tv Bloomberg Surveillance Bloomberg August 30, 2021 6:00am-7:00am EDT
i would argue they have done that. >> the fed does not taper at jackson hole, but we know that tapering is inevitable. >> the fed will raise rates when it has to. >> this is bloomberg. tom: good morning. another week of bloomberg surveillance on radio, on television. taylor riggs harkens the door for jon ferro. lisa, i do not know where to go. do i go to friday and the jobs report? or the effervescence of friday, brent crude near $73 a barrel.
lisa: they are connected -- a dovish taper. the fed chair saying we will taper, but you will not even be able to tell. we saw the biggest drop in the dollar going back to may, but why are we not seeing a bigger steepening in the yield curve? why are we not seeing it -- federal inflations go up if people believe this that will let the economy run hot. tom: lisa is right. it is gone absolutely nowhere. looking at $73 brent and the 16 64 and that goes to friday. 5.2% unemployment rate. better than good trends. lisa: however people expect a softening in the labor market on
the heels of the labor market -- of the delta variant. they may potentially increase production, you have the fact that people are traveling less, canceling vacations. it is not necessarily that everything is stymied. this is a question, though. how much is this going to eat into economic momentum? tom, how many times did you go to eat this weekend? tom: you really want to know? i found a great new greek restaurant. and i found an italian thing downtown in the land of ferro. but this goes to the delta variant and the mystery of september and this pandemic. taylor: talking about the lack of yield curve steepening. if you taper early, there is going to be lower growth and
lower inflation, because the fed will not hit the terminal limit by 2025. yields are reacting as we saw on friday, the opposite of what is intuitive. tom: the messiness of it all. to me, i see hospitalizations at 100,000. that says all. lisa: the messiness is a question about the pandemic, but there's also this question about the long-term growth rate. are some of these inflationary pressures transitory? is a market buying what powell is selling it? or is the market getting it wrong? tom: the greek restaurant i went to was, the reason i went is they had a complementary dish. taylor, i see an equity lift.
volumes are set with the dow 35,420 on futures. taylor: some of the record highs , some of that reflationary trade bit, it is interesting that the dow, the russell 2000 not making those record highs. how much of that is that low rate story? you go 130. if there is a taper, that is fair value. a big note this morning saying technology, we are just at the early stages. tom: it will be interesting to see. i do not want to sell the end of the quarter, we are not there yet, but it will be interesting to see what the sell-side does in the final week of the summer. he said, what do you have this morning? lisa: let us talk about was
going on in washington, d.c. it is not infrastructure talk. at 10:00 a.m., president biden and vice president harris are going to meet with their national security team and try to figure out the path ahead in afghanistan. there were drone strikes. there is disagreement from the taliban. how can they stay on schedule to remove troops by the end of tomorrow? all these things come amid a backdrop of international relations. how do they plan to deal with the diplomatic strain emerging as a result of this entire situation? the economic data of the day, pending july home sales. the expectation is for an ongoing klein. the inventory is nonexistent. the cdc will begin a two date meeting talking about that
booster shots and whether they should speed up the rollout. anthony fauci, over the weekend, was talking about how he would like to see a school mandate for vaccinations for kids. i wonder if that is what we are looking at. tom: that will be interesting. we have got the perfect guest. we spoke to his people last night and they said he would make an appearance with us, even though his arsenal struggled. let me start with the first important question of the week. if harry joined arsenal, would that help? >> no. unless one of them plays fallback. tom: it is the summer doldrums, but it is not. what are you looking for? how do you frame a setup to maybe a more active september and october? >> we have to get away from
being driven just by the fed taper story. the other currents will take over. i will be interested in what is happening outside the u.s. only in the sense that things change in the other part of the world. if you start to get better data in europe relative to the states, that could change things a bit. but we will decide what does that mean about when they are done and when rate rises come? what are we going to do in 2022? we have to get past that story. there is geopolitics coming up. covid is either going to improve or become a real economic factor again. that is not static. that range for friday -- the range of forecasts for friday's
numbers is huge. we do not have a handle on job creation. lisa: it seems like the market is in saying that the taper is a nonevent. are we seeing that jay powell has successfully made tapering monthly bond purchases an entire nonevent for markets? >> it should be. the whole idea of the taper was the fed slows down purchases at the same time as the government spends less money and needs to issue fewer bonds. who cares? what we have done is we have the government handing out checks, paid for by debt off the fed. just unwind the process, stop paying out checks, stop buying bonds. we can get back to discussing important stuff, which is did all these checks create savings, demand, inflation?
that is what we are going to find out, but the focus is on kent that u.s. government spend this much money on getting the economy to recover this fast from the pandemic without some inflation that is stickier than the fed is going to feel comfortable with? we will find out over the next six months. lisa: being this far from the pandemic, it is interesting that people say that when we taper, we will have to go faster, given that we are 18 months into this. how are you thinking about the pace? >> the consensus view on tapering is that you reduce the pace by 10 billion instead of the 5 billion that they did in 2014. that takes a year. you could go every month, could try more. in a sense, it should be
possible to go fast because the treasury is going to be issuing less debt. you have got things lined up. the only difficulty would be if we started to get seriously worried about inflation data and the strength of the economy at the same time that there tapering. then the bond market will struggle. that catches us where we are. it is easy to taper without yields going up if inflation is low and the economy is not grabbing too fast. if you this control of the story, it can get messy. i would go as fast as a market let me go once that started, because it buys me a degree of freedom, but you have to be market-led. if you cut back by 10,000,001 month and yields back by 30 basis points in the first week, you do not have a scratch of your head. tom: thank you.
the euro from 1.16 to 1.17. stronger euro right now. lisa: what happened on friday with the dollar is remarkable. it has the biggest selloff, the biggest weakening going back to may. this idea that, global recovery. tom: up against record futures highs. i am watching the vix, 16.62. stay with us. this is bloomberg. ♪ ritika: hurricane ida battered new orleans overnight with heavy rain and some of the strongest
winds to hit the state. the storm has lost some strength but is expected to unleash catastrophic rains as it moves north. more than one million homes and businesses in louisiana are without power. united nations says that north korea may have resumed operations at its plutonium producing nuclear reactor in recent months. the reactor turns out enough to ternium each year for one platonic bomb. north korea has used it for nuclear warheads. president biden's security advisors signaling that the u.s. will keep targeting the islamic state. two members killed on friday. they are planning additional attacks. meanwhile, the president was at dover air force base for the arrival of 13 service members
planning additional attacks. we believe that we have disrupted those attacks. they are part of the larger network of isis-k that is seeking to target americans at the airport and to represent a greater threat. tom: jake sullivan managing the message with jake tapper on cnn ever weekend. there is a managing of the message. we saw the images of the president and first lady at 24 air force base. -- at dover air force base. it is a sober washington. annmarie, it is something that needs to be clarified worldwide. what happens after august 31? tomorrow, is there a date, a
time, a moment or not? annmarie: we do not know the exact moment. we did have a final raf flight out of kabul to the u.k. what happens next, we do not know. this is where the discussions will be focused today. the u.s. hosting a meeting virtually with nato members. also, qatar and turkey will be there. there is about 250 americans in kabul, but what about the remaining afghans? tom: ambassador bolton scheduled to be with us later this week. he is focused on pakistan. and if i talk to you, nobody discusses the nation to the east . is pakistan part of the biden discussion? annmarie: that is a good question. this is something i hear a lot from former senior intelligence
officials about what happens in terms of making sure the u.s. can keep an eye on pakistan's large nuclear arsenal. also, the u.s. relationship with pakistan. the president of the u.s. has yet to call its president since he was elected. following the september 11 attacks in 2000 one, paxton was probably the closest it has ever been to the u.s., but after the capture and kill of osama bin laden, things got difficult with pakistan. part of that was because he was hiding in pakistan and was captured close to a key pakistani military base. they have to trust each other at some point, there is a lot of distrust between these two countries. taylor: meanwhile, as we approach the deadline and the remaining citizens get out, that
u.s. is saying they will continue with drone strikes. the taliban has condemned this. where does the visibility come from as the u.s. continues with potential airstrikes? annmarie: drone strikes, you do not exactly need boots on the ground. the strike that hit that car that u.s. officials say was carrying several suicide bombers came from our base in the united arab emirates. you can do that from bases in the region. taylor: but how do we know that those are people who are carrying bombs? how do we have that visibility into the machinations on the ground? annmarie: it is a good question. we probably have to rely on our partners, potentially pakistani intelligence services, to understand where these people are. also, the taliban. the taliban does not want isis-k
, which for the most part is an enemy, they could cooperate with the u.s.. lisa: that brings up a good point. we are now partnering with the taliban. we trust them? is there an incentive to continue to trust their intelligence? annmarie: it is a great question. the u.s. military thinks that what is happening at the airport, they can trust the taliban. general mckenzie says they believe the taliban have thwarted some attacks, but no one in washington trust the taliban. the taliban was harboring al qaeda. there is also a statement over the weekend. the u.s. and 97 other countries, mission china and russia, but
the statement says they want to make sure that afghans can leave, civilians cannot leave after august 31 and they have assurances from the taliban. what are those assurances? >> another question for me, a lot of concern way central command has not told us who was killed in those drone strikes? there are supports that there were civilians and children. annmarie: there are afghan civilians, including a few children, that could have been casualties, due to this drone strike. they have yet to affirm this. remember that the pentagon did say that there were two attacks at the kabul airport on thursday. there is only one. they have to brief. the information on the ground before they give us a final update. tom: there is a four star
general with three years running the central command. his name is austin. i believe he is the secretary of defense. has he been invisible? annmarie: he has not publicly been speaking, as you have seen from jake sullivan or antony blinken or general mckenzie at the pentagon. but he has certainly been briefing the president. that is what they will be convening with this morning. the president will be convening with his national security team. at what point does the usa could buy? -- does the u.s. say goodby? the president is also going to be working on what is going on in the louisiana. tom: thank you. in the markets, there is a
persistent equity left. lisa: with the backed up a some of these issues come i want to pick up on night and the fact that it was a big test for the $14.5 billion put into fortifying the levees in new orleans. it is interesting at a time when we are talking about infrastructure discussions, especially as the climate changes. i wonder how much that will be on the table this week in washington. tom: we saw the levees after katrina. it is interesting to me and how it has been pushed aside by all these different moments of this different and unique august. futures up. the vix is a huge story to me. it finally breaks. 16.61 now. the yield not giving us much.
>> we talk about those mpl's. will they stay high? >> obviously, i would say almost 50 days of the quarter were impacted. that has come through. all the banks and financial institutions saw higher than expected returns, but we do believe it is transitory. we expect moderation in the second half of the year. july has been better than june. same trend will continue in august. it is already reached 99.5% of pre-covid levels.
♪ tom: bloomberg surveillance. we look at equities, bonds, commodities. we do that before the jobs report on friday. taylor, i see futures up five. taylor: i will start with equities, bonds. it is been the story of continual record highs, particularly if you like round numbers, up 4500. a technology driven market. it is hard to get that reflationary trade with 10 year bond notes. it has been tech and big tech and the s&p 500. about fulton to some of these bond yield dynamics with that 1.
31 on the ten year. the two-year yield, we are not getting a rate hike, just a taper. but we are still not near some of the levels that we were at earlier this year. china, maybe we can, maybe we do not. limiting miters to just three hours of online gaming a week. -- limiting minors the problem is that you wake up every money and -- every monday and there is new china headlines. tom: right now, might some total knowledge of hurricanes is 1948 key largo.
humphrey bogart and lauren bacall stealing the show. rob joins us this morning, our bloomberg meteorologist. rob, there seems to be more hurricanes am i right? rob: you are. the classification for the storms has changed. over the last 30 years, the hurricane center has been naming storms that back in the 80's or 90's would not have been named. that is one reason. lisa: we have seen the storm hit as a category four. this is been a question about testing the levees that were enforced after katrina. what do we know about how well they held up? rob: the testing is going to continue. the problem is not only the storm surge, but the problem in
2005 was not the storm surge. it was the rainfall that occurred with katrina going into lake pontchartrain. lake pontchartrain coming up in height. that caused flooding into the city. that rain is continuing with aita. flash flood warnings in effect for louisiana and much of mississippi. we are going to see that system tested not only today but tomorrow and the rest of the week is that rainfall works its way into lake pontchartrain and brings a lake levels up. we'll have to see how the levees handle the increased pressure. taylor: given the timeline, wind we started to get an assessment of the damage? rob: in regards to the wind damage, that will probably be later today and tomorrow. the winds are down. the storm is about 50 miles
north of baton rouge. crews can get out there and assess how long it will take to restore power. from what i understand, has been some transmission damage. that will take time to replace, but in regards to water -- runoff, flash flooding --, that will probably continue wednesday and thursday. tom: anthony emails in. he says he is driving from philadelphia to nashville this weekend, which is the heart of all the follow-on rain. is the follow-on rain normal or not? rob: it will be excessive. the good news is that it should be out of the continent of the u.s. by the weekend. the system will be a tropical depression moving to the west of jackson, mississippi. by tomorrow afternoon, it is 200
miles to the south of nashville. by early friday morning, it is south of new england. along that path at this week, we are expecting 4-8 inches of rain into the tennessee valley. rain from virginia into southern new england between wednesday and friday morning. tom: i love his lack of hysteria. hysterical on the american economy, gregory daco joins us. what is your gdp estimate for word? gregory: we are looking for growth at that is fairly strong. there is still some momentum in the economy, but we are seeing
headwinds from the delta variants that is putting a damper on optimism, but still consumers are spending. the latest data still showed consumers spending on face-to-face activity. not concerned about that going into reverse, but i still think we will still see a slow down over the next few months. that will reflect the health situation. lisa: that slowdown has been described as temporary. are there no long-term consequences to the fact that the deltek variant is slowing down how quickly the service sector is getting back up to speed? gregory: we have to come to the realization that this covered crisis is likely to linger. there were high hopes that we essentially were passed the worst at the start of the summer and things will go well going forward. we have seen in the latest consumer sentiment data that consumers are feeling a mix of emotions. they are seeing the situation as
something that is not excessively concerning, but they are tired. as we look into next year, that will be a key determinant as to how much people spend and how much they plan ahead for vacations next year. i still am fairly optimistic, but i do think there are downside risks, especially in places where vaccination rates are the lowest. lisa: friday, we get the august report for the labor market. what does full employment need to the fed right now? -- mean to the fed gregory: how many jobs are created on a monthly basis, we are also expecting a jobs figure, there are many created over the past month. part of that will be seasonal factors, but it is not just a jobs. it is unemployment rates across different types of groups, income groups, different types of ethnic groups.
it is participation in the labor force, which is very important. we have seen that stall over the last couple of months. that will be key to help strong the economy is. it is wage growth. in particular wages for lower income categories. all of those will be key factors in driving household finances and consumer spending. this will all be key factors. taylor: is stagflation a risk? gregory: stagflation is a misnomer. it is an environment where you have high inflation and low growth. that is not what we are going to see. if anything, we have seen indications that consumers are reacting negatively to higher prices. higher prices are deterring growth. inflation is falling back. we've seen that in the data. we are not going to be in an
environment of stagflation. we're going to be in an environment where inflation cools. that will be reflective of the u.s. economy being passed peak growth. again, i don't expect to see stagflation. taylor: the taper, a lot has been talked about the pace. it will be faster than 2013. do you see that? gregory: not necessarily. jay fowle a balanced tone at jackson hole. the possibility of an announcement around november and the onset of tapering either at the end of this year or early next year depending on the health situation. but i would expected to take about eight months. a fairly gradual approach. i do not see the fed running faster than that. the other key signal from powell's speech is that rate
hikes are not tied immediately to qe tapering. the first rate hikes i do not expect before the onset of 2023. tom: over the weekend, there was a bombshell announcement that goes to the optima and -- optimism. a firm has come to an agreement with amazon. you get 12 months of interest rate free to finance consumer purchases. what is interesting is that bloomberg first word summarizes to see a firm go from a price target of 85 to a price target of 115, from 82 to 120. others go from 76. lisa: you are looking at the
shares that are up 38% and how that gives them this much bigger of a market. it also raises an issue about amazon as a finance company. tom: this is a huge deal. the failure of nonbanking to become banking. you wonder if this is a way for amazon to completely adjust how they boost consumer financing. taylor: so interesting was friday afternoon. shares were much lower because of financing related to the peloton slowdown. and then amazon lifts higher. tom: lisa has got a peloton in the kitchen, the library. they are all over the abramowitz house. this is bloomberg. ♪ ritika: new orleans is in the
dark. large parts may stay without power for weeks. hurricane ida pounded with heavy rain and powerful winds. more than one million homes and businesses without electricity. meanwhile, catastrophic amount of rain is expected. the hurricane prompted oil and natural gas is to shut down. refineries in louisiana also closed. local rains may have escaped. anthony fauci says the door was open to administering booster shots in the u.s. earlier than eight months after completed vaccination. he said the administration would base its decision on the data. he favors requiring shots for all children. alibaba is moving to resolve a sexual assault case that has
rocked china's tech establishment. the published -- publicized a personal account. a former manager has said the company's handling of the complaints was humiliating. according to dow jones, the rice is about $10 million. global news 24 hours a day on-air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. ritika gupta. this is bloomberg. ♪
fda process. right now, we are sticking with eight, but we are totally open to any variation based on the data. tom: anthony fauci on meet the press with an update. managing the message. there's only one message, get out the calendar. it is august 30. joshua joins us from the bloomberg school of public health. dr. sharfstein, it is august 30. i am thunderstruck by what appears to be that nakedness of the underage 12 group. when a nine-year-old gets kevin, what happens? joshua: generally speaking, it is not a particularly severe infection. it can feel like a cold.
there are more rare cases, which are now more common, because so many are getting sick, where kids can beat sick like adults. for that reason, because there is so many cases, we are seeing more kids very sick, seeing hospitals filling up. a real crisis in intensive care in some places like new orleans. tom: what is it anticipation of what back-to-school will look like in heavily covid- hospitalized areas and away from those areas? joshua: in some of those areas, school has already started. we are seeing if there is a lot of infection in the communities, it is going to come into the schools and start spreading. we are seeing huge numbers of kids being quarantined and schools shutting down. teachers are getting sick. we have to try to avoid that if we are going to have a successful school year.
in other places, where you have the advantage of that community not having as much covid because of more vaccination, also, they're going to be putting in place mitigation measures. there is a good shot at a reasonable start to the school year, but we will have to learn based on what we see. lisa: what is the message now from the u.k., where we did see the number of cases come down and starts to take back up, giving people some sense of paws with respect to a herd immunity or how the delta variant may differ from the previous one? joshua: message ist that you do not knowh what is going to happene. some people in the u.k. said there is no chance it comes down, then it came down. now it is going back up a little. it is hard to be locked in to being sure of what is going to happen, but the u.k. has a
higher vaccination rate than the u.s. it has a much higher rate than some parts of the u.s. it is fair to say that we are going to see this virus burned to the population unless people are vaccinated and precautions taken. taylor: meanwhile, some new variants are being spotted. is there anything that is catching your eye? joshua: not particularly. although it is possible. the biggest issue will be if there is variant that can really make people who are vaccinated sick. i have not heard at this point about that emerging. it is going to be a big deal if that happens, particularly if it starts to spread. taylor: there has been some concern that we are talking about boosters when other countries cannot even get their hands on one stock.
how do you respond? joshua: it is hard to keep both things in our mind. we are sharing an enormous amount of vaccine. it is important to scale affecting production. when good thing was the news that pfizer is starting in north america. the delivery parts of the vaccination effort are difficult. it is going to be important for us to do both to make vaccine available here, because we have now one of the worst outbreaks, but at the same time, continue to distribute vaccines. taylor: we started the conversation talking about schools. this pandemic has reminded us of being doctors and in public health, it is not only physical health. it is mental health.
not being in school has hit some of the low income meet -- low income communities the most. how do you balance that, considering they have to be in school? joshua: a lot of kids of every background have suffered from not being in school, but there has been a tremendous amount of academic challenges facing kids with not been in school and do not have good access to remote learning. we have got to balance these things. the basic formula is that we bring kids back to school and do everything we can, within reason, to protect them. we do not pretend that the virus is not a big deal, but we do put in place reasonable mitigation measures. the first phase was about older adults and people with chronic illness. the second phase is about getting young adults vaccinated. it is possible that this next phase is going to be a lot about
school, protecting children, and all of us aching about what we can do to make sure that that is successful. tom: joshua sharfstein at johns hopkins university. lisa, over it off cocoa, he has enjoyed this bull market and reaffirms a barbell approach to the equity market. i love this phrase, growthier value. lisa: it tells you a lot. this barbell approach is something a number of strategists have been talking about. mike wilson came out in his notes, it goes to this uncertainty, not knowing which outcome will prevail. big tech is not going anywhere. rates are not going to rise all that much. making so much money. tom: i look at this. what we are really looking for is growthier growth.
taylor: he would argue that low interest rates are helping to boost that. my big question is how do you get a cyclical trade with oil that cannot break 70? lisa: growthier value, growthier growth. tom: the price of yield down. lisa: looking ahead. we are going to be talking about a growthier growth clinic with taylor riggs. these expectations are getting more certain and are more bullish. tom: a humbling weekend for the bears. they will recalibrate after the jobs report on friday. we will drive forward your
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>> the fed told us that they would give us advance notice before announcing a taper and i would argue they have done that. >> as long as you are doing this independently. >> the fed does not taper but we know that tapering is inevitable . >> it will raise rates when it has to. ask more dovish today, it allows for a generation of rove and inflation. >> this is "bloomberg surveillance." tom: good morning, everyone. it's monday, "always interesting and more so this monday, lisa, as we set up your jobs day on friday. lisa: it may be more important than jackson hole. last friday, how much will it affect the federal