thet's important for credibility of policymakers to follow through on the commitments they've made. >> the market has gotten really negative about the prospect of future inflation. >> you are going to have a pretty big decline in disposable income in the third quarter. the reason is you've had so much of that stimulus in the second quarter. >> this is "bloomberg tom keene,e," with jonathan ferro, and lisa abramowicz.

edward: -- tom: good morning. wfh, as the jargon now, you work from home. when do we all get back to the office? we thank you for watching. a really interesting wednesday. there are a lot of political moments, there's international relations. in the market, i'm sorry. i started out this morning with on, and all much going now a bid to equities once more. jonathan: you the word crosscurrents. i think that is the right word this week. we have better-than-expected data in the united states. i think the data right now is absolutely critical. the federal reserve has played a huge role in this market, and clearly that is exacerbating

this, but the veracity comes from the better-than-expected data. you have to say that this rally tracks that pretty well so far. tom: lisa abramowicz, what have you learned about the efficacious nature of fed policy? is it helping right now? lisa: it is helping to push down yields and push up prices of assets across the board, and certainly hoping to encourage companies to borrow money. it was an incredibly busy day of issuance, trying to raise capital at a time when the fed is going to double down on its bond purchasing program. kevin warsh raised it last hour. is this getting to the main street economy? are we getting a trickle down from all of this corporate

borrowing at low rates into the real economy? i don't know the answer, and i think that is the question a lot of people are wondering. tom: before we get to our esteemed guest, what is your reading right now on the fact that seven stocks are to the moon? we see that in the nasdaq 100 andthe spx, to an extent, such a huge body of equities aren't participating? what is the sum of the research you see on that? jonathan: that has changed over the last month and a big way. the cyclical rotation is still there, and slowly becoming a consensus call. but as lisa has pointed out many times, for every jp morgan that has rallied, there is a bankrupt company that has somehow caught a bid. there's clearly a misallocation of capital. the fed has an objective to achieve the pro covid economy -- the pre-covid economy. what we will see quite clearly is loose financial conditions that will benefit pretty much everyone at the same time in this market. there were haves and have-nots,

and now far more haves. what i want to understand is what these companies do with the money they've raised. we have seen serious amounts of capital over the last several months, with pretty much no conditions attached to that money. they have tapped the debt market. the markets applies the money to them. in the months to come, if those very same companies start to think about pulling down their debt load and cutting jobs, there is going to be huge pushback against what has happened over the last several months. we have seen phase one. phase two is pay the bills. tom: particularly out of washington, we see those tensions as well. right now, jill kerry hall is with bank of america. she is focusing day in and day out on the grand theory of small and middle capitalization equities. we are thrilled she could join us this morning. and mid-caps find

a bid? when does that happen? jill: thanks for having me. we have been cautious on small caps ella tip to large caps in march. -- on small caps relative to large caps in march. we have seen even though small caps are down more year to date, we have seen a bit of outperformance of of the lows. so i think there's a lot of optimism on the recovery. aroundl have concerns payback. a lot of the market rally so far has been boosted by liquidity and stimulus. if you look at a chart of central bank balance sheets versus faang stocks, market cap

in the fnp -- in the s&p, it is the same chart. as we move to that phase, there is no question that retail sales have been strong recently, but we are not expecting this initial v off the bottom to persist. i think you would want to see a little more confidence in the sustainability of the recovery, but we do see risks that this is more of a u-shaped, even if we do see an initial v off the bottom. jonathan: i think your colleague michelle meyer put it really nicely, that there are three phases. then the real recovery starts, the real slog. she describes it as climbing a rope. it could be quite difficult in the months to come. i am wondering how you align your exposure to cyclical areas of this market with the work michelle meyer and the bank

of america team is doing. jill: michelle does some great work, and it is a good analogy. i think she called it a trampoline to a rope, where you have an initial bounce, but a tough climb from their. i think even though we are relatively more cautious on smaller stocks, medium-term versus large as the economy continues to go through small caps and small businesses are more exposed to the headwinds from covid, and also escalating trade tensions which we expect to remain a headwind, that was one of the key reasons small caps underperformed in 2019, but i think there is still a lot of opportunities, as you mentioned from a cyclical rebound perspective, from a sector perspective. value is an area that we've liked within the overall markets. caps, thethin small key is you just need to be selective. small-cap value has been

increasingly synonymous with leverage and risk within the segment, not so much in large, but still a lot of opportunities. we see financials as a sector that looks attractive across the segment. the value theme should benefit from the rebound come up but also higher quality. tech is a sector we are equal weight in large caps. still a lot of growth opportunities, clean balance sheets. we do see areas within the market that you can still find opportunity. investors, the dispersion of valuations over the market are very high. lots of very cheap stocks and very expensive stocks. lisa: i want to go back to this , and recordack levels in the united states will have to come down, supposedly.

i am wondering what the consequence is. if this had postponing the bankruptcies of a lot of these companies, or are they actually companies frome going bankrupt at all and being able to extend their life? jill: i think it could be some of both. especially within the small caps, as our economists have pointed out, a lot of the boost we saw to the jobs numbers this past month came from the ppp program. even with the extension, the terms get a little tighter there, so as we move out into the summer in the fall, things could get a little more challenging from an employment perspective and for some of these businesses. as you mentioned, leverage is a major concern right now, especially for larger companies come where leverage ratios are at record highs. they have benefited from access

to cheap capital for the last 10 years, and more of their debt is high yield. they have shorter debt maturities. that is a major concern. when you look beneath the surface of the risk rally we saw over the last month or so, when you look within small caps, while risky stocks have outperformed, the other factors that have still been outperforming is stocks with clean balance sheets and stocks with a lot of liquidity. i think investors are still honing in on balance sheets and looking to invest in companies that can clean up their balance sheets and have stable cash , so i think there's still opportunity within small caps to own companies that are more cyclical or attractively valued, but making sure to avoid those potential levered dividend cutters. jonathan: fantastic to catch up with you, as always. our best to you and the whole

team at bank of america. this market continues to have a lift, up 17 points for the s&p 500. the debate at the moment, and increasingly shared view, that you get the sharp oz back out of a contraction as we reopen, and then the difficulty, the longer slog starts after the summer. for equity strategists, you've got to work out cyclical exposure as you work through those phases in the months to come. a levelt's true, but on basis. as mike wilson mentioned earlier from morgan stanley, you get back to rate of change, and the answer is if the first derivative is still good, the directional feeling is good, it begins to feed on itself. sometimes that can go too far, but there can be a second stage to that sharp snapback. jonathan: tom, that whole analogy drives me crazy right now, so let me give you another one. let's say i have 100 flights a day in capacity, and i am an

airline, and i have five flights in may and doing 10 flights in june. rate of change looks great, but where do i break even? how much capacity, actually utilizing at the company? at some point, shouldn't we move away from rate of change and move into capacity to utilization and where companies can make money? tom: the massive variable there is fixed cost versus variable cost. i can't conflict that over to the stock market, which i don't think is really working with the auto companies, clearly. but the airlines have such a massive fixed cost, they are playing by a different rulebook, and it is not pretty right now. jonathan: much more still to come from new york this morning. this is "bloomberg surveillance ." lisa: with the first word news --ritika: with the first word news, i'm ritika gupta. brazil has reported a record number of daily cases from the coronavirus. there are almost 35,000 new

infections, bringing the total to more than 900,000. brazil is second only to the u.s. in cases and deaths. meanwhile, beijing has escalated containment measures to deal with a growing outbreak. more than 1200 flights in and out of the city were canceled today. the trump administration wants to renegotiate america's tariff commitment at the wto. u.s. trade chief robert lighthizer will tell congress today that many other countries maintain high tariffs, and he says the u.s. must make sure its own tariffs protect exporters and workers. the administration has argued that trade rules have tilted against the u.s.. americans are taking advantage of near record low mortgage rates. applications for home loans have had their high level since 20 2009 -- since 2009. it was their ninth straight weekly gain.

global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> these kinds of aggressive policies do lead to misallocation of passable -- of capital, do lead to financial assets that trade better than

real assets, and that is a certain unfairness to that, so this is not a time to have a philosophical discussion inside the four walls of the fed. jonathan: former fed governor kevin warsh there in the last hour. this is "bloomberg surveillance ." alongside tom keene, i'm jonathan ferro, together with lisa abramowicz. getting human shape for the market day this wednesday morning, good morning to you all. have a-day rally, and we little bit of weight to it ahead of the opening bell, up around 0.6%. as we wait for day to of chairman powell in front of the finance committee today, the 10 year going absolutely nowhere today. on the 30 year, up to 1.55%. euro-dollar slightly negative on the euro, slightly stronger dollar. euro-dollar down 0.3%. tom: absolutely, and i really can't say, i loved hearing kevin

warsh there. that was quite a good interview. what i think is so important here is the belief constructs people are making up off the fed meeting. the idea of the dots being flat for two years. two years is a long time. do you know where we are going to be in 22 are 24 months? jonathan: i can't tell you, but many people think we will be low for a whole lot longer than that , and that it will be 2022 before we start to see a rate hike. tom: is it a dampening? that is the big debate. jon and i had a legendary issue with the people at bridgewater at davos, and it was a huge issue. do you get a dampening function in fixed income as you go down to the zero bound? we get an update from matthew ubs and credit

strategy. do we get a dampening and markets? -ness becauseeaden we are going zero bound out for the next two years? matthew: i think what you have seen is the fear of missing out, and certainly the reach for yield has intensified. in credit broadly, high yields and inflows have been best example of that. we have gone to pre-covid levels, up about 40%. from our perspective, it is really portfolio rebalancing acceleration. to us onen a surprise the high-yield side. you had equities dip pretty significantly and lost a couple hundred million in high yield fund outflows, but the money came right back. really, what we are seeing is a pretty aggressive reach for yield as we sit at zero, and

that is expected to sit at zero for several years. our house view calls for yield curve control later in september, all of that feeding the grab for some type of income and annuity. lisa: and this is being doubled down on by the fed, which is been engaging in corporate bond buying, and announced the second phase of that this week, where they are expanding the universe of credit that they could potentially by. evidently, according to bank of america, now the universe they can buy is about $1.5 billion. how big is the fed footprint going to get in the corporate bond market? matthew: we have been expecting commenceo essentially individual bond buying purchases. there was concern in the market around their ability to do that, issues,or certification

and basically them selecting winners or losers. so they need a creative way for the fed to create a basket buy bonds. our numbers are a little lower. debt,got $1.2 trillion of taking into account the variety of hurdles the fed has. but i think the point is what powell said yesterday, that all of this is proof to the market that they are going to essentially do what they say. the telegraphing has been amazing. credit spreads have retraced 7% to 8% from the march wides. our expectation is for the full 12 months, they buy about $70 billion in etf's and 75 billion dollars in individual bonds through this broad market construct. but the latter program, i would reemphasize, is mainly the individual bond buying program,

1/3he ratio is only about of index duration. it really is the promise and the commitment, the signaling from the fed, as opposed to what they are actually buying today, or even what we expect them to buy over the next 12 months. lisa: this is really important, and it leads to the question, has the market gotten ahead of itself, pricing and more aggressive action than the fed is going to take? think theou know, i street has faced a problem where models have broken down, or models that rely on data historically seem to be lagging the recovery of financial assets. a financial market shock that leads to a macroeconomic shock and not a reverse, which is what we saw last cycle. fair, they have been indicating that for the last few

months. what we have tried to show is reasonable forward-looking estimates and fair value, and even then, the market looks like it is overshooting. is obviously the key differentiator in why models are breaking down now. it is hard to argue it is cheap. 375 basis march wide points. we started the year just below 100 basis points. it is hard to just say that credit is cheap, but it is also certainly hard to fight the fed, so you spend your time in pockets of the market that we still think are cheap. for example, the u.s. bbb's. we like china high-yield and property companies. but also from our side, just given how much of the run you have seen in that beta in credits.

jonathan: love having you on the show. he touched on the heart of the problem for so money credit investors right now. given the fed's involvement, and i sound like the broken record we keep repeating here, given that you have a sensitive buyer in your asset class, how on earth do you value what in the same way as before -- do you value it in the same way as before? market?at is this how do we play at given the fact that the fed is backstopping it? not all companies are going to be saved, and yet, look at those prices. jonathan: look at equity futures this morning, up another 17 on the s&p 500. we advance by calling it 0.6%. good morning this morning. alongside tom keene, i'm jonathan ferro, together with lisa abramowicz. next up on the program, we will be catching up with julia coronado of macropolicy perspectives, the founder and president, as we count you down today two -- count you down to

day two on capitol hill from fed chair jay powell. this is "bloomberg surveillance ," live on bloomberg tv and bloomberg radio. ♪

jonathan: from new york city, this is "bloomberg surveillance." we are live on bloomberg tv and bloomberg radio. , i'mside tom keene jonathan ferro together with lisa abramowicz. equity futures elevated. we wait economic data in america. it drops right now. let's check in with michael mckee. michael: one area in which demand has been strong has been housing. we are looking at a house market struggling to keep up with demand. housing starts in up 3.4%. 974,000 at its annual rate. that is below what was forecast. looking at 1,100,000. not that much better than we saw last month.

121,000 in the latest month. that is up from 1,074,000 in april. trying to get back on track. the problem is the ability to many states just now reopening to construction. also whether or not they can get supply chains -- supplies. supply chains interrupted. purchase at an 11 year high. there is demand. housing completions is the measure of how much inventory there is. a major tell off. 1,115,000 and an annual rate up a little bit. there are still a lot of houses that need to be built. jonathan: there is a theme emerging. getting the direction right but struggling with the magnitude of the move. struggling to get a clean read as we open this economy.

you expect that to continue? michael: absolutely. it is hard to model any of this. we shut down an entire economy. there are no comparisons. you cannot plug anything in. it is hard to get the numbers right. the direction is the best we can do. tom: you absolutely nailed it. michael mckee, thank you so much. djitte economic correspondent for bloomberg television and radio. we welcome all of you on our simulcast coast-to-coast. right now julia coronado joins us. dr. coronado, are you is aasting this economy natural disaster recovery, or are you trying to treat it a normal recovery? julia: it is a bit of a hybrid of both. one of the problems with the natural disaster analogy is the

natural disaster is still with us. i am in texas, i am sheltering in texas, and we are seeing escalating cases of covid and we are opening up, yet we live with this disease. as businesses, as consumers, we have to make our decisions knowing there is a deadly disease swirling around. that makes it very difficult to go back to normal. that makes it quite different from a hurricane. this is not something that is going away. it is something that researches when we open up and then we have to make these risk management decisions. businesses have to make them, consumers have to make them, and that is what will make it difficult to get back to normal. that will mean some businesses will still go out of business despite the fiscal support because they cannot be viable at 50% capacity or 75% capacity.

a lot of friction that lies ahead of us. -- the unemployment rate. we have seen a horrific number. now we have a recovery. tomorrow get the jobless claims again. of the the path in terms unemployment rate into the end of the year. what does it look like? julia: you three is probably -- u3 is probably one of the more problematic measures of unemployment. we know we have lost a truman is an amount of people who have dropped out of looking for work. -- we have lost a tremendous amount of people who dropped out of looking for work. we have seen tremendous churn. millions of people newly unemployed. not people sidelined during the first phase of shutdowns. these are new unemployed. that is partly more prompt -- that is probably more permanent job losses. we know there are millions of people reconnecting to employers.

this tremendous churn makes it more difficult to get a read. i think that will probably continue, and then the question for the unemployment rate is to people lean back in and try to start looking for jobs, which could push the unemployment. we also know the significant measurement problem the bls is grappling with that lead to an understatement of the u3 unemployment rate by several percentage point in may and even more in april. they are redesigning their survey to try to address that, which means we could get a pop in the june unemployment rate just because they're resolving that measure. i think we will have some bumps along the road, some ebbs and flows unemployment rate. like the fed's best guess, still close to 10% by year end, that is not an unreasonable forecast

given the magnitude of the number people sidelined. jonathan: a consensus has emerged for the pragmatist, the group of economists that believe coming out of a shut down you get the sharp bounce, and then the big recovery ahead begins. one thing i've struggled with and i'm trying to establish is the dividing line between the sharp bounce out of the reopening and then that recovery . is that an august event, late july event? what is the dividing line? julia: some of that depends on ingress and how much they do terms of phase four. we know that the unemployment benefits end in july. we know the ppp gave small businesses 2.5 months of payrolls, which is running out. whether or not we get a new tranche of unemployment benefits and funding for small businesses

and maybe another round of checks, that could extend the bounce period. we know we have seen the footprint of that stimulus and retail sales in the jobs numbers. that is exactly what it is intended to do. there may be some complacency. it does seem like a consensus is forming to get the phase four done, it is just a matter of how big and what the elements will be. -- is in the fall, which is a big hiring season for teachers. we know they are on the mat. their budgets are crushed. they have been letting go millions of workers. that will be a challenge for that typical fall hiring season. there willwill be -- probably be several bounces as

we move along this recovery path. lisa: i want to talk about the economic misses in terms of economic projections from wall street analysts. this is unprecedented. you had yesterday surprise in the retail sales to the upside, it was dramatic, more than double what was expected. our economic models broken at this point? models,ot just economic measurements are also broken. -- the senses has not been able to survey lots of businesses that have shut down or gone out of business. one of the things we are seeing in the numbers for jobs for the employment report, which also relies on surveys in any of these government statistics that rely on surveys, there will be an upward bias, because distressed companies in distressed people do not answer surveys. to the truther end

, a rosier picture of the truth that will be revised over time as we benchmark the harder data. we knew coming into this that measurement was going to be disrupted. getting our arms around the magnitude of this is what is going to be really tricky given how unprecedented it is. we are seeing noise in the data. theact, we even anticipated surprises would be bigger than anything we had ever seen. that is exactly what we are in the middle of right now. lisa: let's push this a little further. if this is expected and there is an upside bias to the data being collected, is there anything in the high-frequency information you're looking at that gives you a sense of how much worse things are? triangulating is the name of the game. looking at all kinds of sources of data. things like adp are helpful in

this environment, and actually jobless claims themselves, that is hard numbers. we know there has been processing delays and challenges for state and local governments with the programs that have been running. those are not pinpoint perfect, but they are probably more reliable. they do not capture everything. they still capture the flow back into employment as timely as adp does. we are looking toward any kind of high-frequency real measurement-based data that we can. again, the range it tells us, the range of the picture, we know the hole is deep, deeper than anything we have seen in our lifetime. we know we are starting to come out of it. we know may is a month of growth. on the consumer side, on the

hiring side, i think that is probably the right picture. again, putting a fine point on that will probably take years until we can actually revise and refine those estimates. i think we are moving in a good direction. the question for me as a forecaster is struggling with how does this resurgence in the virus affect things? we know we will not shut things wen to the same extent, but are living with this incredibly disruptive infectious disease. what does that do to the shape of the recovery? what does that do to defaults and delinquencies and the jobs picture? as a forecaster, what does that do to the shape of the recovery is what i'm grappling with right now. fantastic to get your

perspective. julia coronado of macro policy perspectives. we are all looking at the recovery. to what degree will it weigh on consumer and business confidence in the months ahead? good morning. the economic data continues to come through. a slight downside on the housing data. tomorrow we will get jobless claims and continuing claims, looking to see if it validates some of the optimism of the coming weeks. also tomorrow, we will hear from the former american airlines ceo on a struggling airline sector. from new york, this is "bloomberg surveillance." ritika: with the first word news, i am ritika gupta. there is a growing concern some of the biggest u.s. states are facing a new wave of coronavirus. yesterday texas reported a record number of new cases. on a weekly basis, florida also set a record for new infections. governor desantis says he has no

intention of rolling back the states reopening the u.s. has spent more than half of the $3 trillion in economic rescue funds from congress. oversight designed to keep the money going. three new oversight boards are barely functional. in one case president trump remove the official from an accountability committee. democrats say some of the money is already flowing to unqualified -- the european union is taking steps to protect industries -- -- goal is to -- the eu could eventually lead to some firms making acquisitions. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> this does assume, all of this assumes the virus remains reasonably under control and does not experience any event

where the virus rises widely across the nation. let's assume that does not happen. jonathan: let's hope that does not happen. chairman powell after day one on capitol hill. day two coming up in front of the house finance committee. from new york city alongside tom keene, i'm jonathan ferro together with lisa abramowicz. a little bit later this hour we will be catching up with priya misra of td securities. tom keene, looking ahead today two of chairman powell. tom: with the two year yield coming up just a little big, worth watching as well. on radio we will have barry i agreed of the university of california of berkeley. an important interview. even more important now after what we have heard yesterday from harvard university. barry eichengreen on radio worldwide in just a bit. lisa: one big question i've been having for markets is how much

the fed policies and ongoing stimulus can counteract the fact we are seeing the pandemic continue to percolate with a number of hotspots. florida making headlines with record hospitalizations. max has been covering it all for bloomberg opinions. can you give us a sense of how significant the increase in infections has been in florida and texas? are we looking at something getting out of control or does it still seem contained? max: the answer is somewhere in the middle. and infection rates, rises and the test positivity rates are concerning, and indicate significant level of spread in the community and a virus and public health efforts not fully brought under control. the thing that concerns me going

forward is that this data, these infections we are seeing now are a week or more old, which means the circumstances that produced them are continuing and we may continue to see more rise in the future. secondly, what we are seeing now is coming out of inhospitable environments for the virus. it is a fraction of the economic activity we have seen in the fall with schools not in session. it highlights the fact that containing this is something we have not achieved and this will get only more difficult over time. a lot of people think you cannot contain it that well. it will just come back. people are saying the idea of a shutdown is politically infeasible going forward. i am wondering how good you think the testing and tracing capacity is at this point to give people confidence to get back into their normal routine,

even without a virus, without a vaccine, without some sort of treatment, and given the fact we will see this virus with us for the foreseeable future? max: i think the notion it is impossible to contain the virus is belied by the fact that other nations have managed to do it. while the testing capability is dramatically better in terms of availability, the fact we are testing people that are asymptomatic as opposed to just those who show up in the hospital, that is much better. ,n terms of contact tracing these long-term efforts to isolate and support people that contract the virus, that is something quite difficult to do, and much more difficult when you have large and growing levels of community spread, as seems to be happening in states like florida , texas, arizona.

it is hard to trace contacts when there are lots of contacts. tom: you are one of the five or six best people in the country on this. you have a fabulous holistic view coast-to-coast and around the world. america does not want to trace, do they? this is hugely cultural. i looked at a chart. , cannot remember the details of the relative excellence of america in this pandemic versus otherwise organized, rich nations. we are in last place. we do not want to affect these sensible rules, do we? max: that does seem to be the case to some extent. a lot of that has to do with the fact that there has been something of a national leadership vacuum on the issue. it has been up to states to define the response, to push the notion containing this virus

will take individual shifts of perspective and put a lot of responsibility on every person in america. your point about how we are performing relative to other wealthy nations is very true. if you look in a comparative chart of daily use, and is the united states against the entire eu, it looks pretty awful. we are still seeing 20,000 cases a day. when you have that background, it gets difficult to do significant tracing. tom: do not be a stranger. your work has been great. we have not had you on enough. newsisen for bloomberg with leadership coverage. i want to get to the market and i want to go back to our interview with the governor of the fed kevin warsh. we got rave reviews on that interview. he talked about the fed out over its skis in terms of doing too

much. when will we learn when the fed does too much? will it be by the next meeting or do we have to wait longer than that? lisa: the question is what does it mean to do too much? they are propping up asset prices. we are seeing stocks getting up lift and corporate bonds. when does that trickle into the real economy? they did start their main street lending program. they open it up for business on monday. then there's a follow-through from the federal government. my question is who is ultimately responsible for the followthrough of the real economy? the fed only has 70 tools. how deep to those go -- the fed only has so many tools. how deep to those go? it is a fierce debate, especially as we look to washington, d.c. and the policies there. tom: on the i.s. curve and the real economy, it is about the

miracle which is the microcosm, the little thoughts we all have within any national experience. you think the people of america will move this forward to better economic growth and all the good outcomes from that, but we are a long way from that right now. you have chairman powell coming up. that will be very important to see at 10:00. the q&a always different between the senate and the house. i need to do a data check, which is really important. futures up 11, dow futures up 64, the bid goes from 34 to 33. at 32.78 on the vix. that gives you a sense. we are not back to where we were before last week, but we are getting there, grinding up towards recent strength. i've been watching the two year yield, cannot get through. there is a foot on the two year yield. maybe does jonathan ferro's foot. we have much more. i am thrilled i will speak with

professor aiken green on radio with paul sweeney. we are produced, occasionally, by riley dent. this is bloomberg. stay with us through the day. good morning. ♪

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jonathan: good morning. the countdown to the open starts right now. equity futures positive. 30 minutes away from the opening bell. we begin with the big issue. the federal reserve emphasizing the long road ahead. >> we appear to be entering the second phase of the economy reopening. >> indicators suggest a stabilization or a modest rebound. >> we probably bottomed out in early may. >> in way -- in may there was a notable rebound of employment. >> the surprise and the jobs number and strong retail sales part of the narrative. or the it the bounceback beginning of the recovery. >> the economy will resume growth in the third quarter. >> there are parts of the economy that will struggle to return to their old ways of activity. andess to do with monetary fiscal policy.