pulled back. >> it has been shrinking. >> we want companies not predicated on free money. >> the story ahead has to be earnings. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jonathan: good morning. this is "bloomberg surveillance" live on tv and radio. alongside kailey leinz and matt miller, i am jonathan ferro. kailey, you have been counting all year, number 70. kailey: the most record we have seen since 1995. the least exciting record that we were up .1% yesterday. volumes light. santa claus driving us to all-time highs. jonathan: the earnings have been great, the inflation story has not compromised.

it remains to be seen how benign last year's surprises will stay for the global economy and for markets, too. even the best forecaster in the world this year might have gotten the market call wrong. matt: inflation is probably the biggest headwind in a lot of ways for a lot of different groups. we were talking to marty about how the democrats would fare in midterms. he set even if the economy is coming along, it is inflation that is the real problem for them. it could turn out to be a real problem for markets, as well. the said may have been too far -- the fed may have been too far behind the curve. you know what else rate raises have historically done, slow down economic growth. jonathan: if we start to see that move, what does it look like in the market and credit

and equities? the cdc and richelle -- we have had isolation cut down from 10 days to five days. people have asked if this is a business decision or a decision backed by the science. it has a lot to do with what they thought people could tolerate. kailey: these are officials in the united states dealing with what is pandemic exhaustion. they are trying to adapt. are you responding to what people want versus what will keep the population healthy? it is an interesting question. there is an accessibility issue with testing in the united states. jonathan: even if you have access to a test, a lot of people over the christmas period tested positive for covid. they are wondering when they can get back to earth. the cdc says a five day

isolation, if you have no symptoms, get back to it. most companies are looking for a negative test to get back into the office. she said docket a pcr tests after you tested positive, because you might test positive up to 12 weeks. i have had friends experiences. there is a disconnect between the cdc and the policy of companies and we have to close the gap in the coming weeks. matt: i have a role model experiencing this, continues to test positive even though he is feeling better. i don't know what to say about what the cdc is doing. we have seen other countries do it differently. we were just talking with a doctor out of london who pointed out they have reduced the timeframe to seven days. as you pointed out earlier, nobody has gotten this 100% right. some companies have made mistakes here or there.

it has been disastrous for administrations around the world. if the cdc just made a mistake, it is not the first and it will not be the last. i don't know what to tell you as far as going back to work. if i get covid, i am going to wait until i feel better physically and emotionally, then i will start testing. i want my colleagues to test negative before they come in. jonathan: what does that positive test actually mean? your positive antigen really does correlate with whether you are transmissible or not. we don't know the answer to that. the fda has not looked at whether your positive antigen really does correlate with whether you are transmissible or not. matt, how confusing is that? this is the quote from the head of the cdc in the last 24 hours. we know the antigen test performs well during the period when you are initially infected

by the fda has not looked at whether your positive antigen really does correlate with whether you are transmissible or not. matt: i have to say, unfortunately, i am familiar with this kind of thing, as someone who has had lyme's disease. i will always test positive. there is no way to test whether or not i still have it, it is not transmissible unless you and i are hanging out with a lot of deer ticks. you have the anti-bodies in your system, you will always be testing for those antibodies to see if you have the disease and you will have them for a long time after you had it. we will have an epidemiologist on later from the johns hopkins bloomberg school of public health and we will ask him. jonathan: we have a lot of questions for him. futures up five on the s&p, all-time highs for the s&p at the close.

number 70. can we get to 71, 72, even? euro-dollar, 1.1319. kailey: i will be singing and dancing if we close north of 1.50. matt: you will be singing and dancing in the next couple of days, anyway. kailey: good point. this is not where we thought yields would be given were inflation is. the chief economist over at charles -- that is not true -- will be joining us. my question is how can they play catch up? we will also be talking about volatility normalization with amy wu. we will be taking a closer look at energy in particular how it will play out. jonathan: my friend is trying to

get back into the office. people have asked out about how he is. tom said he is trying to make the perfect macaroni. is that an indication that t.k. is getting better? matt: he is probably feeling fine. i can imagine him sitting down on a fender amp, playing with this computer and all of his recording equipment. he probably wants to get back to the markets as quickly as possible. jonathan: t.k., get better soon. your call for the u.s. dollar, walk us through it. marvin: the fed pivot, the fact u.s. rates are above global

rates will probably create a bid for the dollar. as we get to the point when the fed hikes and we get a better idea in terms of the inflation discussion, which will be with us going into the beauty of next year. until we get a real sense of what the inflation curve looks like in the second half of the year and whether or not the fed is as far behind the curve as other people say. it will defined whether or not it will continue. as we go into the beginning of next year, the dollar will continue to have a solid bid. kailey: what about the bond market? marvin: i still think we can get

a flattening of the curve -- it will be somewhat surprising. in number to be concerned with from a risk asset market, and what does it say about the future? that part of the curve remains fairly well anchored. you will see some flattening continuing. we will get 30 basis points higher. it is not a number that should scare people given the type of environment we are talking about. matt: i was talking earlier about earnings expectations for next year. that is clearly underpinned by economic growth. if the fed does tighten in order to stave off inflation, are they going to tighten financial conditions enough to impact economic growth?

marvin: that is the risk. that is not in 2022. it has to be something where the market things the fed, and it goes into 2023, will get more aggressive. they have three priced in for 2022, another three or four in 2023. overall, we finish these rate expectations below the neutral rate. that continues to underpin an environment that is still supported by fairly loose conditions. jonathan: that final point is so important when it comes to the market, year. marvin loh, thank you very much. we have been talking about this, even if the fed starts to hike interest rates, they can have a very negative real interest rate. monetary policy can remain

accommodated. build interest rate hikes. kailey: financial conditions can stay quite easy. what does the fed do then? how much of a risk is that in the year ahead that it will be even more hawkish than the fed has said it will be? jonathan: we keep coming back to this -- what is tightening? matt: check out to see how much the fed's move could affect ecfc . jonathan: your equity market up six this thursday morning. seen on tv, from new york city, this is "bloomberg surveillance ." ritika: i am ritika gupta. president biden and let them are

prudent -- vladimir putin plan to talk. the u.s. president warned russian aggression would be met with unprecedented economic sanctions. british socialite ghislaine maxwell faces years in a prison that is likely to be harsher than where martha stewart did time. jeffrey epstein was convicted -- maxwell is not likely to be sent to a minimum security prison camp. another record number of cases worldwide. the third day in a row of more than one million infections. it is expected to drive records in the days to come. the u.s.'s costliest worship can

finally deploy. the uss gerald r ford has what is needed. the carrier cost $13.3 billion. 18% this month after setting a record back in november. bitcoin has fallen for its average. 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 am ritika gupta. this is bloomberg. ♪

>> they are looking for wins.

they want people can be confirmed by the senate. there have been major missteps in terms of the confirmation process over the past year. number two, you are looking for folks who are willing to stick with the consensus of eight powell-led fed. jonathan: looking for some fed picks before close out the year. with kailey leinz and matt miller, i am jonathan ferro. your equity market picture looks like this. yields coming back in after pushing through 1.50 in yesterday's session. 1.5307 on 10 year. crude, 75.99. we are down $.60, down .75%. the euro-dollar, 1.1320. negative about .25%.

joining us, tina fordham. picking up on your line, the geopolitical trifecta of russia ukraine, taiwan, given the perceived weakness of the west. tina: from where putin is sitting at in beijing, they look at the west and the pandemic, very high death toll, vaccine skepticism, internal tension and polarization, and have concluded the pre-pandemic narrative of a west in decline has been accelerated. this is something that global investors have failed to appreciate, that there was this

existing narrative that the west was in a slow decline in the pandemic, as a crisis accelerating trends, has sped that up. the point i want to make is that possibly changes their political calculus when it comes to making mischief in geopolitics. kailey: when we talk about the west, or we primarily talking about the united states? tina: we used to have this term "the international community" in the old days, nobody talks about that very much anymore. the g7, advanced democracies. the notion these countries, even as recently as the global financial crisis, got together and developed policy tools. we have not had that in the pandemic. many people might try to blame president trump for this, but in fact this erosion of working

together on collective action problems predates trump. there is an opportunity if you are a rogue or a challenger actor to try to test boundaries when it comes to a military response or other ways of challenging the international status quo. matt: i look at your research and i see on your wall of worry supply chain and fuel price crisis in the upper left corner. that has been the biggest problem for markets, the biggest problem for the economies of the world due to covid. do you see any recovery there? tina: inflation, supply chain issues and the fuel price crises are the main drivers of risk in markets. the port i want to make is there are also huge problems for incumbent governments that will cause a range of attempted

policy responses and maybe even for policy responses. investors have not been in a situation of managing through this combination of factors and i want to put geopolitical risks on top of it. i am not sure i am expecting a resolution anytime soon because in many ways, it suits some of these challenger actors to have these and that is where the russia-ukraine crisis comes in, with troops on the border. ultimately, will that be about nord stream 2 and fuel supplies to europe? it is a big part of what is going on. matt: i cannot remember what network had a series called occupied, where russia takes over norway because europe wants to keep the gas flowing. how strong is that lever? how much leverage does vladimir

putin have in that he is supplying one of the most important civilizations in the world with natural gas that is indispensable? tina: we can characterize russia's capacity in one word, and that is it is a spoiler and a disrupter. russia has many levers. the gas supply one is the most significant one for markets. what people tend to forget is all of these smaller things happening around the margins, like the weaponization of refugees coming through belarus, to the tensions with the baltic states, poland, etc., these are undermining europeans unity. we can see the new german government has not signed off on nord stream 2, even though angela merkel's government was very much behind it. this ramping up of tensions with

ukraine, you mention the phone call between biden and putin, it is also a way of moscow sing we have ways of making your life difficult, we are a force to be reckoned with, we have real leverage and do not forget about us. jonathan: wonderful to catch up with you. thank you for your contributions through 2021. matt miller, as we look at 2021 and what the incoming ministration promised to do, bring back global order, where you are sitting right now, germany is -- the relationship with russia. it keeps coming back to that german relationship on the economic side of things. in the years to come, how it will reflect on chancellor angela merkel as she has done during little when it comes to russia and done very little when

it comes to the chinese communist party. what i mean by very little is this administration america would like them to do something very different and she has not done it. matt: the cynical view from berlin is that is her m.o., doing very little. making sure things do knock it out of control on the downside. i thought it was interesting tina putting out the difference between the incoming government's take on nord stream 2 and angela merkel's take on nord stream 2. he won the election on a large part due to playing up his similarities to angela merkel. he even does the famous -- it will be interesting to see if his government really does diverge that much, even though they are from different backgrounds, they are very much alike. jonathan: doing nothing is doing something sometimes. maybe that has contributed to

some stability we otherwise might not have had. matt miller, kailey leinz, jonathan ferro. from new york city, on radio, on tv, this is bloomberg. ♪

jonathan: futures up four on the s&p 500. on the nasdaq 100, up 21, advancing a little more than .1%. record highs, record closes, the most since 1995. kailey: 26 years, we haven't seen highs like this. jonathan: yields up six or seven basis points yesterday. this morning, a couple of basis points. bond market, a bit of a snooze compared to what we had yesterday. euro-dollar right now, 1.13.

i thought it was interesting the last couple of days to hear from the austrian central bank governor and the governor of the central bank of the netherlands. two hawks. the hawks have the data to back up the argument. you have the austrian central bank government saying let's get away from negative interest rates. other saying maybe it is time for a hike. this is 12 months away. we have not had this conversation properly for about 10 years in europe. maybe the data might backup the argument. matt: they also will have cover from the boe and eventually from the fed, as well. they could be in a position to raise rates. i'm not sure anyone would be in a position to call that as mario draghi and christine lagarde

were changing seats. as you pointed out a few days ago, you also see economic growth in europe that people would not have expected previously, certainly not going into the pandemic. it does not seem like negative rates are necessary. of course, inflation is very scary for western europe, especially for the germans. jonathan: on the forecast next year, growth, inflation something north-south two. -- something north of two. kailey: on the inflation point, it has stuck by transitory, something the fed has abandoned. let's bring in the chief economist, a long-standing member of the committee. when we think about the fed and its policy pivot, you think they are already behind the curve and

never risk of falling even farther behind. how much more aggressive does that mean the fed will need to be relative to market expectations? mickey: the fed has pivoted but has not done anything. inflation rising, the negative real funds rate is still extraordinarily accommodated. even to get back to neutral, they will have to raise the rate much more than they currently anticipate is appropriate. there forecast now is to get up to 1.6% by the end of 2023, which would apply even if inflation comes down, which seems like a long shot. kailey: do you think the appropriate conversation to be having is on the rate mechanism on how much they will hike in

2022, or do we need to have more of conversation about starting the runoff on the balance sheet? mickey: you are bringing up a very good point. of course ready to raise rates. monetary policy is also about money. m2, bank deposits, our $5.5 trillion before the pandemic, it is still growing. the fed needs to focus on interest rates. in addition, why are they continuing to buy massive amounts when the housing market is so strong? it makes no sense at all. they can certainly unwind that. treasuries, i can see them eventually unwinding. on every front, the fed knows it has to do something and the question is, -- i can virtually

guarantee you in the next three months, as the fed considers raising rates, the core inflation numbers will keep moving up. matt: how long do you expect this cycle to go? how big will the terminal rate be? mickey: on the funds rate, it will eventually get to at least 3% who, but the risks are to the upside. some of these will linger on. particularly in the imbalance between labor supply and labor demand, the biden demonstration has every political incentive to spend as much of the infrastructure money as they can , pre-midterm election and then the 2024 elections. that will exacerbate the imbalance between supply and

demand in labor markets. the supply shortages will continue. let's not lose sight of what is really driving inflation is excess demand. too much monetary and fiscal stimulus. matt: in terms of the labor participation rate, how much further do you think that can rise? have we had a structural change? mickey: i love your question. it is a combination of both. there is some data suggesting a lot of older people who have retired, labor markets are tighter. i think the labor force participation rate will rise further. it has further to go. we have never seen such a large imbalance with labor demand exceeding the supply of labor and new hires by so much.

that will take a wild to unwind. as product demand remains strong, businesses need to increase production not just to meet demand, but to replenish inventory. that can be a very interesting story in 2022. in addition to the labor supply shortage, you also have workers what the upper hand, as they should, and their demand to catch up to the inflation that has already occurred and in addition the higher inflationary expectations are affecting wage setting behavior. look for wages to rise in nominal terms and that is going to continue to fuel this feedback affect on higher inflation. jonathan: much has been made about this fed pivot over the last couple of months.

is if the objective of this federal reserve to tighten up conditions? mickey: my response is, a little bit. what i anticipate is this fed, and as new members come on, it will have a more dovish tone and be more accepting of higher inflation. i think the fed's reaction function will head toward more dovish. i don't think the fed has its eyes on getting inflation back to 2%. it will gradually raise rates. distinguishing between the fed what should be doing and what it is most likely to do. jonathan: wonderful to catch up with you. thank you very much. not just this morning. that has to be the $1 trillion

question for next year. it is never about what we think the fed sugar should not do, it is about what the fed will or will not do. matt: if they end up tapering down to a complete stop in terms of asset purchases, it might not make a lot of sense to many participants why they are still buying mbs. and then they start to raise rates, do they reduce their balance sheet and how does that affect financial conditions? will they be able to stop inflation without hurting economic growth? jonathan: is it necessary to do that to get inflation down sufficiently? kailey: it is a very real question. monetary policy operates with a lag. any rate hike will not show up for months. it does raise the question because the fed is not able to

do anything about supply side challenges. what they can do is on the demand side of things. there is a question, what does that mean for growth if that is the fed's only option? jonathan: conversation with a doctor at the johns hopkins bloomberg school of public health. take the opportunity to put forth any questions you have for the doctor. if a close contact test positive and i quarantine for five days and they test positive again, do i have to start a new five day quarantine? you raise the question a couple of times, the cdc guidance, and then your own respective guidance from the company you work for as you look to go back into the office. matt: you have to use common sense. if a close contact test positive

and you 14 for five days, it does not matter -- and you quarantine for five days. i will be interested to know if a five day period is enough to wait before you can go back into the world. jonathan: as you know, when it comes to corporations and getting back into the office, it is not about individual responsibility, it is about the rules. the respective rules about getting back to work. any questions on twitter, you know where we are on the bloomberg terminal. futures up seven on the s&p, advancing a little more than .1%. from new york city, this is bloomberg. ritika: i am ritika gupta. today will be the second time this month that the leaders of

the u.s. and russia have talk. president biden and president putin will discuss a range of topics. the issue of ukraine is likely to be prominent. president biden said russian aggression against ukraine would be met with unprecedented economic penalties. a new study on the johnson & johnson coronavirus vaccine is welcome news. hospitalizations caused by the omicron variant in south africa -- 85%. the j&j vaccine is being increasingly used across the continent. antony blinken is calling on china to stop arresting hong kong journalists. a news organization shutdown following a police raid. the chairman of credit suisse reportedly broke quarantine rose for a second time. antonio horta-osorio attended the wimbledon tennis finals in

london an apparent contradiction of u.k. rules. earlier, he was said to have flown to switzerland when he should have been in isolation. credit suisse is not commenting. 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 am ritika gupta. this is bloomberg. ♪

>> you can get people safely back out in a five day period

as long as they were amassed, if they are without -- as long as they wear a mask and there without symptoms. the impact is to try to not be in a situation where we essentially have to shut down the entire country. this was not done because of any statement by any ceo of any company. jonathan: that is the science. dr. fauci speaking with abc. alongside kailey leinz and matt miller, i am jonathan ferro. we have a ton of questions on this new isolation guidance from the cdc and some interesting comments from the director of the cdc in the last 24 hours. let's get you to it with an epidemiologist from the johns hopkins bloomberg school of public health. the cdc has cut isolation from 10 days down to five. no symptoms, you can go back to work. some companies, particularly on

wall street, require negative tests to get into the office. the director of the cdc suggested you should not look for a negative pcr tests because you might test positive for up to 12 weeks. if you have tested positive, you have completed five days of isolation, you no longer have symptoms, should companies drop the requirement for a negative pcr tests? >> there is another piece to the five days, you need to wear a mask for five days after. it is still 10 days, but it is five days of isolation and five days of mask wearing. the issue with the testing is pcr tests can indeed stay positive for longer. it is not really informing whether or not you are infectious for others. the antigen test tend to have

shorter positivity, and they are looking for the virus. of course, you can still have a positive antigen test when you are no longer symptomatic. the issue is the five days after the end of your symptoms and then five days of mask wearing after that. jonathan: for so many people, they have been shut out of the workforce for periods of up to two weeks. now to go into some places, they will need that negative test. as we understand from the cdc director, we don't understand the relationship between a positive antigen test and transmissibility. can you shed some light on that? >> it is true. that is why there is the five-day masking afterward. we think you are much less

infectious, but you still might be shedding some virus and might test positive. the test positivity after you have had covid is a challenge. the big change happening with the new guidance, and this is happening with schools, the test and stay. we were locking people down and having them stay 10 days out of work and school for exposure and not having covid, and that is a change. there needs to be more testing for people who have had exposure. kids can stay in class, people can stay at work who did not have covid, but a potential exposure to covid with a negative test. in those cases, the testing will be more meaningful. kailey: i am glad you brought up schools. caretakers, if their child is home from school, they have to consider that. hospitalizations are climbing

substantially. children of a certain age received a lower dose of vaccine to begin with. with omicron, do we need to think about the dosage or boosting children? >> we are recommending boosters for everyone over age 16. the trials are underway for looking at boosting kids. it varies across the country and the world, but it looks like 60-40 omicron-delta. we are dealing with both variants at this point. both can infect children. it does appear omicron, is infecting more kids. cases are exploding. hospitalizations are only up 11% across the u.s. kailey: how much of that is because hospitalizations and deaths lag with case numbers?

>> that is certainly a part of it. hospitalizations are slowly increasing, case numbers are exploding. we had the largest number ever yesterday, over 400,000, and we are still not doing enough testing. we know that is an underestimate. we also know there is a lag between hospitalizations and deaths. so far, the death rates look lower. the good news is they look lower in countries that have been dealing with omicron longer, like south africa. matt: i noticed you are a professor of human rights. what is your take on vaccine mandates considering the u.s. has a pretty bad history with

forcing medical treatment on a lot of groups? >> first of all, let me say we lost desmond tutu on the 26th and he was an incredible champion of public health and human rights. the argument he would have made, not so much about mandates and rights, but more about access and rights. he was a champion for ending vaccine apartheid. that said, mandates have been constitutional in the united states for 116 years. mandates work. there is evidence they work. it takes the onus away from the individual and moves it more onto employers and government. that can have a big impact on people.

we have been under of vaccine mandate at johns hopkins for many months and the university is mandating boosters for people who want to be on campus and i think that is totally appropriate. jonathan: it is good to catch up. we asked the question a couple of months ago, how quickly would it be, how long would you need before you need a booster to become fully vaccinated and we are basically already there. you wonder if it will be another four to six months before you are required to get another shot. we still don't know, do we? matt: absolutely not. health care professionals we talk to say we need more data. i get a flu shot every year. i continually get flu shots. i am never fully vaccinated against influenza and i plan to continue. jonathan: there is a difference. you get a flu shot, i get a flu

shot, and typically i do not care if kailey got a flu shot. matt: i would prefer she did. kailey: noted. jonathan: this is bloomberg. ♪

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♪ >> we are going to have a very volatile your ahead of us. >> we haven't seen is how they react when the ecb money gets pulled back. >> the buy the dip half-life has been shrinking. >> we won companies that aren't predicated on free money. >> the story ahead has got to be earnings. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: is it the beginning of the end for easy money? for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside matt miller and kailey leinz, i'm jonathan ferro. your s&p advancing 0.2%. it has been all-time high after all-time high. kailey: the most since 1995. we could see another today, possibly even tomorrow. it has been