that with the last round of stimulus checks. >> the respond positive to a certain level. >> don't miss out on the bigger picture here. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> a special day for global wall street. a day where the bond market is on the move. kailey leinz in for jonathan ferro. he -- we will get to the equity story in a moment. lisa, i'm thrilled to speak with you about this standard deviation move flattening curve. the real yield on most a jumping condition to a new negative statistic and what absolutely stuns me here is it's a hawkish dawn. >> i look at canada setting the

tone for the market yesterday surprisingly ending the quantitative easing purchases bringing forward the rate hike expectations paid are they a harbinger of what's to come at other central banks or are they independent. this is one of the key questions on the precipice of next week's fed meeting. >> george says the macro analysis, we will do the ecb today, out the window, this is about risk. what that means is positioning. how would a filter is this. >> over the last three days we've seen volatility in the short-term rates of the developed markets globally. shocking move talking about standard deviation. how much of this is a complete inability for wall street houses to gauge central-bank reaction function. a time of faster inflation and slowing growth and a feeling we

are uncertain what's causing inflation. tom: amazon and apple, the advantage of going after microsoft. microsoft simply incredible. do you anticipate in your reading an incredible afternoon for cupertino? kailey: our analysts say microsoft was so strong on the cloud it may bode well for amazon because in terms of cloud they have a duopoly in some respects. talking about what's causing inflation, supply chain issues could be a problem for both companies. it's not even just a question of getting materials, but of labor pressures. and for apple, i don't know if you ordered an iphone 13 there's a good chance you haven't had it yet. tom: this is my reality folks, four new iphones. how many do i have? zero. we will get to lisa's

predictions. nasdaq on a tear, up 8.88% off the bottom. the fix stack 16.83. the yields, we could go all day on the yields. the 30 year bond from two point whatever down to a stunning 1.95%, a lot of dynamics there between the two year and the 10 year going 29 basis points over the last week to see that movement. brent crude off three dollars. we need to be briefed. lisa, put us out of our misery? lisa: perhaps put you in new misery. a question of the day heading into next week which is how do central banks globally grapple with much higher inflation, accelerating inflation at a time of slowing growth.

not stalling growth, slowing growth. this is the conundrum as we talk about intentional inflationary pushes. is it the fact we have so much money towards the supply chain disruption that kaylee was talking about. we get that ecb rate decision and basically you are looking at inflationary rates resins of highest levels and 2008 in the euro zone. however there are stagflation or types of feeling in terms of trade and how much things are costing versus the labor market still going out in some areas. in the united states a different story. the expectations for a new sub 300,000 print. another new lows since the start of the pandemic. we also get the gdp for the third quarter at the same time. i want to point to the atlanta fed gdp forecast. this is shocking, the idea we are looking at the potential for 4% growth that's down to 0.2%

growth for the fed tracker of potential gdp. what does that mean? how does this work with earnings to continue to come out blockbuster after blockbuster at a time where aftermarket we get apple and amazon. it's interesting to see how much we've underperformed is we've gone on with the year. 13% returns for apple. how much of a supply chain disruption is priced into apple and how much are people looking at labor disruptions for amazon? tom: many on the southside way out front with price targets that are up. look for the lows this afternoon on radio and television. this is really timely. the head of fx analysis at citigroup, it does not do

justice to a large and holistic global view. i want to start with a great essay from bloomberg opinion where he talks about a hawkish dawn. are we at a hawkish dawn? >> great to be with you from london. i do think that we are. markets are grappling with what is accurately described as a bit of a change particularly for the inflation outlook. that is inducing central banks to look for some optionality if not now than in the months to come. we will see this continue across central banks. we think the ecb may be a bit of an exception. lisa: particular when it comes to inflation, does that mean it's persistently transitory and some people are expecting in places like canada and the

united states where the central banks are expected to hike more quickly than they say they are? >> there's a combination of factors. still relatively positive demand, but also generally high labor markets and inflation expectations. this is set to last a little longer than we expected not so long ago. in that narrative we've a lot of sympathy with the inflation side and we have at least some openers on the idea this will come down a little bit lower than many had penciled in. kailey: we know they stuck with her transitory messaging and this shall pass. when you think about the fact other central banks are moving towards tightening and as you said the ecb is kind of an outlier, does that mean euro will lag? >> in a nutshell yes. we think the euro is challenged

by the combination of slowing growth including in europe but also ultimately because of sensitivity to global trade in chinese growth. we have a very significant shock from rising energy prices and major energy importer both in terms of trade and incomes in the euro zone as well. in an environment where yields are going higher in europe in general. these have the potential to put euro-dollar in particular. tom: i want to talk about a philosophy that's been out there for years. there's a lot of latin phrases thrown around. all you need to know is it's basically a tone of after-the-fact. today and frankly all the others , they've all got to operate after-the-fact. the bank of japan proved you cannot get out front.

>> i do think what makes the situation difficult for the global central banks is it's not just inflation going up but the uncertainty is really much higher. it's really that uncertainty striving central banks to try and be a little bit preemptive old corrections print a lot of the developments have already taken place. by their own standards after bring forward their options to tighten policy. at least two have the opportunity. does that have to be followed through with? i would say it's more likely than not but far from certain. tom: thank you so much. thrilled to say greg peters will join us. bill emailed to get him in. he will be with us in a bit. it is absolutely extraordinary,

let me explain this simply print give us your view and the concepts i have is a two year yield that's up eight or nine basis points and a 30 year bond betting on a slowing economy with disinflation coming in lower by a solid 20 basis points at the same time. that is original isn't it? it's a rare occurrence. lisa: bond traders are much more pessimistic because the economy is not the market. the idea the feds had to be forced as we saw the bank of canada had, the ecb has a different dynamic they are dealing with. but when they hike rates they will be hiking into the same environment we left off for the pandemic. the idea of an aging demographic and more dead. growth keeping up this acceleration we've seen immediately post-pandemic. the question is slowdown is not

recession. how do you parse out the difference between the two? tom: the slowdown, we are focusing on the bond market because that's what global wall street wants to do. this earnings season is killer. kailey: they are killing it and it's a question of how they have been able to exercise their price power. bank of america putting our research that mark -- margins are expanding on average including for staples which alter sin -- which are ultra sensitive to inflation. companies are proving the strategies wrong. tom: we are thrilled kailey leinz is with us. jonathan ferro is not with us. are we going to miss his expertise on the ecb? maybe. we will talk about the dow all day paid stay with us. read peter's coming up. this is bloomberg. -- greg peters coming up.

this is bloomberg. >> president biden heads to the capital today to brief house democrats on his so-called spending agenda before he heads to europe. the president -- house and senate democrats can't agree on how to pay for the measure. in taiwan, the president says she's faced -- believes the u.s. will come to the islands defensive china tries to invade a. the threat from china is increasing every day. she also confirms the presence of u.s. troops in taiwan. cnn says there are fewer than three dozen americans. the price of european natural gas and power fell after 5 -- after signs from vladimir putin the rush will send more gas to the continent next month.

they asked him to fulfill it -- to fill its gas storage facilities in europe. hong kong is preparing to rollout a booster shot. hot on the list, the elderly, those at high risk of infection and people who were vaccinated with the china sinovac's shot. they are seen as less effective than other vaccines. 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 laura wright. this is bloomberg. ♪

>> now is the wrong time to raise taxes on anybody whether

it's millionaires or average consumers. the problem is it probably won't raise much money since a lot of this money will be given away to foundations so it won't be taxed. the other issue is probably unconstitutional and the third issue is it creates very bad incentives. tom: the former secretary of the treasury yesterday. i thought it was quite something to listen to secretary mnuchin talk about something that six hours later seem to evaporate off the landscape. jonathan ferro on sabbatical. beginning his sabbatical. what do you think lisa? lisa: definitely capri. he needs it. tom: he got the gulfstream. pager and sullivan in the washington post. i guess driving for the

conversation. this was nailed yesterday. a revised framework deconstruct for us now this new phrase, revised framework. >> democrats are trying to come to an agreement. they want to come to an agreement today, preferably by this morning when the president is supposed to speak to house democrats on a list of what they want to put in the bill which is an important part. that means settling on what the tax measures will be, that would also mean they have to calculate how much revenue that gets them and what they can fit in here. the key questions right now are one of the tax measures they can agree to. not good on the so-called millionaires tax. after that they can figure out and it does sound like the paid

leave provision is out. but it will be on the basics and not some final bill ready for a vote. >> right now as the president goes to rome, are the whips whipping this morning? are they counting votes? jack: there is nothing to whip specifically. we've been in a month long process where they are figuring out if there are any objections. democrats have said almost anyone among them can be the joe manchin type figure and hold this up if they want to be. it's less a whip count and running things by the key members including joe manchin, now senator cinema has pivotal views on the tax measures. also they are running this by objections. there was opposition by richard neal to the billionaires tax so

they are running this list by everyone. they are not to a true whip count just yet because there is no bill. >> basically we are talking in theory. kyrsten sinema gave a wish list or a list of provisions of tax measures she would be comfortable with. she said if you could satisfy these let's talk. what was on there you think has the greatest sticking power as we get perhaps a draft of the bill. jack: the key was the 15% corporate minimum rate i believe according to lawmakers what they are talking about is for corporations with $1 billion or more in profits, she can get on board with that. it's expected to raise a few hundred billion dollars over the course of a decade. she appeared to be ok with this

billionaires tax on unrealized capital gains that got opposition from elsewhere. this was not a bill so there hasn't been a proposal out. some sort of 3% surcharge tax on wealthy earners that would be different from the raising the highest income tax rate but adding some beyond a certain threshold about $1 million. that hasn't turned into a concrete proposal yet? -- yet. kailey: progressives in the house were making a lot of noise and i feel like they have gotten quieter even though the social spending pizza their agenda seems to be brought down. >> they have had their say on what they want to be in the bill on the reconciliation bill on the front end and really helped shape that. that's why this is getting funneled through the lens of the moderates. aggressive have been very vocal

on the strategy of how to pass this because leadership it seems would like to pass the senate passed infrastructure bill through the house if they had the votes. but there is opposition from the progressives to do that until they actually have a bill they can vote on on the social tax and spending measures. there try to hold up the infrastructure measure until they have a real concrete deal. tom: thank you so much. an eventful thursday. we need to get back to the bond market. the surveillance row this morning. we need to reset on the bond market. let me give you some data. the two year yield, .55%. the 30 year bond well under 2%. for those on the teeter totter, short-term yields up. long-term yields down. lisa: it signals a slower growth

and the economy is heading towards a rough patch that perhaps people are not pricing in. why are bond -- people in the bond market -- you ask this of me every day. at the same time people say the economy is not the market. then what is the true reflection going on. tom: i'm getting the watching fox sports 12 new saturday. best football game in college football. nobody in the stadium, a 100,000 people, no one is as -- as watching surveillance. kailey: the point about whether it sending signals is a good one. it's come up over the course of the pandemic era. the equity market hasn't figured out yet. or they focus on earnings growth and companies resilience in the face of supply chain pressures. i would also note a lot of the movement in the bond market has

come from higher inflation expectations. real yields are still very negative. we still have deeply negative real yields, can risk assets to ok? tom: we walked through the yield real -- real yields equation. who is doing the real yields tomorrow? >> i think taylor is paid -- is doing it tom: nominal yield minus inflation is the real yield. the residual. which of those three things matters, nominal, inflation or residual. lisa: it all matters deeply for all those people in the stadium it will be feeling pessimistic. i will say this, the bottom line is this. can we continue to maintain growth despite the fact inflation is going up. these are the questions we need to answer. tom: it is interesting and we

will do more data checks. i want to emphasize for those hung up on equities the bond market today absolutely fascinating. dow futures up 24. this is bloomberg. ♪

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tom: "bloomberg surveillance." it is an eventful thursday. a wonderful trend of job creation in america. we are looking at the bond market. really extraordinary right now. i've got to go to the two year yield. tom you are not quoting the two-year enough. >> he is not wrong. tom: right now in what we are doing for bond market shenanigans is really looking at the tech juggernaut and how it folds over into the rest of the stock market. katrina dudley and franklin was federate -- iconic for her analysis of technology. thrilled she could join us today.

i want to talk about something is basic, see if they want to persist of free cash flow. did we massively misjudge the generation of cash and the use of it for shareholders? >> is one of the key metrics you have to look at at a company in terms of assessing the stability or sustainability of the competitive damage. we spend a lot of time looking at cash. we look at what are all the people that need to get paid, is there a restructuring charge. so many parts of that statement that people just completely ignore. i think people get confused about the income number and forget about whether it's a resilient.

>> katrina has read six volumes of it. move up the income statement. can you partition a tech juggernaut over the rest of american industry. do we simply underestimate this great bull market the ability to make profit? >> i think in a tech bull market, would people are focused on is the sustainability of that over a long period of time. focusing on the goal that interest rates and inflation will play. a number of these tech stocks are trading on or you of the stocks that are not trading on earnings, interest rates become something that's very sensitive because on the valuation we are looking to add values. lisa: this goes to the heart of the question of u.s. versus

europe with there is greater tech dominance in the united states versus europe and there is also a feeling there is a different more stagflation like headwind facing europe. is the cash persistency different than that of the u.s.? >> europe does not have the same technology companies but it does have a number of very strong companies there. s.a.p. is another big juggernaut. so i think europe does have a great constitution of technology companies that's not the dominant force or dominant percentage of the markets. what they do have is luxury stocks. when you think of all those very strong brands and that the technology equivalent of europe. i would say those were a lot

longer longevity that have been around for multiple centuries. and so their ability to generate free cash flow has been tested time and again in the stability of those franchises is something that you as an investor can put away and you can wake up in the stock will be there. >> are they underestimating it -- the power of more dovish ecb when it comes to equity performance. >> you obviously have had a lot of hawkish -- coming out of the boe. people are saying there is hawkish pressure on the ecb. on the dovish side we had the bank lending survey which came out recently and shows increasing pullback in lending and a tightening of credit standards. you can find that with the full rising nominal yields.

we are starting to see signs of tightening. a number of programs the ecb the been going until march of next year, expecting an announcement in december from the ecb. you get that december meeting which is there -- where there is a big announcement. let's compare and contrast europe and the united states. the inflation concerns in the u.s. are much greater than they are over in europe. the supply chain pressures exist in europe ended on thing we've seen the same type of tightness in the supply chain in europe. the second thing is the labor market the other element of the inflation equation. the labor market has been quite sluggish.

they were asking for 5% rate and it looks like it may not go through. you've got a lot less pressure in the ecb, the economy came out behind the u.s.. they will watch with the fed is doing. >> talking of inflation into labor pressures, we have caterpillar earnings crossing the terminal. they beat it by 2%. i'm looking through the press release and they talk about manufacturing cost because of higher labor costs, higher material costs. they were able to offset that or withstand it to some degree. have we grossly underestimated the ability of companies to do that? >> i think that is a company by company decision. you have rising costs on one side and i think we are overly focused on those rising costs.

companies can handle rising costs. i think that's what you are seeing with caterpillar. they had those rising costs. what construction worker doesn't want to have a yellow piece of equipment. exactly. people tattooed caterpillar down there leg. we have seen this as an iconic brand name. that's the power of the brand giving you the power of pricing. >> be careful or tom is going to roll up to bloomberg headquarters. tom: i'm not. we are moving the trees around. >> now i am distracted by that image in my head. [laughter] >> talking about maybe supply chain bottlenecks easing. we heard from automakers as well kind of saying the worst of it is over.

cannot expand if supply chain issues are no longer an issue, does that just mean the bull market rolls on and we climb higher and higher on the basis of earnings even if growth starts to slow? >> the market should continue to appreciate because it's very much a reflection on the underlying earnings of the company. in terms of the supply chain i think what we are seeing in -- is the supply chain is started to get more room in it. but there are a number of possible weeks of tightness. think about logistics. we use to when we were short on components to make them in the factory and that would speed them up. we don't have the ability to do that. i think some of the logistics will be higher.

i think some of the component prices, we've been able to build a buffer into it. the question is if you got companies that have gone after the pricing inflation you does need to cover by higher costs. the companies get pushed back on the others. so you really have to understand the most price increases. if they are not sticky you don't get the earnings growth. tom: thank you for that, katrina. you look at caterpillar. 2020 is such an apparition because of the pandemic. 2019, free cash flow was about $4 billion. now it is modeled next year at $6 billion and that's a persistency of free cash flow we've been talking about. kailey: and a question of demand. demand for caterpillar products he's really strong.

it's not to say they aren't dealing with supply chain challenges. the company acknowledging that in their press release. but on the demand side, it is so robust they are able to generate sales and offset that quite a bit. it is a question of demand and asking the question will supply be able to meet it. tom: this goes back to deerfield, illinois, 97,000 people and i'm sorry, this is not apple or amazon, you drop a cat piece, it falls on your foot, it hurts. lisa: and you have a lot of experience as you drive your tractor around with your tattoo of caterpillar down your leg. there is an issue of the revenge of the old industrials. you want to think so you have to buy stuff to build them. i wonder what it means for an economy if they are able to pass along the entire price increase and then some to the consumer.

what are we left with? are we in a better economy or just a reset to higher prices and revenues are that much bigger? tom: i'm good to go back to rebecca yesterday who hinged it all on the labor economy. will we see rising wages in the picture? that is in doubt. >> will it keep up with the persistency of margins and right now the answer is no. what triggers the reset? are we seeing a shift in earnings will be go back to the same regime. tom: we would have missed that announcement without kailey leinz. dow futures up 53, the vix 16.7 two. focus, the bond market. this is bloomberg. >> with the first word news, i'm

laura wright. on capitol hill, the head of the house -- committee says a proposal for a billionaire tax will not be part of negotiations on president biden's social spending bill. the ways and means chair says the house is discussing with the senate a brief -- for those earning more than $10 million. senator ron wyden insists it is ahead. tensions over fishing rights keep rising. the british government hit back as france brought its own retaliatory measures. french authorities say they may disrupt the flow of trade with the u.k. and energy supplies to the channel island due to a lack of fishing licenses given to french boats. -- increased its earnings and cash flow targets by the european airplane maker is on a

recovery in air travel per airbus is hoping to rally to support a significant increase in jetliner production. shall has set up a more ambitious target for cutting greenhouse gas emissions from its operations. the announcement came hours after word activist investor dan low had taken a $750 million stake in shall and is pushing for a breakup. the company reported third-quarter profits which fell short of expectations. 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 laura wright. this is bloomberg. ♪

>> surrounding their children with people who are vaccinated helps protect them against

covid-19. it is important we continue to vaccinate as many adults as possible to provide protection to children, especially those who may not be eligible for vaccination themselves. tom: the director at the cdc, we thank her for those comments. this is just breaking now. pfizer biontech to provide the u.s. with 50 million pediatric doses. a stunning statistic when you look at the population of 300 million plus and begins the conversation for november of this year. we get a recalibration on this pandemic with david. dr. doughty, thank you for joining us. where will we be december 1? >> a great question. i think we are seeing cases go down right now, so there is

reason to believe that they might continue to go down. we might be in a better place than we are now. that being said we are starting to see cases rising europe. maybe we will see a dip and then a swing back up. i wouldn't rule that out either. tom: i look at the death statistic in one of the publications and i frankly see better newsprint we are migrating down. as you see that glide path, where does it click in that we are beyond the pandemic? >> i think we should be asking ourselves that question. 1400 deaths is still a lot higher than where we were back in june or july for example. but i do think we should ask ourselves at what point do we say it is time to consider

ourselves having turned a corner. cases, probably not yet. but deaths are moving in the right direction especially because the vaccines are getting out to more people. lisa: i feel frustration rising with public officials that we are still talking about this and that sony people aren't taking the vaccine. -- so many people aren't taking the vaccine. tomorrow is the deadline for new york workers to get inoculated. we saw pushback saying you will be short. are these mandates working? >> these mandates are working. people are getting vaccinated because they would rather get vaccinated then lose their jobs. i think every city and company as to make calculations about are you willing to deal with having fewer staff around at the expense of having a safer workplace. kailey: is this the precedent?

talk about this from the pediatric inoculations. you have the governor of new york state saying perhaps we ought to mandate these for schools the same way we do tuberculosis and mmr. is this the road ahead? is this the new normal that we have to expect to get to or is this something more akin to the flu? >> i think for kids this may be something different. kids are not people who are getting as sick as adults are. i do think the risk-benefit ratio is probably positive for kids. but is it so positive it would warrant broad mandates, i don't know. tom: going back to my childhood and the raging debate at the dining room table over mmr. i get the children aren't going to die but isn't there a societal construct that we want everyone vaccinated so there is

an interdependency and exile genesis solution. >> yes. i think that's reasonable. i think we need more data to see how safe these vaccines are in kids and how much of that versus the benefit we get before we talk about mandates. i think for kids at least. i think they're at a place where it's reasonable for kids to get the shot and it's going to be coming out for five to 11 years old. i am not sure where to put where we are at mandating these vaccines, especially since we don't have something for three or -- 04-year-olds. tom: thank you so much. that's a hallmark headline as we go back 18 months. lisa: to me, the disagreement among health officials, amongst public officials about what to do with the pediatric vaccines, you nailed it when you said

ultimately it's a societal issue of trying to reduce transmission or are we dealing with something that hasn't been proven which the doctor was saying we want more data and the thresholds to be higher because they don't get as sick. especially as so many adults haven't been vaccinated and are still susceptible. tom: let's do this, let's reframe with futures advancing up 12. nasdaq futures up a solid half of a percent. 15,000 669 right now. we have to reframe on the bond market. i'm getting go to the benchmark which we talked about maybe a pivot point of 1.54% on the 10 year yield. >> what do we pay attention to and a lot of people are paying attention to the real yields which you've been mentioning. the idea it's going more negative or than they are the nominal yields. this indicates the pessimism. a lot of people they say the bears, they get crushed again

and again. but is the underlying economy representing the enthusiasm we are seeing in equities? is it something we have to pay attention to for policy? >> a first look at q3 gdp today that working survey number 2.6% in non--- annual lysing. -- annualizing. diane talking about net exports and imports. exports disappear, that really detracts from gdp. kailey: that will be important for the current economic environment. i would argue what's happening in the bond markets is a reflection of growth further down the line and we are dealing with local central banks because of higher inflation pressures and energy shortages will be pressured to act sooner and perhaps more quickly than they would have otherwise. are they getting pressure into

hiking and making policy to tight too soon. is that going to choke off growth down the line. tom: i miss jonathan this morning. the first time i saw him he was on the lawn in front of the old -- building and i thought what is that. this was a few years back. the ecb meeting today, it is not a snooze fast, it is not almost what she says, but what she doesn't say. lisa: how much she either pushes back on the assumptions being made in the markets and a curtailing of the bond purchases or not. what does she do with that expectation? i'm struck by the different nature of inflation over in europe. this much more leeway to be dovish. how much can they diverge from the rest of the central banking complex. tom: it is just really different for europe and frankly the

united kingdom as well. the ecb meeting coming up. we have for you that announcement coming up. and then an important press conference. you see that on bloomberg television worldwide. futures advance 14. 14.

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>> we do have that with the last round of stimulus checks. >> equities respond generally positive until it hits a certain level. >> markets become more challenge going forward. >> don't miss out on the bigger picture. >> this is "bloomberg surveillance." tom: good morning everyone. bloomberg surveillance, our studios in new york on radio and television lisa, he has a framework to discuss. lisa: we are going to your about the framework perhaps they have agreed upon. what this means to me is the question, does the framework get to the vote for the bipartisan infrastructure plan?