>> 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.

katie calls $200 on apple. maybe that is the highlight today. jonathan: we will discuss that later. some numbers and data. phase three trial data. here are the numbers. 75% efficacy against delta variant. still to be seen as to how it stands up against omicron. that data is still to come. tom: i will deal with a great pharmacologist that we have. there is an urgency to distribute them worldwide. lisa: especially as people struggle to understand whether the issue is getting fit or

going to the hospital. when is there going to be a shift in focus. jonathan: just in reaction to that, it is up in the market. this market is to percent away. we keep going back to this. it has felt so much worse than this. the index is down 2%. tom: a very strong equity. what they are both going to say is that it is not there. what the bulls will say is so what? jonathan: looking at the bond market. unchanged there. lisa: that is where i wanted to

go. it has not been a nice rally in terms of how it feels. today, goldman sachs is holding a conference. i want to hear what the ceos have to say. really interesting to see whether they will see loan growth accelerating. can they explain? president biden is having a video call over ukraine's sovereignty. how much can actually come to a consensus to prevent an invasion of russia into the ukraine, as they build up troops on the border. this is where it gets

interesting. rate hikes baked into next year. how quickly do they arise? jonathan: $36 billion in notes come in tomorrow. it gets lisa excited. you are taking those days off. we have seen some flattening. most people assume that the fed was decent. let's start with a question i know that you have been facing with clients. why is this yield curve flatter and flatter?

>> there is a reflection that this notion will be moving into the economy. it does have growth expectations, but there is also a provisional aspect. people have been positioning further off the curve for some time. as they are unwound, it will be a difficult trend to fight. tom: is there a bet in this market? just one day this way and one day that way. is there a bet into next year? >> one of the biggest wagers is whether the fed can engineer a

soft landing. central banks do not have the best track record of putting them on, so when we look at the major debate, the major debate is, will the fed tightening us into a recession and is it warranted? lisa: to me, this is what i keep hearing from traders. how much do they have to move with people piling into long-term treasuries, causing yields to go down in the yield curve flattening that does not go with its outlook? >> we have a relatively liquid market, very typical with people who have reduced positions

already, given their lack of performance. it follows intuitively that this should exaggerate some of the price action. i would not be solely convinced that this is liquidity. what we will see is a capitulation. in january, we reset and try to do it all over again. jonathan: how do you expect market conditions to evolve? >> i think we will see less of an issue, in terms of the treasury market and more concerns with other markets, obviously some of the high-yield markets comes to mind. some of the more credit heavy, less liquid markets. it would be a touchstone for what happens when the fed is away. at the end of the day, the fed

is very focused on financial conditions. any increase as a result of corruption and stocks would be a fed focus and could lead to another pivot, if they end up doing more damage to financial markets than they are expecting to. jonathan: could that change given where inflation is right now, versus where it two years ago? >> i think that the fed can absorb and justify continuing to hike a 15% to 20% pullback in equities, in the event that it is orderly. they run up against an issue when it ends up being a lot more dramatic. that would tighten financial conditions even more. the flipside is that we are starting from an extremely easy

condition. that is something to keep in mind. there is slightly more flexibility. jonathan: when we talk about tighter financial conditions, that is code for an equity market that is lower. we are talking about a credit market. orderly would issuance continuing to grind lower. tom: one year ago spread. the difference between the 10 and the two. 78 percentage points. what percentage of people did we talk to a year ago, who worse -- who were certain that we would see steepening? jonathan: it was the end of the

first quarter. that is where it all topped out. lisa: lisa: this is where people have been caught by surprise. you have seen the beginnings of some concern. i do wonder at what point it becomes destabilizing. we are seeing deals starting to get pulled, given that conditions are not as easy as they were earlier in the year. jonathan: tom, the resilience of the index this year through 2021 -- the fact that we have not had that correction from morgan stanley, we keep beating. -- repeating. tom: the jolt that we got was

energy giveback coming down to $75. also in the banking stocks as well. if they were to recover, you would get back. jonathan: looking forward to catching up with the strategist. your equity market looks like this. adding to yesterday's rally at the bond market double on a 10 year. yields are unchanged. down in washington, an important video conversation taking place a little later this morning between the president of the u.s. and russia's leader. we will get you cover on that in just a moment -- coverage on that and just a moment. -- again just a moment -- in just a moment. this is bloomberg. ♪ ritika: the u.s. and europe are

considering top financial actions against russia, it vladimir putin invades ukraine. the largest banks would be targeted, along with their ability to convert rubles into dollars and other currencies. they may bring up the sanctions when president putin and president biden have a video conference. 71% effectiveness against multiple variance of the disease. according to trial results published today, no vaccinated person reported serious disease. no serious side effects were reported but the shot. the u.k. is moving forward to increase trade with individual state and is willing to resume talks with washington about a deal. discussions are set with california, georgia, tennessee, south carolina and oklahoma.

a leadership change at american airlines. the ceo stepping down at the end of march, after more than eight years in the job. he will be succeeded by robert isom. there is an attempt to bring in more business and investment that will bring about a four day work week. 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. ♪

>> we spend so much money.

the federal budget deficit is saying. something has to give. you cannot spend trillions of dollars more and expect -- and not expect something bad to happen. jonathan: i think it is fair to say that there is some daylight, some distance between him and the administration. good morning. your equity market is up 60. just off session highs, but it will rally. yields are unchanged. on crude, we advanced 3% and some. tom: i think we have been remiss. jonathan: the cpi is coming up.

they are looking for seven next year. tom: right now, we are going to dodge to washington. i will go philosophical. something asked, do we rehearse the questions? we do not. lisa will mention options. that is understood, but other than that, i have no clue. we are thrilled our guest is with us. terri, i have a philosophical question. i do not want it to be political. in general, what is the new corruption of money in washington? i noticed one story of somebody raising $14 million for one cause or i have a congressman from california going over with a former president. what is the character of the corruption of money in your modern washington?

>> what it is, is that there has not been any revision to finance laws and almost 50 years. you end up with a torrent of water going through the cracks. what you get is arm's-length transactions that certainly comply with the letter of the law but are questionable in spirit. there are all kinds of stuff and it is not partisan. people investing in things to people involved in a variety of different business transactions -- it is very indirect, but it does not keep the character of the country of representatives in good repute. tom: can do that with terry haynes. i give a question and he gives a

smart answer. did they get to keep it when they are done serving the public? >> by and large, they do. they continue to have some influence and clout. there are some campaign accounts that can be used. what they do not get to do anymore -- they do not get to keep it and convert a for personal use. tom: john, is it like this in london? jonathan: i do not see them buying homes the way they do in america. i guess we will do some more research on that. i do not want to play that elon musk piece of sound without talking about how transparent this actually is. this all comes down to ev credits. walk us through how contentious this is becoming.

>> it is -- it is almost like the politics of the last generation. the tax incentives have always been something that you use to boost transitions. there is a lot of interest in that. he is trying to throw cold water on the next generation of competitors. that is as old as the republic, but it has turned into a big issue. ultimately, you will see some. people want to be seen on the side of the next technology. lisa: are you saying this is in his interest because he can dampen demand for some of his competitors in the electronic vehicle space?

it does not necessarily represent a mainstream view. is that what you are saying? >> for the rest of this interview, i will step out and you can do it because i was much utter than what i said. lisa: heading into 2022, is build back better a cry for democrats? >> the answer is yes to both. a rallying cry for democrats, internally. the idea of build back better is huge. we have pared it down from the original thought of 6 trillion and now we are talking about 1.54 -- 1.5 to 2 trillion. compared to where -- from where they started, it is not much.

not only for republicans, but for independent voters, this is a real concern. there is a newfound concern that the country is going too much in debt and there is too much being splashed around in different programs. people are feeling like the covid threat is starting to dissipate. there is certainly no more need for direct subsidies to keep the country afloat. they are talking to themselves internally because it is a valid point, but it is dangerous for broader policies. jonathan: of course, two issues are at play here. i think that is where the tension is coming about here. beyond that, internationally between europe and the u.s., the big push to bring manufacturing

back home to apply credits to these cars made at home. we have seen that a lot over the last few days. lisa: there are so many smaller issues baked into this. i remember when credits were a new thing in the u.s. there have been issues with the fitting from the subsidy. you wonder how much it colors it. jonathan: elon is very skillful. your equity market is up 60. advancing 1.3%. there is a lift in this market. tom: the president was born one year after pearl harbor. bob dole was grievously injured.

this was at the world war ii monument, a controversial monument in washington. when i visited the first time, it was a big day for a generation. jonathan: from new york city, this is bloomberg. ♪

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jonathan: two hours away from the open. in morning. one point 3% on the s&p advancing 1.8. a tiny valley monday into tuesday. some clear follow-through into today. running commentary with tom keene. 66 basis points on the 10 year. we talked a lot about that spread getting flatter and flatter. we talked a little bit about the ecb, but let's talk about the bank of england.

talking about a delay of the rate hike. he is looking for something from the bank of england. we are starting to consider and waiting for the omicron data. tom: there is a huge polarity. there has been -- you wonder where this is going. jonathan: the sterling right now, 172.46. let's say good morning. >> let's look at the big movers this morning. a lot of rebound in the tech stocks. a big reason why we are seeing the broader markets higher. up about 2% after closing at a record high yesterday. video actually -- nvidia

actually fell from its high yesterday. intel up about 8%. this on the news that the company will list publicly shares of its unit first in my autonomous driving vehicles. flip up the board and another big reason why you are seeing this has to do what we are doing -- what we are seeing in the omicron space. good news on the vaccine front. this anti-body treatment is developing with vero -- viable technology in the u.s. and a changing of the guard at u.s. airlines. doug will step down and robert will take over. people become ceo at the end of

march, start of payroll next year. tom: what is your study on the clothes in the afternoon? romaine: we are down to 23 this morning, say you are seeing a lot of that volatility in the short term. longer-term, some of the people that we talked to seem to suggest that we will bnn for a bumpy ride. tom: very good. she has had the courage to be in the market and informs us with absolutely brilliant charts. i guess it is once more in order. what is the most dangerous cliche right now? >> i do not know if it is a cliche, but the notion that the market has been so resilient in the face of all the risks that are well-known, simply suggesting that you are not even

peeling the first layer of the onion back. i posted charts on twitter as the drawdown table, looking at the index level declines. only 10% in the case of the other two, but the average maximum drawdown across all stocks in s&p is -19 and -42 in the case of nasdaq. that is a benign way to go about it. i think we prefer -- we prefer that, but it makes for a more treacherous environment, trying to trade around those rotational corrections. tom: drawdown meditations is about the market. are we guilty of drawdown meditation, where we have become numbed by this bull market?

>> there had been a tremendous amount of complacency. we receiving speculative fraud kicking back in for some areas that dominated in trading. develop -- the volatility that started with the omicron news brought a shift in behavioral issues. that is why they are finding a lift. it got rung out pretty quickly. there is also positioning with other metrics that look at certain cohorts. that is not a bad set up, more recently. lisa: this is not a time for complacency, but difficulty to

hedge. what is your top hedge for volatility at this point? >> i do not know if i would call it a hedge. even when applied to disciplines like diversification, i think true hedging, a lot of that might be able to be done in the futures market, but there is no blanket recommendation. in terms of trying to protect some downside in addition, i think one of the strategies to consider employing, taking into consideration the increased turnover and exact tax implications is more periodic balancing, especially for those who may have taken a calendar based approach. instead, taking advantage and upping the pace of rebalancing,

say you are more frequently taking profits where profits are given to you. in some cases, significant profits. that is probably the best strategy to approach a much more volatile period. lisa: you do not talk about shifts on a broader scale. i wonder if that is new? if inflation is the main threat, that will be a problem for a portfolio. that would be a problem for traditional balancing. >> the key there is watching the correlation between bond yields and stock prices. 30 years from the mid 60's until the late 90's, where that correlation was pretty consistently negative.

that is when this type of strategy struggled more. it was an environment that had more supply shocks. this year, it has been almost exclusively a positive environment where inflation was quite low. when we first saw the eruption, that correlation popped back out , but that was the key to watch, heading into 2022. i think that suggests that we are moving into a more secular inflationary backdrop. that does not necessarily mean stagflation, but it is a different environment. your friend and my friend, kathy jones --

lisa: i wonder when people look at the bond market. they look at the 10 year. that selloff, that negative correlation is just not going to happen because any turmoil will lead back to the end of the curve. is it too premature? >> it is. the equally swift retreat, a lot of that was short covering. you have to sort of take it with a grain of salt, the messaging back to the equity market in areas like that. that does not mean disregard what is happening in the 10 year. what we see happen in term of spread, i think that will be a more important tell, is and when

we get to a point where they are signaling a more dire message. that is the message for sure, but i think you have to take that into consideration when you move across the treasury curve, all the way out. jonathan: kathy jones over on income. thank you. looking at one stock. katie over at j.p. morgan is in line. 8:15 eastern time. tom: i thought apple was falling off a cliff because of china. wasn't that a few days ago? there are other names. romaine mentioned nvidia.

i missed apple, 10 days ago. jonathan: 165 in the premarket. lisa: especially because the why is different. morgan stanley talking about the flight to safety benefiting apple. i do wonder if that is different from what dan was talking about. jonathan: looking forward to the catch up with dan later. tom joined twitter in march 2009 . tom: it is true. [laughter] jonathan: your equity market up 59. you have had enough already this morning.

♪ ritika: with the first word news, president biden warned president putin that russia would face severe economic penalties for invading ukraine. the leaders will have a video call. officials say the president will also tell that a marabou -- vladimir putin that there will be a benefit if he makes an effort towards diplomacy. the biden administration has decided not to send any officials to february's games aging. encouraging users to take a break from time to time. sharing data shared by facebook meta-platform. suggesting that they look at

something else and reminding users about alternatives to social media, like going for a walk. bring news will continue to do all it can to stop -- to help a family, one year after their daughter was detained in china. the company remains very worried about her well-being. 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. ♪

>> number one number two, the

regulations and customer's behavior. the technology deception. -- we have to adjust our supply chain in line with the new normal. jonathan: from new york city this morning, good morning. tom keene, lisa abramowicz and jonathan ferro. up 1.8% on the nasdaq 100. some issuance coming on the front and a little later. year to year is up three to about 60 basis points at the front end of the yield curve. tom: 66 basis points is important. we have been looking at the correlations in the market. what chart should we look at on

radio and television? ritika: we should be looking across the ocean because one of the biggest stories has been the tech space. not just u.s. tech but global tech. hang seng index losing about 25%. a lot of it has to do -- you are seeing valuations become on par with the global tech average. it shows perhaps the extra premium that people had to pay. maybe they are losing a little bit. tom: i will go john mackey on you. i see a set of lower highs and lower lows. kriti: the trend seems to be in place, but it could turn around because of how volatile the selloff has been. perhaps there is more growth in

china. you have the reserve ratio lower. could that mean that china is becoming, dare i say it, investable again? tom: a trend in, and china. the trend is the mystery of china as well. jonathan: we have been talking about the ratio cut more this morning that we were yesterday. reading all these articles, let's get to enda curran. are we shifting towards an easing start in china? enda: yes. you mentioned it is kind of small in the world of's timmy lists -- of stimulus. it does not bring down the cost of borrowing. it does signal that they are coming into support the economy and that there might be some

curves in the real estate sector -- sector. perhaps they are squeezing a little too tightly. now we have seen this turn. they were saying it means more support for the economy is coming in the near term. lisa: stability is the new priority. how big was this? enda: it has all been about the broader economy. the story has not been about the pboc criticizing stimulus in the western world. they are critical of qe and china has been trying to rein in the risk or leverage. that is why we are in the situation that we are in now.

targeting those -- along the way , there will be some spillover. that is mostly coming -- it is about 20% of the overall economy. i should say, we also had some positive news. record shipping's once again from the rest of the world showing that the manufacturing story is going well. lisa: i do wonder when you talk about support for the housing market, how much of this hinges on evergrande's default? enda: there will be a big string.

that has become clear now. they said they would engage with offshore creditors on a plan. there are a couple things going on. on one hand, it is clear that the government is not going to pay evergrande, and but neither are they going to allow them to fall over. we get something of a muddled middle. it will be complicated and it will take a long time. in the meantime, if you bought a flat in china, you will be made whole, but if you are an investor, you should not expect that. tom: if james dimon says something about china, how is it received in hong kong, by the elite, by the financial elite and the family is?

by the great families and the government? what is the hong kong response to all of that? enda: i do not know if there has been a specific hong kong sponsor, but when individuals of a corporation or an association -- there is typically a blowback from china itself, either -- via a group commentary. we sought recent comments. less of a hong kong story and the feeling is that it is very much in line with what is happening. that is what sets the tone for everybody. jonathan: in out of hong kong. thank you very much. this came from press secretary jen psaki the other day. a diplomatic boycott of the winter olympics in beijing. the biden administration will not send any official representation to the winter

olympics and paralympics games on the given the ongoing genocide and crimes against humanity, and other human rights abuses. what we have to think about a lot more, the second piece of that quote from jen psaki. ongoing genocide and crimes against humanity. is the decision to boycott this -- is it consistent with how strong that statement is? just to have a diplomatic boycott? if you believe there are things taking place in that country now, why would you send athletes to that country? tom: everybody has an opinion on this. rhetoric works, until it does not. there is a point where somebody pushes back. are we at the point now or as we go into the olympics? lisa: the of the picks are the linchpin of a lot of controversies.

it generates a lot of controversy over questions of whether people should attend. jonathan: from new york city, coming up with equity futures positive from new york, this is bloomberg. ♪

>> we are dealing. >> inflation is not going away anytime soon. >> we are probably passing the peak and front end. >> the bubble is not in stocks, it is in bonds. >> this is "bloomberg surveillance." with tom keene, jonathan ferro and a lisa abramowicz. tom: good morning. we welcome all of you on rad