inflation. >> it will be gross margin inflation. can you pass it on to the end consumer? >> it's not just in the u.s. where inflation is on the move, it's everywhere. >> i think it will be persistent. >> this is bloomberg surveillance. jonathan: all time highs into friday, good morning, this is bloomberg surveillance live on tv and radio. your equity market is unchanged on the snp on a seven-day winning streak. tom: essentially flat. we are downplaying the record high to extraordinary's of rise and we have the guests to talk to right now. jonathan: contrast the equity move what we see in the rates

market. tom: to our audience, the rows are talking about the five year yield in the belly of the curve as they say. i don't think the five-year is in contrast to equities. it signals recovery and signals better earnings. jonathan: they say we add some weight to the belly. jonathan: this was the rotation of earnings season for me. have you seen anything like this? kayley: supply chain issues are

coming from social media companies who you would think would be more immune than other sectors out there but snapchat says that people are not just spending money on advertising stuff any company that relies on digital advertising or their revenue is going to feel the effect on that i would note it's not just a supply chain issue. jonathan: 1/5 of their market cap. businesses cannot support incremental demand, that's a phenomenal story. tom: it goes to washington and worldwide and showed some of the interesting power we see, the power of cupertino. this is not going away. this is washington friendly and democratic party friendly because apple is saying you don't do the ad thing unless the

iphone user gives you permission. this is individual power led by apple. jonathan: apple earnings at the end of this month. here is your price action. we look good with all-time highs in the s&p 500. the bond market closed 170 yesterday and we are back at those levels. tom: i don't even know where the five-year yield is. it's across all of the curve and we see this in the equity market. i think it was 332 yesterday afternoon, the vix under 15 step jonathan: where were we a couple of months of go. we are still here. kayley: it's not just about the nominal five year yield.

medium-term inflation expectations are moving higher. the central bank of russia has to deal with in elation at a five-year high with the rate decision coming at 6:30 a.m. eastern time. the expectation is they will hike. you have the higher inflation also covid restrictions coming back into play which complicate the picture. coming up later in terms of economic data, preliminary october market pmi. we are expecting a small tick down but they tick up in services. at 11 a.m. eastern time, the big event of the day, fed chairman jerome powell and francine lacqua will moderate a panel on

financial stability channel edges in the central bank. this conversation is at a moment were central banks are in a tough spot because we have inflation caused by supply-side challenges and monetary policy can't be much about that but they might be forced to hike rates anyway. jonathan: what a phenomenal panel stuff we need to ask that chow -- the chairman where he stands on rate hikes. tom: this is an important panel and not only the physical issue globally but how do we unwind from the physical access? do we grow our way out? i would love to know just what do you do about burgeoning bitcoin business they have to police? jonathan: that's 11:00 a.m. eastern time.

i remember the morning in the summer in a note job from jonathan at credit suisse with a year and outlook of 5000 and many people just said here we go a in step they say he is too bullish and here we are at all-time highs. why do you think we can get to 5000 from 4500? >> earnings benefit from these shortages. i know that sounds bizarre but they are getting pricing power. that's going to mean the earnings -- if you look at the last 12 months, the price of the stock market is up less than the spending earnings have improved and stock multiples are down over the last year. that the number one reason and the second thing which people mess -- you guys talked about it a second ago, rising interest rates as a sign of confidence in

the economy, not a problem for stocks and that's the story of the -- of the last month. tom: the earnings sustained call has been great. they came in far better than the gloom predicted and you are as strong as your analysts. what are the analysts whispering to you right now? >> i hate to talk about individuals -- individual stocks but we are seeing what the companies are telling us is they are saying that things are pessimistic about their ability to meet demand and they are pessimistic on margin cost pressures and then the numbers come in and the buzz we are hearing from companies is more negative than the results they are delivering. we are seeing that across the

board. i know matt will tell you that things are going down but it will come in better. there is more price power than they are going to tell you. kayley: i'm looking at how earnings season is stacking up in the earnings surprises an average of 13%. the average sale surprises only 2% stop is that because the bar went higher on the revenue side or is that because of supply and demand issues? you are seeing companies not being able to pull in as much revenue because they don't have adequate supply. >> the first story is that you always have really small revenue and big margins. there is much more clarity on the revenue line. that's not difficult but the story this earnings season is that everybody thought we would

get caught and what we are getting is demand disappointment. i don't want to comment on an individual company but i was out with a bunch of chief investment officers from different firms and people were saying they thought that ad spending was going to be a problem because if you can't eat demand, why would you advertise? especially in an area like automobiles, it's important for the ad market so why would you advertise if you can't deliver? we are seeing this in many places. we are not seeing it in banks. banks are showing up with a levitation separate from this. if you split the market in half which is what the banks are doing, it doesn't look as good. the market is beating by 7% and the banks 11 or 12% so there is

a bit of a bifurcation. jonathan: sometimes the strategist job is to offer their be as to how people stay in business and sleep at night. what's the one reason people should stay in this market throughout next year? >> my therapy is a little different stop i am -- i am bullish about the market and optimistic in general but i'm seeing complacency with people saying just ignore any bad news, the fed's backing this and everything will be ok. there are things to be concerned about and worry about and in many ways i am saying to the bullish guys that i agree with you but we did roll off of a stimulus year. oil prices can be disrupt to, just check to make sure being

bullish is warranted stop i think it is but double check. jonathan: thank you. tom: what great is the line shows up and i learned something about the bloomberg. there is a chart that says you should own. it's blinking on my screen that it you are an idiot to be triple leveraged. jonathan: there are bigger soccer games. a good interview later. good morning.

this is bloomberg. ♪ >> president biden says the u.s. has a commitment to protect taiwan and would come to its defense if attacked by china. the town hall event in baltimore, the president said he did not want a cold war but wants china to understand the u.s. will not step back or change its views. germany has recorded its steepest one-day increase in covid-19 cases and more than five months. there were 116 deaths reported which is the most since mid may. officials have expressed optimism they would not need additional virus restrictions in the last few days. 66% of the population has been vaccinated. shares of snapchat tumbled after

apple issues are weighing on advertising spending and that is impacting its fourth order earnings and they have expected revenue of 1.20 $1 billion in the last half of the year. renaud will lose production due to the crippling global chip shortage. it says it will make close to 500,000 vehicles in 2021 due to a lack of components and it had previously predicted a short wall of roughly 200,000. this is bloomberg. ♪

>> negotiations are on going and

i think we've had good dialogue we want to make sure what we are doing will be sustainable. we are still talking to the white house and will continue. we are looking at everything today and tomorrow and hopefully we can have a framework we agree or we disagree. jonathan: senator joe manchin of west virginia talking about progress earlier in the week. that's the story in d.c. in your equity market, seven straight days of gains, the longest winning streak going back to the start of july. your equity market is unchanged on the market so far. in the bond market, we come in at a couple of basis points. in the ft overnight, the bank of england said jesting the

november meeting at the bank of england is alive one. that could mean they deliver a rate hike. tom: the real issue is to look at the 10 year and not just the l.a. of the curve? -- and not just the belly of the curve? jonathan: if we saw 180, that would take it -- that would take out the height of the year. if we were talking about higher real yield with a better growth profile, i'm not sure that's what's behind this move over the last couple of weeks. tom: the real yield is not done very much. the senator from west virginia says not anytime soon and that seems to be the reporting.

what i see is a lot of different articles saying america wants this legislation. if that's the case, why is this so difficult? >> as usual, the devil is in the details. they want paid leave, they want health care, they want childcare but democrats have realized that this has to be paid for. whatever they spend on these programs, they need to offset with taxes and that has proven to be a big sticking point in d.c.. we are starting to see some progress. senator kristin cinema says she is supportive of getting tax revenue from the wealthy, from companies. however, she doesn't want to raise the corporate tax rate. that seems to not be what she will support so they are looking at other options on how to do this. democrats have to find 540 billion dollars of tax revenues

that the other side will support for this package. tom: one idea is to take a few 10 year program and make it a five-year program and make some other programs one or two years. explain what the efficacy of a two-year program is. emily: if democrats only extend some of these programs like a child text it for a year, they will be so popular among voters that it won't be hard to reauthorize these programs. there is research showing that once congress has a program in place, is much easier to extend the program rather than get rid of it. also notable is what they are not considering is the climate change provisions. multiple lawmakers have been clear that those cannot be funded in the short term. they need to be long-term programs and funded for the

long-term that the reconciliation process allows. kayley: kyrsten sinema is opening her mind a bit as well as joe manchin. is this debate working out politically in their favor? are they start -- starting to feel the heat on the democratic side? emily: there has been no shortage of campaigns trying to pressure both senators and supporting the larger package. to a certain extent, you are seeing negotiations continue and you are starting to see more transparency. i saw lawmakers this week praised joe manchin and they say we might not agree where he is at but he is negotiating and working with us and we are confident he will be able to get an agreement. the white house is saying this will still happen and they think negotiations can wrap up soon. as tom mentioned, joe manchin does not think that will happen by the end of the month but regardless, progress is being

made and the discussions are moving forward. president biden solidified that in the town hall last name -- last night and nancy pelosi staying in town this weekend and negotiations are definitely continuing. kayley: when it comes to the midterms in 2022, tom will accuse me of having a virginia bias because it's my home state but it's starting to get a lot of notice on a national basis. why is virginia so tickly important as a signal for the midterm? emily: election nerds have been watching virginia for months. that's because virginia tends to be a swing state step it currently has elected a lot of statewide democrats in recent years but it still has a strong

voting block for republicans. a lot of the question is what is each party going to be doing and how will voters be feeling? traditionally for midterms is that is the party not in power, in this case the republicans that have the better chance to win and put forward a strong performance. we will be watching to see if the republican nominee is able to pull that off and that would send a signal that 2022 might not be good for democrats but if terry mcauliffe wins, that might signal a path forward. how do they appeal to moderates and independents and how can they hold onto the house and the senate in the upcoming midterms. tom: this comes down to vote early and vote often. emily: she is not the only one asking people to vote early and vote often and that will be another story for next year. jonathan: we don't joke about

voting often. tom: in civics at uva, they go out on this cushy greenlawn were thomas jefferson walked its absolutely stunningly gorgeous in charlottesville and they sit there in civics glass on a per -- civics class and say vote early and vote often. jonathan: emily wilkins down in d.c. do you think that president going down there to campaign is helpful to terry mcauliffe? kayley: he has said it's hurting him in the voting and there is pushback on president biden's policies. his approval rating has been going down so biden may -- maybe rather hurting rather than helping. everyone is getting in on this race. jonathan: that race is coming up. the president wants a house vote

on to spending those next week. we will catch up a little bit later on d.c. from new york, this is bloomberg. ♪

jonathan: live from new york city on tv and radio, good morning step seven days of gains into friday, the longest -- the longest winning streak since july 2 of this year. the small caps are positive. this money is building up in the face of higher expectations of higher business rates. let's start with the deli of the curve, just off the highs of the year and talking about inflation, you can go out -- go back 15 years when we last looked at the five year. the twos are coming in just a

little bit. 45 basis voice, higher interest rates in america, making the chairman powell hannon -- panel with francine lacqua more fascinating stuff tom: the central bank raises the key rate to 7.5% and it does tales with seeing a currency move to staunch the yield rise. yields keep going up until the dollar steps in and adjust. jonathan: what we saw in russia, we could see in brazil. there may be another hike of more than 100 basis points in brazil. sterling and cable, the pound against the u.s. dollar -- a fascinating interview with the chief economist at the bank of england overnight.

he is focused on the start of a journey and is the shape of the journey. it sounds like mohamed el-erian. i think it's interesting that there is a live meeting november 4 for the bank of england to potentially hike interest rates when asked about going beyond 75 basis went pre-pandemic, he pushed back and used the word transitory. it's interesting when you talk about the start of the journey, you have to there in mind what the shape of it looks like stuff even though the bank of england shows -- sounds more hawkish, they are not hawkish about the path. tom: our next guest will talk about where is growth. can they step in and adjust? jonathan: i don't know but this

market is dying to push. we all said the market was in line with this idea that qe was set from higher interest rates. cannot say that anymore in the same way. tom: our next guest has high frequency economics taking the wonderful glatt -- granularity and thank you for being with us today. what is in the details right now? if i look at high frequency economics, which is the item that has your greatest attention? >> good morning and thank you for having me. we are looking at how the consumer is responding to high inflation pressures and what the transition is.

this is centered around the high inflation readings that are centered around more than expected. the priced in rate is a little aggressive and as we see inflation moderate over the course of 2020 two, these expectations will be set and that will have implications for the yield on the short end. tom: can you good -- get good native data in the automobile business for the dislocations at the words on the west coast? how good is the goodness of the data you and carl weinberg have? >> it is challenging right now to figure out what the underlying trends are given the dislocation we are seeing on the supply side of the economy. we expect these disruptions will eventually pan out and what we see beyond that is slower days

were the impetus for demand which is being built into expectations that will last longer, that is not there. you will not see the sugar high of unemployment benefits. as the supply dynamics readjust, we think the demand-side of this equation will also be tempered and that's why we think we will move into a lower inflation and low growth environment. jonathan: can you put some numbers on that? what are you looking for? >> if you look at our forecast, we are up 3% and on cpi

inflation, we are still seeing high readings and that is a function of how we expect the goods and service sector to adjust especially as we see normalization on this service sector. it's a large component. there is so much uncertainty from the supply chain side that it's difficult to timeout how are when that will happen. we expect to see elevated readings but by the second half of the year, growth will be closer to 2.5% and inflation readings will ease substantially, closer to 2%. kayley: the supply chain problems are not something that monetary people are repaired to address. it's causing central banks to be pretty uncomfortable. you have russia hiking their rates, do we run the risk of when the bottlenecks ease? do we end up with policy that is

too tight? >> that is what we have been talking about. this is a supply dynamic that any action from the bed is not to address. if you are looking at the expectation that demand will be strong, we don't subscribe to that. there is a chance that you see a response from the fed that tamps down the economy in a more substantial way than is needed. i think this is centered out -- around what the fed is communicating which is that if inflation turns out to be substantially stickier, that they are ready to respond. i think they are micromanaging expectations rather than saying we will just sit back and let this happen. expectations are rising and they need to manage those expect

tatian's and it's a communication process. they are saying they will not let this occur at a rate that we see now. kayley: we are in the thick of earnings season and are talking about supply chain issues and companies raising costs because of their higher input costs. there was a call talking about the likes of unilever and rice hikes are working for them for now but if they hike further, there might be of where consumers are not going to be tolerance. what is your take on that? >> that's exactly right, i think the expect tatian that these price increases will continue forever, i think that is not realistic. either the can -- either the consumer will step back or you have to adjust your expectations about wage increases for the

response in terms of how the consumer responds to persistently high or accelerating inflation. i think there will be pushed back at some point and i think companies that are able to pass through -- the consumer balance sheets are healthy right now. they have a little bit of price pressure but i think there is a limit to that in terms of how successful companies will be in passing on pricing. jonathan: thank you as always. here is a direct quote from the financial times -- it tells me they are trying to make sure they have credibility around the lesion story. they say we will actively need

to and could act in november but ultimately, we don't need tight policy yet. tom: the major banks want to keep their credibility. a lot of different trends here. with the roar about commodities early in the week, that's an inflationary impulse that has eased away a little bit and maybe it's been managed away. i don't know what they do about rents and other basic costs. a gallon of gas in america, this is a huge story. i cannot say enough. business insider had a great effort with seven dollars per gallon gas in california. that's not a big deal to you but for americans, it's totally unacceptable. the president has to adapt to that as well as the chairman. jonathan: that's what my mom

said on the phone yesterday is the cost of natural step -- the cost of petrol. there is a huge divide between what the fed is saying and what people feel. kayley: maybe not as bad as the u.k. but speaking of the u.k. and the boe may hike in november, the u.k. 10 year is at a 25 year high today, for .25%. that is longer-term expectation and that doesn't look transitory. jonathan: it's worldwide right now. your equity market is unchanged with all-time highs at the close yesterday on the s&p 500, from new york, getting into the weekend, this is bloomberg. ♪

the fed says it will limit active trading after a scandal that led to fed departures. some fed watchers say jerome powell's actions with senior fed officials could increase his chances. vaccinated travelers for most of europe will be able to enter thailand without quarantine. they are among 46 countries to be added to the quarantine free travel list and that's starting next month. china is expanding its booster shot program to people who will participate in the upcoming winter olympic games in beijing

and surrounding regions. at risk groups include those participating, organizing or working at facilities involved with the games which are set to start on february 4. bts is ending its distribution deal with sony and will go to universal music. it had been pursuing them for years and universal interscope has had a deal for three years with a girl group which is -- which is winning over western audiences. global news, 24 hours a day, powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. ♪

>> it's everyone's individual right to choose but it's also every oilers individual right --

every employers to best check aaron way so if an versus the best way for us to protect our wheeze is to mandate the vaccine, then employees have a right to decide whether they want the vaccine or find another job. jonathan: from new york city this morning, good morning. a long weekend for lisa. we had a -- we add a little bit of weight with seven days of gains into friday step the longest winning streak since early july and yields just off the high for the year stuff the high of the year was the end of march, at 177 and we are not far away.

dollar-ruble and that's negative one point percent in the ruble's favor. the strongest russian currency since june of 2020. tom: it's something to be aware of. we tend to overweight emerging-market analysis but there are some important trends right now. there is the reading of this pandemic. johns hopkins joins us now. the mr. reed that i have right now is the ability to takemrna which is a sophisticated vaccine to work countries. i believe you told me you are optimistic we can do that. why aren't we taking things that work and disturbing them abroad?

>> right now, there is capacity which is increasing almost on a weekly basis. we don't really have the limitations in terms of making decisions about who to prioritize in terms of countries. we have enough vaccine to go around and it's a distribution issue in falls into the economic ring where you have to decide who is paying for these vaccines and how to distribute them and get them to the places where they are most needed. we have a surplus in the u.s. other countries are still waiting to get any amount to move things forward. tom: how much does each vaccine cost? i have no idea what it costs to get my booster shot >> no one does and that's one of the things that's an advantage in the u.s. and many other countries.

anywhere from 25-$40 for a vaccine dose is what is probably needed to get that distributed. who is bearing that cost will be important. some of the areas of africa, some portions of southeast asia are not really getting access to those because they are not competing well right now with some of the more economically forward countries who are able to afford those kind of prices. jonathan:jonathan: in america, we've got to decide whether we need a booster shot. one thing i'm trying to work out is how well protected i now, fully vaccinated five or six months ago go so how well protected and might at the moment? >> we know the answer to that but it's a graded answer. if you talk about severe disease and hospitalization, you're are

probably very well protected because there has been at remarkable consistency in terms of protection of the vaccine in individuals between the ages of 18-65 who are healthy and don't have medical conditions. that's why that population has not been targeted for boosters because it's not needed right now. the efficacy is there and it's holding well. what we will be seeing in the next couple of months is there will be talk of boosters in a more broad sense but that's because we will be moving from the initial strategy which was to get as many people vaccinated and get as high in immunity is possible to what it will take for us to have long-term immunity for three years so we don't have to worry about taking shots every six months or every year? that will be the transition for most individuals? kayley: dr. anthony foxx he says he believes the booster age will

be lowered with more data. if i am fully vaccinated, my likelihood of getting seriously ill or dying is low and i'm grateful and we thank science for that. if i have a breakthrough positive infection, i still have to warranting. many people were not salaried cannot do that so should boosters not just be open to anyone that even if you don't get seriously ill, it affects your day-to-day life? >> that's a great point. i think what we want to do is our focus get the pandemic under control and that's where we are trying to balance the issue of maintaining our health infrastructure and getting case numbers down by vaccinating those who are unvaccinated. that population is the one at the greatest risk of not only severe disease but what you

describe as being taken out of your workplace for 10 or 14 days. as we go forward, as soon as the efficacy rate for the regular population drops come i think we will see more discussion about the long-term booster strategy stuff we will need boosters to get long-term protection but right now, that's not the main priority of the vaccination campaign in the u.s.. jonathan: do you agree that when we don't have to talk about this anymore that arsenault? jonathan: absolutely but the red sox are a concern. tom: are you allowed to leave dying patients to go watch soccer? >> i will absolutely be watching

in my office. jonathan: thank you. tom: thank you, dr. for everything. jonathan: 75 basis point hike out of russia and i think i said 50. going forward, ups expecting 150 pace rate point. em is starting to shift. tom: i look at this and we are obscuring what we are thinking about and what we are reading about stuff the gloom crew has been humbled on early earnings. there is no other way to put it . jonathan: we are at all-time highs. tom: we got doom and gloom that the market wouldn't deliver and

it has. jonathan: any word on the red sox. tom: i don't know. it's painful. jonathan: lisa is back was monday, your equity markets are positive, this is bloomberg. ♪

(announcer) looking for a better way to lose weight and feel good? how about the one with a 98% success rate and a more affordable weight-loss solution? that's golo. there are no monthly fees and it's guaranteed to work or you don't pay. no stimulants, no starving, just results, results you'll keep for life. with over 2 million satisfied customers, golo is the new way to lose weight. go to golo.com and get your life back... -with golo. -golo!

>> we do see some encouraging signs the economy is re-accelerating. >> wage growth has not kept up with inflation. >> can you offset the rising input costs and what -- >> >> and pass it on to the end consumer? it's not just the u.s. but everywhere. >> inflation is not transitory and i think it will be persistent. >> this is bloomberg surveillance. jonathan: getting into the weekend, from new york city, good morning, this is bloomberg surveillance live on tv and radio. your equity market is positive 1/10 of 1%. his record high for -- ever -- after record high at the moment. tom: we will have an im