get it and get it now. your body will thank you. (announcer) find out more at aerotrainer.com. that's aerotrainer.com. joe: from bloomberg world headquarters in new york, i'm joe weisenthal. romaine: starting out the new quarter, what else? a record high. joe: the question is, what did you miss? romaine: where do we go next? s&p 500 causes the -- a lot of optimism about the comic recovery. the easy part of the recovered

trade might be over. a rise in the dollar and yields posing a potential to hinder further gains in risk assets and there is still the open question about the economic data. we get a key monthly jobs report tomorrow. i guess the question is, if the market continues to push things higher, are the risks we are not paying attention to? joe: we have all the risks covered. we talk about them all on the show. there is nothing we are missing. investors have calculated everything about the future. everything we see makes sense. who knows. it is really impressive. once again, record highs. if you look at the long term the s&p 500, and thing stands out, which is stocks breaking 4000 for the first time ever. you are not wearing your s&p 4000 hat. romaine: it is still at the printer. joe: let's talk about how we got here. joining us katie greifeld.

day one of q2. q1 saw some internal rotation. this seems like people are back into the by everything mode. katie: absolutely. this is a story we are very familiar with from 2020 where bonds a rally and you have stocks rally as well. that was the story of 2020. it was the case today. like chart highlighted, you saw the s&p 500 finally cross the 4000 threshold. i had that ready for weeks so it is a relief to finally break that. what really happened is you needed tech to rebound to get across the finish line. that is what you have seen. you saw a big bid into tech. you have seen tech outperform over the past week. if you think about the index, tech is 27% of the s&p 500. energy and financial combined is 14%. as you have this rotation trade,

the benchmark a little bit paired seeing the tech rebound to the races now. romaine: you have to tell us what other templates you have in store. i don't know if you already have your 5000 template ready to go or not. you can tell us that all fair. i am curious about the idea that a lot of the future growth -- everything we are optimistic about, whether that is all priced in now. what do some of these companies, what is the economy have to show to not only justify the current gains we have had but to also justify any potential run-up we might see. katie: you are seeing some concern may be the future earnings growth, the future economic growth has pulled forward and priced in the benchmark. you have seen some analysts -- i am thinking of morgan stanley have cooled on the small-cap rally. you are seeing that a little bit

in the bond market. you saw a big move today in 10 year yields down seven basis points. i'm going to argue that has more to do with this being the first day of japan's fiscal year then it has to do with any sentiment in the u.s. or any concerns about whether we have priced in to much growth and are starting to see a pullback. japan -- it has been very important to the u.s. market. it has been a seller of foreign debt for a few months. there has been an open question as to whether they will reset positions. price action today would suggest those buyers are coming back into the market. joe: you have your 10 year 2.0 template ready for perhaps sometime in the second quarter. you are not ready to tear that one up? katie: if i tell you what template i have, they are never going to happen. joe: a discussed market template never comes to fruition. romaine: always working on the

new templates. we will see what comes up next. coming up here on our show, our next guest says just because stocks keep moving higher does not mean a correction is coming. bloomberg opinion joining us next. this is bloomberg. ♪

romaine: today, we are focused on the roaring reflation trade. s&p 500 heading another record high. i guess that means something to somebody. if you're looking at the estimates for s&p 500 earnings, it says there more to come. joe: in the end, there is still this disconnect because there is a long way back for the economy.

the question for stocks is what did the 500 companies in the s&p 500, are they going to make a lot of money? analysts expect them to make a lot of money going into the future. you can talk about the disconnect or whatever, but the point is everyone expects these companies to be moneymaking machines. let's bring in to discuss this a bloomberg opinion columnist. a stunning chart. isn't that what it is all about? in the end, if these companies are going to mcmoran my money, hard to be bearish? -- going to make more and more money, hard to be bearish. >> i don't know if i can see anything more than that. joe: thanks for coming on. no. keep going. >> it looks like in early recovery. it has a broad reflation of stocks across the board.

you could see that in the first quarter if you compare the equal weight index to the broad s&p 500. the equally -- the equal weight won by a good margin. you can see as you mentioned in the earnings expectations, we had roughly 120 last year. the expectations for 2022 close to 200. a must -- close to 200. that is hugely bullish paired the only exception is valuation. -- the only exception is valuation. by the way, interestingly, if you look back at.com, this looks like.com also in the sense that in 2002 what it had bottomed and things started to turn around, the s&p was roughly where it is today. this case and the.com episode are the only you can point to in modern history. romaine: we have talked to a lot

of people who have tried to draw comparisons to the market and some of the economic cycles we saw in the 60's -- the 1960's and the 1940's. the idea there is something larger and structural taking place in the economy that is not only going to justify these valuations but take us to the moon. that might itself might at least put off whatever correction would come somewhere far down the road. >> it all depends ultimately on two things to -- two things. whether there earning estimates come through and how investors feel about it. what price tag they are willing to put on the earnings. the reason the point about correction cannot be made enough is usually when things -- i am talking about the fact the market is historically expensive. i find investors here that and say a correction is coming. it is worth repeating it means nothing of the sort. there is nothing that we have

that will tell as in the near term what will happen to stock prices or valuation as far as i can tell. what it does mean is it tells you something about the expected return. if you break those out in terms of dividend and the changes of valuation, the dividend yield is one and a half percent. earnings growth since 1990 has been 5% a year. now what is going to happen? do you think valuations will expand from here? i think that is highly unlikely. if they contract, you are looking at a lower return. that is the use will away from this. in the near term, the price will do what it will do. joe: i don't understand valuations being similar to dot com levels. that is when i first got interested in markets. it was so much absolute garbage. not only was there total garbage listed, they had huge market caps. you look at some of these stocks

that seem kind of bubbly today like some of these fuel-cell companies, some of them are traded back then except there market caps were 80 times bigger. is it the s&p 500 specifically looks tough for valuations but if you had the thousand ipo's in 1998 and 1999, help me reconcile this. there is no way the market is as expensive as back then to >> it depends on how you look at it. all of that is true in the sense that first of all, every market is different. you peel back the layers, you are going to notice that pricing is different in different places. a lot of people pointed out this market is expensive but a lot of companies in this market or certainly during the pandemic and before have made tons of money. notably there were a lot of big cap companies during the run for.com that were not making a lot of money. there are a bunch of other distinctions. if you look at a stop by stock

comparison -- i stuck my stock comparison, you will notice that. the only thing that matters is what is the price that investors are putting on the earnings of the market more broadly? most people on the broad market. they are not individually picking stocks. i get that more people are doing that. when you look at that measure, it looks almost identical. romaine: real quickly, with regards to the moves we have seen in yields and the way that has spooked some people, this idea you could start to see some erosion in any earnings growth we do get, how are you looking at the balance between the rise in yields and everything else? >> that is going to be problematic. not only that rise in yields could be a threat earnings but right -- but biden's plan to raise corporate tax rates could be a threat earnings. ultimately when the earnings forecast is so bullish, there is

a greater probability these could go wrong. in this environment with the rates going higher and the aggressive posture by government, i think there is a higher probability to start with. investors have to think about that. i think that goes to the price they are putting on earnings. my guess is they are going to rethink the valuation level. romaine: have a wonderful weekend. we will catch up with you soon. founder of unison advisors. wall street stock traders may be off tomorrow due to the holiday but i will be here because there is a big jobs report coming out in the morning. i'm going to be hosting a special report on bloomberg surveillance 6:00 a.m. to 10:00 a.m. joe: how did you get the lucky draw that you got to come in on a day when most people are off and host a special? romaine: they said tom keene needed help and they called me into the rescue should we are going to talk -- into the rescue peered we are going to talk

about that more. wall street is reeling the --

romaine: 2021 marked a shift in the global workforce. into the recent changes with the big banks to adapt, employees shifting priorities. take a listen. wall street is realizing toll of the pandemic that is taking on employees and managers who have had trouble making the distinction between the home and the office. fresh light was shed on that issue in mid-march when a survey by a group of analyst at goldman sachs made the rounds on social media. they complained of deterioration and physical and mental health. goldman ceo david sullivan responded by promising to do a better job of keeping young bakers out of the office on saturdays.

jeffrey's offering its youngest workers coveted fitness perks including peloton bikes take the citigroup ceo barring internal video calls on friday, a day that will be known as zoom free fridays. at apollo, that company putting its money where its mouth is. some skeptics of these announcements wonder why it took a year for them to realize and address the pandemic's effect on their staff. it may have more to do with wall street's tough competition with tech companies for talent especially as silicon valley has embraced the work from home or hybrid model. >> the productivity you left you get is people have the ability to work from home some days and be in the office with the rest of their team. if you can -- if you can save people commute times, you have better access to talent. it is going to result in a better outcome. romaine: as most of wall street

charts the path back to physical offices -- >> there are huge weaknesses to the zoom world. how to handle a client, had to handle a problem. -- how to handle a problem. romaine: the future of work is shifting right in front of us. as the pandemic remains, 2021 will chart held global workforce is move forward. a lot of talk about the future. stay with bloomberg for special programming tomorrow. we are going to talk a lot about the unemployed. we get the u.s. jobs report tomorrow. the labor secretary joining me on bloomberg surveillance tomorrow 6:00 a.m. joe: let's turn the page to something else. joining us now, vanderbilt law school associate dean. formerly worked as legal counsel for the world bank. you have done a lot of work on the treasury market. we saw this volatility in q1.

some big jumps. we are getting passed the one-year anniversary of the glop of the treasury market last march. we saw this disconnect in of the price of cash bonds and futures. what is the big picture telling you about the connection between this and a lack of regulation in that market? >> thanks for having me today. the regulation of this market is a five-alarm fire. the way in which this market is regulated is not set up to give regulators the opportunity and equipment to see the risks that are developing. what we are seeing today is a market structure and lacks core guardrails that are present and common in other marketplaces. what we have here in the

treasury space is a market that does not have a primary coordinating regulator. unlike derivatives, the treasury market regulation is divided. we have a system in which it is hard to come up with basic -- romaine: when we talk about the wreck -- the lack of a let tory issues, i am curious about -- we know when we talk about equities and derivatives, the risk is pretty apparent. when we talk about the treasury market and bond markets, the risk tends to be a little lower. maybe there is an argument you can make that you do not need the same regulation. >> i think that is the assumption that has gotten regulation in the past. it has historically been traded over the counter. this market has been simple in its market structure. that has changed radically over

the last decade. we have seen a market that has automated rapidly. it is a market that is dominated by high-frequency trading. the risk we see operationally and logistically and liquidity in the derivative space on account of the market structure come on account of -- is something we have to see in the u.s. treasury market. this became apparent in the context of 2014 when pricing became disruptive. there is next but nation as to why. we had an outage in the dealer market in the major platform broker tech in 2019. we also had this major blowup that happened in march last year. on account of liquidity pressures that are becoming

endemic. we are seeing liquidity disappear. that has caused price stability. this is a market that is supposed to perform when every other market is collapsing. our appetite and tolerance for any kind of risk in this market -- liquidity is based risk that arises in sudden disappearance of liquidity's, these are rates we cannot tolerate in the u.s. treasury market. joe: in your view, structurally, what would be the biggest first step we could do to eliminate if not all the risks because you are never going to perfectly eliminate all risks but the biggest ones that are out there? >> the first step here is to get regulators on the same page. yesterday, we so chair yellen, with a list of five

priorities. to bring the u.s. treasury market regulations under the purview of the guiding authority and i think in this case the oversight council is a great candidate. to have regulators come on board together to come up with a plan to understand how this market works. i do not think we have an idea here. the reason why we do not have an idea is we do not have information. this is a market that lacks fundamental guardrails. one of them is a lack of reporting in this market. in 2017, we had a reform to bring greater reporting into this market. we are having major significant systemic gaps here. hedge funds that do not wander the purview -- do not come under the purview do not report their trades.

the blowup, we still did not know what the impact of that trading was because we do not have the information to our first -- the information shared our first step would to be to bring regulators on board. we have to consider a whole bunch of reforms to put them on the table to bring a basic sense of safeguarding and security into the market. romaine: can you give us a specific idea of what one of those reforms would be? >> one of the reforms is to think about the ark it obligations. we did have a special assistant in which traders were required to stay on the market. the reason for that is this market has to work. balance sheets have to be equipped to deal with the kind of pressures that come up.

romaine: this is interesting. the fact you are eliminating -- great stuff here. joe, fantastic idea here for a topic and our guest. i know you have had an interesting connection. joe: she will be on our podcast next week. you should listen to our podcast. romaine: we have a podcast? joe: we have a podcast. you and i. they stripped the charts. they cannot see us. what did you missed this week? you can check it out. romaine: only the best content. joe: only the few good segments we do. romaine: we don't but the bad stuff on there. bloomberg technology is coming up next. have a great evening, everyone. this is bloomberg. ♪

♪ emily: i am emily chang in san francisco and this is bloomberg technology. coming up, ev stocks get a boost as president biden's mounts a major push to accelerate the adoption of electric cars. we will talk about at all with dan ives. plus, the global chip shortage.