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stop -- that novavax efficacy data coming out, helping drive the rally today. you see the nasdaq surgeon, chipmakers helping to lead that charge. the chinese semiconductor industry actually saying it will work with u.s. counterparts on chip relation issues. in the bond market, you had investors diving in. we saw stocks are doing well, and you had the announcement that there's no more quarantine needed when traveling to new york from out of state. business a sign of reopening to come in 21? -- is this a sign of more reopening succumb in 2021? ritika: -- romaine: we are getting news of new

restrictions. the biden administration telling suppliers they are not allowed to expand any exports to huawei, basically tighter restrictions on those exports. a lot of this had to do with rules already in place under the trump administration, but a lot of people felt those rules were kind of confusing. the biden administration is basically making that prohibition more explicit. joe: let's talk rates for a second. we had that big tantrum over the last couple of weeks -- no, i don't know what you call it. you had certainly a big move. i'm not going to get in your way, but we did have that sort of upward move across the curve, long and, shortened, a lot of move in supply. implied volatility, the long and jumping, but already we are seeing things calm down a little bit. the question is -- is that a blip or a sign of bigger things

to come? for more on this, i'm going to bring in our bloomberg opinion columnist, covering the debt market for us. is that over, whatever that was, whatever you want to call it? is that over for now? >> i think we still have to see some of the positioning data, but i think by a large, there's a general expectation that we have repriced very quickly, and there does seem to be some indication that rates are settling down a little bit. any time the 30-euro goes above 2.3% or the 10-year goes above 1.6%, it seems like buyers emerge from that, so it does seem like people are willing to step in and catch the falling knife or rising knife in case of yields, but i think we are starting to settle in and the volatility proves that. romaine: you call it a falling knife, i mean, it could be just a spoon. joe: challenging everyone today.

romaine: let's talk about another topic you wrote about. give us a little bit of insight into, i guess, the potential for an exception? >> joe's podcast was really good on this. what are basically found out was there's really no easy answer to the fed here. they are kind of stuck because it might be seen as just catering to the banks by extending the slr as it stands, exempting reserves and exempt in treasuries from the slr ratio, but they may not have a choice because there's so much money coming into the system, so many reserves coming in from the fed's qe purchases that it's going to put a lot of strain on the banking sector. if they don't extend it, that raises a whole other set of questions, like why allow the banks to do dividends and stock buybacks? it's a pretty messy situation

for the fed, which likes to control everything. it's kind of a losing situation if they cannot control it. caroline: a losing situation, as well as you get a lot of packet coming from the likes of elizabeth warren. you say it would put stress on the banks. can you dive into what sort of strain it puts on them? >> the fed is obviously still doing a lot of qe, a lot of bond purchases, and there's no sign that is going to stop soon. the paperless scantron people call it because there's no sign it will slow any time soon. when they do that, they have to effectively buy treasuries and add think reserves to the system, and if banks have to count those reserves as assets, all this could be the denominator of that ratio, the slr ratio increases substantially, so they need to raise more capital or hold more capital in order to basically

incentivize the slr requirements, so it's going to be a real strain on them. that may cap lending, or they may even turn away deposits, worst-case scenario. jamie dimon is exploring the possibility, although obviously, he gets the benefit if the slr is extended. romaine: you can check out his columns every day, always smart based on what's going on out there. coming up we talk about the global chip shortage. we are going to talk about what it could mean that countries are pledging to work together to ease those shortages. this is bloomberg. ♪

romaine: a lot of talk lately about the relationship between the u.s. and china, the chip sector and everything in between. we have just learned the biden administration has advised some suppliers of walworth -- of huawei tightened restrictions. tensions still under way. joe: absolutely. it reminds us that the u.s. has a lot of dependence on taiwan, china, the center for technology, and it is becoming both an economic story and increasingly, the recognition that it is a national security story. caroline: it is sort of enter

that u.s.-china trade tension is what we have to keep an eye on. joe: joining us, a bloomberg opinion columnist who has been writing a lot about semiconductors. thank you so much for joining us. we just got this news about huawei and the biden administration continuing to tighten the screws. in your view, how much is this elevating the urgency and speed with which china is developing its own high class, world-class chip industry? >> china has always had a sense of urgency to get ahead in semiconductors. they have not quite gotten there. if you look at basic trade data, you can see china still imports a fair amount of goods. the latest export license is something that has been in play the last couple of years. because china is a step behind,

this probably just makes that worse, that initial expectation that we kind of got that boost yesterday after the news about the working group to get between the semiconductor associations. this just kind of continues to prolong the tension between the u.s. and china around the u.s. will hold its technology closer. it's not necessarily open to sharing, but it does want to be in conversation around protection and intellectual property and so on. i think this kind of leaves us more or less in the same place. i don't think companies have to be adjusting where they were. there was some stockpiling. they were looking for local suppliers. it kind of brings us back to where we are.

we don't know the exact details of the license requirements, but i think we are still in the same place. caroline: this is an obviously of the moment bottleneck. we see the market take off and suddenly everyone is wanting more chip-related things. i'm interested what we see in the long term. china seems to be once again honing in on the technology or focused on it. do you think china in the longer term will be able to make up for it -- make up for what it lacks so far? >> i think it is difficult. for the last couple years, their whole game has been talking about more technology, more technology. when we look at 5g and what is happening with that, it's probably the highest, but when it comes to things like semiconductor chips, they have

not been able to make it there, and part of the problem is they import most of it from japan. the latest, the machine the kind of shows all of this, is the most advanced chipmaking machine . there was restrictions on trade for that last year, and china will never quite be able to get to that top end unless it is coming up with its own technology to match that, or -- it is always going to be two steps behind. romaine: what do you make of this partnership -- i don't know if it is a partnership or whatever you want to call it between u.s. chipmakers and chinese chipmakers, and the idea that it all seems to be at the corporate level. there does not seem to be any government involved in anything.

>> there's a lot of a simile happening in china. you want to kind of know exactly what your competitors are doing. having a working group with make sense. to that extent, it's great because there's actually an ongoing conversation around this competition, so for both sides, i would imagine that is generally a good thing. however, what we actually get out of that, i'm not sure we will be seeing massive commercial results on the partnership. joe: in order for china to get ahead and be less dependent on certain key pieces of technology that it imports, what does it

need beyond just money? it does not seem like money is the issue. they have plenty to spend. is it going to take changes in market structure, different changes in the research institute? what is it going to take to get them to that next level? >> you are absolutely right. there has not been a shortage of capital when it comes to investing in semiconductors. a big part of that is basically, they need the know-how, the technical expertise on the ground. they need the ability to basically design chips and these machines. this is an extremely, get it processed.

it does not just happen overnight. i think that is what it means. it means the technical know-how. it means the ability to design. it means the more intangibles, if you well, not just the hard capital, and, you know, making better machines. a lot of analysts and companies struggle. some of their machines are not good enough. they are substandard. no one is going to be buying those machines. caroline: we want to thank you so much for getting up so early. coming, we continue our conversation about the reopening's happening in the u.s. and the rest of the world and what it means. we examine a company's strategy to return to work. this is bloomberg. ♪

caroline: president biden is set tonight to mark the one-year anniversary of the pandemic in the united states or the world health organization naming it a pandemic. companies are preparing to return to work. one particular company getting ready for the reopen is servicenow. joe: one of these companies at least from the market perspective has been this huge winner. look at the one-year chart. a lot of cloud names have surged like this over the last year. pretty extraordinary to see. romaine: they made a lot of big moves, particularly since they got a new ceo. joe: exactly. i want to bring in that ceo now, bill mcdermott. thank you so much for joining us. let's talk about reopening in the office and the sort of

future of that. from your perspective, it's coming down, coming interview, a lot of laces are going to be reopening soon. what are you thinking about from a corporate perspective in terms of the physical future of your footprint. >> we envision a hybrid world where people will work from everywhere. obviously, they will get back on the road again once the economy opens up, and it's good to see the progress that has been made with vaccinations across the world, which is something we have been really pushing hard, as you know. countries like germany, scotland, 100 other locations and the united states using servicenow for vaccine management, so it is a hybrid world. today, we made a huge product introduction into the market, as you know. there's two things that might be noteworthy of mention.

one is that gardner predict that all enterprise software will be low code in the future. 50 5% of it by 2022 -- 55% of it by 2022, so you are seeing the end of an era, the idea of repackaged software of the 20th century coming to a close. that's why we delivered a huge low code announcement today. the other thing, ai is really going to revolutionize the employee and customer experience, and we also made a massive announcement on the platform today with artificial intelligence and how it's going to revolutionize the enterprise. caroline: you are helping businesses support a distributive platform. you are talking about the tiebreak future we now see. how much do you worry that the companies that have been coming

to you for help, for projects, for business, for service have already frontloaded that, already understood that that will be their future? do you anticipate the level of demand will plateau? >> it's going to continue rolling. there's been about 3 trillion poured into the digital transformation over the last few years and we have information there will be another $7.8 trillion poured into digital transformation by 2020 or. the point is this -- it's the only way forward. this idea of digital transformation is not only a matter of survival, it's the only way to run a company because you cannot provide a customer a michelin three-star experience a less you have digitized your own operations and enable your own employees. everything is going to the cloud. finally, about 1/3 of the new

revenues that companies need to acquire over the next three years are going to come from businesses they are not in today, so you are seeing this whole frictionless economy, this idea of digitizing your business model on the internet, and you have to make the enterprise as easy to work with as ordering doordash so food gets delivered to your house. things are changing fast. one interesting thing for you -- we have learned that only about numeral one/4 of the digital transformation projects actually deliver a positive roi, and the reason is integration. you have separate systems, separate silos, managers doing their own thing for their own department. what we have tried to do is build a platform that unifies

the enterprise from i.t. to the employee to the customer and now the creator of new workflows and new innovations which could be analysts with no tech skills whatsoever. this is the future, and all of it has to be powered by ai. romaine: this is the future and we have seen the pandemic sort of accelerate the urgency for a lot of companies out there. what type of companies are approaching servicenow, particularly companies that would not have been interested in this -- i don't know -- two years ago? >> first, you are seeing a major

transformation in the public sector. today, as you know, the relief package and the stimulus was signed off on, and you will see $350 billion poured into state and local government. these state and local governments are going to allocate about $20 billion of that funding to distributing the vaccine, which is one of the reasons why we were the first mover on the emergency response, return to work safely, and now vaccine management to distribute and monitor these vaccinations, so that new area probably would not have existed, but in every industry from banking to retail to manufacturing -- telco -- everybody is rethinking the business model. one of my favorite examples is disney. if you take disney, the theme parks are closed. nobody is going to cinema, yet their stock is at an all-time high because they built a digital bridge with disney+, and how they have 100 million-plus subscribers. we are very proud to have played a role in that, in helping disney get those customers and keep them very happy. the thing is, as you order a service or do it online, you normally were doing it with unions. now virtual agents can take care of 90% of the process. that's a new business model. that scales. digital scales.

caroline: bill mcdermott, ceo of servicenow. we look at digital scaling. technology was scaling today. is that going to be sustained and tomorrow we worry a little bit more about bond yields again? joe: you know what? i'm going to sleep in tomorrow. all the bond market -- all the problems are gone. the bond market has calmed down. what is even worth looking at? romaine: i like your enthusiasm there. joe: i'm sure we will have something riveting to talk about on this show. caroline: gamestop will talk. everyone can travel to new york. romaine: i forgot. joe: i'm going to leave new york just so i can come back and celebrate the lack of quarantine. caroline: stay safe. wear that mask. joe: "bloomberg technology" up

next in the u.s. romaine: and bloomberg daybreak: asia next internationally. have a great day. this is bloomberg. ♪

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