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tv   Bloomberg Markets European Close  Bloomberg  January 7, 2022 11:00am-12:00pm EST

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europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: let's take a look at the price action this payrolls friday. what effect is the data having on these markets? just about every sector in negative territory. there are a few exceptions. the euro zone is on the front foot. we had much stronger than anticipated inflation data out of the euro zone today. we had the payrolls number in the states. the dollar giving back a little bit of ground, back above 1.13. we are looking for to that cpi number out of the united states next week. then some of the corporate news. we saw samsung overnight strong, and then you have had this st micro story lifting the
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semiconductor sector on both sides of the atlantic. really strong numbers. they have sold out already the whole of 2022. can they deliver more capacity? that is the big question for the entire economy over the next year. can the supply side get into gear, and what impact is that going to have on inflation? alix: and of course, the readthrough to central bankers. in the u.s. you have that jobs number. the headline number disappointed, but the unemployed rate coming down below the fed's natural rate of employment. we saw yields move a little higher. a tech selloff a little volatile in the meantime. in the last half-hour we have picked up steam to the downside. the nasdaq now off a full 1%. nasdaq 100 getting hit by 1.2%, and yields really climbing higher here. the belly still mostly underperforming. yields up by about four basis points. remember when the 10 year was at this level a week ago?
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the aftermath was in the markets, the kbw bank index one of the outperformer's, up 0.7%, along with some of the other value cyclical names like energy. downside has been tech. let's take a look at the arc etf , for example. on the upside today, this is kind of idiosyncratic, s&p 500 hotels index up 1.5%. in incorporates some of the cruise lines. crews stocks can stick out as an over compelling idea. this comes from steeple nicholas. -- from steeple nicholas. that is sort of the fundament a backdrop. funny you should make that call in the middle of omicron and winter, but in the last, it is the year for cruising. guy: we are additionally going to put that out on social. thank you. let's talk about the inflation narrative out of the euro zone. inflation picking up and continues to pick up. the number we got today
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accelerating beyond already record levels. we are at 5% in december, defying expectations for a slowdown in making the ecb's job a little bit harder. kristine aquino heads bloomberg's rates and fx team here in europe or get is that the case? is this making the ecb's job a little harder, or is this simply the incredibly volatile gas picture we are having to deal with in europe and a core number staying reasonably well behaved will be where the ecb focuses its attention? kristine: i'm sure the ecb would like to believe that this is a temporary blip in inflation, but i think it is made much more complicated by the fact that we have seen similar consensus about the nature of transitory inflation. it is not transitory anymore. we have seen that from the fed, from the boe, now all eyes are going to be on the ecb as to whether they are going to be admitting the fact that maybe inflation is here to stay much longer than they anticipated. alix: but on the flipside, once
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we get overwinter and we have gas prices moderate, realistically, couldn't inflation come down? a huge part of this our utility bills in energy and gas. kristine: i think that is certainly one part of the argument, and i think that is why we have seen such measured responses, particularly from the european central bank policymakers because certainly, this energy crisis is very much at the heart of europe, but at the same time, we have other factors contributing to inflation as well that perhaps could lead to some thing more entrenched. we were looking earlier at some of the specifics of the contributors to the december surge in europe, and a lot of that has to do with food, the prices of certain goods that were particularly and demand around that season. that could be something that could be aggravated by supply chain issues that could potentially come back, especially if we get more word shortages and the like from omicron. guy: do you think christine
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lagarde is going to be as good at managing the governing council as mario draghi was? you only have to look at the different inflation prints we are getting out of europe, spain hi, france less so, germany hi. do you think christine lagarde is going to be able to keep all of the different groups within the euro zone on board when inflation seems to be going in different directions? kristine: that is her challenge, and we have seen in previous periods during her tenure the challenge of keeping the governing council in line as a united front. i think that is going to be very difficult. as you say, it is very disparate levels of inflation. some countries are probably hedged more than the others. i think probably lagarde will keep to a more measured approach in trying to argue once again that the peak is probably soon, if not already here, but it is going to be difficult when all other major central banks akin
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to the ecb are going the other way. alix: thanks a lot, bloomberg's kristine aquino joining us. let's get that take from hugh gimber, jp morgan asset management global market strategist. it is the same question to you. do we see in ecb that moves in snail pace because a lot of this is transitory, or do we see the ecb in force because this is record inflation? hugh: there is something that is going to force the ecb's hand this year, i thicket will come from the labor market because that is where the ecb stands differently from the fed or the bank of england today. it was really the pressure in the labor market and seeing wages rising that i think has changed the tone from the fed and the boe, and really forced them to abandon this idea that inflation is transitory and forced them to move to a tighter pace of tightening policy as we go through this year. for me, growth in the euro zone is the key metric to watch. guy: it is quite a structural
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process in much of europe. when do we start to understand what that wage demand looks like? the big german unions, other unions obviously negotiate for a huge number of people. when do we start to get clarity on what is happening in the labor market in 2022? hugh: that is a really important point. we will start to get some signals in the spring where we have, for example, the chemical union, a very big proportion of the german labor market, starting to tackle their round of negotiations. really, it is more lightly to be a story later in the summer or in the autumn, when you get the bulk of those negotiations coming through. but i think this is going to cause the ecb a real headache because just as they start to see supply chains beginning to normalize and they hopefully start to see some of these energy price pressures easing, the wage growth demands i think a going to be picking up later in the year, and that has real application for global bond markets. alix: one more point on the wage
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inflation linked before we get to the bond market. mary daly in a speech momus ago said she doesn't see much wage price inflation correlation evidence. so even if we are watching wages really carefully in the back half of 2022 for europe, does that automatically mean higher inflation and a more progressive ecb? hugh: i think what it changes is how easy central banks find it to look through inflation. if you start to see inflation leading to price pressures that are being driven by higher wages, than the ecb would have to change its stance. so they can look at the data today, which is still largely an energy story, but given inflation print where wages are rising at the same time, and i think they find themselves in quite a different position. guy: german bund's negative four basis points. let's talk about the obligations of an ecb starting to turn a little bit more hawkish on the
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global blonde -- the global bond market pitcher. much is made of the fact they did this very market -- that the treasury market is being held down by global demand. if we see the ecb starting to trend transitory, what will be the applications not only in the euro zone market, but in the united states as well? hugh: when you look back at what happened in the treasury market in 2021, clearly we had a big move over the first couple of months, but then things fall back because i think the demand from global investors in the euro zone and in japan as well looking at u.s. treasury yields at 1.75% saying, thanks very much, i will have a piece of that. so if you start to see the picture change in the euro zone, you start to see german bund yields heading higher in the ecb joining the party, i think it has to lift analyst estimates for how far you can see not just bund yields, but also treasury yields and gilt yields move higher over the course of 2022. alix: what would be the
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implication of zero for the 10 year bund yield? what would be the application if the two-year gets above where the deposit rate is? what do you do in a portfolio like that? hugh: i think it changes the tone of investors on the way they look at the treasury market in particular because you start to see other options for investors in the euro zone. you are not only going to be pushed to u.s. treasury yields. let's be clear, i thing the outlook for global government bond markets is still pretty tough over the course of this year. i would expect negative returns from most major developed market government bonds this year. but i think if you start to see bund yields pushing higher, you will have to raise estimates for where 10 year treasury yields get to. we have a range for 10 year treasury yields from between 2% to 2.5% for the end of this year , but if you see a change in tone from the ecb, we may be forced to revisit that view. guy: upwards, i am assuming. stick around.
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we need to talk more about what is happening in the united states in a bit more detail post payroll ahead of that inflation print next week. hugh gimber, jp morgan asset management, sticking with us. the president is poised. we think we are going to be hearing from him in the next few minutes. we can see the podium. the president speaking shortly. we will bring you his comments live in a few minutes. this is bloomberg. ♪
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>> we are seeing a lot of positive signs. we know in 2022 we are still
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living within the pandemic, so we have work to do as we move forward. you mentioned inflation. the president is focused on bringing inflation down. president's economic policies continue to work. we will continue to move forward in 2022 to make sure we get americans back to work. alix: that was marty walsh, the u.s. labor secretary, speaking to bloomberg in the last hour. we are awaiting jobs were marks from president biden. the u.s. on image rate falling below 4% in december, even though they headline number was a bit disappointing. still with us, hugh gimber of jp morgan asset management. higher yields, tech selloff. that has been the result of these numbers. does this clear the way for a march hike for the fed? hugh: i think the march meeting is very much live now because the message of today's labor market report is that this labor market is tight and it is continuing to tighten, so the inflation mandate for the fed has been met for quite a long time now. it has been that the labor market has been holding them back, so i think there will be a very live debate as to whether
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they move in march or not. what matters for markets is when you look now at what the markets are pricing for this year, roughly 3.5 hikes for the fed, that to me looks pretty reasonable, so i think the next leg for yields to move higher, particularly further out the curve, is going to be less about the reassessment of the pace for this year, but rather the market starting to focus on the terminal rate being able to move higher. guy:guy: does the terminal rate move higher if they do qt? is there going to be a desire at the fed to maybe limit the rate hikes, but use other tools may be to tighten policy? hugh: i think you are right to highlight that this will be a challenge for the fed. they will be thinking about the right composition of rate hikes and the reduction in the balance sheet to achieve the shape of the curve that they want, but the bottom line here is that there is a real skepticism in bond markets about the strength of the economy, and i think the market reaction consistently over recent months has been to
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say that more tightening is just going to roll over this economy, and we can't handle higher interest rates, and that i think is wrong. i think the economy is strong enough to tolerate a hiking fed. i think they will be moving, treading relatively carefully through the course of this year, but as the market starts to understand that actually a fed funds rate of 50 or 75 bps isn't really too tight, i think you will see the market reassess where the fed is ultimately going to get to. alix: is that what is happening with the dollar? it has been for placing everybody that you saw this huge rewriting in the bond market and volatility in the stock market, and the dollar has done nothing. today, the dollar is weaker against the euro. hugh: the dollar is a really interesting one. i take you have to bear in mind what is already been assumed for the fed. everyone has been talking for quite some time about this year being the year for the fed to be tightening policy, whereas as we have just discussed, i think the next move is made for people
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start saying we have focused on the fed, we now have a better understanding of where they are going to be by the end of this year, which is the next central bank that could move. so i expect that is a lot of what is going on, that the 2022 hikes we are expecting from the fed were priced by the fx markets in 2021. guy: let's talk about 2021 versus 2022. if some of it has already been priced, let's talk about how different a portfolio looks this year versus last year. hugh: i think q1 22 anyone is actually a decent property for the type of market environment we think we are going to be seeing for a much longer period over the course of this year. it is one where, for the equity market, earnings are the key driver of returns, and we would expect positive earnings surprises to more than offset the headwinds you would expect to see from valuations coming down over the course of 2022. when i look at analyst estimates for 2022 earnings, you still
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have analysts thinking that about 9%, 8% is a reasonable estimate for u.s. or european earnings. we think 10% to 15% is more realistic for this year against a backdrop of above trend growth , and therefore we are still positive on equities, but you are looking for the parts of the market that are going to see the biggest earnings upgrades and the smallest headwinds from multiples declining. alix: the question on a regional and relative basis is do you find that in europe, or in the u.s.? hugh: for me, you find that in europe this year. we have already seen multiples derating more in the course of 2021. analysts are more pessimistic on european earnings then u.s. earnings for this year, and i think the sector composition looks a lot more attractive. more financials, more industrials. you have a better energy mix as well. i think the prospects for europe
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this year are certainly looking up. guy: let's talk about that energy mix and the industrials. there are plenty of industrials out there at the moment that are seriously worried about whether or not they will be able to get to gas, the power they need to manage their operations through this year. we are going to get considerable volatility in the pricing power. we have continued -- in the price of power. we have continued to seem that. how much of a headwind will this be? hugh: you are right to highlight the higher energy prices are necessary if we are to make progress on net zero. i think it has been clear that politically, it is going to be quite tricky for governments to step in in a major way and say they can try to force energy prices down because really, whatever one sees is a cost associated to it. the kiefer industrials is the extent to which they are able to pass our prices -- pass higher
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prices onto the consumers. still see so much demand coming from the consumer in 2022. it becomes a really important part of corporate's being able to protect their margins. alix: but i wonder if that is another distinction between the u.s. and europe to the downside. i was really struck by the french finance minister bruno le maire. he said earlier today that the government, if we don't find a solution to what is happening in the energy crisis right now, french people was he an increase between 35% and 40% in electrical bills. for the most part, that can't happen here in the u.s. because a lot of them are regulated utilities. does that put europe at an inherent disadvantage? hugh: i don't think it does. i think european consumers have ample firepower to manage this over the course of this year. i think you will see governments looking to use targeted subsidies, perhaps for the lowest income parts of the population, to help manage that,
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and still you look at the excess savings in the economy, you look at the positive boost we have seen not just from property prices, but also stock prices this year, the consumer looks strong whether you are looking at the u.s., whether you are looking at europe. for me, the outlook is to a positive one despite some of the headwinds we are going to see from higher energy prices this year. guy: politicians certainly worried. the cost-of-living story on the front page of just about every newspaper at the moment. it is going to be an interesting and potentially bumpy year for the consumer. we will see what happens. i think income disparities going to become much more pronounced around this story. hugh gimber, jp morgan asset management, thank you very much, andy. happy new year. we are still waiting for the president. we were expecting him around 45 minutes ago. obviously, he is a busy man. the weather in d.c. fairly implement at the moment. we will bring you the president posco and's when he makes them. this is bloomberg. ♪ -- the president upon -- the
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president's comments when he makes them. this is bloomberg. ♪ this is bloomberg. ♪
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ritika: it is time for the bloomberg business flash. ryanair is closing its base in frankfurt in a fight over airport charges. europe's biggest discount carrier says it will move its five aircraft base there to airports that have lower charges to assimilate traffic recovery. major hubs such as strangford in london heathrow have sought higher fees to recover revenue loss through two years of the pandemic. aston martin says it has put its high-performance project back on track after disappointing deliveries last year. they shipped just 10 of the $3 million cars last year. still, aston martin reached its goal of selling more than 6000 cars thanks to strong demand for
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its suv. prices and the u.k. rose last year at the fastest since 2004. the average price rose 1.4% in december and 9.8% for the year to a record 200 sony $4000, but moment i'm is likely to slow this year because of rising adjust rates. that is your business flash. guy: thanks very much, andy. i think that will be germane on both side -- thanks very much, indeed. i think that will be germane on both sides of the atlantic. this is potentially going to be a huge impact behind keeping the momentum around inflation. prices are rising and they are lightly to persist in doing so. alix: that is in some ways why senator elizabeth warren was going after private equity and their investment in the housing markets in the u.s. for that reason, that they are gobbling up all of these assets and then they are going to control rental inflation, and she is going
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after them because of that. that is a sticky thing. guy: and that is also probably likely to lead to wage price increases, and that is something the fed is going to want to pay attention to, and it is also likely to persuade people, and expectations are so important in all of this, that inflation is going to persist as well if they say that happening. so those expectations could become embedded. alix: exactly, and therein lies the dilemma. guy: we are waiting for the president, waiting for the european market close. the european market closes going to happen in around three and a half minutes. the dax is down, the cac is down. some of the metals lifting the london market, though. the close is next. this is bloomberg. ♪ ♪
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guy: we are wrapping up the date in europe.
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it is payrolls date in the united states. that is a significant factor. there interesting lines coming out of europe. we have a negative session broadly. the cac 40 down .5%, the dax down .7%. the ftse 100 is positive. the mining stocks are has been -- are having a positive day. the oil stocks are doing some of the heavy lifting. a dispersed market, a clear narrative not available this friday can terms of the individual markets around europe. let's look at the week. here things get interesting. we are only just negative. interesting to compare and contrast the huge drop we have seen in the united states when it comes to the nasdaq under pressure. europe only down .4%. this is the idea europe will do better in a high-yield environment. the correlation to u.s. rates is strong.
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you can see the impact of the fed minutes quite clearly and we have been tracking lower ever since. up until that point we were positive on the week. let show you the grr sector breakdown. we have done this over the last five days. the bottom end of the market, technology down 4.7%. then you get to the health care sector down nearly 4%. utilities are also tracking lower as well, down 2.45%. cars have had a great week but the winter is the banking sector. a similar story in the united states. yields have gone higher. we see the banking sector do well. this time next week we will be starting the u.s. reporting season for the banking sector. the miners have done well. anglo-american up 3%. i want to talk about commerzbank. this is a stock up 18% this
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week. that is not a yearly performance, that is not a monthly performance, that is a weekly performance. a significant rewriting of the banking sector. there are also outliers within the tech sector. equity microelectronics -- st micro electronics putting up numbers, a crackling set of numbers. it has already sold out for 2022. the question will be whether or not it can lift capacity, lifted's output, satisfy more demand that is incredibly strong and remain so. a similar story overnight when samsung came out with its numbers. alix: in the u.s. you have the semis using -- losing a lot of steam. let's get more on technology. bloomberg tech reporter joins us now. are we at peak semi disruption
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? does that part of the supply chain loosen up? >> i think we have a few months before we are reaching any kind of equilibrium in the supply chain. on the one hand you have companies like st micro showing demand is strong. on the other hand you have a key european industry, asml. there is still shaking out going on. guy: they make the kit the chipmakers used to make the chips. therefore, can we see, this is the question everyone is asking, can we see a lifting of capacity, can we see, they are already sold out for the year. is there anything else they can
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do to bring more demand? >> these industries have such long lag times before they are able to put it more production. i'm not sure what extent st micro will be able to build out its capacity. in general across the industry everyone is realizing the greater reliance on semiconductors is part of our life and everyone is looking for new ways to attack that. alix: if i go a little bit macro for a second. i mentioned nvidia, amd got really hit. what kind of repositioning shakeout are we seeing within the tech sector? semis versus the growthier names? what have you noticed? ivan: it does seem like maybe it is a better time for semis. it has been a stress time for some of the big tech companies.
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inflation -- there is more pressure on the growth companies, whereas semis, demand seems the resilient and they're playing a different game. guy: great stuff. thank you ray much for the updates. ivan livingston on the chip space. i want to take you to the state dining room at the white house. we have move the shot off the podium, we have moved it to the door, we are awaiting the arrival of the president of the united states. president biden it will be making comments on the jobs report. the headline number not that great, but it looks pretty good if you look under the hood. the unemployment number looks really strong. a lot of people are saying we are now at full employment in the united states. alix: you're taking a look at the rate, 3.9%. the fed natural rate of
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employment is 4%. there target for the end of the year is 3.5%. we are just a stones throw away. the household survey was also strong, average hourly earnings was strong stop or .7% year on year. guy: the key question for the president is what does he do at the fed? the fed has been tough and it is interesting to see the pivot we have from jay powell. we will get the hearing next week to see if it is confirmed. some speculate it is not the done deal we all think it is. the president is about to speak. let's take a listen. pres. biden: good morning. i will be somewhat short today because shortly you will hear a landing outside the window. i'm supposed to be in colorado looking at the damage of the governor at the god-awful
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firestorm, and then i'm heading off to do harry reid's funeral. this morning i want to talk about a historic day for our economic recovery. today's national unemployment rate fell below 4% to 3.9%. the sharpest one year drop in unemployment in the united states history. the first time the unemployment rate has been under 4% in the first year of a presidential term in 50 years. 3.9% unemployment rate. in years past expert said we would not be able to do it, and we have added 6.4 million new jobs since january of last year. one year. that is the most jobs in any calendar year by any president in history. how?
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how does that happen? the american rescue plan got the economy off its back and moving again. back on its feet. adding over 200 million americans fully vaccinated, got people out of their homes and back to work, even in the face of wave after wave of covid. we got schools open. we got booster shots. we brought down the poverty rate. it went from 20 million people on unemployment rolls 202 million people on unemployment rolls today -- to under two million people on unemployment rolls today. the increase in america's labor force was the fastest this year of any year since 1996. among primates workers ages 25 to 54, there increase in labor force participation was the biggest in 43 years. record job creation, record
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unemployment declines, record increases and the people entering the labor force. i would argue the biden economic plan is working. it is getting america back to work, back on its feet. the record does not stop there. today's report also tells us record wage gains, especially for workers in some of america's toughest jobs, women and men who work the front line jobs and restaurants, hotels, travel, tourism, desk clerks, line cooks, staff, bellmen, they also all their wages at a historic high, the highest in history. their pay went up almost 16% this year, foreign head of inflation, which is still a concern -- far ahead of inflation, which is still a concern. wage gains for all workers who are not supervisors went up more in 2021 than any year and four
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decades. there's been a lot of press coverage about people quitting their job. today's report tells you why. americans are moving to better jobs with better pay with better benefits. that is why they are quitting their jobs. this is not about workers walking away and refusing to work. it is about workers able to take a step up to provide for themselves and their family. this is the kind of recovery i promised and hope for for the american people. the biggest benefits go to the people who work the hardest and are more often left behind. the people who have been ignored before, the people who just want a decent chance to build a decent life for their family, just give a clear shot. for them, wages are up. job opportunities are up. layoffs are down to the lowest levels in decades. there are more chances than ever to get ahead. no wonder one leading economic
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analyst described what we have accomplished in 2021 as the strongest first-year economic track record of any president in the last 50 years. today america is the only leading economy in the world where the economy as a whole is stronger than before the pandemic. i hear republican say my talking about the strong record shows i do not understand. i do not understand. a lot of people are still suffering, they say. they are. or i am not focused on inflation. they want to talk down the recovery because they voted against the legislation that made it happen. they voted against the tax cuts for middle-class families. they voted against the funds we needed to reopen our schools, to keep police officers and fire off -- environment on the job. they voted against the funds we
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are now using to buy covid booster shots and more antiviral pills. i refused to let them stand in the way of this recovery. my focus is on keeping the recovery strong and durable, notwithstanding republican obstructionism. i know even as jobs and family incomes have recovered, families are still feeling the pinch of prices and costs. we are taking that on as well. the way to do that, not to step back from the economic progress, but to build on it. i have laid out a three-part plan to address costs to families. one, the first part of that plan, fixing the supply chain. two, protecting consumers and promoting competition. three, lowering kitchen table cost with my build back better at. first, the supply chain.
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a couple of months ago we heard a lot of warnings about supply chain problems leading to a crisis around the holidays. we acted. we brought together business and labor solve the problem. the much predicted crisis did not occur. the grinch did not steal christmas. nor any votes. the number of containers sitting on docks is now down -- for more than eight days is now down nearly 40%. the number of packages delivered on time was nearly 99%. workers stayed on the job and did the job to bring goods to consumers. we are continuing to work to speed up every step of the process. the ports, trains, trucking. my bipartisan infrastructure plan include seen if you get
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investments in each of these areas. i want to thank the 19 republicans in the senate and the 13 in the house who stepped in to help pass it so we do not have to face another filibuster and lose a badly needed plan. the second area, protecting american consumers. the last few decades a handful of giant companies could dominate the market. in meat processing, railroads, shipping. too often they lose their power to squeeze out smaller competitors, stifle entrepreneurs, and raise the prices, reducing options for consumers and exploiting workers to keep wages unfairly low. you see that in your own life. look at your grocery bill and the positive meet. it is not because cattle farmers -- and the cost of meat.
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it is not because cattle farmers are getting rich. it is because fewer processors can call -- can charge groceries more for ground beef. capitalism without competition is not capitalism, it is exploitation. i am determined to end the exploitation. later this month i will be meeting with my competition counsel, which includes key economic positions across my administration to keep pushing for more brought action and increase competition across our economy. healthy competition produces higher wages in a more dynamic and innovative economy. that makes everybody better off. third, i am working to reduce the large cost burden of house budgets, costs that do not need to be such a burden. the biggest weapon in the arsenal is my build back better act, which will reduce what parents have to -- what families have to paper basic necessities to live a life and raise a
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family from prescription drugs to health care to childcare, so more household families can cover the cost of raising their children and caring for their loved ones. as we have seen over and over again throughout this pandemic, if people cannot find affordable childcare, you cannot work. right now there are 2 million extremely qualified women who've not been able to return to work because they cannot afford childcare. on health care, we have made quality coverage through the aca more affordable than ever before, with families saving an average of $2400 on their annual premiums and four out of five consumers finding quality coverage for under $10 a month. the result, when you reduce the cost of health care, more people can afford to get it. over 4 million people have
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gained coverage since i became president. you've heard me say it a million times. health care is also about peace of mind. for example, we will make it so nobody can pay more than $35 a month for insulin. imagine you are a parent of one of the 200,000 children in this country with type one diabetes. insulin could cost $650 a month. it can cost as much as $1000 a month. even though a vial of that insulin costs $10 to manufacture. you can do this without increasing inflation or increasing the deficit. nobody making more than $400,000 a year, less than $400,000 a year will pay a penny more in federal taxes. we will keep working on these fronts. some of the components that are immediate, like on sticking the supply chain, some will show
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their benefits over time, like investments in infrastructure. all will help america's families. it is urgent we get moving on all of it without delay. at this moment, we face an important choice. do we take the steps to create an economy with strong sustainable growth, higher wages , and more opportunity for all americans, or do we settle for an economy that was not working for our middle class, even before the pandemic began? an economy that delivered sluggish growth, stagnant wages, limited opportunities. i'm not an economist. i've been doing this a long time. here is the way to look at it. if car prices are too high right now, there are two solutions. increase the supply of cars by making more of them or reduce demand for cars by making americans for.
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-- americans poorer. that is the choice. a lot of people are in the second camp. you hear them complain wages are rising too fast among working and middle-class people who have enjoyed decades of stalled income. their view of the economy says the only solution to our current future challenges is to make the working families that are the backbone in our country poor, keep them in the same state there in. it is a pessimistic vision and i reject it. i reject the idea that we should punish people because they finally have more breathing room. america does not need to settle for last. we need an economy that has the capacity to generate more growth, more jobs, and more opportunities for all americans. that is why we are going to keep doing everything we can to unstick the bottlenecks that are keeping goods to get to consumers, and build better
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infrastructure so we can get parts and goods to factory floors quicker and cheaper. three, bring more of that production back to the united states to make our supply chain more secure. let's make america, let's make what we are selling in america made in america so we are not at risk of foreign supply chains and shipping delays. in doing so, get more americans working at jobs with rising wages. i want to be clear. i am confident the federal reserve will act to achieve their dual goals of full employment and stable prices and make sure the price increases do not become entrenched over the long-term with the independence they need. the best way i has president and congress is legislature can tackle high prices is by building a more productive economy with a greater capacity
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to deliver for the american people. a growing economy where people have more opportunities, more small businesses opening, and i might add, there is a 30% increase in the applications for new small businesses. goods get to market faster. in economy where we do not just grow the economic pie to make sure the people who bake the pie get a fair slice. for too long, republicans have thrown around terms like progrowth and supply-side economics to drive an economic agenda that did not deliver enough growth and supplied more wealth to those who were already very well off. from day one, my economic agenda has been different. it has been about taking a fundamentally new approach to our economy. one that sees the prosperity of working families as a solution, not the problem.
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there has never been a time i can think of when the middle class has done well in the wealthy have not done very well. working families need to get a fighting chance. by the way, the stock market, the last guy's measure of everything, is about 20% higher than it was when my predecessor was here. it has hit record after record on my watch while making things more equitable for working-class people. at the same time we have created jobs, reduced unemployment, raised wages. i've always said when working people do well everybody benefits. i am determined to grow the economy from the bottom up in the middle out because when we do we get more growth, higher wages, more jobs, and over time lower prices. do not take my word for it. just look at the results. historical results.
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results for working americans. economists call this increase the productive capacity of our economy. i call it building that better. that is what we will keep doing. we will keep moving forward. thank you all very much. i would get a chance to talk to all of you on tuesday when i am down in georgia talking about voting rights. thank you. >> should americans prepare to live with covid forever, sir? >> should americans think covid is here to stay? pres. biden: i do not think covid is here to stay. covid in the world is probably here to stay. covid as we are dealing with it now is not here to stay.
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we have so many more tools we are developing. that will contain covid and other strains of covid. i do not believe this is -- take a look. we are very different today than we were a year ago even though we still have problems. 90% of schools are open. it was 98%. it is down to 90%. we spent the time and money in the recovery act to provide the ability for schools to remain open. we talked about how we are dealing with testing. now we have had 300 million test a month so far. that is 11 million tests a day. in addition to that we are in the process of ordering 500,000 new tests. we will be able to control this. the new normal will not be what it is now. it will be better. thank you.
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alix: president biden marking the december u.s. jobs report. lots of interesting things. the latest is he said the covid situation is different today than a year ago. he put the onus on the fed to clamp down inflation. he said he is confident the fed will keep its policy goals and ensure inflation is not entrenched. guy: he made it very clear inflation was a big part of the fed mandate, the dual mandate dealing with the employment situation, making sure we are a full employment. 3.9% feels awfully close to that. i appreciate the participation rate is not where you want it to be. inflation is where the battle is now. alix: president biden saying inflation is still a concern. you have mary daly saying -- the correlation between wages and inflation continues. still questions. he spent a lot of time talking about all the work the
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administration has done trying to clear those supply chain issues and promote the inflation will get better story. i do not know how successful that is going to be short-term. guy: we will learn a lot next week. we will hear from jay powell. we will hear great deal from jay powell as he answers questions and goes through his confirmation hearing. we will learn a lot more details about how this process is going to work next week. next week is going to be critical. alix: and we get earnings. a lot is happening. coming up, the u.s. house of representatives majority whip jim clyburn be joining "balance of power" with david westin on television and radio and guy and i are also fitted to radio. join us on dab digital radio. if you cannot join us? is out on spotify and apple podcast. this is bloomberg. ♪
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>> from the world of politics to the world of business, this is "balance of power" with david westin. david: from bloomberg's world headquarters in new york to our tv and radio audiences worldwide, welcome to "balance of power." jobs numbers out today point to a strong labor marke despite the miss on the topo -- on the total new jobs created. we go to abigail doolittle. abigail: the 10 year yield now up the sixth day in a row, this week up to levels last seen before the pandemic. that is how high the 10-year gilts is, 1.78. the jobs report supports it from the standpoint of a super tight labor market. i believe it was adam smith who said capitalism cannot live on an unemployment rate below 5%. we will test that again to see whether it can hap

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