>> i think there's a temporary pause in the services sector which could be reflected in this payrolls report. >> even a relatively low print would be consistent with a pretty strong labor market. >> you would have to have a pretty catastrophic payrolls figure for the fed to change the timeline it has laid out. >> i think it is a really low bar for the fed not to taper, so i think anything above zero, the fed is going to taper. >> if economists are right, it is probably an accident. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. jobs day, 29 minutes away.

we will bring you the data, but the data does not matter more than any time before. it is not 500,000. it is another number, and we don't know what it is. jonathan: zero is the number, according to thomas costerg of pictet, ellen zentner, priya misra. i have no idea what the number is. we will find out. but if you listen to those three, this bar is superlow. tom: we can go to the michael mckee world and look at the standard error of the numbers. i don't think it works here. it is a dovetail of a two-part fed discussion in the market reaction which we are going to see exactly at 8:30. jonathan: we've got a 750,000 range. what did ellen zentner of morgan stanley say 30 minutes ago? if economists were right, it was probably an accident. tom: lisa, i know you have seen

it in new york as well. there has been a change in the last number of days. in our little world, i am seeing fewer masks. permeating all of this market babel and econ babel is better news on this pandemic. lisa: are we there? are we out of the pandemic, and have we reached a point where the labor market can normalize to a greater degree? until kids can get vaccinated, you start to get this revolving door at schools. it is going to be hard to see full normalization. i think that is a huge question among the many that ellen zentner was referring to. tom: we will focus on the labor economy of america. we will look at the american economy. but i am focused on setting up for q4, and we've got the right guest to do that. we need to do the data first. i've got nothing to say about the data. jonathan: unchanged. equity futures positive 0.1 percent. euro-dollar positive 0.1%. your 10 year just south of

1.60%. just south of $79 on crude. payrolls 27 minutes away. tom: savita subramanian and her team at bank of america are noted for dense notes. you get a seven-page note and you think you are going to read it in 12 minutes. you read it in 30. jill kerry hall, it is her fault the notes are so good. it is simple. use a free cash is king in an optimistic tact for q4. jill: we are in an environment where the economic data has started to decelerate, so we track our indicator which puts together a bunch of macro factors to try to figure out where are we in the cycle and what does that mean for investing. we have been in a midcycle backdrop since earlier this year , and now, as the data has started to come off the highs, we are shifting to now what

would be considered more of a late cycle backdrop by our indicators. so how do you invest for a late cycle high-quality stock -- invest? late cycle, high-quality stocks tend to do well. in late cycle, it can be a little less clear, but one of the things we have found is if you are a value investor shifting from some of the way you value stocks makes sense, so rather than devalue factors like price-to-book, shifting to a free cash flow-based valuation measure makes sense. there are a lot of claims on free cash flow later in the cycle. capex starts to pick up. tom: what is so important in your research note, you look at the calendar and the underperformance of so many. we are going to have a jobs report in 25 minutes, and i would suggest that as a kickoff to q4 before earnings start, including the bank of america

next week. they are behind, and you say in the late innings, they go along. is that right? jill: that who goes long? tom: we are not talking red sox baseball here. long only by side is behind. they've got to catch up, and it starts in q4, right? jill: right. you do see a change in the fourth quarter of the year, so active managers typically tend to chase higher beta stocks to make up for performance as you get later in the year, so you tend to see higher beta stocks do well in the fourth quarter. i think the only caveat that is when we look at this within small caps. small-cap managers are actually doing very well this year. over 80% of them are over their benchmark. you might not necessarily see that beta takes as much in small caps because they are already largely ahead for the year. part of that might be due --

positive for value versus growth over small versus large which your two styles that we like right now, but covid cases we've found have been a bigger determinant lately, more so than any of the other macro data, so if you see covid cases, that could continue to support that. lisa: economists are basically throwing darts at a dartboard. it is macro becoming less relevant, and micro increasingly so at a time of uncertainty in where the economy is? jill: i think we are going to be

very focused on the micro this season, and there will be relevance in the payrolls number today that the wage data is particularly important and relevant as we get into earnings season because we have seen mentions of inflation on earnings calls have skyrocketed the last two quarters. so far it has been good inflation. companies have been able to deal with it or exercise pricing power. margins continue to expand. but now you have started to see a trickle of announcements, the headwinds of inflation and the costs of supply chains starting to hit companies more. so i think there is more risk going forward, and especially for the wage data, we see significant pickup for s&p 500 companies talking about wage pressures. so especially for labor-intensive areas like some of the more service oriented, consumer companies, parts of industrials, this is something we are watching closely, and there could be more margin pressures going forward. jonathan: given how widely

expected this is, i want to understand how well priced it is. i want to understand how you think stocks will respond to this news when earnings season commences next week. jill: overall for the market, the last quarter or two we haven't really seen the typical reaction for beats, although earnings have surprised to the upside in a big way. companies have not necessarily outperformed given the reporting of those good results the way they typically would, and really the last time we saw such muted reactions for good news was around the peak of the market in 2000. a lot of the good news has been reflected, and there's more risks to earnings and margins going forward, so that is obviously one of the reasons we have been more cautious on the level of the s&p 500 from here. at the company level, i think there are certain sectors we have been more cautious on for that reason, where consumer

discretionary, for example, within the s&p 500 is very expensive relative to history. it is still generally overweight by active managers, but it is one of the areas that certainly has more risk to margins from some of the wage pressures and other issues we are seeing. so i think there are a lot of pockets of the market that are overvalued, but certainly some opportunities. energy can do well in inclusionary environments, so that is an example of an area where we like rates now. jonathan: thank you. send our best to the team. jill carey hall. here's the commentary. what will it take for the fed to taper? morgan stanley, a positive number. td, anything above zero. pictet, zero won't stop them.

this bar is low. tom: is it about rate moves? the textbooks won't help you with this. from a fundamental basis, this is original territory. jonathan: the size of the number may fuel a little bit the conversation about how distant that rate hike is from unwinding that tapering story. tom: we heard that from a number of guests today. is it a 2022 or 2023 discussion? jonathan: priya misra says late 2023. that is the conversation at the moment. futures down for on the s&p, advancing 0.1%. your median estimate, 500 thousand. your number is about 18 minutes away. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the u.s. is one step closer to

averting a potentially disastrous payment default for now. the senate passed a bill that raises the debt limit through december 3. no republican voted for the plan. the house is expected to approve it next week. democrats in congress are starting to discuss how to make cuts to president biden's sweeping social spending bill. the president originally proposed a 3.5 trillion dollar outline. now he is willing to go down to $2 trillion. senator joe manchin says he could only support $1.5 trillion. senate majority leader chuck schumer is hoping a deal can be reached by the end of october. two journalists have been awarded the nobel peace prize, of the philippines and russia, for what was called their courageous fight for freedom of expression. former winners of the prize include nelson mandela and the world food program. ireland will abandon its 12.5% tax and join other countries in

the push for 15% of corporate profits. we spoke to ireland's finance minister. >> i always believed it would be very likely that we get to a point of global change, and in that global change, it would have an impact on our tax revenue, so we have been budgeting for this moment since 2019. we are ready for it, and even though that does mean a loss of revenue for ireland, i believe overall, it is still the right thing for ireland in the long run to be inside this agreement. ritika: 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. i'm ritika gupta. this is bloomberg. ♪

>> if we don't get the pickup in labor supply for the fall, if job gains start to be more

sluggish as we move need next year, that is not about tapering. that is about when the fed eventually gets too high great. now that tapering is a train, we are not talking about fed policy for some time. i think rate hikes are still quite a ways off. jonathan: from new york city this morning, good morning. we are 12 minutes away from the payrolls report in america. here's the price action. equity futures up 0.1% on the s&p. nasdaq futures up by 0.14%. tens 1.5750%. euro-dollar positive by a little more than 0.1%. euro-dollar, $1.1570. a slightly stronger euro. remarks taking place now from secretary janet yellen at a summit in italy. bloomberg is the international media partner. if you want to watch those remarks, you can watch those at

live on the bloomberg terminal. that event taking place for bloomberg subscribers if they want to watch. tom: with francine lacqua moderating, far more of what we are going to see here, comments from lagarde. jonathan: and the space race. are we still calling it the space race? tom: that upsets me. jonathan: are we going to air every single rocket launch? tom: mr. musk is in the space race. the others are in the tourism business. jonathan: there we go. that distinction is important. i agree. tom: should we continue on payrolls? we are 10 minutes away, and not enough time to speak to james glassman of j.p. morgan chase, with wonderful work and an exceptionally strong note this odd jobs day. you talk about the technology, the globalization that is still

with us. the hope of the politicians is reshoring. is manufacturing going to reshor e? james: i don't know how, if we don't have the people to staff those places. manufacturing has one million jobs that folks can't fill. we've got 11 million jobs in the country. by the way, because of this labor shortage, pay is going up, but rising labor pay in america means there's going to be less incentive to bring it back here, so i think it is doubtful. tom: is rising pay the fear of an england from another time, and america from another time, or so what to jim glassman? james: i think it is i thank god. we have been thinking a lot of innovation the last couple of decades. businesses don't have an incentive to tear up the script and use this innovation until they are in trouble. that is what has been happening for the past year.

they are going to be willing to pay more for workers. they don't have as many workers and we need them, so workers are going to benefit from this labor productivity going on. i think that's what the prophet story is telling you, and now labor pay is going to slowly start to catch up with that. it is going to be a good story for everybody, businesses and labor. lisa: and yet we are seeing consumer confidence fall in some respects, expectations falling to the lowest since september. danny blanchflower at dartmouth saying this is deeply concerning. how concerning is it when you travel around the country, the consumer expectations and confidence are not matching the dynamism we are seeing in some of the economic numbers? james: i don't really pay any attention to the consumer confidence numbers because if you look at the fundamentals for consumers, it has never been better. they are sitting on two point $5 trillion of excess savings that they accumulated last year.

there's help wanted signs all over the place. you are not worried about getting a job. the stock market is strong. 2/3 of americans are benefiting from a rise in home price values. in fact, when you look at the problem, it is really more a fear about something out there in the future. i've never seen a time when the consumer fundamentals looked better than they look right now. lisa: which really raises this issue of why we are not seeing more people come back into the labor market, why there is so much disagreement right now about the participation rate and how quickly it will go up as people get back in the market. what is your view on that? james: i think part of the issue is that people have gotten a lot of help during the pandemic. childcare credits, a lot of extra programs to help them if they are unemployed. a lot of people dropped out. a lot of the folks still have

been qualifying for unemployment insurance because they did have a job. that is all beginning to wind down. in the last four weeks, millions of people have seen their unemployment benefit start to drift off. i think we are going to find out over the next several weeks that the trend is going to start to reverse or get the folks that dropped out could because they were getting a lot of help, but when it vanishes, you have an incentive to start coming back in and looking for a new job. jonathan: jim, great to catch up, as always. i believe michael mckee has made his entrance. when he makes his entrance, you know we are close. we are getting ready. tom: the entourage here is at a record size as well. uncle mckee, what matters in six minutes? michael: -- michael mckee, what matters in six minutes? michael: the total number of jobs created. nonfarm payroll. jonathan: november 3, do we have to prepare to have this

conversation about taper on, rate hike? michael: i think ellen zentner made a good point, although i don't think we will not talk about the fed for some time because we always talk about the fed, but the conversation will shift from tapering to tightening, and then we start looking at the inflation numbers in a different way and start parsing out when the fed is going to react to that, who is a hawk and who is a dove. lisa: why is the fed so eager to start tapering? is it because they are not necessarily wanting to raise rates or tighten conditions? michael: you've got one part of it right there. they do not want to get behind inflation, but they have said they would taper first before they tighten, so the sooner they get started, the sooner they can finish and move on to tightening. they are also worried about the financial aspects. the more money they keep dumping into the system, the higher asset prices go and the more

possibility of bubbles developing, so they are trying to make sure they don't do that as well. they are also not getting much done. buying bonds right now isn't bringing more people into the labor market. it is not solving supply chain problems. at this point, there is little reason to keep going. tom: we are going to have our expectations shift here in less than five minutes. how will our expectations shift? michael: i think we will get a little bit of a question about wages and whether that is going to start feeding and if we get a big wage number, but i don't think the expectations shift as much as get confirmed. the market thinks the fed is going to announce tapering on november 3, and if we get any kind of decent report, they get confirmation. tom: isn't it a miracle how mckee does that? he got the report last night at 8:00 p.m. [laughter] michael: i am going to get

arrested here. jonathan: just in case someone out there believes tom, that is not true. we all get the number in about four minutes. michael mckee will be your man to read out that number. from new york, the estimate 500,000, four minutes away. this is bloomberg. ♪

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jonathan: 10 seconds away. your jobs report just round the corner. equity futures up .2%. yields higher a single basis point. 1.58 on the 10 year. there is the number. a downside surprised. michael: it is. i imagine this will raise some questions in the fed's mind about what they're going to do. 194,000 jobs restored in the month of september. the employment rate falls to 4.8%. i have not had a chance to check the components of that. i suspect we had more people go into the labor market then we had had before. let's see if it says that. we do not have an exact number.

i thought it might be in the note. the labor force participation rate little changed, 61.6%, that is a drop of 1/10. that is unusual. it looks like what we are getting from the household report is more people were employed than unemployed and more people were employed in the household number than the establishment number. a couple of other numbers to throw out. 26,000 manufacturing jobs created. average hourly earnings up .6%. that is .2% more than forecast. that pushes the average hourly earnings to 4.6%. the underemployment rate that tom likes so much is at 8.5%. that is a .3% drop from the prior month. you can let us know where we are. jonathan: i will.

you keep digging. equities dropped and they came back. the nasdaq positive about 20 points come up .14%. no big changes compared to where we work going into the print. the front end of the bond market in about half a basis point. yields were higher earlier. at the longer end yield stay up by about a basis point. let me finish. dollar weaker by more than .1%. these are big moves. the positive revision to the previous month, we were looking for 500,000, we got 194,000. very early days. for many people this is the kind of number that keeps the light green to taper in november and it does them a favor on the conversation on imminent rate hikes. tom: as you mentioned revision is critical.

363,000 jobs. where we are is a middle ground. we do see more data. jonathan: we have heard from people this morning, anything above zero is a green light for november 3. michael mckee, your reading of things. away from the price action come equity futures slightly negative. the dollar bit weaker. for the fed, is that light still green on november 3? michael: i think we would come down on that side of it. you get a reasonable number for the last two months combined. also the employment rate will be significant. they are looking for full employment around 4% and now all the way down to 4.8%. we are not that far away. tom: what was the live going to .8%?

let me give you -- michael: let me give you a couple of other numbers that stand out. when we talk about why the number came in weak, it looks like it could be delta related. we saw the payrolls for leisure and hospitality coming week this month compared with what they had in the past, increasing just 74,000. they were down 41,000 last month. employment and food services and drinking places were up just 26,000. it looks like we took a pause in the hiring for a second month during september. jonathan: is it typical -- tom: is it typical you missed the unemployment rate that much? that is a big miss, isn't it? michael: it is and we're not sure why this has happened. i will look for that. one of the unusual things about

this is usually there is a seasonal adjustment factor that would add jobs in this case because we see some declines as the workers leave their jobs and go back to work. that is not what we got this time. let me take a quick look. we mentioned the participation rate was 61.6%, down 1/10. employment rose in the household survey by 526,000 and unemployment fell 710,000. that accounts for the difference. the civilian labor force fell 183,000. at this point it is a statistical reason that it fell. it shows people were not looking for work, which is unusual because even though the federal government cut off the extra unemployment benefits the week before, you would think people would've weighed their way -- would have made their way into

labor force. jonathan: i wonder how may months will be talking about this? initial reaction will be greenlight -- the conversation about the rate hikes is further down the road. push that away. is the participation rate -- what you think will happen with that? i think that shapes your view on how to use this labor market is. that debate based on this report is still very much unresolved. lisa: if anything this is bad news for the federal reserve because it points to a tighter labor market. i will not take the labor market report and make extrapolations but if you were to do so this points to a labor rate not recovering quickly enough. when you speak to people, how many reports to the need to create a life extrapolation and to figure out the trend? michael: if you're a federal

reserve official you want as many as you can get. they are not going to happen october payrolls report at the time of the november meeting, so they will have to go here and add in supplemental indicators like the ice and reports, things like that to decedent -- to see if they could discern a trend. a lot of this may be delta related. there may be seasonals in here they can take account of. if we are not seeing the leisure and hospitality space rise and we are the labor force fall, it does appear there is still covid effects in this data. jonathan: downside surprised, 194,000. a lot of details. here the price action. choppy off the back of this number. on equities it we advance a little bit. yields in about half a basis point. unchanged on tens. in the fx market, the dollar showing some weakness, 1580.

prude -- crude state positive. michael: here is a reason the number declined. we saw 144,000 state education jobs go away in the month of september. seasonally adjusted. about 500,000, 600,000 added in the local government education numbers in the nonseasonally adjusted. seasonals played a big role. that may be affected last year and how nobody was in school. tom: we will go to jeffrey rosenberg with blackrock. when we look at the monitor and i have a fancy bloomberg -- i have seen the blinky red and green color going back to 2008.

the level of uncertainty now. jeffrey: it certainly has a delta variant character to it just like it did. the key disappointing industry sector -- not clear it would've affected that much. overall those two sectors disappointing. average hourly earnings, you see a shift. you are seeing particulate with leisure and hospitality workers less in the mix at that point due to delta variant. as lisa was talking about, the longer-term implications for the fed exactly right, participation rate and very tight market.

put it together and i think the fed can look through this because it so clearly looks like delta variant, and every other indicator, there is a reason why the private market forecast had $500,000 penciled in -- had 500,000 penciled in and that is because there indicators on the labor market pointing to the reopening and the strengthening and the tightness of the labor market. i think the fed will be able to anchor off of that. for the market this is about the message we got in september from the fomc moving ahead on a significant policy change with significant market implications around and the post-covid crisis era of ample liquidity through gradual tapering, and then eventually tightening policies. jonathan: that is how this works. we take the jobs number and then we start think about the market implications. what are they? jeffrey: the big market -- the

18 months we have lived in globally has been historic amount of central bank liquidity globally. when you look across into emerging markets you see removing and adjusting to a post-covid world happened there first because of their inflation pressures. developed markets have more room to delay that, but they cannot do it infinitely, and that is to the discussion about transitory inflation. it is a marker for markets about the tailwinds of epic amounts of liquidity will not be here forever. we are still going to have the effect of that liquidity for some time. we are no longer going to be adding to it and that is very significant. fixed income has ushered in the mother of all reach revealed behaviors. when you see that kind of

behavior, what you get is a risk building up in the system. you are certainly seeing that play out in one part. it is isolated but it is a big part in chinese property developers. jonathan: thank you. i will let you get settled. the rate hike dance is playing out in the belly of the curve. 537's, five's in two basis points. this is the conversation we will have later on the open 9:00 eastern time. i will catch up with mohamed el-erian, i will catch up with rick rieder come anastasia amoroso, michael collins, there is a deep nonmarket conversation off the back of this. what about the rate hike conversation? lisa: it raises a question about not stagflation but those types of dynamics with slower growth and higher inflation in the near term. as you point out the five-year is the big reaction with yields lower as people take their

expectations for rate hikes and kick them like that can down the road like congress. still with us is jeffrey rosenberg of blackrock. i want to talk about that stagflation dynamic. do you think it is a fair bet they will prolong the time before they start hiking rates? jeffrey: i do. the fed has been very clear. flexible average inflation targeting is a major change in the policy reaction function and it says clearly the fed wants to see more inflation surprises, more inflation overshoot. in a stagflationary environment they are going to tolerate that higher degree of inflation. let separate the conversation.

-- the two concepts. i think if we face that environment in the future of stagflation, they will err on the growth side than on the inflation side. tom: none of this is not only in what you and i read but the three and four tomes we read on the bond market. it goes back to one single chart. this is the chart that matters for chairman powell. america. down we went in the financial crisis. on radio it is simple. we plunged and made it back only 70% or so. jeffrey rosenberg, is this market worried about economics or just simply worried about the job count in america? jeffrey: it has been clear,

particularly on the tapering, on the dynamics and the restoration of some of those covid impacts. it is monetary policy to address a lot of those longer-term trends when it comes to labor force participation. some of that is cyclical, some of that can be addressed with monetary policy. a lot of that goes beyond monetary policies ability to impact that. where it impacts monetary policy is tightness in the labor market and how that feeds through the inflationary dynamic, from transitory labor markets to wage inflation. tom: how can they raise rates? forget about taper. how did they raise rates given the fact we do not have employee count back to where it was in february pre-pandemic? jeffrey: that is a question of whether or not that structural

-- something that is permanent or something that can impact or be impacted by monetary policy. demographic shifts, we have retirements, we have a lot of reasons for why you may not get back to the pre-covid level relative to the current assessment of the market and potential. it may not be getting back to that level, but the tightness in labor markets will certainly affect not only tapering but also its impact on inflation through wage inflation and inflation expectations. lisa: from a market call perspective, i am struck with what harry hall of bank of america will talk about, that this will matter with margin compression.

how much does this sound like a foreboding message, particulate for more consuming facing sectors simply because you have wage pressures in the labor market shortage that is continuing, whether it is temporary, transitory, or whether it has longer legs. jeffrey: let separate the surprise on this morning's earnings. that could be about the mixed shift due to the covid impact. the longer run impact will be tightness of -- will really be about labor capital substitution. where can companies mitigate the impact of margin compression from labor increases by substituting? were companies have the flexibility they'll be able to maintain margins. where companies are more exposed to rising wage costs you will have a more negative impact with regards to margins.

there will be winners and losers across the company when it comes to this trend of potentially structurally higher wage inflation. jonathan: if the participant -- lisa: if the participation rate remains where it is -- what does that do to the 10 year? jeffrey: i think for the 10 year it will be about the combination of the labor market dynamics with the overall projections. labor markets are a positive impact. if we are seeing rising wages and rising confidence feeding back through in real wage gains, putting the two conversations together on inflation and wage and laois and about whether those are wage inflation figures keeping up with inflation. if they are, than that is a very positive growth trajectory because it is rising real income. rising real incomes, very

supportive to the biggest driver of that growth. once we get past the restart, the conversation comes back to the consumer and the outlook for consumption. that stronger consumer consumption outlook will bolster expectations for what levels of growth we settle in at and we settle above the 2% pre-covid environment? that will affect the 10 year. let me see if i can get this back in. tom: you're doing well. jeffrey rosenberg of blackrock with a audio difficulty this morning. we thank him for staying with us. down we went on the report. we are essentially flat. dow futures -76. green on the screen come the nasdaq 100 and the vix -- diving deeper into the data, our michael mckee. what is new with the last 20 minutes? michael: what we are looking at a some of the categories that saw the big changes. as i mentioned, 160,000 jobs in

staple education disappeared. that is unusual because school starts in august. tom: where they furloughed or fired? jeffrey: it looks like it is -- michael: it looks like it is seasonal adjustments. last year nobody did go to work in the schools because of covid. if you add in the on seasonally adjusted numbers, there was a gain of one million jobs. the swing is 1.2 million jobs. tom: let's get in front of the monday notes before we bring ira jersey on. when you take nonseasonally adjusted, you get out the job enthusiasm we heard earlier? jeffrey: that -- michael: that also would be seasonal in the sense this is the time when people come back to work in schools. it is not just teachers, it is

the custodians, the lunch workers, all of the people besides the teachers who are in schools who were not there last year. they are back in force and the number would go up a lot and ordinarily be prefaced and that is what we are seeing, a loss of jobs in education that does not add up. a couple of other areas we saw a big gain in, air transportation, 47,000. it looks like the airlines are starting to ramp up their hiring. health care was down almost 18 jobs and a lot of those people may not be vaccinated. we had some rules people needed to get vaccinated. tom: did they seasonally adjust for the red sox beating the yankees? michael: they cap yankees is unemployed right now. lisa: [laughter] we'll be checking with you throughout the morning for more details on this multifaceted report.

we look at the bond market. ira jersey joining us, chief interest rate strategist. i am wondering how one looks at this given the fact it does not give the all go ahead the labor market is healed kind of message. ira: it does not. we always expected, and a lot of market participants are expecting coverage to be relatively uneven. we have to look at longer trends. if we look at the last three months i look at when i look at the employment report is accurate. labor income. hours worked times the average hourly wages, that was still up almost 3% over the last three months. we keep on getting these reports ? i do not think this report takes us away from the taper call. i think a month from now the fed

will reduce its asset purchases. it creates more uncertainty about when they will hike. that is why they are seeing the market reaction with the front end starting to rally in the back end doing a lot of nothing. lisa: the fact that the fed pumped trillions of dollars into the economy along with the federal government and banks around the world, we still do not have the dynamism to push this labor market towards a sense of recovery? how much does that concern you with respect to the 10 year and how high they can go. any withdrawal of support from the u.s. central banks will only slow a recovery that already might have seen its peak. ira: i think that is part of the dynamic. i think the bond yields go somewhat higher because of the reduced demand that the fed taper will create. to your point, i think there's a speed limit to that. it will be pretty hard in the

near term to see the 10 year much above 2% if at all because of the meandering pace of the recovery. not only the u.s. but globally. the developed world, including the u.s., we still do not have 100% or anything like that, but we are still doing better than a lot of the emerging market countries still in the pandemic. tom: the jobs report, one of the most fascinating reports i've seen in all of my years. ira jersey. michael mckee dug into the data. he did note the yankees counted as unemployed. there is a wall of money. this is the ira jersey expertise. redefine the liquidity in the system. ira: there is so much liquidity, we teach on -- we keep on talking about the reverse repo at the federal reserve.

the fed keeps buying $120 billion, and that is created by new cash, new money they create for the financial sector in the form of bank reserves. those bank reserves are not wanted because nobody is using them. they are not being traded among each other. there's so much liquidity that people would rather put that money back at the federal reserve via their various facilities. there is no point in tapering. we have to remember there's all this potential liquidity in the market. the fed is not going to be reducing the balance sheet anytime soon. there is still going to be a lot of potential liquidity available if needed. i think from a market liquidity perspective, it is not going to be an issue for several years. tom: into your weekend writing and reading, if you look at the 10 year you know there's a benchmark for our radio and tv

listeners. what is the appropriate time frame you are studying on the 10 year yield? is it to the end of the year, is it three years? which is it? ira: i think towards the end of 2022. tom: 15 months? ira: 15 months or so. if you are managing a large portfolio you care about your end because your conversation is derived by that, but we have to start positioning for portfolios today for how you think 2022 will shape up. the question now is do you want to slowly get rid of your longs? if you are very short do you want to start recovering some of those? at this point i would rather be mildly underweight duration thinking we will have a bit of a selloff in yields and you will have negative returns. it can be interesting because we have never had come in the time series, 50 years or so in the

bloomberg index, we have never seen two consecutive years of negative had this to be the first time ever we see 2021 and 2022 both have negative returns for that particular index. tom: thank you so much. her terrific five decade perspective. -- a terrific five decade perspective. here's what you need to know. their incredible nuances in narrow ranges right now, futures go read off the report now advanced 10. nasdaq leads the way. small caps flat right now. critically, the vix comes in. we have just gone to an 18.9 -- that is the good feeling. lisa abramowicz, i do not get much information from the tens

and the 30, but the real yield goes to -.92. there is some bond dynamics. lisa: the take away is it is not going to do rail the federal reserve from tapering. it will be more dovish taper that people will readjust their expectations for when the fed will raise rates and they've indicated it might be a lot longer. i do think this is a confusing report with a lot of moving parts. it is the public school teachers and staff -- the covid sensitive sectors did see employment games. we have seen the participation rate fall. to me it is a huge? . michael: i candidate employment report came out the same time as ours. 157,000 jobs. canada has now recouped the jobs that is lost. we have not.

tom: great perspective of closing that jobs cap. -- that jobs gap. it will stay with us on bloomberg radio and bloomberg television. we will have all of the opinions from the street and from bloomberg intelligence as well. the opinion of the secretary of labor, the gentleman from boston, marty walsh, not only on the american labor economy, but on what the red sox need to do to beat the evil horde from tampa. this is bloomberg. ♪ jonathan: from new york city, good morning. a big downside surprise on the payrolls report. is 194,000 good enough to get it

done? that conversation coming up. "the countdown to the open" starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york we begin with the big issue. is 194,000 enough to skip over a low bar? >> this jobs report is huge. >> they were likely to taper started in november. >> the ceiling is important. >> they told us they start november. >> you would have to have a pretty catastrophic payrolls. >> the fed has been pretty clear in its communication.