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00:00We've definitely seen some signs of euphoria. A lot of people were looking beyond the virus. I think a bit too early. And we need to remain reasonably calm during this story is still quite good. It's the fear that's driving prices and I wouldn't necessarily get in the way right. It's like catching a falling knife. This is Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz. Here is your Monday morning bounce from New York City for our audience worldwide. Good morning. Good morning. This is Bloomberg Surveillance live on TV and radio alongside Tom Keene ISE Jonathan Ferro together this morning with Katie Lyons. To Lisa back a little bit later this week. Tom Keene your equity market on the S & P up eight tenths of one percent. Not many people convinced by this Monday morning. It starts in the Vixen. Four big figures John. I put the puts where the crisis is right now 24 points 60. So John what do you say. 17 18 out to 28 or 29. The crisis of Friday and we're back in half way but doesn't feel like we're back in the range of outcomes. Top still white white. Why T.K.. Jan Hatzius over Goldman saying that they're unwilling to change any of that until we actually get a lot more detail on this variant the date itself. We still lack that data that detail. And I'm seeing a lot of that. We lack the data. And Joshua Sharfstein to be with us are thrilled to bring you Peter Hotez later this morning. But John what I see is a Wall Street saying we need more data sound now and ask questions later. And that was the story on Friday. Caylee. We still don't know. So many questions so many answers. Still remain to be seen. Yeah exactly right John. And I wonder if that's why you're not seeing a more convincing bounce in equities. Yes S & P 500 futures up about eight tenths of one percent but that doesn't even go as far as to recover half of the losses we saw on Friday. Same goes for crude. Yeah up 5 percent this morning but a 13 percent loss on Friday. So the market still seems a little bit iffy. Yes. The selling we saw on Friday was just overdone an overreaction or if there was something real there that needs to consider. Charlie we got a few more weeks of this T.K.. We've got three weeks and still a Fed Reserve decision that Federal Reserve right now stuck between a rock and a hard place. They are. Greg Valliere publishers this morning. The U.S. economy is humming and we may see that humming and the jobs report John Friday and the first of the month. David jump. John you like the ISI stuff we're going to see here. When do we see PMI to the ISE. Let me guess what. This week is going to reference the fact that we're in the same room together and we should reassure her. If you in our Greek letters we know. What's the distance between the service right now. It's one of Mark Crumpton. We still don't know what that it sets a distance where we're experiment. And here folks and getting back to Bloomberg who has been great about all of the adaptability this crisis in the weekend we've all been through. And so we're jointly doing an experiment. We're hermetically sealed. Miss Lyons is your equity market positive. Let's work through the price action for you. On Monday we bounced back from a big loss on Friday. Friday Fridays lost the biggest since February of this year up 40 points. So the S & P running hot by nine tenths of one percent. We unwind things a little bit in the bond market. But as I say Kailey Leinz we've been talking about this is unconvincing. We had a monster move lower on 10 year yields on Friday. This morning on a Monday yields up 5 basis points on tens back to 152 77. Yeah it still leaves us about 11 basis points higher than where we closed on Thursday. So there's a long way to go if we want to get back to that level. Now of course there also isn't a long way to go from your couch to your computer. Maybe maybe it is Cyber Monday. So if you didn't get out shopping on Black Friday maybe today is the day you are doing so. Adobe Analytics says as much as eleven point three billion dollars could be spent online alone today which would make it the single largest shopping day of the year. But of course beyond that there are some serious policy conversations we need to have today. One of them being President Biden is going to speak on the Amazon cranberry at eleven forty five a.m. Eastern Time. He'll be speaking from the White House probably going into more detail about why exactly he decided to implement those restrictions on travel from a number of countries in southern Africa. I also wonder if he's going to use this as an excuse to push his build back better agenda uncertainty economic uncertainty created by the virus. Maybe he's sending a message to Capitol Hill as the Senate returns to from recess today. And then of course later on this afternoon at 3:00 p.m. Eastern Time we will be hearing from the chairman of the Federal Reserve Tyrone Power. We'll be joined by the likes of John Williams of the New York Fed. He will be speaking at an event that launches the New York Innovation Center. So does he address this variant and its implications for monetary policy. The conversation we were having pre Thursday last week was about potentially an accelerated taper a quicker normalization of policy. But does uncertainty around the virus give the Fed a little bit more cover. It'll be interesting to hear what he says today ahead of his testimony on Capitol Hill on Tuesday and Wednesday going into payrolls Friday as well. Kelly thank you. Thank you very much. Tell me if you think about what we've heard so far. ISE check clarity. Governor Warner President State President Bostic all teeing up a fast the taper. How do you tee up a fast the taper now given what we've done away for the governor this Fed decision. John you nailed it. This is a key message this Monday morning folks. Within the panic what you're going to do. Portfolios guess what. We wait for the science. They're no different than we are our silliness. Joining us now global head of ethics strategy RBC. Also help us out there. How sensitive will this market be to incoming economic data including payrolls Friday. Economic data can be hard to trade off at the moment just given like you said we're in this wait and see mode. With respect to on the Quran the early indications that came out over the weekend from the chair of the South African Medical Association definitely positive but everybody acknowledging that's a lot further to go. And I think for the moment we're really focused on how markets are trading into Iran. You know Tom you said earlier people have had a really good. Yes. iPhone. Part of the reason I think we've seen the pullback we've seen is people are just trying to lock in those gains rather than get too greedy into year end. Do you readjust for middle or late. 2022 is the essentials you have at RBC that all of your wonderful team recalibrate its. Look at this stage we're much more focused on the central banks that were about to hike and therefore may be put off by the uncertainty. You know to do an RB NZ if you will. And I put the Bank of England very much in that category vs. other central banks that didn't have any kind of big tightening decisions in the very near term future. And I think by the time you get to the back half of 2022 things will look very different to how they do today. I was sort of surprised also lingo. So lack of a dollar retreat in the arm KRON News of Friday and the recalibrate with euro 112 eighty. Can you call a weaker euro. Look I think the euro core will very much depend on. On your macro outlook. Typically euro dollar has been trading in line with equities for most of this year. So that's to say when equities were rallying your dollar tended to be higher and vice versa. We saw a break in that on Friday and I'm really glad that's what we saw because it makes perfect sense to me. You know with the ECB very much back of the queue lockdowns and the impact of Covid already having the euro in recent days it made sense. That should rotate to the dollar. I still have a call for your dollar lower into next year. I've had that call since the start of the year. Not change that now. But that's very much based on the cyclicals strength of the US versus the euro area. And Annmarie Horden doesn't change that for me at the moment. So we saw the flipping to euro strength rather than euro weakness on Friday. We also saw a massive bed come into the Japanese yen and that was coming off of extremely weak levels. Was that just a one off bid for a safe haven or do you expect that we actually could see a more persistent reversal there. Look it's tough for the man because I think the closer you get to fed normalization the more you'll anticipate that change in the hedge ratios of Japanese investors. And you know everybody likes to position for that with dollar yen higher. But at the moment the yen the Swiss franc and even to some extent the euro are very popular vote. The safe havens in fact the dollar like you said a little bit more mix actually outperforming against most of the rest of it. That's just not the majors. John to talk about the problem shout any IMF facts right now. Dollar lira our. So let's go there. We're here from the Turkish leader this morning. We heard from them about 10 minutes ago says he will never advocate for a rate hike. A lot of people see him as the de facto leader of the Turkish central bank. How on earth do you play that currency if it's all right now. Our ISA. I mean it's a very poignant question right. That all I'll say is that positioning in the lira is definitely not crowded. We don't think the market is massively long dollar lira. And I think that if anything creates real concerns when the central bank is not willing to hike rates. Carol Massar greater CAC joining us from RBC on SFX Market. Dollar lira up to about thirteen this morning. Twelve 72. Considering that a number of years ago T.K. we had a three handle. What a turnaround it's been in Turkey over the last several years. It's a complete I mean that stretches from 2002 to let's say 2006 and then it unravels. And of course what we've seen in the last couple days is the mixture of Erdogan politics his positioning in the Levant and down to Egypt. John you know the Abu Dhabi meetings that were held last week and and such were the financial realities of Turkey and the financial realities. It's all about the banks. It's another three percentage point move in the dollar's favor against the Turkish lira. We need to talk about way more than what's going on in this market than just a mutation of the variation of the virus so far in South Africa and beyond. Tom Keene so much was going on on Friday. Spreads were wider in credit. The likes of Peter chair of Academy pointing out Tom that there's more to this than meets the eye. It's not just about a mutation a variation of this virus. Look at what's happening with credit. If he's saying if you're going to fight any move don't fight. Friday faked the bounce this morning. That's the message from Peter Chen. There's a lot of different opinions on this. And I'm going to go out to the long end of the curve or a lot of study was been leader looking at the long end as well. A 1 8 is 7 from 2 percent into one point eighty seven percent and a 30 year bond John in so much of that is the move we saw in the two weeks prior to Ahmed crime. How much of a pullback was just a pullback. How much was actually the virus. That's the point Peter shares trying to make Kailey Leinz your view on that. There's just so much more going on than the variation that has got everybody talking about over the weekend in this markets about credit. It's about the Federal Reserve. It's about pulling back QE a lot more quickly. A Federal Reserve stuck between a rock and a hard place and a question mark over the Fed purchased. How durable were the Fed put be with this kind of backdrop. But you could also take the other side of that coin John in that maybe this does give the Fed more cover to normalize policy at a slower pace not an accelerated one as the market had come to price in over the last several weeks. But also to your point about you know maybe there's something else going on here. We have to consider that this was a market that by and large in many ways was priced to perfection priced as if the pandemic was over and being reminded of the fact that that isn't the case not only just calls into question what's going on with the virus but also just asset prices in general how rich valuations are. And maybe it just gives a little bit of an opportunity to unwind some of that. So if he tune again this morning here's your price action. It's a small bounce back on a S & P 500 by seven eight tenths of one per cent. Yields are higher after shifting much much lower on the 10 year on Friday yields are up by five or six basis points to 153. And look at move on crude Tom. We had to move lower of 10 per cent and this morning were up by What'd You Miss? 5 per cent to 71 figure advance here. And then I'm looking at the Bloomberg Commodities Edge as well. Joe you know it's a crisis. The Dow has moved back to where it was mid-August. We're in the same room and you're quoting the Dow Jones that sound stage. Just a welcome back for us. Both know that council tight near Miami this weekend. It's even so unusual punishment. I was ready to go wake it up in New York City up nine tenths of one percent on the S & P. Coming up 7:00 a.m. Eastern Time Gympie Sankoh the president of Bianco Research from New York. This is Bloomberg. With the FSA news Hammers could get a warning from the World Health Organization it says a new Macron variant could lead to surges of the Corona virus with severe consequences. The variant was first detected in South Africa. Scientists there said it appears to spread more easily. The WTO assessed Icahn's risk as extremely high. Airlines passengers and businesses had to respond to a deluge of travel restrictions announced over the weekend. There was initial spate of flight bans from southern Africa that has given way to wider ranging measures that will make travel more expensive and less convenient. Over in Spain inflation has risen to its fastest level in almost three decades. Consumer prices rose five point six percent in November on higher food prices that underscored the lingering consequences of supply chain bottlenecks across Europe. And shoppers returned to stores in the US on Black Friday but traffic remained well below pre pandemic levels according to said semantic solutions. Visits to stores and shopping centers rose 48 percent from a year ago. Still it was down some 28 percent from 20 19 in New York. Final jury selection and opening arguments are set for today in the trial of Glenn Maxwell. The British socialite is accused of grooming underage girls for sex with the late financier Jeffrey EPSTEIN. She faces as much as 40 years in prison. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts more 120 countries and rescued up to. This has been back. This is a clarion call as far as I'm concerned of saying let's put aside all of these differences that we have and say if you're not vaccinated get vaccinated if you're fully vaccinated get boosted and get the children vaccinated also. We now have time. But the fact sheet over the weekend from New York City this morning. Good morning to you all. Alongside Tom Keene I'm Jonathan Ferro together with Katie Lyons. Lisa back with us a little bit later this week. Your equity market up 40 on the S & P advancing nine tenths of one per cent. This is your Monday morning bounce. It is not that convincing for some people in the affects market Eurodollar USA 113 112 91. Negative two tenths of one percent cent yields much lower Friday a little bit higher this Monday to 153 63. And that's the extent if you turn around accrued some 71 69 negative more than 10 percent in Friday session. Up this morning by a little more than 5 to remind from the oil panic Brent crude 84 down to 76. To give you one measure of that. Of course the president speaking your leader this morning on Iran. Emily Wilkins joins us now with Bloomberg government as we move to the president's comments. Emily I've spent the morning really looking at the vaccination matrix if you will of the United States. And there's one statistic that sticks out and that is they calculate unvaccinated deaths are 13 times vaccinated. What will the president say to use armed Iran as a tool to get more vaccinated. Well you saw President Biden go ahead and use the Delta variant somewhat successfully as an impetus for getting more people vaccinated as well as getting more Americans to get their booster shots. And we can expect similar from the administration. I mean we have seen that travel ban be put into place as of today on South America and seven other countries. But even some of Biden's advisers have admitted that a travel ban is not enough that it's going to delay the arrival of the Annmarie Horden variant to the U.S. but it's certainly not going to prevent it. And so at this point the Biden administration I mean they've tried so much of what their success is going to be to getting over the Covid-19 pandemic. And the administration has made it clear that the only way they're really going to do that is through those vaccines getting more American. Mario Draghi and Italy out with headlines rise in the last couple hours here on I'm a Crime. But I think Mario Draghi running the ship is a fortress Italy Emily. And he's sort of put out a non mandate mandate a few days ago. Are we going to see non mandate mandates from President Biden. Well you've already seen Biden go ahead and feel free to start having these mandates for the federal government workers offer companies sort of putting those things into place. So this could lead to more mandates as more Americans just begin to experience them as more companies get comfortable with them with enforcing them. Right now a lot of the mandates are still at the local level. And it's interesting. I mean even here in D.C. we've had part of the mask mandate lifted but only in certain circumstances. But surrounding areas are having the mask mandate put back in place to a large extent. This is still a local and state game as far as mandates are concerned. But really the one thing that the government has. Are those vaccinations. Are those boosters. And we're definitely expecting President Biden to talk more about that in his speech later today. Emily are we still seeing a correlation between the trajectory of the virus the case curve here in the U.S. and the approval rating of President Biden. I mean to a large extent we have seen the number of vaccinations continue to increase while we've seen President Biden's approval rating continue to slow down and decrease. Part of that is because a lot of Americans don't feel like the pandemic is over. They're still wearing masks. There's still concerns about large gatherings. Things aren't 100 percent back to normal yet. And Americans are also dealing with things like high inflation which the Obama sorry rather the Biden administration is saying is actually part of Covid-19. You heard Secretary Janet Yellen seem to really go over that high inflation. The pandemic needs to fully get behind the U.S.. So a lot of factors here. But one thing is really clear that a lot of what President Biden has at stake is going to relate to how many Americans feel like the pandemic is truly over. And President Biden may be looking for a win as it relates to his legislative agenda. You have the Senate returning to Capitol Hill today after a recess. Is the build back better plan at the top of the agenda or is it more about the actual deadline items like avoiding a government shutdown. It really has to be about those deadline items. I mean if something if they don't pass a stop a short term stopgap funding measure before this Friday then the U.S. government is going to be experiencing a shutdown. They've got until mid-December December 15th to raise the debt limit. So that stuff is really going to become a much bigger priority than the social welfare and tax plan the build back better. Certainly that's something that senators are going to be working on that the Biden administration is going to be keeping an eye on. But just because of the deadlines we have coming up that can't be the priority as the Senate returns today. Aren't you overwhelmed by crime. I mean you're talking like it's business as usual. Emily Chang don't boat for a minute. I mean look there's only so much at this point that Congress can do about Omicron at this point we don't even know how transmissible it is whether or not it works with the vaccines. There's so many question marks right now with Omicron and what needs to be done. We have seen a couple lawmakers say that there does need to be more assistance out there to help people with Covid-19. Seeing the pandemic is still very much in effect. But it's just some of these deadlines Tom. I mean you have until Friday to keep the government open. You have two weeks to make sure that you raise the debt limit. These are incredibly pressing measures for those in Congress and it's something they can do something about. Where with the OMA crowd variant there's still a huge question mark as to what even needs to be done let alone what Congress can do. Emily thank you. Emily Wilkins Dan RTS on the latest take. Were you surprised by a move we saw on Friday not just how violent that was so very little information or you go to the Bloomberg John. This is the tea function and the Bloomberg John knows it well. And I did a fitted standard deviation study from the top the tippy top optimism John. We came down four points six standard deviations on Standard and Poor's 500. John I would use a Standard Poor's 500 for this careful survey because it's a better index mathematically that would grab standard deviation. You've admitted that this morning. Is that because I said it just for each other. Yeah I appreciate that. I wouldn't have done it if you were in the other room. Given what we've heard from South Africa at the moment and the advisers to that government this from a Covid-19 adviser over the weekend speaking to Sky News. The cases that have occurred so far have been mild case mild to moderate cases. I think we should keep making that point this morning. If the little information we have that's essentially it so far. This is so important and this is the virology and the science that we've tried to lead with through 20 months of this pandemic. I really can't emphasize this enough to Joshua Sharfstein here in moments. And then under Peter Hotez we're going to look at the science. And John the science is we really haven't seen the bloom. I take real issue John with banners in the media that say a high alert. There isn't a room with you. There is a virus. We've got to work it out. We've got to work it out. And I go back to the work at Goldman over the weekend some remarks about some incredibly wide if it's more transmissible but less severe can't we see that is ultimately a good thing. I mean that's for the doctors the medical practitioners to advise us on some. But isn't that the end game. And if there's a more transmissible but less severe trances for his muscle I can't pronounce John's Monday. But what I can say is this is an event to get vaccinated and you go from fifty nine point one percent blended American rate. Can we even dream of 65 percent off of our crime. That's the message coming from this administration isn't it. Go get your booster. What's worse. I've had my booster. I was very boosted. You have your dad Emily ever booster. We can ask Emily a little bit later on. You mean Katie Kailey Leinz. I have my appointment next Monday time and we can start doing your part. Katie lies in for Lisa Abramowicz Dawson here. She should have this wish. Coming up Andrew Sullivan senior portfolio manager at Morgan Stanley Investment Management. Looking forward to that one. With your equity market kicking things off this Monday morning up nine tenths of one per cent from New York City. This is Bloomberg. Live from New York City for our audience worldwide on TV and radio it's a Monday morning price action. This is a small bounce back. I say small because Friday was vicious. This is the bounce back this morning up nine tenths of one percent on the S & P on the Nasdaq advancing about one full percentage point on a rough russell of small caps a similar amount talking about an unconvincing bounce as we still work through a really wide range of outcomes for what could happen or may not happen with the Omicron variant. That's what it means elsewhere in the commodity market. Give you a taste of foreign exchange as well. Take a currency pound like Aussie yen Aussie yen some with a huge move on Friday. This morning Aussie yen a move of about five tenths of one per. That's nothing. Crude up five per cent nothing compared to the 10 11 12 13 percentage point move we saw in Friday's session. And in the bond market it's the Federal Reserve stuck very much between a rock and a hard place switch at the board to get to the bond market to tens and 30s. Your two year yield up four basis points your 10 year up six basis points. Tom this was after a monster move on Friday session. And for many people T.K. we've just got to wait. You've got to wait for the nation got away data. And there's so much about this variant with which we still don't know what we do know so far. This is all the information we have from South Africa Tom is that this variance so far the cases they've seen the cases are mild mild to moderate S.K. at least so far so good. That's good news. Exactly. I say so far so good to the president to speak later this morning. But John I really agree with you that we need to look at medical professionals who are tactically involved with the AMA Crown and they're saying wait a minute lose the high alert a stereo and wait for the science. And we going to do that through this morning. As for the wait no doubt. Take a look at how people are already responding to this. The travel bans Japan the restrictions the UK the supply chain issues. You mentioned China grappling with this once. Okay. I got it. I had a long call this weekend with China about this John. And I can tell you it's tangible on the streets across all of the Pacific Rim. And yes they're going to reaffirm a zero tolerance risk. There's no question about Mexico playing Covid zero sum. What does that mean for supply chain disruption. I don't know. What I know is the supply chain disruption right now is getting better. Let's do this. Let's dive into some perspective here with decades of perspective. And I want to bring up the statistics here. What you need to know is in the buy side game there isn't a lot of discussion. You just look at someone's percentile performance. You look five year performance three year performance one year. All of this is discussed with a beverage in your hand and has done in 12 seconds with Andrew Solomon of Morgan Stanley. We can do that. And we see a five year 88 percentile of four year a three year ninety fourth percentile. And in the last 12 months he slacked off of the ninetieth percentile. That's out of 100 managers and only two did better. And probably that was Andrew Sheets for all we know. Andrew Solomon joins us this morning as well. How do you generate those numbers. What is the core slime and religion that generates those stunning performance numbers. Hi. Good morning. You know I look I think it's flexibility to being open minded to what the market offers. Last year Travel Leisure stocks got absolutely obliterated. And we bought those. This year it's been a little bit more inflation value oriented. And it's basically my belief that as much as people talk about inflation sensitive stocks most people are overweighted growth stocks. And so this has been a little bit more painful. ISE Energy has been the best performing sector. Financials have done well. Most people talk about that but they're not invested that way. So having that bias has really helped us relative to the competition. I did as a Bloomberg study Andrew off the trading of a little bit. I did a fitted standard deviation move and we've got a four point six standard deviation move in the last four days. Is that a slight correction. Well you know look on the one hand I do agree with you know what Goldman Sachs say is more transmissible less virulent. I do think that people tend to not react the same way to the issues overall. So Covid as a reaction is less so. But then again there's a lot of complacency. The market's done so well this year. Yes I understand the markers down a lot on Friday but I saw retail money coming in. People are buying the dip and so high levels of complacency. So I don't think we'll get a bounce back but I don't think it's going to be dramatic because of that kind of complacency to this issue over and over. So if it morphs into something more serious that that could be a concern. I doubt it. I think there's much bigger issues next year than Covid. Well let's talk about those issues now. For the first time anyone's going to say this year. The first time I seen some real hesitancy in your voice around this equity market. Typically it's some convictions to the confidence some bullishness. Andrew you're nodding your head. What's happened to that. Look here's a very simple rules. The third year coming off a bull a bear market or low it's harder. The market doesn't do as well. And that's because financial conditions start to tighten because you know central banks say hey things are getting better. We don't need this level of liquidity. So financial conditions are going to tighten. And I think that will be offset by better earnings than expected next year. But the result is you know kind of a single digit year. And you know as well as I do with a market open as many days it is every day and you can have a one or two percent move out any day. That's a lot of volatility around a single digit year. So I suspect that next year is going to be a tougher year to make money as long as it unless you stay kind of focused on fundamentals and buying companies that are beating estimates. And I think that will be the big story again next year as it was this year. Patty Chad raised a really good point. Over the weekend I want to read out what he said on TV and you can tell me what you think of it for the first time since the pandemic started. We faced a selloff where it's unclear what the Fed and other central banks will do. There is no guarantee of easy money going forward. Does that resonate with you. So yeah I think. I mean you know you got tighter monetary policy coming. You have a potential corporate tax increase of fiscal policy could be tighter. Those all things lead to a tough you know maybe multiples come down a bit. My point is I think that will be offset by better corporate fundamentals but it's not going to be a great year next year. It's going to be tougher. So that's why I was not. Yeah. This year has been the game's been on. But I think it will get tougher next year. So too right here as we sit today. I think the travel resource stocks will bounce big today but I wouldn't chase them because those are high beta stocks. I'm just not so sure you want to have a lot of risk in your portfolio as you go into next year. Andrew how much of the tough picture for equities is actually predicated on the bond market and potentially higher yields and higher real yields. I think that's part of it. You know higher rates are part of but I think it's tighter financial conditions really because at the end of the day you know really if the tenure is at one and a half or two percent I mean you invert that that P and the bond market still astronomical stocks are cheap relative to bonds. But yeah I think higher inflation will get the Fed nervous. And you know they may not do anything but the market's going to start to reflect that. And that's that's why the third year is a tough for. I think that's going to be the story of next year. Does that mean stay away from growth in 2022 or what do you want to own in a year where it's harder to make money here. Sure. I think you know again going back to what Tom said this in my view is investors don't have enough of these inflation sensitive stocks in their portfolio. Look at energy. It's the avoid. It's the unloved factor. So I've learned with energy stocks they keep going up until suddenly everyone gets on board and yet bullish and that's where it collapses. I just don't think that's the truth that I see banks you know they had big sell off on Friday. That's a better opportunity to be a buyer today than you know the reopening stocks. I don't think you know that those multiples risks remain really low. So I think it's in the inflation sensitive over the growth names. But having said that I don't think we're in a situation like 2000 where you know the mega cap tech stocks are that particularly expensive the high octane one for they've really come down. I think they can continue to come back. But it's really this concept that inflation census stocks remain under on investors portfolios because that's not worth work the last 10 years. Are we going to see higher inflation. I mean that's arch call. Steve Major over at HSBC was heated this morning. The longer term duration yield shows a bet we will not see a persistent pernicious inflation. Do you agree. I think we're moving into a period like the 60s time where we had higher inflation and higher growth because that's what it seems to me. That's what central bankers were. And so I think this dual mandate of the fed of stable prices and maximize employment seems to be tipping more towards back towards employment. That reminded me a little bit more of the 60s than the 2010. In that environment the S & P did fine. In the 60s it was so 70s it struggle. But inflation sensitive stocks did better. Andrew Sleeman right back to the 1960s and 1969 John get back because Andrew and I want to get back this weekend. The new Beatles documentary is phenomenal. You love that day. It was great. Write about it. It's how naked it is. And they even say while they're filming it that they're not happy that they're filming it. And there's some scenes one scene where George Harrison talks about Eric Clapton is just absolutely stunning at the time. Andrew Sullivan a moment Stanley. Where can we watch that. Some Disney plus one disagrees on Disney plus Disney plus. Yeah. Did you see what they did in Hong Kong with that episode of The Simpsons. No I missed it. They got rid of it at a mention of Tiananmen Square didn't it. Kelly. Yeah but a bit of controversy around that over the weekend. Miss out completely. It's the difficulty of having your business and doing business in China. And we saw that evident many times last week. Jamie Diamond And his comments of course that made a lot of news. But if you're a Western company operating in China you have to play by the rules to a certain extent in The Simpsons a feeling that one that difficulty is not going away. Let's not let this past on. That's the first time I've heard Andrew Solomon sound a little bit cautious on this market through much of this year I think. Yeah I'll go with that. He's been calling for a correction. We need one. I guess we saw a correction on Friday. Maybe we'll get a little more. But I did hear a little bit by the dip there. Even if there is a little more call still miss this adds into something that Peter Chip was talking about over the weekend. I keep bringing this up. We're always obsessed with a shot close to the boat. And right now I saw Micron clearly and for good reason too. But there is so much more coming on that side of it that even if we get past this Tom is it a green light to add to risk assets given what we've got to talk about in a middle of December around three key central bank decisions. John Farrell channelling Winslow Homer Shark close to the boat. I love it this morning. Yeah. You know there's a lot of worries out there but is Greg Valliere said the economy's humming. What's the economic data we're going to see. John for Q4. And how responsive will we be to that. Yeah thanks. Given what we don't know. I go back to data. Well we can talk about this very next on this program coming up. Joshua Sharfstein the vice dean of the Johns Hopkins Bloomberg School of Public Health. Looking forward to that. I'm nine tenths on the S & P that you'll McCartney and that you'll McCartney say it's magical. They start I see in that clip I've seen that clip on how they put that song together. Everyone younger should watch it. It's glorious. Are you selling. Disney said I'm selling. Get down and get back from New York. This is Bloomberg. With the Brad Stone numbers anchors get to the World Health Organization warns that the new McCaughan variant could fuel coronavirus surges with severe consequences. The agency calls the various risk extremely high. IBEX was first detected in South Africa. Scientists there said it appears to spread more easily. A number of nations allow imposed travel restrictions to try to contain the variance transmission. But Anna says it could have a new vaccine ready to fight the Omaha One variant by early next year if required. That has the company's shares rising. Meanwhile biotech is trying to adapt its Covid vaccine to handle Omicron. The German biotech and its vaccine partner Pfizer put plans into place months ago to ensure a new version of their shock could shift. With 100 days France agreed with European allies to take new steps to clamp down on people smuggling in the English Channel last week. Twenty seven migrants died trying to reach the UK. The European Union's border will begin flights over the channel later this week. And it's the latest sign of tension between the US and Russia. Moscow's ambassador to Washington Anatoly Amitabh says that more than 50 diplomats and their families will have to leave the US by the middle of next year. That confirms departures that Russia has warned off for months. The US is taking a tougher approach after Russia than the US or employing its citizens at the embassy in Moscow. The most high profile black figure in luxury fashion has died. LVMH his star designer Virgil Outflow had battled cancer for several years. He was 41 and was known for his influence on streetwear and sneaker culture and for his success in revitalizing Louis Vuitton global news 24 hours a day on which could get to. This is Brubeck. We've got to do more in the developed world to get vaccine to the developing world for both humanitarian reasons and reasons of self. The suppression of variance. We in the United States and other developed countries need to be concerned about what's happening in the developing world. That's the message from Dr. William Schaffner that the Vanderbilt University Medical Center professor from New York City this morning. Good morning. Some Kean Jonathan Ferro Lisa Abramowicz. Back with us in a couple of days. Kathy Light's sitting. Get your equity market up 39. Let's call it 40 passing by nine tenths of 1 percent of the S & P. Big unwinding treasuries in Friday session. It's the unwind the unwind but a muted one so yields up by six basis points on tends to 153 46. And capturing that is crowd lower by more than 10 per cent in Friday's session and this morning up by 5 to 71 54. Brent crude seventy six point zero one down from the eighty four level that we've seen so much. We now begin a discussion this morning with Peter Hotez joining us later. And we are thrilled to bring you Joshua Sharfstein. He's vice dean of John Hopkins Bloomberg School of Public Health. But far more than that he has been a measured voice for Bloomberg Surveillance. John and I feel very strongly we should lead with science and we lead with a measured alert this morning losing the hysteria and frenzy we've all felt the last four hours. Joshua Sharfstein how do we constructively generate a measured alert given our fears. Well we have been talking for a while about the potential of more variants coming. We've said that their experience could well form in places that are under vaccinated and that's what we may be dealing with. This particular variant has a number of concerning mutations that resemble some of the other variants that we had. None of those variants totally escaped the vaccine. None of them were like our worst nightmare come true. And we have to go through the process of studying this variant. While we continue to be vigilant and take precautions that we need to take to prevent the spread of infections you know this may well not be as dangerous as other variants but it may be had the capacity to infect people a little more who are vaccinated. We're just going to have to find out what will this do to the unvaccinated. I noticed this morning one of the statistics was the unvaccinated 13 times likely to die than the vaccinated you presume. And you've been in the trenches on this. Do you presume we will see a trend to vaccination. You know it's it's interesting people who are unvaccinated tend to get vaccinated when they perceive more risk to themselves. And so you saw with the delta searches in the south suddenly more people in the south were getting vaccinated. But it may take things actually getting worse before more people get vaccinated in the meantime. This weekend you know I heard people saying well if there's another very in coming maybe I shouldn't get vaccinated against. With the current vaccine that's obviously the wrong way to think that more people are vaccinated. It's overwhelmingly likely the more protected that they'll be. And that will also protect the entire area from from you know a variant that that is a little bit more transmissible. Doctor help us understand the history of a virus like this one over time. Should we expect this to become A more transmissible and B less severe. Isn't that something we should be expecting to happen over time. But how much time it may not be over this period of essentially months that we've had with the virus a couple of years versus decades. So there was a corona virus pandemic that apparently may have happened at the end of the 19th century. That now may be our common cold. But you know that's not a lot of solace to the people who were experiencing it and getting really sick back then. So it could happen but it may take some time for it really to become mild. I think right now the virus is just trying to you know spread in some of these mutations make it more likely to spread some of the mutations may you know happen to make it more severe. What we're going to have to figure that out and be smart about the kinds of precautions that we take. You know I think really being careful about travelers makes sense in the sense of testing and vaccination. I'm not sure the kind of travel bans we've seen make a lot of sense given how far this variance priority spread. Delta is clearly thought too early for someone like you to draw conclusions. I just wonder how much time you would need. Is it a matter of a couple of weeks. Several. You need a month of data. What would you need. How much time. I think we're going to start seeing it's going to be a little bit of a you know a buckle your seat belts moment because we're going to see all kinds of individual stories before the picture really emerges. I hate based on the studies that have been launched. I would expect two to three weeks for a much more clear picture but I wouldn't panic over any one headline. Dr. Sharfstein we talked a lot about natural immunity. When when having the conversation about vaccinations as well. Is there a difference in response to a variant between someone who's been immunized with a vaccine and someone who has had Covid therefore quote unquote natural immunity. Well it may depend on who which variant there people got sick to in the first place. So immuno logically you can kind of put these different variants on a tree. And it turned out the original virus is pretty close to downtown which is why the vaccines made for the original virus were pretty well for doubt that some of the other variants actually were very different from the original virus and the vaccine didn't work so well. Those got out competed by Delta. This looks more like that. So it depends I think a bit on which virus. If somebody actually had one of those earlier variants there might be more protection than someone who had Delta or the original virus where the vaccine John Tucker. Can't chat with you this morning. An important conversation. Joshua Sharfstein of Johns Hopkins. Tom we start at this hour. This program this morning this week by saying it's going to take time. It's going to take time to get a fuller picture of what this new mutation actually means for this economy for this global economy and for society as well. The covers husband I think very measured all in all. But you see the media frenzy and the president's going to put a clamp on this. I would say John today how the president addresses this is really really important to say. Let's keep going. Let's move on. And John the fact is we're moving on with a bang up economy that retail sales online. John what are you doing for Cyber Monday. I'd already bought the Christmas tree. I did try and get ahead of this time. I gave you three and I gave you a strong ken. And now we have now we have Katy lights a Christmas tree shortage. Jihye Lee Caroline Hyde. To be clear is this just fake trees or real trees too. I think it's awesome. I think it's also real trees and trees. I mean it goes to show you supply chains affect everything in the world. Right. I will say if you're in need of one Tom Keene Tribeca Whole Foods. So I got my food just beneath 50 Ninth Street. Oh yeah I forgot you don't tread in that territory. Was the last time you went down there. Nixon was president. I think you see to see the guys at Oppenheimer. Can I can I can that today's word is Gergen pressing Gergen pressing. Michael Bloomberg. You want to talk about much at United. Is that what you can with this. What is it about your Germanic coaches. Why why did Germany coaches end up in England. Well the new coach shares the new crop of them to show the likes of him. Klopp Kamala Harris fans Liverpool. They played this pressing game which I think is what you're alluding to some this very high press very aggressive has tons of energy. Everyone's got a role to play. They will fulfill it fantastically. And that seems at Liverpool. And of course to Chelsea really capturing that essence of that effort. And then maybe Manchester United get a flavour of that in the months to come. So we'll see. It's like a vertical in hockey. Go to the net. You know Jim Bianco is gonna have a ton to say on this. Crazy of Bianco Research. Absolutely no way of supply chains. And what this new variant means a supply chain. Some other global economy. The inflation backdrop and central bank decisions. Equities up eight tenths of 1 per cent. From New York. This is Bloomberg. We've definitely seen some signs of euphoria. A lot of people were looking beyond the virus. I think a bit too early and we need to remain reasonably calm during story is still quite good. It's the fear that's driving prices and I wouldn't necessarily get in the way right. It's like catching a falling knife. This is Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz. Getting your trading week started live from New York City for our audience worldwide. Good morning. Good morning. This is Bloomberg Surveillance live on TV and radio alongside Tom Keene. I'm Jonathan Ferro together with Katie Lyons. Lisa Abramowicz will be back with us a little bit later this week. Your equity markets are up eight tenths of one percent. You said in two words. We wait. We wait. It's a good bounce and all that we wait for. The president speaking later this morning. Clearly I'll talk about that as well. But John we wait to see if this economic recovery continues. Greg Valliere is saying it's harming it's there. But this bounce this morning I mean it's a great bounce but it's not a convincing bounce. We need to hear science news. Hey get some not many people comfortable with this move this month. A moment we'll talk about whether you should fade Friday late this morning. We'll get to that point in just a moment. The view from Yann Hatzius over at Goldman. So I'm just working through the research from Goldman. I thought Credit Suisse over the weekend but at some fantastic. This from Jan Hatzius. The range of medical and therefore economic outcomes remains unusually wide. That's going to be the case that some for the next couple of weeks. Yes it is. But how did companies adapt. That's been my theme through all of what they have done this year. And let's be clear about doing it all year. But I wonder how the successful stay at home companies adapt to this. And the answer is they're going to wake up and say let's go to work. And that's that's going to be the Tom Mackenzie path towards the middle of the month. Gets a bit Colombia. Katie lines. It seems very clear maybe a week or two ago the Federal Reserve the middle of December the Bank of England the ECB. Let's talk about it. Let's talk about and then all of a sudden we're talking about something else. Well John you and Tana both men saying we have to wait for more information is going to take weeks to get a clearer picture of what exactly this variant is and what the implications are for growth. And yet central banks have to make decisions in about two weeks and change on what they're going to do with monetary policy. So do they exercise caution and wait until there is more information if there's not a clear picture by then or do they proceed with what the market had been expecting was a faster tightening given the inflation picture. Well let me get your take on this. And Kelly Tom both weigh in on this. Tom you first. How responsive will this market be to incoming economic data. Payrolls Friday for instance. How responsive how sensitive. Well that's looking at 4.5 percent as a survey on the unemployment rate. A lot of people looking for a better statistic than that. We'll have to see if we get 500000 non-farm payrolls. Guess what. That's still a recovery. Does that move the dial though. Some of you still don't have the information. I don't know more information to know starting with the president this morning. He's going to come out and talk about getting the facts. That's the definitely. See that's it. That's the difficulty though for market participants on Friday. Katie how do you respond to a really strong prayin if you still haven't got the data you need to work out what the army crossfire in actually means for the global economy. Well it comes down to how you think monetary policy will respond. What will their reaction function be. If you are seeing a continually recovering labor market you're making progress toward that portion of the door mandate. We know inflation is there. It's been running hot. And do those two factors mean that the central banks have to react even if there is a little bit of cloudiness on the growth picture. That's the question. A couple of things. The way through through the following account let's pick up on the price action. Here is your bounce. Tom said it's not very convincing. Most people agree with him. This morning we're up by seven tenths of 1 percent after a monster move lower in Friday session. He see the move on a 10 year yield as well. 6 6 6. You like that. Some maybe not. I think that seven basis points on tends to about 154 after a move lower of about 15 basis points in Friday's session. And T.K. let's round it out with crude were up four point nine percent. Do we have to move it right. Oh I forgot about this. I'm sorry in the weekend reading. Is anybody talking about an adjustment of the taper schedule after everything we've seen we heard from Bostick on Friday. We were having that conversation. And Katie what did he say. Let's go. I'm open to it. Exactly. And of course you were talking about John Hatzius John and about his calls on the different growth implications depending on the severity of the variant. Remember on Thursday is when Hatzius published that he expects come January the Fed will be doubling the speed of its tapering. He also sees liftoff in June. So does he start to think differently about that calculus as we approach the Fed decision in about two and a half weeks time. Now asked for what is on DAX today of course it is Cyber Monday. I don't know if you buy your Christmas trees online Tom but you could buy a lot of other holiday gifts online. Adobe is expecting it to be the number one online shopping day of the year. Could be as much as eleven point three billion dollars being spent. Yes prices are going up but consumer so far have proven that they are willing to pay up for gifts. Now of course also going on today speaking of policy and of course of the virus the president will be giving a speech on the O Macron variant at eleven forty five a.m. Eastern Time from the White House. Does he use this as an opportunity not just to detail what kind of policy response will be coming. But push as Tom has been alluding to to get more Americans vaccinated and also how does this tie in to the president's economic agenda as Congress or the Senate at least returns to Capitol Hill from recess today. And then speaking of monetary policy. Fed Chairman Jerome Powell will be speaking later on this afternoon. That's at 3:00 p.m. Eastern Time. Of course we're gonna be hearing a lot from the chairman this week not just today but also on Tuesday and Wednesday as he testifies before Congress on Capitol Hill. So what does he say about the virus and its implications for monetary policy. Do we get that accelerated taper or do we not. Will he be asked about Christmas tree scarcity problem. Last hour Katy Lyons was promoting Whole Foods down in Tribeca to take my experience. Home Depot same day delivery. Just got it done. It was fantastic. You know we heard officials same day on day needles or silver needles or even take those with the lights already set the lights already on the lines. You already made on one item like my grandmother had where you turn the different color. No no no no. Just sets a y y like a sack. Seven and a half feet tall. Home Depot same day delivery. Home Depot is up more than 50 percent. Throw it out at the end of the year on the street. Keep this here. We keep it. You do use. You know I'm very conscious about climate change. We're said this morning on high alert. You're sensitive. We'll talk about this. Christmas tree sketches. Three Norwegian VIX Save US tries to hunt down a Christmas tree in New York City. Jim Bianco joins us now founder and president of Bianco Research. Jim let's start with this. What do you fade Fridays. Move or fade the move this morning. Which one. Well it depends on if you're short term or if your long term if you're a very short term trader you'd probably fade Friday's move. But bigger picture you might want to be fading. Today's move and the reason is look I don't know much about viruses and I'm not a virologist but I will say this. What is the biggest problem the economy has right now is the great resignation and the supply chain problem. This with all the restrictions that we're about to get it's not going to help that situation. It's going to make it worse. And that probably means that. So constraints are going to get worse. You're lucky you got your Christmas tree when you did. It might have actually been harder to get in the coming weeks as well. And that might mean more inflation because demand for stuff is not going to change. We've only got record demand for durable consumption. We've got record demand for retail products. But yet we don't have products to meet them. They're either stuck in the Los Angeles port or we're just not going back to work to make them. This is not going to help that situation. And it's not going to be resolved anytime soon. Jim you synthesize like nobody. I put you and Michael Dada on the top of that that the abilities synthesize everything we're talking about. Can you say that even with this news corporations will adapt. They will adapt. There's no doubt. But what's different about now versus January of 20 20 or even when we got the Delta virus in May is we've got we've got the economy humming. We've got people wanting stuff. We've got inflation. We did not have inflation in May. Or if we did we were firmly convinced it was transitory. We had we were worried about deflation back in January and February of 2020. So this is going to change the calculus quite a bit especially for the Federal Reserve because it's easy for them to say if there is any kind of restriction in the economy we'll just ease and ease aggressively. That works when you don't have inflation. But when you do have inflation and you try to stimulate especially an economy that's already suffering from a supply chain problem. So let's stimulate even more demand. You might wind up making it worse. H.M. you went that. Are you questioning the Fed put with this kind of backdrop. The Fed put should be questioned when you have inflation when you don't have inflation like we did the previous 30 years. Then you don't have to question it as much because the Fed put would benefit both stocks and bonds. But now if they start stimulating the bond market might not like it because it might perceive that it's going to accelerate inflation. The stock market might like it but you won't get the same reaction out of both markets like we have every other time. Jim Bianco So if I have a longer term perspective forget about the traders scalping this and doing this in that week's out. If I'm out quarters do I change anything today. You don't change anything today and you might not change anything this week. But what you have to be careful of is if we get enough restrictions you're going to see higher and faster inflation because there's one way you can fix the supply chain problem. You raise prices enough to cool demand so that everything comes back into balance. But that's not the way we want to fix it because that's kind of the losing way to fix it. So that's what I'd be most concerned about. Longer term does this potentially mean economic restrictions. No. Everybody still wants the same amount of stuff. So therefore the answer is higher prices or even more inflation than we've already been fretting about. I'm willing to sound the tree fully decorated. That's the price. I mean it's always a price tome. I wanted to go that. Won't you pay for it. Thousands. I would rather you willing to go into the thousands. I would rather put the Christmas ornaments on that bill than buy my free tree than get a factory. You don't want a fake tree. Fake trees are un-American. Jim Bianco Research. Let me use your fake trees on America John. He's not American. Tom Keene about race Central America. It's free to change. So I am going to catch you up. Thank you sir. Kailey Leinz point now on the federales. I can see you in the middle. Just save me part with a check. The French leader working out. Jennings points down. The Fed I think are really important going into this meeting in a couple of weeks. Yeah it's going to be really interesting to see how the jobs data on Friday that informs what the Fed is doing because everything Jim was saying there is this could just feed in more to inflationary forces. At what point does the Fed have to react to that no matter what that may think. A couple of weeks away. 24 hours after that you'll hear from the ECB and the Bank of England Tom Keene you that chainsaw impression again. What was that noise. That's what it sounds like. Fantastic. 8:00 a.m. Eastern Time we do this for the morning. Fishing to the Potomac. It's a skill. Morgan Stanley. That's a joke right. Skill. Get it. Skill saw. Nice good community. That bit niche. You know your base is Bloomberg Technology. That's how they certainly sound like the guys. What do you say. Niche. I don't like the guy saying I'm leaving Skyline. Get back is like you. You can understand a. They're all in each of three quarters of one percent of the S & P. This is pulling back. With the first news others could get a warning from the World Health Organization it says a new Macron variant could lead to surges of the Corona virus with severe consequences. The variant was first detected in South Africa. Scientists there said it appears to spread more easily. The WTO assessed McCann's risk as extremely high. Airlines passengers and businesses had to respond to a deluge of travel restrictions announced over the weekend. There was an initial spate of flight bans from South Southern Africa. That has given way to wider ranging measures that will make travel more expensive and less convenient. Black and its allies will discuss the impact of the open barrier at their meeting this week. That's according to Russia's deputy prime minister. It's another sign that the Pet Plus coalition may reconsider its planned production increase in January and shoppers return to stores in the US on Black Friday. But traffic remained well below pre pandemic levels. According to Send Somatic Solutions. Visits to stores and shopping centers rose 48 percent from a year ago. Still it was down some 28 percent from 2019 and a New York final. Jury selection and opening arguments are set for today in the trial of Glenn Maxwell. The British socialite is accused of grooming underage girls for sex with the late financier Jeffrey EPSTEIN. She faces as much as 40 years in prison. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and which could get at. This is Glenn Beck. 90 day jail time for cutting Christmas trees in Central Park. Is that Tree Hill. Title 18. Chapter 1. Section 8. 90. Day 129. 90 days or 50. Up to 15000 thousand dollars. No I'd be getting a smaller tree so it wouldn't be as large. You'd take the cash. Viviana Hurtado 15 CAC less material. Yeah it's a matter of 90 days and shows Miss Ariel Guy Johnson probably cheaper just to buy mine but he's so against fake trees. Apparently Katie will not go there. Kailey Leinz this morning and for Lisa Abramowicz some Jonathan Ferro together with some cane it's a waste as you price action in the equity market. The S & P 500 with a bounce from Friday's crater. Can we call it that. Yes. Oh we created some crush. We're on high alert. He too advances seven tenths of one percent yields higher by 7 basis points to 154 and a turnaround it create some 71 71 for a 5 percent. It's coming back for those just tuning in we were down earlier agony and all that. We've bounced up nicely. We've come back a little bit on the bounce up here. I'm watching the VIX twenty five point one zero on the VIX. It was a 24 hander when we started off the morning. Right now in Washington Joe Matthews joins us Bloomberg Washington correspondent. What's the power of the middle of the Democratic Party right now. The president speaks today. He'll be speaking to the nation and to the elections of 2022. What's the power of that middle ground. Well I think the middle ground today is going to be is going to be Covid. I mean this has been just a massive distraction. If you're going in terms of the midterms here the way the president is dealing with this is going to be key. And I think today he's got a call for calm. Be consistent acknowledge what we don't know here and point to what's already been done. If we're going to extrapolate this and talk about potential successes or failures with the 22 midterms a lot of it is going to come back to the way this president handled Covid the credibility that he may have acquired in the process. You have to remember today we actually have pretty good protections with international travel. You have to be fully vaccinated. That's something the president had in place by the 8th of November. And he'll point back as well to his six pronged plan that people including me made fun of at the beginning of September. Because why three plans aren't enough I don't know. But it included this employer vaccine mandate that will take form through an Obama rule coming out in January. This president might look fairly well prepared as he speaks to the American. So Joe you and the president had a schooner of Scots whatever they're called Wicked Wicked Island Bakery this week out on Nantucket. And what he would have talked about is he doesn't want to do it. George Bush. And I would suggest Joe that all of Washington both parties are hardwired off the failure of the Katrina response which is to get out front of it. That's really what we're dealing with right now. That's right. That's right. And I think this president says we've been out in front of it. We got you through Delta. We've handled travel. We're dealing with vaccines and masking despite the political implications. And look at this. We've got a new variant here in America is in a fairly good place to deal with it instead of saying oh my God we need to shut down the airports here and we need to start creating policy. The biggest obstacle for this president has been politics the politicizing of masking and vaccines when it comes to cope. But speaking of the politics is there really in between messaging between Republicans and Democrats. Is there any party that isn't on onboard with this or is there actually consensus in Washington among you know the executive and legislative branch those policymakers makers just not among the populace. Well when it comes to Covid look at it. I mean I don't have to tell you that the idea of masking in schools the idea of masking at work the idea of mandating vaccines has been very controversial. And in resulting in litigation as the president tries to pursue this mandate the social rule for companies that have more than 100 employees. He also of course already put one in place for federal contractors. So it's difficult to answer that specifically with regard to legislation or how most of the mainstream parties are handling it. But when you get down on the local level the state level the discourse that we've heard between this president and a number of Republican governors has been less than productive. All right. But at the federal level of course this is not the only item to consider. It's not the only item on the agenda as Congress returns from recess. They only have 10 working days in theory on the calendar before their next recess. Are we just going to kick all cans down the road until they come back for the new year. Well we're going to kick one big can and that's government funding. It looks like there will be a continuing resolution that they deal with by the end of this week. Of course it's December 3rd. We've been talking about this for weeks. Here we are again with really no progress on this. The question is what happens to the debt ceiling. That also was supposed to expire on the 3rd of December. But it looks like according to the Treasury and the Bipartisan Policy Center that lawmakers will have a couple of weeks to play with. There are Democrats finally going to handle this on their own through reconciliation. That's a big question right now as Mitch McConnell stands by his guns and says he won't go near it. Republicans do not want to deal with the debt limit. There could be maybe some backroom negotiating though as Chuck Schumer and Mitch. McConnell have met on this to at least create a scenario in which Republicans don't try to slow the process or muddy the process through extended voter Rama's are trying to attach a lot of amendments to whatever Democrats come up with here. This is something that needs to be dealt with now. We're all talking about a variant this morning. This is arguably much more urgent for lawmakers and for Washington to deal with a joke. Always good to hear from you at Bloomberg Technology. The dumbest sound on humbling back radio weekdays at 5:00 p.m. Eastern with Joe Monday to Friday. Looking forward to now one a little bit later. Here's a call that would have some big political consequences. I'm sure Tommy comes from JP Morgan and the equity team. Brent prices will reach 125 dollars a barrel in 2022. One hundred and fifty dollars a barrel the year after due to a lack of spare capacity. Those numbers again. So I'm just in case our audience need a double take they might do. Brent will reach 125 and 22 and 150 the year after on a lack of spare capacity. This is a complete shift in what's so important in this statement from JP Morgan is who it comes from John. This is Christian Mailer who's off their London desk and he's an equity analyst. I mean it's different than Morris or Francisco Blanch and the others. It's not a broader strategy. Call it synthesizing in their global economic view their global commodities view right down to the granularity of what it means for the oil. They say Katie that true OPEC plus spare capacity next year will be 2 million barrels a day. Below the consensus estimates are four point eight million. That's one heck of a number. Basically double where we are trading this morning. Well and to be fair you actually have seen that reflected in the production hikes that OPEC has put into place thus far. They actually haven't produced as much as now is allowed by quotas. They're not actually producing at that level. So I guess I wonder how much that translates into what JP Morgan is saying here. I think it's also interesting the U.S. part of this they say predicated on that 150 dollars a barrel oil. Coal is slower than expected cap ex response from the U.S. and other non OPEC producers. So those shale players maybe they just want to keep their discipline and they're not going to be pumping that much more either. John what's so important here is a tight tightness of the marshalling in cross of supply and demand on oil. We all know that that's not news. The key sentence here is OPEC plus depends on the efficacy of the spare capacity. The money sloshing around set to fall to a 25 year low of 4 percent down from an average of 14 percent. John it's a huge delta OPEC plus we'll meet a little bit later this week. Tom can you imagine a politics of 125. Of what. No no. This is a market. No I don't state unequivocally. This is not in the in the market. You know it 80 and we're bouncing around here. I think we've framed out 90. Maybe with a timeline. We frame out 100. That's it. This is Brent Collins IBEX this morning. Where are we. 71 44. Negative four point eight percent. Coming up on rates. Looking forward to catching up with Edward al-Husseini senior global rate strategist at Columbia Threadneedle. Your equity market this morning of seven tenths of one per cent on the S & P advancing 31 points year old time by seven or eight basis points to 154 83. Jonathan Ferro Weinberg says don't cut a tree down in Central Park Time. You have to go up north. There's plenty of time up north. How far up north. I think it's like 400 miles. And just keep going and you can pick on it till you find a tree. Can't get it out of my head. Just the idea of seeing them build that with an atlas on the middle of the night. It's Central Park. Tom with a chainsaw which might look dangerous to middle of night in Central Park. Cutting down a tree. No. Well just about. But actually it's really serious. And the city takes it very very seriously. I went up a couple years ago north side just beyond the Harlem. Just having a look. Just looking around you know the officer stopped me and said we don't care that you work for Mr. Bloomberg. That was what came out. I hope that's not a true story from New York City this morning. Good morning to all. Tom Keene Jonathan Ferro CAC 9 sitting again for Lisa Brammertz. Lisa we'll be back with us a little bit later this week. He's the equity pitcher for you. We bounced back up seven tenths of one percent on the S & P advancing 31 points on the Nasdaq up eight tenths on a rustle up nine. We back away from session high switch on the board and get to what's happening elsewhere. We've talked a lot about crude already in this turnaround up by just four point eight percent relative to the move like we saw on Friday. It's not a big move. Look at Aussie yen. Aussie yen had a move of two point six per cent in Friday's session. So if you take the Aussie that kind of good risk proxy take the yen that haven status Aussie yen negative two point six per cent on Friday session to date some Aussie yen it's a move of half of 1 per cent. It's not a major move. Let's go to the Pacific Rim. I mean I'm going to take it across from the south to the north there. And it's a huge Pacific Rim proxy John along with Asia D X Y. And the answer is we don't know. You mentioned it earlier 0 Covid is the theme in Asia China. And you wonder with with Ahmed Krona. I mean how are they going to handle 0 Covid Japan shutting down its borders to foreign travelers as well. The restrictions are coming back. And Thomas you've said all morning we've got to wait. We've got to wait for more than I should wait in this. Vice president's going to say clearly in the 11:00 hour today you know we'll have to see what are individual stocks doing. Well let's talk about the bond market before we get that. Some of these towns and said should turn around of the two year yield looks something like this down 14 basis points on a traders session and now just up 50 K to about 55. I tell you what that meeting that meeting CAC lines in the middle of December for this Fed reserve is going to be absolutely fascinating. We still don't have the information. We need to get some clarity on this mutation. Yeah. We don't have the information. The Fed may have to make a decision without that information. John. And do they then decide to stay the course stick with the pace of their tapering of asset purchases or do they decide to accelerate. As we've seen a number of Fed officials drum beating to over the course of the week including on Friday or over the weekend when Raphael Bostic spoke. He didn't seem that worried about the variance and what that would mean for the implications for the pace of taper December 15th. It's in the diary. You're meeting for the Fed Reserve. Now we can get you some single names some stock movers. We can do that with Romaine Bostick remain. Hey good morning John. Of course we talk about what's going to happen of course in a couple of weeks here. But of course we came into this month are really thinking about the idea here that looks DAX resort basically searching for some sort of direction. And I had a lot more to do with inflation some of the macro issues. Now of course it's about armor crime. And that dealt that Covid variant here and how folks are going to respond. Do you shift up the playbook. A flurry of notes out this morning kind of providing sort of a mixed guidance here. Some folks saying this is a buy the dip opportunity. Other folks say you really need to sort of reassess where you go what is moving today. You got Maddern during a higher by about 10 percent. Remember we started this month with Madonna ceding its crown as the best performing stock in the S & P 500. It regained that title on Friday with that 21 percent move 10 percent here in the premarket biotech higher as well. Both companies talking about that they could potentially Tom have on a crime variant ready within a couple of months for your reading. Did you see any capitulation of the S & P 5000 people of that S & P 5000 people know most of the people who are bullish. You were basically saying that we're going to go into next year and the 48 hundred to 5000 range of basically stuck by their guns on that idea here that this is more of a speed bump that this is probably a little bit overblown and that some of the short term pain that we're going to feel here in the markets and even potentially in the economy will be short term Don. I have to say when asked. Well flip up the board here and you can see some of the rebound that we're seeing in the airline stocks and Carnival Cruise and a lot of the sort of going out the stocks you've been talking about sort of the great church treasury rally that we saw last week. That's kind of reverse itself back above 150. And that's given a boost here to some of the bank stocks Dani Burger remain. Thank you so much. I'm looking at the VIX twenty five point zero 1 and the VIX this morning. It was 24 and a little bit soft here in the last hour. Maybe some steadiness right now who's every Rosine over the weekend wrote a wonderful note. You senior global rate strategist at Columbia Threadneedle and provides wisdom this morning. Edward I love love love what you said about minutia. I'm calling this minutia Monday. We've been more into the minutia with armed crime than we've been in ages and ages. How do you keep a big picture if it is minutia Monday. Yeah I see. You know the context here is with the virus and the evolution of viruses shapes everything in the course of the past 18 months it's shaped policy both on the fiscal and the monetary policy front. It shapes labor market outcomes and it shaped how the consumer and corporate soul responded again in the course of last year and a half. So this is a good opportunity to refocus on those themes and take a look at how they're likely to evolve over the next let's say the next six to 12 months with this new risk. That's that that's front and center for us right now as the global rates theme to make money or to not lose money. At the moment I would say it's more it's more not to lose money. We're starting with levels of yields particularly the longer end of the curve that that are relatively relatively low. Let's let's put it that way again. Third year yields closer to 180 which is the low 4 for the second half of the year than than they were even in the middle of the first quarter when we had that significant move. Higher inflation is closer to 6 percent. We've had significant fiscal stimulus that's working its way through the system. When you look ahead and I think we have several scenarios where rates move higher particularly if inflation turns out to be more persistent and the Fed's more forceful in squeezing it out of the system. But at the same time we have the economy likely to slow as fiscal stimulus steps back. So there's a balance between these two factors. That doesn't give us a lot of directionality. So I would say it's important to be quite defensive. So Ed are you saying that it really doesn't matter how quickly the Fed tapers if they finish halfway through next year if they finish three months from now. I think it matters that it creates a lot of a lot of room for them obviously to tighten earlier and to tighten proposed steel but faster. But at the end matters a lot more for the front end of the curve and the belly of the curve than it does to the long in the long end has not moved that much even as we've priced almost three hikes into 2022 over the course of the last quarter or so. So the flattening theme and the curve I think has caught a lot of people offside. I think a lot of people expect of the curve to deepen as as the Fed brought forward hikes. How much of that do you think it's that concerns around the virus and just any uncertainty out there outweighs whatever happens with Fed policy because they're still going to be a bid for treasuries. I think stuff like that. I think it's also sort of the balance between two things which is first rate can rise in the short to medium term as the economy recovers as the labor market recovers in particular. And as we get a look at at how inflation will settle over the course of the next year at the same time the longer term structural forces that have been bringing rates down longer nominal and real rates down over the course of the past three decades. They're still with us. And if anything accelerated in the course of the pandemic. So it's these two forces coming together that will determine where rates settle over the next. Let's say you know what are two years ever. How do you respond. And I'm catching you unawares here. That's unfair to you. With JP Morgan modeling out of persistent eighty dollar plus Brent crude was surges as high as one hundred and fifty dollars a barrel over the next 24 months. What does it do to your world. If and when we would see that outlier call. Yeah I mean it's it's it's interesting you know in red space you really start to think about break even sucks. That's the closest proxy that we have for oil moving to those sorts of extremes. And if oil ends up there you'll break even. What will remain elevated if anything right now. The starting level of regime is relatively high. You know we're consistent with inflation averaging north of 3 percent over the next decade. That's quite unlikely. If the Fed's reaction function remains intact if oil goes to 100 dollars plus particularly the does the relatively quickly in the next one or two years. Yeah you can see you can see those ratings remain exceedingly relatively elevated. All right. Ed good to catch up. Good to hear from you as always. And always Sunny that Columbia Threadneedle t CAC was a week ago. We heard that Chairman Powell got a second term. It feels like a long time ago. It does the same thing. It's like one week ago. And John you go to the jobs report and who knows what we'll see there. And I'm going to go back. I'm sorry. I'm getting the details on this JP Morgan note. Sure. This is somebody who went field by field to try to calculate that spare capacity and then normal as let's say 14 percent spare capacity. And we go down to what is an amateur I'm speaking of 4 percent spare capacity a 25 year low. It's stunning. You're right to go back to it. Gets your attention 125 on bread next year 150 the year after. They think we get a lift in that lift sticks and more. It's quite a headline. I have to wonder too if this assumes that you won't get any kind of Iranian crude coming back onto the market because we also have to keep in mind those talks are resuming in Vienna again today through proxies and grain. And we've seen many many rounds of talks that have come to no fruition of any kind. But do you actually end up seeing the rule of sanctions because that would actually bring a lot of capacity back onto the market. I guess this is operating under the assumption that that won't happen. John what's so important here is you know I look at the chain saw we were talking about earlier and I've got a nine on their phones gasoline capacity in the steel side. And you know you say well you say it's not a lot but you got to refill that pump. What is this one like. You gotta you gotta be honest. You want to explain this to our listeners on radio. Well what I can see on the screen right now you're advantaged on radio now because it's the beautiful walkway of Central Park which I have actually had the privilege of sitting in during a snowstorm like that. And folks they've got me with a chainsaw out there. Those aren't Santa. Guys guys you know this is Rachel in the control room. Rachel. Those are oak trees. Those are not Christmas trees. You know we wouldn't be going you wouldn't go that. That's just one of the entries. Tom we had six. I believe we've got a second one as well. Got it. Thank you for listening and putting me out of a job. Can you see the hundredth mayor looking at this. Tom I'm not amused. I think that that particular man might be disappointed on more than one occasion. One reason perhaps he's got a whole list. Yes. And I don't think that list is going to end here. I think you'll keep adding to it over time. If you're just tuning in to directly mark up 36 on the S & P we turn around a little bit. We're up eight tenths of one percent. And we wait. We wait for more data. You going to say that cold in the break. I'll take the call on the Juliette Saly in the break up 7 basis points on tends to 154 66 and crowd 71 73. J.P. Morgan one fifth looking for forensic out to 150. Not next year the year after next year just 25 is a wow. Wake up. OK. Coming up 845 Eastern Peter Hotez the Baylor College of Medicine dean of the National School of Tropical Medicine a man you want to hear from a little bit later this morning. With the first vote news armors could get to the World Health Organization warns that the new McCain variant could fuel rotavirus surges with severe consequences. The agency calls the variance risk extremely high. McCrum was first detected in South Africa. Scientists there said it appears to spread more easily. A number of nations have now imposed travel restrictions to try to contain the virus variance transmission. But Anna says it could have a new vaccine ready to fight the overcome variant by early next year if required. That has the company's shares rising. Meanwhile the UN Tech is trying to adapt its Covid vaccine to handle Annmarie Horden. The German biotech and its vaccine partner Pfizer put plans into place months ago to ensure any version of this shot could ship with 100 days. France has agreed with European allies to take new steps to clamp down on people smuggling in the English Channel last week. Twenty seven migrants died trying to reach the UK. The European Union's Border Force will begin flights over the channel later this week. And the most high profile black figure in luxury fashion has died. LVMH a star designer Virgil Pablo has battled cancer for several years. He was 41. He is known for his influence on street wear and sneaker culture and for his success in revitalizing Louis Vuitton. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in more than 120 countries Rich could get to. This is Glenn Beck. It turns out that the vaccines are perfectly effective against this new variant prices should give up eighty dollars. I think the market continues to tighten from here into 23. They will continue to bring back production and the market is going to need it. We just don't have production anywhere else. I'm going to send them the energy aspects. Founder and director of research from New York City this morning. Good morning Tom Keene Jonathan Ferro together with Kathy Lyons. Elisa Ramos will be back with us in a couple of days. Your equity market up eight tenths of 1 percent on the S & P yield time by 7 basis points to 154 66 euro dollar just south of 113 at one twelve eighty six negative a third of 1 per cent and a moving crude a bounceback of 5 percentage points and change to 71 69. And here's the call. Tom you brought it up again from J.P. Morgan and a team off the London desk in Europe. We see long term. Eighty dollars a barrel Bren as the marginal cost to deliver a bandit's market beyond 2024 incorporating our model of OPEC plus true capacity. We expect oil to overshoot to 125 and 22 150 in twenty three. That's some Brent time and that's a big call. They really count what I like about this research. Jonas It's countable. They really go fueled by field and they really try to count up the spare capacity the microeconomics of supply and demand within this. And they say OPEC plus is in charge. Questioning the spare capacity that I pay plus actually has to help is somewhat of a lift. Brent crude 76 40 14. The call from J.P. Morgan to the team out of Europe they're looking for 125 then onto 150 for the next couple of years. Well we've learned so much folks is how this is a market of 5 10 20 stocks or maybe the cyclicals doing well. The banks doing well and everybody else having a really tough go of it. David Wilson has gone back and looked at Mexico and sells that Harkins to 1994 and 1998 and on and on. Crisis to crisis. David it's about the Latin American equity markets. And I see the Colombian market where you've got you know they're down 9 percent but currency adjusted they're down 22 percent. Yeah absolutely. And that's part of the mix here because what we're talking about is a comparison between the MSCI Latin American index which is indeed dollar denominated. andI S & P 500 I saw this originally in a chart the other day or a report from Michael Hartnett over at Bank of America who's their chief global equity strategist. And it really jumps out in terms of historical comparison. The MSCI Latin American Index starts at the end of 1987. Let's put that in context. And so it's now at its lowest level relative to the S & P 500 since January 1988. So just a couple of weeks after the calculations began and it's down 89 percent from a peak back in October 2010 at least it was a couple of weeks ago when the ratio sat as record. Well got close to it on Friday closed just above it. Nonetheless I mean this week this has been going on for years and years. And you know there's more of it showing up this year. And it isn't just you Colombia like you mentioned time. You look at Brazil you look at Mexico look at other countries in the region. They've certainly had their rough share of weakness. Mr Hart mentioned that this is a value trap to avoid RTS go long Latin America and weak U.S. dollar. Well that becomes a question. It was more of an observation than a recommendation really. And that becomes the issue. I mean at what point do you get any kind of shall we say a reversion to the mean. That is an open question at this point. And given the weakness we've seen over years and years in Latin America you know it's a challenge to say you know the bottom is in. Well Dave Latin America obviously encompasses a number of different countries whereas the biggest point of weakness. Well there is a lot of it to be found across the markets. I mean you look at Brazil and the challenges that countries had under its present Jihye Lee both scenario that's certainly one of the biggest markets in Latin America in terms of stocks. And you know that that's an area of weakness. You know Mexico you could argue with oil prices is doing OK relative terms nonetheless. You know having its challenges as well. And you go across markets and it's easy to find declines of 20 percent or more in dollar terms this year at a time when the S & P 500 is up more than 20 percent. Well and obviously what's different between the U.S. and a lot of Latin American countries is Latin America is tightening and tightening quickly trying to combat inflation. Here in the U.S. we have inflation of policies going a lot slower. Is this gap going to only get more wide. Once the U.S. starts tightening as well. Well mean that becomes the challenge. It's more of a matter of pace of increases down the line at this point. You know what we're seeing indeed. Well taken. You've got a number of countries and emerging markets not just Latin America that are moving to raise rates to try and rein in price increases. And so it becomes a matter of when the Fed finally ratchets back on bond buying and starts raising rates. Well how did they move relative to the rest of the world in this case Latin America. David Wilson thank you so much. Greatly appreciate it this morning there on Latin American Dynamics. John it's been a huge cost to me. It's always waded back. The U.S. dollar and that we've had that that David Bloom that Mark McCormack resilient dollar this year. And that's doesn't farewell for a year even if things start to slow down or at least people begin to think that things will slow down again. Some you know it's going to happen. A dollar will get stronger. We could see that all over again. I'm looking at this equity market right now a close on Friday to short a 46 hundred and country someday calls for next year 50 300 on the S & P. The call from BMO. And Brian Bousquet that's the most bullish that I can see at the moment. David Kostin over at Goldman at 50 100 IBEX Laurie Campesina all good friends at this program 50/50 on the S & P that a high end coast home at the low end. We're looking for 40 400 over Morgan Stanley. Mike Wilson of the team surveyed Lisa Abramowicz has been less constructive on this equity market with Morgan Stanley through much of this year over a Bank of America that call forty six hundred four year and 22. Just a flavor as somebody calls coming out on this benchmark going into next year to see a revision rolling off. The president's comments this morning but also revisions of the science that we see Israel. John I just did a very loose extrapolation folks. This is nothing fancy. I just took a Bloomberg and I bolded on a Monday morning radio. You can really do that on Bloomberg radio. You can eyeball a chart on Bloomberg radio. And the extrapolation of the bottom of 2020 up to one hundred and fifty dollars a barrel on oil is late summer of 2023. That's if we keep this trend going. What a rally it's been. And to be clear here I haven't seen anyone change any forecasts off the back of what's happened with this mutation to this virus Caylee over the last week. Over the last few days I've not seen a thing. The only thing we can do is just go through the incoming information. The information so far suggest in the cases that have been seen in South Africa have been mild mild to moderate. That's the good news at least so far. And if we get any changes to that we'll change things. But ultimately for market participants they can't wait around. So it was sound now and ask questions later and we wait for the answers to those questions through the next couple of weeks. Well it was asked questions later in terms of the policy response as well. We saw instantaneously places like the U.K. barring flights from South Africa and its neighboring countries immediately before we had those answers. So I wonder if you start to see reverse reversal maybe in some of that policy response that starts to ease because again there's so much that we don't know that doesn't apply to just markets but really policymakers across the board. So you need a PCR test to go into London now Tom. And then before your second day you need another PCR test and you should self isolate until you get a negative result. That's what your entry into the UK look like week later this week. Mean ignored on this. And I got to get smarter because I am traveling. John do you carry PCR tests with you in your. You have to. You have to preorder a PCR test so that the government knows you've already paid for one and ordered one. When you land in the UK I'm not sure you can actually carry it with you. I think that they have to deliver it to the address. Your wrath. At least that's my experience self itself. I I'm just I'm sorry folks. Some amateurs are going to get I've got to get ready. We're all trying to figure it out from Christmas holidays from New York City this morning. Good morning to you all. Tom Keene Jonathan Ferro. Katie lined your equity market with a left up eight tenths of one per cent from New York City's Bloomberg. We are in a tricky situation. We saw a pretty dramatic shift in heading pent up demand will help drive the economy. For instance the Fed Fed's going to have to make some hard decisions based on data that's not perfect for this. Fed is going to take probably a harder stance on what's going on inflation. This is Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz. A tricky situation. We saw a pretty dramatic shift in hugging pent up demand will help drive the economy forward next year. That's going to have to make some hard decisions based on data. That's not perfect. This is going to probably a harder stance on what's going on inflation. This is Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz ISE. Good morning everyone. Jonathan Ferro Lisa Abramowicz and Tom Keene. Simon Curtis Bloomberg Radio Bloomberg Television. We economics finance investment. We do virology and we'll do it in this hour. Peter Hotez will join us here in a bit. He's been all over the media this morning. We're in our science questions of Dr. Hotez. Before we get to the president of the United States at eleven forty five this morning. John Farrell we're all on the virology world. Yeah we are on a felony to get away with Leerink get away from layering speculation on top of speculation here some as young announces a Goldman put it. And I keep coming back to that research note the range of medical outcomes is incredibly wide. Therefore the range of economic outcomes is still incredibly wide. And I know that's not much help. You're in markets right now. But it's our job to sit here and say we got to wait. Before you draw any conclusions whatsoever about this new variation we're gonna take a measured response to what we see here. Some of the frenzy out there. We're on high alert. No we're not. We're unmeasured alert. Angina measured alert to me is we really haven't seen adjustments by strategists off the shark. And they can't some they can't before. We know a couple of things. Is this one more easily to transmit to other people. Does it more easily transmit. Okay let's get through that. Is it more severe. The symptoms more severe. Okay. If they are then we've got a different thing to grapple with. And Tom ultimately can the vaccine still target it well enough. There are the three things you got to work out Tom for the next couple of days the next couple of weeks. And it could take two to three weeks to find that out. So you've got to go from there to a Federal Reserve decision in the middle of this month. And I think that's stuck between a rock and a hard place at a fat kid. I'm going to be rude here and stay with John Farrell from John. This headline out is stunning. It's a cultural headline which John you reported on many times from Frankfort 6 percent inflation in Germany. It's not 6 percent inflation in America 50 basis points north of the meat an estimate and going into an ECB meeting on December 16th. So you got the Fed on the 15th the ECB on the 16th were having a very different conversation. So let's set the stage as follows that the Federal Reserve are having a conversation now about accelerating paring back asset purchases at the ECB. We're having a conversation about how much flexibility gets taken from the emergency pandemic bond buying program to the more traditional bond buying program over the ECB. So pulling back at the Fed. Ultimately it's a change of character at the ECB. Juliette Saly. Kelly rereading him for the 5:00 a.m. show as well. What is a single research piece this morning that gave you clarity. Well there's been a number of them Tom. I think many of them as you both have been alluding to as there haven't actually been that many changes in terms of what the implications are going to be of this variant because we just don't know yet. And what does a day like Friday actually even mean. Was it really just a sell off based on Covid-19 or was as John alluded to and Peter cheer over at Academy Securities as pointed out it was something else. Let's go to the data right now. John I want you to jump in into and I'm going to mention Euro 112 81 is still a weaker year didn't get to 111. And you wonder what the front pages of the belt will look like. Bell newspaper in the coming weeks coming days come off the back of that inflation print. If he went through the price action the equity market has a left yields have left crude has a left euro dollar on the back foot to 112 80. But that's the moving crude 71 45 up by four point eight per cent on crude. Some we've had a left on Brent and WTI in the bond market yields high by 7 basis points that what 54 49. And just to build on something Katie said please. The move on Friday was so much more than just about a new variant. We've got so much more to grapple with here. Credit spreads and they're the way to the year. Not quite that Tom but approaching them. And that's something to get your attention. I've had a lot of people talking about the back end to 2018 a repeat of that. I'm not sure we're there yet. So that was a very different scenario. But credit is a place you need to keep focused on at the moment not just this equity market. After the vicious move on Friday for global. Wall Street the last four trading days of Standard and Poor's 500 of four point six standard deviation move from the enthusiasms down to the shock of Friday right now. And this is an immense joy. After Morgan Stanley desk Velshi took a operator as global director of fixed income research in an always interesting and fractious and healthy Morgan Stanley debate. Virtually the heart of your research note in the collegial response at Steve Roach and Vanguard is the idea of a three point six American unemployment rate. And you say the Fed won't won't raise rates to that wonderfully low unemployment rate. How does that happen. I think that I can a federal look at two things in the Fed will look at has to mandate or from managing inflation as well as managing getting to full employment. We think that over the course of next year we will begin to see our participation rate pick up somewhat and we will inch closer to where we were before the pandemic. And we think that will what economists really to be to be clear to think that if we get to that point offer a lift off in the first quarter early 2023 which is somewhat out of consensus view I would say just pair that up with your view on credit. They see that patient view on the Federal Reserve with your view on credit. So I think the view on credit two things here one is that the you know when you think about credit do you think of a default and the linkage between economic growth and cut it physically through. We go through the default picture and that before picture remains very constructive. You know given that the defaults are such low levels today we might see a slight pickup in defaults but overall default we a pretty benign outcome for defaults. Defaults will remain below the long term average. What we had been expecting and what we have seen over the over the longer period of time we will see defaults. There is staying a little below that long term average. That's the good news. The credit story is good. As you know it's the credit story is expensive and that's what we need to do. So that's a little bit more vicious. I imagine that's where you'll go next. Absolutely John. That's exactly what I was getting you know a lot. The markets are anticipatory. Markets know a all of this and a lot of this good news is already in price. So and if you start looking at where is the incremental opportunity in the credit markets. We think that incremental opportunity is more in the high yield sector as opposed to the investment big sector. And we didn't high yield sector more in loans than in bonds. Our reasoning is very sort of straight straightforward. This is the time we think is to take a default risk because we expect it to remain well below the long term average level. We expect the better opportunity is taking default risk or spread risk. Spencer. You know in the last few days we've seen some widening spreads. We still remain on the tight end of the offer a 24 month spectrum. So we think the best our best strategy for it is actually pick default risk. DAX one point says to prove what high yield and high yield points us towards loans as the best way of taking default risk versus taking spread risk. How do your expectations of how much supply just straight up issuance there will there will be in 2020 to factor into this if it doesn't mean we. So we we we take all of those factors into account supply. We've had I have we've actually gone through a pretty robust supply in even in the last month. And you know this year has been pretty robust supply period. We do take the supply into account now. We take into account those you know what we expect to be the effect of paper in the market. And you know all of those things we are reflected in our expectations about outcomes. Speaking of the taper and the effect in the market if the Fed doubles its pace of pulling back on stimulus if it at least doubles the extent there accelerates the way that it tapers. What's the implication of that. So I think you know a doubling of the pieces. You know I would have said before Thanksgiving I would have said that that more of that is getting placed into the market. Certainly with this new information on Friday ready with the con ready and a lot of those questions which I think John rightly said at the beginning a lot of the things are unknowns and we really don't know what. We still have to wait for that to be resolved. So with the you know a faster withdrawal of accommodation in some ways you can put that would be it would be broadly you somewhat better. They go to the credit markets. But I think in the overall scheme of things which is they go back to things saying where should we take credit risk again bet on defaults and not on spreads. Vichy great to catch up. Can I just say I've really enjoyed the outlooks coming out of Morgan Stanley over the last couple of weeks. Thanks for sharing. Obviously it's good to see a vicious reporter there of Morgan Stanley on your credit market and the march towards payrolls Friday. And let's be clear about payrolls Friday. I've got no idea at some how sensitive this market will be to incoming economic data. Given how much we don't know about this variant do we respond more to a softer print than an explosive really really strong jobs print this Friday. I'm not sure. Tom Mackenzie by the time we get to Friday and frankly even to tomorrow. Are we going to see first cases as Dr. as she talks about in America of Emma Chandra. And should we respond to that. No I don't think we should. Tom let's be clear about this. Most people believe it's already here. What matters is not if we have a couple of cases in America we're gonna have those headlines. You know we will those headlines will drop. A case found here a case found there. What we need to know is it more contagious. Is it more severe. And does it escape vaccine protection. That's the questions. The answers we need to find. Here's the headline. This is off. Morning Joe. This morning for our international audience there's many cross purposes and messaging within U.S. health CDC and the rest of it. This from the National Institutes of Health. Collins The leadership at NIH I'm a crime probably highly contagious. And as a science John I see two adverbs there. And that's always not good. Probably two adverbs probably highly. That's as unspecific as you. And then some even if that is the conclusion then you've got to work out how severe it is to do that is going to take a number of leaks highly. Then from there you've got to work out as it escape vaccine protection. And ultimately because it's more contagious does not necessarily mean it's worse if it's less severe. If the symptoms associated with it Tom are less severe then that's approaching what a lot of people have been looking for for a while which is the end game type stuff of something that is more contagious but ultimately less severe. And we can work with that. John this is important. I mean where would we use that. We will probably Haidi Lun a highly toxic. And isn't that an issue Tom. They can't they can't give you any conclusions because there isn't enough data to draw any conclusions right now. So for all the hyperbole that you've seen in a meter over the weekend I think it's tremendously unhelpful. I'm going to repeat a sentence. We've said all morning we've taken some criticism for it. We don't know. Why can't people just say we don't know. We don't know. Probably highly. Probably highly. We don't know. There's probably not very helpful at this point. Jennifer Lee senior economist at BMO Capital Markets is going to join us a little bit later live on radio and TV. This is Bloomberg. With the Paul Sweeney numbers could get you a warning from the World Health Organization it says a new Omicron variant could lead to surges of the Corona virus with severe consequences the very it was first detected in South Africa. Scientists there said it appears to spread more easily. The W.H. assessed on the Crohn's risk is extremely high. Airlines passengers and businesses had to respond to a deluge of travel restrictions announced over the weekend. There was an initial spate of flight bans from southern Africa. That has given way to wider ranging measures that will make travel more expensive and less convenient. Black and its allies will discuss the impact of the OMA variant at that meeting this week. That's according to Russia's deputy prime minister. It's another sign that the Open Press Coalition may reconsider its planned production increase in January. And in Sweden the parliament has once again voted to make Magdalena Anderson prime minister. Anderson will. My one party government. After narrowly winning the vote last Wednesday Anderson became Sweden's first female prime minister. She resigned the same day when her junior partner in the government quit following a defeat over the budget. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than a hundred and twenty countries. I'm which could get it. This is Lindbergh. I think it's time for a change in policy at the Fed. And I was of the view that this may be easier with someone who hasn't repeated over and over again that inflation is transitory. Don't worry about it. It's going away. Inflation is not transitory and it's really important for the Fed to realize this. Mohamed El-Erian speaking over the weekend to Fox News Sunday. Always great to hear from Mohammed. Hopefully hear from him a little bit later this week on Bloomberg as well from New York City on Blowback TV and radio. This is Bloomberg Surveillance alongside Tom Keene ISE Jonathan Ferro together this morning with Candy Lyons. Alisa back with us a little bit later this week. And here's the price action for you shaping up as follows as we kick off a brand new trading week. Your equity market has a left. It tilts higher by 36 on the S & P up by eight tenths of one percent yield to high 2 by 7 basis points to 154 66 euro dollars negative for the dollar making a comeback against the single currency and crude T.K.. That's the move for you. Up by three dollars in about 40 cents by five per cent. Current course. Seventy six dollars on Brent crude up three dollars 25 cents. Of course a JP Morgan note this morning after London NASDAQ a bit of a shock. One thing we will do John and Kelly will probably and highly look at the data this week. We have the right guest for that. Jennifer Lee joins senior economist at BMO Capital Markets who probably and highly always looks at the economic data. What matters this week. Jennifer good morning everyone. Of course is going to be all about the jobs data. That's always the highlights. Almost every single month. But you know what. I'm going to point to the ISAF survey. As to service I think are going to be far more interesting than payrolls because that's where you get all those little comments and an inside look basically at what purchasing managers are facing these days like sources like on the ground news. And we know that these supply chain problems can't last forever. And I think these two surveys are probably going to be the first place that you can probably glean that things are hopefully getting a little bit easier. I was hoping to see that last month that we didn't see it. So we'll see what the pundits respondents are saying for November. But it was interesting though I will say that last month I thought that a couple of them were mentioning some work arounds like because they don't have you don't have X. Well then we'll take Y. So I noticed that comment. And like the education sector it and wholesale. So people are trying to deal with people are adopting or businesses are adopting and they're figuring out ways to get around these supply chain issues if the economy is harming in the year end. And certainly that's the reports we've received. Can you gauge what the first quarter of next year looks like. So right now we have a three and a half percent annualized gain for the first quarter. This will be a little slower than that than what Republicans see for the fourth quarter. But again it's all you know is all within within the trend. It will still be about you know about 4 percent above year ago levels. So the gains will continue. And this is as we see some some easing I guess of the supply pressures as as the year begins to these forecast. Jennifer now have a huge asterisks next to them until we find out a little bit more about this new variant that we're obsessing over over the last week or so the last few days. Oh everything I think has an asterix around it but I think there's like I mean even the weak and I mean I will admit that I was even trying to figure out to pronounce it. But I think we have to figure out. Still there's so many unknowns about this new variance just trying to determine how serious it is you know. And yes we know that it's easily transmissible. But you know we're gonna be back to Pax ISE to use you know let's hope not. Yeah I think that's that's a big question mark as well. I mean this is the big difference from last time around like last year is that you know we've got around 70 percent roughly of the population are vaccinated. And that's the huge difference. Now whether or not it will be effective against this particular variant we will see. But it definitely helps bar some of those effects. I would think we've got to wait to find down the reason I asked that. Jennifer as you tee up the ISE Sam typically I would say I'd say the ISE send that on to pay roll was a really important week for economic data for many market participants right now. I wonder how sensitive they'll be to that incoming data given the conversation we're having more broadly about Covid. Jeff when you speak to people in the market right now how receptive are they to this message that you should focus on the ISE this week because they're focusing on something else. I still think we have to focus in on the data. And a lot of this again is just fear especially with with with Covid. And you know everyone is it's odd. It's understandable why we would be fearful of something of a big unknown. But I think the data's still matter especially for the Federal Reserve. And as we see you know price pressures rising continuously the oil we're going to expect some sort of a rate hike in probably the third quarter of 2022. Well Jennifer speaking of fear and price pressures we've seen consumer confidence waning at the same time that you're not seeing it translate into consumer spent CAC spending or consumption. They are still out in the economy. They are buying are maybe using those stored up savings in order to make purchases of items that are more expensive than they were say six months ago. When do you expect the consumer to start feeling these inflationary forces more. I think they are already facing it. And that's why we're seeing some you know some wavering I guess on the consumer confidence front. But at the end of the day I mean that also depends on you know on on. I hate to say it but the time of day and what day of the week that they're being asked this question. But at the end of the day it's all about savings and incomes. And we saw from last week a very solid increase in wages and salaries which at the other day that's what that's really what matters. And having a nice little nest egg put aside for a rainy day. And I'm sure we're going to have a quick few of those in the coming months. So I think that at the end of the day is just what matters most for consumer confidence. And of course everyone is not happy about all these are increasing and increases in prices. But as long as they have the incomes to afford it you know I think that's you know that's the bottom line of that. What do you expect we'll see from the wage data specifically on Friday. So we are looking for an increase of about four tenths on on earnings about 5 percent year over year. So that's basically in line with the last average of the last seven months or so. Again steady increases to help you know Pat everyone's wallets and savings accounts because the labor market remains very very tight. And who knows what's gonna happen with this new variance if it's going to put pressure on people to you know perhaps not go back to the workforce and as quickly as they were thinking about. So then you're going to see higher wages coming from the businesses to help entice them over. Jennifer Lee always good to hear from you. Thanks for being with us. Jennifer Lee of BMO on the data for the week ahead. The ISE come in on Wednesday and then on to Friday as payrolls Friday. This jobs market through the whole of this year has been incredibly incredibly unpredictable. We've talked about the wide range of estimates every single month. When we get the payrolls report so I'm just a 425 thousand spread now 800 CAC the high end just the low end 375 Katie. I say just the median 535. But some come on 800 of the high end 375 at the low end. We've got no clarity on this lately as two Americas. Maybe the president will address it today as he has in recent comments that you've got a fully employed bang up Tom Keene economy and you've got a whole nother group of Americans just simply not participating. What I find in the pandemic and before the pandemic is accentuated inequalities there. I've got a ton of respect some for the economists on the street. You know that so many of them are good friends of ours in this program. We still throw a dart some way when we hear from BMO and they say we've got a tight labor market I can find someone just as educated just a shop with just as much experience on Wall Street saying completely the opposite thing. That's what makes the argument. But we're so divided that I know and I'm going gonna go back to the technology overlay here. There's a whole group that is you know the Amazon and Target and all the rest of them booming those warehouses booming and just fully employed. America you can't get labor and then you can't. They're trying to work it out. Jihye Lee 800 of the high end 375 at the low end. Forecasting has been impossible in the pandemic economy and that remains true. It's been true for some time and it's true consistently. Every single jobs report we've gotten for what seems like months and months now. Remember that when we get the new economic forecasts from the. Reserve on December 15th. What are those forecasts worth. In an environment like this what the dots are stocks are coming up the dots you excite about the dots. The dots a few weeks away from New York this is Bloomberg. It's a turnaround Monday. A little one and unconvincing one for some of you. It's the price action. Done it with your equity market. Equity futures bouncing back on Friday. The biggest one day loss going back to February of this year. This Monday morning up eight tenths of one per cent on 10 year yields. We were down 16 basis points on Friday. This morning we're up seven on we were down 15 basis points at the front end. A real repricing and then a little bit of a bounce again on a two year old this morning. If you take a look at crude WTI was down about 13 per cent on Friday. This morning it's up by five point three per cent seventy one seventy five. Just a nice day Tom. If the turnaround we're having this morning in the context of a drawdown that we saw on Friday. A lot of people looking at this and saying I'm not so convinced. Yeah it has correlated turnaround. Everything sort of linked together here. We don't need to spend a lot of time on this but it's there. And again I'm watching the VIX just as a single litmus paper 24 points 7 7 where it was hours ago. It got worse in the last two hours. It's come back a little bit. A little bit of enthusiasm to bring up hurts quickly. Two billion dollar program. We've got a big thumbs up for the free market. I want to be careful here and just stay with facts. This is an IPO of November 8 98 percent debt. It's two point. It was a one point two percent equity. Wait. All of a sudden they come out with the share buyback and came out of 29 down to 23. And they announce a buyback today. And they're doing this with the fiction of a financial statement. It'll be interesting to see. I don't have any strong belief here John. Other than it's odd you're comfortable using the F word fiction. I'm I'm sorry. I'm just looking at the Bloomberg. OK. Keep it. They got some generation able. I'll give them that. But the massive cap ex going on you get cash from operations not that much. And I got free cash flow which I guess is going to flip in the next 12 months to billion dollar buybacks. Help stocks up in a free market. Eight point seven to surging. Is that a surge. The surge is a surge of almost 9 per cent. Let's get back to the market. And I want to look now at the summation of equity markets and then off the bid. NASDAQ Michael Barr is very good at that movie maybe from the theory and 60000 feet down to actually. What do you do now. He is. Chief what do you do now. Strategist at Jones Trading. And we're thrilled. Michael Rooker join us this morning. Michael I look at all of this and it's simple. Forget buy the dip. It's buy the fear. And you say buy the fear. Well I say fear. The fear I guess is the best way to describe it because it's still questionable about the equity market here. We saw some notable weakness last week where on Monday we hit all time highs for the S & P 500. But simultaneously we got a thousand new lows on U.S. exchanges and then we had another thousand new lows on Tuesday. So I do wonder if some of Friday's action was actually just this little latent weakness in the U.S. equity market or a tired bull market. Whereas on the flip side a lot of these other moves like you guys mentioned energy bonds those are all moves that I would take the other side of Friday's action. So another group that was weak on Friday was that value space which are in favor of growth. And again by buy that value space and so that growth space. So with the exception of the S & P 500 soft I would take the other side of Friday's action. Was it a correction on Friday. Can you have a one day correction. Well that's the problem. And that's exactly what I think is the issue here. You're talking about making your all time highs on Monday. We have a two and a half percent sell off on Friday. It's going to take more time than that. The closest incident we've ever had to that with you know such a level. New lows reached so close to all time highs was back in December 2014. And for the next three to six months we saw a lot of volatility with the equity markets without the S & P 500. Much meaningful progress. John is a correction of two point three one percent a two point three percent correction. It's still close to all time highs. Rushed not far off them anyway. Mike you picked up on something I think is important. What does it say about market conditions when we could switch so easily from one extreme to another almost instantaneously. We've gone from inflation's too high. The Fed needs to go quicker. So we're facing a lockdown. That's what people were talking about on Friday. Just one extreme to another. Just like that. I I think it's a lack of confidence. I think people are unsure what's going to have to play out in 2022. And that's for good reason because we are looking at a change of regime. We're looking at a Fed that's facing real inflation for the first time in 20 years. Now it's probably more like 30 years. Sorry. So so you know for the past 13 years every time we had a dip in the markets the Fed could always step in and support them. And they had this luxury of a benign inflation environment. That environment doesn't exist now. Yes. So it brings a lot of caution and. Know the tentative nature to the market that I think again I think that's why we're seeing that that underlying weakness in equities you don't see it because the big six NASDAQ you know momentum mega cap names support the index. Well beyond that you're seeing weakness elsewhere I think is also going to show a lot of your own tax loss selling just because of that underlying weakness in the tape. Mike you've picked up on something so so important. Peter chair of Academy Securities brought it up. Jim Bianco of Bianco Research earlier on this morning on this program boarded up as well. With this backdrop the Fed put its less durable. And with that in mind. Should we get used to more episodes like what we saw on Friday. And was that just about a mutation of Varian that got on everyone's radar. Or more broadly does it tell you something about the market conditions we're likely to experience over the next several months. I think I think it's the latter. I think it's there's gonna be a little more volatility. The path isn't quite so clear. The Fed does have its hands tied. Obviously they've stuck to the trends transitory argument all year. Nobody in the market believes that. So again any any step back from the current policy path is really going to be scrutinized. And I think they're going to have a challenge there. So for the time being you know. And Chairman House says it repeats itself although he hasn't acted on it. That the Fed is not supposed to react react to movements in the stock market. So obviously we'll see him on Capitol Hill tomorrow Wednesday. We'll see which post you know how he talks about inflation things like that. But it's definitely a different environment than the one we've experienced for the past two years now and the 10 years before that. So we should see how IBEX 122 plays out but it should have a little more volatility does not mean it starts as it's time to start buying protection. Mike. Well when volatility is low it is generally a good time to prioritize action especially with the combination of prices being high. So I've been on the more defensive side of the tape to begin with. Either way I've been pushing the value trend. I think value is as attractive versus growth as it's been and probably ever. But we're testing the lows we made last year which were in the fall. So I think that's one way to play it is. You know I've talked about the financials. I really like the banks here. I like to the recovery. I like them for the rising rate environment. You look as a group like energy. You know the energy policy in this country has now shifted to we don't want to drill here. So the guys who are drawn you are going to benefit from that because they're going to have a competitive advantage and there's going to be less to fly out there. So I think it's these structural shifts out there that you have to identify in the market and that's what you want to play. But more broadly speaking the major indexes are are driven by these mega caps that have had incredible runs. And you might want for protection against any type of weakness or consolidation among them. Well wouldn't that mean weakness or consolidation for the broader market given how much weight they pull. Hundred percent. That's exactly it. And that is why that is why you want protection for that for the broad team because those big names drive the major indices. My final question is the Christmas tree up in the royal household. It's not up but we picked it up yesterday. Picked it up. Was it fake or real. Might which will miss it. It's real. It's real. And we have to go. My someone who's home from school. Tom Keene proud. You proud of that. I'm proud of that. But the real issue John is you have to understand you have white cutesy pie lights like you have little perfect little white lie lights if you have to have ugly big ugly colored lights where a number of them are out. And so you move that tradition you've always got what I had as a kid. This is traumatic. You always have too many orange lights and not enough. Well the model is one. The Bobs. Yeah I might go out and you'd have to replace them. You know I used to plug it in. You're back with Richard a 14 foot trio. Plug it in. Staten Island would dim. But you know it's changed now. He come with you've got the multicolored was ready with a smaller tree this year because Colonel Fee just is just out of control. Mike thank you sir. It's good to hear from you. Michael Barr there. Michael's like what do we do. You know it's an important moment somebody to talk about that coming up on the open. Correct. Leaders peach. You mirror. See I. Oh we'll catch up with Greg ISE. Tree is all orange lights. Oh how cute. Well she said if you've got the lights up go down River City. See they're all yellow. Had a go at me a couple of weeks ago. Forget in this tree up. There's a scramble. Scramble now. Just I don't think I'm getting it out. There's a scrap going to take a CAC just moved over it. So this is it. There's a monster scramble to get the tree up now just like where are you going. I'm not going. They played the music. I was going to leave it. And I looked at the clock and they played the music too early. They did it. Guess what we've got. Guess what we've got. We've got a minute and 40 seconds to burn. So at 9 a.m. you're going to drive for the story. Seriously goes out to the president at 11:00. Now we got to talk about credit. Where credit Peters. Yeah there's more going on here than just obsessing over there. I think it's important to talk about that and I think it's important to work out a questions. We need to have answers. It's important to recognize we don't have the answers to those questions. Is this a more contagious. Is it more severe. Does it stand up. The vaccine is going to take a couple of weeks to find that out. But what we saw in credit and the issues around it were a continuation of the story through much of the last month. Tom there's a worry about this fad needed to Paul Sweeney is a bit more quickly sold Peters out to nine o'clock and I saw Peter Hotez coming. Absolutely. And you should do. Peter Hotez folks is one of the most original guys here. The privilege of being at Rockefeller University and the absolute ferment of the invention of MRA in a and all of that theoretical virology stuff John. And he's just such an authority. And I'm going to grill him harder. And we've got to work out some the right sources to go to over the next couple of weeks. When you hear from the vaccine providers say things like it looks like we're going to need to change things up to address this particular matter. Then there's the correct of a degree of skepticism around the message that would come from the vaccine providers who quite clearly Thomas got some skin in the game although the providers is one thing. But here's the thing. We got 59 percent of the president's going to come out John. Who is going to say what does it take to get the 69 percent total vaccination. Maybe this is the event that does it. You can play the music now and kill Tom Keene. I get a royalty fabric every time they play that music. Candy nice that you design this music. No I did not design the music. Got to say is this your fences. No no. From New York. This is Bloomberg. With the votes these numbers could get to the World Health Organization warns that the new McCain variant could fuel coronavirus surges with severe consequences. The agency calls the variance risk extremely high. McCrum was first detected in South Africa. Scientists there said it appears to spread more easily. A number of nations have now imposed travel restrictions to try to contain the variance transmission. But Anna says it could have a new vaccine ready to fight the Annmarie Horden variant by early next year if required. That has the company shares rising. Meanwhile Beyond Tech is trying to adapt its Covid vaccine to handle Omicron the German Beyond Tech and its vaccine partner Pfizer put plans into place months ago to ensure a new version of that shock could ship within 100 days. President Biden meets today with CEOs of companies from a variety of sectors. He'll discuss supply chain bottlenecks and the administration's efforts to combat inflation. Chief executives from Best Buy Mattel Kroger and Samsung are amongst those expected to attend in person. The CEOs of Wal-Mart and CBS will attend. Virtually shares of Hertz are rising today. Free market. The car rental companies announced a two billion dollar stock buyback program. Hertz went public earlier this month after emerging from Chapter 11 bankruptcy protection. The company has thousands of locations under the Hertz dollar and thrifty brands. And the most high profile black figure in luxury fashion has died. LVMH star designer Virgil Adler with battled cancer for several years. He was 41. He was known for his influence on streetwear and sneaker culture and for his success in revitalizing Louis Vuitton global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 20 700 journalists and analysts in more than 120 countries. And Rich Kid Gupta. This is Bloomberg. This particular area has a number of concerning mutations that resemble some of the other variants that we had. None of those variants totally escaped the vaccine. None of them were like our worst nightmare come true. And we have to go through the process of studying this variant. While we continue to be vigilant. Professor Sharfstein Joshua Sharfstein vice dean at John Hopkins they're on the domestic story of AMA Crown and all that we've heard about since Friday the shock of a variant. Well we knew there were variance there but the mystery I should say of this variant right now Kailey Leinz and I with our conversation that day and it's with the gentleman Peter Hotez the dean of the National School of Tropical Medicine at Baylor College with far more than that someone who has fought the virology and virus wars in the Paris histology wars for decades. The difference is Peter Hotez understands a tropical medicine of Africa the challenges of the geography of southern Africa that we don't understand. Peter to me that's so much the mystery here is how ignorant we are about what needs to be done in southern Africa. We don't understand. It's larger than America on a geographic basis. Yeah you're absolutely right. If you actually were to superimpose a map of the United States and the African continent it would barely registered. I mean the African continent is vast geographically. And unfortunately the rate what we have. The one lesson we've learned about the worst variance that we have is they arise out of large unvaccinated populations. The alpha variant arose out of an unvaccinated population in the UK in 2020 dealt out out of an unvaccinated population in India in 2021. What did people think was going to happen. Allowing Africa the African continent to go completely unvaccinated. This is not hookworm and you've been leading on this for decades. You did your puja thesis at Rockefeller on the horrific tropical diseases the parasites and and all that. If you know the terrain what holds the rich guys back from helping the poor guys. Is it is it a I think a normal constraint a financial constraint or is it a moral constraint. It was the way I see it. Tom was a science policy failure. The G7 countries are so fixed when this virus hit on speed and innovation that they all ran like little kids soccer game where the ball goes in one direction. It was all about MRO new technology and new new and exciting. You know what I sometimes say and my frustration shiny new toys that that no one ever gave thought is any first year engineering student will tell you that when you have rely exclusively on a brand new technology there's a learning curve. Before you can go from zero to nine billion doses or 9 billion of anything whether it's widgets or MRI new vaccines if it's a brand new technology there's a learning curve. And so there was never the situational awareness among the G7 leaders to say hey wait a minute. We also need to balance the portfolio with an older technology that we know we could scale in places like India and Bangladesh and an Indonesian on the African continent. And that's what we did. So we've developed this recombinant protein vaccine. It's been licensed with no patents no strings attached to vaccine developers in India Indonesia Bangladesh and now with the developer linked to sub-Saharan Africa. And we're doing it and we're making it. But if we had even a fraction of the help that Madrid or Pfizer had gotten from the G7 countries we might have had the world vaccinated. Peter you talked about policy failures. Is just imposing travel bans from southern Africa a policy failure. I think it is that we we've we've learned that travel ban simply don't work. We learned this from the beginning. Right. We remember how and in February of 2020 everybody was so focused on travel bans from China. Meanwhile the virus had already entered into New York City from southern Europe to ignite that horrific epidemic and across New York City. So we know that this virus is already spread around the world. And that's not because not because there's anything unique to Omicron that's been true of every variant that we've seen so far. By the time we identify a variant it's already it's already gone global. And and so I think a lot of this is based on optics where the especially in the European Union and now the U.S. they want to show that they're doing something. And unfortunately it's incredibly self-defeating. It actually impairs our ability to fight the pandemic number one. And number two it punishes African countries. And number three it hurts the economy because it spreads unnecessary panic among investors. And and so it's it's a policy failure on all accounts. Well we did see that panic in the markets taking shape on Friday. This Monday morning we're getting a little bit of a lift to them now as people really understand that we have very little information at this point. What information is most critical to ascertain first. There's three three things we need to know one about the severity of the illness. And so far it does not look like this variant is producing anything unusual in terms of symptoms or severity of illness. But we'll know more. Second we need to know if the vaccines are current vaccines will cross protect against the Omicron variant. That's what we're doing in our lab our laboratories this week with our vaccine as I'm sure Pfizer and Madina. And the way you do that is you measure. You look at antibody responses to your vaccines and showed that across this neutralizes the Omicron variant or what's called a pseudo virus variant. And we'll know that in the coming days. I think there's a good possibility that with third immunizations and that boost that you'll get enough virus neutralizing antibodies to cross protect at least partially. I don't know that for certain. But but that's the hope. And then we really need to understand the transmissibility. We don't know them. Peter one final question. I really looked at the vaccination trends this morning and I think what we're gonna hear from the president is we need to get from 59 percent vaccinated to sixty nine percent vaccinated. How quickly is that doable. While 69 percent unfortunately won't cut it we need 85 percent of the U.S. population vaccinated. And you know Tom we've got this horrific situation in the United States where since June 1 2021 one hundred and fifty thousand Americans who refused vaccinations needlessly perished from Covid-19. Hundred and fifty thousand or so anti science defiance and aggression is now a leading killer of young Americans in the United States. And as long as we have that defiance it's going to be hard to see how we get to that 85 percent level. Peter Hotez thank you for joining us particularly a perspective on southern Africa. He's with Baylor College as well. Kelly a lift to the market. I've sort of been waiting for this this morning and that we get a little bit of an authority. Dow futures up 240 have become Dow futures up 360. ESPN futures up 50 as well. And Kelly the VIX comes in. Yeah and it seems like the move may have been led by oil time. Tom. WTI now up better part of 7 percent about six point six percent. Right now we're back to 70 to sixty seven a barrel. So right now we're up at about half a half of Friday's loss is being gained back. And that is true too when you look at equity futures. So maybe the bounce is becoming a little bit more convincing. There's a little bit more gusto as we approach the opening bell. Please stay with us on Bloomberg Radio and Bloomberg Television through this morning as we work towards the president's address to the nation. I believe again 11 45 is the schedule for that back rested from Nantucket I presume. Got lots more coming up. Good conversations on economics finance investment and yes highly improbably virology. Coming up the chairman and chief executive officer of Pfizer. This is Bloomberg. Good morning.

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'Bloomberg Surveillance Simulcast' (11/29/2021)

Tom Keene, Jonathan Ferro and Lisa Abramowicz have the economy and the markets "under surveillance" as they cover the latest in finance, economics and investment, and talk with the leading voices shaping the conversation around world markets. This show is simulcast worldwide on Bloomberg Television and Radio.

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