>> inflation is not going down. hi. wes you have to worry about the service sector and all those areas connected to travel and leisure. >> we have to work our way through this. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: i am alongside tom keene and lisa abramowicz. we had down .25%. we are trying to set up for the season. tom: we need the earnings. it really gets by.

as you say, we get to a most unusual earnings season. it is compared to the caution of morgan stanley. jonathan: will they take a bite out of profit? we saw it in fedex as well. tom: and what will happen to revenues versus the pricing of the revenue point? enormous mystery there. jonathan: powerful stuff. the big question for the fed, will pay rules pay for it? lisa: higher prices are bleeding into confidence. you do wonder how they deal with

these competing issues. jonathan: we shape up as follows. we had down about one third of 1%. yields are higher. .2%, a stronger euro. lisa: we are climbing to new highs in oil. i'm really watching factory orders that we will be getting for the month of august and durable goods orders. this comes as companies are trying to stock up before christmas. how much i you going to see

those lag times increasing as they try to not lose sales? we will be sharing about the expectations and how china has not met some of the trade goals. it is about the lowest it has been, going back to the early 1990's, but how do we priced out the fact that the u.s. need the supplies from china and do not want to hamper the growth. how do they that lying? how seriously should we take this? we hate discussing this. people expect it to get resolved, but we are expecting a timeframe. jonathan: i can show you how

fired up eli about the story. lisa: we are bumping up against a timeline. if they get republicans onboard, they have a longer period of time, but we are getting close, considering how gridlocked the party is within itself. tom: you framed it beautifully. the democratic party was -- the liberals have some real power. they had a lot of power going back to the 60's and 30's as well. it will play out at the voting booth. jonathan: bob joins us now. let's start here.

what horizon do you have in mind that you can remain focused on? >> the near term is a little more treacherous, but we do not have signs of recession. it is hard to see a down movement. we had sorting out what was a pattern. inflation is not all transitory. tom: i love that you talked about technology. the advantage that we have had with technology. i suggesting that is overreactive >> not at all. it will keep things from getting really out of hand.

it is the most insidious, hard to get out of the picture inflation, and it is very prevalent now. it is exacerbated by the supply shortage. lisa: how important is this? >> i think it is very important. they seem almost unilaterally focused on the jobs front. at some point, as the members continue to improve, inflation will come front and center. lisa: a lot of people i saying it matters less. they are talking about how much they are affected by the supply chain disruption. >> it is absolutely about

earnings. there are a lot of questions about third-quarter earnings. we are getting deceleration from the quarter, but will companies be able to sell and what will the supply shortage mean? how are they dealing with price pressures? we saw a big increase in raw materials, etc. my guess is that the earnings season will be more mixed. lisa: what are your expectations on what you would change in your portfolio? is there some scenario that you see as potentially likely that could change that view? >> the mainline story is that cyclicals are cheap, relative to

growth and momentum. if they creep higher, the market struggles with that. what would get in the way of that is, this unbelievable pedal to the metal, monetary and fiscal policies are not having the effect that it has been having. tom: i would guess you have seen four times the margin contraction, margin pressures. how do you respond to it if you are an investor? >> i think that those margin issues are veal and need to be paid attention to. it seems like quarter after quarter, they are better-than-expected and they are reaching all-time highs.

it is probably not sustainable in the long run and i think a long-term look at earnings has to have a picture a little bit below where we are today. jonathan: i would love a playbook from you on what to expect from weakness. if you are thinking about these issues, everyone is talking about the same thing right now. how do i want this story? how do you want to do that? >> i want to own but i think will work best. that is cyclical, value, international. they are the places where it is going. financial stocks -- you see them as interest rates that are higher. they are better than what you might think. that is the kind of area that i

want to jump onto. i have less valuation risk. they have done so well. jonathan: it is going to catch up. lisa, supply chain constraints are not priced. companies struggle at the same rate that they have the past five quarters. that is the number one issue. lisa: absolutely. we saw it genetically reinforcing. it is not a bearish scenario. so much good news has been priced in that they have room to come down a bit as people recalibrate.

tom: up 16%. it is terrible. jonathan: we are negative about a third. we are down 71 points. people often hear us say on the graham, over and over again, this show is nothing without its guests. going into the weekend, we lost a special one. tom: a huge loss. we are all very upset about it. the other equity strategists adored tobias. jonathan: the chief equity strategist has died at the age of 60. ♪

>> with the first word news. on capitol hill, progressives are looking for ways to rescue the economic agenda and have opened the door to compromise. they have offered to scale back some of the more aggressive social spending. they have rejected senator joe manchin's offer. the biden administration will directly engage with china in the next few days to enforce commitments in their trade deal. it will start a new process in an effort to help american workers and businesses. the u.s. needs a strategy that takes it into account. they are signaling that they are more likely to let the oil price rally.

opec-plus is gathering for its production meeting. they are in no rush to increase the supplies. one of the world's largest generic drug makers has made a massive drug recall. the drugs may not be sterile. j.p. morgan ceo is defending his pay again. the board awarded more than $30 million. the compensation is part of a broader umbrella. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> it is going to be somewhere

between 1.5 and 3.5. the white house is working on that because what we want to deliver is climate change. jonathan: somewhere between 1.5 and 35. the congresswoman speaking to cnn. morning. your equity market is down 19. you'll time this morning, about 150 to 149. we have back with a 76 handle. one third of 1%. tom: we begin the week with an elevated tension. jonathan: some jitters around the federal reserve.

tom: emily, i want to talk about the infrastructure bill. >> what you heard president biden say, when he went to congress on friday and met with emma corrin, they just have to wait until they get back tax bill done and then really move on together. it is such a clear win. they are already being attacked on that spending bill. the fact of the matter is that they want both of them to pass.

tom: was there any discussion about what they would give up in 2022? >> particularly in the house and they realize that they really need to deliver a big package, that they need to go to their constituents to say this is what we were able to give you and this is what we were able to deliver. if they do not have something like this, they may as well handed over. we have heard from progressives that they have come down from that.

>> the range at which they are talking about, the range set up during the meeting is 1.9 trillion to three point one trillion. -- 3.1 trillion. they are talking about how to get there. they would talk about various expansions of health care. they would spend less money. it means that they would get on board with this plan. how much wiggle room is there to cut the difference? there is some wiggle room. they have been in contact with

each other. we have to look at what they are willing to do. we do think that there should be this reconciliation and human infrastructure. they are supportive of that, it is just a matter of getting the details. >> instead of doing a half measure, just take one or two things and do this right? and if we do it right, let's get elected? >> that has been discussion of that on capitol hill, but there are multiple lawmakers backing every piece of this bill. to take something out of that would really lead to a number of

lawmakers being visibly absent. there could be things that are visibly removed from the package. at this point, as far as the big-ticket item, the topics we have all been discussing, they seem like they need to stay in the legislation because of how popular so many of them are. jonathan: what did we achieve last week and over the weekend? tom: president biden achieved what we knew he would achieve, like other grizzled politicians. the answer is, he is moving it forward. it is supposed to be frustrating. government and prosecution.

they achieved that last week. lisa: they said there was something that they accomplished. communicating that these plans, the bipartisan infrastructure and other spending are linked. they cannot pass one without the other. i think there is something there. they have this range that is more reachable. that is the headline range. jonathan: come on guys. lisa: but they have come down. my point is that i think the communication has shrunk. even biden is saying perhaps

this is the range that we are talking about. it seems like that is more reachable. jonathan: d think it has been lost somewhere? tom: the liberals say that every time. go to a big round number. 900 billion. let us prosecute this program. i am not sounding like senator manchin. congress people, in america, they have to get elected every two years. jonathan: your next senator from

virginia. tom: where you grew up, where you in rotten borough? jonathan: this is bloomberg. ♪

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jonathan: what do we think of that? give thoughts? tom: if i am elected, free beer. make a banner. jonathan: the nasdaq is softer, half of 1%. the tension continues. you know the story. the market capturing it as follows. yields higher on a 10 year. just a little bit of a lift year. that one has four basis points.

that is part of the story. decelerating growth. starting out overnight. thank you for putting that in my inbox. the average at about 647. this has been a really resilient currency. they are thinking about various channels. the commodity channel, what that could mean for the south african currency. tom: we will have our esteemed guest here any moment. once a year, it is great. jonathan: dear me.

tom: could you see romaine bostick in the same situation? jonathan: he is wearing great today. let's get to some stock movers for you. >> a lot going on today. tesla is moving higher. cars delivered in the most recent period. 20,000 above the longer term average. they actually fell. the lowest on record. this was the most heavily shorted stock. so quite a turnaround. flirting with 800 bucks a share. a rally from last week.

really have not found any out there. this could be a game changer for the rest of the space as well. they are all down once again. philip the board. interesting for the airlines. getting the upgrade today. a lot of the airfare carriers are faring much better as we move into the post-pandemic period. tom: it is important that you brought this up. the zeitgeist of expanding premium economy is all part of the new domestic game. >> airlines have a lot more flexibility. you rip out some of those normal

economies to make a premium economy. it just means that you pay more. i cannot see tom in the economy. jonathan: tom, is it time to deliver this premium? tom: i think they are getting more aggressive. that is what i see. everyone is way more sophisticated on that. this is the interview of the day. just wonderful notes. i want to go right there. jp morgan, china ascended. you agree and you call for a strong renminbi. >> that's right.

there is no question. china has turned negative. we see all these headlines. maybe that is a crack. there is definitely an issue going on with the real estate sector. we understand the property in general, but there is also an important structural tailwind. that strong structural tailwind is currently acting to upset the cyclical negative expect of what is -- aspect of what is really happening in china. if you break it down or if you look at it in general, you will see that when we have strong flows, a large number will

remain sticky because they are sticky by nature or the trade balance, or because you have the ongoing inclusion. you have these ongoing flows into china. we started the year being more bullish than we currently are. china is at the epicenter of the global growth slowdown. we think that the currency will trade fairly well. above all, the message that we are giving is that this is the currency that will maintain stability. jonathan: i have been surprised by the stability.

talk about the stability a little more. what about 644 or 645 right now? why are we so resilient? why are we so stable? >> a lot of people will say, define the growth. you are going to see a weakening. it is not as strictly managed. it is still a managed currency. they are not really concerned with the current level. the second element, we go back to a structural tailwind.

you get the pricing in. global and chinese slowdown. you have these that stay in place. the current account is the portfolio investment. you can actually see that it stems, three times what it was. there is a strong structural and sticky element. lisa: we will hear about the relationship with china going forward. how much does china have an incentive to appreciate a little bit more as a token to representatives saying, we are not devaluing our currency.

we are being fair with our negotiations. >> i think they are a little bit past that. they have allowed a large element of the market to control the exchange rate. what has been happening, due to the big moat -- big movement, you saw the renminbi in line with other currencies. from that perspective, the general mentality, and a gradual fashion, we will be withdrawing. it is definitely part of it. in that respect, i do not think they will mind.

even with further depreciation in the renminbi. i think it is something that would not annoy. jonathan: everything is back to normal? >> pretty much, everything is back to normal. there were certainly lines of business and we still have some locations, even other banks. putting much everything is open. quite is that mcdonald's open, where it is $21?

>> yes. if you want it delivered. it has been open for most of the time. tom: we are giving him so much grief. jonathan: i usually take a picture. just to see what the price is. lisa: no time to die actually has showings in zurich. so check it out. jonathan: usually you chime in with something serious at this point. tom: daniel craig is serious. jonathan: coming up, up a little bit later from new york city.

this is bloomberg. ♪ >> with the first word news. house speaker nancy pelosi has set a revised target date. $550 billion infrastructure. she promised to bring the measure to a vote this week. pelosi is wanting to get progressives and moderates to agree on a spending package before voting on infrastructure. the u.s. is moving closer to its first ever default. they have signaled that they are ready to back down from a partisan showdown of the debt limit. chuck schumer plans another vote

with plans to suspend the debt ceiling. infectious disease specialist anthony fauci says they are turning a corner with the coronavirus surge. more people need to get vaccinated to keep vaccination on a declining trend. in japan, parliament has appointed uchida -- kushida as prime minister. they have promised to make -- place younger members in the cabinet. ♪

>> inflation is not going on inflation is hot.

-- is not going down. inflation is high. -- hot. jonathan: tom keene, i imagine he is in a better mood. the -- he is a happy man. tom: he is a happy man. jonathan: i'm not sure it is a great comparison. features down 19 on the s&p. let's whip through this price action for you. yields are higher. the euro is stronger. tom: i think the stability here

is important. the spill -- the stability brings new levels. what is not stable is from an 18 or 19 level. jonathan: it is shifting. a soft landing at the fed. i do not know where. transitory is becoming less transitory. tom: you are poetic. with that, we migrate to david wilson with some really good observations on the equity market. let a set of differing opinions. >> absolutely, but not all that different. tom: this is a story about

narrowness. >> you avoid the worst performing group and you tend to do better. it will have a list among energy sectors, but what happened in the third quarter is that there was so little distinction between the best and the worst performers that they did not really matter. the gap of less than seven percentage points, the best performer out of the 11 -- that was the smallest differential. tom: you stagger back and say, what has happened here before? >> we have not really been here before. the smallest was back in 1889. it is a matter of, do we get more overtime?

this is how many managers justify their existence, avoiding or if you do not have that much of a gap in performance, not a lot of opportunity to do better than the index. lisa: this flies in the face of discretion. can you talk about how this undermines that and going forward on a wholesale level? it is based on some of the differential components. >> you take the quarter as a whole and it was fairly stable. you look back over the year and you have certainly seen some swings.

the growth versus value stock comparison. at least for this perspective, not a lot of difference. tom: dazzled by a chart on television. it shows the narrowness within this market that we felt in the third quarter. steve cohen steps in. it is a new regime. the jets win and the mets lose. >> i am more concerned about the jacksonville jaguars. tom: they are worse than the giants. david wilson, thank you so much. losing at a greater level. jonathan: as long as we do not mention the mets. a great sports weekend as long as you do not mention the mets,

and then you did. tom: of course i mentioned the meds. lisa: the mets are actually a financial story because: -- cohen owns them. he has lamented them. jonathan: we are doing great. we won yesterday. good stuff. tom: it was a devious plan on my part. i brought up the mets just to get lisa going. she sat in every seat at citi field. what does mr. cohen accomplished in the first year? lisa: deep frustration. perhaps it is described by

outlook, perhaps a little less optimistic. jonathan: on a serious note, he weighs in on an important note. it does not make much economic sense. the more likely behaviors are to change. he is right, tom. the longer this process, the more they could become a real thing. tom: all the people that we talked to, they all have a single skill. the single skill is game theory, identifying the dynamics. that is what he is talking about their, the ramifications to a dynamic y-axis.

>> i know. it is not thinking. it is the imf to go now. lisa: i think it is an important point and it gets to this controversial issue of do you have expectations that become predictive? there was a pregnant column from a researcher who said that this was hogwash. if you think that housing prices will be that much higher, you will recalibrate what you buy and when. what is the signal for immediate

disengaging? jonathan: that. does that work on radio? tom: it is the pendulum of the mets. jonathan: from new york city, radio and tv, this is bloomberg. ♪

♪ >> inflation isn't going down. inflation is hot at the core level. >> what the fed does is absolutely essential. >> you still have to worry about the service sector. you have to worry about all of those areas couldn't had to travel and leisure -- areas connected to travel and leisure. >> we can still grow with a relatively weak supply-side. >> we don't have these signs of a recession. it is hard to see a big down movement. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

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