♪ >> the fed's got to be a lot clearer, and fiscal policy has to confront the fact that we do have to pay for things. >> it is just going to add further oomph to this economy. >> we understood covid was easing, and that started getting priced into the market. now we are delivering the earnings to justify that. >> we know the economic data is great. this is all the reopening, fiscal stimulus. how much does behavior change? >> where does this thing peak out? i have no clue. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: pulling back from all-time highs. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. tom keene back on monday. it has been a blowout week of

earnings full of big tech players. the numbers are just phenomenal. lisa: which is the reason why our discussion has been price to perfection. i like this idea that perhaps you learn more from the stock' reactions to these earnings then from the earnings themselves. jonathan: and the numbers in the reaction have been mixed, but within the numbers come of the performance of the earnings has also been mixed. pull forward and pay back. where do we see that? arguably saw it in netflix. definitely saw it in pinterest. higher costs, 3m. a lot of companies talking about higher costs, but i think the standout story outside big tech has been risk. caterpillar, ford, big companies will struggle to meet demand because of a chip shortage. that's going to be a question we've got to ask a little bit more. we will see a big year.

which companies can meet that demand? lisa: and which companies are going to be disproportionately affected by that shortage that don't necessarily have the leverage the likes of apple? not as much specific chips apply for a ford, say. they don't have the clout with the chip suppliers as apple, which demand such a big component of this. jonathan: apple negative yesterday, down again the -- down again this morning by 0.9 percent. look at the market right now. equity futures shaping up as follows. we are down a little bit, off by 25 on the s&p 500 at -0.6%. yields unchanged. we settle down at 1.6383%. euro-dollar slightly negative, down by about 0.3%. great growth in america yesterday, and negative for europe for quarterly gdp.

that story very well known. lisa: the consensus that europe might be the source of positive surprises getting a little bit turned on its head over the past couple of days as the dynamism of the u.s. continues. if tom were here, he would make fun of me for having barrels of oil in my living room when it hit negative levels. it has surged dramatically, and so too have oil company. exxon shares up 45% year to date. chevron just reporting earnings. shares down a little bit and premarket trading, but they beat expectations and showed the key aspect for big oil, which is financial discipline. they are paying down their debt, expending their dividends and share buybacks. this will increase the conversation about stocks acting like bonds. at 8:30 am, we will get possibly more evidence of u.s. exceptionalism. core pce, and measure of

inflation the fed looks at in order to determine whether to raise rates or tighten policy. also, income and spending figures out of the united states. expect blowout numbers on the income front, as well as spending. 20% increase in income on some of those checks that went out in march. tomorrow, berkshire hathaway is reporting at its shareholder meeting. they will be talking about their cash pile, and also warren buffett perhaps discussing a little bit more about what he did with airlines. not so great. you were talking about this earlier in the show. i found this interesting because he didn't get it right. he really didn't get it right. jonathan: sometimes you have to turn to the smartest people to ask them the lessons they learned in a downturn, some of these estates they might have made -- the mistakes they might have made. i've said repeatedly that they last 12 months has humbled a lot of people. you've got to maintain that humility because there is so much unknown for the 12 months ahead of us. lisa and i had a nice back and forth in the credit market yesterday on how things were stacked up in credit's favor.

default risks through the year ahead. that has been trending nicely lower. we have seen a lot of refinancing in this market. that gets better. upgrading some of these names, there is real upside to upgrade risk in the year ahead, too. what you touched on i think has got to be the most important element. it is valuations and where valuations are right now. bank of america asked in their european credit survey what they are most worried about now. you know what the answer was? it knocked covid-19 off the top spot. it was lofty asset prices. that went from 10% in the previous survey to 19% this time around. there's always that cliche line that the only thing to be bearish about is there's nothing to be bearish about, and that seems to be the story in credit right now. lisa: riddle me this. companies have a record stockpile of cash in their balance sheets, and they are selling hundreds of billions of dollars of debt, long dated

debt. these are investment grade companies. why are they raising more money if they have so much cash that they can't even use? it's because they can, because they think they are getting a good deal. that does mean perhaps that bond investors are not getting as good of a deal. jonathan: more than 70% of issuance in high-yield refinancing at the lower end, lower interest rates. that adds to this bullish story and the credit market right now. it's been a phenomenal first three or four months of the year. want to bring in chris marangi, gamco investments co-chief investment officer. the thing that we all teased out of earnings so far this week has just been execution risk. i know you're focused on it, too. it is just a civil question of whether these come buddies can execute on it, whether supply can meet demand. do you see them in different places? christopher: i think you hit the

nail on the head when you said the thing to be bearish about is the fact that there aren't enough people who are bearish. we thing about the risks out there, and in my book, the biggest risks are supply chain issues broadly. that includes getting goods on and off ships, higher copper, oil, and chip shortages we are seeing across a wide variety of companies, everything from sirius xm radios to caterpillar, as you mentioned. silicom is the no oil -- the new oil, and it is everywhere. so like inflation, that maybe transitory, but we are talking quarters if not years, and not just a one quarter issue. that is something that curbs our enthusiasm a little bit. higher price levels and an inability to meet consumer demand. jonathan: easy for me to pick on a sector and say the autos will all suffer with this. do you see signs that some companies are navigating this better than others so far? chris: it is a little early. it is a little hard to tell.

obviously we will see. the management teams are going to be able to source chips and do a better job than others. but we haven't seen that quite play out just yet. jonathan: are you avoiding -- lisa: are you avoiding autos because of the chip shortages? chris: no, we like a lot of the auto parts companies. obviously, forecasts are going to be impacted by those shortages, but the demand is there. there's a lot of pent-up demand across the consumer sector, and autos is one of them. if the auto companies can price their way to better earnings, they are going to do it. they have the opportunity to do it. lisa:lisa: we were just talking about the response to these earnings, particularly from big tech, basically being a shoulder shrug. it was priced in. do using this is a sign of caution, or a sign to buy? that perhaps there is enough caution that the risk to euphoria is not there? chris: the only real surprise

for me this earnings season so far is the magnitude of the beats, at amazon and google and apple. i think the question is is this as good as it gets. they are still in many ways benefiting from quarantine. covid-19 isn't over. interestingly, they don't get the benefit of the base effects that a lot of other companies do who have significantly down first, second, third quarter. so i think the focus for earnings, for stocks will continue to shift from the mega cap names to many of the more cyclical value names. jonathan: on a lighter note, we haven't caught up since what we say play out in europe on the european football friend. you like sports teams. you mentioned that in our last conversation with lisa and i, and you were talking about getting exposure to that thing. where there any takeaways from that dramatic incident over the last couple of weeks for european soccer?

chris: i think it just indicates how tribal sports fandom can be, and how durable it is. that's one of the reasons we love the sports industry. you get exposure in the u.s. by owning madison square garden sports and the rangers, who are doing pretty well. we think there is monetization coming over the next few years. jonathan: and we won't talk about the yankees, i promise. tom keene is not here, so we don't have to. chris marangi, gamco investments co-cio. i'm about to get a lot of hate mail because i just accidentally said the s-word, soccer. i don't know why. i'm not consumed by it. lisa: what is your take away from the whole debacle with respect to the premier league? jonathan: bottom line, not just the premier league, this isn't over. barcelona and real madrid are

still trying to figure this out. some of these big italian clubs. ac milan is still trying to figure this out. the problems that led to this incident have not gone anywhere, and this whole story is nowhere near finished. it might be for some of the premier league football clubs, but i don't to get his football more broadly. lisa: we talk about those clubs -- i don't think it is for football more broadly. lisa: when you talk about those clubs, are you talking about the owners, or the actual fans, pushing to bring this to a little more vape your place? jonathan: your first point, yes. your second point, i don't know. to your third went, i think some of the domestically owned clubs like real madrid, i don't think that story is over for them. i think the way they sit football -- they see football as a spectacle, where they have the best players in the best teams that all play each other and they can generate the most money from doing that, i think a want to consolidate that even further, and i am not an a place right now where i think that effort is finished. i think it is far from done. lisa: tom is researching it

today. jonathan: i'm sure he is. i've got no idea what tk is doing. i saw him post a picture of a drink last night. lisa: that's what he's doing. jonathan: i imagine that's continued this morning, too. lisa abramowicz, jonathan ferro. tom keene back with us monday morning. tomorrow is set to be a good one. ignore the clouds. it gets better from here, i hope. i'm 23 on the s&p 500, off by 0.6% -- down 23 on the s&p 500, off by 0.6%. this is bloomberg. ♪ ritika: by september or october, president biden is likely to see some version of his $4 trillion economic plan passed in congress. the president has two major tasks. he has to keep various democratic factions from splintering the party and keep fending off republican attempts to portray the plan as radical. democrats can use senate rules to bypass republican opposition to most of the plan.

the euro area economy slid into a double-dip recession at the start of the year. strict coronavirus lockdowns kept businesses closed and consumers were reluctant to spend. output in the 19 nation euro area was down 0.6% in the first quarter. it fell nearly three times that rate in germany. meanwhile, the u.s. posted annualized growth of 6.4%. in israel, a stampede at a jewish religious festival early today killed at least 44 people and left 150 hospitalized. it is one of the deadliest civilian disasters in israel's history. the crowd was estimated at 100,000 people, mostly ultra-orthodox jews. apple is being formally warned by the european union that it's app system may violate european rules. regulators are speaking about the issue right now. it is investigation that lead --

it is an investigation that could lead to billions in fines. 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 think it was probably the most consequential first address to congress by a president since

ronald reagan declared a redirection of the country in 1981. jonathan: yes, that was larry summers, the former treasury secretary. you can catch the full interview tonight on "wall street week." almost in shock. was that something nice about the admin astray? lisa: he was one of -- the administration? lisa: he was one of the biggest opponents. i keep thinking about that article he wrote, basically saying this is terrible and not useful, and potentially detrimental to the economy. could potential he foist inflation upon the economy. now he is saying maybe it is not so bad. jonathan: i have to say, the former treasury secretary can be quite a polarizing figure. lisa, that one publication, that one issue, that one essay sparked a massive debate. so whatever you think about the former treasury secretary, that is some impact, to write one piece and have the impact that it did. lisa: it highlights how

inflation has become such a politically polarizing issue right now. you have some people, the democrats, saying we haven't gotten inflation for years. we need to spend a lot more. we can do deficit spending. republicans saying this time could be different, and people are looking at different data points to justify their view. jonathan: i want to turn to the data right now, the price action on the s&p 500. good morning to you all. alongside lisa abramowicz, i'm jonathan ferro. tom keene back with us on monday. on the s&p, we are -0.6%. q1, rougher europe, good for america. does that story start to converge with europe getting better? euro-dollar, $1.2085. it's not just been a gain in equities on the month. on the week, treasury yields starting to break up again. lisa: it seems like people are kind of moving back to this idea that yields perhaps were too low. i don't see this massive selloff

leading to yields rising in the consensus that yields are going to spike from here. jonathan: i've got no idea until we really understand what is happening down in washington, and right now there is no real consensus on that. what happens next, and what will get approved? let's turn to mario, our bloomberg reporter down in d.c. mario: that is a tough lift for president biden. not only is he facing republican opposition, republicans are staunchly opposed to any type of tax increases, but he also has to keep his party in line. moderate democrats like joe manchin, kyrsten sinema, mark kelly, they are going to have pressure on them as republicans continue to try to attack both the president and attack them with the midterm elections coming up. he really has to convince his party to stick with him. jonathan: a rock and a hard place. the moderates who want more -- the progressives who want more, the moderates who want less.

who's got the louder voice? mario: that's one of the problems, one of the challenges facing president biden. he's gotten relatively high marks from his party so far. he's on i think day 102 now. but he's had some disappointment from the left flank. the $15 an hour men among wage, if you recall that debate a couple of months back. student loan forgiveness as well. so he is facing some pressure from the leftward flank of his party. whether or not the left wins out is still to be seen. the package, his infrastructure package and family plan does have a lot of the social safety nets that the left has been calling for. lisa: we keep talking about this for trillion dollars of spending as sort of a monolith, that basically it will be a fire hose into the economy. when you talk to bipartisan individuals, think tanks, what is their evaluation of the efficiency of this plan, how the

money is spent, and how levies are given to companies and wealthier individuals? mario: one of the things the biden adminstration touts is that people are by and large in favor of what he wants to do in terms of infrastructure. broadband, redoing some of the roads, the bridges, some of the energy initiatives. the problem comes in with how to pay for it. that's where you see the kind of disconnect. the biden adminstration is saying that outside of the washington, d.c. zip code, there is bipartisan support for the bill, but once you get here into washington, when you get to the think tanks where you see some of the discrepancy is how to pay for it. that's where you see some of the differences. lisa: outside of the beltway, there are people wondering is this efficient use of the spending. in other words, will the money that is put out there actually

have a real generative effect for the economy? what do experts tell you on that front? is there anyone trying to evaluate that? mario: experts are saying it will have a bump on the economy. of course, as you alluded to earlier, there's the question of whether or not it could cause inflation. so far, the consensus has been that it may not. that is to be seen. so far, from what we understand, there is no doubt that it will have some type of impact on the economy, and he gets high marks for that. the white house has been touting that part of the bill. jonathan: how important is the big four in the white house and a couple of weeks? mario: they will be at the white house really soon, which is a very large signal that president biden sees the importance of having them at the table. one thing that is always fascinating and helped president biden, then candidate biden become president biden, is the fact that he's been in washington for four decades, so

he knows how these things work. he knows how to get the leaders of both parties into the oval office, and the symbolism to that, and what that means for negotiations. jonathan: good to catch up. come back soon. mario parker, bloomberg white house reporter. this is significant because we saw a republican senators being brought into the white house early on in the conversation around a really, and ultimately, bipartisan talks went nowhere. when you invite the big four, how important is that? lisa: maybe from a pr standpoint. obviously, i have no inside knowledge of the negotiations going on in washington, d.c. it does seem like this is a go it alone type of approach, the idea that they are trying to get something by september, and very much the democrats are leading the effort, but i don't feel a consensus with joe manchin, with chuck schumer, with the sort of disparities between the more liberal wing of the democratic party and the more centrist. i don't see it. jonathan: never mind uniting the

country or uniting congress. you've got to unite the party. the progressives want more. the moderates want less. who do you please? who do you disappoint? i always think everybody should be somewhat disappointed in a good negotiation. you have to give up something. who gives up what in this party right now? lisa: it shows how much the parties are shifting because trump republicans actually like a lot of aspects of these plans. they are not the ones that are going to be taxed that much higher on average, and some of these issues are actually appealing to a working-class, blue-collar group, whereas on the democratic side, it tends to be wealthier, which is what you see in some of the states. jonathan: here in new york, in california. let's turn to the price action. equities doing ok. we are down 25 on the s&p. on the week we are ok. on the month, we are even better. 1.64% on tends.

euro-dollar, $1.2088. on the fx market, mark mccormick , td securities global head of fx strategy, joining us on the others. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ♪

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♪ jonathan: from new york city for our audience worldwide, this is "bloomberg surveillance," live on tv and radio. take a deep breath. tom is not here, so this next couple of minutes won't be interrupted. futures off by 23 on the s&p 500, by about 0.6%. the nasdaq down by about 0.75%. this has been such an interesting week for earnings. three different themes that we have been looking at through the week so far. execution risks. can supply meet demand? then you got the payback for both forward. pinterest, may be netflix in the mix as well. and then the underappreciated story elsewhere has been the embedded cyclical story within big tech. the ad spend at amazon, facebook, and alphabet, where they knock it out of the park.

the stock market has picked up on those stories because alphabet has been flying year to date and added some weight to that move. switch up the board. in the 10 year right now, over the last five days, up by about eight basis points to 1.6419%. we had several weeks of gains for treasuries yields lower -- for treasuries, yields lower. we will have some data next week that will be explosive. we could have a job sprint north of one million -- a jobs print north of one million. morgan stanley looking for may be something like 1.5 million. they are the kind of numbers we will have to think about in the weeks to come. let's finish on this. i will run you through euro-dollar. euro-dollar, $1.2088. first quarter, great performance for the american economy, terrible performance in europe. a story that is well known. we have been testing $1.16.

we snapped back because we have been talking about convergence. euro-dollar, $1.2088. negative on the session. we need to see some better data from your at that back up vaccine progress. that was good, wasn't it? lisa: i'm laughing. what would tom say? how was capri? jonathan: yes, yes, something like that. [laughter] lisa: that was awesome. kailey: now i need to pull it together. let's talk about the explosive growth at amazon. i feel like i might be personally responsible for this because all through the pandemic , i've been getting at least three amazon packages a week, and it seems everyone else's, too. revenue up 44%, and the thing about it is the outlook also very strong. the company does not think that pandemic online shopping behavior is ending anytime soon. that stock is higher by more than 2% in premarket trading.

but talking about the advertising boom that you were just speaking to, facebook and google, the thing is twitter is not benefiting from that in the same way. it only had revenue growth of 28% in the quarter just reported. that met expectations, but it is much smaller than the growth seen for some of those other advertising competitors. the outlook also missed, so that stock is down by 12.5% in premarket trading. western digital is higher. it beat on the current quarter, eight on the outlook. it is benefiting from demand for those memory chips. texas roadhouse, apparently people are very hungry for stake and ribs as the economy reopens. they are going to that restaurant chain. it beat on the outlook. it is higher by about 3%. but we have to talk about one of the other themes you mentioned, and that is the supply shortage, specifically in semiconductors. we have serious logic moving down. the company is blaming supply

challenges. you have another apple supplier, skyworks solutions. at outlook -- it's outlook beat, but it is down in premarket trading. become an he reported more than 30% decline in revenue for -- the company reported more than 30% decline in revenue for mobile phones. apple warned about the semiconductor shortage yesterday. that is why the stock gave back its early gains on the back of earnings. once again, lower by nearly 1% in premarket trading. jonathan: execution risk has got to be the story of the week so far. i know you get your second dose of the vaccine today, so good luck. we hope to see you on monday in good shape. kailey: fingers crossed. jonathan: what am i talking about? she'll be fine. lisa: you didn't say that to me. jonathan: i did. i got the second dose, i came into work and felt absolutely terrible. lisa was given the second dose the day of, when i felt terrible, and lisa walks in and says, i'm a mother. i can take it on.

i'm like come all right. then 24 hours later, how did you feel? lisa: actually, during the show i started getting a chill and shrinking down. [laughter] jonathan: mark mccormick joining us now, td global head of fx strategy. ultimately, what are you looking for now? mark: it's an interesting story where the euro peaked to start. it is u.s. exceptionalism, the vaccine story. although things were not in the price when we came through, looking too short euro trade in december. what we see now is quite interesting. april was a reversal of some of these themes. it was very good for commodities and the story that the fed is still going to experiment with average inflation targeting, which means they want to keep the expansion moving stronger

and inflation rates at bay. i think where we are now is very interesting because it is a pivot went. we think that euro $1.15 to $1.20, rather than $1.20 to $1.25. jonathan: now we have these shifting reaction functions, the shifting framework at the fed. does that challenge traditional concepts in foreign exchange? mark: i think it absolutely does. we are in a very unique cycle. i think everyone is aware of it. structural forces are really important because we are seeing less globalization. we are seeing a pull more towards domestic agendas, domestic spending. you have a dollar smile where the dollar performs well when the u.s. economy is doing better than the rest of the world. the u.s. does well when the west -- when the rest of the world is not doing well as well.

i think the theme for europe is going to be how do equity flows and central-bank policy and growth policy all work together. i think a big part for the dollar and the second half of the year is going to be how does biden basically pay for the stimulus package through higher taxes, which will come through equities? that could push the euro higher or keep it from stumbling too much on what is a u.s. positive growth story. but i think when we go back to the fed, the experiments around all of these things, if the fed is going to be the central bank that lags, we are seeing and now with the bank of canada, the norges bank, the fed is lagging other central banks. that is going to be very interesting to watch as a structural week driver of the dollar, especially if equities, u.s. equities underperform other major economies. but the flipside is that on the dollar smile, the u.s. does have a better growth story than most other g10 countries. lisa: let's unpack some of this because there are three different components to fx trading you just touched on that

don't have necessarily cohesive stories. you have where is growth accelerating the most area you have interest rate policies. then you have the debt deficit. these are three different stories, and the kind of lead at different times. which is leading now, the growth story, the interest rate story, or a debt sustainability story? mark: it is a great question because it is basically what we have called the unsatisfying mix of global reflation and u.s. exceptionalism. i think what the market got wrong at the end of last year was really extrapolating the global liquidity trade, and kind of missing what was happening on the positive side in the u.s. i think the market kind of stumbled again in march and april, trying to extrapolate u.s. exceptionalism. i think what we have to do now is manage the fact that both of these seems are very -- these themes are very important, and the flight is driving us more to a reflationary environment. what you have to think about in terms of style or think about currencies is really its relative growth, it's carrie,

it's terms of trading commodity exposure. his inflation going higher because of supply constraints or demand? if you look at supply, copper, palladium moving based on mining supply bottlenecks in russia and south africa, so there's an area here where we don't know if it is supply or demand driven. when you look at the canadian dollar, the norwegian krone which anything about chile, colombia, russia, some of these major currencies are trading off the terms of trade. so i think when we go back to it , you need to think about the factors. it is absolutely growth, absolutely carrie. it is relative central-bank policy, and it is going to be the commodity cycle who wins and loses on that throughout this. lisa: what is your highest conviction trade right now? mark: i think the most

interesting trade in g10 is selling the canadian dollar. if you look at some of our models, like what we are trying to figure out is how much good news is priced in. the canadian dollar story is really interesting. the bank of canada is kind of a lone wolf right now. it looks like they want to hike rates next year versus our call for a fed rate hike in 20 24. what is interesting is we are moving into the cell in may, moving into what is a very choppy trading time. i think what is also very interesting, if you look at the vix, is trading at about a three standard deviation discount on our top line, top-down global pta model which is telling us volatility should be higher. if we get more to weigh risks and a weaker data story coming through canada in may, i do think there's a lot of room for cad yet to move lower. jonathan: this market would love a whole lot more to weigh risk. mark mccormick, td bank global head of fx strategy. what year it has been for crude.

some numbers out of exxon. first quarter adjusted eps, six he five cents. the estimate, zero dollars -- adjusted eps, $0.65. the estimate, $0.68. reducing the debt by over $4 billion. those of the headlines from exxon this morning. lisa: i knew you would pick up on that, just beating expeditions dramatically, the biggest profit since 2019. paying down debt is interesting because you have see this renewed discipline in the oil space. this comes after the shale boom and bust, particularly in the debt markets. you do wonder how much big oil will consolidate their share, consolidate their power as some of these shale producers continue to struggle, and they really shore up their bottom lines. jonathan: a lot of money that was raised last year wasn't needed. you saw that in reserve releases for the big banks in america. lisa: although again, it is a tale of two different kinds of

companies. the big companies are getting bigger, and the small ones still have a lot to pay back. jonathan: amazon capturing that story perfectly with last quarter's earnings. coming up, paul sankey, sankey research lead analyst. we are -21 on the s&p. alongside lisa abramowicz, i'm jonathan ferro. tom keene is back on monday. this is "bloomberg surveillance ." ♪ ritika: with the first word news, i'm ritika gupta. in israel, a stampede at a jewish religious festival earlier today killed at least 44 people and left 150 hospitalized. it is one of the deadliest civilian disasters in israel's history. the crowd was estimated at 100,000 people, mostly ultra-orthodox jews. astrazeneca will ask the u.s. for emergency authorization of its coronavirus vaccine after it

missed an original target. u.s. citizens may not see the astra vaccine in clinic than the near term. the u.s. announced it would share its entire supply of the vaccine with other countries. in florida, republicans in the legislature have voted to impose a number of restrictions on voting. that adds to the national push by republican lawmakers to make it more difficult to vote. florida has been a crucial battleground state. donald trump won the state by more than 3% in november. nestle is expanding in a segment of the company under the five-year watch of ceo mark schneider. it has agreed to buy vitamin maker bountiful for a little under $5.8 billion. kkr has been planning an ipo valuing bountiful at more than $6 billion. the nestle deal means that there won't be a public offering. hsbc becoming the latest global bank to address burnout amongst its staff. according to a memo seen by bloomberg, hsbc's global banking

unit will raise fixed paper in key hubs and higher more of them to share their workloads. the british bank will also shorten the time needed for some associates to become vice president. 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. -- and on bloomberg quicktake. i'm ritika gupta.

>> i'm excited about having good exposure to copper at that time when the world is going through

the energy transition. i think upper has got a pretty good story in front of it. i think it's day in the sun is more towards the end of this decade when it has -- when we have more exposure to it. jonathan: i would be excited about that, too. that was tom palmer, newmont ceo and president. good morning. alongside lisa abramowicz, i'm jonathan ferro. tom keene will be back with us on monday. the 10 year to 1.643 7%. in the equity market, positive, the negative, down 27 on the s&p 500. down on the day by about 0.5%. euro-dollar down 0.3%. a negative gdp print against a much better u.s. read. relatively speaking, the story obvious through coup you want -- obvious through q1. $63.74 on wti. crude on the year up 31.47%.

this line from goldman earlier in the week, "we see commodities rallying another 13.5% over the next six months, with oil reaching $80 a barrel and copper reaching $11,000, with risks to the upside." lisa: it is dramatic. you think about how this super cycle will be different because it is not being led by china. but this goes to the whole idea of disinflationary tilts. there was a story on the bloomberg today that copper, the fact it has risen so much, it does bring up the china is reducing their use of it. so how much is this supply/demand going to change based on the high sticker price? jonathan: paul sankey joins us. can we go to that goldman call? this huge demand shock that is set to come through the rest of this year, what was your take on that?

paul: a core business of ours is covering oil, so interesting. we do agree that the demand side is going to go up a lot. goldman numbers are very big. they are talking about 6 million barrels a day increment oh man growth which gives rise to the sort of $80 price forecast. they were in specific about the dollar. the dollar has held up pretty well. the question then becomes if those two start acting to support oil and push oil higher, we could easily get to $80. jonathan: at the very front end of the yield curve, what did we get? zero.

lisa: the u.s. can borrow money for free, going back to the height of the pandemic. if you look at where things are trading, negative yield. this raises the and going forward of how much this money is going to fuel demand, is going to fuel some of the dynamics that would lead to at least $80 a barrel, as you say. do you see people continuing to consume even in the face of higher commodity prices? paul: on u.s. gasoline, there's an s curve, so there's a wide range of prices. we are a long way away from gas prices being higher. they don't change their behavior . my favorite was in 2008, when products got super for gasoline. i think one of the pet companies said we are the last shopping trip of the week because gasoline prices are so high. unfortunately, people are not

going to the pet store. we are also worried about india because india is very price-sensitive. but in the past, you have seen them price and demand. in the past, we have seen china really use a lot of oil at high prices. so when you add all of that together, you are in a situation where demand will continue, as goldman has said. it will continue to rip just because we have been in a covid situation, which is not a price elastic situation. no matter how cheap gasoline was, people weren't going to drive. now it is because of the scale of economic activity, it is being pumped by the fed, i think you will see pricing elastic demand for oil, which will drive gasoline prices very high this summer. lisa: the supply side is more of a question. you do wonder how much the

discipline of opec+, the discipline of shale producers will sustain itself in the face of $60, $70, $80 a barrel. what do you view in terms of supply to meet the a band -- meet the demand? paul: i had a good meeting the other day where they realized that this industry has got a bad reputation for spending more during high prices. one of the rollouts they've had is the improvement of strategy over the past year or so come over there only going to spend 70% of cash flow on capex. we are kicking back on that. like, that is not good enough because it means you spend more on higher prices. we want to of capex, and we want all of the free cash flow to come back to shareholders to make this truly attractive. the worry is the private equity will pile in any way, but of course, you cac introduction and financing for oil and gas for various reasons that you are aware of, such as esg. so it has become a much tighter

financed industry with a much higher cost of capital. that is why people like bp and shell talking about investing in esg are kind of misguided because their cost of capital is so high. should not be competing with investment companies to have zero effective cost of capital. that is a big mistake these companies are making. so we have seen very negative relative to cash flows reactions from bp and shell results this week. really quite staggering when you think about how much money they make. jonathan: we've only got about a minute left and i want to make sure we get this in. is that leading to specific calls, stock selection for you right now? paul: well, i mentioned devon. that's a great company. across the board, the industry is just much better. on top of that, we have good refining and good chemicals. oil in general looks good here,

especially if you are looking for inflation and higher interest rates for the treasury. jonathan: paul, good to catch up. paul sankey, sankey research founder and lead analyst, thank you. exxon with some decent numbers again. the stock down by about 0.4% in the premarket. crude a little lower this morning, but up 34% year-to-date. not bad. lisa: really interesting because not only did exxon post good earnings, they posted their first profits since 2019 and wrote their dividend. the idea here that they are shielding their third-largest dividend, or they generated enough cash to cover it, again, stocks and bonds. when are people going to start to play that? or is some of the reluctance to buy big oil simply a question of esg parameters and things like that keeping people away? jonathan: the bank of america merrill head of cmo strategy will be joining us -- cio head

of strategy will be joining us. that's a long title, isn't it? on the s&p, we are down 0.5%. yields of a basis point, one .645 4%. alongside lisa abramowicz, i'm to -- 1.64 54%. along lisa abramowicz -- alongside lisa abramowicz, i'm jonathan ferro. ♪ nathan ferro. ♪

♪ >> the only real surprise for me this earnings season so far is the magnitude of the beats. >> we know this economic data is great. this is all reopening, fiscal stimulus. how much does behavior change? >> whether you are growing at 9% or 6%, the labor market is going to remain very strong for at least the next few quarters. >> i think we are in the third inning of a continuous economic cycle that will continue to bear fruit, so i don't think this is peak growth. >> where does this thing peak out? i have no clue. the companies don't have a clue.