>> the $1.9 trillion stimulus, we think that will lift global gdp growth. >> we are about to have $2 trillion stimulus, so the propensity of consumers to spend is very high. >> inflation is going to be a burst coming in the next 12 months, and then it is going to calm back down again. >> the fed is not going to hike when they start to sniff out inflation. they are going to wait. >> fed policy inevitably, at some point, is going to shift. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa

abramowicz. tom: good morning, everyone. a simulcast on radio and tv. inflation studies in 30 minutes. we will have that for you. michael mckee giving us great assistance. right now it is the sum of all our parts, and it is good news. the visibility to an end of pandemic, and that folds into our economics, or finance, our investment. jonathan: everyone agrees the data gets better. it is agreement is what happens after that. how markets will respond, how policymakers will respond. that better data, that higher inflation in the months to come. tom: lisa, let me go right to you on your bond and corporate expertise. not only do we see american airlines with a balloon deal -- full disclosure, i don't understand it -- but also two government auctions. full disclosure, i don't understand it. what have we got? lisa: you've got companies

looking to get in while the getting is good. the idea that interest rates are probably going to rise from here and that borrowing costs could be as low as they are going to get, if you take a look at yields for high-yield debt, at the highest level going back to december. there's this feeling perhaps we are moving into a new regime, but right now it is a great time to borrow, and you are seeing it with the government even after rates have risen, that seem to be having a pretty easy time finding buyers for those treasuries. tom: into the markets off what lisa says, it is about a change in behavior and how chief financial officers deal with the optimism, including a $1.9 trillion stimulus. jonathan: they've been able to borrow. do they start to invest more? do they start to hire more? that's what this had been a station wants to see a man that's why this administration is going to stick with it for a long time and the federal reserve will stick with it for a long time as well. that's why this moment is so different to what we have seen before. they are implying -- they are applying the lessons learned

from the previous cycle to this cycle, very different to what we have seen before. tom: a seismic roof sponsor from our listeners and viewers on twitter, and they all agree the story of the morning is adidas and what they are doing with better outlook. i'm sorry, i looked at adidas and say, are there going to be many more i did this headlines to come from hundreds of companies? jonathan: one thing i know for sure is i won't be the first anchor to walk offset so far this week. [laughter] lisa: well done. jonathan: do you want to get a market check? tom: let's do a market check. i've got red and green on the screen. the vix comes in critically, at 23.29. i will go to foreign exchange later this week. jonathan: euro weaker against the dollar, just south of $1.19. ahead of that, yields up just a

little bit. we had higher by three basis points to 1.56%. tom: the conversations here are incredible. jon nailed this a year ago, two years ago. everyone does a analysis. we are going to reset in march with patrick armstrong of plurimi wealth management as he resets his calls for the year. what have you changed in your view? patrick: the view from the start of the year, i've become more convinced that the fed is going to let the 10 year yield rise a bit. i don't think they are going to let it get out of control, but jerome powell last week was unequivocal that he is not going to be raising rates, and i think the tenure took the message from that. that is actually a risk to longer duration bonds because if you've got a fed chairman who is not going to be raising rates once he starts to see inflation,

that just pushes up the longer end of the curve. that is something i think you will have to probably evolve on his messaging. i do think the path is higher for tenure rates. we have a strong inflationary backdrop. i came into the year expecting that to be there, but it has strengthened beyond what i expected as well. jonathan: we talked about healthy chairman -- about how the chairman of the federal reserve will respond to this. we kick higher, we are reopening. gdp is rowing again. how do you think the market responds to that? how do you think perceptions of policy recalibrate towards the back end of may as well? patrick: it is going to come down to powell's messaging a lot, but people can probably keep telling themselves inflation is nonexistent, and it has been nonexistent. but it is going to become more apparent to everyone. all of the asset prices are already pricing inflation if you

don't get lumber, steel, corn, wheat. they are all up 30% to 70%. if you look at prices on the ism surveys, manufacturing and services prices are all going up. it is something that people will probably still be surprised by i the summer, but i don't think they should be. we are in the midst of reflation of the economy. it is not completely discounted in markets yet, in my opinion. jonathan: what is your game plan without market moves again? patrick: my game plan is, in bonds, i want bonds from banks because inflation is toxic to bonds. the one part of the industry that benefits from higher interest rates and a steeper yield curve come you get better fundamentals for profitability of banks when you've got an interest-rate margin. i like emerging-market inflation linked bonds. people are worried about a strong dollar being a negative for emerging markets. we have seen that over the last

few days. but i think in a inflationary backdrop, especially if you are a commodity producing country, you're going to generate inflation and have growth there, and getting real yields on invasion linked bonds of 3% above what is higher than developed market inflation right now, so that is an equity backed with premium. lisa: i think it is important to parse out inflation risk versus just higher rates. recently we have seen rates going up not because of inflation at patients going up so much, but subtly because people don't expect the fed to come in and buy as many. we are going to get real growth, so there should be a higher yield. at what point do you start to take a look at a 10 year inflation forecast and say it is too low or too high, and make a bet on that and how that coheres to where yields are? patrick: that is the other thing we are doing in bond positioning now. we are shorting traditional bonds against that, and that is

when you are zeroing out to expected inflation breakevens. i don't think 10 year yields are going to go out of control, so i am shorting them in case they do, but that is one where were you can get the pure inflation expectations, by owning inflation, shorting conventional bonds. lisa: do you get the sense that other people are doing the same, and this is one of the things that has driven the record short position we have seen of late in the 10 year treasury, versus actual real rate expectations or even inflation expectations? patrick: i think that is part of it, and i think that it is another way because it is correlated to everything as well , that the biggest risk if you are owning a growth company is higher rates right now. that is what is driving markets. when the growth stocks are selling off, it has been triggered by rates recently. you're almost hedging a growth portfolio as well, so i think there's a lot of players

shorting treasuries, and with yields solo, it is not a big cost to put on. rates can move a lot higher. i don't see how they move massively lower in this inflationary backdrop. tom: adidas out with a great headline today. does revenue growth matter? patrick: revenue growth always matters, obviously. it is just a product of what we are going to get in the economy as they reopen. the cyclical companies that have been low growth, when he's got such a strong economic growth in the tailwind, you've got the secular growth companies growing as they always do, but i think you getting cyclical growth as well. jonathan: patrick, got to leave it there. patrick armstrong, plurimi wealth cio. an insurance policy is very different to a conviction trade, and i think that is what you have to draw a distention between when you take a look at these markets. tom: really well said, and the idea that insurance policy has

not worked well for people. the people caught in the middle have really been left behind. that is important. you know where i am going to be at 3:00 p.m. after the acclaimed "surveillance" nap. the talks are playing zagreb of croatia. jonathan:jonathan: some of the major players will play. i thought you would bring up adidas again. tom: i am going to bring it up because gareth is going to be out there with his adidas cleats. let's be honest, gareth says adidas, not ah-didas. jonathan: i think he says football boots and not cleats, as well. [laughter] the stock is at a record high over in germany. tom: what does gareth get paid to where adidas cleats? jonathan: i don't know. i imagine is -- i imagine it is a lot of money. tom: is the dynamo in zagreb any

good? jonathan: not as good as your tots. lisa: -- going deeper into the red. [laughter] it is interesting to see the nasdaq heading down to lows right now. jonathan: i could walk offset because we are now on tv as well. [laughter] we get cpi later, and a ton of supply in the u.s.. the 30 year coming up tomorrow as well. setting the tone for this market, the cpi print coming up in about 20 minutes. tom: we will see the cpi print, and all of the different slices of it. i'm looking at the price inflation of adidas shoes. in america, they are pretty good. lisa: oh, dear lord. seriously? jonathan: a bloomberg subscriber rights income "who is gareth -- writes in, "who is gareth?" [laughter] from new york come of this is

"bloomberg surveillance," heard on bloomberg radio, seen on bloomberg tv. your equity market direction to be dictated by what happens in about 20 minutes' time, inflation in america. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the world's two largest jet leasing companies are coming together. general electric has agreed to combine its leasing business with rival aircap. aircap will receive $20 billion in cash and shares in the combined company. they will also get another $1 billion when the deal closes. one of the largest economic relief packages in u.s. history. the house is set to give final approval to president biden's $1.9 trillion package, likely to become law without getting a single republican vote in the house or senate. millions of american families will get one-time payments of

$1400. there will also be more unemployment benefits on aid to state and local governments. the pentagon will keep national guard troops deployed at the u.s. capitol through at least may 23. deployment began after the january 6 riot and was set to end on friday. last week, the chief of the capitol police asked for an extension. in china, producer prices rose last month by the most into years. the chinese producer price index is up 1.7% from a year earlier. that raises the prospect that china could start exporting inflation as factories raise prices for products sold abroad. hackers say they gained access to 150,000 surveillance cameras inside hospitals, companies, police departments, and schools. among those whose footage was exposed, carmaker tesla. the video was captured from a

silicon valley startup which collects security camera data. it is taking steps to prevent unauthorized access. 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 ritika gupta. this is bloomberg. ♪

>> on inflation, it is something that, as the president said, as secretary yellen has said, we are monitoring carefully.

our belief has been from the beginning that the risk of doing too little to help american families outweighed the risk of doing too much. jonathan: that was a white house economic advisor on the monster plan out of d.c. good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's the price action. we look like this in america on the equity market. equity futures come in a couple of points, down about 0.1%. yields higher by three or four basis points. a cpi print about 12 minutes away. several hours after that, we get supply from the treasury in america. tom: the cpi print a huge focus for all. there is a raging debate as we heard from bruce kaz men -- from bruce kasman earlier. the idea that the labor economy, whether it is secretary yellen and her codified work, or what dr. bernstein has done for years, labor is front and center

for this biden adminstration. jonathan: it is a unique moment, so let's have a conversation with jared bernstein, u.s. consulate economic advisors member. we appreciate -- u.s. council of economic advisors member. we appreciate your ongoing transparency. let's start with how unique this moment is and why a unique approach is required. jared: it is a great question. the american rescue plan which we expect to pass the congress any moment now is certainly one of the most consequential and progressive pieces of legislation in recent or even distant american history. we are talking about getting $1400 in checks out to almost 160 million american families, and those start going out the door days after signage. in fact, speaking of deadlines, in just a few days, about 11 million americans risk the potential of losing enhanced unemployment benefits if we don't extend them, which is at

the heart of the american rescue plan. then there is the crucial issue of finally gaining control of this virus, producing industry beating vaccine, getting shots and arms, and launch a robust, reliable, and inclusive recovery. jonathan: the shock is different, yet we have been conditioned by the previous cycle, and the lessons learned are being applied to this one. that is something i am struggling with. we have been conditioned by the previous cycle that we need to do more because the recovery was so shallow. if the shock is different, why are the lessons we have learned previously pertinent to this one? jared: i don't think, if anything come the magnitude of the shock would really emphasize that lesson, which is the tendency has been to do too little, not too much. when i came up in business, there was no such thing as a jobless recovery. a bunch of folks were furloughed from the factory. the shock when into the rearview mirror, and a lot of folks came

back. now we have had these sluggish jobless recoveries that often set up expansion that underperforms. that is not the way joe biden wants to see his a adminstration get out of the gate, and with the american rescue plan behind us, we think, especially with finally getting this virus behind us, it is so critical to launching not a wait-and-see, off-again, on-again kind of recovery, but a reliable recovery that can be durable. tom: thrilled to have you with us today. you did a frontline interview in the heat of the financial crisis talking about inheriting a recession. your critics will say you are manufacturing a boom economy with this stimulus, and they will then go on to say you are manufacturing new, higher inflation. defend the administration. jared: first of all, i don't hear too many of those voices outside of partisan republicans. even some economists have been

worrying about overheating and critical of the magnitude of the package have recognized the support -- recognized support the importance of assistance. are you ready for the three s's? spending, slack, and savings. spending, the spend out of the american rescue plan does not occur in one month or two months. it is true, and it is very important, that the checks and unemployment insurance benefit it's out very quickly, right out the door. the plan itself spends out over the couple of years. then there is slack. there's still way more slack in this labor market then i think your question implied. we have an unemployment rate for african-americans 9.9%, 8.9% for hispanics.

that beats the deepest part of the great recession. some of these benefits, some of these parts of the american rescue plan will be at least initially saved by people who will then use it to meet accumulating debts, and that puts downward pressure on price pressures. lisa: we've had a number of economists come on and say perhaps consumers are not as indebted as they have been in the past. there isn't as much debt to pay down. another argument saying the depths of this crisis was deeper in some ways than the last crisis, but it was very different, and he bounced back has been much faster than economists are predicting. what makes you confident that that is into sign that we are going to get some sort of growth that is turbocharged, a very different picture than what we have seen in the past 10 years. jared: let me taught about could -- let me talk about the debt issue. you might want to consult with

mark zandi, who has been tracking a very specific type of debt for people who have been benefiting from rent moratoriums and mortgage forbearance. this type of debt is quite escalated right now, and it is precisely the type of debt that folks are using these benefits to spend down. even in risk is still upon the land, and the american rescue plan addresses that head on. you talk about the pace of the recovery, every forecast i have seen has a couple of things common to it. one is that we will grow above trend this year and next year, and that is precisely the kind of growth rate that the american rescue plan is supposed to set off in a reliable sense because we finally put the virus behind us, we have safely reopen schools, we've gotten families and businesses the relief they need. but this has also showed heat in terms of interest and inflation rates, but not overheat. jonathan: before we let you go, something you have been fighting

for for a long time will not be in this bill, a higher minimum wage. what is the administration's message to progressive member's of the house who didn't get what they want either? jared: president biden was disappointed by the ruling of the senate parliamentarian to keep this out of the bill. however, that does not mean he is putting this fight behind him. in fact, he continues to be extremely committed. i got an email this morning to that effect that i won't double what it says, but -- i won't divulge what it says, but -- [laughter] feel free -- jonathan: feel free . [laughter] jared: the administration remains committed to a $15 men wage, and that is hopefully some thing you will be hearing about moore going forward -- $15 minimum wage, and that is hopefully something you will be hearing about more going forward. i'm keen, five minutes away from the cpi printed america -- tom

keene, five minutes away from the cpi print in america. coming up, mark howard of bnp paribas on this fiscal plan in washington come on the outlook for growth, for inflation. futures come in a single point on the s&p 500. heard on bloomberg radio, seen on bloomberg tv, this is bloomberg. ♪

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jonathan: from new york city for our audience worldwide, this is bloomberg surveillance. alongside tom keene and lisa abramowicz i'm jonathan ferro. your equity market comes in a single point. stable on the s&p 500. let's bring in michael mckee. michael: this will be the most important release of the month next month. this month is the month before we get to the base affects, which will be pushing inflation way up. we do not see a big jump europe rate cpi on a month over month basis up .8%. -- we did not see a big jump. cpi on a month over month basis up .8%. the headline up 1.7% on a year-over-year basis. that was forecast.

gasoline, one of the big culprits, up 6.4% in february. it accounts for half of the increase. you can expect that to bleed into next month because oil prices continue to rise. food up .2% in february. we should see services rise on a regular basis once we start to see the economy open up. right now services, less energy, up just .2%. the number we look at as a substitute for housing, that is up .3%. that is the biggest gain in some months because it is at .1%. rents may be stabilizing around the country. tom: we do get a market move. jonathan: there is information content in the data, also

information content and how i market response to the data. this is a small case study into how the market will respond to inflation in the months to come. for the market you get what the economists expect and what the market is worried about. off the back of this, equity futures higher, on the nasdaq up 51 points, advancing .4%. treasury yields in. the big test comes next month when the base affects kick in. tom: what is your sense of how distant we are from 2%? that is a lofty goal. measure that gap, the emotion of getting to 2% core cpi? michael: what you will see is a quick change in the cpi annual figures because we will get into the next two months. in march and april we have big declines in the cpi, fell off the cliff. that will wash out of the data.

if we see that happen, mathematically you get a big jump, and if energy gets a big move, the headline will move up to 2% rather quickly. the core not as fast, but it will get there in the next couple of months. the fed is expecting this. that will be the market debate. does the fed react to this comment to the markets push the fed to react? lisa: there is also a question about services, whether we can see the cost of doing things at a time when people do not have the ability, completely, to freely go out and do things due to ongoing shutdowns and closures. what is your expectation there? what are we seeing the services side of laois and and how much is the fed looking to that? michael: not seeing much in terms of services inflation compared to goods. the big question is when will people feel safe enough to go out and what are the limitations

going to be? are there going to be enough restaurant seats for the people who want to go out? food prices are still contained. are they going to jump, and we see enough retail goods for people to buy when they feel like they can get out? tom: moffett nathanson coming up. michael mckee, thank you so much. futures up 16. the vix comes in, 22.86. mark howard, senior multi-asset specialist. his the inflation worrisome? mark: not really. mike covered it nicely. what is important is the fed will be looking at this closely. discounting the fed reaction function next week. this means the fed will not have to pivot and we will only see subtle changes in the forecast. it is not the risk event some people might have been worried about.

jonathan: how markets respond, that is critical for market participants. how do you think people will respond to those higher inflation prints? mark: it is an interesting dynamic. that is going to be baked into the growth narrative we are hearing increasingly from corporate america. at least talking earlier about the way been corporate issuance. corporate america is seeing growth in their pursuing growth in a number of ways, not just the most beaten-down companies like the airlines. they are doing it through m&a, through expansion, through investment, through sustainability initiatives. i think the inflation numbers will reflect corporate activity and consumer activity with the fiscal outlays come into their pockets. lisa: there is a question of people have left tech for de ad.

john was pointing out some of the market moves. the biggest reaction is in the nasdaq with the nasdaq shooting higher .7%. i find it big tech and it seems like the idea of not getting that much inflation is playing into the story. jonathan: it tells you what people are worried about. the question that came up on the program earlier this whether the price action we have seen in inflation protected sick 30's and anything that gives you -- inflation protected securities and anything that gives you -- how do you process that? mark: you guys were talking about japanese equities yesterday. inflation has been a tricky trade as an offense of trade for a long time. it has almost been a hedge for many years because of the secular trend of inflation. i think it is more of a hedge. there are tactical and macro

funds that move around aggressively. i think is more of a hedge against the broader fixed income bucket. lisa: you buy the argument we could see 10 year move to 2% and could still see the s&p or higher on the year? mark: absolutely. the challenge is the speed at which we get there. if we shot up to 2% over the next two months, that would be very disruptive to equities and the nasdaq. if it happens gradually and happens not just based on u.s. growth but on global growth, and i am looking to the ecb tomorrow to provide incremental signs of initiatives there they may pursue. tom: what are the incremental signs we will get? smoke signals? lisa: [laughter] we are not talking about the pope. tom: what are they actually going to do. mark: there are a number of things, whether it is monetary policy, open market purchases, or whether it is browbeating the

fiscal budget of different countries. they are behind the u.s. in physical, they are behind -- behind the u.s. in fiscal, behind in vaccine, so the ecb will do what i can to stimulate growth. lisa: it raises the question of what it can do. the ecb has been having issues following through. how do you ease from ultra easy? jonathan: have they got a communication problem? mark: i am not an expert on the ecb or their communication methods. jonathan: you introduce the ecb and then you want to dodge the communication question. lisa: [laughter] the answer is yes. mark: i think central bankers globally are in a tight spot. you see it in the u.s. and other central banks. jonathan: mark, i will not put you in a tight spot. always great to catch up. mark howard. there has been some issues at

the top of the european central bank in the minds of many people in this market around the communication and what they are doing. tom: let's be honest. we are biased with our relationship with madame lagarde over decade. the jury is out. who is in support of the effort of christine lagarde? jonathan: i think the chief economist is in support. i do not want to say they have clashed, but what they have seen is a cleanup act with philip lane following president lagarde. that cleanup act we have also seen in the united states. tom: fair. the cleanup act has been vice chair clarinet. jonathan: what we have seen is a tremendous -- the experience of leading a central bank and not being an economist and not having your hands around monetary -- around monetary policy in the same way as clarida and lane, i think lagarde has struggled and i

think powell has struggled. tom: is it a cleanup act of the politics or the non-politics of the united states of europe, or is about christine lagarde? jonathan: it is a cleanup act about the economics. for many people i have spoken to, they are much more comfortable talking to me on background and not on the record. they would like to see philip lane in the press conference on those thursdays in frankfurt. lisa: there is a larger point, which is the central banks have been following the market in the market has had a lot of power to push the central banks. people could argue the markets have gone it right more often than the central banks. it raises the question. it is parenting toddlers. people have raised this issue of whether the central banks are terrible parents succumbing to all of the tantrums markets throw. that is a credibility issue. tom: i think the christ -- jonathan: i think a crisis keeps everyone on the same side.

we saw that with governor carney. that is what he liked with forward guidance in the bank of england. once the crisis phase is when the division starts. that is when president lagarde gets tested, when the reopening begins and you get the push back about crisis era policy in an era that is no longer a crisis. tom: i look at the inflation. i love what mike mckee said about we have to get through the data swing of 12 months. i think there are transient notes on both sides of the atlantic, let's stop worrying about inflation until it is observable. jonathan: amazing to see inflation in line with estimates , and see the nasdaq higher, just off the highs now. we advance .5%. on the bond market, yields have dipped. coming up, why you should stick with growth equities. counting you down to the opening bell on bloomberg tv with kate moore, blackrock strategy team head. from new york city, this is

bloomberg surveillance alongside tom keene and lisa abramowicz. i am jonathan ferro. futures up 10 on the s&p. this is bloomberg. ritika: with the first word news, i am ritika gupta. the battle between news publishers and facebook and google in australia is coming to the u.s. in congress lawmakers plan to reintroduce legislation that would allow news media to band together to bargain with tech companies overpayment stories and data. last month australia passed a law to force big tech to pay publishers for content. the house is set to send the 1.9 trillion dollar coronavirus relief package to president biden for his signature. the measure will provide an economic used that will last long after the $1400 checks start arriving. house democratic leaders expect

final passage this morning. the measure also includes supplemental unemployment benefits, and expansion of the child tax credit, and an expansion -- defending his brokerage against watchdogs and critics. he fired back at a complaint that the robinhood app uses aggressive taxes to lure inexperienced investors while failing to protect them. >> we will defend the firm vigorously because we disagree with the fundamental premise. the facts will come out. it will bear out that robinhood is a customer focused company that is operating with the highest standards of integrity and will continue to do so. ritika: you can watch all of emily chang's interview with the robinhood ceo today at 1:00 new york time. global news 24 hours a day, on air and on quicktake by

bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪ tom: good morning. lisa abramowicz and tom keene. bloomberg surveillance on radio and television worldwide. it is now a joy. an annual visit with craig moffett and michael nathanson of moffat nathanson. the founding partners. if you got their hands -- if you got your hands on their black book years ago you read it cover to cover. this year, the importance of our homes, our tv's, our kids come and what the future is for media. this is must listen for global

wall street. i do not know who to begin with. i think craig moffett is better looking. michael, i'm going with craig. lisa: starting with the bank. -- starting with a bang. tom: craig, i was thunderstruck at the cord cutting that is going on. when the pandemic is overdue we continue to cut the cord? craig: thank you for having us on. it is always a pleasure. thank you and thanks for the kind words. we will continue to court cut. what michael and i have been writing about in the last year is this has become a self-fulfilling prophecy. we talk about two vicious cycles that have started in cord cutting, where first it was about sports. the sports contracts are fixed for the programmers. their prices keep going up. they have no choice but to push

the price increases through the distributors, cable and satellite operators who raise their prices and make it less attractive for anyone who is not a sports fan. those customers leave and that drives the price higher for the customers left. you get a self-fulfilling dual loop for customers leaving. now you're offsetting that with the media companies getting rewarded for taking their best content and moving it to their direct to consumer platforms. that is starting -- you are stripmining the traditional ecosystem. i think we are past the point of no return for this transition. tom: michael nathanson, since our last visit with the two of you, what i have been struck by is the courage of bob iger at disney, the courage of people to be bold. we see more iger-like courage in

the coming quarters? michael: they have been rewarded for that vision and now everyone will emulate disney. wall street has rewarded disney for the execution of that vision and people want the same narrative for their stocks. in the past couple months, discovery, viacom, have all joined the bandwagon. as craig said, all of the media companies are going to accelerate growth as well and follow disney down the same path. lisa: you said something that was important. nonsports. this is a key phrase. right now cable is holding onto sports. there is a question of how much of a grip cable has on sports, especially of amazon ekes thursday night deal with the nfl. what is your expectation going out one to two years in this relationship? craig: i will defer to michael.

he is the expert on sports. i will let you answer that. michael: our view is only the biggest events, the nfl, major league baseball playoffs, ncaa playoffs, the biggest events will stay. you are starting to see the chipping away of the poor sports. amazon is taking a package you will probably see the nhl do some deals with other companies. the bundle will still have course sports, but now poor sports -- but now core sports fans will have to look at other platforms. it will lead to more inflation when it comes to the pasta of video. lisa: that raises the quest -- when it comes to the cost of video. lisa: it raises the question at what point people will cut the cord. have you done any research on the price point of when it is

worth it? craig: i do not think you can say it is just price anymore. as michael was describing the vision of disney, as companies are rewarding for putting their best content on their direct to consumer platforms, it is more than just price, it is about the product itself. we have done some work on the video value chain. you have to think about what is coming being the aggregation of individual shows rather than the aggregation of cable networks. cable networks themselves disappear. in that world, it is hard to say there is a floor for cord cutting if you define cord cutting as who is buying the traditional bundle of cable networks? there has to be a bundle of cable networks to buy. tom: michael, jump in. michael: our core thesis had always been there is a percent of the u.s. population that is a

sports and news fan. as long as sports a new stay in the bundle the bundle will survive. now you're starting to see the fragmentation of people putting their sports on their own services and in the bundle. that will lead to the acceleration of cord cutting. tom: i want to get to the lessons learned and i can go to warner bros. and all that mess with hbo. craig, i want to start with you. nathanson is better looking than you, craig. what i want to say is at&t, what a train wreck. you published it was a train wreck. we all knew it was going to be a train wreck. what were the lessons learned from at&t's effort to going to the moffett nathanson world? craig: the lesson is when you overpay for assets, bad stuff happens. i do not know that it tells you anything specific about media as much as it does -- it was not a

mystery when they thought they were overpaying for an asset poised to decline. we rode at the time and lots of others knew it at the time. they double down because they got into so much trouble on the directv deal their dividends look questionable and they had to spend even more divide time warner, and in retrospect -- remember what time warner was. they had wonderful assets but it was still a of cable networks. that looks like it is a declining business they paid too much for. the problem they have now is the balance sheet. they have had the balance sheet problem for a while. i do not see how they grow out of it. michael: -- tom: the major lesson is the creative side. disney hit a homerun with amanda lori and ann john fab -- with the mandalorian.

michael: the other lesson is you cannot have at&t management leading read of companies. creative businesses in the way disney approaches their business is unique. that is why disney has been able to scale so quickly. slowly but surely we on the street have realized not every machine is the same. you hit something. it is hard to distinguish. you know it when you see it. that is the other lesson of at&t/time warner. craig: it is a great point. this is not the first time they have done it. old-timers like me, telco try to get into the business in the late 1990's and it failed miserably for all of the reasons michael was saying. these companies do not do well in managing creative businesses. tom: we are out of time.

let's do this again. let's do this again. this is affecting every single listener, every single viewer. moffett nathanson with us. wonderful research. do not ask lisa or me for their research, we protect the copyright of all of our guests. what did we learn? i thought that was superb. lisa: it is interesting sports is a key component for people keeping the bundle. about 60% penetration of cable, rapidly going down. the dam breaks when nfl goes away, when mlb goes away. that is a key question and a key threat. tom: one of the things we see is the boston red sox, their rights crater because of their pitching staff. that is a different story. what i see in the pandemic is our children have no collective memory of what i grew up with, gunsmoke sunday night at 8:00,

or what you grew up with a generation later. it is gone. it is vaporized. lisa: i wonder what the new generation will look like? this has been the era of ample screen time. you have to wonder how much tha. how many bundles do you have? tom: i try to cut them back constantly and then they start screaming we have to get this. lisa: how many can you maintain? that is a key question. will we get three? can you get five? tom: paul sweeney has 14. let's squeeze this in. american airlines not up in the air, their earnings are terrible. it is like carnival cruise. you have people lined up. lisa: we have the bond tranche of this offering from 5 billion to 6.5 billion, and then the loan offering gone up to $3.5 billion. a total of $10 billion late the frequent flyer miles.

american air has a reason to lock in borrowing costs because there is a question of whether they are only going to go up based on the fact that yields are rising and frankly people will not give them that much leeway now that they have to prove they can turn a profit. on the flipside, you've investors that want some yield. the u.s. is still offering something. i think there is a confluence of everything. it is still in issuers market. tom: something to do with united states government and the bailout. lisa: you think? tom: we are at wednesday and it feels like friday a lift off of inflation. dow futures up 177. nasdaq leading the way. .6%. lisa: that is interesting. tom: that is a reversal. 22.89 on the vix. the yield space, two basis points higher. 1.55 off the enormous move we

saw yesterday. the dollar is weaker. stay with us. lawrence pulp and generous electric, 12:00 noon with david westin. this is bloomberg. good morning. ♪

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driving markets. from new york city for our audience worldwide, good morning, good morning. the countdown to the opening bell starts right now. we begin with the big issue. a big plan with a major price tag. >> this $1.9 trillion. >> $1.9 trillion. >> $1.9 trillion. >> this larger stimulus package. >> unprecedented stimulus. >> it is probably never going to be this good again. >> this is the biggest fear starting to creep into the market. >> is there a tail risk of high inflation? >> this is a different kind of stimulus. >> $1400 checks. >> this aims directly for consumer pockets. >> that is where you're getting the immediate wage inflation. >> what if there