>> i am caroline hyde. joe: i am joe weisenthal. romaine: markets flat. down on the week. joe: the question is "what'd you miss?". >> we have this reflation trade. the vaccine rollout will gain momentum. the trade was up this week.

ppi, inflation, reflation, in fact, the worst start for bonds since 2013. this trait is picking up speed. joe: it is picking up steam. what we haven't seen, real rates, the rates on the tips, those have been low, but in recent days, picking up. extremely low. 30 year bonds, you getting paid for positive real rate. you can see the number because it is so tiny. , but you're getting a rate higher than inflation. romaine: cash out your bitcoin and roll it over. joe: some pretty fat yields.

alex, everyone rushing into it. >> you know, increases everywhere, especially let's talk about the back end, but you know we would be remiss if we did not talk about the federal reserve. the fed said we will not extend our durations when it comes to asset purchases. everyone thought there would be conversation about yield curve control. john williams said, oh, no, yields reflect optimism. you know, i am feeling skeptical. i wish it was easy as straight optimism, but the market is pushing the fed, because the fed

is allowing the market to do so, so it's not just about vaccines and faster economic growth and recovery. there is a chance the fed could be wrong. caroline: talk to us about that. larry summers has been saying the market is too hot, and economy too hot. can the fed that pushed into raising rates by market action? >> you know, it might be. this is what i am curious about and i wish someone would have asked john williams. what is the breaking point? what is the outline where they get too high, and they have to come in and do something for the market?

watching the fed and how they react to markets over the years, i feel like they have a tendency to be more reactive than proactive. so no one knows. this is the problem. this isn't their priority. their priority is looking at that unemployment rate, real unemployment somewhere around 10%, so they have not given us a lot. there is an interesting piece by my colleague in london who talk to us strategist at mizuho, and he is saying the five year yield is keeping him up at night. he thinks the way at shot up, 75 basis points yesterday, that implies more tightening in the market, and if you're the fed, you don't want more tightening

if you are relying on near zero rates. romaine: you talked about the five year yield, the line in the sand around 75. take the spotlight off jerome powell and shined it on janet yellen in the treasury. some of their decisions to stop selling on the short end of the curve and other maturities, i'm curious as to whether the treasury could right size things, at least until jerome powell in the company figure out what they want to do. >> yeah, you know, it is not a great time to be pulling back on those sales. i feel like the treasury and the fed is in a lose-lose. it is too big. i think everyone thought that would come down when the stimulus bills passed, and they

have not come down. there is no reason to be sitting on $1.6 trillion in their account at the fed. however, there is so much cash on the front in. money market assets total 4.3 trillion, that is a lot of money , and there's not a lot of places to put that, or treasury bills are crucial here. the other thing is the treasury has said even though we are taking these out of the cycles, we could issue more bills to offset these declines, and that is what people were looking for this week, and people were shocked we did not get increases , so next week, when you see them redeeming $96 billion of treasury bills, they will see those rates come down. i think we are likely to get auctions yielding zero,

especially the two-month auction at the end of the week, and then they will put some supply in the market or end up waiting until the next stimulus bill passes, then they feel we can increase supply here. either way, the front and is in for a few weeks of pain here. joe: call it -- caroline: call it less dumb than cash. thank you. stay well. meanwhile, coming up, the debate continues. we have a new report tracking different scenarios for interest rates. we will have that. this is bloomberg. ♪

romaine: today, the reflation trade. inflation, real and coming. joe: it is not real. it could. with the recovery and rates, the free end economy, inflation again, you know, various times, 2018 for example, bottlenecks, trucking, etc., you see it there with the ism purchase prices, and so the question is, if we do see inflation, what is it mean? it's a transitory or something else? caroline: at the moment, transitory, only the short-term, but longer-term, how long is that going to last? joe: right. joining us with insights, our guest on inflation.

prices might go up. we are expecting headline prices to go up soon, base effects from last spring. what is the main thing, the fed, investors become anyone else should be looking for to get a sense of whether inflationary pressures are something to worry about or something that is transitory, to use a popular term? >> thank you for having me on. the key ingredient to make inflation persistent enough transitory is wage incomes. the critical thing, if were trying to distinguish between one off commodity prices, airfares, or lodging prices, all of those things, i think we can expect were going to see that as a result of reopenings, and that will be in the year-over-year reading. when we think about how this

will sustain over time, especially as we think about a lot of these fiscal relief packages that are meant to keep people whole, all of this facets are really one off in nature, transitory, because were not just going to get fiscal relief packages if year, not passing the kind of big legislation every year. in the absence of that, the thing to look out for is are we going to get the tight labor markets that mean when prices go up, wages go up? it is something you saw in the 1970's, a big shadow looming in the background, that is the time when we did see wages and prices grew. if we just see prices adjust on a one-off basis, i don't think the fed should be reacting this way. it doesn't seem like they are

inclined to react particularly hawkish, because you see airfares adjust -- hawkish ly because you see airfares of joe's. caroline: we have a piece that shows how much we have yet to see the services sector explode from the pent-up demand. yes, we have been spending on long-term items, decorating homes, but we haven't been able to buy our assets, go out to restaurants, but if we start to see that and we start to see the $15 minimum wage get passed, if we see the new fiscal approaches passed into law driving wages higher advocate that sustainable in some way? >> i don't want to be dismissive of this set of scenarios.

the notion we could have a strong recovery because we passed two big fiscal packages that bring us back to uptight labor market, strong wage growth, there are inflationary pressures. i think we are at long way from that right now. if we do see, if the economy is firing on all cylinders come in no negative shocks, infrastructure bill, vaccinations, reopenings going smoothly and the second half this year, having an economy running closer to the pre-pandemic labor market over time, it can have impacts on inflation. that is a scenario where a lot of things can go right. if they go right, are we talking about wage growth and inflation down the line because of it? it is a realistic story if we get all of those and we do see

expansive fiscal policy, and accommodative fed, because right now we have high levels of unemployment nonemployment, and likely we will see meager wage growth until then. romaine: hold that thought on the wage growth. i want to your thought on how commodities tie into this. we saw appreciation and prices, even before this disruption, a massive increase in industrial metals, copper, aluminum, trading at record highs, with those increases we have been seeing in those prices in the current levels of wage growth, we you add that up into whatever calculus you use here, does that amount to sustained inflation? >> no. it reminds me of the other side of the commodity super cycle, 2007, 2008, high commodity price increases, and yet we did not

see, we actually saw wages and employment go the other direction, so if prices increase and we don't see the concurrent or future wage growth match that to some degree, what we will see is a relative price change, one often nature, the real incomes for americans, but not the kind of things that monetary policy solves. you raise interest rates to solve that, then you will make it harder, because you get that one off through the system, but you should be focusing on commodity prices, which are especially volatile. there is a base effect that will show up in the ppi commit maybe other categories, but will really talking about the longer run of the economy, i think layered markets are the best. joe: we had 30 seconds. what if fiscal stimulus becomes a permanent part of the policy landscape?

politicians want to send out checks every time there is weakness, checks, so this is not one off, could we start to get a new trajectory towards inflation if it really looks like the way we conduct macro, i know it is a long question math changes in the country? [laughter] >> i think a bit more rigorously about that. we see income replacement, not through your wage, but through the government, so incomes are shifting in terms of where you're getting them from. the question is, does that lead to more consumption? that is an open question. some people spend more. but as they get higher, bank accounts, how much wealth they have, the spending pattern, does it change, what kinds of goods, commodities, services of a safer longer-term purchases and investments? that is opened, but i'm open to that, but we are so far away

from that. this moment is a moment of emergency crisis, and that is what has to be addressed first. i don't think anyone is proposing ubi. romaine: ok. let's end it there. we will be back in a moment. this is bloomberg. ♪ ♪

caroline: we learned about christie's, and ansi -- announcing it will auction a work and will accept ether. our guest joins us now. talk to us about these

non-fungible tokens. >> that is an interesting and loaded question. nonfungible token-based artwork is artwork without the base. our audience is familiar art that can be hung on the wall and experienced in the round, and this is our t foray into something completely intangible. it does not have any objects, objectively speaking. what are you bidding on, a nonfungible token with a long sequence of numbers and letters that lands in your digital wallet, establishing its scarcity and uniqueness, but the code is represented on a website , and in the minds eye of our audience by an artwork that mike

created. it is called every days, the first 5000 days, constituting every image in his journey to create a new digital image. and so it is this very, very comprehensive, monolithic artwork we are selling. it is a brand-new first for us. joe: so you probably get this question a lot, what is to stop me from just screenshoting the image and telling people i bought it? >> nothing. the image is not the artwork. the image is not a representation. it is an abstraction. the artwork is completely intangible. romaine: this raises issues about what art is and how it is

a volume. a lot of people will look at it and see their is a future. will we move to a stage where ephemeral art displays becomes more of the norm? is this what art collectors are looking for? >> who knows. i don't think the broader part collecting community we have access to now is desperate for it. no one is trying to assassinate paintings and sculpture, but we are at this point where people are asking provocative questions with it, and other ways of interrogating the meaningfulness of visual art. you have someone selling the banana at art basel famously, a banana duct taped to a wall and

people are lining up to pay hundreds of thousands of dollars for it. the same sort of question from the art universe. caroline: i am interested in this captive audience you have. at the moment, you have a lot of people who love the asset of cryptocurrency and want to invest their bitcoin fortune and put it back into some sort of focused point. are you welcoming them with open arms? are you going to sell this potentially taking ether, an area that you want to spend on? >> absolutely. we are way outside our comfort zone, of course, naturally. christie's has been around for hundreds of years. i never protected we would accept cryptocurrency on a major sale, but we want to make this as easy for the audience as

possible. they are used to transacting in either, in the nft-based art collecting world. it is a natural inclination for us. it is something that could lead to more money on the bottom line for everyone involved, so we have a fiduciary responsibility to make sure if we have the opportunity, we pursue it. it is that perfect situation where we have a seller is very literate when it comes to cryptocurrencies, and we have an audience that wants to pay using cryptocurrency, so it is the perfect situation. joe: we have about one minute left. it seems like people are into buying stuff, art, nfc's, basketball cards, physical ones,

digital ones. what is going on? why this surge to spend on collectibles? >> people have always wanted to collect. it makes us human, the desire to acquire things. in letdown, probably -- lockdown, probably the energy towards that activity is encouraged. you have a very limited real life compared to the virtual life you lead, and there is something to be said about the virtual nature of the asset, right? we have been spending the last year plus, and looking to more time spent in this virtual parallel universe. that gap between reality and virtual experience, lived experience versus virtual

expense becomes more fuzzy. it is easy to see you could equate real life to virtual life right now. joe: great stuff. fascinating. caroline: that is all. joe: bloomberg technology is next. this is bloomberg. ♪ s bloomberg. ♪

♪ taylor: i'm taylor riggs in "bloomberg technology." for emily chang and this is "bloomberg technology." -- in for emily chang and this is "bloomberg technology." the price of the largest digital token surging to $56,000. plus, major ruling in the u.k.