kill the expansion. they are trying to extend it. >> the market does not own the debts and is -- the definition of transitory. >> transitory can mean different things at times. >> this is bloomberg surveillance with tom, jonathan ferro, lisa abramowicz. jonathan: can we lose the "t" word? alongside tom keene and lisa abramowicz, i am jonathan ferro. tom, on the nasdaq, an eight-day winning streak into thursday. tom: the unspoken yesterday was the explosion in small-cap. small is beautiful. this is about economic growth, a bet that off of a measured, in control fed, you will see

continued economic growth in america. jonathan: eight patient chairman underpinning that after yesterday. tom: michael mckee is the toughest interview in economics. once again, mixed keep brought him to -- mckee brought him to silence. and the bank of england do the same? jonathan: maybe. we can play it again later. the bank of england coming up later. a live meeting, according to the chief economist. lisa: markets are pricing in a full rate hike. they are still purchasing bonds. do they continue that and hike rates at the same time? jonathan: only a month left of qe. lisa: signaling that is somebody

and a market that is calling the fed and the bank of england's hands. tom: it is all about the margins, the marginal changes. the chairman yesterday in his own way gave a confidence that they can marginally change over time. jonathan: yesterday is what you wanted to be. read prices cannot move off the back of it. tom: look at the two year yield. there it is. jonathan: just below 50 basis points. here is the price action for you. we advance about 0.1%. i am laughing. i will tell you more about that later. euro-dollar negative.

lisa, euro-dollar 1.1550. lisa: people basically choose their own adventure with the fed's message. we have the bank of england rate decision, as well as their bond purchasing plan. that messaging of both tightening and loosening at the same time is confusing. we are seeing 815 point basis point hike price in four that bank of england. initial jobless claims, productivity in september. the mixture of the lowest rate of jobless claims post-pandemic plus productivity expected to fault with the increase in wages. how sticky is wage inflation? how tight is the labor market that powell is convinced has more slack than a lot of people

give it credit. meeting to discuss output. opec-plus is saying, no, not going to it. there is a question of strategic reserve. would that u.s. go that far to lower prices at the pump. jonathan: fuel costs are high. senator manchin was at fox yesterday. he said we could do more at home on the oil front. tom: a little bit of west virginia there as well. i am mentioned this in a meeting earlier this morning. let us not forget a gallon of gas and its political heritage. tom: do we have that chart

ready? this is what the chairman got wrong yesterday. bloomberg and its phenomenal statistics. john, the chairman said inflation-adjusted wage growth was level. alex says maybe not. with the data we have got, we are running at a negative -1.6%. a lot of americans have negative wage growth. jonathan: labor market numbers later this morning. let us start here. what did you learn in the last 24 hours? >> what we have learned is the market only thinks about the dollar in the context of the u.s. when they wake up the next day,

they think about the dollar relative to everyone else. you have slightly peculiar price action with the dolly weikel -- dog dollar weaker while powell is speaking and stronger this morning. they are doing more than the ecb. that is the main change over the last 24 hours -- that recognition of the reality. tom: what is so important is that everybody in global washington understands the heritage of hsbc. what is your dollar call after you have nailed resilient dollar over the last two years? what is the dollar call 12 months forward? >> it is a grinding, gradual strengthening. it does not sound very exciting. it is feeling a bit more

consensual, which always makes us a little bit twitchy, but the fed took a step yesterday with more to come. you have to ecb saying the opposite. that is a key crunch point. for people who care about currencies, it is euro, dollar, yen. you are paid for holding the dollar. who does not like to get paid for doing nothing? that is where we are at. jon ferro likes it. lisa: there is a key question of whether to trust markets or the patience of central banks that seem to be looking at a

different picture. we say that with the fed, not so much the bank of england. who has it right right now? >> i just expressed bullishness on the dollar. we are calling today a finely balanced outcome. that creates symmetry to the stamps around this debate, but more broadly, the u.k. is going to see a normalization and a deteriorating deficit. there is a lot of talk about the extra government spending in the budget, but u.k. fiscal policy is contracting. it will be a headwind to gross. -- to growth. in the u.k., the tale is waiting the dog -- waging the dog.

we will see rate hikes in the boe over the next 12 months but nothing thereafter. will the market have to reassess , which would be a mess? jonathan: are we done? tom: ferro is so done. jonathan: thank you, sir . a a difference between the federal reserve and that ecb yesterday was start. lagarde saying 2022, forget about it. the chairman did not do that. there was real humility from the federal reserve to say, next year, who knows this is how we will respond to things if they change. that was not what we heard from the ecb. tom: i am going to go to michael

darden. he said, this is proto-keynesian rubbish. this is the chairman straddling the true angst over rising inflation, stagflation and a rational thought about where we go. a nominal gdp, where we go on the inflation trend and job permission. jonathan: it sounds shake, but dependent seems to be the take away the federal reserve. there is a huge balance of risk. upside for inflation. higher for longer. lisa: it is one thing to be data-dependent in an environment moving at a normal pace. it is another to be data-dependent at an economy that is changing at a breakneck pace.

to then understand the dynamics here. the question i have is will the fed have enough time to adjust bond purchases and rate hikes should the data changed dramatically? jonathan: can you imagine if they started this year and said transitory, second quarter, third quarter of next year, we expect --? they have moved the goalpost. lisa: the market is giving them a pass. you are not seeing a tightening of financial conditions. tom: do they move the goalpost in english football? the tops have moved the goalpost. do they have a new coach? jonathan: harry kane needs a bigger goal. the future is up 0.1 on the s&p 500.

tom: he has a cool mercedes. you look like bond. jonathan: we are headed to break. this is bloomberg. >> federal reserve chairman jerome powell is settling down on the framework. he will not consider rate increases until the labor market gets stronger, even though inflation on hot for months. president biden says his party's defeat in virginia shows urgency for congressional democrats to pass his agenda. he told reporters maybe the results would have been different if he had already signed legislation. the president said we should make sure all the american people have -- he is pushing nancy pelosi to take a vote.

-- reviving the deal that imposed limits on tehran's nuclear program. they go through your pan and russian intermediaries. the price of oil continues to slip. investors have turned their focus to an opec plus meeting. they are expected to skip to their gradual output hike for december. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg.

>> senator manchin, senator cinema, the water it's are going

to have a bone to pick with progressives. manchin is looking at at position where he is going to feel comfortable saying, put the bill in my chamber. jonathan: that is not exactly how yesterday played out in washington. the economic policy research director from new york city this morning. your equity market up 4 on the s&p. five date winning streak on the s&p, eight on the nasdaq. yields in by three basis points. commodities bouncing back. opec-plus in focus. i am going to have to google that one. tom: i it to him about the tots

the other day. jonathan: also, he wrote in, saying i guess iou a beer. lisa: want to talk about it? tom: i do. you know what bothered me yesterday with a countdown clock? having to be on air with the fed countdown. i got upset. jeff fitzpatrick on the change in washington. fitzpatrick's washington is stunned, and interesting outcome of this election. is there negotiating between the left, particularly the sanders left, and the center? or is our posturing after this election? jeff: there seems to be

negotiating that involves some posturing. right now, the back and forth, i would sleep more between house democrats have been responsive to progressives and joe manchin. that is where you see the divide on the paid family leave part of this bill, with democrats adding a measure that engine -- manchin does not appear to support. there is a back-and-forth. but there is negotiating as well. t i -- tom: i take great issue with the idea that it is joe manchin against the world. how about after tuesday? jeff: in congress, he and pearson cinema -- kyrsten sinema do stand out. they may be speaking for more moderate members. maggie hassan in hampshire has a

tough reelection. she a not want the spotlight. there are house members. no surprise that josh gottheimer is one of the more vocal moderates from new jersey, seeing what happened with the close governor's race. it is not just joe manchin and kyrsten sinema, but in particular, senator manchin seems to be comfortable with the spotlight. jonathan: let us go to a virginia democrat, abigail spanberger who said, nobody elected him to be fdr. they elected him to be normal. there is a view outside of washington. what we have witnessed has been massive overage. does that resonate? jeff: that does resonate with moderate democrats. the issue with democrats is that they have to please both sites. you have moderates saying this needs to be not excessively

ambitious. this needs to be paid for. we need to address concerns about inflation, they need significant wins as well. they need abigail spanberger and joe manchin to agree with bernie sanders and pramila jayapal. water is do not want to see the bills fail. they want to campaign on significant achievements, but inflation concerns, paying for, the talk of a $6 trillion measure earlier this year was a bit out there. jonathan: the reaction yesterday was that senator manchin would have more leverage. that is not what happened. in fact, many were doubling down. lisa: that shows the bifurcated nature of the democratic party. progressives need to speak to the progressives who elected them. those progressives are not going to be happy with them caving it

you do wonder at one point the ship goes toward something getting done or if they do not. jonathan: do we get a this week or not? jeff: that members themselves do not seem to know. the official schedule is question mark, question mark, question mark. the chair is skeptical it could happen this week but it could potentially happen as soon as today. they have had manufactured deadlines, but really we cannot point to a specific legislative deadline where it is do or die. maybe it is this week, but they may have to keep working. there is no real deadline. jonathan: jeff fitzpatrick in -- jack fitzpatrick in d.c. lisa: i wonder how much president biden's hand is being called by inflation.

i wonder how desperate president biden is coming given some of the rhetoric around oil. the fact that he is pushing opec-plus to pump more and talking about releasing some researchers from strategic holdings. what does that tell you about the level of desperation to bring down the pace of oil? jonathan: i did not get a sense of desperation, even after the tight result in new jersey, even after glenn youngkin's win in virginia. tom: i agree. they are adding goodies to the social parts of the bill. i do not see the desperation. maybe it will be there in polling, as well, particularly if the president's pulls the sand to a trumpian 37%. lisa: it is extreme action. to do that at a time when the

price of oil is not at on all-time high. that is just one input to the inflationary pressure. that highlights something you are perhaps not seeing in these other negotiations. jonathan: they are incredibly concerned about it. the fact they have to defend the economy suggests they are in defensive mode. tom: are going to lose 35 or 40 seats in congress. she is a grizzled, white marble veteran of capitol hill. can we presell this guest? this conversation with dr. pozen on inflation. jonathan: adam posen does not think the federal reserve should be defending where inflation is. he thinks they should be embracing it. he is coming up shortly.

from new york city with tom and lisa abramowicz, i am jonathan ferro. equity market up. bank of england decision around the corner. a former bank of england policy maker just around the corner, too. this is bloomberg. ♪

>> there is some stress. there is that healthy skepticism about history labels or sustainable labels. that is one of the reasons we are having this relentless focus on zero. in the end, we cannot stabilize the climate unless we get to net zero. emissions are either going up or down. if they are going down, are they anchored in the science? francine: should it be compulsory? should we not have regulators saying, this is the new definition? >> great question. six years ago, you and i were in

paris. we talked about this. now it is moving to become mandatory. jonathan: all-time highs on the equity market. record high after record high. from new york city, good morning . a five date winning streak on the s&p 500. up 0.1%. up 0.4%. futures just keep pushing higher. the longest winning streak on the nasdaq of that year so far. jonathan: let us get to the bond market. 26 basis points, down about three basis points on tense.

-- 10's. a lot of people define success of the chairman based on what happened in the market. still some rate hikes priced for next year. here is a reaction function. you decide what we are going to make a move. tom: this folds into our next guest. what we are seeing is wicked important. it is a signal of growth confidence. that full into this inflation target debate. jonathan: if we hike, we have to hike for the right reasons. if we hike because this federal reserve starts to get concerned about price pressure before they achieve their objectives, not so good. at the moment, the chairman has a base case.

he wants his labor market to heal. more about that in a moment. opec-plus, is that meeting today? yes. that pressure is on them to pile more supply into this market. the president said the reason we are 82 is because they are not public enough. if they pumped more, we would be lower. but there are other things going on as well. it is not just opec us. lisa: part of it is the fact that he is trying to reduce emissions and output at the same time he is saying we want more. how does he have tail these ideas? jonathan: puff more abroad. some work to do on that front. wti a little bit positive this morning. tom: this is about inflation, your fears, your confidence in

the american economy. we begin this discussion as a singular high point of our trip to washington for the world bank and imf eating. that was a conversation heated with adam posen. we continued the discussion chairman powell is looking at on inflation targeting. why do we need to move from a 2% inflation level to something that so many are scared of, a 3% level? adam: we have got to get to the 3% target level rather than 2% for two big reasons. the first is when you are this close, your target is too low, that means your interest rates are too low. the fed does not have that much flexibility. it is less effective in countering recessions. it is more interested in markets to get its work done. the second reason you want to

see inflation target a little higher is because it helps restructure the economy. we are seeing this right now, but the labor markets are undergoing massive change in the u.s.. they need space for people to get adjustments and to make chance but -- changes to wages and where they work. that is easier when they are not as close to the lower bound people not get wage cuts. tom: what is the linkage of a reflation of an economy over nominal gdp to the great fear of the conservatives of an overheating of the economy and those ill effects? explain the sequence of 3% persistent inflation over to a large nominal gdp. adam: the two are separate. overheating is driven by real

factors, when you have more demand than supply. the 3% is a nominal factor, about what price level you are taking into account. to talk about overheating, whether it is a bottleneck or fiscal policy, is used with the word transitory. it does mean short-term. powell finally picked up what you and i have been talking about. transitory means it does not affect the underlying trend. lisa: how does the fed, keeping rates where they are, continuing to buy bonds, help job creation, help people refined a position at a time when prices are going up on things like rent, which is directly affected by the fed's policies? adam: nothing is costless.

the point of going from 2% to 3% is not because it is costless. it is because the downside risks are worse. in terms of what you are focusing on, what we are seeing with workers is -- with employers like amazon, walmart is we have a de facto rise in the minimum wage with a lot of big employers. this is really important to get people to make adjustments and resort workers into places that are more productive. if you are a low income worker, it is really risky to look for a new job, but if the wages go up, then there is an incentive to get past those fixed costs. there was a great paper at jackson hole this summer talking about how a slightly looser monetary policy environment

helps you make adjustments in the labor market. this was a point i wrote about 25 years ago with reference to japan. we saw under abe that you keep monetary policy looser if you want structural adjustments. lisa: you think the u.s. can draw a direct analogy from japan? adam: from japan or germany after reforms in the early 2000's, but what is going on right now in the u.s. is that there is a structural change. we have not had a big legislative package, but it is people making up their minds that they need a different form of work. employers making up their minds that, yeah, i can afford to pay a bit more. that is a structural change for about 20-25% of our workforce. we want to facilitate that

change. jonathan: you have been at a central bank at these inflection points. if you look to the bank of england and update start talking about a live meeting this early, what are you learning from the moment? what would you recommend to those of the bank of england thinking about making a move? adam: we are now not just moving countries. the u.k. is not like the u.s., germany, or japan. because of brexit, people have underplayed their real effects of brexit. i have been saying that brexit takes the bank of england back to the 1970's. it cannot just focus on domestic inflation targets the way they

have since 1992. they have to keep one eye on the market. rightly, though sadly, a much sooner left off than other central banks. the other thing about exit is that it exacerbates shocks that require flexibility in supply. they are having the same reopening shop as the euro area or that u.s., but because they cut themselves off from workers in europe, from easy imports and exports, the shock is that much worse. for these two reasons, the bank of england is facing a must -- much less valuable set of outcomes. that is why it has to move sooner. jonathan: you are more polite than i am. the bank of england now has an emergent market flavor to the

policy dilemma. would you agree? adam: yes. going back to the 70's, the emerging is waving a red flag. through no fault of the bank of england's, the stabilization of their economy is less post-brexit and less likely in high income economies than previously. tom: do we need a banner that says, adam posen says u.k. is banana republic? does that work? adam: i would rather go with the child in the background. jonathan: governor bailey with the child in the background. adam posen, thank you. a range of opinions on what is happening. the fed behind us, the bank of england still to come.

tom: this is olivia blanchard saying we need 4% inflation. he said that was 01 off. now we have a group led by adam posen, olivier len chart, and others, who are saying 2% is important. jonathan: some people would take the other side of this debate. if you have to make a move, are you hiking into weakness? that is the question. lisa: that is the reason why you bring up emerging markets. we have seen that in a number of developing markets. that may beat what the bank of england will do today. jonathan: futures up, the s&p help. -- the s&p up. market looks good. this is bloomberg. ♪

>> nancy pelosi is pushing the house towards vote on the economic agenda, but a few issues, family leave, immigration. the measure still does not have the full support of senate democrats. that u.k. has joined about 20 nations to stop funding for fossil fuel projects, but the deal has a couple of key holdouts. china and japan. a statement will be unveiled today. the agreement is not binding but marks the further tightening of the flow of money away from oil gas and goal. -- expects a net loss in the next three months. it is continuing most climate

appropriations. >> at the center, we have strong business. capital markets in a credit and other areas. ritika: tom brokerage was at the heart of the scandal. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> in some areas, vaccines have not happened.

it is unclear when we are going to be in the clear. maybe this is our new normal, but eight manageable normal. jonathan: i hope we get back to normal. i do not think anyone wants to call this normal yet. from new york city, tom keene, lisa abramowicz, jonathan ferro. your equity market at all-time highs. the bond market, yields lower. we come into thursday with a record high on the s&p and an all-time high on the russell. tom: the vix back to 15.02, but a constructive tape. jonathan: with the patient powell. next year, we will have the same conversation about this earnings season going into four q where

the margins can hold up. we will be doing that as growth is decelerating. 4% to get it done, do we have a significant move towards 3%? forget the goldman sachs view? that is a big slowdown. tom: that calculation of nominal gdp forward really full to into this equity enthusiasm. we took comfort yesterday from the chairman. we have been enthused by johns hopkins university. there is some distinguished vintage at johns hopkins. one of them is a professor of public health at the bloomberg school. he is truly one of the world's

experts, with a focus on southeast asia and thailand. thailand a few days ago began to open its borders. they seem to be pushing against zero-tolerance culture of asia. can they be successful at that? >> they were spared early on. it was kind of striking. but they had a serious wave of delta. they seem to be coming out the other side of that. they are a tourism dependent economy. they are trying to balance the public-health imperatives, control immunization, and mitigating the economic impacts. we will see how they do. tom: we talked about one person being sick at shanghai disneyland and tying down 30,000 people for testing.

really likely math. -- ugly math. explain the futility of that approach. chris: what you are seeing is a tension between the idea that you want zero transmission and the idea that if you have high immunization rights, with the efficacious vaccines, that you can live with some degree of covid cases, at least test positivity. the idea that you could get down to zero and see no transmission was pioneered by new zealand, australia. they have moved away from it, because with delta being so much more infectious, it is probably unrealistic. populations cannot tolerate this level of social restriction. our way out of this is going to

be higher immunization rates. now we have emergency for kids. you will see that happening locally. that is the way forward, not the idea that there will be no cases. lisa: we talk about football. let us talk american football. the quarterback of the green bay packers tested positive for covid. he had previously said he was immunized. that was thought to mean vaccinated. it did not. there is a question of how to double check when people say when they say they have gotten vaccinated. do you think there should be a public tracking system? or do you think that trust is the best way to go? chris: what we are seeing is a lot of diversity across the states? there are five states, new york is one of them, that have a

statewide system for tracking immunizations. mostly, we have been using an honor system, but people are checking in a number of states. immunization cards, records against a photo id to confirm that you are who you say you are and you are indeed immunized. that is required for eating in a restaurant in a number of places. but we have 20 states where governors have signed loss against mandates and the ability to convert immunization. lisa: i was going to dovetail into the children debate and homeschools deal with vaccinations. do you end up having to put in a form saying they have been vaccinated for covid, or is it treated as something more akin to the flu? chris: we are not going to have many states moving toward mandates for immunization in

children yet. we have only had this one notably small trial. we need to seek many more immunizations. with adults, we are at almost 200 million people fully immunized. we note these vaccines are safe in adults. the mandates there makes sense. for schools, probably not yet. not until we have had more kids immunized and understand fully the safety picture. jonathan: thank you for your input. lisa, you touched on the messaging around a social issue i find interesting why this particular vaccine has been treated the way it has been treated. if you go into the military, you have to get a of shots. for some reason, this one has been treated as a special case. we have to have a mandate. then there has been pushed back. lisa: the politicized asian --

politici-- that was one issue in virginia, not believing in vaccine mandates. i wonder why this is such a hot button issue. tom: that solution is death. we have gone from 1500 to 1200. what are we going to do it 900 deaths? does the anti-vaccine crusade say it is done? jonathan: i find the politics interesting. when that former president was the individual developing a vaccine, there were some democrats calling at the trump vaccine and saying they would not be in a rush to take it. it is a failure of both parties. to focus on the science together

as a collective unit. tom: i am fascinated with the nfl and the quarterback for the green bay packers. jonathan: do not benchmark yourself to professional athletes. from new york, this is bloomberg. ♪

♪ >> federal reserve has done an outstanding job in pre-signaling. >> the fed is not trying to kill the expansion. they are trying to expand it. >> they know the impact on the equity market. >> the market has its own definition of transitory. the fed owns the transit dish -- the definition of transitory. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the t word is banned for the next hour. for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market up seven, a little more than 0.1%. for all the anxiety around the fed, all-time highs in this equity market. tom: we made substantial for the progress yesterday to a great bull market. it was led by the small