covid vaccine mandate that starts december 27. the city says they will apply escalating penalties thereafter if violations persist. the new requirement affects roughly 184,000 private businesses in the city. the u.k. reported the most new daily coronavirus cases since pandemic began as the omicron variant spreads and the sharp rise is expected to lead to an increase in hospitalizations and it isn't yet clear how much vaccines counteract the variant, though early studies suggest two doses and a booster shot can offer as much as 75% protection against omicron. the european commission says the variant will likely be the dominant strain in europe by mid-january. president biden is getting a firsthand look today at the devastation caused by tornadoes in kentucky, meeting with storm victims and local officials there to offer federal support.

more than 30 tornadoes ripped through kentucky and four other states. at least 88 people were killed. estonia joining the course of countries warning -- the chorus of countries warning russia not to invade ukraine. >> are they bluffing? are they really planning a move? in either case i think we shouldn't wait for the move but send a clear signal of deterrence, don't think about this. because we will react. mark: estonia is a member of nato. the kremlin denies that it has player -- has plans to invade ukraine. 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. i'm mark crumpton. this is bloomberg. ♪

>> it is 1 p.m. in new york, 2 a.m. in hong kong. i'm matt miller, welcome to " bloomberg markets. here are the top stories you're following for you around the world. the fed decides, full coverage of the fed fomc decision with a special edition of surveillance at 1:30. ahead of the decision we have a look at the global head of strategy research from barclays and potential policy errors out of the central bank with danielle dimartino. first we take a quick check on what's going on in terms of the markets. we have seen drops for most of the session but we are now getting back closer to zero with the s&p down just 2/10 of 1%.

the 10 year yield climbing a little bit as investors let go of some of that data. we have seen that yield lower throughout today's session. the dollar index is up at 1/10 of 1%. still, a fairly high level compared to what we have seen recently on the dollar index. nymex crude down to $70 $.64. we have seen a lot of volatility in this today. the fed has one more data point to chew on. that is retail sales. here we see retail sales slowing in november, a month over month change, i gain of only 0.3% and this is a concern. if we have inflation rising at the same time that growth is slowing, it makes more of a conundrum for jay powell and his colleagues. for more, let's bring in our

cross asset reporter. what are you expecting to see from the fed and how is the market reacting? well it -- >> well it should be early exciting. starting this week, he says fed meetings should be fun. we are expecting some fireworks in the big question is if the fed is going to actually double the pace of the taper to $30 billion per month, finishing around march of next year. that is the big question. and of course, the fed and jay powell have really tried to d-link rate hikes from when the tapering wraps up but it does open the door to the earlier lift off then was expected and you have the dot plots to play with. fed officials are expected to project two rate increases next year, three after that. 2024, 2 more. there is a lot of data to chew into and that's before jerome

powell even starts speaking. david: right now we are -- matt: right now we are at $2 trillion on the fed balance sheet. i would love to look at it. we will see it climb another 90 billion dollars until march 9, when they finish their purchases at the expected taper rate. what does the sequencing look like beyond that? do they want to start reducing the sheet? is that the kind of thing we will hear jerome powell talk about? katie: markets, analysts, economists would love if he talks about that today. consensus will tell you that we will probably see lift off before they start quantitative tightening and letting the balance sheet runoff. expect them to get maybe several questions on that, when we might see quantitative tightening actually start. but we have a lot to work through before then.

the question on the front end on the center is whether they accelerate the pace of the taper . they are still buying bonds at this point. whether that increases or brings forward rate hikes and if we could see quantitative tightening, those are the questions markets have coming into the meeting. matt: we are also looking for changes in the dot plot on the terminal. do ts is the way to access that function. what is and how important is the terminal rate, katie? i know that right now economists are looking for two hikes. katie: yeah and i mean the dot plot is where you could see potential for a hawkish surprise. the balance going into the meeting is expected to be hawkish as is between the potential accelerated taper and the dot plot. consensus would tell you the

plot is expected to show two hikes expected next year and in terms of what the market is pricing in at this point it feels like it wavers. that is where you can see fed officials lean more hawkish and for you could see more disruption in stock markets and bond markets. it's already been quite a -- quite a volatile few weeks. matt: katie, thank you for joining us. don't forget our bloomberg special, fed decides. led by the surveillance team in about 23 minutes. something that caught my eye today, the blackstone fourth annual holiday video. like the past few this one opens with the theme song from "the office." they focused on their weekly companywide zoom meeting, which they call blackstone television

and it involves reese witherspoon. take a look. >> it might not be a viral sensation yet. ♪ ♪ >> what is bxtv? matt: quite an amazing cameo there. a lot of other familiar faces as well. i guess we have a little bit of competition here at bloomberg, i look forward to watching a full episode of bx tv soon. coming up, we have the take on fed policy from barclays. this is bloomberg.

matt: this is "bloomberg markets ," i'm matt miller. investors facing a wall of worry when it comes to the fed announcement. you have got a lot of problems with the omicron variant. huge inflation, cpi and supply chain issues and the next guest

says the fundamentals still look good. joining us now is brad rogoff. we welcome your optimism. what's behind it? brad: you cannot deny the worry that you rolled out in terms of the worry. we don't fight the fed as we move spread tighter. the fed, loosening with, -- with quantitative easing. now that we are going in a direction, we can't ignore it. we are sitting here looking at margins that are peak margins, incredible considering the inflationary pressure we have had for several quarters and we look at fundamentals from a leverage standpoint, we are close to if not back to four q 19, making us feel better about the prospects for credit matt: in 2022. corporate credit had on rough go of it, looking at ig or junk

over the last few weeks. why have investors lost heart and when do you expect it to bottom? brad: it's been better since september but when you start from these kinds of spread levels, there's not as much room to a with an you think that if you believe the fundamentals story i just mentioned, you have to generate hairy and in each of those markets you have to go down in quality of it to generate enough carry. the problem that you alluded to in these rate moves, it's all gone in terms of the carry that you have if you haven't gone down in quality of it. matt: one thing that markets don't like is uncertainty and we have gotten that from the fed of late. do you expect to roam powell to be able to cement expectations or provide relief for the market after this meeting?

brad: you guys have talked about that consensus that's forming around accelerating the pace of the taper, ending that around the march timeframe and i think that as long as that occurs and we don't see a dot plot where it is implied that we will have significantly more rate hikes than people think, i think it won't be a large market moving event as much as it seems like it could be a lot more interesting than any fed meetings we have had in the past. matt: is there really a justification for any rate increase? is the idea that since we are coming off the zero level that it's ok? because it doesn't seem like this is a time when you want to necessarily take it away. matt: it will be entered -- brad: it will be interesting to see. he retired the word transitory, but we could hear differentiation between wage

pressures, for example, because some of that sentiment came after the jobs that we sell recently and pressures that are related to other inflationary aspects. mainly supply chain. that's a big part of that. omicron, our factories going to be shut? i'm looking for that to see if he makes a differentiation between them because that could affect whether or not they feel the need to make that move. when things are not as good as they have been recently, looking at the top line and the pricing power from corporate, we are pretty good. matt: is supply chain really the biggest problem? i find that if i lock in i will be waiting 1, 2, maybe three years for these purchases. i'm not going to pull the trigger and that's lost revenue for them? brad: yeah, i did that this

summer and i don't envy you on the vehicle front. it is a problem for a lot of corporate. retailers are another example where it's not like they can't get any products. they might have the right things in store around holiday time but it can become problematic. it's something to focus on but it isn't every sector. the same thing wage pressures don't affect every sector. the i.t. credit universe is moderately affected by the wage price pressures, 5% more significantly so, but not the majority, so hopefully it leads to that differentiation that credit investors enjoy. matt: by the way, my producer, john, sharing a headline with me that just crossed the terminal, fed reversing repo to another record, one point six $2 trillion. is this worry you as a bond investor? brad: no, i think some of the

concerns would be around the liquidity issues in the system for financials. we have a pretty positive view on financials. the spread of the bank's is on industrials. i don't think those kinds of headlines have any signals for stress in the system. it doesn't worry me. things like today, the fed rate will be more important for us on the bond side. matt: great to talk to you, brad. thank you for taking the time. brad rogoff, global head there at barclays, coming to us out of scarsdale. still ahead, the fed decision. next our guest is the ceo of quill intelligence and knows a few things about the fed. she actually wrote a book called "fed off." this is bloomberg. ♪

matt: this is "bloomberg markets ," i'm matt miller and we are counting you down to the fed decision. just about eight and it's to go until our surveillance special. right now danielle dimartino booth joins us. she's the ceo of quill intelligence and the author of a book called at up. what are you expecting from today's meeting? danielle: i think that the market has fully priced in the

old jay powell from 2018, who sounded more hawkish in his most recent congressional testimony. they have fully absorbed that increase every month, implying that by march 15 the taper has concluded, leaving the door open for a rate hike, technically speaking. but i think the market will be paying close attention to the. lots and if there is a potential for a majority of voters, of participants on the federal market committee to anticipate three rate hikes 2022. i don't think it's impossible that we get another five or six in that camp. it's hard to say, because we have our first vice president voting for dallas and for boston. matt: so, what kind of dot plot and terminal rate do you expect? danielle: that's a whole

different one. it was extraordinarily difficult for jay powell and his endeavor to get the federal funds rate up to even get there. i couldn't even take a guess simply because of the flatness of the yield curve. we have seen the spread between the two year and 10 year treasury yields collapse from april to now. it's been cut in half to 80 basis points and of bond market is not really interested in him going all the way down this path to get to the tightening process, so we will have to see the rapidity with which the yield curve continues to flatten into 2022 given the signs of slowing in the u.s. economy absent fresh fiscal stimulus, as we saw this morning in the control number out of the retail sales figure that printed negative. matt: absolutely, i was going to ask you about that. you mentioned fresh fiscal stimulus, that seems like a no go as well.

danielle: the child tax credit, that 90% of u.s. households, that final payment is today and the irs has informed the government that unless ability signed into law by december 28, the january 15 payment is going to be missed and a lot of american families, 90% of american families have become accustomed to getting this in cash every month. that could be its own pickup. we have seen car sales declining seven of the last eight months. cox automotive is not saying when they are going forward on car sales with dealer inventory being replenished at the same time, according to the latest dealer survey. they anticipate all of these supply chain disruptions to have dissipated by the time we get to the first quarter. matt: first of all, i really do hope that dealer inventory is

replenished, but that is a personal issue. is this showing us, when we see him play -- inflation numbers like the ppi we just saw and the slowdown in retail that we are going to see, inflation but not growth to keep up with that? danielle: i think, i think we are approaching a basecase stagnation inflationary scenario that the market has not really priced in. we have persistence in food price inflation being stimulated by the supplemental nutrition assistance program having increased by 32%, the largest in the history of the program. we are seeing idiosyncratic food inflation, the most essential for any household budget, as well as a lot of latency in rental inflation. these are going to stay around in the coming year and at the same time again we have got other signs of slowing growth

among u.s. consumers. of course, consumption is a record of gdp right now. matt: if you were in his shoes, what kind of moves would you be making? danielle: if i was jerome powell i would expedite even further the exit from the mortgage backed securities purchases portion of quantitative easing. i would try my best to get that first rate hike out there. i would be very clear today that the discussion about rate hikes has begun and he is no longer keeping a moat in between the idea of tapering and rate hikes. one is going to follow the other in a progressive fashion. 2:30 p.m. eastern standard press conference, the impetus is on him to be explicit on that and not continue this overly dovish rhetoric, given that every form of inflation you can name, we

saw import prices coming out of a 20 year high today in a report that wasn't well covered by the media. any source of inflation is off the richter scale and i think that powell, it's time for him to acknowledge that this is the fed mandate in addition to the employment mandate. matt: all right, import price index year-over-year is up 11%. danielle dimartino booth, ceo of quill intelligence. coming up, the fed decides. stay tuned for special coverage of the fomc special rate decision. this time it's fun. this is bloomberg. ♪