>> the virus and the evolution of viruses will shape everything in the course of the past 18 months. >> it should be questioned when you have inflation. >> a step back from the policy path will really be scrutinized. >> by the time you get through half of 2022, things will look different. >> much bigger issues next year than covid. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, lisa abramowicz. tom: good morning everybody.

a simulcast on radio and television. the president travels near minnesota, dakota county. up to 271, he has to continue to address this pandemic around all that we have seen in the market. jonathan: just like us and everybody else, he has to wait for data. layering speculation on top of speculation. we want to know how severe this disease is. we want to know how effective the vaccines are. until we get the data, a clear picture, we will draw firm conclusions. tom: he said there is more going on here than omicron. more than that we have the set piece for 2022. there is a mystery. jonathan: chairman powell a little bit later this morning. the chairman who is very much stuck between a rock and a hard

place. we have downside risk to growth coming from this variant. we can't appreciate how great those downside risks are. tom: kailey leinz, what will you listen to from chairman powell? kailey: that dual mandate between what is happening in the labor market. it is getting closer and closer to meeting maximum along with that inflation question. i'm sure lawmakers will be pushing the chairman. how much does omicron cloud that view? that is the question. tom: in radio and television, you follow us. our team is reading of the research. the outlier piece everyone is talking about off the london desk, j.p. morgan with a team over there talking about a sustained $80 a barrel with potential well over $100 a barrel. this underinvestment in oil. jonathan: just north of a 68.

we correct lower. crude down 0.6%. it is a story of the bond market. it keeps getting the retention. yields aggressively lower monday. they bounce back now 15 on friday. yesterday they bounce back. this morning, low again by six basis points. we keep talking about this volatility. let's talk about the last three days. aggressively lower on friday. lower again on monday. lower again this morning by two basis points. something we have repeated several times. the last two months have been about pulling forward rate. chairman powell on deck. i crucial conversation i think with the chairman. tom: let's go back and focus, for global wall street therapies -- pieces, 0.47 percent of the

two year yield, that is the litmus paper. jonathan: 20 basis points higher last week at around 65 basis points. the conversation was very different going into that friday session. has changed that much? what was new overnight? what was new in that interview with the moderna executive? a lot of people waking up this morning saying i don't know either, maybe nothing. tom: we go to houston, texas, victoria fernandez has the advantage. she gets to work with robert dahl. if we get a j.p. morgan 80 or 100 or 100 10, whatever dollars a barrel, you are hardwired to this in texas, what does it mean for america if we get sustain higher oil prices? victoria: it is twofold. the energy companies are looking

for this to go higher. they need that revenue. you could put that capex in. we are looking at inflation and the effect it is having on the consumer. obviously that is where the consumer feels it first and foremost. i think we have a lot of concerns here about what opec-plus is going to do. we will see what plays into that along with releasing from the reserves. there's a lot involved in the air when it comes to energy. like we are talking about the variant, we have to wait and see. same thing with energy. tom: your clientele is a great cross-section of people out there working at it every day. they made a lot of money, i get that. how scared are they of omicron? how scared are they of 2022? victoria: it is interesting. i think this morning, i haven't talked to clients. we might hear a little bit of a different tone.

powell coming out and using that word, uncertainty. we know the markets don't like that word. you have the moderna ceo coming out and saying things are not going to be good. that will feed into the psyche of the consumer. we talked many times about how we think the consumer is leading this economy right now and the strength of the consumer we need to rely on. we will have a little bit more concern from an investor perspective. i think that is where my job comes into play. we could take a step back. you guys have set all morning we don't have the data yet. we don't change the outlook and our strategy until we know more. tom: you pick up on that word, uncertainty. the recent rise and covid 19 cases pose risk to unemployment and economic activity. an increased uncertainty for inflation. what do you think that actually means?

does that mean upside risk to inflation? what does that mean? victoria: it is actually an upside risk at first. i know we hate to use that word, the transitory component. if supply chains do not improve, we are saying we might be at peak supply chain issues. we start to feel a little bit of pressure to relieve support. how do people not go to work causing restrictions and shutdowns? that will lead back into how much of this is transitory? longer-term i think we are still looking at inflation coming down next year to around 3%. kailey: how do you position for the median and longer-term? victoria: what we told our clients before last weekend what we will continue to tell them is we need to have that balanced

portfolio. we don't want to get rid of them. we could trim those and get a little bit more on the cyclical component of our portfolio. some of those consumer facing names that traditionally do well, we think they will once we get past the initial reaction of this variant. names we have added like cvs, walgreens, lululemon, even in regards to logistics to shipping. you could start looking at more of those cyclical names to balance out your portfolio. when you see the credit markets still holding pretty strong, that is a bullish signal for us. jonathan: it is good to see you. victoria fernandez from cross mark. this comes from twitter releasing some of the calls from the bloomberg economics. we expect the federal reserve to announce at its december meeting and acceleration of purchase

reductions. it is likely to double starting in january. in line with some other calls out there. after we heard those comments, governor waller, president's daily also raising the prospect of making this decision. tom: how do you get there? you topped out with revisions. 550,000 jobs in the unemployment rate goes from 4.6. could you imagine 4.4 or 4.3? jonathan: what degree does that report move the dial this friday? if we are waiting on the data we need to see work out, what this variant actually means for the economy, we have to wait for that. do we have that in hand by the time we get to that meeting? do we look back at the payroll support and say we could take this on?

tom: with great respect of the suffering for all of the pandemic, they will see the economy and improving labor force. jonathan: they could afford and see if this variant changes the outlook. kailey: i wonder if this data the fed will depend on is the economic data we already get, not the unanswered questions. the fed has said time again we will react to what is actually there empirically. continuing to make progress. does that mean the fed maybe does think about accelerating january and then dealing with the variant later on? jonathan: i like to put it down to a question, if you are chairman powell right now and you can only have one thing out of two. you could've the labor market report on friday or vaccine efficacy data for this variant, which do you want on december 15? tom: you want both but out of all the pandemic stuff we are talking about, vaccine efficacy

is the heart of the matter. every adult we talked to in science has said we have to move from 59%. not 60%, 70%, we have to get to 80 plus percent. jonathan: 85. jonathan ferro, kailey leinz this morning. lisa is back tomorrow. -9/10 of 1%. if you're just tuning in yields are lower again, lower friday, higher monday, lower tuesday. crude heading south. a 67 handle on wti. this is where they want crude to be heading but not for this reason. 67.70 five on prude. from new york, this is bloomberg. leigh-ann: with the first word news, the top executives from a

dharna say we may need new vaccines to fight the coronavirus omicron variant. bloombergtv was told the numbers are surprising. ceo stephane bancel said it could take months for drugmakers to develop and employ vaccines in large numbers. the british drugmaker has learned -- lured senior scientist who helped develop the vaccine. federal chair reserve jerome powell has weighed in on new variants of the coronavirus. he warns it poses risks to both sides of the fed. powell's remarks came in ahead of an appearance before the executive committee today.

crude has fell almost 20% in november. investors are now seeking clues about what is posed by the new virus variant and how they will respond. they will decide thursday about around of monthly production increases. about half of auto sales in the world in major markets by 2030, that is according to a new survey of auto executives by kpmg. electric vehicles make up less than 10% of sales right now. executives project that will increase. that will be driven by levels reaching a cost equal to cars powered by internal combustion engines. this is bloomberg. ♪

> we need 85% of the u.s.

population vaccinated. 150,000 americans refuse vaccinations needlessly perished from covid-19. jonathan: the data college -- baylor college of tropical medicine. s&p market down 40, -910 sub 1%. the market softer off the backs of an interview of modernity ceo from the financial times. yields are down by five basis points to 1.44. crude is lower, 67.80 on wti. this came from the bloomberg economist with their outlook piece. the pace is expected to double starting in january with a progress starting in march. this could open the door to a

rate hike as early as march if possible inflation risks materialize. tom: you have to believe -- i'm sorry, this jobs report has been underplayed because of omicron. the jobs report is really a key piece of data. jonathan: your next big stop year over, 15.60. tom: you could have the car idling here. jonathan: after the president. tom: lagarde called me yesterday and said are you going to be here on the 16th? i said i'm not. we will see. she is a tree, it is not as fancy as your tree. yesterday was a magical day for us speaking with peter and the good people of johns hopkins. what it is about is the dispersion of our capital.

going from a rockefeller university down to baylor college over the years. going out to nebraska to a first-rate program at the university of nebraska medical center. this is really serious adult stuff about special pathogens. you are looking at an unvaccinated population. my working number is 13 times greater. it omicron a special pathogen that will get this nation vaccinated? >> we think about special pathogens we think about the tools in the toolkits that allow us to treat, manage, save lives of patients that get those special pathogens. we are waiting to see what will happen with the vaccines around omicron. we know some of our tools work. our tests work. masks work. a lot of our treatment will still work on omicron. we may need boosters to improve our ability to protect people

against this variant. right now we could see getting your vaccine is so critically important. tom: do you with all of your resources including at johns hopkins have a timeline of what we will get these answers? lauren: i would say in the next couple weeks. understanding how the vaccine will affect the -- the variant will affect the vaccine efficacy. i would say we could see new approvals for a vaccine if it has to be updated in the next few months. i would say somewhere between two and four months. science is working around-the-clock. it is incredible how fast these changes are happening. the changes to the virus we are seeing. kailey: we have seen the virus change before. we may be are still in it with delta in many places. what stops the cycle of this

happening again and again? lauren: getting that vaccine rate high. as many people vaccinated as possible is critical to stopping and slowing down these new variants. they move through unvaccinated populations easier. when we start to see them appear , they can also move out of those populations quicker. getting as many people vaccinated as possible is huge. i agree with him. i would love to see 85% here in the u.s. it protects against the circulating strain. it reduces the likelihood of severe disease and death. we are seeing unnecessary death, unnecessary strain on our hospitals and our health care workers in particular. kailey: it is also about the treatment of people who do end up testing positive and getting sick. do we know anything about the

effectiveness of treatment? we know vaccine efficacy could change depending on the variant. this treatment as well? lauren: as of right now, it is looking like our treatments will still be useful. we have incredible support here in the united states to treat and care of patients who make their way into hospitals because of covid. the newly developed treatment looks like they will continue to work against omicron, which is great news. we are still seeing with the news, therapeutics, those will -- most developments will continue to happen even as new variants pop up. the hope is that we will keep people out of the hospital as the vaccines evolve and develop. tom: your observation, migrating from the east coast to nebraska with eight 1.9% unemployment rate. what is your observation on

omaha, lincoln, and the rest of it? lauren: i love omaha. i'm so happy whenever i and there. i think one of the things we are seeing is the hospital and health care utilization of people getting covid is still really high. it is a different environment, obviously. i still live in baltimore. i get a flavorful. we love to see increased vaccination rates -- we would love to see increased vaccination rates. there is a push to get people vaccinated every day. jonathan: it is always good to catch up. the university of nebraska medical center. ahead by we will bring you to very quickly bringing updates on covid-19 efforts.

tom: it is the leading message from the president or the one message working for him right now. i don't have the schedule in front of me but somehow that dovetailed in to his to minnesota. this is just below central minneapolis. the dakota technical college message. i'm really not surprised to see that. it is the one thing he has been winning on. jonathan: what does this administration need to do? kailey: maybe more clarity that we don't know. maybe pushing back, we heard from a dharna overnight that it would be a substantial drop. maybe he just tells americans not to panic. jonathan: the comments from a, not just the comments but the reaction to the comments is bizarre overnight. tom: maybe he will come out and clarify. ceos could speak out of turn. jonathan: the message itself

wasn't new. we still need to wait for the data. tom: i love that. adverbs, talk about clarity. jonathan: futures down 43 on the s&p. on tv and radio. this is bloomberg open -- "bloomberg surveillance." ♪

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jonathon: it is a tougher session for the equity boards, down 43 with -.9%. treasuries getting back up off of that yield perversion. going into chairman powell at 10 eastern time and a fed decision on december 15. this coming from bloomberg economics, the chief economist with the outlook piece in the pace of the tapir is likely to double in january. the process wrapped up in march, and it will open up to a rate hike as march. the outlook from bloomberg economics this morning. tom: when do we see chairman powell? 10:00 p.m.? jonathon: 90 minutes. tom: with us, your insured --

ian shepherdson. what is so important about his focus on the united states is also the pantheon macro not -- macro economics expertise on china. his morning notes talks about the infrastructure push of china, and you clearly see a better china than the gloom that is out there. ian: and some of the gloom is quite extreme. china has big problems, but it is not the end of the world. the loss of the real estate driven model for growth requires a shift into other areas and infrastructure is going to be one of them. it is early days and the real estate problems roll-on. but, china has to find a different growth model to carry it through now that it has lost the impetus. tom: with your perspective, i only think leland miller has that dynamic going back and forth across the pacific, how does the chinese dynamics domestically affect your watch of the american economy? ian: it is a problem for us in

the u.s. because of the disruption to the zero covid policies which disrupts their chains and ports. with omicron, they will potentially cramp -- clamp down more. they do not show signs of stepping away from the zero covid approach which means endless supply chain problems to u.s. manufacturers and businesses seeking to import finished goods. i do not think it is going away and it is primarily a problem for the manufacturing sector and it is not the whole u.s. economy, that it is not helpful at the margin and the omicron cloud makes it difficult. jonathon: that is different the war that has been used all year, transitory. does the chairman have the time to sit this out and wait? ian: i think he does, if he gets ahead of what is coming and perhaps the markets for some really horrible inflation figures for november through january, and then things start

to get better. at the moment the fed seems reactive rather than getting out front and saying it is going to be bad and worse we might see core inflation at 6.5% potentially in february. and then it drops sharply. it is a question of whether the fed is prepared today again and say we are going to wait because we know this is coming where they feel that they have to respond to take out something they would call an insurance policy against it becoming more embedded. that seems to be the way they have gone with the taper. if it weren't for omicron, they would be doubling the pace. jonathon: do you think i need to do that to retain the optionality? ian: i do not think they have to, because i am bullish about inflation in the medium-term. i buy the idea that next year we will look back and what was all the fuss about? expect -- especially in the good sector. but, the fed cannot necessarily assume that that is guaranteed to happen and that is where this

question is taking as an insurance policy, giving us room to maneuver in case you were wrong comes a more pressing question. if not for omicron, they would taper sooner, maybe as soon as march. i do think that there is a substantial body of opinion that they need to give it more time, that the labor will fix itself, and ease some of the wage pressure. it might not. if it doesn't, you are looking back saying we should have been more aggressive. there is a real balancing acts to be made and right now markets have a firm view. i am not sure that it is quite so clear yet. lisa: is this mandate not being redefined for a covid area pol -- era policy? ian: do they mean the unemployment rate like it was, or the employment population

ratio returning to where it was before covid or the participation rate going back? they have never really said. it is important to appreciate that chair powell has been very keen for a long time now about reminding people how good the labor market was before covid and how much he wants to get back to something a lot like that before they would consider the full employment mandate. some of his colleagues are more gung ho because they are more nervous about the inflation outlook and mr. powell is and there is a split opinion on the fed and we have empty seats that need to be filled, so we might see the balance of power shifting in favor of the doves in washington and the more obvious regional people. lisa: if you take what people have said, the potential implications, there are things we do not know. but if you have exacerbating challenges leading into those dynamics and it discouraging people -- discourages people from entering the labor market, will the fed be forced to react

to inflation even if the labor market is not where it wants to be? this is a real risk. if omicron keeps people out of the force that would have otherwise come back in, it would be very high wage growth. if omicron stops that from being shifted in favor of more supply, they will be pushed into being more aggressive, but at the moment this is very premature. we might find out that this is a great deal of a fuss about not very much and that case we are back on the previous track and we are all speculated and the message is different from the moderna vaccine people. nobody really knows, i think that the fed has maybe a bit more time to deal with this and some people in markets think. i do not think it is in sustained exploitation. tom: locations are the key

question. what it comes down to is that they are looking for the data. they will just wait and wait. how much does the street and in a general statement underestimate their ability to go? ian: a lot. tom: massive. ian: markets are very gung ho and they always want things to change. the fed, however is not conducting policy on the basis of what might make people more money and in the national interest. and i think this is a strong case to be made for wages. most of the structure impediments have diminished, schools are reopened and childcare is reopen covid, -- so it is very reasonable and it will ease some of those pressures, and if the fed turns out to be wrong, we have just

lost three or four months. we have dealt with the immediate term game changer. using monetary policy to deal with something driven with a shock, the covid shock is a strange response. now, following along in the timeframe and it is reasonable to expect some of these chocks to diminish. this proves to be a mistake. unless of course you are wrong, and those market pressures do not go away. it is too early to make that judgment and they have more time. jonathon: these are semantics, but i think this is important. isn't there an argument that most forecasts are data dependent. they are relying on their own forecast. the danger of it being economic data is saying that they have been wrong. ian: the current employers -- inflation rate in the inflation rate of the next two months are

generating horrible headlines, but of course it is not the job of monetary policy to fix the headlines, it is the job of the monetary punish -- policy to fix the headlines in 12 to 18 months time. sometimes they carry a lot of information. if you have a shock rather than an economic cycle, that is different. it may be that the headlines are terrible guides for what inflation will be. you should not use them to drive policy. if you are wrong, and you find yourself in a much worse position and you have to scramble to catch up to what you have done much earlier. we do not have perfect foresight -- foresight, and i think they can afford to wait a little bit longer. tom: are you trying to talk about newcastle? ian: i am trying not to. jonathon: every said -- every time you said shocking, i was

thinking about newcastle. can they get this done? ian: it is 50-50. there has been improvement under the new manager and he has only had two games. tom: we could go on -- all day on this. but to the two of you, is this another man u waiting to happen where a gazillion dollars will come in and change what you guys love? jonathon: if i pick up the phone and say here's a gilliam gazillion dollars, do you want to play for manchester united people will say sure. if i say here a gazillion dollars and you have to spend one year below the premier league because we might not get relegated, that is a proposition. that is a relegation fight. when they want to spend that money, you want to rebuild the business, the football club, at how easy will it be to attract the talent in january. ian: if we lose these next two games we will be adrift and looking doomed.

and another big start -- and no big start will want to play in stoke on a wednesday night in january. tom: i have no idea what that means. are you the only one that actually cries watching "ted lasso?" ian: newcastle has been a source of mystery in my life for the last 40 years. what difference does it make? tom: it looks like it is the red sox. jonathon: it is great to see you. ian brock's -- brought up that line from oxford university. no evidence that omicron will resist the vaccines but no evidence to the opposite either. tom: i am like you, i have all these different things floating around. i am running out of words and pontification waiting for serious scientific research. jonathon: coming up "the open."

from new york this is bloomberg. ♪ leigh-ann: with the first word news, i national markets things -- seem to have switched. moderna ceo says that new vaccines will be needed and they will take months to develop while the bloomberg tv chairman says that we have to take the new variant for the serious threat it does pose. inflation in the euro area assets a record for the era of the single currency, consumer prices rose 4.9% in november, higher than all 40 predictions in the bloomberg survey of economists. european central bank officials have been reassuring citizens that are facing a run -- a once

in a generation cost-of-living squeeze. regulators in china dealt another blow to didi, they issued a package of rules that protect the rights of millions of drivers that underpin the industry. beijing has ordered didi to delist from the u.s. and they went ahead with an ipo despite official objections. 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. this is bloomberg. ♪

>> it is easy for them to say if there is any kind of restriction in the economy we will just ease

and ease aggressively. that workswhen you have inflatiu try to -- tom: we welcome all of you, kailey leinz and tom keene getting you through this. we have two research -- pieces of research. td securities goes the other way from jp morgan -- jp morgan and looks for oil higher, and then coming back shows you the disparity. kailey: you have on the one hand a call from 125 to 150 and on the other, 90. we are trending at a 67 handle and it goes down to the supply and demand dynamics and a matter of opec-plus and it spare capacity and what it will produce for oil hungry consumers. tom: and then to barry reynolds

trying to look out in the next decade. george reaffirming at deutsche bank that the covid equilibrium, that means lower real rates for longer, just a sluggishness out there, even within our prosperity, and so much of that prosperity is around the new age dynamic and labor economy. he thinks and writes for bloomberg opinion. your piece is the quiet peace every academic is focused on, does labor finally get their fair share? do they? barry: it looks like we are in the midst of a generational reset in terms of minimum wage. we have enjoyed deflation -- tom: outright deflation. barry: part of it has been driven by technology but part of it has been driven by artificially suppressed minimum wages. what i mean, it has been lobbied

by fast food companies and low end retailers and by any measure the minimum wage has lagged, productivity, inflation, corporate profits, most top -- top half wages have gone far faster than minimum wage, and what we are seeing now is a once in a generation catch-up because this generation has left the building, they are not participating in fast food. tom: this generation has left the building when massive unit job creators in these warehouses. i would suggest that part of the technology has moved the needle. barry: and, it is amazing that bezos did a 180 and came to the tactical realization that if we crank up the wages for $15, we will capture all of these workers looking for low-wage -- low-wage workers working -- looking for a job and put competition on their heels. they did that and forced

everyone to play catch up. half of the potential hires were no longer there, and on top of everything else, many of these companies could not compete with the $15 minimum wage floor that was set by companies like amazon. kailey: what does this mean for persistent inflationary pressures on the wage front? barry: there are two things you have to think about, and i think people conflate the two. one is the actual level of price, and we have seen a big increase after long periods of lagging, it has caught up. the next factor is annualized rate of gains. it does not appear that this level of wage increase six to 8% that we have seen over the past couple of quarters, it does not look like it will continue beyond this very far. unless we see amazon hiring another few million people. it looks like this is a reset, not a persistent structural, one

that -- we will have 8% wage inflation for the next decade. that is a problem with the word transitory, people get wrapped up in that. ask yourself is as a one-time increase or structural and persistent. it does not appear to be structural in any way. kailey: what are the implications for monetary policy? does that mean that the fed can take it easy? barry: they are looking at the data and being patient. i would not blame them for that. that is the right approach. we have a real problem with understanding data over a long period of time. this focuses -- forces us to hyperfocus on the last data point when you have to look at this over time. of course in 2020, inflation plummeted in the early days, and now it has spiked in the opposite direction.

year-over-year comparisons are artificially inflated above what is now a higher level of inflation for 2021. once we get into 22 the base raised moderates -- base rate moderates. tom: you look at everything including in your social media, your brand-new ford bronco -- bronco sitting in your driveway. a 1968 ford bronco is $69,000. i calculate all of -- off of the matt miller antique car calculator, a 6% return per year for 50 whatever years. our tangible assets like that a good investment? barry: let me warn you away from the survivorship bias. you are not telling me about the hundreds of other cars that are worthless today from that era, you are showing me the winner. that said, there is only so many of these 60's and 70's era. tom: let you can pay for it along the way. barry: you are painting with --

dealing with rust and repainting it. i have a couple of old cars. i have not calculated what the value of my 60 and sarah -- 70 error wheels are, but i think they are just above inflation. unless you take an old ferrari unless you've done real well. tom: matt miller has the old ferrari. people do not take into account what tangible assets the cost along the way. barry: real estate, and gold. if you have -- an amount of gold you need to have someone to pay and store that. there is a challenge when you look at real assets. you mentioned real estate, you pay taxes and maintenance. it is not as simple as it looks, and when we have the 10 year is 1.5 and going lower, people have a tendency to look at other asset classes and they only see the positive of it, they failed

to see the cost structure, which sometimes is quite substantial. automobiles, art, and real estate, the maintenance costs is not insignificant. tom: you can collect wine? barry: i would rather drink it, that is not my preference. most of these wine bottles selling for $100,000, they are not drinkable. they are trading sardines, they are not truly drinkable winds, but it is collectible. tom: i do not get it, thank you very much. i look at the wrapup of the day and we have this white house discussion. do you wonder if it turns the market either way? kailey: i wonder if jerome powell's testimony will turn the market. what will he say about the outlook and what may or may not change due to the omicron variant? tom: i will go to what kailey leinz mentioned, west texas intermediate 67.0.

brent crude down $13 from the peak of 84 barrels. 71.02. in the 10:00 hour, the coverage of jerome powell and janet yellen. stay with us, this is bloomberg. ♪

jonathon: recovering a little bit as they inched towards the opening bell. i will get my voice back. equity futures down .1%.

the countdown to "the open" starts now. >> everything you need to get set for the start of u.s. trading, this is bloomberg "the open" with jonathan ferro. jonathon: markets facing a volatile december. >> this new variant. >> we have a lot we do not know. >> the question is will this affect the flows. >> volatility to volatility. >> volatility is going to be large and more substantial. >> long periods of calm spiked with terror. and that is just the world we are living in today. >> you're talking about the fed ration function. >> we