is in the price. >> you are looking at the sustainability. >> it is essential to be there. >> the fed is not raising rates until the end of 2022 or 2023. >> this is bloomberg surveillance. >> this is bloomberg surveillance. i am jonathan ferro. equity futures down 16. guy johnson would say in london, today is about exchanging ideas. tom: abrupt reversal from yesterday. we came out of the weekend with a non-correlated market.

the real yield comes back nicely. and there is the dollar weakness. jonathan: the euro-dollar, 1.25. tom: lawrence dyer says what we are getting wrong, we are looking at the critically dyer and major go on the x axis. they have got to take a longer average view, which is what the new federal reserve system is doing. they are not looking at one quarters, two quarters, three quarters of data. they are looking at four quarters of yield and inflation data. jonathan: a whole lot longer. lisa: the amount of debt that

has been incurred to survive the pandemic, that has a lack effect on inflation -- lag effect on inflation. this is the conundrum. can we still get inflation without a change to some of these structural underpinnings? jonathan: let's turn to price action briefly. a slight decline, down 17 on the s&p. i feel slightly hung over except i have not been drinking. sometimes it takes a while to wake up, tom. do know that feeling? tom: we are all doing this together. india is truly blowing up. part of it is people have to get off their butt and go out and get the first and second shot. jonathan: i feel slightly hung over this morning for it.

tom: it was a transitory shot. jonathan: let's round this out. a stronger euro under the mix. convergence as we go deeper into the year. tom: there is a lot of correlation set up. 89 would be stunning. jonathan: there it is, crude. lisa: you see inventories are coming down dramatically and you are synced demand pick up which raises some pressure for the price of crude. what am i looking for today? the very slow news action. apple holding its very first product release of 2021. air tags. you can track things with the little chip. i love this idea for when you

are feeling a little hung over. 2:45 p.m., president biden will be speaking at an electric battery facility. this is interesting to me after the secretary of state's comments. some of the technology that could come back this to reduce -- combat this to reduce the carbon footprint. after the market, netflix will report their first quarter earnings. i am interested to see if subscriber numbers will plummet if people can go out and do other things. tom: everybody should see it to see the use of black-and-white. they purposefully put in the movie mistakes, artifacts.

jonathan: thank you for that. can i say something about netflix credit? the balance sheet is much better. we are talking about maybe investment grade. quite phenomenal. tom: the thundering silences of their grand strategy, whether it works out. spend it, spend it, spend it. lisa: all the people who are naysayers -- there are good stories here. tom: it is a surveillance cam. lisa: let's move on. jonathan: let's start with credit, shall we? some of this universe is stronger than it was 12 on's ago.

-- 12 months ago. jim: it is all about cash flow. what people were able to do in the last 12 months with rates so low that many corporations were able to refinance their debt for longer terms and at lower interest rates. as the economy recovers, you get this cash flow that starts to come back into the market. that clash flow for about investor -- that cash flow for a bond investor is key. as the company is going, as the cash flow stays positive, as long as we do not expect interest rates to rise substantially consistently over the next several years, that means the refinancing risk of all the debt they have taken on will come at a low rate. spreads are tight, as you have been pointing out. as long as that does not widen, it basically sets up for better interest coverage rates. the amount of payment that you

have to pay on the debt that you have outstanding. though start to look better, especially with the backdrop of a and going economy with more positive cash flow. tom: i want you to synthesize the x-axis. i want you to synthesize the game of guessing the duration of some of these arguments about we are going to see higher yields, we are going to see lower yields. how does the x-axis play in? jim: the tales are fat on both sides -- tails are fat on both sides. on the others, we have to question that have things really changed? where we were prior to the pandemic is that we had structural this inflation. we had -- disinflation. we had an aging population,

demographics, technology. has that gone away magically? if the answer to that is no, no structural factors are going to reassert themselves and keep yields from rising out of control or excessively high. if we start to get -- if the data starts to slow down, which we do think the rate of growth will start to slow down over the next 12 months but still stay positive, loopy enough to write consistent -- will it be enough to create consistent -- is inflation becoming the anchored -- deanchored? once that gets ingrained in the psychology, one could think that yields good stay high.

until that starts to happen, we are in relatively low yielding environment. it depends on how all of this unfolds. lisa: that is the rate story. going back to the credit story. netflix is a great story. there are also stories like united air. it seems like a tall feet given -- feat the rate of vaccination. do you think companies have a better balance sheet? jim: it is very idiosyncratic. if you are looking at the cruise lines, airlines, you are looking at some specific sectors of the economy that were hard hit by the pandemic.

when you look at the broader industrials, paper packaging, other areas, you could even look at leisure, all of these areas can start to get better balance sheets. they have been able to refinance their debt for longer terms and at lower interest rates. in that sense, there is a cohort of companies that do have stronger looking balance sheets. that is mainly investment-grade factors. there are other sectors, like the reopening sectors. these are the airlines and some of the cruise lines and things of that nature. that is going to depend on the vaccine, the rollout, how quickly that happens, how quickly are people willing to get back on an airplane and start traveling. the speed at which people return to that will be faster than most people think.

jonathan: it is not about going from bad to good. it is about going from bad to less bad. lisa: without a doubt. there is a justification for where yields are, frankly. what i am trying to read is are there some sort of long-term implications as a result of it? i am not saying the default rates are going to pick up. jonathan: that is been the direction of travel for the last six or nine months. i cannot believe we have done 11 minutes of this program and have not done it. tom: diego llorente -- explain to our global audience why -- jonathan: that is the beauty of

football. doing really well in the premier league. the concern is not enough of that would happen. tom: we are so sophisticated. jonathan: you really sold it. good morning. equity futures down 19 points on the s&p 500. getting it together slowly. no idea what the next 48 minutes holds. this is bloomberg. ♪ >> in minneapolis, the jury resumed deliberations in the murder trial of derek chauvin. he is the police officer accused of killing george floyd.

prosecutors argue that he violated policy and training. that follows a damaging contest within certain markets. he is the chairman of the democratic union. he would be likely to continue angela merkel centrist policies. shares of ibm higher today. driven by demand of cloud services. the turnaround plan is starting to gain some traction. former u.s. vice president walter mondale has died.

he served under president carter. he was a democratic nominee for president. he named a woman as his running mate, making history. he lost to president reagan. he was 93.

>> there is pushback against china, including from many,

including australia. it looks like market capitalism is slowly making its way back into washington. it remains to be seen. china is going to be a very important player. jonathan: a really important conversation. the cornell university senior professor of trade policy. here is the price action this tuesday morning. a couple of hours away from the opening bell. bond market, yields unchecked. euro-dollar, 120.55. there is the 64 handle on wti. up about $.62 on the date.

i want to cut to nike. down about 1.7% in early trading. nike being down traded to neutral by citigroup. there is midterm pressure on nike on sales and margins. a slow down and demand in china related to the cotton issue. tom: they cannot get the product? jonathan: it is about a product boycott on the mainland. tom: interesting. i'm to -- i am trying to buy stuff off nike and you cannot get it. this apple announcement today. we are not going to cover it all that much, but it is a big deal. mark gurman making clear that this is a big, big deal today. maybe it is china, marty, that

we focus on, but i want to go to ukraine. many borders of the ukraine are compressed by russia. it is the first big test for the president. >> not just for the president but for the europe alliance he is trying to restore. speculation is that perhaps putin wants to encourage -- provoke incursion. his intentions are not clear. it is a very dangerous -- tom: it all comes back to this world war ii artifact nato. nato still has a place in all of this. how does nato fit into this? what do the european sources say? >> ukraine is not a member of

nato. that was the catalyst for this. they have asked for european assistance to help fort this looming threat -- thwart this looming threat. it will say a lot about what happens globally to international relations over the next four years. lisa: going back to china and the issue that john was raising about nike, conflicting messages . xi jinping was speaking at a recent forum over and china and he said that the u.s. global leadership is waning and said they should not be asserting their power and reasserted their preeminence over the region and beyond. how is this perceived in washington? marty: it is a point of concern as well. it is interesting that he did not mention the united states by

name but everybody knows who he is talking about. it is interesting that he made a very strong call for multilateralism, the very thing that donald trump sot to undercut -- sought to undercut. mixed signals, a great way to put it, lisa. it is not clear what china wants from the u.s. the biden administration is not going back to pre-trump relationship. lisa: i wonder if the playbook is what we are seeing with nike, pressuring u.s. companies directly. tim cook, elon musk were at this conference attended by xi jinping and there has been a direct outreach to big american corporations. is this the strategy of the chinese government? marty: this is where they have tremendous leverage, right? even the speculation about a boycott of products like nike can absolutely have an effect on

the share price, as you are seeing this morning. this is where china has tremendous leverage. tom: do you perceive in all of your years of following this that we really need a new dialogue with china? or is it the same old back-and-forth, the ping-pong diplomacy? marty: i think we need to reset our relationship with china. the biden administration has made it clear that it wants to do that. the contours of that relationship, based on china's behavior in the south china sea and the stealing of intellectual property, how you deal with those in a constructive way is something that is going to test the biden administration. jonathan: marty, always great to catch up with you, sir. this is the defining issue of

the next several decades. tom: last night, i was watching a lot of the speech on the philippines. they have had a horror for typhoon -- horrific typhoon. now they have the storm of an increased pandemic. and now they have the south china sea. it is front and center. jonathan: we have to feel for the new approach. it is a multilateral one. what i fail to see so far is the new strategy. what is the objective here? gain a foothold in the region? what does it look like? lisa: we do not have a sense of the firepower either. china's economy was the first to emerge from the pandemic. it is not clear how much

momentum there is behind it. china's economy is growing more slowly. does it reduce the capital they have to expand in the region and they are trying to upgrade their economic momentum? the idea of giving more wealth to the middle class. jonathan: the consumer base is so far -- so large now in the mainland. lisa alluded to something that is so important. how do you get corporate america to come along with you in this quest to do something about the challenges the communist party poses? tom: i think you really touched on something here. the nexus here will be hong kong. jonathan: how many companies wanted to comment on that on the record? tom: they don't. jonathan: we would ask them about it and they would bristle. you could see how uncomfortable they were in real time. they did not want to talk about it. the foreign affairs editor just

around the corner on this program. i am jonathan ferro. equity futures down 18. this is bloomberg surveillance. ♪

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there is progress. >> i spent a lot of time last year to listen, to understand, to reflect to understand what i could do as a leader of this organization. >> for many years, we have been a -- very shareholder focused. >> we are seeing unemployment and income losses affecting women more than men. >> two thirds of the jobs lost in south africa where women's jobs. >> societies are reproducing inequality, not producing.

so more weight off of the s&p 500 and pull further away from all-time highs, down 16. outside of that on the nasdaq 100, down a third of 1%. we will take a look at the bond market. tom: thank you so much. i am looking at a weaker dollar today, lots of earnings coming out. netflix later and the apple event this afternoon.

johnson & johnson just out. i will go to the bloomberg terminal. i will take a quick glance. they announce a dividend boost of 5%. this is a joy. the university -- yale university and turned it into a china watch. he has been involved in government and has been anointed with the worst job in diplomacy. daniel joins us this morning. i want to go to the u.s. lisa is very much focused abroad. are we drowning in nostalgia right now? daniel: you see this across both parties. so much focus on how we get back to economic strength of the past that there are ways in which we

are failing to realize the opportunities of the future. there has been this fascinating shift against what has been a pretty strong free-trade consensus across both parties for some time. the narrative you hear now is that we have done too much trade , integrated too much with the world, and that has reinforced the policy of displaced workers. we have seen this period of rising inequality. we have been retreating from the world, in fact, and trying to retreat further will only reinforce that. tom: in honor of john williamson, everybody wants to go back to when it was cozy, would it was comfortable. what is the new washington consensus? daniel: you can see some of the outlines of this in the biden administration. much more of an attempt to have

the government direct certain portions of the economy. much more focus on international competition. much more focus on what countries control different parts of the supply train -- supply chain. those will be the battles of the future. try to take a look at this that is not about just pulling these things back into our own borders or making these domestic industries. think about how we shape the global economy in a way that addresses the security concerns. realizing the economic gains for americans in a broad-based way. jonathan: that is a lot of work to do. it's pickup on the word "consensus." how do you get the european allies to come along with the?

daniel: this is the key tension in the biden china policy. he came out of the gate trying to set a pretty hard line on china. they made clear as they came into office that they were not going back to some pre-trunk consensus on engagement -- pre-trump consensus on engagement with china. they are trying to do that with allies. you saw the japanese prime minister in washington friday. whether it is with our nato allies. the problem is that a lot of these allies have different views about how you compete with china. europe was striking an investment deal with china at the same time that the u.s. was trying to craft this allied front against the kind -- against the chinese communist party.

this is a delicate balancing act. it creates a certain tension. this is the strength of the u.s. and the biden administration has tried to keep this in mind, we go into this competition with china with an incredible range of allies and partners in europe and elsewhere. china does not bring a lot to that. jonathan: let's build on that tension. the issue is the hegemonic that brings everyone out with us. we cannot get the chinese communist party to come with us. this idea the chinese communist party would want to be more like us. that is not going to happen. the issue i have when this comes up, what kind of system can we and our allies embrace if china does not want any part of it? does not want to play by the same rules?

daniel: i read a book about u.s. policy toward china in the 1940's and you can see that mistake. that is the beginning of the american relationship with the chinese communist party, this notion that we just the right amount of trade and diplomatic engagement, the chinese would see the world the way we do. back when i was writing about george marshall, that is something we clung to pretty bitterly. you can see that in some of the chinese policy in the 1990's. just amount -- the right amount of capitalism or diplomacy, the chinese would see the way -- see the world the way we do. that has fallen apart over the last four years. can you use competition, pressure from the coalition to bring the chinese along? we are seeing something like that with climate change.

the biden administration will hold the climate summit at the white house on thursday. we want the chinese to come along. only of these two countries are able to do something meaningful on climate change does the world have any hope of meeting this challenge. we cannot try too hard to bring the change along. we have to show leadership and the ability to shape the global action on this question. that china feels very pressure to come along for its own interest. lisa: the global warming discussion is a bigger one that we will be having throughout this week. i do want to go back to the u.s.-china tensions. with this disenchantment -- paired with this disenchantment.

what is the path forward? daniel: one interesting element of this -- we talk about trade, we think about traditional manufacturing. there is one essay by david mccormick, the ceo of bridgewater, they were both senior economic officials in the george w. bush administration. you are talking about data flows when you're talking about trade. that is the future of global trade. china is working very hard to shape global governance of data. they have this techno-authoritarian model that applies domestically and shapes the way they engage with other countries.

the u.s. really has not gone that far in trying to put forth an alternate vision of global governance. we talk about the trade battles of the future, they are more likely to be about data than they are about the traditional trade battles. which of these global countries will go out and shape some kind of global policy? this applies to everything from how these are taxed to -- how things are taxed to privacy and all of the familiar issues domestically. only if the u.s. goes out and tries to put forward some kind of global rules to define data trade going forward, otherwise, other countries are going to step in and do it themselves and that will not be the approach we will be happy with. lisa: you are saying that people

think the u.s. is behind china coming up with governance of global data. tony blinken said the u.s. was behind china when it came to taking advantage of new job opportunities resulting from fighting climate change. is the presiding sentiment that the u.s. is falling way behind on one of the most important issues? daniel: that has been the view over the last four years. -- last few years. this is at the heart of what the biden administration is trying to do with the infrastructure package. we are having this debate about what infrastructure looks like. some of that is 20 century infrastructure. most of us think that the biden administration is making this case that it should be about how you renovate buildings, how you invest in these future technologies. that is a politically fraught issue.

the case they are trying to make is that we think about infrastructure, we think about investment in ways that will be key to the competition of the future. whether that is on data and technology, renewables. jonathan: we will be talking about this for a long time. great to catch up with the, sir. j&j announcing a dividend boost. just briefly, johnson & johnson reporting $100 million in q1 of the was covid-19 vaccine sales -- u.s. covid vaccine sales. j&j reporting $100 million of u.s. q1 covid vaccine sales. tom: we will see this along the

way and the debate will be huge. we will be looking at every single earnings report. david saying it is a time for microanalysis. jonathan: we will talk about this next with johns hopkins senior scholar. s&p 500, we are down 16 point. this is bloomberg. ♪ >> day to have deliberations in the minneapolis murder trial that sparked a nationwide debate over police use of force. the jury is deciding the fate of derek chauvin, the police officer accused of killing george floyd. prosecutors say he violated department policy.

in congress, a rare show of bipartisanship support for a piece of legislation. the house placed a build that would give safe authorized marijuana businesses. russia is said to have moved 150,000 troops to the border with ukraine, the largest buildup there ever. that is accord to that european union stop diplomatic. -- european union's top diplomat. >> i am concerned with the potential consequences of escalation for my country. we call on france and partners to stand by us in word and deed. >> the u.s. has warned airlines to exercise extreme caution when

flying over the ukraine and russia. 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. ♪

♪ >> they are rare events and what countries are going to do about

this will depend on the availability of other vaccines. it is going to be risk versus benefit. the other problem, of course, is this not happening in a vacuum. it is happening in the middle of an anti-vaccine lobby. that could easily derail a lot of efforts. jonathan: from new york city this morning, good morning. here is the price action this tuesday morning. equity market down 21, a half of 1%. crude did have a 64 handle, back to 63.74. euros stronger, the dollar weaker. that has been the story recently, hasn't it? a slightly stronger euro. tom: the mix has changed here

with the dollar weakness we see. we are back to -0.77. earnings in as well. a merger, dow jones reporting canadian national will go after kansas city southern. right now, our guest is from johns hopkins. the differential seems to be the u.k. doing well and the u.s. doing well. the news out of india and the philippines is absolutely grim. should we get used to this new polarity? >> definitely, most of us were expecting this to be the case as different countries have different vaccine rollout timescales. we have seen these more contagious variants take off in

different countries. if you do not have the vaccine to stay ahead of them, you will go back to where you were. many countries are not going to have this controlled well into 2022. that is why you saw the state department increasing to 80% the number of countries where there is a travel advisory. that will be the case until the vaccine is in place in those individual locations. tom: i look at those individual locations. a couple good charts overnight. jonathan ferro having his second shot onto the last 24 hours. it is rumored he survived. i look at the good news coming on and the younger people are coming on as well. what is your timeline or 20-year-olds and 30-year-olds in america will get back to the

success we see in 60-year-old and 70-year-olds? >> is likely to be the summer. everybody is signing up to get a date to go get vaccinated. there are many places where you can walk in and get a shot here in pittsburgh. that is going to make it easy and will likely continue to get more of this young group that is responsible for many of the cases we are seeing right now. once we get to around 40% of the population fully vaccinated, we will start to see a decline in cases the way israel did. we already see benefits in terms of hospitalizations. that is not happening so much anymore because of how many of them have been vaccinated. lisa: what is the latest on transmission for people who have been vaccinated? what are they can pass the virus

on to other people. -- whether they can pass the virus on to other people. >> it is extremely rare. it does not mean zero, but it is extremely where. -- rare. if there is an outbreak, you will not be looking at the vaccinated people. it will take some time for public health guidance to catch up. that is why we still have put a conservative guidance. in terms of risk tolerance, i am not worried about vaccinated people spreading this virus. i tell people to go back to their life as much as possible once they have been fully vaccinated. we have real-world data from many countries, like israel, that show that transmission does go down. there is data that says it is very hard to get infected if you have been vaccinated. there is a decreased spread as well. lisa: based on this two-tiered

inoculation schedule were most of the world is waiting for the u.s. and the u.k., how soon can we see international travel pick back up? >> there will be countries that have the ability to travel between each other easily without much friction, i suspect, like the u.s. and the u.k.. even for the u.s. and canada, it will be sometime. vaccinated individuals may still have to quarantine organ to test before they go into those countries -- two quarantine or to test before they go into those countries. there will be green zone's where vaccine uptake is high. other parts are going to be difficult. jonathan: always good to catch up, sir. we have to leave it there.

touching on something that the banks are talking about as well, several waves of reopening. the path back to reopening will not come all at once. i want to return to the breaking news. canadian national railway planning to make a $30 billion offer for kansas city southern. there are two bids on the table. these are the bids, according to dow jones. 325 for each kansas city southern share. the offer, a 20% premium to canadian pacific railways. tom: this is an interesting -- this is something i follow. what this comes down to is you have to go down the mississippi river and you have to go down

the heartland of the midwest. years ago, they took on illinois and go down the mississippi river. kansas city southern is essentially west of the mississippi river serving new orleans and houston. canadian pacific desperately needs to make this transaction work so they go down the middle of the u.s. and you have this blocking effort by canadian national. jonathan: kansas city southern in the free market. lisa: given the fact that there is a bidding war. it does indicate the preeminence of the old world industrial economy coming back. you can see that in that share price. infrastructure is such a big push. tom: it's not me.

it's my relatives. jonathan: i wanted to clean that up. lovely. from new york city this morning, good morning to you all. no drama yet. this is bloomberg. ♪

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♪ >> i think we could have an employment and productivity boom and a real change. >> the recovery in the united states is fully in the price. >> we are looking not just at the peaks. we are looking at the sustainability of these trends. >> there's a worry we are getting into bubble territory. >> it looks pretty clear that the fed is not raising rates until the end of 2022, 2023. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: getting back to work in the united states of america. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equities down about 0.4% on the s&p 500. where do you want to begin? with got beets for earnings and a little bit of m&a on the