♪ caroline: from bloomberg world headquarters in new york at here in london, and caroline hyde. joe: i'm joe weisenthal. romaine: i'm romaine bostick, russell 2000 closing just shy of a record high. joe: the question is, "what'd you miss?" caroline: relief that the keyword of today seems to be the fact that we have checks on the

way to many americans as president biden signs the covid-19 relief bill. many will be receiving -- many will be receiving direct payments, there are also child tax credits, and $350 billion for states and local governments to ramp up vaccinations at school reopening. relief also on the inflation front, a key measure of consumer prices in the u.s. rose less than expected where. in the final trade, relief for some gamestop shareholders, the stock stabilized after having tumbled romantically. we will get into gamestop soon enough, but all the inflation euphoria. joe: gamestop basically flat on the day, also more or less flat, cpi. this is a source of anxiety. if there is one thing that would were the market, it is faster than expected cpi. it came in less than expected, i

headline, mild. this month year-over-year is going to get interesting because we have the base effect left from leicester, but on any basis, it is not showing up, at least not in the headlines. romaine: i will be interested in tomorrow and some of those producer price indexes. joe: joining us with more insight, bloomberg news monetary policy and economics reporter matt bosler. matt, thanks for joining us. what strikes you about the report? matt: we can slice and dice this report different ways, but it always comes back to shelter inflation. that is the dominant component of the consumer price index and is also the component that grows in a cyclical manner, so it tends to accelerate during the business cycle and decelerate, so that is going to be key in the coming months as we watch inflation data. we saw today that on a

year-over-year basis, shelter inflation decelerated in february to some of the lowest readings we have seen in a long time. on a month over month basis, it picked up a little bit. so the question is, do we continue to see that uptick on a month over month basis, solidifying that shelter inflation? joe: if you really squint, you can see that. the fed has got to hike. caroline: [laughter] matt: the important point here is that you can look at past cycles and see that this tends to trend lower for potentially years after the recession ends. so the question is, rb going to get a repeat of that, or is this an unusual cycle where we don't see continued deceleration and shelter inflation going forward? caroline: beautiful pinpointing that shelter question, but going forward, joe mentioned base affects, the fact prices dropped

this time last year in march, so it feels like transitory inflation is upon us. but soon, people will be going back on airlines and in hotels. what are key pressure points that are going to drive inflation looking that much higher, even if short-term? matt: just the ones you mentioned, things around travel are going to be interesting, and the airlines, and leisure and hospitality, restaurants. the really interesting thing about that though is that we have already seen price pressures in places like restaurants that have been heavily affected by the pandemic. because what is happening is, we have had a lot of costs restaurants have had to deal with to retool for a pandemic environment, so there is a question about the extent to which that kind of inflation can keep going as we reopen, or whether it moderates, even though you might see a lot of spending suddenly directed toward those sectors. so that is going to be something

we have to watch for and it underscores the uncertainty with these mattress -- with these metrics. romaine: we have seen in the past where that theory of passing on the cost has come up and it hasn't materialized because of a lot of structural issues that have kept companies here doing that. this time around, is this going to be a different story? matt: that is the way fed officials are looking at it. they are looking at the loan elation environment of the past couple decades that they are saying, we don't necessarily see any enduring shift that would really change that story. so all the downward pressures that we have seen, factors like the international economy, trade, so on and so forth, it is not obvious at the moment that that is going to shift in a dramatic way soon. and that is why you hear fed officials and people in the government saying, look, we have

a lot of spending coming, but we are not worried until we have proof something here is going to change and look materially different from the last several decades. joe: matt, as you mentioned and does a lot of people expect, we are going to have this reopening, everyone expects high hotel prices, maybe high airlines and other services, but on the other hand, so much of our spending is connected to goods that we know there have been logjams and shortages in lots of goods. could those things start to ease and balance out expected inflation or price pressure built into the services sector upon reopening? matt: yeah, actually, that is a factor i have seen several analysts mentioned in response to the report this morning. that is something that is going to balance those things out, as you say. and it is also a big reason why

the consensus forecast for inflation by the end of the year , after we get through the bumping the next couple of months, are that inflation is going to settle down to 1.5% to 1.75% range, well below the fed target. it is going to be a very different conversation at the end of the year, precisely because of some of those upward pressures on goods prices that we have seen during the pandemic , they are expected to unwind and make space for that service is spending. romaine: our monetary policy and economics reporter matt boesler. and it is not just a $1400 checks, we are talking about money for pensions and money for child tax credits. the teneo ceo's joining us after the break. this is bloomberg. ♪

♪ romaine: "what'd you miss?", welcome back. we are focused on finding relief points in the markets at the economy. the house of representatives, passage of the $1.9 trillion stimulus package that may get to the president's desk by friday had money could start flowing next week potentially. joe: very extraordinary, huge bill passing today as expected, democrats don't have a huge majority in the house the past it without any problems. the president is expected to sign it saudi and direct checks could get next week. caroline: direct checks hopefully cutting and half child poverty as well, much more of a social safety net then you had ever been used to in the united

states. joe: we are finally getting a little taste of what to you guys is old news. joining us for more on the corporate response to the stimulus bill, teneo holdings ceo declan kelly. let's talk about the bill. lots of moving parts but basically, your perspective is that corporate ceo's are enthusiastic about what this will do for the economy? declan: yeah. thank you for having me. that in itself is an understatement. ceo's have been very vociferous in their support for the bill. i think over 150 of them actually signed a joint letter to the president a couple of weeks ago. it is obvious, the market reaction is what we all expected once this was passed. this meant of stimulus going to the economy of the cement of job creation and support for various efforts around the vaccine speak for themselves, allied with already low interest rates and

plenty of other capital available for investment generally from the private sector. most ceo's we work with at teneo have been expecting this for the past several weeks and are relieved that the day is finally here. caroline: this ceo's and corporations you work with, people you talk today in and day out, are the optimistic as to 21 enfolds -- 2021 unfolds? declan: they are extraordinarily optimistic. a few months ago they thought 2021 would be a story of first half, the first half getting the vaccine administered in the second half, a more normalized economic environment. i would say vaccinations have been delayed by distribution issues, but they are not bad in general, especially in the u.s. relative the rest of the world -- relative to the rest of the world. i think consumer confidence is getting higher. recent data showed 85% of ceo's

in the fortune 500 were very optimistic about the year ahead. we are looking at 5.6% global growth projected by the oecd, 6.5% projected in the united states, so from that perspective, confidence is really, really high, and probable with justification given everything we have seen in the economy. romaine: talking about confidence, a lot of cash going to the public to individual people and corporate balance sheets in many sectors are flush right now. there is speculation about how that money could be put use, whether increasing spending, and mande activity -- increasing capex spending, m&a activity. declan: it is fair to say

fortune 500 ceo's are looking at their capital allocation strategies, and i still think there is a disconnect between the stock market and what i call the real economy, and teneo has written extensively on this end we still have close to 10% unemployment. but in general, most companies are looking at significant capex and significant consolidation in some sectors because there is more cash flowing into those sectors. it is a lagging indicator, but i think m&a will increase significantly as we head into 2022. we still have bumps in the road but i see confidence definitely and see larger deals happening in the second half of the year for sure. joe: let me ask a question that maybe more on the philosophical front. you mentioned this stimulus is expected to be very good for the economy, but what about the idea

that government spending and government involvement in essentially plying the corporate sector with cash during downturns can be positive. i feel like in the past, ceo's may not have been so welcoming of it, or maybe feared inflation or the implications for taxes or so called crowding out. is there a change the started with cares or before that on how corporate executives think about fiscal activism to help rebound the economy? declan: interesting question, because we can look politically at the u.s. end other countries around the world and see polarization and almost a 50-50 split, yet there is this congregation around the middle economically in terms of efforts to inject stimulus into the economy in the u.s. and other places around the world, and other democracies, especially in europe. you are seeing a lot more centrism in that respect, in terms of people coalescing

around the need for investment. yes, and furthermore, most ceo's are flexible, nimble and realistic. but bear in mind when differentiating aspect, which is the pandemic. we have never dealt with a pandemic in living memory. so a lot of rules go out the window when we are faced with what we have been faced with economically. and what you are seeing from a lot of corporations in the united states and frankly globally is that a lot of considerations, and whether you are a republican or a democrat, really go out the window when people see you need injection of stimulus. and in this bill is $400 million for expenditure in major cities around the united states, major state capitals and large urban areas. i think that is pivoting to an eventual second bill which will be around infrastructure. and we have seen in america, not just post-world war ii but another times back to the

industrial revolution that america investing in itself and putting itself back to work and investing in infrastructure has a positive impact on the economy. i think you will see both parties coalesce around that. caroline: let's stay on this philosophical idea because it is not just been a health crisis, it has been an economic crisis and also a social crisis. as we head toward what might be a new normal, what are ceo's saying and thinking about their new roles within this? you have been teaming up with global citizen, for example, thinking about how we can become a more, dare i say, just society. declan: thank you for mentioning our partnership. it is called a recovery plan for the world, with us aligned with the president of the european commission and the world health organization and artists like

hugh jackson -- hugh jackman and billie eilish and coldplay and others are involved. we have people like cisco and coca-cola and verizon and weight watchers on procter & gamble and google and many others get involved. we are confident we are going to get a lot more companies involved, which is a philosophical question. i think 2020 brought to an end a 50 year focus on shelter capitalism and the stark realization that ceo's need to focus on esg, climate change, inclusion, diversity and all those things. we are at a point where that is not going to change and you are going to see a lot of proxy reports this year reflecting that at institutions being very vociferous against companies that don't get the memo, so to speak. so yes, that is here to stay & society will benefit as a

result. that we are looking at that be the new reality and the new normal at teneo going forward. caroline: declan kelly, great to have you with us, teneo ceo. meantime, huge day for gamestop. we dig into the volatility, next. this is bloomberg. ♪

♪ caroline: today, we are focused on finding relief points in the market and economy. joe, potentially at some point there was mild relief for holders and traders in meme stocks, and it seems to have ended on a more placid note. mce beating earnings, looking at fundamentals. joe: yeah, fundamentals are part

of the story too. amc fourth-quarter loss, actually beat expectations. adjusted fourth-quarter low, three dollars 15 shares -- $3.15 per share lost. the fundamental business of going to the movies is still not great. romaine: it will be back though. joe: to talk about meme stocks, let's bring in bloomberg cross asset reporter sarah ponczek. gamestop was actually above its closing-january at one point today. then it fell out. sarah: then it fell out. it was quite amazing, the day we had. at the high, gamestop was trading at near $350 per share. in a matter of minutes, after multiple volatility halts, we saw all the gains given up, gamestop trading as low as $1.72 per share. romaine: and that was all because of a change in fundamentals?

sarah: exactly. next monday mental's and meme stocks together, what do you got, you get gamestop falling. there were theories floated around on wall street and social media and on reddit, as there always are, and with some saying there was a strange activity in the options market, some lending hedge funds, some saying let's move over to roadblocks. -- move over to robots. but i was looking at options activity today and it was interesting that throughout the entirety of today, we saw 408,000 call options trades, more than double the bridge -- more than double the average of the past 20 days, which was already elevated. if you look at the most active gamestop traded today, it was a call that expired friday. people are still very bullish on the stock when they are trading $800 options.

caroline: getting with the lingo, i know we have amc numbers today, but there are all these names getting wrapped up, whether it is the likes of express, are they always going through certain single names and it is the shortened is this is out there? sarah: what is interesting is that today, we saw an unbelievable move higher in gamestop, as we have over the past couple days. but short interest is not nearly as elevated as what it was in january. back in january, we were talking 140% of shares short. that has fallen dramatically, now flipped to 20% or so. it is unbelievable you see these very, very dramatic moves even though short interest has come in a very, very large way.

but every single day, we see gamestop take off. you look at your other meme stocks, i will point out express, riley exploration permian -- romaine: build a bear, bb wf 23% today. if you have been in one of these places, you basically pick up a teddy bear. sarah: build a bear was interesting. build a bear was originally grouped into this in january, when we saw bed bath & beyond taking off, blackberry taking off, build a bear taking off. classic ticker makes up. joe: if you think someone else is going to get fooled by the ticker, is that the idea? sarah: we have seen it a couple of times the pastor, not with zoom but a company that sounded like zoom, you sought with -- you saw it with a company that

was similar to adr. romaine: are people still buying clubhouse? sarah: according to caroline. i haven't checked into it. but i will take her word for it. [laughter] joe: down 7% today. romaine: thank you, joe. value added. caroline: and it was nine point 9% yesterday, so not looking too bad. but the highs and lows of clubhouse. what are people thinking about tomorrow's trades, sarah? dare i say, because i hate to make this easy assertion, but the stimulus checks, does anybody think that is relevant to what happens next? sarah: they certainly do. a deutsche bank survey showed that half the respondents that they questioned between ages 25 and 34 said they were expecting to invest half of the stimulus checks into the stock market.

this will filter in. caroline: a fun fact, we love it. thank you so much on all things clubhouse. that is it for "what'd you miss?" joe: bloomberg technology is up next. romaine: have a great evening. this is bloomberg. ♪

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