>> it has got to be a difficult dance for the fed and difficult for the bond market. >> is a battle going on between the market things will happen and the fed wanting to say hold your horses. >> those checks may be coming at a time when the economy is reopening. >> it gives the appearance of inflation being higher than it is. >> there is a good correction along the way. >> this is "bloomberg surveillance." jonathan: chairman powell coming up. from new york city, good morning. this is "bloomberg surveillance" live on tv and radio. equity futures down 11 points on the s&p 500. a small move lower after a vicious couple of weeks for big tech. tom: chairman powell will be

appear later. we have claims coming up. the one thing that is a pivot point on my terminal screen is i will go bob seeger on you, the real yield has not budged in three days. jonathan: up from a massive move last week. big tech weighing on valuations. apple down 10%. amazon down 11%. it makes it really difficult to get that performance at the index level. tom: it is a partition. do you look at the granularity or the total picture? it has not budged. the nasdaq, there is a rotation going on. jonathan: does chairman powell budget later? lisa: how much does he push back against the rise in yields? as disability highlights the real debate emerging in markets. people cannot agree on if we

will see rapid inflation or a disinflationary environment that causes race to go up to 2%. guggenheim saying we see the highs and they are heading lower. jonathan: it is the what next of this that is fascinating. you will get an inflation spike in the next several months. what happens next is the big story. politically speaking. united states will suspend retaliatory tariffs on u.k. products caught up in the dispute of legal aid to boeing and airbus and a boost to britain's trade agenda. tom: this is a big deal. i'm not sure if we will learn about it today. i don't know who wins. what it says to me is the first movement where the biden administration is walking back from the certitude of the trump administration. jonathan: i wonder if they can

help the u.k. come closer with europe. lisa: the idea of how they play this with china. they try to get a coalition to go after china and have a more competitive half and renegotiate trade issues. jonathan: price action for you. s&p taking a lower move. we are of 5.3%. -- we are off by 3%. bond market, yields are lower by a few basis points. chairman powell coming up later. claims in about 90 minutes. lisa: we will be having the opec-plus meeting. interesting to see how saudi arabia pushes back at some voluntary production because they imposed as part of the january meeting. the delicate dance of are they oversupplied or undersupplied as the world comes back online. 8:30 a.m. we get the u.s. initial jobless claims. the average estimate is 750,000, an increase from last week.

increase is bad. it shows how far we have still to go in the labor market as the market prices in 2022 and 2023. 12:00 p.m. jay powell taking the wall street journal conference. what are his parameters to show there is improvement? how concerned is he about froth in markets? still a lot of concerned about the incoherence between markets flying high and the economy very much battered. jonathan: his testimony last week, he was comfortable with the move. i wonder what he is uncomfortable with after that. the long indoor front and -- long end or front end. tom: time is almost stretching up from november and december of

last year. it was like weeks ago that chairman powell was before congress. it is a weird time. the two-year yield. two standard deviation mark after the oddities of last week. 0.1509. this is the granularity we are doing. that's an important point for me on the two-year yield. we are not there yet. jonathan: the volatility of thursday through the curve. also the front end. rate hikes. tom: our next guest is dazzled that we go to four decimal points. jonathan: philip camporeale. >> when they go to zero, you have to go to as many decimal points as possible. tom: particularly if you want to

get paid. jonathan: why the global part? why not just the u.s. part? philip: sometimes it feels like this is a u.s.-only pandemic. we will see the world emerge from this pandemic. our view is stick with the procyclicality and the emerging equity story. that has the biggest vulnerability to global both. we think global growth will move higher this year. the rate story is really important. i love all this rate conversation. it is such a high-class problem to have. we are having a conversation about 10-year treasuries. i know it happened fast, but treasuries getting to 150. they got there because of this incredible 2 million vaccines

per day. incredible rollout. think about all the collaboration on the rollout, and the fiscal stimulus plan that will be the same as last year's percentage of gdp but in a recovered economy. this is a high-class problem to have. if you are long equities, you are short duration. you need rates to move up in price in this recovery. jonathan: do you think 20 plus point moves -- it's a high-class problem? philip: that is what rattled investors. the big picture -- it is so nice to see auctions move markets again. we have not seen auctions move markets since before 2008. it's been a decade. that brought back some interesting memories. that is what really rattled investors. here is the big picture. financial conditions.

where rates go, where credit spreads go, the way the equity market behaves, volatility, that is informing our outlook. it is still really positive. that little blip to 160 around 1:00 last thursday, that was rattling. you have to step back and say are they tightening or easing? we are still in easy reflationary trade that the fed is going to support. lisa: it's a high-class problem for the u.s. perhaps not for the rest of the world. when you talk about the 2 million vaccinations a day, we are talking about the united states and the rollout there. a dollar that got strength on the heels of the vaccination schedule that has been ahead of the other places around the world. how can you be long emerging markets if the dominant is being driven by the united

states? philip: that's a great question. that is why we have this barbell approach between small-cap, the u.s. reopening story, and rotations in the u.s. we introduced large-cap value suites for the first time. we also have confidence in emerging markets because the beta-2 global growth -- beta to global growth. if the americans get the checks, that's good. if we saw the dollar moving and a u.s. exceptionist story, that would adjust the market view. the base case remains emerging markets and small-cap are the best ways to implement our procyclical story. and china a-shares. it's a small-cap china story

because they have their arms around the virus and the procyclical view. tom: partitions we have are staying with tach as you rotate other things. what do you do with the cash generation of these giant tech companies? it is visible. it appears to be sustainable. philip: that is almost like having your cake and eating it too. in the near term as these rotations are supercharged like we saw yesterday over the past week or so, that will be a tough trade to hold onto. that is what we are balancing more into value. we are not abandoning growth. a lot of people have made this point. tech today looks much different from the real nasty memories folks have the late 1990's when these companies were not making money. these companies are part of the american economy now. these structural winners we will stick with. we want to make sure we don't have too many eggs in that

basket. when you the reckoning was coming. as the economy reopens, the faang stocks or s&p 500 would be somewhat at risk. thus the weighting the s&p had. do you have the s&p in your portfolio? success or failure will be driven by how big and bold are you. saying you are overweight stocks is what everyone is saying. how big and you are bolder you -- bold are you? security selection and active managers taking the reopening, the airlines, when and where that happens, that will determine success or failure this year. last year the case was if you threw a dart at a risk asset, it went up. jonathan: a great summary in the last five minutes of what's happening in the market. philip camporeale of jp morgan asset management.

we recovered just a little bit. from new york city, good morning. 8:30 a.m. eastern, jobless claims in america. chairman powell a little later. this is bloomberg. ♪ ritika: first word news. i am ritika gupta. it looks like the senate will not pass president biden's pandemic relief bill until the weekend. lawmakers delayed the start of debate while they were awaiting a cost estimate on the latest version of the bill. democrats are making changes to the house version. they will tighten eligibility for the $1400 stimulus checks. the house passed the landmark built overhaul elections, but it probably will stall in the senate. the measure would make it easier to vote but also limit gerrymandering of congressional districts.

most republicans oppose the bill and it's unlikely to get the 60 votes needed to overcome a filibuster in the senate. donald trump is telling allies he is strongly considering another run for president in 2024. bloomberg learned he wanted to chew someone other than mike pence to be his running mate. pence rejected his appeal to overturn his electoral defeat. spacex's newest rocket exploded moments after landing. it lifted off from a launch pad in texas and flew to an altitude of about six miles, then appear to achieve a stable landing, just before the explosion. two other tests and didn't fireballs. -- ended in fireballs.

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>> it is urgent and overwhelmingly supported by the people. it is good policy and it is good

politics. i'm not sure if they are seeing something that is needed as badly as the american rescue plan that was as broadly popular. jonathan: president biden speaking with house democrats selling the $1.9 trillion relief plan. good morning. i am jonathan ferro. thursday morning price action. s&p 500 down by .2%. slightly negative for the nasdaq. yields are down by a couple of basis points to 146 on 10's. 750,000 is the number to look for. tom: maybe euro-dollar, what is it going to do? a static real yield. a negati -- -.76%, the quiet

before some kind of storm. we can rip up the script with kevin cirilli. there was a dash by the biden administration and today we have a 7:00 a.m. headline where joe may says the biden administration will give a waiver with the united kingdom for negotiation. that is very non-trump-like. is this the beginning of trade adjustment by the biden administration off the four years of the trump regime? kevin: yes, it is. the u.k. had gotten rid of some tariffs in january just to see whether or not the united states would follow suit. this is a major step in a different direction from the previous administration when it relates to u.k. trade relations. this airbus thing has been going on at the wto for 17 years.

-- world trade organization for 17 years. this is a massive step towards resolution on that front. something that has been going on for quite some time. tom: can you or our team, with all the context you have with craig gordon in washington, will this rotate over to china? will we see amendments which china like we have seen that with britain? kevin: no. maybe in terms of agricultural purchases and holding president xi jinping accountable. it's interesting to see how secretary vilsack has to say on how he plans to hold china accountable for following good on their word to make agricultural purchases. from a broader standpoint i would go further and suggest the europeans are now more aligned with the united states on how to deal with china. because in the last

administration there were many different competing ways to deal with china. jonathan: the former national economic director larry kudlow talked about a coalition of the willing to confront china. now we have an administration trying to work with their allies more. you talk about people being on the same page. how does it manifest itself in policy? kevin: from a cybersecurity perspective there's an opportunity for the united states to work with international coalition organizations, including nato, in terms of raining and not just china on cyber but also russia. i spoke with mike mccall, top republican on the house foreign affairs committee. when i was speaking with him about china policy there was a lot of agreement between the republicans on the committee and democrats. especially in the 5g and quantum space and emerging technologies, there is a lot of cohesiveness

out of washington on how to deal with china. lisa: on the national sphere we have to talk about some of these warnings we got yesterday from law enforcement about the militia threat to the d.c. region today due to a disagreement over when the true inauguration date is. what do we know about that militia? kevin: they are a fringe conspiracy group. yesterday i spoke with the former white house director of communications. she has been very critical of her former boss for his actions and handling communication strategy on january 6. she urged former administration officials to come out and disavow this before today. anecdotally speaking, there definitely is a palpable sense of angst. not like what we saw with 25,000 troops but there are still 5000

national guardsmen guarding the capital. the city is definitely a high alert. lisa: you also got news that president trump is plotting a 2024 run, perhaps without mike pence. can you dovetail the support republicans have for president trump at a time when there are new threats coming out. kevin: great scoop by jennifer jacobs and mark niquette and mario parker. i spoke on background with the top trump advisor about all the 2024 jogging. former vice president mike pence has not been shy about his potential ambitions to launch a 2020 for campaign. if you subscribe -- 2024 campaign. he has to make sure he's not on the ticket. that story does that. it separates them and allows both to move forward over the

next cycle for their own political jockeying. secondly, the biggest hurdle should trump decide to run again is going to be how he maintains he can win a general election argument. a new name on the ticket would help them do that. jonathan: who would he run against? at what point do we have a real conversation about president biden's age and who he wants to where dana's the person to run in the -- ordain as the person to run? kevin: i think everyone on the left is so shy to talk about that elephant in the room, which isn't former president trump. it is if biden runs for a second term. trump running is not a guarantee at all. tom: can you someday talk to us

on background? do you think jon ever talks about background? lisa: no one can hear us. tom: does anyone talk on foreground? kevin: background means you are not able to say who the name is. i disagree. jonathan: you are about to tell us who the name is. kevin: there's a microphone right in front of your face. not to get too academic or journalismy, folks in washington should always speak on the record. you are elected a work for an elected official. come out and say it. jonathan: i don't think they will have a problem speaking to you on the background now. tom: jon never mentions my name. jonathan: kevin cirilli. tom: what can i say? jonathan: from new york city,

alongside tom keene -- i said it -- and lisa abramowicz, futures down .2%. this is "bloomberg surveillance. " ♪ (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you maintain comfortable, correct form. that means better results in less time. and there are over 20 exercises to choose from. get gym results at home. no expensive machines, no expensive memberships. go to aerotrainer.com to get yours now.

jonathan: from new york city, this is "bloomberg surveillance" live on tv and radio. starting with the equity market. futures down about 20%. -- .2%. it's about the waiting for the benchmark and the struggle to get much higher from here on the s&p 500. this is from morgan stanley world, the bank of america world, the wells fargo world. a struggle to break that 3900 level. amazon, apple, tesla. in line with about 12% of the overall index. even though the financials yesterday were up 13%, look at the 30-day performance of these names. apple down 11%, amazon down by

10%, tesla off by 23%. the headline number will struggle. i have been talking about it's been obvious this is the story. if you want the s&p 500 to go higher, these have to stop going down and fast. can we breathe some life into that trade? in the bond market. this went down to chairman powell. down about two basis points. 30-year down four. this will be all about chairman powell later. how comfortable he is and does he feel the need to lean in a little bit. tom: we mentioned the real yields. i am watching the two-year yield like a hawk. after last thursday, don't tell me you can't move. jonathan: rate hike expectations as well. outside of what happened on the long end, that may be made

the chairman a little uncomfortable. >> capital, amazon, tesla -- apple, amazon, tesla. those three names are largely responsible. when you look at the drop in the composite, those remain responsible for that. most make cap tech names are lower again. this'll be the third straight day of losses in the futures market. we should point out stocks have really gone nowhere. what that means for the tesla and amazon, square as well, those are two of the biggest holdings. cathie woods' etf down about 20% of its peak. tom: you know this cold. i will defend cathie.

i don't like these articles that it's a bear market. they are comparing it to down jones standard deviation. that is not accurate. lisa: there is the concentration risk, talk about the benefit of being bold. how much of a spiral is this? romaine: this goes to the point about ideas of waiting. a lot of reason cathie woods is getting beat up because there is a heavy weight between four or five names. the etf is not really going to get much traction unless he decides to do more of that active rebalancing. she thinks tesla is a long-term bet, a good bet. she said on air here she will be buying the death. -- dip.

another story with real implications is the commodity space. we are waiting to get the outcome of the opec-plus meeting here. we saw all the shale producers and the u.s. rally. there is a sense opec will come in around 900,000 to 1.4 million barrels. that would be supportive of prices. there was concerned they could go above the 1.4 million. keep in mind most names on the index have rallied about 5% for the last couple of days here. what we see in copper and industrial metals, we saw tin collapse last week. keep an eye on what is going on. the trade probably has as much speculation is that we saw in a lot of equities. whether those prices are actually in sync at all with what is going on with actual demand, we shall see. the fuel-cell stocks and

alternative energy stocks also moving lower. tom: romaine bostick, thank you so much. bitcoin down to $49,000. -14 on the futures. what is so important about shahab jalinoos is he writes brilliantly clear paragraphs about his belief in the market. i want to get to the heart of it, almost 5000 miles from sydney up to tokyo. you will look at the commodity expression and australian dollar and play it against the yen. why? shahab: good morning. we had the view it is best to really take the dollar out of the picture altogether and focus on being short the classical funding currencies, the swiss

franc and the japanese yen. and belong on the high beta reflation based currencies. the australian dollar is one of those. if you do this, you effectively play the global recession story playing up. that is the reason why u.s. yields are going up without necessarily being exposed to the issues involved with trading the dollar directly. tom: go wider and the credit suisse view on a better start market in america. do you look at these dynamics in the foreign exchange as a statement of a better global economic growth that takes away the ambiguity we are fighting with now? shahab: i think so. if we have higher rates and shaky stock markets, what is more important is the fact although stocks are weaker they are not collapsing.

volatility is fairly subdued by historic standards when you look at events like this. from a foreign-exchange perspective, until you get to enough asset price volatility to really push markets hard on getting out of procyclical trades, what happens is the markets sticks with those. particularly if there is a carry dynamic. as long as implied volatility stays at manageable levels, what we are seeing is a reflation story priced in. not a potential major risk aversion event. that is why we like shorting the big funding currencies. lisa: there has been confusion around what is driving fx traders. is it rate policy from central banks? that has not been the case since it has been a race to the bottom. has it been the inflation story?

vaccination schedules? there have been different stories dominant when it comes to affects flows in the last six -- fx flows in the last six to 12 months. shahab: the dollar is the reflation story. there are different dynamics. there is the vaccination story that has been beneficial for the pound. there is also a u.s. fiscal story you could argue is somewhat unique to the u.s. that has been helpful for the dollar. in some ways they fall under the bucket of global reflation, just different nuances. as long as we can keep looking at things in that way, simplified to that extent, you can come up with consistent themes in the fx space to play. jonathan: chairman powell, what are you looking for? shahab: the question becomes to what extent can he push back against the market's attempts to

price rate hikes? even within the next three years or so? it will go beyond what the fed;s 's dots have. the longer he refrains from pushing back against these efforts the more likely it is the market will reassess it. this encourages the market to continue. i feel if powell is neutral in his comments, that is the direction we will go. that ultimately benefits the dollar against the low yielders, potentially even the euro. jonathan: good to catch up, shahab jalinoos. this is probably the optimal way to separate gdp. the low yielders and the

commodity currencies. how the dollar buys in to those will be interesting throughout the growth. tom: why does this matter outside the roulette of pros trading the currency pairs? when he talked about john ga llop, it dovetails into everything we do. jonathan: central bank policy, fx channel, and it could upset consensus trades. lisa: the idea the dollar should weaken in a global reflation trade. if it is a global reflation story, can it be that if it is just the u.s.? if the u.s. is leading and you have this massive laggard such as the european union? this is one of the big tensions

in markets that has driven uncertainty in the fx channel. jonathan: for those of us looking for a repeat of 2017 again, it's a real struggle to see that develop. tom: i'm not spending too much, that because i don't have a clue of global growth will be. i look at the data coming up. i look go back to what we said a couple of days ago, retail sales in america. is just as important as the jobs report. jonathan: where the labor market has been does not tell you the full story. fiscal policy checks into the hands of americans that has been driving retail sales. tom: back to world war ii, 1947, we have not seen this into generations. jonathan: we have a five handle on the gdp estimate this year. tom: i don't even know had a look that up.

jonathan: you know this already. coming up, olaf scholz, the german finance minister on my euro has struggled to rule out the vaccine and the path ahead to gradually unwind restrictions and europe's largest economy -- in europe's largest economy. this is bloomberg. ♪ ritika: with the first word news, i am ritika gupta. the u.s. will temporarily suspend retaliatory tariffs on the u.k. product caught up in the long-standing dispute over legal aid to boeing and airbus. they can be imported to the u.s. from britain without being subject to an extra 25% tariff. the senate is not like me to approve president biden's coronavirus relief package until the weekend. lawmakers are waiting on an official cost estimate for the

latest version. the president agreed to moderate demands to tighten eligibility for the $1400 stimulus checks. president biden is struggling to head off a potential crisis on the southern border. a spike in migrant crossings by unaccompanied children is threatening to overwhelm government shelters. republicans and some democrats say the president's policy caused the surge. he says it is not a crisis. opec is keeping oil watchers guessing about their next move. the market has been expecting increase production at today's meeting. analysts say opec-plus made deliver a smaller increase than expected. record loss for the year as a struggles to break even before the end of 2021. the pending -- the pandemic has forced europe's largest airline back to a point where it is unlikely to make money. 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 am ritika gupta. this is bloomberg. ♪

>> asking more of those on higher income.

we are going to ask larger businesses who have made a profit to contribute as well. jonathan: the u.k. chancellor of the exchequer speaking in the last 20 for hours, delivering the budget in the u.k. good morning. your market looks like this. we recovered a little bit. 3800 on the s&p. the euro is weaker and dollars stronger. yields coming in a little bit. 146. it's about four hours and 12 minutes away to chairman powell. initial jobless games at 8:30 a.m. eastern. tom: i will call it an improved tape. we have the back-and-forth here and the economics including 45 minutes until claims. to get to the next moment here, and i want to set this up because i think you lived this in your travels. serious stuff going on in

europe. over in germany today, this is the german newspaper talking about how the ministers of the nations had to hand over control of the vaccine operations to brussels. this is the united states of europe versus united states of america parallel here. it is not inflammatory but they have their angle. i think our listeners and viewers no this is a strident article of germany losing control or the perception of that of the vaccine process. jonathan: i hope we can bring in matt miller into the conversation. it is not just that they were pushed, they did involuntarily in many ways. they could have stuck with it on their own. they could have pushed back. i can bring in matt. let's have a conversation.

was it germany forced to hand over the powers to the vaccine strategy or did they volunteer to do that? matt: no, everyone i have spoken to in the government says they wanted to do it this way. they wanted to take a multilateral approach to ensure everyone in europe gets the same shot at a vaccine, not just the big and powerful economies like germany get the first shot. a lot of people said why didn't germany get the vaccine and then divvy it out? they did not think that was the right look or the right strategy for the united europe. jonathan: before return to german finance minister olaf scholz, what is happening in german politics right now? the chancellor from one party, the finance minister from another party. the finance minister is also the candidate for the chancellor position this year in a federal election. how do these individuals within

the german government work together at a really delicate time? matt: they actually work extremely well together. i'm not sure that helps scholz's bid to become chancellor. it doesn't make him a stream the popular with his own party, just like angela merkel's work has not made her popular with the cdu. this is our last year in power and there is a vacuum to be filled. no one party has an overwhelming majority. tom: brief us on the generational shift. it is wonderful to go back through the history of the berlin view behind you. matt has a lovely gate behind him and berlin. -- in berlin. what is the moment of the generational shift in germany? matt: the most interesting part

of the generational shift here is the greens are no longer a bunch of kids who if they were in america would have gone to lollapalooza. it was really a 1990's movement. it has now become very much mainstream. they have overtaken the spd, the centerleft party in polling. they approach and some polls even the cdu, the center-right party that's had so much power postwar. the greens have shifted much more towards the center and that has given them a huge block. tom: how does the biden administration change german politics? we all remember president obama's movement to berlin in the historic recapitulation of the acclaimed kennedy speech. what is the political yellen he of a president biden for the people of germany? matt: president obama was

extremely popular here. coming at a time when america was not. after the invasion of iraq, german-u.s. relations deteriorated. obama prepared that to some extent but you can't repair everything. that is the case with biden. coming in after i present as unpopular as trump is a relief to some in germany but some damage that has been done cannot be undone. i think that is where we stand. lisa: how much can you be undone? the vaccination will it is largely thought to have been angled in the european union. how much of this undermined the idea of the european union and public support for continuing within it? matt: i'm not sure the polls are in on that yet in terms of support for the european union. many are angry about how slow the rollout has gone in terms of the populace. when i talk to people, and you

talk to people on global wall street, it is not going to be something we look back on in 2022 or 2023 and see any lasting damage from the unequal rollout of vaccine. jonathan: we will catch up with the german finance minister shortly. what is the objective? matt: i want to know what they will do to prepare the deeper damage that has been done to the german economy by the extended lockdowns. they keep giving us days of when the country will come out of lockdown. every time we get close they just push the goalpost back. jonathan: olaf scholz will be with us in the next couple of moments. the domestic reopening story, the case study for many countries across the euro zone. we have to talk about this vaccine rollout in europe and

what went wrong in the last 12 months. tom: it has got to be front and center. for our radio and tv audience across this nation this is a relationship that has been underplayed in recent years. this was a former mayor of hamburg. the acclaimed merkel dinner of 2011. he came to washington to represent germany at that important state dinner. this is a guile with real linkages to america. jonathan: he said something that was echoed around london. there was a risk for london the new president, president biden, would be closer to berlin the way president obama was. if we see a repeat to that is remained to be seen. tom: fully see it again today with an important trait of memento for months with britain as well? this'll be a timely interview. jonathan: coming up, german finance minister olaf scholz.

futures down ahead of initial jobless claims in 34 minutes. yields are lower by two basis points. this is "bloomberg surveillance. " ♪

>> it is going to be a difficult dance for the fed and bond market. >> a battle between with the market things will happen and the fed wanting to say. >> global growth will move higher as we emerge into a new state of marv -- normalcy. >> a big story will be what happens to wage growth. >> the era of low inflation and low rates and good growth is probably over. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: good mo