and then the fed has caught up and now the markets are racing ahead again of the fed, pricing in twoikes next year, three in 2023, and more each year after that to get to 2% funds rate. and we are generally taking the under. we think there is a good chance, in a year from now, certainly two years from now, just as the fed is moving into action, to lift of the funds rate, that demand will be weaker in supply is coming online, and inflation and growth are both rolling ford. jonathan: you are pushing back on where it is priced right now, right? mike: i'm looking at the five-year tips. it hit 3%, meaning the breakeven inflation rate was 3% a year for five years, we are taking the under. jonathan: exact, where you? -- so, zach, where are you? zach: we see a gap. we have mid-2023 lift off. the risk is certainly scooted towards a sooner rather than later, but when anything about when the fed tapered in 2013-2014, it finished in october of 2014 and did not hike until 2015, but it again in 2016 -- but it began in 2016 and they waited another year before. so i expect this to be quicker this ti

the feds randy quarles will be speaking. a lot of focus on the fed.r testifying before the house finance committee. that is worth paying attention to. president biden speaking on infrastructure in michigan. that was the delayed speech from last week. we have the eu council dinner in slovenia focusing on china. alix: i am interested in that dinner. it feels like europe is stuck between a rock and a hard place when it comes to china. tomorrow esther george will be speaking. or as johnson speaking. the tory conference. eu leaders balkan summit as well. a little geopolitics into little eco-data. coming up on television, heather boucshey joins balance of power with david westin. david is in d.c.. here guy and i are going off to radio. the cable on dab digital radio. this is bloomberg. ♪ >> from the world of politics to the world of business, this is "balance of power" with david westin. ♪ david: welcome to this special edition of "balance of power" coming to live from capitol hill to our bloomberg and tv and radio audiences worldwide. we have come to washi

another slate of fed speak including fed chair powell.his is bloomberg. ♪ jonathan: live from newark city, i am jonathan ferro. this is "bloomberg real yield." existing home sales on thursday. the fed with another slate of fed speakers. it all concludes with chairman powell on friday. back with us for final thoughts, marilyn watson, matt brill, and krishna memani. is the labor market tight or loose? krishna: labor market is loose but very tight. matt: it tight. -- it is tight. marilyn: tight. jonathan: every overpriced in this market? matt: yes. marilyn: yes, maybe a little bit. krishna: emphatically yes. jonathan: all on the same page to varying degrees. 10 year yields, 150 or 160. we couldn't break 180. can we break the year to date highs by year end. krishna: yes, it is entirely possible. matt: i don't think we will. marilyn: yes, they could. krishna: krishna, we have done this for years. krishna memani, marilyn watson, and matt brill. thank you. enjoy your weekend. that does it for us. from new york this was , "bloomberg real yield."

our guest joins us covers the fed. you have been focusing in on jay powell, the testimony given, and what we seem to be learning that there were traits going on that perhaps makes you -- trades going on that perhaps makes you wonder should they have been allowed. is he tackling things swiftly enough to fend off opposition like elizabeth warren? >> that is a good question. this trading has been going on for years. it has been recently highlighted in the context of the covid recession because you had such volatile markets last year, so you had a lot of people who were shifting money around at a time in which the markets either went way up or way down, making a lot of money or losing it. that, in retrospect, looks very questionable. in fact, jay powell at the last press conference said he did not like it at all. you had two of the people involved in the trading resign. you have investigations. it has muddied the water in terms of powell's reappointment possibility. romaine: we will hear from the senator elizabeth warren a

in the system regardless of what the fed does. >> there is -- the fed is going to taper you know, they are going to taper before they increase rates. that's definitely been pretty clearly signalled. the question is, does the taper really affect both carpet earnings and people's wages? we are seeing wage inflation we are seeing input cost pressures, labor shortages remaining the dominant themes along with these supply chain constraints. but higher wages and cost pressures lead to a healthier balance sheet. and corporate balance sheets are still in good shape is we are showing some of the stocks you like, led by facebook. we obviously got the advisory board 20d. they came out and said facebook is not doing everything they should be doing. it seems like facebook bulls don't care about anything but the fundamentals of the company itself the fact that you basically have a duopoly with alphabet for advertising and that's all that matters. they make the argument that the stock is cheap as well is that the camp you are in, everything else is simply noise? >> it is not just simply noise, but th

we need to hear from the fed. there is an important fed reaction function here. it is not about tapering. they have to tell us about hikes , have they change their idea of transitory. that's what people will be looking for, but i think we are talking about labor force participation for many months. lisa: what is the market seeing now that expectations have risen? priya: i think the market is looking at the word transitory in a bit of english-language cents. transitory was supposed to be three months, six months. your we are almost a year later. i think the market is saying this is not transitory. at some point this is going to call the fed's bluff and they will be forced to come in. we've moved the timing cycle much sooner. they can absolutely start to hike, but if inflation remains high because there has been a structural impact of covid on inflation, i do understand why long-run inflation expeditions are higher. i struggle with the fed reaction function that is essentially getting priced in. lisa: let's talk about how to read different combinations of reports.

at least according to the fed. but i mean, for the average american who may not be investing in the stock market yet, at the same time, they're watching their grocery bill skyrocket. what does that mean for them? i mean, is that something that seems to be even on the feds radar right now? you would hope that it would be on the feds radar because the fed primary mandate is indeed minimizing inflation. in your correct 45 percent of americans do not own any stocks at all. in fact, the majority of stocks are concentrated in the hands of very few americans, a very small percentage. and you would hope that the fed would see its policy is very damaging to nearly half of the american public that is not on the receiving end of the liquidity that the fed has been pumping into the markets. and in fact, is indeed suffering these higher prices. these are very real things. you know, i'm, i'm at the grocery store. i see that a gallon of gas and a dozen of eggs and a pound of beef. all of these prices have risen. these are very fr

fed officials do get concerned.ut we are very used to volatility in food and energy costs which is why we often exclude them from the inflation metrics and look at the underlying core metrics. that is excluding food and energy. underlying rental costs, this is -- or housing costs, i should say -- this is an extremely large component of the overall household balance sheet. if we start to see these prices rise, this could quickly eat into consumers' ability to go into the market place and use discretionary income, thus undermining demand, and by extension, potentially the broader recovery. lisa: basically, this is something that fed officials and central bankers don't have control over because this is a supply side story and these have to do with disruptions that will eventually abate. at what point do central bankers have to pay more attention and say we have to respond, even if it is not our fault, and even if we can't really get ahead of it directly, but perhaps indirectly can take some of the froth or the heat out

. >> it keeps the fed taper on the table. jonathan: joining us now is our guests. does this meet chairman powell's definition of reasonably good, 194,000? >> i cannot speak for chairman powell, but it meets my definition of reasonably good. clearly, they were way off. i think the bigger future is covid and pandemic related disruptions are going to continue to be really noisy. we have to continue to look at the longer-term trends and constant details within the top headline number, and i think for me and likely for the fed, the tapir is still likely going to be on for the november announcement. jonathan: this is the quote from chairman powell, it would not take superstrong employment report better recently good report for me to feel like that test is met. is that testament? >> for -- is that test met? >> for sure. this confirms everything else we have seen in the economy. if you want something, it is going to cost more. it does not matter if it is goods or services, or if you wanted a job, then your employer is going to pay mo

we are also generally more dovish on the outlook for the fed.e are looking for a rate hike in 2023. there's an element here that we get this extreme move in the dollar, we reprice the fed, but it is probably going to ebb little bit into later this year and 2022. i think the dollar probably softens a little bit in 2022, but we've got to get reengaged for what will be the start of the tightening cycle in 2023. we've got to respect the ranges and some of these major currencies, even though it is a little bit higher for the dollar. jonathan: appreciate that. just some insight there into a broader relief in this fx market. we haven't seen the capitulation i don't think just yet on the dxy. tom: that is really well said. what is the set up now for a cathartic capitulation? we are nowhere near there. mark mccormick was lonely a year ago talking about dollar resilience. i miss them all. you know, we miss them all. jonathan: they sent steve major off to hong kong. what did they do with ben laidler? tom: we ask a lot of questions. jonathan: we can talk ab

in the fed chair.n alternative? would you support brainard >> the question right now is the renomination of fed chair powell i have made my position clear on that i'm not going to talk about other ominees. i don't talk about private conversations with the white house. i'm making it clear i cannot support chair powell for renomination. >> senator warren, thank you so much for joining us. we appreciate it as always. >> thank you for having me. >> a myriad of topics. i'm sure we'll discuss later on in the show. >>> up next jeff rosenberg will discuss the risk of stag inflation. we'll be back in a couple. our clients come to us with complicated situations that occur in their lives. for them it's the biggest milestone, the biggest accomplishment, the sale of a business, or an important event for their family. for them, it's the first and only time. we have seen this literally thousands of times, in thousands of iterations. ♪ ♪ i am vince lumia, head of field management at morgan stanley. whether that's reti

fed parlor game.ow, subadra rajappa joins us, head of u.s. rates strategy at socgen. how important is the adjustment in the fed message? do they have to catch up where the market is on maybe slower growth and may be a more controlled inflation? subadra: not really. i think for the most part, you are going to consistently hear the same message from all of the speakers, that they are probably going to be very careful and cautious on rate hikes because of the fact they just don't have information on the inflation front to guide the markets toward rate hikes. that is why i think you are seeing a little bit of adjustment in part of the curve this morning. we did see the market fully price in three hikes by the end of 2023, and now you're going to see a little bit of guessing based on what the fed is saying. tom: equities are on a tear. what does that say to you for the overarching strategy, particularly in fixed income? reporter: i think -- subadra: i think low yields are here to stay. you have to go out t

the fed has been very clear.e average inflation targeting is a major change in the policy reaction function and it says clearly the fed wants to see more inflation surprises, more inflation overshoot. in a stagflationary environment they are going to tolerate that higher degree of inflation. let separate the conversation. -- the two concepts. i think if we face that environment in the future of stagflation, they will err on the growth side than on the inflation side. tom: none of this is not only in what you and i read but the three and four tomes we read on the bond market. it goes back to one single chart. this is the chart that matters for chairman powell. america. down we went in the financial crisis. on radio it is simple. we plunged and made it back only 70% or so. jeffrey rosenberg, is this market worried about economics or just simply worried about the job count in america? jeffrey: it has been clear, particularly on the tapering, on the dynamics and the restoration of some of those covid impacts. it is m

collin: i think it puts the fed in a difficult position and situation.t was a year ago that they change their policy to allow inflation to get a little high, and i do not think they were expecting five percent readings 12 months later on a sustained basis. i think they have boxed themselves in a little bit. i do agree with matt, the tapering will not have any impact there if it is well communicated. for us, we think risk is if the fed would be to tighten faster than the markets are pricing that in, just because of the high inflationary numbers and the concern in the markets. what that does to inflation expectations, we think that would limit any upside and long-term treasury yields or pull them lower if they were to preemptively tighten and choke off. jonathan: subadra, your response? subadra: i agree with the other speakers. the concern is not so much on the tapering side for me, because even with the expectations for tapering, the fed will be at about $600 billion once they are done with their asset per search program -- asset purchase program. it's re

the minutes of the last fed minute are out any second now. it could include key insights into what policy makers are thinking about inflation and the taper time line. >>> also breaking the bottleneck the white house attempts to ease the backlog at the ports are transportation companies already maxed out? a top analyst weighs in. >>> buy this, sell that. our monthly report of flames to own and the names to ditch in two sectors. >> frank, welcome. thank you. >> ahead of the fed minutes let's get a check on markets dow is down 15 s&p up 11, nasdaq 92 at session lows the dow was down 250 points the ten-year hovered around 176 early in the week, yesterday morning. and now at 1755. steve liesman has the key headlines for us he's digging through them right now. bob pisani at the nyse ethan harris and mike santoli join us. ethan, what's the base case for fed tightening at this point >> we don't think they are actually going to get going until 2023 in terms of rate hikes. we will probably here a about tapering. >> when you say on the verge of tapering

if the fed continues to buy u.s. treasury securities and mortgage-backed securities every month, tapering is the process of reducing those purchases, ultimately bringing them down to zero. host: when they do that, what is the schedule? how much is that subject to change by the winds of commerce and this debt ceiling issue that has now been printed -- punted? guest: let me defer to comments that have already made. in a high level, back in october, fed officials announced that they were considering the possibility of begetting the tapering process. that could occur as soon as november. they have an upcoming policy meeting where they might announce that. the debt limit might be punted. hard to say. chairman powell has always been clear that monetary policy is not preset. we need to react to changes in inflation, the job market, the debt limit. there is no clear guidance about when they would begin the tapering process. last i saw surveys of market participants, these are the banks that fewer operate with in rocket opera

that will determine how much the fed can tighten.seen a lot of businesses that have had to take on more debt as a result of the economic disruption associated with the pandemic, so when the fed starts raising rates, we think it will turn out that the economy is more interest rate sensitive than people thought. the other thing to keep in mind is the fed balance sheet is much larger than pre-pandemic and if they want to normalize their balance sheet, that means they will hike the fed funds less than they would otherwise. that suggests the target rate and this cycle will be lower even than it was last cycle. jonathan: tiffany, thank you, and congratulations for 15 years at pimco. bill gross, 1971. tom: starting in the mailroom down in the basement of the pacific investment management company, literally sorting mail. the gentleman out of duke was doing it. pimco has been legendary for the phrases of mohammed and others following on, but to me, transition is a struggle to figure out this great mystery of the new technology. now and 10 yea

the fed will be on track, probably for its taper.es not mean anything at this point in terms of a tightening. the fed is at pains to make sure the market understands that just because they start tapering they're not ready to start tightening. the numbers today might create an argument. you and neil dutta can get into that about whether the headline number is something the fed should react to or the core number. core number state where it is and could start to come back down. gasoline was up 1.2%. in august it was up 2.8%. the oil price rise is not filtered into that headline number. that will come next month. tom: 3.27 dollars a gallon on aaa unleaded. whether it is topline or poor, 47 other flavors of inflation, it is an art unto itself. on this and on the american economy we welcome neil dutta, renaissance macro research head of u.s. economic research. we are addicted to 7%, 8% economic growth. omg, economic growth is coming down, but what permeates your growth, demand is pretty good. are we still in a boom economy? neil: absolutel

i think some of the fed disagree with me. jonathan: i think a few do and i wonder if that division can be hidden over at the fomc. he is flirting with higher interest rates. the same story applies to the u.k. in many ways, yet you have a central bank thinking he has to roll. why do you think that is? matt: i am not as much of an expert on the bank of england versus the fed. with the fed, you get somebody like powell, whether or not he is going to be a chairman going forward brings some of that into play. you have other major issues going on in terms of the energy crisis and that is on people's mind and people paying more for natural gas. they are saying good central bank needs to help us out. there is some regard when it comes to energy because that is a huge component. in the u.s., it does not matter as much. gas prices are going up not the same as england. jonathan: what does apple know that we don't? matt: apple knows that they can borrow for cheap and they can continue to turn out maturities. but apple is under leveraged.

the boston fed president and dallas fed presidents will have their board picked their replacements because they are stepping down. they are private banks by title and then they do not get their funding from any sort of government appropriations out of the federal government in d.c. but they do report up to the board of governors in washington dc. there are weird message -- even though it is independent in atlanta that takes the fed president, the atlanta fed president has to be ratified by the gourd -- board of governors. every five years, they review the presidents and ratify or approve that the atlanta fed, this board felt this is the person that should lead this institution. there are these controls that make it such where even though the reserve banks are private, they go up to a reporting structure at the federal government level and i think that is interesting. it is dizzying but that is how the federal reserve operates. pedro: you can find the reporting work of our guest at finance.yahoo.com. thank you for joining us. hope you will come back. brian: thank you, pedro. [captioning per

, fed moving faster than previously expected.saw this with some of the rate hikes brought forward and still the rally. do you think this is ultimately an endorsement at the market will sell off if the fed does not act quickly enough? margie: i don't. you can see what the fed is going to do is a very modest cutting back on its fines, which is positive for the market because the fixed income markets are starved for long-duration securities. i think it is a plus and i do not think it will have any effect on the economy at all. jonathan: at what point will rate hikes start to print growth? could it derail the rally we are seeing or do you see that is baked in even if we get two rate hikes before next year? margie: i think the economy is on track to continue to expand. the u.s. will be one of the highest growth countries in the world because corporations and consumers are in such good shape. we have consumers that have enough savings that many people do not go back to work. corporations are awash in cash. those are the foundations for

i dallas fed president, robert caplin and boston fed president, eric rosen grand, have both resigned to spend more time with their massive stock portfolios. right, so to the of the central bank chairs in america were caught red handed, stealing, trading on inside information, milking and building the american public, distorting markets, causing financial mayhem. and essentially, operating as, as i've said many for many years, people think it's a bit of an exaggeration, but i think it's financial terrorists. i don't think it can make any difference between j. powell and extremism in any other country. this is financial extreme as of the results are ideologically unsound, producing and deaths. i mean it's, it's a financial terrorist. very, very nice atlas, compare it to what frederick boss yet said, where you know that when corrupt men come together, essentially they'll create the laws that justify their corruption. and one thing like dallas fed president robert caplin was own like or an act of hedge fund. he was like his own hedge fund. she was actively treating. and now it's importan

we are seeing it through the fed's own numbers. morgan stanley's ceo james gorman speaking to our colleagues guy johnson and sonali basak. let's get to vonnie quinn for the first word headlines. vonnie: more fed voices are sounding warnings on inflation. the richmond fed president said prices today are more broad-based and it is time to have a conversation about tapering. st. louis fed says inflation is rising at the fastest pace in 30 years and central banks can't count on it being transitory. >> while i do think there is some probability this will naturally dissipate over the next six months, i would not say that is such a strong case that we can count on that happening. i would put 50% probability on the dissipation story and 50% probability of a persistent story. vonnie: chinese president xi jinping says his company will set up a global innovation center for sustainable transport. xi pointed to his country's successes and transport infrastructure, from high-speed railways to large aircraft. it is the third speech in less than a

lisa: which fed speakers are going to speak. this follows yesterday's rash of fed speak as well. i wanted to point to one statement by christopher waller where he said it's the upside risk comes to pass, inflation above 2% then i will favor lift off sooner than i now anticipate. we talked about how they separate the idea of taper from left off, it's not that separate even in the minds of the governor and the fed officials were looking at inflation that continues to run hotter than they expected. i'm very interested to see how this up -- reply to these disruptions. we did see the gdp now pass from the atlanta fed actually showing deceleration. this basically is a gauge of real-time economic here. it is palpable but not negative. and pretty much predictable because we did see gangbusters recovery after the turn off of the economy in the wake of the pandemic. aftermarket, tesla is planning to report earnings. expectations of the road ahead. the key issue, of the chip disruptions, the chip shortages. how much is this affecting sales when the u.s. is trying to figure out how they can

well, the fed chair, jerome pal, i j. pow. he says, well, inflation is high and unemployment rate is high. so. right, right. a step to play, the fed has 2 jobs. one is full employment. the other is price stability. so there are failing on both of their primary jobs. and in a way that was predictable. because if you're simply printing money to bail out bankers all day long, you create a situation and what you do not have any reliable price discovery, amy economy for any of the components that make up the economy. this leads to both corruption and mal investment, a wealth and income gap. and as we see now, stagflation you have on employment high and inflation. those high in both of these things are now structural cyclical. they cannot be cured by simply extending and pretending they can. if the u. s. or to introduce 100 year bonds or 200 year bonds, that's not going to solve it. negative interest rates are not going to solve it. this is now pretty much heading toward a well catastrophe. yeah, and again, one analogy with made in

fed will look like next year? is incredibly difficult. you really have to look at the labor art look and growth outlook, and on top of that, you don't know it today is going to look like over the next year. what we do know is the competition will likely look more dovish. we will have a more dovish forecast and it will be replaced with something more dovish. more importantly, the voting members will look a lot more hawkish. from original fed, voting block, in 2022, it will be a big lock of voters that will expect to raise rates next year. even if you get a more dovish share, like governor brainard, it will be difficult to push back as long as inflation is above its current forecast. tom: full the china dynamic into it. in your calculations 12 months for, it is undoable is in it must mark >> sure. china and china growth, the impulse from that has been a really important driver for growth in mix over the past decade, and that is likely to be softened owing forward it offsetting that is the story at the moment primari

if the fed being really careful, the ecb is closer to the fed and the fed to the ecb.aybe there is not so much divergence between those two. alix: we appreciate it. thank you. i have the fed and the ecb closer than we may have thought. my question becomes, let us say that ecb does hike in november, does that do anything to condense the demand that is helping because the supply shock and the higher prices? guy: monetary policy is the wrong tool to deal with supply-side shocks. u.k. has all kinds of other factors into the mix as well. the brexit story is a supply-side shock as well. you put this altogether, you ultimately have to deal with the demand side. you have got to figure out a way to balance those two. it feels like a what instrument to do that, but maybe it is the only instrument that is available. i am concerned about what is happening with the physical tightening and a monetary tightening at the same time -- fiscal tightening and a monetary tightening at the same time. alix: what positioning is in the senate for the human infrastructure? joe manchin dug his he

the fed is in a tough box and the challenge is the fed has to take the regulatory and fiscal policiesshington as a given. they can't influence those policies. to the extent those policies are working against with the fed is trying to accomplish, they are really in no man's land in terms of a struggle. i inc. -- i think if i am chairman powell, they are really in no man's land. i think if i am chairman powell, i state the course we are on, as unnerving as it is, because to see inflation running this hat is really unsettling. there is a fear that we untangle inflation -- unanchor that, it will unquestionably plunge us into a recession. erik: a huge risk what you think the fed under chairman fall should state the course? ken: i think he has to stay the course, given his dual mandate. it is not what we would want to do, it is what he is directed to dubai mandate. -- directed to do by that mandate. once we changed the fed's mandate to something more nebulous, the opportunity for government -- erik: there was a lot of talk that the fed had become politicized. do you think the fed has become

it is a path renomination, and some fed washers say that the quick actions will deal with senior fed officials. european government will result in a steep to tech china. they will retain core digital platform such as amazon and facebook. the global tax deal will come into effect, and they will refund any levies in excess of the agreed rate. carbon reduction is lowered then anticipated, due to a mobile chip shortage. manufacturer says it will make 500 thousand fewer vehicles in 2021 due to lack of components. they previously predicted a shortfall of roughly 200,000. authorities are investing after confirming alec baldwin shot two people in an incident involving a prop gun on a set of a gun in new mexico. a cinematographer was killed and a director was wounded. the production has stopped. global news, 24 hours a day, on air, and global quicktake. this is bloomberg. >> the past has become more uncertain lately, and we believe over that five-year time horizon, it will remain uncertain, and is because we think we are moving into what we call an age of transition. there are some also downs

the fed is fighting the last war. what is the war the fed should fight in 2022?s: in the debate there is increasing talk about taking into account financial services risks, the market liquidity as well. those characteristics should probably play more of a role in tomorrow's fed policy, including the sharp increase in debt we see at the private level and the public level. jonathan: there's a difference between em and dm central banks. dm central banks can look through things like inflationary episodes driven by a fuel shortage. em central banks can't. they have to hike to anchor their currency to make sure inflation expectations don't run away. do you think dm central banks might need to get used to a different set of circumstances? there is something bridgewater brought up. maybe central banks and policymakers should stop getting what they want all the time. what do you make of that? thomas: regarding the bank of england, the pound is dropping on the back -- the more hawkish they get, the more the pound is dropping. they may be starting to do a policy mistake by

get this, and the fed will be tuesday and wednesday. china will be kicking things off monday with pmi's and the ice manufacturing numbers here in the united states. finally, closing out the week, you have the main event. eight jobs report. great to hear your heavy with us. let's start with you. what are you looking at, not only the fed, but he pushed for to payroll friday. >> i think those are two of the factors we are looking at. look, ism manufacturing numbers are really important when we are talking about the supply chain shortages, we are looking at regional tmi's that held up pretty well, and we want to see what the trend is looking like, and the numbers give us a low bit better idea than having to wait another month to get numbers. looking ism, rotting how they're going to set up tapering, and in the jobs report, we have a lackluster report for the last couple months people have been anticipating individuals going back into the labor market, so let's see if that happens with a weekly jobless claims or should be a decent number, so

we just heard from the president of the philly fed. he says he does not see hikes going into 2022 or 2023 unless inflation changes dramatically. paul: economics and policy editor kathleen hays. breaking news about boeing. the former boeing 737 max chief technical pilot has been indicted for fraud. the department of justice said the former pilot allegedly deceived the faa and provided materially false information. this relates to numerous problems the 737 max had faced. it comes on top of other issues regarding the seven or -- the seven 87 dreamliner's. this news coming out of the former boeing 737 max chief technical pilot has been indicted for allegedly deceiving the faa. we will keep an eye on that story. shery: take a look at after hours trading for johnson & johnson as well. we are seeing breaking news they will be forming a unit called ltl management to hold the manage cleaned. the unit will be filing for voluntary chapter 11 bankruptcy protection. for the payment of amounts, the necropsy court determines are owed, they will estab

we don't think that the fed will move preemptively. we think the fed will be more cautious.iously we will get tapering of the asset purchase program later this year, but we are looking for rate hikes in 2023. even if we get one rate hike in 2022, we don't think that derails the equity market story. lisa: what is the breaking point here? nadia: if you start to see two or three rate hikes, that will be a moment for the market to take pause. people will become concerned that the fed might be moving to aggressively. as we know, historically, outside of the most recent recession, most recessions have been caused by a fed mistake, so that will give us some pause to think about a potential policy error here. tom: will we see combinations, transactions that are simply about the dreaded word synergy? it has been sort of quiet this year, i would suggest. as we come out of this pandemic, is everybody going to get the urge to merge? nadia: i think you could see a potential pickup in, day activity. i think there's a lot going on in washington around corporate tax reform. what does that r

what was it -- three weeks ago when he said with the fed taper. you're still going to be buying is the fed the equivalent of qe2 plus >> exactly >> there is a lot of liquidity in the system. you just have to get by what is this rough and somewhat uncertain patch and earnings will help you disseminate what the real state of corporate america is and what the outlook is going to be, but why would you sell -- why would you want to sell into what is only a delay and not a derail >> and that would not necessarily be our recommendation we wouldn't necessarily be selling. we'd be much more cautious with regard with deploying new capital and holding on to existing capital you're 100% right that if you look at fundamentals, earnings are still predicted to grow very rapidly. we're in a situation where earnings predict the grow and the s&p is up about 18%. so we're seeing multiple contraction right now and if you look at the underlying fundamentals, the fact of the matter is if you look at the employment report, yeah. you have very good news on the demand sid

the fed does worry about inflation expectations.2.5%, it is in line with their long-term projection. should it get out of hand here, we could expect a more hawkish stance or shift from the fed. that would be our expectation. dani: so wonderful to have you on this morning. thank you. coming up, the s&p saw another record yesterday underpinned by a solid earnings season. big tech fueling those gains. we'll have more on that next. this is bloomberg. ♪ dani: the sapp saw another record yesterday. one move came from tesla valued at over $1 trillion. new records. what do you make of that? >> a lot of optimism from the tech sector. if you want to pick one thing that is extraordinary for this market, it is tesla. not just the big order from hertz but the fact that tesla outsold other european car makers last month to be the best selling car in europe is extraordinary. that is a major statement on intercept from an electric vehicle company to beat europeans on their own ground. $1 trillion, nothing less than extraordinary but it shows you th

long as powell said today, and how people get used to a higher inflation rate and quite frankly the fedsn't know these things either so it's -- it's a question of what -- if you do have high are interest rates or they taper the entire interest rates, you know, you can't love the stock market as a trade necessarily on the other hand, look, if they stay here at 160s, but the ten-year wants to stay in the 160s the stock will probably go up in the short term and you know, that's what will happen. you know, it's a question -- the problem i have with saying that is it seems so stupid to invest in bonds at 160. >> and yet, i don't know, maybe people will continue to do that if they think that rates will continue to maybe stay where they are or move lore. all of the risks that are out there you have to balance that against the fact that there's still a tremendous amount of liquidity in the system, right, david? even with the taper, you still have the equivalent of qe2 and then some. does that supersede many of the risks that you see out there >> i don't know. listen, at some point value has to

the other important factor, what does it mean for the fed policy?ell has been clear saying it does not need to be an exceptional report, just a strong one. 500,000 jobs added is the consensus. more details, next. is is bloomberg. ♪ dani: good morning from bloomberg's european headquarter. it is 6:30 a.m. i'm dani burger. this is "bloomberg daybreak: europe." the senate extends the debt ceiling cap to december, averting a default for now. it stocks rally. investors eye the latest payroll data. it treasury yields tick higher. china adds to risk sentiment, returning to the market after a weeklong holiday. pboc pulls back support, draining cash from the banking system. will the fog of uncertainty be lifted in this market? that is a question -- the jobs number could help the equity rally, but what we need for it is stronger footing, and the sense inflation is getting under control. and indication supply chain pressures are easing. we need more time. does not seem like it will be fixed anytime soon, hence the volatility in these markets. let's get a quick

jonathan: what is the fed's role in all of this? that is something we are going to have to -- the fed has make a hawk us -- hawkish pivot. i think you want to finish that and wind it down in mid 2022. expectation is high right now. markets are too aggressive in pricing in over 100 basis points of rate hikes by the next two years. i think they will squeeze in 100 basis points within just one year. i think at some point you get the fed send we are going to be cautious, and they want to measure. jonathan: you told us what the market is pricing, what are you looking for? how big is the spread between you and everybody else? lara: i think they stay on hold until 2022. i think then you get maybe one rate hike the end of 2023. we have seen the fed, optimistic on the economy, hoping to can have the room to raise rates but they have given themselves more runway than they have. lisa: what is the datapoint the fed officials will cling to as justifying staying on hold as long as you think? lara: i think we will see inflation come down. it remai

we have the fed's evans, bostick, kashkari, and bullard all discussing the outlook. am curious to see what we have been talking about this week which is the idea of tapering bond purchases and how that relates to raising rates. christopher waller said yesterday the upside risk for inflation comes to pass with inflation considerably above 2% well into 2022, then i will favor lift off sooner than i now anticipate. how much this gains steam among said officials as the market prices and wanted to rate hikes be they end of next year. 2:00 p.m., we get the fed beige book. curious to say what they -- to see what they say about supply chains. how much is this due to the slowdown in the auto market? is this a broadening out in the areas that have been affected by the supply chain kinks? aftermarket, tesla is reporting earnings. the share is up 22% so far you to date. how much do they say about chip shortages? how much is this impacting production? what do they say about china as a place for their factories? jonathan: i am looking forward to catching up with dan ives of wedbus