expectations, they get that. >> the risk around omicron is that the fed has two hike earlier. >> the economy can handle higher rates. >> this is bloomberg surveillance with tom keene, johnna -- jonathan ferro, and lisa abramowicz. jonathan: good morning. this is bloomberg surveillance live. your equity market up 62, 2% away from all-time highs. tom: we are not to percent. we are down around 1.9%. jonathan: with everything to worry about, the presidents of

the u.s. and russia holding a video call later today. tom: i looked at the general media today. there is this worry, that were a. there is a report out of south africa that omicron is sort of like a cold. that is what has combed the market. jonathan: we are hoping. lisa, welcome back. lisa: what you are seeing is that even if people are expecting volatility, they continue to expect a buying opportunity in the long-term. we never see the depths. jonathan: she is fired up. -- your equity market up 63, advancing 1.63%.

1.9% away from all-time highs. tom: the important thing today is nasdaq. the dow up 364 points, but a 1.7 % move. jonathan: yields of almost a basis point. we are back at the highs of the year. 66 basis points on a two year yield. lisa: especially because we are expecting rate hikes. we will hear about that today. goldman sachs holding a conference. the number of top seekers notable -- david solomon and -- of the carlyle group. interesting to me that the carlyle group is alongside the biggest banks. more than that, how much can they convince people to come

back into their shares after a nearly 2% decline at the end of august. at 10:00 a.m., we are expecting president biden to have that video call with russia. can they prevent a certain amount of conversion from rubles into dollars? that is interesting given gas prices and negotiations went on there. the u.s. treasury auctioning off . yields have risen to the highest level since march 2020. three year yields more confusing. that increasingly is the question. jonathan: the front end of the yield curve is interesting. we just got back to that. this big discussion of monetary policy. if not broken above 65 basis points. here we are doing just that. tom: what is so critical is the

compare and contrast of yield dynamics with what we see in the equity hope linked to central banks across the atlantic. critically, the swiss 20 year has not moved like the u.s. to year. there is a caution in europe when you look at fixed income. jonathan: and an interesting divide between what the fed might do and the bank of england. they delayed the move they think they will get from the bank of england. the rate hike may be inseparable. -- by contrast, on the 15 should still see a decision in favor of faster tapering. that is an easy sell. this idea that you go quicker on tapering and talked about rate hikes further down the road. to confuse us all, this came from an ecb governor. he said, i have always been against linking a bond purchase

program and rate hikes too quickly. interest rates could be increased. just so that in there next week. lisa: they are not exactly trying to chew down the unreliable boyfriend moniker. you wonder about their credibility as they shift the goalpost. tom: the wife moniker? lisa: i sent the moniker of the unreliable boyfriend -- i said the moniker of the unreliable boyfriend. jonathan: tom, stop trying to cause trouble with lisa. joining us now from pimco, the author of the strategic bond investor. let us start with the shape of the cycle. how difficult is it to keep up? tony: thanks for having me.

thinking the unemployment rate in the u.s., what is full employment? the federal reserve -- reserve said in september the longer run is 4%. perhaps, we are on the cusp, because of the large output of people retiring. this brings about a late psychodynamic. that is an acceleration in inflation, a reduction in monetary accommodation to a reduction in bond purchases. the fed is still for a rate increase. this is what you get in a late cycle -- a late portion of the cycle. the jobless rate next year, most projects, will be somewhere in the 3%'s, matching the low pre-pandemic. tom: you are one of the most

qualified people in the world for this question. do you perceive smooth functions, smooth movements of yield? or should we genuinely fear jump conditions? tony: we probably should not fear jump conditions. in part because the federal reserve has built an enormous amount of respect for instability to in inflation. that credibility is something it is not likely to give up. ben bernanke said that monetary policy is 2% action, 98% action. with a few words, the idea of jump risk, worries about inflation is low. we see that inflation expectations broadly look pretty

tame. the final comment -- is this not what the federal reserve saw after the global financial crisis? to get rid of that disinflationary mindset? it is a huge success. has it gone too far? probably not. lisa: there is a jump conditions indicated by rhetoric from the fed reserve, also on the unity, especially if the fed stops on the treasuries. a lot of people have pointed to a lack of liquidity. how much can we get a clear need on the yield curve? -- a clear read on the yield curve? tony: the so-called principal agent model is broken, which is to say that it is difficult in the bond markets to transfer risk, whether that be to gain it

or to lose it. here is one example. the intermediaries, large investment firms, they held during a billion dollars of corporate bonds in 2007. today, they hold less than $10 million. intermediaries are not willing or able to hold inventories like a game of hot potato. during periods of stress, it is even worse. this is an issue that struck the architecture of the bond market. they probably should think about it, because it makes things difficult again. jonathan: love catching up with you. from new york city, a big rally yesterday on wall street. we had some gains, added to the s&p 500 another 1.63%. the nasdaq 100 advancing 1.9%.

wtf by almost 3% this morning. tom: morgan stanley was an up on apple as well. we've got to make note we are seeing sell-side step and betsy grayslake yesterday with what she did with goldman and wells fargo. all these people are resetting for q1. it is a boom american economy, even if there is large inflation. jonathan: i imagine we will see a lot more of those calls. wells fargo to overweight off the back of their call. at least on the analyst side of things, additional rate hikes from the fed. lisa: why are we not seeing it placed in? people are increasingly pricing

in a rate hike next year. this is what i want to hear addressed, including how much consumer lending can get back up to speed? jonathan: how high can rates go? morgan stanley, from mike wilson over the weekend. lisa, your response? a new covid variant because rockets, but we view that as secondary to the real culprit -- lower valuations, tapering tightening. lisa: to me, that rings true. this rings more true than omicron. omicron seems to be fading from the market. jonathan: not the index level correction. you're going to have to say way more than that to win lisa back. lisa: thank you, tom. jonathan: up 63 on the s&p.

this is bloomberg. ♪ ritika: the u.s. and europe considering the tough financial sanctions against russia if they invade ukraine. the largest bank would be targeted, along with the country's ability to convert rubles. president biden mate felt sanctions today when he and vladimir putin have a video call. russia has denied it plans to attack ukraine. omicron has led to strict -- restrictions. france has shut down nightclubs for four weeks. new york city has a private business vaccine and date. hospitals not overwhelmed so far.

-- that signaled a possible default by the struggling developer. a republican congressman, devin nunes, is quitting congress ahead of donald trump's new media start up he is a fervent supporter of the former president, possibly facing a tougher path to reelection following redistricting. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> all of us, whatever our

background, age, where we live, we can agree that prescription drugs are outrageously expensive. it does not need to be that way. under my bill back better bill, it will not be the same way. jonathan: the president of the united states there. your equity market with a lift. a rally, 61 points higher on the s&p. the nasdaq 100 advancing 1.8%. crude at $71.51, one stock to watch in the premarket's looks something this. you mentioned that call from katie who pretty at j.p. morgan. in line with the big bow on the

street, dan nieves also at $200 a share. tom: in the studio with us live, show. he joins us. there is a photograph from long ago. that is of howard baker, senator dole, and tip o'neill and a guy named ronald reagan. they cannot stand each other, but they got things done. how far are we from tip o'neill and ron reagan? joe: a long way. a lot of folks were asking about that when we lost bob dole. we do not have a lot of bob doles or tip o'neills, although

i still maintain these guys get along better than you might suggest. if we are getting to the spending packet, though, it is not something that is going to be passed in its current form. we are asking a lot of questions about a process we know little about. tom: is the process of linking defense with the shutdown of the budget, the debt limit? joe: yes. they do not have a lot of time to figure this out. i would ask you, how come the markets are not freak out? everybody expects a deal. mcconnell and schumer have been talking. we do not know how this is going to end but there is likely going to be something that comes together. it looks like there might be language for each mcconnell that gives authority to the president

to handle the debt ceiling on a short-term basis. that means democrats do not have to put a price tag on it. everybody gets what they want. democrats have an opportunity to dare republicans to vote against funding the military. that is something that probably is not to happen. lisa: perhaps it has extra emphasis will have this call between the u.s. and vladimir putin, the focus on the trip -- troop buildup. how much can europe approve an ally for president biden, especially given gas prices? joe: it was not lost on us that president biden held calls with eric european allies yesterday they had 8-bit of a summit ahead of the conversation just to look like they are all locking arms.

but when we talk about the individuals, that is when this gets interesting. who wants what? if your name is vladimir putin, you have already got what you want -- it is called this meeting. it is the fourth go around for putin and biden. vladimir putin is looking at the calendar. does anyone remember crimea? there it was a lot of talk about that, too. i am not sure he believes the bluster that the military is going to get involved if there is an invasion, that maybe this is all about leverage to get more negotiations. lisa: that is an interesting interpretation, especially given some of the rhetoric around former president trump. markets are not particularly faced by any of this. you are not seeing a dramatic move in the ruble, even though one of the consequences could be

making it more difficult to transfer rubles into dollars. is it just a win for wagner putin to be seen on the same page as the president of the free world? joe: the burden is on biden to turn this into something else. he be exquisite about those potential sanctions that he will say there is a redline vladimir putin will likely chuckle. he has heard this before from the west. it will be upon the biden administration to prove that this time is different. jonathan: good to hear from you. on bloomberg radio weekdays at 5:00 p.m. eastern. europeans are unhappy with one element of the bill back better act. it is the plan to offer an additional $550-- $500 -- $4500

in tax credits to buy an american-made car. they think it would result in unjustified discrimination. i very much hope it will not create new barriers in the transatlantic elation ship. some friction between the europeans and this administration. tom: announced yesterday, 1.x billion replanted in the carolinas by toyota. that is what foreigners are doing in south. president biden has to confront a huge body of the democratic party on that. or do you want to read in the terminal about the billions invested by toyota in the carolinas. jonathan: bmw has been doing the same for a long time.

potentially because of rules like this. tom: it is one form of globalization. we have such competing interests to get some form of written -- legislation through. i like what the number of people are saying, which is that all of this gets delayed into next year. jonathan: elon musk is that happening -- unhappy. lisa: that is fascinating. he is saying post should be stripped away, also having those benefits stripped away for the gas and oil companies he does not want to see the deficit increase. fascinated from the leader of an auto company that stands to be a beneficiary. jonathan: it is also the union element that he is unhappy about. you remember the ev get at the white house? where was tossed? he was not there. futures up by 50.

there is a lift in this equity market this morning. there was a lift yesterday and some positive follow-through. this is bloomberg. ♪

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jonathan: what a powerful start to the week so five. good morning. -- sophia. good morning. nasdaq 100 is up. this equity market rallying quite aggressively. this is the story for you. we look like this. 40 year yields. 65 basis points on a two year. that curve is flattery. the distance is around 80 basis points. unchanged there. looking ahead to december 15 with a clear view of things. a decision for bond buying is

set on a decision for rate hiking. we expect it to be ending before the rate hikes start. one official specifically might have an idea. -2/10 of 1%. -- negative .2%. this might be a consideration through next year. maybe they could make a move on rates. that is not the process. the sequencing is the right word. it is not the sequencing that we are used to. tom: this is a raging question. it is also an optimization question. what is the most constructive way to get back to some sort of neutrality? jonathan: i do not know. we are at negative points.

tom: we have morgan stanley at 7.1%. on we go with .1%. lindsay, a little below the excitement. how much is .1% in an inflation call? lindsay: i think the market is focused on the momentum that we are seeing. the court continues to move towards 5%. even if you are a ppi fan, right now, the market is focused on the fact that prices are moving higher. the word transitory needs to be retired. tom: we cannot retire the fact

that there is a fear about a boom required -- a boom economy. lindsey: there is nothing negative in terms of the economy growing at a faster pace, but we have to look at the composition. is it temporary growth? that is what we need to focus on we are talking about the growth prospect. we saw much more robust gdp, but most of that was spurred by government spending. again, much more sustainable. jonathan: is that what you expect to get to by the end of next year? trend growth? lindsey: it is disappointing. but remember that we are getting

back to pre-pandemic levels of activity. we romanticize, but we were already losing momentum. down to 2%. it is likely that we do return to that more organic growth. jonathan: i just wonder when it becomes obvious that it will become the trend. maybe it will and in march. if we are going back to trend, does that become evident next year? what does that mean for the conversation? lindsey: i think it does become evident in the middle part of next year. i think the fed is balancing the

fact that they want to quell inflation, but the committee recognizes that they are still very fragile or increasingly dependent on the monetary punch bowl. while they are willing to initiate lift off, the ascension to the cycle peak is likely to be very muted and slow. that peak could be 2.5%. they are talking about accommodative levels for the market. lisa: that is what i keep wondering. can the market withstand that, if the economy is slowing down, and tandem? lindsey: absolutely. we are starting from zero levels. we are talking 50 to 75 basis points. still a very accommodative policy for the marketplace. the economy is no longer in these emergency conditions.

we are no longer in the height of the crisis. it is very appropriate that the fed would initiate and talk about ending that paper sooner. we have focused on moving. getting us back to, not even neutral, but less accommodative policy. lisa: how much do you care about omicron? lindsey: i do as far as, what is the policy response? the impact is less about the virus itself and more about the policy response. if we see a return of the owners restrictions implemented in 2020, we could easily put ourselves in a second round recession. it is likely that the economy will remain on positive footing and we continue towards this

longer-term, stable rate. tom: for you to get back to 3% is a run rate. this is not china. the portion that is real is so much smaller on a proportional basis than what china experienced as well. have we ever dealt month-to-month with such a skewing of the makeup of our nominal gdp of our animals. ? lindsey: i cannot -- gdp? lindsey: we are working through a number of unprecedented conditions. we are dealing with a labor shortage in the marketplace.

there are a number of structural issues that are complicating it. tom: what client? lindsey: businesses are desperate to get back online. they are facing shortages of material, parts, labor. all these variables are compounding the difficulty for businesses to get back to normal , which i think is prolonging the reliance on artificial policy measures, both from a monetary standpoint, but also from a fiscal policy standpoint. we are talking about millions of americans reporting unemployment. some of that reflects this ongoing eldercare and childcare issue. some reflect issues from earlier

fiscal policies. others are concerned about the ongoing impact of the virus. there are a number of issues that will continue to be with us, prolonging this disconnect and inadequate return of balance to the marketplace for some time. there is no quick fix. jonathan: it will take longer and longer. thank you. chief economist weighing in on this at an event saying that some shortages will take a couple years to resolve. the labor situation is very unusual. remember at the end of the summer when they pushed back the full service sector recovery ako we thought after september, legally and people will go back to school and work. now we are talking about what, back half of the -- of next year? lisa: what do they do with that? what if they know that we will get these supply chain shortages? do they raise rates? is it something that the federal

reserve can and will come back? we will hear from a lot of analysts, saying this is why. jonathan: they are not going to wait anymore. the fed will remain patient. they are willing to wait and look through all of this. that does not seem to be the case anymore. that is reminiscent of what morgan stanley said to us on friday. the risk of the omicron variant is that they go earlier, not later. lisa: when you talk about the emergency accommodations, it is -- it is in response to the virus. it is causing a tightening. how they respond will really determine and be in tandem with how much the economy slows down. if you see the dynamism, they will have more incentive to raise rates, even if the overall

economic growth seems to be tapering down. jonathan: access to labor is a huge issue. they may not even be able to play their football game. tom: the concern of the day is idiots. do you assume that they are unvaccinated? jonathan: tom, i do not know. we have had 70 breakthrough cases that i will not assume anything, but there is a breakout in the club. they can apply to postpone the game. any game has to be played. i believe they have 13 players or more from the a list available. we will see, tom. i think they have to get pcr tests. tom: i do not understand these sports guys being unvaccinated. jonathan: on this occasion, i do not know if that is the case.

i will wait for information on that. a rally in this equity market. from new york, this is bloomberg. ♪ ritika: president leo called. the president said it would be a benefit if he makes a commitment . china warned the u.s. that they will pay for the diplomatic boycott of the winter olympics. they have decided not to send any officials to february's games. they say the olympics are not a time for manipulation. setting records in november at 22% in dollar terms.

the data shows the global demand for chinese goods, which has been strong through the pandemic. bloomberg news will continue to do all it can to help a family one year after she was detained in china. 12 months of detention is a long time for anyone to enter. the come -- endure. she was detained on suspicion of national security law violations. 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. ♪

>> it is not all bad. one of the early indications --

you are not seeing so many people going to the hospital very sick, but we are seeing information that it is very transmissible, even among people who are vaccinated. we will have to keep waiting for the information to come in. jonathan: from new york city this morning, good morning. your equity market with a list from yesterday. some positive follow-through. yields are pretty steady at 143.59. here is a single name for you. announcing that succession plan months ago, the stock is up. robert is set to become the ceo

on march 31, 2022. the chairman will continue as the chairman. tom: it is much more than customer service with us airways and america west. out of notre dame and michigan, it is a typical structure. jonathan: that relationship has just broken down between the people who work for the airlines. tom: our personal soap opera is that we are catching up with jonathan ferro. i have a respect for what you and others flying out of heathrow have had to put up with. jonathan: away from the extreme

stories, which are absolutely ridiculous. there is zero support, but people have felt that. very aggressive over the masking. clearly, they feel at risk and they feel like they have to enforce these policies. it creates a natural tension. it is kind of the elephant in the room right now. it's tom: -- tom: everybody has their own anecdotes. we were talking about jetblue earlier. john, you and i got in and lisa was already talking about jetblue. jonathan: as they start on that core door -- on that, it is like

they are ryanair of american airlines. i think it exists to a certain degree. it has been absolutely fantastic. tom: there was a great interest in united airlines. we are united in the value. he was truly in the trenches and this pandemic. the lift in the market, two days in a row -- it is one single news article that says omicron tilts towards being a cold. what say you about the present research on omicron? >> it would be great if it tilted towards being a cold, but i do not include can say that with certainty. -- i do not think we can say

that with certainty. there are not as many people needing icu beds or needing oxygen. a lot of people are getting picked up in the hospital for other reasons. we need more data to say that with certainty, and we need to see what happens when we extrapolate south africa's experience with other countries like the u.s. this will be a good thing. it is interesting because it appears to be converging on this consensus. we are not seeing outliers of severe disease yet. i hope that this is the step that the virus takes so that we can deal with it on a more regular basis. i think we have to wait for some more time. tom: what about the calendar? there are ways to the autumn and the winter where it is called the flu.

what is the weighting of the seasonality versus all of our other fears? >> i think coronavirus will become seasonal because all the other ones do. there is not enough immunity. it is just going to take some time for that complete start seasonality. there is still transmission going on in the summer because too many people were not immune. lisa: getting around certain immunizations, whether it is individuals or previously infected, what does it mean? does it mean a booster shot as well? >> even if omicron is able to get around some of the immunity, it is not able to get around what manner -- what matters.

to me it has always been about preventing major hospitalization and death. with a healthy population, it is a little bit unclear whether they are needed or not. there is some controversy in the field. there may be a need for a specific booster, but first-generation boosters, you are not really giving a great amount of protection. if you are older or have a higher risk, there is a clear benefit there. lisa: i would love for you to weigh in on the mandate in new york city that all private sector employees get vaccinated. is this the course of what you think will happen across the nation and the world?

>> new york city already has one of the highest vaccination rates in the u.s. what we will find is some states are already highly vaccinated and will become more boosted and more vaccinated while the rest languish. we are still in that two track pandemic. because the ocean mandate got tied up in courts, you will see local municipalities and states trying the same thing. jonathan: we always love catching up with you. lisa, on that final point, do we know whether mayor de blasio consulted? it is a little bit curious, isn't it? lisa: i did wonder why he was doing that now before he leaves office. a lot of people say they rely on the virus getting under control, so it seems like he is doing the

dirty work. jonathan: you just cannot escape the politics of it. lisa: i will let you put that out there. is there any chance that he would win? [laughter] ♪

>> the fed tighter financial conditions, they get that. >> the risk around omicron is that the fed has to hike earlier, not later. >> they are most likely to be hiking into a slowing economy. >> the economy can handle higher rates. >> this is bloomberg surveillance. jonathan: here is the bounce from new york city. good morning. this is bloomberg surveillance, live on tv and radio. i am jonathan ferro. advancing 1.3%. we are adding some weight yesterday's rally. tom: yesterday, i thought was led by the dial. today, nasdaq 100 catches up.