♪ >> the idea that is obviously wearing thin. >> the is saying from a monetary policy standpoint, this is just a matter of patients. >> the fed can't really meaningfully do anything by raising rates. >> markets are not comfortable with the idea that central banks will be dovish. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: is the slow grind act towards all-time highs. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market totally unchanged on the s&p after five days of gains. we are almost there. tom: jacob kirkegaard this hour, the interview of the day. i'm looking at the earnings come in.

i will defer to gina martin adams, david wilson, and our great equity strategists who come on the show, but to me, it is earnings glass half-full. jonathan: another developer hitting the wall. chinese home prices falling for the first time in six years. there's a real slowdown developing their. tom: i want to listen to leland miller and others about the real pulse of the chinese economy. i will be honest, i am simply confused. jonathan: tom is not the only one. we are all confused at the moment. lisa: not just on the slowdown in the housing market, but the ripple effects for the broader economy globally. consider the fact that the housing market in china counts for about 1/3 of the overall economy. it shows a deceleration in one of the hottest spots in china's economy for many years. jonathan: when things get tricky, what do you do? you change your name. did you see that report in verge? facebook looking for a name change. i still call google google.

i don't call them alphabet. tom: i've heard three reports. to me, the alphabet of facebook's meta-verse, let's start with that. what is meta-verse? lisa: i looked it up this morning. it is basically the cyber world where people can interact. it is everything social media out there. jonathan: do you think this is divorced for the political woman -- divorced from the political moment for this company? that name is so charged, carries negative connotations. lisa: correlation is not causation, but in this case, yes. [laughter] jonathan: unreal. this wednesday morning, in the bond market, 1.6351% on tens. euro-dollar going nowhere, too. we go somewhere on crude. crude down 1% in change, $82 a

barrel come on wti. lisa: talking about some of the confusion around china, trying to clampdown on higher commodity prices. how much is the crude rally tied to that, and how long it can last, is really a question. it seems to be exhaustive this week. we have the fed's evans, bostick, kashkari, and bullard all discussing the outlook. i am curious to see what we have been talking about this week which is the idea of tapering bond purchases and how that relates to raising rates. christopher waller said yesterday the upside risk for inflation comes to pass with inflation considerably above 2% well into 2022, then i will favor lift off sooner than i now anticipate. how much this gains steam among said officials as the market prices and wanted to rate hikes be they end of next year. 2:00 p.m., we get the fed beige book. curious to say what they -- to see what they say about supply

chains. how much is this due to the slowdown in the auto market? is this a broadening out in the areas that have been affected by the supply chain kinks? aftermarket, tesla is reporting earnings. the share is up 22% so far you to date. how much do they say about chip shortages? how much is this impacting production? what do they say about china as a place for their factories? jonathan: i am looking forward to catching up with dan ives of wedbush. tom: i was blown away by the new apple performance. the speed performance is shocking. can we get ives to raise his bull market call on apple? jonathan: he's at 180 five dollars. how much more bullish do you want him to get? tom: even $201. jonathan: the tech bubble joining us -- the tech bull joining us in the next hour.

james athey of aberdeen standard with us now. you say it makes little macro sense. what do you mean by that? james: it kind of depends exactly where you are looking, but broadly speaking, the point i was making was characterizing and inflation targeting central bank engaging in tighter monetary policy from a stance which is as easy as history has ever known on the basis that broad inflation except patient measures are moving higher, significantly above target. the idea that that can be characterized as a policy error, yet 10 to 20 years of experimental and aggressive policy easing to try to deal with the mild disinflationary impact of a global supply shock

i find to be implausible in the extreme. so the idea that we should have currencies in developed markets behaving as if they were emerging market currencies and immediately ignoring the rate differentials argument, and immediately looking to the potential for some medium-term growth downgrade, i just find to be somewhat absurd. lisa: given the fact that you see central banks as both the arsonist and the firemen, how do you position? how do you read the tea leaves as we get fed speak today and throughout the week, as we get ecb members talking on opposite sides of their mouth? james: really difficult to do because obviously, i am yin when the market is yang. if you think about the world in a very simple model with respect to growth momentum and inflation momentum, we seem to be flitting

from one cloud print -- from one quadrant to another on almost a daily basis. in your intro, we talked about inflation, the couple of talking heads talking about the transitory word. just on that, i don't know the answer. i have said for a decade that inflation is poorly understood, and it is a woefully inadequate measure to be so central in our monetary framework, but just on the transitory, i've said before on your channel that we need to at least get past the first year because that is how bass affects work. in the u.k., we have had one cpi print over 90. we had 19 consecutive cpi prints over 3%, and that was a transitory inflation stock. it was a little more idiosyncratic. it wasn't global. but the central bank was happy

to sit idly by. so framing transitory as one or two months i think is disingenuous. that just gives some context. tom: your idea of arsonist and firemen, which is brilliant and really captures the moment, is it because the central banks and particularly the fed are trying to do too much, they have accompanist -- they have encompassed a new mandate that is broader, wider, and social? james: that has appeared as a narrative recently. certainly some have made that point, and there are huge concerns about the idea that central banks can unilaterally expand their mandate into areas which really are overtly political and democratic issues, not technocratic issues, but also well outside their competencies. i don't think that is where he

-- that is why we are where we are. we are where we are because central bank's have taken it on themselves to prevent any negative downside from ever occurring. that is having additive and increasingly negative and the various effects on the economy because we are not getting any -- jonathan: it is how sustainable that actually is. they have had space to do that over the last 10 years because inflation was so muted, and i think what a lot of people are trying to work out is how curable that fed put is in this new era. if that is what we are in right now, how durable is it? james: absolutely, i think that is the right question to ask. i don't believe that central banks in general will not be credible for them to sit on their hands throughout this period we are going through and we are likely to be going through into 2022 and possibly

the second half of 2022. you're seeing that playing out now. that is why we have had this curve flattening view because we felt that if the world progressed as the market expected, it would inevitably put upward pressure on front ends. jonathan: james, got to leave it there. i will give you a call and we will have a 20 minute conversation about it. james athey of aberdeen. a bit of this, a bit of football. maybe a bit of netflix, 2% lower in the premarket after a really nice run recently off the back of the popularity of "squid game." all about subs. 4.3 8 million subscribers in the third quarter. tom: i've never been warm and fuzzy on this. i don't really understand the model. paul sweeney says i am wrong. he says it is a real model. there are some people out there today questioning it. i don't know. jonathan: maybe those numbers validating where we have been instead of inspiring where we might go. lisa: i have to confess, i was a naysayer of netflix when they were raising billions and

billions of dollars and not posting any profits. they are moving to free cash flow positive and see themselves being free cash flow positive for the foreseeable future, and i find that really interesting. their story is actually born out. it is down 2%, but the stock is up almost 100% year-to-date. it is not like it has been suffering. we have seen a massive run, and the fact is they saw the lowest subscriber growth since 2016, but we did see acceleration that surprised people. i will just put that out there. jonathan: was that a bullish take on the pricing of the credit market? lisa: that was a realistic assessment. jonathan: validating how that credit was priced previously. lisa: basically, people were viewing it as a junk credit, now viewing it is more investment grade. jonathan: the stock 18% year to date, just in case people really run away with the idea of how well netbooks has performed. details matter sometimes on the show. s&p 500 futures eking out five

days of gains. this is bloomberg. ♪ leigh-ann: with the first word news, i'm leigh-ann gerrans. facebook is planning to rebrand with a new name that focuses on the meta-verse, according to the verge. the original app's brand may remain unchanged, similar to google's structure without the bet. ceo mark zuckerberg -- with alphabet. ceo mark zuckerberg is expected to discuss the change next week. jamie dimon has told staff jp morgan will boost pay. the change is aimed to act her age -- to encourage advisors to

stick with the bank. morgan stanley says it will be spacex that lifts to trillions. morgan stanley has a $200 billion build case valuation on it, and adam jonas sees spacex as multiple countrie -- sees a spec -- sees spacex in multiple countries. 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. ♪

♪ >> for decades we have relied upon just-in-time delivery, and now we are beginning to find

that there are real vulnerabilities with the -- vulnerabilities. what the economy needs is less bureaucracy, greater flexibility given to the private sector to ease the supply chain obstacles we are seeing. jonathan: elaine chao, the former u.s. transport secretary, catching up with caroline hyde at the milken conference on the west coast right now. in your equity market, unchanged. in your fx market, unchanged. tom: unch. jonathan: might as well say unch on the 10 year. in the commodity market, $82.03. whereas vindman -- this provides an opportunity for germany's policymakers to move further

into the mainstream. just a take from cattle economics earlier this morning. tom: "bloomberg surveillance" tries to get you the qualified voices on any of these topics. i want jon to drive forward the conversation with his european central bank heritage, and we do with this morning with jacob kirkegaard, senior fellow at the peterson institute. it does not describe his work in defense, and in germany on the central bank. jonathan: let's start with the vacancy at the bundesbank. your first takeaway, please. jacob: elections matter. this is going to be the first nonpolitical appointment that the new german government will make. he has a chance in a situation not do similar to what we are going through in the united states now to put his own team.

but i think it is likely -- we saw that dollar euro was unchanged, so this isn't going to have a massive immediate impact on ecb monetary policy -- [laughter] jonathan: be honest, jacob. does your son work for the greek government? jacob: i have my own in-house. there are very difficult to suppress. tom: do you have your son learning for languages as you speak? jacob: i think we are at three or four. no matter what language i use "get out of here," he doesn't listen. [laughter] jonathan: if he comes back, we want is you on the ecb. what is next for this ecb if this bundesbank and its influence on the european central bank could change a little bit? jacob: i don't think it is going to be a big difference actually

because yes, weidmann had earlier in his career been an obstinate minority hawk, but more recently and certainly during the pandemic, he was in many ways a loyal team player. so i don't think it is going to make a big difference. on the other hand, if you get another high-profile dove, you would have a very strong access between christine lagarde and a bundesbank president that would share many of her views and the views of the majority on the executive board. so going forward, this is an opportunity to cement the current lagarde consensus. but immediate changes, no, i don't see many. tom: let's cut to the chase here. what i am hearing from you is someone clearly qualified, clearly with a dovish tilt,

comes in. that is removed from the bundesbank we know. what do the german people want? ? do the german people want axel weber, or do they want dr. schnabel? jacob: i think the election results last month was very clear. they voted for an active fiscal policy, and clearly he has a chance to give it to them. the reality is that one of isabel schnabel's great contributions at the ecb was the change to domestic german debate. she will be in a greater position to do that while at the bundesbank helm. if the german government chooses to do that, i think she will be very good at that, given that opportunity. tom: there we go. jonathan: jacob, we've got to

let you say, is he a supporter as well? jacob: he has. he clearly only watch the last couple of minutes of last nights game. tom: jacob, we demand that you are nice to him. if you are going to put him in a timeout chair, let's not have it be a dramatic timeout chair. i want something more sensitive like a danish timeout chair. jonathan: we are going to let you run and deal with it all. jacob kirkegaard, fantastic as always. arsenal supporter and just fantastic. tom: what is great about this, would we get through this horror, this pandemic, the deaths, including general powell, when we get through this, we will have a highlight reel of kids. jonathan: that moment not unique to jacob. lisa spend pretty much every morning at home doing this. [laughter] lisa: true story.

when i was broadcasting from home, the kids would wake up and eat their waffles with knittel on the couch watching me, and i would try not to watch right in front of me. occasionally they would be like -- jonathan: is that why you got more gloomy? lisa: it got me really gloomy. people are getting sick of working from home which is why you are seeing people actually enjoying going back to the office sometimes. jonathan: on a very serious note on the ecb, what jacob was alluding to is the influence of inns vindman -- of jens weidmann on this ecb wasn't that great. i think you can see that more generally in the policy of the ecb, with rates where they are. rates aren't where they are because ecb president -- bundesbank president jens weidmann wanted them there. the balance bank isn't where it is because jens weidmann wanted it there. it is because draghi helps that the pastor ticket where it is today. tom: i would suggest it is still a theory waiting for a solution, and the idea of a fixed currency

among all of the different countries, the dramatic surplus of trade is still a common feature. jonathan: the irony of the last 10 years has been the opposition of many people in germany to the policy of the ecb. a major exporter got a much weaker euro than they otherwise would have got, and they got deeply negative interest rates that was just a gift to say go out there and invest in your economy are you lisa, they didn't. i keep going back to this point with chancellor merkel. i do wonder how we will look back at her tenure from an economic standpoint in 10 years on whether that was successful or not. lisa: and whether they actually emphasize the benefit of those -- they actually exercise the benefit of those. is it really supported by the public? how much will a new bundesbank lead that charge? jonathan: ask matt miller about the infrastructure in berlin. that was a gift. go and invest.

didn't happen. your equity market unchanged. five days of gains, just a whisker away from all-time highs. we will break down the price action for you every shortly. a beautiful morning in new york city. this is bloomberg. ♪

jonathan: unchanged in your equity market this wednesday morning. good morning. we are unchanged on the s&p, down about a point. unchanged on the nasdaq, up about three. that is the story for the equity market. the bond market equally as boring. if that is what you want, maybe it is not boring. 1.6373% on tens. on 30's, up a basis point to 2.1%. not doing much there at all. on the two-year, we have basically doubled over the last couple of weeks, just short of 40 basis points now. where we are moving, this chart right here. if you're listening on radio, it is a simple one.

house prices in china have started to rollover. they are negative for the first in six years. you have to pay attention to that because the world's second largest economy is starting to slow. development in the country is starting to hit the wall. default after default. houses are heading in the wrong direction. when these things start to progress, you get that snowball effect. the likes of bank of america's savita subramanian talking about what is happening in china for eps on the s&p 500. i thing it is worthy of a bigger conversation. tom: the bigger conversation is cultural as well. it is the avenue of investment for the chinese middle class. in beijing, they are acutely aware of this. it is not just about the math of it, the investment and the financial. it is the behavior. this is where the chinese people put their money. jonathan: i'm still looking for that chart. i have no idea if it is going to appear. tom: there is. jonathan: there we go. tom: thank you so much.

on radio, the chart from the upper left to the lower right, as mr. gartman would say. right now, jim o'sullivan with us, chief u.s. macro strategist at td securities. i want to piggyback on what we heard from julia coronado earlier this morning with macropolicy perspectives. she thinks the auto industry is so messed up that she is the really partitioning american gdp for what we get, and adjusting for a beleaguered auto business. are you doing the same? jim: there's no question that auto is an extreme case. you could talk about the growth side, you could talk about the inflation side, but particularly on the inflation side, so much of the net pickup in the inflation has come from vehicles, particularly used vehicles. that is also a semiconductor issue. no question that has been a part of it. we saw in the industrial production report this week, there were other factors in

there, too. tom: are you able now to get beyond into q1, q2 next year with a tone of optimism on gdp, or is it a vector down to potential gdp of 2%? jim: our forecast, q3 right now, we have 2.5%. if anything come of the numbers are adding up that it is not quite as weak as the atlanta fed number which has dropped below 1%. but certainly, q3 numbers have been slipping. how much of that is delta, which should be fading as you get into q4, and how much of it could be -- could be supply constraints? fiscal stimulus fades and growth decelerates, and a big surge in demand we have seen has been lifted by fiscal stimulus, and that helps the inflation numbers. so it is not clear what all those are, but we are counting

on grocery accelerating a bit. we've got 4% for q4, but then 3%, not a whole lot better than potential in q1 and q2. so there's a lot going on between covid and supply shortages and abating fiscal stimulus. but we do think growth is going to decelerate meaningfully by the second half of next year. lisa: we have been talking for months about how difficult it is to get the macro call right, the economic call, as well as the market call. at a point when so many people are expecting a deceleration, what will it take for that to become bearish for a market that wants to go up, that is going up, despite some of these concerns? jim: the question is how much deceleration, of course. if it is enough deceleration that unemployment is still edging down, inflation is enforcing the fed, and the cycle is continuing, that could be good generally for risk markets.

if it slows too much and you start getting zero tag numbers and worrying about the cycle again, that is a different story. our forecasts are that growth slows, but certainly the recovery continues and we continue to get pretty solid numbers by pre-covid standards. but ultimately, the cycle continues, giving the some time before they actually have to pull the trigger on rate hikes, although there are clearly going ahead with tapering next month. but absolutely, it is a fine line. of course, there is a lot of uncertainty. you see how much the world can change into months. predicting out a year is very hard. lisa: we talked about the bank of america fund managers survey showing bearish sentiment on growth, the idea of the deceleration you are talking about, but a bullish stance when it comes to equities. i wonder from your perspective whether this is actually goldilocks, whether deceleration is exactly what props up equities, and to view these as contradictory signals is

actually faulty. jim: it is a pretty optimistic sort of fine line being drawn there, absolutely. but if growth doesn't slow as much, there's a big debate now that we see fiscal stimulus as poised significantly. the counterpoint of this is there is so much excess savings that people are going to spend over the next year, that we think the net of that is negative. hypothetically, it could go either way. if you think the economy is still going to be booming, clearly the fed is going to have to rush tightening. a fiscal drag dominates and there is not that much delayed stimulus, the economy could we get a lot more in the recovery could really stumble. so a lot can go wrong there, absolutely. tom: a lot can go wrong. great. but the answer is we need to get a bearing here on what kind of

economy this will be. you've got a shelf full of guessing out six months. are you able to do that now? we used to guess out three years. where we are now, does jim o'sullivan come with all of your trophy taking in market economics, can you get out six months? jim: realistically, there are so many moving parts here. i go back to fiscal drag on one side and excess saving on the other. covid has not gone away. the delta wave is coming down again, but is that the end of it? there's a lot of uncertainty here. it is hard to have very high conviction on where we will be in 12 months. tom: i think this is so important. i remember when people sat there and had 24 months from now. it is gone. there's no other way to put it. it is just gone. lisa: the visibility has diminished her medically. i wonder how the labor market does play into that at a time when people are trying to head back to work.

we just experienced what happens when you are not working in the office, when you're working from home with younger kids. i am wondering what you see as the main obstacle keeping workers from getting back into a labor force that has seen more job openings than ever before. jim: there's no question covid has been a big factor. i think a lot of people are still afraid to go back. even though when employment benefits started to expire, that coincided with the delta wave, so that is certainly a big factor. but i think between covid, between all of the stimulus that has been in place, the generous unemployment benefits, with all of these factors, i think they have contributed to holding the participation rate down, but we think over time, the participation rate will come back more. it is not going to come back overnight, but in a year it should be higher than it is now. lisa: if that is the case, at what point does it become a wage inflation story that we have to pay attention to? jim: i think in general, certainly for the fed, it is

pretty clear they are going to be tapering starting early after the next meeting, and then expected to wind down around the middle of the year. so they are doing something at least until the middle of next year. that gives them the option of acting into q3 of next year which with ink is too soon, but it is an option if it comes to it. dies you get towards the middle of next year and the inflation numbers are not flowing, then clearly the fed is going to be under pressure to act. but we would expect the wage numbers to slow significantly in the first half of next year. if you're running for percent to 5% on wages still, based on average hourly earnings, that is unsustainable over the long haul. we can probably sustain something like 3.5% or so, just given long-term productivity trends, but if you are getting 45% of wages in six months, that is going to be too much. jonathan: thank you. jim o'sullivan, td securities economist. world-class forecaster. on the labor market

particularly. but this one is so hard to forecast now. it has got so much more difficult to read the tea leaves of this economy. tom: i wonder if you're going to hear this from the fed speakers, this idea that dr. coronado brought up of an adjustment to what detroit and the greater auto sales are doing. i know japanese auto sales just as tepid because of semiconductor issues. jonathan: you know the one to call? matt lose eddie of deutsche bank -- matt luzetti of deutsche bank has a call. the rate hike is coming. tom: we have to adjust to what we see, but what i have heard from the pros, maybe you do it just atlanta gdp now -- to adjust atlanta gdp now to be not so gloomy. lisa: this is actually the base case priced into markets. you could argue whether this is hedging activity or real, but nonetheless, you ask this earlier, at what point is the fed's hand called by

inclusionary impulses that continue to run hot? what does that do if they do raise rates? what does that actually materially affect in the inflationary outlook? jonathan: i like the distinction between trades going on and trades coming off. that is important. lisa: i appreciate that. jonathan: team effort, isn't it? that's what it is about. [laughter] lisa: holding hands, arm in arm, socially distance. jonathan: euro-dollar unchanged. the bond market unchanged. there's your wednesday morning. chairman powell friday. that is what we are building up for now. i 10 of earnings in between. from new york city, on radio come on tv, not holding hands. sufficiently separated. tom: now that i think about it, we have never had a photo taken together. we need to do that. jonathan: you know what they do with us? they take three separate photos and then put us together because we won't be in the same room. tom: we should all have one

together in central park. i will sit at the other bench. [laughter] jonathan: thank you, tom. this is bloomberg. leigh-ann: with the first word news, i'm leigh-ann gerrans. a u.s. congressional committee is investigating the generous six riot at the u.s. capitol and has voted to hold steve bannon in criminal contempt. bannon has refused to testify or provide documents to the committee. the chairman is expected to recommend possible prosecution. netflix has hosted its strongest subscriber growth for the year, beating estimates thank to the popularly of south korean drama "squid game." the company added subscribers in the third quarter and expect to sign up more in the coming quarter, turning cash flow positive next year. chief sales growth slowed in the

third quarter after covid resurged in parts of asia. sales at the brand rose 3.8% from a year earlier. that compares with growth of 8% in the second quarter. activision blizzard has reportedly fired 20 employees in a bid to clean up its culture. the company has faced accusations of gender-based this cremation and harassment. in august, hundreds of staff protested after management dispensed a lawsuit describing frat boy workplace behavior. 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. ♪

>> the recovery has been a little slower in new york, but

with what we have added some of the northeast is actually taking a big step up into the fall and winter season. i would expect by next summer, we are going to be back for to close to a full schedule here in new york. jonathan: i heard some of that last summer. that was ed bastian, ceo of delta airlines. we just got to hope that this time around, that is true. on the business cabin, i do wonder whether the business cabin normalizes in the full way that these guys wanted to. tom: i have been looking at the ratio of business troubled family -- a family travel to business, and it is like six to one. jonathan: didn't we have a conversation about a more premium economy seat in these cabins? tom: yeah. my producer was in the front row. jonathan: you weren't better about that. was the plane busy? tom: one plane was busy, and the

other less so. the other was good because i was with a marching band from bethesda, maryland. they were actually playing. [laughter] jonathan: what were they playing, tom? jim: i couldn't hear -- tom: i couldn't hear because the tuba player was right next to me. jonathan: that makes sense. i have a vision of you sitting there was someone holding a trumpet. tom: i had the aisle seat. jonathan: equities just a touch softer here. yields not doing much. in the fx market, unchanged. euro-dollar, $1.1628. $82.14 on wti. tom: 15.72 on the vix shows the good number of days we have had. dan ives is going to join us. this is going to be an important interview on apple, amazon, and the rest of them. david wilson has a courage to look at cheerios. cheerios is trading at a 16

multiple. if you don't know what that means, all you need to know is cheerios are wicked cheap. david: they are not so cheery, put it that way. or you could look at procter & gamble and say the company and its peer group have been pounded and grounded. we are talking relative terms here. when you look at the s&p 500 consumer staples index, you are talking about the lowest index value relative to the s&p 500 since january 2001. so we are not quite back to the lows that we saw in the dotcom years, but we are moving in that direction. eng talking about costs being even higher than they anticipated because of what is happening to commodities and freight. tom: within the research you read, are they a value trap?

david: that becomes the question. you are talking about a slower growth kind of area, no matter which segment of consumer staples you look at, so you wouldn't necessarily expect to see the kind of valuation you would on technology companies growing much faster. nonetheless, the gap as it is reflected in the relative performance of the group when you look at the s&p 500. lisa: a number of investors point to this and say it is time to start looking to buy. they say we can look beyond the supply chain disruptions and take a look at the fact that sales are still going pretty strong. nestle came in showing revenue growth even as they saw margins compress, optimistic for the future. how frequently do you hear buy the dip in some of these consumer staples versus the pessimism of ongoing supply chain shortages? david: what i have seen lately

is consumer staples versus that consumer discretionary category, and analysts pointing out that if you look at the ratio of those two groups, it is setting a new high. they are looking at it as an indication that people are more willing to take risk in stocks. until you get past that mentality perhaps, you have to wonder what happens with the consumer staples in terms of any kind of come back here. lisa: when we talk about the narrative of the market, earlier this year it was looking beneath the surface of the headline number and seeing a lot of churn. how much has that changed as people get a sense of what the macro backdrop is? david: quite a bit. i had a chart the other day looking at the third quarter and pointing out that you had the narrowest dispersion among the 11 main industry groups in the s&p 500 that you had seen going back to when they were created in the late 1980's. the issue is how much has that changed. you kind of have to get through earnings season to see how much

dispersion there is really going to be because we have seen reactions to results going both ways, but not the sort of extreme moves that would suggest there was a big gap between the winners and the losers, you might say. tom: david wilson, thank you so much. what is so important is the massive discontinuity between individual company ups and downs in the index reporting. the rotation has been not so much historic, but original. jonathan: morgan stanley on top of that the past couple of days. 82% of sb 500 companies have had a 10% drawdown this year. apple reporting earnings. october 28, right now the most bullish on the street. we've got atlantic security at $190. dan ives is going to join us a little later on, at $185.

tom: that is important, jon. everyone is ratcheting up over a different news flow. you really want to stay with us for this conversation because we will frame out the trillions, if you will. did you see that amazon and apple are going to invade los angeles and take massive amounts of square-foot real estate in l.a. in the entertainment business? they are going to do apple this and amazon that. jonathan: that is helpful. lisa: i just want to give you this detail. we were talking about the $19 cloth for apple's new product. it is sold out until november, so you can't even order it. we have talked about who would pay $19 for an apple cloth. it turns out, quite a few people. jonathan: they knew people would. that is what is ridiculous about it. lisa: there you go. jonathan: honestly. tom: it is a polishing cloth. jonathan: is that what it is? lisa: you can use it for many

different purposes. jonathan: i am sure you can. equity futures down 0.1% on the s&p. bit of a snooze this wednesday morning. we had all of the hype at the front end of the curve, with yields picking up, and then this conversation about higher interest rates, kind of fades to the background as markets had in the other direction. just a little weaker, but 0.1%. the doom and gloom not quite captured by earnings season just yet, but may be the big industrial companies where you have expected to shine a bit more brightly haven't reported yet. tom: we've got a lot more to come. david wilson with great leadership on that. over not a big company but nevertheless, could be indicative of some is the surprise we could see in the cyclical area. jonathan: margins are looking better. from new york city this morning, good morning. heard on radio, seen on tv, your equity market 15, 20 points away

from all-time highs in america. just an unbelievable turnaround. we are down 5%. who bought the debt? you bought it well. we are doing ok. this is bloomberg. ♪

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♪ >> the idea that things are transitory is obviously wearing thin. >> investors will focus on earnings fundamentals, which will push stocks higher. >> the fed is saying from a monetary policy standpoint, this is just a matter of patience. >> markets are not comfortable with the idea that central banks are going to be dovish. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. in this hour, do you have the courage to be in the market?