>> this>> recovery is not normal. we do not have a playbook for this environment. >> it is not surprising giving the issue coming and bond yields will be higher. >> as you see the economy further reopening, education spending, a normalization of activity, a lot of jobs could come back quickly. >> we may be underestimating the degree of the speed that we will get back to normal. >> investors are waking up to the fact that 21 will be a year where the global economy booms. >> this is "bloomberg surveillance" with tom keene jonathan ferro, and lisa abramowicz. jonathan: good morning, good morning, this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures down 10. the nasdaq up by nine tens of

1%. attention on the bond market. yields are higher by seven basis points on tens. tom: just a little pause but this has been a substantial push higher in yields in the last two hours. i'm fascinated where yields will be through the morning and into the afternoon. we saw that abrupt equity turn yesterday. jonathan: it is global. we are getting the pushback from europe, australia, elsewhere. in the states, a better outlook. that is why bank of america is up. tom: mexican gdp just out, pretty much on track. undo tightening from philip lane , who you and i respect greatly. that undo tightening is with the weak dollar rising currencies. we are living it right now. jonathan: you compare and

contrast europe to the united states. it is night and day. vaccination progress in the u.s. versus europe is better. the fiscal -- fiscal stimulus program is bigger. what's amazing is treasury yields are wracking everything else with them. tom: i think it is more than that. i want to go back to first-order principles, economic growth. the recent we have seen in the last 10-12 days or so. where is reset coming forward? no one is looking for the hired reset. lisa: hope versus reality. i'm not down ramping. what i'm trying to do is explain the gaps we are seeing in the data we are about to see in about 90 minutes time with the jobless claims above 800,000 individuals still filing newly for jobless claims in the united states. compared with is really optimistic outlook for later in the year. we are trading on hope, on what

a reopening will look like. which is the reason why it has been so difficult to pinpoint this economy and why it has been fluctuating. jonathan: the data is better. the reality is we have somewhat of -- we are getting a masco for skill stimulus program. -- massive fiscal stimulus program. that's why the bond market is the way it is. all of the things are coming together. that is real. lisa: that is not just hope your and we have not seen the actual way through. this is the federal reserve, the reason they are keeping rates the way they are and taking a dovish tone, it is unclear if they could affect the labor market with rates as low as they are. or if they want to do no harm going forward for policy. tom: the tension between jon ferro and lisa abramowicz. i would suggest we talk about

hope, they are concentrating on hope. they are trading on hope. i get the markets and all that. data speaks. jonathan: to lisa's point, in about 90 minutes we will get more on jobless claims. good morning to you all. tom: they want your next therapy session to be a 4:00 p.m. jonathan: yields up by eight basis points, 138 to 145. typically a couple of basis points. tom: we have moved so far, so fast it is not about used to. i'm numb. jonathan: what does it do to the euro? not much. the euro-dollar 1.2230. lisa: they do not move in the linear function we are seeing.

we are actually digesting it pretty well. that is an interesting phenomenon that people are watching. 8:30 a.m. we get those initial jobless claims. those have been disappointing, actually. elevated, higher than expected last week. 825,000 americans filing for unemployment. that is only could start seeing that optimism. the idea that companies are investing in infrastructure, hard-core goods with the expectation of growth accelerating. at 10:00 a.m. the house antitrust committee holding a hearing on market power. this idea of what is the appetite to go after the big tech names, especially in a time of any economy. they really want to help that in some kind of way. at 1:00 p.m., tom keene is really keen on this one. take a look at the yield curve

between seven and a 10 year treasuries. it has steepened to the widest since 2014. that speaks to the demand for the shorter-term paper, even by that much. who will come in for those seven years today? tom: the belly of the curve? jonathan: quite interesting isn't it? talking about the belly of the curve. a little bit later at 1:00 p.m. eastern, looking forward to that. gamestop up about 80%. tom: we have the cryptocurrency thing today on bloomberg, which is extremely important. three seconds on gamestop. what are your thoughts on a second squeeze? jonathan: no idea. i have no idea if there will be a change today, if they monetize the move. we are seeing the same way that amc did a couple weeks back. the short position isn't what

the short position was. do you want to call this a squeeze? tom: the 30% short interest there was what we have from a terrible 100% plus before. it will be interesting to see with the new short interest is. jonathan: romain will catch up with us in about 25 minutes time. tom: he's still not in the beginning -- building. jonathan: let's bring enderle, great to catch up. you're basically facing the same question we are all facing right now. what is the tipping point? >> you guys are nailing at this morning, the hope versus reality. the reality is why should investors continue to accept 75-100 basis points in negative real yields. implied rates are absurdly low. on the 10th of february we were negative 106 basis points on 10

year real yields. as nominal rates go higher in the curve steepen's, this is normal. one year ago the 10 year treasury was 1.47. we are 1.45 this morning. not that much different. the curve looks different. a year ago the curve had a smile in the short and and a gradual incline going out. today, the front end is basically pegged at zero. the belly of the curve is ridiculously steep. the rolldown affect and the belly of the curve is really ripe for investors to take advantage of. the wrong end of the curve will still go higher. tom: look where we are. i've been dying to ask you this question with your work at boston university years ago. what would the great steve bodie say with the rupturing of

anything normal, anything in textbooks and say how do we go from here? what would steve say about the linkage of corporate finance to investment right now? darrell: i think he would be a little concerned. he would say the linkage to corporate finance is -- the floodgates are open. you saw at all last year. it is going to be there for some time. the reality is liquidity is abundant and it is predictable. not just chair powell but the vice chair reaffirming back. you have massive fiscal stimulus. you're the fed who wants higher inflation. that equates to higher rates. could risk markets handle that? we believe they can because rates are going higher for the right reasons. rates could go higher for the right reasons, five point 5%, 6% u.s. gdp growth. or they could go higher for the wrong reasons. inflation expectations rising higher and growing up with no

growth. lisa: what point is a bond buying opportunity for you? darrell: i think you have to see the 10 year closer to 1.75 later this year before settles down. you will need some technical resistance right around 1.48, 1.49. we continue to be overweight equities. particularly on the duration side. you look at that 10-year at 1.45, all the way down to the four basis points and five basis points. the rolldown affect is huge. that is where you could make money but you have to protect the ratio. jonathan: longer conversation next time. yields up seven or eight basis points on the 10 year. tom: we will see where we go through the morning.

i love this phrase, in your face qe. that really describes where we are right now, doesn't it? jonathan: what did it used to be? qe1? it was about pushing you out of the bond market. they wanted you investing elsewhere. you start the bond buying to cap yields, not pushing higher. tom: the great sea bodie -- steve bodie, a great mentor of mine. it is so artificial as we look at yields moving, we forget that. jonathan: yields up on the real yield to about -0.73. that has to be the story for big tech. nasdaq futures lower. tom: i want to see where we are at 2:00 p.m. it seems like every day we go through this agony on our simulcast.

a little bit later today -- jonathan: a little bit later, the world bank president. yields are higher, equities are little bit lower. call it a quarter of 1%. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this is "bloomberg surveillance ." ♪ karina: the white house is targeting key states to try to build support for president biden's $1.9 trillion covid-19 relief plan. biden and his aides are pitching governors, and leaders. among the states are ohio, pennsylvania, west virginia, arizona, and georgia. over to china, it is dismissing u.s. efforts to shift supply

chains to alternative sources. that came hours after president biden signed an order ending reliance on china and other adversaries. the shortage has idled production. questions are being raised about the infrastructure americans rely on to process payments. for about four hours, federal reserve system's executed billions of financial transactions a-day were disrupted. it appears to be an internal glitch. the system processes everything from payroll to tax transfers. immunizations could end the coronavirus pandemic. the study published in the new england journal of medicine revealed pfizer's vaccine was overwhelmingly effective against the virus. researchers followed 1.2 million people in israel. global news 24 hours a day on

air and on bloombergquint take powered by 2700 journalists and analysts in more than 100 courtney countries -- 100 20 countries, i'm karina mitchell, this is bloomberg. ♪ (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that and more in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you to maintain comfortable, correct form. that means better results in less time. you can do an uncomfortable, old-fashioned crunch or an aerotrainer super crunch. turn regular planks into turbo planks without getting down on the floor. and there are over 20 exercises to choose from. incredible for improving flexibility and perfect for enhancing yoga and pilates. and safe for all fitness levels.

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>> we have 10 million fewer people working on payroll jobs than we had just one year ago

today. the unemployment rate, 6.3 percent. if you include people who were in the labor force and working in february you get to almost 10%. there is a lot of slack in the labor market. a long way to go. jonathan: that's the metrics from chairman jay powell in his semiannual testimony this week. from new york city, alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's the price action this thursday morning. one hour, 12 minutes away from jobless claims. still up by almost seven basis points, one point 44 on the 10 year. the equity market is slightly softer, moves lower. down by 10 points, down by a quarter of 1%. thought it was really important to monitor the shift in emphasis from the federal reserve the last couple years.

unemployment to employment, it is really important. 10 million fewer people employed now versus one year ago. that is where the focus is. tom: begin with charles evans out of chicago. that meeting of chicago fed 18 months ago was really important. we need to recalibrate on 800,000. if we get 700,000 handle on job claims, what will that do to the markets? jonathan: no idea. a lot of people to look for claims to collapse a lot further down the road. really getting people excited, not coming down aggressively anytime soon. tom: john and lisa want to talk about the issues at hand. a single five word sentence, the gop needs six seats to take the house in 2022. that will be a message for former president trump. i think a lot of people across

america don't realize that plus six number. >> you are speaking to the political junkie in me. three points here. first and foremost, by focusing on the state legislators it is free media in local media markets. the headline is simple. state lawmakers says x. that's how former president trump was able to keep alive the invalidated claims with regards to voter fraud. they have a whole operation targeting some loud, outspoken state legislators. secondly, when i mentioned this on air, what they say is he is going to be organizing not just a super pac to impact the house but also take back state legislators and policy at the state legislator level for voter id laws. finally cpac is down in florida,

it is not being held virtual. it is already being positioned as trump's comeback of sorts. i was struck by senator romney's comments. tom: is there a republican middle that could be part of a one point x trillion dollar stimulus? kevin: if used subscribe -- if you subscribe to the notion that they could be a bigger tent party then we could be talking about in a couple of years the great republican comeback when they were able to have a mind melt so to speak. yesterday at the press conference, at the republican weekly press conference leader mccarthy was asked if shut -- trump should seek a cpac. standing on stage was liz cheney, she's got her mast on --

mask on socially distance and said he should not. lisa: joe biden is trying to go beyond politics when it comes to pushing forward the 1.9 trillion dollar stimulus package. also garnering enough support in the popular vote for the rank-and-file of america to push through some of his other priorities. how is he going direct to voters to try to get popular support for getting free money but also the risk to other initiatives as well. kevin: to some extent, the virtual campaign trail. he traveled to other states in the midwest to try to drum up support here. you have the president's chief of staff, clearly they know they have a massive battle on their hands. they are reading the political tea leaves.

the patients of the white house press corps has started to run thin. they are at a major crossing roads at the passage of this stimulus. it will be fascinating to see whether or not they could get support for infrastructure. jonathan: patients running thin, why? kevin: you have a press corps used to the trump media. then you have the biden administration. there's a lot of socially distant procedures in place that change the culture of washington, d.c. beyond that, it is not just the media, it is the divide in the democratic party. that has been one of the underreported dynamics as we move forward. the tension is now in terms of the party and the biden administration. jonathan: we keep discussing the republicans, the division within the party, do you think the focus should be elsewhere?

kevin: i was hesitant to say this in the first 100 days. i thing it's a really smart point you are alluding to. when does the biden administration say whether or not he will seek a second term? that will jumpstart his ability to have political capital or not in terms of policy. from a policy notion, if you are trying to understand the short and long-term policies being forecast out of washington, that is an incredibly monumental moment. jonathan: is that a story for 2022 or beyond? kevin: people don't want to talk about it yet but i have definitely been fishing around on it. i don't think you get the answer by the end of this calendar year. it is only a matter of time until that is projected into the mainstream media. jonathan: thank you. kevin cirilli, chief washington

reporter. patients running thin -- patience running thin. tom: you went over the political maelstrom that is out there. it is february. we are deep into 2021, what are we going to be talking about in may? jonathan: 10 year yields, who knows at this rate? i'm joking. tom: i thought last year was over december 31, i was wrong. jonathan: i'm looking for to the conversation up next, sarah nielsen. how the ecb would respond to it. a really important conversation coming up. this thursday morning, good morning to you all. we look a little something like this. yields up six or seven basis points. in the equity market we are down about 2/10 of 1%.

it is the no drama story still. tom: until we get to 12 noon today or 2:00 p.m. jonathan: we will talk more about that from new york city this morning, alongside tom keene and lisa abramowicz, i'm keene and lisa abramowicz, i'm jonathan ferro. - [narrator] this is kate. - hey. - [narrator] she takes two prescriptions. kate's son jack, takes one too. kate works hard, and thought she had good insurance. but she still pays too much. that's no good. so kate downloaded the goodrx app. now she can compare prescription prices, to find the best discounts. she even beats her insurance price. good for you kate, good for you. goodrx, stop paying too much for your prescriptions. download the free app today.

♪ jonathan: from new york city, this is "bloomberg surveillance. " for our audience worldwide, live on tv and radio. futures down 0.2%. outperformance on small caps, underperformance on big tech. let's get to the bond market. twos-tens and the spread between the two. yields up on the 10 year to 1.8424%. the spread as wide as we have seen since 2016. in banks, absolutely flying this year. on the s&p 500, up 25%. the outlook is brighter. one central-banker's statement of confidence is another central banker's unwarranted timing of

-- unwarranted tightening of financial conditions. we heard philip lane of the ecb pushing back against what we see. yields up on the french 10 year by five basis points, the german 10 year by five basis points, the italian 10 year by seven basis points. when does the central bank start to push back in europe? it is when yields go through zero on the french 10 year. it is when the german 10 year comes inside the depot rate of the ecb. it is when the italian 10 year is set 0.76%. tom: we will check with romaine bostick on the markets, but you are right. the tipping point to find them is critical. jonathan: in europe, we are there. the united states, not quite yet. and there's a bit of tension we will touch on just a moment. let's get those movers. here's romaine. romaine: we were having this discussion last night on "bloomberg markets: the close."

then gamestop happened and we ripped up the script entered to the most important story. the massive run-up in gamestop yesterday, 100% gain during the normal session, and then in the post-market session, it doubled again. right now, looking like it is going to open potentially up as much as 55%. all of this seems to start with a writ of heavily -- with a relatively cryptic tweet by ryan cohen, the activist investor. it was basically just a picture of an ice cream cone from mcdonald's. that just set up a lot of speculation on what it could mean. no one really knows. you just saw buy and go through the roof, and shares were up about 60%. then the momentum kicked in from there. tom: i don't need an ice cream come. here's what i know. the short interest now is radically different that it was three or four weeks ago. what does that mean to you? romaine: i couldn't figure out who would be by, -- you would be

buying. the option activity was through the roof. we should be very clear, there is no fundamental reason why this stock moved. but again, we talk about the hearing we had last weekend all of the talk about the structure and microstructure of this market, something to keep an eye on as we move into the open. we will go into a more formal discussion about what is happening with fundamentals and yields, and i want you to flip up the board here to hit at some of this fundamental stories. tesla has been moving in the premarket. some concern that they shut down production three days ago on their model three. . that is relatively normal. you have temporary suspensions of auto production lines. they didn't actually make announcement about it. it is not clear why they did this or when it will resume. based on bloomberg reporting, this will go at least through march 7. moderna out with earnings. they gave a broader strategy about what they will do with regards to the next round of covid vaccines.

there earnings were good. their chief medical officer is leaving. not quite clear why. he's been there since 2015. some concern that in the middle of all this, you want your chief medical officer to stick around. best buy, comp sales were well below what the street was looking for. the company saying its growth rate on those comp sales growing from about 12.6% this year to maybe about 1% for the current fiscal year, so a big drop down. that pull forward we saw with all of those folks running out to buy printers and computers not really lasting. tom: thank. you so much. right now, -- thank you so much. right now, one of the interviews of the day. erik nielsen at unicredit, you know i have called him a great euro optimist before. as jon ferro noted, a prescient note this weekend, on the interdependencies in the market. let me cut to the chase because i know jon has some really important questions.

at what point of a euro-dollar does lagarde, lane, and the rest of the elites of europe again to sweat? is it $1.25, or is it higher? erik: i don't know the answer, but i would think that $1.25 would be a problem. it is speed as much as level. i think most people would argue that the level is $1.25, $1.30, but if they move quickly, they don't like it. in my note you talked about, i think they should focus lots more on the curve than the yield. it is much more important for financial conditions in europe than the euro-dollar. jonathan: let's talk about that. you got out in front of this in your morning note, that one central-bank's statement of confidence is another central bank's tightening of financial conditions. the ecb, the bond market, italy as well.

why is what we are seeing in europe and unwarranted tightening of financial conditions? erik: i think you can cut it down to the following. you have a massive fixed school -- massive fiscal expansion coming in the u.s. and a better outlook for the economy than europe. therefore, you are seeing u.s. yields move higher, and the transmission to europe, which is not word to do the same degree by the output of the economy. so you are looking at less fiscal inspection in europe than in america, and an emerging monetary and financial conditions tightening. so the ecb, you see the philip lane statement, they should be worried. jonathan: we had verbal intervention. what is the actual intervention look like? erik: they will use the picture to put firepower behind their

words. there's always question about how much you can actually generate things without doing it, but you have to show them the bazooka and the willingness to use it. lagarde tried that on monday. broadly speaking, now philip lane is coming out with something more robust, and i am sitting here looking at the text where he says they would use the pepp in order to prevent any tightening of financial conditions that is inconsistent with the downward impact of the pandemic on the path of inflation. very clear words from philip lane here. lisa: this is kind of sacrilegious, but taking a step back, our interest rates where they are, or perhaps lower than where they are now, are those stimulative? does it lead to more inflation? erik: stimulative, i think. there's little doubt about that.

but it is the debates that we who are in europe in the camp of go big, the pushback from the other camp is you forget to say that it is stimulative. yeah, but it is not stimulative enough. if you can't stimulate growth in a reasonable amount of time like in the u.s., and you can't forecast inflation even approaching the target, and i am not talking about the short-term spike right now, then for me, policies are not stimulative enough. that is what they should look at. lisa: what i am struggling with is a lot of people took a look at the negative yield experiment and said it has not borne fruit. we have not seen inflation pickup. people say it would have been worse inflation if we would not have had get of rake pollen -- had negative rates policies in europe. but people have less to spend and it actually has a deleterious effect on the

flow of money. where do you weigh in on this? erik: i don't really buy the argument that it is counterproductive, per se. it is counterproductive because of they have to do more in terms of negative rates for the banks and i'll of that sort of stuff. but my view is if you go back to negative rates in europe, it was a mistake. they were done at a time when there was other qe, but draghi failed politically. he couldn't get it through. so when you try things done at small scale in scandinavian countries, done at fx considerations, to see if they could get away with that. and when the negative rates didn't work, draghi finally persuaded angela merkel to do qe. jonathan: i think something

really important happened this week. the chairman of the federal reserve at times has acted as central bank or to the world. this week, he acted as the central banker of the united states, which is his job. when he saw treasury yields drifting higher, he said it is a statement of confidence. if this persists, the move we are seeing globally, and if it is an unwarranted tightening largely because of what is happening in the united states, how much longer can chairman powell maintain the position he started this week? erik: i don't think he is too worried about the world right now. he is, as you said, the best chairman for the u.s., and that is his first priority. it is only when he starts to do analysis of what is the negative impact on europe and on emerging markets, and how does that then feedback to the u.s. economy, that he will start to worry. i think he is doing fundamentally the right thing. my concern may be in the u.s. is that by being so dovish, and you see the higher yields, that you

could get a stock market adjustment because you start to discount by much higher rates. but i think we are a good long way away from the fed changing tune. they will just sit back, get some inflation and job creation. i completely agree, a very important shift from unemployment to employment, and good for them. jonathan: great to catch up, and great note over the weekend as well. erik nielsen, unicredit bank group chief economist and global head of cib research. a really important shift is taking place this week in the world of central banks. tom: we see dxy begin to retest the weakness of about an hour ago. i really want to make clear to those on radio, those on tv, these are really markets on the move, even though it seems a jumble. jonathan: europe doesn't want a stronger currency. europe doesn't want higher

yields. the chairman is comfortable with what he sees at the moment. when do we start to thing about the feedback loop if this continues? tom: it could be a deflation spiral or a feedback spiral. jonathan: don't get lisa started. lisa? she's letting ago. lisa: carry on. jonathan: all right. coming up in the eight a clock a.m. our, -- in the 8:00 a.m. hour, david malpass, world bank president. this is bloomberg. ♪ karina: in new york with the first word news, i'm karina mitchell. new research says the pfizer/biontech vaccine could help end the pandemic. the study was published in the latest edition of the new england journal of medicine. meanwhile, capitol hill, the fate of the democrats' proposed $15 an hour minimum wage maybe in the hands of the senate

parliamentarian. it is part of the $1.9 trillion stimulus bill, but the parliamentarian needs to determine whether it is allowable under the rules of debate. the president has revoked a series of executive orders and memos issued by paul former president donald trump -- by former president donald trump. one of them rolled back the impact of dodd-frank. another cut illegal immigration to the u.s. according to dow jones, boeing decided to redesign a cover after two other engine failures in 2018. the incident over the weekend included in engined fan blade breaking off, slicing a second blade in half, and ripped away the engine cover. luxury carmaker aston martin will almost will production this year. the british coming plans to make 6000 vehicles in 20 anyone --

british company plans to make 6000 vehicles in 2021. there is strong demand for its dbx suv. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. ♪

♪ >> basically, people are getting what amounts to combat.

they are getting paid extra because they are taking on more risk. once the pandemic ends, the labor market is hopefully going to get to something closer to what was normal before. i think it means to be seen with that means for wages. jonathan: economic data in just about 40 minutes' time. that was stephen stanley of amherst pierpont. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market looks like this. we are down 15 on the s&p 500, off by 0.4%. yields are higher. let's call it 1.45% on the u.s. 10 year. it happened quickly, tom. $63.50 on wti. tom: brent crude, $67.30. we have been doing a lot. it is a global wall street conversation. now on the stock market, gina martin adams of bloomberg intelligence. it is a basic idea of cash flow

and what it is going to be in a 6% nominal gdp america, and also all of the people working under you at bloomberg intelligence, and what they are seeing on the guidance forward. how opaque, how transparent is the guidance forward? gina: honestly, it has improved considerably over the last several months. even during the last week, we had 60 large caps, more than 30 mid-caps, 20 smoke at companies add to guidance. we are back to normal guidance environment. that is from half those levels of guidance offered to us over the last couple of earnings seasons. almost all of it is very optimistic. companies are telling us their expectations for 2021 for too low. 70% of guidance on top line was guiding higher. that tells you sales growth is going to improve at a much

faster pace. roughly 50% of guidance for etf's is higher. even though margins are not moving up very quickly, they are still moving up. analysts are still adjusting margins higher. with topline and margin growth improving, you are going to have much better than expected growth in 22 anyone for the s&p 500. -- in 2021 for the s&p 500. lisa: we have some projections also from companies with respect to how much they can pass along increased commodity prices to their customers, read inflation for the federal reserve, as well as what their raising and spending plans are. gina: if you look at operating margin increased, analysts are anticipating they will reach new peaks by 2022, above the 2018 peak. they think operating margins will return back to 2018 levels over the course of 2020. if you look into what companies

are telling you about inflation, not necessarily attributing bond market expansion to inflation or looking at what financial markets are trying to price and, but really look at what the company's are telling you, we have found that inflation was mentioned more in the fourth quarter earnings season reports, but mentioned about half as much as it was mentioned throughout the year 2019. so companies are mentioning it more than they were in q1 or q2 when they were really focused more on distress and reducing topline growth expectations, but they are not mentioning it en ma sse, or even back to 2019 levels. they are also talking about wage and currency pressures. there are a few mentions of social inflation. but frankly, this is not the huge issue i think we are trying to make it into, based upon financial work at pricing and based upon what is happening in the bond market. at least not what companies are telling us. they are saying inflation is going to accelerate, but we are

going to be able to pass the mass majority of that through. jonathan: i keep hearing the same thing about inflation, inflation worries. what has driven markets the last week has been growth hopes. that is what has been driving the market. tom: i am so glad you bring this up. this is true. we are trying so hard not to input our opinion into this. but jon, you are right. everyone is losing the up ramping of gina martin adams. jonathan: real yields are higher. it is growth hopes. those have been plugged into what is happening with the financials forget the banks have rallied 21% this year. much smarter people with visibility on things have been talking to me in the last 24 hours, saying that actually, the allocation to this story isn't full yet. there is still some money due to be squeezed. do you agree with that? gina: certainly out of banks.

we have had financials as the play top-performing sector and our scorecard since november. it has been creeping up since last summer. so certainly, the outlook looks much better for banks than most people are anticipating. i think it is a big tell also, regarding positioning, that the banks all sold off on much better-than-expected fourth-quarter earnings. so any sort of irrational exuberance embedded in the financial sector was relieved in the first couple of weeks of earnings season. as long as the yield curve is becoming more upward sloping, it is really hard to fade the banks trade. it is just going to result in financials performing much better, and there's still plenty of discounts in that sector as well. i think you have to have a longer-term perspective and thing about the fact that this was a space trading more than a standard deviation cheap to long-term average as of last summer. it is only very slowly back towards that long-term average, and still has the discount available. tom: the great dennis absher

quotes ed hyman this morning, talking about a 10 year yield going to do percent. what does a 10 year 2% yield due to your stock world? gina: it matters most what happens on the short end, so if the 10 year to do percent and the short end is still anchored, it is very positive for equities. if the 10 year goes to do percent and that is forcing the hand of the fed to continue moving the short and higher -- the short end higher. but again, it really depends on what is happening on the short end. i think we have all fixated on what is happening on the long end because that is where the price action is, but frankly, all that is happening in the bond market is confirming to me better expectations for growth that are powering the equity market, so it is very consistent to see longings move, the long

and move higher and see equities continue to inflate. jonathan: gina, thank you. always great to catch up. gina martin adams, bloomberg intelligence chief strategist. yields right now up a couple of basis points on the 10 year. but to gina's point, it is the long and. that's where the big move has been. tom: dennis debusschere over at evercore isi talks about the global lifting yields, and particularly the lifting yields. when you and i look at this take 10 days ago, we would think we were on mars. jonathan: real tension starting to emerge between central banks this week. i think it is important to pay attention to that. lisa: there's also a question of how much american exceptionalism can remain in a bubble when the rest of the world still has questions of the vaccination schedule, as well as growth. jonathan: that is a really important point. coming up, david malpass, world

bank president. from new york city this morning, good morning. this is bloomberg. ♪

>> we are seeing the employment numbers already lagged. jobless claims should be doing substantially better than they are now. >> this recovery is not normal to the upside. we do not have a playbook for this environment. >> it is not surprising given the issuance coming that we are going to see the curve steeper. >> bond investors should love it generally. >> investors are finally beginning to wake up to the fact that 2021 is going to be a year where the global economy booms. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: