>> is not just inflation is going up. >> equity response generally positively to inflation until it hits a certain level. >> really don't see much more scope for two-year yields to move much higher. >> this is bloomberg surveillance. >> good morning. jonathan farrow. interesting and unique friday for bloomberg surveillance. we welcome all of you. it lisa, we are going to get to the markets with michael purves. if president and first lady finishing up a meeting scheduled with the probe to begin a true

lateral meeting with the secretary of the state for the vatican and sergio montebello of the republic of italy, the italian republic i should say. a meeting with his excellency. >> it was a difficult thing to swallow. i think this is a fascinating moment as we head to g20. we have two of the most powerful catholics and the world meeting today to discuss the most important topics of the day which is ending the covid pandemic as well as climate change. heading into a very desperate weekend. >> i know you are going to brief us on it as well as annmarie hordern, but the elephant in the room is where is china?

where is russia to mark -- where is russia? >> so when you will about them, but they are powerful. >> these international relations, we saw that yesterday. is everyone within the economic system that the pope judges tries to figure out how to extricate themselves from this pandemic natural disaster. >> is not just the pandemic might you also have an energy crunch which sends and that's which sets an interesting backdrop. results from energy crisis. china telling coalminer's produce as much as you can. it don't worry about annual quotas. that i think is very interesting

considering renewables cannot yet provide a backstop to energy sources. >> we get ready for weekend reading. pretty much people saying a better fourth quarter. we will talk about that in a moment. a really interesting reversal. nasdaq down 9/10 of a percent. amazon and apple figuring out what they are going to deliver next. a lower yield and a 30 year bond backup. i don't get much news to the dollar this morning. we need a brief. i believe we need a g20 brief. >> we are going to be seeing a meeting of officials. today we saw those images of

president biden meeting with two of the most important catholics in the world. recovering from the pandemic, how does the text rates when the best they can do is implement tax in the united states? the s&p really raises a question of what to get accomplished with only a virtual addressing to the confab at some point. we get a slew of data. personal spending and income data as well as inflation index as well as employment costs. how much are they going up? how much are we expected to see rise to yet another post 1991 hi. -- post -- rise?

people going to the grocery store and noticing their bills for the first time and buying less? at what point do we see that? >> please stay with us as we address november. michael purves chief executive officer, tallbacken capital advisors llc. is it half-full, half empty? there were glimmers of profit? >> i think it is important to remember that earnings seasons are perfect -- are not perfect. the trend we will continue to see are the actual earnings. q2 was one for the record books,

but half the companies on the s and p have reported and what we are seeing here is the topline and bottom-line are impressive. that's going to reinforce the 2022 earnings. >> it's disappointed, they are getting punished with $180 million taken off their market caps off today. what gives you confidence to go in and buy this at this point given the fact that some of these issues are going to go on for much longer than just this quarter? >> i think you made the point earlier about some of this will be deferred revenue. if you are not able to buy your iphone or whatever it happens to be this year because the supply

shortage, that is not mean the demand is going to go away. i think if you step back and think about this whole equity market through covid, 2020 one is effectively over but we need to see is the reasonable growth prospects into 2022-2023? i would be much more concerned about margin pressures that i would be about advertising revenue. >> michael, you just said that 2020 one is effectively over and you are right. yet you say 4800 targets on the s&p might actually be too low. could you talk me through where the upside comes from? >> from a fundamental point of

view, i looked at earnings next year. i get very comfortable at the equity risk premium that we are looking at at your end will be very comfortable if we are at 4800. it is important to remember that november, december could be disastrously ugly months. they are typically the strongest months of the year. very often each of these months could be put in three to 4% each. another 200 points are so to get to 4800. i don't see that as problematic. i've -- i venture to say trailing their benchmarks, into your end unless something really bad happens.

very constructive for equities. and the earnings over all are probably going to be certainly confirming the upper -- the trend in earnings. >> kailey: beta chase -- >> beta chase at the end of the year. could you explain to me, michael purves? what is beta chase >>? -- if the benchmark is up 18% or so , they don't want to end the year trailing the benchmark by that much so they feel maybe i missed something. maybe i was too conservative. let me, if they have some cash

on the sidelines they put into work and it helps propel into year end. if you go back to 1960, you will see that november, december collectively and individually are easily highest. >> shocked. michael purves, thank you so much for giving us, lisa, help me. we are going to beta chase in the meta-space. >> you gotta call it betta. >> tom, i can tell what you think about meta. you think it's a good name change for facebook? >> no.

i grew up within the shadow of the american can company. lisa, my high school girlfriend father works at the american can company. it was taken out buying fancy financiers by the liberal state of connecticut and they changed the name to primerica. whether it primerica or sci-fi, it's just desperation. can you imagine? i'm being sensitive here with president biting -- president biden being at the vatican. we will continue if we can get out of this and keep our jobs. stay with us. -23. ♪

>> president biden went to the vatican to meet with the pope. insisted that the meeting be closed to reporters. president biden is catholic and the bishop has weighed other to deny him communion over his support of abortion rights. china's president will skip this g20 summit. he will address, she is continuing -- he is continuing his preference of staying home. he has not left the country since january 2020. results from apple and amazon unhappy holiday season. posted disappointing earnings, even the mightiest of

corporations suffering because of the surge and because of labor. apple cannot meet the demand for its products. a search and continued spending to 3%. germany and spain posted germany -- posted figures weaker than expected. 2.2% and the third quarter. 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. this is bloomberg. ♪

>> for much too long, working people in this nation and middle

class in this country have been out of the american deal. it is time to deal them back in. let's get this done. >> the president of the united states, a tumultuous thursday. no other way to put it. as the president and first lady meet with the pope at the vatican, sitting with pope francis, the vatican city state and other meetings with other italian state. other catholics visited rome. at john f. kennedy, the summer before his assassination. it was really quite a scene at the time. he received quite the greeting in a post-world war ii italy.

it is very different now. from the jfk memorial square in rome, annmarie hordern joins us. i've been watching on the side of my tv wall. airlines such down in rome. there is not an airline from russia. there is not an airline from china. let's start with why. >> what this is about at this g20, what's int who is not attending. the president of china has not left china since the pent -- since the beginning of the pond since the beginning of the pandemic. -- since the beginning of the pandemic. without these two individuals, there will be some sort of communique that will be

released. we do know that the biden demonstration is trying to plan some type of sit-down with the president of china. he has not left china since the pandemic struck. >> should the president accomplish more in rome that he accomplished yesterday in washington? >> he's facing two big struggles. one in washington and one in rome. if he cannot deliver his economic agenda at home and bridge his party together, what message does that send when he sits down with world leaders today and this evening? today is going to be the president of italy and president of france. tomorrow is going to be negotiations regarding the nuclear talks with the u.k., germany and france. if the president is unable to

deliver, what brings world leaders, can he deliver on a global stage? iran wants to make sure that it is ironclad. they want to make sure that if fate that that if you had a swing of domestic in the united states that does not affect global agenda items. is the president going to struggle to deliver given that his initiative is stock and installed in congress? >> what is president biden going to come home too? i wonder if anyone domestically is watching this with and i toward elections. >> it's a great question. yesterday was confusing. everyone was scratching their heads on the hill because the president seemed to want to get

something a little more ironclad. there was talk of voting on that hard bipartisan infrastructure agreement. that could've been something that people are looking to have at least delivered. he is going to go home potentially with the democrats losing a key race in virginia. this is a key thing that will push the democrats back even further. can he also not deliver at home? >> terry mcauliffe, no doubt would be placed on the biden administration. they are looking to reenter in terms of leadership on the global stage. >> you talk to european leaders, america is "back."

you have the submarines with the french. you have trump era tariffs in china as well as aluminum tariffs on europe. i think one of the main concerns is going to be how hard this group confronts china. he said there is still a big division transatlantic in regard to china. europe wants to engage, but america wants to up -- wants to confront. can they deliver? that's the question. >> thank you so much. i count 10 churches around you so i'm not going to try to guess which church bells were going while you are speaking. lisa, my recollection was g20

pittsburgh with president obama. i'm going to go on dangerous ground and say they actually accomplished something? >> there are low expectations for what will be accomplished here. the global warming debate and how you address that, i think that's more consequential than g20 meetings. >> won't you -- what will you be watching? >> is going to come down to whether china plays. you really can't do much without china's buy-in. they are not changing their targets. they are still looking to reach peak commissions 2030 and carbon neutrality 2060. it is a country that is wrapping

up and call and we know that the president tends to prioritize the mastic issues versus some of these more international goals like karma change. >> all usage -- climate change. you are looking at >> you are looking at markets that are going in the wrong direction. i said the wrong thing. honestly, what we are seeing is the price of dirty fuels going up and encouraging production of more of them. how do they use some of those dirty fuels and move to cleaner energy service -- cleaner energy sources? it is a real conundrum. to try to get them all on the same page? good luck.

>> president at the vatican with the first lady scheduled to meet with president and his excellency coming in the next two hours or so. stay with us, this is bloomberg. ♪

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>> is a different friday for bloomberg surveillance, getting you ready for november. it looking at the international relations of the president of united states. across assets, -22. a little bit of attention. bonds reverse, a little steepening off the shock flattening last week. let's leave it at that. >> it's all about tech. that's what is driving the narrative. these are not just any companies. these are giants and even they

are vulnerable. amazon, thank you very much to labor shortages. down for and a quarter percent. -- down 4.25%. they can't meet it with supply. they took a hit for that. apple is down about 3.5%. i can't even call it facebook. meta. >> stop. stop. stop. i'm calling it facebook. at lisa and i are not going there. >> we have a rebranded from mark zuckerberg. shares are up 1%. the case of mistaken identity

because the canadian materials company is up 4%. there are other earnings as well. commodity prices aiding commodity oriented companies. bigger buyback. steel prices up a .6. the downside, digit -- not buying enough pumpkin spice latte's because starbucks not meeting expectations. that stock down 5%. i'm just going to blame you. >> lisa, can you and i agree that as you go up the spanish steps in rome, the museum to the two authors that i can't pronounce. that's like alphabet. at what they wrote is like alphabet compared to meta.

>> we can agree that it is mock able at this point. >> drinking the zuckerberg kool-aid. >> let's move on. >> they will move on to italian dignitaries and a really difficult meeting i would suggest with the president, republic of france. a lot of symbolism after certain australian submarine. we will continue to monitor that. we monitor your problems in the market and there is no one better to do that than george

who writes really clear research notes. we are seeing a deceleration in the fixed income market. explain that. >> sure. what we are seeing is a deceleration in the bond market. we have seen a pretty big move in the last week are so as bond yields have dropped and the curve is flat. importantly, we have seen the very long and between the 10 year points on the curve. people have rushed to assume that this is a meaningful indicator that we are headed for a hard landing. i think that's getting a little bit ahead of the curve, and the reality is that there are tremendous technicals that drive fixed income markets. the shape of the curve come up one of the best indicators that

you can look at for the direction of the economy, the direction of growth and ultimately a flattening curve usually -- usually raises alarms. what we would call, yields are moving incrementally higher. they are moving higher. the fact that yields over all while the curve flattens, that underscores the message that the economy is decelerating. it's not headed for a hard landing. we saw a soft batch in the third quarter as we saw yesterday, but the demand is very robust. supply constraints are impacting . at the end user pretty healthy area -- healthy. >> a lot of this is predicated

on central banks raising rates. it do you by that story that the market is telling? or do you by what central bankers are trying to tell us? >> i think the market is testing the limits. what the central banks have told us is they are definitive -- they definitively wants to be behind the curve. you can debate whether or not the market is getting ahead of itself. at current levels of inflation are high by historical standards and are remaining higher that people would have expected, but there is a good chance they start to celebrate. supply-side constraints don't last forever. that they do start to get some level of relief. i think the market is pressuring

limits of the fed. we are going to hear from them next week. that will set the stage for 2022. other central banks are already in motion so the reality is the extreme liquidity that has been in the market now for 18 months or so is starting to come out and starting to decelerate. we are going from extreme liquidity to less liquidity. >> is there a tipping point? the idea that there is a similar sentiment in central banks around the world where you saw yields go down globally in tandem and now we are starting to see it move in the opposite direction in tandem. people start to normalize rates with something more akin to inflation and growth. >> we could reach a tipping

point. i think that is a fair point. a game of cat and mouse. the fed is trying to recalibrate the markets when they see the same dale a desk data we do. -- the same data we do. we can't let it move too far too fast. do central bankers lose control tomorrow do they allow or are they unable to control the pace of the move? so far, that has not been the case. that is exactly what we are seeing right now. there is still very strong technical support within the fixed income market. there is a chronic shortage of -- chronic shortage. others move to try to immunize their liability. it is not a value trade.

it is a requirement. when you get to a point where we are now, stock markets at an all-time high heading into your end. those are very strong technicals that we think keep his markets in check. the big picture, yields are moving higher. it is a matter of pace. >> have we seen the types? >> what we have seen in historical periods is -- what we have seen an historic bowl -- historical periods, that trade can last years. it is a little bit dangerous to get too far ahead of the curve. you start to move your portfolio around.

you start to move up in quality. start to move down in spread durations. you try to buffer yourself with these potential spikes in volatility. it is much too early to cut and run. we want predictable cash flows. >> i'm way out ahead of you on the board of continuum. i bring in the duration. george, thank you so much. next, we try to put perspective in bloomberg surveillance. how about the last 20 years? how about the last 10 years? 2.11% per year return with a snappy recovery. >> very snappy recovery.

tom, this connects with what we heard from goldman sachs saying that 2022 was going to be a massive year for buybacks. companies are flush with cash. they expect an 8% increase from this year. we've seen it with exxon, starbucks, facebook. a lot of companies buying back shares area this is me they just don't have anything else to do with their money -- buying back shares. is it me or do they just don't have anything else to do with their money? >> stay with us. in rome with the president. this is bloomberg. this morning. -- good morning. >> president biden is in rome where a group of g20 leaders

will try to come up with a deal on climate. the g20 runs the risk of falling short. how much is up in the air. the push to end and achieve zero emissions. that is according to the u.s. taipei. manufacturers are concerned about a possible leak of trade secrets. chevron posted the biggest profit in more than eight years. surging gas prices. it chevron is now considering whether to increase its share backs. it is currently buying back as much as 3 billion a year.

apple is falling while microsoft hasn't changed. if the result holds up, the software giant will have a market cap of just under $2.5 trillion beating out apple. the lies microsoft beat apple -- the last time microsoft beat apple was in 2020. investors are buying into the companies around of its promise of an electric feature. 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. this is bloomberg. ♪

>> inflation increased in

september. we expect it to rise farther this year, but inflation will last longer than en route -- that originally expected. we expect inflation to decline in the course of next year. >> the gentlelady from france with the ecb. lisa briefed me on this. we will see. euro coming off trading a little higher. my eyes are failing me right now. u.s. s and p -20 as well. it this is a joy. it entirely appropriate that maria is with us and she is truly one of the most famous -- she is in truly one of the most famous buildings. it is the jewel of the 16th

century. maria, i would suggest that the people of france have to spend zillions of francs keeping it in wonderful restoration. >> they probably do, but the french do have and i for beauty. we are going straight with our guest. always nice to see you. you have an important meeting. before we go into the economics, i want to talk about the politics. your president is meeting with president biden. last time they met, are you making peace this time or are you angry? >> makepeace of course. we have been disappointed. everyone is aware of that. the first step in the way of building trust and confidence between the united states and france. >> is there anything specifically that will come out

of the meetings? >> i will attend the meeting, but let's wait minutes before explaining anything about this meeting. >> you are also involved in the deal. we know that this is something you worked on read it finally seems like it will be agreed in rome. how about the implementation? >> another quick -- the key weston is limitation so we will do our best -- the key question is limitation so we will do our best. digital taxation and minimum taxation. our goal is to have this national taxation system no later than 2023. >> what is your message to facebook, google? >> they have to pay. they are making profits.

i think they get that, but look at consequences of the covid crisis. facebook, google and all of these giants are the big winners of this crisis. so it's fair that they have to pay their due level of taxes. >> you mention economic recovery. we do have problems on the supply chain. how big an issue is the shortage? do you buy into this theory of tight supply? >> very good news on economic recovery. third quarter of the year's growth which means we will reach our goal of having 6.25 percent and we already have the same level of growth of the one we had before so that's excellent

news. recovery is quick. we are fixing the negative consequences of this recovery. bottleneck shortages might affect next year. to find very concrete -- to find very concrete solutions to this bottleneck shortages. >> she said it heating up but it's temporary. do you by her theory? >> i think it is to very inflation. nevertheless, we should be very careful about this question of bottleneck. let's have a look at the question of semiconductors. you know that have -- you know you have the auto industry being

directly hit by the lack of semiconductors. be more independent. it president mccrone made it very clear --macron made it clear. be more independent. >> i want to follow up on the acb question. i know you don't want to talk about the central bank. there will be an interest rate hike by the end of next year in europe. does this economy still need more stimulus? >> i think we need to go step-by-step. the first step was to protect companies against the most important crisis since 1929. second step, economic recovery. we are successful.

that is very good news for all of us. united states and europe. third step, come back to some public. otherwise, you render it killing growth. the best response to a crisis is more growth, sustainable growth for all the people. >> we are seeing the bills going through the roof. governments have announced how to ease on households. are you willing to work with russia? >> nuclear energy is one of the best solutions. you should want to be dependent on russia -- that's your choice. that's not my choice. investing more in renewable

energy so we can have a mix which makes europe fully independent from the other countries. >> more french, less german at least on energy. >> yes. >> i hope the meeting goes well. thanks so much. tom? >> maria from the embassy of the republic of france in rome. the international relations piles on us, you wonder to weeks from now at the end of scotland what will be accomplished. >> i wonder, i am trying to, but hopefully it will be something that will be a little more concrete. i think was interesting the conversation about supply chain disruptions. what kind of conversation will be question mark you can't even

deal with it here rate i just wonder -- conversation will that be? you can't even deal with it here. > i just wonder. stay with us. this is bloomberg. ♪

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>> bottom line, you cannot expect to turn up a global economy, then to it back up. >> some pushback on where rates are going. >> the expectations are pretty seriously overdone. >> there has been a shift that seems to demonstrate that central bankers are inherently hawkish. >> i think we will see the hawkish trend to continue. >> this is "bloomberg surveillance." here is tom keene, jonathan ferro and lisa abramowicz. lisa: goomo