♪ >> the economy is looking promising. the recovery is still at the early stages. it is still quite fragile. >> things haven't changed that dramatically, other than we replaced people's income. >> pent-up demand continues to build. >> we have seen people take the money they get from the government and their income and spend it like mad. >> inflation is an eventuality, and that is the only thing that will probably not be market off course -- probably knock the market off course. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz.

tom: across this nation and worldwide, we are thrilled that all of you are with us today. import conversations on a market -- important conversations on a market that is changing its dynamics. it is all about good news on the pandemic and worries of inflation. jonathan: up on tends to about 1.37%, on 30's to 2.16%. now we start to see that tipping point. u.s. yields up, basis point -- yields up. tom: maybe someone slips up in q&a, or maybe it is in their comments. jonathan: look out for that. let's see if the script changes a little bit, any kind of verbal intervention, any discomfort with what we are seeing in this bond market. . tom:tom: what i am looking at pushing against this -- tom:

what i am looking at pushing against this to get reelected as the american jobs economy. yes, i know it has been better. we saw some nascent strength particularly in the midwest. it's got to get there month after month. lisa: especially because -- it better month after month. lisa: especially because we have seen a steady decline in manufacturing jobs over the decade. there's a question of what it would take to revive some of these blue-collar jobs which are in hot demand right now. how much can we get this pushing forward past the pandemic into a new trendline? tom: and getting restaurants and the rest back here in new york city. what we are looking at is the vix, up 2.4 from aloud over 24 on the vix. i also note the parsing and the equity market area to me it is not a question of equities down. they are just off the bid. jonathan: yields up and equities off the bid, but down 0.9%. real yields have started to bite into the valuation of some of these big tech players, and that

is why the nasdaq is hard down again today. we've got crude at 1%. we are really taking it back to 2011 and the metals, numbers we haven't seen for about a decade. tom: chicago copper right now, for those of you on radio, this is a running battle. do you quote commodities off of london or chicago? the convention in america is to look to chicago. are they different in price? jonathan: the convention is to look to the price in london. that is what it is based off. tom: each meadow is different, but we are seeing the bloomberg commodity index come up here. let's get right to it. we've got tons to talk about across the next hour as well. lisa hornby with us, the schroders u.s. had a fixed income. what is the level of

recalibration at schroders right now with higher yields and lower his? -- lower prices? lisa h: i think everyone is revising significantly higher over the next remainder of the year, and i think part of that is obviously expectations for stimulus being greater than we are expecting, better data on the vaccine front, so a release of this pent-up demand that we see in the u.s. consumer, so that should mean slightly higher rate. it should mean steeper curves. the thing i am following the closest is really the move in real yields, which you guys were mentioning. nominal yields have been rising for quite some time, but it is really only recently we are starting to see this come through.

that is where we could potentially see some other markets come under pressure, this move in real yields essentially, if it continues unabated. jonathan: over the commercial break, there was this individual that looked like lisa abramowicz with some optimism around. [laughter] lisa a: ok, i am talking on a personal level, that you walk around and feel like the cloud is beginning to lift. don't get me wrong, there's the question on whether we will be on a different trajectory. there's one thing to have reflation. it is another to have inflation. when do we get to the point that we are ahead of ourselves on the asian expectation, and it just leads to tighter monetary condition and perhaps -- conditions than perhaps the market can handle? lisa, please. lisa h: that is the big question. is this rise in real yields going to continue?

is it going to feed through into other risk markets? you see financial conditions tighten. i guess my view on it is that this is somewhat to be expected. it is not a taper tantrum scenario because we are talking about it, and just the fact that we are talking about it now suggests positioning is going to be more on sides with us in a higher yield environment. people are not coming into this max long like they were perhaps in the past. the second thing different between now and 2013 is that there were a lot more buyers -- excuse me, or sellers of duration and a higher rate environment, so the convexity hedges you had in the past don't have the same needs today when rates move higher. that should stop that vicious cycle from happening. so i do think we can get yields moving a bit higher here, but i do think there's a bit of a cap, and the third element on that is

that the fed is likely to look through any inflation in the near term. they have been quite clear they want to see inflation, so you don't have the risk in my mind of them moving prematurely and actually raising the discount rates. so it is a bit of a markets getting on-site call with the idea that growth is going to be stronger, and yields should reflect that to some degree. jonathan: we could frame this in another way. at what point do yields begin to compete with capital elsewhere when you had valuations in part of the equity market predicated on the yield staying much lower than they are right now. when do you start to see that competition for capital to evolve? are we already seeing it? lisa h: i think to some degree. you have seen the equity move let up just a little bit in the last few days, particularly in certain parkas of the market -- certain pockets of the market. there's been a huge move in growth stocks.

yields are moving higher. i think it doesn't necessarily depend on the level as much as some of it depends on the speed in which we get there. certainly if this is everyday, we move 5, 10 basis points higher, that is going to cause a much more significant reaction in other markets. if we are gradually moving higher in kind of a step change fashion, where things kind of pause, people reset, then i think we could see yields move 20 or 30 higher without much damage being done. tom: on a multisector basis, where are you comfortable now? where do you hide with yield up in price down? sam: there are some sectors -- lisa h: there are some sectors clearly that benefit from high guild. banks clearly benefit from steeper curves, higher yields. the bigger question is not

necessarily the high yield environment, but the everything looks expensive environment, so how do you position in that is a multisector investor. i think you have to focus on the pockets of the market that are set to do well. when we look at corporate credit overall, we see extraordinarily expensive valuations. again, there are still some companies in the more covid related sectors, although i think we are expanding the definition of what that means as we seek companies that still have value. taxable municipal market is another area that we see some opportunity where the fundamentals and that market are quite strong. fiscal stimulus is certainly going to help this time around if there is more set aside for municipal issuers. so there are certain pockets, but this is a year where we have to be more judicious on the security selection. last year we could have bought anything with more spread on it,

and anyone would have done really well. this year it is about finding those difficult companies that continue to perform in this environment. jonathan: last year what is easier -- jonathan: last year was easier. it just didn't feel is he at the time. [laughter] the easy money has been made. it just never feels easy when you are trying to make it. tom: we are seeing that with mike wilson. this is alpha and beta, equity speak, away from ms. hornby. you do great versus going out and finding the individual stories, the individual sectors. jonathan: it is a really interesting morning to kick off the trading week. we have yields higher on tends to about 1.37%. we have seen the equity market gap lower. granted, in isolation at negative 87 basis points, it is

exceptionally low. it is about the rates change. the move was pushed higher for -- tom: chris verrone links it directly to the good news on the vaccination. he said the bond market has voted that covid is over. lisa a: there's a tenuous balance right now that everyone is betting inflation isn't going to pick up too much, that there's going to be self correction within the bond yields to keep risk assets continuing to float upwards. that is the key question. at what point does inflation call the hand of the fed and change this whole dynamic? i don't think anyone knows the answer, and it feels like we are entering into a new cycle. jonathan: it needs to come from the labor market, a much tighter labor market, and we don't have that right now. lisa a: it depends where. you are seeing a tighter labor market and things like manufacturing goods, transportation, the idea of

packing your boxes for amazon. if there are fewer restaurants, will they have to pay more to attract employees? jonathan: let's hope they do. let's hope we get away from that business where we need to tip to pay in restaurants. lisa a: ooh, you are going to slip that in as a music -- as the music goes on. jonathan: just contrasting with other parts of the world. those people work hard. they deserve to be paid well a little later, greg valliere. in washington dc -- greg valliere in washington, d.c. this is bloomberg. karina: i'm karina mitchell. democrats begin the final push for president biden's 1.9 trillion dollar stimulus bill this week. democrats want to get the measure passed quickly before an earlier round of benefits runs out. the house plans a vote on

friday, and the real action will be in private talks in the senate. some democrats are opposed to planets for a $15 an hour minimum wage. -- two plans for a $15 minimum wage. a draft of a study says the vaccine is 89% effective. some scientists are disputing its accuracy. and while, airlines have grounded several boeing 777's after the weekend. a delta airlines flight made an emergency landing after an engine failure. airlines in japan and south korea are doing the same. another takeover in the regional banks business. m and t bank has agreed to buy

people's united. the combined company will have about $200 billion in assets and more than 1100 branches in 12 states from may to virginia. -- from maine to virginia. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2 (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it.

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♪ >> we are hoping that there will

be a strong recovery. we have every reason to believe there will, especially if president biden's plan gets acted. we will -- gets enacted. it will provide support for this economy. jonathan: that was joseph stiglitz, the nobel laureate. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your monday morning price action looks like this. the bond market that can smell the good news on the covid side of things, can smell the fiscal stimulus kind of things. now we start to bite into risk assets, down 33 on the s&p, -1%, adding to the losses. a four-day losing streak, set to become five at the opening bell. tom: i will call it a little bit weaker dollar, but really nuanced dynamics on a monday. it will make for even more

sporting data checks to come. right now on the sport in washington, greg valliere joins us with agf investments. greg valliere, where are the senate conservatives? president trump would have tried to talk to -- tried to tock-tick president biden. what is the state of senate austerity right now? >> i think biden is going to lose 50 votes in the senate, all of the republicans. i think you will get 50 democrats, although that is not certain after what joe mansion did to a by denomination -- joe manchin did over the weekend to a biden domination. i think we will -- by denomination. i think we will know by this -- by a biden nomination. i think we will know by this week.

jonathan: what are we married to ? what do we let go? greg: i think either is pretty generous, and i recommend a really interesting editorial in "the wall street journal" this morning talking about how much of the bill could be pork. maybe 1.5 trillion is enough, maybe $1.4 trillion in enough. there are some things i think could get a haircut. i am not sure we are going to get $15 an hour and wage. jonathan: what are you looking for? not what you think should happen, what you think will happen. greg: i think it will be close to 1.7%. lisa a: this stimulus is not

necessarily pro-crew slipped -- necessarily preclusive of an infrastructure plan later in the year, but rather is a precursor. you have to get vaccinations before you can think about rebuilding. can you give us a sense of how much that is the accepted narrative in washington? lisa h: it is among the democrats -- greg: it is among the democrats. republicans are thinking it is too much. if we follow up 81 $.9 trillion bill on infrastructure -- follow-up a 1.9 trillion dollar bill on infrastructure, that is over 10 years, but the numbers are astonishing, and i think the republicans are getting cold feet. lisa h: because they are -- lisa: because they are worried about having to tax? or furthering their own particular interest. greg: that is a fair point. i think they want to obstruct and they are not crazy about a

bill that big, but they have pretty big cover from larry summers. he said that $1.9 trillion is too much, and a lot of republicans agree with him. tom: mervyn king talks to the former of the bank of england about putting it to work. do you perceive that one point asked trillion dollars -- perceive $1.x trillion going to investable youth, or is it all pork? greg: i would see maybe 1/3 as maybe not totally necessary, but with a number like that, i do worry that you could have a economy that, by default, could look like it is overheating. jonathan: greg, there's one question i think a lot of people have on their mind right now. does this suck all the oxygen out of the room to keep doing

everything else? greg: that is going to be a lot tougher. the manchin statement over the weekend is really crucial. i am not sure he would go along with another big infrastructure bill after this one. jonathan: that is the worry. greg valliere, agf chief policy strategist in the u.s.. they have some control to shift the debate one way or the other. tom: the question is so what, and this is an immense so what for investors. whether in bonds or in equities, the scale, the bank into to where we are, whatever your politics of scale of where we are, it is all most impossible to measure. jonathan: i think you've got to put two things together with this bond market move. 1, 2 builds on the words of chris verrone this morning --

one, to build on the words of chris verrone this morning. really improving news, and it looks brighter after the study in israel. lisa: it also shows how people have been issued efficiently -- have been inefficiently -- the idea of overheating, what does that look like? does this set us on a new economic trajectory by the end of the year? what does that look like? does that force the fed's hand in a new way? jonathan: this pendulum has just swung from one to the other. in december, we had a negative payrolls print and there was massive worry about the labor market. now there's worry about the economy overheating. this is exactly the policy prescription they wanted to see. they wanted to see major fiscal stimulus.

they don't want to do all the hard work themselves. this is what they want to see. they have been talking about this for years. chair yellen identified it and never followed through. lisa: the issue here is that people have been conditioned to not see inflation. basically, they've gotten it wrong time and time again. they think this time will be exactly the same. tom: you can measure it anyway they want. to me, the idea is the uncertainty out there which leads to the good conversations on our simulcast. there's massive uncertainty out there, three months and seven months forward. jonathan: the bias right now is a better six months, nine months ahead. tom: there's been a massive shift in that note. you can feel it on the street. jonathan: things getting better. your equity market drifting lower. yields are higher by about two

basis points to 1.35%. the equity market down 0.8 percent. coming up on the program, megan greene, harvard kennedy senior fellow. good morning to you all. this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg surveillance." live on tv and radio, an interesting morning, a nuanced morning. equities are lower. down .8%. your underperformance is in the nasdaq, off 1.4%. the y is in the bond market. -- the why is in the bond market. yields up. 1.3551 is where we sit. really yields are picking up a little bit and they're starting to bite into the valuation story. the story as things get better in the future. aussie-yen has moved 13% in the aussie favor since the end of

october. something defensive. copper, gold. the copper/gold ratio. ok. it has gone vertical. tom: i can tell from the symbol that is based off of chicago copper. if that were london, it would be a different ratio. jonathan: i did that just for you. let's keep that there. lisa: [laughter] tom: a little confusing. as i said last week. full disclosure i am in jonathan's camp on the predominance of london within our history of commodities. chicago is what we look at across america. i want to go back. mohamed el-erian emailed in. he is trying to come up with women's ice hockey for the

university of cambridge as you and i are wrapped up in the top rank of the debate in central park, he has a prospect. lisa: we were mentioning we do not go through and what we were talking about. there are two ice rink in central park that are a mainstay for people in a pandemic that are a main -- for children to get out and mayor de blasio talked about shutting them early. he decided he was overruled after a petition went out. over the weekend it was a point of heated debate from all of the parents from new york city kids who found that as a respite amid the pandemic. tom: the image you just on bloomberg radio, you can see the fierceness as she is trying to get to her $30 breakfast snack. lisa: nobody really feels that. tom: mr. trump said that is how they are paying for the rake. megan greene joins us, harvard kennedy school senior fellow.

there is all this debate on economics and we toss around ratios like the productivity three ratio, six unit idea. then there is the output cap. we really have knowledge of where these relationships are? megan: we never know where the output cap is because it is predicated on an idea of potential growth. measuring potential growth is much worse than art than a science at the best of times -- much more an art than a science at the best of times. i would put out the idea of potential growth that the economy will come back to might be antiquated. in economics we believe in equilibrium. usually there is just one. we have all spent the past year looking at epidemiological models and the hard scientists do not view the world this way. they look at the world differently, thinking there is

no actual equilibrium we know about at the beginning. instead we will look at actors, use agent-based models to see how they respond to things, use machine learning around that, and figure out what the outcome is. this debate about the output gap based on some kind of equilibrium is probably missing the point. we assume there are intelligent actors in a simple world. i think scientists have a different view of the world. they assume they are simple people in a complex world and there is a lot we can learn from them in economics. what tom: what are we getting wrong about the x-axis? we've been talking about this all morning. the estimates out to june, after september. you have a belief in the x-axis or is that a mystery? megan: i think everything is a mystery at the moment. this is not a typical downturn

and it will not be atypical recovery. as i have been saying since the beginning of the virus, the virus will be dictating everything and will be determining prices and quantities. it is actually the epidemiological data that is much more important than the economic data. jonathan: people were gravitating toward the upper cap , trying to assess -- towards the output gap, trying to assess how big the packages in d.c., maybe it is too vague. what is the way to assess that? megan: i do not think we should think of it as a stimulus. we should think of it as catastrophe mitigation. the point is not to figure out the size of the hall to -- the size of the hole. the point is to get dirt out of to the most vulnerable so we can protect them and then the next stage thinking about providing a stimulus so we can get on our way to a recovery. in this sense the next package

is the more important one if you want to think about potential growth or you want to consider there might be multiple equilibria and we are trying to end up on a better one. the next package, the build back better, is the one that is going to do that. jonathan: what do you think that package should look like? megan: it should be full of public investment. it does not matter if you believe in secular stagnation or not. if you think we've had low growth, low inflation so long because of supply-side issues or demand-side issues, there is one thing that fixes both of those issues. that is public investment. a massive infrastructure spending program that is green in nature is an absolute no-brainer, and a lot of money should be behind that. lisa: i love your assessment of the efficiency of the $1.9 trillion package. greg valliere was talking about the wall street journal talking about the op-ed about the fork built into this plan. do you have a sense of whether

that is the case or if there is a sense behind each dollar and firepower behind it? megan: there is firepower behind it nearly based on the size. is every dollar perfectly allocated? absently not. we have already learned in this crisis we do not have great tools for ferreting out needs how much money and getting it to them. the idea is if you get out a lot quickly, it is not particular targeted, it could be more targeted. it does not include things like automatic stabilizers, which i wish it did so you took the politics out of this process it was based on what is actually happening in the economy. the idea is not to fill in the hole perfectly. we are clearly overdoing it on filling in the hall. that is ok because the point is to get money to the most vulnerable. lisa: what about people who look at the savings rate. the fact that it is climb so high.

this gives people firepower when the economy does reopen. does this indicate to you people are not going to necessarily get this money out of the economy right away and it is not as efficient, and perhaps the people who are getting it are not the people who needed the most? megan: that is where i think this might be targeted better to those with lower incomes or no incomes rather than a check going to everyone, which i would not advise. that being said, i think the savings rate is misleading. it does not consider all of the forbearance we have at the moment. the savings rate has skyrocketed , so has household debt. you have to consider that when bills finally come due, which many of them are under forbearance, a lot of the savings will have to be plowed into that. tom: part of your charm is holding politics into your economics. mr. rishel was on friday from florida where houses are being sold in 12 minutes. clearly the benefits are being

skewed across different income levels. do you have any confidence washington has the political will to actually get money to those that need it? megan: from a macro sense, absolutely. if you look at who the administration has hired on the domestic side, it is labor economist because there is a real concern about income and wealth inequality in the u.s.. i think in the big sense, the bided administration does want to do something about this. as i said, we do not have great tools for figuring out how to get money specifically to those who need it the most. what you mentioned in the housing market, that is clearly a result of central bank policy. that is the fed, mortgages, cars , those markets have been on fire because rates are low. i think they will be for a long time so i think you can continue to see those markets do well. tom: -- jonathan: good to hear

from you. thanks for joining us. megan greene, harvard 30 school senior fellow. i want to pick up an appointment and made. -- on a point megan made. debt has exploded, so has forbearance. there are debts that have not been paid that need to be paid. the be interesting to see the portion of the savings that gets used to pay off the debt. tom: why can't they use one point x trillion to help with the rents for the landlord to open crushed? lisa: i will put the politics aside. speaking of people saving this money to pay back the debt that has accumulated, this is what jared bernstein, advisor to present biting said when he came on the show -- the president biden said when he came on the show. perhaps we are overestimating

the savings. how much goes into discretionary spending and how much his pent-up repayment to all of the debts that have built up? how much of this is removed from dynamism and goes instead to maintaining the status quo. jonathan: we have to put you on the spot. will we get inflation or archway? -- or aren't we? lisa: that is the big debate. people do not know how this will play out. jonathan: we will have that conversation on bloomberg television in the next hour. matt michigan -- matt miskin of john hancock and stuart kaiser of ubs. quite a lineup. tom: maybe i will stop by and check it out. jonathan: that would be awesome. you do have a show on bloomberg radio you might have to anchor, but if you have the time to see me, you're more than welcome. tom: we get the zamboni driver

over at woman -- at woolman rink. jonathan: welcome back after the weekend. interesting week with chairman powell just around the corner. equities off the lows of the session. bond yields off the highs of the session, up just a basis point. down 27 on the s&p. -.7%. this is bloomberg. karina: the u.s. and iran are sparring over how to revive the nuclear deal. over the weekend i ran renewed its demand the bided administration renew -- the u.s. response is iran is isolated diplomatically and the ball is in their court. the next phase of president biden's legislative agenda is taking place, and economic package that will be potentially much larger than the 1.9 trillion dollar relief bill before congress. it could be the biggest

infrastructure spending commitment since the new deal. it all may be unveiled next month. meanwhile, the first real world indication the vaccine occurred to spread the -- to -- a vast majority of the vaccine -- the vaccine was 89% effective in preventing laboratory infections. in the u.k. boris johnson will announce all schools in england will reopen starting march 8. johnson will be in parliament outlining how the coronavirus lockdown will be lifted over the next few months. more social contact will be allowed march 29, including outdoor gatherings of six people and two households. shares of petro gas plunged as much as 60%. brazil's president replace the head of the oil company. impatient with the government's ability to appease its political base. truck drivers have been

threatening a strike over rising diesel costs. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. ♪

>> texans have suffered three days of freezing cold without power should not be subjected to

skyrocketing energy bills due to a spike in the energy market. i held an emergency meeting yesterday with legislative leaders to begin the legislative process to shield texas families from unreasonable bills. tom: the governor of texas, a beleaguered governor of texas. good news about taxes and all of the midwest. even the idea of from electricity to the urgent need for water. all in all, it has been good news. lisa: after a pretty dire spate, the idea this unusual weather pattern might not be so unusual going forward. tom: here is what we do, from bloomberg on the economy to bloomberg surveillance. to get away from the hyperbole. you actually talk to adults in the room. on the breed nationwide -- on the grid nationwide she is the

adult. her book, "the grid" is the bible, the definitive book on what we have wrought. professor cohn, thank you for joining us. great to have you. can texas become more like the other states, the other regions? prof. cohn: that is an interesting question. we could become more like the rest of the country by interconnecting with the western interconnection or the eastern interconnection. we could become like other states restructuring how we trade wholesale and retail power. we could become more like northern states by winterizing our electrical system and our natural gas system. tom: it happens by crisis. i remember the great blackout in

the 1960's where life changed on the east coast. we had another blackout-like occurrence. what legislation will you look for, what action we look forward to say not only texas but the entire nation has changed its tune? prof. cohn: texas is heading into a couple of weeks of hearings at the state legislature on that point. i think the big questions will be do we need to build into our market ways to incentivize investment in winterization, ways to look at interconnecting, and i would love to come back to that point in a moment, and i hope, although i've not heard people talking about it, ways to protect the public in the event there are these kinds of emergencies again. one of the characteristics of large and complex technological systems is they might fail. we need other ways to think

about how we protect the public. what we do to make sure that if that happens, there are backup plans in place? lisa: let's go to what you were talking about, connecting the grid. texas has intentionally isolated its grid from the rest of the nation. can you talk about why it has done that, the logic behind that and how it has played out? prof. cohn: is a long history that dates back to 1935 when congress gave the federal power commission the authority to regulate interstate wholesale pallet -- power sales. the texas utilities prefer not to fall under that regulation and forbidden agreement to not interconnect across state lines. i do not believe they were isolated in the sense they were the only utility avoiding federal regulation. i look at a map, and there were other states in which the utilities did not interconnect for some decades in the 20th-century. for texas, it was not a problem.

the reason companies interconnect is to gain access to bigger markets, to reach distant power resources like falling water, and to provide backup power to each other. within texas the utilities were able to do that without crossing state lines because it is a big state. beyond that -- i lost my train of thought. tom: it is "surveillance." you're allowed to lose your train of thought. lisa: that it goes to the whole idea of competitive bidding on certain energy and that allows for certain innovation. going forward, there is a question of whether there should be more national control, not necessarily out of necessity but out of putting money behind resources, behind the development of grids that can be more stable and sustainable through all types of the weather. do you see that as a way forward

, that there needs to be a national hand in this? prof. cohn: it looks to me like there are multiple paths going forward. one would be bigger and stronger transmission links across the country. that could benefit utilities fail of renewables. another might be distributed energy systems that provide redundancy and resilience with their outages. a little neighborhood has exams margaret. if the big grid goes down -- has its own smart grid. if the big grid goes down a little neighborhood can run a generator and keep power on. whether that would become a federal rule, it would be unusual in american history, but it could be a solution. it may not be a palatable solution. tom: thank you so much. julie cohn, the nation's expert , yes on texas but on the nation.

her one volume "the grid" is the definitive source on what we've all observed. thrilled to have her on our simulcast. we move on and you wonder what the political follow-through will be in texas and nationwide. lisa: initially it was interesting to hear the regulators paint this as a problem of diverting too much money to solar energy and wind turbines. that shifted. that was a small fraction of the overall power, was clearly more complicated. this does fuel joe biden's push to upgrade the infrastructure. you have to wonder how much support will there be? tom: a major shout out to matthew winkler who nailed this. texas has led the nation in renewable energy, renewable power. what i know is everybody has a political angle and you have to go to people like professor cohn to find out what is going on.

what you see in the market? i see a vix to 24. lisa: reflation trade very much in front and center. what is interesting is yields go up to a certain point, stocks go down. at what point does that get the attention of the fed? at what point does that get the attention of investors? tom: i will not get into buy the dip. the punditry is healthy. there are a lot of different opinions. i have to go to what we saw today, which is the m and t bank merger in buffalo at people's united. deals are getting done away from all of the hysteria. lisa: you said something i thought was profound. tom: can i go home for the rest of the week? lisa: sure. the nimbleness of being big. there is a nimbleness of being large because you have to merge and consolidate. tom: that is true.

it is without the bright lights of inflation -- you have to be nimble. balance of power on radio and television. the gentlelady from florida, stephanie murphy with david westin. stay with us. this is bloomberg. good morning. ♪

♪ jonathan: from new york city our audience worldwide, good morning, good morning. 30 minutes away from the open, down 26 on the s&p. treasury yields off the highs. we begin with the big issue. treasury yields breaking out and equities breaking down. >> markets down today. >> didn't makes sense yields are rising. >> treasury yields now trading close to 140. >> there have been rotations under the surface driven by this increase. >> all markets are pointing towards reflation. >> the direction of travel is gradually higher yields. >> the negative real yields are telling you there is weakness. >> starting to see real yields move from below -1%. >> short-term we have seen a sharp move. >> i do not think this is cause for concern. >>