no. we cannot hide. >> central banks are not good at being nimble. >> the balance sheets are fine, the consumers in great shape. >> if we slow to 3% next year, we are still growing well above potential. jonathan: talking bear, acting a bullish. good morning. this is bloomberg surveillance live on tv and radio. equity market up 0.3%. four date winning streak on the s&p. tom: we heard optimism yesterday. the dip up 6% plus.

the drawdown is evaporating. we have a negative 1%. omg, the bear is humbled. jonathan: this is a comedy act. we just had a from bank of america from managers surveyed the least bullish report. this equity market keeps grinding. what they say is one thing. what people seem to be doing is another. tom: abramovitz and farrow really strong on twitter in the early hours. to me, it is stunning, october 2020. jonathan: lisa, we are doing this in the face of a conversation about slowing growth in china. two your story feeling a bit. for speak today front and center. lisa: fading growth might be the silver lining for a lot of bulls

-- the idea that inflation be contained by the fact that we are not going to enter some new regime. we are seeing earnings that are going gangbusters. at the same time, low rates, risk on. jonathan: an equity market with a lift. 15 points higher on the s&p. bond market yields, basis points of 1.5880. 83.40 on wti. tom: this is the province of commodity prose looking at the price of copper and looking three months and farther out. basically, lme warehouses show that there is huge demand or lack of supply. warehouses, 4.2 million square

feet to store tangible stuff. 594 soccer fields. jonathan: the term is monster bankquidation. lisa: i am trying to fit that was football references and coming up lank. this is a story behind data points with the crude. more expensive to drill because of commodity prices, labor prices. we will see the same trend in the housing data. the expectation is for a bit of softening but not much. this idea that there is so much demand. it how do you bring supplies online at a time with are not above elders? today the second day of the conference. interesting to hear from howard marks, as well as steve mnuchin. it is here with yes to say about the debt that is increasing. cathie wood.

netflix is reporting third-quarter earnings. a lot of people are keen to see if they can justify the more than 90% gain in the shares. everyone is going to talk about squid game and whether they should stop their children from watching it at night. jonathan: thank you. nord stream 2. a gas pipeline from russia to europe across the baltic sea. the politics is fascinating. a headline dropped -- russia has signaled that europe will get no extra gas without nord stream 2. you want to weigh in? tom: is it every year we do this based on the calendar? jonathan: it seems to matter more this time. tom: from america, we are

distant to this. basically, europe freezes unless they play nice with russia over hydrocarbon. jonathan: the american administration, this one and the last one, is a mess as well. i am happy with the germans about the arrangement. tom: i seems to meet like itt is a calendar item. you think the russians are serious this time? lisa: the idea that there could be a shortage, the people are paying twice as much for their gas bills, that changes the equation politically. jonathan: russia signaling to europe no extra gas without nord stream 2. annmarie hordern can add some color to that one. let us turn to our first guest from mass growth -- from macro risk advisors. you call inflation an accident waiting to happen. >> these things are all related.

they are ultimately grounded in the transition from this lengthy period of global disinflation to something considerably different. we are all watching the data, seeing an economy that is growing, but it is bumping up against supply and demand this -- the result is going to be higher prices. the biggest risk is the degree to which equities, specifically growth stocks that sit at the top of the s&p 500, comprise so much of the market capital. there's a contingent on this low inflation. the fed just watches the data, -- date come -- data come. i step back and look at the interaction, the fact that the

s&p has got so much interest rate risk and it is a function of these large cap road stocks. then we have got this idea that inflation is rising and interest rates have not adjusted. i am worried that there is a potential that the market finds itself with a much less accommodative fed that has suddenly -- that suddenly now has conflicting mandates. they have appointed the same way as we have tried to get inflation above 2% for the better part of 20 years now. the conflict is what i am worried about. tom: let's say it is moving along, nothing to see. then you mentioned that optionality has decreased or investors who want to participate but escape on time. how do they accomplish that? >> optionality is about renting the market.

i like to see the renter does not pay for the plumbing problem. you couldn't walk away if things do not go well -- you can walk away. equity options-price he. crazy in terms of the high vix and in terms of the vix relative to the day-to-day swings in the s&p 500 -- they have been pricey. volatility is in the 30th percentile. it actually has been higher than implied over the last month. some of that is because we experienced a 5% drawdown. the opportunity to transform long-term exposure through options is favorable. to go back to how john led this segment, there is action waiting to happen.

when we look at the price of insurance, we want to reevaluate it based on our forward-looking assessment. we are opening up on the precipice where something could go wrong in a hurry. lisa: it pains me to ask, but has been difficult to bet against optimism, and this market. you say it is an accident waiting to happen, but it has been for a long time. the fed repeatedly steps in. why not go the other way if you are trying to make the biggest returns at a time when bonds are losing money yucky -- money? >> there is a great point to be made there. the price of options was so expensive post-pandemic that it made sense to earn risk premium by selling them. the best time to be short options is right after a crash. that strategy has been sound if

carefully risk managed. we are getting closer to something that really could go wrong. it is all grounded in inflation. as you referenced earlier, as inflation comes down, everything is going to be fine. we do not have a strong idea that that is absolutely going to happen. the price of entry, of transferring risk in the market to options has gotten favorable. that is, especially as we approach the end of the year, the s&p is extraordinarily high. take some chips off the table, transmit to things like call spreads on the s&p 500. you can sleep at night as we get closer to the end of the year. jonathan: thank you, sir. this has been really difficult in this equity market. morgan stanley have struggled at

the index level call. they put that in their research. 88% of s&p 500 members have experienced a 10% drawdown. yet at the index level, we have only corrected by 5%. a huge anomaly. tom: we are back to management. i dovetail the morgan stanley caution. what a great job mike wilson has done with someone like ben landlord who has said get on board. yesterday, we had a guest who bar belt the strategy. jonathan: cuddled that index. hug it tight. the s&p coming into tuesday, we had 16 points. coming up later, a conversation with david solomon of goldman sachs sitting down with francine lacqua. this is bloomberg.

♪ >> boris johnson says global climate talks the u.k. is posting at the end of the month be extremely tough. the british prime minister made a last ditch call to world leaders for concrete steps to protect the planet. he says nations attending the cop 26 summit must have made promises to/emissions -- to slash emissions. >> we need to respect growth in temperature to 1.5 by the end of the century. we think we could do it, but we are going to need to see real action. >> johnson is hoping to use the summit in glasgow to showcase that u.k.'s leadership and

climate change. the u.k. will allow heathrow airport to increase ticket surcharges by as much as 56%. heathrow has been seeking to increase charges buys much as 95%. airlines have denounced higher fees. the fda is reportedly going to allow a mix and batch approach for covid boosters. the agency could act as soon as this week. it may say it is preferable to use the same vaccine when possible. moderna's ceo sent the company expects a decision very soon. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

>> what is so confusing about where we are is that you have

both shots hitting the u.s. and global economy. people say it is not right for the fed to raise rates, but there is oh demand situation unfolding. jonathan: such a fascinating moment and also confusing. tom keene, lisa abramowicz, jonathan ferro. equity market up 16. four date winning streak on the s&p and we add to it. in the bond market, we reverse things a bit. yields lower. lisa, how much fed speak is there today? lisa: it is ridiculous. jonathan: chairman powell is a

bit later. lisa: i was going to go down the list and then i realized it sounded bad. jonathan: on crude, 1.52%. tom: t commodity story is there. he other metals in a moment. the equity market -- the bears have been humbled. a bit going on in washington as people we gauge and adjust. joe mathieu joins us this morning. joe, i look at catherine wrangell in the washington post talking about the actual realities of something is a sick and simple as childcare -- of something as basic and simple as childcare. how do people in suits and ties actually write a bill about childcare? that underscores how distant

america is to a social contract we see in europe. what does leadership do about that? joe: they would love to know. it might come to fruition today at the white house, as president biden holds close sessions with moderate house members and progressives. they do not ci guy on childcare. -- they do not see eye to eye on childcare. we have joe manchin saying you should cap it. you have to be employed. that doesn't do a lot for families being run by rand parents. it is not driving with reality. we are nowhere compared to a week ago. this deadline on october 31 is drawing near. tom: this is the absolute part of the matter. we are trying to redefine an american social contract without having the kind of discussions that you're upon the case ago.

lisa: we are doing it at a time where there still are a lot of women out of the work horse -- workforce and childcare workers in short supply. joe, how much is the message relating with voters at a time when there still is so much haggling over the logistics of getting a vote through? joe: there is still no agreement in washington on why people are not going back to work -- never mind what families are being run by whom. there is no consensus. is it covid that is keeping people away? a different structure of the american family? no one is having these conversations, maybe because we started backwards with a price tag instead of figuring out exactly what is going to go inside this bill. that has been slowing things down. for has got their heels again and has a different interpretation of what a family

like and what these policies ought to be doing for them. lisa: much domestic focus in ec, but the world is moving on. russia is saying they are not going to provide additional gas to europe without a deal on the nord stream 2 to. then you have north korea appearing to have fired eight ballistic missile for the first time in two years in the south sea. what is going on there in asia as people tried to fight for that dominant position for trade and national security? joe: this also follows the hypersonic missile that china sent in august. we only found out about it a couple of days ago this is a whole different conversation, as most politics in washington appeared to be domestic at the moment. the president is gearing up for cop 26.

here i thought vladimir putin said he was not going to use gas as a political weapon. i am not sure how that headline moves joe biden this morning. you have got a president would like to meet with president xi --president xi. we are nowhere near an arrangement like that. tom: i met with mr. mathieu in washington and we spent the entire conversation on cop 26. is there a biden strategy to the sojourn to scotland? joe: get something done. joe manchin does not want to have this power grid component to the reconciliation bill -- that is not the headline biden wanted to leave the country with. he's been talking about other nations not doing enough. we cannot even figure out how to

clean up the power grid here. i am wondering if there's going to be another opportunity for a deal here. what if this component is allowed coal plants in west virginia to get some of this money? somebody has got to budge. jonathan: great to catch up as always. you can catch joe on bloomberg radio weekdays at 5:00 p.m. eastern time. october 31, u.n. climate change conference in glascow. that looks awkward, doesn't it? tom: i think you and i are going to be there. jon, this is so important. we are having climate change talks with all this up for in metals, which are front and center on pollution. one way to not pollute is to

take a settlement of your copper contract. lisa abramowicz once again is absolutely -- has absolutely killed it in copper like she did in oil a year and a half ago. she is taking a delivery in her living room. jonathan: can't we explain the difference between the stock price right now and the three month price? let us tie some of this together. there is a difference between what is happening with copper and what is happening with crude. opec-plus can do something about it. they can respond. this administration, the contradiction starts to emerge. they don't want to invest in oil in america. they want us to cut back, but at the same time, they want to ramp up because of what is happening politically. tom: what is important. lisa was in five is ahead of me.

jon, she was looking at 10 contract when i walked in. jonathan: lisa abramowicz, tom keene, jonathan ferro. equity market up 0.3%. this is bloomberg. ♪

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city on radio and tv, this is bloomberg surveillance. here is price action for you. equity market up 19. nasdaq, up by 0.3%.four days of gains on the s&p. within 1% of all-time highs. here is a single name -- danone. their stock is down. this from the cfo, we expect 2020 to on the same level as -- we expect 2022 on the same level as 2021.

stock trading -- that stock trading negative in france. let us quickly finish on the bond markets. it is yesterday in reverse. that two year yield comes up three basis points south of 40. let us catch up with francine lacqua. francine: i am at the science museum where we heard from the prime minister on innovation. one person who was in the room and who i believe had dinner with the prime minister yesterday is david solomon. david: it has been a while since i have been in london. i am thrilled to be back. good to be spending time with you. francine: the pitch from that u.k. government is come here, invest, be green. have they been persuasive?

david: i think they have a good pitch, but we have been committed to the u.k. for a long time. we have 6500 people here in the u.k. pre-pandemic, we built a new building, a billion-dollar commitment. we built up in birmingham. we see the u.k. is a tremendous opportunity for us to have a significant outpost, serve our clients and provide resources across the continent. francine: has that changed because of brexit? is there anything you need to ask authorities to do better? david: we are and moment in time, coming out of the pandemic , where there are a handful of things going on -- labor issues, a reflection of the transition, supply chain issues, some of this stuff is transitory.

we are adjusting and dealing as anybody else is. leaders here are thinking about at the same way as it is around the world. francine: when you look at the u.k. and green investments, you have been extremely involved in carbon offsetting. david: it is important is important that governments around the world partner with the private sector to try to get capital directed toward innovation in a way that we can accelerate the climate transition. we need policy. we need to put a price on carbon. there is an enormous premium for certain green technologies. we can invest in technologies that can allow us to deliver a more sustainable future, but this is going to take some time. it requires both good public policy from our governments and active involvement from the

private sector we are trying to do our part. we have made a big pledge, some hundred 50 ball -- $750 billion. we tried to spend a lot of time with our clients thinking about how we can support them in their transition. francine: there is also a lot of regulation. where does that end? can london beat the green finance capital of europe and the world? david: i think there is a real -- we heard clearly from the prime minister real sense of trying to spur on in this economy an opportunity to create less regulatory structure and more incentives to spur more of that investment. i am optimistic the u.k. will

play a part, but when you think bradley about these issues, this is global. it is particularly so in the developing world. we are going to have to help get capital focused -- focused on the technologies that can move this transition. francine: china, exciting news from global -- goldman sachs. how committed are you to china? david: we take a long-term view. we take this view largely in the fact that we have many clients that have been doing business in china for a long time. they want our support. we are extremely pleased that after a long period of time we have ownership and control of our joint venture in china. we have a long-term plan to continue to grow in china. we have recently announced a

joint venture. no question that the bilateral relationship between that u.s. and china is complex and will continue to evolve. was a long-term lens, -- we're watching it was a long-term lens. china operates as a global player. in the long term, that presence will be important. francine: is it riskier being alone or safer in a joint venture? david: there are always regulatory risks in all markets. we have shown an ability to adapt to regulatory change to the degree that there are regulatory challenges we will deal with them. we do not own our joint venture. we owned 3% of our -- 33% of our business in china.

this allows us to continue growing for the long-term. my job in stewarding this 153 -year-old institution is to take a long-term view. francine: how much do you want to grow in china? david: it is a big opportunity. we have put forward a five-year china plan. we are a relatively big business in china, although it is a relatively small part of overall goldman sachs. there is good growth in china. access to the wealth of individuals, wealth management platform isn't something that is attractive to us. -- is something that is attractive to us. corporate activity is quite high. corporate's turn to our expertise in capital markets. there is a good opportunity for us. francine: high energy prices?

david: there is no question that we are going to go through a period where there is more inflationary pressure on commodity prices. this goes back to when we are talking about --, i said we had to balance good public policy with short-term implications. if we are too aggressive in the context of how we direct capital , that can be inflationary. that makes his way down to individuals -- the cost of energy, gasoline. if that goes too quickly, is something people are not going to be happy about. for politicians, that will be something they will have to rest with. francine: what do you say to climate change activists who say we have the energy prices but it is also an excuse for big finance to delay the transition, not be as aggressive?

david: i have said clearly that goldman sachs is going to be in a position where we are going to be doing business with fossil fuel companies, financing fossil fuel companies, but it is a direction of transition. we want to be in business with people that are investing in their transition. we have to put a price on carbon. that will allow us to accelerate the transition, but all this is a balance. the most aggressive point of view on transition and the least aggressive are not right. it is a constructive partnership between government and the private sector to make sure we protect our society and get capital into technologies that help us make the world greener. i firmly believe that is something we can do but it will require focus and patience. but with appropriate attention, energy, commitment. we certainly have that. francine: what happens is cop 26 is a failure?

david: i do not see it as being that black-and-white. i note the prime minister was asked this morning what do you expect? what is a win? a constructive thing about being a part of the session here today is you need to create dialogue. people need to have debates. we have to be willing to discuss, learn, make good policy decisions. this is all part of the process. i see the fact that these dialogues are occurring is pushing us forward. that is a very important part of that transition journey. it is not that yes or no, win or failure. this is a process. francine: thank you so much, david solomon. i want to talk about your music, but another time. david: happy to be with you. jonathan: francine, thank you.

some of our audience may be happy that we are spared the music talk. goldman sachs up 57% year to date. well, did that bank execute in the last quarter. tom: they knocked it out of the park. i wish there had been more on the financial aspects of goldman sachs, particularly retail banking. can the transition journey and the pr talk of cop 26, i want somebody to show me evidence of successful carbon pricing. i have asked about this before. i agree it is key, but i am looking for a carbon pricing that actually works. jonathan: i will keep looking. i cannot find it. let us talk about how orchestrated that meeting will be. we get diplomats together, the hash something out, we have an

agreement before they technically have an agreement. this time around, it seems like a struggle to agree on anything. tom: that kickoff is like davos on steroids in terms of pr messaging. we will hear the word journey 472 times. i would focus on the idea that we are fortunate that john kerry, whatever your politics, is fact-based and does his numbers. that is different from most of these people. jonathan: some uncomfortable numbers. crude, brent 85. wti 83.50. an uncomfortable moment for the energy conversation. lisa: countries need the oil reserves, the gas, some basic commodities vilified by the carbon neutral discussion in

order to survive. how do they dovetail conversations about decimating that industry without having any agreement on how to support greener fuel sources. jonathan: these are multi-decade commitments. we have got people in leadership roles playing a political cycle, thinking about the midterms. tom: it is highly politicized. you want to say to get something done, where are the adults in the room? i would look for discussion of what is the message to the greater global public? jonathan: equity futures up 0.5% . this is bloomberg. ♪

>> the balance sheet is high. we are seeing signs of inflation.

they have to begin to stop the quantitative easing. that taper is going to be a challenge. issues of supply change, growing inflation. to navigate economically the next year is going to be a real track. jonathan: the barklay ceo. from new york city, your equity market is shaping up as follows. the s&p advancing 20. yields no -- yields lower. the euro renewed strength. in the commodity market, 83.50. a list on brent. we touch on the commodity story more broadly in the next hour. this line summing things up perfectly -- the market now

believes the fed will tighten faster than the fed thanks. tom: michael kershner has been a good guest. we are thrilled when he is on. michael, i want to talk to you about how you walk through the idea of it is not stagflation, it is slowing growth. lisa abramowicz mentioned earlier that correlates into a more quiet since inflation. michael: as long as it settles into this trajectory, in most countries, we are probably over predicting how fast rates will grow up. recovery your will be strong. corporate earnings are going to be fine. corporate revenue is going to be fine. it may outpace expectations, but we will be fine.

we will have continued strong labor markets, strong inflationary pressures at the margin. there is no doubt that inflation that is going to slow over the next 12 months. the question is what happens after that and we are back into a more normal trajectory, assuming the supply-side disruptions go away. tom: what is your x-axis of where bonds move forward? are you looking at weeks and quarters? michael: it is quarters. in a longer-term, no doubt that pricing of interest rates are low and definitely into the future. if real interest rates are going to be negative into 2024-2025, even the fence projections are

suggesting negative real interest rates. we will have to see if that is true. i think it is too pessimistic. but right now, it does look like yields going to be taxed in the short run. we have seen that with the flattening of yield curves. yes, inflation is pushing a central banks to act or sooner, but the cumulative amount of increases is not really changing very much at all, suggesting that long-term interest rates are capped. lisa: we have the bank of america fund manager survey. they showed bond allocations at a record low. isn't that bullish? michael: i think so. everyone is worried about tapering, but the u.s. fiscal deficit should shrink dramatically year.

i do not see a supply-side issue on treasuries right now. global demand is still strong. treasuries are the world's risk-free assets. it is something that everyone has used as a store of liquidity. that is not going away. the level of u.s. yields relative to the rest of the world is also valley high, meaning that u.s. is a high yielding alternative. the dollar still looks fairly firm. jonathan: lisa, repeat that stat. lisa: global bond allocations have reached a record low, which is shocking and goes to your point of the fact that people are bearish when you ask them how they feel that bullish in their stock allocations continuing to go up. jonathan: this is the most bearish fund manager survey since last year, yet allocations

to bonds is falling and allocation to equity is higher. that makes me wonder if the risk is inflation whether i get traction from the bond market? if i get less constructive, michael, how do you think about that? michael: that is a good question. we have seen twice this year this massive inflationary shock on the view that supply chain -- supply-side disruptions are not going away. central banks will react. this 10 year will struggle to get over 1.6%. in this ring, when we had maximum bullishness, that was it. we have not seen much pessimism about the trajectory of interest rates going forward. given past experiences, the fed

and central banks have struggled to get interest rates higher than they are. it is not that people are so bearish on bonds, it is that there is the return? you are looking at negative returns from many sectors where if you want to make money, you need to find something else. lisa: before we let you go, we have a ton of fed speak today. all of these people are discussing their view ahead. how much are they going to push back against rate hike expectations? michael: that dovish end of the board will start pushing back against the pricing that the market is having, which is now outpacing the fed into 2022

-2023. we are talking a hundred basis points. this is a global phenomenon. the question is whether they push back or not, given the pressure outside the u.s. and how hawkish some central banks are -- new zealand has become very hawkish, the u.k. is insistent they are raising rates sooner rather than later -- there is a global thing going on. markets are not comfortable with the idea that central banks will be dovish. jonathan: michael, thank you. plain and simple. the market believes -- tom: that is the bottom line. i look at the equity market reaction.

his rationality is appropriate. look at how the market has rationalized. jonathan: up another 0.5% on the s&p. from new york city, this is bloomberg. ♪

jonathan: >> you are looking at the fed

probably on hold next year still. you get one hike, but it don't see two bikes next year at all. >> central banks aren't very good at being nimble when they are trying to catch up from being behind the curve. >> at the end of the day, the consumer is in great shape. the appetite is very healthy. >> if we slow to 3% next year, we are still growing well above potential. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: sperry thought for an equity market bear. -- spare a thought for an equity market bear. alongside tom keene and lisa abramowicz, i'm jonathan ferro. up 22, up another 0.5% on the s&p. it is a four-day winning streak, within one present from all-time highs. tom: the way we do it this way is an impulse. must watch, must