>> though concern is our central banks going to withdraw too quickly. the fed getting really aggressive. >> there may be left off evenly might not think you're at maximum employment. >> the fact that they believe neutral isn't -- means they are farther to go. >> this is "bloomberg surveillance" with tom keene, it jonathan ferro and lisa abramowicz. >> i am being bullied in the commercial break. just so everyone knows. for audience worldwide, good morning. this is "bloomberg surveillance" live on tv and radio. the fed decision hours away. tom: the bond market here has -- you mentioned nicely, ensuring

it talks about the terminal rate. a story for 2022 is the em challenges that were talked about. i rarely editorialize. short lire on a long chart is absolute textbook. the trend there is horrific. >> you bring up em. we have the hikes from em this year. i'm looking to brazil and elsewhere. next year, that's the question isn't it. >> they are defending the currencies against the shocks of the pandemic. the shocks of trade, open economies etc.. they have to do with jerome powell. jonathan: two dots --

lisa: how concerned are they -- what would you call the bank of england? >> it behaves like an em currency from time to time. most people would still assume governor bailey would return to his central bank as a developed market. lisa: i say that because they have to face off with a rate hiking decision after inflation increase. you are seeing right now this idea perhaps they can push up a rate hike. it really creates attention for that. but similar to emerging markets. jonathan: tomorrow morning if they hike interest rates i will get on the phone and say i was wrong.

futures unchanged on the s&p. i don't insult you guys with what you wear. what's wrong with the sweatshirt? lisa: i look like a hobo when i come out of here. jonathan: futures unchanged on the s&p. your bond market unchanged. a bit of tension in the room going into a fed decision later. tom: tension for the building as well. there is a tension in this dynamic of taper and rate rise as well. we have to remember our wide set of experts really disagree. jonathan: we will catch up with an annuity market view. equity market is still pretty close to all-time highs. lisa: which is shocking considering the idea of a hawkish surprise. is it an equity market that's accepting the risk in looking past earnings or is it not waking up to the reality of the paradigm of the federal reserve.

u.s. november retail sales as well as empire manufacturing data. interesting to me the retail sales not parse out what's organic increase sales versus inflation. it does not strip out the 6.8% increase that we've seen year-over-year. how did that factor in. trying to figure out whether consumers are losing some momentum with respect to how much they are willing to buy rated everyone sees a statement followed by a jay powell press conference. a very good question. a lot of people are wondering if they will talk about the balance sheet not only the acceleration of the tapering trying to end in march or april but when they start to allow the bonds to rolloff. we will ask that question and talk about the issues they are facing as well as bill dudley. the former fed chair. also him curious to hear from, a

former fed officials have taken a starkly different tone. sing the fed needs to act. jonathan: the doing men's range. a range of clothes for the men. your equity market. let me move on. we are negative about a 10th of 1%. joining us, a portfolio manager of federated service. when this fed policy start to become a problem for this equity market that's close to all-time highs? >> should i change? [laughter] jonathan: maybe or you can rock patagonia. >> in all seriousness in a weird irony the market is welcoming the fed to move and i think

that's why you see the equity markets near all-time highs despite the fact bond yields are where they are. the concern of the marketplace is by having waited this long, the fed is already at risk of having to react and i think that's where powell will try to reset the narrative. hopefully starting today trying to make the argument that by accelerating taper and starting that rate hike earlier we can proceeded to measured pace. that's a tough sell. credibility is not abundant right now. it's not an easy one. >> i want to talk about the great bull market since 2018. your entire team participated in this. a stunning numbers of the great bull market, the dow up less. mastec 100 up.

what is the courage it takes to be in the market to enjoy 18, 19, 20 and all of 2021. >> you are right. it's not always easy and there's times where you doubt yourself. you have to be able to take you longer term view and not get lost in the most recent headline. you have positive headlines, negative headlines. you can get lost at sea if you follow the headlines. for us we've used an earthquake framework. the initial shock is terrible and damaging. the ground does shake again and those are dangerous. and each aftershock tends to be less severe. you've got to be able to take that longer-term view and so far that serves as well.

at some point that's wrong and you have to get more defensive. if we look at the current cycle, and we are just at the dawn of the fed rate hike cycle and certainly not well within it. i think you will see some volatility forthcoming. it's going to spook some people out of the market. our bet is that's not the right thing to do here. lisa: you say this. a lot of people say we are overdue for a correction for probably a year now. every dip is viable and now the dips are getting smaller and smaller. at what point does that paradigm change or do you pile in on it. >> i think you're in a scenario with inflation running at near 7%, fixed income if you're yielding one and a half or 2% on 7% inflation you are setting 5% of your money on fire.

it's that dynamic that pushes people into equities and makes them shallow. we will see. if we are sitting here two years from now or over that timeframe is an rates are higher in the fed is actively within a rate hike cycle. you see the economy rollover. i think you'll see a different dynamic. right now it's hard to see were also can go and not get eroded away by these inflation opportunities. i'd love to think so but frankly i'm looking to take time in the last two weeks. we will have some fireworks the last couple of weeks. tom: you guys have nailed it. jonathan: just fantastic this year. thank you for everything you've done over the last 12 months. tom, hoping to wrap things up after the close. tom: i think we will wrap it up

and try to do some pandemic. we have done some serious -- we need an adjustment to the dot plot. this is the dot plot that matters this afternoon and what you do is you have the classic polkadot shirt. this is a polkadot print. [laughter] $1300. jonathan: is that how much it is? bloomberg.com [laughter] -- jonathan: that's not the men's range. [laughter] wonder you going to start -- people are, start thinking that's what i wear. that is not what i wear. lisa: that image is gold. jonathan: do you want to talk about the actual dot plot? lisa: we can try to shift.

if you want to talk about inflation, there you go in terms of how much something would cost. we are expecting some sort of shift. how much can they shift. tom: i have to get notified, they don't have my size. they don't make anything that fits me. jonathan: tom keene. lisa abramowicz and jonathan ferro. your equity market unchanged. tom: i tried. -- lisa: i tried. jonathan: this show has a real year and feel to it. [laughter] jonathan: a beautiful one in new york on radio and on tv. this is bloomberg. >> with the first word news, the

u.s. house is voted to raise the nation's debt ceiling by $2.5 trillion. extending the government's borrowing authority past next year. congressional election -- it also averts a potential default and now goes to president biden for his signature. the biden administration is considering whether to impose sanctions on china's largest chipmaker filter in an effort to limit beijing's access to advanced technology. the u.s. reportedly will face eight more chinese companies on a military-industrial complex blacklist. one of them is dji. one of the most widely used vaccines in the world doesn't provide enough antibodies to neutralize the omicron variant according to recent data in hong kong. those findings may have consequences for millions of people relying on the shot to protect them.

in the u.k., inflation has reached its highest level in more than a decade. consumer prices driven by the high costs of gasoline and use cars. -- used cars. boris johnson has survived his biggest rebellion. johnson had to rely on opposition votes for key measures to stop the spread of the omicron variant. almost 100 members of his conservative party opposed his plan to mandate the use of so-called covid passes at nightclubs and other venues. 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. i'm ritika gupta, this is bloomberg. ♪

>> i think the last cycle didn't have an inflation problem.

i think this was just above 2% so the fed wasn't fighting inflation. in this cycle you're fighting inflation so there's more reason why you should have a much higher terminal rate. >> that was such a fantastic conversation in the previous hour. from new york city this morning, good morning. tom keene, lisa abramowicz and jonathan ferro counting you down with futures just about positive up two points. yields are going basically nowhere at 1.4480. we think about a consensus view into this afternoon, a quicker taper in the dot plot looking for two hikes next year, three the year after. a big question for many people. with all of that so discussed, where does the supply -- surprise, from? tom: those of the domestic fares we talk about. we will do that with julie norman.

she holds much on international relations. particularly her focus over the years, terror in the middle east. all of a sudden in the past three days, syria heats up again. can you explain the new biden projection to syria and beyond after afghanistan? i don't understand with any clarity what our new policy is. julie: i think a lot of people are waiting to hear what the u.s. approach is composed afghanistan. overall approach international relations. even dealing with politics for the middle east.

the more the u.s. retreats in the region the more creates a region for china to move in and for russia to extend their influence as well. also with tensions with israel. israel over the last couple of days we jump back in a couple of chemical weapons sites. it is something that probably good to be something we will try to be doing in the future. >> one final question on your expertise, what's the symbolism of the handshake of israel and the united arab emirates. >> this was a handshake between the acting head of the uae -- this was coming out of a lot of the abraham accords as they were called started on the trump administration but formalized relations between israel and a

number of gulf states. coordination happening in terms of trade and that kind of thing. having this public show diplomacy just shows how far those relations have gone even though other relations are very tense. they are not without controversy of course. for many who watch the region it's a step toward some type of stabilizing relations. lisa: these international discussions bear significant somebody mastic one. particularly a better recent push from the biden team to be eventually clamp down on china's chipmaker restricting some of the business u.s. manufacturers do with them increasingly there is a tension here with the inflationary backdrop we have with trying to clamp down and restrict whether it's china or the iran nuclear deal and restricting some oil exports. how do you view this in terms of the inflation influence? julie: certainly the inflation

influence will be crosscutting pre-much everyone and we are seeing how much the biden administration is trying to balance their policies around that. for iran i don't think it will change things that much. we've seen lack of coordination for so long it won't make a difference. it doesn't affect how we coordinate with chinese pushback on different types of products and technologies. it's been a pretty easy way for the u.s. to pushback in targeted ways on what they see as aggression from china. we know china's prices is one reason why we've been able to keep prices low one -- overtime. lisa: based on what you've seen so far where is the emphasis right now? the geopolitical strategizing or the inflation and keeping it

down in the midterms. >> i think policy wise it has to be on inflation. for biden right now it's not just a question of 2020 conditions but the impact on citizens. the wall street journal reported -- of americans are feeling inflation rate over 25% in major ways. so biden is going to be content just let that sit out there. he will keeps bending -- sending his usual messages on foreign policy pushing back against authoritarianism and stepping up against russia or potential threat. at the end of the day you have to focus to mastic play. jonathan: always good to hear from you. the latest geopolitical situation. throw in europe. making a statement on how europe needs to be united and seeking dialogue with russia. going on to say in new version of this policy must be a european union initiative rather

than one directive from berlin. tom: part of this is that time marches on. we launched into 2022 and 2024, other elections in the turmoil there of an election and all of a sudden it's eventful to say the least. jonathan: a long winter coming up. lisa: it highlights how difficult it is to put pressure on a place like russia when they are supplying your gas, the basic inputs for your daily existence and if you cut them off trying punish them you end up shooting yourself in the foot and this has been the big concern. how much can germany pushback against russia given what we are seeing with natural gas prices surging to highs. you see that also for the u.s. in china. how much does the u.s. cracked on china if the goods they import from china help keep inflation low. i find this fascinating. jonathan: the team at bloomberg

writing up the following story. any violation of ukraine's borders will carry a heavy price to the kremlin. what will that price be? tom: i'm no expert here, but sanctions do work, going way back. there are levels of sanctions. >> it's far too depressing for this time in the morning. futures are just about negative, down a point on the s&p 500. lisa: we merge yesterday evidently on twitter. jonathan: terrifying. the surprise for many people on tens. how on earth do we have 6.8% inflation. yields up. tom: our twitter feed is an embarrassment. [laughter] jonathan: do you want to give me a flavor as to why? tom: summary put on celine dion.

jonathan: you could rock that. lisa: i want to see that. jonathan: that little shoulder peace. from new york on radio, this is bloomberg. ♪

jonathan: it is fed decision day. here's the price action. positive about 0.04% on the s&p. coming into today, tuesday, monday, losses. the equity market and tension. historian want to talk about in the bond market. as we wrap up the year or least wrapping up these. i want to talk about where the 10-year has been and where it's ended the year. there's a story in their, the highest on a 10 year yield this year. the end of q1 there was consideration the fed would tolerate higher inflation. and who would get a steeper

curve. the highest of the year on twos a week ago, that's the story. we have the highest from year on twos at the end of the year and the highest for year on tens. we have a flatter curve, different story. a federal reserve many believe is less tolerant to the inflation story and belief that they have to adapt. tom: one of the calls here is curve inversion. at some point we get an odd inversion. there's a lot of uncertainty within the bond market. jonathan: this goes back to the conversation, how much work does the fed need to do at the front end. with a federal reserve chair himself talk about that in the news conference later? tom: i would really want to know lvmh over in france has at a phenomenal year since they --

it's important to quote. jonathan: there we are. up 1.4% on the day i have no doubt that studio free promotion. getting more to the euro dollar index on the year over the last year, the last 12 months on year-to-date. 6% -- six or seven percentage points. expecting that weakness. maybe the fact even winter, the chinese currency has been stronger against the euro dollar -- the dollar. we are not there just yet. if tom was an analyst, a single name analyst falling under his coverage would be the luxury names. i'm not sure how any people know that that's the case. lisa: he would also be the bloomberg shopping channel. [laughter] jonathan: there's a fed decision

today can we wrap it up tom? tom: let's wrap it up. jonathan: some single names and say good morning. >> i feel like i missed some conversation harry -- some conversation here. this sums up what we are seeing here in the premarket. basically everything is either up or down fractionally or unchanged on the day. the big event in six and a half hours will begin the fed decision. tom: you've nailed this. netflix, adobe and microsoft. what is your take on the lack of breath right now. >> my take is what we're hearing out of the analysts which is this valuation story now and the idea that as you have a less accommodating fed with all the inflationary pressures that are leading to a less accommodating fed, do these valuations hold up. most of the analysts say no. that's why you saw adobe fell

off 7% yesterday. like chris off down 4% of days. everything else is been relatively weaker relative to what we saw in the middle of the year. a lot of people are saying this will persist particularly if we get the expectation there's some sort of acceleration or signal of an acceleration of pulling back accommodations. when you flip up the board you want some beneficiaries. some of the bank stocks could benefit. there's commentary about some of the materials, some saying they could benefit here from this new environment while others are saying maybe not. tom: thank you so much, really appreciate it. mr. bostic joining us on our fed coverage this afternoon on the equity market reaction to the emphasis taken in the press conference. chief economist at the conference. what's important is our other guests focus on the unique skills of the conference board

while measuring american economic dynamics. this is such an important conversation on the ability to sustain economic growth. what is the call you have 12 months forward on real gdp. >> we are thinking we are following around 3.5% this year. -- next year. we could potentially see growth around 4%. >> we will have six, 7% top line gdp. what is that due to the conference board in america. >> certainly that would be positive if a lot of that was driven by consumption. we are anticipating hopefully next year much of the services activity will return to pre-pandemic levels. that's really going to be highly dependent upon the people of the pandemic, whether or not people

are vaccinated, people feel comfortable getting out there and going on trips, traveling, visiting restaurants, hotels, etc.. lisa: in about an hour we will get those retail sales. we expect in increase paid how do you parse out the increase due to inflation from the increase due to consumers. was it ever a strong pile of cash to defend? >> the easiest things to take that nominal headline and deflate it. you will see much of that is probably going to be related to price increases. our own survey suggests consumers even though they are little bit dour on the outlook, they will extend their holiday shopping survey saying people need to get out there, go to malls and doing person shopping. we will see that's going to show up in the retail sales today. lisa: does it matter they are shopping at lvmh or the other

luxury providers. perhaps they are restricting some of their purchases at target and walmart we are not seeing as easy of a pass-through with some of the inflation. >> it depends on the shopper. the person shopping at walmart or target may not necessarily be shopping at louis vuitton. but certainly consumers do have heads-up savings that they've had with big stimulus checks. more people are employed relative to when they were before. we will seem more cautious in terms of people looking for discounts. that's not delivered at the big box stores then we will see weaker spending going forward. >> i have trouble with a weak consumer at a 9% nominal gdp economy. >> the consumer really isn't weak, it's just that they have

soured in their opinion given the fact inflation is high. they are still worried about covid. cases arising as omicron in front of us potentially. when we look at incomes they are still very high. many people are working. that does not signal a weak consumer. it says maybe they are a little bit sour on the environment. lisa: how do you square what they say and what they do. we're talking about consumer sentiment survey that been deteriorating. at the same time everyone says the consumers incredibly strong and willing to spend. >> consumers may say one thing but what they do is more important. what they do we can find out in the retail sales of the data we received. so far consumers have been getting out there and they've been spending. jonathan: we have to leave it there. dana peterson. getting some news from secretary

blinken's member of the press pool testing positive for covid. they had to cut that trip short. we've learned that a member of our traveling press corps tested positive for covid-19 upon arrival in kuala lumpur. just an indication of how difficult it is to get things done to move around the world. >> reporting on this it really goes to the dynamics of the surveillance team facing with travel and certainly the secretary of state and i'm can assume 100 people moving him around, testing every day. a three day pcr tests and then can you see the secretary of state on his phone on the terminal wherever he flies doing the abbott labs test. >> travel getting difficult away from the jokes, there's a belief

these governments will do more to make it harder to travel around the world now. we speak to the medical professionals and what they will tell you is for the most part it doesn't make a massive difference. an easy way for a politician to make it look like they are doing something and it seems to be what they reach for on any given day. tom: there moving around and i agree it gives politicians cover, the variant is spreading and the answer is hospitalizations are problematic. jonathan: we ask this question, can we draw some conclusions just yet and we are told we have to wait for longer. lisa: talk about messaging and politicians trying to go out there and give a sense they are doing something about it. i wonder how much people will actually get that message versus really again we are going back to that. tom: is it pandemic like

quarantine? jonathan: i think it's good to be a lot at the arsenal stadium. whether you will be watching the game or on the terminal when the fed decision comes in and he says i wish they had a bloomberg terminal because i think it will be -- to watch the arsenal game. tom: you and i and lisa could go over and do a remote. jonathan: a member of the press traveling alongside the u.s. secretary of state antony blinken on his tour of southeast asia has tested positive for covid-19. this according to the state department spokesperson. this is bloomberg. >> with the first word news, i'm ritika gupta. the u.s. death toll from covid

has passed 800,000. more than 200,000 of those deaths occurred after vaccine became widely available. the u.s. has the highest death of any country. the house voted to hold former president trump's last chief of staff in contempt of congress prayed he has refused to testify in the capital insurrection investigation. he turned over emails and other records but cited executive privilege in refusing to appear before lawmakers. congress is seeking to increase pressure on china for its treatment of muslim uighurs. they passed a bill that would ban goods from the country's region unless companies can prove they were not using forced labor. china has denied those allegations. carmakers like volkswagen and general motors should brace for the global chip shortage beyond next year. they say they need fewer of the

high-tech components. this shortage -- bloomberg's learned a french billionaire is considering a u.s. ipo sotheby's. he purchased it for $3.7 billion. sotheby's is that strong online sales during the pandemic. 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. ♪

>> we think china long-term as

an economy and fundamental story. i think as we go into 2022, we think there's a live opportunity for sentiment to improve. jonathan: fantastic to hear from the jp morgan global head of macro equity research. from new york alongside lisa abramowicz and tom keene, i'm jonathan ferro on this fed decision day. yields up one on tens. the fed decision. tom: it's a big decision. stay with us through the day as well as we drive towards the meeting. the emphasis taken in the press conference. michael mckee leading our coverage. leading us with a chart, her

take on it. >> we just heard from dana peterson. i want to put that into some perspective because we know sales are booming across the board. compare that to a five-year chart where we look at the trend line. it's moving in a big way. the question is is the momentum waning because as dana mentioned stimulus effect coming down. tom: we've got a trend, it pandemic, recovery and then a pop. is that all the fiscal pop. >> this has everything to do with the savings rate. essentially you have this major dip in 2020 where everyone is holding onto their funds and then this major pop ahead of this huge trendline. the question comes down to the savings rate which is recovering from the highest in history. even higher than the great depression era. now it's coming back down to earth. the question is do we see this

move for retail sales. >> we drive to the outlook release this morning. really diving into this state of retail. can there be a repeater retail and 22 like we saw. which bloomberg office are you in? >> i'm not sure. tom: we have to take notes here. you and i need a green screen. jonathan: i've been dreaming about one. it would be wonderful. you set the camera up in bed and do the show. [laughter] tom: we are learning from you every day. what will be the distinction? >> i think there will be two parts to 2022. we will continue to see the boom we saw in the latter part of this year. however as you move into the

second half, a sales could slow again because people will not be shopping in stores that we saw next year. we think the real shift will be toward online and there will be more material next year. all in all if you start to see rates rise which we think they will be a key indicator of consumer spending next year. funding could derail that. lisa: the common idea is consumers are looking for the inflationary push. in case there is any concern about a waning consumer appetite. are there any signs under the cover that starting to shift. >> right now, no. we've seen robust demand. typically in holiday you are looking for a lot of promotions, larger discounts. this year we didn't see that in stores. there were discounts but weren't as high in consumers are still purchasing bring the trend through november has continued.

>> is there a bifurcation in the level of the items in terms of how expensive they are for luxury goods stores doing well. our people having a harder time passing along inflation. >> right now it's very broad-based. topline has been off the charts across the board. the concern is margins. that's the concerns moving into the first half of next year. >> you have an array just call that in three years, 50% of apparel online. how does for example this drive to everyone online? >> it's not luxury, it's more apparel. those are the reasons we think will make it bigger question online.

some of them are already there. they are ready making headway. some sales over the next few years or so. >> how does amazon not so much defend against that. if they haven't done it before. >> they are already doing it. we don't know the numbers. amazon across the board. it's about third-party provider with new inventory on the platform every day and that's what's attracting users. amazon is my google. that's where i go to search and if i find it i get it. jonathan: always good to catch up. for a long time u.s. retail sales, u.s. retail has been well behind. the last companies really caught up.

this omni-channel push let me give an example with nike. black friday sales brought -- order it on your phone. you want that ease. just get all the friction and most of those big players have made a massive effort to do that over the last couple of years. >> microsoft, netflix before. do we know or do we underestimate technological advance with this pandemic. i don't think we really understand. jonathan: i'm conditioned by experience. we always underestimate these and continue to do so. >> just how much they've gotten woven into the fabric of every experience that's not just experience and was ordering it online. it's tracking different customers, understanding their profile and how to cater to them. understanding all of these things, of the data gives

retailers tools for and the quickest will be the most successful. that's the shift under the headline of move to a technology. >> all of a sudden they know my size, they start pushing the shirt sizes that shirt in that size. pushing that to my inbox on sale. >> does that bother you? jonathan: it is convenient. lisa: that's what people are finding. jonathan: when it follows me to another website. that's when it bothers me. lisa: like what type of thing? jonathan: let's say an item of clothing. some sneakers. and you go to the sports page of the daily mail website and then all of a sudden that item of clothing is down. tom: on a fed day in particular follows you to consider the dots

moving forward. it's going to follow you throughout the day. jonathan: bottom line here it is, tom keene has a shirt just like that one.

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>> central bank 101 as you want to look through some of the supply driven increase in inflation. >> the risk of a 60's or 70's thousand fallacious story is overblown. >> amick spec and the fed to not make policy mistake. they will air on the side of easing. >> this is an economy that does not need additional accommodation. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: jonathan ferro, lisa abramowicz and tom keene. the sum of all yourrs