>> it could be a little patchy, but once we get into june, we are going to be in better shape. >> economically speaking, we are going to start out on a better note. >> absolutely inflation is coming back in 21. >> you can have an economic recovery and not necessarily a stock market recovery. >> we all knew winter was coming, but you've got all the bears in hibernation right now. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning to you. good morning 2021. our first show of the year. ferro, it's like gilligan's island. it's a three hour tour and he's off somewhere. where in the world is jon ferro? lisa: jon ferro took off a

couple weeks to invest more heavily in bitcoin. of: he sold the 8000 shares doordash. i guess they round-trip. bitcoin right now 30,000. make it 31,000. it's a little different than it was over the weekend. we welcome all of you on radio and television. the news flow does not let up. really extraordinary what we saw from the president last night. the impact in the currency markets is tangible. really think the election in georgia tomorrow will determine so much of the fate of the nation with respect to biden's outlook and what he can possibly get past. interesting to see what he can get past but really, another year of incredible enthusiasm. tom: we thank dr. bremmer for all of his help in making for an interesting two hours. kevin cirilli will join us in a bit.

races really indeterminate right now. lisa abramowicz, start out with the 2021 morning brief. of howhere's a question strong manufacturer will be for the month of december. we have seen it boosted by the weak dollar, boosting the price of some of the week commodities. we have german data. today opec holding their monthly meeting deciding whether to continue to increase output. disagreement between russia and saudi arabia on that front based on ongoing weakness and president front -- president trump and joe biden, turn out so far already at record highs even though we haven't had the day of. a lot of people are watching in particular the african-american voters that have been coming out in force in record numbers.

a lot of people see not a strength for the democrats. this will determine so much of the agenda. tom: let me look at the data check. it is up off of the strong currencies weak dollar view. equity futures up 18 right now. points and up 160 the vix 23 .0 five. in the currency space, this is important. it is a weaker dollar. it is a weaker bloomberg dollar index, but it's the way that it's weaker. it is massively specific written base. even mexican peso goes out to almost new strength. turkish lira is idiosyncratic. we really see is a pacific rim that going on right now with asia dxy. ha stunning 6.46. that is renminbis strength that

will drive and correlate that dollar market into what we see in equities. benjamin layla of tower hudson, who was brilliant in december 2 or three years ago called again out of the pandemic for double-digit -- this morning, been lately or of tower hudson reaffirms an unprecedented three double-digit years in a row. that is really, really extraordinary. are abramowicz and i thrilled to bring stuart keiser in as my first interview of the year, ubs head of equity derivatives research. let me go right to what then later said. gains ine double-digit 2021? >> good morning and happy new year. i would say why not would be my answer to that. you have a tremendous amount of risk premiums still priced into the market. it's hard to imagine that risk

premium coming out of the market without equities rising. with the specific return numbers in, the table is set for the markets to continue around this year. there's a lot of uncertainty in the markets right now. tom: within your study of the cross moments of derivative, what is the speculative bet right now? , thee speculative that market is in a place where they are very positive about the growth outlook. there is still a reasonable amount of uncertainty out there and i think for that reason, the speculators have been a little bit cautious against the high volatility we are seeing in the market. if you look at where the vix curve is, the markets realize that kind of volatility about 10% of the time over the last 80

years. so i think right now you're seeing, people would like to lean against that high volatility. confusionust too much about what the pass is for the virus and a lot of muscle memory in terms of what happened last year. people are being cautious about short-term volatility because of last year. the way risk is priced, the speculative trade would be to lead against that. is strugglingrket to put that trade on right now. a question ofses whether fundamentals and historical models work at a time when cash is supreme and massive. out, $240int this billion went into money market funds. that was the biggest amount.

how much is this purely a cash game and not connected to fundamentals? >> i'm not a fundamentals person. i think fundamentals ultimately do matter. to your point, the involvement of central banks in the financial markets is at a level it has never been in the past. a lot of people would argue that has allowed valuations perhaps not to get to levels they wouldn't have gotten to, but to get there faster. the s&pre asking now, was up 15% last year and a very crazy year with a very difficult economy. it is the equity market the head of economics at this point and could we see a time where the equity market moves sideways just because it sort of ran ahead for a while. theiew would be if you get economics growth and earnings growth that we expect,

ultimately fundamentals will push you higher. i think it is a fair question to ask about what is the timing and has the cash inflow to the market allowed equity markets to run the race before the economic data appears and in that case, you would be a little bit more cautious or just more conservative in terms of what your return outlooks are for the markets. us, the path of least resistance is going to be higher. lisa: if fundamentals still matter, why do people not care that the vaccination schedule seems to be delayed? >> it's a fair question. the news we had from pfizer and the u.k. in terms of mutating virus and the slower pace of rollout in the u.s., i would have expected that to be more of a headwind to markets and it hasn't been. given the high efficacy numbers on the vaccines, people are

willing to sit on their hands and wait for that to evolve. why volatility has remained high from a risk pricing perspective. even though your base case is much better, there is still uncertainty about when does this get rolled out. that really worries risk managers. you see risk probably stay higher than it might otherwise be even the rally we've seen in the equity market, so i agree with you. a little surprised it hasn't been more of a headwind to cash equities. this is interesting, stuart kaiser. are you suggesting it's not so much about capital gain or total return in equities but about playing as one example the vix to a lower statistic for the year? strategists,quity are bullish u.s. equities markets, i'm not saying people

shouldn't invest in them. if you look at the relative pricing of risk, you are seeing a rally in cash markets that has a relatedirrored by decline in the volatility markets. there sort of a disagreement and volatility markets are telling you you need to be more cautious than you are being on the cash side. they do offer you an opportunity that if we get the economic growth and vaccine rollout we expect, the longer part of the volatility curve is too high and that needs to come down. a december 2021 s&p put, you generate almost three point 2% premium. that's an extreme amount of premium. tom: this is really important. kaiser, thank you so much for the union bank of switzerland. greatly appreciate that. i look at all of this and i look at the bonds dynamics, i was

away for three or four weeks. bonds do nothing but look at the real yield really buttressed down to new greater negative lows. is whether wetion can continue to increase inflation. our fundamentals good as these record highs on stocks and incredible valuations are the highest in decades. are they still really worth it given the fact that we still have the hangover affects and the pandemic isn't over? tom: the uncertainties as well. i've got to admit, washington is front and center over the next 48, maybe 72 hours. lisa: what are you watching most closely? tom: you've got to watch the georgia elections. there's all sorts of transitional stuff. let us continue. we do this with futures up 17. all these bursting through.

to be at 19, it's not. at 23.14. we drag forward this discussion on the markets. stay with us. washington awaits. maybe kevin cirilli is awake. good morning. it was an extraordinary attempt by president trump to strong-arm fellow republicans in a telephone call saturday. the president urged georgia election officials to find thousands of vocus and recalculate the results to flip the state to him. the president ranged from flattery to threats as he urged officials to take actions. are calling the president's call impeachable. nancy pelosi will once again be the speaker of the house. with theelected

majority of votes. there was talk of the need for change, but no democrat challenged her. she begins the new session of congress with smaller majority than in the last term. blocked thedge has extradition of julian assange. u.s. lawyers say they will appeal. he faces criminal charges in the u.s. over wikileaks publication of leaked military and diplomatic documents a decade ago. the opec on maui and smedes today to see if it can keep lifting out put. coronavirus pandemic has hurt demand. opec and its allies will decide what to do about february production levels. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> all i want to do is this. find 11,780to

votes. which is one more than we have. because we won the state. tom: an extraordinary moment and little comment from the white house so far. kevin cirilli is trying to follow and stay focused on the moment by moment and all of atlanta and georgia and of course the moment by moment in washington, d.c. he is our chief washington correspondent. you do your sources tell about what's really going on beneath the stage-managed headlines? 2024. seen fromf what we've senators like ted cruz who are starting this year with the beginning starting line of the next four year election cycle and as a result of that, you are seeing some calculated measures, calculated tweets. on the senate floor.

in order to keep their political options open. and the polls suggest that this is resonating with many republicans. as a result of that, they are keenly aware of that. there, i'm intended sure. i wasn't aware of it until the third person asked me about the senator from florida. vandalism at the senator from kentucky's house. vandalism at the speaker of the houses house. great. senator rubio has people outside his house protesting for him to act. is there a republican voice that is visible away from blind allegiance to mr. trump? coates senator john thune has commented that any efforts to overturn the election would shotne -- go down like a dog. he is really indicative of where senate leadership is at in this context. that, president

trump again very much aware that his message is resonating with a mistrusting electorate has said that senator through and will now be primary. so it's a very contentious volatile situation right now and the republican party. have thegeorgia, we republican incumbents that are up for reelection not really weighing in so much on the wednesday certification of the electoral college where there is opposition among some recover lukens -- republicans. kevin: senators leffler and perdue both having to navigate in the closing days of this race in addition to the certification, also the pandemic. senator perdue having to quarantine after being exposed to covid-19. have seen topou republicans, top democrats from the upper echelons of the party both lay down their campaign

markers in the peach state and quite honestly from clarity perspective, we might not have a result, similar to the november elections, we might not have a result tomorrow night when the votes are being is still counted. i bring that up because for those who are looking for a clean narrative as tom keene has educated me, you might not get those results until a couple of days after. lisa: i'm shocked. we are not going to get a clean narrative out of the recent election. i do want to know how much oxygen is being taken out of the room with these postelection debates. dealing with the pandemic, the rollout of the vaccines. -- kevin: candidly, ever since the stimulus has come to fruition, there hasn't been much policy discussion in the past several days. see whatis looking to getting through the certification of the results on

wednesday and also looking for there to be some type of result and some clarity to be gleaned from georgia as well. all of this centers around the immediate politics. what is the politics of the house of representatives in the first weeks of 2021? >> how will speaker pelosi the rising left flank. tom: is she as fragile as john boehner? not a question of fragility. longmore a question of how does the speakership tenor frequently last. this is someone who has beat the political odds and reclaimed the gavel, which is historic in and of itself. that perspective she is a bit of a political anomaly. , the question of how many years her speakership the

last and which incoming generation, not even necessarily from an age perspective, but from a factions perspective is being now openly discussed. take if the democrats do the senate, what are the likelihoods that you see the chances of an infrastructure bill getting past? next round of stimulus, if it was juxtaposed with a national security element pertaining to 5g technology as well as talking about the stimulus checks, i think they could be able, the democrats could be able to find a sympathetic ear and some of the more moderate members of the republican party, like senator susan collins and those type of lawmakers. senator josh hawley raised the prospects of being able to checkt a $2000 stimulus and he is also jockeying for

some 2020 positioning. president biden, when will he announce whether or not he will seek a second term? that is also a question that will have to be answered in the next 12 months. tom: next 12 months, come on. at his age, that would be a shock to consensus right now. does he want to get out front and say it earlier rather than later? >> that is still a question. until he makes a declarative statement, the democrats -- we are talking about 2024 jockeying amongst republicans. he has still frozen the democratic party from being able to explore which direction they would like to head into. you did a report considering the eagles season is over. i thought you would take january off. >> what did they tell me? there's always next year.

tom: kevin cirilli, our chief washington correspondent. i look at this and the distraction and we've got to remember, futures up 17. look at these levels. 3765 on spx. i just did that for pharaoh. o. ferr i really don't care. lisa: i'm glad jon ferro is dow points. quote the noise that we are hearing 1.3% ofospitals, only the u.s. population so far has been vaccinated. israel has gotten 12% of its population vaccinated. tom: look for manus crying and his reporting on israel's success and vaccination. coming up on rates, lisa

demands. on radio, on television. this is bloomberg surveillance. good morning. ♪ - i'm dough hirsch. you may already know that goodrx can help you save up to 80% on your prescriptions. unfortunately, many americans can't get to a doctor right now. the good news is that for many health issues you can see a doctor online. it's easy.

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tom: good morning, everyone. bloomberg surveillance on bloomberg radio and television. i'm not sure where jon ferro is right now, but he is enjoying some well-deserved time off. lisa, we have to talk about these markets with futures out, record highs is the general statement. the vix doesn't come in. lisa, where i see it is on the borders of mexico. strong.anada coming in, renminbi has a life of its own. lisa: dollar weakness being driven in the emerging market currencies in the east -- by the strength of the chinese currency and there was a question of how

long the dollar weakness can continue. talking about buns, we are not seeing much action. it is notable given the fact that we are seeing stocks making new highs every day. has been looking at this as well subadra -- as well. subadra, what is your sense of the market as we get this on risk feel? subadra: we will get a lot of movement this week, when we get the data. broadly speaking, what the market is focused on is short-term gain versus long-term gain. bond markets are more focused on the near term and the near term data is going to show you a decent amount of weakness going into the fourth quarter. we are going to get the weakest unemployment reports since may, we are going to see weakness in

the manufacturing data. week isthe data this going to disappoint. the question is whether the bond market will move past that. lisa: let's unpack some of that. you are saying the bond market has been more worried about that weakness. and will we have to see, what will that real move look like? inadra: i think the move bonds is going to come after we see the vaccines being deployed and the data gets a little more stable. becomes what is going to change the data over the near term, and i don't see anything much. half, the riseor in yields is going to come in the second half when we start to see an improvement in mobility

rates, as well as an improvement in the data when the date -- when it comes back online. to the residual, the real rate, where is the opportunity within that equation? subadra: that is a very interesting question, because we have seen a decent rise in inflation expectations after the election, partly because of exuberance and partly because of the fact there is always an expectation stimulus would get past by the end of the year. that caused expectations to rise. yield has declined, so is question becomes, realized inflation going to rise at the same rate as expectations? 4.8% buts expecting

that rise in inflation is going to be gradual and that is ultimately going to cap the expectations. tom: are stocks a yield? i think it is a fair question in january of this year. and evidents yield equivalent to growth for someone like you? subadra: perhaps. stocks are trading in a very different dynamic. as long as the nominal yield is that is ad 1%, maybe positive for equities. yielda case for nominal to gradually rise during the course of this year, given the --t that unemployment rates let's say that the end of limit rate does get to 5% by the end of the year, which is what projections are calling for. then you should expect a gradual rise in yield, that should sort of offset the gains or comparisons.

lisa: it is hard to think about cash is in an era when supreme and there is so much of it. sidelines, 4.3 trillion dollars in market -- in money market funds that could be deployed. how much can yield rise in this kind of environment? subadra: i am calling for yields to get to 1.5% by the end of the year. have a very large amount. trading rates are actual -- are also quite high. that money is going to find its way back into the market, once we get past the first half of the vaccinations actually taking effect. i think there is a good case to be made for yields to rise. the -- we have 10 getting to 2%.

i think higher than 1.5% is very possible. lisa: does the fed get involved, subadra? subadra: i don't see the need for the fed to get involved, unless the rise in yield is unruly. i think if it is gradual, you go 1.5% over the course of the year, that should give the fed no reason to worry. i think what they will do under the circumstances is think about gradually tapering asset panicses, so as not to the market, as well as gradually moving stimulus so yield can rise. tom: subadra, it has been an extraordinary bull market, the shock of 2009, i believe it was 2012 we saw another total return

ramp. there is always a rationalization of total return in bonds. are you telling stocks and clients -- are you telling -- with thets pricing we are at, do we think total return? are going think bonds to underperform in 2021, which is kind of a consensus view. the question is to what extent, and that is where -- the big unknown is how much credit yields actually rise. i think the broader sense is that bonds will underperform. tom: if you are just joining us, subadra rajappa is with us from societe generale. we will look at equities today, dow futures up 154. yields -- subadra, if i look at the bond

market and i compare it to the competition that is out there, it seems to be so competitive, and you have monetary and fiscal dynamics, as lisa mentioned as well. what is the greatest uncertainty for you, and the actual calls you are making at socgen? subadra: i think the uncertainty comes from what happens tomorrow in the election, in the georgia runoff. we could see more fiscal spending. broadly speaking, the uncertainty will come from if vaccines get deployed a lot sooner than expected, and they are effective, and we start seeing increasing mobility faster. there is a little bit of complacency in the bond market. if things start

to pick up sooner, people will anticipate that will cause the rise in yields sooner than expected. tom: i think it is so interesting to see a sophisticated talk about bonds and it still comes back to washington. lisa: it comes back to whether or not we get some stimulus that could juice growth. given how much optimism we are put on ai want to debbie downer hat. we have to get the contrary intake because no one else is doing it. in the bond market, taking a look at credit. high-yield bond yields, 4.18%. yield onsee a sub 4% bonds of companies that are the closest to default. subadra, how much of a concern is this, that nobody is taking into account credit risk because there is a belief in this recovery, a belief in fed fiscal support and a belief that defaults just won't matter.

is --a: i think the fed hasbad stock provided by -- caused corporate bond spreads to narrow quite deeply and there is always a presumption in the corporate bond market that the fed will step in, if there is any sort of rise in defaults. to be fair, defaults have been rising and are pretty much in line with what we saw back in 2009. ready to step in, if needed, and that is worthy confidence in the corporate bond market is. tom: subadra, thank you for giving us our first briefing on rates in the new year. lisa, thank you so much for bringing in the gloom. i want to frame that the caution lisa adds is a huge part of the

zeitgeist. it is out there. the double digit equity gains as -- i thought it remarkable over the long weekend, how silenced the bloomberg crew was. lisa: that is why i thought i had to at least represent the three people at the bar trying to drink away their sorrows. to covid,nt, thanks but it does raise this issue of whether people are overlooking unseen risks. the s&p right now is trading at 30 times earnings. it is the highest level since 2000, even higher for the nasdaq 100. you look at some of these valuations and start to think about as you compare it to the tech bubble, i'm sorry. but i jon disagrees, personally just have to wonder. fundamentals are not there.

that we areknow is going to continue to find the best voices we can. i would suggest martin adams of bloomberg intelligence. lisa is looking for an earnings surprise. we saw a huge earnings resiliency. i am still looking for my 2019 entry point. lisa: how about 2018? tom: futures up. kidding. earlier, i'm we are not on the dow 31,000 watch. stay with us on radio and television. this is bloomberg. david riley is next. ♪ ritika: with the "first word news," i am ritika gupta. president trump urged virgil officials to find thousands of votes and change election results. that came from a recording of an extraordinary phone call over the weekend. flipped between

flattery and threats, but the georgia officials did not back down. nancy pelosi will have a smaller democratic majority as she begins another term as speaker of the house. -- was related to the post she was reelected to the post. that were talks progressive and moderate democrats wanted a new generation of leadership but no democrats decided to challenge pelosi. bloomberg tv. andudging by the population the efficiency of the medical teams here, we can get probably eligible toto those receive the vaccine, somewhere in may. i think we are getting there, and we are not going to slow down. ritika: israel has already administered first doses of the pfizer shot to about 1.2 million residents, for more than 12% of

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

>> we are not where we want to be, but i think we can get there

if we really accelerate, get some momentum going, and see what happens as we get into the first couple of weeks of january. tom: dr. fauci with abc this week. he will be joining the biden administration. the vaccine was the talk of the weekend, certainly in new york city it is tangible. not back to march and april, maybe back to june, but you can feel it in the city, the immediacy and frustration. when do i get the vaccine? we do that with the markets lifting this morning, futures up 16, the dollar is weaker. now, that vaccine question we all have. the bloomberg intelligence head of pharmacology joins us. you stunned me with a france-israel distinction. the idea that france has been a

huge success and france has been beyond tentative with 500 plus vaccinations so far. what are the distinctions between those two nations that we can learn from? >> good morning. i have to say that i am a lot closer to the french story then the israeli story -- than the israeli story. in france it seems to be bureaucracy in getting the paperwork done. i spoke to my local family doctor, and he needs to see me whenever i come up for a vaccine, before i go in, so it is two visits twice for my two doses. i have to give consent and fill out paperwork each time. maybe that is what the french deemed necessary to get the --lic to comply, but tom: this pace isn't going to get it done all stop dr. fauci

said that. why have we lost that spirit? dr. fazeli: i think some of it has to do with the good steps we have taken in giving people more freedom of choice and less centralized driven -- you go through with this or else. we are dealing with a situation where if we don't deal with it faster, what my personal activity does in terms of potentially passing the virus to somebody else is impacting other people's freedoms and rights and that is not right either. we have to get a good balance on this. lisa: i don't think the shut up and take this spirit has died on the merck surveillance. -- has died on bloomberg surveillance. questioni, there is a

on delay and if the -- and have you seen any viable projections on how to model out when we finish with this pandemic, based on where we are? dr. fazeli: i haven't and what we have to do is be a little more humble. everybody tries to do this, but there are so many levels and layer's of human interact -- layers of human interaction. when we wouldq3, not need to be on lock down, but a lot of that depends on how this virus responds to the if thision program, and virus can mutate in a meaningful way, we have to build that into our models, and i have not seen one out there that answers that question. lisa: sam, what about data on

whether people can still transmit the dot -- can still transmit the virus once they have been vaccinated? dr. fazeli: sadly, nothing new apart from what we know from the trials so far. do seem torials suggest you get potentially lower transmission, but we need astra trialnd the should be able to answer that. tom: dr. fazeli, the sharpest article i saw this weekend was from the atlantic. there covid study they do, the covid tracking project, and they said shut up, it's about hospitalizations. new york hospitalizations up, all the regions of the americas, terrible. synthesizem fazeli the hospitalization statistics worldwide? dr. fazeli: it is not just the u.s. or new york story. we have some hospitals in london

that are totally at capacity. you just have to follow twitter and some local doctors to see that. germany is showing similar directions although they have a lot more icu beds per capita. least, may be but at these two countries have managed to keep the rates of infection under control. the u.k. is what worries me a lot. tom: i look at this board and i want you to lab all of your expertise in pharmacology. tell our listeners and viewers what they should expect across the next eight weeks. how do we get to march 1? unfortunately, i think it is going to be more pressure on keeping people away from each other. maybe we shouldn't use lockdowns anymore. key people away from each other so the virus cannot continue to transmit. we will see rising cases in the

u.k. unless we get severe lockton. -- severe lockdown. tom: one of our best resources on sound science in this pandemic, sam fazeli, of bloomberg intelligence. we have big rest to these other stories as well, but we need to get back to markets. they ended strong and they begin this year strong again. lisa: the strongest they have ever been, if you look at sheer valuations. i am wondering how much we are baking in and how much people are looking past the economic pain. tom: i have not added up the top six or seven companies but i just came in and since i am all apple, $2.3ok up, trillion market cap. getome point this year, can $3 trillion market cap for apple? lisa: apple is a mainstay for a lot of people. my question is the carnival cruise line, some of these more

speculative country -- these more speculative companies who can't do anything right now because people are traveling. how much runway do they have if we don't get in and to the pandemic until august or september? how much is that being priced in, given the delay in the rollout of these vaccines? tom: the heart of the matter is the rotation of small caps. one of those dollar dynamics and what it means for international investment. lisa: what is interesting is because of the euro strength, some people were suggesting you could see a rotation out of european stocks, that this would potentially hamper earnings. you are not seeing that, so some of these currency dynamics are not necessarily playing out because frankly, it is just risk on and finding the areas that haven't been up the most. the cable, 1.37 rounded up. i am getting ahead of myself.

strong canadian dollar, really showing up front and center. the jump condition on china. 6.71. as we continue to greet the markets in 2021, on radio and tv. this is bloomberg. ♪

>> it could be a little patchy but once we get to june, we will be in a much better state. >> starting out a more somber note. inflationely, i think is coming back in 2021. >> there will be some form of simmering slow inflation. >> you can have an economic recovery and not necessarily a stock market recovery. >> we have all the bears in hibernation right now. >> this is bloomberg surveillance with tom keene, jon ferro and lisa abramowicz. lisa: good