caroline: from bloomberg's world headquarters in new york, i am caroline hyde. joe: i am joe weisenthal. romaine bostick is out this week. caroline: russell 2000 and dow at a record high. steepening of the yield curve. bitcoin continues to surge. a sacred number, a sacred day for some. investors might forget that there is still a lot to prepare in terms of the u.s. economy.

expected treasury secretary nominee janet yellen. americans expectations for the future even grimmer. with no fresh round of stimulus and covid cases surging, many people are not feeling so optimistic as we head into the holidays. one positive side of the economy is housing. joe: it was one of the early strong parts of the economy this summer and continues to show incredible momentum. the speed of housing price growth through multiple measures. month over month, i think that is the fastest pace of home price growth ever. sincet sequential growth 2013. i don't even know if that is a good thing. if you own a home, i guess that is good.

if you are looking to buy a home, not great. caroline: there is always the haves and have-nots in any story. consumer confidence, we know that the u.s. economy is determined by the strength of our desire to spend here. consumer confidence was not looking so pretty. we had dana talking about the worry that there is in people's minds, that they do not see the market or -- don't see the economy or labor market gaining any strength. joe: joining us for more insight, former federal reserve vice chairman alan blinder. let's start off with the macro situation. we do not know if we will get anymore stimulus. by some measures, the economy continues to surprise to the upside even with this third wave of the virus. as of right now, does the

economy in your view have the momentum to get to something approaching precrisis levels of activity without further stimulus? i am a little worried about that. right now, it looks pretty good, better than, say, we had any right to expect six months ago. the most recent teal leaves about confidence, as you just mentioned, some of the mobility data you get from google, apple, other places like that, are looking just a little bit like march. i don't want to be alarming. they don't look that bad. there is a look that maybe people are getting a little bit worried and hunkering down because of all of this disease. for that reason, i think it is imperative that we take out another insurance policy.

that is what these relief bills are. a little bitomy up more to make sure it does not stumble. caroline: does it need to be targeted? do we once again need to put checks into people's letterboxes? do fee to do ppp loans? alan: i am tempted to say, just get the money out. it until things get worse, think you do want to target it on unemployed and poor people that need the money to maintain their spending. you want to target it on small businesses. we alreadything have. stately would emphasize and local governments. a vice between greater spending they have to do

, covid safety and so on, and falling revenues because of the weaker economy. and they have to balance their budgets, so this is kind of an imminent need. i would target some of it right there. ppp, stateoyment, and local, those are broad areas. there is a lot of parts of the economy that need aid right now in your view. alan: that is right. right this minute, i am thinking of it as an insurance policy so that we don't fall down a rabbit hole. if we start falling down that rabbit hole, it will be a lot more than insurance. it will be relief. caroline: i know you have been thinking and writing long and hard about the inequality we have been seeing. how much is that going to be

something that will need to be tackled as we go into 2020 one? alan: i think it badly needs to be tackled. the question is whether we will be able to tackle it if we still have a reply consented. everyone can make their own guess of the outcomes of the senate races in georgia. i am a democrat myself as you know i would like to see them win those two seats. if i was betting, which i am not, i would probably bet against that. which means mitch mcconnell has the ability like during the obama administration, to block everything. i would like to see republicans speaking out against that because we do have a huge inequality problem in this country. theou did not realize that, pandemic made it clear as a bell. you could just see who was hurt

by this. i would love to see a full throated attack on the holes in the safety net. , we need ado that democratic senate. joe: we will talk more about fiscal policy in a moment. but real quickly, at this point, is there more that the fed could do unilaterally? setting aside some of the questions of cares act programs and so forth, are there more tools on rate policy, credit policy, etc., that without waiting for congress to give it more tools, that it could deploy right now to make this recovery more self-sustaining? alan: i think there are but i don't think they are very strong tools. in the qe program, it could lengthen the maturity. basicallyive of qe is

to flatten the yield curve. if you go out and buy maturities, that could help. they can raise the volume of purchases. that could help. tools whichall bore the fed can do. number one on the fed's agenda is to try as best it can. the new secretary of the untilry, but that is january 20. meancannot do the nasty, destructive actions of secretary mnuchin in trying to destroy the emergency lending facilities. insurance policies, that is what they are. mr. mnuchin looked at these and said, we don't need insurance anymore. there have been no claims basically. so let's destroy our insurance policies.

that is not the way i act or you act probably with your homeowners fire insurance, that there has been no fire, so let's cancel the policy. jerome powell, as best he can chairis perch as fed where he has to be a lot more polite then i just was, has said in polite terms more or less the same thing. caroline: nasty, mean, crazy. i am really excited to continue this conversation to discuss the former federal reserve vice chairman alan blinder with us. he will discuss janet yellen and what she can do. that is next. this is bloomberg. ♪

caroline: today, we are focused on what the bided administration might do -- the bite in administration might do. one person who we expect to be on the forefront of this is treasury secretary nominee janet yellen. reserve formal federal chair, former head of the san francisco fed, someone who everyone seems to think is while the qualified for the role. let's bring back alan blinder. your basic thoughts on this. what does yellen bring to the table as potential former -- potential treasury secretary if confirmed? alan: she brings just about everything. she brings brainpower, relevant knowledge at the federal reserve, the cda, in academia.

she brings strong but i would say softhearted attitudes. we were talking a bit before the break about inequality and things like that. she cares deeply about issues like that. was notrman of the fed any position to do much about that. is in ay of treasury position

that. you could say she has been getting schooled, and she is ready to execute. caroline: ready to execute on the politicking. you have written about this at length, that people, in particular america suffers when we see economics and politics aside. i was mentioning before the break that the roadblock named mcconnell who will still be in the road and less the democrats take those two seats in georgia. so there will be a lot of hard negotiation for sure. there is no doubt about that. it is not like janet yellen will just be able to go to president x, y and say, we should do , z, and he says that will be great, and they go to congress and passes. joe: presuming that mcconnell remains his role in the senate, depending on the georgia runoff, eight is going to be tough. in your view, are there potential areas for compromise, ways in which stimulus could be

paired with some republican priority that would help break the logjam. everyone thinks it will be tough, but will it be mobile? -- will it be doable? the fiscalgine that stimulus and relief package, if one passes, is going to have to --substantially smaller there is no biden proposal on the table now but there is a policy proposal on the table. which i personally like but it will not pass muster with the set of republicans. it will have to be smaller than that. forink a key area republicans have been amazingly unwilling to move

thison that, even though is not just a blue state issue. blue state, asa in my state of new jersey, that were suffering. that is not the case anymore. in fact, the worst of the suffering is happening in red states right now. they need help and they should get help. this is not a blue pandemic or a red deming. i keep hoping that enough other senators from struggling states, republican senators, will whisper in mcconnell's ear and say, we need to do stuff because it is my state suffering. joe: so great to get your perspective. alan blinder, former federal reserve vice chairman. coming up, more on what janet yellen would mean as treasury secretary. what would it mean for the

aspect of financial regulation? this is bloomberg. ♪

caroline: today we are focused administrationed -- with the bite in administered -- what the biden administration will mean for the economy and the marketplace. joe: financial stocks doing extremely well of late. financial stocks, we know they got hammered earlier in the year. snp financials, pretty impressive comeback lately, lagging behind the overall market. still, what does that mean? 's pick ofelect biden janet yellen for treasury, what would it mean for financial

regulations? let's bring in a professor of law at columbia law school. in your view, what needs to be the regulatory priority under the next administration from treasury and how closely does yellen'snow about viewpoint match the priorities we seek? to thential threats non-bank financial sector, and i think that is completely in line with janet yellen's recent statements regarding potential threats. the adoption of a revised framework for monetary policy. they have made clear that the only way that they will allow the only the lash -- that they will allow the economy to run hot if there is no threat to stability. to really work probably with regulators to address these

potential threats and allow the fed to do its job. caroline: the shallow banking equation, the particular threats they want to address head on, first and foremost. big lessons of the crisis, even though the risk spilled over into banks, it emerged from the non-bank sector, where we had a bunch of interconnected entities who were exposed to the same risk. we have seen yellen speak recently about the fact that we still do not have an idea of what is going on with hedge funds, for example. a broad jurisdiction outside, independent of, but housed within treasury. mutual funds, both of which really needed help in march. also, leveraged lending. she took action as she was the

faded chair and could create a more broadly coordinated response to address corporate lending, which of course could have been a drag on the recovery that the bided administration wants to see -- that the biden administration wants to see in the years ahead joe: is there a difference between running a financial receive that keep the -- financial system that keeps the system stable? ,> in the short run deregulation can have the effect of boosting credit creation. on the other hand, it brings the entire economy down. i think what the biden administration wants to do is create a more sustainable path for growth. that potentially means allowing the economy to run out. we have learned lessons about what is possible on the monetary policy front in a few years.

,o be able to make that happen to allow that type of energy to go into the economy, then you want to make sure that there is nothing to cause the financial sector to implode in a way that can bring down the real economy. that is where using regulation in a more targeted way. for example, open-ended mutual funds. , backinghave bonds those bonds is not very liquid. but if people get scared, you are going to have runs and stability concerns. to try to figure out ahead of to addresse can do those dynamics. caroline: what about the retail investors, the fact that throughout 2020, the power of .he robinhood trade

>> that is a good question and she has not spoken on that yet. my guess is, on the whole, a threat to financial stability. rulesnot so much to make as much as it is a coordinating body. you are bringing together the other coordinators. if you are identifying them and telling the primary regulators like the sec, we want to know more about it. coordination among different agencies, a development like , i can imagineew their pain close attention to this end it would be a big step forward. joe: talking about hedge funds of a shadow banking, leverage late -- leverage lending.

what about big banks, too big to fail institutions? what do you see as the priorities on that front? >> there will certainly be an ongoing need for diligence. allowing banks to continue to make payoffs after the pandemic and. i think he has a deep understanding that you have to bankingell-capitalized sector. countercyclical bubble, so they can spend it down in bad times, and try to figure out what additional roles they can play. kathryn judge, professor of law at lumbee law

school. -- at columbia law school. joe: i woke up this morning like, today will be an important, critical, sacred day in history. and it was. caroline: i am glad i got to share it with you. joe: this is bloomberg. ♪ businesses today are looking to tomorrow.

adapting. innovating. setting the course. but new ways of working demand a new type of network. one that's more than just fast. you need flexibility- to work from anywhere. and manage from everywhere. advanced technology. with serious security. and reliable coverage, nationwide. forward-thinking enterprises, deserve forward-thinking solutions. and that's what we deliver. so bounce forward, with comcast business.

♪ taylor: i am taylor riggs in for emily chang. coming up in the next hour, president-elect joe biden puts his national security team in place. this after president trump agrees to a formal transition. for thecrossing 30,000 first time. a true believer. longtime bitcoin champion dan moorehead on the rally.