♪ >> the cyclical element almost certainly show some update. >> you had an incredible amount of churn in this economy. >> this is going to be a global recovery if it happens , for the same reason it was a global recession. >> is inflation that will ultimately drive the shift in monetary and fiscal policy. >> we are still in the depths of the crisis. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city for our audience worldwide, good morning. this is "bloomberg surveillance ," live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. in the last 24 hours, the big story is in the bond market. a clean break through 1.25%, and then overnight, through 1.30%. tom: the non-correlation here, just an odd data check right

now. what i would say, coming up next, our most important conversation of the week on the oddness of the vix. jonathan: we do -- we need to do a clinic on volatility. in the bond market, what is important is a treasury market selloff. lisa: you are seeing this even more in the u.s., but as you said, around the world, this idea of everybody piling in, getting back to normal. we haven't emphasized this enough, the idea that we are seeing the cases decline substantially across the united states. jonathan: equity futures pulling back just a little bit on the s&p 500, down two points, negative not even 0.1%. euro-dollar, $1.2062, off by 0.3%.

down to $1.29 on the u.s. -- down to 1.29% on the u.s. 10 year. got to get used to that. i keep thinking, is that euro-dollar? it's not, it is u.s. 10 year. tom: i think it is interesting to see dollar-yen back to a 1.06 level. you see that with euro-yen, and that is unusual. jonathan: crude picking up on brent and wti. we do have an energy crisis in the united states. joining us on that is rachel adams-heard, bloomberg energy reporter. i've been told you have some energy problems yourself. the power is down, so we will be ready for any technical issues. walk me through where things stand where you are. rachel: they are restoring power to homes, but it is moving slowly. there are still over 2 million people in texas alone that don't have power. i am looking out for my apartment, and as far as i can

see, there's no light, even downtown. it had been let up until last night, but it is dark at the moment. definitely seems to be, at least for some people, to be getting worse. they are trying to rotate the blackouts now, so if you did have power for the first half of the week, you might get it back to the second half, and then those who did have power are leslie to see outages going into the weekend. jonathan: rachel, stay safe. thanks for touching base with us. rachel adams-heard on the latest in this energy market across the united states. for market participants, brent is $64 a barrel. wti approaching $61 now. tom: that conversation in the last hour was critical. i was surprised how he did not mince words. he said this is historically one of the two biggest oil outages globally ever. jonathan: and even beyond this, looking to a move to $80 potentially on crude.

we need to mention what you did at the top of the hour, a on the vix. we want to bring in dean curnutt , macro risk advisor. can you walk us through why the vix is not just the fear gauge, and what it actually is? dean: certainly the vix is negatively correlated to the s&p. we see the s&p fall, the vix rise. that negative correlation has been around since the inception of the vix some 30 years ago. what is different right now is the equity derivative markets, which are governed by supply and demand, and you have buyers of optionality. it is vastly undersupplied. what do i mean by that? first is right around a year

ago, as things started to heat up, and through march, the explosion of volatility in the s&p 500 imparted huge losses to strategies that had banked gains for years. these had done very well, and good, effective strategies tend to invite capital, so people were very big into the short vol trade. a lot of that capital got wiped out. it is still recovering. you have in some ways a supply shortage from people who are able to sell volatility. alongside that, as has been talked about for a long time now , the reddit phenomenon, the retail phenomenon, which is a lot of things, but one of them is a voracious source of demand for optionality. these folks have learned enough about options perhaps by watching td ameritrade commercials and using trading

technology that gets them instantaneous exit cue since. they know enough about options for sure to buy them, and they are all buying very short dated call options on single stocks, on indices, so you've got this supply/demand imbalance. less supply, more demand. in addition to being a fear gauge, the vix is also representing this imbalance, and it is clearing the market at a very high level relative to just about anything with inc. it is related to as a function of this supply/demand imbalance. tom: beautifully explained. you talk about how odd this moment is. for our listeners and viewers, can the vix be used to determine a great bull market right now, or is it so messed up in the derivatives space, it is not the tool it was a year ago or 10 years ago? dean: it is valuable.

it is tradable, which is important. you can use it for risk management purposes. it is an instrument that you can use for both offensive and defensive purposes, both through futures on the vix and through options. but as i alluded to, it is dislocated versus other metrics, so you've got to be careful in terms of the readthrough. one of the things that caught my eye, as mario draghi takes over in italy, he's pulled off this bond issue for italy. $10 billion, 10 years, 65 basis points. the demand book was 110 euros at 65 bips for italy. folks are tripping over themselves to take all kinds of credit risk across the spectrum, so it is very different, even as

taking credit risk and volatility risk are similar. these markets are really reacting to very different supply and demand imbalances right now, so you do have to be careful in terms of the readthrough. lisa: there is a larger question embedded in what you're talking about, the sort of untraditional inputs that are pushing the vix higher, that are pushing bond yields lower. it raises the question about hedging your portfolio, where a reliable hedge is. what is the buffer? how does the vix factoring to that if bonds are perhaps not the buffer they have been, given how low yields are? dean: it is the question right now, and typically you've got three sources of defense in your portfolio that are running smaller in terms of how long in the market you are. you've got hedges, which are expensive. the vix by all counts is high relative to the volatility in the markets and to other metrics

we think it is related to. diversification is very challenging. it is very easy to get caught up in some correlated unwind, a factor unwind. we just saw this whole gamestop saga induce a lot of volatility in the market. and lisa, as you mentioned, duration owning bonds as a hedge , it is really difficult to get excited about that process. in fact, you are losing money owning bonds. so this was, for years come i positive kerry hedge. you earned a coupon, and on the days where the market went down, the bond market rallied. so you've got both positive return and a negative correlation. that set is improbably difficult to find, and the tailwind that has been the 40 year bull market in the bonds side is done. so it really begs the question, what to do?

at a time when valuations are very stretched, investors really, i think the nervousness that you hear is this collective, boy, this market could really ramp up. i thought drunken miller's comments recently hit home for me. we are about to throw a gigantic amount of stimulus, as larry summers laid out really well, on a market that is about to reopen anyway. so it is really difficult not to be involved. i listen to people who allocate money for a living, and i just see the challenges. it is very difficult not to be along for this, but it is also very uncomfortable. there is no obvious defensive play. they all seem expensive or difficult to access. jonathan: dean, we've got to have this conversation soon, and quickly. dean curnutt of micro risk advisors.

the days of having that uncorrelated asset that provides you with risk meta-getting characteristics, two words -- risk mitigating characteristics, two words. it is over. tom: we are here in our studios with the terminal, and it just shows me in oddness right now that is substantial. i am waiting for bitcoin to print $3000. but what dean said about the vix, we are going to have to go back and relisten to that, about how odd we are at 21.49. jonathan: if it is over, what does that mean about how much risk you do want to take? lisa: it shows that is the reason why risky assets are not treated as riskier than safer assets because things have been turned on their head. it has a higher cushion against losses, and you are seeing safe treasuries lose value. jonathan: we've got a lot to talk about this morning. coming up in the next hour, per

pressure of economics at why you stern school of business on bitcoin. bitcoin absolutely flying so far over the last year. good morning to you all. alongside tom keene and lisa abramowicz, i'm jonathan ferro. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ♪ karina: but the first word news, i'm karina mitchell. utility operators struggling with that deep-freeze in texas warned that rolling blackouts could keep parts of the state without power for days. blackouts extended to arkansas, louisiana, and mississippi. total u.s. oil production has plunged by the most ever because of the cold. in america's biggest oil field, the permian basin in texas,

production has plummeted by as much as 65%. president biden says he has invoked a federal law to speed up production of the coronavirus vaccine. the president told a cnn town hall meeting that moderna and pfizer agreed to sell more doses of the vaccine to the u.s. faster than planned. last week, the government announced there would be enough doses by the end of july to inoculate all american adults. another day, another record high for bitcoin. the world's largest cryptocurrency scaling another peak, rising almost 6% to break the 51,000 level -- the $51,000 level. activity in bitcoin futures suggest traders don't see a sudden end to the crypto rally. 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. this is bloomberg. ♪

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♪ >> the fed can't actually give people jobs, and the tools that the fed has for the macroeconomy

in general, whereas the problems we face are much more narrowly focused. the fed cannot get a new way of that recovery, and that is clearly what they are intent on doing. jonathan: talking up the recovery and what the fed can and can't do. good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's the price action this wednesday morning, shaping up as follows. equity futures on the s&p 500 marginally lower, a mild move of 0.42, not even 0.1%. foreign-exchange, euro-dollar no longer with a $1.21 handle. $1.2059 now. tom: west texas intermediate rounded up to $61, brent crude $65 and higher, you wonder how

that will change perceptions. right now, let's going on here. kevin cirilli joins us from washington, our chief washington correspondent. i am going to assume the honeymoon is over. what does your capitol hill look like with the honeymoon over? kevin: it has actually returned to some sort of normalcy. we've got the gamestop hearings set to begin, and i think that the focus is about 10% to 15% of staff on capitol hill has returned to office. it is a very somber mood, but really, as you mentioned, a return to normalcy, an adjustment of sorts, but there is still a troop presence, but things are getting relatively back to normal. tom: what does that mean for you in terms of getting legislation done? is it a gridlock? is it a new kind of gridlock, with democrat, democrat,

democrat? kevin: i think the two main issues shaping this week's conversations from a policy level are obviously the stimulus talks continuing, and i would anticipate that its final signage sometimes within three to four weeks on president biden's desk, but secondly, energy and infrastructure as a result of texas blackouts. i think there has been a conversation about the need for infrastructure in the wake of what is going on in texas. this day i spoke with former energy secretary denver let of the previous administration -- energy secretary dan berlowitz of the previous administration, and he said there are some republicans who would be willing to get on board. others are very wary of any more spending, especially if it comes after the stimulus talks. but i point to do this yesterday , following "bloomberg surveillance." i did speak with two

sources in texas who wrote to president biden and said to back off of some of these energy policies. based upon my reporting, i can tell you that those conversations are only going to become more public, and with the new energy committee chairman in the senate, joe mansion, ready to ask joe manchin, ready to take the gavel in that committee -- joe manchin, ready to take the gavel in that committee, that is only going to continue. jonathan: the former president just called the senate minority leader a "dour, sullen political hack." [laughter] kevin: the only thing abnormal about that is that it was done via a statement and not twitter. i've spoken with sources close to former president trump who

told me he is carefully eyeing and weighing whether or not to inject some of the trump political machine into a potential california governor runoff election. you will note that there are a couple of weeks left for the signatures to be gathered for the tally of a potential california governor recall election. governor gavin newsom, a democrat, has faced incredible criticism not just from democrats, but obviously from republicans as well. if you are looking at california, that signature threshold will have to be reached by mid-march, and following that, about 60 to 80 days is when that recall election would come. from a policy prescription menu standpoint, silicon valley, big tech, energy policy in the auto sector, this is really potentially ground zero for a bellwether state of sorts for republicans and democrats as

they head into the midterm elections. lisa: meanwhile, there's the question of when we can actually start to get back to normal, and joe biden last night was talking about this christmas possibly getting some sort of normalcy back. he also talked about getting kids back to school by april, clarifying a position his administration has had. how close are we to actually getting kids back to school? do we have a sense of what the biden adminstration's plan on that is? kevin: democrats point to just how much of a complex issue education is for the democratic party because they are weighing obviously the want and the need to get students back into the classroom in a safe and responsible manner, but they are also weighing teachers unions. you look at another battleground state like florida, where desantis has really rise to the top of 2020 for chatter in terms of political ambitions -- of

2024 chatter in terms of political ambitions. education and getting schools reopened safely is a very local issue, but now it has really penetrated the halls of 1600 penciling avenue. jonathan: let's -- 1600 pennsylvania avenue. jonathan: let's finish on this. you've mentioned the midterms. the president went on to say, "i will back primary rivals who promote making america great again." outside of supporting or showing support for the former president, what are the policies he wants to see? kevin: when i talk to a source who frequently talks to the former president down at mar-a-lago, three things. first and foremost, primary with the super pac against those republicans who voted to impeach him. second, election integrity, albeit in a very different way at the state legislator level, not necessarily at the congressional and federal level.

thirdly, california recall. i can't stress this enough. whether it is the former acting director of national intelligence or a couple of republican mayors, this is shaping up to be a massive bellwether election where you could have the former president holding rallies in california, and he is weighing that. i can report that he is weighing holding rallies in california over the next couple of months. it is not that complicated. he is not going to change, and he is going to continue to play a role in the republican party, is that poll yesterday showed that 53% of republicans want him to play a role in the party. jonathan: kevin, good to see you. host of "sound off" on bloomberg radio. tom, we are about to see more of the same. tom: the politics continue. we just continue on.

that's all there is to it. we had an election, what, six weeks ago? jonathan: something like that. coming up, patrick armstrong, plurimi wealth cio. good morning. this is "bloomberg surveillance ," live on bloomberg tv and radio. ♪

♪ jonathan: from new york city, this is "bloomberg surveillance ," live on tv and radio for our audience worldwide. here's the price action. equity futures come in marginally, by about two points on the s&p. . the nasdaq down by 0.2%. the russell down by about 0.3%. we want to get to the story of the last 24 hours. 3900 is the year end target over at morgan stanley, and my spoken -- and mike wilson is sticking by it. your 10 year yield intraday coming in about a basis point. crude higher, rallying. yields up. what does this mean? it means these two sectors have been absolutely flying. want talk about energy. once talk about financials.

the readthrough obvious -- want to talk about energy. want to talk about financials. the readthrough, obvious. higher on the kbw bank index. absolutely unreal year to date. tom: checking the broader indexes right now, and i correct -- and a correction just back to normal. jonathan: maybe you get this range bound s&p 500, and the mind of morgan stanley, but beneath the surface, you get this massive turn. that is the cross asset story. let's say good morning to romaine. romaine: good morning. that's dramatic music there. the shutdown and u.s. oil production shaping up to be one of the biggest disruptions in u.s. energy supply in a non-war era.

chevron has shut down production completely. pretty much the entire shale industry is dark at the moment. you are seeing bids coming into those stocks. it will be interesting to see how that plays out over time. hilton actually out with earnings. hilton had benefited a lot during the summer because a lot of their locations are where people could drive too, so they actually saw a pretty decent uptick in demand over the summer. that sort of petered out over the summer. more importantly, they actually reported a surprise adjusted loss. the street was looking for profitability, so some concern about the trajectory. i know you love to hate on anyone who loves video games, but filings just showed one big fan is the prince of saudi arabia, mohammed bin salman. apparently riyadh and the big public investment fund there invested in take-two activision, as well as electronic arts. apparently a lot of this shouldn't be surprised --

shouldn't be a surprise because he talked about his affinity for video games and how he would like to see more investment in that space. shop of high -- shopify reporting earnings today, pretty much knocking it out of the park. a lot of people now concerned about whether they can continue this pace of growth. obviously a huge beneficiary of the covid shutdown. keep an eye on the maker of these multilayer batteries for evey's. they finally showed some proof of concept last night that these things could work. this is basically going to be a safer, cheaper, and potentially longer-lasting alternative to lithium-ion batteries that are now popular. they still have a long way to go to get these things made, but if they do, it is going to be a big eel. microstrategy ate about $1 billion in purchases of bitcoin over the last eight months or so. now they are going to borrow $600 billion of convertible debt and use that to add more bitcoin to the balance sheet. bitcoin is now trading at an all-time high. tom: that's known as the ferro

strategy. [laughter] lisa: you came on with boxing gloves today. rheumatic music? -- dramatic music? romaine: i like it. the new color scheme, the new set, jon moving around. does tom get ever get to walk -- does tom ever get to walk? tom: no, don't even mention it. [laughter] romaine bostick, thank you so much. "the close," look for that this afternoon as well. with us now, patrick armstrong, plurimi wealth management. he writes strong notes inking economics, -- notes linking economics, finance, and the movement of money. you write about the inflation-adjusted yield where it is rising, but it is so negative right now in the united states. what is the requisite real yield? what is the hurdle rate for you,

where the real yield really begins to move the markets? patrick: it seems to be a bit of a status quo right now, where yields are rising, but inflation swaps are rising by a similar magnitude. last week, the tenure yield had risen a little more than inflation swaps. if we are -0.5 percent, i think that is still a tailwind for risk assets, so we are still at the -0.1% level now. -- at the -1% level now. growth stocks, you got to discount them at a higher rate. but with such a disinflationary backdrop, i think you are going to more than compensate with the higher earnings we expect. tom: we don't do the math on radio and tv, but when we get to that trip point, do you see jump conditions in the market? do you see great instability, or is it something that the market can manage, the dawning of a

positive real yield? patrick: i really think you have to have such a strong growth backdrop for the markets to manage it. so it is possible, if you do have a very strong growth backdrop, strong earnings growth, and it real clear path to earnings growth, where everyone expects that. i think you can manage without record of -- without negative real yield. every trade is so correlated right now because every trade is being driven by negative real yields, whether it is gold, bitcoin, equity prices, property prices. all of these things are dependent on negative real yields, and the negative real yields push you into those things. that is why the correlated bonds and equities shouldn't be correlated, when you about it. jonathan: let's talk about nominal yields as well. there's a negative depot rate of -50 basis points. i have spoken to a lot of people who just don't think that ecb can get rates back to zero in the next cycle. so i am trying to work out what

that means for the bond curve. this morning, the 30 year auction with the guild just north of 0%. how do you think about -- with the yield just north of 0%. how do you thing about that? what does that mean for the curve? patrick: it means a flat bund curve at best. you don't get above zero until you get depot rates at zero at least. as you say, it is very difficult to do. we are going to be in a growth year for the euro zone evidently , but there's no inflationary pressures. you're getting inflationary pressures much more in the u.s. because of the currency depreciating in the u.s.. the strong euro saps any hope for inflation in the euro zone right now. lisa: even given the fact we are seeing a split right now between the u.s. and the euro zone, that was not necessarily expected running into this year. we see inflationary expectations in the u.s. outpacing those in europe by the most on record, according to some measures. are you piling on that trade, going into u.s. assets and

avoiding the eurozone completely? patrick: we actually have more euros in assets than u.s. assets right now. we are short dollar come along euro, just because that euro strength, you want to have assets that are denominated in euro if you have a we getting dollar and the global context. even with that backdrop, i think it favors euro denominated assets. lisa: and you are still doubling down on that, if no there is correlation between the strength of the currency and their vaccination schedule, which is favoring the u.s. patrick: definitely. the u.s., even the u.k. has done well on the vaccination front, better than expectations. probably doesn't dwell for consumption in europe versus the u.s., but i think the manufacturing economy, which is germany intensive, i suppose, is driven by the global backdrop. i still think that bodes very well for germany. tom: a number of our guests have

talked of the health care sector as behind. is there an opportunity in health care out of this pandemic? patrick: i think there is. i think you can make the case for moderna that it has really risen sharply, but vaccines, i can see a very possible scenario where they are with us for decades to come, where if you want to travel, you've got to get vaccinated two times a year against mutations and things like that. a play on diabetes, and everyone staying at home, not exercis ing as much. i think the pandemic has probably made that even worse. jonathan: patrick, great to catch up. patrick armstrong of plurimi wealth management on the vaccine. i think it was rolled out or at least hundred by qantas very early on. do you remember when they

started to thing about that is maybe the future for airline travel? tom: you were way out front on can we just get jfk to heathrow fixed, and we are nowhere near that. tom: we haven't -- jonathan: we haven't. i hope you can get a corridor open given how well the u.k. and the united states are rolling this out, but the level of nervousness and anxiety these governments have over these new strains seem to be much more comfortable allowing consumers mystically to reengage with the economy, keeping -- consumers domestically to reengage with the economy, keeping international travel shut. tom: there's no question about that. what i found great there is about the real yield. where is that trip line? i know that is going to be a theme of your new half-hour, "the real yield." but you wonder, where is that trip point where things change? jonathan: one of the interesting thing about the move in nominal is it has not just been treasuries.

can you get a selloff in treasuries in a vacuum, or do you need the rest of the global bond market to come with? i thing a lot of people will lean towards the latter. we have seen bunds play ball, gilts play ball. the next question you have to ask is, ok, if you need the rest of the core government bond markets to come with treasuries, what are the limits of that? i think we touched on that with patrick. if you don't think the ecb can engineer a recovery with rates back to zero, what are the prospects of 10-year bunds selling off more than they already have? tom: as we get briefed for your weekend, we have to have the extended 30 minute edition of bloomberg's "real yield" on friday. jonathan: i am trying to work out what you've done to me this week. i understand what you've already done, but i don't know whether there is something i don't know. you know what i mean, lisa?

making up for something i don't know about yet? lisa: just brace for it. jonathan: i am going to walk offset and find out tom has done something, like something has happened to my desk. [laughter] tom: wait until we get a when iritis and of up what the real yield -- when we get a one hour edition of "the real yield." jonathan: coming up jordan rochester, nomura fx strategist. this is bloomberg. ♪ karina: with the first word news, i'm karina mitchell. that deep-freeze could keep parts of texas in the dark for days. they implement it rolling power cuts for the second day in a row. the operator of the texas electric grade says it could be days before they are back up and running. outages spread to arkansas, louisiana, and mississippi. the u.s. and japan reportedly have agreed to extend their agreement on troop funding for a year. according to a newspaper, the deal will keep japan's share of

the cost of hosting u.s. forces at about $1 billion per year. former president trump demanded a fourfold increase in financial support. and obviously there is no love lost between donald trump and senate republican leader mitch mcconnell. the former president blasted mcconnell, calling him a "dour political hack responsible for losing the senate." trump said the party can never be respected again as long as it has leaders like mcconnell. after the senate acquitted mr. trump in the impeachment trial, mcconnell said that the former president was was possible for the riot at the capitol. and in europe, ford didn't sell a fully electric vehicle on the continent last year. the company is putting $1 billion into a german factory that will start making an all electric model in two years, playing catch-up. 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. there is much more to come. stay with us. this is bloomberg. ♪

♪ >> it is still needed for the world economy, in particular in

the u.s. and europe, to have reflationary policy, expansionary policy. monetary policy is going to remain accommodative, and there will be a time into or three years to address inflationary pressures. jonathan: socgen's chairman. from new york this morning, alongside tom keene and lisa abramowicz, i'm jonathan ferro. the price action looks like this this morning. equities now positive, just about up two points on the s&p 500, 3929. in the bond market, yields come in a couple of basis points after a peek at life above 1.30%. euro-dollar back to $1.2064. tom: west texas intermediate at $61 a barrel. we've got to look at that as well. right now, this is fun. jordan rochester with us with

nomura, out of the university of warwick, and he is really quite good. very acute research notes as well. i want to go right to adxy, and your reaffirmation of pacific rim strength. adxy has been stuck all throughout 2021. how does the pacific rim breakout to stronger currencies this year? jordan: it is going to be a bit of a battle between the central banks who want to avoid having too much currency strengthen the area, but also we are in a global recovery, that reopening vaccine trade. it is very hard for currencies not to appreciate, especially when it becomes clearer into the asia region -- clear and the asia region it's a stronger vaccine pipeline.

there's been programs about developing markets as well from those developed markets. that is going to be one of the factors. the other factor is the rise in commodity prices means that some within asia, the energy importers, struggling here. the oil price move will hurt certain countries, but there's also a massive demand for consumer home goods. that is a hangover from last year's 2020 trade. we had inflows into china based on ppe, based on consumer goods. that trade is still going. you are still at home buying things off amazon, mostly imported from china during this shutdown, so when it comes to the asian trade, i think that they are going to be one of the leaders on this. we are looking for dollar-cnh to get to 165. think we've had a recent risk off position reduction effectively in these markets. u.s. yields are going in higher. definitely it is a bit of a short-term game changer.

i don't think it is medium-term, but in the short term, people have to think again about the trades they have on, especially the sort of lazy long trades they have had since last year that have done very well. tom: this brings a tear to my eye. only on "bloomberg surveillance" can you get a cross rate asian quote like the board we just put up. on radio, it is hard to see what ruby is asked what rupee is doing -- what rupee is doing. jonathan: you talked about the commodity currencies, and some of the countries that would be suffering, and said you like india. can you square that circle for me? jordan: isn't that the story? there's always a tug-of-war in foreign exchange, and this is a framework people thing about when looking at trade. there's the trade flow, which is your sort of goods trade coming your services trade, and then there's the financial flow. very good trade is when both are in your favor. in china, that is currently the case. in india, it is tricky with

rising commodity prices, but there is a financial inflow story keeping it supported, too. just take a step back. we are in a recovery. historically in recoveries, high beta carry trades do very well. that is going to be the financial flow that drives most of these currencies stronger for the next year. bear that in mind. trade flows always make it up it tricky when it goes against you, but i am focused more on the financial flows in the very short term. lisa: you raised some skepticism about whether this higher treasury yield trade and stronger dollar could persist. what do you see in the near term? can you square that was a consensus view heading into 2021 that the dollar will continue to weaken and yields will continue to rise? jordan: absolutely, great question. about two weeks ago, we went short the euro and got burned. so we cut the break below

$1.20 -- so we caught the break below $1.20. therefore we had higher u.s. yields and so forth. it has been a bit of a mess in the g10 ethics space for the past couple of weeks. -- the g10 fx space for the past couple of weeks. we are looking for a trend following cta signals. we are reaching levels where we are seeing treasuries go from maximum long to actually selling. we are not yet at maximum shorts, so we will probably see continued move in the yield space. so we see the u.s. 10 year at 1.65% by september. that makes trades that have maybe been going sideways recently force you to readjust and say, that has made 4% or 5%. it is not really going anywhere. it is my next trade? so we are seeing position reduction. i think that is what is happening for the time being. we need to get to a place where

u.s. yields settle. then the dollar will stop strengthening like it is. medium-term, when we are thinking early march when this package goes through, that's a lot of fiscal stimulus within a short period of time. it is going to be quite important intensive. you are going to see the trade balance in the u.s. widen. and then you might say, well, that is just one and done, but actually we've got the infrastructure package hopefully in september. that is another $1 trillion, $2 trillion. that is also going to lead to demand for commodities, so the trade flows will really work against the dollar during that period. financial flows are currently working in the dollar's favor, but i think when we get to that period, there will be such significant outflows that it will be very hard for the dollar to strengthen. jonathan: before i let you go, this bit of the program is just for you and i, two boys from the midlands.

in the midlands which are you looking for -- in the villas which he looking for? jordan: i think the leads game -- the leeds game in two days, that's good. it is one of the weirdest years in terms of everyone can't go watch it in the stadium. but it is one of the best years to go watch it. we are hoping for europa, aren't we? champions league still seems pretty tough, but fingers crossed. who knows? it's been a fun year. jonathan: do you hear that? that is the sound of the ratings just going. [laughter] tom: free people just drove off the road in pennsylvania -- three people just drove off the road in pennsylvania. [laughter] would you guys explain which league is the one that is most proceed just? americans are like, premier league, world cup. which ones matter?

jonathan: for the national teams, the world cup. i would say the champions league is the best of the best in europe. at the continental level, it is the merely. we got to go -- it is the premier league. we've got to go. jordan rochester of the mora. -- of new mora. ♪

>> cyclical elements will show some uptick. >> you have had an incredible -- >> the point is to unleash consumption. >> the hope is that we see this unleashed pent up demand left us even higher. >> it is inflation that will ultimately drive the shift. >> at the core of it, high yield will foster growth. >> this is bloomberg surveillance with tom, jonathan ferro