♪ >> it's not bad news is good news anymore. it is bad news reflecting a painful couple of months ahead for the economy. >> that is a persistent theme into 2021. >> you have all of the signs of a structural bull market in play here. >> stimulus is coming. that is going to help the consumer and small business. >> i think we should be assuming that inflation is going to go off to the races. >> there's a lot of stimulus coming in, and recovery from covid, kind of like you do thousand nine year. -- like a 2009 year.

>> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. "bloomberg surveillance" on radio, on television as well. an inauguration tomorrow. it is pardon tuesday, widely presumed from the white house and president trump. we join you on our simulcast to speak about economics, finance and investment. lisa, we must make note that finally, after a world's sojourn out of the 19th-century and lord byron, he is back. jon, you and i talked this weekend as you were getting off the gulfstream, and you talked about what you observed on your travels of people lined up to get back into america. talk about that. jonathan: it is not a secret i've had some issues over the last several months. i won't go into too much detail. but whilst to this country was drowning in divisive politics and the ugly scenes of the last

couple of weeks and the decay of the united states of america, i can tell you that i was outside a u.s. embassy in a line of 100 people deep, going round the corner, and the sun wasn't even up. in that line was just a whole group of people from all walks of life looking forward to getting a working visa and getting back to the united states. without laying it on too thick, i think it is important to recognize as we work through difficult times in america, it is still a country that offers millions of people the world over a hope and promise. tom: so much going on here, the emotion that jon has missed on his travels. your thoughts on this final active day of the trump administration. lisa: we are going to be seeing whether the pardons come through, and what they are. jon's point about people coming into the country and immigrating, that is going to be

one of biden's key policies. this dovetailed very much into the economy because we are looking at debt to gdp right now around 200% by 2050. it's ok if yields remain low. what happens if they don't? how will we pay for this with a slowing population and idling growth? tom: front and center is the number one divisive theme of this nation. let me look at the data right now. you are still rusty on this. we've got to get you back to the game. the 10 year yield, 1.11%. what do you see when you consider the real yield? jonathan: every time i tuned in over the last four weeks, i heard you polluting the air with

dow points. i am happy to be back to try to clean this up a bit. i'm looking at high yields. i think the demographics point is really important because this is about an outlook that goes beyond the next six months. you get people re-engaging in the economy the way they couldn't. you have people going out there and spending. how long will that last? what does that look like in 12, 18 months? can we really alter the trajectory? that is the outlook we need to focus on down in washington, d.c. i don't think a one-off check changes that. tom: a one-off check won't do it for brent schutte. they are looking at long-term investment as he looks at investment guidance as chief investment strategist.

i don't care about the here and now. i care about a morn northwestern -- a more northwestern view. is it a single digit return, or can we do better? brent: i think it is a single digit return. it is only real returns that matter. that is assumed to be an inlet -- to be in a lower inflation rate. there is a revisiting of those, but i think people should focus on real returns. all in all, consumers and citizens will still be fine. jonathan: do you know what i find amazing looking at markets right now, going through a long list of research notes and saying you can only really develop an argument on valuations by looking at web valuations because rates are

going to stay so low. my difficulty with that as we have seen the last 10 years in europe and japan, where rates have been ultralow for a very long time, and markets have not returned to big gains. low rates don't always get it done. why is the united states any different? brent: i think because of the monetary policy we've had, the promising to do more, and the fact that our long-term growth rate is above of those places. so there is a little bit better in outlook in the u.s. based upon that one of the commentaries you missed in the beginning is that productivity is rising in the u.s., so perhaps our long-term growth rate is inching up if you think about that. so i would focus more on that. i think you are 100% correct. the risk to me probably combines into year earlier talk about no fiscal hawks.

it means central banks around the globe aren't going to do more into one of three things happens. either the dollar rises too much, inflation rises too high, or people start demanding real return on their fixed income because the stock market is built on the bond market. until those three things occur, and two of the three are considered positive right now, then i think we can do and really have -- we continually have the market moving higher because right now, the cost for policymakers on the other is zero. there is nothing to contemplate. until that changes, i think the market moves higher. lisa: implicit in jon's question is this idea that perhaps there is fundamental inconsistency between rates remaining so low and growth being sufficient to justify valuations where they are. at one point, do people go in

because they have been pressing into much growth? brent: if people lose hope in the future or our growth rate dramatically slows, i think the first part you mentioned is certainly true. on the others which to still think is the biggest risk because you have the stock market having to reprice because now bonds are more attractive, now money has to go somewhere. they decide stocks or bonds. tom: this is so important, folks. it is the idea of absolute relative. the nasdaq 100 12 months trailing, tmt, is up 20%. the russell is up 24% as well. two polarities in terms of factor analysis and such. do you sell those to get an

absolute return on the other stuff, or do it on a relative basis and use that cash to go someplace else? brent: i've been talking about moving into small caps, even just broadening u.s. growth. if i take you back to 20, a lot of these charts went completely off the rails. if you think back then, we were first introduced to the trade war, which was designed -- we do have that big cap sector, and now you are starting to see the economy broaden out even before covid loosens its grip. you are seeing manufacturing do well. we think that continues into 2021. broader, inclusive growth means the stock market will be broader and more inclusive.

it is branching out into things like value, small caps, even emerging markets. jonathan: can i ask you a philosophical question, just to wrap things up we have heard --wrap things up? we have heard so many times on this show that we are in a bubble. is that the reality if valuations are close to bubble territory? brent: there are parts of the market built on things that will happen. if i take you to 1999, there were parts of the market that were not expensive, but the decade was really only lost in those expensive parts of the market. things that hadn't done so well in 1999, like small caps, actually did well up into 2007, when the world fell apart at the seams. i suspect this time will be very similar.

i guess that is the good news by diversification. to switch from what they were to what they will be. jonathan: brent, great to catch up. thank you. lisa, a question just for you, a bubble and bubble calls. lisa: the real question is, how much can we see these bubbles people are expecting to pop at some point? bitcoin, some people are saying. how much could you see that a nazi disruption the rest of markets. bank of america surveys shows people think bitcoin is the most overcrowded trade right now. jonathan: with tech and the short dollar call in the mix as well. alongside tom keene and lisa abramowicz, i'm jonathan ferro. back in new york city for our audience worldwide. heard on bloomberg radio, see on bloomberg tv, with equities up

0.7% the beauty of working remotely is that i can sit and just hear the delay. [laughter] they do sound -- the sound is not good enough. i can't hear him. this is bloomberg. ♪ karina: with the first word news, i'm karina mitchell. treasury secretary nominee janet yellen is expected to tell a senate committee that low interest rates mean it is time to act big on a coronavirus stimulus package. the former front. sa -- the former fed president will have the hearing today. according to the associated press, the european union will include a past -- include --

president trump is expected to release pardons today including one for a famous rapper, lil wayne. the international energy agency has lowered forecasts for global oil demand. it has cut its first quarter estimates by 600,000 barrels a day. the iea is putting us on a fundamentally stronger view for the year. they say it will take longer for oil to recover because the new lockdowns in europe, -- because of the new lockdowns in europe.

global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. much more to come. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

>> it is pretty clear that the u.s.-china debacle is here to

stay. but i think you will see a lot more dialogue when the new administration comes into play. tom: mr. tannenbaum is better than good on sanctions and the punishment they can cause areas of course, these are tangible issues with china. we welcome all of you on bloomberg radio and bloomberg television. this is without question my china conversation of the day. leland miller is different. besides being exceptionally competent on asia and on china, for years he's taken a different tact of looking at china data. no one i know digs deeper on china than mr. miller. he joins us right now. your note is very strong. you speak of deceptive data out of china. what is deceptive? leland: i think if you focus

only on headline growth numbers, you are going to get a very cheery story right now because the recovery is better than any other major economy in the world. the true question for markets should not be whether china can nail a certain gdp number in a particular quarter or year. it should be how healthy is the growth. is it sustainable going forward? when you look at a consumption economy, it is the weakest part of this recovery. you see it in the retails data, the services data, both in our data and government data. tom: you have talked for years about deceptive data in china. do you look at the vector of which way they are moving, or is it so messed up now, even the trend is deceptive? tom: -- leland: since the virtual standstill from covid,

we have not seen as intensive a recovery. we saw a recovery that was manufactured driven, then property driven. basically, the industrial economy, driving growth. those parts of the economy have not bounced back as much. it is not that we are seeing a different picture. sometimes we do. sometimes we are totally diametric to what the government is seeing. we are seeing the picture. we are just not seeing the same recovery that beijing is saying. lisa: a lot of people have said faster than expected growth in china puts it on track to exceed the u.s. economy much sooner. do you think that has been overstated based on what you are seeing on the ground? leland: i know people care about this, but the question is not what we should be focusing on. if china wants to be the u.s.

gdp, they could simply from building a bridge to california, but along the way, you build up aggregate growth to ramp up gdp levels. much more important would be gdp per capita at six times or so greater than china. household income, household wealth is more important. these are the things that make a country great, and i think it is a complete distraction to just look at the gdp number, which can be manufactured in the short-term, but can lead to serious long-term problems if we do that. lisa: you see an increasing amount of foreign investment into china, saying people will support the economy, support asset prices going forward, and try to get the appearance of faster than expected growth. are you making an argument against those investments, or against some of the enthusiasm we are seeing, somewhat unbridled from across the world?

leland: not really because if you are investing in china right now, you're doing it for two major reasons. the first is for diversification. the second is that a lot of things look really bad right now . the covid recovery. i think where people fall short in their analysis, they look at china and say there's this growth story. there's going to be this linear growth pattern. you can see it right now and the consumption data. there's a lot of problems with what is happening in china right now. it just happens to look a lot better than other places. lisa: there's been a divergence in exports and imports. we have seen an increase in exports from china to the u.s. and around the world. deep expect the stronger yuan to handle that?

when do you expect that to become a headwind for the nation? leland: they've allowed the renminbi to appreciate this year because they don't have much of a choice, with the trade surplus hitting highs, but they don't want to see a skyrocketing one. they want to keep it relatively stable with a slight appreciation against the u.s. dollar. so i think what they would like is stability, but because china is a more attractive destination because of the covid recovery being so well done, you've got these real pressures. they are not in a danger area right now, but i guarantee you it is causing a lot of sleepless nights, and they are facing the problem. jonathan: leland, great to catch up. from cities across china, shutting down.

i have to say, 12 months from davos, switzerland, the world economic forum, and a whole range of issues that had nothing to do with covid-19, wow , did the world miss what was about to happen. tom: it is a stark adjustment, and it is a pandemic nobody saw coming. while you were on your sabbatical, richard edmond stopped by with a blistering trust barometer. it really is the hallmark every year of the start of davos. not this january. jon, richard edelman made clear it is a completely changed trust matrix right now. he was heated that ceos have to pick up the rhetoric to assist governments. jonathan: for once, i've got no real defense on the sabbatical issue. usually it is after i take a

couple of days' vacation, but after a month, you have license to take this further. how long will you keep this up for? [laughter] are we going to do this for a week, through february? tom: i think we get out until tottenham slides back into first place, and that ain't happening. lisa: when people say, stop it already with the sabbatical talk. tom: ferro thought the show shut down because he wasn't here. lisa: he was watching the dow points, are you kidding? jonathan: lisa sent me a message every morning at about 7:04, and the subject said, "please come back." [laughter] alongside tom keene and lisa abramowicz, i'm jonathan ferro. ignoring tom keene. tom: the dow is up 211 point. jonathan: s&p 500 futures are up 27. in the bond market, yields are

higher, the curve is steeper. the main event is in washington, d.c., when we hear from janet yellen, soon to be treasury secretary of the united states of america. heard on bloomberg radio, seen on bloomberg tv, i am pretty sure j (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you?

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jonathan: from new york city for our audience worldwide, good morning, good morning. alongside tom keene and lisa abramowicz i'm jonathan ferro. we count you down to testimony with janet yellen, soon to be treasury secretary. we had some weight to the s&p 500. future tire, treasuries lower, yields are up. equity futures up .7% on the s&p. the benchmark up 26 points. what if i told you we are just 22 points away from where we finished the year. that is the message from citi, from socgen, from bank of america. in the bond market for treasuries, the top of supply,

the curve is

.

>> the issue of getting a hundred million doses in the

first hundred days is absolutely a doable thing. what the president-elect is going to do is invoke the dpa to get the kinds of things we need. annmarie: -- tom: dr. fauci moving on. we have tried as best we can to bring you adult in the discussions. the packard hospital of stanford in the standard children's hospital after a tour of duty at the boston children's hospital and out of pennsylvania medicine and we are glad she could join us. those of a certain age have the vision of being in the doctor's office and it being in the

corner. how do you vision the vaccination of those younger in the coming months? >> we are looking forward to having the ability around safety and efficacy around our teenagers and 12 and older. currently, we are able to vaccinate those 16 and older when those became available to us to be able to vaccinate at a local level. we will need to push for vaccine clinical trials in younger age groups. it will be important for us to protect all of our kids and adults and older adult population as effectively as possible. tom: do you assume we will be using the new, modern, mrna vaccines or do we wait more -- weight -- await something more traditional? richard: -- dr. lee: my

perspective is that we need to have a more diverse portfolio to be able to protect the younger population. so testing the mrna vaccines and those are anticipated to go into hopefully trials down page six months. i also anticipate the other candidates we hope will continue to be in development for that population. we will need as many vaccine candidates as possible. >> can we get to herd immunity without children being vaccinated. dr. lee: children are known to be able to be infected and potentially a symptomatically be infected. that continues to be a challenge . although children are less likely to be have hospitalization or severe disease. we do see severe have -- severe disease happen, but we can also

employ mitigation strategies, specifically for the younger population, elementary school. we are still going to need options in order to get that to a new normal. we are going to be wearing masks and doing social distancing for a long time. >> question is enrolling in of kids in order to get the data necessary to roll out the vaccine. are you concerned about safety, considering the fact that younger individuals don't get as sick with the virus and perhaps are reticent as a result. dr. lee: safety will always be the number one priority, especially in the younger age groups. the benefit risk balance will be different for younger kids than it is for older. we not only get vaccinated to protect ourselves, but also to protect our family members and loved ones. i do think the trials will

emphasize the safety protocol of these in younger children. i anticipate it will be more challenging to evaluate to the same degree at the casino -- degree efficacy as we did in the older population. there are studies anticipated to be able to understand the response can be robust and like it is in the older population. tom: there was a terrific summary a day ago on the global set of small shocks for being effects. how would you -- how would you characterize the shock and what we need to look for in the vaccine. dr. lee: regard anaphylaxis, all clinics have protocols in place to monitor everybody for 15 minutes, so everyone should

anticipate that after a vaccine. but early minutes for those who have a prior history of a severe allergic reaction. individuals who carry an epipen our number one, we do screening before they come to make sure they are eligible and can receive the vaccine safely. there are still individuals who we want to make sure we provide access because people with food and environmental allergies, we will continue to monitor those individuals more closely per the protocols in the lenox are asked to be prepared and be able to manage and monitor and effectively be able to get those individuals to care as quickly as possible. it is a challenge with this particular vaccine. tom: thank you very much. dr. lee with stanford children

hospital. lisa, it is truly weekend in our history. all sorts of discussion about a washington under siege, the different themes of those arrested and such from the riots and also about the economy forward. we do await secretary yellen likely never have. lisa: we are getting a sense of how she operates as a political operative, not just in a political appointee head of the federal reserve. there is a question of what line she will toe encouraging spending and how she navigates the cake shaped recovery. when you talk about the pivotal aspect of the data which have been devastating for the lowest tier earners. the question is -- what could she as secretary can be done that she couldn't do as head of the fed. tom: we know that the package

will be less than the $1.9 trillion. what is important to me is right away they have to start with the second idea which wrapped around infrastructure, if you can't do infrastructure with a democratic president, house, and senate, when are you going to do it? lisa: infrastructure spending will be on the table and also the minimum wage. this idea of doubling it to $15 an hour. i think it is a controversial point. the economic statistics seem to point to a higher wage being an official for the economy, but there is a lot of opposition as well. interesting to see how much republican support there will be given the economic support. tom: so much of that goes back to the national sense of a

minimum wage versus a state to state battle. on a yellen as chair and secretary of treasury, look for this coming up. stay tuned on bloomberg radio and bloomberg television. rumor has it pharaoh -- ferro is in the house. ♪

jonathan: good morning, good morning. the countdown to the open starts now with 30 minutes. equity futures up .6%. we begin with investors preparing for secretary yellen. >> the exchange rate will be the main emphasis coming from janet yellen. >> it is a boilerplate moment. the u.s. would continue to support strong dollar area >> -- dollar. >> it is pointed toward dollar weakness. >> weakness we see it should push inflation. >> what happens with the fiscal package. >> yellen may be christmas coming. >>