>> stocks are still the only game in town. i think that gets lost in this equity market discussion. >> we think this bull market has legs still. >> liquidity is slowly going to be drawn away through the course of next year. >> the market is telling us that this economy might actually be re-accelerating. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast, bloomberg radio, bloomberg television as well. extraordinary tuesday. there's no other way to put it.

i settlements ago. i think you agree with me. i have never seen it like this. the differences of opinion. jonathan: how patient do you think this federal reserve will be. the answer to that sets the stage of where you think the interest rate will be. this market looking at the middle of next year. that's the spread right now on wall street. tom: all of this coming from a chinese like economy. overlap home depot, even walmart. onto a huge nominal gdp, the mystery of that glide path into next year, it is flat-out unknown. tom: real wage growth right now -- jonathan: real wage growth right now is at a low. goldman out with that call for 5100 on the s&p. they think margins don't contract next year.

they think profitability will keep on climbing. tom: lisa abramowicz which this comes down to is the set of experts who join us for conversation, who are narrowly looking at inflation. they are focused on inflation, while everybody else, including priya misra, is focused on a wide set of issues. lisa: and inflation in an economy that is highly indebted -- that is highly indebted. how much do we talk about the terminal rates for policy at the federal reserve. what are we talking about where it starts to bleed into the economic momentum? how much can an economy hinged on this much debt, this is one of the key distinctions and a lot of calls.

tom: we are going to get to the data right now. the brazilian dollar stronger, writing the two standard deviation real. jonathan: euro-dollar, a $1.13 handle. tom: what is the shock and awe of $1.10? jonathan: in the equity market, in and around 4700 on the s&p. equity futures positive by 0.5%. morgan stanley at 4400 year end next year. tom: we continue this year ahead view with andrew sheets, chief cross asset strategist at morgan stanley. let's start with the why. is the reason there's such a variance of opinion across the wall street simply because of this natural disaster and the boom american economy right now?

we don't know how that is going to unfold, do we? andrew: i think there are a lot of uncertainties across different axes of the debate we are dealing with a 2022. the training wheels are off, so to speak. how much does that affect market multiples and performance? we are also dealing with at inflation dynamic we haven't seen in some time. our economists think that inflation is going to moderate as 2022 goes on, but there are obviously different opinions on that, so i think we are phasing interesting questions as we look at the year ahead. jonathan: what stood out for me is you put out an index: 4400, but when i read through the research itself, you almost

deemphasize the research call. can you build on that for us? andrew: there's some interesting factors about how we are thinking about the year ahead. if we thing about the arrow -- the market narrowly, we are cautious on the year ahead. we do think the market ends 2022 lower, but we think there could be a wide range around that. we think the market could trade both higher and lower over the course of next year before ending a little bit lower, and we think single stock dispersion is going to remain high. i think in these midcycle environments like we are in today, you get less action at the high level of the market, more of the importance in stock selection beneath the market, and we think that is a really important theme for next year. jonathan: does the same story apply? andrew: i think europe and japan

will be a little more straightforward markets. europe and japan are very unique for satisfying two really important conditions. we think they usually outperform at this stage of the economic cycle, and they are cheaper than the usually art this stage of the economic cycle. there are a few assets the checkbook of those boxes at the moment. we think both of those markets can deliver about a 10% return next year, and they will be some of the better places for investors to hide out, and we think that performance can be relatively broad-based. lisa: how much do you think the fed holding off on raising rates will lead to a steepening in the yield curve, an overweight and financials, a sort of tailwind to some of the cyclical trades? andrew: i am really glad you asked about that because there are two interesting factors about how we see this playing out. the first is the market night much -- the market might not

believe our view. there's no reason for it to. there's very little incentive for the federal reserve to come out in january or february and say we are not going to hike rates in the second half of the year. why would they? that is a reason why we think the dollar can start off the year stronger, why we can get real yields rising from the first of the year. i think the market could act will little -- with a little bit more of a hawkish tint to it. i also think that as you move into -- as you move throughout the year, our view is that the hike of the fed is not going to do 2022, shifting back into 2023, 2024, that the market starts to think starting a little bit later is going to mean that the fed is ultimately going to be able to hike more, so the curve will steepen between the two year and the five-year point, and again, that is a key point of how our interest rate strategy is thinking about the year ahead. lisa: so if the dollar is going

to strengthen, does that mean going into the beginning of the year, you want to be overweight stocks? in other words, this nuance call calls for a frontloading of all gains, and perhaps a steep selloff mid to late in the year. andrew: the stronger dollar will tighten financial conditions. i think that is the reason why we are waiting to turn bullish on emerging-market assets. they are in many cases cheap, but we would like to get that dollar strength out of the way first. if i think about the other markets, the weaker euro, the weaker yen can act as near-term tailwinds to europe and japan, while for the u.s., it is going to increasingly become how much this dollar strength is starting to impact earnings. we think our caution is almost entirely around the multiple. it is another tightening of financial conditions.

jonathan: when you sit down with the team and do this work, this said call, how fed chair dependent is this call? andrew: as we think about it, we are not sure it is as dependent as it might otherwise be. we think the fed is going to be facing, moderating core pce throughout next year. the core pce rate is going to be well below the rate others might be focused on. so there's going to be a strong argument for some patients, whether it is chair powell or somebody else. that is not the main determinant of our call for patients. our determinate is around the inflation path and how we think the fed response to that path. jonathan: love catching up with

you. send our best to the team. andrew sheetz of morgan stanley on our outlook for 2022. not so fed chair dependent for the likes of morgan stanley. tom: i am with them. it happens every time. this is a normal reaction. there's a mystery to it. it shows the power of the presidency. what is the monetary distinction between brainard and powell? is it a political distinction? yes. jonathan: on monetary policy, i don't think so. specifically for this market, perception versus reality is always the issue with financial markets. there's a perception right now there is some daylight between the two, but when it comes to call itself, why it is so interesting at this time, it is the moment we are at. morgan stanley think the fed can wait. they are looking for 3% on pce, on inflation next year. that is interesting religion to where they think pdp will be, close to 5%. that is an economy that is

decent, and inflation story that is elevated. people see the same data. they see a different outcome. tom: december 17 conversation changes. jonathan: feeling like a lifetime away at this point. lisa: although there is a consensus that the market has it somewhat under control. there's not a lot of concern that they are going to torpedo things, and there seems to be a view that they've got it right so far. i find that interesting, especially given some of the pushback we are hearing from former fed officials. jonathan: december 15, your next federal reserve decision. you will hear from them. you will hear from the ecb and the bank of england. then we will hear from the ecb and go home. just like that. tom keene down the fort. tom: i didn't get this memo. jonathan: i look forward to that. we left you off that memo, tom.

of 0.06% on the s&p. this is bloomberg. ritika: with the first word news, i'm ritika gupta. walmart appears to be weathering the global supply chain problems and rising inflation. the retail giant reported third-quarter comparable sales that beat estimates and raised its outlook again. it is benefiting in particular from the reopening of the economy after last year's lockdowns. a sign of increased spending in north america on hunting proven is outlasting the pandemic. come store sales rose 6.1%, well above the average estimate and the average ticket size rose towards $82. president biden and china's xi jinping spoke of the need for cooperation in their first virtual summit. the two leaders announced no major breakthroughs. they discussed a wide range of issues, including trade, taiwan, and human rights. it is another hurdle for russia's controversial stream to gas pipeline.

russia has hold the certification process need for the link can start operating. the move comes as the pipeline operator has decided to set up german subsidiary in a bid to beat eu requirements. pfizer is taking a step to help coronavirus patients in 95 low and middle income countries. the company will allow generic drug makers to manufacture cheaper versions of its coronavirus pill. pfizer won't get the royalties from the generic version as long as the coronavirus is classified as a public health emergency. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

pres. biden: we risk losing our edge as of the nation -- our edge as a nation. that is about to change. things are going to turn around in a big way. jonathan: the president of the united states. from new york city this morning, good morning. we are 12 and its away from retail sales in america. equity futures advancing 0.04%. in the fx market, euro-dollar $1.1367. tom: and of course, retail sales we look to, and then bullard of st. louis with us as well. this is an exceptionally delicate and important interview. with franck riester, the french trade minister, and hugely engaged in french domestic politics. we are so honored to have you join us at bloomberg in our

washington offices today. i did note in rome that the president of the united states had to wander over to the french embassy to meet with mr. micron -- mr. macron on a matter involving submarines and australia. what is the state of the rebuilding of this fractured relationship? mr. riester: first, thank you for your invitation. it is a great pleasure to be with you this morning. yes, president macron and president biden had a good meeting, and the first steps to build back better for the future. things are going in a good direction in many fields. insecurity and defense issues, with the recognition by european defense, complement re-with nato , and in several other issues, global issues, and bare-metal

issues. so we are very committed to strengthening our relationship with the u.s. tom: i had the immense privilege of seeing charles de gaulle in paris in the summer of 1968. america and france have had a history of where things get a little dicey. that is the language we would use. what is the domestic french reaction to what we saw with australia and submarines? what to the people of france think of what america did to mr. macron and the republic of france? mr. riester: people in france did not understand this decision without consulting france. they felt very -- wondered of

such an act from a frame of france. but now things are going in a good direction really because we saw president biden, of kamala harris, of the u.s. to rebuild the trust with france, so in the relationship with two countries, sometimes we have to talk each other. the main thing is to build trust. in france, we need declarations, and there are declarations that are going in a good direction, and we need proofs of love. proof of love have to come in the future. but i am very confident because i feel the will of the admin's to ration to take into account

what occurred. that was not a good way to treat an ally, a friend as france. so i am quite optimistic for the future. not naive, but optimistic. lisa: we are about eight minutes to get some data in the united states on retail sales. this goes very much to the trade backdrop, and particular tariffs since that has added to higher prices at a time when prices are already rising. how highs the bar to implement nor tariffs -- to implement more tariffs as everyone is feeling the result of supply chain disruptions? mr. riester: i think that a decrease in trade tensions will help the growth. it is the case for the dispute between boeing and airbus, with the lift of the tariffs

thanks to the agreement. it is the fact that for the trade tariffs, the volume of steel and aluminum expectations from europe to the u.s., it will lower the price of the aluminum and steel. so it is going in a good direction. that has not ended. we still have to find an agreement for the future because we could not accept the fact that there are some tariffs on european steel and aluminum because supposedly, this exportation harms u.s. national security. but it is going in a good direction and it will have some good effects on the prices, i think. so it will have good effects for both.

-- for growth. jonathan: good to catch up. the french trade minister. from new york city, the focus shifting to retail sales. mike mckee in the building, in the studio. the data moments away. if mike mckee can hear us. tom: i guess he can't. michael: i didn't know that was an introduction. jonathan: just a little softball, if you might, to hit a home run welcome, sir -- hit a homerun. welcome, sir. tom: jon, he was looking at his bedding this weekend on the denver broncos. [laughter] michael: i would not do that. we are looking for a significant increase in retail sales numbers. the question is how much of it is going to be due to inflation because retail sales is calculated in dollar terms, and how much is due to demand. we will take a good guess at it and see what we can figure out.

tom:tom: what do we know about the imminent decision? you know, don't you? michael: it is actually in a mayonnaise jar, for those of you old enough to room or -- to remember. i don't think there is any question that it is down to powell and brainard. he says it is imminent. the question is what imminent means because the president is off to new hampshire today to tout the infrastructure bill, and i understand he is traveling also on wednesday. so maybe they get on marine one with him at the white house, the new chair. maybe we tom: wait a couple of days tom: jon -- maybe we wait a couple of days. tom: jon, he knows. michael: maybe you will do it friday when he pardons the turkey for thanksgiving. jonathan: i don't know if anyone knows because i don't know if they have made a decision. who knows? dana peterson joins us shortly.

the retail sales numbers are moments away. i will give michael mckee a proper introduction in about four minutes. from new york city, on radio, on tv, retail sales up next. this is bloomberg. ♪

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jonathan: your economic data in america is seconds away. futures up two or three points, advancing .5%. 10-year gilts -- michael: up 1.2% on the month. have a that is petroleum. a little more than half is petroleum. we are up on import prices 10.7%. inflationary pressures from overseas. retail sales headline of 1.7%. that is 1% above the .7% last

month. it is significantly better than what had been forecast. the ex auto number 1.7% as well. the control group, which is what economists watch, the retail sales, up 1.6% that is double last months and certainly better than the .9% we. this is somewhat in question because as we were talking about before the break, they do count retail sales in dollar terms inflation for all items in the cpa i up .9%. if you want a rough calculation, deflate that you get about .8% for the headline number and .7% for the retail control group. that is not the way you would do it, but that is one way to look at it.

looking at some of the categories that matter the most, retail motor vehicles, parts up 1.8%, that is an increase in that is a little bit of good news since we have had a shortage of cars for sale. electronics and appliance stores of 3.8% and you wonder if this is pulling forward black friday. food and beverage stores up .9%. grocery stores up 1.1%. that will be because the positive gasoline up significantly. department stores 2.2%. the only declines we are seeing his health and personal care down .6% and clothing and clothing accessories down when 7%. food services and drinking places flat. no change at all. tom has avoided the carlisle, is that the headline out of the retail sales report? tom: breaking news. michael: we see strong growth

but about half of it is back of the envelope, not actual calculations. tom: what you see in the bond markets? jonathan: looking at twos, fives, and tens, it is about the rate hike conversations. you see the pick up on two and five, yields up another two basis points. the two at the highs of the year around 54 basis points. the data is an upside surprise and there been people talking about this looking for a real acceleration in this economy into year end. there is an inflation story and we knew that going into the print. when you put it together, i want to go back to something lisa said. watch what people are doing and not what they are saying. people are feeling this economy in a negative way. consumer sentiment is that a decade low, inflation is in a multi-decade high.

we look at the numbers coming out of corporate america and the labor market and out of retail sales, output is flying. this economy looks pretty strong. tom: i thought of rebecca patterson and the demand driven economy and the revisions underscore that. i do not spend much time on export price index, but there they are an important. why do pros like you look at that import price index? michael: we bought a lot of stuff. last month in september imports were at a record into the united states. we are importing more oil at higher prices. tom: so that is oil affected as well? interesting. thank you so much. through the morning we will dive into this deeper as well. right now dana peterson will join us, chief economist at the

conference board. the heritage of the conference board is so much about a reading of the american consumer. what is a distinction you see now in your research? dana: our last reading on consumer confidence was in october and i know there've been other readings for november. that leading showed people were still pretty optimistic, still looking forward to buying things , cars and appliances and big-ticket items. also our holiday outlook survey indicated that even though people anticipated in's would cost more they are still looking to buy and spend the same amount of money this year they did last year. lisa: how much is this people bringing forward their purchases ahead of the holidays to get ahead of the bunch with supply chains like people buying christmas trees in the middle of november from home depot? dana: that is definitely happening. when you look at sporting goods,

toys, and hobby sales for october they were pretty strong. even i bought all of my christmas toys ahead of time in october. we think some people are probably buying in advance expectations of store shelves being under stopped and inventories are a big issue. are we going to see an increase in inventories in the fourth quarter to help us see a real bounce back in gop -- gdp growth. there is also -- lisa: there is also a question of whether strength and retail sales through december or whether we have frontloaded the data. dana: that is a great question and will not be borne out until we see november and december data. strong indications, especially folks looking to buy clothing and high-tech goods. i'm very optimistic and certainly encouraged to see the auto sales up. we know there's been a semiconductor crunch and certainly there is more demand for cars and probably will help

bolster sales for the balance of this year. jonathan: how uncomfortable you think the fed is with this incoming data over the past couple of weeks? dana: what the data are telling us is that after the delta variant setback the economy is getting back on track, even though the restaurant and bar sales were flat and probably in real terms they might have been negative, we are seeing mobility data pick up stop people are getting back out there. growth is strong. inflation is powerful. inflation expectations in this short-term, the delta is pretty steep, and also labor markets are feeling. i would imagine we are getting to the point where the fed feel we have reached full of meant and are well -- full employment and are well beyond our expectations for inflation, let's think about normalizing policy next year. jonathan: when you say we are getting to the point of full

employment, what he looking up to guide you? put some numbers on that. dana: we know there are 4.2 billion person still absent from the payrolls report, we also know tons of people retired, about 3 million, not all of them will come back. when you look at the participation rate, it is probably telling a story that is under representative of what is going on in the labor market. if we continue to see half a million jobs added over the next you months and also anticipate that folks are not coming back from retirement, we are probably close to full employment. once we reach that i think the fed will feel comfortable starting to normalize. tom: what inflation rate is the inflation rate that makes wage growth impossible? is it 3% inflation or some statistic higher? dana: i am not sure what that rate is. i would imagine even though the fed signals that they are not

seeing a wage spiral right now, it is hard to imagine some of these increases in wages are not filtering down to immerse. certainly that is what we are hearing at the conference or -- filtering down to consumers. certainly that is what we are hearing at the conference or. as we see wages increase the fed will become more concerned there will be the spiral and they need to do something to address it. jonathan: dana, thank you for being with us. dana peterson of the conference board. the data has been better-than-expected on retail sales and elsewhere. the market is picking up the front end of the yield curve. the conversation of the next fed rate hike, we will have that with david jones of bank of america talking about the latest economic data in america. the rate hike conversation gets a little bit more fuel. tom: we cannot say enough about

the originality of this november of 2021. as we spoke to william dudley and mr. lacher, today we speak with the genuine beast. james bullard back to 2008 who said the economic community on its ear talking about regime change, the idea of how a central bank should act. the phd from indiana joins us this morning and our questions always led to the beginning, unlike at the press conference, by our michael mckee. michael: i am not sure what the beast means, but we are happy to happy with us on bloomberg radio and television this morning. there's a lot going on to talk about. there is an elephant in the room or at least there will be imminently in the room. let me start with that. sherrod brown told us last night as far as he knows it is down to lael brainard or jay powell for the next fed chair. you have worked with both.

what would be the policy differences between the two? how would the fed change if at all? pres. bullard: i think no matter how this comes out there'll be a lot of continuity in fed policy. both of these players have long track records at the bed -- at the fed. it is a big committee. people have to keep that in mind. there is a lot of experience on the committee. i think we see continuity. michael: would you anticipate any change in the timeline for typing policy? i would use that broadly to mean tapering and raising rate and forward guidance from anything you might do between one or the other? pres. bullard: it is a committee decision, and as i just mentioned it is a big committee. lots of opinions around the

table, great staff around the federal reserve and the board of governors. it is a collective process and we have to react to the data and make decisions. the chair's job is to guide that process and get to a good compromise in the center of the committee. michael: you have opinions and you've expressed them on what the fed should be doing, the possibility of a faster moved to tighten policy, but you have also put that on the data. the data are showing strong and asian and it shows up in the retail -- strong inflation and it shows up in the retail sales report this morning. are you ready to say we should move more quickly? pres. bullard: i did not see the report, i was getting ready for the interview, but the inflation rate is quite high. the core pce inflation rate is about 3.6%, that is the highest it has been in 30 years, well

above our 2% target. that number already throws out food and energy. you are taming the data when you look at that kind of venture. it is quite high and does not have the reputation of moving down easily. i think it behooves the committee to go in a more hawkish direction in the next couple of meetings so we are managing the risk of inflation appropriately. if inflation happens to go away we are in great shape for that. if inflation does not go away as quickly as many are anticipating , that it is going to be up to the committee to keep inflation under control going armored. -- going forward. michael: are you talking about speeding up the taper? are you talking about forward guidance? how would you tack? pres. bullard: i think we've

gotten past the taper tantrum issue because we went ahead with the taper. we could move faster, we kept optionality on this that we could speed up the taper if it is appropriate. we have a hot cpi report. as you know i've advocated a faster pace, a 2010 pays, that is 20 per month less treasury purchases and 10 less mortgage-backed security purchases. the reason i propose that is we would be done tapering at the end of the first quarter next year and that would give us a little bit earlier moment that we could assess where the data is and decide what to do on rate policy. i think that is something to consider. some might say that is faster than they would like. i don't know.

we did retain the optionality on this. lisa: thank you so much for joining us this morning. it would be great to get your sense of ill dudley's comments about that in -- of ill dudley's comments about the end terminal rate given how high inflation has gone. a lot of people think it will not get beyond 2%. he said 3% or 4%. you think that is a realistic end policy rate? pres. bullard: that is not my base case right now. i have rates only rising to where they were pre-pandemic. i think it is good to keep in mind the pre-pandemic economy was not a zero interest rate economy. whenever you think we are back to the pre-pandemic levels of output, which we already are, the pre-pandemic level of labor market performance, then that should be the moment you are back -- maybe that is something

to think about. the rate policy and tapping all officially -- and tacking hawkish leave now could pay great dividends because it means we would have to do less later on it would the process out. the scenario ill dudley was describing was one where we get behind the data too are and then we have to move more aggressively later and that was a stop and go type policy that did not work very well in the 1970's. it makes sense to try to move a little bit more hawkishly here and try to manage the inflation risk. if it all dissipates next year we will be fine in that situation.

we can push out rate increases into the future. lisa: how high can rates go given where the economy is? the idea of frontloading rate hikes make sense to avoid a doom and gloom scenario bill dudley was laying out. how high can we currently handle given the trillions of dollars of debt we have incurred? pres. bullard: the good news is you probably do not have to go to that high of a level to get a normal sense of interest rates. 2018 and 2019, 1.5% to 2% was a common level and that seemed to work pretty well for the pre-pandemic economy. there are some adjustments and trade issues going on and other things. i take it is good news we do not have to go to that high of a level to remove the accommodation and remove the upward pressure we are putting on inflation with our current policy. tom: good morning to you, sir.

christopher waller, who got an upgrade from your shop a few years ago, now governor of the fed in washington, you and chris wallace did a paper in 2016, i think. i want to discuss for the economic community if we are in a regime change where the theories are not working. here we are coming out of a natural disaster. we have a china like boom economy, and then we have the idea we have to somehow unwind this to the terminal value. scope out, given a regime change , the whim of a terminal value you are looking out to. are you looking out six months? are you looking up to a cardinals world series, or you can you responsibly look out five or six years? pres. bullard: i think this might be a moment where there is

potential for regime switching to a higher productivity growth regime. i am not ready to commit to that right now, but if you look at the data it has become volatile, it is not so clear we are in the low productivity growth world that i was talking about in 2016. we might push out of this. the pandemic is the kind of event that forces businesses to hustle and to think about how they can use technology to their advantage. they have a very tight labor market they are facing. they are probably dusting off plans they had for a long time. using technology in a better way. that is promising we could move to higher productivity growth. that would be great for the economy and it would perk upward pressure on interest rates. tom: this is a critical theme

for bloomberg surveillance this year, the idea of a technology overlay being underestimated as we come out of the pandemic shock. if we get a technology overlay and an upgrade in our statistics , can we get to where instead of a 2% inflation target, we could migrate to something of a 3% inflation target simply because we have better productivity? pres. bullard: now, i do not think so -- no, i do not think so. you should take the productivity on board and the economy will grow faster. that would be sensational. last time we had this was the late 1990's and at that time we were talking about paying off the entire national debt. it did not happen, but we were talking about it. that shows you what a big impact this kind of thing can have on

macro economic performance. i would not mess around with the inflation target. that has become an international standard. if the leading economy in the world decided to mess around with the inflation target, you would get all of this chain reaction around the world. that would be chaotic and it sounds like the 1970's to me. i would not try to go in that direction. nevertheless, i think we may get the higher productivity growth that is promising coming out of this pandemic just because everyone has been experimenting with new technology. tom: did you see how he treated me, like you get treated with chairman powell? he just laughed right in my face. [laughter] michael: that was a long-term look at what might happen. let's talk about what the traders want to know, the very short-term. if you're thinking we should tack it a more hawkish

direction, with that speed up the rate of rate increases? there does feel rate increases for 2022 and almost a third. is that realistic? pres. bullard: i am agreeing with the markets right now because i have two hikes penciled in for 2022 dependent on the data. it could evolve going forward depending on how the data come in. i think there are other ways we could tack in a hawkish direction. i think we could play up the idea that maybe we do not have to wait until the of the taper to raise the policy rate. historically when we have done this before we have not wanted to be raising the policy rate and we are still tapering. you could argue the taper is priced in and what is going to happen over the next eight months is just follow-through on something already priced in, so

that would relieve any constraint the committee might yield about when the appropriate time was to commence with lift off. another consideration i would put on the table and have it on the table is we can allow runoff of the balance sheet at the end of the taper instead of waiting on that decision for a while. i think that would be a way to have a somewhat more hawkish policy than otherwise. we can debate how big impact that would have, but you can allow the balance sheet to be running down sooner than is currently priced in to the market. michael: one last question. we will keep it in the sailing category. when you tack you run the risk of the wind coming on too hard and you can capsize. i wonder what your view of the u.s. economy is in's policy works with a lag.

you risk cutting off the recovery by raising rates too soon if asian is transitory? -- if inflation is transitory. pres. bullard: if you're in sailing you have to be good at what you do in the same is true with the committee. we have to react in an appropriate way and managed risks appropriately. i like the chair's emphasis on risk management in the recent press conference. i think that is exactly what is going on. you have two scenarios, one where inflation dissipates as the economy continues to reopen and another one where it does not and you have to be ready for the second one if the first one comes we are in great position for that already. it is the second one we have to get ready for. i hope we have the gust of wind we are playing at just right. tom: james bullard is the president of the st. louis fed.

our thanks to michael mckee as well, not only on retail sales in this economy but on the delicacies of the fed forward. the day extraordinary. are we going to do this tomorrow and wednesday? i think we have to. lisa: i think we are obligated to come in every day of the week and i think we want to because it is a fascinating moment. to think that james bullard is talking about other tools to tighten, including allowing the balance sheets runoff would be a game changer, including also raising rates before the end of taper because the taper is priced in. these are innovative approaches, not the consensus by any means, but highlight the sense of concern people have that the balance of risks is getting more heavily weighted to inflation that seems to be picking up quite a bit. tom: it shows our economics, our finance, our investment wrapped

around the politics of this been demoed. there is no other way to put it. sobering statistics out of germany, switzerland, and austria. stay with us on bloomberg radio, on bloomberg television. we focus on singapore in the bloomberg new economy forum. good morning. ♪

jonathan: more fuel for the rate hike debate. for audience worldwide, good morning. your equity market dead flat into the opening.

"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. jonathan: fly from new york we begin with the big issue. wrapping up the pressure on the federal reserve. >> i think they are on track towards a major policy blunder. >> i think they have made a mistake. >> they got stuck on the narrative they held on for too long. >> give us a sense of being so slow to start the taper. >> they're looking at inflation much higher than they ever expected. >> recovering from that will cost them -- will cause them to raise rates