♪ >> right now where we are, the data is not there. markets are pricing and stimulus that hasn't yet been approved. >> you've got a lot of buying power with pent-up demand that 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 knock the market off course. >> what will the market look like in 2022? >> 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. three hours away from testimony from chairman powell. nasdaq futures down 1.44%. tom: as you mentioned earlier, with a bond yield move, banks are doing well. the s&p does well. dow has green on the screen. moments ago, brown university published an extensive twitter thread, a medical authority has taken the extrapolation of the better news on the vaccination, the better news on the deaths across this nation. jonathan: yields have gone one way, yields have gone higher. think the one question people

ask is whether we get any sort of subtle intervention from the federal reserve chairman later this morning. tom: i dazzled kailey leinz this morning and the 5:00 hour with a positive 30 year yield. are we seeing higher yields or a normalization from the really distressed yields we have seen? i am going to go with the optimistic case that we are normalizing. jonathan: you know where lisa is going to go. but i think we should be asking this question. i keep hearing the reflation trade, but this move in the last few days has been real yields, and inflation expectations haven't been coming along for the ride. lisa: if you take a look at five-year year five year breakeven rates, the expectation for inflation over the next 10 years has declined for five straight sessions, which really calls into question this reflation trade. i would argue that is what you are seeing in stocks, the knee-jerk reaction when yields go higher is for stocks to go lower. it is concentrated in the most overbid stocks, and yet you wonder if there is a self

corrective cycle that starts to kick in, where people view this as risk off and then go back into bonds. tom: i agree 100% with lisa that there is hesitation in the bond market. it is all the worry that jerome powell will talk about today. jon, you go the other way today. jonathan: the question is, how self-limiting is the bond market selloff? how self-limiting is it because it starts to affect risk assets? are they going to give it the green light to test those kind of levels and see where it goes? no idea. very interested to see if that script changes later today. tom: i am going to go to brian deese. we will be featuring that interview across all of your properties today. you've got to wait for wages to move, wage inflation to move. jonathan: we will hear from the

national economic director -- national economic council director later in the program. tom: you will be playing it on "the real yield" on friday, for all i know. [laughter] jonathan: good morning to you all. equities heading lower by about 14 on the s&p, down 0.4%. the pain, the epicenter of it is in the nasdaq, down another 1.35% on big tech in america. 1.36 53% is where the u.s. 10 year is, but crude is higher. lisa: it could be the mark that jeff currie was looking for at the end of the year. you mentioned fed chair jay powell speaking in front of the senate. i want to recommend everyone read the column from bloomberg opinion, where he talks about the fed as a parent and capital markets as toddlers, and trying to assess how to manage their tantrums while trying to gear

them towards independence. anyway, i will recommend that. 10:00 a.m., we are getting u.s. february confidence data, as well as fed manufacturing data out of richmond. interesting to see whether we continue to see any grinding higher in the data, or whether this is a hope trade when it comes to reflation. at 2:30 p.m., we hear from the man who was on the hotseat last week in front of congress, vladimir 10 if -- vladimir tenev, robinhood ceo, under increased scrutiny from regulators, as well as others in the capital markets. jonathan: he has struggled to communicate in the last couple of weeks in a major way. in a major way. you've struggled to commute kate for the last 10 years -- communicate for the last 10 years. tom: yeah, ok. jonathan: you wonder whether he is the mentor ticket public, given the difficulty he's had dashed the man to take it public

-- the man to ticket public, given the difficulty he's had. chairman powell in about three hours, going before the senate banking committee, and a conversation about where we are right now. typically we always make it about wall street, financial markets, and sometimes these things rear off somewhere else, and it is about individual lawmakers trying to make their youtube clip to send out to their constituents. let's bring in michael shaoul, market field asset management ceo. to me about what you expect from the chairman at 10:00 a.m. eastern. michael: i expect him to reinforce the view of the fed, that their main goal is to create full employment across the racial divide. that seems to be the issue powell has been given since jackson hole. i think he will allow for the fact that vaccination has a good chance of changing the medical

emergency over the course of 2021, but i think he's going to have to be steadfast in his view that the fed is on the right course. i would be very surprised if he hinted at fed action over the next few months. lisa: how do you view this rise in yields, given the fact that, as jon was mentioning, we haven't seen a move higher in tandem with inflation expectations? michael: i think you know i am of the view that we are transitioning into an inflationary boom. i've had that view for several months. i view the move higher in yields as part of that. nothing happens in unison. i've never been a big believer that in the short term, you could look at inflation expectations and the bond market and arrive anything. but i heard tom's and jon's comments earlier.

i do think we have gone from a depressing yield curve to a much healthier variety of one. i think over the next few months , we will transition into a different kind of yield curve, that the fed is losing control of inflationary pressures building in the u.s. and the global economy. lisa: is there some sort of inconsistency in the markets for a reflation trade to take off in stocks, while we have a normalization trade taking place in bonds? michael: no, because i think the path of deflation to inflation runs through normal. since september, i think the market has been reacting to this by steadily pushing cyclicality towards the top of performance, and globally, the equity indexes where the long cyclic or --

indexes, the long cyclical buyers within them, have been significant outperformance. we may be at the point where you are in a benign rotation, but it really hasn't hurt anything else. we may be reaching the point at which it is a less benign rotation at which people start to worry about the sheer market cap, the issue you are seeing within the super popular part of the market. i think cyclicality continues to do quite well, but indexes that are stuffed full of high multiple, super popular equities may start to struggle. tom: jeff currie was just with us. he's getting a lot of claim for calling the commodity trend higher. you have been way out front on

that. you have called for almost a theory of recovery commodities for months and quarters as well. are we deep into the cycle? for example, in copper, do you foresee that the easy money has been made, or can we go much further? michael: i always think the easiest money is the first money because it is much easier to have a double off 5000 then it is off 9000. but unlike 2011 or 2008, when copper was at these levels, you haven't had years and years of reduction and exploration leading to excess supply. i think we have the potential -- i wrote yesterday an article for a magazine -- that we are reaching this critical shortage of durable goods in the u.s. and elsewhere, which i think is going to require a significant step up of manufacturing

globally. so i think there's going to be a period of a huge shortage of raw materials, and what prices do during that period has to be a depression. so my short answer is yes, the easy money has been made, but i do think there is more to be made in the future. jonathan: michael, good to see you, sir. michael shaoul, marketfield asset management ceo. the point is so powerful, that the mistakes made in the previous cycle have really set the stage for a very profound move higher potentially in commodities through this cycle, largely because of underinvestment. coming out of 2008, these miners were just digging holes because they had a lot of cash. then prices rolled over and they all had to pull back on capex aggressively, and that has been the story of the last decade. tom: i do want to point out that

michael shaoul was quoting london copper. we've got a clear london trend. jonathan: we have a consensus, don't we? lisa: a "bloomberg surveillance" exclusive. tom: we need to start quoting chicago and london. jonathan: dr. fauci right now, expecting cdc guidance on behavior after a vaccine soon. tom: really beginning to extrapolate to a better place. jonathan: coming up in the next hour, leif average -- next hour, lee ferridge, state street head of macro strategy. this is bloomberg. karina: with the first word news, i'm karina mitchell. the investigation into the riot at the u.s. capitol takes a new turn today.

three officials have already resigned their post. donald trump's allies have downplayed his role in the riot. they blame mistakes by congressional leaders and capital security officials. it was a little more than a year ago that the coronavirus made its way to the u.s. since then, have a million americans have died from the disease. the u.s. has recorded more deaths than any other country. the next closest, brazil, has fewer than half as many. still, deaths and hospitalizations in the u.s. have fallen in say peak in january -- fallen since a peak in january, and more people are being vaccinated. british prime minister boris johnson says the end of the pandemic is insight. johnson has laid out a four-month type table -- four-month timetable for easing restrictions. by june 21, all remaining businesses will resume operations, according to the plan. a year into the pandemic, home depot's signaling demand is still strong for home improvement products.

u.s. same-store sales rose a better-than-expected 25% in the most recent quarter. home depot wouldn't give a forecast for the year. the ceo says if conditions are similar to the last half of the past year, sales would be flat or slightly positive. global news 24 hours a day, on air and on bloomberg quicktake, so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

♪ >> you sum it all together, we are at a very precarious and

unique moment of economic crisis, and that is why we feel pretty confident that we will be better off if we take these actions definitively. we put ourselves on a trajectory of growth, and work with the tools we have to manage any challenges we face going forward. jonathan: brian deese, national economic council director come on the u.s. economy. and tom keene freaking out a little bit. tom: that is kudlow 101. it is an economic crisis. what is the run rate on gdp, 6%? jonathan: just cap to three in your head, quietly. -- just count to three in your head, quietly. this is "bloomberg surveillance ." tom: we are growing gdp at 6%, even 7% right now. look at the home depot earnings. jonathan: they think we need some real relief because there are 10 many old people -- 10 million people fewer employed than last month, and they say this program is needed. tom: what else did you learn

from mr. deese? jonathan: the fed chairman hasn't spoken with the president of the united states, it seems. i find that peculiar because the package is huge. chairman powell's term ends in two months, and these two haven't spoken. if you are the president and you have a package, almost $2 trillion, to go into this economy and you are dependent on rates staying low, wouldn't you be interested to see what the fed chairman has got to say? tom: i think that would be true. let's pick up on this conversation and talk to somebody who knows what they are talking about, kevin cirilli, our chief washington correspondent. i need to rip up the script. at what point do they begin to really compromise on a $1.x trillion deal? kevin: now.

to your point, whether it is joe manchin, houston cinema, or john -- kyrsten sinema, or jon tester, these are centrist democrats. and guess who is on the budget committee? bernie sanders. on the minimum-wage issue, which is been a sticking point for sometime now, this is going to come down to whether the biden adminstration wants to make a deal with centrists or progressives, and a deal will ultimately get done, but that backdrop, who he sides with, that backdrop is going to set up every other fight for the next year and a half. jonathan: i find it amazing that the likes of somers and blanchard are making the argument in financial circles. it is not good when a former treasury secretary, a former democratic treasury secretary, is raising a lot of important questions about your very large fiscal plan, and a lot of people are siding with the former democratic treasury secretary,

and also joining in. that is where the opposition is coming from. the biggest questions being asked are not from republican fiscal hawks. they are coming from democrats. kevin: and you know what larry summers is able to do? he was able to be a loud voice that cut through the noise, and that is where centrists have really struggled. elected officials in office who are centrists have really struggled in order to get that large of a microphone. from that vantage point, should biden, as it is very much looking likely that he sides with a lower minimum-wage number , be fired up on every other policy issue going forward? a democratic-socialist said to me they are ready for policy battle to move biden back to the left after these stimulus talks. lisa: there's another question

jon and tom were raising about fed chair jay powell and his last communication with joe biden, apparently they have not spoken, which is how much is this plan by the democrats contingent on rates staying where they are? if rates continue to rise, how much does that factor into the discussion, the pushback in how big this deal could be? kevin: when you go to the senate banking committee, these were all the questions that fed chairman jay powell received, especially for trying to figure out the longer-term strategy because when they are talking after the $1.9 trillion stimulus and having an unnamed price tag on the infrastructure, we only have the previous administration to go off of. we are still talking billions of dollars on infrastructure. tom: i love your phrase policy battle, kevin. i am going to steal it from you. what is the cost of policy battle? if the progressives have a policy battle, do they lose the

house? kevin: you know, that is what the republicans are banking on, that the suburbs will want to swing back to the middle in 2022, and that they will be the party of the middle, and they will continue to be able to say the democrats are the party of the far-left. but look, infrastructure stimulus is incredibly important, but there's another issue that is going to be the political unknown over the next year and a half, and that is vaccine distribution. it's why i have my eye on that big pharma hearing today in the house, testifying about vaccination rollout, and whether it is governor cuomo or evan or newsom, senator ted cruz -- or gavin newsom, senator ted cruz or president biden, who do people blame? tom: i believe axios had a cover article saying the u.s. is leading on vaccination. why do we have a problem with vaccine distribution if the mass grinding out every day seems to

be get -- the math grinding out every day seems to be getting better? kevin: i was covering a group of bipartisan senators who said to me that they were going to have a bipartisan push in the rollout in president biden's first 100 days on an educational push of where folks get vaccines. this is the question of the day, no matter who you are with. did you get your first shot? are you getting your second shot? there is so much confusion, and that confusion is going to lead to political blame over the next couple of months. jonathan: i had a really good conversation on "the open" yesterday as well. kevin, you are getting good. [laughter] kevin cirilli, washington correspondent and the host of "sound on" on bloomberg radio, weekdays at 5:00 p.m. bank of america merrill lynch publishing on crude.

just a little bit of capitulation. they've lifted their forecast from $60, saying that oil will likely find a top at $70 this year. just a little more capitulation on the sell side around the commodity market. tom: it is a rationalization here. you see it in the bond market as well. what i would point out is rationalization in fixed income is very different than the day after day equity blather that we talk about. it is really interesting to see yield up, price down, and how everyone is rationalizing that. jonathan: it was interesting to hear from mike wilson of morgan stanley on this program talk about how comfortable he still was with his 3900 year end price target, because his call ultimately is not about the index. it is about the churn starting to do really nicely through 2021. tom: ben laidler, i think it is a distinction, but are we rotating or are we catching up

on the cyclicals? jonathan: i've never heard a tom keene opinion. tom: i never editorialize. jonathan: absolutely not. [laughter] michael kushner, morgan stanley global cio a fixed income, joining us a little later. chairman (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

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♪ jonathan: from new york city, for our audience worldwide, this is "bloomberg surveillance," live on tv and radio. we pull back on the s&p 500. the pain is in a nasdaq, off on nasdaq futures. 27% weighting for big tech in the s&p, 41% and the nasdaq. banks are at 18%. the nasdaq is up by five. just think about the outperformance, the relative outperformance we are already seeing in the back end of

february. that is huge outperformance of the back of what is happening in the bond market. tom: there's no question it is high yields, but it shows the partition in the markets. some are winning, some are losing. we are at -1.9% on the nasdaq 100. we have improved to -1.4% right now. the vix over 25 has come into 24.5. you see what is going on here. we just have to follow it tick by tick. jonathan: let's check out the bond market briefly. the spread between twos and tens, the widest since 2017. yields penned at 11 basis points -- yields pinned at 11 basis points on twos. here's romaine. romaine: i want to go back to the nasdaq 100. we are seeing a little improvement off the lows, but

even with the losses we have right now, we are talking about a 6% drop from that february 12 high. when you get underneath the hood, you are talking about pretty much the entire complex flirting with correction territory. tesla down by more than 5%. it's down more than 19% from its highs setback on february 6. apple is down from its high about 12%, with the indication today it is going to take you down 13% or 14%. netflix down 9% to 10% as well. pretty much all of these high fire momentum stocks, these big cap gross names of all of these have pretty much course corrected and are starting to flirt with bear market territory . this is a yield story. this is a valuation story. three stories that are, to some extent, effectively one in the same. another story here come of the covid story, the light at the

end of this pandemic tunnel. the reopening of our economy, and what it means for those names that have benefited from the pandemic. zoom down 30% from its high, 11% just in the past 48. pellet gun -- peloton also selling off pretty hard here. doordash fell 14% yesterday, down another 2% in the market. we just don't have as much need to sit at home and order noodles or whatever else we were ordering from home. tom: let's talk about that. have you seen yet a poem endemic -- a pandemic adjustment of the pandemic ending? are we starting to see those stocks flow away? romaine: absolutely. you look at all of the material stocks, the industrial metals companies, they are rallying hard. there's a big belief in the market that there's not only a reopening trade, but more importantly, a rebuilding trade,

that you will see the services economy pickup and the industrial economy pickup. jon headed earlier with the kbw bank index. they are getting a boost not only from yields, but also the improvement in the economy. so what you are seeing isn't so much a broad market selloff as much is it is a rotation. unfortunately, that rotation is coming at the expense of some of those highflying, higher weighted names. tom: romaine, thank you so much. this is a joy. to give us a perspective moment, michael kushner joins us with morgan stanley. the pedigree of princeton, london abenomics -- london economics, and morgan stanley. he has enjoyed a seat at morgan stanley since time began. [laughter] you walked in the door to enjoy the crash of 1987. what was your crash of 1987 like? michael: it was quite

interesting. i had only been working for several months, and my first thought was last in, first out, that my career in wall street was going to end pretty quickly. but that ended pretty fast. tom: it was amazing to see how the markets cleared it by december. it was an afterthought. i want to go right now to the changes of technology. jon and lisa have a bunch of fancy questions. we are in a time of digital social media, the technology, the way messaging works. how do you handle a downdraft now versus the way you handled it 10 years ago or 34 years ago? michael: your whole day is longer. you've got more information, more action in markets coming in london or asian hours. so things can be already happening. you see more volatility in treasury market futures, sometimes overnight leading the way into what happens in new york during the day. there's large-scale demand for u.s. dollar bonds coming out of

asia, and to a lesser degree out of europe, affecting credit spreads, the level of interest rates, the cross currency basis affects a lot of demand for u.s. dollar assets. there's all sorts of things going on which links financial markets all over the world, and relative value and opportunities to what is going on everywhere around the world, not just within the united states borders. jonathan: jonathan golub and credit suisse raising the s&p price target to 4300 from 4200, and citing the gdp growth in some 35 years -- the hottest gdp growth in some 35 years. tom: that goes to the double-digit call of ben laidler. i would also mention, the distinction of credit suisse is that they still like tech. jonathan: they have been very constructive on big tech over the last 12 months, when others have started to shift, rotate towards other sectors. just add to this if you can, michael, on the bond side of things.

we have been talking about how self-limiting a move would be in the bond market. can you weigh in on that? michael: absolutely. one of the interesting things which is happened over the last 12 months is a massive recovery in equities earnings. we had a dramatic rise in commodity prices from last winter to where we are today. but many safe haven assets are still lower yield with regard to bonds, whether it is u.s. treasuries, high-quality corporate bonds, the yen, the swiss franc, currencies that would typically function as safe havens. right now we are talking about commodity prices rising sharply the next 12 months, the fastest growth we have seen in the united states in decades. the u.s. economy could grow faster than the chinese economy in 2021, which i thank no one would have believed was possible a year or two ago, or several years ago. so all of these things are changing the narrative of what is going on in the world, and

these boom conditions could continue. what that means is that the levels of interest rates we thought were restrictive for the u.s. economy may not be restrictive because there is so much fiscal policy coming. there is so much spent up -- so much pent-up spending coming. many more moneys will be available to be spent later this year, so the u.s. economy is forecast to be raised continuously by various analysts on the street and elsewhere to 6% or 7% this year, and 4% or 5% again next year, which is unheard of in the past 25, 40, 50 years. lisa: but there is a distention between higher rates -- a distinction between higher rates crimping borrowing and crimping growth. a reassessment of valuations that have gotten very high-end specific sectors, and that is why michael shaoul was talking about a less benign rotation within the surface -- rotation

beneath the surface. how close are we to that which with treasury yields going up? michael: the way we look at it is that u.s. treasury yields are one of the few things which are still at a lower yield than they were preventive it, so 1.35% 10 year treasury yield is through january and mid february of last year. real yields are a lot lower today still than they were in september of last year, so the question is if the economy is going to do so well, why are these yields so low? shouldn't they at least be back to where they were before? this is why the market is coming back to the idea that we didn't think yields could rise as much as they have come but they still look low relative to the implied growth forecast we see in other assets, and the fed may be happy with that. jonathan: maybe they will be. michael cushman, morgan stanley

-- michael kushma, morgan stanley global cio. tom: i keep a positive swiss yield, 20 years with yield to kate's some of that german move as well -- 20 years wi -- 20 year swiss yield indicates some of that german move as well. jonathan: corporations can come to this market, funds themselves cheaply, and so long as that remains the story, they will be comfortable with it. tom: if italy did the bond deal they did 20 days ago, the issue would be record issuance. lisa: that is true, except there is a distinction. i keep going back to borrowing costs and valuations, which have hinged on yields remaining in a

certain place. at what point does that valuation equation start to weigh on some of the highest flying names, and how much can we get if bitcoin and the tesla selloff without affecting larger markets? we are talking about some of the concentrated bets on these names together. what happens with the leverage if that starts getting pushed out with a violent move up? jonathan: what is the qe right right now, $120 billion? where are rates going in the next five years? are rates going up in the next five years? the fact that we've even got to have the conversation about rates going up next five years at the ecb -- lisa: but at this pace, given the infrastructure spending, certainly in the u.s., there's a question of if the fed can absorb all of that, even with the bond purchases they are laying out. jonathan: and we've got a correction off the back of it. i keep coming back to this. with the treasury market, with a deeply liquid market like the treasury market, with a reserve

currency, what matters is not just what supply achieves. if supply achieves better growth rates, that is better for everyone. yields are going to roll back over again. wouldn't you think? i don't know. alongside tom keene and lisa abramowicz, i'm jonathan ferro. up next, more from brian deese, national economic council director. from new york, this is bloomberg. ♪ karina: with the first word news, i'm karina mitchell. a grim milestone for the u.s.. a half million americans have now died from the coronavirus that hit the nation a little more than a year ago. the u.s. accounts for almost 20% of global fatalities. it has more than twice the number of deaths then the next closest country, brazil. still, hospitalizations and deaths have fallen since peaking in early january, right after the holidays. federal investigators are bleeding metal fatigue for the engine failure -- are blaming metal fatigue for the engine failure on that boeing 777.

the incident led to the grounding of dozens of 777's. the lights are back on in texas, and the state has to figure out who will pay for the energy crisis that plunged millions into darkness last week. it will probably be ordinary texans. the cost of electricity over a five-day period totals over $50 million, 12 times higher than the week before. utilities will look to pass those costs on to consumers and taxpayers. hsbc is looking to become the go to bank for the wealthy. europe's largest bank says it will spend to expend its -- to expand its asian operations. hsbc announced full-year profits that beat estimates. . 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. more to come. this is bloomberg. ♪

♪ >> i do think people get bought into these manias who may not

have as much money to spare, so i am not bullish on bitcoin. my general thought would be that if you have less money than elon, you should probably watch out. jonathan: that is just brilliant, from bill gates. that's pretty much everybody. lisa: including bill gates. jonathan: i think that's changed in the last 24 hours, based on the stock, but pretty much everybody should watch out. bill gates, but going. tom: my goal is to read 200, fine lined, single page spaces on bitcoin. they use the same word secretary yellen used yesterday at the "new york times" summit, the idea of the efficiency of bitcoin. how do you measure that, and what is it? there's huge distrust among economists over the efficiency of bitcoin as a transaction item. jonathan: and volatility as well.

the volatility is just immense. they are trying to read out the price, and it is all over the place right now. equity futures down hard. nasdaq futures off by about 1.5%. s&p futures down by 0.5%. 10:00 a.m. eastern, we will hear from chairman powell, two hours and 11 minutes away. tom: let us look right now at home depot. i want to do this on a retail basis with sarah halzack, who is wired into how we go in stores and app stores. you know this success story. almost at the level of apple cache of apple computer -- of apple computer, net they get no respect. by is that? sarah: i think because the

pandemic has really pushed people to invest in their homes, whether to create space for teleworking or working at home, or just that it is driving you nuts while you are at home on the time -- at home all the time. the revenue growth this year was $21 billion. that is like adding an entire macy's to the revenue in one year. it is quite extreme every. -- quite extraordinary. lisa: there is a question of how long this trend can continue. did we get any guidance from home depot today about the home-improvement trends, whether they expect that to slow over the rest of the year? emily: --sarah: they did say they expect comparable sales to be flat to slightly up, so that means they will sustain the gains that they had in 2020 in terms of spending will be higher than it was pre-pandemic, but

this runaway train of investing in our homes last year, it looks like the brakes will be pumping a little bit. lisa: home depot is a fantastic example of a larger trend, not only with respect to homes, but supply chains, given that it is the physical goods that have been in demand. do we have any sense of supply chain disruptions, how other corporations have been dealing with it and how it affects pricing? sarah: home depot did not offer any specifics in the press release. i am sure they will in the call later this morning. this is clearly an issue that has been affecting across the consumer space, that there were certain products that became in very strong demand and that were hard to secure more of, so price levers were definitely pulled to try to control that demand, and some cases reducing promotions in order to disincentivize

categories. i'm sure home depot, like every retailer, really had to look at its promotions and pricing and try to use that as a way to make sure it can meet customer demand. jonathan: the physical footprint of companies like this, what has it been like in the last 12 months? sarah: home depot, for a long time, has not been adding stores. it really feels like it has the physical footprint to court the customers it needs to court. it also does not feel like it needs to close doors. it is a very different position than, say, a mall-based retailer , a closing retailer. a lot of them are over expanded. home depot is sort of unique in that it is not in that position. it has the physical footprint it needs. it just needs to focus on productivity at those stores, serving as many customers as it can and boosting its online business. lisa: given its efficiency goals, how much can it pass along the higher cost of the items they are buying come of the commodities, the supply chain disruptions on to consumers?

sarah: i think it will be hard to pass along prices on really fast-moving top items at the head of the assortment in retail come of the things that folks are coming in for day after day and are very aware of what they expect the price to be on those items. that is usually the place in the home-improvement sector you can't really raise prices. but long sale items, things that are harder to find, rare purchases, really niche, specific products, that is usually a place where you have a cushioned price. jonathan: home depot down by about 2.3%. great to catch up with you. bloomberg opinions sarah halzack on home depot, which had a fantastic year last year, up about 23%. we can only gauge the economy in certain ways, and one people engaged were in their homes. tom: i am biased on this.

the founder of home depot, i am honest, i got the vaccines at the nyu langone center, so maybe i am biased. [laughter] jon, this is the great spoken -- the great unspoken success story. apple, netflix, blob, blah -- netflix, blah, blah, blah. the financials of home depot are a miracle. jonathan: totally agree with you. i do wonder what the next 12 months looks like as people reengage with the economy in they couldn't in the previous 12 months. how many people fall forward some of the home improvement activities that won't be repeated in the next 12? tom: we built onto the west wing of the house. we love it, but you are right. we may not do that next year. lisa: there is a question about commodities. you talk about two by fours, which are populating jon ferro's living room, and prices have

been on a tear, that have risen i believe more than 40%, to the highest levels on record right now. i believe a 30% increase year to date, less than two months for lumber. tom: this is really important. it is not just about the metals, copper. lumber is higher as well. jonathan: i think you and i should have a diy competition. tom: no, oh no. let me make this clear. when there was nailing to be done, my father would turn to me and go, tom, you can take a break. [laughter] jonathan: we are going to record a video of tom going to home depot for the first time in his life a couple of years ago, and then we were going to try to build something, but we never got around to doing it. lisa: i think you should do that. tom: we argued about what we should wear. jonathan: is that what it came down to? i thought we were going to walk right at us here -- right out of here to the home depot around the corner. lisa: what are you going to

build? jonathan: i don't know. a doghouse? lisa: who are we going to put in it? jonathan: tom, with "bloomberg surveillance" across the top. [laughter] futures down 15. this is bloomberg. ♪

♪ >> right now where we are, markets are pricing in a stimulus that hasn't yet been approved. >> we are creating really tight markets, whether you are talking energy or agriculture. >> the market has gotten a little bit nervous that the fed is going to preemptively start to withdraw liquidity. >> the real question is what is growth going to look like in 2022. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.