>> it's pretty simple to recognize we are in the midst of a boom here in the u.s. >> there is so much of does a vision of this moment of fully reopening the economy, -- so much anticipation of this moment of fully reopening the economy, so i think we will see vulnerability. >> the question is how long is transitory. is it a couple of months, a year or 18 months? it is certainly not long term. >> until the tax changes happen, you ignore them, but the reality is the market is not ignoring it. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: we've got an earnings boom. from new york city for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. 10 minutes ago it was pfizer upgrading its outlook. in the last couple of minutes, under armour joining the party. tom: it is really important this

week into the nuanced and the snooze fest wednesday, the jobs report friday, this week is as important or more important than the tech boom we saw last week. we are seeing these companies in a boom economy. the number one thing, whether it is under armour this or pfizer that, they are all adapting and adjusting. jonathan: desensitized good news maybe. that's been the take away from some people over the last week or so. morgan stanley is taking the negative skew to price action so far, among the strongest we have seen since 2007. andrew slimming of morgan stanley was on in the previous hour, and he said ash andrew -- andrew slimmon of morgan stanley was on in the previous hour, and he said just ignore it. tom: it's the bull and the bear debate. to me, the mother of the call is whether you take morgan stanley, the wonderful way they have always argued within their research collegially, is the idea of the boom economy and gdp

drifts away quickly, or do you have in a boom economy that sustains afterwards? we don't know. jonathan: we have some positives this morning on pfizer, on under armour. i think the table a was the apple numbers. they knocked it out of the park. to see that stock close slightly negative on the day was kinda confusing for a lot of. lisa: especially since it was unclear what was driving. i want to go back -- what was driving it. i want to go back to what interest lynn -- what andrew slimmon was talking about. he noted this 11% miscalculation on the spx earnings. basically, this is how much wall street underestimated earnings. he couldn't understand why there was no humility, why there was no reckoning for that. why there has not been any

material recalculation of some of these expectations. that is a good question. jonathan: wall street has a message for its staff. let's get back to the office. sri natarajan reporting for us on bloomberg news right now that goldman is set to tell employees they should be prepared by mid june to work from the offices again. this according to people with knowledge of the matter. the investment bank is planning to tell employees they should be prepared by mid june to work from the offices again. tom: that is financial management. they can use their bloombergs at home or in the office. it differs from what we hear from tech as well. to lisa's point on apple, i don't know what they would turn to work game is at apple -- the return to work name is at apple, apple is trailing. jonathan: it's been really tough out there. tom: the expectation function, the algebra about the stock

market, there's an expectation on the left of the equals sign and an expectation at the right of the sign. that's one of the few equations that has that. stocks look forward. it's religion, like twins baseball in minnesota. jonathan: have you got a comment on the return to work on wall street, tom? tom: i'm not surprised. paulsen wants it, dimon wants it. i think every buddy wants it. lisa: they talked about the divide between the u.s. banks and the european banks. we have seen european banks say, get rid of -- say, stay at home all you want. we will get rid of office space. people i speak to when they get back to the office, they might not like the commute, but there's a niceness about separating work and home and being next to the water cooler. jonathan: there issei be being

away from the family -- dare i say being away from the family? tom: all of these reasons about work from home, blah blah blah. the number one by a country mile was the stress of commute. jonathan: i agree with you. sure. but the likes of goldman, jp morgan have got a pretty strong message. the commute is coming back. tom: the three of us don't know what we are talking about because we are all getting fancy pants driving services and that. jonathan: you might be. speak for yourself. tom: i still can't figure out how to put the window down in the backseat of the bentley. jonathan: have you noticed uber times in new york city? tom: it's gotten difficult, and the price is up. jonathan: times are getting longer. it is a bit like a pmi. lisa: someone has a violin out for us. [laughter] jonathan: i'm just indicating the demand. lisa: no, it's true. and it is a good point.

if you try to rent a car, if you try to get a car, if you tried to get on an airplane, all of the costs are getting ramped up dramatically. jonathan: here's the price action. 4183 on the s&p 500. futures down close to 0.1%. yields higher by a couple of basis points. euro-dollar, brief break of $1.20. right now, $1.2014. lisa: 8:30 am, we seemed that record trade deficit, the expectation that the u.s. is importing way more than it is exporting. a lot of the money going over to asia in particular for some of the goods everyone is buying. 10:00 a.m., we get factory orders, durable goods orders. this idea of the demand really driving some of the chip shortages, some of the ongoing shortages jon was rightly talking about, i really important point that everyone has seen when they try to go get hiking boots, for example, and they can't find any in their

size because there's a lack of supplies out there. g7 ministers are meeting and demand to discuss travel between the atlantic corridor or possibly some sort of collaboration on how to address china. that's the other topic that has been on the table. jonathan: jim paulsen joining us now, the leasehold group -- the loose hold group -- the leuthold group chief investment strategist. for many people in the markets, this is the moment we have been anticipating, building up towards. it is why we positioned in the cyclicals in early november when that first headline dropped about vaccine efficacy, and rollout was just around the corner. now many people are asking, is the cyclical trade done? just as the get back to normal story starts to build, is it? jim: they've had a nice run here, there's no doubt. people are concerned, as you

said, about we are going to reach peak growth soon in the expansion probably. year on year at least. we've also had a nice run and stocks are forward-looking. we are probably due for a correction at some point. all of these things are true, but when i look at cyclicals, the relative total return of the four major cyclical sectors of the s&p, their level is lower than 85% of the time, as you go back to 1945. they are closer to we relook historically at recessionary lows then expansion highs. i think they still have quite a bit of room left. there -- their price today relative to the overall market is like the early 1960's. they are priced comparably to where they were in the early 1980's, outperforming. in the early 1990's, where they are performed in 1995.

even in the early to thousands come over they are performed from 2001 to 2007. i think there's more room here for the cyclicals. i also like the environment around them, in the sense that, just about this for a moment. cyclical stocks are highly correlated to three big things. to commodity prices, bond yields, and a weak dollar. at least two out of those three, and there's not much debate, everyone kind of knows yields are going to go higher, commodity prices are going to go higher. i personally think the dollar is going to go lower. all three of those would mean that cyclical stocks still have more upside, so i would continue to hold them. you got to kind of hold your nose. they are volatile. it is not like a steady eddie stock or a growth stock, but i think they can do good things for your portfolio in the next few years. lisa: have you been upgrading

your expectations for returns on u.s. equities based on some of these revisions upward in full-year forecasts? james: at year-end, i had a $200 estimate on the s&p 500. that is where i'm at. i think the street is continuing to come up. one of the things we've had happened, if you look at the bloomberg economic surprise index, it has been in the upper quintile of its range since 2000 80% of the time in the last year. it has never done that. what that tells me is that surprises have chronically been better than expected. even though people are revising up their expectations, they still can't revise them up fast or aggressive enough because the economy and earnings are coming in even better. every day the surprises keep coming in better-than-expected, people have to raise their earnings targets, raise their price targets for the stock market, raise their targets for

gdp earth. i think that is chronically happening. we are going to eventually catch up. but i still think the street is behind it. i think the fed is talking about 6.5% gdp. i think we are going to have more like 8% to 9%, and the street is around $180 on earnings. i still think we are going to do $200. so i still think there is room. but to tom's point earlier, the market is a forward-looking animal to some degree, so you still have to question how much of that might be in the market. jonathan: it is always great to catch up, and good to see you, i believe back in the office, too. welcome back to the office. tom: he's got that glow. [laughter] jonathan: in the office glow, tom? tom: the twins are horrific this year. the minnesota twins beat the texas rangers last night. that's the only reason paulsen has got the glow. jonathan: coming up at 8:00 a.m., seema shah, principal global investors chief

strategist. futures down three on the s&p, down by 0.1%. for our audience worldwide, tom keene, lisa abramowicz, jonathan ferro. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ♪ ritika: with the first word news, i'm ritika gupta. in mexico city, a raised subway track collapsed, plunging trains with passengers aboard to the ground. at least 23 were killed and about 70 others injured. the accident is blamed on a broken beam. the subway line that collapsed opened in 2012. the project suffered from design problems during construction. wall street marched back -- wall street's march back to its skyscrapers is picking up. goldman sachs is preparing to tell employees they should be ready by the middle of next month to work from offices again. that follows jp morgan's mandate last week for a return to offices in rotation starting in july.

pfizer raised its forecast for the fiscal year and since coronavirus vaccine -- and said coronavirus vaccine revenue will be higher-than-expected. they expect vaccine sales to hit $26 billion, up from a previous estimate of $15 billion. pfizer first quarter sales and profit beat estimates. cvs posted first-quarter earnings that beat estimates. the drugstore chain also raised its earnings forecast for the full year. revenue for cvs's health insurance business is up almost 7%. a fortune valued at $146 billion is at stake in the divorce of bill and melinda gates. the couple announced they are splitting up after 27 years of marriage. they made no hint of their financial plans, though they said they will call barb right -- they will cooperate on their continuing nonprofit operations. 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. ♪

♪ >> it seems as if the fed has been somewhat overtaken by events. it will stay accommodative.

chairman powell has said again and again we aren't even thinking about thinking about raising rates or tapering. but my sense is the amount of fiscal support that is underway and the strength of the economy will probably force the fed to perhaps rethink what it has laid out. jonathan: really interesting comments from the university of chicago booth school of business professor and former reserve bank of india governor, with some scathing words for his home country as well which we can touch on little bit later. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures are down three to 4182, off by almost 0.1%. yields higher to 1.6137%. euro-dollar had a little break of one dollar 20 since earlier, north of that level again. crude has a $65 handle, up by

1.67%. told you a lot about the number here -- the numbers here in america. the vaccination, the improvement . vaccinations have been rolling over recently. there's been some concern. but here in new york city, we will reopen. we are dropping restrictions, capacity restraints. a headline just crossed from singapore about 10 minutes ago, with a covid crackdown with groups limited to five people. two different worlds still. tom: you compare it to tokyo with the olympic pressures, it is just extraordinary the different worlds out there right now. in washington there's only one world, and that is the election in 2022. that's always the story in washington. emily wilkins joins us now, bloomberg gridlock reporter. greg valliere out with a sharp note that it is not certain, but democrats were really struggling

to get to a house majority in 2022 with retirements, etc. what to say before gridlock biden look like? what is the new urgency from the white house given these political realities? emily: i think the white house realizes if they only have two years of having democratic majorities in the house and senate, they better get to work and do something that they can make sure to run on in 2024. i think that is what you're seeing with this for trillion dollar economic plan that has been proposed. the idea is to do something big to give democrats something to run on. you're absolutely right, the cards are stacked against them in terms of redistricting, in terms of historical. usually it is the minority party that ends up winning in the midterms. but when i talk to lawmakers on the hill, they say if we can get this bill passed, we can at

least go back to our districts and say look at what we were able to do for you. please reelect us again in 2022. tom: i've heard a number of republicans talking about the idea that you are going to raise taxes on the 1%, whatever the number is, and that also means you're going to raise taxes on everyone else as well. explain that new to our audience , particularly our international audience, where the opposing party is selling the idea that you can't trust the certitude that just the 1% is going to pay the bill. emily: for republicans, if you are taxing those who are the job creators, who are the ones who have the companies, who might be wealthier because they start the company and now they are the ceo or president, if you tax them, they might decide to move those companies elsewhere, and those jobs elsewhere. at the end of it, this is what we saw was president biden's speech left when day. jobs, jobs, jobs, jobs, jobs.

that is such a keyword for both parties at this point. republicans are hoping to tie those tax increases to a loss of middle-class jobs and middle-class americans, which both parties are trying to target right now. that's why when you saw president biden go down to georgia last week, when you heard him talk to americans, he is really trying to portray this as raising taxes on the rich and only the rich. that's why he had that line about having no one who made less than $400,000 was going to see a tax increase. of course, now we know that is a little bit different for married couples, but he is really trying to portray this as an increase on the wealthy. lisa: if i had a script, i would rip it up, as per tom keene. i want to go to these five new community cases in singapore that prompted a three week covid crackdown, with groups being more limited and restrictions being put in place. we are still reporting thousands of cases in the u.s., not anywhere close to being

concerned about five cases. that would be an absolute victory. where is the pressure in washington, d.c. when it comes to reopening more cracking down? that was such a huge focus under the trump administration. emily: we are seeing states at this point be the ones, as we saw in the trump administration, to say we are going to open up or we are going to crack down further. yesterday we saw florida's governor ron desantis say that he is lifting all covid restrictions in the state, including those that cities and localities have enforced. but as i think you guys pointed out a few minutes ago, we are also seeing new york city get ready for a return to normalcy, as well as other states. there's a sense of how do we do this. we have seen the cdc already come out with new guidance for those who had vaccinations, clarifying when people who were fully vaccinated do or don't need to wear a mask. i think the pressure in d.c. at

this point is to make sure that americans are getting vaccinated. how do you convince those americans, and there are many of them out there, who don't think they should get a vaccine, either because of health reasons or other concerns? how do you convince those americans to get a vaccine? i think that is being worked on at the national level, at the state level, and at the local level at this point in trying to convince those holdout groups to take the shot. lisa: it seems like there is increasing dissonance right now between the states and the federal government when it comes to the pressure of whether to reopen faster or whether to crackdown for longer and tried to get the virus counts down lower. it seems like that tension is only growing. jonathan: when it comes to hesitancy, i think it is pretty clear. last week, the president leans into the camera with a microphone and says you don't have to wear a mask outdoors anymore if you have been vaccinated. that's a reason to go and get vaccinated. i think myself and many other

people just found that was so out of touch with the moment because for a lot of people, that is not enough. that's not life-changing. do we need more guidance? do they have the science to back up that guidance? where is it? emily: the cdc is expected to come out with more guidance as higher percentages of americans begin to get vaccinated, so absolutely, we are going to be seeing her guidance from the cdc and more guidance from the white house, but even at the start of this pandemic, this was widely something that was state lead. even though the biden adminstration is really trying to nationalize the message, to a certain extent, this is still something that is state led when it comes to these specific regulations. joe biden sat up there like, we need to lock down los angeles and open up new york. this is something that is really at the local level, and the job of the president here is the messaging component and trying to convince individuals to get that vaccine shot. emily: thank you. jonathan:jonathan: -- thank you.

-- jonathan: thank you. did you see governor murphy talking about pints of free beer as you get vaccinated? tom: clumsy is what i see nationwide. lisa: it's transitory. jonathan: i will reserve judgment on that. tom: i think he offered schaefer of average -- schaefer a beverage, a new jersey beverage. jonathan: this is bloomberg. ♪ ♪

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♪ jonathan: live on tv and radio, this is "bloomberg surveillance ," live from new york city for our audience worldwide. we declined by about zero point 1% on the s&p 500. no real drama on futures. we come in about 0.3% on the nasdaq 100. switch up the board. in the bond market this morning, a really thoughtful note published by the rates team over at hsbc. the idea being that may be deficit peaks pretty soon, and we have already locked in a lot of the issuance at the longer end. so longer-term debt a uctions could fall as well going into next year. that's what backs up their call for a 1% 10 year yield. right now, 1.6137%. yields of about a basis point on

30's, up around 0.0023% area -- around 0.0023%. . we are thinking about economic predictions by economists and the actual data relative to those estimates. upside surprises, downside surprises. we came out of the downturn last year with a huge flurry of upside surprises, basically under appreciating the snapback. we should have been conditioned by that. in some ways we have snapped back even quicker, though i have to say, just in the last couple of days, we are starting to roll over just a little bit because the pmi came in softer than expected. tom: to me it is the blunt interest of gdp in this raging bet that gdp is going to fall off a cliff when we get out three months, six months, nine months. there's a group pushing against that. jonathan: peak growth seems to

be the theme at the moment. who are you throwing shade at this morning? tom: i'm looking at peak nuance. lisa: just general shade. [laughter] jonathan: we were talking about going back to work earlier this morning. who were you having a day get? who needs to get -- who were you having a dig at? who needs to get back to work? tom: i don't know. jonathan: news this morning that goldman might get the message, and as far as i'm aware, the letter hasn't been sent out. the investment bank over at goldman have got this letter prepared to send up to the staff, and we are breaking that news this morning. tom: people that cover apple, sri covering goldman sachs. jonathan: romaine is the stoxx. -- is the stocks. tom: romaine is locked in. romaine: pfizer still benefiting

from the covid crisis. this is a company that came in above estimates on the revenue side by about $1 billion, and actually raised its full-year revenue estimates about $8 billion to $9 billion above what it previously forecast, above what the street was looking for. a lot of this is because it expects to make more money off of this covid vaccines than previously expected. on top of that, it's none covid drugs doing pretty well. cvs health did report a bump up and revenue growth, but a lot of that had to do with raising prices on some of its prescription products. it is still being heard by the covid crisis because a lot of people aren't coming into that store. they are not buying that front of the store merchandise they would normally sell with all of that foot traffic. that is still waiting on them going forward. an interesting move at twitter. you are starting to see a lot of activity among elliott management and kathy wood's arc fund. we continue to see buying coming in, and bloomberg reporting that not only has elliott bought into

that dip, but apparently they are rattling the cages of some of the other hedge funds, saying they should be buying into this as well. i want to show you what has been going on. we talk about commodities enough on this show, so i am going to introduce this one. up 2% on the day. they are really benefiting from a lot of the crop price inflation. this is one of the biggest commodity processor out there. on the meantime, you have mosaic really being hurt here, a big fertilizer maker. those shares are down in the premarket. kroger getting a downgrade over at goldman. shares are down a couple percent here. companies like albertson and kroger aren't going to be able to pass that on. tom: i saw dupont, citigroup had an important note on dupont. what was important was there underestimation of asia-pacific

growth. they made real clear asia-pacific growth has been the variable for international companies. do you see that? romaine: absolutely. they were also hurt by those rising commodity prices, but when you look at the demand, the aggregate demand coming out in asia as well as southeast asia, and even parts of the middle east and africa, that is enough to blunt the impact of some of those higher costs. tom: romaine bostick, thank you so much. right now which of the most anticipated morning notes on the street. and lincoln -- ian lyngen with bmo capital markets rights and exquisite note on the state of fixed income. he joins us, head of u.s. rates strategy. i love how you frame friday's job report as the what now jobs report. we are going to get one million jobs, and then there is the what now of it. describe that. ian: first of all, thank you for that wonderful introduction. i appreciate the kind words.

that said, we are at a pivotal moment for the treasury market. we are at a pivotal moment for the reopening narrative, and the fact of the matter is we have brought forward a lot of the upside, the vaccine rollout, whether one believes we have any chance of reaching herd immunity at this point or not, it has been accelerated, and we are at a what now. what happens if we get a one million to 2 million nfp print, and we still rally after the fact? people are just looking past the initial stimulus inspired growth in the first half of the year, and they are looking toward what happens when we are reopened. it is not going to be a situation with a limiting factor in simply reopening a business. the binding constraint is individuals making the decision to go back out and engage in in person commerce.

we have a market just don't know how that is going to play out. jonathan: from your perspective, what is the balance of risk around treasuries going into friday? do we respond more to a downside surprise more than an upside one? ian: i do think it is asymmetric , and a disappointment will have a more bullish impact on treasuries then an upside surprise. part of that is simply because as a market, we lack context for the magnitude of these numbers. we just need to see them go the right direction. jonathan: what does that mean for the big call in this market? we could get closer to sue percent by the end of the year. if we can't get trajectory higher -- closer to 2% by the end of the year. if we can't get to the rectory higher, what takes us there? ian: if we can't get 2%, it is going to be difficult to justify continuing yields above 2% before the absolute end of the year when the market starts serially considering pricing and tapering. lisa: meanwhile there is the

supply/demand dynamic. hsbc came out saying there was likely to bp issuance when it came to treasure -- ugly to be peek issuance when it came to treasuries -- likely to be peak -- likely to be peak issuance when it came to treasuries this year. how does that work with yields, versus allowing the fed to taper and reducing and some of these auctions? ian: i would argue that the bigger issues at play in the treasury market really are the macro outlook, not only domestically but globally. that said, on the margin, curtailing supply will be net positive for treasuries. it will limit how far 10-year gilts can backup. if we get above 2%, it will put a limit on how long we stay there. that said, the bigger numbers in terms of treasury issuance on the net issuance side are behind

us, and if that was actually going to feed into the bond vigilante argument, we wouldn't be having a conversation right now with 10-year gilts at 1.65%. we would be having a conversation with tens closer to 2.5%. lisa: what would it take with respect to inflation data if that is the main metric that is going to drive yields from here? what would you have to see to push yields higher than 10%? you were saying it is hard to see that in the near term. ian: one of the big issues at play at the moment is that the fed is dismissing any increase in inflation as transitory, and as a market we are spending a lot of time arguing about what the definition of transitory should actually be. from our perspective, it really comes down to what the fed says it is or is not. so to get yields sustainably higher, we would need to hear the rhetoric from the fed change to this is actually true cyclical inflation that is not

transitory, and it is here to stay. that would recast the markets expectations for how quickly we move onto the next stage of the cycle. jonathan: we've got to leave it there. always good to catch up with you. ian lyngen, bmo capital markets head of u.s. rates strategy. this came from fed president john williams. mike expectation ash "my expedition -- "my expectation is that inflation will come back to about 2% next year." they are willing to wait. that is the story for the federal reserve. the patient's. they are willing to wait and see if they are wrong. if they are, they will not find out potentially until year end to start of 2022. that is what vice chair clarida alluded to to us. tom: he's got history on his side. richard clarida to his extremely smart, as is adam posen, another name knowing their fed history.

i know i sound like a broken record, but the answer is they are going to wait. the question is which inflation index. i would watch the atlanta sticky cpi series, and for years i have enjoyed the cleveland fed index, which is an adjusted core index. jonathan: i know you like the cleveland fed index, too. another comment from williams was the international aspect of this. haven't heard that very often from federal reserve officials over the last several months. we are seeing a slower rollout of immunizations, emerging strains of the virus, and subdued rebounds and other parts of the world. this international context is why a will take time to achieve. lisa: and it is -- a complete u.s. recovery will take time to achieve. lisa: i do want to say on the front of inflation picking up, manufacturing data coming out. what if production picks up, then it all comes online, demand declines?

you could get back to slow inflation. jonathan: futures rolling over, back to 23 on -- back 23 on the s&p 500. yields come in, too to 1.59 percent. just in the last couple of minutes, this market is turning. more to come. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the u.s. treasury more than quadrupled its borrowing estimates for the quarter through june. ed expects to need about $1.3 trillion to pay for new pen to make really spending. the latest wave of stimulus payments sent the budget deficit to a record in the first half of the year. that began last october. the state of texas now and dissipate's and unexpected budget surplus area tax collections are rebounding along with the nation's economy, causing the state to boost

forecasts for the next two years. texas expects to end the current budget cycle in august with a $725 million surplus. in january, the state forecast a deficit of nearly $1 billion. the coronavirus may be around longer than many people believed . we spoke to the chairman of moderna, which makes one of the vaccines. >> this virus may well take on a pandemic character in the sense that there may be enough variance that we start seeing some form of it in various seasonal fluctuations. so it is not a sure thing, but it may well settle into a behavior similar to seasonal flu. ritika: moderna is testing lower dose vaccines in an attempt to boost the supply. saudi aramco profit soared in the first quarter after a recovery in oil and global gas markets allowed the world's largest energy firm to keep its court or leave it into. almost -- quarterly dividend.

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. ♪

>> can a we announce a major reopened ash today we announce aim -- today we announce a major

reopening of new york state on may 18. what we have agreed on a regionally coordinated basis, beginning may 19, most capacity restrictions will end across the tri-state area. jonathan: that was governor cuomo of new york. . i want to turn to the price action right now. in the last couple of minutes, just a bit of rollover on the s&p 500. futures down about 0.5%, off by 20 points. china's military aircraft entering taiwan's air defense identification zone on may 4, which is today. futures down about 0.5% of the back of this headline as it crosses. i want to turn to the bond market briefly and show you what is happening elsewhere. yields were higher on the 10 year maturity, now basically unchanged on the day at 1.5995%. just to repeat that headline,

because a lot of people scratching their heads about that price action, the chinese military aircraft entered taiwan's air defense identification zone today. tom: and it's happened before. i believe this is the 11th incursion. we will have much more on that. it is a larger zone. many nations have these zones. they are not uncommon. this goes back to the u.s. setting us up just after world war ii, but certainly it has been something that has occurred before. i would note the real yield, -0.80%, spikes down to -0.83%, so it is a correlated move with some dollar strength. jonathan: it gives you some indication as to what investors are nervous about right now, the tension between china and the rest of the world, over what happens next in taiwan. let me repeat the headline for you. a chinese military aircraft entering taiwan's airspace. the price action off the back of that headline pretty clear, down about 0.5% on the s&p body have an -- the s&p 500.

unchanged on the 10 year yield. tom: i will make it clear to people as we struggle with this, one headline, this is a clearly coordinated response. jonathan: couldn't agree more. lisa: it shows where the bias in markets is right now. we are getting incredible earnings, and there's the potential for some sort of disruption in the south china sea, and that has greater weight on markets, and that says a lot. jonathan: couldn't agree more. a range of issues right now we need to work our way through. just in case you're just tuning in to try to understand what is happening in the market at the moment, we are down about 0.5% on the s&p 500. a headline crossing that a chinese military aircraft entered taiwan's airspace today. equities lower, yields correcting just a little bit. a brief break of 1.60% on the 10 year. want to get some stock movers as well. let's say hello to dave wilson. good morning, dave. dave: focusing -- dave: focusing

on consumer staples today, really looking at dividends. it is something that julian emanuel, the chief equity and derivatives strategist at btig, pointed out in his latest research note, specifically looking at the dividend yield on the s&p 500 consumer staples index, talking food, beverage, tobacco, household product, comparing that with the s&p 500. we are at more or less historic highs in terms of that dividend yield gap. you go back a couple of months to the beginning of march, you saw the differential at 1.5%. that was the widest in the history of the consumer staples index, which goes back a little more than 30 years. so at the moment, you are still at about 1.4 points, and for emmanuel -- and for emmanuel, that is enough to make it worth at least looking at these

stocks, so he turned neutral as opposed to recommending that investors underway to them. so take that as you will, but it is interesting to see this sort of gap open up, especially at a time when you are talking about the s&p 500 dividend yield being low at one point, corporate bond yields come down. so it is still a matter of where you find income, even as interest rates are rising, so at least for emmanuel, one place that is worth looking at and considering is the makers of these consumer staples. jonathan: i saw the same note, the pricing power. we got to keep it short unfortunately. got to turn back to this price action. equities off by about 0.4% off that headline, a chinese military aircraft entered taiwan's airspace. tom: you go into the markets here, and that's always the 10 year yield. i will bring up the market intraday. we have bounced back. we will see how this unfolds. lisa: from charles risky at

mizuho, saying it is not the china-taiwan hairline. basically, it is not the ferrari headline either. the point being -- jonathan: well, we know it's not the ferrari headline. [laughter] let's be clear, sometimes it is our job to say this is the headline and this is what the price action is. it is pretty strongly correlated in terms of the timing. that doesn't imply causation. it is just that is where the headline came out, and this is where the price move was, and it was basically at the same time. tom: i used correlation and causation last night with afterthought. it didn't go well at all. right now, sri natarajan with us. he's been wonderful on the travails of fortress solomon. are the employees going to return for david solomon? sri: it looks like they might

not have an option. had jp morgan and jamie dimon come out with a note for his staff saying that all workers will have to be back in the office by july. of course, they will implement a rotational schedule because those are the cdc guidelines right now. capacity is still capped at 50%. we expect them to ask for a return to the offices by the second monday of june. lisa: do you get a sense that bank officials feel like people have not been very productive at home? sridhar: especially when it comes to these two banks, jp morgan and goldman sachs, throughout the course of dependent, we have sensed both from the desk course of the pandemic, we have sensed both -- course of the pandemic, we have sensed both that they have not been pleased with the occupancy rates in their office. some have been in the office every single day, and clearly

they would like to see the office buzzing again. i think they are taking a much more lenient stents -- they were taking a much more lenient stance, but now with the vaccination picking up, they may not. jonathan: thank you as always. sri natarajan there, senior reporter for bloomberg covering goldman sachs. equities were covering a little bit, down by 0.3% on the s&p 500. we are down about 15 points. tom: the new wants tuesday, and then a little exciting off of headlines. that happens in any kind of old market. but again -- any kind of bull market. but again, we bounce back right now to four digits, 1.60 66% on the 10 year yield. jonathan: up about a basis point. no drama. lisa: the idea that the balance of risks seems to be downward for markets amid a slew of better-than-expected, better than good, to quote tom, earnings reports. people still looking to the downside. jonathan: very much so. this is a headline we have seen

before, but it is interesting that off the back at that headline, you might get a boost this time around. a little bit of nervousness around a couple of issues. once again, not my job to say what markets should or shouldn't do. that is not what we do. here's the headline. tom: we are near a correction. jonathan: there we go. this is bloomberg. ♪

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♪ >> it is pretty simple to recognize that we are in the midst of a boom in the u.s. >> we are potentially going to see faster prices, both in consumer prices and inflation. >> the question is how long is transitory. is it a couple of months, a year or 18 months? it is certainly not long-term. >> there's no question in my mind we will have a pull back at some point, but i don't forget is in the near future. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: