caroline: from bloomberg world headquarters in new york and in london, i am caroline hyde. romaine: in u.s. financial markets, a revival ofrisk trade. 10 stocks at the highest in four months. caroline: from risk off to risk on, call it dip buying, trading, whatever you call it. the nasdaq 100 gaining 4%.

the main arc etf, kathy would having her best day on record. but, what fundamentally changed? sure, we had a bond auction, it went well. what does that mean for inflation? today, the risk on rally, let's talk about it. it basically took custody nasdaq level we were at at this time last week. joe: if you look at the intraday, extraordinary. it speaks to how intensity selling has been in some of these areas, that even with these huge gains. they are back to where they were a week ago and many of these cases. they still have a pretty big hole to climb out. romaine:'s today the day where we like cathie wood again?

joe: every day. joining us for more, bloomberg cross-asset's reporter katie grayfield. were you alive the last time we had a day like this? katie: it is hard to say. if you boil into the market action today, yesterday we were action with -- we were asking where the dip-buyers were. today, we found them. you saw some familiar names up front in platonic, tesla. like most things in markets, i am going to argue that this boils down to rate of change. nothing fundamentally changed between today and yesterday. it is just that things got really stretched. if you look at the nasdaq 100 relative to the s&p 500 index, it was the most oversold since 1990. and i will admit i was not alive then. that is what we saw today, even

though the consensus in markets remains for higher yields, that will pressure growth and tech names. today was really just about buy the dip. kailey: -- caroline: that will be our new measure for volatility, was katie alive? the time horizons, i keep hearing so many investors saying, growth will win out again. they seem to be getting frustrated with the trading going on in these markets. katie: i think it is important when we are talking about time frames to boil down to what we are talking about. tech and growth, it is important to separate the faang names, apple and amazon, they will probably make money matter what cycle we are in. some of the momentum names like tesla which have really

flourished in this low rate environment, if we truly are in a rising rate environment, going to get harder to justify valuations in that space. sort of duration sensitive tech names, that is what we are talking about. those are the type of timelines you have to think about when looking at this market. in the super short-term, if you look at the next few days, we have 52 billion of long-term treasuries. cpi data tomorrow. it is hard to bury those two. romaine: taking a look at a chart giving you some idea of some of the potential inflationary or maybe not inflationary pressures. katie gray felt, of course cross-asset reporter, giving us that update. i do want to bring some breaking news that has been crossing the wire. apparently another hacking incident. a group of hackers said to have breached a trove of security

camera data. according to the story, it exposed carmaker tesla as well as software provider cloud flare. we will dig into this to see if we can bring you any more details. caroline: keep an eye on this. stocks meanwhile, plenty more coming up. in a moment, we will be digging into what is expected tomorrow. what does this all mean for the fed? will get to tim dewey in a moment. this is bloomberg. ♪ ♪

romaine: welcome back to "bloomberg markets: the closed

." actually, this is "what'd you miss?" hopefully you can pick up on what i was supposed to start off with. a stimulus bill it looks like it might actually get past as soon as tomorrow. joe: inflation coming tomorrow. cpi later in the week. this comes against the backdrop of higher rates. next week -- we are in a blackout period, so not much fed talk now. the fomc decision, it will be a substantive chance to really hear from the fed and get a chance to hear how they are thinking about the backup in rates. caroline: so far, they have not minded the backup in rates at all. joe: joining us, tim duy

economist at macro advisors, and at the unit via -- at the university of oregon, and bloomberg opinion. let's start with that fed decision next week. everyone is getting super bulled up about the economy, rates picking up. is there anything that will make it tricky in your view or do you expect a very sort of disciplined, consist of -- consistent message that they are still just waiting for a long time for that first hike? tim: i still think they are going to hold. there is a chance that someone decides to increase their rate forecast for 2023. but i think we are going to get the same story we have been hearing from the statement and chair powell in the press conference. romaine: a lot of the talk or at least a lot of the fear of

inflation rearing its head seems to but up against an argument made that there are structural forces out there, technological forces out there that have created disinflation or at least kept inflation at bay. is there any sincere that that narrative has changed? tim: no, i think it is far too early. we think of it in terms of the idea here is that we can push unemployment to very low levels before we see inflationary pressures emerge. under the circumstances, the fed is really focused on inflation. and we are well away from full employment. so i think the fed is serious about interest rate policy as long as they can possibly be. caroline: it feels as though the market is already pricing in

inflation expectations when you are looking at the breakevens to a large extent. how much do they need to keep on guiding the markets, that we are going to see eye-popping inflation numbers? at the moment, the market seems to be continuing to push it further. tim: we know that markets are pricing in rate hikes for 2023 and even edging into 2022. the fed cannot prove right now that they are not going to hike rates in 2022 or even 2023. what they can do is keep pushing on that message even if inflation numbers start to rise here. i think that is where the test will, sooner than expected, if we see these stronger inflation numbers come in a month ahead and the fed says, we are not

worried about that. let's see where we are in a year. joe: let me ask you a question. the message we have gotten from the fed is that the rise in rates represents a stronger economy. they are not worried about it. but, to the rising rates at some point threaten to tighten financial conditions such that in order to get to that destination we know they want to get to, they have to push back in some way. is there a point where it becomes sort of mechanically a problem? tim: yes, there is theoretically a point where you can imagine financial conditions tighten. it is not so much that longer rates are rising up, but something happens to tighten financial conditions noticeably. what i mean is probably

something outside of the expected growth of the u.s. economy, something like a basic misunderstanding of monetary policy going forward or some kind of financial accident. those are the kind of circumstances where i would want -- where i would expect the fed would want to be more forceful in pushing back against the rise in long-term yields or the expectations of tightening. i think the fed will try to just reiterate their message as patiently as they can. romaine: it seems he has been patient so far, as far as powell goes. he has made it clear that he is sort of laser focused right now on the job market, on labor force participation. the idea that it could take as a while before we get back to pre-pandemic levels of employment. when you look at that goal, should investors pay little bit

less attention to some of the inflationary signs and more on what is going on in the labor market. tim: we should be watching inflation because it could get "out of hand. out of hand here is probably 3% rather than 20% or whatever your worst fears could be. we should look at that we don't expect that to happen. what we should be focused on is how quickly the labor market recovers. more likely to see inflationary pressures that could be something higher than they are looking for. if this market is slow to recover, they will be less concerned about the inflation numbers going forward. i have been for a while now focused more on the state of the

labor market per se. caroline: what data are you looking at? more high frequency data? what are the telltale signs that you will get a quick recovery or we will see more longer-term scarring in the labor market? tim: i am looking at how frequently we get the labor apocalypse up. hopefully, when we can open the economy, open schools, open daycare is more fully, then we will be able to get the labor force participation numbers up. the fed could be launching unemployment to population ratios, not just of the relation as a whole but of subgroups. i do think the fed genuinely

desires that this could be a broad-based recovery and does not think we can have that until we get everybody participating in the labor market. this is why i take the fed at its word when it says it wants to be patient before tightening up on policy, particularly rate hikes. caroline: tim duy, columnist for bloomberg opinion and so much more. coming up, we are on the people of the house vote on the stimulus. next, how the bill plans to take on that labor data, that policy experienced by so many. this is bloomberg. ♪

caroline: the u.s. house is set to vote on that 1.9 trillion dollars stimulus package tomorrow morning. the biden administration's hope is that it helps those most affected by the pandemic. joe: that really is one of the big stories. we side with the cares act last year, how much power that in reducing policy. of course, high expectations. assuming this bill goes through the house tomorrow, high expectations for what this will do for lower income households and growth overall. for more on this and the potential impact, we are joined by elizabeth pancotti senior advisor with employee america. of this extraordinary bill, $1.9 trillion, what do you expect will be the most powerful impact?

is it the checks, the expanded unemployment benefit? what really stands out to you? elizabeth: i think it is a combination. i think it was developed as a package rather than ad hoc stimulus here and there. topped off unemployment benefits and extended unemployment benefits have been extended out to labor day to the beginning of september. that $300 per week payment will be extended to their and workers will receive 29 additional weeks of unemployment insurance. on the non-jobless worker front, $1400 checks will be sent to households and individuals making under $75,000 for individuals and $150,000 for couples. the child tax credit expansion increased to $3600 to children

under six and $3000 for children over six. that alone could cut child poverty in half. income for the pot of 20% of americans increased by 20% and for the top 20% of americans buy only 1%. i think the package will target aid where it is needed. romaine: this bill does seem to be more targeted toward middle-class and working-class people in a way that may be the cares act necessarily was not. i am curious that a lot of the failures we saw with the cares act came more from the implementation rather than what was in the bill itself. i'm curious whether we have any sense as to how this gets implemented and we avoid any of the same mistakes? elizabeth: i think the biden administration has focused on giving aid primarily to people. there is some business aid in

the bill but i think over half of the money will be given directly to american people rather than corporations, businesses, etc. the child tax credit is one for change. typically, the child tax credit is paid out to families every april in season every year. now, the house and senate have passed a bill -- or the house will pass it tomorrow morning. but they have passed it to have the irs cut that check theatrically. we are understanding that the administration will direct that payment to pay monthly. we expect it to start in july. they have quite a few months for the irs to work through the implementation. we could cehic ups. i think they are prioritizing getting that out the door. on the checks front, it is pretty easy nowadays.

the december bill sent out 600 large checks and most of those were in bank accounts or mailboxes within three weeks. there are broader issues i think on our ui system. this directs money to the department of labor. on the implementation side, there will still be hiccups. getting money out the door to jobless worker just like have been for the past 12 months. caroline: quite amazing if it does indeed cut child poverty in half. i am interested in the efficacy as they will deem it. many felt that perhaps the stimulus checks in particular were just save rather than spend. is that what you want to see, some savings so people protect themselves, if they do have to meet rent, it is no longer on hold, or do you want to see it plowed back into the economy so that everyone then hopefully

sees all boats rise? elizabeth: i think it will depend on family financial situations. we know that black families on average have much less than that much less liquid wealth than white families. it will certainly have an effect on financial stability for families left behind in previous recessions and in our labor market. on the other hand, you want folks as soon as we all have shots on our arms to get on planes, take vacations, have that discretionary spending. you might see short-term savings where people may say, i expect to spend that money in two months. i think on the long-term savings front, we are not going to see long-term savings. we are going to see an injection of those pent-up funds as people's -- as places start to reopen, as we can travel again. romaine: -- joe: how much do you

see an opportunity to make some of this permanent. particularly the child tax credit. what do you expect in terms of the fight to establish some of these things as a permitted benefit? elizabeth: on the child tax credit front, i would hope there is not a big fight there. republicans on the others of the aisle have said they are supportive of working families and children. politically, opposing that could be quite difficult. on the tax credit front, the child tax credit, there are a number of other tax credits. repealing those, pulling them back is difficult. there was an ack rk place -- there was aca marketplace subsidy put in place for two years so premiums cannot be more than 8.5% of your income. i think you'll be tough to claw

that back. i think those will be the two things we see stick around even though they are only in the bill for a year or two. it will not be easy. but i do think that is a real priority for the biden administration and they will work across the aisle to get those two things implemented on a long-term basis. caroline: great to have your expertise ahead of that bill, likely to be signed off tomorrow. senior advisor at employee america, really great to get your thoughts. and while, everyone thinking about the stimulus checks. him stop going to be your stock to watch? joe: are you saying you think that is where a lot of the stimulus money is going to go, gambling on gamestop? caroline: i feel like it is much more hard-earned cash be inputted to gamestop a lot of the time.

joe: gamestop will be my 4:00 a.m. tomorrow morning. caroline: that does it for "what'd you miss?" joe: "bloomberg technology" is next in the u.s. romaine: this is bloomberg. ♪

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