tv Bloomberg Surveillance Bloomberg November 30, 2021 7:00am-8:00am EST
>> what is the biggest problem the economy has right now? it is the great resignation and supply chain problem. >> it will be hard to trade up at the moment. >> we have scenarios where it is higher if inflation is more persistent. >> we are moving like the 1960's. higher growth. >> this is "bloomberg surveillance." jonathan: the equity selloff resumes. this is bloomberg surveillance live on tv and radio alongside tom keene i am jonathan ferro. lisa back with us tomorrow. we are down 1% on the s&p. tom: in the last hour some surveillance dance, we have seen some nice improvement. the angst of the 10 year yield
from 1.41. two solid basis points. all of that because of the sterling hour. jonathan: it is not just about omicron. a conversation we will have in just a few moments time. can central banks around the world maintain this dovish stance if we get some downside risk it starting to build for this economy? tom: what does the volatility main -- mean for the financial system? we have seen the 10 year yield, the vanilla benchmark yield, three or four standard variation moves in six days. the answer is volatility is really painful for people like mr. gallup, they need to manage that. kailey: on the bright side the 60-40 has been working over the past few days. equity down hard what you are seeing that traditional safety in treasuries. the short end of the curve is
what we need to pay attention to. rereading those expectations in the market. now they are pushing them back out. jonathan: 47 basis points. chairman powell coming up later. tom: there is a little more common. we are omicron'd up. the two year yield is the central bankers yield. jonathan: yields lower on tens by about six basis points. good morning to you all. we are down 41. -9/10 of 1%. on tens, 1.4443. inflation coming in hot. the euro-dollar is 1.1348. kailey: topping all estimates just under the challenge central banks are dealing with
inflationary pressures on the one hand and a lot of pressures around growth on the other hand. that was a question jerome powell probably have to answer in the senate. he and janet yellen will be testifying in front of the senate banking committee. we know what they will say in their opening statements. the chairman will talk about inflationary outlook. he also talks about the downside risk. that will be important for his language especially ahead of the jobs report on friday. also coming up in terms of economic data a conference form dashboard consumer confidence. we saw a slight uptake in october that we expect to see come down in november. inflation risks, virus concerns, how much are they weighing? we will see if that trend holds. finally at 1:00 p.m. eastern time the vice chairman of the federal reserve will be
speaking. does clear that echo when he said days ago or has that thesis changed with about two weeks to go? jonathan: the vice chairman unleashed in the final moments of his term. unleashed, a little bit later on. for our audience on radio tuning in, everyone talking about the interview with the modernity ceo. i will bring in the quote. there is no world where you think this is the same level he is talking about vaccine efficacy against the omicron variant. i think it is going to be a material drop. i don't know how much. all scientists i have spoken to alike, this is not going to be good. i read the same interview you read. a little bit of price action. two said what is new? tom: the double adverbs yesterday. kailey: highly publicly. tom: these are material drops.
it is science talk and it is a little bit inflammatory. i am critical of somebody with skin in the game saying material drop when there is no science evidence. jonathan: let's wait for the data. some people saying it could be weeks. tom: i think he had a material drop in his profile. jonathan: you don't have to go there first, i think we start with a question you want to talk about. can central banks maintain this governor stitt considering the backdrop we have currently? alberto: i will give you a quick answer. as a bottom holder in treasuries or euro zone government bonds you have two choices. you could lose money slowly or lose money quickly. either central banks remain dovish but we have the problem of inflation. or the yield curve comes up.
central bank is going to try to be as dovish as possible. for the fed it will be much harder game plan next year with unemployment probably having a free handle. picking up not just in consumer goods and manufacturing but also in services. consumers are spending. it is going to be a very different game for 2022. it cannot be too dovish. other economies in the world -- are ready for a hawkish fed. jonathan: jp morgan modeling out a sustained rate of $80 a barrel of oil and they model out over 100 or 125 dare i say 150. what does sustain higher oil due
to the financial system and the fixed income market? alberto: we will have higher yields. we will have persistent inflation. it is not only about supply, it is about demand coming back. we will have weakness in emerging markets. look at the turkish leader upgrading -- a lire 13 over the dollar. we cannot pass prices to their clients. how to manage a portfolio is a lot similar to the 60's and 70's. we are still in the 60's, we have strong growth of positive returns. the assets move in a different direction. you want to be long hard assets. kailey: if the omicron variant causes central banks to move at a slower pace, let's talk about
the fed particularly, do they risk falling far behind the curve? alberto: i believe the fed is already behind the curve. if you just stepped two weeks back, we have unemployment on a high projector -- trajectory. it is very hard to justify keeping the foot on the pedal when there is only a few people that are unemployed. there are still a few million people unemployed. the question is does monetary policy really solve this problem versus increasing other issues like asset bubbles? real estate prices going up, in the end they are not as productive as investment in companies. the point where keeping the foot on the pedal is probably doing more distortion and damage than good.
we have been saying the fed is behind the curve. they are going to hike earlier than the market expects. these have faded because of omicron. they could come back. jonathan: i want to understand with real clarity what you have been doing over the last several days when you have seen this weakness and then you have the rallies off the back of it? what have you been doing in the portfolio the last couple of days? alberto: we have been defensive this year. maybe a little early. we have talked a good amount of liquidity in our portfolios in the last few days. there isn't a huge opportunity. you see some opportunity in particular across difficult sectors in sectors that are linked to the reopening. everything that is an airline or cruise if it has gone back to 2020 lows almost pricing the scenario where people won't travel anymore.
jonathan: airlines and cruise lines on the credit side. is this the story for you? alberto: it is a global story. you want to be in companies that have support. these companies open up more than a year of liquidity. there are selective opportunities. where you want to play offense is in the convertible debt and hard assets. jonathan: interesting, always is. good to catch up with you. has been too long. not just the risk but where the opportunities are as well. a good for a grant -- friend of this program put out a survey overnight surveying nine-day five -- 95 fund managers. these are the responses of how
omicron is impacting their positioning. one of the quotes, i'm not doing anything until i get more information. that was the most popular choice. 49% of the vote. some were buying nervously, 19%. and those buying confidently was 22%. that is the split. a little picture of how people responded in the last few days. tom: she called me, i said triple leveraged cash. jonathan: i'm not doing anything until i get more information. tom: the jobs report friday, i'm data-dependent. jonathan: i think it has maybe lost some significance. tom keene, kailey leinz, lisa back with us tomorrow. -8/10 of 1%. is it lisa dependent on the tape? you have a morning in new york.
this is bloomberg. leigh-ann: with the first word news, i am leigh-ann gerrans. top executives of mcdermott say the world may need new vaccines to fight the coronavirus omicron variant. the number of mutations of the virus are frightening. ceo stephane bancel said it may take months for drugmakers to deploy updated vaccines they could deliver in a large number. oil is headed for its biggest monthly loss since the early days of the pandemic. crude has some 20% in november. producers will respond. opec and its allies will decide on thursday whether to hold the run of monthly production increases. inflation in the euro area hits a record for the era. consumer prices rose 4.9% in
november. that was higher than all predictions in the bloomberg survey of economists. european central bank officials have been reassuring citizens they are facing a once in a generation cost of living squeeze that just won't last. it is another blow for big tech from regulators. facebook parent to address competition concerns. the competition in market authority already removed giphy as a potential challenger in the display market. they are considering all options including an appeal. global news 24 hours a day, i am leigh-ann gerrans, this is bloomberg. ♪
not only a high threat of confidence but a very high level of confidence we could manufacture it. jonathan: some of the commentary we have had from the pfizer chairman and ceo. good morning, tom keene, jonathan ferro. the equity market down 39. we improved a little bit on the s&p. yields come in five or six basis points. crude down 2.62%. $68.10. tom: 500 points or so, we have come back nicely. jonathan: we are still struggling with the why of it? we have a picture of the idea of what is going on more broadly around us right now. new variant, concerns about bank policy, i get that. when so many people point
towards this interview with moderna, what is new? what did we learn overnight that we knew yesterday morning? tom: waiting in washington is emily wilkins. what is washington waiting for? you can't tell me the politicians are becoming epidemiologists overnight. how will they handle omicron? emily: politicians will be taking a close look at what is needed at this point. remember back when covid-19 became a global pandemic they talked a lot of funding. saying they wanted to give americans assistance and make sure they were getting them through the pandemic. after president biden came into office use are republicans hold back and say we think we have spent enough. we are worried about high inflation. you have seen those worries within the democratic party. you hear democrats saying this just means we need to pass that social welfare and tax package
from president biden. even within the democratic party you are hearing senator joe manchin say there are serious concerns about inflation. they are worried about pumping more into the economy. a huge question about whether we will see another big spending bill targeted at omicron. tom: does the zeitgeist this morning simply that they will continue with the booster program and we will nudge the vaccination rate up in america? is that all we've got? emily: at this point what we heard from president biden yesterday was he does not want to go back to doing shutdowns and mandates. he thinks the way forward is for vaccination and booster shots. although this depends on what we continue to learn about this new variant. if it does spread quickly, people who have their vaccines are not immune to it. that could change the calculation for how the white house and congress want to go forward with how they respond to the omicron variant.
kailey: what kind of questions do you think chairman powell and janet yellen will get when they testify on capitol hill later on today? emily: we saw testimony from fed chair jay powell saying the omicron variant is something to be concerned about. it could to -- lead to longer rising inflation. it could lead to more unemployment. he is really going to paint a picture that this new variant could really cause some issues with the market and with the economy. powell said in a copy of his remarks that most of the economist do expect inflation to go down within the next year. you're also going to hear a little bit of a positive picture from janet yellen on this. the recovery is still strong. she seems to make the bigger concern about the looming debt limit congress needs to deal with.
kailey: are they addressing it? the clock is ticking. emily: we really haven't seen any momentum forward in how lawmakers plan to move. we see democrats saying they want republicans to join them on raising that debt limit. we hear republicans saying no way, that is not going to happen. we do know mitch mcconnell and senator chuck schumer have been having discussions about the debt limit and how to potentially move forward that might result in some sort of agreement where democrats are the only ones to move forward but republicans sort of make it a little bit easier for them to actually get the job done and knock down a couple of those procedural hurdles. at this point we do not know anything except they have marked this as the warning date. tom: in the zeitgeist of this early week, is the bipartisan stride towards china. are they going to be able to
effect a tone to china on a bipartisan basis? emily: that is a great question. if you remember a number of months ago, the senate passed legislation to pass the competitiveness with china. it has more than $50 million for semi conductors. then that bill went to the house where there were a ton of disputes and things hadn't gotten done. discussion over that legislation , we saw the senate and the house saying they would come together with lawmakers to work on a comprehensive package. at this point it is a part of how much oxygen there is in the room. you have to figure out how to fund the government, debt limits, figuring out this social welfare plan. this doesn't leave a lot of time right now to focus on what the response to china needs to be.
jonathan: emily wilkins in d.c.. absolutely petrified, jp morgan jamie dimon was an example of that over the last couple of weeks. can a man who leads a bank very outspoken on a whole range of issues. if there was one person you think could say something and wouldn't have to apologize afterwards, a lot of people would've picked him. tom: it is clearly in the zeitgeist and how do you respond. what will be the response of china and what will the response be when it comes to america? critically how they accept our exports into china? that is not to be underestimated. tom: four years -- jonathan: four years there has been this issue of upsetting the
chinese communist party and then they make a decision anyway. playing by the same rules u.s. firms play by. what have we seen over the last year? the chinese communist party made the decision for them. particularly i would focus on hong kong as well. as you mentioned how the western banks adapt and adjust to hong kong. jonathan: a lot of people have echoed this sentiment. the belief the chinese coming his party would want to mold china in the westbrook. clearly that has not been the case. it is too late in some peoples minds to do anything about it. tom: there is no evidence now. it is in the year end. it has wrapped up in omicron and all of that. it will be interesting to see how they react to the information on the virus as well.
jonathan: your equity markets shaping up as follows. the morning, tom keene, jonathan ferro, kailey leinz, down on the s&p. the nasdaq down 4/10. we have been lower, we have been higher, we have been lower again. one move that has been consistent. we will get to the bond market. the front end of the curve. friday, monday, tuesday again down two basis points. 0.466 percent. tom: the two year yield is saying we need to hear from the fed and they need to see the data. we will have this conversation in a moment on 500,000 jobs
created. another one of that on the back of 5 million jobs. jonathan: we have been pulling forward rate hikes and then pushing them back over the next several days. the euro-dollar, let's have a chat. the conversation about inflation in the euro zone, 4.9%. tom: he is basically saying resilient dollar. at some point it will break down. e.m. doesn't move until you get dollar weakness. jonathan: we have to talk about that meeting with the ecb. december 16. the day after the federal reserve. kailey: the garden company has been low -- lonely for a while. they tried to stay dovish as central banks tighten. how long could they say that way in the face of inflation? we are talking 4.9 in europe more broadly, 6% in germany as
they handle we got yesterday. jonathan: the cross asset price action, let's get you some individual names on stock movers. >> all the talk is still about omicron and how it will affect the market. moderna shares down slightly after stephane bancel tried to walk back some of the comments about when the company could develop a vaccine that could fight the omicron virus. talking about a stock that is up 34% over the past two sessions alone. joe biden speaking about this on thursday for a made up detailed plan with the latest wrinkle in the coven plan. we said pretty clearly we did not exacerbate any travel restrictions. american airlines yesterday clears -- close near a nine month low getting ready for what could be a seventh straight day of losses. jp morgan and the banking sector down as well.
a lot of eyes on jay powell. his written testimony is out. he focused in on the downside risk. that is what the market is focusing in on. the omicron issue that will be talked about today bumps right up against maybe the 15th that the self -- that janet yellen has flagged inc. -- if the government does not raise the debt ceiling. a couple other movers here. a lot of the retail stocks took it hard. some of the preliminary data on black friday cyber monday not living up to expectations. a second straight day of the kleins. most of the other names in the space also lower. an upgrade over at bank of america. a lot of the spotlight on twitter because of jack dorsey's decision to step aside as ceo. tom: you are doing this to a
great effect. what is the more prestigious job, ceo of twitter or ceo of square? >> longer-term probably square without a doubt. at least as far as the equity performance including square. definitely want to go for square. tom: thank you so much. this is a joy. one of our themes has been the underestimation of technology and what we would call technological progress. jp morgan was brilliant on this a month ago or so. scott clemens is chief investment strategist at brown brothers, a brilliant essay on our underestimation of technology. you get right down to the nitty-gritty of a gdp moving up. you call it absolute gdp in the labor force. we are doing this with fewer jobs. the mathematical soup of this pandemic.
do we have new productivity? scott: i think we do. two of the very broad silver linings coming out of this otherwise horrible 20 month period is an acceleration in the adoption of technology. coupled with a greater utilization and more efficient utilization with primary one. those are productivity enhancing trends. it has shown enough economic activity. we have levels of gdp with 4.8 million fewer workers. i'm not sure that is sustainable. at the same time there is a greater utilization of things like real estate. that is the real fuel for the equity market. we are seeing corporate earnings and corporate profit margins. tom: i think really she with
people that do compare and contract -- contrast. how do you respond to people worried about these dynamics that say it could be the 70's? scott: a lot of difference. policies being one of them. a thing in short tension is simply demographics. the 1970's a lot of what fueled inflation was a younger population still engaged in household formation, a lot of fundamental spending. fast forward 50 years later we are not as young as we used to be. although we still look that way. an aging population tends to spend less money and tends to spend it differently. in the long run that is a secular cap on inflation. we acknowledge the cyclical combinations of pent-up demand and disrupted supply chains are leading to inflation worldwide. jonathan: that's a wonderful
economic framework. to frame things up and think about the economy, what does it mean for how you invest? scott: we are still finding a lot of opportunities within large-cap equities. we are active investors. we are picking and choosing stocks within the market. when you see market movements like we saw on friday or like we saw monday or it looks like we will see today, a lot of that looks like a fanatic trend in terms of reopening trade. that is fueling a lot of opportunities within the market. with large-cap equities that tend to be more economically sensitive we are still finding a lot of opportunities. they are below the radar screen of the large caps moving. jonathan: could you describe the characteristics a little bit more of them? scott: they're the kind of companies that facilitate the
trends we have been talking about. companies that are technology enablers. the backbone of the things that we now do as a regular basis on the day-to-day effort. we like companies that provide central product and services. nondiscretionary consumer spending as opposed to discretionary consumer spending. the omicron variant or whatever might be consumer sentiment. kailey: the omicron variant is confronting the equity market as it did on friday. would you be a buyer? scott: i think we would be. what we are seeing over the past couple of trading sessions is the useful reminder that price volatility is a feature of market. it is not above. it is not a feature we have seen in quite some time. the relative absence of price volatility over the past 20 months is abnormal. that is the exception. we have had a bull market since
late march of 2020 without a single 10% correction. in a usual year we have 20 trading days in which the s&p index moves by 10% or more. there are any number of things. omicron being the one today. the debt ceiling later this month. continuing resolution. there are number of things that create price volatility. as long as the underlying fundamentals of the job market, corporate earnings are headed in the right direction. that is still coming in. we would be a buyer. jonathan: payroll comes out friday. what is that data given about what we are talking about at the moment? scott: i think it does. the historical support of fiscal stimulus packages, those things are beginning to wane. going forward we need to see the
fundamental support like jobs and income. tom: i look a lot in this interview with scott clemens. i'm not as young as i used to be. he nailed that. jonathan: thank you. scott clemens there. we keep coming back to this payroll support. i wonder how many people would be willing to do you -- deemphasized. tom: his note was brilliant. we protect the copyright. we have a productivity change going on. my analysis is drive up 3rd avenue. it is completely lined with trucks and rentals including u-haul vehicles piled at the cardboard boxes up $30.
that is technology. that is the new productivity. jonathan: a road trip with tom keene. 550 the median estimate this friday, can we top that range? 375 on the low-end. kailey: it is an interesting point considering how much this number does or does not matter. less than two weeks ahead of the fed decision. the omicron variant does process the labor market. jonathan: i did not think we would be talking about this in november, 2021. tom: do you see how she ignores our humor unlikely say? kailey: that is not true. i laugh at you, tom. tom: i noticed. jonathan: ignore us. coming up at 8:15, we need to talk about the pandemic still. lauren sauer of the university
of nebraska medical center joining us in the next hour. from new york city, this is bloomberg. leigh-ann: with the first word news, i am leigh-ann gerrans. financial markets appear to have been spooked by comments about the omicron variant from executives at moderna. new vaccines will be needed and it will take months to develop. on bloomberg tv the chairman says we need to take the new variant for the serious threat it poses. manufacturing rebounded in november after a power crunch subsided and current pressures eased. the purchasing managers index rose with expansion in production. that is the first time that has happened in three months. a warning from the spacex the ceo elon musk. most says the company could face
a genuine risk of bankruptcy if it cannot launch one of its starship vehicles at a rate of one every two weeks next year. musk said production issues are worse than they seemed just a few weeks ago. one of my favorite golfers, tiger woods admitted his days as a full-time golfer are over after suffering severe leg injuries in a car crash last february. woods said he could see himself playing occasional tournaments. global news 24 hours a day on air and on bloomberg quicktake, i am leigh-ann gerrans, this is bloomberg. ♪
the market doesn't do as well. that is because financial condition start to tighten. a lot of volatility around a single busy year. i suspect that next year will be a tougher year to make money. jonathan: next year will be a tougher year to make money. a message from morgan stanley senior portfolio manager. far less constructive he has been through far of this year. together with kailey leinz, lisa back with us tomorrow. your equity market recovers a little bit. still down 44. yields are lower by six basis points, 1.4302. inflation in the euro zone close to 5%. crude, $68 $.12 on wti. tom: i'm waiting for the economic data to really kick in.
i want to start a two day celebration of david wilson. he said i am retiring. david wilson with us. this starts with bloomberg news starting off a rolet desk -- rolodex and a wooden desk. it was like three of you commanding the equity world, wasn't it? david: that's about all it was. one of the things i remember when i moved on and started doing company coverage, you call people here in new york and they tell you we don't need any forms because they thought bloomberg was an officer play chain called bloomberg -- blumberg. tom: old people like me read the back page of the wall street journal to get corporate coverage and really bloomberg with other media, you and matt winkler invented corporate
coverage before the earnings, on the earnings, and after the earnings. what was it like after you started that? david: it was a whole different universe. you didn't have the depth of corporate data. we hired 25 reporters and started out with a small company bureau. tom: the cigar spittoon's in the corner. david: we spent eight weeks because we had no place to put them. it is really a carryover from yesterday in a sense. jack dorsey leaving twitter, giving up his ceo position. it worked out great for square shareholders. twitter, not so much. if you look over the entire tenure he became interim ceo in june of 2015.
you go back to june of that year and find out the stock was only up 31%. this is a time when you look across the stock where you find alphabet and facebook. up six fold. then you look at square. i one point it was of thirtyfold. now it is more like 22. still such a contrast in performance. you can only hope if you're a twitter shareholder that their new ceo could deliver better for stockholders. jack dorsey ultimately was able to do that. kailey: the issue isn't people using twitter, they are. it is just not reflected in the share price. david: they started this service called twitter blue. you could get some extra bells and whistles. that is one way they are looking to make money. how well is that going to do?
advertising, you figure they are up against the likes of google and facebook when it comes to driving the ad dollars. it shows up in the stock's relative performance. twitter has not been able to keep up. kailey: we could rely on you every day tweeting out your charts and stock of the day. will we still get those pix? david: it is an interesting question. we will be able to keep up chart of the day. she will be taking over much of what i do. tom: she drink the kool-aid? david: i hope so. it delivered what needed to be. we will keep up some of that. some of that may pass with the history. we will see how it all shakes out. tom: david wilson will be with
us tomorrow. thank you. we will see you tomorrow. jonathan: celebration of dave for the next 24 hours. 37, the youngest ceo on the s&p 500 now. he was born earlier than zuckerberg. zuckerberg now in the second spot. tom: i don't have any real wisdom on it. we use twitter like crazy. it has been a huge benefit to all of team surveillance. i don't understand the revenue production. jonathan: most people would say they don't understand how this has been a massive success given the president was the main attraction on it much of the last four years. tom: i have the lectures where people have asked me about this. i remember david gregory was at
nbc. he found this thing called twitter. i had no idea what it was. he just jumpstarted. david gregory jumpstarted so many people in news. even that it took two or three years before it got a critical mass. jonathan: it took place between the likes of senator sanders and elon musk. you have to be able to make money from those kind of things. kailey: twitter has not been able to monetize on all of it. you have to take a harder line with some of the political access. they don't allow political advertising. a lot more flagging tweets, blocking them. we saw that happen with president trump. i wonder how much of that was jack dorsey, who has been open about his opinion on things and if that model will change under a new ceo? tom: up three quarters of 1%. your broader market, let's take stock of things. futures are -43.
a little bit of risk off that seems is bleeding through this market. tom: what are we waiting for? are we waiting for a research report from who? i don't know what we are waiting for. jonathan: transmissibility, do verity, and vaccine efficacy. we want details on all three. it could take a couple of weeks to get a very full picture. tom: the answer is get a booster shot evan gotten vaccinated, hold somebody's hand and get the shot. i am willing to walk people over. jonathan: coming up, victoria fernandez from cross mark. looking forward to catching up with victoria in about 10 minutes time.
>> the virus and the evolution of viruses will shape everything in the course of the past 18 months. >> it should be questioned when you have inflation. >> a step back from the policy path will really be scrutinized. >> by the time you get through half of 2022, things will look different. >> much bigger issues next year than covid. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, lisa abramowicz. tom: good morning