>> the pandemic is still not over. >> the risk of doing too little is far worse. >> the economy could bounce back much faster than people anticipate. >> the fed wants inflation to pick up and give the economy a chance to run hot. >> we are flooding the economy with monetary stimulus. >> where'd you put your money? >> this is bloomberg surveillance with tom, jonathan ferro, and lisa abramowicz. jonathan: this is bloomberg surveillance live on bloomberg tv and radio. i am jonathan ferro. equity futures are down on the s&p. we are -0.2%. as we went into the pandemic, record inflows into equity

funds. tom: you see it in the charts. go to the bloomberg terminal. pick your beast, disney doing so well. some of these are up even 40% since the election. i will let you pick the date you want. the story is a two year yield. it is 35% decline from the high two year yield of mid-january. stan fischer would tell you that percentage change is a huge deal. jonathan: what's going on? what's this about? tom: dornbusch fisher stars and stanley fischer at m.i.t. would tell you the media and wall street doesn't look at percentage change of the yield with the respect that the economists look at it. i'm fired up. jonathan: just taking the opportunity. tom: i can't concentrate.

jonathan: i can tell. we can all tell. the broader markets, ipo's above range for credit markets. any offering, you pick equity or credit, it's yet to be seen. tom: let's get it out of the way. lisa popped 8000 shares of bumble. lisa: it almost doubled, going back to that. i'm going to gloss over the idea that i purchased shares. if i could get in on this, that would be fantastic. i want to tie your points together, the ultralow to year lows flowing into credit. not only are we getting record equity funds, we see the balance sheet of the federal reserve rise to a new high. you know i love looking at the data on thursday evening.

what i find interesting, 7.4 $4 trillion, they are keeping the pedal to the metal. here's what i'm looking for. 10:00, the university of michigan survey. we have seen things flatline and go down his people reassess how quickly they can get that opening, how quickly they can get out and go to restaurants and malls. at 11:15 a.m., joe biden is meeting with governors and mayors. it's a bipartisan group. they will discuss the infrastructure plan they have after they pass this round of stimulus in washington dc. i find this interesting, janet yellen the treasury secretary join jay powell for the first international meeting. she is representing the u.s. at a virtual meeting. she is going to take a different tack than the trump

administration in terms of international cooperation and trying to support economies in the developing world more than trump let on. jonathan: i just emailed stan fischer. tom: this is great. jonathan: we will see what he said. do you look at bond yield moves in percentage or basis points? tom: i sat behind him at the economic club at new york. the chicken was lousy. stan fischer was viscerally engaged in this fixation on yield and not movement of yield. you've been on all week and i know you will lead with the real yield this afternoon. this is a huge move in the two year yield. jonathan: i was going to lead with the asset sorted. thank you, tom. equity futures are down seven or eight points. in foreign-exchange, we come in about 0.2% there.

we saw a new high for the post pandemic of 1981. since then, it is stable, 116.15. tom: the real yield, you've got to watch this afternoon. with all of this, the real yield hasn't moved. for our guests, that has -- is critical. jonathan: it's great to catch up. it's an early morning for you. thank you sir. let's start with yields. are they good for this equity market? >> hi yields are good. it suggests the vaccination process is working in the economy is reopening and people are gaining confidence. money costs a little bit more. this is all about how cheap money is, it's going to get more expensive is a good thing.

vaccinations don't work, the economy doesn't reopen, we have negative yields, we have deflation, is that a better environment for investors? no. to me, the secret of investing success over the next six months is to not pay any attention to this debate. tom: you have been wonderful and this goes back to your morgan stanley days. ron temple was just on and he agrees with you that these signals are constructive signals for the economy. you don't talk about a 120 10 year. explain why that is good for america. >> that is exactly right. when i looked at the forecast over the last couple of months, one thing that stood out for me was a glaring mistake, everybody had the same view. the 10 year going to end at 1.2%.

we are already there. i think we are go consider -- going to go considerably higher. things are working. the economy is getting better and the price of money starts to go back up. it suggests it has big asset implications. it means the bear market in u.s. treasuries, it means tack suffers. you were talking about big tech not doing anything. rising rates and the vaccine is kryptonite for big tech. we want to think about innovation, not disruption. these are good things. these are investors looking for opportunities to get closer to the innovation and early innovation stage. we saw the model with intellectual capital and financial capital globally focus on a vaccine. we got it in 1/10 of the historical time. this is moving to climate, to

crypto, that's where the energy is and that's where people want to dissipate. that's where the i/o the -- ipo action is coming from. it continues in a 2% 10 year at the end of the year. if we get there in the next couple of months, it will be problematic. if we get there in the next couple of quarters, no problem. jonathan: let's do it. let's do it. i let it slide less time. let's let it go there. >> not in the u.s. jonathan: nicely refined. >> look, i am of the view that there are two huge things going on. one is that we are in an investment landscape that hasn't been seen for 50 years. we will be in a global economic boom. the last time it was the strong

was in the 1970's. the u.s. is at a pivot politically. we are going to go back and ask you how it was back in the day. the u.s. is at a political pivot point, moving from 40 years of government is bad from the ronald reagan days to big government is good and we need huge needs and money is cheap. we are going to execute good economics. that has asset applications. there is cyclical value, the u.s. outperforms. emerging markets, yes, commodities, yes. this leads to policy driven markets, thematic investing is where you will find alpha and alpha is necessary because the 60/40 risk parity, returns 10%

in the u.s. over the last decade. the coming decade will return to percent if we are lucky. lisa: that's where i wanted to go, the idea of what is a reasonable return to expect going forward. if you do alpha generation, if you find the right opportunities, what you people target given the future priced in? >> you know as well as all of us to that the pension fund community, they target a 7.5% return. that's not going to be happening. the people that do this gmo kkr who forecast returns, they are dismal, absolutely dismal. 2%, 3% at best. it's going to be a challenge. the opportunity set is being provided. we are building a new market as we speak.

the opportunity set is in the thematic's. you can participate through different vehicles, including the etf space. the opportunity set is fantastic. you see this with arc. this is the poster child of the day. that's what the opportunity says. with bitcoin it, the question is no longer should it be a part of the portfolio, it's how much should be part of the portfolio? in the last couple of weeks, two things of happen. blackrock said it will out bitcoin futures and its allocation fund. i do that. i have to pay serious attention because the big dog will buy bitcoin. yesterday, bank of new york said it would settle bitcoin. it's a done deal. the climate, cyber, fintech, that is 20% of my portfolio

versus five months ago, less than 5%. jonathan: we've got to go. i like that. thank you sir. alongside tom and lisa abramowicz, i am jonathan ferro. this is bloomberg. ♪ ritika: the biden administration is changing the way the u.s. handles asylum seekers. they will slowly start to admit those turned away by the trump administration. there are 25 thousand migrants waiting at the southern border. prosecutors have concluded their case for convicting donald trump in his impeachment trial. they say they approve of the former president incited an insurrection when a mob of

supporters storm the u.s. capital. his lawyers will present their case today and include video presentations, and attempt to counter the gripping video house prosecutors showed. $1400 payments have been approved to millions of americans. that will be part of the coronavirus relief package. the panel okayed tax credits to children that will be mailed out on a monthly basis. the u.s. is wrapped up deals for vaccine doses from pfizer and moderna. that will given a supply to inoculate all americans. the delivery dates been moved up to the end of july. global news 24 hours a day on air and on bloomberg quicktake, more than 120 countries. this is bloomberg. ♪

when you switch to xfinity mobile, you're choosing to get connected to the most reliable network nationwide, now with 5g included. discover how to save up to $300 a year with shared data starting at $15 a month, or get the lowest price for one line of unlimited. come into your local xfinity store to make the most of your mobile experience. you can shop the latest phones, bring your own device, or trade in for extra savings. stop in or book an appointment to shop safely with peace of mind at your local xfinity store. >> i watched the news.

i didn't watch any of the hearing live because i was going

straight through until after 9:00. i think the senate has a very important job to complete. i think my guess is some minds may have been changed. i don't know. jonathan: joe biden in washington dc. good morning to you. i am jonathan ferro, counted down to the open in about two hours and 12 minutes. equity futures are negative, down 2/10 of 1%. in the fx market, the euro-dollar is sitting above 21 -- 121. in the bond market, unchanged. feedback of the morning so far on twitter. i think jonathan is being

disciplined. something does not seem normal between them. tom: we know that. jonathan: have i been disciplined? is this normal? i thought this was normal. tom: we have to say with love and affection how much we hate our team. they do all these leaks. the control room, they know the real dirt on us. they are leaking it constantly. that's how you see this garbage on twitter. it's like to gossip in washington. let's save ourselves with kevin cirilli. there will be a defense for president trump today. what should we listen for? kevin: three or four hours of testimony coming from the lawyers today. he is in mar-a-lago and has been assured by top senators that he faces no chance of a conviction.

i've got to be blunt. oath sides would like to see this trial and and for them to move on to other issues like the stimulus. tom: one of the papers talks about the assuredness of a saturday closure. is that possible? kevin: it's possible the senate could wrap this up as we've said from sunday or monday. jonathan: let's talk about objectives of the former president. a lot of people would like him to do certain things this weekend if we wrap up. what are the objectives of the former president once this is behind us? kevin: the economic stimulus. it is really working its way through the committees. i spoke with carolyn maloney of the oversight committee. she said they been continuously being in markup for these bills.

they are going through the process. i spoke with rendon boyle from pennsylvania. he said they've been working virtually around the clock in markup's to move through this package. at the end of the day, this bears repeating, the democrats have decided to forgo trying to garner republican support. the process to get financial assistance to communities around the country is going to be a much more fast process. lisa: let's talk about the details as they come into focus. 1400 dollar checks sent to families. 15 billion dollars in airline payroll assistance. what is that? kevin: this is being pitched as financial aid for the airline sector. the critics would say it is a bailout. democrats do not want to be using that word.

many republicans are impacted. lisa: this is crucial. he said they don't want to use that word. why not? kevin: to your point, when i talked to republicans they say this is not the funding we need to be using. what is fascinating about the airline industry is republicans are careful about this. they know the ecosystem of the airline industry, they are reliant upon a robust airline sector. there is a lot of slicing and dicing going on making it a complex issue for many republicans, even those in deeply conservative states who don't want to bailout blue states. tom: did mitch mcconnell have a good week? kevin: republicans would say he did. here's why. if you look at the map for 2022, it would appear it is eight

difficult in the senate for republicans. -- it is difficult in the senate for republicans. he has been able to navigate through a treacherous time of republican party soul-searching. this power vacuum of who is really in charge of the republican party, which is typical in this process at the beginning of a new cycle. jonathan: great to catch up. kevin cirilli in washington dc. tom keene, let's sit on the airlines. is that going to be a tough business to be in this year given what we understand so far? tom: you have live this with all your jetting around. i don't get it. there is manufactured enthusiasm about the airlines. i am not feeling it. statistically and visually in the near skies, i don't see it. jonathan: the difficulty here is

the vaccine program has rolled out nicely in the united states. why are not we talking about a london new york corridor reopening. the bar to reopening national travel has crept higher even though vaccinations have been increasing. lisa: this is a real concern because it's not just new variant in the united kingdom, it is also south africa. how do you track people coming into the u.k. or the u.s.? the other aspect of this, do you think business travel ever come back? jonathan: in certain places. this is my scenario. client one, we are not going to come down to because we are not traveling as much. it's to zoom call. another bank calls at the same client and says let's go to

lunch. who gets the deal? where they have those face-to-face meetings, that's where things get interesting. is it in new york? is it miami? tom: we are going to have to see. we are opening restaurants here. it's going to be the third time we have tried to open restaurants. lisa: this is going to be tough. i want to go back to the planet, not bailout, -- plan, not bailout. u.s. airline spent 96% of their free cash flow before the pandemic on share buybacks. there is a question of use of cash and management of the airlines. that is one of the political questions as we deal with assistance from the federal government given what could be attached. jonathan: i don't think you can make the argument that you shouldn't send aid to states because you think they've been

mishandling their finances. you are ok sending aid to airlines who did worse. tom: that's what we learned from kevin cirilli. it's a three day weekend. i didn't know that. jonathan: good morning. (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you maintain comfortable, correct form. that means better results in less time. and there are over 20 exercises to choose from. get gym results at home. no expensive machines, no expensive memberships. - [announcer] imagine having fuller, thicker, go to aerotrainer.com to get yours now. 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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this is bloomberg surveillance. it is friday morning, good morning to you. we pull back from all-time highs on the s&p 500, off eight points this morning. we had for a second straight week of gains across the board. the outperformance comes from the small caps. the russell is down 0.2%. this is an issuer's market. equity ipos come to market. we've got a range. the debt market and credit, the same thing. you get people on the phone, asking them to issue debt. it ties to the initial guidance. that's the story of the market. we had some stability in treasuries.

the high on monday, that was a high post pandemic. we have settled down from then. it's almost a basis point on the 30 year. is this what the fed wants? how hot is too hot? we started the week asking that question. from new york, this is the cross asset price action. >> there is a story. disney had a surprise profit. we knew the streaming service was doing well, or the 90 million subscribers. the parks business, they controlled costs. the street was looking for a loss. the company came in with an adjusted profit. paypal, keep an eye on that stock. there were some aggressive comments about how he wants to become everything in the

financial space. he wants to be like we chat. this could involve offering stock trading as well as other types of financial services yard with the company already does. he got a little bit of a pop. keep an and stb. -- and stb. -- nstb. they did the clearinghouse for robinhood. they are going to go public, that is somebody keep an eye on. michael klein raised two new funds last night. a couple of interesting side notes, carnival downgraded. a region also downgraded. they are pushing out their estimates for a return to pre-pandemic levels in the cruz space, maybe back to 2025.

at morgan stanley, quantum scape is singling out as plays in the ev space. quantum space is a battery maker that partnered with volkswagen. they have a much lighter model. they could avoid some of the manufacturing headaches that tesla ran into. tom: i think you well understand i am clueless on this. is this an ipo equivalent? romain: absolute. some would say it's the best of both worlds. right now, this is the vehicle a lot of people are coming to the market on. for people like the deck he -- him, they are the new investment anchors. lisa: he basically keyed in on the islanders.

he wanted to talk about the islanders. he related the spac to the islanders. tom: the coliseum was the greatest. i don't know what the soccer field is. the old islanders rank was the only rank that felt like the 1940's and 1950's. you looked straight down. it was like you were on top of the players. it was old and ancient and they got rid of it. jonathan: i thought you were a fanned. tom: no! the only time i am arrangers fanned is when mark messier shows up. the only reason rosenberg come on the show is because we do the montreal canadiens. lisa: thank you. tom: he was a huge value to

bloomberg. he sat down at his desk one day and said it where can i work for blocks from maple leaf gardens? he's got a job for weeks from maple leaf gardens. jonathan: reversing is not a bad thing. there are no bad bonds, only bad prices. i didn't say it was a bad thing. they made it sound like exuberance. how can i mask that? make lisa deliver all of your important points. [laughter] [applause] jonathan: make lisa deliver all of your important points. that is going to be the cheat card for the show. tom: this is so off the rails. lisa is the only adult in the room. i am not worthy enough to do it. lisa: you are worthy and i'm not

going to ask you to weigh in on his delivery. i want to get your sense on the u.s. economy. i want to pick up on that carnival note. the idea that people are downgrading their expectations are when we return to normalcy. how much of that has been adequately wagered in when it comes to economic rejections? >> you have two forces. we are grading reviews for the coming package. people including myself, we were expecting something around $1 trillion. now it is going to go north of that. that is likely to have a big impact. when the economy rebounds, i think the delay from the second quarter to the third quarter.

it's unlikely we will see a sustained pickup in activity before july. there is a slight expectation in upcoming activity. lisa: timing matters when it comes to employment and inflation. it raises the question of whether the north of $1 trillion stimulus package will become more of an income replacement, more of a plugging the gap if we push back the pandemic and end up with a later recovery. how much dissent have a less long-lasting effect? >> right. definitely, the economy needs more support and we will have more stop and go policies. you need to plug the gap. part of the package is necessary due to the conditions that will likely stay quite bad. we are seeing in europe those

variants that are gaining traction. we have to wait for everyone to be vaccinated before we can raise the white flag. we are not there yet. we need more support and i think it's coming. i don't think we will have an inflation burst over the summer. that is way overrated. inflation -- prices on tourism and travel, maybe hotels. it will be very short-lived. it will not be persistent. tom: ask a question. jonathan: can you ask thomas if there is too much froth? lisa: thomas, what do you think? >> it is whether the fed looks

at the stock market. i think that's a valid question now. the fed is very focused on the labor market. they want to go to full employment. what we are seeing with policies in general is there is a link between monetary and the stock market. sometimes, fiscal policy ends up financing the stock market. that is a valid question. the rich right now in the economy, fiscal policy is plentiful and will be sustained. we are not seeing a buildup and risk out there. jonathan: it's great to catch up. there's a future in this. i think this can work. tom: you and i know this. they came from a magical team.

what is so important, we will do it next time. the leakages of the american success and the vaccine success in the u.k. and around the world , that emerging market world. where will we be in august with a follow-on of better gdp? jonathan: it's not synchronized. that's the big shift in the last couple of months. in early november, there was this feeling that we've gotta vaccine. the rollout has been so different in different places around the world. tom: it's always in the finances. we forget he is a pharmacist. he was amazing this morning about the desperation south africa feels to get the vaccine. it was visceral the way he was speaking. jonathan: not just south africa,

the whole continent. it's a real issue in the emerging world. lisa: it's a race. if you have mutations, have to create a critical mass to stop the mutations from threatening the progress we have made. this is the tension. timing does matter. not necessarily having a synchronized and to the pandemic, it's a big deal when you have kids at home. you relate to this. when can we stop wearing masks? when can we go back to school? when can we go to a restaurant? tom: it goes up the food chain as well. it's not just young kids. jonathan: you complained about that. is that what that was? tom: we are getting swanson tv dinners. it's going to be great. jonathan: they can have that tonight for dinner. lisa: thank you.

i appreciate that. jonathan: from new york city this morning it, i am jonathan ferro. common up, what a guest -- coming up, we look at the fixed income market. from new york city, this is bloomberg. ritika: house democrats spent three days trying to show why donald trump should be convicted of the storming of the u.s. capitol. his lawyers will need only four hours or less. one of the lawyers did dismiss the video heavy presentation. he accused the democrats of using for entertainment value. arizona, utah, new mexico, california, and ohio led the declines. hospitalizations in new york

rose 6%. the japanese prime minister has resigned as head of the tokyo olympics organizing committee. he made sexist remarks and added more trouble the tokyo games. that led to chris's and from the elliptic committee and sponsors like toyota. l'oreal is counting on a post pandemic rebound. fourth-quarter sales rose 4% after dr. downs hammered the cosmetics industry. >> the situation -- we are positive. we are optimistic and confident. we think the market, the beauty market is bouncing back. we think after a year of -8%, we will be in positive territory this month. ritika: this is when berg.

-- bloomberg. ♪

>> this is going to feel like a flood of cash hitting the banking system. it is going to drown out and put

downward pressure on front end rates. they are likely going lower. the fed will have to make technical adjustments, hiking rates in order to prevent u.s. rates from trading negative. jonathan: that was one of the best conversations we have had this week, the bank of america research head. good morning to you. i am jonathan ferro. let's get a quick check of the price action. we fall back eight points on the s&p 500. we are just above 3900, just off all-time highs. to round things out in the bond market, yields are up a single basis points on the 10 year. tom: we always tell our history we have with our different gas. i am pleased to tell you i have

a job rejection letter in my file from daniel, from 2001. he wrote me a brilliant note. he said, i really want to hire you. you are just to obnoxious. daniel joins us, some who invented the modern bond business. you are the one who told us to forget about yield by depressed price bond. the bonds will appreciate for total return. you can't do that anymore? daniel: that's right. all i can do is agree with what you just said. it's a tough row to hoe right now in the bond world right now. you can make some money. you can ride the yield curve at the short end.

i don't recommend it. you can buy a slice of each of the new high-yield common out. you've got some yield. you can be a bit smarter about it and you can say i'm not going to buy a slice of each one of them. i'm going to try and keep my maturity short. people say to me, that's all well and good. our discount rate is seven. the portfolio is 3.5. what do you expect us to do about it? i don't like to get rid of it. i have to be honest with you and tell you it's that type of yield environment. if you are discounting at seven and the yields you were getting our 3.5 or even 4, you've got a problem.

last year, we were lucky. prices went up some more. the total return looks nice and people say that's really very nice. you have done it again. listen, that was luck. by this time, they will never let you into another meeting. that's the reality of life. jonathan: i want to talk about the experience through the last few cycles beyond what we've been through the last 12 months. what is it about the way we recover and rollover through these cycles that leads to lower highs on the 10 year bond yield each and every time? what is that dynamic? do we repeat that in this recovery as well? daniel: i don't know the future. i think what we are in right now is low rates for quite a period

of time. i don't think they will stay down in the u.s.. i don't think we are going through the popular stage that -- inflation in the market. i don't buy that. maybe it will happen. i doubt it. that's a whole different world there. i think what we are in right now is an excess of liquidity finding its way into the bond market. there are a couple of indicators if you look at what is happening with the etf's. if you look at the high-yield etf's, they are not really growing anymore. as a matter of fact, as reported they have flattened out. that is one indication.

you look at what the new issues coming out are being used for. a good chunk of them are being used to refinance the older ones, bringing down your coupon to adjust. that is smart financial management. the underlying fundamentals and a lot of the issuers outcome are quite good. on many more, they are deteriorating. you have a floppy or credit environment. you have lower yields. lisa: this goes to the point you made recently in an interview with bloomberg news. you said there is no outstanding value in the fixed income market. as one of the fathers of the bond market as we know it today, where'd you go if there is no outstanding value in the fixed income market? daniel: i'm going to go back in

history. do what you did at a different level of yields. in the 60's, you start to work with the yield curve. you are patient. it's easier to see in munis. i am going to buy the five-year and roll it back out after two years have gone by, or three years. that was a steady positive curve. there is a spread between. if you stick with higher quality and work with the yield curve, you can add some value. then you watch for the occasional anomaly. on the credit side. they do come along, not many and not big. they don't last long. you can find them. one thing i discourage people from doing is saying listen,

this economic rebound is going to be ferocious. everything is going to be back to normal. maybe that will happen. i sure hope so. i wouldn't bet that way. i would not bet against the return of inflation. i think milton friedman had something right. follow the growth and the rate it's growing. use any other proxy you want. if the stock market. there is excess liquidity and it is in the system. the fed is caught. we are fighting a war right now against the pandemic. when that is the case, everybody has to get in and support the war effort. jonathan: forgive me for jumping it was fantastic to catch up with you. thank you for giving us some your time.

from york city this morning, i'm alongside tom and lisa abramowicz. we pulled back just a low bit from all-time highs. the next hour a bloomberg surveillance is just around the corner. this is bloomberg. ♪

>> while the recession is over, the pandemic is not. >> the risk of doing too little are far worse. >> this cycle is worse than any other. >> the economy couldn't bounce bit -- could bounce back faster than anyone expected. >> we are flooding the economy with monetary and fiscal stimulus. >> if you don't have money invested in the equity market, where do you put it? >> this is "bloomberg surveillance." tom: good morning, everyone.