shortages in the economy which i believe are showing through in hiring trends. >> covid is the enemy of everything and exactly the case in labor markets. >> a substantial repricing of growth and inflation. >> growth is much more moderate and inflation is on its way back down. >> reflation, recovery is still ahead of us. >> announcer: this is bloomberg surveillance. jonathan: the week begins. good morning, good morning, this is bloomberg surveillance live on tv and i am jonathan ferro. tom keene put it in a headline, the week begins on wednesday. tom: it begins tomorrow. the inflation picture with all

its complexities. jonathan: it is a test for the big story we have discussed for week, the upside risks for inflation. the upside risk for inflation. tom: the conversation we had yesterday was important. he implied we need to be very careful. you can get back to a 4%, nominal gdp. that is a topline gdp. i don't think anybody is mentally prepared for that. jonathan: we can pretend it is a monday and welcome back in lisa and brahma wits. -- risa abramowitz. -- lisa abramowicz. lisa: the idea that consumer sentiment is declining and this, white is confidence in the

reflation story picking up and we are seeing small is this optimism, disappointing. people's optimism seems to be waning on a consumer level. what gives? jonathan: look out for the fed speak. lisa will give you the day ahead. the s&p 500, totally unchanged, advancing a single point. outside of that, yields in on tens, reopening the bond market, three basis points. the two year yield 34 basis points. we keep inching higher. tom: i am surprised at 160 on a 10 year yield. i thought on it close we would get 162 and stay there. jonathan: lisa, we keep climbing, crude, 80.70. wti up 1%.

lisa: crude and 10 year yields climbing in tandem. how does this make sense when people talk about stagflation, shorter term increases in prices will dampen demand? this is something that will be an ongoing theme. u.s. august job openings, expectations to climb toward the 11 million mark. this is the big labor market question, why? where are all of the workers? why are they not coming back. as you have been saying, the vice chair, richard clarida, speaking at the annual meeting. the question is whether he will respond to the comment that the fed will limp out and not necessarily hike rates if they see disappointing data points people are expecting. we will hear from the atlanta fed president on inflation. the u.s. treasury planning to self $30 billion of 10-year

note. we have sealed -- seen it yield climbing the highest since june. is that inflationary long-term. is this a knee-jerk of withdraw from international buyers? tom: see what we missed yesterday. jonathan: i missed lisa. lisa: fired up and depressed at the same time. jonathan: southwest positive in the premarket. positive .6%. have we figured out what is going on with that airline? tom: no. we haven't figured out the imf, we haven't figured out southwest air versus the other domestic carriers, and we haven't figured out tomorrow with the inflation report. jonathan: will you trust southwest with your booking around thanksgiving?

will you trust southwest with your booking around christmas? tom: no here and i could be completely wrong and i defer to the experts, but it sounds like they are trying to run it lean and mean. jonathan: and can't find pilots. it seems to be a problem if you want to fly planes. tom: we are so amply staffed here that we don't run with that psychology. jonathan: marvin: marvin loh --marvin loh joins us now. a quote, this week is likely to feed fears and we think cpi risk is to the upside and rito growth to the downside could do you agree? marvin: yeah, i have been in that camp. what is interesting with some of these discussions now is not only are we acknowledging that 2021 is not evolving the way we thought it would be, but 2022 is

not potentially going to be the pickup. and that has been the most interesting thing with the revisions. it is an overall decline other than a shifting of the feet. lisa: why are 10 year yields rising? marvin: it is very much an energy story at this point. you hit various fresh holds when it comes to different asset classes. with the stagflation discussion as rampant as it is, it caught the market off guard. you had such a great intro, because you touched upon all of the questions in the market right now. how long is covid shortage, challenges with hiring goes on is something the market is struggling with, because it's a lot longer than we thought at the beginning of the year and a couple in's ago. lisa: go back to this idea it is the energy story that is letting

yields rise. this doesn't make sense if people are viewing this as a stagflationary type of drop. ewing higher prices as damping sentiment as we have seen survey after survey. can you square these two ideas? marvin: ultimately in the intermediate term, i am not in the stagflation camp. this competition around slower retail sentiment and sales very much is feeding into why inflation eventually will come off. it is really the constant barrage of shortage discussions, how challenging the holiday season is going to be in terms of securing toys for your kids, and how long the labor market shortage is going to last a that keeps it front and center for a while. certainly there is a period when we have the savings and it is going to keep everything

bouyed. real yields, before the fed around 90 something basis points and now back. we are not changing the longer-term view. it is just maturation's in the short. driving markets. tom: there is a frenzy of narratives. what i find fascinating is for the most part, the narratives are short-term. if i am an adult and i have a two or three or five or 10 year investment perspective, am i supposed to sell now and go to cash, or do remain invested through this frenzy of narratives? marvin: personally, you remain invested. when you are talking about negative yields, negative real yields to the extent and the developed market, and we always

look to earnings for clues and look at the valuations and shake our heads because these are valuations we haven't seen than in other stressful periods, but you remain investment and make your calls in terms of where you think monetary policy is going and where you think the challenges are from a growth and demographic perspective, which haven't changed since before the pandemic. jonathan: can you talk about the u.s.-europe divide kumar -- divide? marvin: the prospects in the u.s. are stronger. we are still looking at above trend gdp numbers, even though we are bringing them down, speaks to the strength in this economy. when we worry about job shortages, it is because the demand is there. earnings estimates are continuing to increase. my equity colleagues are pointing out margin expansion is still in the cards for next

year, even if the growth of margin is slowing. jonathan: interesting. marvin, thank you. marvin loh. euro-dollar, stink short. to turn this one around saying we need the ecb to get hawkish and talk about rate hikes, probably not going to happen or we need the fed to get more dovish, unlikely. tom: i believe the barbell of u.s. and europe and also noted the yen dynamic as well. i have dollar-yen. help me here. 113.30. that is two standard deviations, weaker yen and an indication but also an indication of the tension with europe. jonathan: fx, crude 83.63, unchanged this morning.

80.50 right now. this is from raymond james, above 80 he says, it will be a combination of opec's response and threshold of pain and demand. i wonder how much pressure builds on the former from this administration specifically leaning on opec-plus to get something done. lisa: this is really the big question, when are we going to hear more noise from washington, d.c. for opec-plus and why isn't there more of assigned to the shale patch to get restarted. jonathan: where else can you go which is brutally honest when saying the week begins tomorrow. you can't go anywhere else for that. lisa: of course that is what i am thinking. jonathan: we missed you. your equity market unchanged. up next, a market asset management. the audience can't wait.

from new york city, this is bloomberg. ♪ >> kim jong-un showed off an arsenal of missiles designed to frustrate defense systems. it was a rare display that appeared to be the latest effort to make a medic stalemate he blames the u.s. are creating regional tension. the house is set to vote on a short-term increase in limit to avert the immediate threat of catastrophic default but sets the stage for a bigger showdown in less than two months time. the international monetary fund will keep the managing director. the board viewed accusations that she improperly influenced china's business. she has denied wrongdoing. the number of people working in

the u.k. went about the pandemic levels last month, an indication of a stronger labor market that may lead the bank of england to raise interest rates. payrolls rose by 200-7000. -- 2700 -- 207,000. boosting capacity to 2019 levels , with the lifting of travel restrictions with easyjet. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am leigh-ann gerrans. this is bloomberg. ♪

>> tapering is very likely. that is going to take until the middle of 2022. the forecast is much more moderate and inflation is on its way back down to something like 2%. in that environment, i don't think they are going to move directly to rate hikes. jonathan: wonderful to catch up and start the goldman sacs chief economist. good morning. your equity markets shaping up, down three, let's call it negative for. it is a mild move lower. yields on tends about a basis point as the treasury market reopens. 159.79, yields -- 15979.

the fx market, euro-dollar unchanged on crude holding on to 80.47. it is about 8:18 p.m. in brisbane, australia. it was written in, i watched it truly for tom keene sport news. my goodness, george. what do we need to know about the baseball. get it done. tom: it was exciting. i have been to a zillion games at fenway park and have not seen it that fired up. jonathan: do you want to tell the audience what happened. tom: the better team was defeated. jonathan: you support them again? tom: they are way in the mix and will go up against a tough houston team or a renegade white sox team. jonathan: one man in australia happy. carry on.

tom: is what you do in brisbane. joe mathieu joins us. the radio silence on social policy and infrastructure as well. the idea of a very different president and all the warring factions of the democratic party . what is the biden strategy that you glean on your radio program? joe: i remember being in boston for the anniversary of the boston marathon bombings went vice president named joe biden came to town to mark the occasion. a big speech at the heinz convention center. he said we are americans, we own the finish line. he used that line again at the next democratic national convention with regard to the country, not just the city of boston. that does expose and embody his

world view. we will use a lot -- we will lose a lot of battles but as long as we win at the end of the game, that is where joe biden is with the long haul trying to get moderates and progressives to gather. tom: i was at the boston convention and met twice with senator obama, long ago and far away. i looked on the kennedy clan watching ted kennedy in his final moments essentially with his gathered democratic rather in. -- democratic brethren. that is gone. is the president part of that part of the new liberal, aggressive democratic party? joe: i think it depends what day you ask him. he was a product of that will happen when he went to capitol hill when things were falling apart, he sided with progressives and said, this is obviously the heart of the party , and i'm paraphrasing, and said, we will put the structure

and reconciliation together. they seem to be guiding this conversation so far, despite loud cries from moderates. tom: do we allow paraphrasing on surveillance? i can't remember. lisa: we do tuesdays and thursdays. joe: tomorrow is the first day of the week, but it doesn't count. lisa: oil prices amid the backdrop of building infrastructure, are we looking for a washington response to encourage opec-plus to put more? joe: i am always looking for a washington response but washington doesn't have a lot to respond with. we have seen this with administrations, particularly inching up on election time. we could well see the biden white house suggesting a willingness to use reserves. if you as republicans on capitol hill, they want to start

drilling for shale i wonder when that might start happening. it is something that would run totally opposite from the biden climate agenda. lisa: the idea here that they want oil prices to go down but they also want to support the green if occasion -- the greenif ication of the u.s. economy. you think they resolve these? joe: they won't unless gas prices are moving higher. it is not always embraced by the climate agenda in the white house. everyone knows that that israel. you can talk about inflation, drug and food prices, but gas -- everyone knows that that is real. you can talk about inflation and drug and food prices but gas prices is what they talk about. jonathan: great to check up.

joe mathieu of bloomberg checking out on bloomberg radio at 5:00 eastern. it is the politics of crude. tom: i am sorry. i am old-school on this. there will be a tip point on gas. when we look at aaa and unlighted gallon of gas, most of listeners and viewers are saying, i am paying a lot more than that. you get more and more people towards four dollars a gallon, that is the third rail of american politics. jonathan: with -- we will hear people say that is not important and let's strip it out. tom: the gap is huge. i am as guilty of that as anyone else. it is about driving around. it is an american thing. there is a difference here that i can't articulate it versus

italy or the united kingdom or poland. there is a different tone and it is a third rail and the moderates know that. jonathan: lisa, 83. it is clear we got back to the threshold, pain threshold for a lot of people. lisa: wall street people are people to. jonathan: please move on. lisa: i will move on. it is not just the price people pay at the pump but natural gas prices are going higher and food prices are going higher. it is the perfect storm of all of these things coming together and how does that bleed into the biden agenda? it is pushing against it. i wonder how they respond to both of these theoretical goals of becoming greener, reducing carbon emissions, creating jobs at a time when you have frictions and people don't want to pay more.

jonathan: they need to nominate a fed chair at some point. your equity market down put 1%. lara rhame, chief economist joins us soon. she is a person, a real person. i am told, tom, there are two of us in australia who enjoy the sport. congratulations. ♪

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jonathan: equity futures down on the s&p about.1%. nasdaq, positive on the russell. the week begins tomorrow, earnings season begins. year-to-date, on s&p 500 and on the banks, we look like this. on the s&p come up year-to-date by 16 percentage points. the bank index up 38%, and since september 22 when the fed meeting started about higher interest rates, the bank index

up 10% and bank of america is up 12%. that is a big move coming into this week for earnings season. we reopen in the treasury market with twos, tends, 30's -- 10, 30's. the front end is the highest we have been at since march of 2020. there is a heartbeat at the front end because there is a bigger conversation about higher interest rates. 34 basis points. vice chair clara later -- cla rida later. tom: thank you so much. lara rhame joins us from fs investments.

one of the themes besides waiting for inflation are the narratives out there right now. how do you take a set of narratives, some of all of our fears -- a sum of all of our fears and put it into a forecast? lara: the narratives are completely new to us. i think over the long run you need to just stay with your conviction that in the u.s. we are probably going to work out things that are private sector driven more quickly than in the rest of the world. it is for that reason i think u.s. recovery and continued strength look more positive than the rest of the world. it is important to realize we are dealing with narratives, some we have seen before like

oil. we have seen this story play out. you see some of the supply chain and in particular the labor market, labor supply shortages. they hard -- they are hard to explain. i don't think it is a one-year story, to your point. tom: how do you hingedly consumer into this? headlines yesterday talking about it weaker consumer that get you back to trend gdp. do you buy that the consumer is the tip point? lara: looking at retail numbers, i think it is consumer confidence that will be critical to watch. higher oil prices and energy prices, not being able to get toys at christmas, those are the things that erode consumer confidence. when i look at what is happening right now, the consumer

continues to be the focus. later on, we have seen a lot of durable goods and consumption throughout this pandemic. there is only so many goods you can consume. there is a lot of pent up demand coming out of sessions that we see. while we have good traction on the balance sheet side of the consumer, i don't know if we have the penta manned that will keep us growing -- that pent up man that will keep us -- pent up demand that will keep us growing. jonathan: what is the fed's role in all of this? lara: that is something we are going to have to -- the fed has make a hawk us -- hawkish pivot.

i think you want to finish that and wind it down in mid 2022. expectation is high right now. markets are too aggressive in pricing in over 100 basis points of rate hikes by the next two years. i think they will squeeze in 100 basis points within just one year. i think at some point you get the fed send we are going to be cautious, and they want to measure. jonathan: you told us what the market is pricing, what are you looking for? how big is the spread between you and everybody else? lara: i think they stay on hold until 2022. i think then you get maybe one rate hike the end of 2023. we have seen the fed, optimistic

on the economy, hoping to can have the room to raise rates but they have given themselves more runway than they have. lisa: what is the datapoint the fed officials will cling to as justifying staying on hold as long as you think? lara: i think we will see inflation come down. it remains persistently higher than it has been prior to the pandemic. but if we see growth decelerating to 2% or 3%, that is where we were and where our potential gdp growth is. data points will focus on the labor market. lisa: we have seen goldman sachs and others downgrade expectations for growth and not ring forward or delayed at some of the growth to 2022. are you in the same camp, downgrading expectations for growth as the shortages continue? lara: absolutely.

when i at it up i get around three in -- around 3%. there is no reason why we shouldn't have 4% 5% in the fourth quarter. in 2022, i think we decelerate faster than people expect. tom: where we are, we are going to get all this information out. everyone has a parlor game of fed height -- rate hikes. do we need to wait to autumn of 2022 to see what we will do in 2022 and 2023? lara: absolutely, and especially with so much of the narrative being driven by things that are totally outside their control. this is america, we do expect private sector to work it out, but it still is an environment where you end up with some risk

off. you see private sector working around supply chain issues, but heavily favors the larger players. you do end up with pressure on small business you do end up with pressure on households given higher energy prices coming from a lot of other areas of the economy. tom: this is so important what you say, the split in america and what it comes down to in talking to the nobel prize winners yesterday is the new technology accelerated the pandemic brings on more pressures which has only the big guys when. is that where we are? lara: i think that is where, if there is any way for regulation to help us, it's to help us continue to elevate small business. something that was so extraordinary during the pandemic was that small business

effort was done in an emergency situation. right now when you think about markets going in to the end of the year, there is a clear concern about what we are seeing with supply-side destruction but also efforts to work it out. i think they will settle for just doing less. lara: good to catch up, lara rhame, fs investments. this is too tight and hawkish. lisa: i love that she said that there was a hawkish pivot. she is also the second guest to mention toy availability as a barometer of consumer sentiment. that will really crimp people's attitude heading into christmas time. jonathan: that is a lot of worried parents.

tom keene, get the christmas shopping done. tom: it is funny, and i know we are going to talk to johns hopkins in a minute, but we are having an american discussion, worried about narratives assuming covid is fixed or really on our way to doing way better. there are so many other parts of the world with that is not the case. i look in australia, you look at the australian football league and i'm not sure the brisbane lions are going to get it done. jonathan: you've never watched it in your life. i used to watch the rugby league, the broncos. tom: i am more concerned about the afl and what the liens are doing. -- lions are doing. jonathan: i have to make a joke about it. lisa: those two people are watching surveillance for the

sport updates. tom: you don't have a heart. you are heartless. lisa: he is a person too. tom: there are parts of the world are where we are but i want to see it brisbane can do it against sydney. they are not the same as they were. when they had michael voss they were better. jonathan: coming up, dr. adalj : joins us. your 10 year down to basis points to 1.5926. this is bloomberg. ♪

leigh-ann: washington averting the immediate threat of catastrophic default today. the house scheduled to vote on a short-term increase on the borrowing limit. it is good for less than two months and then congress faces a bigger showdown over debt and spending. oil above $80 today. >> texas intermediate futures little changed, expect haitians -- expectations demand will lift . the european union record demand for green bonds. more than $156 billion in orders today for $14 billion of securities aired the money will be used by eu nations for energy efficiency, and climate change adaptation. here in the u.k., a parliamentary report found that

boris johnson's government made serious mistakes in the early handling of the pandemic. lawmakers say imposing a lockdown quickly would have saved lives. in china, tesla overcame a slump in car sales are the electric vehicle rose for second month in a row, more than 52,000 teslas sold. china's auto sales fell 17%. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am leigh-ann gerrans. this is bloomberg. ♪

>> it doesn't mean no virus and

no risk and there couldn't the outbreaks here and there, particularly where there are pockets of people who are unvaccinated. so i think the more likely scenario is we will be the with the virus and hopefully the been with a low level of the virus rather than a medium of of the virus. jonathan: we show that hope. from new york city this morning, good morning. your equity market unchanged on the s&p going nowhere. a break at 1.60. euro-dollar one point 1556, unchained. $80 and $.75, up about $.20 on the session. call it a third of 1% higher. tom: we have a thing called

launch pan which is a matrix. i am sorry, it has a holiday blinking to it. jonathan: because it begins when some -- when tom says tomorrow. tom: it is sluggish lights blinking on and off. a little bit of a window into the adult nest of the pros -- adultness when we talk about the pros. how much is v.a. it's berg among -- v.a. pittsburgh among other hospitals. he and a team went into the trenches of anti-biotic consumption wrapped around infection in a hospital and the overweight on that on a viral pandemic. we never talk about this stuff.

amesh adalja thanks about it and publishes. are hospitals going to get back to normal or is the linkage on viruses and bacteria meet hospitals are forever changed? dr. adalja: hospitals are probably forever changed. we have not seen an infectious outbreak impinge hospitals for this long since 2018. hospitals dealing with covid plus products plus strokes plus all the other bacterial infections we see. there has been a reconfiguration of how hospitals are from personal protective equipment to visiting hours, all of that has been changed and hospitals are much more attuned to the threat of infectious diseases. in the threat they never cared about them because it was an afterthought your they were thinking about surgeries and now they have to be resilient to infectious seizes. tom: microbiology is

staphylococcus and the worry about antibiotics and losing the value of antibiotics. how does that change within and after a viral pandemic? dr. adalja: what we have seen is there is a lot of inappropriate antibiotic use for covid-19. so many might have covid -- pneumonia from covid-19 and they might get antibiotics started even though they are not necessary. we have seen increased resistance in terms of the bacteria that live in their lungs and body because people are inappropriately prescribing antibiotics. when you look at the long-term public health disease threat, and about it distance is probably the biggest we face. that is something that is really important that we not take our eye off of the long game in infectious disease. bacterial resistance has to be considered probably the top priority. lisa: if there is another pandemic which a lot of people

expect, and you focus on all of the other issues percolating around the world, are hospitals prepared for that? dr. adalja: they are better prepared than in the past but it shows how unprepared they are in general. hospital preparedness is often an afterthought and something they do to check a box to meet requirements and focus on mass casualty accidents like a shooting or a fire or something like that, not so much on pandemics or things that are a sustained change in the way they operate. that has to change. you have to have the executives talking to emergency managers. it shouldn't be an afterthought that they basically have no communication. this has to be integrated into hospital operations if we are going to be prepared, even for severe flu season. lisa: a lot of people are discounting covid in terms of the ongoing backdrop. it will fade, people are

counting on that. but it is used for explanation in the labor market frictions. people are saying long covid or fear of covid is keeping people out of the labor market. what has been your expense for the very side effects of covid and how that impinges on people's ability to work? dr. adalja: there is a small subset of people have a case of covid who haven't back to their baseline. i am excluding the people in the icu, because they are going to have post icu syndrome and will take them time to get to their baseline. we don't quite know a lot about this other than it happens in older people and more likely in females and people with other comorbid conditions we don't know what fits into the criteria because some people may not have gotten their taste and smell back where others can't walk up stairs. we have to do science to know what is going on to define it and study it and come up with treatments and there are people coming up with treatments. it will be time before we get

our hands around long covid and what treatments may work. tom: very simply, where are we on masks? dr. adalja: we know now during this pandemic that masks do work and play a major role, especially when you are talking about an unvaccinated population. mask wearing for the vaccinated has very marginal benefits, maybe for some people risk-averse. they work for other respiratory viruses, other than covid-19. that is why people didn't have common colds or influenza. we may see that become part of the culture, not because it is a mandate what people saying i am in a crowded place and this is something i think we can use to blunt any respiratory viruses we may encounter. jonathan: we have to leave it there. dr. amesh adalja there.

a milestone in the u.k.. the number of workers on payrolls in the u.k. above pre-coronavirus levels last month. we've got there. a ton of job openings in the u.k. as well. that conversation about higher interest rates in the u.k. gets fuel from the labor market conversation. tom: i agree and what is so important is getting back to the level and then extrapolating the vector before the pandemic and then getting back to that, and we are even beginning to see some trends where we are getting leveled back to the presumed extrapolated vector. those are hugely constructive signs. jonathan: we have got some work to do. maybe a few more months of data. having this conversation who would hike first, at this point,

it looks like the bank of england has more than its nose in front. lisa: the question is, how serious the response will be and how quickly they will reverse course. i am just saying. there is a question, how sustainable is the labor market strength in the headwinds. tom: we will learn more from the auction this afternoon. jonathan: this is bloomberg. ♪

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>> there are a lot of delays and shortages in the economy that are beginning to show in hiring trends. >> we have seen a substantial repricing of growth and inflation. >> under our forecast, growth is much more moderate, inflation is on its way back down. >> the whole reflation recovery trade is still ahead of us. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: earnings season just around the corner. 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 equity market positive