expectation is out of control. >> the taper transitory folks were completely wrong. -- >> negative real rates are abnormal. you are really funky stuff happen in the markets right now. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: getting your trading week started. from new york city for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio kit alongside tom keene, i am jonathan ferro, together with kailey leinz. tom: the nasdaq down 1.2% on futures. look at the roller coaster of the vix, which really sets up the week ahead, coming from a really quiescent 26 level, we explode up to 31, i believe we

saw friday, and even now elevated above 30. jonathan: you mentioned a roller coaster. 10 year yields down friday by 10 basis points, up this morning by four to 1.38. what was friday about? trying to work out what all these moves are about. tom: be careful here. fankly, kailey is probably better read in than me, but the zeitgeist right now is to push aside omicron. i do not agree with that. i really people worldwide are fixated about what to do about omicron, and that has filtered into the market. italy changing their super green pass. jonathan: it is the good news -- it is a quiet period for fed speak. no fed speak going into the decision next week. kailey: and no fed speak in reaction to the cpi data we get later on this week. the question is will the fed have to react to that first? and on the point about omicron, i would say you are seeing some

worried about it. goldman sachs cutting their growth forecast for the u.s. this year and next year because of the variant. jonathan: but still looking for 5100 on the s&p year and next year. pretty big forecast out there still. tom: that is important. people are still sustaining equity market valuations. you say why, and it is corporate performance in the bloomberg economy. before we went to air, you mentioned ism data. it still indicates a bullion american economy. jonathan: a 69 handle on the ism. your equity market, here is the flavor of it this monday morning. good morning. unchanged on the s&p. it was nicely positive k the nasdaq down almost 100 now. if the fx market, your break at 1.13. the move in the bond market, yields higher by 4. 1.38. kailey: retracing up about half

of the moves we saw friday, 10 basis points lower. and it is the fed's quiet period , not a quiet period from the boe. we will hear from ben broadbent. the question is what hints does he give? he is speaking following michael saunders last week, who sounded a little bit more dovish than a month ago. than the euro group meeting will begin in brussels. finance ministers eating, and the real backdrop continues to be higher energy prices and the impact is felt more so among lower income people in the euro zone, so what do they decide to do about that? following that, the imf managing director will be giving a press conference at the euro group meeting. does she give any indication about the potential growth

indications of omicron? jonathan: let's get straight to brian levitt, level market strategist at invesco. let's talk about the bond market. labor market look stronger, federal reserve ready to go faster, and 10 year yield at 1.39. can you make sense of all of this for us? brian: it is a little bit of the opposite of the taper tantrum we saw in 2013, and in this rate -- in this, rates are going lower. we are dealing with a bloomberg economy and a variety of challenges. you talked about the omicron variant. you also talked about a fed looking to potentially raise rates while we are still dealing with the uncertainty of the pandemic. it had been a long time since we had seen this kind of volatility. you are getting a bit of a flight to quality amid pretty big concerns that exist in the bond market. ultimately, i think we will find our way through this challenging period in rates will settle that a more reasonable level, but we are dealing with challenges

right now, and it is being reflected in the bond market. tom: what do i do with my investments, with my allocation, with a marginal dollar in cash? brian: i would think you would want to position for what will become over the next year, a slowdown in economic activity from very high levels amid fiscal tightening, amid policy untightening, and amid uncertainty around the omicron variant. we have a playbook. the playbook has been a relatively strong dollar environment, an environment where rates do not go up significantly and investors favor growth stocks wherever they can find them. i know the nasdaq has been under some pressure over the last few days, but if you think about where we were coming out of march 2020, i think it is a similar playbook until the fed either backs off its tightening stance or the omicron disappears. tom: in the dow up 13% year to date.

standard and poor up 21 percent year-to-date. nasdaq 100 up 22% yesterday. what do those companies do with our top line given the brilliant nominal gdp inflation induced? brian: corporate profits should continue to look good, revenue should look good. the companies have done a good job on the expense side. we should still be in a bullion environment for businesses. the question is whether the market will favor those companies that need outside economic growth going forward, that need policies and going forward, or will we be back where we were again in the last cycle where we were for a lot of 2020, where investors were favoring structural growth businesses? we went through this recovery phase where you want to buy the cyclicals, the reopening, commodity trade. my guess is that starts to move away and investors will be back

favoring structural growth businesses in a world where business will be moderating back towards some reasonable level while the fed is also tempting fate with normalizing policy. kailey: but is a bet on growth and longer duration areas of the market also a bet that yields, especially real yields, will stay as low as they are? brian: yeah, it is about that, as the fed normalizes policy, you will see some flattening in the u.s. treasury yield curve. that is what we have seen multiple times over a number of years, when the fed has started to raise rates, whether that was 95 or when they moved again in 98 or 2015 42018. it is that flattening of the yield curve as the fed normalizes policy. in that type of environment, the more value-oriented part of the market tend not to perform as well. jonathan: look at this list of worries out of barclays. slowing growth, rising inflation, tightening by most

fiscal banks, more covert related restrictions. the bear case is the easy one to make, they say. tom: over the weekend, considering the verbal curve cash fund. brian: can i reply on that? jonathan: go for it. brian: there is a difference between a structural bear case and volatility and draw down in the markets. this is a mark that has been up for a very long period of time without even a 4%, 5%, 6% drawdown. we know these type of drawdowns emerge. we know that they tend to not come out of nowhere, they tend to be the result of policy -- we are dealing with the uncertainty around further reopening and further getting back to where we were in the economy. so it makes sense you should see volatility markets, it makes sense you should see a drawdown in markets, but i do not think we should be talking about a structural bear case.

as you said early on, this is an economy that is still booming, and we have some heightened inflation, but what we should expect over the next year, as policy titans, is a moderation in growth and inflation that should start to ease, some challenges that served -- should start to ease, assuming we get this omicron period without significant further disruption of the supply chain. you would have to ask yourself if this is an economic cycle that is ending in order to be bearish. i do not believe it is. i believe it is a fed that will start to normalize and ultimately back off as the economy slows, extending the cycle. jonathan: let me get the conclusion from barclays. the bear case is the easy one, but we believe fundamentals being absent from the major list of concerns, credit will be there. is there anything to be concerned in high-yield credit and credit broadly in corporate america? brian: the high-yield market has behaved reasonably well.

you have seen spreads behave a little bit amid some of this uncertainty, but corporate fundamentals look good. if you look at leverage in the market, if you look at corporate debt to total market could revalue, it is where you would expect to be coming out of a year after recession. it is not spiking up to the levels that are disconcerting. if you look at lending standards amongst banks, it is not problematic, so there are none of these indicators that suggest a recession is in the offering. we want to watch high-yield spreads. if they start flowing out, that will tell us something more ominous. they are up a little bit but still low from a historical perspective, but to me, that signals all clear on these markets. but it does not mean that -- jonathan: good to catch up. ryan leavitt of invesco. a bit of news out of lucid. kailey: it says it received a

subpoena from the sec friday, which they say may be related to the activa. we will continue to keep and i on the sec subpoena for lucid group. jonathan: another headline about an hour ago, a reserve climate in china. tom: i am still out of touch, i do not even know what lucid is. there china thing is a big deal. i carefully read the bloomberg coverage of that. this is flat out has to do with a busted real estate economy. jonathan: kailey, heknows. he knows what lucid is. [laughter] it is mostly sarcasm. kailey: you can never tell. tom: speaking of sarcasm -- jonathan:. good morning. lisa back with us tomorrow. your equity market taking a dive

from session highs, basic unchanged, up almost 0.1%. from new york, this is bloomberg . ritika: with the first word news, i am ritika gupta. president biden's chief medical advisor says initial data from south africa on the omicron variant is encouraging. cases need last medical intervention. the data were present only the first two weeks of the omicron wave, but dr. anthony fauci says there does not look to be a great deal of severity to the variant. in china, the central bank trying to give a boost to a slowing economy, cutting the amount of cash most banks must hold, releasing billions of dollars of liquidity. the u.k. will push the u.s. to move -- remove trump era tariffs on british steel and aluminum. the tariffs are a headache far

prime minister boris johnson. he said that improved trade relations with the u.s. would be one of the major benefits of leaving the european union. saudi arabia signaling it sees demand for oil staying strong, despite the spread of the omicron variant. the saudis have raised prices for buyers in the u.s. and asia. the move comes after opec and its allies made a decision to boost oil output. 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 ritika gupta. this is bloomberg. ♪

>> we have a strong market

moving forward. obviously, we have job openings to work on. we saw people out of work. we are still dealing with the coronavirus. we are looking at the new variant to see the impact it will have, but overall, i feel good about where we are as an economy. jonathan: that was u.s.-led labor secretary marty wash following the jobs report in the u.s. tom keene, jonathan ferro together with kailey leinz. the markets up 6 on the s&p. very small fans back from a week of losses on the s&p, down last week about 1.22%. t yields higher onens -- yields higher on ones. by severely limiting the fomc's ability to respond to the downside risk posed by omicron, inflation has essentially destroyed the fedput. that is a conversation we have been having for the last couple

of weeks. inflation has effectively destroyed the fedput, the view coming out of jeffrey's this morning. tom: the markets move ahead of the fed, and maybe we are seeing a lot of that. you mentioned the yields suppressing friday. they have bounced back for now basis points, 1.39%. did you imagine we would be here six months ago with these low yields? jonathan: with this kind of data, absolutely not. tom: they're real yield was standing when i looked at it saturday. jonathan: but that is where we are pure this brings in inflation into sharper focus this coming friday. looking for something close to 7 on cpi, effectively the point jeffrey's is making, that the fed is not have the space tobacco way. tom: 6.7% on combined inflation. jack fitzpatrick with us right now. maybe it is a normal seat in washington.

back to i guess normal after a five-year client of the kennedy center honors, but there's nothing quiet on capitol hill. the clock is ticking. jon has his advent calendar. jon ferro has a's debt limit advent calendar, and he opens a door every day to see who is behind it. who is behind the debt limit advent calendar this morning? jack: right now, the eyes are really on a few senate republicans. there have been -- there has been a back-and-forth on how they will address this. republicans have insisted democrats need to handle this alone through the reconciliation process, which is a long, complicated process they are trying to pass their tax and spending bill. democrats have complained that could take a couple weeks, and if so, it is worth keeping in mind, according to the bipartisan policy center, the earliest possibility of one that that line deadline could be is

about 15 days from now, december 21. it is people like senator pat toomey and lindsey graham who have made overtures and said, if you go through this process, we will not make it take too long, it will not quite take two weeks, so they are still trying to figure out the deadlines and they're looking to people like toomey and graham to see what exactly that process will be like. tom: educate us on the arduous washington december. when do they go home? i have a mind of december 20 -- monday of december 22 thursday of december 23. when do they leave? jack: the past three years, a lot of the time, they do not finish until the friday before christmas. this year happens to be christmas eve, so it is hard to say what the practical deadline is when lawmakers get fed up with the inconvenience and the travel holidays. but right now, you can pretty

much through the congressional calendar out the window and said it will go up probably close to the holidays, especially as we get closer to december 21 or so, whatever the hazy debt limit deadline is looking like sometime around christmas. if they have a plan and can follow through it leading up to then, they should be able to know, but that debt limit defense authorization, it looks like the tax and spending bill is more and more likely to probably get fixed to january. kailey: on that defense spending authorization,isn't that an area you can usually find bipartisanship? and that is not present this time around? jack: i would say it is not present but it that's locked up in sometimes the senate can get tripped over its feet. lately, the primary issue has not been the defense authorization bill, it has been some requests for ready by partisan amendments, the key one

by senator marco rubio to attach a bill that, at one point, past the house with only three voids against -- three votes against it, which would enforce imitation on forced labor products with an eye to the u ighurs in china. the question is whether you attach it to the defense authorization locks things up. there is a matter of what is the strategy to get it by. there is bipartisanship, but it is hard to get a bill to become law. kailey: the president will not just be focused on domestic politics. he will speak with vladimir putin tomorrow. what do we know about his number one agenda item? i would have to guess it is ukraine. jack: i think the obvious answer of that would ukraine and the buildup of russian troops on the border with ukraine. probably not a good sign that

the latest reporting from our colleagues on the terminal is there was a bit of a tense interaction between the secretary of state, antony blinken, and his counterpart in russia, sergei lavrov, in which lavrov essentially looked back to the 2014 end of the yanukovych regime and called it a coup. but the fact that there is a flareup recently makes that sort of the number one thing to look for in that meeting supposed to be tomorrow. jonathan: good to hear from you. jack fits -- jack fitzpatrick. the u.s. announced a diplomatic boy cap of the beijing liv-ex to what we heard is that beijing had no plan to invite american politicians, and on top of that, very difficult to get into china

right now. tom: i do not know what to say. i think it is back-and-forth on a daily basis. at the heart of the matter, you focus on what seems to be the tension point -- not the philippines or the south china sea but taiwan. i think that is where you got to focus. jonathan: then with all the human rights abuses on top of that. canada and australia also reporting a so-called diplomatic boycott. what is that about? any substance there? kailey: i think it is optics, maybe a symbolic move. on human rights, ray dalio catching heat over comments he made about china, as if it is a parent disciplining its children when it talks about disappearing people in china. he had to walk back some of that, as we have seen many high-powered wall street executives walking back comments they made on china. jonathan: senator romney had some things to say about that. your equity market posited by a little more than 0.1% on the s&p

500. joining us shortly as we stare down the barrel of a cpr print, sarah house of wells fargo on higher inflation in america and an estimate at the moment that is approaching 7. six point 7% estimate of friday's inflation number. this is bloomberg. ♪

this is elodia. she's a recording artist. 1 of 10 million people that comcast has connected to affordable internet in the last 10 years. and this is emmanuel, a future recording artist, and one of the millions of students we're connecting throughout the next 10.

through projectup, comcast is committing $1 billion so millions more students, past... and present, can continue to get the tools they need to build a future of unlimited possibilities. hey, angie! you forgot your phone! hey lou! angie forget her phone again? yep. lou! mom said she could save up to $400 on her wireless bill by switching to xfinity internet and mobile. with nationwide 5g at no extra cost. and lou! on the most reliable network, lou! smart kid, bill. oh oh so true. and now, the moon christmas special. gotta go! take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes switching fast and easy this holiday season.

>> i think there are a few things that are not very clear. one is the clear manifestation of this environment. is it creating more severe disease or not? is it making it easier or not? all of these are things. bigger is something we will know in a few weeks. s.

jonathan: this monday morning, good morning to you all. positive five, let's call it positive six. the move fades as the session grows a little older. we are seeing a move lower than .5 -- .5%. the inflation looking for 6.9% in the next trend. tom: you just said the heart of the matter. this is an extension of what we saw last week. jonathan: the bond markets have been choppy and volatile as well

. they are near the flattest levels of the year so far. dollar china. think about where the dollar index has been this year. here is the move on dollar china. one of the mysteries of the market is overnight into this morning, trying to ease the supply of credit. tom: i remember reporting on evergrande. one of the things going on is the real estate economy is broken. they are not very transparent. it is amazing how you are killing this on a monday morning. jonathan: i do not get it.

i do not know what that means. tom: it means that you have your act together this morning. jonathan: it is a word i had no idea about. kailey: i think he is trying to give you a compliment. tom: we are looking at hong kong and i think bloomberg has some special abilities off the bloomberg and beijing. active work in the measurement of what we do in america. sarah, we have never had a china like economy. is 10% nominal gdp healthy for america?

>> i do not think it is as healthy as we could see. it is getting us through a double-digit pace, but it comes down a lot to strong demand that we see. these are, in many ways, good problems, but this -- unsustainable. tom: it will moderate through the upcoming year. the fed has to respond. right? >> we have certainly seen that shift, where the october cpi was a wake-up call that inflation environment is going to be somewhat longer-lasting than they anticipated. it is the magnitude.

we have seen the fed realized that order for inflation expectations to remain close to 2%, they do have me adjustments. tom: they have a company growing at 3% to 5% revenue growth. they have to adapt to that. jonathan: they have done that well. you are looking for that. we could come close to it later this week. deutsche bank said the following. surely more than 150 basis point have tightened -- this is the conversation that we are having at the moment. how much tightening do we need? >> it depends on when it starts.

it is important to remember the momentum. we are getting further away from fiscal support that supercharged growth and inflation this year. there is a lot of uncertainty. what we have seen is the fed shifting and laying the groundwork. they had options to raise rates earlier. kailey: is there a risk that it could be exacerbated by the omicron variant? >> there is so little that we know about it that we have not modeled it after what that will do to our upcoming gdp numbers and inflation numbers.

it has the chance to dampen gdp we have seen that with each successive wave, the impact on the economy has weakened. consumers are growing more comfortable. we have tools to continue on with our lives. unless we see some scary headlines coming out, right now we do not think it will have a massive impact. kailey: say you do not think the of a con variant would give them some cover? >> i think it could get them some cover, if they want to take it, but i do not think that they will.

if you look at what happened with the household survey, we have seen a decline over the past three months. we are staring at it long term. this inflation issue is not going away anytime soon. i think that while the fed might be able to spend it, they might go ahead and accelerate the taper. tom: the dumb question of the morning. i am looking at unemployment in nebraska. you are a -- we are almost at february of 2020. is this economy back to february of 2020? sarah: you could say it is

getting close. there is tremendous variation. there are a lot of question when we look at the labor market. there are a lot of questions. ultimately, we are very quickly towards unemployment. it is not just inflation. those mandates -- tom: they said they are optimistic. why are we so angst rented -- angst-ridden?

sarah: it is natural to be more conservative or turned in to the risk. labor income is up 10.5%. nobody really likes the actual numbers changing. it overrides the growth story that we continue to see strongly. tom: sarah house has a great christmas tree. tom, is yours as nice? tom: extra points for the star on top. it is -- jonathan: extra points for the star on top.

it is hard to balance that. sarah, thank you. let's not allow the christmas tree to distract us from a very interesting call from sarah house. tom: ok. i am getting out here on the computer. the march 17 meeting with the 7% runway on inflation. i never frightened that in my mind, for one minute. kailey: they could have the taper marched up -- wrapped up by march, in erie. -- in theory. jonathan: much feels like a lifetime away. this came from bank of america over the weekend. a partial recovery.

we expect the fed to be in a its program in march. but march is playing. tom: you mentioned china earlier. it was tweeted outcome of the evergrande 2025 piece collapsing back to 20 on the 100. it is stunning, that collapse. jonathan: not looking pretty. we advance .2%. we have a great audience helping me out. based means being yourself and not being afraid of what will think about you. thank you, buddy.

♪ ritika: a new report from south africa says that the omicron variant has not led a surge in hospitalizations. president biden's chief medical advisor anthony fauci says it does not look like there is a great degree of severity caused by omicron. the u.s. will declare a diplomatic boycott of the beijing olympics. it could be largely symbolic. struggling chinese property developer may be on the verge of debt restructuring.

evergrande has $200 billion worth of debt. it will include all the offshore public bonds and obligations. the nobel laureate was found guilty of violating coronavirus restrictions. he was the first in a series. this is bloomberg. -- global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> does not look like there is a great degree of severity to it.

jonathan: -- jonathan: your equity market is 12 points. 139.36. one hospital releasing some indications of what they are seeing. the main observations include most patients had not been oxygen dependent. this is a departure from previous waves.

as we started to get a clearer picture of this, it seems like it is less candy -- less contagious but more severe. tom: i'm not sure about clear as well. this is so important. when your doctor speaks, you listen. it was made clear to me that hospitalizations is the number one thing he is watching. jonathan: dr., help us with this data. what are we learning so far? >> it reminds me of when i was in the hospital seeing patients. you know what is going on. if the patient was getting

better or was basically stable, that was good news. here, we have a situation where we are not sure. there is a lot of uncertainty. it is not all bad. you are not seeing so many people going to the hospital sick, which would be bad. on the other hand, we are seeing information that it is very transmissible, even among those who are vaccinated. we will be waiting for the information to come in. it might be a situation where there is increased risk. it will reinforce the need to get vaccinated and they our vaccines. jonathan: it will take a wild to

get a clear picture of things. if it was less severe but more contagious, how would policy need to change around things like that? >> it might increase the necessity for vaccines even more. it really overcomes immunity from an earlier, mild infection. it may be less than this variant. tom: you have to help me with the percent vaccinated. i am looking at the new york times. i am looking at hospitalizations. there is a direct, massive

correlation of being unvaccinated and being hospitalized. that is all this comes down to. >> the vaccine does not just give you antibodies. it stimulates your immune system to protect against severe illness. it is much more likely situation for unvaccinated people to be hospitalized. if you have a much more transmissible variant, it will find all those people not vaccinated and put them at risk. kailey: i am vaccinated and i am about to get my booster, but will i be back three months later to get in omicron booster -- to get in omicron booster? -- an omicron booster?

>> the different pieces of data will come together. one is whether or not there is a big difference from the antibodies that you get the vaccine to what would be ideal and the other is whether people who are vaccinated are getting sick. if it turns out to be a mild illness for those that were back needed without hospitalization, it might be more of a judgment call. people might want to wait for a more severe variant. we have evidence that a booster is safe and effective? i think will be ok. jonathan: looking at these markets, advancing .25%.

tom: a little better tape the last hour. the dollar is looking for direction. jonathan: up this morning by five. as we reflect on the words of sarah house from wells fargo, looking at a cpi report, 6.9% in it. she is expecting to see seven. kailey: how can we be talking about a potential seven handle and still be talking about treasury yield south of 140? how much of the move was short covering? jonathan: they got caught

upside, big time. that is not a football reference. but this is a question that deutsche bank is asking as well. tom: does not matter if i agree or disagree. they have been absolutely brilliant about calling for sustained, lower terminal rate. you talk about offsides. i'm sorry about west him is the real deal. they are based. jonathan: i'm going to take you to that stadium someday. jonathan: it was in that episode of ted lasso. jonathan: i have watched it and i think you just ruined it for anybody who is going to watch it

over christmas. catching up with steve. i'm sure steve is a happy man at the moment. this is bloomberg. ♪

when you have xfinity xfi, you have peace of mind built in at no extra cost. advanced security helps keep your family protected online. pause wifi whenever for ultimate control with the xfinity app. and family-safe browsing gives parents one less thing to worry about.

security, control and peace of mind. with xfinity xfi, it's all built in at no extra cost.

♪ >> risk around omicron is that the fed has to hike later come in earlier. >> the market is not confident that the fed can handle higher rates. >> negative real rates are abnormal. you are seeing really funky stuff happen in the markets right now. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: nine days until your next fed meeting. good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene, i'm jonathan ferro coming together with kailey leinz. -- jonathan ferro, together with kailey