labor market adjusting to a shock. >> the recovery is seeing divergence. >> the macro shifts that were in place before the pandemic have not changed. >> this is not a typical recovery. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: let's get this week started. for our audience worldwide, good morning. this is bloomberg surveillance live on tv and radio. alongside tom keene and lisa abramowicz, i am jonathan ferro. tom keene front and center. we have a bigger rate hike debate. tom: you highlight goldman sachs and the bank of england. there is much more going on than that. the major central banks versus others whose hands are forced by inflation. jonathan: they are already

moving. let's look at the front end in new zealand, the u.k., and the u.s. in new zealand they have already hike. the u.k. is encouraging the move at the front end. the united states is doing anything about. this is becoming a bit of a market test for chairman powell going into november 3. tom: what you see, and this goes to the central banks, is the linking in of energy costs, hydrocarbons into other commodities. i was younger at the last time i talked about that. jonathan: central banks are starting to respond. we are seeing it in the u.k. much more so. could they hike? goldman says november. than it is onto the fed. forget about tapering. it is on. it is what they talk about around the interest rate discussion that has been sparked up over the last couple of months. lisa: if you take a look at futures contracts, traders have brought forward two rate hikes

forward over the last year. we have a slew of housing data. this has been the one factor that has been the question for fed officials. they are paying attention to rent. it is getting higher. it is a stickier gauge of inflation. jonathan: down 16 on the s&p. -0.3% on the s&p. the nasdaq is down 0.4%. on the s&p 500, we are within a couple percentage points of all-time highs. in the bond market, yields are up. breakthrough at 1.6089. euro-dollar 1.1581. we are -0.2%. lisa: we also get a sign of how much the supply chain disruptions may be peaking.

at 9:15, we will touch on the u.s. september industrial production. the idea is how much hurricane ida and all of the labor shortages and the higher prices for components really crimped factory production and output in the u.s. we get october housing market index data. rents are getting higher at a faster pace than the federal reserve would like. housing prices are up 20% year-over-year. frankly, developer sentiment has been declining as labor market shortages have picked up as components have gotten more expensive. i know tom keene is watching. he is buying these apple devices for every dog and child he has. apple is unveiling the first redesign to its macbook pro in five years. people are looking at what is going to be their indications on

supply chain disruptions. this comes ahead of the next two weeks earnings from big tech. netflix tomorrow. everyone is going to be talking about squid game. we get tesla and intel on thursday. the following week, we get the big tech giants. jonathan: the first redesign in five years, it might take five years to get it. tom: optimism, tech stuff is getting made. the fact is this stuff is powerful. the fact is people are using it at the office. what i observed in washington was massive work from home. jonathan: i love when we all ignore each other. appreciate that point. lori, thank you. tom is going to have a drink. he is going to settle down. we are doing this in the face of slowing growth in china. we are doing this in the face of

the conversation about higher interest rates at the federal reserve. what does the resilience of this market say to you? >> i think the resilience of the market has been remarkable. one of the things we noticed last week was the big banks were talking about how much cash the big banks had sitting in their bank accounts. the underlying assets out there for corporate and consumers, that strength of the balance sheet has made talk of growth premature over the last month or two. we have clear speed bumps. central banks are one of them. the balance sheets fine. consumers are in great shape. the appetite is healthy. that has allowed investors to look through these supply chain issues. lisa: in your recent note, you said there are signs in the data that supply chain disruptions are peaking. what are those signs? >> one of the things we have been talking about over the last

few weeks is if you look at the relationship between global covid cases and freight costs, global covid cases tended to be a leading indicator. we started to see some modest declines in freight costs. it is still early days. that is one of the glimmers of hope. some of the others have been looking at regional fed surveys where we look at indexes on delivery times and backlogs on earners that are hard to feel. -- hard to fill. we are seeing growth that is a little slower. that is something we talked about a month ago or so, we have seen the rate of growth start to come in. these rates have changed. when they start to improve, that is a necessary precondition to getting out right relief. we think we are starting to see that in a lot of different parts of the data. lisa: does this mean it is time

to start buying consumer discretionary, industrial material? >> we are neutral on all of those sectors. we did not go to on bear. we noticed the rate of upward positions was starting to decelerate. interior's is probably the safest place. the valuations there are already cheap. industrials and consumer discretionary is still looking pretty expensive. one of the things we have been talking a lot about, if you look at industrials and materials, the rate of upward revisions has fallen like a rock. it is straight down. we are seeing levels of upward revisions that are consistent with bottoms in that particular indicator. we think there is a good chance a lot of these supply chain pressures are baked in. tom: the gloom crew is taking a

view of earnings as being problematic. you say they are wrong. you say there is a positive tilt sector to sector, company to company with your analysts. discuss that. when you listen and read your analysts, what are you listening and reading? >> it is a great question. once a quarter we do a check in with all of our analysts. we survey our analysts across the industries we cover. we say what do you think in terms of performance and what do you think about fundamentals? what we have found is they are still looking for a strong outlook for six to 12 months. they have favorable views on the fundamental backdrop and cash employment. the valuation views have gotten better since june. they are concerned about margins. they see good indicators over the next six to 12 months.

that is the boots on the ground feel. even on supply chain issues, only a handful of them told me it was a major problem for their industry. most of them were in the moderate problem cap -- problem camp. i get accused by some investors of being too bearish. i get accused of being too bullish. it is not heroic. it is a trend like forecast. we expect the market to continue to move up in the year ahead. we think the bones of this economy are strong. i have not heard anything in the last couple of weeks in this early part of reporting season that has made me change that view. jonathan: constructive on the year ahead. great to kick off the week with you. the equity market down 15 on the s&p. there is a lift in european gas. this headline just dropping.

russia keeping gas supplied to europe limited month. tom: even saw a little pop in north america. i am going to say this as much as i can. there is a mathiness, there is a log convexity in the lme metals market like i have not seen going way back. i am talking 20, 30 years. that log convexity is french for acceleration. these prices are moving. jonathan: you mentioned how higher energy prices are starting to influence higher metals prices. we talked about it last week on this program. cutting back production because energy cost to get out of this -- to get this out of the ground is getting too expensive. tom: it is so important, and you literally have to go into the science of it. these are not financial instruments. these are not suits and ties moving paper around. this is tangible stuff.

there is demand and supply variance. coco is actually down today. these are processes, and so many revolve around $86 brent. jonathan: central banks starting to respond to this. you heard that from the bank of england. lisa: 1% potential interest rate overnight in the united kingdom. how is that going to help the energy price? jonathan: it will not, but they are worried about inflation expectations becoming embedded, higher inflation expectations. they want to do something about that. i don't know. that is up for debate. we are negative 0.33%. good morning. this is bloomberg. ♪ ♪ >> with first word news, foxconn

has unveiled its first electric vehicle today. it is a milestone that could boost the taiwanese electronics credentials as a serious bidder for apple's secretive automotive project. it is the largest producer of iphones. china is considering asking media companies from tencent to bytedance to let rivals access and display their content in search results. bloomberg has learned china is considering the policy, which would be a big step in beijing's campaign to break down barriers among the countries internet giants. key legislation in the fight against climate change might not get the final swing vote it needs to survive. west virginia senator joe manchin has told the white house and congressional leaders that

he will not support including a clean power provision in the democrat spending package. it would pay utilities for using clean energy and penalize those who do not. in the u, demand is out placing -- outpacing supply when it comes to london luxury housing. it is the fastest pace of growth in a decade and has now returned to pre-pandemic levels. even for those who can afford it, there is not much to choose from according to a report out today. the number of available homes is down 68% from a year ago. global news 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ ♪

>> i think overall we can

contain the of her grand -- the evergrande risk and prevent the contagion from evergrande to other real estate companies. jonathan: the governor of the people's bank of china. tom keene, lisa abramowicz, and jonathan ferro. we are -20 on the s&p. yields are higher on 10, up for basis points. we are higher on twos as well. higher rates expectations around the world. tom keene, your two year yield is now falling for basis points. it will be about what is next. tom: you are right, the two year

yield space comes up. higher yield than what we see farther out the curve. right now in washington, the nonstory in washington. the quiet in washington. i look at infrastructure, and i say how dead is dead? joe biden, you are in the room with the president when all he talked about was labor, labor, labor. i believe infrastructure is about labor. why is that this the top -- why isn't this the top of the presence pile? >> infrastructure is certainly the top of the president's pile. you say it is quiet, but is it really quiet? the democrats are really digging in on each other. look at what is going on in west virginia. bernie sanders, senator from vermont, writing an op-ed in the charleston gazette taking aim at senator joe manchin, saying he is the hold up for president biden's economic agenda. you have senator manchin quickly

with a statement saying he is not going to let this independent socialist be the reason why he bones. things are not quiet at the moment within the democratic party. tom: who does manchin, synema, who do they represent? >> he says he is not onboard with this clean electricity plan, which the president needs not just for his own climate goes here at home but to walk into scotland and cop 26 to say the u.s. has the goods to supply in terms of meeting those emissions targets. senator manchin, he represents coal and gas country. when you look at kyrsten sinema, it is a different story in arizona. she is for a lot of climate initiatives. we don't know this directly from her. her past history reflects that.

she was part of the green party at one point in arizona. you can see how hard it is for the president with these slim majorities in the house and senate to get his agenda done. lisa: let's talk about some of the details, the taxes for part of it. that could have some of the biggest ramifications for markets. >> at the moment, it is the same as we have had, no one making below $400,000 will see their taxes raised. you will see the rise in corporate taxes. that number might wiggle a little bit. we know from the letter this summer what joe manchin had as his top line. we are waiting on what is going to happen with salt, so the high taxes of states like new york and new jersey, california, san francisco, we don't know what is going on with the salt reduction.

moderates in the house say if there is no salt reduction, they will not vote for this agreement. they have not even gotten to that yet. there is so much that is still being worked out. because the fact that the top line number has been reduced so much, they need to start to pick and choose what is going in. lisa: there is also the issue of china tensions as the u.s. supply chain disruption. i wonder how capitol hill views the recent news that goldman sachs won full control over their efforts in china, the second major u.s. bank to chart this footprint in that region despite the tensions. how is that being read by the president or democrats? >> we have not heard from the president or democrats about this. we have the senate coming back today. the senate foreign relations committee will be meeting this week. there will be hearings on potentially the next ambassador

to china. tom: as we framed this up, it is the end of october. the calendar at the end of the year, very short days of congress. i don't know how many days are left where they are in session. it is not like john or lisa or i. you are working the same schedule they are. how constrained are they by the calendar, the small number of sessions? >> it is a great point. they only have days to weeks, not months in terms of having legislative days in session. they can extend that. they can take away some of those recesses and stay in the capitol. some of these deadlines are self-imposed to get that infrastructure package done. there is transportation money that would need to get past. they would need to do some small funding measure for 30 or 60 days. some of these deadlines the

democrats have imposed are on themselves. there is the december 3 one because that is the end of stopgap funding. that is when we have a new date for the debt ceiling. that october 31 deadline is self-induced. the mood in washington is that they will not make that deadline. jonathan: thank you for the latest down in d.c. and a bunch of deadlines. tom, is the red stocks dead? are you finished? tom: i am not. it is interesting. i go to the blood of sports that is out there. people only have so much time to watch this stuff. jonathan: i was thinking yesterday morning, patriots and cowboys last night, just do it in the morning. wasn't it great to wake up and just watch premier league football in the morning? tom: the great thing about it is

it starts and then it ends. jonathan: nighttime scheduling, i hate it. why do i need to wait until 9:00 p.m.? why wait until 9:00, just release it on a friday night and let me watch it over the weekend. tom: this is the revolution that is out there. i go to scott galloway's spectacular note. i said you are middle england, and you are worldwide. that is how you take local and take it worldwide. he is eluding to the korean television combine. jonathan: i don't know what that was about. you understand, read between the lines what we are getting it. lisa: the only tv to watch is morning television. that is the clear message. the whole point. tom: lisa abramowicz nailing it. jonathan: kicking things off on a monday morning. tom: will we go to a new high on

brent? jonathan: we might do. tom: you sound like you are already worn out. jonathan: not a shop. 25 minutes of this show would do it to anyone. from new york city, this is bloomberg. ♪ bloomberg. ♪

♪ jonathan: live from new york city, this is "bloomberg surveillance." futures down, 17 on the s&p, -4/10 of 1%. -.6 for russell futures. we have this conversation about high interest rates. the whole curve is just higher here. 10 is up four. the two year yield has doubled since september of 22nd -- september 22. it is about a rate hike debate,

sparked by what is happening elsewhere. the u.k., new zealand, yields higher by 14, 15 basis points on two's. of 24 basis points in new zealand. tom, here is the difference between the u.k., new zealand and the united states. two year yields are up across the board here. the u.k. is encouraging the move on the front end. new zealand is validating the move and the federal reserve is having nothing to do with the move at the front end. this is not a test for the u.k.. it is quickly becoming a test for the federal reserve. repeatedly, they want to separate -- they said they want to separate guidance from tapering and signaling of rights. this conversation is happening without chairman powell. tom: steve matthews wrote a terrific article on where the fed is in this debate that jonathan outlines. two good guests to give you a

monday brief. first, enda joins us. chinese growth is under 6%. what is the significance? >> two things going on, you have this energy crunch which has hit pretty hard. factories were told to curb their use of electricity. the result is that they are restricted. that drag down the initial side of things. the authorities are intervening. they are trying to get a cool or -- cool or get a handle on risk. that was a big drag on growth in the third quarter. the upside was retail sales. consumer demand was better than expected in the month of september. lisa: was the surprise the

headline number of 4.9% gdp growth or was the surprise that it was not lower? >> indeed, it was a question of how much weaker can china's economy get from here? most will say it will hit the growth targets this year. around 6%, that is pretty respectable for any other emerging economy. the question is how much support will the authorities tip in? they are still being disciplined about that. they are not willing to open the way other economies are. some support will be needed and some economists are worried the new g crunch -- energy crunch -- jonathan: there is a conversation now, increasingly so, about initiating and deploying that property tax. we have been talking about that

for a long time in china. what does the growth situation next year look like, with all of that in mind? >> the important point is that with the slower momentum heading into the beginning of next year, that will influence what growth target the authorities set for next year. the target this year was around 6%. people said that was easily achievable and it looks like it still will be. policymakers will meet in november and decide on what the growth target will be for next year. they will not set too ambitious a target. that will dictate how much stimulus and support authorities will need to tip into the economy. there is a feeling that the government is serious about this reform agenda and will push through painful measures, even if that means there is a hit to gdp growth. that seems to be the picture in terms of where we are at right now. tom: thank you so much.

damien joins us. 85 .98 on brent crude -- 85.98 on brent crude. the walls process, which you know takes energy, when you get your electricity from hydropower , that is part of the process of making zinc. we forget these are not financial instrument. they are real things, are they? >> they are. the copper prices can't be ignored. first, it was $70 to $85. we are talking about $80 to $95. all of this is ramping up and the reflation trade is back on. now, you see everyone going for commodities. at the risk of getting short rates, getting short credits.

that is where we are. tom: can you play the financial market off of the commodity guests you have? >> you have to. the way to do it is probably looking at some of the beaten up african credits. some of the african energy and oil producers, that is one area that has been hit hadley. i -- hit badly. i prefer to stay away from oil contracts. the volatility is difficult. it is difficult to inject commodity exposure and keep the ball low. lisa: a lot of people are getting on the same page with you. you take a look at where yields are. they have continued to climb with some of the highest levels in years, in comparison to where local currencies are. how much is this a commodity story? how much is this a fact that we have china slowing down material input for other economies? >> you are hitting the nail on the head read the belly has

steepened significantly, not just in the u.s.. we are talking about 117 on five year u.s. treasuries. real yields should rise. you have breakevens at elevated pace. i agree with you. the push from commodities and energy prices, the pressure on yields, nominal yields to go higher, remains intact. lisa: that said, a lot of people do see it, this story that tom was talking about, fed officials are seeing the markets wrong. we will go back to when inflation rate of 2.2% by the end of next year. if that is the case, is this an opportunity? or is this basically trying to catch a falling knife? >> it is as likely as the red sox eating two grand slams in the first two innings of a game. trying to target yields is anyone's guess.

it creates a risk for all global markets and global growth included, including emerging markets, where you see yields going higher. tom: yields going higher, when does it roll over to e.m. currency, where you can make big figure moves? i don't see it yet. >> i don't see it yet, either. tom: why? >> the geopolitical risk premium. tom: people are saying i'm sorry, e.m. is different this time. >> somebody emed me and said what is the focus on china property when it is a country that does not respect property rights? that was a bold statement. i don't agree with that. people ignore the fact that on friday, there was a potential death swap. tom: i thought you meant the death swap at the ferro house. >> premier sock are the blues

and the bees, you can't beat that. jonathan: it is nicknames, tom. tom: blues is chelsea, right? there is a guy who dresses head to towing chelsea, when they play. -- head to toe in chelsea, when they play. jonathan: i think i met him. did you meet him going to the gym? i've met him before. thank you. we should remember these people with names, tom. lisa, the hiking in emerging markets has been real. and it has been big. let's be clear about that. we are talking about 100 basis points in brazil. 125 in chile. lisa: the fact that you have not seen strength coming into their local currencies as a result is a warning signal to some people. the idea you have seen yields continue to climb up, people are not necessarily pouring their money into developing markets that are trying to reward them

with higher yields. that is a warning sign. jonathan: i won't get involved in the em-sterling debate. that currency has weakened this morning. the dollar is stronger. the government teat up a rate move before the year's end. november, this is happening. that currency is not stronger off the back of it. lisa: it bodes to your question, which is what does it do if the central bank is hiking into an economy that is not necessarily stronger, where you see inflationary pressures that are eating out some of the potential growth? this is a potential problem. i don't know what the implication is. jonathan: we experienced this for a long time. when a central bank has two hike when they don't want to, and they have to hike because of what is happening with inflation. it has been a while. tom: the ghost here, john, to all of these major banks, they

had to hike and then fax changed. that is the overarching mental construct that they want to avoid. jonathan: there was an energy factor. the numbers were different but there was an energy component in the conversation at the time. tom: this goes toward an inexact science which steve matthews captures today. it sets us up for a fascinating -- i don't know if december will be fascinating but i know november will be. jonathan: you can look foolish in hindsight. tom: i'd have you over for thanksgiving. jonathan: ok. tom keene, lisa abramowicz and jonathan ferro. from new york city this morning, good morning. >> with the first word news,

toyota plans to invest $3.4 million in the united states through 2030 to establish a new company and build its first u.s. factory plant. it will become the first automaker to accelerate the transition to electric vehicles through a factory push. the company says production will start in 2025. toyota does not disclose the location. facebook says it will create 10,000 new high skilled positions in europe within the next five years. that is part of the social media giants push -- the so called internet frontier the u.k. will miss out on. >> the e.u. is a fantastic way to be able to do business, considering the consumer market and the talent as well. it builds on the investments we have been making over the years,

whether it is the research development we have on artificial intelligence in paris . >> facebook says target markets for hiring include ireland, germany, france, spain, poland and the netherlands. bitcoin has rallied early today after falling over the weekend, ahead of an anticipated exchange traded fund. bitcoin has more than doubled since the start of the year. that rise has been volatile. global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. -- global news, 24 hours a day, on the air and on quicktake, this is bloomberg. ♪

>> this should have been a two dose vaccine to begin with. if you boost people who have

originally received johnson & johnson with either moderna or pfizer, the level of antibodies that you induce in them is much higher than if you boost them with the original j&j. tom: dr. anthony found she -- fauci speaking. the equity market is down 14. yields are higher. that has to be the story worldwide. we are 160, 160, not on tenants but on two's. doubling from september 22, about 45 basis points. take your pick, tom. the front end is sounding off and we are having a bigger conversation. tom: what is important is the ambiguity of wait a minute, we see the central-bank probability of action and is it because of

good news or bad news? that is a raging debate. we will cover that. there is no debate, tomorrow at the 11:00 hour, i will brave it. jonathan ferro coming along to hold my hand. i will get my booster shot. i took the first appointment. that is the only reason josh joins us. when we were kids, getting a booster shot was not discussed. it was something you did. why are we having this discussion? >> because at the beginning, we did not know when it was going to happen. most times, it is well known, before the vaccine is approved. here, we had an authorization, thinking there would probably be a booster shot. when it pops up, everybody is

trying to figure it out in real time. usually, this would happen well in advance. tom: do you have a clue, the duration of two vaccines and a booster shot? is that a direction -- duration of one year, five years or a lifetime? josh: we don't know but it is most likely pretty significant. we think that for that particular strain, it is going to be durable. most people are saying for a couple of years. the real question is whether there is a mutation in the virus that makes the vaccine not so good? it is not a booster, it is a different vaccine against a different virus that we might need. lisa: there is the issue, not only in the developed world's, that frankly it seems to be on the decline when it comes to the number of covid cases, but the rest of the world that might not have access to the vaccine. are the pharmaceutical companies doing the best they can to

increase distribution and supplies to the other countries that have not yet seen penetration with vaccines? josh: no, they are not. particularly, the criticism from moderna has been intense, because the company is selling a very small amount of vaccines, sometimes at high prices, to lower income countries. there are many parts of the world that have very poor access to those effective vaccines. i think pfizer is considered to being -- be doing a somewhat better job. we need a manufacturing capacity so that they are not dependent on exports. in the future, they can use that capacity if there are other vaccines that need to be made. the government funded the technology here. in many different ways, it is appropriate for that technology to be transferred effectively. lisa: where is the burden?

should it be on the public sector because it is a global health issue and it is not just a humanitarian one, it is also about health to get covid undercontrol around the world? or, is this really on the specific private biopharmaceutical companies? josh: there is such a mixture in terms of how this works. the technology is supported by investment from the public sector. the actual vaccine is only possible because of guaranteed purchases and upfront investments in the case of moderna, from the public sector. that is where the technology is. you can't say go fix it without the pfizer and magenta vaccine. it is our responsibility to the world, not just to be handing out vaccine -- tom: we have our way of measuring this disaster.

the good news is it is ebbing down, the number of deaths per day. do you have a target for number of deaths per day in the united states of america? josh: i'm looking forward to it going under 100. we are still at 1500 or so. tom: 1500, correct. josh: it is really high. i will feel like we are in a much better place at under 100 a day, which is totally possible with vaccinations and a little bit of passage of time. we have to keep pushing forward. jonathan: what is the efficacy of the j&j vaccine after six months? what are we finding out about that? josh: we are finding out that it is holding steady in the 70's, somewhere. particularly for hospitalization.

that is not as good as the other vaccines, which you are hearing at the fda advisory committee. jonathan: why are we still using that? why are we not pushing it to one side and saying the efficacy is not there? josh: that is not an unfair question to ask. part of the reason is it looks pretty good with two doses. i think that, and that second dose may be from one of the other vaccines. it might be that the fda will say it is fine to use a booster with a different dose. you are asking a good question. why start out with it if we have these other vaccines? i will give you one other reason. there are some people who are allergic to components of the mrna vaccines, they cannot take them. jonathan: thank you for that perspective. an important conversation as we start to find out more and more

about how effective these vaccines are, six months after the first shot and the second shot. tom: jonathan, when you hold my hand, i will give you the slice of orange. i take tang with me. jonathan: do you still need me to come? tom: it is still very emotional. it is either you or matt miller. maybe both of you? jonathan: equities lower and bond yields are higher. crude, we are staring down 84. tom: 86 on brent crude. jonathan: a massive move, year-to-date. wti up 72%. tom: her majesty, that is a

thing. it is refreshing. jonathan: surprise, surprise. do you want to go to dorchester? perfect, beautiful. this is bloomberg. ♪

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♪ >> i think the economy is on track to continue to expand. >> the recovery is showing divergence, and that divergence is going to get bigger. >> the macro shifts in place before the amendment have not changed. >> stop looking at the aggregates. this is not the typical work every -- typical recovery. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the rate hike debate starts early. for our audience worldwide, good morning. this is "bloomberg surveillance live on tv and radio," -- "bloomberg surveillance," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. a rate hike conversation starting much earlier than expected. tom: it is the shock and awe o