we are less than one hour away from the fomc decision. will be speaking with the former advisor to the dallas fed, danielle dimartino booth, now the ceo of quill intelligence and bloomberg opinion contributor. we have the latest on china's evergrande as a sources close to the government say the real estate drive will be restructured into three separate entities. what kind of fallout will that have? we hear from the cofounders of one of the fastest growing and best-performing firms in credit investing, diameter capital partners. they discuss the opportunity with the fed's move. i want to check on what is going on in the market. another day of gains and little bit stronger today. up more than 1% on the s&p 500. we have been over 4400 for some time today. the u.s. 10 year yield coming down as investors buy the government debt. dollar index down 1/10 of 1%. crude up to $71.98 a barrel. something caught my eye today in italy and that is a move in the countries 10 year yield. it took a dip today after bloomberg reported the treasury is planning

no one on the fomc is happy to be in this situation, to be having these questions raised. it is something we take very, very seriously. this is an important moment for the fed, and i am determined that we will rise to the moment and handle it in ways that will stand up over time. i am very reluctant to get ahead of the process and speculate about different things. when we have things to announce, we will go ahead and do that, but that is really what i have for today. reporter: one small follow-up, i know you didn't have the 2020 forms in hand, but you would've had past-year forms in hand. at least in the case of the dallas disclosure forms, similar trading activity was shown in in years past. that in theory could have been something that came up in the process. chairman powell: the five-year review that we do under this unusual law where all the reserve bank presidents are reviewed for reappointment at the same time every five years, that is really a broad review about their leadership and if there were a concern, we would not wait for the five-year -- we would not wait th

the fomc meets.e fallout from china real estate won't stop the fed from signaling it is on track to taper. things are looking a little bit up. yesterday, we had a selloff in carmakers. tom: in the end of the session at the s&p 500 ended in the red firmly, but there was some buying and that aligns with the view of jp morgan that this is a technical selloff and it was time to buy the dip. morgan stanley had a different view, suggesting that the chances now for the correction is growing. we are seeing some more optimism back in these markets. the stoxx 600 up. leading the pack in terms of the index. the cac 40 gaining more than 1%. digesting the travel news out of the u.s. and the u.k., positive impact on the airlines. we have heard about executives coming out and welcoming that news. how things are breaking down on a sector by sector basis. basic resources was firmly in the red yesterday. leading the pack very strongly indeed, media. followed by energy and basic resources. you are in the green. 0.2% lo

the median inflation projection from fomc projections falls to 2.2% next year. the process of reopening the economy is unprecedented, as was the shutdown at the onset of the pandemic. as the reopening continues, bottlenecks, hiring difficulties and other constraints could prove to be greater and longer lasting than anticipated posing upside risks to inflation. our framework for monetary policy emphasizes the importance of having well anchored inflation expectations both to foster price stability and enhance our ability to promote our broad based and inclusive maximum employment goal. indicators of longer term inflation expectations appear consistent with our longer run inflation goal of 2%. if sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to assure that inflation runs at levels consistent with our goal. the path of the economy continues to depend on the course of the virus and risks to the economic outlook remain. the delta variant has led to significant increases in covid-19 cases resulting in signific

that is the period immediately before, during fomc meeting. third there is regular disclosure. of these, everyone's ownership and activities are all disclosed on an annual basis. would i have had to go back to read people's financial disclosures to know what their activities have been. this has been our framework for a long time. i guess you would say it served us well. the other thing you would say it is now clearly seen as not adequate to the task of really sustaining the public's trust in us. we need to make changes and we're going to do that as a consequence of this. this will be a thorough going and comprehensive review. we'll gather all the facts and, look at ways to further tighten our rules and standards. >> great, thank you. we'll go to steve liesman. reporter: thank you. thank you, mr. chairman. i want to follow up on jean's question. the issue of ownership of these stocks and trades, do you think it's appropriate for federal reserve officials to be owning the same assets that the federal reserve is buying? is that one of the modifications that you're looking at? in t

certainly it feels like last wednesday's fomc meeting was a seminal moment and people realize now thes serious. it is not a great surprise we will taper in november, but the reality was a splash of cold water in the face. more importantly, if you look the short end in the belly of the yield curve, market participants are thinking about rate hikes. that was inevitable the minute tapering was a reality that people would move in the next step, which is when will we get left off. the fed has move the timetable forward quite a bit over the last six months and then market participants are starting to seat we are getting serious. tom: young turks like jonathan ferro and lisa abramowicz look at the 10 year yield, the standard & poor's 500. i look at the dow jones industrial average and i always look at the 30 year bond. you suggest the 30 year bond is below any kind of appropriate measure? stephen: even if the fed is right in inflation comes back down to 2%, that leaves you with basically no real return for 30 years. things have to play out perfectly for that to be a good investment over the

the median inflation projection from fomc calls from 4.2% this year to 2.2% next year the process ofpening the economy remains unprecedented. as was the shotdown at the beginning of the pandemic. bottlenecks, hiring difficulties, and hires restraints could be longer than anticipated posing upside revvings to inflation. our framework for monetary policy emphasizes the importance of having well-anchored inflation expectations both to foster price stability and to enhance our ability to promote our broad based and inclusive maximum employment goal. if sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to assure that inflation runs at levels that are consistent with our goal the path of the economy continues to depend on the course of the virus. and risks to the economic outlook remain the delta variant has led to significant increases in covid-19 cases, resulting in significant hardship and loss, and slowing the economic recovery continued progress on vaccinations would help contain the virus and support a return to more normal econ

the fomc is expected to signal a reduction in stimulus later this year.four days until the vote in germany. chancellor merkel campaigns for armin laschet in a tightening race. francine: let's have a look at the futures. we could see a big selloff in china, but things seem to be -- somewhat with evergrande. we have had cash injection from the pboc. we are seeing a bit of a selloff. overall the focus will be on the fed. because we have china and everything else, the fed are more hawkish than expected. we could see market jitters. tom: we look ahead to the fomc, the flags pointing to the november taper. you are right to highlight what has been going on in china. you had this injection of liquidity from the pboc. a calming balm. you look at the evergrande payment, we are waiting for details and uncertainty remains. a less bad session is an asia. the shanghai compass it currently in the green. the ftse 100 gaining 0.9%. france, you looking at gains of 62 points. span, the ibex gaining 0.7%. energy companies in the u.k., stocks taking customers into the energy

soon in fed speak means the next meeting of the fomc so that is done. it would take a disaster for that not to happen. the other thing i would say is, among the district bank presidents, rosengrant and kaplan were not knee-jerk hawks spirit over his career, rosengrant has dissented both on the upside and downside and kaplan is nowhere near as chronic at the center as his predecessor, richard fisher, was. tom: so is it a misreading to characterize this as a reduction in the emphasis or at least the influence that the hawks are happening across the fed? >> the way to interpret this is a reduction in this way that the district fed's will have relative to the power of the board of governors. in washington, d.c.. the board has long regarded the district banks as some time rebellious provinces. this gives them the opportunity to reign in the centers, be they on the outside or the downside, and manage the communication flow a little better. francine: dan, thank you so much. dan moss from singapore. let's check back into the markets. juliette saly joins us from

that is basically reflected in the fomc forecast. i think beyond that, people are saying even if they start to taper in november and december, by july, they will probably be done. if inflation is rising, and it doesn't pull the economy down, and inflation is still high, they will be ready to walk through that door. it remains to be seen how hawkish the tilt really is. maybe more fomc members will get over to the 2022 rate hike camp if inflation remains high. that will be a big determinant. rishaad: good stuff. kathleen hays. let's get back to john woods. asia-pacific cio at credit suisse. >> it was a little more explicit than i thought the day before. >> no major surprises. one of the benefits of forward guidance is there are no shocks to the system. pretty much everything the fomc announced and discussed subsequently was expected. at credit suisse, we anticipate the taper in november. it will be implemented in december. my own personal view is they will run the taper down to a moderate level. and then start talking about interest ra

and then we had a big moment at the june fomc when the dot plot moved.relative to that is an adjustment rather than something that makes you hide under a desk. that's the message i got. they are on track. their hand was stayed a little bit by the economic situation, the health situation, possibly by the debt situation in the state. we didn't get a big enough change in the markets to shape things. tom: did the dot plot changes that we've seen, there is no consensus whether you see a hike next year. there's now a bit of a moderate hawkish tilt around some of these projections. but no consensus. is the lack of consensus on that question enough to support these markets, in the short to medium-term? kit: in the short term for two reasons. there's a sense that some of the dot moves are sending a signal within the fed as opposed to telling us what is likely to happen. the second is that you took, they are going to have to paper twice as much because they are buying twice as many bonds as they did the last time we went through this. if they start in november and

the fomc press conference, transitory.imes in march, nine times in april, two times in april, six times in july. how many times did they mention transitory in september? >> zero. they might have used another preferred word like temporary. >> as long as it starts with 18. that's all we care about. manus: transitory, temporary, and tantrum. great to have you with us. a very measured perspective on the resignation. coming up, we will discuss the potential for coalitions. the german elections. they have decided, but not quite. this is bloomberg. ♪ dani: it is "bloomberg daybreak: europe." i am dani burger in london. manus cranny in dubai. olaf scholz of the social democrats has claimed a narrow victory after sunday's election. he is appealing to the greens and the pro free democrats to back a coalition. let's bring in maria tadeo to discuss more. maria, the ftp have been telling us about how they are one of the potential kingmakers here. hopefully, we have a little bit more clarity. do we know which way that they are leaning n

jonathan: 30 minutes away, and persists, and it persists in a way that i don't think many on the fomc anticipated. to what extent does it persist into the new year, and to what extent does it change the message of the fomc? there's a believe they can reverse guidance -- they can divorced guidance around qe from guidance around -- lisa: i think it shows that the gains being made are on the lower end of the factor. how does this change the dynamic going forward? on the inflation point and the storm point, the storm that we saw, hurricane ida, brought a lot of oil off-line. this has actually led to an unexpected dearth of oil, which has led oil to rise higher faster than expected. at the same time, people looking at the income brackets in terms of what the cpi elements are, how is this broadening out from idiosyncratic into a broader swath of prices rising? tom: let's do this in 30 seconds , your personal inflation statistic. mine is a one-bedroom apartment in new york. i've been stunned at how one-bedroom apartments have lifted in new york. jonathan: if you have a doorman, rents are fly

know, in terms of having confidence and that sort of thing, i think no one is happy, no one on the fomc is happy to be in in this situation, to be having these questions raised. it's something we take very, very seriously. this is an important moment for the fed, and i'm determined that we will rise to the moment and handle it in ways that will stand up over time. i'm very reluctant to get ahead of the process and speculate though about different things, and, you know, when we have things to announce, we'll go ahead and do that, but that's really what i have for today. >> one small follow-up. you didn't have the 2020 forms in hand, but you would have had past-year forms in hand, and at least in the case of the dallas disclosure forms, similar trading activity was shown in years past so that the, in theory, could have been something that came up in the renomination process. >> so, yeah, that's a good question. so, you know, the five-year review that we do under this unusual provision of law where all of the reserve bank presidents are reviewed for reappointment at the same time every fiv

and what is the general type of mood at the fomc.you have that level of uncertainty, any acknowledgment of a risk management tool, but try to pivot yourself to what the data will show you. our expectation is that the deceleration in growth, even the hardened hocks will have to recognize it is challenging and will have to start tightening in 2022. jonathan: thank you. to hawkish dots. lisa: i love the idea of chief dove you were saying. chief dove, the bar is getting higher and higher. that is what i wonder, how much is this administration going to pressure any new fed appointees to be ultimate dovish or how much will some of the inflation data push their hand and the key issue in 2022. jonathan: i thought he gave a different view, if you that right now was needed. i think we have a spectrum of dolls from super dog to go, and we need a little bit and have -- super dove to go, and we need to have a little bit to have that conversation. tom: he is someone who essentially writes nonstop. he has written phenomenal leadership books. he was

know, in terms of having confidence and that sort of thing, i think no one is happy, no one on the fomc is happy to be in this situation to be having these questions raised. it's something we take very, very seriously this is an important moment for the fed. and i'm determined that we will rise to the moment and handle it in ways that will stand up over time i'm very reluctant to get ahead of the process and speculate, though, about different things when we have things to announce, we'll go ahead and do that but that's really what i have for today. >> one small follow-up i know that you didn't have the 2020 forms in hand, but you would have had past year forms in hand, at least in the case of the dallas disclosure forms, similar trading activity was shown in years past. so that in theory could've been something that came up in the renomination process >> so that's a good question you know, the five-year review that we do under this unusual provision of law where all of the reserve bank presidents are reviewed for reappointment, at the same time every five years that is really a broad re

the supply chain disruptions are more profound and long-lasting than what the fomc expects. let me pause and be clear. inflation is going to be above the fed target, you can see in the forecast it was going to be above the target for a while. trans or a tort -- transitory increases in inflation is rather -- measured in quarters, not weeks or months. so far it has been five months, which is absolutely truly transitory. and it could persist for quarters. if you look at the forecast, they are expecting inflation to be above the target next year. that does not seem to be accelerating their plan for raising rates that much, a few months but not a lot. here is why. i think they are serious about letting inflation run hot. not too hot, but hot. and perhaps for quite some time. haidi: the ever grand risk, jay powell was measured in responding that the main risk is the confident channel globally. is that big when it comes to the strength of chinese demand? patricia: i am not 100% sure it pertains that much to the strength of chinese demand. i do think the confidence channels in finan

jonathan: we have faced down risks out of china many times on the fomc.king summer of 2015. how are you processing that, digesting it at the moment? i think your experience is valuable on this particular topic. >> the federal reserve certainly understands china is an important player in the global economy. if china has a hard landing, it would have serious consequences for the united states. at this point it is premature to reach that conclusion. the chinese have tried to tighten things before. when it starts to affect greater growth and employment, they tend to ease off. i think that is going to happen. jonathan: how do you think the chairman will approach that issue in the news conference this wednesday? >> i think he will say we take the world as it is. i don't think he is going to make a strong statement about it. lisa: do you think if there is a 20% drawdown like some are expecting, what does the fed do? do they not taper at all? >> obviously of things happen in a way that change the economic outlook in a meaningful way, then we will adjust course. a

and we are still looking for clarity on the timeline and we may get that later this week from the fomced. what do you think is the bigger market dynamic, the most important dynamic, the removal of some of these asset purchases or the starting gun on rate rises in 2023? stÉphane: we think the timing will be -- the tapering will start at the end of 2021 or the beginning of 2022, and basically the tapering will be done by 10 billion per month, so they will go over 12 months from 120 billion to zero. then we expect rate hikes will only happen in 2023 and we expect two rate hikes in 2023 and two in 2024 and then we will reach something like 2.5% at the beginning of 2026. this is our main scenario and i think it is along the lines of market expectations. now, if there is a risk in our mind to this scenario, it is more on the upside, and this is probably to hike more than two times in 2023 and 2024, and it is a bit too early to gauge the reaction of the market, but it could be a bit of a surprise at that point in time. right now, this is the expectation and in the market will react according

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 into next year, republicans vowing to block provisions in the senate. chances for twin fiscal disasters, default as soon as next week. anne-marie, what's the lay of the land over the next 10 days? >> it doesn't even have to do with the bill back better agenda. there's a stopgap funding measure to keep the government afloat past the end of the month as well as suspension of debt ceiling. they linked the items together and we knew that going into the senate republicans said they wouldn't hav

possibly if the focus shifts to the fomc.ember still in play and what are the dot plots going to tell us about the trajectory, the timeframe for those rate hikes? manus: we have just spoken to fidelity. there is a more than marginal risk that a rate hike could come into play at the end of 2022 but there will be things. ray dalio says investors will be stunned but it is a manageable situation in regards to evergrande. they just heard from fidelity. it will not be one big bang solution. it will be a bit like the road to hell, paved with good intentions, and it will be long and hard in terms of chinese debt. tom: also highlighting our previous guest from fidelity, the pressures from energy prices on the industrial sector here in europe. a question mark for earnings as well, manus. manus: we have a question for ihs and will continue with that discussion about the prices. homes will be heated and getting electricity but it will be industry which steps back and that is a demand disruption prospect on the table, tom. i think it is a

the fomc kicks off its two-day meeting today. we will discuss with scott minerd.na and the state of the banking industry when bruce van saun, citizens financial group ceo. and we will go to the greenwich economic forum to speak with ares capital ceo kipp de veer on the state of the credit market. let's get a check on the markets right now. we have had the s&p 500 balance this morning and then drop into losses, now back to a gain, .3%. 4370. the u.s. 10-year yield doing a whole lot of nothing right now, although earlier we did see investors comfortable enough to sell this debt, pushing the yield higher. the bloomberg dollar index coming down a little bit 1 to153. nymex crude also little changed at 70.45. regional banks in the u.s. are seeing a wave of deals. one of the most recent was citizens financial buying jmp. that transaction was the latest in a string of takeovers by the nation's fifth largest regional bank. let's bring in the ceo and chairman, bruce van saun. thank you for your time this afternoon. let me ask you about these acquisitions. there is the jmp d

we have the fomc decision, expecting to yield clues on the taper timeline.nomists expecting a formal announcement in november, but in the coming year of the taper, it is the physical version that may really bite. the pullback in stimulus from the federal government is likely to have a much bigger impact on economic growth next year. let's get to our guest, alan higgins. i was struck by a message from andrew brenner, he says there is this huge wall of worried the markets are climbing and all of these risks are out there. is it a cut coming in the cards from the fed? that is far from consensus, but it shows you have a sentiment is shaping up. is the balance of risk for the fed very different than it was, say, a month ago? alan: a little bit. i would argue look at financial conditions. you have your own indicator, the gold one around for a long time. they are exceptionally loose. exceptionally loose monetary policy. our advice is going from exceptionally loose to just very loose monetary policy. the fed is on that page but very cautious. i don't think they will

at least change the data for which the fomc will talk about progress. movie too many times to be scared by the u.s. debt ceiling. tom: there is a sense of groundhog day every time you bring up the debt ceiling and those political negotiations. u.k. retail sales for a fourth straight month are falling, what does that tell us about the trajectory of the economy here? simon: we have had data out of china, the u.s. and now the u.k., mixed pictures. many of your viewers are used to retail sales being a cyclical indicator, a straight read across retail sales and can tumors ending. i do not think that will be the case this time. this is not the difficulty. this morning has been a soft print. in august you saw in the u.k. a pivot back to consumption of services, experiences that consumers have not been able to purchase for 18 months, and that is not, in the data. that that does not come up in the data. in terms of consumer spending, two thirds of u.k. gdp, that is the wrong take. we get a lot of countercyclical noise and retail sales for months to come. tom: wh

i think you will not see a meaningful change in the dots based on one data point, at the september fomc meeting. jonathan: collin martin, yields higher, the curve is steeper. 10's five four basis points. what are we sniffing out in the market on the back of this report? collin: when you look at today's disappointing number, that pushes back the timetable for hikes. differentiating between tapering and actually hiking interest rates. at the last conference, powell made the point, it doesn't mean that once they start tapering and in imminent rate hike is coming. a longer they remain patient, the longer inflation and inflation expectations, asset prices get to rise. that can result in a higher terminal rate. the mistake they made a few years ago was that they said multiple hikes were on the horizon. they were far from where they wanted to be. that spooked the markets and choked up growth expectations. a longer they stay at zero, let those inflation expectations bubble up, means they may need to hike faster down the road. that pulls up the terminal rate and should pull up long-term treasury

john: if they announced november, which i believe they will at the november 2 fomc meeting, they announced in november, aiming to finish around the middle of next year, and let's say it will be into, the third quarter then the arithmetic works out neatly at $15 billion a month easily as the fed has signaled. it is probably proportionately between treasurers, $10 billion per month, in mortgage backed securities of $5 billion per month. we are going into this at a faster pace of purchases the last time the fed tapered. and the chair said we would probably wind up the process more quickly. it took a year last time. i think those numbers speak in their mad accents, that that is what we are likely to see. taylor: should it be equal, the previous taper when it was five and five? or is there a case that you should be tapering mortgage backed securities faster, given the huge strength within the housing market? john: well, i think the main thing is to get out of the bond buying business here. if you go more quickly on mortgages, the fed is buying 40 billion of mortgages per month. $80 billion net

your question about impact on monetary policy, we are losing two fairly aggressive hawks from the fomcsing as presidents, but it is really clear that the board of directors in the regional banks will likely pick people similar to them. now, rob kaplan had tremendous sway and rosengren had tremendous sway because of their service and their intellectual fire power i think coming up we are going to see this hawkish tilt progress more because jim bullard and esther george are becoming voting members. we are having a convergence of hawks whereas the centrists and doves on the board are starting to leave >> let me highlight this it is interesting and against the grain right now because, bill, as you know the current line of thought is the more vacancies, the more likely the fed is to become dovish. there's a lot of political pressure on them obviously from the white house, just the democratic party in general, and there's a thought that even though the regional banks choose their own representatives that somehow that political pressure is manifested in those who are more dovish. you have a c

i think fomc potential taper is a bigger deal. i sold a bit. plan to have 7 1/2% correction in the s&p, perhaps 11% correction in the nasdaq. not only is it normal but it is a good thing. charles: by the way, jim, that has begun? this is not a false, not a head fake, the pull back you've been looking for it has already begun now? >> i'm not putting every chip on that square but i think it has. i entered some short positions too. i'm not banking everything on that but, yes, i believe it has. charles: michelle? >> i'm sorry in advance because i'm having a little audio issues but to just on what was just said, there is one big concern if they cannot roll this out with some feasible solution in china and that is to the raw materials, particularly those used for construction and infrastructure, copper, steel, wood. that would actually really affect the imports into china and that would of course be a factor for our economy. so that is one way it could roll. the other way it could roll if they do resolve the issue, consumption starts to rise again on

there aren't very much on the fomc except for the chairman and kaplan these guys grew up in the worldhink that is two years. these are two opposing forces which should we be putting our reliance on? >> we have an imbalance between supply and demand. bottlenecks on supply. this will not be alleviated. whether you are looking at the port activity and everything coming to us from asia or the seaboard these pressures are more su sustained i believe. what we like to look at the national independence surveys, half of those looking for employees in this critical part of our economy, half of those looking for employees cannot find them. real pressure in the survey here clearly not covid related. i think we are exaggerating covid d in terms of price pressures. we are only going to be here for a certain amount of period it's a real dilemma with the fomc >> before we had the price inflation, you've always been someone who said the asset inflation is something the fed needs to keep an eye on. have you seen something happening that has you thinking there is a lot of cash around thatyou need what y

half of fomc british offense forecast these economic conditions will be fulfilled by next year.an projection for the appropriate level of the federal funds rate lies slightly above the effect of lower bound in 2022. shery: fed chair jerome powell speaking up -- speaking about the rate outlook and paper timeline. philip in decision in asia and much awaited boe and a meeting in norway where we may see the first g10 rate hike. let's bring in kathleen hays. let's start with the philippines. what are we expecting? kathleen: let's put this in context. southeast asia's virus and still not completely under control. vaccine rollout is very slow. that is the biggest cloud hanging over the economy. the philippines inflation is rising but what can the central bank do? they cannot take steps to raise interest rates. they have already made several cuts in the rrr rates this year. the last time uber television spoke to the central bank chief, he expressed this resignation i guess you could say they have done all they can. it is one of those situations that has happened to a lot of central bank

we know the fed and the fomc are watching wages and the jobs picture closely.ement from china over to europe but europe is now posting some gain. the technology clamped down regulatory changes in china pushing the tech shares. europe seeing some modest optimism. the ftse 100 up 31 points. the dax in germany gaining. olaf scholz is arguably less market friendly and he is a front-runner. the cac 40 up 0.5%. another gauge as to the stickiness of prices in this part of the world. and goldman sacks sang we could be looking at stronger oil prices, maybe $80 per barrel. let's switch to the sectors. energy, utilities and auto parts topping the list 30 minutes into the trading day. basic resources, technology. that is the shape of play 30 minutes into the trading day. inflation front and center. let's get the first word news with laura wright. laura: england is to abandon plans for a vaccine passport, the system for entering venues. it was expected to come into place at the end of the month following a similar scheme in scotland. israel is ensuring it has a sufficient s

tom: where does this leave the dot plot for the fomc? 2023 are when the hikes are expected.ill that change? joerg: this is difficult to say because since the last dot plot, the economic outlook has deteriorated. inflation came above expectations, for me it is unclear what the impact on the dot plot will be. tom: joerg: tom: joerg kraemer, chief economist, commerzbank, thank you. let's get the first word news. simone: china's factory inflation accelerated in august to a 13 year high with commodity prices remaining elevated despite beijing's battle to curb gains. cpi rose 0.8%, less than the 1% forecast by economists. prime minister johnson has won a mandate to raise taxes to fund health and social care. the vote in parliament passed comfortably. 40 lawmakers from johnson's party abstained or voted against the plan which will bring the tax burden to its highest level on record. easyjet is planning to raise a billion pounds to help compete during the travel rebound. the carrier has secured 5.5 billion pounds in the liquidity since the start of the pandemic. european airlines ha

yields, a 13 basis point move in 10-year treasury yields after the fomc meeting, giving investors confidencet what the fed says they're going to do, tapering by november, is what is going to happen. you can feel that in real yields spiking. this is the metric that a lot of people who invest in tech stocks are looking for. it has a lot to do with the correlation we saw in february, the yields spooked tech investors but today, yield and tack are up. i want to bring the conversations of social media stocks because when we think big tech we think facebook and twitter and ordinarily, the recovery trade would show up in social media stocks, but look at this, in the last months, a convergence. if there is a place to watch in technology, social media stocks is. emily: thanks. twitter will let users send and receive tips using bitcoin as part of a push to help users make money from the service. twitter also looking into authenticating users' identity eyes. bloomberg check's kurt wagner joins us. jack dorsey at square has made a big bet on crypto, why is twitter making this move? kurt: they want to gi

the fed has announced aggressively at the fomc that by december they will probably start tapering. all of the factors that were keeping yields lower in the second quarter and part of the third quarter are starting to run in reverse and you are seeing yields moving higher, not to mention energy prices moving up and covid cases are on the decline. we can be setting ourselves up for a much stronger, much waited for fourth porter. all of this is pushing treasury yields higher. tom: when you are on the gulfstream flying at 32,000 feet looking at the yield markets, what is the 10 year yield where you signal shift or trip points ? jim: think we are past that. i think it is around 140. the fact that we are back above 140 is telling us the correction lower in yields is over with. we have to think about yields progressing back toward the march 31 highs come around 175, even up to 1.8%, and it's even possible you could pass to percent by the end of this year, beginning of next year. it will be hard to get above 2% and stay there, that is the trajectory we are on and the fact that many people

tom: of course, part of that consideration for jay powell and the fomc is the evolving situation aroundhe delta variant and the pandemic more broadly. the market seems to be saying it is a risk. are they right? >> based on what we have seen so far in highly vaccinated countries, the delta variant has represented a delay, but not a derailment of the restart. the vaccination remains to be reasonably effective toward serious illness and hospitalization. that is the underpinning reason for a stew feel reasonably comfortable, especially around the progress of the restart story in highly vaccinated countries, including the u.s., the u.k., and europe. the story is somewhat different in less vaccinated regions and countries, such as the emerging markets where they previously perhaps could be viewed as seemingly in control of the virus lockdown situation. but the delta variant kind of takes over. there are bigger questions around how much of a delay it would be for some of the lesser vaccinated countries and the long-term scarring. this is why there is a broader preference for developed market e

ultimately, need one vote to move for the 2022 fomc dot plots to move higher. ultimately, some of these devilish voters, being jerome powell -- dovish voters, being jerome powell one of them. perhaps it is a repeat of the more hawkish sentiment that we have seen in june. the second thing is is advanced notice of discussion. advanced notice is similar to what i would categorize as the new --. when you hear the turn, it is a very familiar tune. if it comes across as familiar, that is exactly what jerome powell wants. from that perspective, this advanced notice should be in on a bench. but as you highlighted, the tension for investors is in the digestion mechanism, between ultimately bringing on the tapering event and when rate hikes occur, which there will be required air room and breathing room to get to those hikes. do not expect rates to change much, but expect the calibration of the said to ultimately change . ultimately, we are making further progress to that substantial further progress paradigm. tom: the history book on the shelf is always repeating itself

there is a split on the fm -- fomc illustrated by the dots.upports the fed tapering in november. after liftoff, we need accommodative policy for some time. this is why i say there aren't really any real hawks on the federal reserve. what divides the doves from the super doves is whether to go at the end of 22 and from there, there is almost universal agreement to keep the rates quite shallow if they can. lisa: we have not seen an inflation acceleration over the past few decades and what jonathan: jonathan: will change that? this was fine. -- this was fun. tom keene is back with is for monday. when does matt miller get married? lisa: next friday. but he leaves today. congratulations matt miller and have a wonderful wedding. to your beautiful wife who i thought you were already married to. i don't know what this is. i met the wife about 10 years ago. from new york, this is bloomberg. ♪ ritika: the influential north korean leader says the country wants to resume talks with south korea under certain conditions and it indicates it wants the u.s. to

but in the next few weeks, the next few months, evergrande and fomc, the delta variant and others willlity. to some extent, that can be an option. shery: we see debate about whether this could be a moment. this is where ray dalio stands on whether or not this is a moment. >> it has -- reduced structural damage through the system that was not rectified until the treasury came across in terms of its borrowing and the fed him across quantitative easing. this is not that kind of a shakeup type of thing. $300 billion is what they owe. this is manageable. shery: you mentioned some opportunities perhaps, where you see that? vasu: i agree. if you look at the liabilities of evergrande, it is less than a percent of chinese banking system loans. it is very low right now. even indirectly if you look at the chinese banking system, exposure to property developers, construction companies, it is in the region of 9%, something manageable. i don't think this is a systemic problem. most of the loans of evergrande domestic, not international. you do have some u.s. dollar loans, most is domestic. i think t

fomc, boj, brazil, even south africans are getting in on the action.story is one we will pay attention to a great deal. alix: i am looking forward to unga in theory, we have some great guests, and the trains are terrible, so how will i get home? that is obviously my big concern. we are headed to radio. coming up, republican texas congressman kevin grady will be joining "balance of power" with david westin and go to dab digital radio for guy and myself. this is bloomberg. ♪ in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities. >> from the world of politics -- >> we did not pay for that tax cut. we borrowed to pay for the tax cut. >> to the world of business

we have to get through the fomc tomorrow to see is the fed going to be a little more hawkish, or do they toe the line. we get to the debt ceiling. over the next two weeks, we see a lot of potential headline risks to get through. until we come clear of those hurdles, i think people get more comfortable that the underlying fundamentals haven't really changed. may the summer slowdown is over if that is the case -- maybe the summer slowdown is over. if that is the case, i think it gives people comfort that ultimately the fundamentals r.o.k., that sets us up for -- fundamentals are ok, and that sets us up a good year end. tom: how do you actually tactically do it? jason: it depends on exactly what your baseline allocation is. you were talking about you couldn't pull the trigger and buy yesterday. for us, it is a situation where we don't want to pull the trigger and sell. should you be adding more risk? where do you want to add the marginal dollar? we think there's more in these stories. it is probably a bit overpriced in the market, leading us to more value stocks that can still do well. if y

that housing costs could remain but the key question remains what happens next week when we have the fomc meeting for two days. will the transitory camp went again, or could we have a hawkish surprise? haidi: the more hawkish central banks around the world, in sydney, pushing back on the idea of early rate hikes, saying don't need to see a lot more when it comes to robustness and wage growth before they change the outlook at all. and we talk a lot about tax restructuring and tax reforms. a new report saying they recommend australia should lower the income taxes like so many other populations around the world struggling with an aging population. sophie: and perhaps that spending package in the u.s. could boost growth. it's interesting because despite the fact that we may have reached peak growth and peak earnings, and that seems to be the case when it comes to find managers and the bank of america survey, they're not giving up on stocks. investigator -- investor allocation is only falling slightly to a net 50% overweight. haidi: will get more on that from sophie who is in hong kong this mo

reflation push and the slightly more hawkish tone we got from jay powell yesterday signaled that the fomcre comfortable with the economic recovery in the u.s.. we saw the biggest one-day take up in u.s. 10-year yields since march. morgan stanley said 1.43% is a key level for u.s. 10-year yields. we are at that level now. more upside than is likely. let's switch the terminal to look at what is happening in china. it is a very different picture as a result of the travails around ever grand and the concerns about growth in the world's second-largest economy. you have seen the pboc stepping into liquidity for a third straight day. you seen that injections of about 40 billion u.s. dollars in that timeframe. this chart shows what has been going on. very gradual, you get a few pickups around some seasonal demand for liquidity in china, and then it is very strong liquidity injection over the last three days in the people's bank of china. many say you will need to see a triple reverb cut from the pboc to support the economy. goldman sachs saying don't worry too much about the plight of ever grand.

the ten year didn't react to strong to the fomc meeting yesterday.eve in strong interest hikes going forward. >> the fed has two official mandates, first is innation, secondly, most increasingly important is full employment the third mandate that doesn't getting a knowledged quite obviously is the markets do you think the fed will ever be able to pull back if it creates turmoil in the markets even if it's a pull back pullbacks we have been talking about this week are still 3% or a little over 3% for the all-time high for the three major averages >> when you look at tapering historically, if it's done correctly with strong economic growth it tendsing to temporary i think the feds will be able to stomach that when we look at inflation, we are seeing much higher numbers, our view is that spike in inflation is generally transitory there will be permanents going forward in the 2 to 3% range will the fed view that as too hot or just right? employment is coming in lower than expected going forward. the fed said one more strong employment number tapers the c

half of fomc part is up and's forecast that these favorable economic conditions will be fulfilled by end of next year. as a result, the median projection for the appropriate level of the federal funds rate lies slightly above the affected lower bound in 2022. alix: that was fed chair jay powell speaking yesterday. joining us now is mark cabana, bank of america global head of u.s. rates. take a look at the curve. flatter yesterday, trajectory still flat, yet we are seeing a steepener relative to yesterday. what does the bond market tell you about what it learned from powell? mark: yesterday i think the bond market was telling us that the fed was more hawkish than anticipated. today i think the market is trying to more deeply digest what the fed suggested and understand that if downside risks diminish, this is a fed that is going to want to hike rates, and that should imply a higher directory of overall interest rates. it is a fed that seems like they want to get going, and if they do, rates probably need to price and the fact that there will be rate increases in the future and overall

at the last fomc meeting, jay powell's presser, he talked about -- he was asked what he is looking forward to taper. one thing he mentioned in passing, "i would like to see a couple more strong's job reports." that is why so many traders are on the edge of their seats, even at the end of a long holiday weekend, to see which way it goes. maybe the weaker side or the stronger side. haidi: also have them on their edge of their seats when it comes to watching what happens in china on the regulatory front. we heard from the president. was it something of a charm defense, and olive branch when it comes to foreign investors? he announced a lot of positive, but very broad measures, potentially a new stock exchange, small or medium-sized enterprises, pilot projects, trade agreements? will go to the open to see if it has an impact on sentiment. they want broad stroke measures that were enough. kathleen: the latest on the hurricane, the death toll in new jersey is even higher. an estimated 29 people. 12 deaths in new york city. a total of 29 looking at the region. people were caught unaware. this is

we are looking towards the fomc meeting that could be enough to trigger a bigger move in the markets. tom: to go back to a story we had before the jon ferro sabbatical, what i'm hearing from you with great respect is a narrative. narratives in which we hope and pray, you circle the word hope and you do that because you're going to lose money. everyone has the hope thing going on because they have a narrative or a story going on right now. when do we capitulate and others climb on board? >> i guess i don't know that that narrative is problematic or even a part of this year. going back to the ecb in january that had a narrative around recovery and reflation, there had been some hiccups and delays around eltek, but by and large it's happened kind of like we had anticipated. no reason to abandon it yet. we are much closer to the point where you say you have seen the inflection point in earnings before there's a different narrative around most of the year. tom: -- jonathan: morgan stanley talked about midcycle transition. what's the what next? is the hotter economy tighter or softer next y

the bears sang the selling, the seasonality is still a factor and you have to go into the fomc tomorrow. a lot of that is positioning. what led to trade with the tech stocks. as you can see with the faang index ending. the bid lower with the yields up 1%. let's start with the tech trade as a whole. it was not just tech that rallied. you sought become the big tech bundle trade we have been talking about. whether it was chinese adrs, those in the green by over half a percent and semi conductors. even to the point where autonomous vehicles, electric vehicles, those were in the green as well. pretty significant that the tech bundle trade was doing well. what was not doing well, cryptocurrencies lagging the broader market. which brings me to how they are reacting to stocks in general because today they were not on the same page. this is a correlation that shows the trend is building higher and higher. what does that mean for stocks? it means the volatility is correlated to bitcoin. he could mean there is more volatility in the future of the s&p 500. let's get to the micro picture with ed lud