tv Bloomberg Surveillance Bloomberg November 11, 2021 6:00am-7:00am EST
paris and with them in their remembrances. the scope of this needs to be remembered and with 300,000 total casualties in world war i, completely told by the british experience, 10 times larger and no one more affected than franch with 6 million -- france with total casualties. jonathon: around the world and veterans day in the united states, a moment of silence at 9:00 around the opening bell which we will observe. good morning to you all, the equity and bond market -- the equity market is open and the bond market is closed. many ways, the story of yesterday is a story of today. 6% inflation in america. tom: we are coming to grips with it. yet when the news shows up, it is like oh, and all the charts that we saw.
what we -- what i would really emphasize, except for the shining moments of 1990, this inflation is vintage. jonathon: we are talking about the stock at 6% and you are right to bring it back to the 90's. the sticker shock and the difference between 5.9 and 6.2. 5.9 is the estimate and 6.2 has a lot of people talking. lisa: the bond market is closed but yesterday you saw a complete repricing. expecting the fed to have to move slow there. this is a -- move sooner. in the long end is feeling that we have wildly mispriced the long end of the yield curve and rates in an environment where inflation will be different. jonathon: the u.s. bond market is close. your equity market is open 15, .3 percent. yields in germany might be one to watch, negative 25 and we
back away once more. the front end repricing for a conversation about repricing. just a messy auction giving a lot of weakness to the long end of the curve. tom: i looked at the dollar movement, the global litmus pace -- global litmus paper. what is so important is the bloomberg dollar index, 2.6 standard deviation and that is expressed not only in the majors like the euro, but also in ef. what does this inflation mean for emerging markets? i think that is a story. jonathon: they are already hiking, that is the inflation story worldwide and that is the story out of priscilla -- of brazil or maybe not your turkey. chris is joining us, we have a start, how did you react when you saw the six handle on the cpi in america?
chris: unfortunately not with a lot of surprise, we are just getting through the earnings season and unquestionably the theme of all of these calls whether it is auto, food, or the walt disney company is inflation and supply chain issues, inflation being one manifestation. so, everything is transitory on a timeframe, it just does not look like we are changing anytime soon. freight will loosen up first, but semis will take a longer time and later -- labor we do not know. tom: how do you inflation proof a portfolio, a measured value? a certified start portfolio, how do you inflation proof it? chris: the reality is there is no way, and that is something that equity managers have had to think about for decades. withstanding that, there are ways to limit the impact of
inflation looking for companies with pricing power and the nirvana is defined companies with pricing power at fixed costs. wage companies i have talked about before, it does not cost more to get rid of garbage in a landfill we are are -- that has been already paid for. they pulled -- the prospect of inflation has driven the crypto market. tom: if you bring it down to a big percentage margin that helps you with the inflation, does that steer you back to big tech? chris: there is no question that some of the big tech companies have enormous pricing power, and are inflation conduits. then we think about what is the impact of interest rates and, obviously higher interest rates are more impactful on those companies that have cash flows into the future and we must balance those things. lisa: it was warren buffett who said that when the tide rose out
-- rolls out only then do you discover who has been swimming naked. is the tide rolling out now? chris: we know that they come in and out, but we do not have a good schedule for that. i think we are closer to the tide going out. rivian has an 85 million dollar market cap so this is not changing yet. lisa: at what point do we see some real disruptions where we see the most vulnerable players shaken out? chris: i think we are already starting to see that, the slow inability to pass along costs will cause financial pressure and pressure on debt service for a lot of companies that have leverage. and the debt markets as they tighten up they might not be there for those companies. this is a process that probably plays out over time. jonathon: could you weigh in on
that, that we have an $86 billion market cap on an automaker that only started delivering the vehicles a couple of months ago? how do you respond to that? chris: someone like me who owns gm, with a similar market cap and a larger market share, it is puzzling. without amazon i do not think they will have the market cap that they do. they appear to be a real company, but it is challenging to make stuff and get cars delivered to customers and service them. it will be a bumpy road, but they will be a good competitor. jonathon: did you buy the stock? chris: no. we like to participate in some stories through suppliers and one of those is a tiny auto suppliers that make suspension. that is one way we play it. jonathon: great to catch up. a remarkable moment for that industry. tom keene, $86 billion valuation
for reference, the ford motor company, $77 billion. tom: i do not know what to make of it. i have the clearest memories of the prophet illusions of 1999 and 2000 and it was reported in 2001 what a fiction it was. i am not suggesting that now but in some such -- sensitives a silly season, the silly season is always always there in a boom. jonathon: is it easier to transition to ev or start from scratch. they believe starting from scratch is more than doable. lisa: patel saying that she sees the space. when tom talks about the silly season, we only know when it is silly when it stops. are we starting to see the beginning of that with inflation or does it persist because long-term it curtails growth and we end up with lower yields?
and then stocks go up. i wonder at what point do we get a reality check? jonathon: who is ready to lean in and push back against communication and chairman powell? who is ready to do that? lisa: honestly i think that is what is going on with the market. the market is saying you will end your bond purchases sooner than expected and you will be raising rates two times next year. jonathon: he looks pretty reluctant to make a move. tom keene and lisa abramowicz, the middle of december the next fed decision. expect changes. tom: three weeks or four weeks. jonathon: once we have done that and i am out. lisa: you said that a month ago. jonathon: i have been listening. tom: equity feet -- jonathon: equity futures up 16. from new york city, this is bloomberg. ♪ tom: with the first word --
ritika: with the first word news, elon musk sold 5 billion shares shortly after holding a poll on whether he should sell 10% of his giant stake in the company. he has more than 1.4 million shares this week, his first sale since 2016. china's president is first -- is ready to deliver the first resolution on communist party history that would give him the mandate to rule for life. only two others have offered a historical reveled -- resolution and both use them to dominate party politics until they died. spacex launched a third crude -- crew of astronauts. they lifted off late wednesday from the kennedy space center. it is scheduled to dock later today. the astronauts will begin a six week -- six month research mission. the shares from disney are lower
, they reported a more than expected increase of subscribers to its streaming service. both missed estimates. starbucks has lost an attempt to stop union votes at three of its restaurants in buffalo, new york. the u.s. government has mailed ballots to workers and said that any union victory would create the first union in thousands of locations. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪
we know why, they see higher prices. they cannot find what they always want when they want it, and we are tracking these issues and trying to figure out how to tackle them head on. jonathon: it is the biggest issue in the country right now. from new york city, tom keene, lisa abramowicz and jonathan ferro. the shape of your market as follows. yields are, much higher. today we are closed in the bond market. in the bond market, -- bund market. in the fx market, euro-dollar at 1.1457. crude down $.40 on the session. $80.88. it took senator manchin one hour and eight minutes to respond to the cpi print on twitter yesterday. the threat posed by record inflation to the american people is not transitory and is getting worse.
from the grocery store to the gas pump americans know the inflation tax israel and d.c. cannot ignore the economic pain that americans feel every day. how much did that change negotiations in washington? tom: not only for the next big effort at the political path for the first tuesday in november. it seems distant, but it is not. jack fitzpatrick with us now, what changed yesterday in terms of the political heat, we need to spend more money because that always works versus the inflation print? jack: it amped up the pressure. obviously senator manchin is front and center on this issue because everybody on the democrat side is looking at him and kyrsten sinema. before the report there were democrats trying to emphasize that this bill is meant to be paid for which does not negate the fact that a lot of the spending in it is more
frontloaded in earlier years than the revenue so there could be reckoned -- there could be inflationary pressure, but it amps up the dynamic that we have seen for months, which is the question of how deeply will senator manchin and also senator cinema dig in their heels on the spill over the inflation concerns. tom: they are not length. every textbook tells me that. why in your world are they linked? jack: i am not clear on the question? tom: you have a fiscal policy, a set of fiscal policies going back months and this pandemic involving trillions of dollars, we under stand that -- we understand that. we have inflation and there is a big debate, i get it, why are they linked in the legislation. if we cut 300 billion dollars out of this program, what is it actually due to a gallon of milk at the grocery store? jack: that is where 2022 comes
in and that is where the bill has a much smaller effect than anything we have seen in terms of the supply chain management and a number of economic issues. really it is a talking point. even if it was entirely paid for to go for a 1.8 or so trillion dollar bill is -- it gives republicans what they want and moderate democrats something they do not want which is a big number in terms of government spending at a time when there is inflation. this will not be the main cause, that it would be a cause of serious heartburn for democrats on the campaign trail. lisa: joe manchin was not the only one to swiftly respond. president biden also responded. in his discussion of highlighting the need for the infrastructure plans, he also said he had a commitment to the fed to monitor inflation and take the steps necessary to combat it. what does that mean? jack: part of that is probably
just a response to the talk, one about whether there is -- whether the president will look for a new fed chair. also keeping in mind the politicized pressure on the fed chair that came up in the last administration. that is a fairly broad statement that does not necessarily mean that much from the president, other than a promise to generally support the fed's independence. lisa: given that, that is not much we have heard in terms of nominating a new chair. this is an anomaly. in the previous you can name it administrations there was already somebody named and well on their way to confirmation at this point. why the delay? jack: at this point you can look at the pressure from progressives as a reason for the delay. not that we have had a breakthrough in terms of actual
news that the president would look for someone else, you heard through some indications of support from members of the administration including janet yellen for jerome powell, but it is a bit of an aberration and noteworthy, and i think that the number one point of emphasis is the number of progressive lawmakers in the senate saying that they would like to see somebody else. tom: we are remembering armistice day and veterans day, the vice president of the united states is in paris, that is not unusual, that is highly symbolic of the relationship of the two nations. what is the story this time around? not that modest uproars ensued, but a mystery over the vice president's visit to paris. jack: there has not been a ton of news from the vice president's trip talking about
cyber security issues, cooperation in space and the bigger piece of news is reportedly according to jennifer jacobs they did not talk about the blow over the submarine deal that the u.s. got involved with via australia. so, it probably more is a matter of the vice president president's profile, because our focus on border issues have not been easy, but the biden administration trying to reach out to macron and the french government and trying to have a presence in a way that is positive and not quite so uncomfortable as the previous meetings. lisa: good -- jonathon: good to catch up, thank you. lisa trying to tiptoe into the realm of speculation, are you suggesting that maybe chairman powell starts to become the fall guy for what is happening with the inflation picture? lisa: honestly i did not
understand what president biden was talking about. is he saying that this is their independence, i have nothing to do with how quickly inflation picks up and if it goes too quickly, are we going to basically say that the fed is screwed up, or is it his way of saying the fed is there and hinting at a nomination? i do not know the purpose of that statement. jonathon: you are not the l.a. one asking. tom: it is a debate, the separation is tangible from what is clearly real inflation. look at the rents in new york city if you want to go personal. the other thing is the academics, the economics. there are some arguments. i like what adam said, we better get used to 3% inflation. jonathon: he is saying embrace it, not just get used to it. tom: well said. jonathon: it is well said. i am not saying i agree, what i
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♪ jonathan: live from new york city for our audience worldwide, good morning. the biggest one-day drop on the s&p 500 going back about a month to early october. your equity market advanced on the nasdaq 100 up about 100. advancing 6/10 of 1%. the bond market picture from yesterday, we are closed for yesterday -- veterans day. we had a move of about nine basis points, 10 to about 11. cpi we are pricing in a conversation about interest rates. we had a big move. further along into the day, 1:00 p.m. eastern time we have this very messy auction on the long end.
that's where things started to drift. if the bond market advances, this has been really difficult for a lot of people to get their heads around. this one is open. quick look at italy, quick look at germany. off the high of the last couple of months just south of 1% at 95 basis points. the austrian central bank governor out this morning talking up the possibility of completely winding down bond purchases at the ecb by the end of next year. december the big meeting for the ecb. we have this big punch to end the year with. it will be very interesting to see what guidance we get on that program. tom: it gets stronger this morning of note, 114.62, the euro.
chairman powell's inflation, julia coronado out of texas, always vetted for a position with the fed where she has worked for a good number of years. iconic at bnp paribas, thank you so much for joining us today. you are read worldwide for charts on page seven where you go -- your chart this week is old and new estimates of rent inflation. what is the dynamic of rent inflation in america? >> we have a hot red cycle -- rent cycle on our hands as well. it came a month earlier than we were expecting. a lot of the indicators have been pointing in this direction.
calibrating the magnitude is always the trick. it came in higher in october. it looks like we will have a surge in the first half of next year starting now. like many things this cycle, there was a surge of demand early in the cycle. we are seeing the building response, that takes some time. it will take even more time as the supply chain bottlenecks. that will also probably be a 2023 issue before we see that moderate back down. that is adding to the other pressures that are more related to covid disruption that have perhaps renewed in intensity because of the delta variant. it is the combination of things that look more cyclical and the third factor of course, energy prices.
that is really a china, european driven dynamic. it sort of rolls into the u.s. and hits u.s. consumers. tom: tell me about the timeline of fed and waiting for inflation turn around become disinflation? is it after january 26 of next year? the fed meeting of march 16? could they be dependent until may 4? julia: i think they could be data-dependent. this is an uncomfortable situation. the inflation is being frontloaded near term. anything they do today isn't going to have an effect for a year or more. we are searching this epic wave that will fade over 2022. that money will be spent. the consumers will demand -- the consumer demand will cool off to
some extent. that is what everybody is forecasting, including the fed. do you want to pile onto this frontloaded tightening? do you want to buy your time and wait for some of those forces to play out? it is going to be a tough road, a tough balance for the fed to strike. we don't think it will be towards the end. we are putting in a lot of global removal of accommodation. we haven't yet seen the impact on markets or the economy. i think the fed precedes. i think the bar is pretty high to accelerating tampering. some of this reflects a u.s. recovery that is pretty resilient as delta fades, we are seeing demand stay strong. that bodes well for the same
part of the recovery through this first inflation. one thing you might worry about and a handful of analysts to is this could be demand destroying. it tends to be a harbinger of a recession. we don't think that is the case because it is such a good foundation for u.s. recovery. jonathan: the next stop is the december meeting. i'm looking at the forecast for next year, it is 2.3%. how much does that need to change? julia: that is actually our forecast. that is a strong forecast. that includes a very strong red cycle. the key there is good inflation moderates as the year progresses. that is above target inflation.
all that goes into it is the supply chain issues ease and semi conductors become more available. car prices flatten out. maybe cool off a little bit. it sucks going up to get to that forecast. that said i think they raise the near-term. the current year forecast looks too low. i do think instead of half of a hike we get a full height. it becomes the outcome for the committee. they will feel the heat from all of the questions. the job here is the steady hand and keep the eye on that medium term. lisa: the idea of that being a steady hand when it is not as if they are affecting some dynamics. let inflation when they are
talking about buying bonds and reduce the yield on the margins. at what point will stay the course not be adding accommodation and will they be forced to end sooner? julia: if you think about what the choices are here, slamming on the brakes, will that be better than letting demand run a little hotter for a little longer? what are the pros and cons of these scenarios? ideally if the fed could calibrate policy in a timely way but what been less accommodative now and more accommodative towards the ends of 2022 when fiscal impulse becomes a drag. we just have this epic impulse.
from a growth perspective, that will run out of gas. even with this new fiscal package. these are longer-term packages. they don't have anything to do with the near-term demand profile. if the fed could find tune things, they would do a little less now and maybe a little more later to pass that baton between fiscal and monetary. they don't have that luxury. what is the best thing to do? obviously if there are signs of wage crunch dynamics becoming more inclined, they could lift up in june. that could be a tightening of monetary policy. we could kill inflation. the fed could kill this recovery anytime they want. that is not what they want to do. the good news is the other
important piece of october data was a really strong jobs report. that is creating the foundation for the fed to pull away and hand the responsibility back to the private sector and the labor market. they are in process of doing that. ripping away stimulus and slamming on the brakes probably won't be good for anybody in the global economy. one thing i think the fed is well aware of is the u.s. is outperforming. we have more support than most countries and regions. we are the keeper of the global currency. that is a pretty important responsibility. we slam on the brakes and that hits the global economy, which is more fragile. that will roll back and
re-stabilize global markets. that means the u.s. runs a little hotter for a little longer. that is probably a price worth paying. jonathan: it is good to catch up. julia coronado. this is as bad as it looks. the reopening trade and all of this removes most of the motels. it comes in at 5.4. it is broader, stickier, that is the conclusion for so many people. tom: watch em. jonathan: futures up 16 on the s&p. sounded so random. tom: i don't think it is random. jonathan: i don't think it is either. futures up one third of 1%. from new york, this is bloomberg. ritika: president biden admits
immigration is a problem but insists he has part of the care. the president said it is a portion of a plan to overcome the effects of the coronavirus pandemic. the report shows the president -- it is a rare movement -- moment of cooperation between superpowers locked in a geopolitical rivalry. china and the u.s. come together to slow global warming. they agree to boost their efforts to cut emissions. the deal injects new momentum in global climate negotiations. a federal judge has denied other records be given to a congressional panel investigating the capitol riot's. they're one of the judge to delay the order tuesday, the national archives will release the records friday.
in texas, governor greg abbott's crusade has been dealt a blow by a federal court. the judge calls it a violation. it rose the most on record last month. medium red moved 18%. almost $3400, it is the biggest annual increase going back one decade. many new yorkers looking for places to live as they anticipate going back to work. global news 24 hours a day on errand online, i'm ritika gupta , this is bloomberg. ♪
million kids between the ages of-11. we have more coming online. we expect the dates to accelerate over the coming days and weeks. jonathan: from new york city this morning, good morning. your equity market opened underway. we advance one third of 1%. the u.s. bond market closes today. in germany, yields unchanged. the stock of the morning, we have to talk about tesla. this stock is up by 2.51% in the free markets. elon musk has updated $5 billion of tesla stock. you should not be able to talk about this story unless you cover the following, the findings released wednesday show some of the transactions were prearranged in mid-september. weeks before the poll over the weekend. he also didn't mention in the
tweet that he has millions of stock options that must be exercised before next august when they expire. the former piece of that i don't think you should be able to talk about this story without discussing. tom: i have to be very careful here. he clearly has a different rulebook. i don't understand. i'm glad you brought it up. i diplomatically will say there seems to be the rules and then there is the elon musk playbook as well. the very important pandemic we are in. pediatric vaccines are front and center. christopher, from johns hopkins, truly one of our international experts. we walk into the fancy offices that we have and we don't even look at the syringe.
we look at 1860 and the miracle of modern syringes of world war ii. we don't even think about the technology give us -- giving us these vaccines. internationally where there is no technology, how do we distribute syringes out to help the millions that have not been help like we have been helped in america. >> it is one of those examples where we need to rapidly increase local capacity to manufacturer. the idea that they should be a first world product that we are distributing really is a problematic model. the other challenge of course is the pfizer vaccine really requires technology. tom: do you see other vaccines that could help? johnson & johnson in the news in the last 24 hours.
>> easier to use, easier to field. astrazeneca also easier to use. not being used here in the u.s. but in many countries. it is one of the most commonly used covid vaccines. there are two new vaccines in the pipeline that will also be much easier to use. those are the novavax vaccine. lisa: we are seeing the number of cases and hospitalizations rise at a record pace. in israel they are having covid wargames to figure out how they could counter the more deadly strain of covid. should we be doing wargames too? dr. beyrer: we need to be doing way more immunization. we are still under 60% of the total u.s. population. as long as we are that relatively low threshold that
means 40% of the population is not immunized. we really need to address the vaccine hesitancy and the folks who are still unwilling. i think that is a big part of the reason why president biden has done his mandates. they are constitutional based on the 1905 decision in the street -- supreme court on smallpox. lisa: what about for kids? dr. beyrer: everyone agrees first of all that the vaccine really does work safe it is highly effective in kids. vaccine rollout in kids is going really quite well. there is high demand out there. it is probably too early to mandate. pediatric vaccines are still
being used under emergency use authorization. it is likely that there won't be mandates. alllisa: if you have -- lisa: if you have gotten immunized, does that mean you cannot get very sick? how protected are you after six or nine months without a booster? dr. beyrer: it is important to remember that these vaccines were never designed to totally prevent infection. what they work so well against, serious disease, hospitalization and death. they dramatically reduce the odds of that. there still are people postimmunization who got sick with covid, breakthrough infections. some of that is underlying. it was just fully immunized.
he was on cancer therapy and was immunocompromised. what we really have to look at between people who are not immunized at all and those who are, closer to 1300. we need to do better. we are still in that basic race between the virus and the vaccine. jonathan: was that an aaron rodgers reference? it wasn't lost on us. lisa: he said he was immunized, that men vaccinated. jonathan: i want to turn to a story in the financial times i just got published. the fed's inflation miscalculations.
read the first couple paragraphs. surprises on the upside, the underlying driver has been one of the most vulnerable segments of the population. those have been characterizing this inflation episode is transitory. we reduce the convictions despite contradictory data. go to the conclusion that this is really punchy. failure to act properly would turn any characterization from one of the worst information -- inflations in decades with widespread and unnecessary damage particularly to the most vulnerable segments of society. that piece just dropping. tom: the essence of this is the game theory of all of this, what he's talking about through this heated essay. limiting or diminishing the freedom they have in decision-making. jonathan: we will keep talking
>> deletion is going to begin work before it gets better -- inflation is going to get worse before it gets better. >> the fed is navigating the most difficult period in its history since the volcker era. >> we are living in an environment where prices are going to be higher and where wages are also higher. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the most contentious debate in a long time. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market futures up 17, up 0.4% on the s&p. it is day two reaction to that cpi print. tom: dr.