>> this is a fed focused on meeting both its mandates. >> the market needs to revisit the risk of policy error at this point. >> the day fed raises rates for the first time, that is it. >> i think the economy is going to be able to handle rate hikes. i am just not sure the market is going to be able to handle it. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. kailey: good morning and welcome to "bloomberg surveillance." kailey leinz, gina martin adams, and guy johnson in for tom keene, lisa abramowicz, and jonathan ferro. it is quiet out there relative to earlier this week. guy: i think it is harder when it is quieter, but definitely big shoes, particularly in the

case of tom keene. it is super quiet out there. i think most people are more focused on making sure they get a negative test, finding a test, trying to basically hunker down for christmas. so like volume. there's not a lot of noise out there. kailey: finding the test is one problem, and testing negative you can worry about afterwards. the biden administration trying to take some steps to address that, but lockdowns not on the table. gina: and i think the market did celebrate that a little bit yesterday. there is certainly some relief that we get confirmation that there is no lockdown. i would say that is the single most consequent factor that could impact growth going forward. everyone is assuming if there's lockdowns everywhere in the world, the u.s. is still not going to lock down. the u.s. is still going to power some degree of growth. if the u.s. locks down, it is a completely different story. kailey: i think it will be interesting to see how the consumer data shakes out.

even if there is no lockdowns, if there is fear around the virus, in theory that could mean people don't travel, they don't go into the office. all of that could weigh on consumption, and at some point that has an impact. gina: at the very beginning, the downdraft in consumer sentiment seemed to be more about inflation and concerns about inflation becoming more deeply embedded. a december pull forward of purchases even before the holiday season we are entering now. i do think there's potential for that to shift, and consumer fears around inflation morse into consumer fears around covid. i don't think we have seen it yet. i think the consumer is alive and well and certainly has a nice store of cash to keep fueling those purchases, but it is absolutely a possibility, particularly if rates of infection skyrocket again and we start seeing localized shutdowns. kailey: almost as if right on cue, president biden says they will press forward on passing his economic agenda bill. while we are talking about the virus, talking about monetary

policy, we also have to keep in mind there is still a major fiscal question mark out there. guy: how much can get done as we start working our way toward the midterms? let's talk about where we are with the markets. first thing this morning, u.s. equity futures were little negative. they started to turn little more positive now, but only a little. volume here in europe on the equity front is superlight. monday and tuesday, ok. certainly monday definitely fading. the euro has cleared $1.13 this morning, which is really interesting. there is some kind of noise starting to come from the hawkish end of the ecb spectrum, suggesting the be the ecb is behind the curve. if you take a look at what is happening with gas prices, energy prices here in europe at the moment, maybe there is some evidence for that. it looks like we are going to come out of the winter with record low gas storage, as a result of which this energy

crisis is likely to persist for longer. people talking about the fact that maybe there's a possibility, even a small one, that the ecb raises next year. a little on offer on the bond market today. the crude market feels like it is stabilizing a low but as well. ti trading at $71.41. i'm not sure there is much signal. i'm not even sure there is much noise. kailey: not much of anything, but we could potentially get some catalysts later today. we are going to get a lot of economic data in the united states throughout the next couple of hours. 8:30 a.m. eastern time, we will start with the reed for core pce data. 2.1% is what we are looking for on the gdp metric. obviously that is a slowdown impaired to the prior quarter, but we are expecting that to pick back up in the fourth-quarter. at 10:00 a.m. eastern, we get the confidence data gina and i were just discussion. what you consumer

expectations, inflation expectations look like? we are expecting a read of about one 11 on that later on. we get the eia crude oil inventory report. what kind of drawdowns or stockpile builds could we see in an oil market that is really trying hard to balance the supply equation with the unknowns around the demand story? guy: there's a lot going on, even as we come through into the end of this week in terms of the data, but it is all fairly rearview mirror. looking into next year, the big question is are we late cycle, and if so, what does that mean? ? for the equity markets christopher harvey -- mean for the equity markets? christopher harvey, wells fargo head of equity strategy, joining us now. i hope you continue in your successful negative run into christmas. i think everybody is focusing on that right now. talk to me about where we are

with this cycle. a lot of people are starting to tell me we are late cycle. do you believe that? if so, what does that mean in terms of portfolio structure? christopher: i think we are late cycle. at the least, we are late midcycle, but i think we are early late cycle. growth is decelerating. you are starting to see a lot of speculation in the marketplace. at the end of the day, we have had an incredible run. what we are looking at is a more hawkish fed. these are all classic late cycle signs. so i think we are late cycle at this juncture in the market. kailey: you also think we are close to an inflection point when it comes to risk appetite. what is the trigger? what flips the switch on that? christopher: one of the things we have looked at in the past, in the second year of the recovery, typically you see multiples compression. we should see what tuples compression for some of the reason we are talking about. you have squeeze a lot of the

juice out of this trade. you are going to decelerate. the fed is going to be more aggressive. i have never seen the kind of pricing power corporations have, and my career spans over two decades. we are probably going to see peak pricing, which means we will likely see peak margins and peak multiples. that all tells you it is time to re-risk. it is time to start thinking about the risk out of the equation first and the returns second. there's a ton of speculation in the marketplace, no matter where you look. gina: as you talk about de-risking, how do you do that in your equity portfolio? do you move into low vol securities, low earnings variability? what is the factor that defines moving low risk in this climate? christopher: that is a great question. we do letlow -- we do like low vol, but the best is to move up in quality. you are not paying much of a premium, especially as you go down capitalization. as we talk about it is late

cycle, usually quality does much better when growth is decelerating. it does better when credit spreads are tight or widening, and it does better in a low risk environment to get the last thing i would say is what all of the does, it gives you a certain return distribution. that return distribution is very attractive to us. it allows you to participate to the upside, but really participate to the downside. you can stay in the game, but you have shifted around the risk for your portfolio. we are recommending that to all of our clients. gina: how do you define quality? i find that investors are very frustrated with this term, as every shop defines quality securities quite differently. for you at wells fargo, what defines quality? christopher: you are right. whether you want to talk about quality or value, you tend to get 10 different answers. for us, it is a very large emphasis on balance sheet. we want really attractive balance sheets. balance sheets that have cash on hand.

looking at factors like net debt to ebita. the last thing we look for is we want to stay away from the core secular stories. we are looking for higher net profit margins. those are the factors we look at. guy: is big tech quality? is microsoft quality? is alphabet quality? that is the question i hear a lot at the moment, and that i find hard to deal with. christopher: we put together a quality portfolio, and in that portfolio we do have microsoft. microsoft does have a very good balance sheet. it does have good metrics. but that is not the only type of names you get in there. what we find typically our companies that have really good balance sheets, often have cash on hand. they can use that during times of stress or acquisitions. they know how to manage.

they know how to use their product. they know how to get the most out of it so we can have high roi see -- high roic's and high roe's. but you can find that in consumer discretionary, industrials, and tech. kailey: chris harvey of wells fargo securities, thank you very much. a seat that gina use to sit in. how lucky we are to have her here at bloomberg now. if 4715 target on the sb 500 next year. that is not much upside from where we are now. yet, we see huge divergence when it comes to strategists. what can you make of the fact that no one can find any consensus? gina: it is interesting. i think there are various calls out there for one reason, and that it's because you have to make a call on where inflation is headed and what the fed is going to do about it. some think the fed is going to move extremely hawkish layover the course of this year. others think the fed may not do what they say they are going to

do as they start to backpedal once inflation peaks. the moving dynamic between rates and inflation is, and our mind, driving the outlook and really creating a big variance in expectations. kailey: we are going not much of anywhere in equities this morning after a volatile start to the week. we seem to have calmed down a bit. for futures are at session highs , up 3.5 points on the s&p 500 futures, so that should tell you a little something. euro-dollar is gaining a little bit today. $1.13 is where we sit on that currency cross. you are seeing slight movement in the bond market, up on the 10-year treasury yield. we will try to make sense of all of these markets with brian nick , chief investment strategist at nuveen, coming up next. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the biden administration is

ramping up plans to fight the covid-19 pandemic is the omicron variant continues to spread. bloomberg has learned the white house expects to deliver 4 million covid treatment by next month. they are awaiting the green light from the food and drug administration, and that authorization could come as soon as today. there are new concerns for anyone flying this holiday season. the top adviser to the world's airlines says line passengers are twice or even three times more likely to catch covid-19 during a flight since the emergence of the omicron variant. the international air transport association says this in this class may a safer and more densely packed economy cabins. -- says business class may be safer than more densely packed economy cabins. western governments have imposed restrictions on products from the region.

the annual meeting of the world economic forum which was postponed to summer 2022 in davos, switzerland, consult with a panel of virologists about delaying the event scheduled for next month. the decision was based on covid-19 infection rates of the new omicron variant in countries -- and countries such as the u.s. advising against traveling to switzerland. 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. ♪

♪ pres. biden: we should all be concerned about omicron, but not

panic. if you got vaccinated, especially your booster shot, you are highly protected. if you are unvaccinated, you are at higher risk of getting hospitalized and even diane. so the best -- even dying. so the best thing to do is to get vaccinated and get your booster shot. kailey: a headache for president biden. he was also facing a question as to the outcome of his will but better plan which is having some struggles in congress. a lot of questions for the market, need decision today seems to be let's not put any positions on while we wait for answers. session highs up a couple of points on s&p. we are sitting at 4643 at the moment. a little more movement in fx, with euro-dollar sitting at 1.13 at the moment. of course, we will continue to talk about the implications of domestic policy on the market

for 2020 22, but let's talk about how it could shift the electoral landscape get emily wilkins of bloomberg government joining us from washington. as we think about the pandemic and its trajectory here in the states, about fiscal policy and the difficult he of getting that through, how is it going to shape the midterms year from now? emily: democrats are talking about provisions in this spending bill they are delivering for their constituents. the checks that millions of americans have been getting in the mail, climate, reducing taxes. these are all things democrats have talked about for months, and with senator joe manchin's statement over the weekend, there's no huge question mark over whether any of it is going to get done. to play into everything with the midterms, democrats are seen as not being able to deliver, democrats already face a really difficult midterms just because

of historical factors, as well as the redistricting going on by light of -- by a lot of state legislatures. both of those are in the republicans' favor, and what we have seen this week with president biden's ratings, the sense that the administration is not getting the country past the pandemic, that is going to wind up can contribute into how americans feel when it comes time to go to the ballot box next year. gina: can you talk us through just how many representatives and senators are up for reelection? i know you have also talked a little bit about some retirements recently potentially changing the landscape. give us some ideas of what we can expect in terms of the runnings going into 2022. emily: we have the entire house up for reelection. the interesting thing is that many members are now representing slightly new districts. that means we will have members facing off against other members. it also means, as you point out,

we are seeing a large number of retirements, more than 20 democrats at this point have said they will not be coming back next year, either because they are running for other office or just because they want to leave. that includes some lawmakers at the heads of their committees and a very powerful positions. that is really an indication of some concern about whether or not democrats are going to be able to hold the house next year. in the senate, you have about 1/3 of senators who are going to be running again. right now, the way the map looks is it could be anyone's game. democrats could wind up coming out ahead. we are just going to have to see how some of these races shape up in terms of which candidates ultimately go against each other in november. guy: what role will donald trump play in the midterms? if he backs a number of candidates and those candidates are successful, how does that set us up for the general election? emily: that is a huge question right now, and that is evident

when you take a close look at how republican lawmakers are talking about things relating to trump, trying to talk about trump, about their connections to trump. i think a lot of it is going to depend on where they are running. if you are running in some of these deep red, highly conservative states, you absolutely want that trump endorsement. as we saw in the virginia governor's race this last year with glenn youngkin, the republican nominee who will be governor, he tried to keep himself a little distant from trump. he accepted trump's nomination, but did not have trump come to virginia. he did not talk about them a lot. i think this is going to wind up being a bit of a strategy more for each individual republican, each individual race. i think everyone in washington is waiting to see if the trump endorsement holds a lot of power. is he still he still licking maker within the republican party? that is going to be a huge storyline throughout the midterms. kailey: when we are talking about the power of single

individual politicians, let's talk about the power of joe manchin and kyrsten sinema. obviously, we know where joe manchin stands. that has been made abundantly clear. if he gets what he wants, do we know that kyrsten sinema will be on board? emily: manchin seems to be more willing to go on the media shows and say where he is at. senator christensen, will often tell people she does not negotiate through the press. she is having what conversations she needs to have behind the scene, and therefore it is a little more difficult at any given point to tell where she is at. it was interesting to hear senator joe manchin talk about his desire to make sure that the tax code allows everyone to, and his words, pay their fair share. that being higher taxes on corporations and the wealthy, but something senator sinema absolutely does not. we saw the bill changed dramatically when she announced she does not support those cuts.

it goes back to the fact that if you look at the process democrats are using, the fact that they need every single one of those 50 centers to be on board, it's really only takes one senator to have one problem with the bill to threaten to hold it up, to change the dynamics of everything. we have really seen senator manchin and senator -- senator sinema use that power. but they all have their own redlines. kailey: we are talking about a single senator within the president's own party being the make or break vote here. thank you to emily wilkins of bloomberg government for joining us. i think one of the main issues for the markets, looking through the lens of potential inflation or economic impact, what it could mean for consumption, is that child tax credit. gina: and how much has it meant? we are susceptible to a downdraft in general income levels if we don't get child tax credits, and particular for certain segments of the u.s.

population which have been spending to the beat of the band -- to beat the band over the course of the last two years, really holding up not only u.s. economic conditions, but global conditions. kailey: consumer tolerance for price hikes is going to be key when we think about the argent story and earnings next year. guy: i think the consumer tolerance is already being tested. i think it will be interesting to see what is happening. facing challenges on a number of different fronts area high gas prices, high energy prices. everything is going up, and that is regressive, and that is going to hit the bottom of the demographic spectrum the hardest. it is going to be a tough year for the consumer. yet, they have been bolstered this year, but those saving rates are coming down. kailey: we will talk about the impact of winning stimulus not just on the physical front, but the monetary front as well, and how that is going to translate into the market's in the year

ahead, with thierry wizman, global interest rates and currency strategist at macquarie. we are up less than 0.1% on as be futures, sitting at 43. we are just shy of 1.48 present on the 10 year yield. on tv and radio, this is bloomberg. "bloomberg surveillance ♪ rg sur♪

every day in business brings something new. so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month

when you get four lines or mix and match data options. available now for comcast business internet customers with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities.

kailey: on tv and radio, welcome back to "bloomberg surveillance ." we are taking a breather on this wednesday morning after two days of volatility. calm is reigning. all quiet on all fronts when it comes to different asset classes. you are seeing a bit of strength coming into the euro at $1.1306. a single point upwards on the 10 year yield. crude essentially unchanged as well at $71. there are some pretty sizable movers, one of them being goya financial. that is getting added to the s&p 500.

it is in anticipation of that, and potential index buying that could come with it. that is up 7.8%, and this is a stock that has only risen 7.5%, so it could potentially double gains for the year today alone. you are seeing tesla up about 4%, even as elon musk continues to offload stake. he sold another $520 million of shares, getting close to getting rid of 10% of that stake after twitter said he should do that. we continue to monitor elon musk's twitter feed as well. one of the downside is biogen, down about 2%. japan says it cannot yet approve its alzheimer's drug because it does not have the efficacy data that signals it should do so. guy: absolutely. the europeans are taking a very cautious view on that over here. let's get back to the ethics story and the rates -- the fx story and the rates story. thierry wizman, macquarie interest rates and currencies strategist, joining us now. the big question everybody is

trying to figure out for next year, certainly when it comes to fx, is this dollar strength that we see this year going to participate that's going to persist into next year? what is your outlook? thierry: our outlook is that the strength and the dollar will persist for at least a few more weeks or months. there's still a lot of legacy issues from 2020, especially the latter part of 2021, that caused the dollar strength that are going to persist. one of them is simply the slow down in the global economy. we think that is going to crimp the economy a little further. that is not going to come out until january. china is still in the midst of a slow down as well. we think they are going to stimulate, but we won't see the benefit until the first quarter. do you have it, the two largest economies outside the u.s. in a bit of a slow down here. the u.s. not necessarily doing great in terms of growth.

there are still risks. they don't seem to be as big as the risks that have slowed down in prevailing -- guy: i think you've got a one hand or the other hand situation. i hear right you are saying about the potential for industrial slowdown caused by high gas prices. i think there's already end total evidence of that coming into the market. on the other hand, those prices could be inflationary and last longer than maybe the ecb is anticipating at the moment. i am starting to hear rumblings from the hawkish fringe of the ecb about the possibility of needing earlier action to deal with that. how do you balance those risks out? thierry: you are right, there could be a u-turn coming from the ecb. certainly if inflation surprises to the upside, they may have to move to raising rates in 2022.

however, we follow the majority right now, not necessarily the hawks. the median view is represent by christine lagarde. after the ecb meeting a few days ago, she came out and said she really blames energy prices for 2/3 of the inflation europe is seeing. i think what she was trying to say is inflation they still see is transitory. at some point, when energy needs fade out, energy prices will come down, and most of the issue with regard to inflation in europe will have resolved itself, so right now we are taking her at her word. . at the same time, this is a seasonal issue that pertains to geopolitics. it is not a permanent issue. certainly it is more of a supply-side related issue than a demand shock related issue, and

that gives her room here do not have to raise rates anytime soon. kailey: i would love to talk about the readthrough to sovereign bonds. we are looking at a tenure german bund yield at -28 points. here in the u.s., the 10 year yield is one point 2737%. our bond markets properly pricing the trajectory of monetary policy in your view? thierry: let's keep in mind this depends on where we are in the cycle. if you believe we are late in the cycle of a recovery in the u.s., it makes sense for the curve to be somewhat flat, potentially even inverted at some point over the course of the next few quarters. if you believe we are early in the cycle, that we have a lot more to go in terms of growth in the u.s., then bond yields are probably properly priced. we think we are somewhere in between. it is certainly a late cycle situation for the u.s., but at the same time, we don't see

inflation persisting. that means the long-term yield in the u.s. should be going higher, but not that much higher. you're not looking for 3% on the 10 year. with ink it will drift higher into the low twos, maybe 2% over the next few months and quarters. gina: can we dig in a little bit to the dollar versus other currencies around the world? the dollar versus euro, i think we have covered that index. some interesting things that happened over the last few months, with the dollar getting extremely overbought versus latin american currencies. asian currencies are holding up pretty well, so it strikes me that the dollar balance relative to emerging market currencies may be the story for 2022. what you see versus other major emerging currencies in the world ? thierry: if you mean the dollar versus other emerging markets, they have benefited from a huge amount of goods demand in the developed markets, the west in

the u.s. and europe in particular. it is really the same thing that is happened in china, even though china has had a slowdown in the economy in the fourth quarter that has been pretty dramatic. their currency has done well because they continue to export to other asian economies, and the repatriation of those dollars helps the local currencies. latin america is a completely different situation. it depends much more on commodities demand and commodities prices. although oil has stayed fairly ok and copper has done ok, iron prices have not, and that has hurt brazil. but with regards to latin america in 2022, the big issues are going to be the politics, because we see elections in colombia and brazil, and high debt impinging on their ability to raise rates aggressively, and as a result, we are not as optimistic about the latin american currencies as

we might be about the asian currencies. gina: clearly china is now starting to take efforts to reduce reserve requirements and potentially move into an easing scenario as their economic conditions continue to hear you're right. if they continue to move along the easy pass, does that change the currency dynamic for greater asia, or is it more about trade and the persistence of trade improving out of that area? thierry: if they were to go to an easier monetary policy, it would at the margin help depreciate the currency. in effect, that is really what i country or central bank tries to do by easing. what is it things it tries to target is the exchange rate. so we do see dollar-you on -- dollar-yuan moving up, maybe 26.50 as they move more aggressively. but this is not a direct or the most important reason for the

loosening. most abort reason is to support the domestic economy. china will have a 5% floor on growth in 2022. they need to achieve it for political reasons, and i think this is what they are trying to protect with the easing we are going to see, not necessarily export growth or the currency. kailey: thierry wizman of macquarie group, thank you so much for joining us. happy holidays to you and yours. we talk so much about the divergence between western central banks. we also have to keep in mind that china, to a large extent, is going and the other direction. policy is getting easier, not tighter. guy: and you wonder what impact that is going to have globally. my sense is not as much. the chinese economy increasingly feels like it is inward focused rather than outward focused. it is still a major global exporter, but it feels increasingly like they are doing everything for internal purposes

, that they are going to limit as much leakage as they can about policy to the rest of the world. that is certainly what it feels like looking at what the pboc is talking about right now. gina: it is a tricky situation because just like you don't fight the fed, you don't fight any central bank. this currency impact is feeding through to the equity markets. asia really doubled up to the top of our scorecard. across all regions, more bullish than even the u.s. outlook or the european outlook or the latin american outlook which sort of falls towards the lower end. a lot of that is due to currency and what is happening with the central banks, so we are somewhat dependent on this currency dynamic to drive equity market performance going forward, and i would argue it is one of the biggest risks to equity markets, particularly as we see those central bank's diverge. guy: it has been a huge risk this year, hasn't it? a 10% performance difference in

europe if you are a u.n. fed -- a u.s. investor or a eurozone investor. gina: i just wonder how much it becomes asia as the story next year, considering the difference of central bank policy starting to emerge. kailey: we will continue to have the conversation on the year ahead. a chief economist at jefferies will be joining us. i can't see the market has gotten any more exciting as the futures session has grown older. we are still essentially unchanged, up about 1.5 point -- up about 1.5%. we are looking at $1.13 on euro-dollar, 1.4 seven cents -- 1.47 percent on the 10 year yield. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta.

president biden will host a meeting at the white house to discuss supply-chain bottlenecks and the covid-19 pandemic. numbers of the president's team will be on hand, as well as part to spend from the private sector including the ceos of fedex and gap. bloomberg's -- southeast asia continues to populate the ranking as the region lags in vaccination and reopening. in december, vietnam took over last place from the philippines, where restrictions have eased somewhat. if you contract the omicron variant of covid-19, a study finds you are 80% less likely to be hospitalized. that research in south africa showed that once a patient is admitted to the hospital, the risk of severe disease does not differ from other patients.

israel says it will give a fourth dose of coronavirus vaccine to people over the age of 60 and medical personnel, the first country in the world to do so on such a widespread basis as the omicron barrels across. authorities have been told to prepare for a nationwide is -- to prepare for nationwide. 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. ♪ bloomberg. ♪

>> the data over the first quarter will probably lead them

to hike. powell is pretty clear, he's not signaling much discomfort with the limited space between the end of the tapering program in the first hike. i think markets will be ok with it because it is not the data. kailey: the fed may hike four times next year, but do not call them hawkish. that is the message from neil dutta. the market is trying to way with the fed is going to do, what the outlook is in washington, d.c., and weighing the path of the virus across the world. where that leaves us this morning, as we have not a lot of answers to those questions, is we go nowhere when it comes to futures trading. we are essentially unchanged on s&p futures. a little bit of strength coming through for the euro, while the 10 year treasury yield sits at 1.4703%. crude oil literally unchanged at the moment, sitting at $71.12 a barrel. for more on the markets and the economic outlook, bloomberg's critic up to his here -- bloomberg's kriti gupta is here. kriti: we have been talking

about how the recovery has been so fast and so furious, at a faster pace than you have seen in history, even going back to the global financial crisis. but compare that to what you saw in the oil market, particularly in the last two years, as we emerged from the depths of that original covid hit, and you see, compared to the last financial crisis, the recovery is a lot faster, so perhaps the stock market does actually have it right in that sense. that is what my chart of the day shows, a chart of global oil demand that you are looking at from a perspective of the line of regression. i pulled a big tom keene move of how quickly the oil demand has moved in the last 10 years, compared to how quickly oil demand has moved in the last two. all unity know is two lines. the one in the last 10 years is much flatter compared to the one you're seeing right now. that steeper curve really tells you the oil demand as a proxy for economic growth, global

economic growth, is going to be a key piece of the equation. even if we are dealing with the omicron variant, demand is still recovering, especially as we talk about the growing demand in the united states, as well as the energy crisis in europe. guy: nice chart. thank you very much, indeed. let's stay with the energy theme and bring in bloomberg's will kennedy. i want to talk a bit about what is happening with the european gas story. we have faded a little bit today, but not by much. we are still near record highs. france is having to burn oil in order to keep the lights on. nuclear power stations are going off-line. the question i am starting to hear at the moment is not really about what is happening now. it is what will be happening this time next year. the set up at the moment looks like we are going to come out of this winter with record low gas inventory here in europe. what is the set up right now, and what does this tell us about the persistence of this crisis?

will: i think that is likely right. i think the market is shifting to the idea that we have a short-term emergency over this winter, to the view that this is a longer-term structural problem. as you correctly say, gas inventories are very low for this time of year. they are going to into the winter presumably -- they're going to end the winter presumably empty. we will end up in a cycle going into next winter, and when you look at forward pricing, you look at for electricity pricing, there is increasing recognition that this isn't going away. the only thing i would say is this story is always dependent on the weather. it has been cold this week in europe. if we get a warmer january, february, march, it may not be as bad as people think. but that danger of a two-year

crisis is definitely there, i think. gina: is there anything else we should be on guard for evolving and 2022 that could really change this? will: of course, the big unknown in this whole story is the nord stream 2 pipeline. going into this winter, it was thought we would see a lot more gas into europe. i think traders would like it to get going in 2022, and that could make winter a lot easier. there's a lot of political considerations going on there. putin is basically making it part of a big political game with europe, and if things escalate in ukraine, who knows where they might leave nord stream 2? so the future of that pipeline is perhaps the most important question going into next year. kailey: it is not just in terms of the eu versus adversaries

were allies. it is also internally in the eu, where they are trying to balance a push towards a green agenda with the basic fact that they need to keep the populace happy and warm this winter. it strikes me that the eu is talking about rules for sustainable and green investment today, and they are likely going to include natural gas, in that. the internal sheet said gas is not an idea energy source, but it is better than cold. are we having to have a rethink about how reliable some of these are? will: intermittency, what happens when the wind doesn't blow in the sun doesn't shine, is definitely a key issue this year. german wind power is almost nonexistent, and we have had below average wind generation for much of the last few months. there will be solutions longer-term, principally through storage, batteries, but in the

shorter term, gas is going to have to fill that gap. unless you want to keep burning coal, it is going to remain very reliant on gas, and i think most policymakers understand that. the question is where will that gas come from in a way that is sustainable and we are not openly dependent on russia? kailey: will kennedy of bloomberg news, thank you for joining us. that meeting seems to have been moved, but nonetheless, it is a conversation that needs to happen. a lot of meetings being moved in the face of the omicron variant. you are starting to see the return to office get pushed back farther out. wells fargo was the one that struck me overnight. they are now putting it off indefinitely. guy: i think ces is still on, though, isn't it? gina: but some pulling out, saying we are not sending people in person. guy: that may be as an early indicator that they are not

going ahead. maybe it will turn out to be a -- we will wait and see. it is interesting to me that being so focused on meta-and the metaverse in virtual meetings, it is having its meeting in person. kailey: it just goes to show you, you don't need a lockdown for behavior to change. las vegas will feel the burn. gina: certainly travel and service industries have felt that, just when they thought they were getting back to normal. you get another variant, and down goes the services industry once again. i think that is creating some sort of volatility in the stocks. we have seen it over the last week with this rotation in and out of some of the travel stocks. it is not over yet. kailey: but at least it seems calmer today. equity futures are essentially unchanged. we have just about an hour and a half to go until the opening

bell, so we will see how things shape out of the cash. the 10 year yield at one point 47%. on tv and radio, this is bloomberg. ♪

this is elodia. she's a recording artist. 1 of 10 million people that comcast has connected to affordable internet in the last 10 years. and this is emmanuel, a future recording artist, and one of the millions of students we're connecting throughout the next 10. through projectup, comcast is committing $1 billion so millions more students, past... and present, can continue to get the tools they need to build a future of unlimited possibilities. - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music)

♪ >> the markets right now are cut between a rock and a hard place. we are seeing this mismatch between fiscal stimulus and central bank support winding down. >> growth is going to continue to be important, but it has to be profitable growth. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. kailey: good morning on bloomberg tv and radio. this is "bloomberg surveillance ." kailey leinz, gina martin adams, and guy johnson in for tom keene