♪ >> this is a scenario where you've got consumers sitting on $3 trillion of extra savings. >> we are looking for slower equity gains. there are definitely storm clouds we are concerned about. >> i don't think it is going to be enough to force the fed's hand into tightening anytime but for -- anytime before 2024. >> people are still not ready to go out and do things the way they were before. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: 90 minutes away from the data in america. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equities down eight on the s&p 500. the data at 8:30 eastern time,

looking for continued improvement in claims. tom: as i mentioned with lisa in the last hour, it is real simple , line up all the charts we have, and there's a mathematics to it, whether it is arithmetic or logarithmic. it is the most elegant trend in hundreds of charts. claims every week is on a great trend to improve. jonathan: and we want to see more of the same going into a payrolls report just two fridays away. tom: this is the first time we talked about this. all, it is upon us. after that -- all of a sudden, it is upon us. after that you've got the fed meeting as well. jonathan: 620,000 is the estimate.

from that big downside surprise in the previous month at 266,000. lisa: the question i have is which data point is going to be the most relevant. a lot of data comes out, it beats, it misses, people shrug. however, we will get personal spending and personal income data. i am curious about that. i feel like that is where it matters, how much people are spending in real time. i wonder how much more weight that has than the jobs number. jonathan: how much savings come down, that's got to be the key variable for economists. lisa: they had this incredible cash glut in their savings accounts. tom, you'd keep -- tom, you keep talking about it. tom: you guys have touched upon, to me, the biggest issue out there. the quality, the behavioral makeup of all that cash that is out there. how much of it is going to be spent? how much is going to go into various forms of markets? how much is just a lead weight that will never move?

jonathan: we don't know. payrolls, the low estimate, 355,000. your average, 627,000. tom: all of the economists from last time are still employed this time around. jonathan: your equity market this thursday morning down about eight on the s&p 500. we come in 0.2%. in the bond market, yields are higher by a basis point to 1.5875%. euro-dollar back with a one dollar 22 since handle, up 0.1%. that is a slightly stronger -- a $1.22 handle, up 0.1%. that is a slightly stronger dollar. lisa: looking at u.s. initial jobless claims, they are incredibly noisy. at elegant trend tom has been talking about is what we are

looking for, a continuing downdraft in terms of the number of initial jobless claims. first quarter pce and april durable goods may offer more insight into the economy in a predicable way, although still, i am looking for which data points really matter most. 1:00 p.m., the dreaded seven year sale, $62 billion oxen of seven-year notes by the u.s. treasury. the question is, will there be any pushback? there has not been so far, for the two and five-year options earlier in the week. president biden is delivering a speech on the economy in cleveland, ohio. how much will he give in to republican proposals for a roughly $1 trillion infrastructure spending plan that redefines infrastructure away from social plans back to bridges and roads? jonathan: thank you. we will head down to d.c. in 20 minutes on this program. it is still early cycle. that favors credit over treasuries, cyclical over defensive. brian levitt of invesco, the

global market strategist, joins us now. that first piece, it is still early cycle, that was basically the outlook coming into honey 21. some people have started -- into 2021. some people have started to move on. you still see yet as early cycle and you expected to play out over a multiyear period. why, brian? brian: that story has played out well. i think what investors need to differentiate between is where we are in the cycle and what is the direction of the economy. we have seen cycles play out in the united states on average something like seven years. the last cycle was 10 years and probably would've continued had it not been for the coronavirus outbreak. so the cycle continues. the story moves more from a recovery phase of the cycle to the expansion phase of the cycle. there's some implications for markets as a result of that, but

the cycle will continue until we build massive access, until there's big inflations of the fed has to raise rates multiple times. i know investors are worried about that. i think it is premature. tom: where are we on international investment? everything was to the moon. e.m. collapsed. how do we refrain to allocate -- how do we reframe now to allocate? brian: it makes sense. the dollar had a little bit of a leg up when there was a lot of concern a few months ago that the fed was going to have to tighten early. some of those concerns have started to come out of the market. the dollar has been weakening. that provides a nice tailwind to non-us dollar assets. you are seeing european equities performing well as vaccine rollouts improve. the emerging markets still have some challenges in this vaccine

rollout, as we all know. please is like brazil and india still struggling under the weight of the coronavirus. but there are companies, really good companies in the emerging markets that are trading at more attractive valuations, have good growth prospects, so investors, i would suggest, don't go out and buy in emerging markets where growth prospects are good, and if the fed continues to remain on hold, we should be in a stable or perhaps even weaker dollar environment. lisa: where is the biggest risk right now? brian: i still think the biggest risk is on the inflation story. last time i was on, jonathan said we can't say transitory anymore. lisa: we just drank. brian: so i just say temporary or momentary or however we want to categorize it. that is the risk, and my opinion. that you get some inflation data . i won't think it is into the

cycle inflation data, but what you will see as that happens is a tightening of financial conditions in the market which could bring about an equity market correction. i would view that equity market correction as a buying opportunity. they tend to happen in most years anyway, usually because a policy uncertainty, so i expect that will happen at some point. but to me, that is not the end of the cycle. lisa: i do wonder why you don't just do a massive barbell, to have some treasuries, some cash, then go as risky as you possibly can. is that the type of portfolio that you see are performing the work -- outperforming going forward? brian: in the early stages of the cycle, you want to be more value-oriented. we have seen that perform very well. as we start to move into expansion, growth stocks start to participate more, so it becomes a value and growth story. credit goes from being the big outperformer to more of a coupon

return like assets. treasuries can protect you in a bout of volatility, but in an expansion phase of the cycle, if you are looking for absolute returns, treasuries are not an ideal place to be because rates should move somewhat higher. if you are looking to manage risks, obviously you want to be in core bond like securities. but if you are looking for what is going to be the big outperformer, i continue to expect it to be the equity market, value stocks and growth stocks. jonathan: good to catch up. brian levitt, invesco level market strategist. cable breaking out a little bit, up 0.25%. that's the pound against the dollar. the bank of england, a voting number goes on to say that hikes might come, likely well into 2022 in the central scenario. goes on to say that an early rate hike is possible if we get a smooth transition from some of these labor support programs and the u.k.

cable, pound just a little bit stronger. what is interesting here is the subtle shifts you are seeing in places like the bank of england, like in canada, like in new zealand, in ways that you don't get over at the federal reserve. just these subtle shifts, and they have a little but of a hawkish flavor. i think it is also worth pointing out, we didn't have a significant period of undershooting the inflation target in the u.k. in the same way that the federal reserve has done in the ecb has done, too. i wonder what that means for the bank of england for the years to come. tom: i would suggest whether it is easy -- it is ecb or fed, they are literally making out of -- making it up as they go. none of this is in any of the textbooks. jonathan: going on to say inflation comparisons with the 1970's are "misplaced." lisa: what is interesting to me is that a lot of these central banks seem concerned about

stability, and they are citing that as a reason for looking at possibly raising rates sooner than later. the federal reserve does not seem worried at all. i mean, a little bit on the margins, by nonvoting members. jonathan: it is just two issues for them, isn't it? they will talk about financial conditions as if it is exclusive from what is happening elsewhere. lisa: it could be related, jay powell to saying. do you buy that? jonathan: it's not for me to buy. sounds pretty ridiculous, though, doesn't it? lisa: that is actually what other central banks are trying to say. tom, are you buying that? tom: i am just listening in fascination. lisa: look, the federal reserve indisputably has affected financial conditions, loosen them, and caused money to flow into much riskier part of the markets. jonathan: that move of 0.3% is the most interesting thing

that's happened in the last hour. coming up, peter tchir, academy securities head of macro strategy. if you think i am joking, i'm really not. if you are waking up thinking today is going to be a busy day, it really isn't so far. we might get back to 1.62% on tens -- 1.60% on tens. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ritika: the biden adminstration is taking steps to prevent ransomware attacks like the one that crippled colonial pipeline earlier this month. directives will be issued as soon as today requiring pipeline operators to conduct cybersecurity assessments and report any incidents to federal officials. penalties could start at $7,000 a day if they don't comply. exxon mobil's ceo has been dealt a stunning defeat by shareholders. a tiny activist investment firm

snagged two board seats and promised to diversify beyond oil and fight climate change, the latest setback for woods. the oil giant has shed more than $125 billion in market value during his tenure. thailand's capital and talk is opening registry -- capital bangkok is opening registration for covid-19 vaccines, expanding eligibility to everyone 18 and older. kylie reported more than 3300 new cases today, with 47 deaths -- thailand reported more than 3300 new cases today, with 47 deaths. cases have quadrupled since april 1. the u.s. justice department is opening an investigation into the meltdown of archegos capital in march. sources tell bloomberg federal prosecutors in manhattan since requests for information to at least some of the banks that dealt with the firm.

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. ♪

♪ tom: from new york -- jonathan: from new york, for our audience worldwide, this is "bloomberg

surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. live on radio and tv. you'll on the 10 year up almost two basis points to 1.5926% -- year yield on the 10 year up almost two basis points to 1.5926%. the bank of england having a bit of a flirt with a further interest rate move maybe in early 2022, with a big maybe on top of that. then goes on to say not many rate hikes are necessary to slow the economy. isn't that just the issue? regardless of timing, you get back to neutral pretty quickly in this world. tom: this is so important and observation. i will give credit to zero hedge, but it could have been somewhere else, there was a photograph of arthur burns from long ago, and this is what greenspan codified. you can have a bigger impact quicker than you think. jonathan: go early is one thing. how far can you go?

how long is the path once you begin it? i agree. tom: he was raising by 3/8 and 5/8, and greenspan codified that quarter-point move. right now we get perspective from wendy benjaminson, bloomberg politics editor, with truly an understanding of the cadence of conservatives and liberals in washington. we have the passing of john warner, who was a courageous liberal republican when the south was going very much conservative republican. there's a whole path there of decisions. now we have senator warren of massachusetts with her sense of liberality as well. tell me where the liberals stand right now. when senator warren gets up on her podium and lectures the banks, as we saw yesterday, how big is that liberal audience that she is speaking to? wendy: i think it is large and

growing. this is the wing of the party that is pushing biden to the left. he is naturally a centrist, naturally a dealmaker, and elizabeth warren's candidacy, bernie sanders' candidacy, and a whole new generation of voters who believe in big government and big government regulation are pushing the government towards the left. tom: do they have a critical mass, or is it what i am just going to call, with great respect for the process, the fluke of two georgia senatorial wins? wendy: it is a little hard to tell right now because donald trump sort of skewed all the normal metrics that we used to gauge something like that. we don't really know if warnock or john off off -- or jon ossoff

were elected in georgia as rebukes to the claims of election fraud donald trump and his supporters, or was it really georgia becoming a blue state. i think it is going to be 2022 or 2024 before we actually know that. lisa: is donald trump still the leader of the republican party? wendy: yes, donald trump is still the leader of the republican party. all of the republican politicians, we can see with what happened with liz cheney and some of the others who are getting rebuked by state parties, by the national party, by kevin mccarthy, the house minority leader, they are all acting on donald trump's behest, or at least what they believe to be donald trump's behest, and he remains the leader of the party. what is the mystery to be solved is whether republican voters are still as beholden to donald trump.

donald trump is restarting his rallies in june. the republican party is a little worried about that because they want the midterms to be about bidens agenda, and the democrats want the midterms to be about donald trump. they still want to use donald trump as a foil. lisa: what does donald trump's leadership do when it comes to this counterproposal, this one trillion dollar plan we are expecting to see from the gop regarding infrastructure? when president trump was in office, he talked a lot about spending big. is there a similar kind of push among the gop, just with a different emphasis than the democrats? wendy: yes, i think that is one area where donald trump is less in the picture. this is a really interesting phenomenon to watch to see the democrats and republicans going back and forth with one bill after another. a few weeks ago, mitch mcconnell said he would be willing to spend up to $800 billion. now senator capito and others are offering a plan closer to $1

trillion. i do and once $1.7 trillion -- biden wants 1.7 trillion dollars, but he has come down a bit. so we are looking at a deal as soon as we figure out what infrastructure is. tom: i look at where we are and the path forward, and what i see more than anything is great uncertainty. reg bellyache -- greg valliere writes this morning, "massive uncertainty over infrastructure." where are we in the summer recess of your washington? is it just another year, or is there something unusual this time around? wendy: i think there is something unusual, and of course, the summer quiet doesn't really start until august. they really believe that they can get an infrastructure deal in place by the end of the memorial day weekend, by the end of this coming weekend. so they want to come out with a deal, and then would hope to vote on that and some other of

bidens economic priorities for the august recess, because after that the midterms start, and nothing is going to get done. jonathan: some people might say they have already started. wendy, thank you, as always. equities down about 0.10%. the race to make a deal, make a deal with who? within themselves, within the party, or with republicans? tom: lisa and i were going back and forth on this, i don't buy the bipartisan thing for a moment. the campaign of 2022 started that late tuesday night, early wednesday morning of november last year, and there is no indication i see whatsoever of a bipartisan thrust. maybe it is a new kind of gridlock. jonathan: did you buy it, lisa? lisa: i do. people say both sides have an incentive to come to the table on some level. the question is how much pushback there will be on both sides of the parties, the ultra

progressives and some of the more conservative in the republican party. what we hear, they are actually negotiating somewhat in good faith. jonathan: who needs to agree with the other more than the other? does that make sense? lisa: that makes sense. this is a popular plan, so both parties want to see like -- want to seem like they are getting something done. jonathan: i think for the president, he talked about unifying not just the country, he talked about unifying congress. tom: but it is too close. this is something that got lost in the review. the republicans did really well in the selection and congress. did they take a majority? no. big speculation about the next time around. but i think the idea of democratic party dominance here is even now still overplayed. jonathan: i hear you, tom. the s&p 500, -0.16%. coming up, conrad dequadros,

brean capital senior economic advisor. a little bit of tension today, ok. [laughter] lisa: not at all. jonathan: yields up a basis point. on radio come on tv, this is "bloomberg surveillance." ♪

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♪ jonathan: stay in bed, enjoy the long weekend. the s&p 500 down about 0.2%. tom: are you already to the weekend? [laughter] jonathan: want to start it right now, to be honest with you. lisa: he's selling it hard. jonathan: why sell something that doesn't need to be sold? tom: here we go. what is this, philosophical? get to the data check. the weekend starts thursday morning at 7:30? jonathan: the most interesting thing in the last hour, a gentleman of the bank of england talking with a lot of caveats about the post furlough environment. there's a labor market support program in the u.k. called the furlough program, and as they start to unwind that, what does the labor market look like? that is a big unknown in the u.k. if you don't get a smooth

transition, you talk about a late 2022 hike. the market is running away with a hawkish tilt, just a subtle flavor of a hawkish tilt coming from that particular bank of england member. yields higher in the u.k. by four basis points. elsewhere, pretty subtle. unchanged on the 10 year, 1.5943%. what's wrong couple about the treasury asked what's remarkable about the treasury market is how stable we have been -- what's remarkable about the treasury market how stable we have been amid talks of tapering. you like that, tom? wasn't it beautiful? thank you. [laughter] gold today up by 10.70% -- gold today, up by 10.72% over the last year. it really hasn't done a lot

until recently, now starting to break out. for the likes of ruskin and others, this is where they are looking for may be the inflation story to bubble away just a little more. maybe we've got too much faith in the federal reserve you, not enough anxiety elsewhere, and maybe this is where it is going to show up. the view at least from the likes of alan. tom: you are poetic today. jonathan: thank you. i'm really trying to add some spice going into the weekend. tom: you're nailing it. jonathan: i'm a poet, tom. tom: it was like middle england. jonathan: thank you. the midlands. just outside coventry. tom: david wilson here to save us. he was talking with dan curtis, bloomberg aviation correspondent, about airbus and boeing, and some really interesting dynamics. dave: that's all about what is going on at airbus. tom: optimism. dave: yeah, at least a sign of it, for sure.

they are planning to increase production of their best-selling a320 series of jets. they are looking to years out to have output levels that would exceed what they were before the coronavirus pandemic. we have seen the recovery in air travel. now you're getting a sign of a recovery in airplanes. tom: right after a great story on this, dan curtis nailing the research on it, boeing says production lapses relating to boeing 737. they have problems that won't going away. dave: they are still dealing with the recovery from the 737 max jet. but here, at least you have a positive sign for the industry. boeing supplier spirit air systems also higher in early trading. then we turn to snowflake, a data warehousing software company. warren buffett's berkshire hathaway among the investors. their numbers didn't go so well. losses wider than expected, and

looking at slower growth in product sales, the bulk of their business, this quarter. i say slower. they are talking as much as 92% as opposed to 110% in the previous quarter. tom: and the symbol is snow, how cute. dave: berkshire actually invested in this before it went public. tom: a great bio, the name escapes me right now -- dave: snowball. tom: yes, that's it, right? we are killing at this morning. give me a couple more. dave: i do have a couple more. the meme stocks, if you will come of the ones that are favored by those amateur traders on reddit, they had a bit of a run-up this week, and they are pulling back today. we are seeing some volatility. they've actually come off their overnight lows. gamestop, the videogame retailer , and amc entertainment. we should point out gamestop has

been up 37% the past three days. amc up 62%. jonathan: having fun, tom? tom: just waiting for wilson to break into poetry like you. ferro is doing 80 hausman -- doing ad hausman. who will you do, eb white? dave: i would probably do bob dylan. tom: conrad is coming, what are they talking about? "lay lady lay" and "national skyline" have really endured. dave: a lot of his songs. tom: see that? this show, we go off the rails. [laughter] jonathan: you are crushing it. tom: david wilson will be back on tomorrow talking brooks & dunn. conrad dequadros is with us now to save the show, with brean capital, their senior economic advisor. what is the tendency of a gdp

gas right now? are you guessing -- gdp gas right -- gdp guess right now? conrad: over the next couple of days, we are getting a lot of important information on that. today's durable goods orders report gives us a first look at capital spending at the start of the second quarter, and then tomorrow we get the consumer spending numbers. it is looking like the second quarter could be a double-digit gain in gdp, particularly because of the strength of the consumer. consumer spending has been extremely strong. that brings us to where do we stand in the economy relative to where we were pre-covid, and it looks like the gdp gap may have completely closed by the second quarter. if not, definitely by the third quarter. the production side of the economy has been extremely strong. jonathan: given where the year has gone so far, what was your view on 2022 compared to where it is now? conrad: now it is stronger.

obviously we were looking for strength in 2021 as we were rebounding as the economy reopened, but it is looking like this probably has some legs, and a lot of that has to do with the consumer, the fact that we have this large accumulated savings. much of that is going to be used up over the summer as services spending comes back. but just the amount of savings on the consumer side and the amount of money that is there to be spent, two point $3 trillion is our estimate of the amount of savings above what would be a normal level if we hadn't had covid and all of the federal programs that followed. so that is probably going to give the consumer some legs. the fact that the business side of it, the investment spending is also looking like it is bouncing back, at least on the survey data, even through may, capital spending spenders have rebounded sharply, so that is very encouraging.

we are looking for obviously reopening related, very strong growth in 2021, but it is looking like this has some legs into some continued above trend growth in 2022. tom: you have touched on -- jonathan: you have touched on the key variable of the moment. it is somewhat easier to come up with that $2.3 trillion number you came up with for the additional savings given where we are if we didn't have this pandemic. adding to a point where you understand how those get spent and whether they will be spent i would suggest is harder. how do you go about drawing conclusions around that? conrad: i think that is a very good question. i think one of the things we need to do is to look around which cohorts of the household sector, where those savings have built up. the more recent federal programs, the ones that kick in this year, but the january payments that were made, the march payments, those were directed more towards lower income households that have a

higher propensity to spend. i think a lot of that money is going to get spent, and the coming months are going to show, but what we know is, for example, look back at march and the retail sales report. as soon as things started to look like they were getting better, the labor market was starting to recover, we had this surge in spending. so i don't think this is by any means precautionary and we are likely to see higher savings rates than what we have seen pre-covid. i think those savings rates are going to come back down. we were looking at a pre-covid savings rate of about 7%, and i think that is the direction we are going to be headed over the coming months. lisa: you guys were laughing at me earlier when i said possibly snooze bill was stemming -- snoozeville was stemming from the fact that everyone is going on vacation, but seriously, everyone is going on vacation. everyone i talk to is getting on flights. will some of those service

providers, the airlines, the hotels, be able to hire enough people? how important is it for frictions to be ironed out for spending to continue at the pace you expect? conrad: i think that is a critically important question. tomorrow we're going to get the retail sales report. we will get some information on the services side of consumer spending, and i think that is really what is going to drive the economy over the summer period but what are the impediments to getting people back into the jobs and services sector, the restaurant industry, hotels, airlines? that is very important. we are still trying to figure out, and i think next week when we get the jobs report we will have more information, in our view there is an issue with the lack of labor supply. we can see that from very high levels of job openings, the small business survey, for example, showing record levels of percentages of companies, and

there are questions about what is driving that. is that the fact that we have enhanced unemployment benefits? is it continued concern about getting sick? transportation issues, childcare issues? i think it will take some time to resolve that, and it might take much more of the summer. it might require the reopening of schools after the summer and people returning to normal family environments that will allow some people to get back to work. jonathan: conrad, thank you, sir. conrad dequadros, brean capital senior economic advisor. it might be late august, september until we figure some of this stuff out. the kids go back to school in september. the additional ui expires then, too. lisa: i am not counting down the days until the kids go back to school. jonathan: it sounds like you are. lisa: how do you go back to a job that keeps your from the house all day? tom: tea -- jonathan: tk would love to get away from the house. tom: no, serious stuff.

lisa: getting away from the house, or childcare? tom: getting past the third week of august is a huge social statement for this nation. jonathan: coming up, the congressman from arkansas, french hill. equities down 0.2%. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. british prime minister boris johnson is heading back after his former strategist thomas cummings -- four more strategist, cummings said he was unfit to lead the country. johnson said some of his comments "bore no relation to reality."he refused to comments when asked about the allegation that he made the assertion he would "rather let the bodies piled high" then order a second lockdown. the rapid spread of a coronavirus marriott --

coronavirus variant. in melbourne, people will only be able to leave to get essential items, work or study, or get vaccinated. officials called the move highly regrettable, but necessary. a panel is being accused of dragging its feet. the panel met wednesday for just five minutes before heading into a private session. state lawmakers and government watchdogs say the process is moving too slowly, giving cuomo time to redirect the political narrative. he is facing allegations of sexual harassment and accusations of covering up covid nursing home deaths. airbus plans to ramp up production of its best-selling a320 series within two years. the world gift reduce or of commercial jetliners is telling suppliers to be ready to raise output of its top-selling narrowbody to a rate of 64 per month. i the second quarter of 2023,

airbus says that could climb to 75 per month by 2025. 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. ♪

>> the bigger gap is around what's called exchanges, crypto exchanges.

i would think if we could work with congress to try to bring investor protection to deplatforms where these sometimes commodities, sometimes securities are traded on the platform. jonathan: that was gary gensler, the u.s. securities and exchanges commission chairman. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equities down eight on the s&p, we declined 0.2%. yields higher on the tenure to 1.5977%. -- the 10 year to 1.5977%. here's a story that has really changed in the last 12 months. the high of the year on dollar china was exactly one year ago. we had a seven handle. right now we are at 6.37. it has been a severe move to the yuan's favor. we have been waiting for commentary from the pboc, and

they say the following. "the current fx market is balanced. it cannot be used to offset commodity price increases. we can't let it strengthen to impact the commodity market. it cannot be used to spur exports either." what's interesting about this is the s-word is missing, stability. this is a chinese central bank looking for stability. i don't see it in this particular release, though. tom: out of error hong kong news bureau, they have really written this up smart -- out of our hong kong news bureau, they have really written us up smartly. enda curran joins us, our bloomberg chief asia correspondent. the key headline john underscores his the discussion of a stronger currency offsetting the reality of copper being very expensive.

that is fx 101, but this is not a floating currency, is it? enda: no, it is not. these are very direct comments from the central bank in beijing, and it does look like they are trying to manage expectations. i can tell you that manufacturers here are screaming out in terms of the input prices they are facing, especially in terms of the imported commodities. all of them make the point that they are struggling now, but clearly the pboc needs to come out an offset in excitations out there the exchange rate can be a lever to pull in the middle of this. jon pointed out they are also making clear it is not about exports either. tom: what is so important here, going back-and-forth with our tonya chen in hong kong, 20 years ago, ken rogoff at the was talking about this.

the answer is you are floating or you are fixed, and then there is a pboc where they are their own rulebook. they controlled foreign-exchange dynamics in china, or has the market intruded in to change the formula? enda: it is clearly a managed currency, a manipulated currency. they had been allowing the market a greater say in recent years. this year, the yuan has been on a tear. it is at its strongest level since 2016 when you look at it against a basket of trading partners. we know that exports have been part of the recovery story, but china does control the currency. it controls it very tightly. i think they are trying to send this message that they are responsible global players, that they use the exchange rate as a weapon or a tool in the middle of all of it.

lisa: there's a question here as the yuan does strengthen, it invites more foreign flows into the country. does the pboc want to see that, or not so much? enda: we had record flows going into china. and the one hand, china is actively seeking capital, opening up their markets. that has been a big part of their policy push in the recent years. there does come a point where they are worried that it might trigger financial instability. they have warned about bubbles in recent months. they have said there could be a point where there is too much capital flowing in, but i don't think we are there yet. we have not heard the pboc pole and a levers to slow the flow of capital -- the pboc pull any levers to slow the flow of capital. tom: for those on radio, it is real simple. the history of 2005, where china

gives in and it is an ever stronger yuan for years, we revisit that 2014 strength with somewhat of a move down to the six level. jonathan: in addition, what is key here is the chinese authorities have been tolerating it. they have been tolerating the additional strength. do you expect that to continue? are we going to be laser focused on the fix all week, all month, for the rest of this year? enda: i think it will remain in focus, but the real turning point will come when the export story starts to lose steam. exports have been going gangbusters. therefore, they have been able to tolerate this strong exchange rate. when we reach the point where that manufacturing story starts to ease off, that is when you will see these exporters start to say, wait a minute, we are suffering from higher input prices and strong exchange rates that will put pressure on the people's central bank.

but there seems to be another message about managing expectations. jonathan: what a timely conversation. inc. you, enda curran -- thank you, enda curran, bloomberg chief asia correspondent. exactly one year ago today is where dollar china topped out last year, where we had 7.167 one. right now, 6.37 on dollar-yuan. some people have started to raise the question that maybe they would push back against some of the commodity strength by introducing may a little bit currency strength. they say it can't be used to offset the commodity price rise. they also say the exchange rate can't be used to spur exports either. maybe some weakness. the idea being maybe stability is the way forward. lisa: the idea also, it can be used to spur exports either, speaks to rising tensions

between the u.s. and china. we are seeing that joe biden has reiterated some of the rhetoric from president trump recently. he says the era of engagement with china is over. it is now going to be an era of competition. you wonder how much that is feeding into the pboc's stability call. jonathan: lisa alludes to the fact that this was i think the first talks between the two trade leaders in the last 24 hours. . tom: i should point out here, very importantly, this is what president trump on to. let's be honest about it. he wanted weak dollar to spur u.s. exports, and you never know how you get what you want, but president trump certainly has a yuan delivering at 6.377, on its way to six. jonathan: from new york city this morning, morning. things getting a little more interesting is the day grows older. peter tchir joining us next, academy securities head of microstrategy. your s&p 500 -- of macro

strategy. euro-dollar, $1.2198. crude heading south, down about 1% on wti. on radio, on tv, this is "bloomberg surveillance." ♪

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>> what investors need to differentiate between is first, where are we in the cycle, second, what is the direction in the economy. >> people are vaccinated and they are still not ready to go and do things the way they did before. >> what we see for most of the year is quite a bit of anxiety about potential inflation. >> we are looking for a slowing rate of equity gains. there are definitely some storm clouds we are concerned about. >> the fed's objective right now is managing expectations, and they are doing a great job with that. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.