tv Bloomberg Surveillance Bloomberg September 2, 2021 6:00am-7:00am EDT
demand. you got international rates where they are and longer-term >> i believe the fundamentals expectations, where is the shift are there. >> you don't want to be out of that will trigger things into a new paradigm? >> this is not going to happen the market. >> at some point, we get a shock overnight and there is a reason and the policymakers overreact. why bond yields are so low which >> we have to figure out how is the sheer weight of money. transitory are they and how long it's exacerbated by the fed pumping in $120 billion every can the companies navigate this the best. >> this is bloomberg month. surveillance. the point is that that will stop jonathan: from new york city, at some point. i don't think tapering will stop this year but will stop next good morning, this is bloomberg year. at that went, the market will surveillance live on tv and wake up, i think. radio alongside tom keene and i'm not saying tenure yields lisa abramowitz. will go over 12% but they should record rainfall in new york city be in the 2% range. jonathan: bill gross mentioned , a little over three inches in a single hour. tom: a master shout out to our that cash is trash and has been for a long time but now there are new contenders. team and everybody showing up in earnings growth had better be some real damage done. double digits or they could join it's up north to boston, the garbage truck.
tom: they look like they will be buzzards bay and martha's vineyard getting not hammered doubled. many others are talking about this. but the storm continues to the northeast. what i find interesting is not jonathan: an easy commute into so much that bonds are trash but work this morning. many people, it's been difficult what is the social consequence of it? this is becoming exhausting. through last night and this morning. tom: the police were stopping 15 years of note legitimate real yield for savings? jonathan: if you are in japan -- all the traffic down 5th avenue, over three inches of rain in one tom: are we becoming japan? hour in central arc. jonathan: many people are lisa's kids were out with the discussing that. cops going how to they measure will the united states get the rain? caught in this trap this time lisa: thank you very much for around? lisa: a lot of it hinges if that. people can spend the money in you have to wonder what this will do to some of those -- to their savings account. cash is trash and everything is trash so where do you go? some of those who work from home. if there is so much money out does it mean that things are there in the financial system, at one does it go into the real less disrupted in some ways because of the continuity plans. economy? people have been doing this for how many months? there is no reason for them to tom: the abramowitz kids are sell off if it does. unless people start using the
money for real stuff or real checking the rain. experiences, you will end up with the same paradox on and on. jonathan: the kids have what will trigger the budweiser beer? reinvestment? i don't think her husband will jonathan: we hated bonds at 1% be thrilled with this. last decade. then we despise them at zero and now we are negative 40 basis points? it's all about the data. lisa: talk about the market. jonathan: payroll is coming up it's in artificiality and we are all dealing with it. we really didn't do that correct friday and demand was in the ism dow jones data check today. the doubt legs over 35000 and yesterday. tom: some of the data is there the nasdaq is on fire. jonathan: the s&p is up as well. and up we go. the job data tomorrow is critical but you wonder how the the bond yields are in about one errors recalibrate into the jobs basis point. in the next hour, the portfolio report and out of it. jonathan: equity futures are up manager will join us shortly. eight and we advance on the s&p from new york, this is 500 and the yields come in by bloomberg. ♪ about one basis point step
lisa: it's interesting to note about the opec meeting that took about an hour yesterday to have their output increase which >> a divided u.s. supreme court has decided to ban an abortion affected crude which is a little law. bit lower but now it's a little they put the law on hold while higher. the legal fight goes forward. 830 a.m., we get a read of the delta variant has had a material opponents are the measurable ban effect on the labor market and abortions but 85% of the the expectation is no. jobless claims are expected to patients it will affect in come in lower than the week texas. the remnants of hurricane ida before. the momentum continues and there is a robust recovery underway, ripped across the northeast. perhaps softer than otherwise would be based on the increase streets were inundated and traffic was a mess. of the pandemic. in central park, more than three they have been talking about how inches of rain fell in just one difficult the flooding has been. hour. president biden will deliver remarks in his administration's about 2.1 million jobs in the u.k. are still affected by the response to hurricane ida. pandemic. the institute for public i'll see warned of what a hidden jobs this extends beyond louisiana as cap. the hurricane has made its way to a tropical storm to just a heavy storm. the british government is
this is not a one off. preparing to end its support program at the end of the month. it's one offer this storm but they are getting more frequent china is ramping up financial support for small businesses hit hard by the pandemic. and climate changes allowing for the people's bank will provide the storms to get worse. how does this factor into the $46 million to lend to small and infrastructure plan and the fortification of areas that medium-size companies. experience flooding? tom: there are five reasons we the economy has shown further sides of slowdown with more virus out rakes. will not get an infrastructure global news, 24 hours a day on plan. it's pretty tenuous, the two air and on bloomberg quick take, plans together. lisa: the $550 plan, how much this is bloomberg. ♪ can that should over the line? we will get earnings on broadcom and hpe. how much do that chip shortages including the food sector really feed into a diminishing of the gdp? if you don't have's tough -- have stuff to sell, it won't get sold and that's the bottom line
approach. jonathan: let's go straight to the data. new export orders expanding. a backlog of orders so let's talk demand and some live. the employment index contracted and that led to some revising their outlook for payrolls this coming friday. we are still struggling to get the labor supply force to meet the demand. tom: there is no academics here. when i see 40,000 jobs needed, 10,000 jobs needed here, there is a labor shortage because some of these technology driven drug or not are hiring tens of thousands of people. jonathan: they are trying to. we talked about september for so long, return to school and the expiration of the additional unemployment insurance. will that make a sufficient difference? lisa: there are increasing
studies that show perhaps not all step you pointed yesterday to the wall street journal story that say that states ended it early did not see a material uptick in the number of jobs being filled. how much is there a cross over to other states? there might be other factors at play but there have been structural changes to the labor market that are not getting reflected in data because they are social like people deciding to stay home or retire early and that will make a material difference over a long time. jonathan: let's start with the economic data. the u.s. anticipates the supply constraints to heal going into year end? >> i think there will be ramifications of this, it was
like a switch going on and off for the world economy. i don't think it will fade away by the end of the year. it's a global thing and we see the industrial goods price and even european inflation is lower than the rest of the world stop it's everywhere now. this is not going to go away. tom: we had an executive lunch yesterday and john and lisa got on my case that bonds are everything. are we seeing the exit to the bond market reaffirmed? where is the new september of 2021? is it june of next year? >> all i can say is what bill gross said. what is going on at the moment, you've got credit spreads super tight and stocks at an all-time high and 10 year bond yields are below 1.3. something is wrong.
i saw a very famous bond market geithner out bill gross saying bonds are trash. something is wrong here. tom: can we have confidence in the shift to equity or is it ephemeral? >> i think there is no other alternative. at least earnings are strong. you should be in equities and they may be a little too expensive. really, there is no other place and it's not in bonds. lisa: when you talk about yields to low and treasuries are garbage, i'm looking at the spreads. they are over benchmark rates and the lowest since july. we are seeing a huge it into treasuries every time yields bid ♪ up. what's the trigger here? >> in afghanistan, our military
mission is now come to an end. we are going to learn from this experience as a military, how we got to this moment in afghanistan will be analyzed and studied for years to come. jonathan: general mark milley, the joint chiefs of staff chairman. good morning. here is the price action this thursday morning. the equity market is higher by seven points, into the fx market, a stronger euro at more than one 10th of 1%. jobless claims a couple of minutes away in your 10 year yield uppermost a basis point. tom: i'm going to the real yield. the money is flowing to equities. jonathan: 725 is the estimate
for payroll. i don't think that's off the back of the adp. tom: we will have to see. we will look at claims in an hour and onward and forward. in washington, it's an odd day after the shock of afghanistan which is a continuing story of our new relationship with a tele-band. let me ask you a question, what is our relationship going to be with the tele-been? does anyone know. >> nobody entirely knows but when you parse the statements from the president and secretary of state and others in the administration, there are hands of trying to work with them to some extent especially because there still are people including some american citizens who want to leave and have to leave through diplomatic means now but that's the biggest variable going forward in that region is
to what extent we negotiate with them on a day to day basis? tom: how is the administration doing with multitasking? how is this administration doing at partitioning the president's time? >> it seems to be going reasonably well but keep in mind, there is one big push in september that will determine the success or failure of a lot of what the administration wants to do. they need to work on multiple bills, the infrastructure will and the $3.5 trillion bill. they need to manage the hurricane response and there is the deadline that is looming for the debt limit in the fall. we will see the results probably in september to see how they are really managing. it hasn't blown up in their
faces yet but it will be a tough month. lisa: let's talk about the debt ceiling which many analysts have been citing as a potential risk factor for markets. how is the white house trying to wrangle support to get the debt ceiling lifted so they can push on without defaulting? >> there was some communication yesterday between the white house and senate democrats on the basics of what the plan is. they are banking on a bipartisan deal. it's possible to address the debt limit in up partisan way through the reconciliation process but the instructions we saw earlier this summer, last month from democrats did not include anything on that step the game plan the democrats have set out is they need 60 votes total in the senate and republicans have pushed back hard on that. it's not entirely clear how they win over republican votes unless they come up with some sort of fiscally conservative measure to
attach it to. they might -- they may try to attach this to a short-term funding measure. if you want to keep the government open, you might have to vote for this issue so it's a tough issue now. lisa: we are dealing with something very tangible and that is the aftermath of hurricane ida and the fact that you saw a lot of failures in the infrastructure space. we will hear from president biden at 11:30 a.m. as the northeast deals with floods, deaths and a whole host of issues with cars just stalled out in the middle of the highway. what does the administration plan to lay out for near-term help but also longer-term to try to shore up some of the roads and bridges and levees around the country? >> the short-term stuff is that they have laid out some of the basics and is nothing surprising.
in the areas that were hit first, they have talked about the federal government helping set up health centers and health emergency response. they have tried to help get the electric grid back up and running. we are still in the stage where they are determining the longer-term damage and some of that speaks to the need for an infrastructure bill. it's unclear if they would attack extra things on in response to an infrastructure bill or more likely have a separate bill depending on the extent of the damage. that can take a little while especially looking at new orleans, the issues are not with flooding but with electricity outages which can be a longer-term problem because it can take a couple of weeks to get that back on for some people . they're all sorts of health risks and communications. we are still in a confusing time right now in terms of putting a
number on the damage and figuring out what the federal government needs to do other than that initial emergency response. tom: as we stagger into september, the washington post sums this up -- newark, new jersey, the wettest day in 90 years. i see lots of cogent notes about the moderate democrats in washington. who is leading the progressive democrats? i don't see those notes. who is the voice of the liberals? >> that depends on the exact issue. there is a large progressive caucus in the house but it's a bit watered down. it's not like what you saw with republicans with the freedom caucus, uncertain -- on certain issues, they will be both -- vocal on the social spending bill of $3.5 trillion.
on other issues, if you are expecting a hard-line fight with leadership, that would be the alexandria he cortez and those. the issue that maybe has to work out is the legislation specially on the bills coming up. i would probably look toward someone like the leader of the congressional caucus. jonathan: thank you so much. you mentioned newark new jersey. 6.42 inches of rain in three hours yesterday evening. the equivalent of seven weeks of average rainfall falling in just a few hours is unreal. tom: also martha's vineyard a
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♪ jonathan: live from new york city, here is the price action this thursday morning. the equity market is up and the nasdaq is up about a quarter of 1%. the story hasn't changed. we are pushing a ton of demand and generating price pressure. what does that mean for the bond market as we approach the back end of this year. your 10 year yield is 128 135. -- 128.35. for many, they thought september was the beginning of answering
the supply chain questions with the return to school being one part of the story and the other being the expiration of important -- of unemployment insurance. perhaps labor starts to come through in a more profound way. can we meet the demand with supply? that question hasn't changed. tom: that 30 year bond yield to me is the easiest number to follow and it will revisit a 189 handle as it did two days ago. that will be into the jobs report and after. jonathan: we will build on that in a moment. opec doing what they said they would do in crude is still elevated today about $72 per barrel. the crude is hanging in there at 4/10 of 1%. tom: we are following this form
and we will have much more on that eight deaths reported in new york and new jersey and this overnight storm. we continue to be focused on the markets we do so with greg battle who took mathematics in school would bnp paribas. it's all about the marginal bid and you say the marginal did right now are sheer buybacks. what does that mean for our viewers? >> when we look at the broader equity market, germany is stretched emily -- germany is stretched. from september last year, every buyback has gotten slightly larger. when we look at the announced buybacks last fall, it was a big change.
what happens when they go away? do they go away when earnings come up? are they risk to the market or is it a big drop that would be in order as the heirs talk about needing a 10% correction? >> with share buybacks as they tend to be sticky locally. if we have a minor fall back, we expect to see an acceleration with corporate balance in good shape. there is no reduce -- no reason to step back from them. it we have a big economic downturn like 20/20, that's a different story. if we have a shallow draw down, that's the type of environment where buybacks remain strong for equities. jonathan: up to 15% is a sizable
move. >> storm clouds for the equity market, there are some headwinds we need to be wary about. we saw the buybacks last year get slahed. it's is not going to drive and earnings recession. lisa: a lot of people have pointed to the fact that we have seen a draw down of 15% in specific sectors. you may not get the full on drawdown. how much do you go in and by specific sectors that experience a draw down like you are seeing versus waiting for the whole market to move in tandem? >> it depends on what you think drives the draw down. it felt like a risk off day to me with energy and financials
under performing and utilities and real estate that were leading market stuff you look at the headlines, they were all in positive territory. what you need is a different type of de-risking. you need the heavy indexes to come under pressure. what drives that will be higher interest rates, maybe higher tax rate and it won't necessarily be driven by a big cyclical downturn. it could be driven in the final quarter where there is a reversal of the pullback in rates from the last couple of quarters that brings equities a little lower. that is something that i brings a shallower draw. lisa: what will the bond market do if there is a 10-15 percent drawdown in the stock market? i think it will rally. the idea the treasury yields will go up, if equities are falling out of bed, wouldn't you see a rally in the bond market
and then it starts all over again? is this the ballast and wall of money we are talking about that we keep this going and prevent any kind of drawdown at all? >> this is one of the things we have spoken about that that is something to the cycle that affects some of the large-cap stocks in particular. we are to have rates derail, they haven't so far but it's when we look to september, that's a good example. we had a bookish fed and we had a 20% drawdown but at the end of the tightening, the fed reversed the market back up in the third quarter. tom: let's go greek right now. you are a derivative guy so let's go there. the greeks right now and the character of this advance in
equities, the gig stocks doing so well. what are the dynamics and what to the greek letters say about this great full market? -- great bull market. >> it is more of a hint of caution in the options market. if we look at the price of index options, they are not particularly high but relative to where volatility is and how the market is moving, they are a little elevated but that's not the full picture. the spread is most interesting in the derivatives space. it's the concept of skew. what we see is that is of very elevated level. if we look at the skew in the s&p, it's a little bit down. i think they may give us a better signal. jonathan: good to get your
thoughts. i think you brought that up yesterday, the downside potential. lisa: if you look at the internals, you can see some particular nervousness or not complacency. you see that in some of the rotations. the valuations are not good for anyone. nobody wants to buy things at this price. it's hard to understand the catalyst that will cause sustained downdraft and the fragility just isn't as fragile if you look at the underlying technicals according to some. perhaps the fact that people are looking at this tells you everything you need to know for it to keep going but i thought that was notable. jonathan: what would the bond market do if we had a draw down of close to 15%? it depends what causes the drawdown in the equity market. if it's inflation, there is a question mar i totallyk agree
and we don't have the time to go into the true definition of. tom: crash, do we know with these phrases mean and the only way we will learn is to experience them. the bond market will react when you see those equity moves. jonathan: given the straight-line over the last year on the s&p 500, that move would be quite disruptive but if it's inflation that leaves the correction, the federal reserve that has to change policy, does the treasury market rally or sell off? tom: it has to selloff with a lower price and higher yield. credit suisse has a chart from 20 years ago maybe, 15 years ago of everybody predicting rate hikes.
rates up, rates up, wrong. jonathan: what you just described as toxic. if you had a move that big in the equity market followed by a selloff in the treasury market and high yield, but cuts that? what is the circuit breaker for that? the federal reserve has to come in quicker. it's totally toxic for investors. tom: on a tilt risk faces, it's tangible and needs to be measured and needs to be counted. is it going to happen? you have to be aware of it step when i lecture on this, it's simple, you shouldn't be in the stock market unless you know you will go down 18% as a rule and as you get older, you will go down 35 percent, that's normal. where we are now is not normal. jonathan: that's the ultimate risk. lisa: people are complacent and
expect it to keep grinding up. i've been thinking about the idea of what could potentially trigger the inflation you're talking about that would be hard for the fed to control and wouldn't necessarily lead to bonds being in -- a buying opportunity. it has to be driven by wage gains. it has to be driven by the labor market. if people feel they are getting paid that much more, they will start spending those savings that have been sitting in the bank and they might take out more loans. lending activity is not picking up yet and until we see that, i just don't see it. jonathan: bloomberg surveillance, your equity market up. the yields are almost one -- up almost one basis point. for our audience worldwide, this is bloomberg. ♪
ritika: the toughest restriction on abortion remains in place. a texas law was locked by the court. they had asked the lobby put on hold while the legal fight goes forward. the states freeze on addictions in new york have been extended. it was supposed to have ended two days ago. the remnants of hurricane ida ripped through new york and across the northeast and that triggered tornadoes and thunderstorms and torrential rain. traffic was a mess and train service was suspended in manhattan. more than three inches of rain fell in one hour in central park . the u.s. is being pushed on climate change. they say washington must take the first step.
boost. with viruses that mutate and change all the time leaves this is necessary. the question is when do we need a booster when you have a global supply chain shortage? jonathan: the associate professor of johns hopkins, good morning alongside tom keene and lisa abramowicz. zero .1% on the snp. bond market yields are in almost one basis point. euro-dollar is positive. we will get jobless claims within the hour. it's payrolls friday. tom: some real interesting nuances on wages and the unemployment rate of fully
employed america. on the pandemic, johns hopkins, we spent a large amount of time yesterday on the booster shots. let's move on to the battle of the vaccinated versus the unvaccinated. where will that battle be in 30 days? >> i think you are increasingly seeing employers require vaccinations for their use. i think that will have a huge impact in terms of uptick. i can understand why employers are doing that because they want to get back to work and make sure they are safe and as the pandemic drags out, it's clear that vaccinations are the only way to do that stuff i hope in my heart that people can see the inherent value and benefits of these vaccines and they don't need to be coerced in order to get them. the fact of the matter is, this is what we need to get back to normal. tom: every media organization
has matched with pretty colors and it's a homogenous america explain the vaccinated/unvaccinated granularity beneath those pretty colors. the granularity of new york city or wyoming, how partitioned is vaccinated and unvaccinated? >> we see real variations between states where the northeast is a highly vaccinated part of the country compared to other parthe country. the state numbers hide what our dangerous pockets of gaps in immunity even within states. that's why see cases rising that have on average good vaccine uptake. we are also seeing a lot of variation in terms of who has
vaccinated their teenagers. kids are going back to school and i think that's important. even in high vaccinated states like new york, the uptick among teens is white low compared to adults and that suggests some underlying lack of confidence in the vaccine. although my kids are too young to be vaccinated, if they were available, i would have the vaccine. lisa: we are talking about the vaccination rollout during hurricane season and natural disasters that are bound to occur in the fact that the health system has to respond to other crises. how fragile has the health system become its focus on covid as a response to the rest of the issues that naturally come up? >> is incredibly fragile. if you've ever been to an emergency room for something, you know you have to wait a long time. we are always operating at a high level of occupancy and volume on a day to day, absent
of pandemic, absence of a hurricane or you have to evacuate people who are in the hospital. it's incredibly difficult. even if we see a small surge of covid nations, that will put a strain on the whole system so that means if you show up with covid or a heart attack, the level of care you will get is probably not going to be the same. we all have a role to play in this affects all of us. we want to survive illnesses work conditions and that so much harder to do when we have a pandemic raging and natural hazards in the backdrop. lisa: it raises the question of moving from a social distancing regime to a new normal of certain viral cases and perhaps an increased push to vaccinate were to create barriers to protect those who are not vaccinated. how close are we to moving to that regime where there is a resurgence back to a more normal type of society? >> i think we are getting there.
we are making some progress but not as quickly as i'd like in terms of getting people vaccinated and once we get more people vaccinated and keep them out of the hospital, that takes off the pressure. we all locked down and had to stay in our homes because we were concerned that hospitals would be overwhelmed. vaccination helped. this uncoupled the case we see from the amount of serious illness that keeps people in the hospital. as a country, we have to identify whatever goals are in controlling the vaccine? the conversation about booster stems from our not understanding what we are trying to do and we have to remain laser focused. tom: one final question -- this is lisa from the upper west side on email. give us the update, september two and your thoughts on schools
and masks. give us the official john hopkins a on that. >> i will give you my official statement. i think they are really helpful because if you have exposure, fewer kids have to quarantine at home is -- and the goal is to keep kids in school as long as possible. jonathan: thank you. tom: for the kids is brutal. the hurricane was going on last night and is really serious. the kids are like whatever, they are on their phones and the wi-fi goes out. in america, we count mississippi's but i don't know what you count in england. i got 27 mississippi's and thenomg the wi-fi is out. jonathan: thanks, jennifer from johns hopkins.
tom: the wi-fi went out. jonathan: some good news, hospitalizations of covid in the united states -- they are starting to head in the right direction? lisa: yes, they are starting to decline and how much will this be a determining factor? how low to hospitalizations have to be with -- for people to get on with things? if people get sick but they don't get that sick, we won't close down the entire society for a cold. jonathan: falling numbers and recent hotspots. tom: it's a glimmer. i have heard this from the pros, viruses slip away and we usually don't know pandemic to pandemic why. jonathan: the delta variant has been part of that story. futures this morning are up on the s&p step equities are doing
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>> for us, the market is one thing. what customer aspires from this? customers in the united states aspire for suv's in the pickups and titan is a great pickup truck. we are focusing on the titan but as i said before, in our full lineup, her main focus has always been in the sedan and suv's in the smaller pickup trucks.
♪ >> the consumer is very healthy and we are unburdened by death and saving and we have the demand. >> i believe that the fundamentals are not as supported as many think. >> you don't want to be out of the market. >> at some point we get a shock and policymakers will overreact step >> we are trying to figure out how transitory the pressures are and how long will it take and which companies can navigate this the best. >> this is bloomberg surveillance. jonathan: from new york city for our audience worldwide, good morning, this is bloomberg surveillance live on tv and radio. equity futures are up 2/10 of 1%. tom: a quarter of a million without power. the scope and scale that i was