>> the great exit from these emergency policy settings has begun. tiziana -- >> the fed is moving toward exit. >> the 10 year treasury is right about where it should be based on where we are headed. >> already positioned behind the curve. >> i would say inflation is running up at a pretty furious clip. >> this is bloomberg surveillance. jonathan: the bond market making some noise. from york city to our audience worldwide, this is bloomberg surveillance live on tv and radio. i am jonathan ferro. your equity markets down a 10th on the s&p. your bond market yields approaching 150. tom: we have an important guest

coming up. i am going to go away from red and green on the screen and say all sorts of levels moving rapidly up to technical breaches on this monday. it is very exciting. jonathan: how loose will any tightening be? tom: i am going to go the central bank analysis. i think it is a little bit washington, a little germany. maybe it is just global economics. i go to oil at near $80 a barrel. it is a game change monday. jonathan: down in d.c., the policy effort, speaker pelosi for later this week. lisa: it is amash -- a mush here in central banks are not necessarily tightening policy any.

-- any time soon. some of these moves are incoherent. if the fed were going to let the economy run hot with a policy response, why is it the yield curve steepening more -- white is -- why isn't the yield curve steepening more? it could be five tens. there is not necessarily significant steepening akin to the fed is going to be loose with their policies with high inflation. tom: i was getting my morning tang and i looked at three technical studies. we have moved rapidly up to a trend break out resistance. we are not there yet. jamie dimon's waking up this morning going, yeah. jonathan: it depends on where you pick on the curve. the belly of the curve is where this rate hike debate is playing

out. lisa: this is the question. can the fed afford to remain as loose as they have promised? jonathan: you can take your pick to explain whatever story you want to explain this morning. we have work to do, equity futures coming in. we are negative almost .1%. yields are higher by three or four basis points. tk, very focused on the oil market this morning. we are at 74-82 -- 74 dollars $.82. lisa: we are going to hear from one of the many fed members speaking through the week,

through the day. i want to hear what he has to say on the idea of supply chain disruption, higher oil prices, inflationary input, and how much is slow growth in a way concerned about. this is interesting in light of the near 1% yield on five years -- five year bonds. you can see the yield climbing to some of the highest levels we have seen going back to february of 2020. talking about the legislative agenda, house speaker nancy pelosi said she will bring the info structure bill to the floor. -- infrastructure bill to the floor. a lot of progressives will not look at this until there is an agreement on the $2.5 trillion plan. jonathan: we have a start with a fantastic guest this morning, head of the blackrock institute.

you have this framework, the new nominal. the conversation we are having come out once we start raising interest rates in america, maybe the back end of next year, house people the policy path be? -- how steep will the policy path be? >> i think will be the shallowest we have seen in decades. we have to go back to may be the 1950's or 1960's to see the same kind of shallow path i think we are going to see, so nothing of the recent cycle is a guide. much shallower. we have seen ongoing evidence. i think they have been deliberate to try to separate the taper discussion. tom: blackrock and your team say you are pro-risk. you mince no words about it.

how does this affect corporate thinking with a higher yield regime? with steepening of the curve and on and on? how does progress come to corporate action? jean: the path ahead for equities and risk assets is getting narrower. you look at the chart of the s&p . you start in january 2020 and look at it. this does raise questions. i think we are going to be an environment where markets will be more primed to look at risk, but in that environment we still think the fundamentals are constructive for the time being and as a result that is where the probe risk is coming from. lisa: how concerned are you with what is going on in china with what some people are calling and increasing energy crisis, especially as the regulators try

to clamp on fossil fuel usage ahead of the olympics? jean: the broader story in china is the direction of travel, the greater role of social objectives, politics over economics. we should all of knowledge that. however, we have seen a very steep decline in activity through the course of 2021, from 80%. that is a pretty steep decline. i think they cannot ignore the growth. that makes sense. we have been a neutral on chinese equities for the last few months. but start to think now it is time to dip our toback in the

chinese equities given we see some using -- our toe back in the chinese equities. lisa: can you elaborate? where do you see is a safe place to park amid ongoing uncertainty? jean: we have just broken out chinese equities for the first time in june on our outlook. we are dipping our toes. you see a 25% on the performance of the chinese equities over u.s. equities for good reason. that is why we are neutral. at the same time, while there is a lot of uncertainty, that means the risk premium has increased considerably. i'm thinking about broad market

exposure. that broad market story. jonathan: how do you reconcile your bond market call, your federal reserve call, with where you want to own and the equity market domestically in america -- in the equity market domestically in america? jean: we think rates are on the way up on the 10 year. our conviction has not waned despite the fact that it has been stubbornly low over the last few months. that said, we are going to see a shallow normalization of policy rates in the u.s. and some inflation coming. inflation coming through with very low rates, it is a real rate environment that is very negative. that will be supportive of risk assets even in the u.s..

we are neutral on u.s. equities. we are going to hear more this week. lisa: i want to make that clear. you care about the debt ceiling? jean: we think headline risks are on the debt ceiling. we put out a note where we say there is going to be noise or in the market is prone to react to noise -- noise. the market is prone to react to noise. we have uncertainty around corporate taxes and the like. jonathan: jean boivin trying to reconcile thoughts from the bond market to the federal reserve and where the equity market you want to sit. tom: we strive for clarity of notes. blackrock and mr. boivin have

clarity to be pro-risk. they push against the accumulated gloom. jonathan: what you make of that story, the high tolerance for inflation they are anticipating? tom: it is a level where we are historically and we are far below any form -- we are miles from neutral or restrictive. john williams will address that today. jonathan: without a doubt. we will hear from the chairman of the federal reserve tomorrow. yields approaching higher by three or four basis points. we are negative a little more than a 10th of a percent. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta up. and germany -- in germany, the

party won a narrow victory in yesterday's election, calling on the greens and pro business democrats. armin laschet insists he will also seek a deal with the greens and free democrats. the head of the cdc warns parts of the u.s. health system are in dire straits because of the spread of the covid delta variant. idaho and alaska hospitals have big gun to prioritize -- begun to prioritize who is treated. youtube says free speech is a core value. youtube removed some navalny videos after russia's government's request. >> we certainly get request from governments and we look and

consider why we are getting the request, what is actually happening on the ground, and based on different factors we make a decision. those are not always requests that we honor. in certain cases, we will honor them in that country. ritika: she declined to comment on specific requests from the russian government. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> we have seen large numbers of individuals and counter --

encountered at our border making a claim for asylum for humanitarian relief, which is a law. this is nothing new. it spans many years. it spans different administrations of both parties, and it speaks to the need for legislative reform. jonathan: that was al hundred mayorkas -- alejandro mayorkas. i'm jonathan ferro. this is bloomberg. here is your equity market price action. we are done by 0.06%. there is something happening in the bond market, yields up by three or four basis points here in kenya line that up with what is happening in the nasdaq? futures down half of 1%. euro-dollar, earlier at $1.17.

if you're wondering what happened in europe over the weekend, it is down about .1%. the stp is going to -- sdp is going to spend a long time trying to put a coalition together. it is as you were in germany for the time being. tom: the coalition focuses on the development of the left with mr. scholz. that is a mystery, to say the least. we usually do a different theme in washington hour to hour on bloomberg surveillance on radio and television. we break that rule this morning because it is so important to look at our congressional political experiment. emily wilkins joins the conversation this morning. i want to look at the whipping of votes. who is doing the whipping of

liberals in congress? emily: that is a great question. it seems there is not a giant with -- whip operation underway. lawmakers have been speaking to each other, but at this point it is not clear exactly how many progressives will or will not vote for an infrastructure bill if they do not also bring the reconciliation bill to the floor, something that is not possible before the penned -- planned vote this thursday. there is a huge question around that as well. how many republicans might wind up voting for that bill? i had brian fitzpatrick, the head of one of the big backers of this bill, saying he expected 10 to 11 republicans to vote for it with five or six more that is still a narrow margin for speaker nancy pelosi. tom: tomorrow -- to borrow from

the politics of the great movie "casablanca,", they have to go out and round up the usual liberals. what speaks to the modern liberal? emily: they rounded up the usual suspects and still did not get the one person who wound up doing it in "casablanca." tom: film expert emily wilkins. emily: it is a difficult balance here because you not only have to manage the progressives but the moderates. question is whether they are going to try to bring the reconciliation passage -- package to the floor to try to appease the progressives. in that case, you are going to lose some moderates because they are going to say this bill is $3.5 trillion. we know that is too big to go through the senate. there is still in number of debates within that bill.

they have yet to be resolved. it is trying to balance these two groups and figure out some sort of solution. to an extent, it is going to be try to convince progressives that even if they vote on infrastructure without reconciliation that reconciliation is coming. that is the biggest fear for progressives, they pass infrastructure now and moderates and centrists say we have done enough and they never wind up passing climate change provision, medicare provisions, and health care provisions in general. lisa: it seems to me that nancy pelosi expedited the timeline for this by setting a thursday vote. why did she do so? emily: moderates demanded consideration of this began on the 27th, so that was one thing. polluting you she would be in trouble, and danger of losing those if she did not do it now. the other component is this infrastructure bill includes

funding for highways that needs to pass and will run out on september 30. that is a hard deadline. this is usually a bill that passes annually, something there's usually a lot of support on. it is not very controversial. gus was know if they wind up holding back this funding as the deadline approaches that could cause issues for them in their districts and among their constituents. jonathan: thank you. in germany, the csu giving a postelection briefing, saying conservatives have no mandate to form a government. laschet believes they are first in line, and that is the case this morning. tom: sdp is comfortable with the left. who is the csu comfortable with? jonathan: this morning it is about the fdp and the greens. what we're learning from the fdp is they've decided to start

talks with the green party. to what degree can the fdp work with the greens? they will be the kingmaker for the spd. tom: i am confused, like i was yesterday. can we admit that yesterday and this weekend was magical for global sports? what i loved was the angle of the sun and just the beauty of it. jonathan: i love that you skip from german politics strata soccer. dressed strata -- strata -- tom: this tops it all. this gentleman is 87 years old. this guy was a mediocre pro ballplayer and he has become beloved starting with the iconic ad of the 1970's for miller

lite. go watch it. you will love it. iconic with the milwaukee brewers. he goes out of throughout the first pitch using a pitch machine. that is classic. jonathan: that is what i would do as well. i saw one of the first pitches recently from an m&a fighter -- mma fighter, and it was shocking. to avoid that, i probably would use the machine too. tom: we have to sit down and watch a miller lite commercial so i can explain how this guy completely took america and the 1970's with a 32nd spot. jonathan: we have not watched a baseball game together. what happened with the red sox? -- tom: baseball is great. the padres are out. it has been a magnificent season. the most important thing i saw this weekend, another record length of baseball games. i love the way premier league does it. jonathan: just get it done.

tom: it goes on forever. jonathan: how many games a season? 200? tom: 162, but i have watch may be one full game this season. jonathan: from new york city, this is bloomberg. ♪

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jonathan: live from new york city on radio and tv, this is bloomberg surveillance. we are down five on the s&p, down .6% off the back of three decent days of gains on the s&p 500. we pull back just a little bit. our attention is on the bond market. it is about where we were and where we are. to use -- twos are back to 28 basis points, yields higher by a basis point today. we were in the low 60's and early august. they are pushing on percent. tends -- 10s are pushing that.

we are starting to price in a bit of a hiking cycle here, starting to have the conversation about how loosening potential tightening -- how loose any potential tightening will be. that is the debate for the bond market this morning. tom: that is the partition right now. it really is two parts. the bulls are saying calm down. jonathan: just for you. let's finish on this, crude. five weeks of gains. $75.11. i have to go back to the call from bank of america with the triple digit crude potentially

in the middle of next year and wondering whether we get it this year through winter if we get a cold winter. the power story right now -- tom: here we go, blaming the weather. jonathan: -- in europe is phenomenal. tom: are you going to be a truck driver in the united kingdom? jonathan: it takes a while they are thinking of bringing the army in to help pick the process up, so maybe you can come with me. maybe we can do that together. we can train to be heavy goods vehicle drivers. tom: we do not have time right now. later. jonathan: you and i can go back together and become truck drivers. that would be something. here is your cross asset price action. good morning. >> i want to pick up on where you left off. energy is the story today. pretty much everything in the oil space is higher.

a lot of that has to do with the energy crunch around the globe. at one point, it looks like crude was ready to float with -- flirt with $80 a barrel. at the bottom of your screen, that is up about 1.8 percent, that etf setting up for its fifth straight day of gains. we talked to some of the data last week. you saw a 21 million barrel drop in global supply among global inventory. that is a huge deal. a lot people are having to switch to oil to keep factories up and running, and a lot of strategists say a push higher in oil could continue. i want to stay on the energy theme. one thing that has flown under the radar is the global energy crunch in china. there is a huge power crunch over there. we had a report over the weekend saying china had mandated a

shutdown of several production facilities to meet certain consumption targets got to keep below those consumption targets. we are seeing apple, huge manufacturers here that have big operations in china being affected by it. all of those shares are lower. we are waiting on confirmation from u.s. companies as to how this will affect production. for a lot of these companies, it is not only about primary production. intel has a huge packaging facility there. even if primary production is able to keep up and running, some of that end production could be affected by this. tom: a really interesting close as we move into earnings season. what we have seen is simple here and on bloomberg intelligence. fedex cannot forget about revenue.

amazon, still overweight, not revenue dynamic. are we forgetting revenue as part of the story? >> i do not think we are necessarily forgetting revenue because the stock market is still rising along with revenue growth. what i think is happening is we are stirring to see certain stocks in the stock market getting picked away at as a result of margin pressures eroding some revenue growth when it comes to the bottom line. we have a third of s&p 500 companies experiencing some degree of pressure, whether earnings related commodity price related, cost of goods related. those companies have gone through something of a margin squeeze and are experiencing a different reality than the rest of the index, where revenue growth is still rising. tom: this is critical. you have stocks that are perceived as having revenue growth and there is a wall of stocks, hundreds of stocks where

the revenue growth is not good enough. what do those companies do? gina: they have to manage their costs. what we have experienced in this recession is anomalous relative to past recessions. it is almost impossible to manage costs when the labor market has recovered as fast as it has. we might start to see tax increases adds to cost pressures, reducing overall margins as well. companies are forced to manage costs. they have to lean on technology. they have to find ways to create greater and greater market share gains. maybe they merge. they find ways to make up for that added cost pressure. tom: they need synergy. jonathan: looking for a merger in north london. i doubt it would be a merger of equals right now. here is a quote from morgan stanley.

based on our economic forecast, this spread should decelerate incoming quarters, which suggests margins should contract, not expand. let's see some numbers on this. are you looking for margin contraction? gina: i do not think we will see margin contraction, but i think we will see margins at a lower level than they were a quarter ago. we saw this in the second quarter. we started to see companies record margins still high relative to long-term perspective but not as high as they were in the first quarter. that pressures want to continue into the third quarter. what we are seeing across the index at large is half of the companies are experiencing downward estimate revision. net income margin is still intact because companies are still paying low levels of tax and low levels of interest, but that will likely change into 2022. for now, you are looking at a 50-50 split, some companies

experiencing too much pressure to satisfy analyst expectations, other companies able to pass costs on. lisa: we get $100 a barrel for oil by the wintertime -- what does that do to the s&p at this point? gina: it damages some of the cyclical calls. industrials and materials in particular, those companies like the fedexes of the world or other companies that have high exposure costs will likely experience greater compression going forward. and then the consumer space. consumer spending on energy is low, but for some lower income households higher energy expense is going to go through to higher transportation costs, which will result in pressure on retailers, consumer staples companies, even some of the discretionary space to mount where energy costs are competitive with other

discretionary spending. lisa: are you saying higher oil prices threaten the cyclical trade that a lot of people have leaned back into? gina: they do, parts of it. higher oil space -- prices are great for the energy space. higher oil prices might be ok for financials where we continue to see some budding debt growth. it creates this divergence within the cyclical space as opposed to damaging the entire thing. you have damage on some of the consumer materials and industrial companies, while it could benefit energy and financials. tom: -- jonathan: thank you. this conversation on margins and cost pressure, labor costs, power costs, transit costs, take your pick. costs are up. tom: costs are up. we have seen it before.

revenue comes to the rescue. to the analysis of a two part market and do you want to pay a premium for identified revenue gainers, that is the chess match out there now. jonathan: where in this market do you want to sit? lisa: that is the game with respect to inflation and input prices. is this a short-term burst or a slowing of growth in the long-term or something that could threaten the longer term with a tightening cycle? jonathan: the power issues i find to be amazing. reports out of asia this morning that apple and tesla have stopped production at some facilities in china due to a power crunch. is that going to be the issue? tom: i observed it on a friday night. i was in an apple store on a separate matter and it was thunderous to see how crowded it was. jonathan: demand is great. can they match it with supply?

we saw it with nike last week. tom: our audience tearing up over the light filtering in from the southhampton saints. we have a guy who emails in and says he was tearing up as well. tom: -- jonathan: he is not happy. he said this was not a great weekend of sports. my jets got destroyed. my mets lost five straight. qpr give up another lead and lost. -- gave up another lead and lost. tom: i watched the entire match. jonathan: equity futures down a 10th. this is bloomberg surveillance. ♪ ritika: in germany, it may be months before there is a clear

picture of who will lead the next government. the centerleft social democrats won in a close election. armin laschet says he plans to head to the next government. german parties are discussing the next step. china will take steps to rein in internet companies, curbing monopole is stick -- mono bull -- monopolistic behaviors. economists are warning of slower growth in china because of electricity shortages. the power shortages are forcing chinese businesses to cut back on production. cutting two years off the life expectancy of american men.

deaths among working age men contributed the most to declining lifespan in the u.s.. amazon's price target has been cut and analysts note higher wages result in profit pressures for the world's largest online retailer. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> typically the fourth quarter of the year is the strongest by

far for the s&p 500. it tax on 4% to 5%. investors underestimate how strong they finish to the year could be. i would be careful about underestimating the return in the fourth quarter this year. jonathan: from new york city this morning, good morning. your market looks like this, yields higher i three or four basis points. euro-dollar, a break of $1.17. the dollar is stronger of the back of that store in the bond market and crude inches higher again, up by 1.4 1%. crude, $75. tom: a nice lift in oil this morning. right now, we are going to rush to david wilson and important observations on china. >> i saw a twitter post friday

from compound advisors comparing the market value of alibaba with walmart. you look back several months, alibaba had a much higher value. that has turned around. it is really a function of what we have seen in terms of the efforts to kind of rein in chinese, tech driven companies. you have alibaba down 54% from its peak last october. you are talking about a year and this company, which was twice the size of walmart when you look at market value back then, is now even smaller now. walmart is pretty much right there. tom: one final question in our busy segment here. now what for alibaba? do we have visibility and what they are doing? david: that is the challenge. they have so many pieces of their business. they're having to back away from media because the chinese government is basically telling them they have to.

that is the question. it comes down to how much leeway this company can get the government. that will determine what lies ahead for them. jonathan: we will have to -- tom: we will have to leave it there this morning. this is important. the uss iowa battleship museum in los angeles my the iowa took on all sorts of duties in world war two and korea, fighting the great battle power supply shortage at the port of los angeles, just to the edge of long beach. we have been looking into the actual dynamics of what is actually happening with our exports and imports at long beach. what have you learned? >> behind me in the bay, there are 60 to 65 container ships awaiting a berth. they cannot unload the

containers quick enough year. the mo -- more worrying statistic is the time they are spending in the bay is growing, currently at 9.5 days, a record by some distance. there are so many factors that account for the backlog. part of it is covid-19. there are restrictions slowing the process. once they unload the containers, they need to go somewhere, and we are seeing the same backlog. i took the 99 east over the weekend, and along the way there are miles of trains part, not moving, stacked full of containers. that is a problem. this is the bottleneck for america. 30% of our exports go out and there is not a lot of movement going on. lisa: i am sure you talked to a lot of people in the industry. how long will it take to move through the backlog given the fact that it has been going on for a while? ed: the average consensus is the

end of next year into 2023. we will speak to a ceo later today. his forecast is the beginning of 2023 because data shows inks are not improving. they are getting worse. the duration it is taking to get a container from china into north america. input costs are rising. there are some sanguine voices out there. morgan stanley said things will start to improve. high input costs are being offset by insatiable demand. and then corporate america and corporate europe being able to basically command higher pricing to offset it, but it is worrying. the data is not pointing in the right direction. lisa: how realistic is on shoring, the idea of building supply chains that are more domestic because it is going to go on for several years? ed: that is the main question i

have. the guys actually carrying the containers argue the biggest take away of the covid-19 pandemic and what we are seeing in the global supply chain is an infrastructure problem. it is the port of l.a.'s fault because they do not have the adequate acreage to deal with the volume coming in. the way experts described it is everything on a supply chain is in perfect sync in normal times. you know how long it takes to move one consumer good. when you have a delay or shutdown, it sets everything back in an unquantifiable way. tom: let's talk about the elephant in the room. is this about the unions and the love of a lousy buck? ed: we have seen in the port of los angeles 2012 being a specific example where walkouts brought the porch to a halt. the biggest issue on the labor

side is a shortage, as you have been discussing for weeks, and the issue that this lower pay, lower skilled labor is taken elsewhere. this is just the arrival, the destination. you have issues at the port of origin as well. policymakers will not hesitate for a second and china to shutdown a port completely to prevent the spread of the delta variant, which is a big issue at the moment. part of it is what is happening in los angeles. the delay, the backlog is a series of events starting in the main export markets of the world in asia. jonathan: what time is that interview? ed: a: 40 pacific time -- 8:40 pacific time, 11:40 eastern. jonathan: this is from facebook. instagram to pause work on instagram kids to give them time

to work with parents and regulators. they say it is not an acknowledgment that the project is a bad idea. many people might have read the facebook files in the wall street journal. there are many people out there who do think it is a bad idea. the company is saying they are pausing work on instagram kids. tom: where is tiktok for kids? jonathan: no idea. tom: to me, that is a bigger risk. jonathan: why? tom: look at the usage at home. tiktok is something parents do not know about. jonathan: lisa, you have a comet on this? -- comment on this? lisa: i think it is incredibly revealing that the wall street journal published every parent is worried about their kids developing bad body images as a result of instagram. we do not know the long-term ramifications. tom: my kids have a broad body image. they just look at me.

tiktok for kids. jonathan: futures down five on the s&p. we are -.1%. this is bloomberg. ♪

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♪ >> the great exit, if you will, from these emergency policy settings has begun. >> the ecb is curbing their pepp purchases. the fed is moving toward exit. >> the treasury is about where it should be based on where we are headed. it is already positioned itself behind the curve. >> i would say inflation is running at a pretty furious clip. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

not you