♪ >> how do markets deal with the pace of growth that was so abnormally strong and is now slowing to something much more historically normal? >> people don't like inflation, this is true. but they will tolerate it. >> fundamentals for most companies have been quite good, but the fundamentals for the reflation trade has been even better, so everything has risen. >> transitory gives the impression of over and done very quickly. i don't think that is what we will see. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is risk off this wednesday. good morning. this is "bloomberg surveillance, " live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures down 35 on the s&p. we declined 0.8%, and target

absolutely flying in early trading. another retailer in america doing quite nicely. tom: retail is doing great. the shift from yesterday is the yield dynamic today. it is not a big move, but it is tangible. 1.64% to 1.66%. jonathan: i think the focus for us this morning is very much on europe, with bund yields climbing recently and italian yields up once again. tom: we didn't know what it was like going positive to negative yield long ago in germany. we will find a new experiment of going negative to positive yield. i guess it is good news for mr. sewing of deutsche bank. jonathan: i'm looking at the headline, interim along -- inter milan set to be getting a 336

million dollar bailout with oaktree. tom: let's pause here and reflect on this. this is where things that are injured get solved by big money. jonathan: and there's a lot of money on the sidelines waiting to solve things that are injured. lisa: and this is talking about u.s. potential involvement in european football, which was absolutely maligned with the lights give jp morgan -- with the likes of jp morgan, and now the likes of oaktree coming in. it really raises the question of where in the cycle we are at. you talk about your preopening and people -- about europe reopening. target aside, these are the best earnings in a decade according to some measures, and yet we are still midcycle and this is backward looking. i wonder how much that is the narrative. jonathan: target fading now, up by a little more than 2.7%.

as we talked about in the previous hour, we saw this with home depot, with macy's yesterday, a nice forward look, and the stock price, we have already seen massive moves. tom: i am going to defer to our guest on this, but it is buying the rumor, selling the news. that rule is still there. the news comes out. everyone pauses, and then they recalibrate for q3, for the holiday season coming up. that is a mystery, but that is what is going on here, a reset. lisa: the markets have been way ahead of wall street when it comes to expectations. s&p 500 companies reporting the best courtly results in at least a decade. 87% of companies so far have beat estimates, the most in the history of data tracked. i am just wondering what people are looking for to change their view that we are midcycle. jonathan: really nice piece on that, wrapping up the earnings. i think that is the story as well. analysts may be behind the curve on some of these numbers.

markets haven't been. they have ripped. tom: in defense of the analysts, the got to make their guesstimates. jonathan: i'm with you. tom: but we are going to see this across different industries , of a 10%, 8% gdp economy. to me, do we really know what the path is of gdp to the end of the year? to me it is a massive mystery. jonathan: down 34 and the s&p, we declined 0.8%. this wednesday morning, good morning to you all. yields higher by three basis points on tens, 1.6642%. euro-dollar, $1.22. tom: i'm just waiting for an entry point. [laughter] jonathan: wti, $64 37% -- wti, $64.37. tom: i still think harry kane and inter milan, what do you call them? jonathan: i don't mean to

interrupt, inter. lisa: this is what we are looking at today. i am watching at 10:00 a.m. the fed's randy quarles to be testifying in front of a house panel. he's vice chair for super visit -- for supervision. i am curious to see what he says about concerns about financial stability, froth in markets. will he repeat the same mornings we heard from the ecb? expect him to have positive things about the economy to say? expect him to reiterate the transitory word? go ahead, tom --the transitory word. go ahead, tom. we have antony blinken meeting with sergei lavrov. at 2:00 p.m., the fed minutes

from their previous meeting. how much will they start talking about the other t-word, tapering? how much will they talk about how deflationary risks remain the biggest threat in markets rather than the inflationary push that many seem to be worrying about? this seems to be the dichotomy driving the difference between many investment houses. do they see inflation as the bigger risk or disinflation, or even stagflation? jonathan: or decelerating growth later in this year into next year. when you get a dovish message from news conference, maybe from the statement, usually the minutes is the platform to let the hawks dance a little bit. we can only identify one hawk out there right now, kaplan, and basically nobody else. tom: to the german moving yields, the market is your big hawk right now. the market is acting as a surrogate hawk, and we have seen that before. jonathan: i'm telling you, i think the ecb is the more interesting one next month. and i am not just trying to be

controversial for the sake of being controversial. tom: i thought human harry kane. jonathan: the ecb does not have the framework the federal reserve has either. it does not have that framework to lean on, that binds the hand of everyone on the governing council. tom: it is very different. we were talking about modern monetary theory. it seems europe has to be incapable of affecting what the u.s. has done. jonathan: it will be interesting relative to the previous news conference, just to hedge myself, since some of these news conferences haven't been interesting at all. lisa: no. but this time, i think they have to enter in terms of where the balance of risks are, and what they could potentially do to ease financial conditions more at this point. jonathan: can i bring in dan alpert now? tom: then we got to get back to harry kane and ac milan. jonathan: dan, we started by talking about this market. great numbers. that has defined earnings season so far. the response hasn't been great.

dan: no, it hasn't. let's put the target data behind us because the retail spike is behind us. their data is obviously quite good, and the same from many other retailers. this is we have all understood what happened -- understood would happen as we emerged from dependent. it is -- from the pandemic. i think tom's point before about the market being the inflation hawk is probably the most salient. even as the economic data has started to back off, think about this. we had this massive pearl clutching cpi data come out last week, the 10 year went up to around 1.70% and then fell back, no kind of in the middle of that 1.60%, 1.70% range.

i won't believe we are formally risk off until i see the bond market yields collapse a bit more, but i believe that is going to be coming because as the inflation data became more and more understood later in the week, people realized that the things that spiked were all of the obvious things that you would expect at this point, given not only a spike in demand, but also supply chain shortages. tom: i've got to talk about your wonderful essay in "the new york times." you allude to your work at cornell with paul mcauley, who we all know at pimco, ages before. how do we project out five years given the way that we do infrastructure? daniel: two big things to look at. i wouldn't even go out five years. i would probably go out three to four. if we are able to enact the kind of packages that are on the table on the political side, i think america's future looks terrific. i think we are going to have

re-stabilization of inflation at a more normalized level relative to history, and i think we are going to see stabilized growth move from what was previously considered unattainable in this sort of post grandeur level of economics and stabilize somewhere in the 3% to 4% range. the problem is we don't have that stuff on the table yet, and it is likely to be significantly watered down. i do think you will see enough physical activity, given where yields are even globally, not just in the united states. but at the end of the day, there's going to be a lull in between spiking inflation and where we see the economy going out 2, 3, 4 years. jonathan: dan alpert with westwood capital, managing

partner, thank you. the retail sales boom is behind us. target still up in the premarket by a little more than 4%. tom: we've got to remember that mr. albert's book is one of the strongest out of the crisis in the age of oversupply. we have to get him on for a longer period because it is about the under supply and those logistic dynamics we are seeing industry to industry right now. jonathan: the future is brighter. can you imagine us buying an electrified ford f1 50? do you think matt miller is going to by an electric ford f1 50? lisa: i do not see him in an electric vehicle of any sort. jonathan: lamborghini talked about that yesterday too, tom. tom: i don't know what a lamborghini is. jonathan: you don't know what a lamborghini is? tom: i think the f-150 thing is brilliant. it is going to be an amazing marketing campaign.

i drive in a nash rambler. could you leave me alone? lisa: i'm the only one with a driver's license among the three of us. just want to put that out there. i will drive for the next road trip. jonathan: we are driven. lisa: driven by me on the next road trip we go on. jonathan: preferred to be driven, not to drive. lisa: in an electric car. jonathan: in an electric ford f1 50, apparently. tk, lamborghinis and spaghetti? what is that? tom: i don't know. jonathan: is that detroit bias? is that what that was? tom: no, detroit had a no-hitter yesterday. jonathan: this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. target's first-quarter sales blew past wall street estimates. comparable sales rose almost 13%, more than twice what analysts had been forecasting. target says it expects wider

margins for 2021 that it had for seen earlier this year. it is a sign that the year-long home-improvement boom isn't over. lowe's posted first quarter sales that beat estimates. the chain has adjusted its strategy to keep customers it won during the pandemic. it is improving its digital business. israeli airstrikes battered the hamas ruled gaza strip today. palestinian militants fired rockets into israel again. all of this happened while there was talk of a possible cease fire. israeli news media reported egypt had proposed a truce that would start thursday, and that hamas had agreed to comply. new york's attorney general says her investigation of the trump organization has now morphed into a criminal probe. letitia james had been focused on the assessment of a trump property in westchester county, new york. former president trump's company was already under criminal investigation by the manhattan district attorney.

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. ♪

♪ >> we did a hard pivot to digital. we really work us on our cost structure. he really worked on what

customers were voting on. coupled with the economic tailwind of this, they have low debt, they are ready to spend, they are ready to get out. jonathan: that was the macy's ceo on the earnings of the last 24 hours. the run of the stock has been amazing. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your market you hours and 12 minutes away from the opening bell. we do declined by 14 points, off by almost 1% on the s&p 500. yields do not provide you with your buffer at all. they are higher by three basis points to 1.6659%. treasuries not doing the work you might want treasuries to do. in the fx market, euro-dollar just about $1.22. some dollar strength in the mix this morning. crude off by 1.8% to $64.29.

tom: the dollar is really out of it from what it was yesterday or monday. it is a yield study for all of you watching and listening on tv and radio. i would measure the 23.29 on the vix is not 27. we are nowhere near the angst of a couple of days ago. good news on retail. stephanie with think -- stephanie wissink of jefferi es nailed it. do you have any idea, any new information on where the retail juggernaut will be passed august, past october? stephanie: it's a great question. i think we are seeing evidence that the consumer is interested in re-engaging with retail. walmart, home depot, macy's, lowe's all beat handily, all

signaling that momentum has persisted in q2. looking at the back half, we are looking at a few key indicators. the first is back-to-school. that will be the next single confidence that we are back into a cycle of normalcy. we didn't really have a back-to-school season last year, with a very unusual back-to-school period, so we are looking for signs that not only the youth are returning to the malls and apparel retail, but really going through the motions of the back-to-school purchasing cycle. we are also keeping an eye on what has been happening in fashion. we have been living in leggings and fitness apparel, and we are now seeing indications that we are exploring fashion again, that we might see in the early signs of a fashion cycle. lastly, i think we are looking at the strength in homes. home-improvement have been stripped -- home-improvement has been so strong over the last 12 to 18 months.

do we move from what we call hard home into soft home as we get into the back half of the year as well? all of those things are top of mind for us, looking at the consumer and how she is behaving and where she is prioritizing her dollars. lisa: can you give us a sense of where some of these companies are gaining market share, or whether they are just asked thing the reality of an incredible savings glut in american households from pandemic tax and other aspects? -- pandemic checks and other aspects? can you give us a sense of what will be the winners out of this spending boom? stephanie: it is a really interesting question because there are two classes. there are going to be the survivors, those that make it through, and then there are these winners. the upper class ofretailers?

stephanie: every company has talked about rising costs, wage inflation, but also signaled there is some product price inflation that is likely to come through, so we are also monitoring the cpi through the middle of this year and into the back half. we think we will see a step function in consumer pricing. jonathan: stephanie, thank you. copper down by about 2.77%. it was down going into that headlined by a fair bit. a big move lower, $64 to anyone since on wti, came before that headline, too. just something worthy of attention. tom: i'm glad you brought it up. i think it is a big headline. we've got bitcoin moment away from a triple bottom, breaking down to new weakness. we are not there yet, but we will be there by the time we go to break. jonathan: just a bit of commentary coming out of china. lisa: the question is both from a state-sponsored perspective, how much are they going to counter some of the pressures we have seen in prices from commodities, but also on the consumer side. how much are people going to stop buying as much or perhaps invest less overall if you do

see prices continuing to rise? this goes to the whole stagflationary, disinflationary environment. jonathan: what do you make of the defensive move this morning? lisa: a lot of people are blaming inflation, and yet last week is really when we got the data. i think people are looking around and trying to see what is the next positive surprise that is going to come. i think that really is the issue, as it has been for months. have the gains already been baked in? are we heading to midcycle? jonathan: do you get frustrated when we get a drawdown and the equity market is lower, and we blame inflation fears everything will time? tom: it is a parler game -- it is a parlor game. lisa: do you get annoyed, jon? jonathan: i get annoyed. [laughter] tom: we just had a new low on bitcoin. to me, it is the pendulum of positive surprise.

we don't want too much positive surprise. jonathan: everyone was shocked by how bullish lisa was on monday. lisa: and that i went back to sleeping not very much. so you jonathan: jonathan: get a week -- jonathan: so you get a week's vacation, it translates into a day's bullishness. lisa: pretty much. jonathan: from new york, this is bloomberg. bloomberg.

(announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that and more in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design

to help you to maintain comfortable, correct form. that means better results in less time. you can do an uncomfortable, old-fashioned crunch or an aerotrainer super crunch. turn regular planks into turbo planks without getting down on the floor. and there are over 20 exercises to choose from. incredible for improving flexibility and perfect for enhancing yoga and pilates. and safe for all fitness levels. get gym results at home in just 10 minutes a day. no expensive machines, no expensive memberships. get off the floor with aerotrainer. go to aerotrainer.com to get yours now.

♪ jonathan: 7:30 in new york city. good morning to you. bitcoin, session lowe's. we are down -- session lows. we are down hard on the s&p 500. tom will wear new through -- will run you through xpt in just a moment. small caps down by 1.4%. treasuries we've talked about. i want to talk about europe priestly and get to the banks. in europe, the banks -- europe weekly and get to the banks. in europe, the banks are up your to date. in america, the banks are up by 34% year to date. yields have been climbing. in germany, yields have been climbing in the treasury market. that cyclical trade has played out on both sides of the atlantic, even though q1 was a

story of u.s. exceptionalism. this is where i want to finish. we can switch up the board and get to germany and italy. in bund yields priced back towards zero, in isolation you would say that's good for the banks in europe. what happens if italy comes along for the ride? we had seven straight days of italian yields climbing. soft auctions in europe across the curve in germany, and a soft auction in germany this morning. we had a soft auction in italy last week. 1.12%. i just wonder whether there is a little bit of a tantrum starting to evolve in europe at the moment. if you just looked at germany, you could say that is consistent with a better outlook. i get that. when i look at italy, i don't think that is consistent with what the ecb wants to see. that's why i am interested in that ecb news conference in a couple of weeks. tom: i look at the swiss 20 year at 0.14%, that tells me your tantrum is there. that tells me i need euro $1.23,

$1.24. it is not there yet. jonathan: just briefly pulling back from $1.22. but maybe the pressure comes from the bond market. tom: what's great about this, you are yapping away and bit dog is down $1000. romaine: let's get to tom's point in a moment. we did get earnings from target and lowe's. we had relatively good earnings yesterday from a lot of the retailers, yet the rally and those stocks faded pretty quickly as we got deeper into the day. targets numbers were phenomenal by pretty much any stretch of the imagination. comp sales growth itself, the pace was about twice what the street was looking for, and they guided pretty aggressively going forward. similar story for lowe's, but home depot also knocked it out of the park yesterday, and its shares fell. shares that were down about 30% in the archegos selloff at the

end of the quarter, one reason why i bring this up, hedge funds piled into this, basically buying the dip. since then we have seen about a 70 drop, the shares down 5% in the premarket after the company is coming out with latest earnings that weren't necessarily good here. a big online retailer over there in china, so that is the set up in the retail space. what everyone is going to be talking about today is this breakdown we are seeing in the crypto space. this is not just going. this is pretty much across the board of all of the assets out there. tesla sparked this whole rally. we went from $38,000 in early february 2 above $63,000 on cash in early february -- in early february to above $63,000. it was the embrace of institutional owners that helps drive this thing up. are you still income and tom -- are you still in, tom? tom: no, i took it as small as

coinbase would let me. lisa: big bitcoin investor. tom: down about 4% since the 4:00 hour this morning, $36,000 handle moments ago. jonathan: romain, thank you. romaine: you're welcome, jon. [laughter] jonathan: don't worry. tom: it will be $29,000 by the time we get to the close this afternoon. jane fully joins from rupp -- jane foley joins from rabobank. she is always looking at the synthesis. not about gaining -- not about gaming what sterling or the dollar is going to do. it is the synthesis of what we see on the speculating side of what foreign-exchange says. what does foreign-exchange say right now about the cards that madame lagarde has been dealt? the synthesis of everything jon has been talking about in bonds, in foreign-exchange, in the real economy, what does it suggest to

the head of the ecb? jane: before we head of the -- before we had the head of the ecb, we have their chief economist to speak this afternoon. it is going to be interesting to see how these be react not necessarily to the level of the euro against the dollar. that is going to be interesting, too. but what has really caught my attention this week, and risk to what is happening in -- in respect to what is happening in crypto's and various commodities, i think it is the moving european bonds. we have seen italian bonds. we have seen german 10-year buns returning to potentially positive territory. that is something which i think is a really big potential new story, and something which i think the ecb will really want to address. jonathan: the federal reserve has a new framework which basically ties the hands of pretty much everyone on the flimsy, for all of the voting memory is at least. the governing council does not have that. resident lagarde does not have the luxury that chairman powell has come of a sick way telling

everyone, you've all agreed to it. this is the story. stay on script. how does this play out in the coming meeting? jane: that is what is really going to be interesting to see. there is a lot of anticipation that at some point, maybe the ecb will also turn to an average inflationary target, allow inflation to move above 2%, and even if they don't formally do that, i think to some degree there might be some relaxation in order for that to happen. bear in mind that the fed weren't the first central bank to do that. it was the bank of japan. there's a lot of psychology tied up with why they would want to do that. i think that is quite possible, that they will potentially allow inflation to push out and they will be quite relaxed. after all, they would like their interest rates to get a little bit higher, too, so they have more ammunition for the next downward cycle. but i think this is about do they want yields to go up higher now. do they really want to see this tightening and financial conditions? i suspect that right now, they

don't. we've got to remember that we still got a lot of restrictions. we are seeing relaxation and restrictions this week in france , and certainly during this current quarter, we are still going to see some nasty economic data, so i think this is perhaps a little bit too soon in terms of the tightening and financial conditions that the ecb. would want. -- that the ecb would want. jonathan: euro-dollar, $1.22. euro-dollar down 0.2%. but going off by more than 12% now, just south of $38,000. lisa: although there's a question, can we compare bitcoin to currencies? jonathan: clearly not. lisa: there is a question of whether this is the best barometer of the marginal risk on/risk off sentiment how much do you look at bitcoin, understanding it is not analogous to the other currencies you track, in order to determine sentiment and the path it moves in more traditional, more accepted asset classes? jane: i don't look at it that

much is a particular gauge. to me, bitcoin is more about sentiment within the retail investor. there's a real crowd mentality there. we've seen a couple of negative headlines today saying financial institutions shouldn't be using bitcoin. that was just another negative headline. i think that created a big surge to the door for a lot of retail investors. so we know this is volatile. we know this is a very early stage of digital currencies, and we will be watching this for years. central banks are going to be very reluctant to allow money supply to move out of their hands and into the general population. so in some respects, perhaps it wasn't a big surprise what the people's bank of china said today. maybe that was just a matter of when they were going to say that. so we know it is going to be a volatile asset. we know there's volatility in many commodities. but i don't think you can really put that analogy on

foreign-exchange. it is a very different asset. lisa: that being said, there is a question of what precedent this sets for volatility that could come from digital currencies backed by states. we have seen this from the chinese government and what they said about the digital yuan, and we've heard the u.s. examining a digital dollar, which could diss intermediate a lot of banks and create volatility with people looking for a store of value that is separate from a physical good. have you modeled what potential ethics impacts could stem from announcements that are expected of the digitization of sovereign currencies? jane: this has got to be a long-term thing, and you really explained why it will be a long-term move. that is because it is going to be such a disruptive element with the banking sector. we have seen from the central banks that are a little bit more advanced in doing some analysis, at the riksbank for example in sweden, and they have said they will continue looking at this for many years to come. the bank of england is another central bank that has begun to

look at this. israel is another one. so many central bank's are looking at this, but what we know is that yes, it is going to be massively disruptive for the financial intermediary sector, banks, and therefore, no central bank is going to allow this to happen anytime soon, and order to allow for a slow progression and slow adoption of these digital central bank run currencies. jonathan: jane, thank you. jane foley, rabobank head of fx strategy. still down about 11% on bitcoin to $38,500. tom: i'm looking for an entry point. jonathan: do you have a serious take on this or no? tom: i wasn't bright on the way up, and i am not bright on the way down, and i don't think people need my opinion on crypto. i try to talk to experts. i try to read the academics on

the different parts of it, the banking part of it, with james dimon and what retailers focused on in their belief in this. jonathan:jonathan: i think a lot of people have run. they want to give access to the clients that want access. lisa: and i think that troy gayeski skybridge talked about how this is the macro trade. the idea that central banks and federal governments around the world were printing money, and this would lead to a debasement of traditional currencies. i wonder if people are rethinking that macro bet, especially as places like the united states look at higher taxes, curbing the overall price hike. i do wonder how that is going to play into this trade. jonathan: everybody who did their tax return in america will know, what was one of the first questions? in a crypto assets to declare? have you bought any cryptocurrencies this year? right on top of the pile, wasn't it? lisa: did you do your own taxes?

tom? tom: jon, it is the pendulum of debasement. all of the institutional marketing garbage is great until the thing goes down, and it is like silence. jonathan: it is down now, and you are very silent. you are very quiet. you sound like someone that might not have had a cash position, and maybe you were playing around a little bit. tom: bought doge coin for nothing. she's buying a fender telecaster, jimmy page telecaster. jonathan: let's get real. we are down 1.1% on the s&p, 4078. tom: jon, you don't even know who jimmy pages. jonathan: this is bloomberg who jimmy page is -- who jimmy page is. jonathan: this is bloomberg. ritika: president biden appears to be boxed and when it comes to fighting in the gaza strip. he is able only to urge a cease fire rather than taking stronger steps. the problem come of the

president is wary of applying too much pressure on israel publicly, and has a lack of influence on hamas. president biden is looking to build on a denuclearization agreement donald trump reached with north korea, likely to be welcomed by south korea. the 2018 agreement between the former president and north korea's kim jong-un was a bare-bones declaration that called for the two sides to work towards complete denuclearization of the korean peninsula. the ecb is relatively upbeat on the economic outlook as it prepares for a crucial meeting next month, but acknowledges mounting risks to financial stability from overvalued asset prices. we have been speaking with its vice president. >> risks looking forward are much more violent than in the past. you will have a speed up in terms of vaccination. vaccination is getting momentum everywhere in europe.

we are catching up, as i said before. on the other hand, you have risks and uncertainties, the uncertainty of the virus. ritika: global news, 24 hours a day. i'm ritika gupta. this is bloomberg. ♪

sec. yellen: we are confident that the investments in the jobs

plan will enhance the net profitability of our corporations and improve their global competitiveness, and we hope business leaders will see it this way and support the jobs plan. jonathan: janet yellen there, the treasury secretary. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. counting you down to the opening bell about an hour and 42 minutes away. equity markets near session those. the s&p down a little more than 1%. bitcoin getting hammered, crushed, cratering. it is not doing well. dollar showing just a bit of strength through g10. in the bond market, yields up to basis points, 1.655 heaven percent -- 1.6557%. wti, $64.11. i often say i feel lucky to have one of the most six sophisticated -- one of the most sophisticated audiences on tv.

tom, jimmy page played a less paul -- played a les paul. come on. tom: this is what we do at "bloomberg surveillance." we rip up the script. michael mcglone is going to join us any moment, but right now, david wilson, visual guide to financial markets author, we are waiting for a visual guide to crypto. dave: i'm going to give you a visual guide to quality. it is morgan stanley highlighting what may be a developing shift toward higher quality companies and away from lower quality ones. now they are -- no there are all kind of ways you can define quality. tom: things like apple? dave: that kind of thing for sure. it comes down to looking at an index which, in essence, buys the highest quality companies

within the russell 3000 and bets against the lowest quality ones. going back to march of last year when we started to see stocks taking off, that that really went awry -- that bet really went awry. this index that morgan stanley uses was down 58% in about a year. it is starting to come back, and their chief u.s. equity strategist mike wilson is saying look for more of this. it is basically an economic argument we are making, that we move beyond the early stage of a recovery and we are getting to the point where you have to think about what is called midcycle investing. actually saw that pop up any report as well -- pop-up in a report as well, so i knew it needed to be highlighted. tom: does midcycle replace transitory? dave: it may well do that. who knows? you see that little bit of recovery in the last couple of months, some morgan stanley is going to look for more. tom: visual guide to crypto

doesn't float your boat. visual guide to bit dog, does that work? dave: i haven't looked that closely at bit dog yet. dave: we get a brief -- tom: we get a brief from our mike mcglone. why do bitcoin and other suffer? mike: i think immersing for can thing is bitcoin is a high gamma trade that is leading everything lower. every asset is down today. excuse me. i don't see a commodity that is up. to me it is the bigger picture. it is the gamma leading it lower, the high-value trade, and bitcoin is getting some good support levels here get the question is how much lower it goes. even bonds are down today, so what is up? i looked at the commodities, i thought it was live cattle. lisa: jon was actually asking about this earlier. how much is the decline we have seen and bitcoin driving other

things lower? is this something that stems from and possibly exacerbates a risk off feel across assets? is that really what is going on? what is driving it? mike: i think it is more indications. dogecoin was an indication of massive fur off in this space -- massive froth in this space. what the markets are overdue for, and nothing that the fed authorities can really do, is that everything got way too high. i think that is what is happening. to me, the biggest risk to bitcoin with a macro correction, and i think that is what is starting now. so maybe it gets to 30,000. if the stock market continues to simply mean revert, bitcoin is part of that, and it is a high gamma part of it, so to me, that is the bigger picture. i think most money managers are not so worried about bitcoin. they are worried about every thing else. gold is down, bonds are down. what is up today? lisa: the other big picture here

is regulatory pressure. we saw that out of china overnight, the idea that they could potentially reiterate their view that crypto assets would not be accepted for transactions. how much does this lead the way for similar regulatory pressures in the united states, and how much does that really push institutional investors away from the asset class? mike: isn't it the same country that banned winnie the pooh? i don't think people are really worried about china bands because have to steal intellectual property, they have to protect their currency because they don't have open discourse. they don't have people like me criticizing everything. i think most people expect that. to me, this triggers a weakness in this space. bitcoin was supposed to be holding about $40,000, but it is not. to me, it is the macro picture. i look at bitcoin as part of that today. tom: i am not going to do a technical analysis. i am looking at the bloomberg

and i see comfort in your $30,000 idea of where the gamma takes us, the acceleration of this trend. to halt a negative gamma, somebody has to step in on the bid. as a broad statement, who is the institution that steps in on the bitcoin bid? is it retail? is it institutional? is it somebody i don't know? mike: i think it is more institutional, but today, everybody is more worried about margin calls than everything else. if this continues, bitcoin is just a small part of that. even gold is a small part of that. and we know what happens. tom: so are you assuming that 2:30 this afternoon, typically margin call time, we are going to get some bitcoin joy? mike: i don't know about bitcoin joy. right now it is heading margin calls in everything. i don't see anything that is up. to me, that is the more significant part of it. the market has had so much froth. the question is how far it goes. i think people are less concerned about that this morning and there is more

concerned about just selling what they can. jonathan: i think you are right. it is across the board, that's for sure. wherever you look, brent down 2%. copper off by 2.7%. gold lower, headed south by 0.9%. seeing the same story over in europe. equities off by 1%. the nasdaq doing pretty badly as well. just defensive across the board here. it is not pretty. tom: i'm watching vicks as a metric -- watching vix is a metric. i have no idea where key support is on dow. it is not ready for thousand. lisa: -- not 34,000. lisa: with respect to oil, there's possibly deal for oil to come back online, but now it seems that there's a bit of dialing back on that, and the price down. jonathan: coming up biggie china

of deutsche bank -- coming up, b -- coming up, binky chad ha of deutsche bank. alongside tom keene and lisa abramowicz, i'm jonathan ferro. this is "bloomberg surveillance." ♪

♪ >> how do markets deal with a pace of growth that was so abnormally strong and is now flowing to looks like -- now slowing to something that looks more historically normal? >> people don't like inflation, but they will tolerate it. >> fundamentals for most companies have been quite good, but the reflation trade has been even better, so everything has risen. >> i do worry that after a 2021 boom, we will slow perhaps more than people expect next year. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.