♪ >> the fed to stop fixing to do something and actually do something. >> it is hard to have much of an inflation problem if wages are still quite quiescent. >> the fed is changing policy. >> regardless of what the fed does or does not do, the economy is going to go somewhere 6%, 7%, 8% this year. >> 2022 is going to be a year of deceleration. the economy is going to be growing slower. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom:tom: good morning, everyone. a simulcast, bloomberg radio and bloomberg television. a jobs day after the humbling we saw 30 days ago. every economist missed the mark. jon off, police officer. romaine bostick with us -- jon off, asa off -- lisa off.

romaine bostick with us, and taylor riggs as well. matt miller earlier with a whisper number of the 800,000 level. taylor: we are getting ellen zentner around 7:30. i think what makes me chuckle is one of my favorite research notes said the sensitivity of those inputs means you tweak one little thing, you get zero jobs or one million. your guess is as good as mine. tom: give that woman a tang mimosa. what you need to know is we will be doing a lot of economics with ms. zentner. i thought her note yesterday was really interesting. james glassman with the pulse of this labor economy. but the market shifted yesterday off of claims at 8:30. to me, there was no question about it. you saw dollar stronger in the real yield moved.

romaine: actually did move, and this has been the talk for quite some time now. we have seen a market moving sideways for the last 5, 6 weeks or so. they have been waiting for a bit more clarity about the economic picture, and more importantly, what the reaction function from the fed is going to be. navy would get more clarity out of that -- maybe we'll get more clarity out of that number. tom: let's set it up with a data check. romaine and i will struggle to be on the edge of moscow. red and green on the screen. not much going on there. centre tendency on vix, 18.04. the dow is at 35,540. to me, this is not a small issue. we have really seen oil persist here at the $70 level. romaine: remember, we've got a

big catalyst potentially next week with the resumption of iran talks. it will be interesting to see if a deal is struck and whether they return to the market and cause a little more pressure to the downside. tom: i mentioned that two-year yield. it has a just a little bit, to say the least. 0.1 6%. but the 10 year yield, ro maine, your thoughts. taylor: magnetism, as taylor would say. we haven't made a meaningful move above 1.7% for quite some time. we haven't made a meaningful move below as well. people starting to say one forget clarity on the economic data, 1.9% is realistic this year. taylor: let's talk about the magnetism of an 8:30 am u.s. payrolls report. that's pretty much the only thing we are going to be focusing on here. we are going to count down from 8:30 and then take you into the open at 9:00 a.m. that will be wage growth, and of

course, the nonfarm payrolls. 9:55 a.m., i shared the open with you as you interview our u.s. labor secretary marty walsh, as we know him from boston. that interview will be coming up. in: 15, we hear from the president on that jobs report, so we will have to get some comments. if it is good, what does that mean? if it is bad, what does that mean? we certainly think the fed will remain on pause despite any of the numbers we continue to get this morning. tom: again, we've got wonderful conversations coming up on the mystery of 30 days ago, the shock to the markets, and where we are now and forward. priya misra joins us now, with td securities, global head of rates strategies. i've been really looking forward to this on the nuance of full

faith and credit. what have you seen in inflation type securities in the last number of days? priya: thanks, tom. it has been the most interesting part because as romaine was saying, the tenure has been camped out, 1.60%, but it has really been inflation tips that have been going up in price, or i guess lower in yield, pricing and higher inflation exhibitions. what that has done is it has taken real rates significantly lower. i think the market is too complacent about not talking about talking about tapering. if today's number is actually solid, i think the fed starts to talk about talking about tapering potentially as early as the june meeting, but more likely in the september meeting. that is when those real rates need to rise. i think in place and expectations are well priced. it is that real rate component,

given also supply we have to take auction after auction. taylor: if the fed does indeed start to talk about tapering, if there is more positive news later this summer, where would that show up? where are the markets being too complacent? priya: it is really the belly of the curve, the five to 10 year sector. the long and has demand from pensions. the front end is anchored by the fed. that is not likely to hike anytime soon. it is really the five to 10 year, we have a ton of supply coming in. there's no natural buyer. i understand it is a symptom of inflows. they have to slow down because as people realize there is some risk we haven't had to deal with for a very long team -- a very long time, as duration risk starts to show up in portfolios, it is the belly of the curve i worry about. romaine: when we talk about what the reaction is going to be, a lot of people focus on inflation numbers. they are also focused on some of

these secondary employment numbers. the idea that powell and the rest of the fed have made it clear that they want to address some of the inequities in the economic recovery and try not to repeat some of the mistakes that were made coming out of the financial crisis. how do you model that when you are trying to get a sense of when the fed will move and how aggressively they may move? priya: great question. that is a reaction function around the first hike. i do think this reaction function is much easier. they want an inclusive labor recovery. they want inflation to overshoot. i think what will happen is when we start to price in tapering, i have to say that the hay bring bar is not that high. we need -- the tapering bar is not that high. we need substantial for the progress. as the rate starts to rise, it could take the front end. the tapering threshold could come much sooner than that. tom: let's go back to first

principles here on jobs day, which is to frame the tenure yield. we've had a move, and now there is legitimate stasis. is your vision out, as we heard from a guest yesterday, to a 1.85%, or 22% or higher? describe that path sure to to bring -- or to 2% or higher? describe that path for us. priya: we actually think the june fomc will still be dovish. in the very near term, i've got a 1.75% for fax -- 1.75% forecast. that's will bring investors from risk assets from other areas. so i think there will be buyers, but not at 1.85%. if the fed is stepping away on we have all of this supply to take down, real rates will need to rise to take the omelette tenure to 2% to bring buyers --

rise to take the nominal out of the 10 year to 2% to bring in buyers. our forecast for growth next year is lower. we will be dealing with fiscal drag. the reopening impacts will go away. so do investors start to reduce some of their risk asset returns as well? maybe real rates at 50 basis points on the 10 year or 0% on the tenure will start to look attractive. 2% or 2.5% on the 10 year i think is equilibrium. i think that is the level where you do bring buyers in, for safety as well as liquidity. there is some role for that in

any portfolio, i would argue. tom: priya misra, thank you so much. priya misra of td securities. it will be fascinating, as taylor riggs mentioned, to see where the short-term space moves as well. much going on on a friday worldwide. the bank of international settlements does what they do best. the central bank for central bankers, or i should say the central banker for central banks , that's right, they have gathered together on climate change and what central bankers can do there. a discussion with christine lagarde and jerome powell, among others. this is a real set of worthies trying to figure out how monetary dynamics fold into better gdp and sustain gdp among climate change.

it is a different effort than the paris accord, which really went to the documentation of data coming off of cities and smaller institutions. taylor: and i have to say, larry think of last week i think talking about the higher inflationary trend as we shift to going ev, to going green -- larry fink of blackrock last week i think was talking about the higher inflationary trend as we shift to going to ev, to going green. romaine: this is a push, and global push right now, by our monetary policy makers into that arena. tom: it really is. this is what bis does. i can't say enough about the institution. as one of our guests mentioned the other day, they are absolutely definitive on thinking through this event

called bitcoin. let me do a quote. romaine bostick insists i quote bitcoin, $36,800. we have not mentioned amc in at least 12 minutes. we will fix that problem when we return. salida subramanian on the equity markets ash savita subramanian -- savita subramanian on the equity markets when we return. ritika: traders are waiting to see what the u.s. jobs number is like. the may on and limit report is out at 8:30 new york time -- the may unemployment report is out at 8:30 new york time. economists had forecast a big number for april. instead, employers added just 206 t 6000 jobs -- just 206 t 6000 jobs. -- just 266,000 jobs.

evidence that the british economy is bouncing back after last year's recession. president biden is turning to taxes as a way to get a come or my's agreement on infrastructure -- get a compromise agreement on infrastructure. for now, the president is setting aside his proposal to raise the corporate tax rate from 21% to 28%. the european union regulators have opened a formal investigation into facebook. they want to know if the social network violated competition rules by using data gathered from advertisers to compete against them in classified ads. facebook says it will cooperate with the investigation to show that they are without merit. nvidia is in talk to sell universal -- to sell universal music group at more than $42 billion, include debt. vivendi plans to spin off most of umg later this year, listed

in amsterdam. 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. ♪

♪ >> what the economy really needs right now is a way to help

people for the jobs of the future, the businesses of the future, and for the kind of plans that president biden is proposing. unfortunately, the opposition is not proposing much either. tom: really thrilled to have him on yesterday, with bill dudley. hubbard and deadly really speaks volumes about -- and dudley really speaks volumes about our booking team. taylor riggs and romaine bostick in for jon ferro and lisa abramowicz. joining us now, josh wingrove is on the lawn of the white house this morning, our white house correspondent josh, i think of -- i think "the washington post" had it beautiful. it was a photo of the gentleman from oregon, a personification

of what the democrats face. he won like 110% of the vote in the 1990's and his oregon district. last time around, he barely won because of the coming on of the republican party. how does that dynamic fold into this infrastructure and transportation debate? josh: absolutely, he's been an advocate for infrastructure. democrats believe their path to winning or holding onto things in the midterms is typically to get things done. regardless of whether that will deliver them the midterms or not, they figure they might as well get things done because the alternative is they lose and they won't be able to get much done at all. so we have seen joe biden continue to negotiate. he's going to talk to senator capito today. maybe we'll get a bit of an

update, but i wouldn't bank on a deal today. tom: the president of the united states was an action with a democrat from oregon, not from the liberal wing of the party. are they out of the picture now? josh: i wouldn't say that. the president stepped in a bit this week when he took an implied swipe at least at joe manchin and kyrsten sinema, the type of endangered moderate democrats trying to hold together the coalition. the progressives were very skeptical about joe biden when he became the nominee, when they begin to president. so far, they have been more or less ok. this infrastructure package is a bit of a crossroads. in particular, what is he willing to take off the table to get a deal with republicans if there is a deal to be had? i think a lot of democrats remain very skeptical of whether that is the case. he's going to turn around and maybe do something with democrat only votes, but then he's going to run into the wall of joe manchin, and we will see where that goes.

but you're right, this is a democratic party torn between the progressive wing, the more urban wing, and other members who are sort of scattered in different districts saying don't forget about the rest of us. romaine: in addition to keeping that coalition together, there's obviously the big question about some of the tax policies he's been promoting, both in terms of the specific ones here for the u.s., but we also know that yellen is on her way for the g7 summit and is going to be pitching what would effectively be a minimum floor globally. whether the rest of the world will go along with that were means to be seen. how much of that can actually work in biden's favor with regards to what he is trying to negotiate in congress? if they do move away from that corporate tax rate that was first floated and to some sort of minimum tax that the developed nations would embrace? josh: it is something he dangled out there for republicans this week. our colleague reporting on that, that he said, what about 20%

with all of the various write-offs? why don't we do sort of a floor? he's taking on amazon and others, big companies that have paid little or nothing in federal taxes recently because of all the ways they are able to minimize their tax bill. republicans i think are going to be cool to this idea, but they might have a crossroads here. are they willing, with a rather a 15% floor than biden just tried to ram something through under part of entry rules with democrat votes only? broadly speaking, biden borrows from trumpism when he can, when he is willing to, and one thing is the almost populist lunch pail pro-worker message. he's been very willing to take a bit of a hammer to corporations for stock buybacks, for excessive ceo pay, and in his view, not paying enough in taxes. taylor: where does the conversation stand on debts and deficits?

we were speaking to a professor saying that there is no amount of increased taxes that can help push off the rising debt and deficits. you have to start to bring in the private sector. has the white house looked at bringing in the private? -- the private sector? josh: they haven't talked about that publicly, but there almost isn't any in washington, to say the truth. president biden's budget, after joe biden could still conceivably even be president would his measures begin shrinking the deficit rather than expanding it. let alone closing back to a zero deficit scenario. so deficits just seem to be the reality of it. ayden has come on the flipside, argued that he doesn't like deficits in order to support his tax hikes, saying we can't just deficit finance everything. we need to pair infrastructure

spending with tax increases, with a corporate tax or otherwise. on the other hand, his budget sees them as far as the eye can see. tom: thanks so much, josh wingrove, on this job stay. lots to talk about on jobs, on economics. some good guests coming up. certainly, romaine bostick, we have to turn to amc and what we continue to see. is the short squeeze over from where you sit? is the fireworks done? romaine: i think the short squeeze was over a while ago. when you look at the volume and the amount of money that other than swapping hands here, this is less about the short squeeze and more about i don't know if you would to call them true believers or what, but people jumping into the stock despite the fact that the trendline has been down the past couple of days. but there's been no lack of ability to sell your shares. usually when we have a short squeeze, you can sell, and that is what pushes the prices up. the volume is just as high as it has ever been over the last few days, yet we continue to see it drift lower in the premarket,

and of course, the company seemingly going to take advantage of this again but putting more shares out there, but not until next year. tom: what will the traders look for today? into the weekend, is that a big deal? romaine: for the types of traders in this, i'm not sure that is a big deal. if you believe there is a true fundamental rebound story here, maybe you stay camped out of this at $48 right now. i think most analysts you talk to on the street will say the fundamentals really don't match up right now with the price. taylor: if you want to trade on the weekend, just going to bitcoin. it doesn't close. tom: i've noticed that. it has a life of its own on the weekend, maybe based off of mr. musk's tweets. taylor: i hear there's a breakup. tom: we will have to see. right now we are focused on the jobs report. lots to talk about here, and of course, we go beneath the headline data and exactly one hour.

i'm looking at labor participation. to me, that is the heart of the matter. we are distant from where we were valentine's day of 2020. coming up, islands and their of morgan stanley. stay with us -- ellens and mayor of morgan stanley -- ellen zentner of morgan stanley. stay with us, on radio, on television.

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♪ tom: "bloomberg surveillance." good morning, everyone. it is jobs day. we welcome all of you. we will address the data in exactly one hour. last month, without question in my career, the biggest miss ever, a lot of which has been rationalized. i will be speaking with marty walsh of the biden adminstration in the vicinity of 9:50 five this morning. taylor riggs with me this morning, and also romaine bostick. do you go with amc or start with something a little bit removed? romaine: let's start with amc. it continues to be the biggest mover out there premarket. unfortunately, the trendline for the last couple of days has been down. you can see at down about 5% in

the premarket. another potential share sale coming down the pike here. the ceo making it clear they are going to take advantage of the recent elevated price action to get its balance sheet right. also, keep an eye on pershing square, the biggest spac ever raised here. last july, they raised about $4 billion. apparently in talks to strike a deal to buy 10% of universal music group, so billie eilish and bill ackman may be breaking bread at some point. keep an eye on coinbase. another cryptic tweet by mr. musk enough to take down a lot of the crypto stocks. we've been talking about amc and the meme stocks, but there are a lot of stocks with real fundament of value that have been rallying. ford is up 3.5% on the day. this is one of the best-performing stocks of the year, up more than 80% year to date right now. a lot of enthusiasm coming into this company and its ev

strategy. that is apparently going to continue, and there's a fundamental story that says $16.55 might actually be lower. their post financial crisis high as around the $90 level. a lot of strata -- around the $19 level. a lot of strategists and analysts think you can reach that level. facebook down with the eu investigation into some of its competitive practices. wells fargo, interesting upgrade from the folks at of america. this is primarily -- at bank of america. this is primarily a valuation call. a lot of people jumping back on the wells fargo train after jumping off a couple of years ago when they were dealing with all of those -- tom: and i know some of the growthier guys really reaffirming what you show their with those stocks today. "bloomberg surveillance" now less than one hour to the jobs report. we continue our coverage here.

romaine bostick and taylor riggs in for jon ferro and lisa abramowicz. joining us, ellen zentner of morgan stanley. i first came to you when i noticed your wonderful work on consumption. we all see the consumer has been a goods producing consumption. when do we shift over to service sector doing better than goods? ellen: we are seeing service sector spending pickup. it is still lagging behind the sheriff spending that was taken by durable and nondurable goods -- the share of spending that was taken by durable and nondurable goods. capacity is now open in about 49 of 50 states, not fully, but a good deal of the way. service spending will continue to pick up. but i would love to see in our consumer surveys is that the preference for experiences over things does not change. kobe does not change that.

we just weren't able to experience all of those wonderful things that create memories until now. we will continue to catch up, and over the course of the year i think we will see the share of go to services, back towards its pre-covid level. tom: across your career, we have always seen the zentner humility meter. it spiked 30 days ago. that was really something, to see so many people get this natural disaster in our labor dynamics wrong. are we setting ourselves up for another humbling moment here in and our -- in an hour? ellen: if we look at consensus around 650,000, it is around middle ground. we are all saying that april was a one-off, that we are not going to get that kind of weak jobs print again, but we are not saying that we suddenly expect that in may. so i can say there is downside

risk in the friction that we are keeping people from going back to work that is still present in may. we still see the anecdotal reports of missing workers and having to pay out for workers that is still quite prevalent, but you can also say that there's upside. there were a lot of positive things in the employment data last month that just didn't quite get captured. i think what we should do is expect to be surprised. taylor: given the wage dynamics you just described, what are the key drivers for the decline in workers and the average work week? ellen: it is a good question. there are a few different metrics that we follow for gauging rates. average hourly earnings is probably the worst one of those, but apparently, that has been this payroll report, so the markets follow it. when we are bringing back low-wage workers, and that is

the bulk of the jobs we are creating because that is the bulk of the jobs we lost, the more we bring back those workers, the more it depresses wage gains because there's a mix of things here. they are dragging down the average. so average weekly hours is actually a great metric, and that tells us that part time, we are starting to add more hours to the work week or we are bringing back more full-time workers. so we want to see that move up. average hourly earnings right now is so volatile and marred by all of the comparisons to last year, so i would sort of put that aside and focus on the fed's preferred measure, the employment cost index, but we don't get another reading on that until july. taylor: push us forward to june, july, the rest of the summer into the fall. is wage inflation the type of good inflation that the fed likes? ellen: that is a deep debate within the fomc and with the economist community. there's two different kinds.

you could have higher wages that lead to a wage price spiral. that would be sort of 1970's style. we haven't seen that in a very long time. or you could have wage increases because prices have been rising, and workers go in and demand more wages. that is more of what we are seeing today, and that seems to be more durable. i think that is what the fed has to wrap their heads around. we are seeing wage pressures because prices are increasing in the minimum wage at which a worker is willing to pay to go back to work has been rising. the interesting thing is it has risen the most for the lowest income groups, which makes sense because we had a tight labor market there because people are not willing to go back to work, but it is also rising across the high wage and middle wage paying industries as well. so this is something the fed really needs to watch. we think these wage pressures are more sticky, and that means

households are more price tolerant, and there's even more chance for business is to pass on those price increases and become more durable. romaine: with regards to the willingness of some of those folks to go back to work, you look at the ratio of unemployed to job openings, how much of that is being driven right now by some of the fiscal policy measures and proposals out there? ellen: that is probably the second most debated thing within the fed. i can point to at least six different studies out there, good academic studies that say yes, the generous unemployment benefits are having an effect, and those that say we don't find they are having an effect, or that they are having an effect, but it is no greater than health concerns and transportation issues and childcare issues. the fed beige book released yesterday, which gauges conditions across all of the federal reserve districts, has 44 mentions of unemployment benefits keeping people from work, but the other district says no, it is similar to

transportation, childcare, and other issues as well. what we do know is that people will get more comfortable coming back to work, but they are demanding more wages to do it. what we will do is the 24 states that have now decided to stop these benefit surly -- these benefits early, starting next week all the way through july, will start to watch the state-by-state data to see if that is really having an effect. romaine: one of the big divergences in opinion i hear from portfolio managers and market strategists is trying to pin where we are in the market cycle. as an economist, where do you think we are right now in that cycle? ellen: i think we are much further along than people suspect. the argument i can make is that this may not be a new cycle. we are picking up where we left off in the last cycle, except we've got $5 trillion of stimulus behind us. if i look at all the deleveraging that normally goes on, there was none.

if i look at the concerns within certain segments of corporate credit that we were concerned about late cycle in the last cycle, that is still the concern today, except you have easy monetary policy and fiscal stimulus behind it. so we are seeing the inflation pressures we would normally see midcycle, and we have not needed to deleverage the household balance sheets. everybody agrees that we should assume that we are midcycle and conduct ourselves accordingly. tom: ellen zentner, think you so much. greatly appreciate this and your follow-up after the jobs report at 8:30 as well. i look at the dynamics right now in the economics space and how it will fold into the market, and after the humbling 30 days ago, you wonder where we will be at 9:30 when we open. taylor: a really great chart showing that the markets love those big misses because it means there's more uncertainty

about how the fed will and when they will react, so the markets certainly enjoying perhaps the big surprise that some of the economists -- the big surprise, but some of the economists, may be not so much. romaine: i think a lot of people have forgotten about it for the time being. they will probably re-embrace it, i'm sure. but when you look at apple, microsoft, all of them really, you're talking about all-time highs for a lot of these companies all the way back to january and early february, they really haven't been close to them ever since. a lot of people have been focused on maybe some of the more momentum stocks, for lack of a better term, but we cover this all the time. as you know, taylor and i host another show called "the close." we were told you needed help this morning, so we are here. tom: absolutely. thrilled you are with us this morning. romaine: you should come cohost "the close" with us. tom: that is in the middle of

the "surveillance" nap, as we call it. [laughter] it's a shameless plug. "the close," 2:00 p.m. stay with us on radio and tv. the jobs report in 40 minutes. good morning. ritika: president biden hasn't given up on trying to get republicans on board with his infrastructure proposal. he's raised the possibility of a 15% minimum tax on u.s. corporations, along with tougher irs enforcement efforts. the white house says the president has not abandoned his goal of raising the headline corporate tax rate from 21% to 28%. he is just setting it aside for now. president biden's revamp of donald's china blacklist leaves room for dialogue -- of donald trump's china blacklist leaves room for dialogue.

americans are banned from investing in them. unlike the previous order, it does not affect the subsidiaries. that leaves both sides open for discussion. apple is trying to keep momentum going for ipads, whose sales were rejuvenated during the pandemic. they are said to be working on a new ipad pro with wireless charging, and a new mini for the first time in six years. shares of amc trading lower. yesterday, shares saw another wild ride. it lost 40% of its market value, then regained more than half of that. at the same time, emc raised more than 547 million dollars by selling new stock. bitcoin fell after tweets from elon musk apparently hinting at a potential split with the largest cryptocurrency. it dropped more than 5% at one point to trade under $37,000.

in a tweet, musk wrote #bitcoin with a broken heart emoji. i'm ritika gupta. this is bloomberg. ♪

>> the integrity of the markets is crucial.

we've seen a lot of newcomers into markets and a lot of coordination of those newcomers in markets, and ways we hadn't seen before. people using technology. so regulators need to be aware of that. market participants need to be aware of that. tom: starting us strong this morning with the booth school in chicago. it's been a really good series of guests here on the moment, and it is jobs day. it is about the dynamics of the labor economy, but is also about much more. the linkage into the financial system, we've all been distracted by whatever it is, the new gamestop, amc. romaine bostick and taylor riggs in for us this moaning. david wilson with a chart ready for radio, and it is about those dow components to be. are these going to be dow components? dave: i wouldn't go that far, but it is russell reconstitution month in june. the russell index gets a once a

year overhaul. we actually get preliminary lists of the companies there will be in each index today. the process plays out over the next three weeks. then on june 28 come over her the opening bell -- on june 28, before the opening bell, we get the newly reconstituted index. tom: and if you get bigger, you are tossed out, right? dave: that's sort of how it works for the russell 2000. it is going to be especially noteworthy this year given the rise of amc entertainment and gamestop. i ran the numbers on the bloomberg terminal, found out that those two companies account for 7.5% of the russell's gain this year between them. we are talking about an index which has more than 2000 stocks at the moment, according to our data. tom: let's cut to the chase. if somebody listened to their financial advisor and bought passive funds including a

russell 2000 fund, they own these stocks. dave: absolutely, and they won't own these stocks a little more than three weeks from now. that's the thing. it is all going to change. . i did a list of the top 10 influences on the russell 2000. that's what the chart shows. everyone of them, as it turns out, has a market value that is high enough that the companies would be promoted to the russell 1000. certainly that is the case with amc and gamestop. will your index is now is not going to be what it is come the end of the month. taylor: i am still trying to teach romaine the difference between mean and median. where are the forecasts relative to the median in the russell 2000? dave: that's an easy one, median versus mean, at least for someone who has been doing charts for years. both amc and gamestop are well above the median for the russell 1000. you see the numbers there. $15 billion compared with $1.1

billion for the russell 2000. it shows you, even if you were to see these stocks fall as amc is doing today, they would still be well within the range to move to the russell 1000. so there go your biggest influences on the russell 2000 because of an index overhaul. romaine: what is the influence on the dow? dave: well, i don't know. we will figure that out when the dow gets reconstituted. actually, that is a good example -- romaine: will he get reconstituted with the meme stocks? dave: i don't know about that, but this a rolling process. companies come in, companies come out. with the russell index, it is once a year. that's why there is so much focus on this reconstitution. tom: you can see that on david wilson's various properties today, sticking outlook a sore thumb, gamestop, amc, and the

rest of them as well. taylor, let me go to you first on this. i think it is really important the diversification debate. it is always out there within our retirement plans, and it comes out to a blended strategy or as a barbell strategy. which is reigning supreme now? taylor: barbell. i hear that all the time. you've asked romaine about big tech, and you have to have some exposure, but you also have to have some exposure to that reflationary cyclical growth trade. that is where the financials, energy come in. they are up 40% year-to-date. they've been the big outperformer is everything will day. every single guest we have on "the close" says don't ignore big tech either because those structural issues that underwent 2020 aren't necessarily going away. romaine: a lot of the structural changes we have seen in this market is that some of those big names, those former momentum names, have to some extant become safety names.

we see these pullbacks in the market and you see flows go back into the macro softs and app -- the microsofts and apples of the world. tom: is that a production? romaine: i don't make -- is that a prediction? romaine: i don't make predictions, but we have seen flows going into those big mega cap names, and we will probably continue to see that as the cycle goes. on the bloomberg terminal, you see that rotation and see how it goes back and forth with these weak week, month-to-month -- these week to week, month-to-month moves. tom: is it good jobs report, yields higher, don't own the preferable techs? romaine: that would be the script, but that script, in your words, probably got ripped up a while ago in the fact that yields don't seem to be budging that much off of this data. taylor: i think gina martin adams told us yesterday, correct me if i'm wrong, it is 12 hours ago and i can barely read member, that everyone thinks higher yields hurt, but not as much as they hurt other sectors. tom: where are we on banks?

there's a load of cyclicals and values to go to. but on global wall street, where are banks? is it still curve steepening 101? dave: last friday -- taylor: last friday, everyone said curve steepening is here. they are betting on further growth out, steepening the banks. romaine: we should have had this conversation before i took cfa. taylor: how did that go, by the way? romaine: i learned a lot. [laughter] tom: these are the questions the pros are going to write about off of the jobs report this weekend. i would suggest everybody is waiting for this report this morning to rewrite their midyear review. the midyear review is about better economic growth than what anybody expected. taylor: we .2 michael gapen of barclays, who we had yesterday -- we point to michael gapen of

barclays, who we had yesterday striking a different tone. he's looking at a gain of 0.3% and the work week to remain unchanged, a different tone than what we heard from ellen zentner, looking at a decline in both of those. romaine: but the markets have reckoned with this idea that we are peaking, and now we will get down to whatever sustainable growth is going to be. there's a lot of people still priced at peak levels rather than at that the sustainable growth level. tom: i thought carl riccadonna of bloomberg intelligence, their chief economist, was absolutely brilliant on the jobs out there, the obvious bartenders, restaurants, service sector going back, but he underscored the need, the tepid data as well, that is going to lead to a very nuanced report. we will give that to you here in 35 minutes. red and green on the screen. really interesting to see what the tape doesn't the next 30 minutes. we will drive forward the conversation.

david jones of bank of america securities is a decidedly different global investment strategist with some serious imf analytical credit. stay with us. it is jobs day on radio and television. ♪

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>> it's hard to have much of an impatient -- of an inflation problem if wages are still quiescent. >> people will get more comparable coming back to work, but they are demanding more wages to do it. >> the market is a little too complacent about the fed not even talking about talking about tapering. >> 2022 is going to be a year of deceleration. the economy is going to be strong, but it is going to be growing slower. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on a jobs