public is still engaged. diane's are still heavy. flows are step -- by ends -- buy-ins are still heavy. >> there might be room for the fed to normalize rates. >> i don't think the fed is ever going to see runaway inflation. >> the economy and stock market don't always go in step. this seems to me to be the year that main street beats wall street. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: yellen and powell testify, day two. good morning. this is "bloomberg surveillance ," live on tv and radio. alongside lisa abramowicz, i'm jonathan ferro. tom keene is off today. we advance zero point 3%.

the nasdaq up 0.7%. they go in front of the senate banking committee. lisa: the range of issues here is phenomenal. you have the stimulus, how it is getting deployed, how much has been deployed. then you have taxes, how much they support raising taxes on a variety of constituents. then you have inflation, and of course, international relations. one thing we have underplayed today is janet yellen coming out in support of an imf fund in support of developing nations that former president trump actually shut down, raising questions about the international collaborations on that front. jonathan: a range of issues. let's sit on the domestic story for a moment. the push to maybe hike taxes going forward from here, we talked about the bias for this market to focus over womanly on the spending side of things. the stimulus, the relief. at some point, taxes hit the radar. i think they already have.

lisa: although you are not necessarily seeing it in price targets for equities. perhaps that is the reason for the pause, although you would expect it to hit the big tech names harder than perhaps the russell 2000. there was a story on the bloomberg talking about how the most likely tax hikes will be on wealthy individuals, and that corporations will probably be secondary in that push. jonathan: tom keene dropping in email in my and box -- in my inbox on the spurs. hi tom. [laughter] unbelievable. here's the price action. equity futures up 0.3% on the s&p 500. the nasdaq 100 up by 0.7%. 1.6225% on tens right now. crude still positive, bouncing back after a really ugly story the past week. $59 handle on wti.

the fx story got my attention. i know it got your attention in the last day or so. euro-dollar breaking down, $1.1825, down 0.2%. in europe, the u.s. pmi data coming up a little later this morning. lisa: the divergence between europe and the u.s. continuing to widen, despite any data showing otherwise, because it is backward looking. 10:00 a.m., day two on capitol hill. jay powell and janet yellen are appearing before the senate banking committee. we talked about the range of issues they will be addressing. there are other issues come up bitcoin among them, that could come up. also, the discussion of their collaboration. the head of the treasury, the head of the federal reserve, seemingly interchangeable in some ways. how do they work together in a new way going forward? then u.s. crude inventories.

the suez canal issues, yes, it seems to be transitory, but it is some of the inventory data we will be looking for. the u.s. is selling five-year notes. we are getting towards the more interesting securities. perhaps we will get some indication of what longer-term treasury demand looks like both here and abroad. jonathan: looking forward to the supply a little bit later. the seven-year issue will get our attention tomorrow, i'm sure. let's turn to mona mahajan, i leonce -- mona mahajan, allianz global investors u.s. investment strategist. i am trying to understand how you approach a market like this right now. you drip since the end of okta -- huge rick -- huge rip since the end of october. mona: 2021 has really been the story of the reopening trade,

that value trade, the rotation into the value stories and out of that gross come -- that growth of large cap covid winners last year. there may be some questions around the reopening, given some rise in cases, given what is happening in europe. what we are thinking about is, as we are heading to this summer , that real unleashing of pent-up demand, i think perhaps the real unleashing of the stimulus really flowing through the system, we may see this value cyclical rally have some legs through december. but what we are really thinking about towards the second half of this year are some of the risks on the horizon. those include p grillo opening. at some -- include peak reopening.

at that point, the fed starts to slow again in terms of gdp growth. the second is we do think that yields can continue to grind higher. we do think that the 2% handle on the 10 year is feasible, and that will cause some additional volatility and pressure. finally, the fed has been quite accommodative thus far. we think that continues for most of this year, but at some point they are going to have to come off this crisis level accommodation they have been providing. we are clearly trying to reemerge, so a lot of good news, a lot of the reopening story, a lot of this value trade is starting to get priced in. so keep in mind, if you haven't yet, you do have an opportunity to tactically layer in some cyclicality, but just be mindful as we are heading towards the second half of the year.

jonathan: everyone has their own process to work through. a lot of people talking about where we are in the cycle. the early trade, is the early cycle play still with us? is that going to last another quarter? do you use the same approach? do you have that early cycle playbook? when in the cycle do you think we are in this market? mona: i think we are reemerging from a recessionary environment, different from some of the others which were more rates driven or consumer driven. this was a health crisis, but we are clearly reemerging from it. certainly, areas like energy, financials, industrials, and cyclical stocks, the reopening plays, those took a nice leg higher. the easy money perhaps has been made. that being said, we do think that the earnings growth environment, there is still upside to some of the numbers we

are seeing out there, especially on some of these sectors like financials, energy, industrials. some of the areas that do well as rates continue to grind higher, of course, financials, especially with steeper yield curves. even areas like clean energy which has been a clear focus of the biden adminstration, and now the nasdaq has sold off a lot of the growth story, could have another leg. we think that is a secular growth theme. it is an interesting one here. certainly we are looking at it more now with a more active approach, taking a sector by sector positioning approach rather than a broad market approach. at this point in the cycle, after we've had this reopening rally, we have to be more selective going forward. lisa: just to be clear, is the reopening rally done? have we reached a plateau and we

are just going to fluctuate from here? is that what you are saying? mona: i think there is one leg higher. if you think about seasonality, sometimes it is sell in may, go away. but those summer months are really when we are going to see that pent-up demand unleash. so consumers will hopefully have the next round of stimulus checks in their pockets, the vaccination program in the u.s. will be more fully rolled out, so you will really see that demand for areas like travel, like going back indoors, perhaps into restaurants. going to sporting events. so i think that is when the economy really is going through that hyper demand phase that we will see the market react to that. but after that, what happens after peak reopening? you probably have a few months of this rally, but it is time to start thinking about being a little more neutral or cautious. jonathan: used one line in this

conversation that always pops out to me when people say the easy money might have been made. [laughter] forgive me for doing so. did it ever feel easy? mona: ever since march of last year, it felt a little bit tough , so i think the whole dichotomy between main street and wall street has always been a tough one to follow. but i certainly think in this case, the market has been very forward-looking. perhaps looking towards the second half of 2021, so they were very astute in realizing that at some point, we will reopen fully. interestingly, the retail investor last year played a very large role in that. so the investor was in some ways the winner of 2020. they kept that optimistic outlook throughout the year. so we have had an optimistic reopening trade. you could argue since perhaps

march of april of last year. hopefully most investors participated in some way and that. the good news was last year, if you had growth stocks, this year could actually have an opportunity and the growth stocks. that's why there is still a little bit more ketchup to go in that sector. if you think about it, a lot of these value names like financials, energy, industrials, they are still slightly off of march of last year, so they have more ketchup to do from the february 2020 highs. -- more catch-up to do from the february 2020 highs. jonathan: it's never easy. [laughter] you know it is never easy. mona mahajan, allianz global investors u.s. investment strategist. that was the difficult part of the past year. lisa: what, it is hard to be

optimistic? who knew? you think it is hard for me to be optimistic? jonathan: that's for sure. [laughter] coming up, the mai capital strategist and senior portfolio manager. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. at the suez canal, authorities are said to be close to re-floating that giant container ship that ran aground and caused a massive traffic jam. that comes from in addition logistics shipping company. it became wedged links ways -- wedged lengthwise along the canal. in israel, a deeply divided company has failed to resolve a political impasse in its fourth election in two years. neither prime minister benjamin

netanyahu nor his opponents have a clear path to forming a coalition government. if no one is able to build a parliamentary majority, there could be another election. president biden is urging congress to pass gun control measures in the wake of the shooting at a colorado supermarket. the president called for background checks and a ban on assault weapons and high-capacity magazines. earlier this month, the house passed a bill that would require background checks for firearm sales, including at gun shows. in germany, the plan for a five day nationwide lockdown has been scrapped. bloomberg has learned chancellor angela merkel made a decision after the plan was met with massive opposition. merkel is trying to handle a surge in coronavirus infections and a sluggish ramp-up of the vaccinations. gamestop is hoping to bounce back from disappointing earnings in the fourth quarter. the videogame retailer wants to make good on a comeback plan that helped to turn it into one of the year's hottest stocks. gamestop disappointed executives

with tech experience that have a plan to make the company a big e-commerce power. 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. ♪

chair powell: indicators of economic activity and employment have turned up recently.

household spending on goods has risen notably. services remain low, especially in those that require in-person gatherings. jonathan: from new york city this morning, good morning. alongside lisa abramowicz, i'm jonathan ferro. tom keene away today. here's the price action in the equity market. the s&p 500 futures up 18. we advanced 0.4%. up 0.8% on the nasdaq. yields higher by almost a basis point on tens. euro-dollar back down to $1.1828. crude still positive, $59 handle, even with this back-and-forth with the suez canal over the last day or so. lisa: perhaps it is people coming in and reassessing this inflation trade. are we seeing a pause that is going to continue in terms of this rotation into cyclicals which includes oil which

includes yields going higher, and banking stocks, or is this something that is a reassessment of the market? i think it's the key question for today and the entire week. jonathan: that is the debate of the moment as we drive you forward to the opening bell. let's drive you forward to washington, d.c. and the latest on the policy front. washington's -- kevin cirilli, bloomberg's chief washington correspondent, joins us now. why does this lineup so well with the approach of this current administration and the one that came before it? kevin: first and foremost, manufacturing jobs that are going to be intricately linked to the semiconductor chip shortage, the biden really say is a top priority on the u.s.-china front. secondly, in terms of infrastructure, this is a clear opening bid, so to speak, that chip infrastructure and manufacturing is going to be

linked to a longer-term domestic strategy to the others if i the supply chain. candidly, i think intel getting their first is only going to attract other companies to do the same thing. jonathan: they want to go after china. the u.s. wants to make sure we invest in this country. the companies want to track down taiwan semi, which has done so much over the last few years. there is so much catching up to do. what is the administration doing to help these companies achieve those goals? kevin: that's where things get dicey. republicans would say they are not raising enough, and that by raising the corporate tax rate, that is only going to deter companies from investing in the united states and doubling down in terms of where they would like to make investments domestically. that is part of a longer-term debate, that once infrastructure really gets started with, is going to be very difficult to come to some type of consensus. yesterday i was speaking with lawmakers, and they still remain worlds apart on how to pay for $3 trillion worth of stimulus.

lisa: perhaps the payment is the main issue in terms of getting some sort of bipartisan support for a bill, but there seems to be consensus that there are problems with respect to technological prowess and with respect to the supply chain. a viewer road and that the supply chain has zero capacity for exacting us shocks, and we are seeing that in delays for other supplies. is there any consensus on how to combat some of the supply chain and the disruptions that can erupt? kevin: yes, between people like senator mark warner, the chairman of the intelligence committee, even to an extent senators tom cotton and margie blackburn -- and marsha blackburn. i even go out to lawmakers like tom garamendi. he has urged for there to be

more diversification. i think you will see over the next couple of weeks and months people like senator chris coons, a democrat from delaware, put together some type of package as it relates to china, but the hope from what i am hearing, based upon my reporting, is tha t this type of package will be a nonpartisan bill that will move through congress, similar to the bill a few years ago that senator schumer and i believe senator cotton were able to push through in terms of investment to diversify supply chains. lisa: a nonpartisan bill is hard for me to wrap my head around right now. i imagine a fraction of $3 trillion. how could this be constructed? what could the size of the consensus bilby? does that mean that this effort really has to be piecemeal, a number of different bills spread out over months or even years?

kevin: i think this is the type of legislation that, quite frankly, doesn't really get the attention of the mainstream press. it is more in the wonk world, and the policy weeds that we focus on. while this won't be a major initiative and that it won't grab a lot of watercooler political chatter, seemingly for the past couple of years, there have been defense bills, funding bills that have been nonpartisan that get through. could see a bill like that move on china. jonathan: before we let you go, i do want to talk about china and how it folds into the policy effort. it is ok to do that on foreign policy. a lot of people are endorsing that approach right now. but if you maintain the america first approach on the economy, how do you support your allies and make sure that china and the communist party doesn't leverage the commercial ties it has with the europeans. kevin: simple, it is auto

democracy versus an auto technocratic regime. that is really the battle line this administration is trying to put forth, in a sense to say if you were to make deals, especially on 5g technology and other parts of 5g technology that relate specifically to benefit the communist party of china, would that be a long-term play? lisa: honestly, hold on a second, kevin. i understand this is a highfalutin topic, but at the end of the day, it is about money, and if china is getting money and getting business to europe, doesn't that speak louder? kevin: no, i don't think it does because ultimately, it comes down to democracies and the value proposition of investing, which, by the way, democracies do have a financial benefit. but if you look at some of the human rights abuses, the genocide occurring in the singeing province -- in the

singeing province -- in the xinjiang province with uighur muslim minorities, this is a higher priority. jonathan: kevin cirilli, thank you so much. lisa: i think this is the real conundrum here. at what point these concepts of democracy and outrage when it comes to some of the human rights abuses that europe is pressing against china, how much does that outweigh a fundamental business case to continue doing trade and other type of transactions with china? this is harder than it might seem, and it does but the onus on the united states to perhaps give more to europe to make them a closer alliance. jonathan: they have to please and increasing the progressive base at home in the united states, and maintain a presence in an authoritarian state as well.

i'm not sure you can have one foot on either side in the way that you could. alongside lisa abramowicz, i'm jonathan ferro. coming up, kit juckes of socgen. this is bloomberg. ♪

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♪ jonathan: from new york city for our audience worldwide, this is "bloomberg surveillance," live on bloomberg tv and radio. good morning to you. a bounce back in the equity market. the russell is where the outperformance is. on the nasdaq right now, up 0.8%. the key to that may be some stability in the bond market. twos-tens 30's, yields unchanged. we get some five-year supply today, seven your supply tomorrow. yields doing that a lot. we get chairman powell and secretary yellen, day two. let's finish on the fx market. the euro dollar breaking the 200 day moving average. finally a break in the single

currency. euro-dollar, $1.1832, uighur by another 0.8%. we talk about the limited ability to push the fx pair. -- $1.1832, weaker by another 0.8%. we talk about the limited ability to push the fx pair. that's the story cross asset this wednesday. here's taylor riggs. taylor: it is all about chips this morning. great conversation about the political angle of chip manufacturing. it really was the news after the closing bell yesterday, with intel's new ceo trying to think about this company returning back to its supremacy days. this is not about profit, but about regaining the old era of this company.

how do they think about reopening, producing chips for rivals, opening up some of their traditional companies and sourcing a lot of that manufacturing? amd, which has been making -- amd, which is been making some inroads on intel, falling on this news. other chipmakers reacting to the news as well. name stop, big news after the closing bell yesterday -- gamestop, big news after the closing bell yesterday, missing net sales profits, but they are bringing in a veteran ceo, trying to get those digital sales. that transition to digital continues. stick a look at viacom. -- let's take a look at viacom, falling today after that share sale of $3 billion. they just signed a contract with the nfl that will cost $2 billion a year. how do they fund that?

they do it with share sales. tesla, bitcoin. dare you guess what this story is? elon musk at 3:00 in the morning tweeting that they will accept bitcoin for tesla. how much tesla are you buying with your bitcoin? jonathan: these are still priced in dollars, and bitcoin will still orbit the sun. those won't be converted back to u.s. dollars. that is what i think is the interested part. these will be priced in dollars, and that price of but going for a tesla will have to be adjusted seemingly every day, every second, every minute. taylor: i have to find my bitcoin password. i think i have $20. jonathan: there we go. taylor: i can buy 1/10 of a tesla. jonathan: taylor riggs, thank you.

let's get back to the fx story. a break of the 200 day moving average in the last 24 hours. kit juckes joins us now, socgen chief fx strategist. let's talk about that clean break. how clean was it for you? kit: psychologically, that is enough to push us down to $1.15, $1.16 on momentum. i think it is enough to probably flush out what is left of the short dollar come along euro position that has been hanging over the market for the last couple of months -- short alert, long euro position that has been hanging over the market for the last couple of months. i'm glad it's done that. we have been stuck in ranges for too long. jonathan: now i am trying to understand whether we have reached that point of peak pessimism in europe, peak optimism in the united states. kit: we are pretty close. you wouldn't want to say we are definitely done, but in the last six months, we have revised up

consensus forecasts for 2021 gdp in the u.s. by 2%. we revised down the forecast for the euro zone by 1.5%. that is a mad move in terms of the scale of it. we have seen this dramatic move in yields higher in the united states relative to europe, all while the fed is doing what the fed is doing, and it is 366 days ago that the fed said, we've got this, and gave us a long period of superlow rates. that is why the dollar is weaker than it was way back then. so i think we are in the last act of the dollar bounce, frankly, at this point. but it is going to play out probably over weeks, not days. lisa: this is a really important point and it actually runs counter to what other people

have been talking about on the show over the past couple of days, that we are in the last act of the dollar bounce, and pretty close to peak optimism in the united states. are you calling for a significant weakening in the dollar throughout the rest of this year versus the euro? kit: less significant than the moves we had from $1.07 to $1.23, but i don't think this move is done yet. the bulk of it comes when you get more global optimism. at the moment, it is more of a relative story than a global story because the u.s. has done so much better in every regard than almost everyone else. when the goodness spreads and we get optimistic about everything, then i think you will see a more conventional weaker dollar story, underpinned by fed policy , underpinned by capital flows. but that is only going to feed through gradually in the next few months. at the end of the day, the

dollar was very expensive and is still expensive because the u.s. had exceptional monetary policy compared to the bank of japan and ecb. that is no longer the case, and the dollar can't go on being this expensive. lisa: the idea of global recovery i think is valid. perhaps the euro region is lacking behind the u.s., but eventually it will catch up in the pandemic will be over. there was a leadership question that was really highlighted this morning, with angela merkel reversing her decision to have a five day lock down the easter holiday, and then she came out and recently said this mistake was mine and mine alone. she said she made a mistake in backing the easter lockdown. there's a leadership vacuum in europe that has been highlighted by the vaccination rollout. how much does that factor into how strong the euro could be digitally get versus the dollar? kit: it plays a part. you could have a bad taste in your mouth at the idea of europe

taking back on the back of fiscal policy and things like that. but even so, it is not new. the structural weaknesses of governance in europe and leadership in europe have been there for a really long time. what made the european currency unable to withstand extreme cheapness is the persistence of a very large account surplus, and the fact that the ecb does so much more than other central banks. take the ecb's exceptionalism, if that is the right way to put it, out, and the euro will be stronger, however badly run europe is. jonathan: i want to bring up these headlines. the chancellor turning around and saying she has made a mistake in backing the easter lockdown, going on to say she wants forgiveness from the german people for making that mistake. i mean, that is truly shocking

to have this situation in germany right now i to see the chancellor just 180 within 24 hours on a massive issue. from a currency perspective as a market purchase up and, how are you approaching the politics in europe? it is reminiscent of what we saw out of the last financial races. everyone seems to be all over the map on key issues -- financial crisis. everyone seems to be all over the map on key issues. kit: it's been pretty clear at various points they are trying to do the right things with lockdowns. it is very difficult. when you don't, you pay for it with the human catastrophe that comes with it. people are fed up with it, and politicians are trying to do the right thing to avoid more people dying and run into a huge amount of resistance. the whole thing is a nightmare. i thing it is a nightmare for people more than politicians, so i am not surprised you get this

indecisiveness sometimes. but i come back to the fact that looking at foreign exchange markets, i have an environment where you could have as much indecisiveness over the pandemic as you like. if you had intelligent fiscal policy, i would say the currency is going to go up a really long way. what i would say now is the euro is not going to go up because of anything anyone does in europe particularly. euro is going to go up because it can't go on being this cheap if the said does not have completely different monetary policy. jonathan: kit, good to catch up. just want to repeat these headlines out of europe right now from chancellor angela merkel, unlike what you have seen elsewhere in the world throughout this pandemic. an acknowledgment that someone has made a mistake. mistakes must be acknowledged and addressed.

she asked for forgiveness and admitted a mistake in backing the easter lockdown. lisa: policymakers have had a really tough time. i'm not giving her a pass, but there is a question, how do you follow the science in a way that reflects fatigue and populations? if you start to impose lockdowns at a time when people are just done with it, they are going to disregard all of your advice. a couple of weeks ago, when you said we can have small group gatherings on july 4, how money people are going to wait until july 4 to have gatherings with their friends? people saying they will take it into their own hands. jonathan: we will be catching up with michael o'leary of ryanair in just a moment, alongside our colleague and good friend guy johnson. huge conversation about what travel looks like maybe this summer. lisa: the question is, how much

can it really surge in the european region versus the united states, domestic versus international? it is going to be tough. jonathan: very shortly on this program. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ♪ ritika: with the first word news, i'm ritika gupta. a new survey finds that president biden's likely wins on taxes will come in the form of higher individual rates and tougher audits of wealthy americans. bloomberg surveyed 15 current and former white house and congressional aides specializing in tax policy, and they said a proposal to tax unrealized capital gains can't make it through congress. u.s. treasury secretary janet yellen has promised work with congress to ease the $10,000 cap on the state and local tax deductions, known as the soft cap. that has been a key area of

focus for lawmakers in new york and new jersey. the limit was put in place by donald's tax law. lawmakers from -- by donald trump's tax law. lawmakers from high tax states says that has caused their constituents to pay higher rates. un-american -- american refineries are buying more oil than before, at a time when washington is talking about energy independence and warning europe not to become too dependent on moscow. sanctions prevent u.s. refiners from getting venezuelan crude, and opec has cut back shipments, so last year, russian oil became an option. russia was the third largest supplier of oil to the u.s. in 2020. intel has unveiled an ambitious bid to regain its manufacturing lead. the company is going to spend billions of dollars on new factories, plus found a foundry business that will make chips for other companies. it is an aggressive move that puts intel back in competition

with taiwan semiconductor manufacturing. 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. ♪

>> we are worried not just for what happens when we are on the airplane itself, but what

happens when people travel. they go out and mix, and with people who are not vaccinated. we are currently in a situation, as we look at our european friends, we do not want to be at this rapid uptake of cases again. so i would just encourage people and remind people now is not the time to travel. jonathan: that is the view of the cdc director, dr. rochelle walensky. we will talk about that in just a moment. equity futures are up 0.7% on the nasdaq. on the s&p, we advance 0.3%. that is the message you get from the cdc at the same time this market is talking about something else, focused on reopening. that has been the dominant story since we first got the vaccine news. this market has absolutely ripped. we want to bring in our friend and colleague out of london, guy johnson. the cdc is saying one thing, the market looking at something else. when you talk to friends and family, they are thinking about

other things, too. guy: everyone talking about how they will get away for some sort of vacation holiday throughout the summer. you listen to what the cdc is saying, and a similar thing in the u.k. as well, the scientists are incredibly cautious about traveling. certainly in the u.k., that is the narrative, but investors just don't see it that way. bring up the chart of ryanair. from the beginning of 2020, we are back to the same levels that we came into 2020 at. a sickly, the stock has completely rebounded -- basically, the stock has completely rebounded. so investors certainly see a reopening. a lot of volatility in the stock over the last few days as we have seen the equivocation from the u.k. and the case counts climbing within the eu. the health situation getting worse and worse. let's bring in michael o'leary, the ryanair ceo, to talk about this. i go, good morning. you were talking about the idea

-- michael, good morning. you were talking about the idea earlier on that you will be flying 80% of the schedule that you would normally fly july to september. what is your confidence in that schedule? michael: it is a reasonably high degree of confidence. short-haul flights will recover july through september. 50% of the u.k. population has now been vaccinated. by the end of may, that will be at 80%. europe will catch up over that period of time. we think 50% will be vaccinated by the end of may, 70% by the end of june. and then i think you will see a pretty rapid recovery of short-haul holiday travel between the u.k. and the european union. already, the portuguese, spanish, and greek governments have said they will come vaccinated u.k. travelers from -- said they will welcome

vaccinated u.k. travelers from 17 may on. we will see i think quite a significant recovery of short-haul travel within europe. you won't see long haul recovery this summer, but again, people will holiday at home in europe, and we think ryanair will be the beneficiary of that. guy: you sound confident it is going to happen later in the year, but the date keeps getting pushed to the right. the noise out of the u.k. the last few days has been less than optimistic. you said this morning that you could survive if we don't have a summer season. i question to you is how. michael: we have a very strong balance sheet. we are sitting on more than $3.5 billion of cash at the moment. most of our aircraft are grounded the moment. we can survive. we don't want to survive.

we want to see people return to travel. if, as the u.k. government has, you vaccinate 80% of the population by the end of may, why are you restricting their movement? there are very little risks. the one thing we know from the vaccines is that if we vaccinate large portions of the population, the risk of infection and hospitalizations and death almost collapses. we are looking to eliminate the risk that covid cases will overwhelm the hospitals and health systems. frankly, i think people are going to rebel. they are not willing to be locked up. it is clear they are not going to stay at home. life will return to normal, and i think covid will still be with us, but it will be much more similar to the annual flu and

the annual cold because of the vaccination. jonathan: they might rebel, but right now it is illegal to go on holiday, so until that is lifted, we have a problem. how hard are you lobbying on the vaccine passport issue, and how close are we to a breakthrough? michael: it is illegal to drive over the speed limit, but a lot of people do it, too. [laughter] jonathan: are you telling me your summer is reliant on people repelling, getting on a plane and breaking the law? michael: no. certainly come a long haul travel will be more restricted, but you have people within the european union, and between the u.k. and europe as well. by the end of may or end of june, you have all of the high risk categories vaccinated. 80% of the population have been vaccinated. the children have a lower rate of catching covid, but don't suffer serious illness anyway. what would be the basis of the u.k. government keeping people

from moving around europe when by law, we have free movement of people? i think short-haul domestically within the u.s., there will be very few restrictions this summer, and short-haul within the european union, i think there will be very few restrictions. guy: you are clearly focused on the summer season, which is going to be the holiday for the kids, but nevertheless, short-haul is driven by younger demographics. they are going to be the last to get the vaccines. is that going to be a problem? michael: again, summer holidays tend to be driven by families. the school holidays in europe start around june, july, august. that is when families are moving. young people are generally working at that point in time, hopefully in the hospitality or tourism industry. i think that is what will drive the recovery. everybody predicts that europe will be a wash with vaccines through may, june, july.

i do accept that the date has moved backwards, but we still the that there is sufficient time and vaccination room to run. we still have april, may and june to go to allow us to recover the holiday season in europe through july, august and september. jonathan: we've got 45 seconds left. chancellor merkel says she has made a mistake, backing down from that easter lockdown. your response to that this morning. michael: i try not to respond to the comments of politicians. we are planning for the european peak. we plan to run most of our schedule through september with that kind of outlook. jonathan: come back soon. always great to catch up. michael o'leary, good to see you. guy, tense time over in europe. american airlines trying to do business. guy: the amazing thing is that the investment community just sees a recovery.

you have to wonder what happens from here. i think it is going to be a bumpy ride for travelers and investors. jonathan: couldn't agree more. counting you down to the market open. equities up 11 on the s&p. we advanced 0.3 percent. from new york city this morning, this is bloomberg. ♪

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