fed chair jay powell in the fed, that is what they talked about. the central bank could scale back as seen as november and complete the process mid next year. we are going to focus on that in the various risk of their facing the taper timeline from the u.s. political deadlock, to china, to covid, all of the things that may disrupt the timeline. we are also going to talk about the relationship between the fed, rates, and inequality. is inequality pushing the fed to do what it does, or is the fed fomenting that inequality? let's hear what fed chair has to say himself. >> i continue to expect that it will be appropriate to remain the percent target range for the federal funds rate until labor market conditions have reached levels consistent with the maximum employment and inflation has risen to 2% is -- and is on track to exceed 2%. if progress continues as expected, the committee judges a moderation may soon be warranted. while no decisions were made, participants to generally view that so long as the recovery remains on track, a gradual tapering pro

from the boston fed and over at the dallas fed as well.ed to talk about what is happening in the bond market. goes through 1.50%. we need to head down to d.c. to get you up to speed on what is happening with this federal reserve and the boston fed. tom: our esteemed reporter craig torres joins us on short notice. your thoughts on what we would see from dallas after this medical condition in boston? craig: i don't know. that is kind of up to kaplan and his board. what i would say is we are in for some big changes in the composition of the federal reserve. potentially four openings at the board, now i president. that is -- now a president. that is potentially five new dots. that is very influential. all of these people will be participating in these discretionary areas like what exactly do you mean by average inflation. is it three years, five years, 10 years? what exactly do you mean by maximum employment? lisa: given all of the openings we have at the federal reserve and given the compositional mix that we currently have on the fed, what i

to go keep it right here we will talk more fed and the we will talk more fed and the markets after this i mean, put it this way. if i told you i'd been jarring raspberry preserves for 85 years, what would you think? (humming) well, at first d be like, "that has gotta be some scrumptious jam!" (humming) and then you'd think, "he looks fantastic! i must know his skin care routine." geico. saving people money for 85 years. beg your pardon. >>> the dow is up about 500 points after the release of the feds's decision or non-decision. the fed says if economic progress continues that tapering of bond purchases may soon be warranted. let's bring in bob heller, former federal reserve governor. bob welcome. what does "soon" mean to you in there was some discussion of how soon is soon >> well, i would expect it is probably in november, maybe december it's a nebulous concept. they should have said in a few weeks or in a month or two >> yeah. let's talk about inflation, which is clearly running hotter, double the -- more than double the target and the members of the board seem to be thinking it is go

do you think this fed sounded a little bit like the old fed in yesterday's news conference? i think that is a good point, in particular the discussion of rate hikes. powell sounded a little bit frustrated with that discussion. so i would say yes, it's under like the fed dialed back for five years. jonathan: they've told us they will tolerate higher inflation. if using about the long end of the yield curve, that is where the hope is. they have just been doing this, down into the right, from the upper left to the lower right. that is a problem, isn't it? that's not what we were told coming out of last year into this year. mike: against that, i would say inflation is running at a pretty furious clip. cpi is already up 5% this calendar year. forget about year-over-year. so 5% inflation year to date is a staggering number. the fed has got to be at least somewhat concerned, perhaps a lot concerned about that. i think that is why we had the subtle change in tone yesterday. lisa: how much do you think that their buying bonds contributes to that inflationary push? mike: probably not,

the direction of the fed, within the broader framework of the fed being overly dovish, it seems there is a hawkish move in terms of expectations. no >> you could say that. i wouldn't disagree with you, melissa. it's very slight though. i will be interested what the traders think about this if there is one in stead of no rate hikes in 2022, i don't think seymour would throw up his hands and scream start running for the hills. i don't think that's the way they would work. maybe guy would, but i'm not sure the point being it is a quarter point rate hike. if there was a reason to get nervous it would be the following scenario, the fed is tapering too late and then it gets to the beginning of ynext year and still on the 4 or 5% of that cpi and has to pull up rate hikes further. if we are going to be where the forecast is now, i would not consider that a major reason of concern. >> that's what jamie dimon hinted at in an interview overnight. bingo, because i think that's where guy would fall >> i can't run anymore so clearly i am not going for the hills. there is no question that in terms o

while the fed's monetary policy execution changed. i think powell said it last week, that hey you know, any fed official could own muni bonds because the fed would never buy muni bonds guess what, they started buying muni bonds, corporate bonds. before 08, they hadn't done that i think it changed but the code of conduct did not change. i think powell will have to respond to that. they will have to do a thorough look to answer the question officially, were there any other trades that are issued here and should the fed dramatically change the trading policies that govern federal reserve officials? >> steve, it's karen thank you for being on do you think that chairman powell can put this behind him quickly enough so it doesn't become an issue and whether or not biden named him to continue his chair? >> that's a great question i don't know the extent to which congress is going to make this into a major issue we know there are elements of the progressive part of the democratic party that seem to want a different fed chair for a whole host

how do you read the fed?ow does the data on the labor market plug into the nerve going forward -- into the narrative going forward? michael: the jobless claims numbers don't tell us a whole lot about how many jobs are added, but they do point to a downside risk for that report because as you mention, there is another increase. we go up to 351,000 from 335,000 last week. it does suggest that for some reason, there are more people losing their jobs. the other half of that is the total number of people who are getting claims. it is not up to the minute with numbers, but it falls to 11,250,000 from 12,106,000, but it is the day before benefits were cut off, so next week will be important. we will see if that benefit cut off really get people off the unplanned roles, and may be looking for more jobs. this leads into whether or not the fed does start its taper in november. unless it is a terrible report, they probably will. my isn't the market upset about this? this is the taper, which works out to about $15 billio

. >> anyone expecting the fed to give advance notice to taper in september. >> if the fed is pushing off tapering. >> if the delta variant slows the pace of hiring, that will be a problem. >> i thought a september taper announcement was in the bag. >> it is decidedly telling us that taper is a little bit away. >> that has to be pushed off. jonathan: let's bring in the team. let's start with your reaction to the payrolls report. >> i think the number was disappointing by any measure, especially compared to what we had in july, week headline number, jobs -- especially with the unemployment rate down, participation rate stayed unchanged. even though we have seen people trying to come back into the workforce, it is not as fast as the fed with like. from here on, every employment number will be important for the fed to decide if they will be tapering asset purchases at the november or december meeting. jonathan: jim young go? >> this number may have showed us that the july number of more than million jobs was an outlier and not this one. all the data we have gotten in the last month has b

the fed there.'s related. but how will we know when that started -- when we're starting to see that not work or signs it's not going to work next time >> i mean, i totally agree it is related to the fed, right. they've done such a good job telegraphing this tapering and the survey hikes that has butt ressed this buy th dip trade. monday we saw j.p. morgan come in and say we think this is technically driven and it's time to buy the dip and investors continue to do that throughout the week you're seeing it in the futures market today especially with the higher individual interest in marktss we've seen the past year, that's one thing people are watching how long will this trades persist and when will it stop working. that's what i'm trying to figure out as well. >> shouldn't we just keep it simple and say you know what, since it is, in large part, due to knowing the fed is there, if the fed starts the second derivative, startslessening the amount of accommodation and you see they passed the rube con an

coming up, special coverage of the fed.ecides with tom keene, jonathan ferro and kailey leinz. this is bloomberg. ♪ it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today.

in that the fed's code of conduct said fed officials should avoid even appearance of conflict.those trades in fact and holdings violate the fed's code of conduct? finally do you have a timeline when you might be done with your review, thank you, sir? >> don't have a timeline yet. we can start with that. so, let me address the muni question since that's, that's in there. i personally own municipal securities for many, many years and in 2019 i froze that, i'm holding all the securities, my wife and i to maturity. and munis were always thought to be a pretty safe place for a fed person to invest because as you know the lure was the fed was would never buy municipal securities t was not a common thing. then comes the covid crisis. i reversed that policy. i did it without hesitating. the reason was that the financial markets, including the municipal financial market were very much on the verge of collapse and it was time to go and we did but we also checked with the office of government ethics who looked carefully at it said i didn't have a conflict. that is one answer i wanted to s

the new york fed survey, let me talk about that specifically, and this is from the new york fed, it's only an 8-year-old survey, and it does, it does seem as though they're looking three years out, and it seems like there's a high correlation between three-year and one-year. for the most part, surveys are showing that households expect higher inflation in the near term but not in the longer term. and that's also what expectations are showing. so there are many, many different inflation measures, of course, and that's why we have this thing called the cie which is, it's an index of -- it's market-based measures, it's professional forecasters, and it's household surveys. it doesn't have a lot of grand theory about it. you put them all in and you measure the change. and also you measure things like the dispersion and that sort of thing. so you can look at all of that. and it tells the story of inflation expectations moving up. many of the different measures will also show inflation expectations moving back up to where they were in, say, 2013. which was before the really, the drop in infl

this signals a credibility issue beyond markets for the fed. >> it depends on if people trust the fede trust the fed, inflation moderates. if people do not trust fed, inflation expectations stay high, and it will push up inflation. lisa: do you think the market could have a problem or disruption if the fed does not signal tapering soon enough? >> i think the fed is going to signal tapering pretty soon. they are making progress toward their goals, setting up the notion of tapering at the next fomc meeting. tom: what is the effect of the u.s. dollar on all of this philosophy and calculus? we are different with the u.s. dollar. how does that make chairman powell's press conference different on wednesday? >> having the dollar as a reserve currency allows us to attract foreign capital on attractive terms as long as we have credibility. if people start to doubt the feds commitment to stable inflation, then the dollar would start to weaken. people might start looking around for substitutes to the u.s. dollar. tom: you have been a great optimist on this. within the body of the william dudley

fed does not belong. i have your reaction to that? glenn: it's hard to know what senator toomey is referring to. the fed has to think about the broader social construct of the economy. the same as any organization. you want to be clear that you don't have mission creep. job one is maximum employment. and financial stability. some of the social concerns are tied up in that, like climate change for example. the fed has to be careful to focus on its key jobs and do the work. kailey: 10 chairman powell continue to do his job? do you think he deserves a second term? glenn: that is of course for the president. i think he does. the vet has a good record during the pandemic period. certainly not with everything, certainly a good record. chair powell has the ability to talk credibly to people on both sides of the aisle. i think it would be a mistake not to reappoint him. kailey: let's talk about the press conference, do you think the fed can separate a tapering of bond purchases versus starting to hike interest ra

the new york fed survey, let me talk about that specifically and this is from the new york fed. it's only an 8-year-old survey and it does seem as though they're looking three years out. it seems like there's a high correlation between three-year and one-year for the most part surveys are showing that households expect higher inflation in the near term but not in the longer term. and that's also what expectations are showing there are many, many different inflation measures, of course, and that's why we have this thing called the cie, which is an index of, it's market-based measures, it's professional forecasters, and it's household surveys. and you just put them all -- it doesn't have a lot of grand theory about it. you put them all in and you measure the change, and also you measure things like the dispersion and that sort of thing. it tells a story of inflation expectations moving up many of the different measures will also show inflation expectations moving back up to where they were in, say, 2013, which was before the really drop happened around '14 and '15. so, that's not

of trades by fed officials.did not mention what trades specifically and who is being looked at, but fed presidents rosengren and kaplan resigned yesterday with questions surrounding trade practices last year >> we are also looking carefully at the trading that was done to make sure that it is in compliance with our rules and with the law >> reporter: both kaplan and rosengren said their trading were within the law and fed's code of conduct. powell said it may well be the case, showing the need for rules to change. >> even if as appears to be the case, i think appears to be the case, these trades were in compliance with the existing rules, that just tells you that the problem is that the rules and the practices and the disclosure needs to be improved. >> reporter: powell has promised a wide ranging review of the fed's code of conduct in the wake of the controversy. banking committee chair told ylan mui, you saw her in the previous report, he thinks fed officials should be barred from trading and owning individual

it is fed decision day.ory with evergrande evergrande -- that story with evergrande still moving. from new york city on radio and to, this is bloomberg. ♪ >> this market has been way stretched, and way overdue for a pullback of any kind. >> this could be choppy but 100 days from now we will be in a better position. >> the question is how much you want to be aggressive? >> this will persist for a while and the flood will have to normalize. >> the fed has given us a good indication of where it has been and where it's going. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morn

is the fed too late? has it missed the window? >> it is still there, it is smaller, and now it is more of a complicated maneuver, but the window is still there. it can move,er time hike you said the fed was late and it caused a recession. more progrowth, more supervision. it is not an engineering problem. it is ll. >> let me take you back to 1992 on the original firing like, there was a debate entitled resolved that if you want more jobs, the government should get out of the way. listen to this. >> a lot of people say they can't build houses, they can't afford the interest. why is interest so high. because of inflation. who causes inflation, the government. the private sector today has never been able to do it. a dollar is worth 1/6th of what it was. it one always rest blame at the feet of the federal government? >> no. there is no doubt that you can have governments lead to inflation through insporm fiscal policy andn countries where the central bank is not independent. that happens quite off. and it is a problem with many develo

jon: did the new fed sound like old fed in yesterday's news conference? >> i think you brought up a great point at the top which is we seem to have a bit of clarity on tapering. november feels like a kickoff and we finished middle to next year but to next year but beyond that, personally i was respond -- i was surprised we did not get more of a reaction from the market from the dollar coming out at 1.75%. the markets seem to'-- seemed to say may be, and they don't believe the fed can quite get there, and now, once we -- we will get taper out of the way, we know what the deal is and put much do already so the focus has to be on rates. we just don't have clarity there and it is weird, the lack of reaction where i thought it should have been much more like a bid for the dollar. lisa: the concern here is the dots might not matter, especially if these nonvoting members or people that could be removed and replaced by president biden. what you say when people look at the dots and say they do not reflect the main core of the fed? daragh: there will be a collectiv

the fed was very clear, in terms of providing us with a roadmap. as the taper begins, and we are around the middle of next year, we will have a volatile. of time. it may end of 22, it may be 23. we will start the process of normalization. given our view that the economy will continue to do well, we think that rate should be moving higher. i will give you the 10 year yield. we expect 175. it makes a lot of sense. >> does that make sense to you? >> i think you have to get to the question of what is driving the martian this week. -- market this week. we have to talk about what is going on and what is been driven by the stimulus. last year, we had a spectacular surge in growth on the stimulus that drove yields up to about 170. people began to wonder, you have fiscal headwinds, and the stimulus is dropping off. you saw activity leveling off and falling. you saw lower home sales, which maybe was constricted by biden, but but it will fall for a handful of months. that took us from 170 down to one teen. in addition to ever grand, there is acceleration. we

if anyone wants to point fingers at the fed -- point fingers, point at the fed policy. all of these people calling to audit the fed. there is skepticism around fed officials who have more power than ever. jonathan: not a situation you need. let's bring an wells fargo international economist. i want to start with morgan stanley. the argument we have made, it has been strengthened. do you agree? >> no, probably not. it is too early to sound the all clear. when you look in to the fourth quarter of the year, even though various governments have not put widespread restrictions in place yet, we are seeing some uncertainty. it is not necessarily related directly to the health scare. feeling unsettled will be a drag on it. kailey: perhaps it is the fiscal rolloff, the idea that the enhanced unemployment benefits dried up this week. although this goes into a weaker consumer spending picture. how much are you tracking that? how much credence to give to that argument? >> i do not think it is dire in any way, shape, or form. household disposable income was down in the second quarte

it's time for a special fed edition of "rapid fire."t themes to watch, steven raciutto and brian reynolds. it's wonderful to have you guys all on board our first topic is this the taper or just the tease for it fed chair jerome powell signalled the potential for tapering asset purchases at jackson hold but noted the need for improvement in many areas of the recovery, particularly the labor market you'll recall while the unemployment rate dropped to 5.2%, we only added 235,000 jobs it was half a million below estimates. so does this meet the fed's threshold for substantial improvement, brian >> i don't think so. we're close on unemployment to where they were when they started raising rates in 2015, 5.2 now, 5.1 then. but we know they did too much too soon back there so i think they'll wanting to see it go lower before they start raising rates so i think we're a ways away from a rate hike. >> steve, do you agree >> i think we're a ways away from a rate hike are we a ways away from taper? that's a different story i don't expect one announc

. >> next fed meeting. >> the fed is in a really difficult position right now. >> tapering decision which we know the fed is looking at. >> the pressure is there for them to taper. >> it will be dependent on the evolution of how the economy moves forward. >> whatever the fed is looking to do could probably be viewed as wrong. jonathan: he has got to thread the needle. joining us to discuss is victoria, krishna my money. what are you looking for from chairman powell? >> i am not looking for much really coming out of this september meeting. last time we spoke, you asked if i thought we would get an announcement in september. i said november possibly december. i have a contrarian view because powell is sitting in a good spot right now to where he has an option available, evidence either way with the decision he makes. if he tapers, he can start doing that because there has been a precedent set by the bank of canada, ecb reducing their amount. we have data that comes out that is weaker than expected, not just jobs report and other data as well that allows him to postpone doing that. he has ev

by fed officials. those rules are, in many respects, the same as those of government agencies, plus a number of things that suppress difficult apply to us. one of those is ownership of certain assets is not allowed -- banks, securities, and other things. secondly, there are times we are not allowed to trade at all, to buy and sell financial assets, and that is the period immediately before or during an fomc meeting. third, regular disclosure. ownership and activities are all disclosed on an annual basis. i would've had to go back and read people's financial disclosures to know what their activities have been. this has been our framework for a long time. you could say it has served us well. it is now clearly seen is not adequate to the task of really sustaining the public's trust. we need to make changes, and we are going to do that as a consequence of this. this will be a thoroughgoing and comprehensive review. we will look at ways to further tighten our rules and standards. reporter: thank you, mr. ch

fed. francine: there's these scandals which rocked the fed officials, giving them a chance to reshape the fed. brent crude topping $80 a barrel. that looks to be outstripped by supply, depleting inventories. prices rising for a sixth consecutive day and it comes as natural gas source to seven years -- source a seven year highs. we are joined by our middle east markets reporter in dubai. anthony, first of all, how much of a headache is this for the global economy? and do we have any idea when it goes down? >> this is kind of piling pain on top of paying for consumers because it is already coming in the context of this natural gas prices where we are facing shortages in europe, in asia. this was in part to be expected. we had a really strong year already for oil as demand has recovered as we have moved out of the pandemic and we got vaccines. people are traveling and working again. now, we have this gas crisis which is shortening those supplies as well and people are having to switch into oi

tom: that is the fed. we have heard that they are looking to lift qe regarding the pepp program. how much should we pay attention to that? ven: the pepp will always be folded into it in some form or another. the program has a lot of -- the longer running assets purchase program does not cap. will they be incorporating into it? i think they will. that will allow them to support bonds especially in countries where the bonds have rallied a lot. there are signals from the ecb saying they may be concentrating more on that. this is all moving along expectations. they are preparing the ground for incorporating elements of pepp into it. francine: thank you for the insight. ven ram therefore the -- there from the market live team. the underlying issue, evergrande saying it will not be easy for the markets to swallow it. tom: there is also a difference from domestic bondholders, they have been pushed to one side. you are right, they are also coming in with some support. francine: we are trying to figure out how much

tom: yeah conservative tilt to the texas fed. -- you have a conservative tilt to the texas fed.n is its own interesting soup with all of the universities around. i have a great confidence the local boards will solve the issues washington cares about. jonathan: a lot of questions for chairman powell. that starts at 10:00 eastern. lisa: i wonder whether this takes pressure off him in the sense he has fewer questions to answer in terms of the ramifications for trading activity. i wondered stephen stanley will be right that the new fed, the new composition of the fomc will only be more dovish than what we have seen? jonathan: cap and you get more dovish than what we have seen? lisa: what does that mean? jonathan: all i know is the two hawkish dots go. tom: i was confused about boston university because the closest professor to fenway park in the world. jonathan: are you trying to correct something you said? tom: i went down in flames on the river. jonathan: do like this line from kailey leinz? males ages 45 are more likely to freak out and up their portfolio during a downturn. lisa:

the long-term forecast by the fed's you could have 4%.t takes into account a smaller labor force. they want to bring down the black unemployment rate, which was down in the fives before the pandemic began. they are trying to make it a broader definition. jonathan: thank you. do you like that? it's a baseball reference. michael mckee in five minutes time, along simon tom keene. this is bluebird surveillance with your equity market at record highs going into friday. your 10 year yield is up just a single basis point. we've been hanging out in and around 130 over the past week since chairman powell spoke. your estimates, 733,000. the range is wide. the low end is 400 k. at the high-end, it is one million. the payrolls report is next. this is bluebird. ♪ -- this is bloomberg. ♪ introducing xfinity rewards. our very own way of thanking you just for being with us. enjoy rewards like movie night specials. xfinity mobile benefits. ...and exclusive experiences, like the chance to win tickets to see watch what happens live. hey! it's me. the longer

like the fed did its job. fed chair jay powell and the vice chair will be at a fed speak event. i want to hear what they say and i want to hear about the balance sheet and how they view the threshold. we saw a new all-time high in new york on a thursday evening. we saw that we have a new all-time high of nearly eight point $5 trillion for the balance sheet. what's the risk of letting it grow versus starting to taper at a time of economic uncertainty? at 10:00, there's a question about home sales, there has been deceleration. i am curious to see any ramifications for the expectation of tapering. if you look at mortgage rates, they have reached a low of about 3% in the united states. how much could that climb as they pare back some of the purchases of mortgage debt. today president biden is hosting world leaders to help their discussion on their first in person meeting to figure out how to come up with an asian-pacific strategy in a region currently dominated by china. it goes back to that story. lisa: let's take a look at nike -- jonathan: let's take a look at nike. you have touc

fed day. >> it is fed day. finally here. what is going to throw the fed off of its tracks, if anything? we are really set up for some? -- questions. the fed playbook, the s&p is up 7/10 of 1%. most are leading the way. all the indices being in the red, since march of 2020. keep that in mind as well. yields again going nowhere. the dollar again, pretty much going nowhere. still slightly elevated. it feels like we are on our toes a bit in a wait and see mode. guy: existing home sales right now, the fomc will be the later event. continuing to follow the picture, sales month over month, 2%, the market locating for -1.7. we will take that as a phase. not a big phase. the prime number revised higher as well. 5.88, the housing market is slowing down a little bit, but there does seem to be continuing momentum broadly in that sector coming off a very elevated level. alix: it's all about that supply chain issue. let's get to those in how they will impact the fed. washington, debt showdown at a tipping point. suspending the ceiling int

that rebound partly fueled by the fed's easy money policies. they're here to stay for now but rate hikes are tapering. it's not just the fed, shares of evergrande are surging after the company said they're going to try to pay investors back. we're on the ground with the latest the fda giving the green light for booster shots for pfizer for millions of americans seen as the most vulnerable to the pandemic >>> our special series, "go big or go home" goes on. why our guest says the bull markets still have plenty of room to run. he has brought stock picks with him. it's happening on this thursday, september 23rd this is "worldwide exchange. >>> good morning, good afternoon, or good evening as always welcome from wherever in the world you may be watching i'm brian sullivan thanks for joining us let's get to it. here's the globals are setting up the day stock futures are higher across the board. major averages up about 1.5 down to .6% if you want to get specific at 5:00 a.m we had decent gains on wednesday as the fed stays dubbish there was a little

the fed cannot and in my opinion will not.n hike all it wants but it is not going to materialize in the semiconductors out of taiwan. the fed cannot response -- respond to this. if you want to get the fed call right i am focusing on the type of inflation they would respond to, inflationary pressures are that will be much more important. that is why we ended up with a 10 year at 1.3. 1.5 seems disjointed but it is not. it is about the type of inflation. jonathan: people want to get the market call right. fold the debate into the markets, treasuries. you said repeatedly you have seen the height on the yield and 10 year. what is the framework for the bond market? frances: i still leave we likely have seen the peak in this cycle, though we may go back. a lot of that will have to do with what communications we get from the fed. powell was hawkish last week. he didn't reiterate 2022 was so far off here but the challenge is how do we see a fed hike when we will see pce inflation go sub 2% and growth decelerating. not the least of whi

a fed president stepped down

to be within the fed's code of conduct and he added the need for the rules to change and the fed would rise to this moment and address the ethics issues. >> a couple of things. you said it yesterday on one of the conversations that you had on this network and the minute it happened during the press conference last week when jay powell was asked directly if he had the ability for them to do their jobs and i'm paraphrasing and that's the spirit of the question and he did not answer it directly. you knew from that moment, steve, that the writing was on the wall >> yeah. i can't say i knew this was going to happen and i've never seen something like this happen before the only one was steve lacker, saying things he, perhaps should not have said and he ended up resigning and nothing like this before, scott and i didn't think both presidents would end up resigning in the same day. we've never seen anything like that, but certainly, you're right. powell was asked, are you confident? nobody is happy that this has understand and did not express his confidence my understanding is powell was not a

tom: the fed won't jonathan: -- jonathan: the fed won't announce tapering because your not expecting it. the federal reserve is in do no harm mode. people excited evolution to tee up tapering further down the road. this week can you imagine this on the screen right now? tom: we have to get to wednesday. jonathan: the rbc capital markets ahead of u.s. equity strategy joins us right now. is this the set up you've been waiting for? >> looking at the futures this morning, this is the first time in sometime we have had a real meaningful parade. if you talk to investors, of the fear is starting to become palpable. ultimately we have to see a breaking institution investor sentiment to get this pause that ultimately refreshes. we've been talking a long time about this. we talked about the deceleration at the rate of change with the earnings growth time and again out of a recession. it typically leads to pullbacks in the stock market. it is natural for this to happen and we have a lot of other catalysts with earnings growth that are starting to perk up to help catalyze that downward move. i a

he gave the market plenty of notice and going into that fed decision, everyone expected the fed was going to do exactly what it did. jonathan: just a note on this, the chinese saying it's illegal to trade crypto so is this a broader part of the crypto story? lisa: this all goes to this question of how they contain the risk that seems to be percolating as a result of the regulatory changes and another big company, a chair that has been arrested by chinese officials. is it really in isolationist event or it is it something bigger? jonathan: that is not a big move for bitcoin, nothing. ritika: lisa: what does it mean to not have transactions in china for toe assets? jonathan: what a week, down 22 on the s&p 500. yields are breaking out on 10 with yields down a basis point. do we need to rethink the commodity trade given the shift in china. lisa: the idea of a slowing trend and what that means, maybe less demand over there but on the flipside, you have the figure infrastructure push. are we still talking about infrastructure in the united states? jonathan: we do have to talk about it. tom wil

>> this will persist for a while and eventually the fed will have to normalize it. >> the fed has been good indication of where it has been and where it is going. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jonathan: for our audience worldwide, good morning. this is "bloomberg surveillance" live on tv and radio. lisa back tomorrow. futures up 22 on the s&p. it's a little bit of a bounce back, but as we have seen a lot over the last week, the best of the day cos

we are waiting on the fed. what is the price action look like? >> we are looking at the best day for the s&p 500 since july. let's start out with what is not working. first off, facebook is down 3.8%. this is after saying that apple's new ad policy will put a drag on growth in the third quarter. it is resulting in lower shares. fedex is a really big down story on the day. it is down 8.1%. the worst day since march of 2020. they missed profit estimates. also, the profit outlook weighed on, having to do with labor. that could really be a dangerous issue, especially for the fed to tackle. you can see upses down. as for what is working, pretty much everything else. conocophillips is up 4.9% read the energy sector is on fire. in sympathy with oil investors who are positive about the economy. freeport is up nearly 5%. it is in line with copper. the demand picture have a more constructive you today. thanks are higher too. there is a big rebound rally for everything reopening and reflationary. alix: thank you a lot. setting us up for the fed which is abo

does the fed need to potentially step in? there is a great wall street journal piece saying that the fed has lifted this playbook before. there is a potential thing that could put a ceiling of the deal -- debt spike. manus: powell has used words like loathsome and repugnant, other things they could step into do to help with the debt ceiling. master george. brainerd. with all of this kaplan, rosengrant shuffling, what does it do to powell's position? these four voices are moving the narrative to substantially slow the progress, which puts the taper more aggressively and play. dani: tapering looms. interest rate rises are another concern. we don't know this for certain, but rosengrant is likely one of the dots in 2022. without him, could we get a shift to a lower bound? it depends on who replaces him. manus: rates are moving. dani: they are moving and it is really what is dictating the markets. it is happening again today. it is a day of superlatives when it comes to the front end of the curve. you have above 1% yet again for t

the fed has a very challenging job. the basis as it tries to allow the bond market to adjust to what will ultimately be tighter policy. they are in the process of trying to unwind the extraordinary policy that they implemented sort of last year in response to the prop of covid. the second issue as you just mentioned, it is responding to everything around them, in particular congress. they are almost stuck in a wait and see mode. wait to see what congress ultimately presents and are able to pass, what they are able to do. and then the fed can recalibrate. all of that will come together in the fourth quarter. go ahead. lisa: i will elaborate on your review. we are expecting the fed to taper regardless. real yields are moving up and people are expecting that. george: real yields are moving up. our view is that they will continue to move out, but the fed, as i mentioned, is trying to recalibrate the bond market. they want yields go up, but not too fast. they want yields to be more in-line with the broader economic growth. y

reynard is currently at the fed. he would be a more appealing chair fed as far as she is concerned.k against some of the regulatory relaxation that powell has signed off on, along with the number two official at the fed for regulation. this is a part of the trend for elizabeth warren. there are a couple democrats who have yet to indicate where they stand on powell. they will be closely monitored. tom: european stocks trading higher after selloffs in the u.s. and asia. the market conversation, bring you the latest. this is bloomberg. ♪ ♪welcome back to tom: tom: the open. higher yields ebbing somewhat. the session is positive here in the first 53 minutes of trade. gains of more than 1% on the stocks 600. you can see across the board, europe is positive again. take a backseat for now. let's take a look at some of the stories we are following today. we start with the eu. eurozone consumer confidence survey results are due to be released. france coming in better than expected. later today, u.s. housing data. pending home sales will give us a snapshot of what's a red-hot market. francine

i do think that the fed matters but right now the bond market is seeing what the fed is seeing. jonathan: upside surprise of good news bad news for this market? tom, your thoughts on that? jonathan: my answer is its september data, september 1 and what we have done is extend the x-axis. six months ago we were pontificating about wait until september. it didn't happen. everyone, including chairman powell, has extended out into somewhere in 2022 and frankly i have seen very little literature on 2000 22 versus the equity guesses. lisa: so his answer was punt, john. tom: no, that's very good. do they do that in english football? jonathan: i'm not sure if that's the technical term. tom: we have so much to catch up on. jonathan: it's so good to be back. want to talk about renaldo back to manchester united? tom: how did king play for enthusiasm, i thought he had two feet out the door. jonathan: these players have got to turn up. what's great about him, back to united, it's so, so good for the young players to see what that kind of polity, the effort that goes into that kind of quality,

is this fed driven the debt ceiling in there? >> i'm not thinking too much about the debt ceiling i think this is fed related. jay powell that essentially we have achieved the inflation targets and you have a 20% year over year increase in the home inventories today and seeing signs of inflation and really every capacity and one thing that you haven't seen in the inflation data is a contribution from the housing component and it's still running at very low levels and something we think trickles into the system nengs year but look at what happened into the pricing it is not just the 10-year and 30-year. but we have seen this line in the sand with the 5-year and thought to be the health of the economy and the barometer of the economy has shot up past 1% and 1% is nothing magical about it but all of a sudden you are seeing a repricing of inflation expectations as well as potentially bringing that rate hiking cycle forward and so why you also see this in the credit sensitive assets is within the bond market high yield and some secure

that is the real dilemma the fed faces. when the fed tapers, what friends doesn't make when $120 billion a month -- what difference does it make when $120 billion a month becomes $100 billion? ? or $80 billion -- billion or $80 billion? dr. levy: it doesn't make a difference at all. what is the difference to the economy or financial markets if it slows down to $105 billion a month? it has no impact on the economy. in fact, it is quite striking that fed chair powell has said several times when we begin tapering, it has no implications at all for when we hike great. so the market is focusing on this tapering, which doesn't really have any impact at all. you could have an announcement that bond yields will go up, but they are already ridiculously low, so it shouldn't have much of an impact at all. jonathan: mickey, appreciate the conversation. berenberg apple markets chief economist. the worry is that -- berenberg capital markets chief economist. the debate has picked up a lot in the last six months. tom: that is so true, and

the fed -- i worked at the fed. they used to move gold from one country to another to balance payment accounts. they don't do that anymore. they don't do that anymore. >> i will try to make you both happy and give you each a magic wand and three picks. [ no audio ] three policy picks that you would implement right now, whether it's immigration, regulatory, corporate, whatever. what would be the three things you would wish for? >> i will take that. they talk about the five pillars of reaganomics. >> you got six between the two of you. >> you can eliminate one of the five. you don't need to worry about spending. spending will naturally fall if you cut tax rates, get the dollar stronger and stable again and have real regulatory rollback. if you had those three things, the demand for the private sector would be so great, people would just jump off of welfare, they would get out of obamacare. they will go into the real economy. investment that would come from king dollar. get regulation out of the way. spending would --

has led the fed to be more hawkish than people expected. the statement was vague that chair powell came out. there were comments as being more hawkish. we are watching for any move that may come as soon as november and scaling back of asset purchases to be completed by mid 2022. officials also revealing a plan to raise rates next year. haidi: there have been speculations as to whether the fed or jay powell will consider the risk of ever grand and he did address it. he said this seems like a situation that is particular, idiosyncratic to china. he pointed out china has high levels of debt or an emerging market. when it comes to the u.s., he says there is little direct exposure he can see, corporate defaults in the u.s. are at low levels right now but he did put out the caveat that he would be concerned that whatever happens to ever grand, if it continues to disintegrate it will affect global financial conditions. that is why we continue to see or have seen the macro contagion connections with the likes of iron ore. shery: analysts asking wha