acnes, no expensive memberships. get off the floor with aerotrainer. go to aerotrainer.com to get yours now. ♪ >> the focus right now is this unfolding growth surprise, which i don't think we have fully the numbers. >> we will transition from fiscal support to fiscal drag quickly. >> the whole point is to get the economy growing faster. >> it will keep the fed on the sidelines. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

it is a simulcast of economic boom. we have green on the screen. i have all of the research we have seen this morning, fabulous research morning. 7, 8, 9% economic growth. jonathan: the outlook gets brighter. pick a forecast, any forecast right now. i would say look out, morgan stanley. talking about selling small caps, paring back amidst this rally. at what point do you start to pivot the other way as we sense more and more capitulation morning after morning on the show? tom: the capitulation will follow the data slowly. what i would notice more than anything is the stock market,

the bid comes in, comes in, comes in. jonathan: a bit of participation. the next stop is 29 minutes. we get retail sales. tom: i thought it was a global observation on astrazeneca, she was heated. get over the gloom on astrazeneca. these vaccines are working. lisa: germany and sweden, they are not listening. everyone is talking about this globalization story. it is not are a matter of if, but when. the degree of policy uncertainty , as we head into a fed meeting, how much does that change the backdrop? tom: i want to go to both of you. this is so, so important. retail sales, what will you look

for? jonathan: how the market response to them, tom. will we get a blowout report again? i think it is not just the data, but it is how this market response to the data that will be important for the months to come. tom: my highpoint yesterday was talking to the great restaurant eur about the proper way to cook a cornish and. -- cornish hen. lisa: even though investors seem to think it is over, it is not really over yet. we still do have some restrictions. tom: the vix, 19 point 84, does anything else matter? jonathan: up by about five or six points on the s&p 500. stability at 159.51.

tom: if you are just joining us on radio and tv, this is the research reports. i have to go into one of them, the bank of america survey. it was stunning, their contrary and courage -- contrarian courage. jonathan: small caps over large caps, maybe go the other way. is it too early to do that? let's talk to dan morris. it is in the forecast. is it in the price? dan: we are not there quite yet. a couple of things we are looking at. if we think about the performance value overgrowth, we have seen the relationship with rising rates. if you look at futures for 10 year treasuries, you just mentioned some forecast even more bullish than that. the expectation is that rates

will continue to rise. that correlation has been -- as long as the forecast bears itself out, we think value still has some room to run. jonathan: what is the difference between value and cyclical? dan: it really has been a pure value versus growth story. at least since this started in terms of the selloff last february. there has been no differentiation between the performance versus cyclical. what is going on right now, the chronic underperformance of value that we have had for years and years that is starting to unwind. lisa: how do you gauge when that trade is over? dan: the outlook for interest rates, as long as we continue to

see rising economical yields, value versus growth is the trade to be thinking about as opposed to cyclicals. the other key thing, and moving toward -- what happens with taxation. if you look at relative valuations of growth versus value, the premium that growth had to value went from 20% to 60% just before the pandemic. a lot of that was driven by the taxes. to the degree that that is reversed, that premium could go back to where it had been for a decade before. that will be one of the key things. how is the next stimulus going to be paid for? lisa: the tax breaks gave a boost to the growth stocks disproportionately. the big tech stocks. if that gets reversed, what does

that mean in terms of how to position your portfolio? dan: it went for my 20% premium to a 60% premium. during the pandemic, that premium went to 80%. it is in unwinding of the pandemic premium. we are still there with the tax cut premium and it will come down to how much do taxes go up and where do they go up, how much does it affect growth? the answer to those questions will determine where the premium normalizes. i am skeptical that it will stay at 60%. tom: are you skeptical about the linkage between nominal gdp and revenue growth across the developed world? is it the 4% or 6% revenue growth is the new model of the 8% or 10% revenue growth? dan: what we need to be thinking about, and this comes back to what is going on with inflation, what do we mean when we talk about inflation?

which prices are going up? if a company is seeing increasing input cost and is not able to pass those onto its own customers, we will squeeze margins and the revenue growth will not keep up with the inflation. what we are hoping is that going into this period, we will have a big surge in demand with constraint supply that companies will be able to pass along some of those costs increases. that should translate into the revenue growth we will need to see for the market to continue to rise. tom: what is your call on the markets? dan: we do not have a target price. we are overweight risk, overweight equities, overweight the u.s. until it is going in the right direction on the right train. jonathan: are you noticing any reluctance?

or is everyone pretty on board with the message? dan: not so much reluctance. his when you have that much -- when you have that much consensus, it is the time when you do need to be questioning those assumptions and looking for those signposts that are telling you things will change. at this point, it does seem to be -- you do not fight $1.9 trillion. jonathan: that is true. they say it is the best way to play the airline recovery because of this exposure to domestic. the price target is 90, trading at 72 right now. tom: it is all the tea leaves as well. the team at citigroup just we

tolerate -- recalibrate. they have a neutral rating. the bottom line is that it is truly double-digit consumption across all regions. i thought i would bring that to you as a micra note of importance. jonathan: we are seeing the story again and again and again. lisa: i keep thinking about this midcycle move. this idea that if we are moving away from the recovery, what happens of treasury yields go to 2%? are we going to get a new cycle of inflation and growth, the likes we have not seen in 20 or 30 years? i do not see it with an aging population. all of a sudden, people start going back into treasuries. emerging markets, riskier debt. i am trying to gauge this out. jonathan: hpc talks about the cyclical openings. tom: i love how she does that.

jonathan: a tug-of-war between the two. lisa: you are not just hearing it from him. the bond pros are talking about how we are not going to enter the new regime and the implications are significant for investment. it could be debbie downer -- tom: debbie downer? lisa: the idea of -- tom: i am not making fun of it. lisa: we are not going to enter a new phase without immaterial policy change -- without a material policy change. tom: i am sorry, she is looking at the pendulum of the abramowitz. jonathan: the goldman forecast, a percent growth, quarter over quarter -- 8% growth, quarter over quarter.

2023, inflation just north of 2%. the inflation dynamic story does not change even though you get this massive room upfront. tom: very transitory. jonathan: i cannot wait for the fed special tomorrow. a important -- a really important conversation with a friend of this program. from new york, this is bloomberg. ♪ >> president biden pushing his coronavirus release bill through congress without a single republican vote. he is hoping to get republicans on board for a huge infrastructure spending bill. supporters say earmarks could be the key to dealmaking in congress. china -- president xi jinping

warrant beijing will go after companies that have amassed data in rocket power. regulators have set their sights on tencent holdings after ordering an overhaul. sweden has joined the growing list of european countries that have stopped using astrazeneca's coronavirus vaccine. authorities are waiting for the outcome of reviews being conducted on possible side effects. t-mobile is kicking off a bond sale to help by new high-speed spectrum licenses. the mobile carrier is setting up $3 billion of bonds. last week, verizon sold 25 billion in bonds to finance ip airway purchases. u.s. job listings using working from home as a selling point. it is assigned that top companies will keep using the benefits to woo employees even

as the pandemic wind down. 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. this is bloomberg. ♪

♪ >> nearly everybody i know thinks this is good news.

the whole point is to get the economy growing faster, inflection -- inflation expectations up. jonathan: that is exactly what has happened the last month. from new york city this morning, good morning. we are counting you down to retail sales in america. we will get that in 12 minutes. on the s&p 500, we had a little bit of weight to it. nasdaq up by 70. nasdaq 100, up by half of 1%. tom: one of the great resets, huge research morning, let's revisit standard chartered. the dots are going to move in the fed will have to jawbone that move.

jonathan: that news conference is going to be fascinating. we get the summary of economic projections. the delicate dance comes from the chairman himself. lisa, who was it that said this is the news conference chairman powell would rather not have? lisa: i thought -- i forgot which income manager this is. how do you measure faster growth? jonathan: ethan harris. tom: you guys are on top of your game. let us save the show. this is a high point always for john and myself. there was no davos this year. her acute knowledge of the hydrocarbon. what i see in the region -- the research is a split between a western developed world in

recovery and everybody else not. synthesize that. are we really detached, developed world, and everybody else, or we -- are we in this economic growth together? >> great to be with you this morning. i think this time around, it depends entirely on whether we move out of this inequality you were just talking about in which jerome powell and the rest of the fed, for the first time in a long time, facing down. the fed's job has always been to deal with monetary policy. we are hearing them deal more with income inequality. u.s., europe versus american markets? the tale of two cities has become more complicated. in emerging markets, you cannot

bunch american markets together anymore. china has its own dynamic. the rest of emerging markets, depending on what kind of sectors, whether they have vibrant technology sector, whether they are dealing with semi conductors, like taiwan and korea, versus making leapfrog's in terms of getting there health sector i had will be different -- i had will be different situations. obviously, the big question that affects both developed and american markets is how covid vaccines are getting distributed. in the u.s., of course, we are moving very fast from thinking we are all working from home to maybe as soon as june or july having the option to go back to offices. schools reopening, colleges letting everybody come in at the same time. that is a very big deviation from europe, which has been

behind on its purchase of vaccine. emerging markets either cannot afford to or cannot get a supply of vaccines. lisa: there is also this -- as treasury yields rise, as the u.s. provides higher rates to investors that will suck money away from the developing world. at the same time, they struggled to catch up with the rest of the acceleration due to a slower implementation of vaccines. how do you invest around this? how much do you factor this into your allocation? >> you have to look at it much more actively. you cannot just do the index think that has been going on for the last 10 years. you cannot bundle sectors together and you cannot bundle countries together. it becomes much more interesting in terms of our day-to-day jobs. the big trend across emerging

and u.s. and europe will be the impact of the innovation and the very rapidly changing lifestyles across all income segments and all countries. the way technology has entered our lives and is entering the lives in emerging markets the same way in health and education. and with renewable energy, of course, which we have talked about before. the current oil prices encouraging more investment in renewable energy. i think all of that will be really good, not just in terms of climate change, but in terms of bringing growth levels much higher across the globe, emerging and developed countries. lisa: how active are you right now deploying cash? are you taking a step back and waiting to see how things

establish themselves when it comes to fiscal stimulus? >> you want to not have too much cash and you want to be well diversified. we probably come at the cash level, we keep two or 3% cash. really not much more than that. we are excited about equities in the u.s. and in europe, you have seen the run-up in equities. we have had a lot of interesting opportunities across emerging markets, both asia and not asia. taiwan i just mentioned, continues to be an exciting place. in terms of bonds, we are at the lowest and of allocations to bonds.

staying at the shorter end. the big question for a lot of investors is how much you continue to invest in private versus liquid assets. if one of the innovations we are looking at need to lock up investing in early-stage or growth stage companies for longer-term, and that is an area where we have been doing more and more. jonathan: always love listening to you, great to catch up. retail sales coming up in five minutes. we are looking forward to that. four minutes and 30 seconds. tom: four minutes and 30 seconds. i do not know what we are going to see. mike mckee will give us all of the visibility. it will be less exciting this time around. jonathan: then it is onto the fed decision tomorrow. tom: the vix is under 20.

jonathan: equity markets all-time highs. alongside tom keene, lisa abramowicz, i am jonathan ferro. this is bloomberg. ♪

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jonathan: this is bloomberg. we are waiting for retail sales. michael: we are just getting the numbers for the export and import prices. giving those while we are waiting for the retail sales to drop. a bit of improvement. no inflation at this point coming in from overseas. overseas we are looking at additionally expensive gasoline, that other than that it is not a major issue. they are down 3%. .

a lot worse than expected. the forecast was negative .5%. waiting for revisions to pop up. the way they do this down in washington makes it difficult for everybody. take out auto and gas and we were down 3.3%. the control group down 3.5%. this translates mostly into what goes into gdp. it was expected down .6. it was down 3.5% on the month. the retail sales overall number ex autos down 2.7%. if i move down to table two, let's see, this is the one, individual groups, it looks like we are down across the board. department stores up 23% last month. that has been revised down. it is now down 8.4% for this month.

retail sales, we have the revisions. retail sales for january were up 7.6%. the original was 5.3%. we gain about 2.3%. if you want to look at it as a two month average, you're looking at retail sales down only about what was forecast on the month, .7%. tom: john, give us a market move. jonathan: i think it will help know what to do with this. 1.56 on the 10 year yield. on the nasdaq, little bit more so. up .4%. first of all, before we have the discussion, huge shout out to jim o'sullivan at td who is looking -- a nod to michelle meyer of bank of america who is looking for -3%. the market does not know what to do with this. this is february, show me april,

show me may. tom: exactly. i will go to michael mckee. on february 16, tulsa, oklahoma, 13 degrees below zero. did that weather fold into this? can guys like you put together a three month moving average based off what was clearly a disturbing cold? michael: two factors went into these numbers. one is the cold and the snow. the fact that much of the country shut down for several days if not a week. one of the best performances in the numbers is food and beverage stores were flat on the month. grocery stores up .1%. everything else is down. the other factor that comes into this is everyone got their stimulus checks in january, the $600 come and they spent. we got the huge retail sales numbers for january, 7.6% on the

revised basis. we did not get anything in february. jonathan is right. the checks went out. the direct deposits went out this last weekend on the $1400. let's see what happens in march. tom: we have a fed meeting coming up. michael mckee in the press conference. michael mckee with all of our economic coverage. an hour ago we spoke to ian lincoln -- ian lyngen, head of u.s. rates. he joins us this morning. i make jokes but it is not funny. it is a record issuance of debt. what is the distinction of this record issuance of debt? ian: the defining characteristic of what we are seeing at this moment in terms of new treasury issuance is it is not going to all be in the front end of the curve. the treasury secretary wants to

term it out so we are seeing more 30's, more 20's, more tens. it is coming at a moment where the fed is content to characterize the backup in yields as a positive sign because it reflects in improving economic outlook in inflation expectations. there will be a point at which we look back at the higher rates we are seeing and say that was a great buying opportunity. the question in my mind is that 1.60 10-year gilts or 1.75. -- 10 year yields or 1.75? lisa: how much is the fed buying? they have sucked up a substantial portion of this. will they continue to absorb the u.s.'s ample and record sales? ian: they will not be buying the entirety of debt issuance. we are projecting somewhere around $1.8 trillion in debt issuance.

we will need underwriters from different parts of the economy in different parts of the market and different parts of the world to get the u.s. debt. lisa: what you think treasury yields are capped at 1.75? why not 2%, 2.25%? ian: i think at 1.75% we start to look at what is going on in the u.s. in terms of the treasury market versus what is going on in europe or japan, and date comparative -- and on a comparative basis we are already starting to look attractive. another 15 to 20 basis points is the point where we start to see wobbles in risk assets and bring in sidelined buyers. i could certainly envision a situation where the fit if the green light to the reese deepening tomorrow and we take a shot at it two handle.

that would be a shock to the equity market. jonathan: can you gives a game plan for the 20 year issue. how much of a read across can you take from the 20 year issue in the broader treasury market? ian: the 20 year issue is a recent reintroduction. it has a set of natural buyers because it is the ctd for the classic bond contract. there has been a solid did. -- a solid bid. options tend to tale slightly but it is not a big foreign issue unlike 10's. it does have structural buyers, but as a read of what it means for the rest of the market, the only way the 20 year auction matters this afternoon is if we get a repeat of what we saw for very seven which is a significant tale. jonathan: you think that should

be ignored? ian: at this stage i think there is plenty of underwriting demand. at some stage if we see supply indigestion comparable to the sevens, consistent tale versus the issue rate, that will merit a more significant repricing. that would be one of my biggest concerns in terms of how supply reshapes the curve. jonathan: i know when this pandemic is over they will drag you up to montreal. you will see the canadians being released and someone will turn due in the second and third period and say my biggest fear is the foreigners do not show up. how do you answer the age-old question that the foreigners will not show up to by the united states full faith and credit paper? ian: the classic bond market adage there is no such thing as a bad bond, just a bad price

come is particularly apt. people will show up to buy u.s. treasuries. the question is at what yield will need to be enticed in from the sidelines. that is what we are seeing to find -- seeing defined as the 2021 outlook continues to brighten. tom: does lisa go twice? -- jonathan: does lisa go twice. is that what you're implying. lisa: i've been to a hockey game. it depends where you are. if you're in north dakota, pretty exciting. rangers game pretty exciting. you really want to have this conversation now? jonathan: i do. ian, thank you. tom: she holds court in the boxes at madison square garden right you can hear a pin drop when she walks in. jonathan: my fault, i will reset. we started this program around two hours and 40 minutes ago with the theme of capitulation,

capitulating on this view that things could get better. that is the view of everyone right now. i think you have to take that view, the better forecast, the high-yield forecast we've seen across the board, and ask ourselves what it means for this market. a massive rotation. the movement small caps has been enormous. the move in financials and banks has been gigantic. to lisa's point she has asked repeatedly, we have seen the early cycle move. have we seen all of it? to borrow that line from bank of america, they say it is over. what is over? the pandemic? tom: i am in the camp, we do not have a clue. we have never lived this before. we have in america with chinese gdp growth. the mystery falls to equities, bonds, currencies, commodities, and in the equity space we do not have a clue what the

denominators will look like. lisa: the real variable is inflation. we are conditioned by getting it wrong year after year. economists saying in 2009 and 2010 we will spur inflation, we did not. i have to go back to what pgim and hsbc set on your program, why is that going to change. tom: you watch the open? jonathan: when you are on radio, lisa and i coanchor the open together. we do not tell you. we do a fourth hour. coming up on the open, mike wilson of morgan stanley will be joining us. an interesting call on going long small caps. it was april of 2020. tom: that was lonely. jonathan: everyone laughed. now they ship the other way. tom: this is great. i am set up for tomorrow, the next day into the weekend, this

is fascinating. jonathan: you will join us? lisa: he might saunter off to the radio instead. jonathan: alongside tom keene and lisa abramowicz, i am jonathan ferro. downside surprise from retail sales. the price outlook dominates the market worldwide. this is bloomberg. ritika: with the first word news, i am ritika gupta. a bipartisan group of senators wants to revamp the law covering tariff used on national security grounds. section 232 of the trade expansion act imposed to duties without a vote by congress. those tariffs have been challenged in the u.s. and by the wto. the proposal would give congress more of a role. top u.s. officials are trying to rally asian allies around a common approach toward china. secretary of state antony blinken and defense secretary

lloyd austin went to tokyo. blinken accused beijing of using coercion and aggression in places including hong kong and taiwan. more potential problems for the boeing 787 dreamliner. bloomberg has learned the company is looking at the flight deck windows of some of its 787 after it found out a supplier modify the production process. manufacturing has delayed the delivery of the marquis jetline. visa is delaying plans to increase the speed merchants pay when consumers use credit cards online. it will purse -- it will push back the charges until next april because of the pandemic. retailers have been asking for the delay at a time when consumers are especially reliant on online shopping. 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: bloomberg surveillance.

lisa abramowicz and tom keene. we digress and do so with a book that has perfect timing. we are picking up the pieces after the pandemic. it is a miracle of these vaccinations, pfizer, moderna. we were told today we should not fear the astrazeneca vaccine. that was world making headlines. dr. fauci on msnbc with the same tone. walter isaacson shows up to rescue us. you know him from the accessible steve jobs, you know him from da vinci, and now the code breaker, perfectly timed around the end of this pandemic. walter isaacson, thank you for writing this book. it is about the path of our genome from watson and crick forward. what was the biggest surprise in writing the code breaker? walter: how important rna turns out to be. a microbiologist from way back -- everyone was looking at dna.

the main character in my book jennifer and her partners realize that rna does the real work. rna takes the information it builds protein in ourselves. that is how the pfizer moderna vaccine worked and the important thing is you can recoat it. every time there is a variation, you can say i will tweak the coding, just as if you are coding a microchip. tom: what is important from the headlines and what david baltimore and others did in the revolution of rna, what is so important is the fear of science, of getting people who are afraid to be vaccinated, not because their anti-vaccine, but because they just afraid of what is in the code breaker. how do we get them to have the confidence to be vaccinated? walter: one of the things is

your show and you. in a small way that is why everett in the book. i take you hand with jennifer, this wonderful character. when she is in sixth grade and she reads the double helix and she notices rosalyn franklin and notices women can be scientists. i explain how simple these processes are and how natural they are. this is something bacteria have been doing for one billion years, which is using rna as a messenger to get things done in cells. if we understood science, if we demystified science, if we made it seem like a journey of discovery, which is what i try to do in the book, then we feel more comfortable with it your -- with it. lisa: this raises a lot of implications. the ethics of the past 20 years has been how we digest information, how we form communities in the era of facebook and different platforms

people are joining. the ethics of the next 20 years may be more fundamental in terms of what is a human in terms of gene editing causing changes to the way people exist. can you talk about some of the advancements in some of the ethical questions you expect to arise from this? lisa: absolutely. -- walter: absolutely. the book does take on these ethical questions. religious leaders and ethicists. we are now able to use these genetic editing tools to cure diseases. most people are totally there. we cured a woman of sickle cell anemia for the first time by editing her blood cells. you can do it to fight cancer. you can do it to fight muscular dystrophy or single gene mutations or blindness. the real question comes, their

two lines we have to be careful about crossing. one is when we are no longer curing pure diseases. when we are saying i want to be taller, have more muscles, or have a different eye color. the other is will we do it in a way that is inheritable? will we do in reproductive cells when we are having kids so it will be inherited by the human species? in the book i go step-by-step and say let's pause for the time being. you are right. over the next decade we will have to figure out, we want to deal with -- do we want to do what the chinese did and edit the human species so it is less susceptible to virus? that caused a huge outcry, but after this pandemic we might say that is not a bad way to fight the virus. bacteria have been doing it that way for a billion years. lisa: there are so many issues and i could spend all day talking about them. there is a business case to be made. we have seen big tech emerge as

behemoths of the market and the global economy. who will be the behemoth of the next 20 years in the area of the rna revolution? walter: i think it will not consolidate the way the tech industry has. i think there is so much innovation. clearly this year you saw moderna and biontech, the company that created the vaccine pfizer is distributing. more importantly, what jennifer knew, she has a group of companies, and her arrival at m.i.t. -- they will be very important because they can detect anything genetic in our body cancer cells, coronavirus is, strep throat. you look at sherlock technologies. you look at mammoth biosciences. these will bring devices into our home, if you look behind my

shoulder you'll probably see an amazon echo or something. i have those digital devices. soon i will have devices in my kitchen or bathroom to say put saliva in and tell me all that is going on. tom: screamed last night, tell drew breeze not to retire. walter: it did not work. what a man he was. tom: if you go to to lane, and many of the schools around this nation, it is about getting kids into stem programs. you know tulane's science scholars program is widely acclaimed internationally. how do we get big money to fund things like the tulane science scholars program? walter: what are wonderful question. i think not only is it science,

but the lifesciences will be important. a great university like tulane, a medical school, biological research, we have to create innovation. it is not simply about doing the basic research. it is about translating it into something that can help patien ts. we are creating a center at tulane, not based on digital coding, but based on the coding of life. that will be something that the u.s. government under joe biden, the cancer moonshot, a lot of donors, a lot of foundations, a lot of great universities will do. tom: have to leave it there. walter isaacson, doris kearns goodwin says it is important, "the code breakers." i want to draw your attention to

poul roemer, on balance of power. red and green on the screen. the vix, 19.97. stay with us through the day. this is bloomberg. ♪

♪ jonathan: where did all of the

bears go? good morning, good morning. the countdown to the opening bell starts right now. let's get straight to it. we begin with the big issue. signs of capitulation. >> the yield curve has not begun the process of reopening. >> the consensus forecast is getting jacked up. >> we are going to see better data in terms of gdp growth. >> 4% contest is just 4% consensus estimate -- >> i think the recovery is coming a lot faster. >> you might get another period of u.s. exceptionalism. >> this unfolding growth surprise. >> these positive surprises will start to run out of steam. jonathan: economic optimism still building on the street. bank of