>> there is an argument to made it we've gone too far too fast. >> there will be a day of reckoning. >> you look at hiring, you see permanent layoffs. >> it's possible you will see numbers start to disappoint. that's another reason why the fed is intact. going to doot anything. it >> the timing of the spend has shifted. >> i see the economy getting back to normal. >> this is bloomberg surveillance with tom keene,

jonathan ferro, lisa abramowicz. lisa: this is bloomberg surveillance. tom keene it, jonathan ferro, lisa abramowicz. jonathan ferro has stepped away. he left, and myself here to hold down the fort. tom: life is so much easier. lisa: for him or for us? tom: both. lisa: the news was encouraging out of congress with the stimulus package getting past. today, the news is grammar. a grammar pandemic, a grimmer. you can see that throughout the morning. tom: it's been agonizing, particularly for the people of the u.k.. don't meet indoors on christmas day.

that's what this has come down to. the ramifications include futures. this raises a question about inflation, the fed printing all this money. thisig question it, will cause inflation? not necessarily if there is a pandemic. that could drag on longer. we have to say masked and distant. tom: the real yield was horrific two hours ago. now, -1.05. that's lower by two basis points. that is much worse a number of hours ago. lisa, what gets your attention? lisa: i've been looking at the dollar. this is one of the big consensus calls. you saw it strengthening since march.

this is going back. given the fact that this is a drag in the euro has been a drag. today, itws we saw was down 2.5% earlier this morning. tom: it was ugly. we welcome you on bloomberg radio. to the new york jets winning. this is an extraordinary thing, much like the conjunction of saturn. it's a very rare occurrence like the jets win. astronomy and new york jets football? it fits as well. vix. big figures on the

on the fixed income market, he is with wells fargo. he is attuned to the clipping of coupons and the search for total return. mi content to clip a coupon? should i look to try and find total return? george: good morning. thank you very much. we want to talk you through fixed income. yields are still very low. as lisa just mentioned, you can't give up on bonds yet. uncertain, bonds or rally. they tend to be the anchor for your portfolio. as we think about next year, it's a reverse of the trend. that, that is going to continue.

we are likely to creep upward. there are a lot of strong forces. you mentioned several already. the trajectory of covid, it's difficult to simply throw in the towel. bond yields are low for a reason. they are likely to stay low. we will see an incremental move up. jobus, your most important is a bond investor's capital preservation, maintaining the games you've captured over the last 30 years. you've had a great run. look for extra income. little bit of payment coming your direction. lisa: i am struck by one noted

bond manager who said last week you don't want to hire an optimistic bond manager. you just want to get paid back. lookingager seem to be at what people are demanding too. given the fact that companies are still struggling. the economy is not back to normal. have people gotten exuberant when they look at this lowest rated debt? george: there is an assumption baked into the market. the first big assumption is the fed has got your back, the fed will be with you. they are not going to allow yields to rise significantly. to remainis going very well contained. those are the two factors we think underpin that bond market

enthusiasm. the data looks to support the inflation story. i don't know if it's an optimistic bond investment. there is a certain amount of complacency in the market. that does concern us. and spots of the market, we think it is too fast. investment grade corporate debt is one of those parts of the market. if you look at an interesting are just about back to where they were at the beginning of the year. year-over-year, one of the smallest changes in credit spreads in history. it was one of the largest ranges over the course of the year. you are going to say not much happened in 2020.

anyone that lives through it knows it's been a wild ride. the spreads look tight. we want to take some profits and move that money into other things. higher rated it, even going down in quality. is an optimistic strategy and high-yield. we've got to find those coupons. lisa: just keep plowing through. that's well done. we got to the point where safe bonds aren't so safe anymore. george: that's a great point. based on that belief about the fed in interest rates, your biggest challenge is not your corporate behavior. the long maturity you have with very low yields. any marginal increase could

represent a loss in your portfolio. we do have a preference for short to intermediate bonds. these are investments in pensions. we want to be careful at the long end we want to maximize as much yield as possible. that's a sensible strategy right now. tom: you've been doing this quite a bit. one of the things that upsets me know when does the belief that bond money will move into equities. oft is your experience psychological bond money all of a sudden finding the equity market? does that actually happen?

george: not as much as we think. large assetry allocation teams that are managing between bonds and stocks. allocate back and forth. we have a whole team the does that. that is the balance of the market. the big run-up in equities has driven a fair bit of money into bonds. we expect that trend to continue. we have not seen it go the other way. it stands today, there is still moving out of equities and into bonds. my long tenure, it's been mostly the other way. although there is a lot of discussion about it this year, we have yet to see a meaningful shift going into equities. we don't think that's going to happen yet. tom: thank you so much.

space, .1129 on the 10 year. quoted today.s points on the 30 year bond. curve flattening a bull flatten her? i don't know what that means. lisa: i am just struck by the jets winning. they were 0-13. this is a pickup. you are on the edge of knowledgeable about that. lisa: can we have t-shirts made? tom: futures are -66. the s&p futures, the dollar index. a weak dollar takes a pause this morning.

thanks for making us smarter on foreign exchange. the euro is 12175. on this virus, on our variance and mutations, northwestern university will join. please stay with us on radio and television. an extraordinary monday. this is bloomberg. ♪ congressional leaders have reached an agreement on a $900 billion spending package to boost the economy. most americans will get a $600 payment. inre will be $300 unemployment. the paycheck protection program will get money, that includes forgivable loans for small businesses. they won't have much time to review the measure. the house will vote on it today.

panel says the elderly and front-line workers should be next in line for the vaccine. those workers include firefighters, teachers, grocery store workers. the first round of vaccinations is mace lee going to -- mostly going to health care workers. and germany have joined italy in suspending flights from the u.k. after london went into emergency lockdown. a new strain of the virus is out of control. boris johnson canceled plans to allow families to see each other over christmas. hung up overre fishing. ofy missed another deadline the trade deal. the two key disagreements are access to british fishing waters. low blues 24 hours a day on air

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general public will be getting

vaccinated in the spring sounds optimistic from everything i've seen. i want to be careful we are not sending out messages that say it will all be over by late spring. i think it will take months longer than that, probably into the fall. the most important video we could bring you of last week. the president elects covid task oure out of boston, one of premier officials across the nation. that was the message i received week, theations last vaccine into the autumn. iseone equally as expert with northwestern university in evanston. i want you to address to our

public how you have less of a , a variant, asn we look at the united king. how do you as a pro treat the known that there will be mutations? mercedes: that's a good point. it is scary and concerning when we hear about mutations, especially when the messages coupled with news that it is spreading more rapidly. we have known for multiple viruses over time they do mutate. that's how they stay alive. they have to keep changing so they can keep infecting people, keep their stream of people as open as possible. runhanging in the long enough that they can start to reinfected people. why it doesn't concern me as much is the types of vaccines

right now being developed can address that directly. they are different than the flu vaccine it, which has to be repeated annually. now, it will be effective, even with mutation. lisa: how long will it be before we can get back to normal? given the schedule of the vaccinations, we have seen a little bit of a delay in the united states. there are questions about the supply chains. how much does this prolong the pandemic as we know it? no evidenceere is that the vaccine will not be effective against a new strain. what's going to happen is the delay will be our behaviors don't continue to hold the line on social distancing and

masking. if you think about a rollout strategy, we are protecting the infrastructure. vaccinating health workers and those with the highest rate of death. who we are not vaccinating first are the people we think are the super spreaders. as long as that 39-year-old vaccinated, being we think they are spreading it. that's what's going to slow down our return to normal. polio, do you place this tragedy in that group? can we be successful with this vaccine and eradicate covid? possible.it's it's going to require a global strategy. i was reading concerning a

report out of africa. they'd have a vaccine. they don't have the ability to at -80n a vaccine degrees celsius. travel,of global eradication will be hard if we don't focus our attention on reaching every corner of the world. lisa: i'm wondering what you think of the schedule of the vaccinations as they've been laid out? who is essential? mercedes: i'm pleased with the schedule. i think protecting the infrastructure of health-care workers who must interact with patients does need to be the highest priority. we need to address those with the highest rate of death. i'm pleased with that. i was pleased to see that the federal workers were

prioritized, they are educating our children. they are providing food and manufacturing services that cannot be done from home. i do believe that is the right route. perhaps by fall, we can start to see a return to normal. news ande got breaking we've got to go. we are anticipating a market turn. what we saw this morning, not as grim as 6:00. futures are -71. lisa: how much of this are people cashing out their positions? we are looking at a selloff. it's been a tremendous run since october. there is a change in the feeling, there is concern about

lockdowns and the fact that we've got the stimulus bill. is there going to be another one? take profitsto when you are all cash. lisa: you've been trying. tom: there it is. lisa: when you keep asking if this is an entry point, it's a good question. now, there are people saying go long into risk. headedthe consensus, into 2021. even if it's not that significant based on what we've been seeing, do you go in? that's what we see earlier today. are -502.utures that is pretty much correlated across the board. would really underscore for those getting in tune to the

morning in america, this started in the united kingdom with a major shut down. it was measured, calm. at some point, with the new york jets when the process of winning, there was a huge deterioration in the sunday afternoon and sunday evening. borders, shutting down airplanes, the united kingdom is on complete lockdown. we are waiting to hear from the prime minister. lisa: i'm curious about the timing. if they saw this coming at all, why did they do it all of a sudden. you sought crowded trains. all of a sudden, they locked it down and people got together to get into trains. you wonder the logic of it. tom: this has caught everybody by surprise.

we will have a look at that over the coming days. futures are -68. more data checks through the day across all of our bloomberg platforms. megan greene it, we do that next. good morning. ♪ when you switch to xfinity mobile, you're choosing to get connected to the most reliable network nationwide, now with 5g included. discover how to save up to $400 a year with shared data starting at $15 a month, or get the lowest price for one line of unlimited. come into your local xfinity store to make the most of your mobile experience. you can shop the latest phones, bring your own device, or trade in for extra savings. stop in or book an appointment to shop safely with peace of mind at your local xfinity store. (announcer) do you washed pounds? stress? do you want to flatten your stomach? do all that in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you maintain comfortable, correct form.

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tom: good morning. "bloomberg surveillance." lots going on. we can look the economic data through the week. it'll be an interesting week for the truncated economic data. this morning it is all about the markets. -464.tures in the bond space, it is just what you would expect. yield down. the dollar weakness finally gives up on the 10 year. i guess we saw it coming. there it is. the news is extraordinary out of the united kingdom, where they are overwhelmed with a mutation of the covid-19 virus. there is a shutdown of the u.k. with all other nations reacting.

one of those best qualified to speak on this is megan greene, with her time and united kingdom , now the harvard kennedy school and a senior fellow there. with the news of the virus, stimulus has been subsumed. in my reading last night, it is stunning how quickly it will all end. do you just assume it is a stopgap stimulus until we get to march or april or may? megan: the stimulus package was always meant to bridge to the other side, and the other side is the vaccine, which thankfully we have a lot of good news on, though the new strain in the u.k. does raise questions on how quickly the virus will mutate and whether the vaccine will be effective. how often we have to update the vaccine. this stimulus is a stopgap. it is note late and

as big as i would have liked, but it is better than no stimulus at all. if we would have waited until the new administration had come into power, particularly of the republicans control the senate, it probably would've been even smaller. this is the best we could have hoped for. policy will be committed in the abided administration. i know you have to say -- within the biden administration. i know you say we have to wait to see the georgia elections, but are you optimistic about policy or will it be gridlock? megan: i think the joe biden administration is committed to managing this virus as a top priority and building back better, taking a more medium-term outlook, not just filling in the hall we all fell down when we shut down our economies, looking how to

fundamentally retool our economy for sustainability. in,biden folks are coming they had an ambitious spending plan, and i think that will be curtailed. things like health care reform, tax reform, that will be a lot harder now than it would have been had there been any significant majority in the senate, particularly for the democrats. whoever wins in georgia, it will be a razor thin majority. that will mean the biden administration cannot do anything it wanted to. you said the support bill was a little lame, but there is a question of the efficacy and directness of the support. you call it a little lame because of the size or because of the type of support being delivered? megan: it is mostly because of the size. i think it should have been between $1 trillion and $1.5

trillion, and also because it left out any direct support to state and local governments. it did offer indirect support in terms of virus measures and testing and tracing. generally pretty small. they devoted less money to testing and tracing and the vaccine than they did to the airlines, although the airlines was for payroll support. it is not useless. i am surprised by how little was devoted to the virus itself. unless we contain the virus we will have to do this over and over again, passing more stimulus. lisa: this is such a politicized point, what is the best method of financing? is it to give direct payments or to give money to state and local governments. it has been highly politicized because democrats have been for the state and local funding and

republicans have been against it. republicans have come out on either side, with some people sing direct infusions into lower sange households, others state and local governments needed more. where do you weigh in on this debate? both. we should have done the markets are begging the government to borrow, the fed is begging the government tomorrow -- the government tomorrow. the answer is -- begging the government to borrow. the question is we should have done both. in this case it was inappropriate we felt we had to accept trade-offs. another interesting point is the reaction to the fed. the fed has to be worried about its own independence if the republicans are going to be attacking the fed throughout this administration. that is a concern as well. tom: let's rip up the script, i

was going to go three other ways with megan greene including red sox baseball. this is more important than red sox baseball. it is another shot at fed independence. how does the fed defend itself against the independence -- the battle on independence? megan: the fed has to be creative. the fed cannot provide the same cookie-cutter programs and will have to innovate more. in an era when central banks are globally trying not to be the only game in town and asking fiscal authorities to step in, it fiscal authorities do not step in the reality is central banks will have to be the only game in town. to do that they will have to do unorthodox things. we will need to see central banks in it. .hat will be harder for the fed

the fed will be much more sensitive to moving into physical space if republicans are taking shots on its independence. tom: we will rip up the script twice. we rarely do that except with megan greene. russia in the headlines looking for an outlook lift on opec. i do not want to overplay the movement. my book of the year, "the new map." he talks about the new map of opec, the new map of russia. judge -- does oil politics matter anymore or is that the legacy of another time and place? megan: matter for who is the question. it matters less for the u.s., but it still matters. we saw that in march when oil prices started going negative. what it did to the market and what it started to do to the oil patch. but lessinly matters,

for the u.s. than it did wants. in: lisa, why don't you jump and rip up the script for a third time. lisa: i will rip up the script for a third time. let's talk about consensus being turned on its head because that is a theme of today. the question of whether a blip in the market calls into question the consensus that has been so dominant. in the economic world, the consensus is next year will be a lot better and we will continue to grow and potentially start to grow out of the pain we saw in 2020. where are the cracks in that consensus? such an've never seen overwhelming consensus among economists going into the new year. i agree with the consensus. it is hard to disagree there will be pent up demand off the back of a widely distributed and then strategies defined yields higher at the

u.s. dollar lower. the major potential shortfall is inflation could pick up your i will die on this hill. i do not think inflation will pick up. there is a chance as you get relief you could get a small uptick in inflation. if you ended up having central banks feel like they had to hike into that, a lot of leveraged companies in a lot of countries will get into big trouble. vulnerable most point in that consensus view. tom: megan greene, thank you so much. harvard kennedy school senior fellow. massive data. it is a holiday workweek where you have the december 24 christmas eve where i will begin my christmas shopping. what happens is you do not get the data dump on the 24th, you thethe week's data dump on 23rd. wednesday is the key day.

i guess a new breath, futures negative. 59 is a lot better than 20 minutes ago and two hours ago. i want to pick up on a number of things megan was talking about. the question of the central bank independence. this is one of the biggest hang ups on the fiscal support package, this clause limiting potential fed action, similar to what they took earlier in the year to try to spur lending to specific businesses. raising questions about what the parameters will be. that has been dialed back in the language, but it raises a battle we will see next year with respect to republicans versus democrats and how much leeway the fed has to battle any private negative weight to the economy. tom: they defend themselves pretty well. it comes down to messaging but

also the legislative branch coming to the defense when things get testy. on dollar dynamics, lisa points out a stronger dollar. 90.44. a little bit of lift off of what we have seen. back..22 does not give a stronger euro. this is interesting dynamics with sterling 1.3318. what is credit doing? it was supertight. has it moved at all? lisa: no. in a word. there is an incredible bid. some people have been catching out of positions, but for the most part people plowing into risk seeing credit as the place to do it. tom: a historic day. lisa abramowicz and tom keene, we continue through the morning. futures at -60. coming up, benny goldberg will join us with the peterson institute with the wonderful

herrick -- penny goldberg here on some of the nuances of the pandemic. for those just tuning into the zeitgeist, the united kingdom essentially in lockdown. futures -59. this is bloomberg. stay with us. lawmakers will not have much time to review a nine hundred billion dollars economic planlus palin -- stimulus congressional leaders have agreed upon. thousand senate are scheduled to vote today. most americans would get a one time hundred dollar payment. $300 a week and enhanced unemployment benefits through march, and the paycheck protection program would get $284 billion. that includes loans to small businesses. u.s. officials argue there'll will be a lengthy effort to determine the extent of a

russian hack on federal agencies and private companies. republican senator mitt romney says russia acted with impunity and says president trump has a blind spot about it. the president has contradicted u.s. intelligence officials and suggested china may be behind the cyberattacks. president trump campaign is turning to the supreme court began to challenge the election results in pennsylvania. he has filed another longshot appeal aimed at overturning three separate decisions from pennsylvania's highest court. the supreme court has already rejected two efforts to overturn joe biden's victory in pivotal states. aboutusk has inquired converting large transactions of tesla's balance sheet into bitcoin. -- elon muskhange had an exchange on twitter with muskminent -- he said elon would be doing shareholders a

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>> this support is unequivocally beneficial. if you think about we restarted in march when covid hit our

shores and where we are now, it is responsible this economy has done so well. tom: the gentlelady from san francisco, mary daly of the san francisco fed. look at her biography. an extraordinary story of determination. lisa, you are looking forward to the open. a property of jonathan ferro. lisa: jon who? tom: who do you have as the guest? the walls must've been breaking down to be on "the open" with lisa abramowicz. lisa: tony dwyer is joining us. one of the questions is whether we see more pain going forward as people reassess the optimism. tom: i will give you a hint. tony dwyer named his banks by the dip. lisa: thanks. [laughter] stay tuned. tom: with janet yellen taking

over as secretary of the , penelope goldberg has been definitive in economics. it goes back to her tenure at the american economic review, her tenure at yale university enter public service to the world bank. penny goldberg joins us from yale and the peterson institute for international economics. you pride yourself on applied economics. to aou apply economics natural disaster like a pandemic? penny: that is a very interesting question. the pandemic was truly novel. it was something unprecedented. that means we cannot take official models for techniques and apply them to the pandemic. what we can do as economists and scientists more generally is

apply the wisdom with opportunity to this situation. apply a certain way of thinking about the problem. part of this involves looking at the evidence very carefully, following the evidence. tom: part of the applied is the run right back to normality. do you have a run rate of when we get back to normal after a vaccine? is it one or two years or you like to live your blanchard where it could be a much longer line back to normality? penny: i am very hesitant to make any predictions. in the past year everything is uncertain. i think it is a long road ahead. of 2021 weby the end will be in a much better place. the pandemic will be on its way out. it will of played out. we still have to deal with economic fallout.

the consequences are going to be felt in the long term. i do not think things will return to normal fast. i think we will have recovery, but i think it will take a long time before we have a sense of normalcy again. tom: do we recover by growing our way to recovery or do we recover with a higher tax burden? to be anowth is going important part of the equation. taxes isthink raising a short-term priority. eventually we have to deal with the fact that we have an enormous debt and this has to be thated, but i do not view as a priority in the next few months. left, i the time i have must speak about your sterling career and the great frustration of more women in economics.

i would suggest economics is leading the way with academic acuity. how do we get more women involved in the people science? penny: first let me say it is getting much better. now there are more women at every level. what happens at the undergraduate level, we have fewer women than men, even at that level. then you go to the graduate level you have fewer graduate students than male graduate students. at every stage of the career progression we lose women throughout an academic career. this has to start early, it has the start of the high school level, perhaps at the undergraduate level, encourage women to enter economics, not because they have to come everyone has to follow their dreams and their talents, but i think economics offers very good career and many women have a lot to offer so they should not shy

away. -- aimes women have a long wrong conception of what economics is about. this has to start early on. as we move through a women's career we have to make sure that every stage we do not lose women. is in the main issues economics you tend to peak in your career in your 30's or 40's. that is when women have children. that has always been a very important issue. retreature women do not because they have to take care of the family is important. tom: childcare mentioned briefly in the stimulus bill we saw over the weekend. this has been a joy. penny goldberg, we would love to have you on again. but lb goldberg of yell university and the peterson institute on covid -- penelope goldberg of yale university and the peterson institute on covid.

it has been an extraordinary day. we want to give thanks to our united kingdom team for wisdom during the morning. many of our staff on severe london -- on severe lockdown in london with a skeleton crew. we appreciate their efforts. the news without question is the lockdown of the united kingdom. maybe not a total lockdown but there it is. with the airlines, with the rails, with shipping. it will be interesting to see what we see out of the prime minister's meeting. in the united states, stimulus celebrated. much more on that through the day, including david westin on "balance of power." look at that on 12:00. david wetzel was on twitter and copy?s there a printed i am not sure there is a printed copy. look for that in january or february. $900 billion, the second largest

stimulus in american history. much more on this. kevin cirilli watching the story with our team in washington. you deserve a data check. way better than it was early this morning. we were -100 on futures. , -61 onnd, down 1.6% futures. the vix up seven figures. we were out well over 30. a 28.84. that is an elevation of volatility over the last number of hours. 10 spread comes in three basis points. i want to make note of oil, particular the russian headline. that is two dollars on brent crude. then of course, we have a reversal of the weak dollar, strong e.m. view.

we will see how that plays out here. anthony dwyer will be on with lisa -- what's her name? lisa abramowicz. thank you, megan. lisa abramowicz and tony dwyer are coming up. this is bloomberg. good morning. ♪

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lisa: for our viewers worldwide, i am lisa abramowicz in for jonathan ferro. the countdown to the open starts right now. 30 minutes until the opening bell. we begin with the big issue, the new virus strain weighing on global markets. virus, mutation of the particularly speed of transmission was not possible to ignore. when the virus changes its method of attack, we as a country have to change our method of defense. that is what we are doing. lisa: the u.k. health secretary echoing the prime minister, saying "the new product -- the new variant is out of control and we need to bring it under control." the news of the variant -- countries across the world closing their border