>> we just can't catch up after going through a depression-era bust with this health crisis to suddenly having a runaway bull market. >> this is all reopening, fiscal stimulus. how much does behavior change? we are all becoming behavioral scientists. >> are we heading into a period of peak data? peak data historically has been met with corrections. >> all eyes are on what constitutes substantial progress for now. >> it has a long record of controlling inflation, but it

could come back to haunt us. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast, bloomberg radio, bloomberg television. good morning. in the heart of her season, more earnings at 7:00, no further earnings at 8:00. we wait to see what big technology does across this station. jonathan: onto apple, then onto amazon this coming thursday. the stories change. it is about the year on your base effects. a little more complex than the base effects for some of the cyclical companies. the story for me has been repeated by morgan stanley. demand is good. can we meet it with supply? can we execute? it is the execution risk that gets a little more interesting as these numbers poor in -- these numbers pour in. tom:tom: it is to america's.

there's an america guilty from its prosperity, and another america flat on its back. jonathan: political risk around wages, around the taxes you pay, and these companies want to put themselves out front as part of the solution before anyone concludes they are part of the problem and does something about it. i think washington, d.c., parts of it have already made their minds up that they are part of the problem and they want to do something about it. the federal reserve is doing its bit to keep things looser a long time while this administration has got to start doing its bit a lot more, too. tom: jerome powell's press conference tomorrow. i think one of the observations you have added is simply the labor shortage that is here right now. we are hearing about that in earnings releases. lisa: and how does that translate into persistent wage growth. we continued to say that with respect to all of the inflationary pressures, but going forward, is this going to

be transitory, especially if there's a change in the workforces of these companies? jonathan: any excuse to let him have another drink. here's the issue right now, and i'm with you, is it transitory? is it persistent? how persistent will it be? i love doing this. that is the issue right now the federal reserve. can we meet that demand with supply? to what degree has the physical effort helped back that supply and choked things off a little bit, and when do we start to bite into that in the months to come? tom: this gets to the data. we have a wonderful guest here on the courage to be in the equity market given all of the transitory themes we speak of. i've got green on the screen. i'm sorry, it's an equity market with a bid. jonathan: the equity market up almost 0.1%. about a basis point, one .5 790%

on tends. euro-dollar -- 1.5790% on tens. euro-dollar totally unchanged. it is the lack of response in the equity market to some of these big eats. i can say safely that ups isn't one of those names this morning, which delivered some really nice numbers and is absolutely charging on, higher in premarket. tom: a story from a, i want to get to it -- a story for may, i want to get to it right now. we see it in l.a. me -- in l.a. me -- in lme. copper $10,000 is cause for celebration. jonathan: the highest since march 2011 for copper. that story continues. higher prices. miners are doing better off it. we want to bring in james bevan of ccla, the chief investment officer. do like the miners right now in

europe? james: i absolutely do. i think there's a great quality opportunity. interestingly, the ratio between the copper price and the gold price suggests to me that the 10 year u.s. treasury yields should now be at around 2.5%. we know it is not that. japanese investors have basically been buying zero yields within their own bonds. i would have a side bet with you that we will see the 10 year yield at 2% by the end of the current year -- by the end of the calendar year. that is a relatively big move. jonathan: is that a move that looks like the move we saw in q1, a company by better banks, better bank stock performance, better cyclical performance, better small-cap performance? james: i don't think they do. i think they are going to have a very difficult time. i would observe banks are now awash with overnight deposits.

that is extremely bad news for banks sinking to -- for banks seeking to lend on. i think the banks have had their day in the sun. i would only indicate that the investments at j.p. morgan and bank of america, both of which have excellent opportunity to cut costs and support long-term returns. i would say that is going to be one of the challenges for cyclicals writ large. they discount a lot of bad news. when i am looking at cyclicals today, i'm looking at the better quality defensive's, tele-communication companies, and some of the drink companies which i still think are too cheap. tom: i want you to rationalize 35 times earnings. one estimate of microsoft is the 12 months forward view is 35 times earnings.

justify owning microsoft right now. james: let me rationalize it by talking about the earnings yields rather than the price earnings yield is the price-earnings multiple reversed. we've got an earnings yield of 3% needs to be considered in the context of where cash rates currently are. equity risk premium relative to cash does remain relatively elevated. that puts all of the focus on whether or not they are going to get real rates. i'm in the camp that says we will get a short-term acceleration in inflation. that seems to be absolutely baked into the cake. nothing we can do to stop that. i also believe inflation is going to come down again, and i would say that is driven by demographic changes, disruptive technologies, high levels of indebtedness, and continuing

globalization, notwithstanding the trade tensions, does mean that there's a list for some of these businesses to raise cost of processes generally. that allows me to believe that with 3% earnings yield, coupled with long-term growth, still leaves a company like microsoft offering premium returns to corporate debt, and also very much to government debt. lisa: if you are listening to markets, i'm looking right now in earnings that have beaten patients -- beaten expectations by 26%, versus an average of 5% versus earnings seasons. how does that explain the fact that you have not seen this excitement about this growth that is beating expectations in what is expected to be a low rate world for a long time because of what you just said? james: one of the problems we have with earnings numbers are

your on your comparisons are high given the extraordinary downdraft we saw in april of last year. what investors are looking at is the trend growth rather than the one-off growth for the period. looking forward, i think we are going to see well over $180 of earnings for the s&p 500. that will extend to the end of this year. my greater concern is we get to that level earlier on the backs of this extraordinary liquidity environment engineered by federal reserve banks and treasury. but no, i think index earnings on trend are going well. i think the your on your comparisons are going to be at -- the year on your comparisons are going to be ignored. jonathan: james bevan, thank you. i want to turn to the automakers quickly. tesla down by about 1.83% in the premarket.

a conversation on this program through much of this morning about better demand, and can we meet that with supply. have a look at the supply of inventory over a tesla. they are down to eight days of supply of inventory. things are getting tight for some of the automakers. they have been able to meet the demand. they have done ok with the chip shortage. others, it won't be the same story. tom: i'm glad you bring it up because with jp morgan's wonderful we can note, their friday note, buried in their is a real discussion of inventories and the dynamics of inventories. it is a little bit inside baseball, but it has a lot to do with how you get gdp estimates ratcheting upwards, and that is what we are seeing right now. lisa: the idea here is that you're going to see these chip shortages, which are so crucial to a lot of the automakers, persist for a significant time. a number of chipmakers have said it is going to be years before it is resolved. how do they get that backlog of inventory when other automakers

are looking for the same types of materials, especially in the electric vehicle space? jonathan: and do we stay with these elevated inventory levels after the experience of last year? are we conditioned by that? tom: that is the money question right now. what do we do q3, q4, and the whole worry into how you structure the next year? jonathan: lisa, do you think that is persistent? james: a lot of -- lisa: a lot of people i have spoken to say yes because people go to what is most convenient increasingly, and the only way you can be convenient is if you have the goods to deliver in real time. so yes, a lot of people think that will persist. jonathan: what a fascinating time for the global economy. full coverage continues here, live on bloomberg tv and radio. this is "bloomberg surveillance ," and here is your price action. up about five points on the s&p 500. futures advancing a little more than 0.1%.

a seven-year auction a little bit later. some supply in about five hour'' time. euro-dollar $1.2083. last week it was the ecb. this week it is the federal reserve the two day meeting kicks off today, concludes tomorrow. from a beautiful new york city, where the weather continues to warm up, i think it peaks tomorrow. we call it 27 degrees. what do you call that? tom: we call it transitory. jonathan: this is bloomberg. ritika: president biden's proposal to boost the capital gains tax would hit individuals earning $1 million and married couples jointly earning the same amount. the president is set to unveil his plan tomorrow. it would almost double the capital gains rate for some taxpayers. in china, bloomberg has learned that how wrong asset management has repaid an offer bond provided by the nations just

state owned bank. it has more than $20 billion of offshore notes outstanding. general electric burned more cash than expected in the first quarter. ceo larry culp's turnaround push showed signs of improvement. ge earnings did beat estimates. still, they see a challenging environment for the crown jewel of ge's industrial business, ge aviation. u.s. companies faced soaring bills for all kind of materials they need to do business, and rising demand is helping them pass on those costs to customers. in earnings calls, executives from businesses ranging from aaa to whirlpool have outlined price hikes -- from aaa to whirlpool have outlined price hikes -- from chipotle to whirlpool have outlined price hikes. for british prime minister boris johnson, allegations of incompetence in his government have picked up. he denies the claims he said he

would rather see bodies pileup then order a third pandemic shut down, despite multiple reports. i tv reports that the conservative party represents a highly unusual arrangement. 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. ♪ this is bloomberg. ♪

>> we have too much pressure on

public companies and we don't ask the rest of society moving on. we are going to but our public companies at a disadvantage, and more importantly, we are not going to get to net zero. the only way of changing that is getting all of society behind it, not just the thousands of public companies. jonathan: larry fink, blackrock chairman and ceo. good morning. be sure to stay with bloomberg for more from the bloomberg green summit. we will hear from others this morning. i'm jonathan ferro. your equity market looks like this. equity futures on the s&p 500 slightly positive, up a little more than 0.1 percent. yields slightly higher, up around two basis points. euro-dollar, $1.2087. muted price action on the euro. tom: maybe we will see something

tomorrow. look for our fed coverage tomorrow afternoon. most people looking forward to the june meeting. right now on the president's speech on infrastructure, jonathan lieber joins us with eurasia group. i want to go to the reality which i am sure you faced years ago with senator mcconnell, which is a bridge over the ohio river. it is the brent spence bridge, and it says all about how we can't fix our infrastructure in america. how do we fix the brent spence bridge given the president's initiative. jonathan l: that's a great example of a really important piece of interstate infrastructure that carries quite a bit of interstate commerce, and should be a pressing national issue that congress wants to try to fix. it has really gone that elected for far too long. i think the reality is biden has got the partisan alignment he needs to pass a very large

infrastructure bill. one of the biggest challenges of the last 10 years has been declining revenues with the highway trust fund that has made paying for these type of repair is extremely difficult, but right now we are in an environment where the democrats are basically united around increasing taxes on corporations and wealthy americans to get this stuff done, and probably by the end of the year, they are going to have the authority to start fixing these kinds of things. tom: do you look to focus on projects like the brent spence bridge, or are we going to look for a more omnibus bill? jonathan l: i would be surprised to see republicans even being involved in this process, frankly. the democrats have the votes probably to do most of the infrastructure projects. they've got big ambitions beyond physical infrastructure with this human infrastructure side, focused on childcare and subsidies for education and health care. republicans just aren't going to play ball for that, and more

importantly, they don't want to raise taxes to pay for it. that is what makes this basically a partisan exercise. lisa: i want to go a little deeper into that, given your work with former senate majority leader mcconnell. there's a question of whether there would be republicans open to any tax hikes. does he talk about the necessity for paying for different projects, or did he believe that things would pay for themselves if you had the right project? jonathan l: i think i would say that your average republican member believes in the user pay notion when it comes to infrastructure. for a long time, that user pay idea was embodied in the highway trust fund, where the gas tax fueled the highway trust fund, and the highway trust fund was used paper service restoration projects. now cars are becoming more fuel-efficient and the gas tax hasn't gone up in a generation, so those revenues are declining. but if you ask your average

republican if they want to raise taxes on corporations or small business owners to pay for infrastructure, the answer is going to be no. this dynamic is just really difficult to get anything done. lisa: does a $900 billion skinny infrastructure bill, and it is funny that we are calling a $900 billion plan skinny, doesn't seem feasible and likely to be the outcome of some of these negotiations? jonathan l: it is absolutely wild. two years ago, the senate committee that deals with infrastructure put together a bipartisan bill that was around $400 billion, and it was considered an historic achievement. now many of the democrats involved with that process basically roll their eyes at the republican $600 billion proposal. but no, i think the challenge here is the house. even if there were a senate compromise that ended up around $900 billion, which i am extremely skeptical of, the house has an opportunity here,

and joe biden since is an opportunity to go much bigger in a way that is going to be really transformative for america's anti-poverty programs and really change the game when it comes to green energy incentives. that is really what this is about. this isn't about fixing the brent spence bridge and doing a couple of projects on infrastructure. this is about doing big things to accomplish the biden agenda. this is why he ran. they think that is why he won. it's their goal -- that is their goal. tom: how does this fold into the beginning of the run to november 2022? jonathan l: sniffing for 2022 is an interesting year -- november 2022 is an interesting year. the party of the power loses seats in the midterms. it is possible this cycle is a little different because biden didn't have any coattails, so it isn't like the democrats have any extra members in the house, as some majorities do. the odds are, and the historical

trend would be that the democrats lose probably the house, potentially the senate as well, which means that biden, like obama and trump, is going to lose his ability to do any legislation after his first two years. so if you think you are elected to get things done, this is your window. ultimately, that drives to a partisan deal by the end of the year. jonathan f: good to see you, good to hear from you. jonathan lieber there of eurasia group. will there be some payback because some people within the electorate in this country, many people, in fact, believe there has been some overreach be on the mandates that was given was such a skinny margin in both chambers? tom: that is a mystery. there's no question, that is the zeitgeist through the end of this year, but you're going to get into primary season, and that is going to have its own battle. but i am fascinated where that payback is in the summer of next year. i don't think anybody knows. jonathan f: d midterms, the race

for that starts right now, and it continues. lisa: the biggest unknown in my mind is what the economy is going to do. biden has a lot of popular support from that pole over the weekend. but coming forward, talk about the labor market. can we get back down to the lows we saw pre-pandemic? can we get inflation big enough to potentially offset the debt, but not too big to make people unable to buy things? jonathan: we could have a 4% handle on unemployment by year-end. great news. copper at decade highs. larry summers argument i think we all know well at this point, that there's going to be some difficulties with inflation may be. that will be the experience regardless of what the fed tells you. it is about what they experience month on month, tom. lisa: there's a fed special coming up. that's what we are going to be doing, and he's promoting that. tom: he just crushing -- he

just crushed me. jonathan: i think you did that yesterday. tom, come on. tom: caroline hyde is in tears. jonathan: i'm in tears the way this is going. equities up six on the s&p. this is bloomberg. ♪

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jonathan: live from new york city for our audience worldwide on tv and radio, here is the price action. equity futures grinding higher almost five points. on the russell, we advance one third of 1%. morgan stanley brought this up in the last couple of weeks. it is coming to be the story. execution risk. execution risk. demand is good in this economy. tesla gave us a flavor of that. inventory starting to tighten up . a chip shortage. if the demand is there and you cannot beat it, what have you got? an execution problem. that is what morgan stanley is getting at. switch of the boarded get to the bond market. dues, tends, 30's.

-- twos, tens, 30's. the pride of the treasury that caused a problem -- your tenure -- your 10 year -- want to finish on euro-dollar. 1.21 handle friday. tuesday, 1.28. totally unchanged. totally unchanged. really muted going into the fed tomorrow. tom: stronger turkish lira this morning. our conversation of the day on economics. peter hooper joins us of deutsche bank. his deck on economics fully expected on wall street. i want to go to the heart and soul of your must-read. you go to the heart and soul of gdp ended unemployment rate that drives us down to a fully employed america. balance that for us right now.

will that occur within market stability and national stability? peter: that could be a tall order. there is a lot of driving growth at this point. we have the normalization of demand out of covid. people getting vaccinated. we have tremendous fiscal support. behind us and ahead of us, we probably have half a percentage point on gdp out of what is still to come. household income support we have gotten so far, building up a warchest of household savings is going to get 10% of gdp waiting in the wings to be spent. there is no way we will see less then 6% or 7% growth this year. our forecast with above consensus at 7.5%.

that is not to get the labor market backed out of the 3.5% unemployment rate we saw precrisis. tom: you coined a phrase. you talk about the amazonization of the american economy. do we underestimate the cardboard boxes and the cloud out there for mr. bezos? peter: amazonization has a number of factors, but one important for the fed is despite this very rapid growth and a tightening of the labor market, unlike what we have seen for quite some time, amazonization is a factor we think will keep inflation from getting out of control. certainly the vast increase in new information flow about

supply and demand of all kinds of commodities and services, price information globally is going to keep, after some initial disruptions as bottlenecks appear during this normalization process, amazonization working in the background will be there. lisa: even at amazon we are seeing pressure in terms of labor shortages. having to offer higher wages to more people, not to mention the fact of unionization. jonathan: you want to stick cap you in? three, two, one. we are restarting. you can go again. we can tried again. lisa: there is a question about whether amazon will face longer-lasting cost pressures for a longer period of time.

i think peter hung up because he was like forget it, if you cannot say amazonization or unionization, he hung up. tom: we are going down in flames. this is not transitory. jonathan: clearly not. payback from pull forward is a conch concept -- is a concept we need to get our teeth in. we got a taste of that with netflix. what about the other big players are we saw huge acceleration of existing trends through the pandemic. i wonder whether there will be payback because of the pull forward beyond the netflix of the world. i want to bring back in peter hooper. we reestablish that connection. great to catch up. let's wrap things up with a couple of shots. the difference between transitory and persistence. we have talked all morning.

tom has a drink and it is a drinking game. what is the difference for you? what defines that as the year goes on? peter: one thing the fed has been wanting to say is a string of good information on the labor market. i think four or five months, something approaching one million on payrolls before they give us any indication they will be giving us a hint about tapering to come. there is another issue, transitory versus persistent inflation. we are going to get a bulge in price increases in the middle of this year as growth normalizes and the economy normalizes. one of the things to keep in mind going back to the amazonization is we have been well above trend in consumption of goods. covid meant people dropped back

sharply on their demand for services. as things normalize we will see a shift back toward services. that means taking some of the pressure off the good sector. yes we are seeing a lot of shortages. we will see real disruptions as the demand pattern shift and things normalize. we have been encouraged by the extent to which labor supply and the hospitality sector has picked up. hiring has picked up. there is a lot of unemployed people that need to get jobs. the recent disruption, we will see some transitory price increases, but our expectation is inflation, which could get to 2.5% later this year will be back below 2% by next year. that is not a persistent problem. lisa: what is the economic effect of higher taxes? peter: looking ahead, what we

might get, listening to some of your earlier discussion, a lot of uncertainty about this. if bided gets his broke -- if biden gets his program, if we get this 2.20 $5 trillion jobs plan with the corporate tax package to go with it, that is worth -- assuming 10% of spending comes from the first year in the tax program goes through as planned, we are seeing about 1% of gdp growth out of the spending side and roughly .5% as an offset from tax increase. the total ask kris -- the total tax increase over the next year is something on the order of $90 billion, little under 10% of gdp. they are all kinds of questions about what impacts the particular form of tax has

across the corporate sector as well as household, but the broadview, the macro view is we are looking at something like .5% stimulus to growth -- would be more if it were not for this .5% drag from the tax hike. lisa: it strikes me the degree of policy uncertainty for economists to factor in. you have the stimulus package that may not see the light of day, followed by 1.5 chile dollar plan expected to be announced this week -- a $1.5 trillion plan expected to be announced this week. how do you game it all out? tom: i think you gave it all out with five seats in the house in 2022. the politics will take it over. you have a deck and there is one page that describes the foolishness of this all. it is stunning how the savings

of this fiscal strategy has gone to the wealthy. it is a breathtaking chart. go to deutsche bank to get the chart. peter, how far apart are the two americas right now? peter: they have grown ever further apart, certainly over the last decade, and accelerating over the last four years with tax cuts come into the last year with the asset gains in stock and the housing market. no question, politically, something has to be done about this. it will be painful, but that is one reason to be considering taxes more heavily at the upper income levels going forward. jonathan: we have to leave it there. apologies about the technical problems. peter hooper, deutsche bank head of economic research. coming up, michael collins, pgim

senior portfolio manager. adding a little bit of duration. nibbling at the 10 year torts 1.75 on a -- towards 1.75 on the 10 year at the end of march. mike collins bringing up an interesting thought. the idea that the fed does not get away from zero. gets stuck because it waits too long. conceptually that is something to spend more time on later in the year into next year. something to consider in something michael mckee tried to ask at the news conference. tom: he got slammed. jonathan: they played elevator music over the top of him and chairman powell did not respond. tom: that is accurate. what is fascinating as everybody is calling for higher inflation. jonathan: you see the research and you hear it on the corporate calls as well. this earnings season, microsoft later, apple tomorrow, amazon

after that. the federal reserve with the decision. captivating coverage on tv and radio. tom keene and caroline hyde and scarlet fu making an appearance. looking forward to the coverage tomorrow afternoon. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this is bloomberg. ritika: with the first word news, i am ritika gupta. president biden will propose a large-scale tax increase tomorrow and also call for giving millions more to the irs to make sure the rich people and large corporations pay all they owe. bloomberg has learned the proposal will raise the top tax rate to 39.6% for those making at least $400,000. that is a key element in the american family plan he will unveil tomorrow. president biden is stepping up pandemic assistance to the rest of the world. the u.s. will share its entire

supply of astrazeneca coronavirus vaccine with other countries. plus it is putting together an aid package for india. president biden has been focused on making sure americans are getting the vaccinations first. vice president kamala harris -- $310 million of a to stem a wave of migration from central america. the money will go to honduras and el salvador. she discussed it in a virtual meeting with guatemala's president. the british energy companies as will begin share buybacks after what is called exceptional natural gas trading boosted earnings. bp cut its dividend in half last year and out plans to -- 30% to shareholders. eli lilly has cut its forecast of earnings per share after the government cancel an order for

the company's coronavirus antibodies. it said the agreement now focuses -- global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> the scepter that is telling the most -- the sector that is

telling the most interesting story is consumer staples. staples are at their lowest relative point we have seen the last few years. the relative weakness in staples, in utilities suggest bonds probably tanaka lower. tom: christopher verrone, strategas head of global strategy. lisa abramowicz and tom keene cured jon ferro prepares to drive forward the conversation at 9:00. barry ritholtz with us. i want to go over the debate of what capital gains tax is obscuring. you and i have a collective memory and i want to give a shout out the visualizing economics for a memory of the 1960's, when we had multiple brackets and the top bracket was 70%, 80 percent, almost 90%. are we going back to higher brackets and sustained brackets for the haves? barry: it looks like that.

the focus on the 40% number is misdirection. what we have going on is the creation of a brand-new top tier in terms of taxes for the wealthiest 1%. in some ways that is a throwback to the pre-reagan era. tom: is a throwback to the 1960's as well. you and i remember five for one call deals, commercial aircraft leasing deals, where there was a cottage industry to avoid the agony. why won't we see that again? barry: the devil is in the details. it depends on how the tax code is drafted. keep in mind, back in those days all of the crazy tax dodges looked at the existing tax code and said what can we do to hide legitimately this income from uncle sam? incentives matter.

when you leave an incentive for people to engage in that lease by back nonsense, the funny thing about it is lots of companies decided why do i need to own my building or my office? i might as well do police by back get -- do a lease by back and get it off my books. how it is drafted makes a big difference. the incentives involved makes a difference. if this is carefully crafted without a lot of room for loopholes, the expectation is raising taxes on the wealthiest real estate and stock owners is going to generate more income that will pay for infrastructure that everybody gets to enjoy cured lisa: how much will this change -- everybody gets to enjoy. lisa: how much will this change investment strategies? barry: it depends on what they do with the short-term rates. i have not seen where that wants

to go. there has always been a penalty for traders. if you're looking at robinhood and those sorts of things. lots of those traders were surprised at how high the higher tax rate is. the short-term tax rate is 30%. you cannot have your top 1% long-term taxable rate higher than the short-term rate. there'll have to be an adjustment there. if you are a long-term investor, i do not think there is a lot you will do to adjust your portfolio. if you are living on dividends, if you're living on income distribution, may be might tilt the scale towards munis and other income producers. for the average person with a 401(k) who are saving for retirement, it would not make any difference because it will be in a tax-deferred account. maybe it shifts people more aggressively towards roth rather

than traditional. most savers are tax-deferred. lisa: in addition to being star of stage and screen and audio and print, you also help people manage money. there is a question of how seriously to take some of the proposals put out in terms of higher taxes and some of the infrastructure spending. how do you game out policy proposals in washington when it comes to how much you might make, whether it is in the stock market, or whether it has to do with gains due to infrastructure spending? barry: i love that question. the first level of that analysis is assume 90% of what gets floated will not get past. a lot of these things are rough ideas and outlines and sometimes there is pushback. you cannot start flipping your portfolio every time something comes out of d.c. nine things a-day come out and you are best ignoring all of them. when there is a groundswell such as there has been in terms of pushback to wealth and income

inequality, and when there is an overwhelming demand for bringing our infrastructure, forget 21st century. i would like a late 20th century infrastructure in america, it would be a huge improvement. there is an increased possibility that something will get past. my best guess is 40% is d.o.a.. you currently have three tiers of capital gains, zero if you are making less than 80,000 or 45000 and change if you are single. 15% above that below about 400 and change. everything above 400 is 20%. there is a balance symmetry to 15%, 20%, 25% cured i think 40% is an opening gambit and it will end up closer to 25% number. ps, if it is 25%, you still have carried interest as a loophole. it would make sense, with this

proposal, to close that loophole . at 40% carried interest becomes ordinary capital gains or the same thing for private equity venture capitalist. if they take the right to 25%, that carried interest loophole would get closed as well. tom: have to leave it there. barry ritholtz. lisa, your thoughts as we dive into earnings and microsoft this afternoon. lisa: the idea that companies have beat and beat substantially and the response has been what are you going to do for me next week? traders have not been responding. i am curious. james bevin says in a low yield environment the earnings yield on this company -- on these companies looks that much more attractive even if it is lower than it has been historically. that is one of the tensions. why is that not holding? tom: we call it earnings season

and i wonder if we should call it revenue season, because companies have higher single-digit revenue gases forward. companies that deliver revenue growth seem to be doing ok. look at ups. for others it has been more challenging than i expected . lisa: it is surprising when you have coca-cola, procter & gamble saying our input costs are rising, but we can pass it on because our consumers are doing well. when does that translate into a renewed push into equities? i don't know. tom: 36 month, three year gdp for deutsche bank is 4.23%. that used to be called a boom economy itself. that is a distortion from where we are right now. right now our distortion, markets not a snooze fest. extremely exciting after the

9:00 hour. red and green on the screen. ferro will not mention the dow. 33,859 on the dow. down 18 points. this is bloomberg. good morning. ♪

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jonathan: from new york city for our audience worldwide, good morning. the countdown to the open starts right now. equity futures almost unchanged on the s&p 500. we begin with the big issue. can corporations meet big expectations? >> there is collision between expectation and reality. >> earnings estimates are being upscaled. >> given all of the concern around inflation. >> we want to see how much higher cost has cut into margins. >> companies have been remarkably resilient. >> you want to see how stocks are reacting to the news. >> some of the response to the earnings might not be as robust as one would expect. >> we want to make sure that does not become a trend. >> as that cycle matures the bar gets higher. >> execution risk. jonathan: