>> i think the narrative on inflation is a little bit confused. >> i think the markets are overly alarmed about inflation. >> i think central banks are always behind markets. >> a lot of economists see that growth and inflation slows pretty heavily. >> what we have to figure out next is what normalization looks like. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio, on television come across this nation, we will look away from the politics in this hour. david westin will fill us in

later this morning. it is about the markets, about a fed meeting. join us this afternoon. we will be doing that on radio, on tv. the markets higher. jonathan: all-time highs on the equity market. there is one thing we have not discussed all morning, chairman powell's future. i think we need to talk about it. a little later today, when he talks about the years to come and policy at the federal reserve, for the strategy to be credible, you've got to know who's executing it. right now, we don't know. tom: published moments ago by douglas kass, doug kass channels chuck prince from another time and place. at some point, the disruptive event will be so significant that instead of liquidity filling in, the liquidity of 2021 will go the other way. i don't think we are at this point in 2007. that is the sum of all our fears. jonathan: do you want to keep on dancing? that is the question. tom: i guess so.

you've got to look at this, the politics of the moment. you pulled that she folded into the markets. it is about a fear that just hasn't happened. it is a good8q■'c market. lisa: and we have not seen the signs of a policy error yet. what could it take for the federal reserve to make a policy error that leads to the analogy of 2007 heading into a 2008-like event? that is one of the key questions haunting the market. tom: what does the chairman want to not say today? jonathan: i've got no idea, and that is the issue with the chairman today. they have held onto that t-word so tightly, and there is the belief that now they maybe need to move away from it. it is difficult for them to do that without conveying something that they perhaps don't want to. tom: al gore will join us, former vice president of the united states come with his decades long commitment to climate change. before that, we are going to get to alisha levine.

red and green on the equity screen. jonathan: we are -0.0 6%. in the bond market, yields in a couple of basis points to 1.52 96%. you miss my chuck prince quote there? isn't that the quote, "you've got to get up and dance?" you just let that one go. i thought that was perfect. tom: he blew me off at davos once -- at davos once. i remember when he came and did the show. i had flip flops on. jonathan: let's talk about this seriously. do you really inc. it is that kind of moment? tom: no, no, no. i am pushing back hard. are we done? we will continue on the data through the morning and this afternoon for the fed meeting. alicia levine with us, bmi

mellon -- bny mellon. how do you adjust? alicia: an interesting october because we rallied hard, so earnings came in better than expected. but what we expect into the end of the year, when markets are up this much in the first 10 months of the year, you do so into the following year. they are expecting a good market in 2022 as well. the interesting moves here are happening in the bond market. the fascinating thing here about the bond market is that the breakeven curve is still inverted, and yet the market pricing of those rate hikes is hawkish. those two things are at odds with each other, so it will be really interesting to hear what powell says today. incidentally, i think what happened last night orally increases -- last night electorally increases the chances of powell being dovish.

i think there was shaping up to be a big log roll about trading off for different factions of the democratic party. i think the message of last night was essentially there are more centrists here than perhaps the discussion has been in policy, and i think to that extent, keeping powell ensures the continuity anyway that the markets would appreciate, and given the message last night across the board really, i think the chances have increased. jonathan: what do you think that means for fiscal as well? alicia: i think it is harder. i cannot imagine anymore dovish fed chair, but we do know that markets test new fed chairs. so i am very pleased to see that there's increasing likelihood he will stay. his discussion today, i can't imagine him omitting the word

transitory, but the bottom line is in those five factors he laid out back at jackson hole, they have slowly unwind -- slowly unwound to suggest this might not be transitory. the market has done the work for him. so even if he sounds more hawkish, the market has gotten their anyway. lisa: how much is his credibility at risk if he does not acknowledge some of the inflation we are seeing not only with respect to consumer prices, but also on the wage side? alicia: i think he will acknowledge it, but ultimately, transitory is a funny thing. it can mean different things at different times. right now it means sustained for long, but eventually will turn the other way. i think there is some evidence in the real economy that this can happen. we heard overnight vietnam has all those nike factories open. we have all of the gm factories open in the midwest, having

sufficient chips. so there are signs that some of these supply shocks are loosening up, and as you talked about the second derivative again all morning, that second derivative is telling you that perhaps the peak in inflation is over. is it sustained? probably, but he will have to a knowledge that. lisa: i am curious to get a sense of the pain trade come with the biggest potential trade could be in a market where the bears are increasingly killed off and it seems like military policy -- like monetary policy is ruling the day. lisa: everybody coming into the fourth quarter was short the bond market come along value, shorting tech, and the pain trade is going long tech and yields not moving where the market was expecting simply because that terminal rate for the fed funds rate is going to be lower, and therefore yields won't get that high. the heavy lifting has been in the first quarter of 2021. we don't see another quarter like that again. jonathan: brilliant, as always.

love catching up with you. ali -- alicia levine of bny mellon, thank you. it sounds painful for you, lisa, every time you asked that question. what is the pain trade? someone wrote in about avis and said maybe the pain is on the short side. a lot of that was behind that move yesterday. tom: we will see. i don't know. there will be a new avis today. jonathan: without a doubt. there always is. tom: in glasgow at cop-26, there are people that have parachuted in to climate change. that cannot be said of the former vice president of the united states. with that, there's no need to mention his name. francine lacqua with the gentleman from tennessee. francine: thank you so much. i am delighted to speak to al gore, the original proponent of

climate change, who for years and decades has been trying to make this a reality. inc. you for joining us. -- thank you for joining us. we are focusing on the funding, the finance come on how we transition better. i want to learn more about your investment firm. this is a joint venture with goldman sachs, and you are basically only targeting the assets that are decarbonizing, which means all of the portfolios are well below the 1.5 degrees. is this how you do it right? mr. gore: generation investment management was one of the small groups that convened this net zero asset managers initiative, and it is now up to the incredibly large number of $52 trillion, and part of the larger package that mark carney talked about. the rules of the road are still being worked out in great detail. for our part, we are actually committed to net zero, real net

zero. some who have made this commitment are still working towards that maximum goal, and i think what you are seeing here in this conference overall is a big wheel turning slowly. i think the world is awakening to the dire danger our civilization is in, and i won't go into all of that, but obviously mother nature is making the point very powerfully, and people are now responding. in the finance sector, they are now saying we've got to be part of the solution, and we have got to stop funding the problem. jonathan: how do we turn --francine: how do we turn the wheel faster? how do we avoid greenwashing and making the mistakes because your product is not esg enough? reporter: greenwashing -- mr. gore: greenwashing is a cheap trick that people are beginning to see through. it won't work for long. in the age of the internet, people are figuring out what is real and what is not. it will take a little time, but

society as a whole is now insisting that all of the institutions of our civilization begin to respond to this with the sense of urgency that is appropriate. that is why you have seen this wave of esg investing, albeit with a lot of greenwashing, and as people begin to focus more intently, they are going to insist that they do it for real and get rid of this greenwashing. francine: how do you measure success? i know we are waiting for a common language, waiting for taxonomy, waiting for a price on carbon. but how do you make sure that investors don't walk away from cop-26 with a pat on the back, saying we've done the job, let's go back to business the old way? mr. gore: i don't think they are going to be able to do that because a lot of the large asset hdu(vr'g we want to go with managers that are actually committed for real and not just

a pretend commitment. i don't think there's going to be a letdown after this. i think the pressure is on. this conference or process includes 50,000 people, and a lot of the major commitments and progress that is being made takes place outside of this plenary call, outside the negotiation sessions, but actually involve people who are in finance, who are ceos of businesses, and they are hearing from their customers. francine: how much of a problem is it that private money is going faster than public money? what can we do to change that, to at least align them? mr. gore: we need reform of the multilateral investment banks, for sure. the head of the world bank is a perfectly nice guy, appointed by the previous u.s. president. the staff is actually very good there, in my opinion, but they

are not yet really committed to helping as they should. there is a tremendous amount of work going on to try to come up with sensible reforms not only at the world bank group, but kristalina georgieva i think is a real champion here, and she is pushing hard to get these reforms in place, and then there are a whole group of other multilateral banks. there's a general awakening among all of them. here's an example. if you are a business in nigeria and you want to build a wind farm, your interest rate is seven times higher than it is if you are in an oecd country. that is insane. obviously the market is perceiving risk of various kinds, but that is what these publicly funded multilateral development banks should be doing, taking that first level of risk off of the table and speaking for society as a whole

and saying it is in our public interest to make this transition faster. francine: why is the u.s. not doing more? i know we have an agreement on methane, but president biden has not been strong with some of the politics back home. why is this happening now? mr. gore: we still have a political battle to win in the u.s. it is a divided politics in the u.s., and the narrowest possible majority in the senate, so president biden, i think he did a fantastic job with his two days here, and i think he has done a fantastic job in proposing a really meaningful time it package. but it is very tough when you have a if-50 senate and ache -- a 50-50 senate and a couple of the democratic senators are not yet on board, one from a coal state, so it is a challenge. i do think that in another couple of weeks, before the end of the year certainly, this

package will be passed. it may be modified again, but i thicket will be passed. jonathan: well that help with convincing --francine: with that --francine: will that help? ? with bringing china on board -- will that help from bringing china on board? mr. gore: i do think it has to help with china. but i am convinced that china is as serious about making its transitions. they are building more solar panels and wind farms than the rest of the world put together. they are still burning more coal than the rest of the world put together, and that has to be transitioned away much faster, and they can save money by doing it. but the coal industry in china is as powerful as the coal industry in the u.s., so it obviously is taking some make that transition. there's an old chinese proverb, i am told, that says the mountain is high and the emperor is far away. i think some of the regional

governments in china have close ties with coal and coal related industrial operations, and it is taking them some time to get them on board. but they better do some carbon pricing and a chunk of their society that is due to expand. they have put out a net zero goal that is farther out than i would like it to be, but they plan their work and work their plan, and i think they are determined to do it. jonathan: when we see how much --francine: when we see how much green finance there is out there , what happens to the companies that are not working on their transition now? mr. gore: i think we are in the early stages of a sustainability revolution that is the biggest investing and business opportunity in history. those who don't recognize that and adapt to it are as commercial risk, of course, because they are going to be left behind. you remember the subprime mortgage bubble that led to the

great recession. we now have a subprime carbon bubble of $22 trillion based on an absurd assumption that all of these carbon fuels are going to be burned. they are not going to be. they cannot be, especially because the new renewable sources of electricity are much cheaper now and will be cheaper in 100% of the world, already in 2/3 of the world. francine: do you believe that once we have a proper carbon market, that reprice his private assets? mr. gore: i think once carbon risk, the climate crisis risk is internalized, then yes, it is going to affect the value of all of these assets. we have had this insane illusion that we could just ignore the impact of the climate crisis. but mother nature is telling us, not so fast. these events are getting more

extreme and more frequent, and people everywhere are recognizing it and demanding action. there is still resistance, of course, and the legacy fossil fuel complex and the bankers that continue to invest hundreds of billions of dollars every year, they remind me of the old cartoon of wiley coyote running off the edge of the cliff, and the legs keep moving until gravity takes hold. we are in that moment now. we are in a transition. those who make the transition faster are going to do better as a result. francine: thank you so much for your time. with that, i am going to send it back to you in new york. we will have plenty more from glasgow, cop-26. jonathan: got to move to the data. the adp report dropped. it is a big upside surprise. 571,000. the median estimate, $400,000. -- the median estimate, 400,000. it is an upside going into

payrolls friday. we do this every month now. the high-end, 700,000. the low end, 250,000. all-time highs tuesday into wednesday, equity market futures are down four points on the s&p, negative zero point 1%. yields lower by a couple of basis points, 1.5313% going into the fed. tom: on radio, on television, right now we are going to regroup with michael mckee. he will darken the door. is it virtual today? michael: still virtual. tom: still very virtual. a virtual and virtuous michael mckee this afternoon with the jobs report. i want to go where abby joseph cohen is. her determinant is wage growth. combine the two. how does the chairman today deal with the inflation fear of wage growth, and how will we observe that friday in the payrolls report? michael: it is not just the

payrolls report. we got the big number in the eci that came out earlier this weekend, so there's a lot of concern that we are going to start to see second-round effects, that people are going to look at rising inflation and say we need additional raises to get past that. there's also the question of the low participation rate. as long as people aren't coming into the labor force, it gets harder to hire people, to keep that unemployment rate going down as the fed wants. then companies are probably going to have to raise salaries again, and all of that contributes to an inflationary cycle. seeing how jay powell squares all of that is going to be important to markets. tom: i look at what jay powell will say today. totally unfair question. we hope you don't get the last question as you so often do. what will be the thrust of the four or five or six journalists in the room? what is the mystery to economic journalism right now that the chairman can give us information on? michael: it is the cap -- the

gap's between the fed and inflation. the dot plot is not fair because that was three months ago. the fed can't change its forecast as fast as market participants, but the idea that we are looking at transitory inflation, and then it doesn't go away, is a difficult concept for the markets. when the fed says it is going to let average inflation rise for a while above the 2% target, how long is a while? the new framework is less clear than the previous regime. jonathan: it seems to me that economists are the only people on the planet scared of higher wages. i asked this in a serious way of you. can you explain why the fear of higher wages is so embedded in

conventional economics? michael: because a lot of economics and the people in this studio were around in the 1970's and inflation got out of control , and we had to bring in paul volcker's were the economy into recession, which is kind of the playbook that the central bank would have in that situation, as people tried to bargain for higher wages consistently, and that created a wage price spiral. so there is that fear that that could come back. the fed's argument is inflation dynamics have changed. globalization has changed. labor unions have largely gone away, so we don't have that problem going forward. lisa: right now we are facing a different political reality and washington, d.c. alicia levine thinks jay powell and have more comfort in being next fed chair. are we going to see an emboldened fed chair this afternoon? michael: he hasn't got the job yet, unless he has and we don't

know it. so i think you will be very cautious. the last thing he would want is to make some sort of slip and have a major market reaction. we've already got basically today's decisions priced into the market, the $15 billion in taper. so anything that would go beyond that that would move markets might be a problem for the chairman. lisa: basically baked into the market is the idea that tapering will start mid-november. what are they going to potential he signal in terms of the pace of this? the difference in economic projections there are more significant, especially as they concern when liftoff occurs. michael: it is just mass, basically. they've got $120 billion a month that they are buying, and if they are going to cut it back by $15 billion a month, that takes you back to june if they start in november, and they might as well start in november. so we've got 7, 8 months of reductions at $15 billion a month, and at that point,

theoretically they could start raising interest rates, so the discussion will rapidly shift to win do they raise rates. the issue is going to be does inflation come down in the meantime, or is the fed going to be forced to act? one of the questions that i'm sure will come up today is what happens if inflation starts to accelerate? do you accelerate the taper? jonathan: you and i have talked about that through the week. mike mckee, thank you. is it set on autopilot wind begins? can you speeded up? there will be an impression in this market that we are on a preset course. tom: there's too many variables. that is the way i look at it. the groom clue -- the gloom crew talks about acro economics and monetary theory as if it is a three factor equation. it is not. it is way more complex than that, with way more adept ability and changes in probability. jonathan: let's talk about

recent economic history. is this an fomc mirroring the postwar period or the 1970's? tom: i'm going to say it was the bank of japan, which had to capitulate and reverse. that is the ultimate fear in this deflationary time, is we've got to go higher, oops, we were wrong. jonathan: that's what is what was behind the shift in the framework for the federal reserve, to ensure they have that patients. now it seems the conversation has shifted just around this word transitory because it is so hard to keep repeating the same thing when the data is moving the other way. tom: we are making jokes about it, but the cost of the ecb to ///%w which i have been screaming about for months, which is the x-axis dynamics. jonathan: when fear. -- lengthier. tom: we need long come along charts. jonathan: if you accidentally

tuned into financial news and listened to the conversations, they are utterly ridiculous. lisa: i think that is just us. [laughter] jonathan: it is not just us, the. it is the scent -- us, though. it is the central bankers. it is all of us. from new york, this is bloomberg. ♪

jonathan: live from new york city for our audience worldwide, this is "bloomberg surveillance" on this fit decision day. your equity market down five. into the bond market, a little announcement. yields in one basis point. 1.5348 on tends. let's get to that announcement. how much supply we get from the treasury. michael: treasury is cutting the size of its options going forward -- of its auctions going forward. raising $44.1 billion, 10 year $39 billion, and the 30 year bond in the amount of $25 billion. the cutbacks are these. they will be cutting the size of

3, 10, and 30 year refunding sales by $2 billion each and cut the seven year by $3 billion and they say the seven years being cut because that is the one they increased the most so they are cutting it back the most. they anticipate decreases of $2 billion a month in the new and reopened 10 year options -- auctions and the new and reopened 30 year options. -- auctions. it says in its release based on the latest fiscal outlook, current sizes are projected to provide excess borrowing capacity over the medium-term. we know the pandemic spending has leveled off and is starting to decline so they do not need to finance as much. he of michael gapen coming up, -- you have michael gapen coming up.

there are two warnings. one is from the treasury department about the debt limit, suggesting congress needs to make sure it gets it passed by december 3. the treasury borrowing advisory committee calling it reckless to not do that. in terms of the cash balance because of the debt limit, they say treasury expects its issuance to decline between now and then because they cannot go over the debt limit and that could cause problems in the short term markets. jonathan: a conversation has taken place for people on the fixed income side as to whether everything you have set cancels out the taper from the federal reserve. michael: is a tale of two tapers. as the thin starts to cut back on bond buying -- as the fed starts to cut back on bond buying -- stephen stanley put out a note that suggested when you look at the totality of the cutbacks in 2022 and the fed cut

back in its buying, they roughly cancel each other out, which should leave no real rate move based on these changes today and on the fed's taper. we are seeing some on television , some reaction in the bond market. it is probably going to fade out and be overcome by the fed this afternoon. lisa: the expectation was for the treasury market to reduce the supply of t-bills and continue with longer-term securities that have low yield. are we surprised they did not do that more aggressively and more heavily weight the cuts on the front end of the curve? michael: they are cutting on the front end of the curve when you get to the note level but the bills they are leaving in place except for cashman -- basically

for cash management purchases -- except for the fact they cannot sell as many as they get closer to the debt ceiling december 3. they are going to supplement the benchmark bill issuance with additional cast management bills and hope they can get through this period. tom: the only thing you got me on was a tale of two tapers. janet yellen saying it is a far, far better thing i do than chairman powell. what is the distinction between treasury taper and fit taper. do we care? michael: we do not care as much as the people in the trading desk but the fed will stop buying as many bonds and notes at the same time the treasury is selling you are bonds and notes. if the fed steps back on the private market has to absorb more. in this case the more they have to absorb is less than it otherwise would be. tom: price down, yield up? jonathan: -- michael: that could

be, except of the fed is no longer buying as much it could cancel each other out. tom: jon ferro, lisa abramowicz, and i ought gunpoint had to retail of two cities. michael gapen read it because he wanted to. chief u.s. economist at barclays. how's the treasury taper different from a fed taper? michael: the fed's unique holder of securities. they are different actors. onnet these two things generally cancel each other out but the fed's backing up the market as a unique buyer. that is the main message. i would not take the net comparison too far. i think the big news is the fed will be tapering. tom: the big news is they will

be tapering and they'll be cautious and conservative. this november how measured will chairman powell be? michael: he will be fairly measured. when the fed's tightening policy they like to offset it by giving something on the others. i do not think they'll be a strong push back against market pricing. i think it will be an emphasis that does the -- the decision to taper and the decision to lift rates are two different things. that is what he will try to soft pedal the taper message with. yes we are starting to taper and we are still concerned about risk to the outlook. there is a risk management component to this decision. do not push this too far, there are two separate decisions. that is where his caution will come in. lisa: you expect them to say we expect a lengthy transitory period going forward? michael: it has become a dirty word.

it was not in his press conference statement last time around. he did not mention it in the press conference itself. it is in the statement. i think the flavor of that has to stay. therefore cath are consistent and ours are trances it with a transitory or temporary impulse, the duration is just longer than we thought. we have to find a way to keep that flavor around but may be back away from the pure usage of that word. lisa: what is the potential market reaction if jay powell does not push back significantly against the idea of one or two rate hikes next year? michael: in the short run it may mean the market moves to pricing more hikes as they have done elsewhere. certainly they did so immediately following christine lagarde's press conference previously. from the fed's point of view, and i think they are right, it is a long way out, it is at least six months down the road given what they know today.

they do not have any incentives to push back strongly against market pricing or confirm it. at this point it is get the taper decision done, communicate they are two separate decisions come and let the markets have at it. tom: frame the immovable force of gross excess savings or access row savings and also the immovable forces, everybody is moving their terminal values to a length any out. put those does go together. michael: part of it is there is this pool of savings. we are just now getting to the point where we will know whether households will be drawing down on that pool of savings. right now government stimulus has faded to the point where the personal savings rate is almost back to pre-pandemic levels. you could see a situation where the saving rate goes below low single digits and we will see if

households drop down. if they do that is a situation where you could combine that with spending and you have a prolonged period of above trend growth in the future and depending on where that inflation is that could be a longer cycle. that is how i interpreted in terms of the contribution it could bring to demand it what it might mean for the duration of the tightening cycle. lisa: have we reached a point where jobs data do indicate a shift or something true or are we still seeing the comeback of a market that was severely distorted by the pandemic? michael: i think it is the latter. we debated about forecasts and the accuracy of models and we can do that all day. this is one point where we in the economist community have been consistent. we have said it will take 12 to

24 to 36 months to short -- to sort this out. the data it will tell you about 4 million people were out of the job market last month because they hide could -- because they had covid over taking care of somebody who had covid. it is a huge number and rotates over time. in terms of who's been out of the labor force, it is the married couple where financial resources can be shared so one person stepping out for one reason or the other. there's a lot of room for that to heal over time. we will not know whether that changes. my view is it will come back more incrementally it will take six to nine to 12 months to get a good idea of where that is. jonathan: thank you. michael gapen. i appreciate the sound of a busy trading floor at barclays. music to my years. -- music to my ears.

looking ahead to the line up 9:00 eastern. bob michelle, subadra rajappa, krishna memani. bob michele saying risk for much of this year. looking forward to this one. tom: smart discussion. ask them if they would like to come on earlier. jonathan: i will. tom: krishna memani will probably love the photo. jonathan: he might not come back after that. from new york, it is fit decision day. special coverage later. this is bloomberg. laura: with the first -- ritika: in virginia, republican glenn youngkin has sent democrats a wake-up call for 2022.

the candidate backed by donald trump defeated democrat terry mcauliffe in the race for governor. glenn youngkin returned some suburban and independent voters to the republican side. that is an omen for president biden and democrats hoping to keep control of congress. in new york city democrat eric adams has been elected mayor. the brooklyn euro president -- the brooklyn borough president easily defeated the republican. you have to grapple with covid, widespread inequality, and issues keeping workers from offices. it is a new frontier for many banks managing climate stress tests. francine lacqua spoke with frank elson. frank: a bank having a spindly office is so 2011. we need banks to incorporate this in their very dna, in their business models, in their management information, in their

risk management. for a bank this is not a fringe, this is core. ritika: the bank of england has threatened to come down hard on companies that fail to manage climate risks starting next year. the kathy woods flagship exchange fund took advantage of a huge slump in zillow. the ark innovation etf bought shares worth around $29 million. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> as long as powell says the influences of inflation or temporary, the market has to accept that.

the best we can do is figure out any point at which the fed might abandon that definition. tom: ian lyngen on the bond market. let's talk about this. we had a refunding dance in the yield moves up to .47%, the two year yield highly. lisa: i wonder how much that is in the back of the adp report? we did get a better-than-expected report and i wonder how much some of the bond moves will hinge on the employment side. the idea we are going to see a tale of two tapirs, the idea that the taper announced today will be meaningless because supplies being reduced at the same pace. tom: we end today with henrietta treyz. i want to drill down to the president of arlington come of the eighth congressional

district, the auto guy, he is a democrat and he is looking at arlington and saying we are democrat, we are not, virginia is republican. how is don beyer's job, how does his november and january change after last night's results? henrietta: you have to focus on the independents. the swing among the independents was 13.6 last night, and when republicans look at new jersey they see the great white whale of the parties future. focusing on independence is what you have to do. tom: how does the congressman from arlington the senator from west virginia adapt again to the selection out,. -- to the election outcome. how much more power to buyer and mansion have? henrietta: democrats should be thankful there is not a virginia senate race.

senator manchin, senator cinema, the moderates in the house will have a bone to pick with progressives and repeat something joe manchin said to them a while ago, which is you might have a forum in the house but you need to win more elections if you think you are the backbone of the party. you do not have the votes for your progressive agenda and virginia prove that without question. a 13 point swing in the electorate in one year is a huge harbinger of things to come. i would estimate 45 to 50 seats in the house could be lost next year if you follow that trajectory. joe manchin is looking at a position where i think he will feel comfortable saying put the bill in my chamber, it is my turn to write it away we can keep independents on board and you will be lucky if we pass it. lisa: people have been saying this loss, the virginia and whatever happens in new jersey could potentially push the democrats to get something done,

will push progressives to the table and allow more things to fall out of the purview of the legislation looking to be passed through year end. do you agree? henrietta: not to be dirty about it but you need to put this bill in the senate immediately. whatever the progressives have, this bill needs to be in the united states senate where it will be tweaked. the house to acknowledge -- the house has to acknowledge that will occur and it will probably take a month. send the bill over, take a vote, pass the infrastructure bill, send a bill to the senate where they can make adjustments in a way that makes democrats be able to sell it on the campaign trail. they need the economy to turn around, they need inflation to get under control, they need president biden's approval ratings to rise to mitigate the losses. lisa: people have said they are expecting $100 oil next year or beyond that.

is it game over to democrats in the 2022 elections regardless of the talking points were what they get done if you see prices of oil rise that far? henrietta: nobody loves a high price of gas, but what democrats need to do better is to get out the message about what is in the build back better plan and what is in the 1.88 $9 trillion covid relief bill they passed in the first quarter of this year. the child tax credit more than offsets the benefits families get from going back to work and separate the message out from inflation issues and gas price issues that are still after effects of covid and supply chain shops. get that back in line and hope you can get economic movement selling the benefits from your agenda. tom: i love talking to you. you are so cynical and hard. the language is different. let me have you say some nice things. the oval office, a rested joe

biden after all that travel, schumer and below see, what do they talk about? henrietta: you have to talk strategy about how to get the bill over to the senate. you have to talk about how to roll progressives. i think they realize they were played their hand. tom: what does the senator from vermont to do? the senator overplayed his hand, he is losing, how is he gracefully finesse this? henrietta: the same way he always has. there is no piece of legislation with senator sanders name as an author. he has never passed a piece of legislation because he votes for closure and votes against the bill in his final stage. tom: you see how she tops like that. she is on the -- do see how she talks like that. when she is on the other network she talks nicer? henrietta: i promise i do not.

tom: lisa, continue. let's see if we can make her more cynical. lisa: thank you for being with us. we appreciate your insight. henrietta treyz. tom: it is so important to talk to people like that and not talking heads. i cannot convey enough the importance of that. lisa: especially at a time when fiscal policy will matter so much. remember when we were worried about the debt ceiling? there cannot be anymore more unforced errors by the democrats. does that mean a better fiscal backdrop people can factor into their equation? tom: an inconvenient truth. we speak to lisa abramowicz about all the option mumbo-jumbo michael mckee the speak about. what does it mean, this treasury thing? lisa: it is the first time the treasury department is reducing the total amount of dupont debt sales going back to 2016 -- of coupon debt sales going back to

2016. they are saying we can start to pare back, jet we sell at the same time the federal reserve -- pair back how much debt we sell. how does this factor into what the liquidity backdrop is when the fed is still highly accommodative? that is the so what. tom: can you be henrietta treyz cynical and say janet yellen is on the phone to jay powell, parcheesi? lisa: i am happy to play parcheesi. i am not happy to spread rumors. the issue is how long can this dynamic persist? when do we see the tightening that goes to the wind you stop dancing question? tom: my head is spinning. could we talk something dumb like equities? lisa: let's talk about avis. tom: there'll be a new avis today. lisa: bed, bath & beyond.

tom: all of this wisdom from miss abramowitz comes with her two sons with their new back book -- there new macbook pros trading on the couch. more of lisa abramowicz this afternoon. this is bloomberg. ♪

moving is a handful. no kidding! fortunately, xfinity makes moving easy. easy? -easy? switch your xfinity services to your new address online in about a minute. that was easy. i know, right? and even save with special offers just for movers. really? yep! so while you handle that, you can keep your internet and all those shows you love, and save money while you're at it with special offers just for movers at xfinity.com/moving.

jonathan: it is fed decision day. your equity market all-time highs. on the s&p we pull back .1%.

the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ tom: from -- jonathan: we begin with the big issue. that decision time. >> that decision -- we are talking about tapering. >> the federal reserve has done a great job in pre-say going. >> a boring one. >> the markets are ahead of what the central banks are doing. >> significant front end repricing. >> a downward shift in the long end of the curve. a classic tale of two markets. >>