♪ >> the course of the virus, the pandemic, and the vaccines will determine the course of the future economy. >> the economy has shown fairly good resilience to this third covid wave. >> the street has woken up to the idea of cyclicality being dominant. >> you are likely to see some turn and maybe a pullback. >> volatility kills people's confidence and when you can make a buck. >> if we have recovery in 2021, that's a failure. we need to have a boom. >> this is "bloomberg

surveillance" with tom keene, jonathan ferro, and lisa abramowicz. lisa: good morning. jonathan ferro, tom keene, and lisa abramowicz, john farrell off today, but the hope for a economic don -- dn on the $2 trillion hope from biden. tom: it takes $2 trillion to keep the economic -- rising. let's review this for people not up to speed. it is so important. we were chewing glass with $300 billion, 400 billion dollars, no, i want $800 billion. with these elections, house, senate, democratic president, we launch up to $1.3 trillion, and look where we are this morning. lisa: we were talking about all the money we were going to be pumping into the economy. bond yields were responding.

i don't know if you can call this responding. they are tcng up -- ticing -- up. tom: i have the cerro book of technical analysis. look for that on real yield. to me and is like a 1.13 and we are not getting there, 10 year yield rounded up 1.11%. curve steepening a little bit, fractional. equity markets nasty, turning better in the last hour. oil, 55.73 off the big bid. lisa: one of the questions is talking about the yields, bob michele of jp morgan. he came out and said that the fed is enabling monetary -- modern monetary theory, enabling the u.s. government to borrow

trillions of dollars and in debt without actually incurring higher costs borrowing. this essentially is what they are doing to allow the economy to continue to grind higher and this is why he is so much risk on. first of all, whether the fiscal authorities will take that grant and to go with it, that is what people are taking a look at. tom: an important paper released by adam posen of the peterson institute, from dr. or zag, robert room -- robert room and, and joseph stiglitz -- robert rubin, and joseph stiglitz. a policy by those three noted officials. lisa abramowicz and tom keene on economics with sam stove all. i have to start with where we were with matt o'connor of deutsche bank. thank you for emailing in a note where doug kass has said the banks have come awfully far,

awfully fast. sam tov -- sam stove all, all of the banks. sam: we are seeing better numbers expected for this fourth quarter. diversified banks were expected to be down 22% in the fourth quarter earningsf, now off only 17%, the -- so things are looking to get a little better. regional banks were 13.5%, now 12.5%, and things have not gotten started. where there is a vacuum of valuations is where they are most likely drawn. tom: the other idea that you have so many decades of experience on, corporations and ceos adjust to the cards that have been dealt. do you anticipate a lot of adjustment by companies this year, that will surprise with utter margins down the income

statement -- better margins down the income statement? sam: you are right that companies say, we don't like the uncertainty, and whatever cards are dealt us, we will work around that. that is why it is interesting that every democratic president since woodrow wilson, has come into power backed by a solidly democratic congress, yet with that, we have seen the market do root -- do really well with those six presidents come up more than 11%. if you include the russell 2000, they have been up 16% and a president's first term, rising eight times. lisa: this is a different year that comes on the heels of an incredibly -- incredible dynamic. how do you sort out the froth when you looked at the earnings expectations that are baked in?

sam: the earnings expectations need to improve. we are looking at sub $173 earnings for the s&p 500, which is causing it to trade at a 40 year premium to its average or p/e ratio. we need to see earnings approaching $200 a share in order to bring down the pe -- p/e from 23 plus to closer to 18. lisa: another aspect influencing equities has been the resale -- retail price setters. i have been struck that on monday, retail traders accounted for 1/5 of equity trading. if you look at the top six most active stocks, were penny stocks. how does this affect your thesis at all? is there a flag that something is amiss? sam: yes, and anecdotally i got

phone calls from two nieces who have never invested before who now want to invest. lisa: [laughter] sam: that is like joe kennedy trying to get advice from their boot black. when you also see the russell 3000 trading 37% its moving day average, 40 day moving average, the highest on record, they are on -- in need of a digestion of gains. tom: what you are getting is the stovall clinic. what we do with democratic house and senate is textbook looking at our history. what is our trap right now of looking at too much history, and at the present of this modern market? sam: i always like to say that history is a great guide, but is never gospel, that even though

as mark train one said, it might frequently rhyme, like the singer of the national anthem, it sometimes forgets the words. you have to overlay historical tendencies with economic projections, fundamental forecasts, and technical considerations. right now, the trend is your friend, and while we are likely due for some sort of a pullback, one occurs every nine months, i still think that we are headed higher for the full year. tom: we are heading higher for the full year. are you going to be like ben layla and give me a double digit number? i heard that with your history back to woodrow wilson, your great grandfather was covering the street back then, but are you going to go all double-digit on me? sam: no, high single digit. i call myself a bowl with a lowercase -- bull with a b.

lisa: how much is your prediction of the year end predicated on this idea of $2 trillion of fiscal support? sam: fiscal support is already baked in largely to the market. expectations are that we will come -- i read greg valliere as well on a daily basis, and i believe i will be looking for biden going big when he announces tonight. so i believe that that is factored in, and we are starting to see the interest rates and inflationary worries creep higher as a result of that. now we are looking at a dichotomy between our economists and technicians as to how high interest rates go. so it should lead to some very interesting trading, but i think the stimulus is important to ensure we have a strong takeoff in the second half. lisa: i would love to get your take on the rotation trade that

investors are going further into the banks and other cyclicals in a way on the margins -- and away on the margins from big tech. does not have legs or has it been made too much of? sam: absolutely, it has legs. my portfolio looked at those industries that were the best and worst from the prior calendar year, and the outperformance typically has been anywhere from 200 to 400 basis points, whether you look at the best or the worst. the bottom 10 sub industry constituents are up 8%, whereas the market itself is up 1.6%. chances are this ends up continuing through 2021. tom: sam stovall, thank you so much. we go from matt o'connor to sam tovall there is some depth of knowledge. lisa: i can't get over that his

nieces called him up and asked, should we get in? do you have an entry point yet? tom: an entry point, and iphone broke the other -- two days ago and another one will break in three days. lisa: i remember when you told me the apple pods, the air pods were littered on the floor like lego pieces. tom: the biggest problem is they are h you toy or a vet bill -- a chew toy or a vet bill. lisa: that is the keen household, a very different reality than what other people have. tom: a wonderful bloomberg summary of the rentals in new york, there seems to be a pop, a buoyancy of people shopping lower rents. lisa: leasing activity has gone up 94% on a lot of concessions and the prices of rents have come way down. correcting, but there still is interest to live in manhattan. tom: it shows a little bit of

the spirit of the new york and scape beleaguered, like -- landscape beleaguered, like so much of the rest of the world. coming up in washington, sam stovall says he reads every day, greg valliere. a note on fire. ♪ ritika: i am ritika gupta. it is up to the senate to put president trump in the history books, impeaching him on a single charge of insurrection. it is the first time a president has been impeached twice. the resolution was supported by all democrats and 10 republicans , and goes to the republican-controlled senate which refused and -- refused a request to bring senators back before the inauguration. biden's advisors have said a coronavirus relief plan will be

in the $2 trillion range, according to cnn. he reveals that program today, said to include direct payments to american families, and state and local funding. the struggling french carmaker renault is setting conservative goals to return to pre-pandemic levels of profitability, targeting and operating margin of more than 3% by 2023. it is clear renault is trying to downplay expectations. >> plans have changed. we would prefer to work on the cars and the needs of renault, having cards and better margin -- cars and better margins. we do not want to under promise and under deliver. any good news on the market will be under that -- on top of that. any new partnership which we are working with. ritika: renault has to deal with excess capacity, but also has to

pacify its largest shareholder, the french government. global news 24 hours a day, on air and at quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

♪ >> hi rise today to support impeachment. i do so with a heavy heart, and

lasting and searing memory of being in this valerie, the people's house, right up there, fearing for my life. why? because the president incited others to be violent, a mob of insurgency in this house. it is unacceptable. >> this heinig act -- heinous act of domestic terrorism -- donald threat remains a threat to our national security, and wholly unfit to serve. >> the democratic majority has determine he is guilty and there is no need for a trial, and to move forward quickly with this phony impeachment charge. i joined my republican colleagues in standing against this effort. >> my vote to impeach is not a fear-based decision. i am not choosing a side, i am choosing truth. tom: this is the "surveillance," difference. michaela khyber with the third

and fourth congressional districts of washington state, north of portland, oregon with ms. butler, and dan newsom to the east of that. the rest of central and agricultural washington state, that is just a microcosm of tension across this nation, coalescing in the southwest corner of washington state. greg valliere now. what will be the price to those 10 republicans? can you calculate the price to them in the primaries of 2022? greg: i think some of them will lose. i think liz cheney has decent support in the house. i would not predict her downfall, but some of her colleagues might pay a price. tom: your note this morning, sam stovall, thank you for that. you think pardons -- link

pardons and the dynamics of this president on senate votes starting the 19th. greg: if there was a vote today, the senate would vote to acquit. i don't see the votes necessary, however we have a week to go? are there more disclosures about who was behind the riots, who was complicit? are there more pardons? the events in the next week or so will be crucial. lisa: it is happening in tandem with efforts to draft a new fiscal stimulus, joe biden planning to unveil that at 7:15 eastern time. 2.2 trillion dollars, the expectation republicans will sign off on it. how realistic is this bipartisanship people are expecting? greg: i think it is for this bill, then i would get concerned whether they could get a lot more. the plan for now is to go big, $2 trillion or something close to it is big, and the plan is to wait and come up with another

bill on infrastructure, green jobs, that stuff in the spring. that second bill could be difficult. on this one, i think biden will prevail and it is a story the bond market has to worry about. lisa: one story people have been saying is the impeachment turmoil has unified congress, unified republicans and democrats to some degree to get bipartisanship. is that an accurate representation? lisa: not necessarily. both parties are still in great disagreement. it is a surreal climate in washington. it is an armed camp in downtown washington and will stay that way for a while. tom: i went for a long run yesterday, too. [laughter] lisa: to get a new iphone. tom: a marginal cocktail. as we look at this drama and move forward, there is changing from mcconnell to schumer. color that change. what's the backstory?

greg: they are both very partisan and know how to deal. they have different priorities. schumer feels strongly about infrastructure. he has had to drive on the be qe and l i.e., and knows more money needs to be spread on infrastructure. a lot of things schumer will place a big priority on, a big increase in minimum wage, i think that will come soon. they are different but at least superficially they will get along. the big relationship is the relationship between mcconnell and biden. tom: i will go with that, but if you are $2.2 trillion on the top end of the biden stimulus, do you have a figure on following infrastructure? do we get out to the kind of support that the liberal economist claudia sans mentions? greg: that comes in the second bill in spring, they could talk about half a trillion or more on infrastructure. the republicans have now found

religion on the deficit, you can be sure of that, but the bond market ends yields quite higher. we just can't spend an unlimited amount of money, or the markets may rebel. lisa: this is kind of a sensitive question, but based on your conversations with your clients, typically big business has skewed republican, more toward the policies of republicans. who is the party of the c-suite now? greg: that is a really intriguing question. you've got a lot of businesses that were aghast at what happened last week, aghast at republicans refusing to accept the results of the election, so for now, a lot of businesses will view republicans in the doghouse. lisa: we have seen that in terms of campaign contributions. what does that mean in terms of policy and where they will work with republicans and democrats? greg: eventually, we do get deals. i think it will come.

we are still in the kumbaya phase, where everyone will talk in the inauguration about everyone working together. it never works out that way, and there will be huge differences over spending. the issue we haven't talked about is taxing. biden and the ways and means committee will be putting together a tax bill that the markets do not like. tom: what is great about this is lisa and i are still in the kumbaya phase. lisa: for each other or 2021? tom: we will see. lisa: the answer is yes. tom: i am trying to correlate the stimulus over the stock market. if we have already seen the move because it spurred forward, that seems to be the money question. lisa: not only does it bend on the headline amount, but exactly where it goes -- depend on the headline amount, but exacting that's exactly where it goes. the $2 trillion would go to

state and local governments and a $2000 payment to individuals. that has bled into the economy, particularly consumer discretionary's. someone who receives a check can go and buy lots of stuff. tom: the real yield under 1%. before we had this democrat, democrat, democrat reality, we had a real yield -1.0 and now we have a lesser negative statistic , -0.97. higher nominal yield, higher yield in the 10 year, with rising inflation expectations, and that gives you the debris, which is the real yield. look for it tomorrow. lisa: and the theory behind it is how much will this increased borrowing actually juice growth going forward? tom: we are seeing that was some people, with optimism, but some mystery out.

andrew ball of pimco was brilliant. dow futures up 90. coming up, frances donald. we recalibrate the american economy. she only comes after maple she on- [announcer] imagine leavehaving fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands

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tom: bloomberg surveillance, good morning. tom keene in new york. lisa abramowicz. high frequency data of unique failure to economist including our economics and policy correspondent. with the measure of the angst of this nation in our labor economy, michael mckee. michael: good morning. we are getting the numbers a little delayed. here they come and they are not good. jobless claims soar. now that everybody is paying attention. tom: "soar" is unusual to hear from michael mckee. lisa: and accurate. michael: we have not even read the number yet. 965,000. that is up for the week by over

200,000. that is an amazing increase because we are expecting to see a little bit of a decline because at this point seasonals should kick in and expect people to be laid off who were never hired because of covid. an increase of 181,000 from the previous week's revised level, revised down 3000 to 784,000. an extraordinarily big jump in jobless claims. that will make joe biden reveal tonight a little bit easier. we want to look at the overall numbers, the total number of people claiming benefits falls 745,000. that is a two week old data, to 18.4 million, that is from december 26. we can expect the number to go up again. everybody is keeping an eye on

pandemic unemployment. 284,000, change of 123,000. these are the people who are independent contractors, gig workers who were able to get unemployment but maybe not last week because of the delay in getting the bill passed. now they are filing again and filing a lot. tom: we are thrilled you are with us with this important information. frances donald will join in a moment. i did a bunch of fancy gyrations with moving averages and it is simple. statistically we are at a tipping point. what is the significance of a president-elect if we break through a given fancy moving average study to a higher rate, indeed over one million per week? michael: you have to say it is in the optics. we know the number of people who are claiming unemployment benefits is very elevated. a certain amount is fraud, a

certain amount is seasonal adjustment with this many holidays in a row. the idea we are close to one million is something the president-elect can sell tonight , he can say we really need to do something for this economy. if we had gone down 200,000 it would be harder to make the case. this puts pressure on republicans as well as democrats to do more. if he is proposing $2000 checks, he is likely to get support. lisa: just to put this in perspective, this is the highest weekly jobless claims we have seen since august. a sense of perspective, and the biggest weekly jump in the number of claims going back to march, the two to the depths -- to the depths of when this was surging up. traditionally good news and bad news. bad news is good news based on the expectations for the fiscal response. you are seeing yields down, which is bad news is bad news.

the idea this will dampen the recovery. before we let you go can you give us any color on the dispersion between the upper income and lower income tiers of the labor market in terms of who is suffering the hardest in this renewed wave of layoffs? michael: this data does not come up in the jobless claims numbers , but others have been calculating, particularly the group in harvard that put together that kind of information and more contemporaneous spending information. we see the upper incomes have been much less affected because they can largely work from home. it is the people who have to go into work and the people who work in the service industries who were laid off. we saw big layoffs in the service industries, particularly layoffs and tricking establishments in the december jobs numbers. it looks like we may see something like that in january as well. this is the week that includes

the jobs survey. you will start seeing people markdown their estimates for january and hiring. lisa: thank you so much as always for laying that out. not only was the headline of the initial jobless claims much higher than the expected 789,000, but also continuing claims much higher, increasing from the prior week to 5.3 million individuals currently on the unemployment rolls. a sense of the ongoing pain come all this pointing to a deepening of the crisis which raises the question of how quickly we can emerge from this. we have markets expecting it will be a rapid recovery once a vaccine can be distributed. frances donald joining us now. your first take on this disappointing jobs report? frances: for the last couple of

months when we have had bad data we have struggled to make the point it mattered for markets. bad data means more fiscal stimulus and who cares because on the second half of 2021 the economy will re-accelerate? this to me speaks to a tipping point in that narrative. we are not seeing rates surge following this terrible number, implying we will get a greater fiscal spend. we are looking at a deepening of the crisis, a second economic wave coming through. there is a lot to say about what -- about fiscal, but what is powell saying. seeing global economies heading back into lockdown in europe. in canada. he has talking about tapering and he has 10 million americans unemployed relative to the february unemployment claims. it is not bad news is good news.

it is bad news reflecting a painful couple of months ahead for the economy. lisa: can you elaborate on the tipping point? visited it a tipping point for markets or a tipping point for the economy where each of these initial jobless claims some -- suddenly has import beyond what it did a couple of months ago? frances: first and foremost for the economy the first half of 2021 is going to look rough. it will not be a formal recession because the year-over-year costs do not get us there, but in december the u.s. lost 140,000 jobs, that is recessionary territory. we will see a lot of weakness in the economy. the citi economic surprise index will fall and i struggle to see how the federal reserve allows rates to decline, even if it is gradual. this is not the time to be risking raising rates. we have to keep things supplanted. if they do not, i worry about some form of taper tantrum.

tom: what is the most efficient use of stimulus? what are the lessons you learned from support in canada were support in europe? frances: first and foremost, you have to plug the holes. the best types of support are the ones that make sure people do not leave their job. this is successful in germany. we've been thinking longer-term about infrastructure spending and how we raise inflation. i suspect we head back into an area where we are talking about providing immediate and urgent support. you will see -- tom: i do not mean to interrupt, but this is important. with the politics and the new calculus in washington, is there a change in individualism in america where we will become

more like canada, more like europe, and provide the income substitution and replacement jonathan ferro speaks of? frances: we are heading towards redistributive policies. you will see more demand from that. watch stimulus not for the headline numbers but what is being spent on. what is being spent on is what will drive growth and inflation and redistributive policies have a lot of marriage to that. they're not as inflationary as other types of spending. let's be cautious when we are analyzing fiscal, not just the headlines of what is under the surface. lisa: frances donald of man u life asset management. a dramatic jobless figure coming out. the highest number of initial jobless claims, almost one million individuals for the first time going back to august. the interesting thing is, critical in what frances donald was talking about, it is

unlikely the federal reserve will allow yields to rise anytime soon and we are seeing this play out in markets. yields coming down attached but equities turning up a little bit more. tom: i just put out on twitter the claims chart, a fancy math chart. i will not going to the glide path, but it completely destroys the idea the fed can be proactive in moving towards normalization. it is not going to happen. it evaporated at 8:30 this morning. lisa: the question is how you influence the areas of the economy that needed the most. is fed policy going to be what gets people off the food stamps and off of the food bank lines? i do not think so. it has to come from washington. frances: we will hear that -- tom: we will hear that tonight. david westin with kevin cirilli. mr. bided will speak. i assume the president-elect got

a heads up on this number. you have to wonder how he amends a single word. lisa: you did not need to have a heads up seeing the high-frequency data that the economy had declined. the beige book yesterday showed a deceleration. tom: i do not read the beige book. lisa: you watch him alone. tom: i watch my fifth version of home alone to look at the trump rate at central park south. it is true, it is out there, and we know it, but there is nothing like michael mckee said, the actual statistic always has an impact. lisa: people struggling to understand how quickly the labor market can recover. once people can go back to bars and restaurants, people can get reemployed. the scarring implications not only after people of been out of work, but in an economy that is fundamentally transformed in a much bigger way remains to be seen. tom: is never boring as it was

for claims, and we move through the economic week. the president-elect to address the nation tonight with a fiscal plan, i believe the 7:00 hour. look for that on bloomberg. coming up, on oil, jeff currie, goldman sachs. this is bloomberg on radio, on television. ritika: with the first word news, i am ritika gupta. president trump has become the first president ever impeached twice. the resolution was approved by all democrats in the house and tan republicans. the president was accused of one count of incitement of insurrection for last week's riots at the capital. the next move is up to the republican-controlled senate who already wrote check did -- you already rejected requests to bring senators back early. mitch mcconnell says he is not made a final decision on whether to vote to impeach president trump. he sent -- he wrote he intends

to listen to legal arguments before deciding. national guard troops have taken up positions in the u.s. capital. more than 20,000 have been summoned. that has turned the capital into an armed camp. authorities say there is a major security threat around next week's inauguration and they're trying to prevent a repeat of the riots at the capital. the number of apartment leases signed in manhattan almost doubled last month from a year ago. that is a sign that falling rents and landlord incentives are attracting tenants. the value of those perks led the median rent to fall 17% to $2800 a month. china's president xi jinping is calling on starbucks to help improve relations with the u.s.. in a letter to chairman howard schultz he said he hopes starbucks will make active efforts to remote trade cooperation and bilateral relations. schulz previously set china is a

competitor with the u.s. rather than an enemy. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ >> with no long-term supply, with maximum fiscal and monetary stimulus, the combined backup and the tail winds make this one of the best commodity cycles ever. you should see 100 to 300% returns. lisa: that was dwight anderson, osprey management founder talking about the expectations of fiscal and monetary support. we will continue that conversation on the open. lisa shalett helping us carry

that conversation forward as people look to the joe biden administration's plan at 7:15 this evening. tom: we will see. looking forward to that. right now jeffrey currie of goldman sachs on the surge in oil. many people are modeling this at the top end of the range. can you model a top end of oil through $60? jeff: all of the telltale signs of a bull market at play. not only do you have oil charging toward $60 a barrel, you have metal prices back to super cycle era levels. grain exploding. global liquidity increasing tremendously. at the same time, the dollar broke a multiyear trendline back to 2011. when we think about the potential for a macro repricing across the commodity complex, this is the highest it has been in well over a decade.

we think there's a lot of upside risk, not only to oil but the entire commodity complex. tom: i wanted to talk about a wonderful new book. you probably helped write it. for the rest of us it is overwhelming, the dynamics of the u.s. production of oil. are we at risk in the new math that joe biden is writing? jeffrey: no. when we think about the current environment, particularly given the esg overlay, there is only two sources of oil that can be brought on quickly -- simple deficits we expect over 12 to 24 months. that is the middle east and the united states. it will be a very important part of that supply mixture. when we think about the potential for a grant coming

back with the bided administration, iran has probably fallen down the policy agenda. we expect there to be room for that supply in 2022. tom: where to the sally's and russians -- the saudis and russians, where is their optimum oil price? putin will say higher and higher, but where's their best price? jeffrey: and the 2000s they say the best price is $22 a barrel to $20 a barrel, the best price is $35, i do not think they know and i do not think we know. structural repricing occurred in 2005-2006. we saw structural repricing in 2015 to the downside. we are in the cusp of one of those happening. we may be in the deals in terms of what is going on. it starts to become very difficult to pinpoint where the cost structure is. tom: let's go to chicago with jeffrey currie, teaching for

years at the university. you and i know there is a general equilibrium theory of markets, of oil supply and demand. there is a misunderstanding by the public of how sensitive and tight those responsiveness are. are we in a new equilibrium or is it the same old, same old? jeffrey: it is the same old, same old, but the underlying costs associated is the one that is uncertain. let me give you an example. in 2012i was talking to one of my private equity clients, canadian assets at $120 a barrel. a return at 100%. then oil collapsed from $120 to $45. the dollar went from 1.4 on the euro to 1.05. iron crushed, copper crushed.

sitting at $45 a barrel. if you went back to that same asset and revalued it, what was the irr? 21%. everything repriced. that is why it is difficult when we say is there something different about this equilibrium? yes. what is the price attached to it? tom: for those taking notes on radio and at home, i must say what you just heard was brilliant. do we have that same formula, that same reaction function now, or have we cut prices so much to a new efficiency you will lose to this in the new math that the technological leap is not there anymore to cut costs if we see price pressure? jeffrey: i gave you the example to the downside. this is moving to the upside. i do not have a good private equity example for 2005.

i think in terms of what is going on right now, costs are rising. we have wall street sanctioned cost inflation going on with companies, particularly ones that do not follow stringent esg strategies. we are in an environment -- give you an idea of why a weaker dollar creates upward cost structure. let's take copper. 45% of copper production costs are local. when we have the dollar weaken and the chilean peso begin to strengthen? what happens to the cost of copper? it goes up, and the dollar begins to weaken. even in countries like columbia, the cost structure begins to creep up. then we get that reflationary feedback. what if you have a weak dollar but upward pressure on commodities? higher commodities -- saudis

excess reserves went up in november by $10 billion. that excess liquidity gets lent out, created more demand for commodities and the whole cycle goes up. tom: does the circuitous function lead to optimism in price and the microcosm of it helping push prices up, does it lead to a commodity bull market or is it a lift off the great commodity recession? jeffrey: i would argue, talking about the type of tailwind you have going on, you have structural underinvestment and supply similar to 20 years ago but turbocharged because of covid prices going negative and the fact you have the esg overlay. second you have policy driven demand. read distributional policies, all that fueling the upward

shift in demand. the third is you have the tailwind to create inflationary feedback. tom:'s american big oil ready for your scenario? jeffrey: part of the reason why we are bullish from a supply perspective is they are not there. looking at the permian, the activity has come up tremendously. there is an esg component but returns were not that great. the bottom line is there is the making for a strong bull market. these companies are moving forward in a different direction. tom: this is important. bringing over the commodity perspective of currie to the equity market application, can you advise david costin in overweight energy even after the lift off the bottom? jeffrey: we want to be

overweight commodities. the one thing that separates commodities from financial assets is financial assets anticipate the future. commodities are spot assets. they pick up as a hedge against potential inflation the unanticipated physical moves in the real economy. we think you will physically take off the vaccination improvement in economic activity , you will want to be long spot assets, real assets. we prefer the commodity as opposed to commodity related equity. tom: i need to revisit this. one final question. if you look in the break of commodities off of 2008, this is the glide tap we have seen through a decade. you are calling for reaffirmation of a commodity bull market? jeffrey: without question. this ship has sailed. if you look at all of the telltale signs of a structural

bull market, you have the weak dollar, grain prices. you can talk about grain prices. then you have what is going on in the metals market. overlay that. the ticker is global liquidity is beginning to rise because that starts that reflationary feedback loop. tom: hugely informative. jeffrey currie with goldman sachs. cannot say the value you heard there. it falls into all of the other commodity sources at bloomberg intelligence. i do not have time to throw up all of the chart, but it has been interesting the rebound currie has been on in the blended commodity index really up against ancient resistance, and a breakthrough that to some form of bull market would be a great goldman sachs call. i want to reframe the markets, and i can say the yields have come in, but fractionally off

the shock of the claims report. the 1.10 a level. excuse me. i do not want to oversell that. gold cannot get a bid. $1841 an ounce. in the currency space, this goes to the pandemic and may the british response versus europe. sterling at 1.3630. holding on nicely. the same with the renminbi, 6.47, going the other way on the chart. yuan resilient over the last couple of days. thanks to michael purves for that view of the pacific rim earlier this morning. now to the politics. kevin cirilli getting ready on bloomberg radio. that will be important. a delicate interview today for david westin with donald trump's good friend wilbur ross of

florida, the secretary of commerce. the balance of the changing power of washington. stay with us on bloomberg radio come on bloomberg television today. good morning. ♪

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lisa: the can down to the open starts now. we begin with a break -- big issue, an unprecedented second impeachment for president trump. >> the house demonstrated in a bipartisan way that nobody is above the law. not even the president of the united states. that donald trump is a clear and present danger to our country and that once again we honor that oath of office to protect and defend the constitution of the united states. lisa: the house of representatives clearing the measure with 10 republican votes making it the most bipartisan peach in u.s. history. jamie herrera butler crossing party lines and voting in favor of impeaching the president. >>