>> economic data will be hard to trade up at the moment. >> a lot of the good news already impacts. >> inflation could turn out to be -- >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: you can turn yesterday upside down. from new york city for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene, i am jonathan ferro here with lisa abramowicz. it is yesterday in reverse. tom: up and down. looking at resistance and -- frankly, i know you have been looking at this. the 10 year yield is extraordinary, from up to down, 1.70, to 1.47, back to 1.70.

jonathan: you talked about the volatility of the 10 year pay let's talk about the two year yield, which has moved in a straight line friday, monday, tuesday. that tells you about the rate hike debate. tom: let's open this up. has the right height -- rate hike debate disappeared? jonathan: it has shifted in the last couple of days. tom: oil is its own sub story as well. what we need to do, and we have felt this way 20 months -- we will talk science, not guessing, about omicron. it is what it is, and they're so much we and the president of the united states do not know. jonathan: there are so many things. -- a lot of people pointing to that

interview. can i read a couple lines? there is no world where i think effectiveness will be the same level. i think there will be immaterial drop. we just do not know how much. we need to wait for the data. kailey: the operative words are "i just don't know." none of us know the efficacy will look like or what immaterial drop will look like, at the market is waiting for the answers to that is -- to those questions. jonathan: pick your poison. here is the price action this tuesday morning kate equities down 46, negative about four percentage points. the euro-dollar .11360. and there is your move on tens. tom: carnage. we are down 2.2%. jonathan: it is a bear market. tom: come on. down 2.2%.

jonathan: down 1% on the morning on the s&p 500. futures a bit softer this morning. kailey: it will be interesting to see what kind of cues the market will get from jerome powell later on today. he will be testifying alongside janet yellen in the house -- in the senate banking committee care that starts at 10:00 a.m. eastern time. we have already gone their opening statements and we know jerome powell will talk about the risks of the omicron variant poses to the dual goals. the markets will be paying close attention to any hints he drops. also happening at 10:00 a.m. eastern is conference board consumer confidence. consumer confidence is key in terms of economic indicators. this has actually been performing a little bit better than the university of michigan sentiment. we will see if that continues, but you are expecting a slight drop after a bounce in october. later this afternoon, but more fed speak.

vice chair richard clarida will speak alongside the cleveland fed president. clarida was talking about how there may be a need to accelerate -- we will watch for headlines from him. jonathan: thank you. that is the big question. do they continue to separate guidance from rates from guidance on the qe pace of the unwind of taper? i think they do, and that is the conversation we have to look at. tom: let me throw in some good news and statistical clarity. i believe, from two sources -- covid deaths well under 1000 a day for that is a triumph of the science and vaccination community. as we mentioned yesterday, unvaccinated 13 times more likely to die, but we are down at 900 or 800 deaths, whatever

that is a triumph. jonathan: when it comes to disease severity, let's hope that these cases are not severe. we will need to wait for more data. if that changes, we will report that. but so far, that is not what we have heard. tom: we will have to cpa we have some headlines out there. jon and i cannot keep up with the headlines early in the morning to look at what regeneron is doing. their antibody drug loses fitzsimmons -- loses effectiveness, so i guess we are further out of bed. kailey: this report from dow jones is siding for luminary tests, though you are seeing the market react before we get full answers to our questions. regeneron stock down about 2%. jonathan: let's get to an investor, howard ward, cio of growth equities that gabelli funds.

what you have heard so far, is this? howard: hi, jonathan. very optimistic, because the message i was getting yesterday was existing vaccines would be fairly efficacious against the new variant. the data that we do have, which is that 70% of the country is vaccinated, 8% of those people over the age of 12, and we are administering one point 8 million doses per day. i was optimistic. obviously, the comments out of the merger and a ceo -- the moderna ceo in "the ft" are alarming, but it will take a couple weeks for them to have a good handle on just how good the existing vaccines are and how

long it will take to develop one more focused on the omicron variant. i do not think there is enough data to support this being a game changing. tom: what this means is we have to stay invested as well. do we shift new investment, the marginal dollar we will place with this uncertainty, does that change? howard: i do not think so. of course, i started working on wall street in the 1970's. i've seen this economy and stock market weather all kinds of turbulence over the years, and essentially every downturn on the market was a good buying opportunity. i specked this will be the same because -- i expect this will be the same. by opportunity for the investors who have the willingness and patience to invest for it period of years. focusing on what will happen next week will consume us more

often that it should, and it is hard to avoid that, but we really try to focus on the long-term. and really a lot of good news, that this economy is very vibrant. it is a technology driven global economy. there is so much good about that. this is not the 1970's, where we had 15% inflation, stagflation, 16% five year treasuries, 15% 30 year treasuries, inflation went from a 5% to 15% in a couple of years. that is not this economy. we have been spoiled. circumstances will change, but this is still an extremely vibrant, positive economy growing this year and for the next couple of years, as far as we can see. kailey: the economy may be vibrant, but you're not seeing that in rates. do yields have to stay in this lower range in order for equities to continue doing well

and for there to continue to be dips that you want to buy? howard: that is a good question. we would anticipate upward pressure on rates, as everyone has been anticipating, given the fact that the economy is rebounding strongly from 2% growth last quarter to %%, 6%, 7% growth this quarter with something of a 4% growth handle next year. and with the fed beginning to remove monetary stimulus that has been so important to stocks and lower rates. rates should drift higher. if traits go back to where they were pre-covid, we are back to 1.90% or 2% on the 10 year. that would be my base case scenario over the next three to six months. that is ok. that may create some indigestion for stocks. but we can certainly deal with that.

if we are completely wrong on the transitory nature of this inflation, and it becomes more insistent, and rates spike higher 3% or 4% kinds of handles , that will be a problem for multiples. jonathan: what is the grade for this tree? tom: howard ward is killing it. jonathan: 12, 16? tom: for those of you on radio, ferro talking -- howard: how big is that thing? it is nine feet. kailey: is it real or fake? howard: it is real, made in the usa. [laughter] tom: mario has the ugly-colored lights going. howard:he's got a lovely tree. jonathan: i bet he does.

a man who understands seasonality. you have to get ahead of the rush. tom: you talk about supply shock. out of stock -- it is real. jonathan: it is true. not just fake ones, real ones too. i drive through manhattan every morning, there are real trees on the side of the road. kailey: maybe people in new york do not like christmas trees as much. you cannot have a nine foot tree . if you have a loft with high ceilings, like tom. tom: kailey was a sophomore and cut down a tree just off of the famous commons there. kailey: the lawn. jonathan: we are negative a little more than 1.4 percentage points. we will carry on the portfolio manager from algebra investments. this is bloomberg. ♪

leigh-ann: top executives of moderna say that there may need to be new vaccines to fight the omicron variant. the number of new mutations on the virus are surprising. ceo stephane bancel said it may take months to update vaccines they can deliver in larger numbers. senator joe manchin will not commit to moving ahead on president biden's bill before the end of the year. he is still reviewing a version of the legislation passed by the house. manchin says he is concerned about the impact of more federal spending on inflation. federal reserve chairman jerome powell has weighed in on the omicron variant of coronavirus. he warns or poses risks to both sides of the fed's mandate,

stable prices and maximum employment. here's her marks came in testimony prepared for an appearance before the senate banking committee later today. there is another indication that americans did their holiday shopping earlier because of concerns about global shipping logjams. inventory was scarce, and there were not many deals on big-ticket items, such as alec tronics. excel stays like black friday and cyber monday are gradually losing their prominence. global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪ this is bloomberg. ♪

>> this variant is a cause for concern, not a cause for panic

data will be putting forward a detailed strategy outlining how we are going to fight covid this winter. not with shutdowns or lockdowns but more widespread vaccinations, boosters, testing and more. jonathan: a cause for concern, not panic. message from president of. tom keene, jonathan ferro together with kailey leinz. your equity market negative 49. markets lower by 1% on the s&p 500. yields friday lower, higher monday, tuesday lower. the more consistent move of the front end of the curve correcting lower on 2's friday. we will talk about that difference later in the program. picking up on crude, crude $68 handle on the wti. tom: for those of you not part of global wall street, jon and i followed this quite well.

we have really not seen swiss franc break to new strength. if i get 1.03 on swiss franc, that gets my attention. jonathan: we are heading in that direction, and we have been for much of this year. it has just been a slow grind lower on the currency pair. tom: we will talk about it through all of "bloomberg surveillance." right now, we go to washington, joe mathieu with us. star of "sound on." i want to talk about the biden administration now. it seems like a slow, political day in washington. what is the plan for the president and his team to get a more consistent message out there and not stagger from event to event? joe: great question, because i think the great threat facing this president right now and the messaging coming out of this white house is the straightest split screen coverage. the president is leaving the bubble, going to the twin cities

to publicize the infrastructure law and try to make the case for his social spending agenda. you know how this will go. when new channels or others carry the coverage, it will go against and alongside coverage of covid updates and testimony you guys have been talking about with powell in yellen today at, both of whom are warning about interruptions in the labor market, rising inflation from some of this. this is, at best, a distraction, and, at worst, a game changer. i just outlined the distraction. the game changer is one i would prefer not to visualize, but i do not think we have to use our imaginations much to get that into our heads, having lived through delta. tom: the biden team is a little different from the trump team. the trump team seemed to be hugely visible in managing the message. are they purposely less visible to accentuate this president or

is there a theme going on you see every day? joe: or is it simply competing issues -- interests as the president tries to get a message out on infrastructure spending while the country is worried about inflation? is choosing the word "transitory" something this white house should have done or maybe evolved? i think it is keeping up with the news flow, paying attention to polls, and this white house has found itself a couple weeks behind, certainly on the inflation story. look at what has happened today. it is a completely different conversation. kailey: speaking of inflation, we heard from senator joe manchin, a key vote in getting that building back at her bill passed, and he said that he couldn't commit to passing that by year end. realistically, are we talking about that package signed, sealed, and delivered in 2022, if at all? joe: "if at all" might be the best way to put it. everything is being recalibrated

from last friday, if omicron is, in fact, our new reality. that goes for those social spending agenda. if this is increasing worries about inflation. this white house says reconciliation will help with inflation. it will make it harder for lawmakers like joe manchin vote for that. chuck schumer would love to have that under the christmas tree for joe biden, but when it comes to manchin, every time one of these stories came up, go back and read his memo last summer that he signed with chuck schumer. he has been nothing but consistent. if you follow the memo, everything since that makes sense on joe manchin, and you may be able to extrapolate how this ends. kailey: that may be pushed often a year, but there are certain pressing deadlines, most importantly avoiding a government shutdown by friday. what kind of progress is being made? joe: that seems to be another kick the can story.

the question is how far they will kick the can into next year, whether it is mid to late january, then we will do it all over again. the other issue is the debt ceiling. janet will talk about this, talking about the potential to eviscerate our economic recovery if this is not managed. who is janet yellen speaking to, her boss, joe biden? or lawmakers on capitol hill? that scenario is very concerning one. tom: what is the agenda for the next couple days? joe: you will have joe biden selling infrastructure and social spending, but my eyes are on thursday. that is when he says he will speak covid once again and outline his plan to manage covid throughout the winter without shutdowns. we expect details. also on wednesday, we never heard from the president yesterday following his meeting with the retail ceos. we will hear about supply chains

on wednesday. all of this is one big story in washington. jonathan: looking forward to the coverage down in d.c. do'nt miss "sound on" with joe weekdays at 5:00 p.m. eastern. and don't miss jerome powell and janet yellen's testimony. in the preprepared testimony -- a lot of people said this was dovish, but i thought it was balanced the chairman talked about the omicron variant posting downside risk to employment, but he also talked about inflation with this -- we will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched. tom: my emphasis is on the labor report that we start picking up on tomorrow and into thursday and into friday's job report. i think the jobs report, this factor is more important. three month moving average. what if the on employment drops

even more than surveyed. jonathan: take a three month average and for darts, because that seems to be what is happening. we talk about it every month, that range once again wide. kailey: by hundreds of thousands wide. pretty much every jobs report we have had over the last six months or so, because it is impossible to forecast in this economy. without people would come back in the labor market wants schools started, unemployment benefits rolled off, those turned out to be not as predictable. tom: this came in and i showed it to kailey, and she got misty eyed, the emotion and the christmas season here as well. we want to start with the tree -- [laughter] kailey: one ornament each. tom: kennel fee, everyone. jonathan: the yellow stain on the wall.

i figure that out quickly. tom: on radio, it is a painful tree. jonathan: thanks for sharing that. we are almost into december. tom is getting festive. it's beautiful. ♪

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♪ jonathan: live from new york city for our audience worldwide. lisa back with us tomorrow. europe the market on the s&p 500 after a round-trip friday through monday on the nasdaq 100. about half of 1%. down 1.1 5 -- 1.53%. i want to run you through the bond market. talked so much about volatility on the tens progressively lower friday and then higher monday lower this morning on tuesday. work through the move on the two-year, we have gone from 65 basis points last week, november 24 and then we come in aggressively on friday by about

14 basis points. they are lower again by two. interesting to see the front end of the yield curve anchored out to maybe 30 and a little bit less so. the move on twos has stuck. stick or stuck, take your pick. you get your point. tom: sort of your european keel if you will. maybe a flatter or -0.02. any of the bond dynamics we see really have not broken down. jonathan: the next screen we show the yield curve. you take a snapshot over the last year and we talk about the flattening coming through. it is important to point out where it is coming from. it is coming from tens, further

along the curve. it is coming from the 10 year and the yield shifting lower. kailey: interesting to see those dynamics playing out in the bond market in terms of inflation expectations. the fears around the omicron variant and what that means for policy. a week ago we were having the question of an accelerated tightening. does that sound different when you hear the chairman speaking on later this morning? jonathan: chairman powell, 10:00 the recent covid-19 cases and the omicron variant pose downside risk. it goes on to say an increase in certainty for inflation. i wonder what that actually means. goes on to say additionally to that rates of concern about the virus could impact people's willing was to work could slow the labor market and intensify supply chain destruction. this is the chairman of the federal reserve right now stuck between a rock and a hard place. tom: i will cut him and every

other government type major slack here. we mentioned modernity this morning and part of the zeitgeist. there's a lot of uncertainty out there. chairman powell -- this is the first interview after leaving jp morgan. wonderful for the synthesis of emerging markets. we will have a real mandate to fund the bottom on e.m. and make profit from it. diana, congratulations on your new position of actually putting money to work. do you load the boat on e.m. and particularly latin america right now? diana: not at a moment -- the moment right now, tom. it is a little bit too early going into a huge political cycle next year.

for now you stand on the sidelines and wait for more. it remains fairly challenging. to get into some of these markets, the risks remain fairly elevated i think it is probably a touch too early. tom: off the work at mcquarrie years ago, the australian dollar currency dynamics. how linked is the strategy on e.m. to dollar dynamics and particularly the desired dollar weakness? diana: it is highly linked. particularly when you talk about em currencies. a correlation between em currencies. typically you tend to see performance during periods of dollar strength.

that usually requires a specific catalyst. we are not there yet. when you look at the growth dynamic, the advantage is very much in the field of labor. we are in a singular dollar press view. there is a fair amount of premium in some of the currencies. while not necessarily stepping in to buy em currencies yet i think it is probably a little bit too soon. kailey: how do your assumptions about when the fed will lift off factor into that? diana: what tends to happen historically when you look at previous fed hiking cycles, e.m. access, historically local rates and fx, e.m. has typically

underperformed. when you look at the adjustment on local rates typically on average you can get anywhere between 100 and 160 basis points. e.m. policymakers have been responsive and we do tend to see markets running back. the timing is important because we will see it. unlike in previous cycles especially 2013 comes to mind. e.m. policymakers have been trying to stay ahead of the curve in hiking rates in advance of the fed. like what we are seeing with the inflationary pressures we are experiencing right now, most of the central banks have only managed to keep real rates unchanged because inflation keeps exceeding expectations. kailey: as they try to stay ahead of the curve do you think the fed is far beyond the curve? diana: i don't think the fed is necessarily behind the curve. given the current dynamics that

they face. it is a fairly challenging policymaking environment where the fed has said they have the policy objectives but they are also reacting in real time. we have seen that with the business headlines around the new variants that the fed is trying to retain some sensibility, which in this current backdrop seems large. tom: this was an example in a few door. there seems to be an interior confidence with e.m. moving on from the fragility's of decades ago. do you buy it or are we just overconfident about the new worlds for e.m.? diana: it really varies depending on the emerging markets. i think they are certainly less

vulnerable. we are looking at the current dynamics where they are actually coming out of this position. whether you are looking at smaller e.m. mentioned cute are. -- ecuador. that said, there are some countries that continue to remain vulnerable. turkey probably checks that box looking at the development there with the way the market has pricing premium. tom: that is the difference. she is ticking the box on erdogan, never would've said that at jp morgan. china is e.m. and china is transparent enough for you to exist -- invest, does it exist? diana: at the moment the

challenge for china investments is there is a recalibration of domestic priorities and policies. there isn't a lot of clarity for markets, which way the policy is going to swing next. that is interest with a degree of uncertainty. when you're looking at china investments. for me at this point in time i would say it is different opportunities. jonathan: congratulations on the new seat. always good to hear from you. remarkably in china's favor over the last few months. tom: i'm glad you brought that up, one of the stock -- quiet stories. was it managed or not? i get all of that. it is one of the unspoken

stories. did you see how she has changed? jonathan: are you saying she has a stronger view? tom: it is like dante's inferno. she was just talking. she never would've talked like that with don michael. jonathan: on turkey, the lira, one arise that has been the last couple of weeks. tom: thank you for letting us speak to her, she is really quite -- has quite the perspective. jonathan: all roads lead to the fed. every conversation going into the december 5 meeting. the first time in a long time the two sides of the mandate opposing forces at the moment for some people. tom: a central banker to the old -- omicron world. jonathan: it will be pretty important for the path forward.

kailey: i imagine the lawmakers questions will be focused around inflation given that is what their constituents are feeling. how does the chairman handle that and talk about the inflationary pressures while talking about the labor market recovery that may not be what the fed wanted to be yet and how all of that factors into the normalization? jonathan: what do you think he means by that? upside of inflation, more upside risk to inflation? kailey: uncertainty. the markets love that. jonathan: that is the crunch going into chairman powell's testimony a little bit later. december 15, ecb and the bank of going -- england after that. from new york city, this is bloomberg. ♪ leigh-ann: financial markets

appear to have been spooked by comments about the omicron variant. moderna ceeo stephane bancel said new vaccines will be needed and it will take months to develop. saying we have to take omicron for the serious threat it poses. manufacturing rebounded in november after a power crunch subsided. the manufacturing purchasing managers index grew to a level that signals an expansion in production era that is the first time that has happened in three months. in the u.s. senate a bus pass defense spending bill is on shaky ground after debate failed after republican senators demanded consideration of more amendments. that derailing the possible legislation. republicans want an amendment that would impose more sanctions

on russia's norm streamed as pipeline. a u.s. labor official has thwarted a new union election at an amazon warehouse in alabama. they accuse the company of intimidation. the retail director for the national labor relations board says amazon hijacked the process and made a few -- free and fair election impossible. mobile news 24 hours a day on air and on quicktake powered by 27 hundred journalists and analysts in 120 countries, i'm leigh-ann gerrans, this is bloomberg.

>> i definitely think this threat is something we have not seen before.

the number of variations, mutations on this virus are surprising. they are not theoretically impossible. we have to think about the serious threat it poses. jonathan: the moderna co-founder speaking to bloomberg recently. lisa back with us tomorrow. your opening market down 44, negative about 1% on the s&p 500. some risk aversion. six basis points on 143.92. the reason for a selloff, did you see anything new in the moderna ceo comments? here are the comments for other people to make that decision. there is no world i think where the effectiveness is the same level. it will be material. we need to wait for the data. this is not going to be good. that is the comment from moderna's ceo. i don't think that moves things along much at all considering

what we knew 24 hours ago. tom: we are staggering from news item two news item. the president address that yesterday. really some of the media hype of high alert and the rest of it. we are down 2%. that is where we are. let's bring in an expert. i am not the expert. he is not only senior scholar at the center for health security of practicing medicine but very importantly has a financial background at carnegie mellon. can you calculate the certainty or uncertainty of this new variant? are you as blind as everybody else seems to be? >> i don't think i am blind but there are more questions than answers. we are rapidly trying to clone

the scientific experiments to understand the epidemiology of this variant to know where it fits in the world of delta, alpha, gam a. tom: is it a bell curve? is it a normal probability distribution of risk or are there moments that we should be fearful of? >> there will be heightened risks in certain areas. in south america were 20% of the current population is vaccinated. it is likely breakthroughs are probably going to be more common with the omicron variant. they may be not severe. it protects you against hospitalization and death. we may need to adjust to that.

it is important to remember what we are trying to do is keep people out of the hospital. it is hard for any variant to erase what the vaccine does to you. jonathan: there is transmissibility, vaccine efficacy and there is severity. how long do you need to get a fuller picture of that? what have we learned so far? we have heard about mild cases. how much longer do you need to get a picture of that? >> probably a few more days. i want to look at the features. what we are hearing from south africa is they are occurring in younger people who tend to have mild illnesses to begin with. we are also hearing the hospitalized individuals cannot be vaccinated, which makes sense. we get more of a denominator to see how common it is. i suspect the vaccine does what it is supposed to do when it comes to severe disease.

they are able to get around the vaccine and cause mild infection but not severe disease. i think that is the goal. kailey: we are talking about a vaccine outcome being binary. neither works or does not work. we are talking about degrees of efficacy, correct? >> protection against any infection, mild disease, moderate disease, serious disease, hospitalization, and that. where vaccine falls on that spectrum varies. the tail end of that, that is what the flattening curve is all about. we are trying to tame this virus. we are trying to make it something more manageable. even with the omicron variant, if vaccines hold up i think we are in a good position. we may need to modify them to get better. that gives us a lot of reassurance so we won't see hospitals get crunched if we get

enough vaccine in people's arms. jonathan: we have travel plans over the holidays, i just wanted to get your thoughts on travel restrictions, this knee-jerk response we have seen from south africa and beyond. >> they are always disastrous. they enhance the disruption the virus and variant causes. they make no sense. it is likely everywhere you look. as soon as you start to look. it already left the area it originated in. you have community transmission in belgium, scotland, cases all over. it is not surprising you are finding that. that is what this virus does. it gives people all sense of reassurance. they make it worse for countries that should be getting praise. south africa is an example of what the transparency and sequence we want to encourage. now south africa is having

problems getting agents to use experiments we want to know the results of. this is a disastrous policy. it makes them look like they are doing something, even if they are doing something wrong. jonathan: always great to catch up with you. i know you are on the overnight shift. then you for making some time for us. tom, on the latter point on restrictions we have the country that has done the sequencing. they are talking to the rest of the world. the rest of the world punishes them by shutting down travel. jonathan: you project -- tom: you particularly live that as well. i go back to hurricane katrina. for most of global politics changed forever politicians behavior to crisis. they are under immense pressure because of what happened to president bush during katrina to get out front. as the doctor says even if they

make the wrong decisions they have to get out front because of the speed of news. jonathan: the willingness to introduce restrictions is clearly there. kailey: not just when it comes to travel. we heard from president biden saying don't panic and we will not go back into restrictions on lockdown. not the case in a lot of european countries. jonathan: need a few more days to get the data. maybe not a few weeks according to the doctor, a few more days. tom: they 32 page powerpoint off their desk, we will protect the powerpoint and not send it out. it is stunning, not as a base case but as a possibility. it looks as though a shock absorber. they want to be more responsible as he claims they will be back in the driver's seat. jonathan: 125 next year it may

be 150 the year after that. prude this morning's -2.8%. equity futures down 1% on the s&p 500. on this tuesday morning, good morning, this is bloomberg. ♪

>> what is the biggest problem the economy has right now? it is the great resignation and supply chain problem. >> it will be hard to trade up at the moment. >> we have scenarios where it is higher if inflation is more persistent. >> we are moving like the 1960's. higher growth. >> this is "bloomberg surveillance." jonathan: the equity selloff resumes. this is bloomberg surveillance live on tv and radio alongside tom keene i am jonathan ferro. lisa back with us tomorrow. we are down 1% on the s&p. tom: in the last hour some surveillance dance, we have seen some nice improvement. the angst of the 10 year