the peak, we are looking at sustainability of these trends. >> have things structurally change? >> not so fast. >> people are still assuming the fed will not be able to tighten dramatically given where rates are. jonathan: from new york city and our audience worldwide, good morning, this is "bloomberg surveillance" live on bloomberg television. equity futures little change. the theme over the last couple of weeks, of the cyclical trade has stalled. tom: of course earnings coming in and i will go to the research. we are in the midst of a micro market.

we have the reaction to the earnings revenue forecast. the russell, of the small caps down by more than 3%. two days of big losses. the airlines, 10 straight days of losses. it's been pretty brutal out there. maybe regressing --mainly regressing. there's a thing called factor analysis where you pick those themes. if you pick them wrong in the last two weeks you've gotten smashed. i think the -- jonathan: i think this reflects the domestic story. lisa: international travel not happening based on this bifurcated recovery from the pandemic. basically he was talking about the hope trade. earnings season is so great to a

market trading on hope. there will be a recovery trade that resumes. however right now people trying to figure out how do you price hope jonathan: i'm in shock. anything to say or add? tom: what does tottenham do when they play southhampton today? to be honest here it is a complete blow up. could you imagine if there were 40,000 fans to greet them today? jonathan: away from the games themselves we are talking about florentino perez, we are talking john henry of liverpool. these are some of the -- of business individuals worldwide not just in the sport. i find it amazing how much they miscalculated this week. absolutely remarkable. for all the commentary in

england that foreign owners don't understand, perez is not a foreigner in spain. i think that misses the point of that many of these people have been around the sport for a long time within these countries and still got it dead wrong. tom: i thought all of her brown and the telegraph was brilliant. in the glazer family rochester new york and the tampa bay buccaneers. wow did they miscalculated. jonathan: we will touch on that a little bit more. slightly chaotic. tom: lisa is vaccinated, calm down. lisa: i'm feeling great. down to on the s&p 500. unchanged after a couple of days. small caps is where the pain is being felt. yields high by single basis

point. euro-dollar just about clinging onto 24 hours out from ecb decision and christine lagarde news conference. >> talking about vaccinations it's a rite of passage and there is an excitement that your body is doing something with this. just want to put that on the record. what i'm looking at, we will look at the eia crude inventory. there is a push poll dynamic here. you have an increase in supply but you of the increase in demand until now. how much is the increase in the pandemic cases in the covid case in places like india and asia. japan in particular going to crimp some of that demand. then today we are going to get 1:00 p.m. the $24 billion sale of twenty-year notes. interesting to see what the take-up will be. a lot of speculation has been

they have taken on a big proportion of this. i mentioned no how big of a role. tom: 20 year bond you are doing on radio? lisa: this is just tv. apple, google and spotify -- will hear. tom: what color imac are you going to get? lisa: minor going to -- tom: continue please. jonathan: lisa, thank you. netflix down by around 8% in the

premarket. pull forward is the theme. the acceleration through last year. pull forward some of the demand this year. competition is something there pushing back. competition is going to be a thing this year that's for sure. tom: to our wonderful guests you are going to bring in, these are such unusual times and you see that in the very beginning. jonathan: let's set the stage briefly. the commodity market story topped out late february early march. treasury yields topped out at the end of march. the cyclical trade has stalled a little bit. city global head of fx analysis. the conversation and debate is pretty simple. had we -- have we just paused or are we set to reverse? >> great to be back on the show. our view is we are pausing and

that we are in this exhaustion phase were a number of more challenging trends have exhausted just as much as may be the stabilizing force as we've seen over the last two weeks or so with rates probably finding just about a bottom. his sentiment about deep pessimism about places like brazil even also being reflected to some degree in market prices. we think this is probably no more of that cyclical trade in the coming months. tom: a lot of mathematics and correlations on the linkages of asset classes. how linked and smooth are the dynamics working now or is it all discrete and separate? >> they have been somewhat unstable for quite a while and that is in line with i think the

-- i think there's one correlation that's unstable and equally very stabilizing for the markets. that's between rates and risk assets. you've probably seen the volatility of u.s. rates the top out here that we are probably in the range between 150 and 175 for the time being. that puts us back into a world where equity prices and risk assets resume their assent. there's not quite a negative correlation we've established their but there is hope for the so-called risk parity trade that u.s. rates have probably peaked in the short term. lisa: a lot of analysts talk about the reflation trade is a monolith. it has not. the nature has changed significantly over this period of time in terms of what's getting reflate it. the u.s. was the dominant

reflate and trade based on the nation. why is that not going to continue as the reflation trade gains traction? >> i would highlight two i think changing developments over the last couple of months that are notable. u.s. exceptionalism, there are views and probably peaked out in the exception of that nature. the rest of the world does have a chance of catching up somewhat. the other is even in the u.s. what's happened over the last month or so is investors have decided they are not extrapolating that too much further out. so if you look at the u.s. rates , if you go a couple of years now investors are telling you we are getting a big -- in the short term but further out we might be going back to where we were and it's very important for u.s. rates are. it's important relative to the rest of the world. our view is we are still in a

more or less synchronous global recovery environment. tom: give us a conviction of the dynamics of the euro. we have a, 9, 10 houses for the most part looking for stronger euro. it's a path of 123, even out to 130. give us these citigroup conviction on that path? >> we have been on the higher side of euro-dollar for the year. we think it's probably in the 125 two 1.2750 range as a target. i will note that's reinforced by the more recent trends by people moving back into dollar funding which boosts the value of the euro. as a result. i will also tell you where our optimistic case of the euro will end because we've already started to hear a few noises

around that. sometime in the second half of the year i think that will start to become a theme to top out at the euro-dollar. jonathan: always good to catch up with you. thanks for being with us. you will like this tweet, tom. it says as long as you don't need money to pay for living expenses, housing, a college or medical expenses there is no sign of inflation. >> long ago and far away when lawrence kudlow made his name screaming about core inflation. i happen to be in that camp trade it's sad that there has been damage of this but it's been -- the partition inflation out. jonathan: do you think we could get mr. carney to make a comment on this? tom: we will speak to the governor about climate, about

biden. i know you have some good questions on the monetary path. i just want to ask him -- lisa: i'm all for it. tom: i'm can ask him about the toronto maple leafs. they haven't won since -- jonathan: confirming the club no longer will start. how long have we worked together, tom? lisa: i was about to say defined together. tom: snooze fast. [laughter] ♪ >> in minneapolis, a police officer derek chauvin has spent his first night in jail. a jury convicted him of second-degree murder and other charges with killing a black man.

george floyd, when he kneeled on his neck for more than nine minutes. derek chauvin will be sentenced in about eight weeks and could face decades in prison. white house officials have told supporters able pledge to reduce u.s. greenhouse gas emissions by at least half by the end of the decade. that's an almost doubling of the nation's earlier commitment. the goals being discussed ahead of the international climate summit. that rebel soccer league in europe is fallen apart days after days. the collapse was inevitable after all six english teams involved pulled out of the so-called super league. shares of netflix lower sharply in the premarket streaming service. it had fewer newer customers than wall street expected. it even missed its own forecast by millions of subscribers. netflix says the current quarter

will be more challenging, a lack of new shows may be contributing to this slump. this after record growth in 2020 the netflix said was due to the pandemic. 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 r.g. -- ritika gupta, this is bloomberg. ♪

>> we still have work to do. we still must reform the system.

this bill is part of george floyd legacy. the president and i will continue to urge the senate to pass legislation, not as a panacea for every problem, but as a start. jonathan: accountability, not justice yet. that seems to be the takeaway for many in the united states of america. alongside tom keene and lisa abramowicz, i'm jonathan ferro. after two straight days of losses, we are down another two points on the s&p 500. into the bond market we go. 1.5714. the euro -2/10 of 1%. crude down a little more than one full percentage point as well. wti at 61.97. tom: governor carney joining us later.

climate change and monetary policy. right now we digress. for international audience in particular we get a bit of a window into minneapolis. emily wilkins joins us. i thought peter cahill, of the judge yesterday was extraordinary when i look back on other cases where a nation stopped to listen to the verdict , it's happened a few times in my life. we all remember the moment of oj years and years ago. how does washington move forward. the president and vice president made appropriate comments yesterday but how do the politics of washington move forward after this verdict? emily: there are a lot of lawmakers in d.c., particularly progressives, who see this is one step in what -- in more that needs to be done. congresswoman causey of cortez says the verdict is not the same

as policy change, which is needed. he saw the democrat led house passed a bill on police reform that would include a ban on chokeholds, make it easier for individuals to sue the police. that bill is stalled in the senate where they are trying to find a way to get 10 republican senators to vote for it. the outlook is not good on that. tom: you lay out beautifully the divides of the nation as witnessed by the house and senate as well, is this an issue that is germane to the elections of 2022 or is it a moment of national pain, natural -- national crisis that we move on from? emily: i think it's a little bit of both. he saw individuals from across the ideological spectrum come out and condemn this. when you get down to the brass tacks.

i think democrats are very aware that black voters handed them a victory in 2020, particularly in georgia where they gave them those two senate seats needed for democrats to have that very thin majority. >> does this verdict energize or deenergize the defund the police movement? emily: to be careful here, i think it energizes democrats and progressives. i think a number of them, particularly lawmakers would be particular saying their part of the defund the police movement. democrats don't want to be accused of defunding the police but want to show they are strong on police reforms, ensuring things like george floyd don't happen again and that we see verdicts like we saw yesterday. i think they are trying to move away from the name defund the police while still trying to move forward with policy actions

that show they are serious about the issue. lisa: talking about the agenda, he also came out with some pretty ambitious green policies, carbon emissions reductions policies, much more aggressive than what we saw under president obama. how many teeth are there to this proposal, to some of this coming to fruition? emily: definitely an ambitious plan. i think when it comes down to the fine details we will be looking at that upcoming infrastructure package where president biden has said he wants to include climate change provisions and other provisions to help alternative energy sources grow, the question is exactly what's going to be in that bill and how much of an impact it will have. president biden from the start has been adamant on having climate change be a focus of the administration. i think the details that came

out yesterday are in line with that. it's going to be up to congress to see exactly how much change can be made here. tom: is this what we will get for the next x number of years? where there's a lot of presidential proposing but an inability of the legislature to dispose -- dispense it? emily: if you look at the trump administration there wasn't much of that push. i think this is another thing you are seeing with president biden here. he is having to turn the tide after the trump administration coming back to these countries and saying the u.s. was absent from this space. now we are back and stronger than ever. he's really trying to convince other countries to take the u.s. seriously in this arena and to work with us and continue to be a part of our initiatives going forward.

>> many people taking this administration seriously on this topic. interesting to hear from secretary blinken who said we will not allow other countries to use this issue is a bargaining chip to excuse bad behavior elsewhere. i think that was directed at one specific country and one specific government, but that's where the conversation has been that may be the chinese communist party would try to use climate change and climate issues as a bargaining chip to excuse other issues the united states has been ferocious about. tom: i will let you gauge the cynicism here. mr. xi will join mr. biden at a climate summit in two days or so. they will go through the formalities. jonathan: there are issues where they can agree and this might be one of them but it doesn't mean we will move on from the other issues quickly. lisa: there is an answer to how much this agenda could spur new employment.

that's how biden is trying to spin this. we can invest in green energy and be the dominant player in the transformation around the world and it will help the u.s. economy. how does that play with china? >> it's very important and very european here, we blew up the paris agreement. i attended those meetings with a lot of support for michael bloomberg. do we have a new paris agreement or a new confab to approve the pre-trunk mandate? jonathan: i'm not able to say that. this seems more sincere than in the last four years. lisa: also tom, you are european. paris climate accord, ago. obviously. tom: i think the europeans have to provide a lot of leadership. jonathan: europe is the problem child on so many issues. germany under russia, germany over china. so many things need to be worked out.

tom: to me what they can deal with in the next few days is a reaffirmation of the paris agreement. jonathan: good morning. this cash equity shaping up as follows. off by a 10th of 1%. this is bloomberg surveillance. ♪ surveillance. ♪

jonathan: good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. two straight days of losses on the s&p and nasdaq, of the russell, the small caps down monday through tuesday. a little bit up on the russell. down 2/10 on the nasdaq. the s&p 500 basically unchanged. yields look like this, a little bit higher. we creep up by a basis point or two. finally in foreign exchange a quick look at euro-dollar if we can. euro clinging onto a 1.20 handle. down a about a third of 1% on

the six session -- the session. tom: didn't we see a lot of strategies line up markers to a stronger euro? jonathan: the path forward pretty clear, vaccinations in europe a whole lot better relative to where we were several months ago and that opens up a different runway for what we had in front of us. jonathan: europe doing -- tom: europe doing better, the united kingdom leading the way. the moment we are in this natural disaster we are facing. after holding court at ubs for years, those of you internationally wilmington trust is someone who manages quiet money. he does it with a philosophy of brown university, the sorbonne, and other academics. what's your philosophy on diversification? you have a pressure of people coming in who made it big with five or six holdings.

what is your theory or philosophy of modern diversification? >> good morning. thank you for having me. i would start by looking at the observation that roughly one third of the perspective of the u.s. investor, domestic equity opportunities are in the private market and two thirds are in the public space. if you start from diversifying public market equities and private market opportunities. in many cases it's inversely correlated to public markets. the longer-term industrial holdings, of things. within a public market space, make sure we are diversified within u.s. equities across different factors and different sectors. we time some of those two considerations, but not too aggressively.

you have that kind of diversification marks go up more than they go down and over time you will come out ahead. >> how do you manage the response of your clients and your trust company to the -- to the technology boom? they are not satisfied with the return, but as a general statement they are all saying why don't i own more apple or amazon? what do you say to those people? tony: in the context of -- we like those big technology platforms from a secular standpoint. we think they will outperform over the next three to five years. they are the rails of the digital economy. having said that, we are in a class location towards -- stocks and even though we had a pullback in the last few days or weeks on this economic stocks,

we see those big technology platforms relatively underperforming for the rest of the year. we have an historic dividend from goods to services that will drive is more at economic sensitive stocks and sectors. clients want to be in those sectors if they want to outperform the s&p. the biggest issue we have right now which is really shaping up in a fascinating way with respect to technology stocks is we at wilmington trust have had a historic overweight to those technology stocks. consequently our clients in most cases still have it overweight. we are looking at a potential doubling of the capital gains rate, we may be in a position to convince our clients to sell down some of those holdings and pay capital gains on a lower rate. lisa: given the fact we are seeing a pausing markets, a sort

of reset as people try to chart the path ahead, i want to go to philosophy, this question on a larger scale. have we skipped the default cycle? what are the consequences of the death of a default cycle based on monetary stimulus? tony: i asked our chief economist almost every day where are we in the economic cycle? there's a whole slew of indicators we are early cycle that relate to the kinds of economic sensitive stocks that are going to see a drive in the market and direction of interest rates. then there are other indicators like the default cycle. we haven't had those defaults. i don't believe we will see the default in this cycle. given monetary policy and the accommodation that we are seeing from fiscal policy even with the tax hikes, there is so much

additional stimulus from fiscal policy overall on that basis that i don't think we will see the default cycle we typically see either in a private space or public space. tom: all -- lisa: a lot of people agree with you. the lowest default rate going back to 2017. the stimulus effectively killed off the default cycle. one of the long-term consequences of that lower growth, a lower return potentially for zombie companies? how do you factor that in? >> i think you will see more zombie companies over time. i think you will see lower returns going forward now. on the uni-side, spreads are still wider. but not on the taxable space. so i do think you will see a lot

less opportunity for professional investors, less volatility. i don't think that from a growth standpoint will be a problem in the economy. i think it will move lower due to the share -- scale. then we are going to settle down next year in the three and a half percent range which is not priced into the market. when you put that together, unusual combination of considerations. i believe that the lack of default will create some incremental -- in the economy but is not a mccready structural problem. tom: how will equities react and critically how will -- react?

use of cash in at three and a half percent economy. >> that's a really interesting question. we don't think the slowdown we are seeing right now, what's happening in the equity market is you are seeing a typical market consolidation on the news. you are seeing terrific earnings so far. 65% on the bottom line. they exceed the average outperform rates. the economy is doing terrific. we had these numbers of retail sales, we are not seeing a slowing in the economy. we are seeing a bit of a pause in the reopening trade. united airlines came out and said things aren't as great as we thought they would be. this would be a more extended reopening for us. you are seeing a little bit of an extension or a pause in the

reopening trade but you are not seeing a fundamental questioning of the underlying narrative. the question is there's going to be a massive reopening dividend for equities so corporate profits up 25% year-over-year. 50% and then in the third quarter probably 30%. how will they spend that reopening. we will see those reinvested in cap acts and hopefully you will see some of that reinvested in job training and skills. the biggest risk we have is inflation materializing. there so many openings right now. the companies need to reinvest that dividend, that windfall reopening in retraining and

investment. jonathan: if you want to read more of this you can on bloomberg opinions. she never told us did she. lisa: i'm moonlighting a little bit. jonathan: was this like the mea culpa? lisa: i was looking around the corner. i'm taking a big picture look at trying to understand the low spreads and trying to understand what this means given the valuation seem incredibly high. yet it makes sense. one of -- what are the longer-term consequences if we won't see an imminent crash? tom: this is as close as we get to british old money and you've got a hugely optimistic catch

from mr. roth on what do we do out of a boom economy. he's basically saying you've got to be on board, you've got to participate as we get beyond these silly numbers we are dealing with right now. jonathan: a little bit more than a year ago, they said you can start panicking when policymakers start to panic. boy did they panic. that's why this default cycle was effectively eradicated before it started and that's why so many have been so wrong about this market. lisa: what are the consequences of companies that aren't well-run but are surviving and continuing to try and pay down debt taken on during a different era? tom: a loss of -- jonathan: a loss of dynamism clearly. every time we have this intervention we prevent that from happening. lisa: there is a question of what ends this cycle. the more debt these companies have, the more push to a

disinflationary environment. who ends this cycle? tom: she is fired up. lisa: it was something i was thinking about. jonathan: i can tell. lauren sauer joining us later, a johns hopkins associate professor. yields up by a little more than a basis point. euro-dollar, 1.20. 4125 on the s&p 500. from new york, this is bloomberg. >> with the first word news, i'm ritika gupta. derek chauvin will learn his fate in eight weeks. that's when a judge will

sentence him for the murder of george floyd. he was convicted of second-degree murder and a number of lesser charges. he could get decades in prison. the u.s. reaching agreement on taxing big companies -- big tech companies is getting bogged down. the new rules would apply to any large company that exceeds certain numbers of annual revenue profit margins but amazon is a low-margin tech giant. other countries are balking at the idea, that could mean it would not be covered by the tax agreement. shares of -- fell after the japanese company set up a buyout. the board had urged caution saying they might not need -- it might not lead to a deal. bain capital is considering taking a private. apple has unveiled a faster ipad pro.

it's a more powerful version of its pricier tablet aimed at workers and students learning to office -- returning to offices and schools. 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. ♪

>> once we get to around may 40% of the population vaccinated based on israel we will see a

decline in cases. we are already seeing benefits based on hospitalizations. older individuals who are most likely to have severe complications is not happening so much because of how many have been vaccination -- vaccinated. jonathan: johns hopkins center for health security senior scholar. from new york city, good morning. here is the story in the market this wednesday morning. pretty much dead flat unchanged on the s&p. into the bond market with yields basically unchanged. in fx, euro-dollar holding on to .20. -- on 1.20. wti down to about one full percentage point. tom: we will talk economics of

mark carney and climate change as well. looking forward to gina martin adams to join us on the equity markets. our earnings if you will, our earnings season conversation of the day. right now, lauren sauer joins us with johns hopkins, associate professor of emergency medicine. i see the charts but i don't really understand the vaccination rate 18 to 25 and the vaccination rate 21 out of 30, how are they doing? lauren: we would like to see an uptick in those vaccination rates for sure. it's looking better as it's easier to get access. across the u.s. we saw the age limits drop, 16 and older can start to get vaccinated across the country. i think even earlier than any of us even expected which is great. the next step is making sure not

just the people who are ready and lining up are there, but then the people who are still unsure or her parent -- or whose parents are unsure for them. tom: help me with the international view? this came up three times yesterday. we have horrific news in the philippines, from india. tokyo and osaka shutting down as well and there's a number of other stories. how does the u.s. protect itself from what is clearly bad international news. lauren: i think we are watching and waiting to see what happens in many of these countries that are experiencing third waves, and some of them fourth waves. our vaccination rates are higher which is great to see but we are also watching the variants moving through these care -- moving through these countries very carefully. as we sort of see our increasing vaccination rates, that we

maintain those measures that worked well for us earlier in the pandemic continue to work well. maintaining distancing wherever policy -- possible, limiting mere exposure to particularly on vaccinated or vulnerable people. wearing that mask which continues to be an important measure we know works. >> i know from a health perspective it makes sense to take all precautions. from a social perspective people are saying forget it i want to go review of my friends and be out to eat. that's what they are saying regardless of whether they are being vaccinated or not. what's the potential development based on the increase in cases we are seeing overseas based on the fact people in the u.s. are done and feel like they can be done. extrapolate out what this could look like? lauren: our worst fear is that it looks like those other countries. so if we let our guards down to early as we are getting this really protective group of

highway -- highly vaccinated populations. if we let our guard down to early, we could be following many of those countries in the same path? lisa: you really think so? given the level of vaccination we are already seeing transmission start to go down. you think there is a risk we could see a situation like india or japan? lauren: i think there is a risk we could see ourselves on the path. i do think our third or fourth wave potentially could be muted, but i think that relies on continuing these measures as we get more and more people vaccinated and as we move into the summer hopefully seeing a reduction in cases. i do worry if we simply drop all these things we know work well while we are trying to get people vaccinated that we will see a significant uptick in cases. >> good to get your perspective.

johns hopkins associate professor of emergency medicine. i think lisa just figuring out if you can take this mask off. tom: i'm reading about that. i'm sorry, the news out of india particularly. jonathan: the news out of india is grim and i think the airline story has really captured the divide between a better domestic economy, domestic travel, but international business travel we are a long way away from that. this is going to happen in waves. the market often treats this as one big thing, one big movement. this will happen in waves. the airline business has really captured that. 10 straight days of losses. tom: give me a window tomorrow, give me a window into why this

is different? jonathan: it's fresher. they've talked about frontloading some bond buying and is not showing up in the data. just how many bonds are they buying and what will that look like? we are not seeing it in a significant way. ecb president has been criticized about her performance in these news conferences. behind the scenes, there is some frustration. at least in the markets community. tom: to be clear, the great distinctions they don't have a booming economy. they don't have anything like china or the united states. jonathan: also a different approach with the furlough programs and entitlement programs across europe compared to the united states as well. you might not see that same snapback in europe largely because of policy difference. the vaccination rollout has been

the clear differentiating factor over the last year or so. the vaccination effort in america has been further and europe has been difficult. we are starting to go through that inflection point. clearly things improved and we want to see a whole lot more of that. away from making a market call we want to see more of that so we can get back to business. tom: we are fully vaccinated. great team support we've had here working remote. lisa abramowicz suffering the second jab yesterday. side effects? i had a little bit of fever? lisa: you really want me to sell -- to tell the world i had a sore arm? that's basically the gist of it. i will excuse anything i do. jonathan: it's very personal and very unique.

i felt very fatigued. others have felt all right. for me personally reclaiming my freedom after this is something i'm looking forward to doing. looking forward to catching up, of the bank of england and u.s. -- u.n. special envoy, mark carney. .

♪ >> it's just been hugely stress tested here, so the market survives. >> you are looking for the sustainability in these trends. >> have things structurally really changed? >> what the bond market is telling you is not so fast, the fed has the upper hand. >> people assume that the fed is not able to tighten dramatically in this economy, just given where rates are. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equities with a lift in the last 10 minutes, up zero point 1% on the s&p 500. it is a pause in this market that has got everybody's attention, at least in the last couple of days, with that move