>> everyone is ready, and i think should be strapped in for what could be a wild summer. >> demand-side is still there. >> the data is important, but it will be data in august and september, when we can say the reopening is behind us. >> people are going to spend, and he bounced back and demand is going to be significantly more than people are expecting. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the nasdaq hammered. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene, i'm jonathan ferro. lisa abramowicz is away all

week. i did that just for you. tom: and i'm sorry, folks, we are hammered, we are crushed, we are cratered. all we've had is a big surge, and in some ways we come back to the mean trend. i misspelled cratered. that's my error, not riley's in the control room. that is completely my fault. i want to point out the vix is one indication, that volatility index on the spx. our guest coming up will be optimistic on that. it is hammered, from 16.90 on a moving basis out to a spot 21.57. jon, the world is coming to an end. jonathan: on the nasdaq, down another 1.28%. when we look at the single names , amazon about 8% move off the high at the end of april. we add to the move to the downside this morning. 11% for apple off the high we

saw in january. we have seen some big moves, and these are big companies with big weightings. tom: and yes, we are through two standard deviations on some of these big names. you mentioned to david kostin's wonderful note on earning money with or without inflation. we haven't had a pullback. we got a bull market this year. a double-digit return, looks like a double-digit 2021. jonathan: credit market still buoyant, too. last week i think we saw ccc yields. what did we see from amazon? they are issuing forty-year debt at about 95 basis points over the treasury. they were issuing two-year debt 10 basis points over the treasury yield. that is unreal.

10 basis points over treasuries on two-year debt? tom: i believe it is aa plus, on its way to aaa. that important interview with caroline hyde today is with ibm, where they have gone to an a- rating. they will not get the yield that amazon got. jonathan: the ibm ceo sitting down with caroline hyde. 4152 on the s&p 500. we are down 0.75%. yields, 1.16 39% -- 1.6039%. tom: the five year yield down to a new negative low. that is just as important as the oft quoted 10 year yield. i want you to bring in michael, jon. for michael purves, it is cratered spelled correctly, not crated.

jonathan: michael purves joins us now, tallbacken capital advisors ceo. how would you characterize the moves you have seen in the nasdaq 100 and some of the individual components of it? michael: as a backdrop comment, we have all been watching this breathless rally over the last 12 months, so on one hand, these kinds of consolidation tight moves are needed. what is a little bit interesting about the nasdaq move is it was not especially technically overextended just now, certainly not relative to the broader market, the s&p 500. also, if you think about earnings, those were really quite constructive. the equity risk premiums for the nasdaq was actually coming into this week, actually in a pretty healthy space.

it wasn't extraordinarily tight. what is also interesting, if you remember last year, you can do those overlay charts of the 10 year real interest rate with the nasdaq outperformance, and it was sort of tick for tick all the way to late summer with a real decline in 10 year real interest rates. now 10 year interest rates are falling again, and the textbook is not playing out from last year here. so it is a little bit interesting. you wonder whether bezos selling some of his shares at amazon the other day sort of marked the top , and you were discussing some of the highs put in there. i think it is a very important part of the broader market, the big cap tech.

it has also been a trade that has worked even if it has been out of fashion for this rotation. for the last several years, it has worked so far. sometimes things selloff because they selloff. we have had this breathless rally. i still continue to argue that this is a quiet, broader backbone of the broader case for owning u.s. equities. these things are earnings machines. sometimes valuations get stretched. jonathan: and we have seen a correction in some of those big names. you mentioned a couple of themes, and i want to sit on the theme around rates because that's where some confusion is. we've got 10 year yield right now at -93 basis points almost, and that has been trending lower for the best part of a month, two months. yet what we have seen as the pain turn up in the nasdaq more recently. michael, just explain that a little bit more for our audience, who have been told repeatedly over the last several months about the relationship

between real yield and big tech. michael: right. it is interesting like i was just discussing, a year ago, the ever lower interest rate matched this move higher in the nasdaq outperformance, and certainly yesterday, that is not revealing itself there. there are broader underpinnings for that relationship off the fact that a year ago, you are looking at a very uncertain outlook for everything. these tech machines were able to ride out earnings growth a lot. i do think part of this big bang we have seen on the nasdaq comes back a little bit to we've got the vaccine, we've got fiscal

stimulus, we have inflation, so you want to be almost inflation hedged, and microsoft isn't really inflation hedged, whereas cyclicals and industrials benefit more. tom: this goes to your research note where you talk about sustained risk on. i believe i want to be sustained risk on. how do you affect that? how do you construct any sense of portfolio or avocation around a phrase, sustained risk on? michael: what i am saying here is that the backdrop of 10-year treasury interest rates and phenomenal yields -- and nominal yields being very stable after the big surge in yields we saw earlier this year, the dollar getting back into its we getting position, there's a high premium of implied volatility to

realized volatility in the equity market, those are all very constructive. and of course, the growth we are seeing, even if it is fits and starts like we saw in the unemployment report. but i am continuing to be very oriented towards the value part, the value encyclical part of the market. -- the value and cyclical part of the market. i think the growth is very palpable. at the same time, i do have a little bit of a barbell where i still have some weighting in the nasdaq, but i am using times like we see right now to bolster that up a little bit. i think the case for cyclical to value is very strong. i would say small caps are a little bit more problematic, and it is very much case specific there.

in the russell 2000, that is a bit of a challenge simply because some of the high flyers that are in that index are being sold here. jonathan: it is the nasdaq challenged this morning, and the russell this well. it to catch up, michael purves of tallbacken. apple down another 2% in early trading. i know what you're saying. for the most part, i agree with you. but when you look at what is happened with some of these major names that delivered blow out earnings in the last several weeks, this is another decline this morning on apple. tom: but i take issue with this. the word is x did or x -- is expected or expectation. you bought apple back when it was terrible, we are all going to die, and then you got the research out of the pandemic, and it is the now what. there's a real mystery to the now what of big tech coming out of this pandemic. jonathan: just to go through

some of the analyst ratings, 33 buys, 10 holds, one sell. at the top end, we talked to dan ives of wedbush. he's looking for $185 from $124. tom: as a bundled thing, david kostin made very clear there's huge cash flow generation here. but it comes down to is a responsible husbandry of that cash flow. i go back to whether you agree or not, the fact is amazon is spending $80 billion on r&d and capex. i can't get my head around that. jonathan: and they are borrowing for what, 10 basis points over treasuries? that's what they are borrowing for. tom: they are literally building out an empire. you've got to treat that differently. jonathan: we've got a great

lineup over the next couple of hours. we will catch up with bill dudley, formerly of the new york fed, after publishing this in "the new york times" this morning. looking forward to hearing the deadly take from bloomberg -- the dudley take from bloomberg intelligence. and later, jared bernstein of the white house counsel of economic advisers. this is bloomberg. ritika: more fallout from the shutdown of north america's largest oil pipeline. gas stations along the east coast are starting to run out of fuel. colonial pipeline says it expects to substantially restore service by the weekend. that made not -- that my night -- that might not be fast enough to avoid shortages.

militants in the gaza strip fired rockets into southern israel overnight, and is really aircraft is bonded by pounding deficit -- and is really fork -- and israeli forces responded by pounding the compounds. the producer price index rose 6.8 percent last month from a year earlier, the fastest pace in three years. the index measures inflation at a wholesale level. it was driven by rapid gains in those commodity prices. ginkgo bio works has agreed to by public and a $7.5 billion reverse merger. the company will merge with a check firm backed by investor harry sloan. the price includes a private placement that includes cascade investments.

l brand supportively will spin off victoria's secret rather than sell it. according to "the new york times," it will split into victoria's secret and bath and body works. they say the deal will close in august. 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. ♪ pres. biden: we are moving in the right direction, so let's be clear, our economic plan is working. i never said, and no serious analyst ever suggested, that climbing out of the deep hole our economy was in would be simple, easy, immediate, or perfectly studied. jonathan: good morning. alongside tom keene this morning, i'm jonathan ferro. lisa will be back with us next monday. equity futures down 0.75% on the

s&p, -74 on the nasdaq, and moving deeper into negative territory, off by over 1%. unchanged on the tenure year at 1.6039%. in the -- the 10 year at 1.6039%. in the fx market, the euro-dollar unchanged. tom: it is a wonderful time to move on from the jobs report and catch up with jared bernstein, member of the white house counsel on economic advisors. dr. bernstein has been definitive with his work at the center on budget and policy priorities before that. an advisor to vice president biden, now holding court at the white house. inc. you so much for joining us today. i want to go back to the archconservative fear that has been there since the time of david ricardo and john stuart mill. we were not grow -- we will not

grow our way out of our challenges. everyone in the middle has battled this for years, including solo at m.i.t. 1957. describe right now this fear that we can't grow our way out of our challenges. dr. bernstein: that is certainly not a fear i share, and in fact, i think the administration's policies thus far are very much targeted at not just growing our way out of this, because that is always going to be just a part of the solution, but making sure that that growth is equitable. that it is reaching people it has not reached before. one of the touchstones of president biden's economic policy will always be gdp growth, stockmarket growth, even lower unemployment. by itself, it is not enough. it has to reach low and middle income people so they can claim their fair share of the growth, which was 6.4% in the first

quarter, and the fingerprints of the rescue plan are over that -- are all over that. the building back at her agenda is a much longer set of investments. tom: what does the biden morning america look like? dr. bernstein: kind of shifting from the american rescue plan to the jobs and families plan. the rescue plan was always intended to do precisely what is to -- what it is doing, get us to the other side of the crisis, making sure families and businesses and childcare providers are intact on the other side of the crisis. but simply getting back to where we were is insufficient for this administration. there needs to be a deep, 10 year set of investments embedded in the jobs and families plan to make sure that what i described my first answer to you occurs, which is that we pull along folks historically left behind

with deep investments in education and opportunity, clean energy and manufacturing and standing up a care sector for child care and elder care. those are all keystones of the family plans. jonathan: south carolina, arkansas, and now north dakota pushing back against the additional unemployment insurance. have you spoken to the governors of those states? dr. bernstein: i have not personally spoken to the governors. jonathan: has the president? pres. biden: there are people within the -- dr. bernstein: there are people within the administration. i don't know precisely who. but the president talks to governors all the time. jonathan: do you think that is the wrong decision? dr. bernstein: i do think that is the wrong decision. i think the right decision is what the president talked about yesterday, which is twofold. to make down we take down -- to make sure we take down any barriers of people getting back to work, with childcare being the most prominent, to make sure the rules of the ui system are

followed, that if someone is offered a suitable job, that they take it, and suitable enables that they go back to work safely and recognize that people have childcare obligations they can't always meet. so helping to take down those barriers, getting folks back to work, and recognizing that a ui system is classic insurance for those who cannot get back to work and has been a boon for americans throughout this period. jonathan: if it is the wrong decision, what will the consequences be in these policies are introduced? dr. bernstein: that's a great question. one is that you will see people really experience a level of economic hardship that would not have occurred had they maintained their enhanced benefits. the other is that you're not going to see much difference between the labor market outcomes in these areas versus others. if we dig into the data thus far

, because these things change month-to-month, we don't see a negative correlation between places where unemployment insurance replacement rates, meaning the extent to which it is were placing the wage, we don't see a correlation between replacement rates and labor market outcomes, so that would suggest that ui is not the problem. we know people are facing barriers to childcare, to school. there's concern about the virus out there. if you look at the vaccination rates among working age people, they are obviously a lot lower than the broader adult population. tom: you are eminently qualified to speak to those on the right and the left with your phd in social welfare from columbia. that is the history and heritage that speaks of a long century. frame right now on childcare the debate of a federal solution versus states rights to decide what they childcare would be. where does that stand now, and where does president biden

wanted to go? dr. bernstein: probably the best way to look at that question is to look at every other advanced economy and recognize that they have stood up an accessible and affordable childcare sector, and the vast majority, the labor force participation rate among caretakers, particularly women, is many percentage points higher than ours. this is not a classical sort of federal state rights thing. this is a classical missing markets problem. even the most mainstream economics recognizes that when a market is missing, there's a role for the federal government to come in and fix that externality. here, the externality is a barrier to work for people who want to get into the labor market, so this is just a very simple solution to a market failure. tom: i look at the solution to a market failure and i look at the politics. you don't have to worry about 2022. your boss does as well.

how are you adapting to the reality of an election coming ever closer in 2022? dr. bernstein: that is an easy one. if you just watch where the president and vice president are going and listen to what they are saying, they are taking their message to the american people. tom: i don't mean to interrupt, but you nailed it. how do they sell this to republicans who support what you are talking about, yet the leadership that they have is dead set against it? how does that metric work? dr. bernstein: you don't have to sell things to people if they are things that people 110 need. you just have to tell them about it. so i think it is less sell and more tell. explain to constituents what you are trying to do, and what we found from the polling is that telling does not require selling when it is childcare,

reopening schools, providing resources to get to the other side of this crisis, and making historic investments in the job and family plan in their lives and their opportunities. what goes on in partisan circles in d.c., we have to show that for what it is, but the president and vice president are keeping their heads down, meeting the needs of the american people on all sides of the aisle. jonathan: the president will be meeting with the big four in the white house tomorrow. you determined to make childcare and policy addressing childcare issues part of an inverse structure package? dr. bernstein: undoubtedly so. you see that right at the heart of those plans. i should be very clear about this. as i said before, i think sometimes this childcare story takes on a life of his in his own -- takes on a life of its own. for us, and is about providing an accessible and affordable path to get into the job market

for caretakers who want to do so. somewhat 12. others will not want to -- some will want to. others will not want to. but it is not hard to find caretakers that say i cannot get back to the job market because i cannot find affordable care. we have to stand it up, and that is what we are going to do. jonathan: when it comes to tomorrow, is that a redline for this administration, childcare as part of a broader infrastructure package? dr. bernstein: i'm not in a position of setting legislative redlines. i'm on the economic team talking about the economic rationale. jonathan: has anyone communicated that to you? dr. bernstein: it is at the core of everything the president has talked about from the campaign through the american jobs and family plan. jonathan: i am trying to gauge where the priorities are. i understand that you can negotiate on behalf of the president. dr. bernstein: high priority. jonathan: how much is it a part

of communications with republicans? dr. bernstein: i think if you look, i don't always like to cite the polls because you can pick and choose what you want, but on this issue, you can't find a pole that doesn't show a majority of people saying this is really important to us, to be able to access. if you look at the amount of income that a middle or low income family has to pay for child care, you are going to start to get into 10%, 15%, 30% of their income in some cases, and that is simply unsustainable for working families, and that is why the president is targeting this issue. jonathan: jared, we appreciate your time. look forward to catching up soon. tom, just some of the tension there highlighting some of the tension will non-in the talks with the big for tomorrow. tom: it is one part the fear of growth. what do we do after 6%, 7% growth but also, he's got his agenda he has to talk, but it is about

federal versus state rights. . as the debate jonathan: bill dudley -- versus states rights as the debate. jonathan: bill dudley, formerly of the new york fed, joining us next. alongside tom keene, i'm jonathan ferro. this is bloomberg. ♪

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jonathan: it is tougher big tech this morning. in the equity market, the s&p 500 down 0.8%. the nasdaq off by 1.42%. it was ugly yesterday, and we take off some more weight for the nasdaq 100. let's get to the bond market. i want to look at the 10 year breakeven. this is the real rate, the nominal rate minus the real rate. . this is what you get. this cap lower in breakevens among the prices of the shutdown, and then a pretty clear move higher. a lot of people use this to gauge inflation expectations. i think this is an ok way of doing that come about we want to talk about the distortions we get from a clean read in xbase

and -- in expectations. i don't think you can do it that precisely in the bond market. it is a market that is being shaped in many ways by fed policy. what is interesting for me, inflation expectations are climbing, real yields are lower. numb also pretty steady. what does that mean for the fx market? euro-dollar, $1.2171. one dollar 20 three cents was the high of the year in early january. we struggled to get back there. right now, $1.2171. when does the ecb start to make a little more noise? is it $1.22? is it $1.23? tom: i agree. we know it is not $1.25 to $1.30.

the blended dxy is not through the 90 level. we don't see that yet. jonathan: before we go, i've got to ask romaine if he thinks this is a hammering. tom: are we cratering? romaine: we can call it a hammering, or a crating as i saw earlier on the chiron. you had 13,160 or so on the nasdaq, below the 100 day moving average, which is right around 13,255. go back to april 16, which was the last all-time high that we hit on the nasdaq composite. since then, 2/3 of that index are in the red, and the ones that are green cannot be considered tech stocks. a company like tesla, which is down something like 28% from its most recent all-time high, now

it is under pressure in the premarket, down about 6.5%, because news out of china saying most recent monthly production numbers in china were down about 27%. on top of that, reuters has a report saying the company may put off expanding some of its capacity out there on some land in shanghai. twitter, since that company hit its record high, it is down about 33%, now down more in the premarket the low $50 a share. that's a hammering. here's a hammering for you. take a look at pella and tier technologies. this stock down 50% from its all-time highs back in january. or importantly, on a 10 day losing streak. today is going to be 11, down 9% in the premarket. the revenue growth decelerating. there's a lot of moving parts here. i know it is hard to keep up with. jonathan: in great shape, romaine. [laughter] romaine: it all goes back to

accommodative monetary policy, easy macroeconomic conditions, investors are starting to question that, and this is what you get, a hammering, tom. tom: you can get hammered with romaine bostick today on "the close." ferro is all wound up about mr. draghi miller. i will -- mr. dr uckenmiller. william dudley is the former president of the new york fed, for years at goldman sachs, writing for bloomberg opinion. we are thrilled bill dudley could brief us this morning. i want to talk about policy rule inertia. the physics of guys like you, you do in newtonian mechanics, and we start talking about inertia. what does the inertia look like right now to higher interest rates? william: at the short end, there

is the inertia of keeping short-term rates steady. they are not going to begin to raise interest rates until they get to full employment, 2% inflation, they are confident in place and is going to go above 2%. we know it will take a while. once they start, they are going to be late, so they are going to have to catch up. i think people don't really fully appreciate when they have to catch up, the level of short-term rates is going to climb much higher than what is currently priced in by financial markets. tom: what you just heard is the synthesis of history with economics that bill dudley was legendary for at goldman sachs. i am going to cut to the chase. in your wonderful essay, you talk about that process of moving from the reality ex post. you talk about talking, and the fed will act, and finally they will do higher rates. will they do it in a measured way, or do we literally go back

to arthur burns, where they are going to be talking about 0.8 points or higher moves? william: i think they will have to move relatively quickly because lift off in terms of short-term rates isn't going to happen until the economy has already had full employment, so there's going to be a big nap between where they are starting and where they need to be if the economy is overheating. it seems to me at least 0.25 points seems the most likely to me. we are going to go quite a bit higher than the 2% that is currently priced into financial markets. jonathan: is this a race back to neutral once you do start, or a race through neutral? william: you have to go beyond neutral because you are already at full employment and inflation is likely to go above your 2% objective. jonathan: how much of a stabling

force do you think the market would be in that situation? william: it is going to be interesting to see how the market reacts. that is the one thing that could slow the fed down. if the market reacts poorly, the fed could step back a little bit. look at what happened between 2004 and 2006. the fed tightened every meeting for or than two years. the stock market was fine and the bond market was fine. jonathan: are you advocating for a change of policy, highlighting where you think the risks lie? william: i think i am just highlighting where the risks lie. there are benefits of what the fed is doing. it is going to keep inflation expectations better anchored. it is going to get people that are still out of work back to work quickly. but the financial market, people need to be cognizant of some of those downside risks. jonathan: stanley druckenmiller, famed investor, saying the

following. "the bubbles dwarf the short-term risk on a booming economy in 2022." what do you make of that aspect of it? william: the fed does recognize that financial markets are frothy, but they are looking through that. they don't see it as a big risk to financial stability because investors in the equity market typically don't do so on a highly leveraged basis. in the great financial crisis, it was the leverage that kilduff. so -- it was the leverage that killed us. so they are looking through that pig at they are determined to keep rates low. tom: i want to digress. we just talked to jared bernstein from the white house about this. the fear that growth will not participate in our deficit

solutions, this goes back to berkeley and m.i.t., etc. the idea that this fear that the growth won't be there, frame your optimism that economic growth of this nation will assist in helping us with its pen that -- it's pandemic debt and deficit. william: i think it will help because we have excess capacity in the labor market. if you look at the numbers, they seem to be better than what people are expecting. at the end of the day, growth is about resources and productivity . resources, not so much. the population growth in the u.s. is pretty modest, the labor fourth -- labor force growth is only about 0.i percent per year. jonathan: we've got to get your take on that payrolls report from friday. how would you be processing that if you were at the fed right now? william: that was surprisingly

weak, but we don't have a lot of experience coming out of pandemics. it is very possible it is weak because people don't want to go back to work quite yet because they don't have people to take care of the children because schools are still out of session . so i think it is just going to take a while to understand what is really happening post pandemic. i don't think they are going to put a lot of weight on one months weakness in terms of payrolls. jonathan: william dudley there, the former fed bank of new york president. thank you. it is going to take a long time to start, but when you start, in the mind of mr. deadly, your goal -- mr. dudley -- mr. dudley, your goal will be a move

lower. tom: i am not saying one is right and the other was wrong, but the debate is legitimate and will be framed, as bill dudley mentioned. it is the events that framed the debate has you go along. jonathan: we've got to respect where those individuals are writing from. i imagine there's a degree of respect for his former colleagues, and doesn't want to advocate for a policy here and now. it is clear that stan druck and miller is trite -- that stan -- that stan druckenmiller is trying to a knowledge those. tom: i mean, those are the

equations guys like bill dudley are using. others are just using blunt analysis. jonathan: i will be working my way through that during the commercial break. thank you, tom. crushed. the nasdaq down 209, down 0.9%. tom: i thought i was crushed. [laughter] jonathan: the producers do that during the commercial break. in the fx market, $1.2167. crude is lower, $61.21 on wti -- $64.21 on wti. this is bloomberg. ritika: president biden says russia has some responsibility to address that ransomware attack that crippled the giant fuel pipeline. the president stopped short of directly blaming the kremlin, but says it is evidence the hackers used -- the software they used they are in russia. colonial pipeline says it

expects to substantially restore service by the weekend. the biden adminstration is ramping up its response to the global semiconductor shortage. commerce secretary gina raimondo plans a summit with companies impacted by this shortfall. that includes the largest chip any factors in u.s. automakers. according to information obtained by bloomberg news, the meeting will be held by may 20. inheritance taxes could make a return to the political agenda after decades of declining youth , according to a new report from the oecd. taxes on inherited wealth out account for just 0.5 percent of tax revenue in the countries where they are still used. the oecd research suggested inheritance taxes could help rebuild public finances hurt by the pandemic. blackstone wants u.s. dealmakers back in the office full-time by june 7, as long as they are vaccinated. the worlds largest asset manager announced the move yesterday.

they have been preparing for an end to work -- for a return to work at the end of the coronavirus pandemic. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> this issue of cyberattacks on

our critical infrastructure, especially energy infrastructure, is not going away. this is a serious example of what we are seeing across the board in many places, and it tells you that we need to invest in our systems. jonathan: that was jennifer granholm, the u.s. energy secretary. good morning. alongside tom keene, i'm jonathan ferro. lisa abramowicz will be back with us on monday. good morning to you all. we are negative 0.8%. the nasdaq 100 down by more than 1% after a big move lower in yesterday's session. in the 10 year, 1.6075%. euro stronger. on euro-dollar, we advanced 0.3 percent. we move lower on crude, down about 1% on wti. tom: bloomberg people doing good work today on oil. javier on to hear minogue -- on the terminal with a really smart chart, and mike mcglone with a spectacular presentation of some

of the hydrocarbon dynamics between liquid fuels and motor vehicle fuels. we get smarter now with francisco blanch of bank of america securities, head of global commodities and derivatives research. i want you to color now, we have all of these legacy issues we are dealing with, our collective memory to of commodities. you say, wait a minute. it is a split super cycle upon us. what do you mean by that? dr. blanch: thank you for having me. i think there's a sector of metals and materials which is clearly in a super cyclical upswing, and we are going to see record prices for a lot of the raw materials there. but when it comes to energy, we are not. in fact, i doubt we are going to see record prices in this cycle. i think we are to seeing cyclical upside swings across the board, although we are down today and oil.

really, when it comes to materials like timber, we are now at a point where supply is extremely low, inventories are extremely low, and prices are extraordinarily volatile. copper is heading in that direction, with inventories declining quickly. oil is still relatively well supplied. opec is holding back capacities, but we are still trying to figure out what to do with all of those spare barrels. jonathan: can you give us some numbers, then? copyright now is that $10,500, on $11,000 watch now seemingly. what are you watching for? dr. blanch: for copper, we are looking for $13,000, and we think we could give us highest $20,000 per ton if scrap copper doesn't make it to the market. tom: whoa, you are modeling a

double off of lme copper? dr. blanch: our official target is $13,000, but we see a case over the next couple of years, if we do not get enough scrap metal coming into the copper market, because a large chunk of the copper market is scrap, so if we cannot scrap enough copper back into the market, i am talking about the copper that we get from past uses, not the copper that we are mining, we need to keep pushing prices to create more supply, and that is the crazy dynamic going on right now. remember, copper is critical to all of the applications we have lining up for the decarbonization of transportation, the decarbonization of industry and the altra city sectors. so those require a lot of comfort so -- the electricity

sector. so those require a lot of copper. jonathan: can you give us a sense of how big copper is in that market, and where you expect that to materialize? dr. blanch: there's a lot of different uses here. i do think copper is probably the most constructive commodity out there from a metals perspective, but there are others. remember, we are at the stage where, as i said before, we have way too much money, and we never quite had that recession when it comes to goods and when it comes to the demand for stock and the demand for industry. we barely had a recession last year. so all of this is really booming

, and copper ores are degrading quite a bit. the supply is declining across chile and peru. we have elections as well and peru coming up, where there's special fear of sector nationalization. this happens when prices get out of control and governments see a lot of money in this market. tom: our collective memory is that we had china boom of two through thousand eight -- boom up through 2008. does china boom again, or do we have a different theme? dr. blanch: the demand is really coming from everywhere. for sure we are seeing strong demand from china, but we are also seeing robust consumer activity in the u.s. you talk often to michelle meyer. she can tell you how strong demand has been here. part of it is we have given people a lot of money to play with while they were sitting at

home, and also, european demand has picked up quite a bit. while this is going on, i'm sure you have noticed, european prices have reached $60 a ton, which effectively means there's going to be even more demand for this copper and for some of these metals that are going to help us to carbonized -- help us de-carbonize. so there's a lot of things going on simultaneously supporting the complex. jonathan: we've got a minute left. just one more question. this big call on copper, is this a cyclical call or a structural secular call, this shift away from the fossil fuels towards factories, etc.? what is it private eminently -- what is it predominantly? dr. blanch: it is predominantly a sector call that should play out through the next several

years. at the end of the day, the initial impulse came from monetary and fiscal. the secondary impulse came from this kind of china taking center stage in terms of growth last year. now we are getting the u.s. infrastructure and decarbonization impulse, and it is going to take about 10 years plus to complete. it may even slow down, decarbonization efforts, so that is a risk, actually. because we just don't have the materials lined up for it. jonathan: francisco, we've got to run. please talk to the team. we will do this again. that is a massive call. francisco blanch of bank of america. right now, copper $10,500 on the lme. tom, $20,000 potentially? tom: this is one of those points through the year where you just stop. up 30%, ok.

up 80%, 90%, 100%? no one has that frame. jonathan: coming up, tobias levkovich of citi, as we get a little bit of pain in the equity market on the nasdaq. this is bloomberg. ♪

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>> everyone's ready and i think should be strapped in for what could be a very wild summer. >> the consumers are still seeing spending in excess of what would be considered normal. >> the demand side is still there. >> the summer is going to be huge. people are going to spend, and bounce back and oil demand is probably going to be significantly more than people have been expecting. >> some commodity prices are completely out of control. it is almost hyperbolic. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morn