♪ >> 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

in small caps lower. tom: there's been an adjustment. i'm going to go to david k ostin. i love his idea that it is a micro market of micro news. jonathan: at the epicenter of that, a bond market that is off the highs of the close last month. right now, 1.57%. we are taking a pause. tom: i don't know where to say the limit is, 1.62% or 1.60%, but we are certainly to a lower yield higher bond price. that is not migrating towards higher inflation, better real yield space. jonathan: on one side, you got the pause crowd. on the other side, the reopening crowd. lisa: when you got that treasury rally, there are technical underpinnings. there was a huge rash of bond sales for the biggest banks.

there was perhaps this short squeezing. is that driving the narrative? what does the bond market know that we don't for all of those equity bowls out there who have been going into an inflationary -- equity bulls out there who have been going into the inflationary trade? jonathan: don't you love that, what does the bond market know that we don't, as if there is some -- that we don't? as if there is some secret out there. lisa: bond investors typically look at the bottom line. they look at where they are going to get paid. if all of a sudden, people are concern -- jonathan: they don't call up their equity friends, have a chat? they don't say to their colleagues, don't share this. [laughter] tom: the bond market people look around the corner more than anyone else. lisa: that's right. jonathan: that's it. lisa: look at that price action. [laughter] jonathan: three points on the s&p, we advance by the 0.1%.

i know the bond market crowd loves to hear this. so far in front of everybody. euro-dollar which $1.2010. holding onto that one dollar 20 since handle going into the ecb tomorrow -- the $1.20 handle going into the ecb tomorrow. lisa: oil has been selling out over the last few sessions. we had seen inventories come down dramatically. cannot continue given the surge of the virus in places like japan and india, and given the fact that you are starting to see rumors of inventory building backup in the united states? as 1:00, the u.s. is selling $24 billion of one year notes. interesting to see with the demand looks like. still interesting given the drama, the rally in treasuries we have been talking about that has stalled out. interesting to see whether we get any indication of foreign demand in particular. today, apple, google, and

spotify executives are appearing ahead of an antitrust committee. we thought this would pick up. it does seem like something hanging in the background for a lot of these big tech names as you start getting a more populist shift, even within the republican party. jonathan: what does the fed know that we don't know? that's one of my favorites, too. haven't heard that in a bit. netflix is off. it has been tough after a massive year through 2020. old forward seems to be the phrase of the moaning -- of the morning for this stock. they don't think this is a competitive story because some of the international markets they were slowing down in, too. tom: i don't know what to make of it. full disclosure, i've never been a fan of it because i am waiting

for profitability. they claim they are going to have sustained profitability at some point. what i found interesting, and again, i am a complete hack on this. two paul sweeney, they were saying they are having -- hack on this compared to paul sweeney , they were saying they are having a hard time of this. but to me, they are on fire. they just have show after show. i just don't know. jonathan: there was nothing to watch in q1, and there might not be anything to watch in q2 either. we are down 8.5% on netflix. the credit story certainly improved. what's that, tom? tom: "surveillance" gambit. lisa: this show is transitory. jonathan: it's really not, lisa, as you know [laughter] -- as you know. [laughter] it's permanent. tom: talking about the credit profile -- lisa: talking about

the credit profile, they reiterate their view that they are going to become cash flow positive. this idea here is that if you look at what they actually said, it was actually pretty positive. jonathan: for credit investors, yeah. lisa: and sticking with the same line they had before. jonathan: credit investors want to get paid. equity markets want to see growth. right now that growth is not in line with what is expected. tom: we are just trying to get through it on netflix. lisa is taking this seriously. jonathan: i know. i've noticed that on several fronts this morning. [laughter] tom: lisa, it's netflix. we are at home. don't watch that. paramount+. who watches it? jonathan: have you got paramount+. tom: we had spongebob weekend, and we got weed if it -- and we got rid of it. [laughter] jonathan: what is spongebob weekend? tom: i don't know, it is some culture. no, i'm watching red sox get it done. padres are just dying.

jonathan: how are you watching baseball? tom: i'm watching some baseball. i'm watching national league ball. am sort of in a traditionalist mode. jonathan: gina martin adams going us now, bloomberg intelligence chief equity strategist. we won't talk about anything we just talked about for the last five minutes or so. we will talk about this equity market, still on the cyclical side of things in the airlines, and the small caps. what is your take on things? gina: i think a lot of this is simply low vol stocks cut cyclically over trade. low volatility sucks just got completely left out for the last year. we are more oversold than we have ever seen in our records, and are actually trading in line with the index on valuations, which is a complete oddity for the last decade.

so i think what is happening broadly in the market, given we are only down about 1% for the s&p 500, is really a story of rotation and not a story of a market selloff. at this time, you got to the point where small caps were really leading the charge. to me, this is the story of rotation, investors taking advantage to take some profits on winners in anticipation of a market that maybe slows down, but continues to turn upward over time -- to churn upward overtime. tom: i look at the 12 month trailing return of dow, s&p, and nasdaq, and these are numbers you and i have never seen. we are addicted to 47%, 51%, and up 67%. now what? gina: our view is that stocks

still have some fundamental upside from here, but it is a slower gain. our fair value motto for the s&p 500 -- fair value model for the s&p 500 suggests closer to 6% or 7% as opposed to the significant double-digit pace over the past several years. the characteristics will probably change. it is no longer a gain riven by valuation expansion. instead it is a story of earnings recovery really driving price. we are certainly seeing a frankly magnificent earnings recovery emerge over the course of the first quarter earnings season. at the end of the year we were anticipating about 3% sales growth and 15% eps growth for the first quarter. we are more than doubling that pace already. so very strong earnings recovery. i think the skeptics said it is

so much more than just easy comparisons to a year ago. companies are showing very strong recovery, and i think that is what is keeping stock prices moving higher. just a slightly slower pace than what we have seen over the last year or so. lisa: there was a train of thought that if interest rates rose significantly, that would hamper the equity rally. what if equity yields went down as hsbc suggest? would that be worse for stocks because it indicates slower growth that can't afford the type of earnings we are seeing currently? gina: i was absolutely. i was never in that camp that higher rates would impede the equity market. it is when that correlation breaks down that you have to be turned. so i completely agree with the notion that if we have a bond market that rallies substantially, it probably does indicate some degree of weakness emerging in the economic outlook

, or something has changed in the outlook for inflation. those two key fundamentals are pretty critical to maintaining the outlook for stocks at this moment in time because obviously , as i just mentioned, we are definitely earnings dependent. so i think stocks and bonds should move together in particular at this stage in the cycle. it would be completely anomalous to see otherwise. we need to see yields continued to creep higher. we need to see the yield curve continued to become more upward sloping and credit spreads to remain tight to remain our -- to maintain our trajectory. jonathan: on the equity side of things, a couple of things to keep up with this morning. netflix down 8.5% on a monster subscription miss. on the credit side over the last year, much better news for that particular company. the airlines down for 10 straight sessions coming into wednesday. s&p 500 airlines have lost 11.6%

over the last 10 days. it has been pretty rough out there for some of the consumer discretionary names, including some of the airlines. tom: it is a pullback, like gina said. we are allowed to pull back. we've heard that from a number of our conversations. jonathan: that i agree with you on, that we have clearly stalled on small caps since the middle of march. that's where the conversation is at the moment. euro-dollar, $1.2009. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. in minneapolis, former police officer derek chauvin has spent his first night in jail. a jury convicted him of second-degree murder and other charges for killing george floyd

when he kneeled on his neck for more than nine minutes. chauvin will be sentenced in eight weeks. he could face more than 40 years. the white house discussing the goal ahead of this week's climate summit. the league in europe has fallen apart just days after its launch. the chairman says the project will no longer go ahead. the collapse was in evitable after all six english teams involved pulled out of the so-called super league. the idea was blasted by fans, politicians, and soccer authorities. the vaccination drive has made u.s. airlines optimistic about a summer travel rebound, but their upbeat outlook is crowded by international markets -- is clouded by international markets that remain out of reach.

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. ♪

♪ >> i would not call today's verdict justice because justice implies true restoration.

but it is accountability, which is the first step towards justice. and now the cause of justice is -- jonathan: alongside tom keene and lisa abramowicz, i'm jonathan ferro. going towards the opening bell, here's the price action for you on the s&p 500. sb -- s&p 500 futures shaping up as follows. into the bond market, yields look like this on to 10 year, higher by a basis point to 1.571 4%. euro-dollar, $1.2007. just want to bring you some news from "the financial times" around this european breakaway super league that is unraveled, with six of the big english clubs pulling out one after another yesterday afternoon. "leak super league documents show clubs signed up for

punitive exit courses worth hundreds of millions of years -- millions of euros designed to lock the men -- to lock them in." so this is not over it all. it's becoming clearer that there are significant fees that might have to be paid to reach for that exit door. tom: we will have to see. tottenham playing this afternoon against southampton as well. right now, and particularly for our international audience, we are absolutely thrilled to bring you mario parker. this nation stopped yesterday afternoon for the verdict of a trial in minneapolis. i leaned back on those from the midwest. our mario parker, our white house reporter out of the university of illinois, i want you to explain to our audience the importance the character of judge cahill in this trial.

what was it about the midwest that colored this trial? mario: what we saw front and center at least for the last four or five years is that the midwest has been front and center in american politics, whether it was the previous administration, what we saw and the election of joe biden, and has encapsulated in what we saw in the george floyd trial in the heart of the midwest area we saw the protests, the unrest, the tensions between the communities , between the police and communities of color. yesterday we saw a result that we quite frankly have rarely seen as a country in the conviction of derek chauvin. tom: is there a middle ground in washington, or are we a nation polarized within the house, within the senate, and within the white house? mario: we are polarized, but

there is a caveat to that. you saw that yesterday, tim scott, who is the only black republican senator, from south carolina, entered a pretty strong statement in support of the outcome of the trial. you saw amy klobuchar from minneapolis, minnesota as well issue that. so we have seen some glimpses of bipartisanship. there is the typical washington gridlock, but there are signs of some type of bipartisanship. there are some glimmers that washington can come together and get something done. lisa: this is not just a u.s. story. there's been an international response, with a number of leaders of nations weighing in on this. what is your view on the importance internationally, both for the united states and more broadly for race relations? mario: what we saw over the past year is something we haven't seen probably since the 1960's. we saw widespread protests.

we saw that videotape of george floyd's death galvanize activists the world over. we saw the black lives matter movement spread from the u.s. to europe, as you mentioned. it through -- it raised awareness. we saw people being engaged all the way up to corporations looking at themselves in the mirror and trying to make some really tough decisions. lisa: there's also a question of whether this galvanizes the movement towards police reform, or puts a damper on it because it gives the impression that in this case, justice was served. was your view -- what is your view from people you speak to an washington, d.c.? mario: there is gridlock, know -- there is gridlock, no doubt about it. president biden spoke about throwing support behind the

george floyd policing act that passed the house some time ago. the white house says it has been engaged on capitol hill in negotiations to try to get that across the finish line, but there's a 50-50 tie-in the senate. there's the filibuster. it is a tough hill to slog in order to get that across, but as i mentioned, there are some glimmers of hope in terms of bipartisanship. there are some people on both sides of the aisle that police recognize something has to be done in terms of police reform. tom: president biden has suggested a second term is in order. the jury is out on that. if he does that, he is really trying to reframe a relationship with the unions. can president biden reframe a relationship with police enforcement officers nationwide? mario: that is going to be really tough for him. we have seen this delicate dance he's had over the course of his

campaign and then in office, all the way until yesterday. we saw the president express very sympathetic feelings towards the floyd family and their plight, and also communities of color, but he was also careful to acknowledge that not all police are bad, to acknowledge that there needs to be systemic reform, that most police officers want to get up in the morning and do their job and come back home. so he is trying not to inflame tensions there. there are some republicans who have said he's too soft on crime, that he's anti-law enforcement. we saw that pop up the campaign. but he's got to thread the needle here, and yes to kind of pull off this delicate dance. jonathan: mario, good to see you. i'm back soon. tom: come back on the white sox. jonathan: how are they doing? tom: the white sox had to face the red sox. it was uneven. jonathan: aren't you a mets fan, lisa? lisa: i mean, it's hard. i don't talk about the mets.

[laughter] tom: the only way we are going to get steve cohen on the show is abramowicz. lisa: to talk about the mets, yeah. tom: good morning, mr. cohen. lisa: suffering through the mets record. perhaps they are winning, but it is transitory with the mets. tom: it is. jonathan: there you go, drink. coming up, scott brown, raymond james chief economist. then, coming up, mark carney, formerly of the bank of england. tom: that game in 1986 -- jonathan: still going. tom: dexter crushed it. jonathan: you should be a baseball commentator. lisa: we are doing a play-by-play of something that happened 20 years ago? tom: but lisa, i didn't mean my

kid buckner. -- i didn't name my kid buckner. jonathan: equities up a single point, 4127. gives you an idea of why we are talking about baseball. muted action. on radio and tv, this is bloomberg. ♪

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jonathan: from new york city, for our audience worldwide, this is "bloomberg surveillance." equities unchanged on the s&p 500. the nasdaq down by about 0.2%. the dow bouncing back after losses of about 3% this week. speaking of not pretty, get to this. a chart of what is happened with the airline stocks over the last 10 days. 10 straight days of losses. brutal. those losses tally up to a loss of 11.6%. i think what this reveals is the struggle not domestically, but internationally. that is the focus over the last couple of days. we moved to concerns over india, brazil.

the airlines are set to struggle just a little bit more. reopening is going to be sequential. in the bond market, lisa talked you through the supply. yields up today about a basis point on 30's. on the 10 year, about 1.57%. the cyclical rally has stalled. through march, we saw the same thing. small caps, 1.74% on the 10 year yield. since then, we have struggled to get any traction to push yields higher. tom: we are benumbed by 1.57%. that it is the greater move over the past five weeks. i think we are just kind of numb to it. jonathan: i agree with you. we agree on something. we are getting along recently, currently? -- recently, aren't we? tom: we are just out of sync.

has milan said they are out of the super league? jonathan: i don't think so. but if these fines are real, how much do they have to pay to unravel this? are they the ones that have to pay, or does everyone have to pay? tom: at the apple show last night, romaine bostick and i were talking about it, i think remain looks good with a pink imac. jonathan: i'll stick with blue. romaine, take the floor. it's yours. romaine: apple shares not doing a lot this morning. netflix down 8.5%. we've been talking about it all morning, about lower subscriber growth in q1 and the forecast for q2. you have a growth stock that is not quite growing, but a balance sheet that is improving. keep in mind, net income did double year-over-year.

furthermore, the company did say it is going to spend about $17 billion this year on new programming, and it won't actually have to borrow any of that money to spend on that. that should be relatively good news to investors, but keep in mind, you're talking about a company that, five or six quarters ago, we weren't talking about paramount+ or discovery or any of these others. roku getting dragged down and this as well. tonight we get earnings out of lam research. tom: what do they do? romaine: this is chip equipment. they have been a big beneficiary of the chip shortage. expected to be about 50% year-over-year revenue growth, which is pretty phenomenal for them. the question is how sustainable will that be. how long does the chip shortage go on, and how much do these chipmakers actually benefit from it? some other stocks tied to the reopening trade right now, this

is intuitive surgical. they make these robotic surgery devices. these are a lot of things used for electric surgery and nonemergency type surgeries. this was a business that effectively collapsed because they had to focus on covid during the pandemic. those elective procedures are coming back, and the cruise lines are getting an upgrade over at goldman. those shares are higher. citrix systems that allows you to work from home, those shares also higher, getting a nice upgrade. analysts saying that work from home trend, why we are going to go back to the office, a lot of the trends are going to persist. tom: so many of these earnings coming out in the afternoon. mr. bostic and taylor riggs will join them as well -- mr. bostick and taylor riggs will join them as well. right now, scott brown joins us

with raymond james. what you know is that every school is different in academics. scott brown was weaned by the university of california at san diego. it is truly one of our most original economic programs, the jewel of america academics. he had the honor of studying not under engel, but under granger, which means he has statistics absolutely nailed. i want you to give us the econometrics right now of a guess of what wage growth is going to do. i can't do it. can you look out with the crystal ball and tell me what wages are going to do? scott: average hourly earnings are notoriously bad statistic because it has a lot on the composition. for example, last year, when we lost a lot of lower paying jobs in the service sector, you saw the average hourly earnings number jump, and now is those workers are likely to come back,

we are like to see big gains in the service industry. we should see that average drop. it does not really tell us what pressures are building. fortunately we do have the employment cost index doing just a couple of weeks. it doesn't really get a lot of attention from the market, but it corrects for this compositional issue, and it also includes benefit costs, so it gives a much better indication of labor cost pressures. in addition, you have to have productivity. productivity is messed up because you lost a lot of these productivity jobs, so it looks like productivity is higher. as they come back, productivity is going to go down. we see some wage pressures. for me, one of the biggest questions is we are looking at faster arrival of vaccines, much greater fiscal stimulus. all of those are positive for the economic outlook.

but managing unemployed workers to available jobs is tougher. lisa: what data points are you looking at, high-frequency data that give you a better reflection of the actual picture, given all the noise you just described in how you parse out the data? scott: it is very difficult. we use to just look religiously at the weekly jobless claims. they are trending down, but still extremely high. it is not fear what is going on. you had a lot of people real thought -- a lot of people refiling. that is really difficult. i think you really have to rely more on the anecdotal evidence. we are hearing a lot of stories that the firms are having a hard time finding qualified workers. you had firms that have furloughed people last year. it's going to be a little bit bumpy. that may be challenging.

maybe we'll get some wage inflation. for the fed, they would certainly welcome a little bit of wage inflation. it is hard to really get it down to numbers. i think a lot of numbers are just going to be really distorted. tom: i want to go to james hamilton, in the one volume we all bought and never read on analysis. is any of the statistics really good in the natural disaster we have witnessed? are you flying blind, or can you extrapolate out intelligently? scott: it is very difficult when you look at something like gdp growth. the truth is we were trying to figure out what gdp growth was for the last quarter, get loan -- last quarter, let alone a year from now. when you forecast, there is certainly a level around that forecast, but if we published uncertainty levels, no one would listen to us ever again. i try to look at individual

pieces, certainly getting a big handle on the fed policy. we've got a clear message from the fed that they are not really going to the brakes anytime soon. it is going to be an interesting challenge. we are seeing the debate now on whether we may see some overheating. there's a lot of stimulus in the pipeline. a lot of it is still coming ahead. that should ensure the recovery into next year. but if we push too hard and you start to get inflation, the fed thinks it is going to be temporary. you've got these base effect that were going to fade out. inflation expectations longer-term are still pretty close to 2%. that i think is the real key. we start to see in place and expectations really rising a lot more, 3%, 4%, 5%. and then the danger is that if the fed is wrong and inflation does start to pick up and expectations start to pick up,

they have a lot of work to do to try to bring it down. . jonathan: what an interesting year ahead we have for us all. scott brown there, raymond james chief economist. out of italy, the super league has few chances of being completed. it is just were markable how quickly this whole situation has unraveled. i will run through the price action quickly as well for us. this wednesday morning, your equity market looks like this on the s&p 500, unchanged at 4126. in the bond market, yields up by not even a basis point. euro-dollar just a little north of $1.20. we come in about 0.25%. tom: very good, jon. we welcome all of you on bloomberg radio and bloomberg television worldwide, to the very un-retired-mark carne -- the veryun-retired mark carney -- the very un-retired mark

carney of canada, out of the bank of england and now the u.n. with his work on many areas. we now have xi meeting with biden over zoom or whatever, and they are going to talk climate. what kind of agreement can we get from biden/xi on climate? mark: thanks for having me on. we have 40 world leaders coming to this summit that the president has called for the next few days. we are going to see some big announcements from some of the g7 economies. that's the first point. the second, it is encouraging that president xi is part of this summit. it is also encouraging that the private sector is leading the way. part of what is coming out of this is a big announcement from

the core of the financial sector. tom: you were born in the north-northwest of the northwest territories. i am going to suggest none of our authorities have ever been as far as the arctic circle as you. the arctic circle is melting. antarctica has glaciers moving. what is the urgency to a northern guy like you to get this done? mark: absolutely. we did drag the g7 up about eight years ago, so they got close and started to see some of the impacts. there is an urgency to this. we are tracking it is a world. paris succeeded in the adjective -- in the objective that it got people in. but the world is still warming north of three degrees, so this is a critical year for action. there is tremendous momentum now . we need to reinforce that momentum, and having $70 trillion of private capital coming behind that has been

announced today is the kind of momentum the world needs. tom: how do you convince the united states senate? mark: first, it is in the united states' interest directly in terms of the impact. i wore her -- i will refer to the comments of secretary blinken of a couple of days ago. it is an issue of competitiveness. the world is moving in this direction. the firms that are innovating, that are part of the solution, and the financial institutions getting behind those solutions, are doing very well. they will do much better. this is where the world is headed. the question is pace. the u.s. should be the leader, can be the leader, and those countries that are the leader will reap rewards as they should. jonathan: i love that, is still referring to u.s. governor carney.

i haven't done that for a long time. tom: we are not rude like the lads from britain. [laughter] jonathan: i'll go with it. governor carney, i remember a news conference at the back end of 2013, you were fresh at your tenure at the bank of england. if you live in london or appreciate the underground system in london, you remember that quote. i want you to help us understand the moment we are in right now. financial instability concerns that go with very low and exceptionally low interest rates for a long time. mark: we do set financial stability policy for inside the circle line. it is very important that authorities are focused on pockets of excess, making sure they don't spread more broadly within the financial system and

undermine the recovery, strong out of the gate because the united states is really just getting going and needs to be followed through. jonathan: the word transitory keeps coming up again and again. how different is this moment, do you think? you faced downside risk to growth at that time. now we face upside risk to growth. mark: it is different. we are in a unique situation, given the nature of the pandemic. i won't list all the reasons why it is different. it is hopefully a temporary supply shock. part of getting out of this hol e's big fiscal, and monetary policy that is explicitly targeting some degree of responsible overshoot of inflation. so it is quite different. the culmination of that is maximizing the prospect that we

will get out of this and get back to the biden summit. we will get this initial pop in the economy. we need investment driven recovery to really have high-paying jobs, and that investment driven recovery. we need a financial sector that is there, and that is why having 28 trillion dollars balance sheet of banks, led by morgan stanley become a bank of america, citi, hsbc, and others, that is the kind of capital we are going to need in the u.s. and globally to have a sustained recovery. lisa: so what are the negative consequent is of the incredible amount of fiscal and monetary stimulus? is this just without harm? mark: i wouldn't say everything in moderation.

everything needs to be calibrated. the fed and other central banks will have to make, as they always do, timely decisions on the tapering of stimulus, and then with the recovery that we want and deserve, withdraw some of that stimulus. fiscal stimulus in all jurisdictions needs to move more towards the type of support for private investment as opposed to sustaining individual consumption, and i am saying that after it has been passed in the united states and elsewhere. where policy stance is today needs to be seen through, but absolutely there are some tough decisions ahead. lisa: going back to your issue as a special envoy for the united nations, treasury secretary janet yellen said climate change was the biggest

threat to markets, the biggest existential threat to the way we operate. we have seen the fed taking a more active role. can you dovetail how monetary policy fits in with climate policy? mark: first and foremost, the fed's actions are related to financial stability risk, so making sure that as we are in this transition, lending, investing is consistent with the industries of the future and not those of the past, and we don't build up large losses in the core of the system. monetary policy is going to have to largely be a question of classic supply and demand shifts in the economy, so more traditional monetary policy. in the u.k. and in europe, the way monetary policy is operated, the type of collateral that is used, the type of assets purchased will be influenced by climate policy, and it is a

consequence that will be yet another influence on the pricing of securities. tom: christopher lind is making quite a splash in your canada. but actually, globally. do we see in canada as we come out of this pandemic a new interpretation of what government will do? they have made worldwide news with a more liberal approach. is that a tone of the future? mark: it is recognition. aspects of the canadian budget our recognition of the loopholes that still exist in this economy , and a centerpiece element in that is around childcare, universal childcare, and to speak as an economist, we are moments away from talking about causality and timeseries analysis. what that is doing, issuing social justice -- what that is

doing, it is an issue of social justice. as more get broader participation in the economy, that is good, but it also supports growth. in canada, as in the united states, the shift from support needs to come from immediate support to households during the course of the pandemic, which is still raging here unfortunately at the moment, to that type of long-term growth and a responsible fiscal policy consistent with longer-term growth. tom: what is so great about these conversations we have, you get little windows for a split second into how competent these people are, as mark carney picks up on granger causality and brings it right over to the political theory of canada. i think jon ferro would agree with me that you are more qualified than any global thought leader, and i hasten --

jon ferro has beat the table throughout this entire pandemic that there is a social contract in europe and indeed in boris johnson's united kingdom that is different than america. out of this pandemic, are we shifting to a new social contract where we budget for the have-nots? mark: i think we are, and the starting place is different as well. the starting place is different in europe, different in canada, different in the u.s. but the direction of travel is similar. we have learned through this pandemic that we don't have as resilient economies. individuals have proven resilient, to their great credit, but we haven't had the predictions we need, and i can extend that analogy to health in pandemics over to cyber and other issues where the

government needs to play a role. also playing a role in the adjustment of the economy. in the end, the economy needs to move to the future, and the future is sustainable and digital. whereas we have that support, we also need the dynamism to move forward, or else we are supporting livelihoods of the past, not of the future. jonathan: we can save these questions for the end of the interview. do you miss central banking? do you miss the world of central banking? i'm going to get to brexit and a second, don't worry. do you miss it, mark? [laughter] mark: you know, i've been in this room for six months. yes, i miss it. [laughter] tom: are the maple leafs going to finally break the curse, back to 1967? they haven't won since your

youth. mark: the oilers are going to spoil it for them. you heard it here. i'm going with the oilers, tom. i silenced you. i can't believe it. jonathan: i've never seen that before. tom: ask a brexit question. jonathan: i don't think mark wants to answer a brick subquestion. mark carney, before you go, let's finish on the story and the u.k. things have changed so much in the relationship with europe. has this ended up where you expected it to end up? mark: more or less at this stage, but we are still in the early innings, to use a u.s. expression, of the post-brexit relationship. it will take a while to reestablish some of those relationships. i think the interests are still very much aligned, and i would hope that over time, the degree of openness and cooperation will increase from this base, which

is lower than it should be, and the interest of both europe and the u.k. jonathan: governor carney, i'm sure you don't miss those news conferences though. thank you. we go back a long time when we think about late 2013. there was so much pressure on the bank of midland to raise interest rates because of what was happening in the housing market. there was this discussion about micro prudential policy. how quickly will have the same discussions? tom: i emphasizing all of my conversations with mark carney where we diffuse the production across all of the united kingdom. he was riveted on what he could do for great britain and not just for the city and for london. jonathan: i think that line about not setting policy for inside the circle line was just perfect. for people not familiar with the underground system, the circle

line basically loops around the epicenter of london. tom: it's amazing how it does that. . jonathan: you can take the circle line from the city out to south kensington as well, if you'd like to. you can walk from there. we will talk about that another time. leeds is a bit further away from that as well. great to catch up with the former governor of england. more still to come on the program this morning. coming up, we will catch up with brian levitt alongside tom keene and lisa abramowicz, i'm jonathan ferro. . let's run through the pricing on the s&p 500, down around a single point. in the bond market, yields higher by a single basis point to 1.5717%. going into an ecb news conference and decision with christine lagarde tomorrow, this one could get interesting. the outlook adjusting.

euro-dollar calls from deutsche bank looking for $1.25. does the ecb let yields run if they start to pick up and it is consistent with the better outlook? that is going to be an interesting one for the next couple of months. this is bloomberg. ♪

>> we've just been hugely stress test here after this bond yields tantrum, and the market has survived. >> we are looking not just at the peaks. we are looking at the sustainability of these trends. >> what we have to question is have things structurally changed. >> the bond market is telling you, not so fast. the fed has the upper hand. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.