all eyes on the fomc on wednesday. that we get in the q&a, that is where it will come, as jay powell is pressed on what tapering signaling may look like. tesla up 3.5% at last check. it will report after the bell. the yield remains a big focus. on the real yield, record lows. the 10-year yield signaling a benign outlook for inflation. then there is what happened in hong kong as stocks slump. $740 billion wiped off values of chinese listed stocks amid this regulatory crackdown. it is hitting tech and education related sectors. me have said it was just a matter of time. if you thought the chinese government would let u.s. rules and regulations become the defective standard for chinese companies, you thought wrong. it's a reminder to some that capital in china will trade under chinese rule. matt: i also think there is something going on here. that, for sure, but i'm fascinated by the reproduction rate. china is not the only country trying to boost that because the demographics don't bode well for the future, but this has

the initial reaction from the june fomc, that seemed a little more reasonable.oming off of it, it feels like there are enough? question marks. the market seems to be dismissing a lot of the inflation print, more than retail numbers. it is a reopening dynamic playing out, but nothing to move the debates further on whether this is transitory or persistent? jonathan: your reaction, mark? >> those fundamentals are a very real shift in tone from the bed around inflation at the june fomc meeting. two, questions around the durability of growth and whether we are at peak growth or beyond. and that has exacerbated in market. when we think about what is the real story here, it is the fed and the markets are questioning their commitment to an inflation overshoot, sustained inflation overshoot. that is what is pulling in the timing of the first few rate hikes. it is that shift in tone from the fed. in order for the fed to convince the market otherwise, we think they need to get taper out of the way, get that launched, so they can start talking about the timing of first rate

-- is still frankly paying people not to work while job openings remain high at 9.2 million in the fomc minutes from june some participants believed that the unemployment rate of 3.5% -- that the previous administration achieved, is not feasible. chairman powell, with 9.2 million job openings and many employers raising wages, and offering hiring bonuses, et cetera, what is causing some members of the fomc to believe that 3.5% unemployment rate is not achievable >> i don't know that anyone said that i didn't hear anyone say that 3.5%. >> it's in the minutes it's in the minutes in june. >> no, it's not. it must be something else. it must be something that says -- you might say that about labor force participation. for example, or employment to population but i don't think -- i didn't hear anybody say that we couldn't get to 3.5% unemployment inny any case, i don't believe that let me say that it's it took us eight years ever expansion to get to 3.5% but i think there is every reason to bleebl believe getting back to that level. >> and vaccines readily available and small businesses with u

data and fomc data due out alert today. regulation is bad for crypto. truth is we're at a transition point where the number pove people participating has gotten so big you need basic frameworks and that is a sign of the maturity or growth of the market more than a sign of something bad. anna: that was brian brooks discussing regulatory concerns about crypto currency across the world, an ongoing theme. no doubt we will return to that. let's gets to the market action this morning. european equity markets making decent gains, moving to the upside .6. laura coop joins us. this rally that we're seeing in the european equity market, a bit of a rebound from losses from yesterday. >> start from the upbeat day we saw in the latter part of u.s. session. what was the catalyst for that? we don't really know? could it potentially be oil prices tumbling? unlikely. potentially it is just the case of stocks taking a breath before they extend their climb higher. anna: indeed. what role is the big move that we have seen in treasury markets p

at the moment we expect that the fomc will be fairly balanced.alized the effect that the june statements have had on the markets. we have seen significant flattening of the yield curve. federal reserve perspective general prefer the yield curve because that shows the confidence that economic growth. and with the delta variant, -- delta variant rampant across the world, it will be more valid. two key things, one, any indication of timeline on the tapering, and second, and the indication of what else they need to see before they have policies. shery: thank you so much for that. let's go to su keenan with the first word headlines. >> we start with the international monetary from the imf maintaining its outlook from the economic rebound and for decades. this while changing underlying regional forecast. it says world output is still expected to grow 6% in 2021 after last year's 3.2% drop, but it warmed unequal vaccine actors continue to widen the recovery gap for developing economies. the u.k. got the biggest bump among majoring economies with the imf

it started with the fed at the june fomc with the dots. expectations of rate hikes being pulled forward. we have heard from other central banks outside of the u.s. that are talking about raising short-term rates. the move down and long in yields has been a global phenomenon, driven by this transmission which runs counterintuitive to what you would think. hire short and yields does not mean higher along and yields, sometimes the opposite. jonathan: jim bianco, that is what we have seen. some may say this is just a monster short squeeze. i know that you don't buy that. jim: as a caveat, there is no good data on how short the market is, but the data we have suggests the opposite, that there was not a short in the market. it is a rush of people looking to get long. it looks like the mirror opposite of march. march was everyone getting short when we hit 1.80 on the 10 year note. when we hit 1.25, it looks like a rush to get long. a lot of those momentum players are now underwater with the big backup we have seen at least since yesterday. if it

guy: looking ahead to tomorrow, fomc minutes. are you expecting any into they taper?ebt any hint of a taper -- any and of a taper -- any hint of a taper? andrew: not really. it looks to me is that when you look at the political aspect of things and the demand, the asia-pacific region demand is massive. around the u.s., the demand is massive, so i don't think there will be much that can be put up in the minutes from the fomc meeting that will actually change that much at the moment in my opinion. guy: we will leave it there. coming up, we are going to focus on the ecb. the biggest strategy review in nearly two decades. the final stretch of agreeing on an overhaul. let's hope they are. maybe we will see some issues here. anyway, the inflation targeting to be reviewed. climate is going to be a factor. we will talk all about this next. this is bloomberg. ♪ ♪ guy: from london, i'm guy johnson. taylor riggs is over in new york. this is "bloomberg markets." the ecb holding a special strategic review meeting tonight that could last until thursday. this as the central bank sta

turning to monetary policy, the fomc kept the federal funds rate near zero and maintained the pace of our asset purchases. these measures, along with our strong guidance on interest rates and balance sheets, will ensure monetary policy continues to deliver powerful support to the economy until the recovery is complete. we expect it will be appropriate to maintain the funds rate until inflation has risen to 2% and is on track to moderately proceed to percent for some time. within inflation below 2%, we will attempt to keep inflation above 2% for some time, so the average is 2%. we will also continue to monitor the implications of information's to the economic outlook, and would be prepared to adjust the stance of monetary policy if we saw signs that the path of longer-term inflation expectations were moving materially and persistently along levels persistent with our goal. we are continuing to increase our holds of securities and nbs until further progress has been made towards our price stability goals. these purchases have materially eased financial conditions and are providing subst

or that dialogue this afternoon >> we're very unlikely to get any sort of bright lines out of the fomc minutes so, from my standpoint, the biggest shift that accompanied the june fomc meeting was the slightest hint that policy makers were less confident in the average inflation targeting regime, right? and so that raised concerns about perhaps premature rate hikes in the event of slightly higher inflation numbers and that's a lot of what i expect is behind the flattening curve in the subsequent period now, the fomc's minutes, they tend to massage or emphasize certain points that the fed wants to make that have emerged between when the meeting happened and when those minutes are released so, i think what we'll see actually is a few lines on greater confidence in reinforcing policy makers' belief in their average inflation regime rather than a discussion of tapering itself. and in the absence of further buying on the part of some of those foreign banks and other financial institutions i mentioned a moment ago, that could be the end, or the beginning of the end, if you will, of the most r

charles: real quick, david, fomc, what are you expecting? you still worried about inflation, considering what the bond market is telling us and everything else? it feels like there ising else we should be worried about. >> perhaps growth, you pointed to it. apple a name i own, nvidia a name i own. the growth trade is working today as 10-year yield are falling. that is ominous. this is not the risk-on trade. it is largely defensive move today where you go to grow when you think the out years will be slower growth. charles: yeah. david, mitch, i got to leave it there thank you both very much. i hope you had a great 4th. we'll talk to you soon. >>> the media loved it, and the white house couldn't step bragging about it but i think the jobs report was a dud. brian wesbury with us in a moment to talk about it more. plus we're in the cusp of the greatest wealth transfer ever. oiler americans stocks piled $35 trillion. every society knows transfers like this are squandered. how do we avoid the fate of being human? stick around to find out. ♪. some

the conversation might look like that on the fomc as they get together tomorrow.: looking at european yields, swiss 20 year comes in lower. nevertheless, settling talks about growth. on the infrastructure debate in washington, our bloomberg government reporter, emily watkins joins us. speaker pelosi is the most important person in washington this week, why is that? emily: because she is the one that is going to need to hold the house members together. what happens in the house is incredibly critical to what happens in the senate. a number of lawmakers have come out and tried make demands about what they want to see in a bipartisan infrastructure bill, threatening to vote against it. i know we are talking tight margins in the senate with 60 senators need to be on board but the house has equally tight margins. as you saw over the weekend, pelosi is continuing to stick out a strong stance, saying she will not move that infrastructure bill until the larger 3.5 trillion dollar reconciliation package is ready to go and sort of setting the tone for how this will be movin

but first, we get the outlook for the dollar and other currencies as we look ahead to this week's fomc meeting. a strategist of cba joins us next. this is bloomberg. ♪ shery: investors around the world are waiting to see if the federal reserve takes any steps towards tapering even as surging cases of the delta variant raises concerns about the u.s. on global recovery. kathleen hays is here with a preview. kathleen, what should we be expecting this time around? kathleen: two weeks ago, when jay powell was giving his testimony to congress, he said this discussion on tapering started in earnest at the june meeting. it is continuing now and it will continue at the july meeting so we know that they are going to talk about it. they are buying $80 million of treasuries, $40 billion of mortgage-backed securities a month. the question is, what did they do now? again, when powell was testifying, he said the economy is always off from the threshold the fomc would like to see to start. there is a camp that says they could start sooner. signal early next year. others are maybe holding back more. an

that step back, millions of americans, ply marginalized communities will be left at a low wage the fomc is projecting multiple interest rate increases before the end of 2023 and before they project achieving the pre-pandemic unemployment rate and at the june fomc meeting, the median fomc member's production on the longer run unemployment rate was about 4%, correct? >> yes, that's right >> now, yet before triggering the pandemic, the unemployment rate reached -- rather the uneme reached 3.5% without triggering inflation, orrect? >> that's right, yes >> and, in fact, in 2019, despite some pickup in wage growth, especially at the bottom, there didn't appear to be signs of the economy overheating. and, as you said in november of 2019, the benefits of long expansion are only now reaching many communities and that there's plenty of room to build on the impressive gains achieved so far so if, indeed, there was still room to expand in the months before covid, that suggests that with time the economy can return to a trend of gdp and employment above the one that was experienced before the crisis

it takes two participants in the fomc to think maybe we should lift rates in 2022 rather than 2023.hat signals in september that 2022 is lift off year for interest rates. lisa: let's say the fed gets more aggressive than the market is expecting and says they will start tapering their bond purchases earlier. the long and yields rise or fall . the last time they signaled the slightest hawkish tilt long-term yields fell because people thought any tightening would lead to slower long-term economic growth. john: that is a great question. if we knew the answer to that, we would all be better off. we have to conjecture. the current is relatively flat. the spread between two year yields and 10 year yield is steeper than it was but still relatively flat at this stage of the cycle. what the fed is signaling it will respond to higher inflation represents a tightening or a catch up to where the fed has fallen behind. we have to be very careful. john talked about the reaction function. the question is does the fed react to the inflation data? if the fit reacts, they are catching up. they have no

kriti: you are seeing the s&p 500 edging a little bit higher ahead of the fomc minutes later.consumer discretionary stocks up as well. the key driver in amazon will be the split contract from the pentagon. the real action is in the bond market and it is the 10 year yield dropping as low as 129 basis points.

also ahead of an fomc meeting, you're not going to want to put on big moves. a lot of things that are unsure. the idea is the fed will not move and nothing will come out of this, but it is still a tricky market to trade in. alix: take a look at what happened to the 10 year real yield. how do you make a strong conviction back on the cyclicals or value out of growth when you're looking at -1.1% on the 10 year? dani: i love robert shiller, his last book was about market narratives and how they are so important. i feel like we are a market without a narrative. it is hard to decide is it an inflation scare, is it a growth scare, and that is where the volatility starts to come forth. alix: that brings us to where we are with the delta variant and all of the headlines from china in terms of the tech clampdown. luckily if you stick with bloomberg tv, maybe balance of power can help you with that. richard haass, counsel for regulations president will be joining david westin -- council of foreign relations president will be joining david westin if you're in london june

and the fomc meeting i very specific, more specific about timing.have to continue to make progress, clear that we've weathered the virus, which i think we have. i think it will be far healthier to start sooner rather than later. why? excess risk-taking, excess in the housing market and imbalances in the overall economy, and i do believe if you take your foot off the accelerator gently, now, we will have more flexibility down the road to avoid more abrupt action or severe actions in the future. i really believe that >> you have set -- that. >> you said to the markets we will give you a long runway. if you move it up, does that shorten the runway, and is that a prism of a taper tantrum fear? >> i think the aftermath of this downturn is very different than the aftermath of the great recession. 2013 we learned a number of lessons. on the other hand, i think, today, i think our adjustment in purchases is likely to go much better. in one of the reasons why i have been out there talking about adjusting purchases is i wanted to get out into the market, and

we are awaiting the minutes of the fomc. much will be interpreted.ng with the chief economist from barclays. michael gapen will tell us what he is looking for in the minutes. stay with us. ♪ amanda: this is bloomberg markets. i'm amanda lang alongside matt miller. we await the fed minutes at 2:00 eastern. for a look at what he is looking for, we welcome michael gapen. we know there will be reading of the tea leaves as to when the taper will happen but what do you think was driving the action in the markets today? michael: several reasons that are continuing to push yields lower in the u.s. certainly started around the time of the last fomc meeting, release of the minutes, concerns about inflation. one of them is the hawkish shift in tone, concern about inflation outcomes further down the road, risk management around that problem. the shift in tone of the fed was one of the factors that lead markets to reduce the likelihood that we will get a significant inflation overshoot in the medium-term. i also think technicals are at play. we think many account

is this the most ex post fomc ever?i won't say ever, but you go back to some of those raising rates a quarter-point at a time, everybody knew what was going to happen. it is going to be more about the taper debate and how much jay powell says about how much they discuss this. tom: so this has got to be the day where you drop a bombshell. michael: i don't think they want to drop a bombshell in the middle of july, when volumes are down. tom: i think this is really important. everybody is half-asleep, waiting for september, and the answer is let's do it now. jonathan: if they start talking about this in a more significant way and start to evolve the language a little bit more, they've got to aggressively delink that conversation from any conversation about interest rates. that's probably the ultimate challenge right now because you know how market participants work. they are focused not on the first move. they are focused on the sequencing and what is next. what's afterwards? tom: ok. i am just trying to set up mike for an

we continue to watch out for more treasury volatility given we have the fomc meeting this week. the bloomberg dollar index with its first gain in about three weeks. we are seeing some you did trading for the bloomberg dollar index. smooth right now up to 2/10 of 1%. this after a weekly gain for a second consecutive week. we have seen signs of demand recovery, and looking more positive for uranium prices. we are talking about u.s. tech earnings we have to watch, the big giants reporting this week including apple, microsoft, facebook, and we have the fomc meeting. so much focus on what is happening on inflation. haidi: what is interesting is we have at least from the white house side, they are suddenly changing the message on inflation. we are hearing less wonky terms, transitory, statistical exclamations. i guess a more plain language to try to soothe not just investor concerns but those that are worried about the impact of pressures on small businesses and daily lives. let's look at how asian markets are shaping up, it will be up as he week. the fed, -- will be a busy week. the

the median fomc numbers projection of the longer run unemployment rate was about 4%. >> that's right. >> before triggering the pandemic, the unemployment rate -- rather before the pandemic, the unemployment rate reached 3.5% without triggering inflation. >> that's right. >> in 2019 despite some pickup in wage growth, there didn't appear to be signs of the economy overheating. the benefits of long expansion are only now reaching many communities and there's plenty of room to build on the impressive gains achieved so far. if there was still room to expand in the months before covid, that suggests that with time the economy can return to a trend of gdp unemployment above the one experienced during the crisis. do you believe this to be the case, that the longer run implies that 3.5 percent is too low and do you think we will be able to reach lower unemployment and higher label -- labor force participation? >> i think we will be able to get to 3.5% unemployment. participation is very much affected -- i'm quite sure we can get to high levels of participation. >> to disaggregate this line be

. >> we are blowing away a forecast at the last fomc meeting. why doesn't the fed recognize that? announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jon: from new york city to our audience worldwide, good morning. this is bloomberg surveillance --"bloomberg surveillance" live on tv and radio. it is chairman powell's testimony little bit later that gets your attention. tom: really front and center. i really would point to mr. summers visit with the biden administration and two hours ago in an eventful overnight, maybe mr. summers was a bit ill willed toward mr. powell. i don't know what that conversation was, but i just it yesterday. maybe mr. powell will be under significant scrutiny this morning by the legislature. jonathan: do you think it is easier to sling mud inside the tent? tom: there are a lot of people that would suggest that mr. summers knocking on the door of the white house the day before the power testimony was ill-timed. jonathan: it certainly splices things up a little bit later. tom: i was going to say, john was way out

but the other members of the fomc seem to be a little bit more hawkish in their tone.hould we take that much from fed chair powell this week? >> i think that it is a confusing one of a when looking at the dots compared to what would be the core of the market committee. i think the reason the market is paying such a heavy emphasis is that those dots became a litmus test for the framework. the idea that you want to post cyclically expand the policy, show it to me in the dots. especially the 2023 dots, basically the litmus test or anchor it could point to. i think june kind of busted that. it is not to say that the fed will be hawkish or preventative of a broader cycle. when you look at what the fed is projecting in terms of nominal gdp growth, only 60 basis points of hikes, that is still accommodative. it is just not as accommodative as we thought. for the market perspective, you get these broader divisions in the sense that there are two big ones. the first one, between the regional bank president and the board, where regional bank presidents are hearing that rates are

it was the june fomc meeting they started talking about inflation. concerns grow about a slowdown. is this a situation where the markets are getting a two -- getting a little too ahead of yourself? kriti: the dollar is catching up to where you are seeing the accelerations in the trends in stocks. you're seeing the dollar catch-up because that pivot to the greenback happened after the hawkish pivot. it is still climbing. analysts say it is well in line with the hawkish pivot. caroline: all through these cross as it moves. some hawkish sentiment coming from certain members of the fed today. inflation is that the market of the fed anxiety. michael of bloomberg had jim bullard and charles evans on this issue. >> it is clear that some of the inflation will be temporary. how much and how much feeds into more persistent process is the question the committee has to wrestle with going forward. i think we are already above our target on core pc inflation. the committee of the economic projections is projecting 3%. that is excluding food and energy prices. that is more inflation they may have

why are these, in your judgment or the fomc's judgment, why are these economists wrong and speak to this issue about self-fulfilling inflation expectations and why that's not a concern. >> okay. i'll come back to that i don't have that survey in front of me, but i think, you can correct me here, i think the median estimate for inflation for 2022 was in less than 2.5%, which would be -- and that's cpi or maybe it was pc, i don't know that would be much more consistent with our framework than with what our critics are saying that would be very much in the range of fomc participants are expecting or at the high end of it or within that range. you may have it in front of you. i don't have that. >> here is what we as members of congress are hearing and you get this data. i spoke to the chamber of commerce at lunch time today this inflation concern is real it's not just that lumber prices are up and the home builders are upset. it's not just that the fixed income seniors are upset because the price of food is up and the restauranteurs are having to pay more for the price of food and the trucks

they do reflect a lot of the game theory about exactly what the fed will say, both in the upcoming fomceeting and coming out of jackson hole, about their pace of tapering. as has been alluded to, this idea that the fed may be out of sync with the economy right now, where economic indicators, corporate profit earnings, growth indicators may be peaking . the peak of fed accommodation is in front of us. that does set up some potential for dissonance next year. jonathan: the idea that we won't get any resolution to the supply side issues before the end of the year, late q4, may be signs of it in september, ashok, what is the argument to move before then? ashok: i don't think there's an argument to move on rates. i think the move to tapering -- and we think they will move on that, if you are the fed and are forward-looking, we have concluded, if the u.s. job market is creating 400,000 jobs a month, that is sufficient to start closing the output gap over the next couple of years. when the output gap is closed, the fed should not, won't want to be purchasing the same amount. so the fed needs t

the fomc is looking at what the timing and pace of tapering its bond purchases is going to be and we have inflation well above the fed's 2% target. it looks like the metrics now for achieving the necessary substantial further progress towards his goals depends on jobs. here is what powell said today. >> what would substantial further progress be? i would say we have some ground to cover on the labor market side. we are somewhere way from having had substantial further progress with -- towards the maximum employment goal. i would want to see some strong job numbers and that is kind of the idea. kathleen: joining us now is the former atlanta fed president, dennis lockhart. great to have you back with us. what did you take away from jay powell's presser today, particularly when it comes to tapering? >> i agree with you that emphasis on the employment picture came across, when that question was asked, he went to employment first. i don't know if you can read a lot into that speaking but it strikes me that employment is front of mind on the part of the committee. i think the committee has

this is exacting what they did with the fomc. they said listen, we are not stubborn. we are aware. we are gradually adjusting our commentary to be aware that inflationary pressures will be coming through, but we are not going to be taking any course of action. the fed may be behind the curve. it is showing to us it is pragmatic and willing to adjust. that reduces an element of risk of a policy mistake. this was very constructive, in our view. anna: you have taken the constructive message. you do see inflation as sticky. what is giving you that? why do you think this will not be temporary, it will stick around? >> more than half believe it is transitory. we believe a number of factors. if you compare the policy equation to the one after the global financial crisis, there was so much stimulus, but the technological advancements, demographics, meant inflation remained low. we believe this is going to be different. number one, we have more geopolitical tensions. these will remain so the price differences will not necessarily manifest. tensions will remain. tariff issues will remain. la

decision at jackson hole remember, the fomc has to decide to reduce purchases. that's an fomc decision. >> sure, but at least get it -- yeah, but at least get a little more explicit, like it's oming >> well, he could. remember, he's going to make a speech it's about inequality in the recovery so it won't necessarily be on topic but you'll have the august employment report. we'll see if we're on track to get there, scott he's just doing this incrementally. remember, it's a simple eq equation he's trying to avoid a temper tantrum and taking a risk with inflation to avoid it. he's winning this battle, but we don't know if he's won the war and he's given himself about six months to find out is this inflation thing transitory >> the market is giving him the benefit of the doubt steve liesman, thank you >>> paul, how do you see that sort of timeline that steve liesman just laid out? do we need to push it back a little bit because of those words that the fed chairman used today? >> no, i don't think we do i think steve's got it right, and the beginning of next year is

the bond buying program will be in focus at the fomc meeting. recordings on wednesday as well. and on thursday, amazon's second-quarter numbers. a host of earnings coming in from the bank sector and the texts are -- and the tech sector. let's get a update. laura: china says relations with the u.s. are in a stalemate in a tent start to high-level talks. weiss foreign minister told visiting deputy secretary of state wendi sherman that some americans seek to portray china as an enemy. it is the highest level face-to-face meeting between the two sides since march. tunisia's president is reported to have fired prime minister and frozen parliament over the handling of the pandemic. according to sky news, the prime minister was removed after a weekend of protests. he was sworn in a year ago amid deep political and economic turmoil. at least six chinese companies have made filings after beijing cracked down on for-profit educational companies. beijing unveiled a sweeping overhaul of its 100 billion dollar education technology sector over the weekend ban

there are signs that inflation will be above target above the horizon from here so if it runs the fomcnext week looking forward there are signs in the labor market in terms of supply shortages it's a little more than short term but is a reasonable reason to expect sustained momentum all subjected to it's right in front of our face but also the uncertainties of covid variance and all of that but the prospect of inflation being above target and i think the balance of this is headed in that direction. >> and lapsing into a central bank we will speak there. if you decide to add to the federal reserve i will put you on the opposite or the hawkish side of the spectrum. one of the things that struck me as i read the book was it is very comforting because you describe ways we could embed values and economic decision-making that don't require us to give up electricity. you describe how we get from here to there and you made the point earlier it will be hard because we waited too long but when you look at the political system in the united states and the polarization and what the uk has been thr

at the moment, we expect the fomc language will be fairly balanced. >> as we look toward the jacksoning, we think they will have an update on the inflation and labor market side. >> i think the market is priced fairly appropriately for an end-of-the-year decline. i don't think the fed needs to push back much. >> i sort of learned don't fight the fed. it is a losing battle. david: the broader index in hong kong, the market has been in focus, so we are looking at some of these maker stocks. our guys at bloomberg intelligence have come up with the research here that this push for exercise is really going to push in china. yvonne: and the olympics as well. rishaad: should make people excited about exercising. a lot more to come on bloomberg markets. ♪ >> from the heart of where innovation, money, and power collide in silicon valley and beyond. this is "bloomberg technology" with emily chang. emily: i'm emily chang in san francisco, and this is "lumbar technology." it is a super tuesday for tech earnings. apple beating on the strength of iphone sales, this ahead of new

the fomc members insist inflation is transitory but it hasn't inspired confidence.here was a statement -- a couple of statements by president mary bailey in february. she declared the pressures on inflation are downward in february. in may, when inflation readings were at three point 9%, she said the higher inflation readings would mean 2.4 to 2.6%. she was projecting in june inflation could go above 3%. despite months of relatively lowball projections, in response to tuesday's high inflation readings, she declared we expect a positive inflation like this. i hope from our perspective you could see that we are skeptical about some of the inflation projections and i have heard -- i've spoken with number of people in financial services and when i asked them about transitory, i am getting more of a response of transitory-ish. can you give me a reason you believe the fed's position on anything transitory, why that is still well-founded? chm. powell: let me start by saying no one has experience of what it is to reopen the economy after what we went through and so all of u

the dollar studies as we go into this fomc minutes.out hong kong and the trading they do. fluctuating on the debut becoming the first chinese electric vehicle carmaker to finish a so-called homecoming share sale. >> having a listing closer to home is always our strategy. as a china consumer and, we want to have our customers be our shareholders as well. coming to hong kong gives an opportunity to achieve that. >> some companies are hedging their bets, hedging against possible delisting from u.s. exchanges. it seems like there is this newfound pressure from chinese regulators when it comes to data security, data privacy. to what extent do you think the didi probe is going to speed other companies upcoming home? >> the regulatory environment is becoming more focused. the data side, the privacy side come of the national security side. those were not positively focused as much. it is something we anticipate. we see the global environment gets tighter. data privacy, data security. that is why we are building up an effort in europe. the u.s.

the fomc of the governing council. they use ambiguous words.erate and overshoot, but how long it overshoot? we don't know. lisa: within the language is unambiguous concern about housing prices. the idea we have seen a huge boom in both sides of the atlantic. we have seen this from the federal reserve as well as christine lagarde. what measures do expect from central bankers to tame housing prices, or will they say this is a necessary consequence to a policy that helps the economy? vincent: here is the irony. the ecb wants to add equivalent rent to their price index because it makes it go higher. they are welcoming that extra tip to inflation to get closer to their goal. what can they do? there is monetary policy and regulatory policy in the same building. expect to see them to tighten where they can in terms of supervisory restraint. it is a problem they would prefer to address from that side of the building. right now, there overwhelming concern is a macro one. the level of employment. therefore they will not adjust the setting rates nor the b

i think the reason 117 and perhaps not 120 is anticipation that perhaps at the fomc, they will keep it on the short end of the curve and keep the market wondering whether the first hike in the fed funds rate could come sooner. we've got jackson hole next month, an important park in the central bank calendar. but there are a couple of dynamics, and i think the bigger risk of change comes from the dollar side rather than the euro side. manus: jane, you worked for a central banker, your front running -- is with the dollar. let's go with it. you think we can maybe get a little hike earlier. i want to delve deeper. everyone is suggesting taper in the next cycle. i am looking at the forward, the one-month rate in five years is trading up 1.5%. this is where it gets interesting. the mutual rate is 2.5%. the market is saying the next cycle will be shorter and tighter than what we think a neutral rate is. the five-year forwards are 1.4%. when the tightening comes, what scale will it the and will it put a lid on the dollar? jane: quite possibly. i think this is what the market is beginning to th

he is not a voting member on the fomc but he will be next year again. can say what he likes i suppose without being on board. is the time right? can we see that in the u.s., persistent inflation? mr. anand: absolutely. i think, you know, some of the factors that are going to cause inflation to be sort of more persistent and more present, and some weights haven't begun, you know, you haven't started to see infrastructure programs really start to kick off. you haven't started to see the very different way in which companies are going to be looking at their sort of working capital. i do think it could stimulate or incentivize the fed to act earlier. i do think whether they start earlier or later will have that much impact on shaping how it looks for inflation. in the same way, that the connotative -- accommodative monetary policy only drove up prices in asset markets. yvonne: it raises the question of whether bond markets were breaking too soon. we saw breakevens up this -- year. worried about the whole inflation story. what does this mean for yields now?

on one hand, the fomc becoming more hawkish than they have been . the fed funds rate, if you look at futures, looking at a rate as early as 2022, to rate hikes in 2023. we have consumers with a lot of cash, we have a reopening, and we have certainly see concerns indicating that it is steam ahead in terms of reopening and the economy getting going again. i think conflicting information. and then the virus getting back into the news now. kathleen: value is worth looking at now. why? dana: i'm a long-term proponent on value and i don't think we've seen the end of some rotation there. low-priced stocks in general, what we saw last year and a greater interest in tech names, with expectation of that being because you are sitting at home, you have to go online to dupree much anything. we are still going 20 look at price as an indicator, particularly now as we have the economy reopening. three opening is not going to be smooth. we have detail that looks at actual credit card spends showing indoor entertainment, movie theaters, etc., they are still not openi

were you surprised about the fomc turn, not just about the rate hike projections but the hawkish tiltds the jobs recovery? lindsey: i don't know if i necessarily interpret the latest announcement from the fed or the latest statement and commentary from federal reserve officials as hawkish. shery: powell said that the labor market would come back very quickly. lindsey: absolutely. we have seen data to support that but at the same time, he was clear that we are not at that recovery point yet and we are not even having the conversation about when to roll back asset purchases. we look at the dot plot and we see that more and more members are talking about a potentially faster pathway to higher interest rates and we are still talking about a timeframe, extended timeframe into 2023 so on a relative basis, yes, a slightly more hawkish than previous tone but on a nominal basis, we are talking about accommodation likely to be in place for quite some time going into the future. shery: given the surge in oil prices, should we be concerned about the real world of these commodity prices surge wher

when will the fomc start moving and what will they be watching before they make that move?> there are two issues at play with the federal reserve. one is the tightening of the funds rate and the other is tapering of their 120 monthly bond purchases. one is related to housing and housing plays into both sides of the equation. we have seen housing prices in the united states up 14% year-over-year. we are really reaching a point where a lot of housing stuck in this country has become unaffordable to the average american. i do think that that is a concern that the fed has. by buying $40 billion of mortgages every month, they believe they are pumping up housing stock. the other side is that inflation. right now, i agree most of the inflation readings we are getting our transitory. the fact is that we are seeing used car prices, hotel rooms, airfares spiking. that will likely retreat. however, there are two elements that are more persistent. wages and housing costs. again, with higher housing stock, that is leading to higher rents and that will feed its way into something more su

markets today were more busy with the fomc meeting and jay powell's press conference so from that perspectiveeast from that dimension, it does not look like the markets have changed the view on the back of this infrastructure news. haidi: great to have you with us, torsten stok, chief economist for apollo management. iron ore shipment data out of fortescue, seeing full year in order shipments between 180 million tons to 185 million tons. fortescue iron ore shipments for the fourth quarter beating the average analyst estimates. fourth quarter numbers coming in at 49.3 million tons, slightly better than expected. when it comes to the companies fundamentals, bloomberg intelligence seeing they have strong cash flow as well as financial flexibility but there are some headwinds when it comes to iron ore. morgan stanley saying that iron ore markets in china could be more volatile moving forward. we did see rio tinto dropping after their results as well so we will continue to watch fortescue going into the start of trading in sydney with that iron ore player reporting better than expected shipments f

expectations have moved up from their pandemic lows and are in a range that is broadly consistent with the fomc'songer run inflation goal, which is an average of 2%, so expect powell to try to stick to his guns, but also expect a lot of pressure from members of congress who don't like inflation because their constituents don't like inflation. alix: mike, thanks a lot. we will have to talk about your background as well at some point. stay with bloomberg. we have full coverage of fed chair jay powell's testimony before the house initial services committee. that begins at 12:00 p.m. in new york and 5:00 p.m. london. the eu coming out with a massive climate overhaul. bloomberg's european correspondent maria taddeo joins us now from brussels. what is in it, maria? maria: it is a funny name, and here there's been jokes that this sounds like a diet, but in reality, what it is is a whole change of green measures and a green to stable package that is being pulled forward by europe. if you look at the details on paper, this is really a green revolution for the european economy. it will touch everything, ev

wednesday we get fomc minutes and the jobs report, always a useful indicator of what is happening inly of jobs and job openings. thursday claims, the oil report. friday the g20 finance ministers meeting in u.s. wholesale inventory. -- finance ministers meeting and u.s. wholesale inventory. i think the fed meeting is probably more interesting but keep an eye on both. great coverage on bloomberg. this is bloomberg. ♪ laura: time for the bloomberg business flash. a look at some of the biggest is the stories in the news. credit suisse plans to give its employees what it calls maximum flexibility when it comes to working remotely or in the office. they will be able to decide with their teams and managers how much time they want to spend outside the office in which days to be in. credit suisse is joining rivals such as ubs and citigroup to allow employees to work remotely as needed. the biggest brokerage in japan holds -- has suspended coverage of more than two doesn't companies because of the departure of two of the firms analysts in tokyo. this comes at a time when new mara is trying to

as you know, there's been a split at the fomc.ers have been more dovish, including jay powell, who will hear from tomorrow. then there are regional fed presidents who are much more hawkish. even the san francisco president daley, who is more dovish, said they may have to pair back qe by the end of the year. our view is they pulled back on the qe probably early 2022, may be the end of this year, but they don't start to raise interest rates until 2023. they will be dovish and cautious. kailey: thank you so much to kathy bostjancic, oxford economics chief u.s. economist. tune in tomorrow at 12:00 eastern time for special coverage of jay powell's testimony before the house financial services committee. i want to check back on the markets. after weak demand for that $24 billion 30-year auction, we are seeing yields shoot across the curve. back above 1.4%, nearing 1.41%. we are seeing it across the equity markets. the nasdaq 100 about to approach negative territory after being as much as .7% higher earlier in the session. the dow, s&p,

i am curious about what this says about how much people are expecting from the fomc meeting this week. how much do people start to ratchet back their expectations for a permanently dovish fed? aftermarket, tesla also kicking off. the key issue will be whether they mention china in light of the new regulations. a lot of the most opulent -- especially as china continues its crackdown on a lot of the most popular sectors in the region. jonathan: the csi 300 down more than 3%. earnings season picking up time. tom: carl riccadonna, always wonderful at bloomberg economics, bidens plan will be inflation light. that is like the champagne of beers, miller lite. jonathan: thank you for that, tom. is this about addressing the supply-side story? let's get to michael cushman, morgan -- michael kushma, morgan stanley cio. let's talk about goldman. "in the near term, a complete service sector recovery will likely overcome virus fears and return to work office patterns. both look likely to take longer than anticipated." both issue a downgrade to forecast growth. what is the view at the moment? michae

expectations have moved up from there pandemic low and are in a range the fed considers consistent with the fomcn inflation golf. the labor market has improved although minorities have yet to see significant benefits. he predicts job gains should be strong as public health conditions continue to improve in some of the other pandemic factors weighing them down diminish. while substantial further progress has not been achieved yet, the committee will continue to discuss when they should start tapering. they will talk about it in future meetings. not a lot of meat. the fed sticking to its guns even in the face of those higher inflation readings. tom: for the complete report i think we have to go to the soap opera at hand, which is lawrence summers. with the biden administration and some allusion he talked to them about who would be the next fed chair. will you listen, or what will you listen for with chairman powell that affirms his desire to continue as chairman? michael: i do not think you will get anything. i think he will be asked and he will say what he always says. i am focused on doing my jo

we are also entering a fed lockout period amid their next fomc meeting.ential volatility without a jay powell to continue to communicate a more dovish message ways on markets. looking at a 30 year yield at 1.5 -- 1.9%. let's get over to opec and the oil markets. opec and allies have agreed to pump an extra 400,000 barrels per day starting from august, ramping up output by about 2 million barrels per day in total by the end of the year. it is a move that could ease pressure on the global economy after pandemic lockdowns. for more, we are joined by a head of research. thank you for joining us. for an agreement on hand, is the bullish case for oil changed at all? >> not at all, there were two things going on. yes, there will be more production, 400,000 barrels per day from august onward, the worry for the market over the last two weeks -- incorrectly i would argue -- the media headlines, this is about cohesion, opec is falling apart and that is not the case. we have said before there will be disagreements between key members but they come together to show th

dollar has generally balanced a little bit sick -- bounced a little bit since the fomc.ouple of headwinds in the short-term but over the longer-term, we like aussie higher. shery: andrew ticehurst, great to have you with us, rate strategist at nomura. crude prices lurch. the biden administration says they are encouraged by the latest opec talks. the latest on oil. this is bloomberg. ♪ >>çí[l:l:ba8p5÷o!?t opec is 9℠℠f together. the market is fragile. i think that is what is reflected through and you can see in the equities. >> either an agreement will be made and they will get some type of dispensation or in the absolute worst case scenario, people hand in their memberships to opec and it is a free-for-all. >> inflation is driving a lot of what the fed is doing as well. oil prices are that component that may not be transitory based on the issues we are seeing right now out of opec less. >> if we were shorter term traders, which we are not, we would be selling our energy positions here and focusing more on this companies in the u.s. that are dividend oriented, income orien