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 listen in

minutes, gina martin adams will discuss and link this into earnings like netflix this afternoon. jonathan: we've had that big churn beneath the surface. a lot going on. at the index level, is it fair to say this is one resilient equity market, tom? tom: the gloom crew has been crushing it. we heard this morning about sluggish growth in inflation, and maybe you can indoor from that. this idea of slug-flation. jonathan: we are staring down all-time highs on the s&p 500. the least bullish survey from the bank of america fund managers survey in a year. nixon's of that. lisa: if you tamp -- make sense of that. lisa: if you tamp down inflation, it pushes down bond

yields, and people have nowhere else to go. to your point, it is an ironic turn of events. jonathan: still tends to come. here's your equity market this tuesday morning, up 22 on the s&p, advancing 0.5%. there's another lift in this equity market on the russell come on the nasdaq. the nasdaq up 0.4%. yields on the bond market to 1.5932%. we are doing this with expectations of higher interest rates at the fed. never mind tapering. we are doing this with a serious conversation about hiking at some point next year. tom: maybe that is the shoe to drop as the past two higher rates drifts away. i would suggest is we are doing this market lift with commodities signaling global demand. jonathan: branch to $85. wti, $83.50. lisa: the fact that the market is still rallying shows

resilience, and frankly, it is ironic that individuals have pushed back. if the market basically giving them a green light? 8:30 am, euros housing starts and building permits. the expectation is to stay high. the idea is we are going to be talking about supply chain disruptions, labor in short supply. zillow crashing more than 11 prevent yesterday after saying they were going to stop buying homes and flipping them. they just don't have the people available to do the renovations and get it out on the market. the mocon institute is having its second day of global conferences. i think it will be interesting to hear what cathie wood has to say, but also howard marks and steven mnuchin. tom, after the market, we get netflix third quarter earnings. the expectation is for it to be great. it better be, since the shares have gone up basically 100%

year-to-date. people will be looking at what is next after we just saw their blockbuster that has gotten all of our children very interested. jonathan: not just all our children, is it? lisa: have you watched it? jonathan: i will not watch any of that. tom: they are watching "surveillance." jonathan: should we do that shout out now? tom: this is lovely, folks. this is why we do this. ring in the child. the offspring. jonathan: here's the tweet. "got to start them off young. also won't know how to provide proper condolences to a top supporter." thank you, sir. congratulations to your first child, sir. tom: for maternity advice, why don't you bring in our next guest? [laughter] jonathan: maybe don't come to me or tom or any -- tom on

anything. gina joins us now, chief equity strategist at bloomberg intelligence. i want to start with the equity market backdrop and the inflation story. a piece of research from you and the team, the inflation story is still too weak to stop stocks. what do you mean by that? gina: when we think about the balance of growth prospects, as well as inflation pressures, growth is still winning out. see this in the earnings stream, where earnings are growing at a faster pace than revenue growth. as much as there is inflation pressure, certainly stickier than expected inflation, demand is still accelerating rapidly. i don't see the slowdown in growth that many people are worried about manifesting itself. when we look at 2022, the next 12 months earning growth for virtually every economy around the world is going to be faster than five-year average. that is still a slowdown from 2021, but really rapid earnings

growth is a big story that i think is driving global stocks, even amid inflation pressures which chair eating away at margins. bottom line earnings growth is still faster than many people anticipated and continue to underestimate. jonathan: two that -- lisa: to that point, we got dannon saying they will have to pass along some of the increases they are seeing in the price of milk and transportation costs. how much have margin pressures already been baked in, considering that we have been talking about this for a long time? gina: in consensus estimates, margin pressures started to fall in fits and starts in may and started to accelerate to the downside in september, but still roughly half of s&p 500 companies are not showing any downdraft in margin estimates at all. behalf that are showing a downdraft in margin estimates are experiencing that for third quarter and fourth quarter only, not all the way into 2022.

i do still think there is some degree of risk with respect to s&p 500 companies that analysts are still not fully capitulating to the inflation trends. there is certainly still some risk to topline, considering how fast oil prices have gone as well. so we've got at least another quarter before we can really clear a lot of the risks with respect to margins, but i think it is healthy now that many people are talking about supply chain constraints lasting for a lot longer. we are hearing things like supply chain constraints will be around for 24 months. that kind of language and constant guidance from companies will ultimately land analyst estimates in a solid place where they can be beaten over the course of 2022. i think we do have a little bit of downside risk remaining to the margin story. tom: where will -- we are 1%

from record highs. what i find so important in the humbling of the bears is the idea of margin compression. have you economics amended -- have you in the mix of your economics amended how much the marginal price compares to earnings? gina: margins are incredibly important with respect to driving price trends for the s&p 500. it is one of the things we watch most persistently. i think the important point is forward margin forecasts have to fall fairly precipitously for it starts to degrade your price outlook. we are just not seeing that yet. we have been on watch for it. tom: give me some big figures. this is important. are you talking that you've got to go to 21.8, or going from 22 to 19 on a p/e ratio? gina: actually, margins i don't think will impact pe is much as many people anticipated because

we are not seeing a downdraft overall. you've got to see margins fall at least 150, 200 basis points for the index that large, and that is the point i am trying to make. this is a company specific, sector specific issue right now, so you are seeing margin downdraft impact groups within the s&p 500. household and personal products comes to mind. some of the food companies have experienced margin pressures certainly. but it is not pervasive. you are seeing energy companies experiencing incredible margin expansion. financial companies also posting margin expansion with the yield curve rising. so there are offsets, and instead of experiencing these bits and pieces of the index with margin pressure, you really need to see it much more profoundly impact the index at large, and we are not seeing that yet. i would give it above something like 200 basis points to fall before we see really strong

pressures in price emerge. lisa: we have been talking all morning about how it becomes a stock pickers market because of the dispersion, the churn under the headline number. is that the case, or is it better to go with the index because it is buoyed by all of the levers being pulled on all sides of the market? gina: i think it is a sector picker's market. you have certain segments where growth is slowing and inflation is accelerating, and it matters less which companies within energy you pick than just being endocyte at this point in time, that sector selection is incredibly important. beyond that, i think within the lagging sectors, picking the right stocks is incredibly important as well. you've got sectors like consumer staples, which is under pretty

significant margin pressure. consumer discretionary, similar pressures emerging. picking a red company -- picking the right company is going to be very important to portfolio performance. jonathan: great to catch up with you, as always. gina martin adams of bloomberg intelligence. deconstructive view on this equity market. trying to dig through the release for procter & gamble this morning. net sales ok. guidance ok. you dig through the release and you start to see this stuff on costs come on prices, and wonder how difficult things will be into next year. tom: what i have heard this morning and frankly yesterday, even within the optimism, it is about stock selection right now. jonathan: up to 21 on the broader market. the equity market advancing 015% on the s&p. on radio and tv, this is bloomberg. ♪ leigh-ann: leigh-ann:

--leigh-ann: with the first word news, i'm leigh-ann gerrans. london heathrow airport will increase surcharges by 36%. airlines have announced higher fees as they try to bounce back from the downturn. the fda is reportedly planning to allow a mix-and-match approach for covid booster vaccines. the agency could act as soon as this week. it is likely to not recommend one vaccine over another, but may say it is preferable to use the same vaccine when possible. an elderly couple who broke covid-19 rules to enjoy china's tourist sites have become the focus of the country's latest virus cluster. huge contact tracing and testing efforts are now underway after the two retired university lecturers from shanghai

continued to travel even after being told their test results were abnormal. or than 1500 close contacts have been identified in at least six new virus cases have been confirmed. north korea has fired what appears to be at least one ballistic missile for the first time in about two years. south korea's military describes the weapon as one designed for simmering base launches, the latest in a series of tests by north korean leader kim jong-un's regime. the launch came --global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

>> we have made clear our concerns about the military capabilities the p.r.c.

continues to pursue, and we have been consistent in our approach with china. we welcome stiff competition, but we do not want that company should to veer into conflict, and that is what we convey privately as well. jonathan: white house press secretary jen psaki. your equity market with a lift again. four days of gains into tuesday. we had some weight to the s&p 500, up 24, up 0.5 percent. yields come in a little bit to 1.5967%. euro stronger, dollar weaker. oil heading north, wti up 1.29%. let's go to procter & gamble in the premarket, just a little softer following earnings. here's the key for this earnings season. get the press release, then search for the word margins. procter & gamble reads as follows. "the net decline was more than

offset by a reduction in operating margin due to higher commodity and freight costs as anticipated." most people anticipating the same thing. tom: i know you are keeping them with your endless purchases at $100 a bottle of sandalwood and cypress cologne from the art of shaving -- keeping them in business with your endless purchases at $100 a bottle of sandalwood and cypress cologne from the art of shaving, but this really is informative about pricing power. that is what gina martin adams another's are going to do. they are going to go inside the data and look at the interior of the company, and what is the pricing power segment to segment. in their case, beauty not so good. shaving care held up by jon ferro, really good. jonathan: clearly shaving so much. here is the conversation where it starts. how much of those sales fall to the bottom line? the pricing power story has held

up through this year. there has been some confidence that s&p 500 companies can continue that trend into next year. that is what will settle this battle between the bears and the bulls right now in this equity market, with the guidance through earnings season looks like, and it looks like some price hikes are coming again. tom: we are going to focus on all of the sectors and the major companies like pg, away from the romance of apple computers. we can add value there, but there's more out there than just the big five. jonathan: apple has their own difficulties. they've got the demand. they can't get the supply because they can put things together. they literally can't get the chips to put in the phones. tom: i am pleased to announce i don't need a new macbook pro, but i was blown away by the chip engineering they announced yesterday. jonathan: what did you make of that, going in-house that way?

tom: it has proven to be successful thus far, and i think the chips leaders say they will fight back. people, the heat of enthusiasm over the progression of the 3m chips is extraordinary. jonathan: pg -1.22%. that is the story we are following through this earnings season. tom: pricing power is what i am watching. let's get to our guest in washington. annmarie hordern joins us, bloomberg washington correspondent. you love to go to the white house and do the press conference thing, but the real news is in the back halls of the roosevelt room. what is the president's agenda today? annmarie: today he is meeting with the two different factions of his party. first he will meet with the house progressives, and later in the afternoon, the house and senate of the moderates. he's trying to find a middle ground between these two groups

to push his agenda forward. this comes on the heels of the meeting yesterday as well. senator joe manchin with senator bertie sanders -- senator bernie sanders. the actually pose for a photo and were talking to the press, so it did seem a little more friendly then we heard over the weekend. senator joe manchin also meeting with the chair of the house progressive caucus, per millage eyeball -- caucus, pramila jayapal. then there is that question of kyrsten sinema. she does not negotiate in public. when i asked the president, he said he will not talk about what she has shared with him. what does she want, and where is her line? that is still a question here in washington. tom: how many sinemas are there in washington? annmarie: the thing is, there's a number of people in the house who could be like kyrsten sinema, but the thing with the house is you don't have as much power as with an individual senator.

i would say a number of people want to move forward. a number of people want to have a compromise. in the sinema area, it would be her and joe manchin. joe manchin, we know what his lines are. there was a report over the summer about what he said you senator chuck schumer about where his red lines are. she is really more the question mark. lisa: i want to shift gears to supply chain disruption, considering every earnings report we get mentions them. it is not just the cost of commodities like food. it is also the fact you've got the likes of procter & gamble saying they took a more than $2 billion cost on the higher prices from commodities. how does this administration dovetail that message, considering the fact that they need more oil to get the prices down politically, and at the same time, want to have an agenda that is respectable heading into c -- into cop26? annmarie: on the first part, we

know that the president is trying to ease up some of the supply chains. we just spoke about that last week. but by and large, the government doesn't have a lot of control over these supply chains. these are private sectors. when it comes to commodities, this is something the entire world is dealing with, this up shoot of commodity prices. this administration is holding talks about the rise in oil prices because what does it mean for u.s. consumers. it is a very fine line they need to walk because the fossil fuel industry would say this administration has been hostile towards them. there is still a ban on federal drilling. they killed the keystone pipeline. they want to transform this economy into a greener economy. at the same time, how do you do that in a safeway that also insulates consumers from higher energy costs? that is a line they are going to have to walk. you're seeing it play out in washington, just with the president's own domestic agenda. this is what senator manchin is

talking about when he says he will not sign up for the clean electricity program as he once to still continue to use coal in west virginia. this is really a tough question for the administration, and it comes at a very precarious point for the president because he's potentially going into cop26 with an anti-back. -- with an empty bag. jonathan: thank you. going into this climate change conference, i wonder what he says to the europeans after the russians have signaled that they are not going to boost the gas supply if they are against nord stream 2. we've heard that message on repeat from the russians. it is hardly surprising. but at a moment like this one, it carries more significance. tom: yes, and don't forget the chinese might come in and adjust the dialogue. we will have complete coverage of that, but to me, there's a lot of back stories. as i mentioned before, the number one is these elites have to talk to the rest of the world, who is skeptical.

jonathan: have you booked your flights yet? tom: no. i am making a two-goal string. jonathan: going to scotland -- making it to gulfstream. jonathan: going to scotland. not sure it is approved yet. [laughter] this is bloomberg. ♪

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♪ jonathan: this equity market keeps on rallying. live from new york city, this is "bloomberg surveillance." the s&p advancing 0.6%. similar story on the russell, the nasdaq, too. small caps up almost 1%. four days of gains into tuesday. that's the story and the equity market. we will run you through the rings story through the next couple of hours. here's the story in the commodity market. switch up the board. jake lloyd smith in london, great reporting talking about what is happening with copper. the spot price is $1100 more then the three months forward. two weeks ago, that number was single digits. a week ago, it was $60. now it is more than $1000.

that is the change right now. what is going on here? backwardation. the spot price is much higher than further down on the calendar. why? because stockpiles have been completed. this is about huge demand right now, and we just can't find the supply. the difference between copper and crude, crude, you can look at the contract table. you can look at the prices through the calendar. crude and backwardation too, but opec+ can do some thing about it really quickly. that is the difference right now between crude and copper on the lme. tom: it is a tangible entity. what is the tangible growth always led by china? to me, that is the mystery. under 6% china growth is no good. they are still growing nicely, and that is where the demand for commodities clicks in. jonathan: can we call it wild? unreal. we've got to work through this. that's the commodity market.

let's finish on the bond market. lisa went through the fed speak today. i know you can hardly wait. every time i talk about the fed speak i have to pause because i know a lot of people are frustrated from hearing from these fed speakers. you will hear from them again. yields in a basis point. lisa excited to hear them. lisa: what are they going to say at this point? what guidance can they give that they have not already given, and what kind of unification matters at this point? jonathan: i think you can repeat the same message, but if the situation around you changes, these can so what you say is not the same. on a day like today, if everyone gets together and keeps beating this drum that there's a difference between tapering and interest rate hikes and a difference between the time between the two will be a lot longer than you think, that is important in the context of a two-year yield in about six weeks. tom: maybe we see a change in

fed dialogue today that adjusts all of the rates guessing going on in the fed parlor game. right now, subadra rajappa joins us, head of u.s. rates strategy at socgen. how important is the adjustment in the fed message? do they have to catch up where the market is on maybe slower growth and may be a more controlled inflation? subadra: not really. i think for the most part, you are going to consistently hear the same message from all of the speakers, that they are probably going to be very careful and cautious on rate hikes because of the fact they just don't have information on the inflation front to guide the markets toward rate hikes. that is why i think you are seeing a little bit of adjustment in part of the curve this morning. we did see the market fully price in three hikes by the end of 2023, and now you're going to see a little bit of guessing based on what the fed is saying. tom: equities are on a tear.

what does that say to you for the overarching strategy, particularly in fixed income? reporter: i think -- subadra: i think low yields are here to stay. you have to go out the risk spectrum and invest in higher-yielding assets. so if you look at the bond market, whether it be high-yield or treasury on the other end of the spectrum, real returns are very low. in treasuries, you're getting -90 basis points. so it doesn't make any sense to be in bonds. you are better off investing out of the spectrum. that is why you are seeing more demand for risky assets, as well as corporate bonds and high-yielding bonds, in an environment where treasury yields will potentially remain low for the foreseeable future. lisa: i want to stay on the federal reserve, the idea that they will inevitably push back some of the rate hiking expectations being built into markets. markets are still chugging along

even as traders price in two rate hikes. don't they want to propagate that because it gives the more ammunition down the line to ease without even moving the range, or down the line, it does leave them the ability to cut because rates will not be at zero? subadra: i think the way i would look at it is monetary possibly -- monetary policy is a very blunt tool in this environment. you are looking at a very unusual inflationary environment driven by supply chain disruptions and labor shortages, higher rents. the fed can't really meaningfully do anything by raising rates to fix the inflation problems they have been going through right now. i think the best course of action for the fed is to remain patient until it really needs to raise rates. that is why i think they will err on the side of caution because they know they get easily guide the markets.

what you will see is the sort of price action in the bond markets, but the bond market thinks the fed is going to raise rates sooner faster to frontload the rate hikes, which would imply a much slower trajectory for growth over the longer run. that is causing this extreme flattening of the curve. they don't really want that either. they shouldn't really be in a rush to guide the market towards rate hikes. lisa: there's also the idea of political risk, that this is perhaps the view of the federal reserve as it is composed today, yes we really haven't heard from president biden in terms of replacing fed chair jay powell, and increasing question. the odds have actually been going down. what is your view of the potential market risk of turmoil at the top of the fed. ? -- the top of the fed? subadra: there's more uncertainty now than a few weeks back about who is going to be chairing the fed and what is the composition of the committee

next year. but broadly speaking, i think that regardless of the choices that are made, most presidents want a very dovish fed. they want policy to be accommodative so that it feeds robust growth trajectory, the labor market is strong, and inflation is not a concern. broadly speaking, the composition is going to remain somewhat dovish, even if there are new choices made for the chair, as well as some of the committee members. so i think policy, especially with the fed, tends to be somewhat stable. i am just not nearly as concerned about the change in leadership. tom: how does this devolve into the equity market? the gloom crew has been absolutely crushed in the last 10 days. how do you adapt to that? how does it change your perspective?

subadra: by gloom crew, you mean the people that expect the equity market to turn over? tom: the narrative, whatever the fears are in bonds or stocks. they have been obliterated. subadra: it is interesting because it has happened within the context of the bond market being concerned about a higher trajectory to inflation, the market being concerned about the fed raising rates. the equity market for the most part is dismissing the signals that the bond market is sending on the fact that yields have gone up with a faster pace of rate hikes. there's probably a potential slowdown in growth. so i think the equity market is going to wait. i am not an equity strategist, but i think the signal i am getting from the equity market is that they want to see and hear from the fed before they start pricing in this doomsday scenario. the bond market always tends to lead in some respects, so the

signal from the bond market is going to be very key for all of the other risky assets. jonathan: you are perfectly entitled to talk about the equity markets since equity strategists have spent the whole of this year pretending to be bond market strategists. subadra, thank you, as always. it didn't really help, did it, tom? at the front end, yields are doubled, and the market is a big time. tom: we are in a natural disaster. i think we all know that. there's people with some immense challenges. i don't know how you do conventional strategy right now. jonathan: no idea. into next year? give me a forecast, tom. tom: i am trying to get to december. jonathan: i am trying to get to november. the chairman powell thing is getting really testy. jason furman was on twitter yesterday evening, former president of the council of economic advisers, suggest and look into senator warren's financial disclosures. a ton of snark in the tweet.

this needs to be settled. tom: what i have been surprised by is where the fed hasn't come out and discerned this person from that person. maybe we await that. maybe we see that. but is it all trading? maybe not. jonathan: what do you think the president is waiting for? always dangerous to try to guess what people are thinking. tom: but you are british. jonathan: we are sitting around here waiting. we are waiting to see them finalize the fiscal package on d.c. before we see what the federal reserve looks like next year? lisa: that's where my mind went also, that he's trying to toe a line with progressive pushing the other direction and taking a hard line when it comes to the what was $3.5 trillion deal, maybe $2.5 trillion deal they are trying to get passed. the issue around fed trading goes to the heart of skepticism in the public about the federal reserve's role and power in the market that has been boosted again and again in a way that

benefits people who have assets in the market. this is a political issue and has a lot of emotion attached to it. frankly, even if you say look at the details, it might seem ok. it doesn't matter even because it is such an emotionally charged debate with people who fundamentally have skepticism. jonathan: are you emotional about the federal reserve? lisa: of course. jonathan: the irony of all of this is the current chairman of the current chairman of the federal reserve has been more dovish than the president's own treasury secretary was when she was the chair of the federal reserve. tom: be careful what you wish for. jonathan: equity futures up 21, advancing 0.5 percent. from new york city come on radio come on tv, this is bloomberg. ♪ leigh-ann: with the first word news, i'm leigh-ann gerrans. russia is hinting that it will not go out of its way to offer

european customers extra gas to ease the current energy crisis unless they get something in return. regulatory approval through the controversial nord stream 2 type line. the operator said the line is ready to begin operations, there it cannot ship until approval is granted. britain has ordered a review of the planned $8.7 billion takeover of aerospace and defense firm hennepin, citing national security concerns. it is one of the last independent british aerospace suppliers, with customers including boeing and airbus. bloomberg has learned credit suisse is nearing an agreement with the u.s. government that would resolve a criminal probe regarding its role in a $2 billion mozambique bond scandal.

the ongoing legal saga stems from the 2013-2014 deal that was supposed to fund a new patrol force and two fishing fleets in mozambique, one of the world's poorest countries. barclays' return to office is well underway. ceo jes staley says the majority of u.s. employees are back in the office. staff are required to be vaccinated to return to barclays offices, and more than 90% are. he says there is momentum for people returning to the office. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

>> the role of the central bank was to provide marginal liquidity at times of crisis and

then to withdraw at after the economy started to stabilize. the central banks are now running the markets. jonathan: it is hard to disagree with that statement from scott minerd, the guggenheim ceo. good morning. tom keene, lisa abramowicz, and jonathan ferro. we add some weight to this rally. four days of gains. could it be five? yields coming in a little bit, 1.5932%. in the fx market, euro-dollar, $1.1658. crude up $0.90 on the session. tom: as always, david wilson is with us. what you have today? david: today it is about bitcoin. we have this first u.s. exchange traded fund, the proshares bitcoin strategy etf coming out.

it is not really the first of its type. go back and you look at the u.s. oil fund as an example. it is another etf set up to own futures contracts as opposed to the actual asset. that is the with his proshares etf is organized. the history suggests there's a real challenge in terms of keeping up with the performance of the underlying asset. west texas intermediate for the oil fund, you look historically at their perspectives, and it says they want to be within 10% of the average daily price change in wti over a 30 trading day period. tom: what does bitcoin say? david: as far as that goes, we will see how they set it up. for the moment, what is interesting is if you look over the history of the u.s. oil fund etf, which goes back to 2006, it

is down 90% over that time, and you are not seeing anything like that with crude. certainly did last year when it turned negative, but at the moment it is up 20% over the period for which this etf has been trading. i think that tells you the challenges this new bitcoin etf is going to face. it is all about futures contracts and the costs of moving from one to another. tom: this is a hugely important point, and only david wilson can bring that insight. the cost of doing business for an exchange traded fund. bitcoin is cost free. we go to eddie van der walt in london with all of the joint of bitcoin as well. what do these etf do if bitcoin goes from $62,000 to $52,000, or for that matter, $72,000? eddie: this is the problem for bitcoin, for the investors who

take this position. it is backed by a futures contract, backed by a cash settled futures contract. so what you are really doing is taking demand away. somebody who might have wanted to go out and buy bitcoin is now taking exposure through a cash settled product, so there is no necessary exposure to the underlying bitcoin. while it is bullish in the short term, i think it drains away some of the demand. you are right that it is very hard for these etf's to completely replicate the price moves in that way, and i think we saw with oil when it went negative last year just how much contamination there can be from these markets. tom: these are not synthetics and they are not cdo squareds, but is this financial engineering because there is no underlying? eddie: i think it is in a way.

some of the investors that take exposures on that futures contract, yes, they will lay off that exposure by owning something. there is no guarantee they will do so. in the long term, the bigger a product like this gets, the more it drains demand away from bitcoin, and bitcoin ultimately has no use case still. we are not seeing people use it really in the economy except for in el salvador, and even there it is doubtful how much it is being used. i think this is a real problem for bitcoin. the options contract, when the original futures contract launched, that was within days that the bitcoin price peaked in 2017. we may see some follow-through buying. we may see the price push through that record high and get momentum carrying it through, but ultimately i think in the long term, this is a bearish development. lisa: we could have a philosophical discussion about

bitcoin and what its legitimacy is in this world. however, that is actually not the point, especially when you speak with jp morgan's jamie dimon, who says he personally think that is worthless, but his clients want it, so they are creating a desk. doesn't the advent of something what this generate more demand by making it more legitimate in the eyes of regulators and institutional investors? eddie: absolutely. as long as there is demand for it, people will use it. what do investors want? they want price exposure. the futures contract can give that to them in an almost perfect way, and so can the etf. so you are grading a perfect substitute for the underlying. the oil contract is not a perfect substitute for the underlying. ultimately, there is somebody who needs crude to keep his refinery turning, so ultimately there is underlying use, so

there is a perfect substitute for the underlying, and therefore it can draw demand away. we see that in gold. lisa: what is your expectation in terms of how the industry believe all, given that every etf provider is looking to get into this space? eddie: i think this may be the thin edge of the wedge. we may see, if we see bitcoin backed etf's coming and being accepted, that is a much more bullish development. we have already seen that another places. i think it is hard to say we have done this for a year or so with the features backed fund, and they will say but we don't want a bitcoin backed etfs well. so this may lead to full acceptance. we are seeing bitcoin more and more being accepted in the wider financial markets, but for that reason it is interesting.

jonathan: got to leave it there. always good to hear from you. just short of an all-time high, the record back in april, around $64,000. this morning, on the bloomberg, $62,000. tom: we will discuss this in the coming weeks as well. i am going to go to the underlying. the underlying is the future, the tangible bitcoin, and what is the underlying of actual bitcoin? jonathan: the underlying story is that we have made progress with this asset class i did not foresee years ago, and at a time when we thought the regulator would clamp down on various activities. haven't seen much yet, have we? subadra: my experience -- tom: my experience is they will wait for the event. they need to see some sort of event where they justify regulation. they haven't seen the bad news yet.

jonathan: your equity market up 22, advancing 0.5% this tuesday morning. good morning to you all worldwide. heard on radio, seen on tv, this is "bloomberg surveillance." ♪

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>> you are looking at the fed probably on hold next year. i think you get one hike, but i don't see to hikes 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 balance sheets are fine. the consumers are 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. tom: good morning, everyone.