♪ >> we are going to be shocked at some of the inflation views over the next few months. >> we look at the economic data, and so far, so good. >> what we've got is just a reshuffling. >> i do not see an inflation phenomenon kicking in. >> i see inflation in commodities. i see inflation and some supply chains, some goods and so on and so forth, but there is no generalized increase in inflation. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is an exciting one. 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. equity futures this wednesday morning moving higher by three points on the s&p 500. do you like anticipation there? just a pause.

thank you, tom. we touched on this a little earlier. is q2 the calm after the q1 storm or the calm before the q3 storm? tom: we are really going to begin to focus on that. we've got the jobs report friday, but our guest as we begin in a few minutes is really going to dive on board on the beliefs from fed, front bonds into the equity market -- from fed, from bonds into the equity market. jonathan: 1.60% on tends, -- on tens, basically on average we have been for the past couple of months. lisa: the idea is that there is nothing to change the view right now that the fed will remain patient, and frankly, to counter their view of a transitory inflationary push. should that change, which it very well may in august or

september in terms of taper talk , that could be very disruptive, especially given positioning in market right now. jonathan: amc in the premarket up by 27%. tom: why? jonathan: you tell me why. tom: is this just another short squeeze? jonathan: i think it's a lot of longs going on. $230 million with a capital raise yesterday, and i don't think we have ever seen anything like this. to take the equity and then flip it and then say it is called overvalued, i just found that remarkable yesterday. we spent a lot of time talking about the equity story. let's talk about the debt story. the 2026 debt, the junk-bond due in 2026, now we are close to face value. for everyone sitting here in

saying this is just a retail story, no one else is benefiting, take a look at what is happening with the credit. it is pretty remarkable, the turnaround there. lisa: mc has gotten help from a lot of different players -- amc has gotten help from a lot of different players. all of the money flowing into the junk-bond market, even with no one going to the movie theater in more than a year. the idea that my drink -- that they have benefited from the equity side of things, there's a real question, are there retail traders, the reddit crowd that are piling in because it is popular that are helping some of these hedge funds make these incredible trades? people say hedge funds suffered from the reddit crowd. how much are they benefiting by taking advantage and cashing out of some of these distressed names? jonathan: equity futures this morning up three on the s&p 500, 42 of 0 -- s&p 500, 4201.

it's improving by three points. in the bond market, 1.6011%. wti crude up by a little more than 1%. your dollar stronger through g10. euro-dollar, $1.2171. lisa: the thought leadership today comes from the ecb's christine lagarde. this comes on the people of the greens event the talks about climate -- the green swan event that talks about climate change. she will talk about how the ecb will extricate itself from the policy it has currently implemented. how will it up down should conditions deteriorate further in the euro zone? 2:00 p.m., the fed beige book. really interested to see how much clarity it gives to the employment picture. the idea that we don't

understand why there are so many job openings, and yet so many people still out of work. is it childcare? is it enhanced unemployment benefits? is the fact that people are worried about their health and going back to the office where the restaurants where they work? this is also very interesting in terms of how much momentum there is behind a bipartisan bill to fund infrastructure in the united states. president biden is meeting with shelley moore capito, the senator leading the infrastructure effort for the bipartisan bill. how much are we actually getting from the republicans, and how much is this taking money that was allocated to other things and shifting it over to this bucket? jonathan: following what you might consider to be a really boring session yesterday, when we were down 0.05% on the s&p, that has largely been the story. at the surface level it might look a little boring. beneath the surface, energy

equities were up another 3.93% on the s&p 500, taking the year to date gain for the energy sector to more than 40%. andrews lemon -- andrew slimmon joins us now from morgan stanley investment management, senior portfolio manager. why do you expect to see more of the same? andrew: because they are underground. think about how often people talk about enp versus how often people talk about tech stocks. i just think that the positioning amongst managers is still in yesterday's winners, and people aren't facing the fact that energy and financials are classically doing what they all do. cyclical stocks are leading the charge coming out of the pandemic last year. tom: describe the pressure on

institutional portfolio managers to rebalance toward an r squared that is pretty much towards one. andrew: well, there is pressure, but i think that i look at this recovery, as much as a pandemic we never experienced before, the way the market has acted is very typical, which is cyclical stocks work. the problem is it is behavioral, which is people embrace what has worked in the past. and the fact of the matter is every time value since 2010, until this pandemic, every time value stocks start to work, they faded. i love this saying, it paid to own growth stocks and rent value stocks.

but since the pandemic, my argument is the fed's changing policy, and i think going forward, it is going to pay to own value stocks and rent growth stocks. but behaviorally, that is so hard to do because that is not what has worked. so i think there is an effort. you've got to figure out how to tilt your portfolio relative to the benchmark, and i think people are still tilted in yesterday's models. lisa: can we really outperform if the yield curve doesn't steepen from here? andrew: i think the yield curve will steepen from here, and i think there's two reasons why. if you go back and look at when the fed did taper in 2013, there was about a 6% decline in the market from the time that ben bernanke hinted at tapering until they actually tapered. there was one brief 6% decline, and then the market rallied

another 17%. but financials did very well in that environment. but leading up to tapering, financials also did well. so i see it as if the fed sits on the sidelines, i think financials will do well because they won't have the kind of margin pressures. but if they do taper, i think the yield curve will steepen. i see it as a win-win for financials. when we look at the cheapest stocks in the value bucket, it is mostly in the financial area. so i think that an energy will continue to be the big winners this year and force more and more. the other important thing to consider, there's a new constituent of buyers into these stocks. that is the momentum players. i want to give you a statistic. last week, the largest momentum etf rebounded from 2% financials to 32% financials.

it went from 43% technology to 18% technology. so there are now this cohort called momentum investors that are going to chase more into financials and energy then they have over the last year or multiple years. jonathan: andrew, got to leave it there. andrew slimmon, morgan stanley investment management senior portfolio manager. energy equities up by more than 41% year-to-date. when you ask people like andrew, lori calvasina of rbc, how long is this story, for most people, the price action would inform the perceived level of ownership. but the pushback you get from the likes of bmo, rbc, and andrew slimmon suggesting they are not. tom: we spend too much time on

price and not on more substantial stuff. jon and i joke about the dow and the s&p, but this is really where the s&p shines, where you see the percent of energy now versus 10 years ago, etc. it is a really bold statement, the idea that the momentum players would overweight exxon. that is an original idea. that is something thought leaders haven't considered for years. jonathan: let's turn to another thought leader, lisa. i thought you ask the right question on the banks. can they succeed without a steeple your -- a steeper yield curve? the response, i expect a steeper yield curve. lisa: you see it start to flatten out a bit. then you see a do nothing, in tandem with this boring theme we also have. there's a question, though. what will cause it to steepen? is it going to be tapering? is it going to be higher inflation expeditions long-term? these things are at odd. jonathan: we will continue that conversation with dan morris of

bnp paribas at 8:00 eastern. going into that, futures are up three. we advance 0.0 7%. your bond market is calm. you can stay in bed if you haven't gotten out of bed yet. the euro it touch you weaker -- a touch weaker, down 0.3%. from new york city, this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the world's largest meat producer will have the vast majority of its plants open today following a cyberattack. jbs says it's systems are coming back online. the cyberattack forced a shutdown of all of jbs's u.s. beef plants, which account for almost 1/4 of american supply. bloomberg has learned a russian link hacking group is responsible. the u.s. and china have taken another step forwards towards restarting trade and economic

talks. treasury secretary janet yellen vice premier liu he had what they described as frank discussions in the first call. so far, the biden adminstration has retained much of former president trump's i cannot policies towards china. that includes -- president trump's economic policies towards china. that includes no reduction in existing tariffs. shelley moore capito and the administration have set june 7 as the deadline for a deal. republicans have countered the president's proposal with a $928 billion offer, but the measure taps unused coronavirus funds to pay for it. that may make it unworkable for the democrats. shares of amc soar in premarket trading after raising $230 million in a stock sale. bloomberg learned that mudbrick sold all of its stakes after

considering amc overvalued. 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. ♪

>> over a pup oh of time -- over

a period of time, these are the two most powerful countries in the world, with also a substantial amount of scientific expertise. and a period of time, we are going to have to work with the chinese and get through this period to deal with the pandemics of the future. jonathan: always good to hear from robert hormats there. alongside tom keene and lisa abramowicz, i'm jonathan ferro. wednesday morning, a quiet morning so far in the equity market. your s&p 500 up around two points. we are advancing 0.05%. yields are going nowhere, 1.6025%. the dollar showing a bit of strength, and crude is still positive, advancing one points in -- advancing 1% on wti.

tom: i would note for the first time this morning, green across the screen on the spx, the dow, and the russell. five or six things we can talk about here. benjamin bain joins us from washington. on china, it is a decidedly bipartisan washington. where are the points of disagreement between republicans and democrats as they look to beijing? ben: good morning. you are right, it is a decidedly bipartisan washington. it started really during the trump administration. what we saw was a really get tough on china approach. we saw bills passed through congress. we saw the trumpet ministry should take a tougher line on everything from chinese companies listing on u.s. stock exchanges and not complying with accounting rules all the way across the board to trade and some of the other issues now coming up with the biden white house. i think the points we are maybe

going to see some fracturing on our when we talk about some of the issues that are very import president biden. so climate policy, for example. i think there will be may be some areas where we see republicans and democrats differ. also, one thing we need to take a close look at is how far biden needs to go in terms of the tough rhetoric and looking at some of these chinese companies that trade here in the u.s. tom: there's going to be visits. all presidents do this. we are going to go to russia. i assume at some point there will be a chinese visit as well. will that be like -- what will that be like? ben: it is one of the biggest events we will see in washington when the chinese delegation does come here, and vice versa, assuming that occurs. this relationship, there's no real way to overstate its

importance right now. if you look at everything from the world economy, the world's two biggest economies, all the way down to what we are talking about with the coronavirus and its origins, there are lots of points of tension. it is a very thorny and important relationship, and everyone is going to be watching when indeed these two top leaders do at some point meet, be it in an international forum, in washington, or in beijing. lisa: tom mentioned russia. i wonder if the u.s. is going to have any response to the hacks that stemmed from russia, the attacks that affected the jbs meat processing complex. is there any sign that joe biden will respond directly to rush on this point? ben: thus far, not. i feel like we were just talking about the colonial pipeline and some of the same questions. i suspect we may be another couple months talking about what the u.s. response will be. cybersecurity, we don't always

know what is going on because it is such a dark world, if you will. thus far, the white house has not said what any response might be. there were some reports yesterday, including in bloomberg news, talking about the way the president and his team had been in touch with russia about the importance of dealing with what the adminstration was calling criminals inside of its borders. so we already have an indication that the u.s. is considering this to be originating from russia, so we are going to see exactly how the u.s. is going to respond. we haven't heard anything thus far that would indicate there's going to be some public response of import. lisa: as we hit the midyear mark, there's a question of how much momentum joe biden has really generated ahead of the 2022 midterms. what is your sense?

ben: i think we will know a lot more over the next two weeks. we will have a very watched meeting this afternoon between president biden and shelley moore capito, publican senator from west virginia who is leading the republican delegation in terms of negotiating this infrastructure plan. this is the one area the bonded administration -- the biden adminstration and republican lawmakers seem to be able to work together on, and both have it in their interest to get something done. so this is really going to be coming down to the wire here. the deadlines in washington come and go, but now we are hearing really the first week in june, second week in june, is when we will see if a deal happens here. that is going to do a lot to determine how much momentum joe biden has going forward because as you mentioned, we are going to get into silly season pretty quickly here, talking about midterm elections. everything becomes even more about politics then it is right now. this infrastructure bill i think is the litmus test for how much

moment he has going forward at how much momentum -- how much momentum he has going forward. jonathan: ben bain ndc -- ben bain in ac. i don't -- in d.c. i don't think you can agree on the size of a bill until you agree on the scope of a bill. they haven't agreed on what infrastructure is. until you have done that, there's no bill. tom: you are right, in the sense that the specifics aren't there, but they could jonathan: come very quickly. sure, you -- but they could come very quickly. jonathan: sure, yeah. tom: then you come up with some agreement. that's the old way of doing this. the real question is do we do old way politics, old-style politics? or are we in some form of new gridlock? lisa: and is this going to be a new era of fiscal discipline, or are we really going to do new spending? i see you laughing. jonathan: if anyone mentions fiscal discipline in the world we are in right now, it is quite

humorous. lisa: there hasn't been any consequence to the money printing in terms of higher inflation. yet, the republican counterproposal includes taking a lot of money that is already been allocated to programs and putting it into this bucket. i wonder how much is being priced enough fiscal spending that is greatly beyond what will actually get passed. jonathan: that has been a struggle to work out, a base case of what comes next from d.c. lisa: and the fiscal uncertainty is pretty big, considering the fact that right now, the proposals that the republic at -- the republicans and democrats are getting together on aren't as big as some others that have been out there. jonathan: ok. what is a fiscal hawk these days down in washington? lisa: i saw some fiscal hawks up in the adirondacks. jonathan: wasn't there a skinny bill? lisa: are you prepping your ted talk, tom? tom: i'm working on it. there's a headline out worldwide

, constellation to be taken out. this is constellation pharmaceuticals, not constellation beverages. jonathan: $34 per share in cash. coming up, daniel yergin. brent threw $70. this is bloomberg. ♪

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♪ jonathan: i think they call this a summer wednesday. i know we usually go with summer fridays, but this is a summer wednesday. the s&p 500 down not even 0.1% in yesterday session. right now, positive 0.03%. the nasdaq almost totally unchanged. beneath the surface and the s&p 500 yesterday, we saw a big move for energy stocks, adding to the gains your to date. energy and financials on the s&p 500 ripping. you have a blowout ism, and i say blowout because anything north of 60 should be a blowout, but we had a disappointment even in the 60's in what is happening

with the labor market. the employment component of the ism running just above 50, just in expansion territory. when you get the nice industry commentary from the ism, you get this breakdown through the sector, struggling to find the workers, struggling to meet the demand. that was captured in the employment component. that i believe had a six-month flow, and that is the story of the moment. great demand. we've got that clear. can we meet it? that's what you got to think about going into payrolls friday. in may ways, that is why we let conviction and why your bond market looks a little bit like this at the moment. we had the conviction, that relative story up things would get a whole lot better. your 10 year yield through q1 ripping, and then calm. since then, 1.6011% on the 10 year. nothing. on the 30 year, nothing. it is the calm in the bond market on a nominal yield because of a lack of conviction

about what the next couple of quarters are going to bring. tom: even the shock of a 1.59 percent handle, i think andrew slimmon framed it out nicely. it is a complete and total mystery. jonathan: right now on the 10 year yield, we go nowhere this wednesday. let's get you some movers. remain dropping by. -- romaine dropping by. romaine: amc, now i large-cap stock, rose more than 20% yesterday, up about 20% in the premarket today, right now hovering around $38. this comes on a day where we saw a downgrade over at citi from two of its competitors saying that a lot of the upsides for the smooth theater chains is priced in. at the same time, there's a lot of secular issues they will have to deal with with regards to the general drop-off in demand is a lot of people move back out. tom: is the move up in amc now

about people sitting on their couch trading, or is it about fundamentals? romaine: i don't know the answer to that. i think it is probably the former. there are people who will try to make the fundamental case and say this is a company that a lot of people thought would go out of business, so a lot of people are jumping back into the stock. right now it is well above where it was pre-pandemic. so it is actually trading above those levels before the pandemic really said in, so who knows? we will keep an eye on that space. keep an eye on tilray. amazon saying they will back federal legislation to legalize marijuana and eliminate testing for positions that don't involve driving. zoom also came out with their earnings, pretty good. there's going to be a big slowdown in revenue growth, but that slowdown is still going to be better than what the street was expecting.

i want to point out a couple of interesting ceo changes. at tyson foods, the ceo leaving after less than a year on the job. he replaced the previous ceo who was only there for two years. similar story with irhythym technologies. his ceo was only there six -- it's ceo was only there six months. and tesla, the meme lord himself, elon musk tweeting now about that chip shortage. these are probably his most pointed comments to date, saying it is wreaking havoc on tesla's supply chain, and that everyone is buying as many chips as they can, like the hoarding we saw with toilet paper during the start of the pandemic. tom: thank you so much. romaine bostick, "the close" this afternoon on bloomberg. there have been a set of books along the way, where late last

year, it was instantly my book of the year. "the new map" is by daniel yer gin right now. really a wonderful book to read on oil and our geopolitics. dr. yergin, thank you so much for joining us. it is $70 a barrel, up from $45 a barrel when your book was released. what is the disrupted future -- what does the disrupted future of oil look like? dr. yergin: glad to be with you, and thank you for making "the new math" the "bloomberg surveillance" book of the year. i think we are in the post-pandemic economy right now, and after all of the obituaries and everything were written for commodities, for oil, we have seen a rebound telling you that we are in a strong world economy. probably in our numbers, looking

at 6% global economic growth this year. tom: that won't bleed into demand. how do you frame the price of oil up? are we here, or do you go to $80 a barrel as we have heard from technicians? brooke and daniel yergin speak of $100 or can daniel -- or can daniel yergin speak of $100 a barrel? dr. yergin: it could touch $80, but we are still using $70 for our price at the end of the year. as economies open up around the world, motorists are on the road , and the opec+ countries putting oil back in the market, and even the prospect of iran coming back into the market soon still has to rile the market. lisa: there's this idea of discipline that a lot of the oil producers have regained, and that they are not going to overproduce for fear of cannibalizing from their future profits. at what point does the shale

complex come back on and see higher prices as something they just can't miss, and perhaps enhance their production? dr. yergin: that's a question that opec+ are looking at pretty carefully. the increase in recount we see is among private operators, not the major companies. so i think we will see the second half of the year u.s. oil production starting to go up again. but i think at a modest rate, and i think there is a new social contract between the shale producers and their investors, and that does mean that maintaining a certain discipline and not going for growth at any cost. lisa: can you elaborate what this social contract is? does it have to do with climate change, or the idea that their debt and equity has been whipsawed by the price action in oil, and that investors don't want to see that again? dr. yergin: it is your second

option. it is about money. any shale producers were spending beyond their cash flow. now they have turned around. some have dividends, variable dividends. they are paying down debt. that has been their focus that they have to show to investors, that they will be prudent managers. that comes with consolidation. we used to follow at ihs markit -- [indiscernible] tom: you and i remember esso and the rollup of many different oil and gas companies across this nation. what does it mean that the climate change activists have assaulted the board of directors at exxon? dr. yergin: it was not only climate change. it was an argument about how the

company has been spending money, about investment. i feel like that has been kind of lost to some degree in the focus about the climate. i think all companies are getting on board about a kind of net zero carbon by 2050, which has become almost the rulebook. that is what u.s. and other countries are going to seek to put into place in a much stronger way when they have their next meeting in glasgow in november. but i think what we have seen about the board of directors at exxon mobil is also a question about strategy, about where to invest, and obviously climate change has been part of it, but that is not the only thing. lisa: when do we get peak oil? dr. yergin: someday we will have a peak conversation about peak oil, i think. i take the view that it is probably around 2030. we are going to see strong demand right now. that is what we are seeing, demand increasing 7 million barrels a day from the first

quarter to third quarter. i spend a lot of time thinking about this. but i think around 2030 is when demand really starts to peak. that means this year we are selling about 3% new cars in the u.s. as electric cars. fuel efficiency has a big impact. recovery in the world, if we have a strong recovery, that is going to propel demand. so i would still use around 2030 as the expectation. jonathan: thank you, sir. always appreciate your perspective. ihs markit vice-chairman. turkish president erdogan stead earlier -- president erdogan said earlier, "it is imperative that we lower interest rates." we just got some headlines from the turkish central bank, releasing a presentation to investors from the governor, the central bank chief, who pledges to keep the policy rate above

the expected inflation, saying that the significant drop in cpi is expected from the third quarter. before you jump to conclusions and talk about pension between the central bank governor and the president, look at the language. "we pledge to keep policy and the policy rate above the expected inflation rate. policy in turkey right now has a policy rate of about 19 -- expected inflation rate." policy in turkey right now has a policy rate of about 19% right now. it gives you a little bit of space to cut interest rates, so i wouldn't jump to conclusions about there being tension this morning between the central bank and the president. i would imagine why that is not we are -- that is why we are not seeing a major correction off the back of this. tom: it is a stronger lire over the last couple of -- a stronger lira over the last couple of minutes. it is interesting to do detail -- to dovetail that in. you wonder what the deck of cards is mr. erdogan has. you wonder what his commanding

heights are as he moves forward politically and economically for the nation. jonathan: the culmination -- the conversation continues on bloomberg tv. at 8:30 a.m., lara rhame of fs investments. 4200 and a bit of change this wednesday morning. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. bloomberg has learned and notorious russia link hacking work is behind the cyberattack -- learned a notorious russia linked hacking group is behind the cyberattack on jbs. jbs says it will have the vast majority of its plants back in business today. the cyberattack affected operations at its meat plants in north america and australia. president biden pushing to close the tax breaks that helped

donald trump amass a fortune. he's proposing narrowing a provision that allows real estate investors to avoid capital gains taxes when they sell property as long as the use the profit to buy more. former president trump's most valuable investment benefited from the rule. in the price of oil was steady after closing at its highest since october of 2018. futures in new york slightly higher, and brent rose after settling above $70 for the first time since 2019. opec and its allies came out with an upbeat estimate for oil demand. oil is up more than 40% this year. zoom has come out with a sales forecast for the current quarter that beat estimates. that signals the company's ability to retain and add large customers even as the demand created by the pandemic eases. first quarter revenue almost tripled. and elon musk says the panic buying of semiconductors is like

the rush on toilet paper in the early days of the pandemic. musk says the chip shortage is wreaking havoc on tesla's supply chain, and blames companies for ordering more microcontrollers than they need. 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. -- and on bloomberg quicktake. this is bloomberg. i'm ritika gupta. ♪

♪ >> we do have a childcare problem in the united states.

we had it for a long time. it was exacerbated by the pandemic. i think as facilities open up, we are going to find people going back into the labor market. >> that was ed yardeni, yardeni research. alongside tom keene and lisa abramowicz, i'm jonathan ferro. we've got dollar strength out there, including against the turkish lira. . your lira is weaker, back down now to 8.59. did lucas president teeing up -- the turkish president teeing up rate cuts after saying he had spoken to the central bank governors recently. the central bank governors saying that fears of premature rate cuts are unjust, and that the expectation of early easing is meaningless. dollar-lira basically not reacting to those headlines at all. we go nowhere off of that. tom: we make a joke about it, but it's not funny.

it is serious stuff going on here, and it is political. it really is speaking to the geopolitics of turkey. jonathan: i would agree. the issue investors have right now is who is running the central bank. in terms of perception, not my view personally, and the perception of the fx market right now, there's a widely held belief that the president of turkey is also running the central bank. tom: for those not attuned to this, this is a really serious issue. we have a very strong is tumble bureau at bloomberg -- strong is tumble -- strong istanbul bureau at bloomberg news, and i am sure we will be hearing more from them. with stock markets, with turkish lira markets, we look for these comparisons, and you've got a major one. dave: absolutely. what you are looking at is the relationship between the vix index in the yield on 10 year treasury notes. it is a 20 day correlation,

basically a month. it shows you that the two are moving together, so bonds down, yields up. you are seeing volatility in the stock market up as well. the relationship between the two, the closest ends september 1999 -- closest since september 1999. tom: there's a range to this, and we are outside the home on the range. dave: absolutely. you've got a figure above 0.7. one is the highest possible correlation, when values are moving in lockstep. we got above that level last week. tom: this is incredible math with dave wilson. tomorrow he will come back with a four digit analysis. that is what we do on "surveillance." dave wilson, too short today. as we look at turkey, we have an expert, damian sassower.

how idiosyncratic is the turkish story? damian: everyone is pointing their fingers at credibility, but this is about dollar duration. non-lire deposit, them talking asked non-lir -- non-lira deposits have risen to 60% of total deposits now. do it is about confidence. it is about credibility. we've talked about this a dozen times. when erdogan steps on the toes of the central bank governor, all bets are off. we are seeing that in the price action this morning with the lira pushing to new lows. jonathan: do you expect rate cuts now? damian: i do. i don't think they were positioned to continue raising rates like the predecessor. i think that is what the market is expecting now, that erdogan is going to force the central bank's hand. they will be trading something

around the rate of 18%. jonathan: as you point out some of the policy rate is at 19%. if they come out with a set of forecasts at forecasts inflation rolling over a little bit, does that give them space to cut interest rates? damian: i think this is about sentiment now, about credibility. i don't think so, no. i think the market is going to keep pulling on this thread. erdogan has been -- erdogan has been very clear that he things higher rates are causing cost inflation, and that's where the disconnect is. until that is corrected, until there's a fundamental change in the way erdogan -- i think the market is going to continue pulling on that thread. lisa: when you look at the broader scope of the emerging markets complex, how much are other developing nations watching the turkey story as a

warning sign? basically, this they don't start raising rates soon, they could deal with inflationary problems, especially in light of some of the commodity price increases we have seen recently? damian: lisa, you are speaking my language. just this morning, we are talking about the rise in inflation over emerging markets. over the past three months, i think we have seven major emerging markets running above their explicit inflation target range, which is unheard of. three months ago, 15 to 17 emerging markets were in that range. now i think nine are running above. that is a big number. whether or not that is transitory remains to be seen, but it is certainly something you want to get ahead of. post global financial crisis, it was emerging markets that hiked first that didn't see that appreciation and their currencies. lisa: although rate hikes usually lead to slower growth. how much is this going to stymie

some of the momentum we have seen, at least in certain corners of the emerging markets recovery? damian: that growth is absolutely key in a post-pandemic world. this time around, it looks like central banks are really sitting on their hands here. they really need to get growth back online in order to get their economies right and/or -- and in order to fight the pandemic. at the end of the day, the market is pricing in a dot plot, so to speak. that is going to spill over into the greater e.m. comp >>. talking about the greater complex, mayorkas -- my eyes are focused on china. it is focused on the amc's and what is going on there. the reality is this is a fundamental repricing of china's sovereign risk premium. every bond, every loan, every deposit in china is based on on the premise that the government is going to backstop them.

now it is a pretty serious issue, quite groundbreaking. it is something i am laser focused on. jonathan: damian sassower of bloomberg intelligence, let's catch up soon. outside of this story, some broad dollar strength through g10. just a sign of how desensitized we have become to this story out of turkey, the idea that the turkish president is still saying these things and yet we have seen a move of their .6%, 0.7% on dollar lire i think speaks volumes. tom: you've brought up a chart, and there's a real acceleration here. you go back to the 1990's, and i am going to pick ecuador out, but it could be several other countries. it sustains until it doesn't. you wonder where that doesn't is for mr. i do want. -- for mr. erdogan is. jonathan: as damian brings up, the focus now on china. lisa: are they going to try to suppress the rise with some of

the measures they have taken for the first time? tom: all of our guests the next hour are thought leaders. jonathan: dan morris is one, from bnp paribas. this is "bloomberg surveillance ." heard on bloomberg radio, seen on bloomberg tv, this is bloomberg. ♪

>> i think we are going to be shocked at some of the inflation views over the next few months. >> we look at the economic data, and so far, so good. >> so what we've got is just a great reshuffling. >> i see inflation in commodities. i see inflation in some supply chains, some goods. but there is no generalized increase in inflation. >> monetary and fiscal policy have adjusted to all of those demographic headwinds. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.