rates. >> implied in the scenario is that the fed is in do no harm mode. >> i think we are worried about a fed policy mistake. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: the wednesday before the fourth thursday of november, we welcome all of you to an active day. jonathan ferro heating the oven at home. kailey leinz is in for jonathan ferro. lisa: we will get the fed meeting minutes in a time being. tom: we are setting up and

equities show for you. michael mckee will give you a complete compressive preview of truly the wall of data to set up jobs report in december. based on cycles, we need to sink s&p 8000, not 5000. that is the most bullish vision we have seen. kailey: he set out five years, but still that is very bullish. he said we are in a ball cycle and that is far from over. we will hear from different people, you have people who are that bullish. you have mike wilson at morgan stanley who says not so fast. tom: thanksgiving is about humility. humility here is the bears are humbled, third double-digit year. i am beginning to see people talk double-digit. lisa: are you coming to me with that?

you are saying it is time for humility, what do you have to say for yourself? i will say this and this is one of the big questions into 2022, there is a difference in bullish on the economy and oldish on the stock market. how much to receive momentum awaiting in the economy the same time we see a boost in shots or vice versa. do you see studying out because of normalization of the fed policy? tom: grandpa lisa abramowicz came over on the mayflower. she is cooking tomorrow. lisa: no, don't worry. kailey: i will be ready for leftovers because i will be here friday morning. tom: the jar of mayonnaise will be acquired this morning. let's keep this on the road, i have to do my job. what is important is we will

focus on the stock market because that has been the shock of 2021. kailey: it absolutely has. will it continue to shock in an upside way? it seems like the conversation is revolving around tech and valuations and if they can continue to be sustained. tom: let's go to the data. this is a full wednesday. all of the news flow we have seen. the dollar is stronger, dxy, 96.73. the euro in weakness today at 1.1 to 10 -- at 1.1210. what do i see in the yield stays -- the yield space, it is a snooze. lisa: you are seeing credit yields flow up quite a bit.

you're seen yields rise the highest on the ear in the high-yield debt space. what i am talking about now is the data dump we are getting which does address the dual mandate of the federal reserve. on one hand, how tight is the labor market and how hot is inflation running. we get u.s. jobless claims. personal consumption as well as durable goods. i'm watching unemployment claims. the idea of how much resilience is that there, how much did they go down? expected to go down to 240,000. the consensus is 260,000. 10:00 a.m., personal spending and income. october home sales and bpce deflator. the interesting aspect is income is expected to rise a touch after falling. if you look at spending, it is

continuing to outpace income. at what point is this unsustainable? at what point will the consumer's pushback? the deflator is expected to come in at a faster -- the fastest pace since 1990. a lot of people think the fed must take notice. the meeting minutes come out. what i am looking for is anything indicating how much consensus there is in accelerating a taper. this is important. we are talking about the tightening of financial conditions. tapering is not tightening. we are looking at the balance sheet of $3.7 trillion and climbing every month. tom: you are way too earnest. lisa: no one has accused me of that before. tom: they are going to look at the mashed potatoes. some people like the mashed potatoes but several people like the cranberry sauce. that is the way the minutes are.

you will get something on the fed minutes this afternoon? lisa: yes. i want to know how much richard clarida debt was representing a mainstream review where the threshold is getting less high of the hurdle to accelerated the taper and bring forward the rate hike. tom: let's start with equity coverage. a little bit of a cautious view. greg boutle goes the other way. 30 years of derivative experience. greg boutle, humans no words, 5100. what is the ratio that gives you -- get you to a double-digit return. >> we're looking for strong economic growth that will bleed into robust earnings growth. we think valuations can compress a little bit and get to 5100. we think multiples will come at next year which is the average we tend to see in the first year of the fed hike cycle.

lisa: do think consumers continue to boom even though income has started to decline off of federal programs? greg: one thing to look at the savings rate. consumers are not just participating in a hot paper market, there is a lot of cash people have around. we think there is a lot of pent-up demand. if we start to see some of the supply chain bottlenecks structure is up next year, we think pent-up demand will drive the economy forward. lisa: you said you expect a 10% total return in the s&p next year, even with this compression. how much is that concentrated in the first half versus the second half of the year? we see a lot of people thinking it will be frontloaded and the back and giving tightening. greg: we think it will be around

the fed rate hikes. you see a pretty consistent pattern which is the equity market has tended to underperform in the first three months after the first rate hike. then the cycle continues and the market performs well. if you look at the four past rate hiking schedules, the market was higher than lower and accelerated from six to nine months. kailey: how do you factor in yield assumptions when forming an equity piece, especially when it comes to names like technology? lisa: one is the cash greg: one is the level and one is the rate of change. real yields are still negative. we are looking at a rate of change which will put pressure on valuations. we start from a level in which policy is accommodative.

the economic environment is a constructive one for equities. we think there could be multiple compression but won't derail the bull market. tom: if we can talk about the reality which there is no breath in this market. -- no brett in this market -- no breadth in this market. when you look at the dynamics of the seven general miss companies, how do you predict what they can do? greg: we have seen some signs of euphoria and risk in the short-term. core volumes, the turnover of core option volumes, have absolutely exploded. there are signs of people chasing this rally. there are signs of short-term euphoria. it is more concentrated in the options market in the technicals and could drive a short-term correction. the medium-term fundamentals, i don't think there is enough on our radar to get us concerned. tom: you for getting us started.

-- thank you for getting us started. we make jokes about it but the answer is humility is needed for 2021. it has been an extraordinary year of not so much missed calls but just not getting the demonstrative call correct. lisa: each call is very specific, idiosyncratic. i am thinking about the winners from the pandemic, zoom video which is 18% yesterday. it is a number of the pandemic darlings that have come off. hedge funds, we are overweight in these. you write the crowd until you can't anymore. that seems to be a theme. tom: i tried to log on to log onto his meeting yesterday and it went down. that is why it went down. [laughter] kailey: you are seeing previously highflying stocks like zoom come off.

the heavyweights, big tech players are continuing to do well. that is going back to your bradth comment -- breadth comment. you hear this conversation about tech double or valuations with higher yields, how do you be bullish? tom: our staff is all cut and chiseled, eating a light and healthy for thanksgiving. they put together a phenomenal wednesday bloomberg surveillance for you. what are we focused on? economic data with michael mckee. the equity markets coming up after greg boutle and amy wu silverman will join. stay with us, this is bloomberg. ♪ ritika: in germany, -- set you

succeed angela merkel. he has formed an unprecedented alliance to promote climate change and digital technologies. democrats say they will present their agreement with the greens today. in turkey, the plans of the lira threatens to erode president everyone -- president erdogan. demonstrations call for any and to economic mismanagement that has led to inflation and led to the lira's longest losing streak. the market clearing -- the spacex rocket carrying a probe will test if it is possible to keep a speeding astroid from crashing into earth. if it goes well, next september it will slam into an astroid to nudge it off course. neither the astroid nor its larger body poses any danger to earth. a jury has come down hard on

white supremacist leaders for violence in charlottesville, north carolina. violent clashes left dozens injured, one woman was killed when a white nationalist demonstrator drove his car into a crowd. jamie dimon raised eyebrows on his comments about china, saying his bank is likely to outlast china's communist party. he said that a chinese intervention in taiwan could be their vietnam. 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 am ritika gupta. this is bloomberg. ♪

pres. biden: the price of

gasoline has fallen about 10% over the last few weeks. the price at the pump has not budged a penny. gas supply companies are paying less and making a lot more. they do not seem to be passing it on to the consumers at the pump. tom: the president managing the message as he heads to a family gathering. that is always a good thing. with a washington brief on a sleepy wednesday in washington. annmarie hordern joins us. i look at the opportunities in washington and you come up with it. you can do the saint regis or wander across the grass to the mandarin. a turkey meat sub, $10.45. that is what we recommend for you.

i tried it, it is wonderful. annmarie: i am happy to give it a try. i usually have an unconventional thanksgiving so i will give it a try. i want to do tofu turkey. tom: senator mcconnell and republicans no people get in the car and drive for thanksgiving. how successful was the effort to lower the price of a gallon of gas? annmarie: on average, the president in that soundbite said gasoline has not budged a penny. it has overnight, we were at $3.40 a gallon now we are at three dollars 39 -- $8.39 -- $3.39. gasoline prices are chief when we look at prices going up.

it is gasoline prices that resonates with americans. the question is, if you look at historical fpr's, they are a band-aid. the president will be lucky if there is more supply next year coming into the market. the question comes down to next week. is this a moment for opec-plus to ratchet back production they were supposed to deliver because of what consumers have done. tom: whether it is a dollar store going to $1.25 or a turkey up 21%, seriously, this topic will not go away. how do they manage the message when they drift back from nantucket? annmarie: it will be challenging. what we have seen the president to is take the speeches that were supposed to be about the impact of the social spending bill and infrastructure bill and now they have become that these

bills are about easing inflationary concerns. yesterday, what they did was more of an immediate effect. based on what consumers say about high gasoline prices, this is something we can do to alleviate that pain. this is their messaging. we are hearing concerns on inflation but it will be challenging. this is global, look at the numbers out of germany. lisa: there are international consequences of this with opec+ still to respond potentially, as well as the reality that a significant amount of the oil released will go to india and china because it is a specific kind of oil that is more expensive to refine in the u.s. it is cheaper for these other nations. what has the pushback been on the international ramifications with opec+ and where this oil will actually go? annmarie: the administration

tried to get barrels onto the market, you alleviate the top line. as we talked about, it was not the impact of the announcement yesterday that has helped move oil prices lower, it was the verbal intervention. they were able to bring wti to sub $80 a barrel --. it was that verbal intervention that did it. now it is the ramifications. for consumers, this was historic. the u.s. working with china, india, japan, and u.k. even though they have reserves. the pushback will be from the gulf. rehab will have to make a decision. tensions are still fractured between this administration and riyadh. lisa: it is also this question of the relationship with china, the idea that there was a kumbaya moment with respect to oriole. at the same time, they are

including taiwan among the invitees to their democracy summit. this will be thumbing their nose at china. how is this characterized by the biden administration? annmarie: china has said they oppose this but the biden administration is extending that invite to taiwan as well as 110 other countries to discuss democracy. it is a comparison -- it is a comparison moment. the president spoke to reporters and said taiwan is independent and then he had to walk that back, another walked back. he said what i meant is it is up to taiwan but we want to follow the taiwan relations act.

this is clearly going to work beijing -- to irk beijing. they want to make sure they have taiwan back. china sent over 200 warplanes into the taiwan identification zone. this is incredibly worrisome in washington. kailey: it is not just china that may have a problem with it, russia is not happy either. annmarie: and they are also not invited. the kremlin came out and said they do not agree with this list and they are not one of the attendees. this could add to issues with the u.s.-russia relations which are very tense, given what we are seeing on the ukraine border. tom: thank you so much. have a great thanksgiving. can we do a trophy for bloomberg radio worldwide? she has the pilgrim look down cold today. [laughter] she looks like henry wadsworth

longfellow. lisa: you look great, annmarie. annmarie: i can't tell if this is a compliment or i need to go change. lisa: you look fabulous. i love the look. tom: she is in pilgrim black with the white collar. lisa: you are not totally wrong. tom: we can continue the show. let's go to 8:30 and the economic data. mike mckee will be here to give us the brief. the deflator is a serious item. kailey: the deflator is what the fed will be paying attention to. personal and him and spending and spending that may be outpacing income. the wage conversation of the inflation conversation will come to play. when do you start to see that trickling through in the company's ability to pass on prices? tom: it is not the normal

wednesday before thanksgiving. good talk on equities. michelson will be with us from morgan stanley. commodities, particularly away from oil, she will join us and she is excellent on the stocks. this is bloomberg. ♪

tom: "bloomberg surveillance" good morning everyone. please travel safe today. what is it, 100 42% of americans are traveling this weekend? something like that. lisa: that sounds great. tom: after the airports. -- out to the airports. we quote the dow for jonathan ferro. he is off today and kailey leinz is in. we go from the beast and all of these sites over to what matters , you better get a decent cup of coffee at the end of thanksgiving dinner. alyssa farah -- lisa, jonathan

ferro has a cup of tea? lisa: i'm sure he makes espresso and it is prophetic calibrated and all of that. tom: kailey is having her tea right now. a gluten-free herbal thing. [laughter] we are going to get smarter as best we can with kona haque. she is with edie and death -- with ed&f. let's start with coffee which is jaw-dropping. let's start with any assumption, your world of coffee has gone up ginormous and a cup of coffee at starbucks has not gone up as much? why is that? kona: it takes a while to get through to the retailers. this is a fast-moving market. the crux of the reason prices shot up is because of the brazilian harvest.

i suppose the retailers have longer before they pass on the price to consumers. it is wages, inflation, energy bills. was that gets passed on, it will happen. tom: turkey is up 21% this year and you say it is an energy of -- a transfer of energy and hydrocarbons. can you call a commodity account to a new super cycle where we talk about turkey up 30% next year? kona: general food inflation has been caught up in the whole move. it is a feat, the price of coin, soybean meal. it is because of the key producing regions suffer from

poor harvest and increment weather. this means it is more expensive to feed your poultry or your life capital. on top of that, you have been struggling to get a hold of a neighbor and wages are going up. these livestock farmers have to make a decision. you keep going on? it is a huge economic decision. you are ending up with costs being passed on for a slightly smaller herd size. it is a real supply-demand crunch. another unintended consequence from the post-covid recovery. lisa: there is any issue that goes beyond the bow to buy switches instability throughout the broader world. this is something a growing number of people are worried about. is there a sense of a circuit breaker to break this cycle and get inflation and food -- inflation in food down? or is this something we could

see continuing throughout the soft commodity complex? kona: my worry is that we also have a fertilizer shortage. a normal day, high prices encourage farmers to produce more. what we are worried about is that farmers are struggling to get a hold of good supplies and fertilizer come supplies of ammonium and urea. they cannot get the nutrients to the crops you need to boost supply. on top of that, you have the whole inflation means where they are going to struggle to build supplies and volumes. lisa: is this a unique circumstance as a result of the pandemic? is this something we will have to get accustomed to due to climate change? what are the aspects feeding into the discussion? kona: yes, weather is massive. we happen to be in a la niña

where there are volatile work on -- volatile weather circumstances in brazil and america. climate change means extreme weather events and parts of the world, extreme droughts or extreme flooding. we saw it in brazil which is a large producer of coffee, corn, sugar, you name it. when you have problems there, that is a big problem. we are not at that point where stocks are at an uncomfortable level. kailey: tom's gucci bowties are discretionary spending. is tolerance of prices a lot higher so this could last longer before higher prices in higher prices? kona: yes. demand is fairly elastic. it is a staple, it is not a gucci type -- gucci tie.

there's a lot more disposable income on food, they will be the first to suffer. china will try to rebuild strategic reserves to protect and save that high cost being passed on to poor people. in advanced economies, it is not that much of an impact. you will see the cost of red and pasta go up -- bread and pasta go up. hi commodity prices, it is designed to curb demand. but staple foods, you do not see demand collapse. the only way to solve the situation is increasing the supply. kailey: how does demand from china factor into this? how big of a boost does that bring? kona: china is huge. they obviously have the biggest

herd of pigs and a massive population. you have huge amounts of grains and cereals and feed commodities. they're looking to input -- import vast quantities and the need to curb food inflation. they will do what they need. tom: thank you so much. kona haque, pleased she could be with us today. we are making jokes about it but i am sorry, it is not funny what has happened to grocery store prices filtered with the oil search. lisa: it affects people who are lower income. wages increasing are not keeping pace with food. how much does this filtered into consumer sentiment readings? how does this filter into momentum in the economy? especially what kona was saying about climate change and people second-guessing how much to

plan, it is a huge issue. it is everything. tom: john emails in and he says what is the real yield? we slept on that a little bit. let's draw on this. the fixed income space this week has been quiet. the real yield narrowed a lesser negative statistic and has now come back. lisa: you are seeing a bit of a retracement and how negative real yields are. what i am watching right now are high-yield bond yields. the yields on the risk is -- the riskiest corporate debt has risen. it does not sound like a lot, but the most in a year. tom: this is the spread? lisa: this is the yield but it is -- you are seeing this in the investment-grade and high-yield complex. this is something to watch. tom: i love the idea it is something to watch. but what is the y right now?

in a lesser quality credit, price down yield up? lisa: that is what i am saying. the y is a repricing. this is the concern of the taper tantrum. what is the through effective and equities? do we see this continuing? this is something i am watching. tom: it dovetails into the equity market. this is the diversion of equity because we have, from greg boutle to what we will hear from mike wilson. kailey: i wonder how much these equity calls depend on the trajectory you think there is for large cap technology. that pulls some much weight within the equity market. mike wilson expects valuations to go down. he expects multiple contracting next year. others don't. there are two different worlds being seen at the same time. tom: into the economic data, we have to frame the outlier call.

the outlier call is td securities where it goes out well into 2023. lisa: they are not alone. yet yet that there will be a deceleration in economic activity. the interesting aspect is that underpins all this because of equities. the idea that a deterioration in economic conditions is a bullish scenario for stocks. if the economy is more robust than people expect, that is a negative circumstance. that is where we are in the economic cycle. a lot of growth has been brought forward. if we see it, it means a tighter fed odyssey. -- fed policy. tom: we are supposed to roll into the holiday season on this wednesday and i don't sense that. between what cfos have to do about debt issuance, what they have to do about share buybacks,

i look for an active december. lisa: we are about to get huge data dumps that are complicated at the precipice of a turning point for the federal reserve. did you see what happened in new zealand? the new zealand central bank raised interest rates, 0.75%. you can see the kiwi fell out of bed. people were expecting more. we are seeing this consistently. certain nations are not able to lift rates enough to be commensurate with what people are expecting. tom: futures at -10. the two year yield, 59.44. stay with us with the pandemic and new zealand with bhakti hansoti. ♪ ritika: president biden's build

back better plan has a tax cut for millionaires. the megarich would pay more. millionaires would collectively pay a higher average tax rate year, 32%. only single digit millions could end up paying less. elon musk is selling shares in tesla. he is more than halfway in making good on selling 10%. a chunk of that money will go to texas. european commission will announce new covid travel recommendations as soon as today according to politico. they plan to quarantine countries who will no longer mended quarantines depending on whether the sin is traveling from and whether the person has a valid covid pass. boris johnson to make peace with the eu over northern islands. the confederation of british

industries is urging him to not follow through on his threat to suspend parts of the brexit deal. shares of dell and hp are higher today, they beat wall street estimates. people are spending more money on -- companies are spending more money on personal computers as people come back to the office. they will continue to limit the number of devices they can ship next year. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> which means it will be like

the fluid, it will come back on a regular basis and people may have to be vaccinated. the question is do you need to be vaccinated every year or every two years? we don't know that. tom: astrazeneca with his comments on what he sees around the world as we come into almost two years of this pandemic. really extraordinary to see that we edged towards 24 months. lisa abramowicz and tom keene with kailey leinz, jonathan ferro is off. we are going to get to an important set of economic data. i do want to mention, john deere , they have you density to report their earnings on the wednesday before thanksgiving. they have a banging up number coming off a difficult 12 month trailing. fourth quarter riley -- fourth-quarter rising with a net

gain of 19%, showing nominal gdp recovery. uaw contract agreement shows commitment to john deere's workforce. this is part of the inflation, wage inflation which is maybe not quite there yet. lisa: yet yet that they are benefiting from what we were talking about, the demand for food has reignited the demand for good. interesting to see their 2022 production sales expected to be 20% to 25%. net sales in the fourth quarter are looking lower. tom: it is a mixed fixture. -- mixed picture. let's move onto this pandemic. thanksgiving will not be as stressful as last thanksgiving, but certainly the losses, the injury, the harm we have seen the last few months. bhakti hansoti joins us,

professor of associate medicine. a major pharmaceutical company just stated this is trending towards endemic. for amateurs like me, that says all clear. are we all clear on covid? bhakti: absolutely not all clear, absolutely not and he endemic -- and not endemic. tom: it is radio and tv so you have to give longer answers. [laughter] the leader of new zealand said we still have a challenge here and a problem. we all know each and every story. how far are we from what the ceo of astrazeneca was talking about? bhakti: we are still in the midst of a pandemic which means we don't know how to overcome the current version of the disease from the virus. there are still daily deaths and daily limitations.

we have some strategies we know to be effective such as social distancing and vaccinating. that has proven to not be enough. the virus continues to evolve. we have been very fortunate so far. it has been a couple of month since delta emerged. lisa: i'm concerned as i look at the numbers. even in areas where there are high vaccination rates, you are seeing surges in the number of cases, south korea in particular with 79% of the adult population with both shots yet you are seeing the highest number of cases diagnosed since the pandemic.

does this indicate that the vaccinesdoes this indicate thate vaccines are less effective than we thought they were? bhakti: mortality has not gone up. hospitalization is lacking behind. vaccines are definitely effective. human behavior plays a big part in this virus. what we are seeing is that it is getting colder. people are going in doors. people are more confident because they are vaccinated and their behavior changes. that is leading to these changes. lisa: how was concern is that for detroit and michigan where you see cases are 600 per 100,000 individuals getting diagnosed? you are seeing people in the icu , 90% not vaccinated. how concern is this that we are seeing the surge before the winter months, ahead of thanksgiving before everybody gets into a small room? bhakti: the concern is that the number of cases is the tip of the iceberg. a large number of patients will still have a symptomatic infection. with vaccinated individuals the iceberg has got from this to this.

a higher number of asymptomatic individuals because people with the vaccine are not getting a sick. if you were to travel to michigan for the holidays, the airports, staying in a hotel, all of these are opportunities for getting sick. kailey: i feel like i have asked this question many times. each time it has proven that there are not enough people with natural immunity were enough people vaccinated for the case curve to be prohibited from driving upward. are we getting closer to that point? bhakti: i think our chances are much higher given the fact that children are in school, work has resumed is normal for many individuals, people are traveling again. the vaccine, some inherent immunity, we would have had higher surges -- without the vaccine we would have had higher

surges months ago. tom: dr. bhakti hansoti, we appreciated. she is off to india, i am told, to do what she does best. lisa, what you see in the markets? lisa: right now it is stasis. yesterday we saw yields rise and the reaction of the nasdaq selloff. the idea of high-fives getting frothed cap out from under them. if we see the data today that does show a picture that mandates a fed reaction, that mandates the risk being greater for them to not move quickly enough, how much action to be get in risk assets which have been sanguine? tom: i agree this is not a sleeper set. it will be interesting. kaylee, what are you looking at. kailey: i will be looking at personal income and personal spending. do we get to a point where consumers have to draw down on pandemic built up savings? what does that do to price increases?

tom: i am distracted. michael mckee will have to carry the load at 8:15. i learned that kraft heinz has put in a recall of tang. you have tang at thanksgiving dinner in the tom keene household. very rarely do they have recalls. they are rolling it out. it really shows the shock of the unexpected you can see at the holiday season. lisa: i am speechless. what is going to happen? tom: megan was here running the floor and the tang disappeared. i said where is it? she said it was recalled. i am fogging up. when you fog up on "bloomberg surveillance" can always do the data check. futures negative one -- futures

120 on the dow. the vix 19.57. two year yield, .64. it little lower this morning -- a little lower this morning. please stay with us. this is bloomberg. ♪

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>> most of the central banks poised to either continue raising rates or start raising rates. >> we have seen a fed that needs to be quite nimble in their resident. >> implied in this scenario is that the fed is in do no harm mode. >> but we are worried about is a fed policy mistake. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. it is a wednesday, and economic data wednesday. 90 minutes away i believe towards a huge drop of economic data that will be critical for the december unemployment report and that december 15 fed meeting. lisa abramowicz, tom keene, kailey leinz in for jon ferro. it is not normal this time. it is a huge deal. lisa: especially because it hits all the main points the fed is looking at.

s