much drama if you like. i think there is a grinding stronger dollar story and john talked about a baby step. i think that is how i would view it. baby steps in the exit, still moving, and other central banks in the ecb -- thanks, like the ecb, are telling a different story. it should always be in the price but it is enough to get you grinding higher on the dollar or buying the dollar on every dip. tom: there are several doubts out to 2024 in the vicinity of
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1% or less. these are people that do not buy the vector described by the dot plots. what does the dollar do if we are in the vicinity of the seven dots two years out? daragh: well, then that should limit the amount of upside we get. tom: so you're limited -- i don't mean to interrupt but this is critical. you are limiting the amount of upside versus the gloom of an ever weaker dollar? daragh: yeah. i think so because -- look, it is a relative story at the end of the day. can we get to a point two years out where the fed has not been able to do anything much with rates? just kind of put in 50 or 75 or whatever. that most likely reflects an environment where everyone else in -- else is in the same boat. the ecb, two years out, they might be doing that.
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one dollar isolation gets you to where you described. i think it is a very risk off environment. weak global growth, i don't know where you would be out to get to that. tom: let's call it the steep major dots. i'm sorry, they are describing steve major. jon: the data out of europe this morning was really soft, downside price on pmi's. when you talk about stronger dollar, i want to understand from your perspective, you push that through g10. how would you play that? daragh: i do like it against the euro. i think the contrast is there an policy direction, as you say pmi's this morning. supply-side issues there but weakening of demand. i think that's a good angle. to tom's point about steve majors, yields forecast, i thing that fits neatly with our grinding dollars trawler -- dollars stronger -- dollar stronger view. in fx at the moment where volatility is low, just come in every day, you get paid for
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doing nothing for holding the dollar against the euro. i don't think anything in the data we have had this morning on those pmi's suggest the euro personality is about to shift in any great way. jon: u.s. pmi's due later this morning at 945 time eastern time, euro-dollar 1.1722. thank you, daragh maher, there. interesting when i got home yesterday. credit where it is due. to the new york times and steve lease been at cnbc. to work off of each other and address a sensitive topic with the federal reserve. tom: we will stop the show right now because this is wicked important as they say in boston. john, it almost had a tinge of an ecb difference. jon: i couldn't agree more. it is so important for the press to act as a pack together. especially on an issue like that. for many people working the fed, they worry about their access.
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some people might say they are doing their job but not enough people do. it's nice to see two reporters work off of the back of each other on a sensitive topic about fed officials investing in this market and investing in securities that the federal reserve themselves hold. tom: gina is working on a new look to the fed and will bring authority there at least as a better guitar player than i am. jon: i imagine that is true. futures up 31 on the s&p 500, advancing .7% of 1% -- .7%. there is a lift in yield market and treasury yields as well. the dollar is a little weaker today. the euro is a little stronger in the face of pretty soft data. euro-dollar 1.7 323, the focus on the fed yesterday and the focus on china and the news still to come. what is evergreen going to do with that interest payment to on the dollar bonds? we will talk about that. weighing in on the labor market from dartmouth college, looking forward to hearing from danny
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this hour. from new york, this is bloomberg. ♪ bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. more than 1.5 million households in britain are being forced to switch energy suppliers after two more retailers collapsed as prices soar. that brings the tally of firms going out of business to seven since early august. the u.k.'s business secretary said earlier this week that more companies would be in trouble as capped retail prices fail to cover costs. japanese prime minister yoshihide suga is warning about china's growing military influence ahead of the first in-person meeting at the so-called quad group. they told bloomberg the changing power balance in the end of threat to japanese prosperity. they join leaders at the white house tomorrow. aging said the group is engaged in cold war. the total hit to revenue this year for the world carmakers is estimated at $210 billion. that's the latest dire forecast from alixpartners, which says
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the industry will build 7.7 million fewer vehicles in 2021 due to the chip crisis. semiconductor availability worsen as carmakers exhaust stockpiles and other industries have no more to spare. the u.s. food and drug administration has authorized a third booster dose of the pfizer-biontech vaccine for at-risk groups, including people over the age of 65 and those at high risk of severe illness. it allows a single dose at least six month after the original shot. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. ♪
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their own ambitions vaccine donations and pledges. that is why today, we are launching the eu/u.s. vaccine partnership to work more closely together. with our partners and expanding global vaccination. jon: the president of the united states there. good morning tom keene, lisa abramowicz, jonathan ferro. your market up 22 on the s&p 500, advancing .5%. we pair the gains to this morning. let's get to the intraday picture. futures coming in just a little bit. we take a little dip, positive 24 but off of session highs off of the back of this story from the wall street journal. "china making preparations forever -- for evergrande 's demise." there looking to bail out the property developer asking local officials to prepare for a possible storm. this can a share the lead paragraph with our audience. chinese authorities ask local governments to prepare for the potential downfall of the evergrande group according to
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officials familiar with the discussion, signaling a reluctance to bail out the debt settled property developer while bracing for any economic social fallout from the company. that is the lead paragraph the mobile -- paragraph are from the wall street journal. two interest payments due on two bonds, one local currency, one dollar bond. we kind of dealt with the local currency issue yesterday. today, the dollar bonds, 83.5 million dollar interest payment. a some indication from chinese officials earlier this morning that they wanted this company to avoid defaulting on that. it would be a 30 day grace period for that particular bond but this morning the stories coming from the wall street journal suggesting china has a degree of reluctance here to step in. tom: no question about that. i would go as you mentioned the social tone of the work. in the bottom of the story, the last paragraph talks about to monitor so-called mass incidents.
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they are worried about the traditional chinese issue of people in protest. jon: the market reaction, there's not much of one is there? if you bring up the chart, just a little dip on the s&p, off of session highs. tom: but we took the bloom off. jon: a little bit, sure. given where we were monday morning, we succumb away on on this, we woke up at worried about what would happen with these interest payments and here we are sitting staring down the barrel of an $83.5 million interest payment for this company. we still do not know what will happen. lisa: and you clearly have the concern about contagion that china seems to be gauging and preparing for based on reporting. to your point our earlier when you were talking about who owns the u.s. denominated bonds, there was a bloomberg done -- bloomberg story that indicated even chinese officials do not know who owns these bonds and they are trying to figure out who they will he note -- will be negotiating with. we do not know the full story and neither do chinese officials.
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jon: china making preparations for evergrande -- evergrande's demise. up a half of 1%. tom: i have got a minority position in evergrande. jon: you made one move out of cash? tom: it is a barbell strategy. [laughter] check this pastor joins us for two short a visit -- too short a visit. you are only the one -- the only one in the room to get to the sunday talk shows. how do the leaders of this great nation get to the sunday talk shows of the calendar put in front of them? jack: the sunday talk shows will probably be a little tense this time. tom: a little tense. jack: monday is really a very key day and we are sort of building and negotiating toward that. monday is the schedule vote in the house on the senate passed infrastructure bill that has been back and forth between moderate who say they think it will pass and progressives who think they will withhold their votes and do not think it will pass. republicans now in the house are
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whipping against this despite a qassam republican support in the senate. monday, we will find out -- despite getting republican support in the senate. monday, we will find out how this will affect the other 3.5 trillion reconciliation bill or whatever that topline ends up being. between now and monday, there is this back-and-forth and forth between moderate democrats and progressives who both think they may have the leverage in this two track strategy with these two major bills. lisa: are we careening toward a debt to policy echo we have one week left and punch will came out today saying probably we have somewhat less than that. frankly, all congress members seem to be dragging their heels. what is your take? jack: we have more than a week until the actual effective deadline for the debt limit and potential for a default. this is tied to a government funding measure. we have one week until -- thursday night of next week to try to avoid a shutdown. the bigger issue is the debt limit in terms of the economic
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impact it could have. that deadline is probably around mid october if not a little bit later. it is not going well here in washington. the democrats are insisting this should be a bipartisan track. republicans need to support it, they have made clear the votes are not in the senate. the question is can they hold a vote that fails and go back and change the reconciliation instruction in time to do it in a partisan way. that is accomplished process that could be time-consuming. lisa: this morning, people are focused on china and the fed and i'm wondering from the fed perspective here, how president biden read the press conference yesterday, the notice that perhaps they will taper as soon as november. does this give jay powell a greater chance at another term? jack: i do not think the reaction seems to be that was a fundamental shift in anyway.
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the mainstream democratic position has remained pretty favorable to jerome powell and nothing really has changed there. in terms of expectations for interest rates and the broader economic outlook, the way the debt limit fight is going and how poorly it is going has dominated the conversation in washington. as far as that could go, it didn't entirely fly under the radar but there was not a significant change in terms of peoples' expectations, at least the people in congress i have been talking to. jon: always great to hear you. we have to keep everybody on top of a developing story. let's call it that. your bond market, yield a higher, equity market is still big, equity futures of 23, but we are off session highs. why? we are still up off of the back of this wall street journal. just to repeat what i said earlier for people tuning in, china making preparations for evergrande's demise.
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beijing is reluctant to bailout the most heavily indebted property developer and is asking local officials across the country to prepare for a " possible storm." that quote from the wall street journal on a day where we have an $83.5 million interest payment due on a dollar bond of evergrande. tom: i still think it is social. i think the financial focus is great, it is bloomberg's focus, but within the article, it is a social mandate. the bloomberg article out an hour ago alluded to that. are we up? i think it is off of the fed meeting. it is fascinating to hear what the full cases after what we heard yesterday. dovetailed into whether evergrande is a discrete one-off event or something larger. jon: you say it is social but that is the reason the growth model in china has not changed. isn't evergrande in the situation? tom: absolutely it is. it's the third rail of china, keep the troops employed at the margin.
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jon: live from new york city this thursday morning, good morning. we have a little work to do. equity futures up 26, advancing .6%. shaking off china headlines. the nasdaq, up 99, advancing .6%, up 97 the russell doing edits, up .2%. are you surprised by how well the market is taking it? tom: no. jon: how well the federal reserve guided us to this moment? tom: they do not believe the hawkish story. i think that is what it comes down to, the fed is a hawkish tone and the regional presidents and the markets are saying no. jon: in the bond market, twos, tens, and 30's look like this. yields higher by three basis
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points. yesterday, yields lower at the long and. tom: look at the 30 year bond. jon: down by three basis points. still sub 100. that spread is coming in over the last one he for hours. we can build on this to the next now. setting us up for the discussion through to down bloomberg tv and radio. i won a finish and china. here is the story for evergrande. two bonds in two interest payments due. it looks like we might have dealt with that. that is the indication yesterday. the dollar bond, $.29 on the dollar, deeply distressed. deeply distressed debt over evergrande. $83.5 million interest payments to today, no idea what happens with that. working off of the back of the wall street journal story at 10 to 15 minutes ago indicating there is a degree of reluctance on china's part to step in and sort this one out. to inject too much money and bailout evergrande. does not look like that will happen here. what will happen with the
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interest payment, i don't know. the market seems to be taking a well compared to monday when we started the week. tom: and on this thursday, no question about it, getting news flow out of china and we will monitor that today and tomorrow. stay with us on radio and television. for news from china that can affect global markets. this is a treat. after what we observed yesterday in the most different press conference, david blanchflower joins dartmouth college, the former bank of england monetary policy committee member, and definitive on america's past, present, and future wage curve. i want to talk about the new social fed. they are oh so sensitive about labor. can that be codified or is that a one-off for the moment, the idea powell and the fed can manage a new wage curve to better equality? david: we will see. i am thankful they are starting to try to understand the labor market.
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not least because between 2015 and 2018 they clearly did not. it is pretty hard to understand exactly what is going on in the labor market now, not least because wage growth does not give you a good steer. we are in adjustment mode. i would like to think of this as a hurricane hits an island and the price of plumbers rises for a while and roofers and carpenters. then there will be an adjustment. these economies are adjusting. i think the sense yesterday was, looking at the dot plot, it was as if the members of the fed really felt they knew what was coming. they have no history, we have no clue about how the virus and vaccine will go, and especially long-run changes in behavior. these will all have big impacts on living standards and on the labor market. we do not know what portion of
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people are retired and how people will do in terms of the remote working. i think it was a lot of wishful thinking. you said it well, i think the slight move to be more hawkish was not based on real evidence, especially talking about china today and we don't know how that is spread. i think this is a little bit of a world of we know more than we do. tom: david blanchflower here and i will suggest both of you are less hawkish than many. what bible or textbook on a hawkish -- are the hawkish crew preaching from? david: from 1975. with you guys, i have probably, over the last 10 years, spent an awful long time trying to talk to people about whether inflation was coming. i do not know what book they are reading from. this looks awfully temporary to me. in the u.k., in two months, we saw last month inflation fell
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from 2.5 to two. this month it rose to 3.2. it is driven by all of these base effect. it looks like, when you look at the data, as far as i can see within 18 months or so, the evidence his inflation will be below the target as this stuff drops. i do not know -- back to your original question, the assumption is the workers will be able to push for huge wage increases. owing back to my island analogy, when the roots come off, the people -- roofs come off, the people that make roofs, their wages rise. this is a disequilibrium shock. this makes no sense to me. i think they're in a dream world. jon: i'm looking at their inflation projections from the december 2020 meeting. they were looking at 2022 at 2%
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basically, 2023 at 2% basically i likewise for 2021. they missed this in a big way. david: i agree. jon: 3.3 next year, 2.2 in 2023. david: go back to 2008. think about july, interest rates were thought to be 5% in the next three years and interest rates expectations were going to remain where they were and inflation would remain at 5.5%. so a shock comes and the other temporary rise and inflation is nothing more than 12 monthly changes. you drop one and add one and as time goes on, as you have a big shock, that drops out. the crucial question is are these temporary things and secondly do they permanently change your view about what is coming on 18 months? policymakers like me, i always think about what will happen in 18 months. is there anything here that tells me inflation in 18 months will be higher than two?
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the answer is zero. jon: ultimately i think it comes out to reaction function. they told us they are an outcome-based fed. is there anything in their reaction function you disagree with? david: these are not normal times. if you are seeing a steady and regular rise in inflation and you respond to that, i think that will be one thing. i think we have such a complicated us mint that the sensible thing for the bank of england to do is wait and watch. and act then. i think the way you should do it is under a scenario, one will do this. and scenario two will do this. i think that is the way to go. we are not in normal times. lisa: are we talking about right hikes also a tapering? you think it's a mistake for the federal reserve to taper their bond purchases in november? david: based on the evidence, i
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think the answer is yes. i think they should be waiting and seeing. if they do it a little bit, ok. the signal is there. likely in six months time they might have to go in the other direction. that's the question. what is the evidence to say you should do that? you have this risk from china and we are going to talk about the bank of england. what we see today is growth slowing, the pmi's coming out this morning, and in england, the u.k., france, the euro area. growth is not taken off. -- taking off. we are seeing actions by fiscal authorities cutting balances of people, taking off people who have been furloughed and they are about to raise taxes. so remember central banks have to compensate for what fiscal authorities are doing. the bank of england is sitting in a situation where fiscal policy [indiscernible] that is not a relevant to their decision. a lot of it depends on the fiscal authority. lisa: to me, there's not a lot
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of evidence frankly the 120 billion dollars in bond purchases is helping the labor market. it is actually getting people higher wages. you see a clear connection on other economists that have come on the show? david: the story is obviously the question is what is the counterfactual that you are comparing two. people say if you say it is not clear they are doing things, it is hard to measure that. we are in an adjustment part continuing from a virus that had the economy fast and deep. so we learned from 2008, if you look back, we did too little stimulus forcing things on the central bank. i think the answer is you have to allow an economy to adjust. if you look at wages, wage growth -- a good example in the u.k. today, the national -- office of national this this takes says wage growth -- national statistics says what
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wage growth is and that -- and i don't agree with that. we see basic facts and people coming out of furlough. we have never seen anything like this. the job of the central bank is to allow the economy to recover and try to get back to normal. all the areas are on the downside. the errors the fed made in 2015 was to tighten too soon and the same errors made by the ecb and bank of england tightening and having to reverse itself. as long as they are prepared to reverse themselves, they are fine but it looks like you should wait and watch and allow the economy over the next six months to adjust and see what happens. jon: good to have you back and good to have you back at dartmouth. does that feel good? david: it's great. one of the stories -- it is always great to see the smiling eyebrows again. [laughter] it is great to be back with real-life people. it's great. tom: do you still throw stock at
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them when they are wrong? or is it like vaccinated stock? david: we do not do stock anymore. i zoom -- chalk anymore. i'm too exhausted trying to speak for two hours. jon: i know how the danny blanchard class -- danny blanchflower class works. [laughter] david: i like to say they are educating people to be right. jon: is that right? tom: i have had the honor of lecturing with the professor. they are sitting in the aisles for the words of danny blanchflower. jon: thank you. from new york city this morning, good morning. equities of 25 advancing .6%. this is bloomberg. ♪ ritika: with the first word news i'm ritika gupta. pakistan's government says the
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international community should come up with a roadmap that lisa diplomatic recognition of the taliban. in an interview, the country's foreign minister says the plan should include incentives if taliban leaders failed to meet requirements. officials say pakistan is in sync with the world in wanting to see a stable afghanistan. new cdc data shows the number of americans receiving their first dose of covid-19 vaccine has dropped significantly in recent days, worrying health officials that flu season -- as flu season approaches. the seven day moving average of daily first doses was 217,000 by the end of last week. first toast immunizations -- last week first toast mean innate -- first dose immunizations. the delta variant disrupted the country's plans for a gradual reopening. singapore has one of the highest vaccination rates in the world with 82% of the population fully
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inoculated. astrazeneca in a start up will work together to fight cancer and other diseases by developing a next generation of messenger rna technology. astrazeneca will make a sizable investment in a company and plan to develop both vaccines and therapies. global news, 24 hours a day, on air and on "bloomberg quicktake," powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪ this is bloomberg. ♪
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morning. , lisa abramowicz is back and i'm jonathan ferro. in the united states on the s&p, advancing by 21, yields higher up to basis points, euro stronger in the face of weak data. euro-dollar is 1.1717 advancing .25%. there is dollar debt and interest payment due on evergrande dollar debt today. $83.5 million worth. earlier, we had a headline from china telling evergrande to avoid near-term dollar bond default. we had a story from the wall street journal with tom making -- journal with evergrande making preparations for its demise. tom: we get expertise here as we mentioned the social angst of china. let's look at the financial realities. we have a true expert on that, damian sassower joins us from bloomberg intelligence. chief of emerging-market.
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damien, you mentioned a couple times in the last two to three days the knock on effect in malaysia and indonesia. i would note to indonesia 615% out 10 years is not really -- 6.5% out 10 years has not come down in price. why is it affected by evergrande? damian: you are probably looking at the local currency bonds this time. i can speak to that. the reason is those local liquidity issues when you talk about the country level within these countries but we have to take a stake -- we have to take a step back and look at it. last night, i was talking about what a restructured evergrande would look like. property unit, electric vehicle unit, commercial property unit. today, the entire room or got blown up in our face. now we are looking at the chinese government telling evergrande we do not want you to default in the near term, do anything you can do not to fall.
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make your payments. at the same time, there are a lot of issues going hand-in-hand with that. as jon likely points out, as numbers are due today, it is something 83 million, subject to a 30 day grace period, that is not a lot of time to work out restructuring or bailout. that is where we are today, back and forth we go. jon: how to the dominoes fall? i've been told great stories over the years about em and talking about the market side of what -- market side of it, there was a great story of people who sold mexico. i seek a was a big issue. then they were asked what are you doing now and they said we are selling chilly. why are you selling chili? because we have already sold mexico. [laughter] sometimes the dominoes fall in a way that is unexpected and does not make sense. from an em investor like you, how do you think these dominoes are set to fall? damian: we are all lemmings at
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the end of the day. the malaysia and the philippines are closely tied to china from a financial value. we saw the initial spread go out to 42, and it continues to widen. we will see malaysians and philippines see impact. on the back of that, it is indonesia. the rest of the southeast asian block. along the way, the commodities like brazil and south africa are going to feel a bit of the pain because china is their biggest client. if you're looking for the blueprints on how it will play out through the markets, that would be mine. right now, the uncertainty surrounding this -- and you have to dig no further than asia is not happy that all of these corporate 20 the united states and they basically told her no. they said we didn't tell you to
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raise money offshore in dollars. this is what you get when you get that and we do not care about your shareholders that much. jon: let's build on what you said. you think chinese officials whether they want to or not might be about to cross the dollar bond market for chinese companies? damian: that is definitely something on everyone's radar, mine included. that does not mean you can crush it altogether. i've seen many markets crushed in the u.s. but here we are all the way back in terms of size. the belief something is squashed into oblivion and never comes back and short-term memory, i think there is plenty of room for come back and room for the investors for a long term rise and play the market well. my goodness, this is definitely a cause for concern. lisa: there seems to be a philip out -- a philosophical shift by chinese regulators broadly in terms of where they are focused.
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are there signals they are rejecting the capitalistic model and welcoming international flows in general on a broader sense, based on this move basically saying we do not care if you default, it is not us losing the money. damian: they should care because the same investors are the ones they want to bring onshore and fund the government's own operations. government bonds, when we've talked about in the past how important that asset has become as a diversifier, as a balance for fixed income portfolios internationally, adding to global bond industries, how they help on this, it goes on and on. it is almost like they are talking out of to size of their mouth. they want offshore investors but one thumb in a way investing in assets they deem socially viable. i think that is something you have to take an too. lisa: are you surprised by the market reaction or lack of more broadly given the fact that even china is examining the potential
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systemic risk of evergrande's failure? damian: i'm really not. u.s. dollar investors in their truest sense have very little exposure. chair powell said the amount of direct exposure we have to china evergrande -- i wouldn't want to say we, it is not that much. the reality is you need to be concerned about it for the right reasons because the systemic blowback of if china is unable to stem the bleeding, if there liquidity injections are not enough to stimulate the economy, we will feel the brunt of that globally. i think that is one thing chair powell was right to disregard. tom: are you like the most -- were you the most insufferable risk player when you were a kid? did you let anybody win? damian: i played strategic -- i played stratego. lisa: my boys like that game.
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jon: damien of bloomberg intelligence, thank you. you can look at this as a single credit story and decide whether it has systemic risk or not. that is one exercise. you can look at this as a symptom of a broader shift in china, a changing growth model, away from property. i think that has profound consequences for the market, a broader macro story that has profound consequences. tom: i agree it is broader macro but it is a social angle. that is what i will be watching. this is thursday and friday and into the weekend. to me, it is much more the social aspect of the new china. jon: damian sassower there. good to have lisa back. i'm jonathan ferro and in your equity markets, we look like this, up 22 on the s&p, advancing .5%. yields are higher vibe couple basis points at 1.2343. as we ran out the wii, you will hear from the chairman tomorrow,
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♪ >> typically the fed hiking cycle does end up killing devalue trade as well. >> as long as the public consistently believes in the market and consistently money in it, i think it will continue to move higher. >> the fed is usually comfortable hiking rates only if the economy is doing well. >> i think 100 days from now, we are in a better position. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: what a week. 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 market advancing 0.5%. we are taking a couple of things very well, the federal reserve and the story out of china. tom:
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