>> small business sector has really taken a terrible hit. things are happening much more quickly. >> a lot of buying power out there with the band continues to build. >> we have seen people take the money from the government and spend like mad. >> the bull market that will last for a long time has begun. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, everyone.

simulcast with bloomberg radio, bloomberg television. we spent a good number of our two hours on the fixed income market. this hour, we go all equity. the bond market, it is a really interesting. jon, one of those indicators waking up to -- pound sterling over 140. jonathan: 24.6% of the population in the u.k., at least one dose. 24.6% on our bloomberg vaccine tracker. that is where the market is going to ignore an ugly retail sales report the cannot. tom: johns hopkins, morgan stanley, there is an optimism out there. how you frame the optimism and what it will do to the job market? lisa: that is the question, when

will it bleed into the real economy and how much will it matter? it was said march or april, people starting to get jobs in the economy reopening. in the meantime, one of my questions, you are talking about equities, we have to focus on micro caps, they have been on a tear. how much are traders getting ahead of themselves and buying into this reflationary belief in going too far into 2025. tom: jon ferro, you mentioned earlier, there is a fed scheduled next week. the assumption is to get to the march meeting, i don't buy it for a minute. there will be nuances. jonathan: jay powell -- tom: something has to break. jonathan: i wonder if they stay on script and the script has not changed and that is what we

expected to get better. we expect inflation to get high. we will be willing to look through it. that is the reaction function. tom: what is the reaction function with commodities? we are looking at the australian dollar, copper, my most important number has not moved yet. that indicates a bull economy. jonathan: if it comes from the economy market -- that is what they want to respond to. they want to run the labor market hot and i don't see them getting away from that idea. tom: we will share a data check. gold, $17 73 an ounce. i have to look at 120 basis points. jonathan: you talked about the market. this morning, it is about dollar

weakness. the aussie dollar more than 1%. copper is absolutely flying. i think that speaks to the china story of the last 12 months and the enthusiasm for the year ahead. tom: that filters into what we see from the midwest. most of it comes from three zip codes on the island of manhattan. milwaukee, wisconsin, brent schutte joins us right now. i want to talk about what we saw from john deere early this morning. it is a better agricultural story. it is a better global story, as well. is john deere a precursor to earnings and revenues surprises? brent: i would like to take it back to the comments you made earlier about the cyclical side of the economy. two years ago, we had a trade war that robbed the global economy. growth stocks did incredibly

well. then covid had the same effect. now, you are unleashing the cyclical side of the economy, meaning the cyclical side of the market will do well. tom: at northwestern mutual in your claim over the decades, it is about a measured approach. is fixed income part of that approach even if you assume yield up, price down? brent: absolutely. tom: why? brent: we have been focusing more on the equity side of the equation. i don't want to duplicate that risk on the fixed income side. i heard the prior conversation about high yields, i want to pick up that return on the equity side of the equation. on the fixed income sigh, we have been more cautious. an important point is the federal reserve and fiscal policy makers have your back on

the downside. there is commentary about duration, you can be short of duration because they are essentially taking that risk off the table. you need to focus on commodities because inflation is an eventuality and that is the only thing that will probably knock the market of course because everyone's commentary on this show is yes, stocks are expensive but they are cheap let of the bonds. jonathan: that is the story. do you want to play the underlying economy through the equity, the energy producer? what you want to do? brent: we on the equity side of the equation, people have chased technology stocks. you are seeing what happens when commodity prices go up. you want to have an allocation toward those. we own broad-based commodities, which will benefit from rising global growth, the manufacturing side across the globe coming back online and benefit from the

cyclicality we will see for the next year or so. lisa: how much do you go into the cyclical story and how much do you buy into the micro cap strategy? certain shares have increased 1000% this year, companies in these tiny indexes surpassing s&p 500 companies. at what point you say, this has gone too far? brent: i would like to avoid those. when i compare these two 1999, it reminds me of that. i think people are going to focus a lot on the next year on value versus price. i think the value side of the equation is still cheap, but we still like small caps, they have gone far in the last few weeks. they are probably due for a breather. it is usually the precursor to a trend, not the end of a trend.

we still like the small caps. lisa: what about the interest rate sensitive areas of stocks? the nasdaq, big tech companies? they have been punished as real yields increase. brent: i would take it back to 1999-2000, i am not suggesting these are bad places to be long-term, those were accelerated by covid. some of the stocks have discounted what the future will be. i would like to take it back to focusing more on value, cyclicality, and deemphasizing some of the tech names that have done well over the last two years in an odd economic environment that was started by a trade war and had covid at the tailwind. jonathan: you are deemphasizing

passive investing as well because based on the mechanics of some of these, including the s&p 500, it sounds like you do not want to own it. brent: i want to own it outside of the market cap weighted. that would mean some kind of active management. in 2010, it did fairly well. i think there is an opportunity for people to avoid some of those stocks and do better in the future. jonathan: s&p 500 equal weight, where the focus should be. small caps this year. up 44%. this year, up 12%. lisa: it is also the specific names. you whether wonder it is a reddit fueled phenomena. if you take a look at what has performed the best, it is not a rotation into value and away from growth. this is a rotation into risk.

the more volatile stock, the better it has done. when does it stop? jonathan: when does this one-stop? tom: when there is a spiral. jonathan: that is not where i was going. that is a clean break at 140. tom: you break through and get covered. i am watching dxy, 90.20. that shapes up to be a friday. jonathan: let's think about what has done well. we have talked about the small caps. em equities have done well. you have commodities doing well, em equities doing well. tom: the pacific rim serious, it is an em series. i am saying the monday morning

china, sunday evening 7:00 p.m. our time, you will be looking at highlights. 7:00 p.m. on sunday, you will start to see china, you wonder if that is when they will act. jonathan: what fascinated me is if we start to see u.s. yields move alone because u.s. growth will be exceptional to what we are seeing. tom: fair. jonathan: if they go along, does that break a consensus over dollar weakness? very consensus, dollar weaker, things have gotten more nuanced. long commodities, energy, etc., copper absolutely flying. lisa: the fact that you have had the consensus on the dollar shaking a little bit to start the year indicates people still believe in the dollar weakening. jonathan: coming up, french

hill, republican from arkansas. from new york city, is that enough snow for you? tom: it is icy on the icc board. be careful. jonathan: could not agree more. tom: the beltway was out of control. jonathan: this is bloomberg. karina: in new york, i am karina mitchell. the u.s. said is willing to meet with iran to restore the nuclear deal. iran wants the u.s. to rejoin the 2015 agreement with sanctions before any talks. donald trump pulled the u.s. out of the deal in 2018 with sanctions that hammered iran's economy. the president will dump mr. trump's america first approach at a pair of conferences sprint

the president will call on industrialized democracies to confront the pandemic and climate change. he will make virtual addresses to the group of seven. republican senator ted cruz is back in texas after he criticized family trip to cancun, mexico. cruz left while texas was dealing with widespread power outages. he said it was a mistake. in the u.k., there are plans to delay consideration of an online sales tax until the fall. because of the economic uncertainty due to the pandemic, aiming to make sure there is not a disadvantage. in the u.k., a landmark decision that threatens a business model. uber drivers are workers entitled to rights like a minimum wage, holiday pay and rest breaks.

there has been a five-year fight over status of the drivers in the u.k. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am karina mitchell. much more to come. stay with us. this is bloomberg. (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. go to aerotrainer.com to get yours now.

>> the gamestop story represents a larger truth. a fundamental change is

happening. like never before, every day investors can communicate, access more information and work collectively to move markets in real time. >> despite unprecedented market conditions, at the end of the day, what happened is unacceptable. for our customers, i am sorry and i apologize. >> it demonstrates i have been right about the country. if you things i am not -- i am not a cat, i am not an institutional investor, i am not a hedge fund. jonathan: i am not a cat. that was a snapshot from hearings into the gamestop situation. patrick mchenry, robinhood ceo. he is not a cat. alongside tom keene and lisa abramowicz, i am jonathan ferro. futures with a lift as tom keene

says, up 16. yields with a lift, up one basis point. let's call it 31. the fx market, euro-dollar up to .4%. tom: i go back to the tea leaves, one is the swiss 20 year bond. it is showing enthusiasm from a negative to an ever more positive statistic over the last three days. it is good to speak to any of our busy politicians in washington. to do it two days in a row is a rare treat. from arkansas, french hill. it is your fault, arkansas has the snowiest february ever, like back to when the hill family came over the border in 1812. what is the snow like in arkansas and what will you do to fix it? rep. hill: it is the responsibility of the politicians in washington.

we are at 17 inches in central arkansas. our highways are clear what our neighborhoods are piled up. east coast style snow. i have been shoveling and doing the best i can. tom: republicans shovel, democrats call in the snow plow. we saw the gamestop hearings yesterday. the washington post this morning gives it essentially zero play. what happens next after the testimony? rep. hill: i think the ceo of robinhood apologized for having inadequate collateral on deposit with our clearing firms and the depository trust, which put their customers in a bad position in the midst of a bubble. that was a key element. in terms of the equity market, i thought the hearing demonstrated it worked as we expected it to. i think maxine waters is going

to have additional hearings. from the discussion yesterday, i think she will focus on payment flow, reassess shortselling, what have been the changes since the 2010 changes? lisa: how concerned are you about the broader environment that has led to this type of speculation, both the fact the people have money as well as the apparent lack of risk prompted by the federal reserve? rep. hill: zero interest rates, accommodative policy, household savings at the highest rate in decades. this prompts people to reach out and take risks, just as you have been discussing the last few minutes. the key thing for robinhood investors is we all know investing is caveat, what is robinhood have support for the new entrants enter the market?

do they have the skills and communication on their platform to educate customers? i have been in this for four decades. monitoring accounts on the margin, use of options, small dollar stocks are all fundamental to retail investment brokerage. his dad being adequately handled on an app based platform like robinhood? tom: brilliantly said. what i think is so important is the strange phrase, due diligence. in the old days, there was a respect for it. technology took over. how do you do due diligence with technology? lisa: congressman hill is talking about attitude which is part of what the robinhood crowd is rebelling against. the balance, how do you ensure you give people access to this

explosion in asset prices? while giving them the correct due diligence? that is complicated. rep. hill: i asked him yesterday, does he have a call center? the average robinhood investor does not have someone to call during the business day, it is all done by email to their account. that is inadequate in tough times. the call centers in robinhood are only granted to those with extreme option approval by the firm. i believe the ceo committed yesterday to much better consumer communication and he made a comment about his consumer education on his platform. look, we all know granting someone margin, option authority is a tough job just a dubai algorithm based on the boxes -- just based on algorithm. jonathan: it is not aimed at you

personally, who understands the industry inside out, these hearings, how can we make them better? would they be better closed the door? it seems to me sometimes these hearings become theater and lawmakers turn around and make it that. they might have pre-existing bias, song and dance, clip the video and send it out to constituents. how do we make this better? rep. hill: some people love click bait. if you use the subcommittee on capital markets, which i believe is shared by brad sherman, -- chaired by brad sherman, you can get multiple rounds of questions and have a much more constructive dialogue on capitol hill. our chair has elected not to do

that on high-profile matters. tom: that is brilliant. it is like the subcommittee we have here were you and lisa tell me to shut up. jonathan: it is a smaller room, a smaller setting and seems to be more direct. i think that his mother congressma -- i think that is what the congressman is alluding to. i am a journalist. what we do sometimes, we like the theater, too. i think we have to acknowledge the usefulness of them. we have to make these better. i know somebody financial professionals who watch that yesterday because they thought it would be a bit of fun. it should be serious stuff. tom: it is political posturing. my basic issue is well-meaning politicians are trying to be experts on every topic. they are not. i want to listen to the experts. lisa: i would argue there is a

financial literacy aspect that is more crucial to make sure people understand. tom: yield up, price down. jonathan: from new york city this morning, good morning. th 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.

jonathan: from new york city, this is "bloomberg surveillance ." it is up .4%. some of those losses a little bit. we advanced by 1.1%. a weekly loss about 12%. let's get to the bond markets. yield, 130.76 on a 10 year. 10 basis points two weeks ago. three weeks of losses for the treasury. yield heading north. the conversation, you are familiar with, it is about inflation, price pressure. wti comes back down to 59, down

by 2%. crude supply coming back online in the united states slowly but surely. a conversation between the biden administration and the iranians. this is the one i want to look at -- copper. 8780. tom: it is american tv. hd1. jonathan: when did all begin? tom: it begins at the dorchester hotel. jonathan: it begins at a coffeehouse. i have 10 minutes. lisa: you were supposed to share this. jonathan: i am going to finish it. copper up 2.68%. looking at 10,500. back to levels we have not seen

since 2011. tom: the lme is a much deeper market. it has a superior history. speaking of chicago, minneapolis 's lindsey piegza joins us. she is warming up this morning. i love your note where you go to automobile sales as part of a better economy. two car sales indicate a boom economy? dr. piegza: what we are seeing is small steps in the right direction. we saw job growth move back into positive territory in january, manufacturing activity continuing to be an expansionary territory. strong auto sales, a consumer spending report showing retail sales surging past expectations over 5%. we are taking steps in the right direction. tom: steps in the right

direction, the real question is can we sustain what everyone agrees is a gdp run above potential gdp? should we get use to 4%, 5%, 6% real gdp? dr. piegza: not if we don't continue to rely on artificial support from the fed or federal government. right now, we have to talk about relying on trillions upon trillions upon trillions of dollars being pumped into the economy to supplement growth. if we remove that, the u.s. economy could struggle to maintain an organic 2% pace. right now, even though we are taking steps in the right direction, the economy is far from out of the woods and we have a tremendous amount of ground to recapture before talking about returning to pre-pandemic levels. lisa: when do you expect people to shift from buying of stuff to

buying of services? dr. piegza: there is a question of expectations with the economy beginning to emerge. we have to talk about consumers imagining an economy post crisis. once there is a certain level of confidence the economy is on a longer trajectory of sustained improvement, consumers will be more willing to go into the marketplace and engage in those service activities, get your hair done, your nails done, be close to other people in a movie theater or sports venue, but we have to be at a point where there is increased confidence where we have a meaningful way of separating the healthy from the sick and the economy is on a longer-term pathway to some semblance of normalcy. lisa: will we go back to people emphasizing service over goods, or have we shifted?

dr. piegza: it is hard to say consumers have changed their behavior longer-term in terms of the goods and services they consume on a monthly basis. from a goods perspective, consumers have dramatically shifted what they purchase month-to-month. that was a reflection of the changing environments, forced restrictions and requirements that businesses and workers needed to adhere to. once we open the gates, once we allow -- presumably -- the economy to reopen and allow consumers to go back into the marketplace, i would expect we do see more back toward normal consumption of services. there might be some sectors pertinently impacted. we may never go back to packing into movie theaters, into conference rooms. we may see some structural changes, but i do think there is it for medicine amount of pent-up demand for that lost

access to services over the past 10 months. jonathan: let's get to the fed conversation. how hot does it need to get before the fed cannot ignore it anymore? dr. piegza: pretty hot. the fed has made it clear they are not thinking about raising rates at this point, not only from an economic standpoint in terms of gdp growth but from an inflation standpoint. the fed does not see inflation as a near-term risks. even if we see upside momentum as some of those weaker price point components fall out of the calculation on a year by year basis, they are already telling the market to brace for that upside potential as it is not an indication of a longer-term trajectory, they will not change their pathway because of one or two months of stronger inflation. the fed is looking at inflation from a flexible average standpoint. that means with inflation at 1.3% since 2015, it could

essentially allow inflation to run hot at 3% for the next five years and still not exceed their 2% average. the fed is committed to low rates for the foreseeable future as far as the eye can see. jonathan: you have market-based expectations, consumer expectations and real-life data. is the fed driven by one over the others or a combination of all three? dr. piegza: the fed keeps an eye on all. when it needs justification to why they see stable or lower-than-expected inflation, it will be looking at -- even though consumers may feel price increases a bit more, even though we might see supply chain disruption, a higher ppi. tom: in every economic textbook, the markets are chapter 23 and you forget about them because you have to go to a party thursday night. or the markets right now associated with your economics or are they de-linked?

dr. piegza: the market is showing stronger expectations than what the underlying structural data indicates print the data suggests it is far from coming out of the woods. the market suggests recovery is right around the corner. there is a sizable gap and downside risk based on where the market is pricing and expectations for a near-term return to normal and sustainable upward momentum in terms of gdp. lisa: the idea of how much to follow data when it is backward looking. we are expecting a seismic shift when people get inoculated and can go out and spend more aggressively. what data points are you watching most aggressively to determine if markets have truly gotten ahead of themselves or if a economists have not gone far enough? dr. piegza: one data point we need to look at is coming out of the labor market.

we need to look at jobless claims. jobless claims remained elevated and this is an important component of the labor market equation -- how sure foot in two individuals feel about keeping deposition of gainful employment. as we see more and more turnover, more businesses closing, this will lead to further layoffs and compound pressure on the consumer. as a consumer-based economy, we look at consumer spending data, but as you mentioned, this is backward looking. real-time data in terms of layouts, jobless claims gives us a clear indication of where we are. jonathan: great to catch up. tom: thank you. jonathan: lindsey piegza, chief economist. copper is higher, crude is lower. commodity markets looking good. tom: the blended index be interesting, let's look at this

right now. we make a joke about it, but jon is right, the heritage of the london metal exchange, here is jon's chart of copper. going back to the boom of 1980, there is no question, this is jon's chart, what is so cool is the relationship of london now owned or the hong kong exchange. over to chicago, where they have huge american inheritance. jonathan: can we do the history of this. formerly came around in the late 19th century in the victorian era, it was about the copper cargo getting delivered from chile into the united kingdom. lmcad -- that is the back story to all of this. that is why we look at london copper prices. tom: i have this battle every

day -- disclosure -- i was weaned on london economics and on the foreign exchange market. off the federal reserve of new york model, it is a whole different architecture in london. jonathan: the london story right now is cable. foreign-exchange more broadly, weaker dollar, stronger aussie. tom: great, great grandpa ferro. that was tough. jonathan: great grandfather ferro, that was iron down in sicily. not london. tom: i thought he was in a coffee house in 1892. jonathan: 16th century coffeehouses. that is where the ring comes from. tom: where else are you going to

get this on radio or tv? the royal exchange is now a bar. jonathan: can you tell there is no lead story this morning? it is right around the corner from the bank of england. tom: do they have jewelry stores in the royal exchange? i am shocked. jonathan: how about those markets? stay safe. tom: stay safe. you are in new york, get boots. jonathan: i have guccis with rubber soles. karina: with the first word news, i am karina mitchell. iran says the u.s. must return to the 2015 nuclear deal with sanctions if it wants to begin

talks with the islamic republic. it appears to be a rejection with the biden administration. donald trump pulled out of the agreement in 2018, re-imposing sanctions. the blackouts that plunged texas into chaos are now easing. an energy crisis is far from over. four of the largest refineries suffered widespread damage and could be down for weeks. john deere raised it profit forecast. nasa is celebrating the landing of its largest and most sophisticated science rover on mars. perseverance touched down in an area that could contain signs. the spacecraft traveled 292 miles since launching from cape canaveral. global news 24 hours a day, on

air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am karina mitchell. this is bloomberg. ♪

>> i would expect rate hikes to be well underway by the end of

2022. i think a combination of inflation and perhaps -- and economy, fiscal policy on fire as we actually build back better. returning to more normal interest rates could be ok. tom: larry summers, former secretary of treasury. his affiliation with harvard university, wall street week, look for that tonight with david westin. the idea of when the fed will act and they will act off of the beige book based on what they see out there. mitch roschelle, founding partner, he is in florida right now. i love what you say, not about the count of units or the price dynamic of housing, it is the timeline on the x axis, the

speed of acquisition right now is out of control. mitch: 100% out of control. the supply and demand dynamics are crazy. brokers down here are telling me their listings year over year are down 50% and the number of customers looking for homes is up 100%. we have seen 10%, 15% price increases in florida across all price points. i have never seen anything like it in my 35 years. tom: can you extend it from florida to the other 49 states? mitch: we can extend it a few. you are seeing some of the dynamic in the texas, parts of the carolinas, tennessee, nevada. what are those places have in common? no state income taxes. the other dynamic here on the ground is the fact that so much of the supply side of the

economy is open in florida. that is a big part of the appeal. i have seen people in the elevator in the place i'm staying that came down here for the week because it was snowing in chicago and they came down here and said our kids will work remotely for school, let's do it in a sunny place. lisa: you have a lot of experience understanding the tea leaves and how long a trend could be. when people look at places like florida, texas, cities like san francisco and manhattan, how much mortars this trend have to play out for people moving away from those big cities? mitch: there are a couple things in play. where is their job? that will influence decisions. some of this is trying to get six months and a day of residency instead of 12 months

of residency. where your job is will ultimately impact where people live, whether it is renting or owning. a lot of people swung for the fences and decided to buy in florida, not knowing of their job would return to an office wherever it is. lisa: that migration into florida has been a driver. how much has this trend been isolated to the higher priced homes? mitch: i think it is across all income bands. the buyers who come from urban environments, you can go down side and get whatever you want, are flocking toward similar situations. miami beach, high-rise apartment buildings, gated communities, which tended to be higher

priced. there are people in the more affordable homes across america who are making similar decisions. they can live in upstate new york and are making a decision to move to a more rural area in florida or tennessee. it depends on where they will be working when their job is back in the place where it was. tom: mitch's hallmark was looking at all of the real estate market and not just those priced at $5 million or above. what does that mean for new york city, boston, washington, san francisco, chicago? what does this mean for the great affluent migration? mitch: every year, there is a new crop of kids graduating from college and wanting to live in cities and that dynamic has not changed. last year, it was disrupted. i think we will continue to see

new throngs of kids accumulating wealth in urban communities. tom: where does charlie the labrador retriever want to live? mitch: charlie is a golden retriever, and i have to be honest, he likes it where it is cooler. tom: michael bloomberg says that is a good idea. mitch roschelle, thank you so much. macro trends advisors. what did we learn about the melt up? lisa: i was thinking about what mitch roschelle was talking about, younger kids want to go to the city. there is a question if lower rent will entice younger individuals to cities? rents in manhattan and brooklyn

targeted the recent month over month decline, with rents slipping 15.5% in manhattan. to give you a sense of how much things are coming down. at what point will there be a tipping point where people say, it gets more expensive to go to the suburbs. tom: we know folks in new york city, i assume they are the same, what is underreported in this is the school dynamic, the idea you are in schools and cities, it is a mess, we all know that. you will go to the suburbs for school salvation, i'm not sure. i just don't know. lisa: i think the timeframe of inoculations will be key. people planning to get back to the office, it is getting pushed back. when we do have a faster than expected inoculation schedule, at what point do you expedite some of that? tom: ferro goes off to the 9:00

show in the real yield moves. -0.86. it is a melt up. it is a spiral of reflation. lisa: at what point do we actually get -- not there yet. there is a moment when people cared. i don't know. it is all risk this week. tom: on bloomberg radio, patrick mchenry will join us. looking forward to that. with futures up 19, dow futures up 95. there is patrick mchenry on television. on radio, you can hear him on balance of power with david westin. look for that at 12:00 noon.

sterling, 140.90. i don't have a copper quote. we need a beverage at the dorchester hotel. lisa: he is elsewhere. tom: this is bloomberg. ♪

jonathan: from new york city, good morning. the countdown to the opening starts now. futures up 20 on the s&p. we begin with a big issue, high theater, little substance on capitol hill. >> we had no role in robinhood's decision to limit trading in gamestop or any of the other stocks. >> by depositing -- in clearing houses. >> it was robinhood's mistake, correct? >> robinhood owns what happened. >> you're at the center of this. don't you see and agree there is something very wrong that happened here. >> robinhood by the books. >> this is a threat to the future of our financial system

and we've got