♪ >> 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.

>> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: getting you through the weekend -- getting you to the weekend. good morning. this is "bloomberg surveillance ," live on tv and radio. alongside lisa abramowicz, i'm jonathan ferro. tom keene back with us on monday. slight decline for the s&p 500, pulling back from all-time highs. we spent this morning, the week talking about big beats. the big beats continue. lisa: i do wonder whether the rest of the people on wall street have the same attitude which is just get to the weekend. i know that is how you start every friday, but i wonder if that is the feeling. if there's a level of exhaustion, especially with the magnitude of beats and just the shrug, the fact that we are sort of range bound here, given the incredible numbers we have seen posted, particularly out of big tech. jonathan: a couple of weeks ago we had a higher-than-expected print. bond market rally. now we are seeing it in the equity market.

tom: there's a -- lisa: there is a question embedded in some of the price action for this month. had the cyclical trade faded? has this idea of the rotation into small-cap stocks really faded, or is this just a sweet pause -- is this just a pause, a reset? we can see the russell 2000 is up less than 2% so far this month versus the nearly 5% gain on the s&p 500. jonathan: i would say the simple trade has faded. what i mean by that, i get really frustrated when people talk about the easy money has been made. i don't think you ever make easy money in the market. i think you can make simple money from sybil approaches. if you think there's going to be a cyclical upswing, buy the cyclicals. this time around, i think things are way more nuanced. let's talk about ad spend. great at amazon, great at facebook, bad at twitter. we had a huge pull forward last year. amazon didn't see that, but

certainly pinterest and netflix. some companies are struggling with that. other companies aren't. maybe the simple part of the cyclical trade has faded. lisa: what you say idiosyncratic? jonathan: i prefer the word execution. lisa: i do think i should be the official correspondent for the right-hand podium on "surveillance." jonathan: what does that mean? lisa: i am just trying to come up with a good title. jonathan: for your podium? i think it would get pretty confusing. lisa: all right. how about that price action? jonathan: i thing i know where you're going. we'll get there in a second. the equity market down 21 on the s&p 500, pulling back from all-time highs. i know we are talking about a market that hasn't responded to better numbers. we are talking about apple not responding. alphabet dipped. amazon not responding in a big way. other companies have. but for the broader market this week, it has been a slight lift. the s&p 500, 4182.

over the month it has been a really decent month of gains, up by more than 6% coming into the friday session. in the fx market, euro-dollar $1.2082. now we will get to what lisa was talking about, long titles. joseph quinlan has one. [laughter] the bond market rallied on good market data. this equity market has not had a big lift this week on greater earnings. what do you take away from that? joseph: i take away from what you were talking about a little bit baked into the cake. the s&p is sitting around 12% year to date. some of these companies are kind of hanging in there, like apple, like we talked about. others go back to execution. so i really think the bias is upwards. we could see pauses.

we have now seen in the s&p 500 a 5% holdback or more. so it is remarkable in that sense. typically they come and go, you reset. so i think the numbers are coming in better-than-expected. it is execution, and i think more cyclicals and materials. that story continues to play out. jonathan: we are resetting on the sell side as well. when we came into 2021, 2 banks had price targets that i can think of north of where we are now. jp morgan was at 4400, goldman sachs at 4300. jonathan golub at credit suisse has just upgraded from 4300 to 4600 on the s&p 500. that is the price target boost on the s&p from jonathan golub and the credit suisse team this morning. so i asked a simple question this morning. when you look at the data this week, i think we all understand the response so far in the equity market. but in how it sets us up for the year ahead, does evaluate current justifications or justify further

gains? joseph: i think it justifies further gains because it is moving at warp speed. companies are executing moving remote, and big government spending, i think that has kind of blown a lot of people away, how much we are spending. it is backstopping small businesses, households. i think this economy is very resilient, and now it is working with the private and public sector. it feels like a mixed economy. i'm a free-market guy, but a mixed economy will have significant growth in these new industries, whether it is 5g, renewable energies. that is where we are going. lisa: i've got to say, tom keene has gotten into my head so much. jonathan: that's not good. what is he saying? lisa: as he's saying we haven't had a 5% pullback, i'm thinking, go to cash. you talk about big spending.

how much of these big spending plans have actually been priced in? in other words, how much of the $4 trillion in fiscal support that joe biden has put out there in social programs have actually been counted for in stock markets? joe: i think there's more to come in terms of the price appreciation because as you know, a lot of this money hasn't even transferred yet. it is out there in construction and materials. some of the building, caterpillar type companies. the key is how quickly does it filter down. these are multi-year plans. these are multiyear invest in plans. if you are an investor, don't change these stocks right now. we've got bottleneck shortages. i think the cyclical play is still on, but maybe later this year on a pullback, you could buy them cheaper. jonathan: just going to cut in with a little more detail from the team at credit suisse on this upgrade on the s&p 500. "we are raising our 2021 s&p 500 price target from 4300, representing 9.2% upside from

current levels and 22.5% for the year." a couple of bullet points. red-hot economy fueling earnings, strongest revisions and surprises ever. lisa: 22% for the year. joe, the idea of a double-digit year, yet another one after people thought it is going to be mid to upper single digits, how long can we continue with this? basically, this is the third consecutive double-digit return for the s&p 500. joe: it's a good point because i think jonathan is pulling forward some of that earnings that we might have saw in 2022, sue pulling forward some of those earnings. to your question, i think 2022, when we look at year-over-year, quarter over quarter comps, it is going to normalize. we will get back to single digits, stockpicking. i think some of the analysts raising their estimates for this year, pulling forward from next year on the good news, how much

is spending, optimism, you name it. jonathan: and starting to price may be a higher tax rate as well. there is a note on 2022 eps that assumes an increase in the statutory tax rate from 22% 25%, a 4% -- from 22% to 25%, a 4% to 5% hit on earnings. joe: we look carefully at that. if we go to 28%, we can live with that. i think the market can make up for that, particularly the multinationals. they've got the scale. they can work their margins. i don't think it is a rally killer, but it is certainly going to shave off 2022 estimates. you could see some selling pressure going into the year end. at the end of the day, companies can handle this. if you told me we were going back to 35%, the market would be marking down estimates. jonathan: joe quinlan there, bank of america merrill lynch head of market and thematic strategy. got that out. this is credit suisse.

2022 eps, there's a slight upgrade to earnings for the team that includes a tax haircut. the s&p 500 year in target over at credit suisse now 4600, from 4300. just to re-emphasize what we were talking about moments ago, it represents another 9.2% upside from where we are at the moment in this market. lisa: where we get the idea that we are bringing forward some of the returns, are we bringing them forward for the next 20 years? i do want to go back to this idea of higher taxes being baked into credit suisse's view. i am really trying to understand what tax rate we are actually looking at. the headline tax rate and real tax rate is very different. the top 20 companies, and this was data that was highlighted by bloomberg economics, paid a median effective tax rate of 17% last year from 35% in 1990. that is the effective tax rate after you already account for all of the loopholes and the

other ways to get out of things. so what tax rate exactly are we talking about? lisa: it depends -- jonathan: it depends what it comes in at, doesn't it? if it comes up, the effective tax rate will come up, so you've got to back that in. lisa: bloomberg economics looking at after trump cut the taxes, taxes did not go down all that much because they were already so much lower than the headline number, so it is very difficult to parse this out. i sound like a broken record, but i keep saying, why isn't there more of a discussion about having a tax rate that coheres more with reality? jonathan: i totally agree, and i don't think it is as simple as reverse engineering what happened last time around. just to add a little bit more clarity to this call, consensus gdp forecasts call for 6.3% real growth in 2021. the fastest pace in nearly four decades. here's a nice tidbit for you. everyone percent improvement in nominal gdp translates to a 2.5% to 3% gain in s&p 500 revenues. lisa: go to cash.

i just keep hearing it over and over again. jonathan: how has that worked out? i wonder if he is listening today. equities pulling back from all-time highs. jonathan golub at credit suisse now looking for 4600 on the s&p 500, an upgrade from 4300, right now 4183. from new york city, this is "bloomberg surveillance." ♪ ritika: with the first word news, i'm ritika gupta. by september or october, president biden is likely to see some version of his $4 trillion a comic plan passed in congress. the president has two major tasks. he has to keep democrats from splitting the party and keep fending off her public attempt to portray the planets radical. democrats can use senate rules to bypass republican opposition to most of the plan. fallout from the latest tensions between the u.s. and russia. the u.s. embassy in moscow says it will slash visa and consulate

services following a russian ban on hiring global staff. services will be reduced to a minimum. russia imposed a new limit after the u.s. announced new sanctions and expelled 10 russian diplomat. euro area economy split into a double-dip recession at the start of the year. 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%. exxon mobil rebounded to its first quarterly profit since 2019. rising oil and gas prices should help restore investor faith it can cover the third-largest dividend in the s&p 500. meanwhile, chevron generated the most free cash flows since the pandemic, $3.4 billion. that was enough to cover its recently raised dividend that

chevron's -- dividend, but chevron's refining division earned less than a year ago. 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. ♪

♪ >> right now you can get $400 extra week, and that is going to go through september.

are they going to not take that job or not? some people are going to make that calculus and not take that job, but i don't buy the argument that everyone is sitting out of the labor force just to collect $400 extra week. jonathan: that was the wells fargo chief economist. from new york city this morning, good morning. alongside lisa abramowicz, i'm jon ferro. tom keene back with us on monday. on this friday morning, shaping up as follows. a taste of the equity market that has been ripping higher over the last few months. we are down 0.5%. the call of the morning, jonathan golub at credit suisse and the team, 4600 on the s&p 500, boosting their price target from 4300. i keep going back over the numbers. another 9.2% upside to the call from current levels for the team at credit suisse. lisa: 22% gain in the s&p 500 would be the implication here. i am just taking about how people thought that 2020 was peek year -- was peak year for

markets given the fire of cash from the government. it seems like that is actually accelerating with that $4.1 trillion plan by joe biden. the question is, how much will actually get into the market? jonathan: and will they upgrade their earnings forecasts, too? to lisa's point, i think this is what we are all grappling with going into the year ahead. what can actually get done in washington, d.c. right now? all of the big numbers we have heard about comer proposals, plans, the start of negotiations. let's bring in michael zezas, morgan stanley head of u.s. policy research and chief municipal strategist as well. those numbers at morgan stanley, how on earth do you come up with them? joe: fair enough -- michael: fair enough. you mentioned about $4 trillion of spending. when we break down the components of that, we try to count the votes that are out there in the senate and the house of representatives.

almost all of that spending is pretty viable. it is really the taxes that we think aren't viable, at least all of the taxes. by our estimate, there's probably about $1.8 trillion or so of tax increases that are viable, including some corporate taxes, some personal income taxes. so your left with a deficit, which we don't think is particularly problematic, or is probably what is ultimately going to bridge the gap here. ultimately i think next year, you would be looking at a year one deficit hit of around $500 billion. that continues the fiscal expansion we had, continues to underwrite the v-shaped economic recovery, and increase the demand in the economy, at least coming from the federal government. lisa: there's a question of whether the debt is worth it. not all debt is equal. if we are spending money on programs that really generate economic growth, this is viewed as paying for itself on some

levels, or at least starting to pay for itself. how much does this plan justify the price tag, justify the increase in debt? joe: the administration is -- michael: the administration is obviously taking this angle as well. one important thing to note is these plans are presented as paid for in part because the administration is assuming that the taxes will continue over a 15 year period, and the spending happens in an eight year period, so there is some payback from economic growth of that spending in early years. i think the way to think about it is if you are spending more than you are taking in terms of the gdp equation, that is net added, at least in the short term. the way our economists think about it is if the money is being put to infrastructure and moving downstream to lower and middle income cohorts at a higher marginal propensity to consume, taxes are taking money away from lower marginal propensity to consume cohorts, all of that should be net additives to gdp.

lisa: which raises the question about how to pay for this, whether foreign investors will see this and actually go into the dollar or withdraw from the dollar, thinking that inflation is going to pick up because if you have a higher propensity of spending and they are spending more, that is definitely a recipe for inflation. how concerned are you about borrowing costs increasing materially without the fed expanding its balance sheet ad infinitum? michael: the way to think about it is inflation is the pay for at the end of the day. deficit expansion to bridge the gap between what democrats can raise in terms of taxes versus spend, that effectively translates to higher inflation pressure. so the next big question for markets is how is the u.s. going to deal with that inflation pressure? what is a fed's reaction function? our economists inc. over the next 12 to 18 months, there's enough economic slack right now that you are not going to see this translate into the types of inflation pressure that, beyond a further bear steepening of

yield curves and some modest margin pressure, that can maybe move the equity market sideways. this isn't a particularly problematic fiscal effort. however, we have to watch that closely and watch the fed's reaction function because if there is some notion that the fed is becoming more permissive on inflation than they previously had or that they have already signaled via, for example, their average inflation targeting plan, then you could see quite a bit more volatility. jonathan: you wear two hats. you run public policy and the research over at morgan stanley. you also look over municipal credit research as well. i just wonder how you tie those stories together right now. michael: i think the easiest tie is that the federal governments really came in through the last few fiscal packages and downstream a lot of aid to me this up governments, frankly more than we think they needed to hit their prior revenue baseline. so you have gone from a situation where, if we were having this conversation a year ago, we would be talking about

how distressed the municipal credit market was, but the era was pointed upward on credit fund metals and all most every single sector. so the federal government has really been quite supportive of that market, and now the sharp economic recovery is probably going to take the handoff from there and continue to create a lot of fundamental help their. jonathan: so you don't think that is fully priced. do you not think that story as fully priced yet? joe: the minas -- michael: the municipal market i do think is fully priced. i don't think there's a lot of outperformance from here, so if you're owning municipal bonds, you can feel pretty good about the credit fundamentals, but the reason you should be owning it is probably for outperformance versus treasuries or outperformance versus corporate. it is for owning duration, a very different mindset. if you are looking to outperform an aggregate benchmark, for example, buying tax-exempt bonds, i don't think that is the right way to go. jonathan: what is the right way to go? michael: frankly, we prefer

owning corporate credit at the moment. lisa: i was looking for him to say puerto rico. [laughter] jonathan: michael, we will let you go. good to catch up. michael zezas, morgan stanley head of u.s. policy research and municipal credit strategy. i've got to ask, what is the right way to go? corporate credit still for some people out there. lisa: it depends where in corporate credit because you've got the same story at the upper end of the ratings scale, where you have very low spreads, low extra yields over benchmark rates, and rates that a lot of people think are going to go up, especially if michael zezas is right about inflation. jonathan: and how is that going to be? coming up, the rock creek group founder and ceo. from all-time highs on the s&p 500, we decline 0.45%. in just a moment, pce, personal income and spending data. yields unchanged on the 10 year at 1.6383%.

$1.2084 on euro-dollar. down almost 2% on crude, $63.47. alongside lisa abramowicz, i'm jonathan ferro. tom keene back with us on monday. on radio, on tv, this is "bloomberg surveillance." ♪

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jonathan: i've always said the commercial breaks are better than the program itself. i will not share any of it with you. lisa: thank you. jonathan: futures down 19 on the s&p. yields unchanged. euro-dollar down to 1.2083. $63.49 on crude. economic data in the united states means we bring in michael mckee for more. good morning. michael: we are seeing the effect of the stimmys. personal income numbers extraordinarily high. we all got our checks. some of us got checks and some of us did not. those who did got a lot and it pushed up incomes. this is going to be an interesting story because we

know this is driven by the government's generosity and so next month we will probably see declines. it will take a couple of months to get a good reading on personal income. spending up 4.2%, last month it was down 8%. overall we are looking at better numbers because of stimulus spending. the real personal spending, which is inflation-adjusted, up 3.6%. the number a lot of people are watching for because they want to see what the fed will do is the pce index. that is up .5% on the month, which pushes the pce you're over your 2.3%. the fed was looking for it to go over to percent. they want it to be in the 2.3% to 2.5% range. the problem is that was largely driven by food and energy this month. the core is only up to 1.8%. it is getting there. it was 1.4% last month.

if that pattern continues, which everyone expects it to do, we will see the inflation the fed is looking for. they are asking is it sustained. the employment cost index up 9%. that compares with .7% for the fourth quarter. the number helps the fed but is not as widely followed because it does just represent three months. jonathan: equities lower going into these, we stay lower. off .5% on the s&p 500. yields elevated come up about a basis point. euro-dollar, 1.2079. we got the stimulus checks, the relief from this administration, and a lot of it is being spent. it has boosted spending in america. we want to understand if it peaks up again. this is the latest data on the bank of america total card

spending. there read increased 20% on a -- on the seven days ending april 24. another lift coming out of easter. how encouraging is that? michael: that is another problem, trying to adjust for easter. you take a two month average. the number that will really influence thinking about that is the personal savings rate. not only did we get a lot of money and spend a lot of money but we put a lot into the bank, 27.6%. the good news is people still have cash in the bank they can spent in the months going forward even if they do not have a stimulus check. lisa: when you look at some of the details, the fact that the key aspect the fed looks at that excludes energy, excludes food is rising more than people expect, at least if you look at the month on month basis. what are the aspects contributing to this? michael: basically when you look at the headline, energy is the

biggest issue involved. we are seeing general price indexes in areas where there are shortages and it is funny because chip shortage is rippling throughout the economy because so many things are made with microchips now. that is a thing you chase back a lot of the core, to the inability of manufacturers to get what they need. a lot of stuff being backed up in shipping. that will be a problem that causes prices to go up but will not last. that will clear. jonathan: good to catch up. michael mckee the latest data. it is interesting to get a read on some of this, to see the employment cost index come in hotter. can we get a lift through the year? can we get a tighter labor market? maybe a much tighter labor market. lisa: is it, dare i say it, transitory? there is a question about the

idea of supply chain disruptions and the chip disruptions. a lot of the car company saying that will last for years. it could be years before they were through the back log. jonathan: i've asked this question, we all have at bloomberg. execution, execution. can supply meet the demand. let's bring in afsaneh beschloss , rock creek group founder and ceo. i want to look -- when you look at companies, are you seeing companies that struggle to meet the demand and if they are how long to they expect them to persist? afsaneh: great to be with you. what we are seeing is we will have short-term issues as you just alluded to. you will have blockages on supply chains. you demand go up, not just because of the checks that people got that you were talking about, but also there has been

savings over the last 12 months as people of been stuck at home and not able to spend the way they usually used to come and of course there is the infrastructure and other fields that have put money into the market and other interest rates. put all of that together and it has created short-term demand. we are starting to see that. we are seeing the impact on lumber prices, on iron ore prices, and copper prices. at the same time, we know there is a pent up demand, there is extra cash coming in to the economy. it will force the prices to go up but that is probably short-term to medium-term versus longer-term. lisa: you agree with the federal reserve that it is largely transitory and we will head back to the same trend we were in before? afsaneh: it is transitory, the

question is how long is transitory? a year? 18 months? certainly not long-term. lisa: given the fact that companies are performing amazingly in the last earnings season, do you view this as a goldilocks recipe for big equities in the united states or do you think all of this has been priced in, especially if we do not emerge in a new trajectory post pandemic and post recovery? afsaneh: i think a lot is changing in terms of the underlying parts of our economy. what you are seeing is a big shift towards certain stocks doing better than others. we are looking at stocks -- not just big tech stocks which have not gone up despite the huge earnings you just mentioned. we have not seen that kind of movement in the mega caps, but at the same time you still see interesting value in a lot of other areas. a lot of value in things that

are getting affected by people coming out of covid, particularly in the united states. we are moving more and more towards a stockpicking environment, where maybe indices are not so interesting for people but they are looking much more at the stocks specifically, whether in the u.s., europe, or emerging markets, and being much more selective. jonathan: we have seen a lot of evidence of that this week's in terms of the performance of certain sectors and certain companies in those sectors. twitterverse's facebook an example. -- twitter versus facebook an example. in terms of coming out of washington dc, are any of them said to change -- if realized jonathan: -- afsaneh: what we are hearing in washington means there will be changes in tax rates. there will be compromise decisions which will not impact

negatively our allocation decisions. overall these decisions will lead to more thriving economy. if the share of labor goes up in terms of the benefits from economy, they will be spending more. in the longer run this is what we are all looking at. much better for the long-term growth of the u.s. economy and the global economy and good for stocks in the long run. we are positive about those. jonathan: how do you think a higher capital gains rate would change things, if at all? afsaneh: those numbers will end up being compromise numbers, but our expectation is they will go up. given the scale, look at a lot of the existing studies on how much the increase in capital gains tax can impact new innovations, we do not think it will impact new innovations, we do not think there will be less ipo in the u.s. economy.

the timing of transactions may change. we do not see capital gains taxes changing the trajectory of the innovation in our economy. jonathan: always appreciate your perspective on things and the interesting conversation on the commercial break. afsaneh beschloss, rock creek founder and cfo. we will get 70 messages. what are you talking about? personal income in 20.1% against an estimate of 20.3%. michael mckee go through the numbers and runs away and goes through the history books and send me a step. he sent me a newer stat. that number is rising the most since records began in 1946. that is all about policy. lisa: is all about stimmy checks. jonathan: reopening. all of that stuff. lisa: afsaneh beschloss was

saying it was transitory. a question my son asked me. he said is inflation good or is inflation bad? jonathan: kids ask the best question. lisa: this is a fantastic question after it was set this is the way the u.s. could pay for it. is inflation the upside or downside surprise? then does the debt become more of a concern? these are some of the dynamics you have to think about when you think about the long-term performance. jonathan: some of our listeners -- i once put the younger abramowitz on bloomberg radio london with me. i think we should send young abramowitz to the news conference to ask simple pointed questions. lisa: he would get the elevator music very quickly. jonathan: they would just turn off the zoom connection very quickly. lisa: pretty much. jonathan: price action pulling

back from all-time highs on the s&p 500. coming up on bloomberg tv, mohamed el-erian, bloomberg opinion, spirit this was lovely. lisa: wasn't it lovely. jonathan: uninterrupted two hours and 40 minutes. tk, i know you are watching, i miss you, i love you. lisa: cannot wait. jonathan: equities off all-time highs. this is bloomberg. ritika: with the first word news, i'm ritika gupta. in israel, a stampede edit u.s. religious festival earlier killed at least 44 people and left 150 hospitalized. one of the deadliest disasters in israel's history. the -- mostly ultra-orthodox jews. astrazeneca will ask for emergency authorization for its

vaccine effort missed -- u.s. citizens may not see the astrazeneca vaccine in a clinics in the near term. the u.s. has announced it will share its entire supply of the vaccine with other countries. in florida, republicans 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 background state. donald trump won the state by more than 3% in november. nestle is expanding in a segment the company entered under the five-year watch. the ceo has agreed to buy vitamin maker bountiful. kkr has been planning ipo valuing bountiful at more than $6 billion. the nestle deal means there will not be a public offering. 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. ♪

>> even in the middle of this very difficult supply-chain

situation we continue to generate growth, have a very good guide, and line of sight for material improvement and supply for us towards the end of the calendar year. jonathan: that was qualcomm -- lisa: that was qualcomm chief executive officer a lack talking about the semiconductor chip shortages which have hit some areas or than others. apple and other big tech companies have managed to avoid the wrath of it while automakers have had a bigger hit. we want to turn our attention to the story of the moment. big tech getting bigger and no one and simplifies that more than amazon, reporting another $100 billion quarter of revenues , charting incredible profits come incredible growth. the question is how much of a target is the put on its back. tom forte, da davidson senior research analyst, joining us now. the earnings were incredible, were they too good? tom: they were too good.

amazon did not get the memo they needed to do a better job turned less money because they are getting the target on their back , it just grew magnificently. lisa: just to be capitalistic, they did not get the memo to not make enough money. you could say this is just regulatory world gone amaq, shouldn't you want your dynamic companies to do well? did they do a poor job of telegraphing how they will use that money or how they will contribute more to society in a way that would offset some of the regulatory targets? tom: to amazon's credit, they are very smart and shrewd politically. what they are trying to convey is they will raise wages for a large number of their employees. even though the increment await may not be materially higher, collectively because they are second largest employer in the u.s. after walmart, that is another billion dollars of spend for amazon.

amazon also has, from a political standpoint, that there warmly embracing physical offices. they have hundreds of thousands of square footage in new york, in washington, they tend to go back to the office. the combination of higher wages, the second largest employer after walmart, and returning to office are things that work in amazon's favor from the regulatory standpoint. lisa: not to push back too much, because these are all things that will be embraced by a lot in washington, d.c., but apple came out and said we will invest $400 billion in infrastructure in the united states, we will build a new plant in north carolina. why didn't amazon come out with something similar, a comprehensive way they will contribute that would offset some of the washington scrutiny? tom: it is a great question, and in hindsight apple's announcement was a red flag because apple was about to have a blowout quarter. the question for amazon is what

more can they do in the u.s.? what is interesting on these races is they are not doing a blanket $16 an hour or $17 an hour across the u.s. they want to give themselves the flexibility for high wage states like new york and california to raise wages more, and low wage states like alabama, not necessarily to have a blanket $16 or $17. they have learned from their experience in alabama, and they want to get themselves more flexibility and have regional raises rather than a blanket u.s. rate. lisa: you were talking about how they were expanding physical infrastructure and office buildings, how they were raising wages. you have a sense of whether the moves they were making in terms of expanding brick-and-mortar is something that the bear fruit in the long run? tom: in my opinion, as amazon

wanted to monday morning quarterback the pandemic, they would look at the structural advantage walmart had by having physical stores in the beginning of the pandemic. in my opinion i've been surprised amazon has not accelerated adding physical stores faster. i hate -- i think having the ability to have projects at the store, think of the beginning of the pandemic, the shortage of paper towels, etc., that amazon would've benefited from having a larger store footprint. i think that is important. lisa: how big of a risk is regulatory pressure. we keep talking about how they catered to the washington crowd. realistically, what kind of regulatory pressure you see could pressure the bottom line in the years to come? tom: my thesis is regulatory pressure on amazon, if the company did not do a good job managing frontline employees at warehouses and whole foods -- my

theory is that means amazon will have have more employees to mirror the output it intends to have. in my opinion unionization is still the biggest risk to amazon. the second biggest risk is a 28% corporate tax rate versus a 21%. lisa: right now amazon is not paying a 21% tax rate. how much is it the headline owing up to 20% versus enforcement of the existing rates? tom: it is an exact -- it is an excellent question and apple is in the same boat as amazon. what works in both their favors as they have a large amount of profitability to have lower tax rates than the u.s.. when i compare amazon versus apple, amazon had years of investment in losing money, which steals them from taxes for years to. come.

-- shields them from taxes for years to come. 21% to 28 percent is not as much of a threat for amazon and apple as it would be for u.s. only company. lisa: -- even though they account for much smaller subset of actual sales. something like $15 billion of revenue. i wonder how much room there is to expand given some of the competitors, specifically microsoft, that are gaining a lot of clout. jonathan: i think microsoft is gaining but the story in 2021 for aws is amazon intentionally scaled-back usage for travel and leisure companies to help them save money to manage the pandemic. as we have the reopening and the economy rebounds, the travel and leisure companies will accelerate their spend on cloud computing, including aws. that will benefit them more than any competitive pressure from microsoft.

lisa: this is for tom keene. why didn't they do a stock split? tom: for tom keene. i have followed the internet long enough to remember that in the late 1990's all you had to do was a stock split for the stock to go higher. i am not 100% sure, clearly it is overdue. lisa: clearly it is overdue. tom forte. maybe they're just waiting for tom keene to come back from his sabbatical on monday in order to do their stock split. tom forte, da davidson senior research analyst. amazon, the juggernaut of the pre-pandemic and the post pandemic economy as it posted another $100 billion plus quarter of revenue. what a day of data. unbelievable personal income. the most ever the increase has come out going back to 1946. 21% gain in personal income. coming up, look at some of the oil majors.

chevron's chief financial officer will be joining bloomberg television talking about the increase in dividends and the incredible revenues on the heels of higher oil prices. from new york, this is "bloomberg surveillance." ♪

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♪ jonathan: getting you to the

weekend. from new york city for our worldwide, good morning, good morning. "the countdown to the open" starts right now. we begin with the big issue. a blowout week for big tech earnings. >> all of the tech names this week. >> the earnings are fantastic. >> amazing numbers. >> got only do earnings grow, they tend to be even elevated expectations. >> you also want to see how stocks are reacting to the news. >> some of the reaction to the arctic's might not be as robust as one would expect. >> some stocks have had very strong earnings result. >> has that cycle matures i think the bar gets higher. >> we went up 7% into the earnings season. we did frontload that a bit. >> expectations were high. >> how much is priced in and has the easy money been made? >> we