internationally on the continent, it is business busins karina: most of the traffic above belarus goes to moscow. they don't go into lithuanian airspace. if they do this, the cost are to build. it could be around this issue. tom: i am seeing a massively range bound market with one exception. jonathan: up another 0.7%.

that is the nasdaq 100. the s&p is up 20. eurodollar is a little bit on the euro side. tenure is basically unchanged -- unchanged. tom: some economic data as we have a full five day week. let's -- to our guest. he is with columbia. he joins us right now. what is the single distinction in your research right now. you can look like convexity, credit quality. what is the thing that matters right now. >> the things that matters right now is the way these inflation pressures are in -- affecting market yield. we know there are short-term inflation pressures. are they transitory? the fed minutes the word

transitory in the minutes we read last week. that was compared to twice in the march meeting. is that going to be the case? when we talk to companies, we are definitely seeing cost and put pressure and wage pressure. we think a lot of that will be temporary. it will be over in september. that is the biggest area. jonathan: what would exert the maximum amount of payment on the most amount of people? high yields are lower yields? >> it might be lower yields. the market is positioned now that we just had the worst quarter for the bond market in about 40 years in the first quarter of this year with the

aggregate printing a negative return it, we have a grounded positioning. >> perhaps the balance of risk is getting skewed a little bit. >> i think it's the right question to ask. i think that's getting a little bit too cute. there will be a. period of consolidation. i think we will be getting into

this conversation as we get into the fall. i think those pressures continue to put upward forces on yields. tom: what is your teat -- treatment of the cash out there? there were four analyses of $700 billion of cash in different guises that are out there. how do you as a conservative fixed income guy treat that? >> i like to look at it as a flow. if you look at the influx of new asset purchases from the largest central bank, including china and the u.s., you see we are at

the point of maximum liquidity right now. i gear from now, that is likely going to be waiting period the fed will likely be tapering in the 12 month window. the ecb promises to ramp up purchases. that has been pretty underwhelming. that is going to be coming down. we can observe a lot of liquidity in the market, that pressure will be coming off. jonathan: why is the fed buying mortgage-backed securities? >> the market doesn't need it. we can see that. risk premiums are exceptionally tight due to the fed's involvement. that is something that might be at the front end of their taper program.

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jonathan: from new york city, for our audience worldwide, live on tv and radio, alongside tom keene and lisa abramowicz, i'm jonathan ferro. about one hour away from the opening bell. we advance .5% on the s&p. in the bond market yields lower by a single basis point. in euro-dollar, 1.2212. positive .25%. that is a stronger euro. the headlines across the bloomberg. the eu summoning the ambassador from belarus. a lot more from that. the leader saying the belarus plane incident has signs of state terrorism. that quote has been repeated.

you've heard that a get again. "signs of state terrorism." i wonder what the implications of using that term are? tom: my major focus is on belarus and we are seeing the headlines. i am much more curious about the headlines out of moscow and the relationship of europe and united states to moscow as a supporter of belarus. the bloomberg headline captures it beautifully. russia rejects western outrage. let's bring in maria tadeo, our bloomberg reporter who has been helping us through the morning. what are you learning the last 60 minutes? maria: for european leaders, this is a very serious situation. it is an aggression that hits them home. this is a commercial plane from a irish company going from athens to lithuania.

this is eu airspace. this is an attack on the eu. they need to come up with something. they are looking at a package of sanctions. they believe individuals sanctions will not cut it and they are looking for ways to isolate belarus further. that could be a ban from flights in and out of the country. we are expecting a decision in the next 48 hours. usually it is difficult to get unanimity from the eu, but this time is different. this is something they look at as an attack on the european airspace. tom: belarus has the gdp somewhere in the vicinity of rhode island. it is tiny. tell me how russia fits into this debate with brussels, but far more with the city states of europe? maria: it is a tiny country, but geographically it is in a key position and the only country

that has backed up by vladimir putin. you have to factor that european leaders have said the election was bony, the leader is not -- was bony, the leader -- was phony, the leader is not democratically elected. this is another thing i've heard from a number of officials. they say this could be terrorism because what they are trying to do is send a message of terror to the opposition, to say wherever you are we will find you and do everything it takes to get you in a situation that is difficult, in jail or killed. lisa: how much dissent is there among european leaders in terms of how harsh the actions of their response needs to be? maria: usually, this is the problem with european foreign policy, you have to get 27 countries, some in western europe, they have different political interest.

i would say there is a lot of unanimity on what to do next, which is move for sanctions and a swift response. what it will also do a going forward, and this is the debate shaping up, is send a message europe cannot have a normal relationship with russia. at one point emmanuel macron had been pushing for that. which would put pusher on germany to drop the nord stream 2 pipeline. how could you have a commercial relationship with russia when this is happening on the ground? jonathan: how does this change the meeting next month with the president? the meeting between the president of the united states and european leaders? maria: there'll be a discussion over what to do with data -- with nato, whether you need to send more troops into eastern europe, whether you need to increase and make it clear aggression on a member state will be a serious deal.

it will also probably retreat the message that it is difficult to have a normal relationship with russia. simply not happening. what you have seen as an escalation from the russian front. hard to see how you normalize our relationships. tom: we have to leave it there. thank you so much. an exceptionally busy afternoon in brussels for maria tadeo. look to us as we do our best to give you the headlines. mona mahajan joins us with allia nz, u.s. investment strategist. it is rude we have barely talked about the equity markets today. futures up 22, we make a joke about melt up. are we prepared for a melt up? mona: we have already had a bit of a melt up, so it is hard for us to think about s&p up 11% year to date.

on a year-to-date basis, value sectors like energy, financials, parts of the material sector, all up 30% plus, while exceeding the s&p return. where we have seen the laggards has been the tech and consumer discretionary. as inflationary pressures started to rise over the last few weeks, we have seen health care and staples, sectors that have had pricing power come to the forefront -- every sector has had its day in the sun. last year it is tech, this year it is the value sectors. all sectors have done their part to keep this market steady this year. as we look towards the next six to 12 months, pricing in an environment where growth is not as strong, though above trend. the fed is in play and maybe there is a different -- you have to be more selective and cautious as we head towards the

second half of the year. jonathan: getting some headlines across the bloomberg i want to be very delicate with. comes with lufthansa. of flight boarding has been halted in midst due to a terror threat -- in minsk due to a terror threat. this comes at a time when the ryanair check over the weekend on its way to lithuania was grounded in belarus under what is widely considered to be false pretenses of a terror threat. i am not connecting the two issues. many pointing out the context of the headline. right now the headline is lufthansa flight boarding has been halted in minsk due to a terror threat. that coming from the minsk airport. tom: coming up on 4:00 p.m. in minsk. one time zone away from communal

europe. seven hours from new york. they are going into prime time. this is when you fly out to 40 or 50 geographies. jonathan: this is when it becomes increasingly difficult and airlines to operate within that country and over that airspace because the threat of any kind of terror is something taken incredibly seriously by airlines the world over. tom: i agree with that. i do not think the airlines will stress very hard. these are easy calls to make. it is much more the politics of the moment that will be important. we will continue to follow this story. with us is mona mahajan of allianz. i have not asked this question in ages. the use of cash has never been

greater, isn't it? mona: absolutely. cash for companies now has been very interesting. we are seeing certain sectors, the at&t's of the world move their cash away from dividends and into acquisitions. some companies are moving more and more into capex spending. what we want to see to take the economy higher and continue to drive it is more spending in capex, in r&d, adding more labor to the workforce and supporting that. it'll be interesting for those investors looking for dividends to see if those dividends do hold. share buybacks have been a big part of the use of cash. we are starting to see that come back. there been shareholder friendly uses of cash in corporation friendly uses. that balance may be shifting more back towards the capex part

of the world. we will see if that trend holds. lisa: to tie the idea of credible cash piles and the global recovery with this existential threat, this exhaustion is threat coming from what happened in belarus, the idea of how fragile our markets to some sort of unpredictable threat from the outside? do you have any sense of that? the concept of price to perfection and people expecting things to keep going on a perfect trajectory? mona: it is a great point. keep in mind when we talk about correction in the market, in any given year one to three corrections in the 5% range are the norm. this year we have not gotten even one 5% plus correction in the s&p 500. we could be set up for at least a period of consolidation after a nice run across the value sectors we noted. what could spark that? we do not know yet, but perhaps

it is something the political regime where the geopolitical realm we are seeing to the forefront more and more. this economy, we have seen this recovery. we talk about the k shape recovery. there has been a diversion in income inequality. that is certainly the case across the country. there are some countries that have reemerged strongly and certain economies that are still struggling. in that background, when there is increasing tension between the haves and have-nots, there is an increased probability we do see more disruption perhaps from a geopolitical event or terror threats or people feeling more disengaged, disgruntled. that is one to keep in mind. hard to handicap from a market perspective. we may be due for more of a severe pullback in we saw over last few weeks. jonathan: have to leave it

there. mona mahajan of allianz. complex news flow that deserves the appropriate carefulness and care this morning as we approach some of this news. much more on bloomberg tv and bloomberg radio. equity futures 41. on radio, on tv, this is "bloomberg surveillance." ritika: with the first word news, i'm ritika gupta. another sign normalcy is returning to new york city. mayor de blasio says all public school students will return to their school buildings in september and a remote option will not be available. he says reopening the largest bull system in the u.s. for more than one million students will be crucial to the economic recovery of new york, which has been battered by the pandemic. european leaders will discuss possible sanctions after belarus ordered a ryanair flight entering its airspace to land and and right -- and arrested a

journalist on board. the move was an unprecedented violation of european air travel protocol and drew sharp condemnation from the u.s. and the eu. bloomberg has learned eu leaders will weigh measures such as travel restrictions and possible flight bands. members of george floyd's families and others who lost loved ones to police encounters gathered in minneapolis for a march to mark the one-year anniversary of george floyd staff. hundreds of cash of george floyd's death. -- of george floyd death. hundreds march -- marks one year since george floyd was killed. phil mickelson won the pga sunday, making him the oldest player to ever win a major tournament. phil mickelson finished two strokes ahead of the field, giving him his fifth major title overall.

he won his first major at the age of 33 in 2004. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> we need someone who is a combination of a technocrat who

understands how things work, who has a political connection to get resources where those resources are needed, and someone who is an optimistic cheerleader. tom: good morning. bloomberg surveillance. lisa abramowicz and tom keene. we are watching the markets with a lift in the equity markets and the vix now under 20. we are focused on the international relations of the continent of europe. the headlines, and that afternoon when politicians get going, the headlines stream mercilessly. lisa: lufthansa is cooperating with belarus authorities on the search of the jet. we are hearing comments from the minsk airport. i expect this to develop. tom: sweden mentioning, as we spoke to the former prime

minister, sweden has stopped flights over belarus according to one of their news resources. this is been a great joy for us to speak to different mayoral candidates of new york city. it is widely presumed to be a one party city. the democrat party candidates are plenty. diane more alice joins us right -- dianne morales joins us right now. what have you changed in your campaign over the last number of days? what is your new message as you go to the middle of june? dianne: i guess my new message, which is not particularly new is this campaign is actually intended to make sure our city comes back in away we never have before, a way that recognizes our collective interdependence in a way that makes it possible for every new yorker to live in dignity. we have not quite lived up to the idea of being the greatest

city in the world and this is our opportunity. tom: we have seen polarizing candidates and those looking for us to come together. how do you link that with the budget realities of new york city? dianne: the budget reality is that why we will not look like we did in between 19, we are still the wealthiest city in the country and not the work -- if not the world. we have seen the message of unity, we have seen who it was that kept the city operating and made it possible for some a bus to work comfortably from home. the reality of it is those are the folks who are right now the most vulnerable and have been the least protected. it is a both and situation. we can make it possible for them to continue their roles and make it possible for the rest of us to exist and make it possible for them to live in dignity. lisa: which leads to the

question about paying for proposals that will allow people to live in dignity. the idea is new york city is already a pretty high tax region there already has been discussions of ultra high net worth individuals moving to florida or arizona. what is the tipping point for how high tax rates can go before you get this exodus that becomes counterproductive to the overall revenue of the city? dianne: the first pushback i will give on the framing of the question is the idea of the exodus. i do not think the numbers bear that out to be true. we have seen in the course of last 12 to 15 months wall street has created more millionaires and billionaires. the real estate market is on an uptick in new york city. i do not think the indicators support the idea of a mass exodus. i also think there's a lot we can do with what we have. when we look at the resources of the city budget, there is allocation and reinvestment we

can do with the dollar before we engage in a conversation about generating additional resources. it is important for us to have that conversation. it is fair to ask people to pay for their fair share. while we might say our rates are higher than others in the country, we also have the greatest concentration of wealth. those things should go hand-in-hand in the idea of comparing to other cities does not make sense given the inordinate wealth we have to begin with. lisa: another aspect of it important to keep businesses here is keeping crime and crime down. a lot of people have asked for more please, having a task force in the subway. what is your way of taking down crime? dianne: the best way to do that is to recognize the link between the increase in crime rate and the increase in security.

we have allowed for housing and security to persist, food insecurity has only grown. we have not provided health care in the middle of a global pandemic. people's individual lives have gotten increasingly insecure and i think that correlates directly to the increase in violence as people try to think about how to survive and make it in the city. the first thing we need to do is make sure we are providing people with access to the resource and support they need so they can live safely at home. tom: thank you so much. dianne morales, new york city mayoral candidate. we have to go to the breaking news in europe. it is transient to say the bloomberg first word news, lufthansa flight 1487 boarding halted in minsk. two hours delayed due to a terror threat. what is interesting is the sourcing is from the telegram

channel fellow lose -- of belarus, which the gentleman that was detained is part of. it is circuitous. lisa: there is also a question of whether they will try to signify this is a real threat. it could be the threat given from reporting to ryanair was there was a bomb threat which was the reason why they had to be diverted into land. the question is is there credence to the threat or will there be -- we are just completely speculating. all we know is a lufthansa flight was halted in terms of its boarding and the luggage is being searched in minsk following the ryanair flight. tom: the timing is 3:00 in europe. that is central europe. in eastern europe it is 4:00 p.m. about at the point of pre-conferences and agreements. i would think in the next six hours we will have a lot more to

talk about. lisa: this comes at such a delicate moment internationally and economically. the idea people are just starting to travel again. we are seeing president biden try to set a new agenda for the united states and prepare for his trip to the summit in europe. such a perilous moment in some ways. a crossroads for 70 different aspects of the global economy. this highlights them in one swoop. tom: no doubts we will have comments from the white house as they wake up at 9:00 washington time. markets are range bound, but then they are not. the vix in nicely with enthusiasm. s&p 500 up 23 point. jon called in from coventry, wanting to quote the dow. 4292 on the dow. a nice lift to the markets. on "balance of power" the cogent

voice on the republican side, glenn hubbard with republican -- with columbia business school. stay with us on belarus. this is bloomberg on radio, on television. ♪

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jonathan: from new york city for our audience worldwide, good morning, good morning. equity futures positive on the

s&p. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: we begin with the big issue. volatility strengthening its grip on markets. >> more volatility. >> volatility and noise. >> more short-term. >> investors dealing with this trifecta. markets is adjusting to the move we have seen. massive amounts of liquidity. that is speeding its way everywhere. >> higher than expected inflation and premium market multiples. >> asset prices, commodities.