i'm sorry, this fat is data dependent. jonathan: the ism out and the last 24 hours in the united states of america. that's the point i want to pick

up on. demand continues to be strong. customer demand remains high. jonathan: -- lisa: how much does that diminish next year as people whittle down their savings rates which you are seeing come down? this is one of the distinctions as we head into a choppy or 2022 that could have higher yields to boot. jonathan: manage your risk accordingly. that was your halloween. equity futures this morning unchanged on the s&p 500. there is morning sarcasm. lisa: that's it? [laughter] jonathan: there's more to come. in the fx market, $1.16. in the commodity market, -0.1%. lisa: we get a lot of pressure from the likes of the united states and japan saying pump more at a time when they want to produce -- want to reduce emissions.

i know tom was watching all of it as he petitioned to become the manager of the tottenham spurs. the idea is that we have seen diminished sales of autos, not because there isn't enough demand, but simply because there's not enough supply. however, prices expected to also rise. what does this do to demand? today, the today fed meeting. the idea is how much are they going to push back on a market that is saying you're going to hike sooner and faster and more than you are saying you will? will they given the indication that they will hike two times next year? today is election day in the united states, including the key gubernatorial election in virginia. the issue going forward will be can the republican candidate glenn young can -- glenn youn

gkin eke out a win? jonathan: we will catch up in washington in a few minutes. i used to go to the gym in my old building. under armour rallying in the premarket off the back of a beat and a raise. how many times have we said that through earnings season. tom: i look good in my under armour, sitting there reading "the wall street journal." jonathan: i would walk into the gym -- anyway, that is my fault. [laughter] that is a big raise. tom: rebecca patterson a week ago with bridgewater, smartest single line i have heard. it is a demand shock. demand is booming. jonathan: yes, demand is good.

anna han joins us now. frame the view at wells for us. anna: what is really giving us confidence for our price targets the next few months, look at how three q earnings have been coming in. as much is all we hear about a supply chain issues, labor costs going up, later of shortages -- labor shortages, margins have been growing overall for the s&p 500 companies. that is telling us that this earnings growth has been robust, and it is partly because, like

you were talking about before, demand has been booming. it is helping us and our prospects going into year end. but like you said, for 2022, we will see tapering start to finish around midyear. then you start to see rumors about rate hike being priced in, and that is the kind of environment where we are shifting from this more midcycle to light cycle. tom: your spx call, maybe we will overshoot 5000, which would be remarkable. on the way up, adults are going to come to you and say we must hedge this great bull market. yet, with this convexity, this acceleration, hedge has become so expensive. is that where we are now, that you can't intelligently hedge a great bull market? anna: as the pace has been accelerating, you look at the volatility market, and you are

seeing it is not too expensive now. a lot of that has been brought down by the additional confidence in earnings. i don't think hedges are that expensive here. tom: this is absolutely critical, and it is an indication that is not cathartic. you are not getting the emotion indicated by expensive hedges where you go, i can take part. lisa: how do you bet against a market that some would call caps on -- call teflon-like in terms of rallying? how much hinges on the idea that there is still liquidity in the market, and even if they become a little more hawkish, if they start to taper their bond purchases, you still have negative real yields of around -1% on the 10 year yield in the united states?

how much is this driving everything, regardless of fundamentals, regardless of what story you tell in the comic cycle? -- the economic cycle? anna: these purchases are massive. this is the most monetary liquidity we have had in quite some time, and don't forget, we have had a lot of fiscal stimulus down the pipeline as well. in that kind of environment, it is helping people and giving up that flexibility to spend and to move markets around. i think as that titans, tapering is just the beginning -- that tightens, tapering is just the beginning. it is still historically low, so all of that is a great point. i think that's a lot of why we are seeing the boost now. jonathan: this could be one of the biggest trim trillion -- biggest contrarian indicators in a while. lisa come are you sounding bullish? lisa: no. what is bullish? tom: what is bullish?

jonathan: what is going on? lisa: honestly, teflon is what the market has been doing. how much is this completely backed by the fed? is it completely accommodative? tom: i am going to start screaming. jonathan: we got you there. it was beautiful. go on. [laughter] tom: i have heard this so many times. it is the conflation of tension, macro analysis into the bid ask of the market, particularly of the stock market. you've got to combine that with a careful gina martin adams, anna han kind of analysis. jonathan: just to confirm, lisa is not bullish. are we done with that now, the flirtation with that constructive you? lisa: i am not bullish or bearish. i am trying to look around corners because that is what is concerning. jonathan: and a final question, how big is the fed's involvement

in this equity market? anna: it is undeniably large, and if anything, the fed has to communicate their stance because they know the impact on the equity market. to lisa's point, there is going to be sector, tech, that is going to be having a harder time if real yields start to take off. i think real yields will start to move higher away from negative territory. tom: but they haven't yet. that is the fact, right? anna: yeah, what has been interesting is as we are getting this consensus on tapering come you would expect real yields to start picking up. they have been going the other way lately. that at the other point of the market we are wondering, is this signaling something different to us? but i think you need to give it time. we are looking on a day-to-day framework. we need you think in months and headquarters. jonathan: thank you, anna han of

wells fargo securities. anna han coming your way towards the end of that interview there. lisa: it is undeniable, the lift that markets get from a negative real yield of 1% on the 10 year. the question is, what can shift that? at that point, you start to see tech come under pressure. use urgency other rate sensitive areas. -- you start to see other rate sensitive areas. jonathan: that's why tom and i don't have an opinion. tom: that if the signal of able market -- of a bull market, absolute silence from the gloom crew. jonathan: silence. lisa: is that silence? jonathan: no. [laughter] not sure where you are going with that, tom. they are not silent at all. futures unchanged on the s&p. good morning. heard on radio, seen on tv, this is bloomberg. ♪ laura: with the first word news,

i'm laura wright. house speaker nancy pelosi plans to push forward with a vote this week on president biden's economic agenda legislation. she's getting pushback from moderates who want a detailed analysis of the full cost and economic impact. the echoes complaints from democratic senator joe manchin. he says congress needs more time to assess the bill. the election for governor in virginia will offer the clearest picture of how much moment and republicans will have an the 2022 vote for congress. gop candidate glenn youngkin is backed by donald trump and polls show a dead heat. shares of tesla are falling. elon musk says the company has not signed a contract with hertz yet for that record number of rental cars. that since shares of tesla rocketing to a record high, but

musk we did there was no signed agreement, and that tesla would only sell cars for the same margin as to consumers. pfizer has boosted its earnings forecast for the full year. guidance beat the average estimates. the drugmaker also forecast that revenue from its covid vaccine will be about $29 billion next year, well above the estimate of around $23 billion. bp will use proceeds of surging energy prices to woo investors who are disenchanted with oil and gas. the company will buy back another $1.25 billion in shares. the announcement came as bp reported a big increase in reported earnings from last year. 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. ♪

>> the present framework does satisfy senator manchin. i understand he wants to read the legislation built on that framework. it includes fully paying for the legislation, using tax increases on the wealthy and on corporations. jonathan: the u.s. treasury deputy secretary. from new york city this morning, good morning. your equity market shaping up as follows. all-time highs into tuesday as the two day fed meeting commences a little bit later in washington. they get up a little later in washington. i was going to joke about day trading. let's not do that. euro-dollar, $1.1599. in the commodity market, $83.85. i love the contribution from some of the audience. this from doug kass, open book there is no silence from this gloom crew team member ash "-- "

there is no silence from this gloom crew team member." tom: they discuss the things they succeed and fail at as well. jon, he has the least expensive house in all of that part of florida. jonathan: you like to share where people live, tom? just to be clear, i read it verbatim, he said groom. i he meant gloom. tom: that's good journalism. jonathan: you've got to, haven't you? tom: terry haines can count as well come up ng a policy founder. the exercise on this tuesday of an election is always strange after a big presidential election. he can county democrats. he can count the republicans. what do you make of the need for democrats to show up in the suburbs of virginia? put some color on that for us. terry: well, the bottom line here, i think that the

republican clinton -- republican glenn youngkin is about 60% likely to win. he's got the wind to his back, certainly. you can tell a lot from candidates by where they are campaigning in the final days. mccullough's has been spending -- mcauliffe has been trying to shore up the suburbs. i can give you another data point in addition to the slight youngkin lead among likely voters, which is biden has gone to negative seven in october from a state that he won by 10 last year. so what you've got is a situation where the suburbs are fleeing, and if mcauliffe is going to win, he's going to have to hold onto it. tom: it reminds me of pre-teddy roosevelt, the nation in 1890 where from year-to-year to year, things shifted seismically on

the mood of america. i usually don't do this, but let's say the republican wins in virginia, and may be the gentleman in new jersey has a tougher time winning is a democrat. will that change the domestic policy dialogue wednesday morning in washington? terry: i think it changes it some. the national democrats won't turn on a dime. people who are from the bluest of blue and progressives are not going to take the results and decide they are going to change entirely the way they think or what they want. but i think what this does, what your scenario does is create a world where they are thinking more about accomplishment and a little less about posturing. i think that is good for markets largely because what the markets have been waiting for from washington is a point of high political risk, accomplishment on the real infrastructure bill and a smaller social spending

agenda that doesn't include a lot of taxes and a lot of the other mandates have been bringing about. that is a good result from democrats, and the scenario you put together helps make that happen. lisa: how much is virginia a microcosm of the rest of the country when it comes to politics? how much of this race is really a referendum on what the democrats have done so far versus highlighting idiosyncratic issues in virginia having to do with education and other local flashpoints? terry: it is some of both. one is that virginia is a really purple state. people like to say it is trending blue, but the last two elections, national elections anyway, have been unusual candidates on both sides, to say the least, with lots of negatives. hillary clinton, donald trump both. even the education issue in virginia, which is the thing firing youngkin's jets here,

with mcauliffe'd gaffe -- mcauliffe's gaffe that parents should not be involved in deciding their children's education, that certainly is a national issue, but particularly local in virginia. with its own characteristics. the locality of that and the way that famous loudoun county and the suburbs has been treating critical race theory and a bunch of other hot button issues, that has a lot of local resonance, particularly in the northern virginia suburbs. jonathan: let's talk to the team and get together again later this week because i said we've got more to talk about on this front when we start to get results. terry haines of pangaea policy. one day, tom keene's twitter account got hacked, many years ago. and do you know who founded on twitter? marc benioff of salesforce. what happened, tom?

jonathan: tom: i can't -- tom: i can't go into the details, but i was hacked like everybody else. what is so important here, a lesson for everybody, if i wasn't so rushed and hurried, i would not have been hacked. benioff came to the rescue. it is cop-26. our francine lacqua is in scotland with mr. benioff. this is a guy who said the end of software, and in doing so, moved on to billions and on to making all sorts of philanthropy. he has spoken with his money. in scotland, francine lacqua. romaine: he has spoken --francine: he has spoken with his money, and i am delighted to be joined by marc benioff. right before this, you were in a panel. you have been pushing this for such a long time. deforestation is good --

reforestation is good. it is only a drop in the ocean. mark: we have lost 3 trillion trees on our planet. everyone trillion trees sequesters 200 gigatons of carbon. we need that carbon storage. this is really important. so to see world leaders make those commitment's, i am shocked, actually. francine: they are pledges. how do you make sure they actually go out and count what has been done and are held accountable if they don't? marc: this is a huge moment where world leaders and philanthropists and ceos all came together around reforestation. every co needs to do some things. wet need to go zero. wo, we need to plant -- two, we need to plant a trillion trees. to see that amount of progress in 18 months, i feel very

inspired and energized today. three, we need to energize the ego revolution. there's all these cool entrepreneurs here, but they are each college he entrepreneurs, creating out of these next-generation innovations. that is very exciting to see these things happening here at cop-26. francine: you are spending $100 million over 10 years. are you increasing that? marc: we have a $300 million tree friend -- tree fund which is about accelerating our one trillion tree initiative. it is excited to see it now that it is so well aligned with what is happening here. it is beyond my expectations, honestly. jonathan: can --francine: can billionaires do more? marc: absolutely. everyone has got to go2net zero. our companies have to go net zero. until you go net zero, i don't have a lot of conversation with

anyone because i want to make sure they are not zero. not in 2030, not in 2040, not in 2050. right now. salesforce is already net zero. this is really important. two, we need that sequestration capability. we could sequester 200 gigatons of carbon through these trees. that is exciting. francine: does that have to come from government? if you don't have the push, if you don't have the regulation to mandate it, this going to be people falling through the cracks. marc: i am so impressed with president ursula von der leyen and what she has do with the -- what she has done with the eu green deal, that she is charging companies who are not net 04 there carbon. i have to make sure that if i am going to go trade in europe that i am not zero. think about all the companies

that aren't yet. those ceos are all thing about how i get to net zero now. that is exciting. she is leading the world. to see her do that, i think she will transform how ceos are thinking about carbon today. francine: i think part of your due on slack so had a green component on bonds. do you see that actually being more going forward? marc: to see financing instruments like green bonds, the idea that everybody needs to do everything they can to get to net zero. so we can do a green bond, or we are regarded as a sustainable company because for years and years, we have been working to get to this point. but we are cutting emissions still, and all of our suppliers now have to commit that they are going that zero -- going net zero. we are building a sustainability

cloud. we are doing a lot of things, building an entire ecosystem to help our customers get to net zero as well. jonathan: --francine: how important is it that in m&a transactions, there's always a green financing component? marc: it is important, but until you are net zero, nothing is going to happen. a company can come in and say i want to do a green bond, but show us your carbon footprint. francine: in 20 seconds, what can you tell to fellow billionaires and chief executives watching? what do you want them to do? marc: plant a tree. if everybody planted a tree, that would be amazing. if they just realize how important the tree can begin creating a better planet. but number one is go net zero. number two is plant a tree. number three, let's get an -- let's get an eco-entrepreneur revolution.

there are many exciting companies building solutions, and i think they will help us accelerate. . this world francine: thank you so much, as all what -- accelerate this world. francine: thank you, as always. more coming up from cop-26. this is bloomberg. ♪

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♪ jonathan: we've got a busy morning. equity futures down a single point, -0.02%, pulling back a little bit from all-time highs. on the nasdaq 100, lower by -0.2 percent. small caps doing nicely through the last 24 hours. from equities into bonds, we will take a look at the bond market. australia, the u.s., the u.k. the rba overnight, bank been lynn on thursday. the rba basically validating the move at the front end of the curve area they had a yield coal -- a yield curve control target. it has been a big move. they validate that move overnight. into the u.s. two-year in and

around 50 basis points. will the federal reserve pushback for the u.k. two-year? the chief economist from the bank of england says thursday is a live meeting. how live is that thursday meeting? we will debate that on thursday. iron ore, here's the chart. in singapore, iron or futures down -- iron ore futures down for the fifth straight session. china wants blue skies for the winter olympics, so they are pulling back on steel output. what i am trying to work out is how much of this big rollover in iron ore we are seeing is about that and how much of it is about a lack of demand right now off the back of what is happening in the property sector, of the back of what is happening with the economy more broadly, a softer economy in china. tom: that is one of the mysteries here, and that is to the data dependency of the fed. jonathan: it is a mystery. mysterious, like getting locked into shanghai disneyland with

33,999 other people. can you imagine that? jonathan: no i can't. -- tom: no i can't. jonathan: locked in the shanghai disney, one covid case. unreal. can you imagine that happening in america? lisa: no. jonathan: this is short and sweet, isn't it? thank you. [laughter] there's your cross asset price action. let's get you something will names this morning and say good morning to remain -- two romaine. romaine: this is the busiest day, 51 companies reporting. pfizer already out of the gate. $24 billion in sales off the vaccine in the most recent quarter, guiding for $36 billion on a full year basis, well above what the street was looking for. this is important because all of its other drug franchises saw a slight decline in revenue in the

most recent quarter, so the big growth driver here for the short-term is the covid-19 vaccine. clorox also out with earnings. a big beneficiary of the pandemic, everyone was buying cleaning supplies. under armour coming in zero dollars showed before cents on eps, about 40% higher than what the street was looking for. those shares up about 9.5%. not having a phenomenal day is check. the company saw a huge drop-off in enrollment. they had more than tripled in the year leading up to february. they peaked in february. it was already down about 40 something percent. since then, add a number 31%. pretty phenomenal drop from that record high. it big beat and raise here in the premarket.

keep an eye on dupont. they came out with earnings. they actually cut their forecast, putting some downward pressure on the stock, but also announced a pretty interesting acquisition of rogers. that allows dupont to enter more into the clean energy space. the shares down slightly. jonathan: thank you so much -- tom: thank you so much. greatly appreciate it. right now as we continue our coverage in scotland of leaders greeting, including prince charles among the attendees here , and he has been committed to this for ages, is someone as well committed. she is from eastern europe, where climate change is incredibly important. for those of you on bloomberg radio right now, prince charles speaking to those gathered in glasgow, scotland. all sorts of symbolism there. but right now, our francine

lacqua with the managing director of the international monetary fund. francine: thank you so much. we are delighted to be joined by kristalina georgieva of the imf. thank you for joining us. i know the imf has been instrumental in helping climate finance and giving aid to public-private partnerships to make sure we deal with sustainability. are you confident that cop-26 will achieve meaningful change? kristalina: i see three reasons to be confident. one, finally, net zero by mid century is agreed by a vast majority of countries, 135 and counting. two, because this time, more of these beaches are about what we can do, not what about you should do, and they are taking responsibility. three, keep your eyes on finance . just to give you a number, we

are proud that climate finance last year jumped by 50%, but jumping by 50% is only $130 billion out of $49 trillion. this is there a .25 percent. tomorrow, i expect to see many grabbing the opportunity to move to net zero as a chance to be profitable. francine: at the same time, the u.s., the president is not coming with solutions. we don't have any new solutions from china. brazil is doing a u-turn, but going back to what it was three or four years ago. can we really achieve it without more from these countries? kristalina: we need everybody on board. we need to continue to pressure countries to come around. when we talk about what worries us, to me, the most worrisome is

u.k. the pledges we have today, nowhere close. we are maybe 1/3 to 2/3 close to the pledges we need to get. our temporal or -- our temperature is below two degrees, or even better, 1.5. so our commitment is to what is necessary, an addition to bringing less willing parties on board. francine: what do you worry about in the world economy? there is inflation, there's a issues. if we don't have a smooth economy, this will turn back on climate change. kristalina: of course, if the economy starts rolling back, this would be a dampening for climate investments, along with any other investments.

so let's look at the economy. what is the problem? it is still that part of the world is emerging from the pandemic very strongly, and another part is falling behind. this divergence causes interruptions to supply chains. we expect these interruptions to continue into mid-2022, maybe even further, and they are putting pressures on prices. we are hopeful that these price pressures are going to be temporary. we also know that central banks have the tools to deal with them. francine: what if they are not transitory, these inflation pressures? kristalina: central banks are going to take action inevitably. we have seen already canada doing some of this. in emerging markets, where inflation is real and more systemic, rates are going up in many places. the problem is if you take

interest rates up, the solution for some would be a problem for others, especially for emerging markets with high levels of dollar-denominated debt or the corporates that are under a big mountain of debt. preferably, we should seek temporary inflation. how can we do that? focus on vaccinating the world so we can see production everywhere. francine: is it going to be stepped up significantly? if we are creating this to speed world within economies, what does it mean for the future in terms of populism and some of the policies? kristalina: it is going to be very problematic on many accounts. for decades, the world was converging. poor people will getting --

poorer people were getting wealthier. of course, we risk affecting the social fabric in many places. we number 2019? progress in chile, in paris, all over the world. if this divergence continues, we will see more unrest. how can we overcome it? vaccinate 40% of people in all countries at least by the end of this year, 70% by mid next year. do we have the vaccines for that? yes we do, but we are not distributing in them yet in a way that makes sense. francine: with climate change, money needs to transfer from the richer countries to the less rich ones. kristalina: we do have to look at taxation's -- at taxations

that help to reduce inequality within countries and across countries. we can do it without this turning into a burden because incremental change in taxation can fuel more money in the right place. we can also improve the quality of spending, make good use of the money you have. francine: the imf board said there was not conclusive evidence of wrongdoing and some of the allegations against you. is there concern that the facts have turned against you -- that the staff have turned against you? kristalina: let me say first that i am very grateful to the membership. they gave me a chance to present my side of the story. and then we had great annual meetings you'd we had fantastic support for the agenda of the imf. of course, staff continues to be concerned. it is not a minor issue, whether we have full integrity of the work we do.

fortunately, yes, we have high respect for the quality of our report. i've engaged with the staff. i have asked as many questions as people have on their minds, and i will continue to do so. francine: have they said they are concerned about what's happened, on the imf board? kristalina: the vote was very clear. the vote was for me to continue to do the important job we have in front of us, including for the imf to play a critical role on climate because it is critical. it affects economic and financial stability, and climate action is our chance to create green jobs and green growth. francine: kristalina georgieva, thank you for joining us. with that, i am going to send it back to you in new york. plenty more from glasgow throughout the day. jonathan: thank you.

looking forward to it. an important conversation there. a signature issue for the imf editing director after the imf managing director reportedly, according to a report we put out , tempered some language around climate change for brazil after gyre bolsonaro -- after j or bolsonaro -- after jair bolsonaro objected to it. tom: interesting to see how she manages her way out of this. it will be closely scrutinized. jonathan: i imagine she will be pressed a whole lot more through the coming days. concrete, -- tom keene, lisa abramowicz, jon ferro. from new york, this is bloomberg. ♪

>> security selection will be critical if you have 3% inflation with very strong

economic growth. i think your cyclical stocks will do will. financials can do well. i think those that will be most challenged in an environment like that are those that hope to make money in five to 10 years. jonathan: ron temple there of lazard. he will take 3% inflation with 4% to 5% real gdp. in new york city this morning, good morning. your equity market, all-time highs into tuesday. equity futures basically unchanged. 10 year yield, 1.5505%. a stock to watch is tesla in the premarket, down pretty hard early on. we are down now by about 4% or so after a monster rally. through october, up something like 30%. elon musk saying, "if any of this is based on hertz, i would like to emphasize that no contract has been signed yet. we will only offer the

same margin given to consumers. " tom: jon, wheat is spiking up over eight dollars a bushel. you go up to new york to the accord market. jon, what are wheatabix? jonathan: it is a breakfast cereal. get a couple of wheatabix in a bowl. we used to put sugar on top. that would make it work. i enjoy that. tom: i thought you would put guinness on it. jonathan: i was eight years old. a little bit early for the guinness. pints of guinness came later on in the teens. tom: in the backdrop here is transitory moving into some form of inflation dynamics. it is a jumble, and to provide clarity here, james sweeney. as you know, in coventry in the united kingdom, there are phenomenal italian restaurants,

and they are serving bowls of spaghetti, but it is weird spaghetti. how weird is our economic spaghetti right now? james: you are seeing all sorts of strange shapes. i recently wrote that if you pick your favorite indicator or two and look at the line chart, it looks like a weird piece of spaghetti doing something that you don't expect. if you overfocus on one or two things, whether it is inflation or industrial production or service is pending, you are likely to make a mistake because the key here is to not focus on the data piece by piece and compare it to past recessions. it is to look at the whole ball of spaghetti and say since the pandemic, this is different. why does the data look like this? i think there's a very coherent story as to why the data looks like this. what we have to figure out next

is what normalization looks like. tom: i get the idea of the study of what, but i would suggest the real mystery here, including for the fed at their meeting today and tomorrow, is the when of it. we have lost complete track of the x-axis. james: i think on certain items, no, actually. for example, on social distancing is down significantly, so services is not completely back, but it has largely normalized. spending on goods got to an extreme level this spring and is now falling in volume terms. but it is still very high. it will continue to fall. i think the high inflation we are seeing is largely about that overshoot and spending on goods, which was fueled by savings from not spending on services as well as stimulus. a lot of these so-called supply shocks we are seeing is actually

demand exceeding normal capacity in many businesses. there's often not enough supply to meet demand for goods. but the goods have overshot hugely in the spring, are still high, but will be coming down as we consume more services and we get farther away from those stimulus checks. that is going to free up some capacity and alleviate the inflation issue. we see the worst part of the inflation problem coming down sharply in the middle of next year. lisa: this is what frances donald was arguing earlier, basically that the fed will be committing an error should the hike rates one or two times, as the market is predicting. the one counterpoint to this is the employment cost index, or one of the many, probably the strongest of late. what do you make of the idea that wages, at least according

to this indicator, is rising at the fastest pace on record? james: well, it is not really the fastest pace on record, and they are not really rising faster than inflation. when you look at strong productivity, workers are certainly not capturing the proceeds of their productivity in a way where the real inflation-adjusted wages are exceeding that. so the wage picture is not a strong as it looks. the labor market has some slack in it, but i have some confidence it will be coming back. i would say even though the labor market is not as tight as it looks, except for some specific industries, that does not mean that the fed shouldn't be looking at hiking here. i think they are going to wait a while. i think there will be some further wobbles in the data. next year we see weaker industrial production, weaker retail sales, but we will see

stronger services spending and last instant thing -- less distancing, i hope. it will be a debate, and whether wages and housing inflation can be strong enough to sway that debate in favor of early hikes and aggressive hikes, that is something that the market is no pricing for. i think the market is being a little bit over aggressive at this point, but i think as we go through next year, we have to watch how this normalization plays out. there are still things we don't know yet. but the wage picture and the labor market picture right now does not scream hike now. it might in six months. it very likely will in 12 to 15 months. jonathan: getting back to normal. what is normal anymore? the average on the fed funds rate over the last 20 years is about 1.5%. james: i think the long-term fed

funds rate is 2.5%. the market seems to think it is something more like 1.75%. that is the normal they are talking about. i am not sure that normal is going to turn out to be correct. but when you are looking at the data, retail sales exploded relative to very stable historical trends that jus e looks like a straight line for years in a row. you are not back to those trends yet. you are way above those trends in terms of consumer goods spending. these things are likely to tend to normalize toward old trends, give or take some underlying changes, and those normalization paths are likely to be the dominant force in what you see in the data. the question is, will the people focus on falling retail sales and things like that, or will they focus on rising services spending? that's going to be the two sides

of the debate in 2022. jonathan: good to catch up, as always. james sweeney of credit suisse. demand not the problem. tom: we will have to see. it is open to me. we will have our fed coverage tomorrow. jonathan: full coverage on bloomberg tv and on bloomberg radio. this is bloomberg.

>> the market is certainly testing the limit of the central banks. >> i think central banks are always behind markets. >> chair powell has slowly morphed from being ultra dovish to a serious tengion of hawkish nest -- a serious tinge of hawkish nest. >> we know the destination is not far away. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio, on television, from our head colder's on lexington avenue in new york city