so join the carrier rated #1 in customer satisfaction... ...and learn how much you can save at xfinitymobile.com/mysavings. ♪♪ ♪♪ caroline: from bloomberg world headquarters in new york, i'm caroline hyde. joe: i'm joe weisenhall. i'm romaine: i'm romaine bostick. the nasdaq 100 down 3%. joe: the question is "what'd you miss." caroline: losses, oil takes a tumble.

yields strike, too. worried about jay powell, the economy, the inflation run too hot, traders ramping up the bets, the rate near zero until 2023. amid all of these concerns, the fed must balance equality in the recovery, why they're so focused on the labor market, joe, before we go into that, today's selloff, what do you make of it? joe: pretty dramatic, yesterday after the fed rates muted, victory for chairman powell, i woke up, rates spiking and that gave way to a pretty pronounced selloff, everything down, but even with that down issue, you see the fingerprints of this rotation. tech really took it on the children, q.q.q.'s, nascar back 100 down 3%. within the s&p actually like industrials and financials were up, so even in a down day overall, the trade seems to be off.

romaine: j.p. morgan, bank of america, a lot of those health care stocks as well. joe: for more, let's welcome katie, what is it about yesterday, we had this little pause and we have gone right back to old ways with the selling and the tech? katie: it was pretty dramatic, as someone said on twitter, it's think again thursday. romaine: are we quoting people on twitter? katie: i'm always quoting people on twitter. joe: i'm going to tweet something right now. katie: it's pretty fun. it feels like the mood music changed overnight. some news from the bank of japan and they're 10-year trading ban. this boils down to people rethinking what we actually got from the fed yesterday. i'm going to venture there were two wild cards, we had the dot plot and two more officials versus december roll forward the rate hike expectations to 2023. there is a concern that that view could catch on and we'll see more start to move, but

there was also this idea of prints versus forecast, the fed is going, the way to actually see the data get to their certain targets to move versus their own expectations of where things are going to go. there is that worry out there that could leave the fed behind the curve, we have this $13.6 trillion dose of stimulus coming. caroline: katie, we're biased because it's called the market close, but there is a theory that of course in the early start of trading, promotional buying and selling and towards the end, smart money comes in. at 2:00 p.m. on wards, we got this acceleration in the risk aversion? katie: 2:00 p.m. did feel dramatic. i'm still looking for reasons along with you guys. you did get an oil move. you saw oil drop sharply. there is some theory there. that could be the paris lockdowns getting announced, it just speaks to that this recovery on a global scale could be uneven, things look to be

rolling along in the states, but oil is a global market. so if you have big areas such as paris, the broader european area not be able to get out of lockdowns as quickly as the u.s., that's going to impact that global demand for oil, so some of those factors might have played in the sharp move lower in oil. romaine: we saw that in oil and some of the industrial metals that were still trading out there it will be interesting to see what happens when folks come in in the morning in asia. regards to the pop we saw in financials today, even with the selloff late in the day, financials held their own. is that still all about the yield curve right now? katie: i think so, if you look at the yield curve versus bank stocks, for better or worse, they are tied at the hip. banks posting record revenue in terms of trading, it's really been this yield curve that's really been holding bank stocks down. what is interesting, when you think about where this could go, you look at break evens and what

is priced in there, you have higher break even rates two years, five years versus longer term, 10 years, so that tells you that the market is expecting sort of a pop in inflation that then fades. what that means for this rotation trade which has obviously been a big boon to banks, it comes into question how sustainable this is. romaine: katie breaking it all down for us. coming up next, we're going to talk about those jobless claims that did rise unexpectedly last week to the highest level in a month, now a little more than a year out from the start of the pandemic, we discuss the latest market recovery with simona, this is bloomberg.

caroline: all this week while bloomberg has been holding its equality summit and one of the legacies of the covid crisis is the exacerbation of inequality, an economic divide made worse by the pandemic. here is a look at the essential issue of the global recovery from covid. on march 11, 2020, the world health organization declared covid-19 a pandemic. at the start there was hope that the shared fear of the virus would in fact bring people together. it became clear that not all were affected equally. >> the high commissioner says people who are already barely surviving economically may all be easily pushed over the edge by measures being adopted to contain the virus. caroline: covid has amplified inequality by race, income, gender, and nationality. >> it's troubling and i think it's actually getting worse which is a big challenge.

caroline: the pandemic made long present inequalities impossible to ignore from the job lessless to healthcare and education. in february of last year, u.s. unemployment rates were 3% for whites, 6% for blacks, a year later, 5.6%, 8.5% and 9 .9%. the covid death toll in the u.s. is over half a million with the rate 1.9 times higher for black americans than whites. one positive, covid has stimulated fresh thinking about ways to protect the most vulnerable. president biden's unprecedented $1.9 trillion relief program signed into law last week, it expands tax credits for low income americans with children, bolsters unemployment insurance, pace out $1400 checks and expands rental assistance and food stamps. >> everything in this package is designed to relieve the suffering and meet the most urgent needs in the nation and put us in a better position to

prevail. caroline: covid has amplified every structural bias that exists. now as the world recovers, many are hoping to address these serious inequality issues for the long term. romaine: and now to discuss how this inequality will be addressed going forward, i want to bring in simona mocuta, senior economist, thank you so much for joining us. let's take stock of this recovery. one of the bets that the fed is making is that it really do a lot of good by letting things run out, letting the labor market get truly strong in a way we haven't seen in past cyclings. do you feel we are on that trajectory now or is it still too uncertain from your perspective to feel confident in a robust labor market recovery? simona: i think we are going to have a robust labor market recovery. i think a lot of this simply

hassed to with the process of the economic reopening and full economic reopening. i am hopeful that some of these disparities that really are very troubling across income, educational levels, different demographics will narrow as we progress on the road to reopening, but i think the fed and policy makers are looking at the concept of fairness, equality, inclusiveness in a much closer way than before covid because if anything, you know, makes the covid recession different, it really is just the extent of disparities in terms of how different parts of the economies have been affected. and you heard chair powell yesterday talk about we want a strong labor market recovery, not just a strong recovery, but inclusive recovery. when he talks about when are we going to meet the parameters,

it's not just about one number, the unemployment rate, but all the other things that make us understand when are we truly looking at employment. investors are learning to learn at unemployment and the labor market metrics in a different way as well. joe: i'm curious, as they sort of start to move away from the headline numbers, powell was very clear that the headline labor numbers that you would normally look at, that they're not necessarily illustrative of what is really going on in the labor market. how do you sort of quantify some of the more squishy sort of metrics that he is looking at to sort of determine whether or not this is an inclusive recovery? simona: well, i think you want to, first of all, get as much information across as many dimensions as you possibly can, so you are trying to see are historical discrepancies

narrowing, are they exacerbating. i think it's going to be very, very difficult to get to a point in the near future where historical discrepancies altogether disappear, but at least you want to get to a point where you see the narrowing of the gap and true healing and true inclusiveness and equality of performance across the different demographic groups, it's a task for many years ahead of us. caroline: it's got to also be a government-led approach as well as monetary-led approach and we're seeing much more of a safety net being stitched together by the biden administration, not that the u.s. is used to. you talked in particular in your notes about how education levels have been affected, different demographics, but, of course, those that could work from home and those that couldn't. how are you seeing that pay out longer term and as well as the scarring that the long term participation rate, how is that going to feed into things?

simona: so, i'm not the only one, i think this is a well understood fact that education is opportunity. and there is one charge that you want to show a young person, why would you invest in education, it's without fail in good times and bad, people with the higher level of education do better in the labor market. and so i think it has to be an effort to improve those opportunities and especially in early childhood education, the starting point is so important for determining a long life cycle performance. that's where we have to put a lot of effort in the coming years. joe: do you think, when you talk to, say, clients of your bank, do you think they appreciate or have fully internalized the fed's new approach, how committed powell are to keeping

rates low until it has achieved certain goals. yesterday and some of the moves we have seen, people are waking up to the commitment to this new framework. how much do you think people really get it and how far they're willing to go? simona: i think even the fed itself is probably finding out its own level of commitment. there is a lot of uncertainty about what actually would happen not in the next three months, but in the next three years. i think what we are starting to more fully appreciate and investors are starting to really understand it is this idea that under the average targeting, we are no longer talking about preemptive, that is the key point and the data as it comes through will inform how quickly this is feasible. the data will lead the market, investors, and will lead the fed.

i think the fed has taken its hands a little bit off the rein in the sense that they no longer necessarily want to lead the market by projecting lift off-based on forecasts alone. they want to see the data and see for a while to insure that's a new trend, not just transient. caroline: simona mocuta, really great to have you with us, state street advisors chief commitment. and countries spend sums leaving some worried about growing deficit. stephanie is not one of them. she joins us next. this is bloomberg.

caroline: so governments around the world, well, they jumped

into support economies fighting a pandemic. the u.s. passed a historic fiscal measure, the spending causes deficits to spike, do we worry? joe: that's exactly right, the level of fiscal report is what is sort of very new about the response to this crisis. you can look, pretty incredible, the response to just this crisis as a percentage of gdp, more than the last like four downturns combined, which shows just how much, there was the past unwillingness to really open up the fiscal tabs dramatically changing even with the recent stimulus. it feels new. the governments are taking a turn. romaine: it feels new, an experiment that a lot of people want to see it experimented with, see how it shakes out. joe: joining us is stephanie kelton, professor of knicks and the author of the best selling book "the deficit myth." which is out in paper book. professor kelton, thanks for

joining us, the school of thought, the limit to deficit or government spending really is inflation, real resources. and some would argue we're seeing that. we're seeing bottlenecks emerge. oil prices rally up until today. we saw nike coming out and saying they're having issues with their supply chain. why should we not look at this and worry that perhaps this is a sign that fiscal policy makers are pressing too hard? stephanie: the kind of inflation that someone like larry summers have word about openly, he is talking about overheating, he is talking about generalized increases in prices, where you have too much fiscal stimulus, too much money in people's hands, they run out into the economy and they try to spend all of that money and the productive capacity of the economy, the ability to meet all of that demand with higher supply just isn't there. that's very different from these localized instances where we

have issues with supply chains and bottlenecks and so forth. there are different kinds of price pressures, but what we're not seeing and what economists don't expect us to be seeing or confronting anytime is the kind of generalized price increases that somebody like larry summers has been worried about, jerome powell is clearly not worried about that kind of inflation. romaine: yeah, definitely not. part of the pushback that we have seen on m.m.t. or things that maybe try to mimic it is the idea of deficit spending. i'm curious, though, we have gone through what could be considered to be a pretty long deficit cycle now. we haven't had inflation, at least not meaningful inflation above any sort of target rate set by policy makers here, is there any reason at all in your mind that we should worry about the current state of the deficit cycle that we might be on now and how that might actually affect inflation? stephanie: i don't think that the deficit cycle as you're describing it that we're on now

is cause for concern with respect to the kind of inflation that somebody who is worried about getting this stuff entrenched, right, an inflationary cycle where price increases become entrenched and you get year over year increases in prices. i don't see that. what we have is fiscal support that is mostly about supporting incomes, right, helping workers who lost their jobs, continue to spend what they were spending, pay their utilities. pay their rent. buy food, helping small businesses keep workers on payroll. those people were already being paid, helping state and local governments keep essential workers paid. so much of the spending that is being supported through these deficits is just a continuation of the kind of spending people are already doing. now, there is a bit of potential for some stimulus, some of those $1,400 checks will go into the hands of somebody who will turn around and spend money they wouldn't have otherwise spent and to the extent that they buy

goods and services, that gives a little bit of a boost to the economy. but most of these provisions are temporary. the stuff runs out toward the end of the year, so, no, i don't think we're looking at the kind of deficit spending that puts us as risk of a move up in inflation that becomes entrenched. caroline: professor, at what point do you worry about what is being encompassed by inflation as well, because for many, food is getting more expensive, i make an age old argument that education is more expensive. house prices making livings more expensive, does this worry to you in not being encapsulated by the data? professor kelton: many of these things have been happening for a long period of time. education costs have been increasing pretty significantly year over year for many years, the same thing with housing, housing prices have been increasing. so separate and apart from coronavirus and the deficit

spending to support the economy, there are, you know, issues facing family when it comes to affordability of food and housing and education and those sorts of things, we need different policies so tackle those problems. joe: stephanie, what is next, we are looking at the massive fiscal expansion, the likes we did not see in other recessions or downturns or crisis, let's see we get back to something resembling normal. what do you want to push for and see governments do even after we're out of say crisis economics? jess: i think president biden makes it pretty clear he considers this $1.9 trillion package in his words a down payment. he is not done by a long shot. the democrats and this administration intend to come back, they're looking at potentially trillions of dollars more. we have even heard people like senator manchin use numbers as high as $4 trillion talking

about the biden build back better agenda. joe, this administration i do believe wants to see not just a bridge to the other side of coronavirus, but the foundations for a sustainable and inclusive recovery, right, and getting infrastructure and education and a lot of other things in place. romaine: when we talk about the sustainable recovery, a lot of talk is about the jobs themselves. what about wages? will we see any sort of meaningful increase in wages as an outgrowth of these policies? stephanie: maybe so. i know that's what the fed would like to see. we were making some progress there. you got the labor market very, very tight and you do begin to see some move up in wages, especially at the bottom which is exactly what chairman powell has said he hopes that we will get to the point where the labor market does again get tight enough to produce that kind of wage pressure, but, of course, congress can do something about that as well and they didn't

manage to get an increase in those federal minimum wage in the last package, but clearly there is a desire to come back and make another run at this and try to get the federal minimum wage up. that would have some benefit to lower income workers whose wages would also rise? joe: our thanks to stephanie kelton, stony brook university professor and author of the best selling book >> "the deficit myth." you can hear more expansive conversation with stephanie on the episode outlawed podcast coming out today and you can find it wherever podcasts are sold for free. caroline: for free, no inflation there. none to be found. joe: we print unlimited episodes of it because there is no real resource constraint. romaine: i would give you three coins for that. joe: missed that opportunity. we should have done that.

romaine: not over yet. the bubble is still going. caroline: exactly, roaring ahead. joe: "bloomberg technology" is up next in the u.s. romaine: have a great evening, everyone, this is bloomberg.

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emily: i'm emily chang in san francisco and this is bloomberg technology. google doubles down on commercial real estate investing in offices and data centers. the search giant promising to create at least 10,000 new jobs this year, an investment of $7 billion. what does it signal about the search giant's positi o