♪ caroline: from bloomberg world headquarters in new york, i'm caroline hyde. romaine has a day of rest. we see the markets drive higher in his absence. the s&p 500 held higher by the likes of apple, amazon. meanwhile, the nasdaq clearly the outperform or on the date. joe: the cushion is, "what'd you miss?" -- the question is "what'd you miss?" caroline: the stimulus talks in washington appeared to be dead. big tech lead the gains in the pandemic.

investors are back on and betting that stimulus is off and their favorite trade is back in. they, amazon, facebook, are all helping the s&p 500 higher today, having held it back earlier this month. stimulus is not just key to the value investor right now. fed chair jay powell and treasury secretary steven mnuchin making the case today for more stimulus. it looks as though the base case is no additional fiscal support. that is why we are suddenly seeing the rotation back into big tech and bye-bye any value investing. joe: yes. the prospect was already looking dicey for fiscal stimulus. with the new fight in d.c. over the vacancy on the supreme court, that reduces the odds. but even setting aside the market question, we hear from fed chair powell that to get a

robust recovery, we need more stimulus. it was expected by the fed we would have it. bloomberg economics is projecting that gdp growth will be 5% slower than it would have been in q4 in the absence of stimulus. again, rotation, value of growth. if we do not get more cash, we may still keep growing but not as much as we could have been. caroline: when you have the overwhelming discussion we are seeing from the u.k., for example, seeing further restrictions on certain economies. we heard from fed chair powell testifying in front of the house financial services committee calling for more help from the government. listen. >> i do differ to the administration and congress who have responsibility for this, but i think it is likely that more fiscal support will be needed. caroline: i feel he says that every time. joe: yes, a broken record. maybe they will listen to him one day.

probably not. for more, let's bring in professor and bloomberg opinion columnist. let's say the earliest we will get fiscal stimulus is under some theoretical party in january or early next year. how damaging is it in your view to the recovery without any fiscal eight at this point? point?at this >> it is probably self sustained at this point. the situation we had at the last expansion where the fiscal stimulus would have slowed the ability of the economy to recover as quickly. speed thertant to recovery but not maintain the recovery. caroline: is it just that we need -- if you could have a wish granted at the moment, would it be for further monetary stimulus

in any form or purely fiscal? and where would it be directed? tim: it would be much more helpful to have fiscal at this point. we should take chairman powell his advice and heed that what we could do is continue the unemployment benefits. it does not necessarily have to be the full $600. phased down. something along those lines. aid for state and local governments. things, youose two would probably accelerate the pace of the recovery. those are good policy options. as you start the discussion right now it looks like that is dead in the water. joe: so your view is that even in the absence of another round, we will probably continue to see up arrows even if they are not as up as they otherwise would

have been. what are the costs of a slowing recovery? even if we get there eventually, unemployment eventually gets back to where it was precrisis, are there long-term damage to the productive capacity of the economy by taking the slow route? tim: this is clearly the concern we are worried about. one reason the fed would like to see more fiscal stimulus, because we worry about the longer people are unemployed, the skills deteriorate. maybe more firms will go under that are hard to build. the possibility of lower investment in the future. all those signs are key and critical in defining that we need more fiscal stimulus. the issue of, how quickly to be want to get out of this mess? caroline: as quickly as i impossible, i'm sure. really interestingly on twitter yesterday, i think you made a point about some of the wealth being accumulated at the moment.

there was a really interesting data showing u.s. households at the moment have improved in terms of their wealth. not every single race unfortunately but certainly most income brackets. can you talk us through whether some of the data is perhaps better than you anticipate and whether that can be sustained in this environment? tim: that is a great issue i think right now that a lot of data has been better than anticipated. was theyhe reason extended fiscal stimulus. one of the data points we originally saw was household wealth has basically gone through old records. that is not a huge surprise. we talked about that on the show a few weeks ago and how much has been built up in recent months. we saw higher stock prices, higher home prices. that contributed to a solid financial situation. we also had a recent fed survey

on households and that was interesting because most household showed at least they were doing financially ok at a rate that was at least as much as they were prior to the covid pandemic. also, more households had a better capacity to handle emergency costs. there is a lot of evidence out there that the fiscal stimulus did in fact have a positive effect on households. this is one of the reasons why i think we should keep going with it. joe: i want to talk about monetary policy a little further because of course a few weeks ago we got the new framework of average inflation targeting from powell. ,ut since then, we had the fomc two dissents, and then charles evans raising the prospect of hiking rates even before inflation hits the 2% level. maybeu surprised there is

not as much togetherness or consensus about the path forward as there seemed to be? tim: no. i think it emerged quickly after the fed announcement framework. you saw the fed taking different interpretations of what that is. i think a really critical point to remember is all of this is something that will happen in the future. right now, forecasting the outlook does not support the issue higher. a uniform idea of what average means. we are not sure what their ultimate intentions are. caroline: great to always have it with as. professor at the university of oregon. we wish you well, particularly with the fires in your state and we hope you can stay safe throughout them. now let's get some breaking news for you because there are deals being done. a private equity giant nearing a

$3 billion plus deal for 1-800 contacts. it looks as though there is some value in this. a deal to be said by kkr. also some interesting news in terms of nike numbers being better-than-expected. keep an eye on some deals. a deal for 1-800 contacts. coming up, we will be digging into how the u.s. stimulus stalemate is affecting the positioning on markets and how it fits into value versus growth. the debate continues. this is bloomberg. ♪

today we are focused

on how the lack of stimulus talks in washington is affecting the economy and the markets. one area you can look at in the markets is the ongoing on and off again value growth rotation, whatever you want to call it, but it feels like we are back to our usual playbook today. joe: yes, it is one of those things where we obviously since the crisis have seen this incredible surge in tech stocks. every once in a while, value ons a great value trade back and then growth starts picking up. we see the last couple of days growth really rallying, especially perhaps as people do not really see the fiscal stimulus coming through. we are talking about people really bet on that secular growth story. caroline: i just feel like today it was such a case in point. you look at who was the biggest point movers on the s&p 500. amazon, apple, facebook, google, you name it, the usual suspects.

joe: joining us now is bloomberg opinion columnist. thank you for joining us. the value people have a winning streak that lasts longer than 10 minutes? >> i wish i knew the answer to that question. value investors are long-suffering now, going on by my count to 2006 if you look at the russell 1000 growth over the value growth. so the question is, when will value come back? i think investors are thinking about this. have to be really clear about a couple of things, especially in this environment where there are so many narratives flying around. one is we have to agree that historical evidence tells us value in general beats growth over rolling 10 year periods going back 100 years close to 90% of the time. the second thing we have to be clear about is no one knows when

this outperformance is going to happen. in recent years, we have had three cycles. the nine-year growth one and then the off value one and then growth is winning again. it seems as if it comes and goes. when valuable, again, i hate to say it but your guess is as good as mine. caroline: is there any pockets of value we are ignoring that are continually getting some sort of a bid? financials never catch it clearly. has there been some dabbling around the edges that you think could hold if it is not a trouble measure and not in the banks? > that is definitely the right way to think about it. the answer to that generally is no. i say that because value has been overtaken by energy and financials. both of those sectors are down and out. a lot of people look at that and say, it is hard to see a path

forward with energy and financials. therefore, value will not come back. the thing to keep in mind is the reason value is down is because everyone knows it is about energy and financials, right? in other words, by the time it becomes obvious there is a turnaround in those beaten down sectors, it will be too late. you have to ask yourself, are you willing to be early? are you willing to suffer? that is the only way you would get paid for the value trades. if you say, i will buy this, suffer for a while while amazon and everything else continues to rally. joe: we were just talking about the policy landscape. what if, in your view, we got sweep, comes, democrats $3 trillion stimulus some sort of a permanent fiscal stabilizer so there is more money, something that allows the fed to raise rates sustainably without having to backtrack right away like they have done so many times in the past?

could this be the type of thing where, ok, we are growing now? so that lifts the price of gasoline. that helps energy. that helps banks make more loans. meanwhile, rates go up and you are suddenly not so inclined to paper twice left -- to pay for tesla's 2016 earnings. >> that would help. several years ago, i wrote a piece called "stop lying to yourself about value investing." i went back and looked. one of the things you often hear is value stocks do better during expansions and growth stocks during better -- do better during contractions. i could not find any reliable relationship. even though intuitively you would think leave value stocks would do better in expansions. in general, both come to pass. i think that certainly cannot hurt value stocks. i do not think value investors can count on that to be the wind

that will carry them higher. caroline: is there any rule of them we can stick to? if you cannot find any real sort thevidence to support that become aware should we be holding on to and buying at the moment? >> i think there is one thing you can. if we go by the evidence, it is very unpopular to say this these days but the one thing you have to take away from the evidence and if we can big we had everything that is evidence-based, it has to be this because there is so much evidence for it. value stocks over time appear to be growth stocks. i think the evidence for that is overwhelming, even though they have not done so recently. the penalty you pay for buying it is that you have to go through these long stretches where you get hammered. what i would say is you should be able to count on getting a so-called value premium in the future. this strikes me as good of an ever because the difference between growth and

value historically is high. but if you believe in evidence and you want all the evidence, it seems to me you go in now because you will not get a better entry than this i don't think. joe: playing devils advocate for a second, is it possible the way we measure value stocks is wrong? people say this from time to time. we look at tangible or things like that at we should be looking at intangible value and brands. peloton is a value stock under our new rubric. could that be the answer to all of this? >> it could be. that is the question you have to ask. there are value etf's out there where the biggest names in them, the fertility value etf -- the fidelity value etf, they are apple and microsoft. sorry, what did you say? joe: that is cheating. >> right. a lot of people think that. wait a minute, this is not value. it is value. questionto ask that

all the time i think because anytime you are in that strategy, are you measuring it the right way? but one thing you have to keep in mind is over the last 10 years or whatever period you want to look at what value has underperformed growth, no matter what measure you use, value lost. whether you use something that is outdated or price to earnings or price to sale or dividend yields, whatever you use, you lost. you have to be careful in saying that to the extent that there is miss measurement. it does not explain the fact that value is down. the reason value is down is because value is down. no matter how, you get beat -- no matter how you measure it, you could beat. joe: we will have you back in a year when we ask the question again when value will return. coming up, we dig into three charts you might have missed. this is bloomberg. ♪

♪ caroline: now we are going to talk charts, the charts you are missing. sarah ponczek joins us. joe: the whole show, we have been talking about some of the re-rotation, some of the signs that perhaps with the no stimulus that things have slowed disinflation is

reemerging. the gold line is gold and the white line is rates. you can see how they are inverse with each other beautifully. what you can see that in the last several weeks we have seen real interest rates start to creep up a little bit. the fed has done and extorted a job depressing real rate trying to excel with economy. real interest rates coming up a little bit and gold has lost a lot of steam. ounce andr 2050 an now at 1900. you can use gold as a proxy of disinflationary deceleration. perhaps thatus gold is rolling over. caroline: difficulty finding a non-correlated asset right now. maybe bitcoin is it. maybe crypto is it. maybe you can get total diversification. no, you can't. let's look at what happened in terms of bitcoin and gold. good for crypto lovers.

interestingly today, that did not work out. we saw gold down a touch and bitcoin up a touch. in general, you see this massive correlation. people potentially seeing it as a have been trade. it isrd michael saying safer than gold and cash. but overall, there is this saying that it is an ominous correlation going on in the market at the moment. sarah: not only is gold coming under pressure, but so is comfort, which would typically -- copper, which would typically be a sign. dr. copper. it ties into the real rates and inflation trade. you think about what is happening with the dollar right now. you look at the blue line right here. we are not going crazy. it is inverted here. we have seen the dollar rise. the strongest three day gain since back in april. that has inflation expectations fall on fiscal stimulus falling 20. tot is in turn -- falling

zero. i will note that copper is not far off of its two-year highs hit in the past couple days. sending a pretty optimistic signal. caroline: up quite a bit today. we were talking tesla. tesla's battery presentation is underway. today the stock was under pressure. but now after hours, not doing so badly. joe: you know, it is probably going to be something we will see in 2027 but he is such an impressive showman that people will love it anyway and maybe it will send the stock higher. that will be the first thing i check when i wake up in the morning. caroline: generally what i care about in the presentations come i want to see big tex ceo's making me dickie list. themselves. sarah: we have expectations for timings on the technologies but the least he can give us his dance moves. joe: it is so funny because it is one of the classic things. battery day and then you toss it

off in a random tweet last night. this will be 2022. a little thing i will mention on twitter in response to someone. that probably explains why the stock was under pressure a little bit during the day. we see it up modestly after hours. but i am sure my inbox will be flooded with endless notes about cash flow implications of whatever new battery technology they are rolling out. caroline: meanwhile, quite a big name in e.v.'s. joe: what a rise that was. that was a real flying too close to the sun thing. sarah: the most recent elon musk tweet is pretty much the new tesla stock is too high. he has tempered expectations somehow. caroline: that is all for "what'd you miss?". joe: "bloomberg technology" is up next. have a great evening. this is bloomberg. ♪

♪ >> tesla battery day got underway just about 50 minutes ago. we will bring you there with the very latest. about 15 minutes ago. we will bring you there with the very latest. tesla was down most of the day on the back of the ceo's tempering expectations about the long-awaited b d