♪ >> the market is becoming more concentrated and less contestable. >> right now people are focusing on low quality stocks, whether they are meme or not -- or not. >> we have a real recovery in process. i don't think the roaring 20's are the right analogy. >> i think inflation is going to run. that is a good sign. that is an economy getting back on track. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

on radio, on television, a simulcast. an exceptionally busy thursday. no other way to put it. romaine bostick in for jon ferro this morning. people emailing in, get romaine on to give us the meme update. romaine: that's why i'm here. [laughter] tom: the major news item out of cornwall, where the u.s. did a formal statement to the united kingdom about a week ago. really concerned about northern ireland, the republic of ireland and such. within the last three hours, disputing the report in "the times of london," jennifer jacobs. the official said the united states is not planning to issue any official rebuke over

northern ireland. that's one way to start things off. lisa: he's meeting with boris johnson, so it would be a surprise to come out with some sort of major rebuke today ahead of those negotiations. that said, still so many tensions underpinning these meetings. that cannot be overstated because honestly, even post trump, there are some remaining tensions. tom: a new atlantic charter. i'm not sure they will get in front of the prince of wales, the military pride of the united kingdom, for the signing of a new atlantic charter. probably in there is a paragraph on our markets because away from inflation, jobs, we need a meme update right now. yesterday was insane. romaine: and we keep talking about this rotation from one meme stock to another. you had context logic, clean

energy, a lot of stocks no one was really paying attention to. cleveland cliff, an old economy company, briefly became a meme stock yesterday for some reason. the rotation continues. this morning, some of that volatility is a little bit him to down. right now you are seeing a little bit of a holding pattern across markets as we wait for 8:30 a.m. new york time. tom: besides the shock of the chicago white sox, the other shock is gary gensler hasn't weighed in. did the chairman of the sec change tune? has he weighed in to derail the roulette of the meme stocks? romaine: they've made it clear that some sort of regulation or some sort of crackdown is coming. it is not really clear what that crackdown is or what it even can be. late last night, gamestop released its earnings and did provide a disclosure saying that the sec staff had requested documents about activity around

that surge back in december and january. it was kind of vague as to what was being requested, but the fact that the sec is looking into this should give a lot of people pause. lisa: there's another gamestop news item from yesterday. they are going to sell potentially millions of new shares. this is fascinating because they are trying to de-memify themselves. actually raise more money so they can try to update their business model to the amazon era, and this is the question. can this rally actually have some fundamental purpose beyond just a parlor game? romaine: and it already has. how many of these meme stocks were already bankruptcy cases, or just the potential of them may be going bankrupt during the pandemic, and have been saved during this run-up in the share price? they are in a healthier position. there's still a long-term case

that may be that business model isn't going to carry them much further, but for now they are any much better position today than they were six months ago. tom: so campers, what is our key take away from this discussion as we move forward to the data check? [laughter] it is the pendulum of de-m emification. [laughter] dow futures up 71. the vix comes in, 17.79. important inflation data coming out, and with that, the jobs report as well. i think there is a briefing out there somewhere. where is it? lisa: 7:45 a.m., we get the ecb rate decision. christine lagarde is going to come out, and what everyone is looking for is whether the ecb is looking to planning to taper their monthly purchases of bonds.

right now the market seems to be shrugging off suggestions of that. 8:30 a.m., we get a slew of economic data out of the united states. cpi for the month of may, consumer prices expected to rise, the fastest pace going back to 2008. if you take a look at treasury yields, people shrugging it off. we are also going to be getting jobless claims. unless the numbers are as noisy as they have been, i might be watching jobs more than anything because perhaps that has a longer-lasting effect on inflation, if you look at the stickiness of wages when it comes to those equations. 2:00 p.m., treasury secretary janet yellen talking about the budget, as well as her views on the cpi print. she's been talking about the importance of doubling down on the low rate regime for a longer time. she has also been pretty vocal with her support of the global minimum tax rate, and that i think is also going to be interesting to see how she plays that in terms of u.s. competitiveness and attracting

u.s. corporations. tom: i'm glad you bring that up because we really haven't touched on it this morning. all of a sudden, they want exemption for the city of london , i think they want exemption for the upper west side. lisa: there was a really interesting op-ed in "the washington post" by five different finance ministers, including janet yellen, where she was basically saying the pandemic accelerated the wealth gap, that countries have been stripped of their sovereignty when it comes to tax policy to do competitiveness as tax policy due to competitiveness -- due to competitiveness. tom: i misspoke. there's been two articles, one by treasury secretary's, and the one that lisa alludes to. futures flat right now. watching an hour half -- an hour and have away. then emmons joins us with mentally been emmons -- ben emm

ons joins us now with mental global advisors. deutsche bank speaks of the timebomb of inflation. do you fear the regime change, or to use a phrase from abramowicz, the paradigm attic -- the paradigmatic shift that they allude to? guest: you know, i understand where it comes from. we are coming out of the pandemic they shock on the price level. you are essentially in a deflation territory. we still see that coming true, including today. when you get through that fog, i think the inflation rate itself probably tempers. that is what the market has been pricing in. it is in the assumption. i thing that is rational because if you do get to a reopening that is full and all services are available again, you get competition and you get more

people coming onto the marketplace. i think in the united states economy, we will probably get some moderation, other than the ongoing effect of commodity prices on inflation. lisa: and probably the phrase of the month is capitulation. we have seen capitulation of all of the people trying to short treasuries here ahead of inflation rates expected to be fairly high. have we seen full capitulation, or is there more to go? ben: great question. we are right at that point where 1.5% treasury yield, for where the economy is currently, that is really dislocated. just in a mode gdp terms, rates are way too low. we are here because i think the markets have judged as you are coming online completely, you don't have to sell out -- don't have to settle out a new trend. i think the market is struggling with this, the negative

technical positioning around it. so i see ironically yields lower from here instead of higher. that is extraordinary from where we come from. romaine: is there anything about the trendline in the economic data, particularly some of the price indicators, that would actually change some of the calculus, change some of the theses out there about what the fed is going to do next? ben: again, that message that we have to confront each time with these numbers, we think about payrolls numbers, it is about talking the talk, and when we talk about inflation, it is about thinking the think. but we are trying to start talking, and though inflation can surprise again, i think the markets are focused on this labor picture. we know it is in .5 million unemployed, and that is going to take time to work off. i think that is where most

people decided to see that materially change, unlike the inflation picture, it affects markets, but inflation can also slow down activity over time. tom: ben emons, thank you so much. i look at this, lisa, i really don't know what to make of it. it is not our job to give an opinion on all of this, but the mystery going into 8:30 is extraordinary. lisa: if markets are right and we are going to go back to a low inflationary environment after this blip upwards, what does that say long-term about being able to print money, modern monetary theory, the idea of fiscal and monetary expansion at the same time? this to me is the biggest question. that means it doesn't matter for the developed markets. tom: it rolls right over to the equity market. it's not that there is an uncertainty. there's a set of uncertainties, a huge mystery. romaine: and there's a structural change in the market

and what is driving the market right now, and a lot of people are trying to use old models from previous economic cycles, previous market cycles, and apply them to something now that is just unprecedented, and it doesn't work. tom: we will try this through the afternoon as well. we do this through this equity market, right at your eyes. i believe some of the international series yesterday went out on good international performance to record highs as well. under 1.50% again. the 10 year yield, 1.4975%. that is something. on radio, on television, this is bloomberg. stay with us. ♪ ritika: with the first word news, i'm ritika gupta. the u.s. and china have agreed to push forward trade and investment links. that came out on the first call between commerce ministers from the two countries since the start of the biden adminstration. it is still not clear what the

u.s. plans to do with the phase one trade deal signed last year or tariffs on chinese goods. the u.s. plans to buy five hundred million doses of pfizer's coronavirus vaccine to share internationally. the word came as president biden prepared to join other group of seven leaders in a campaign to end the pandemic by distributive shots worldwide. the g7 leaders have gathered for their summit in the u.k. g7 leaders are discussing plans to shift the balance of car buying away from gasoline to greener vehicles by the end of the decade. it is part of a package of measures to combat climate change. according to one document seen by bloomberg, governments would "strive to make sure new cast injure -- new passenger car sales are green by 2030." the world's food import bill is expected to climb to a new high this year. according to the u.n.'s food and agriculture organization, developing countries face a 21% jump in the total bill.

the richest nations will pay 6% more. the increase is led by higher prices for grains, vegetable oils, and seeds. united airlines is an advanced talks to buy at least 100 boeing 737 max jetliners come upri -- jetliners, part of a larger rebrand. 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 eu's approach is clear. china is a partner, a

competitor, and a potential rival. [indiscernible] -- distort the level playing field or are incompatible with our values. tom: the european council and their president on china. one of the back stories in our international relations in cornwall. we welcome all of you now to "bloomberg surveillance" on radio and television. romaine bostick in for jonathan ferro, lisa abramowicz and tom keene. we could literally do a six or nine hour show today. the news flow is extort mary. -- is extraordinary. lisa: romaine pop is actually doing -- romaine is actually doing a full nine or 10 hours, i think. romaine: that's just a day for me. tom: for our josh wingrove,

bloomberg white house correspondent, he is in cornwall, and we are thrilled he could join us this morning as well. we are going to have a new atlantic charter this morning, harkening back to the miss in history and reality of 1941. what does the president want out of a new atlantic charter with the united kingdom? josh: good morning. first and foremost, the mo on this trip is to show he's very close to european allies in the build up to the nato summit and that putin meeting. the event itself is a big part of the ballgame for him. the relationship between the u.s. and the u.k. was a little bumpy the last few years, but even on the u.k. side in terms of the special relationship, things don't really fly here as

much as they used to. you might have seen the press and the u.k. are in a tizzy over biden's views on brexit, in particular the good friday agreement and the irish border. tom: are jennifer jacobs reporting that the british press is off the mark. there has not been a formal document by the u.s. state department chastising the united kingdom on northern ireland. but maybe there will be about china as well. are the prime minister and the president on the same page on china? josh: the u.k. prime minister and the u.s. president, once the g7 kicked off, i think it will be a little more mixed. angela merkel and emmanuel macron have taken a little less of a hawkish stance. biden wants european support and positioning china as a chief

rival. they want official investigations into the origins of covid-19. if you pull back the curtain, there are tensions here. the u.s. still has still tariffs in place. the airbus dispute is ongoing. there's the nord stream 2 pipeline, of course which biden wants -- excuse me, doesn't want, but has thrown in the towel on trying to stop it. it is not all chummy here, but they wanted to at least look chumm chum -- look chummy ch ummy. lisa: there's a question about how much chummy chummy there is around the tax proposal for a global minimum corporate tax rate. how much moment to ms. there in the g7 for that? -- how much momentum is

therefore -- is there in the g7 for that? josh: i think there's a lot of momentum. the question is if there is momentum in the congress for that. of course, the u.s. backdrop is what does that mean for the infrastructure talks. talks have shifted to this other group of senators. will they want to do either the 28% corporate tax or the 15% floor for the corporate tax rate? we asked jen psaki, the white house press secretary that on the press plane yesterday. she said it is all up in the air right now. we are going to see how it goes, but they are clearly not eminently rounding the corner on this sort of thing. romaine: i know there's a lot of focus right now between biden and johnson, the u.s. and the u.k. here, but talk to us a little bit about the relationship as well with the other two important nations part of this group, japan and canada, to relationships that certainly deteriorated a bit over the

previous four years. josh: the japanese prime minister has already met in person with joe biden. he has a tele-meeting with the canadians, trying to get that feather in the cap as well. he wants close ties with these countries, and he won't get an ear full per se, but had this been a few weeks ago, he might have. japan and canada and even germany, france and italy are much farther behind in the vaccination campaign then the u.s. in the u.k. the u.s. and the u.k. really gobbled up doses early. they made it difficult, if not impossible for other countries to get their hands on doses made on their folio, at least in large -- on their soil, at least in large numbers. for the other countries sitting around the table, it is kind of four months too late, and they

are not so keen to get a pat on the back. tom: thanks so much. greatly appreciate it. romaine, there is. kristin flanagan reporting. it was up as high as 1.64 -- as high as 104%. bank of america out with the first sell rating on clover health. you have to. romaine: i think it is funny, or interesting i should say, how many sell side analysts have abandoned coverage of some of these because they are basically divorced from any sort of traditional modeling, and if you are an analyst, i guess whatever duty you have to your clients here, it is hard to make any sort of model that is going to work. tom: what did you learn from gary gensler? i thought his comments were pretty important. lisa: the idea that they are

really looking at regulating some of this retail trading. but again, who are we regulating? are we regulating the day traders, the robinhoods and citadels of the world? that seems to be where a lot of the focus was directed, at the order flow. but again, who's being harmed right now? i think we will see that play out certainly if there is a fundamental reckoning for some of these shares. tom: i am going to keep my opinion out of this, but it is free. it is free to be chummy c -- -- chummy chummy. lisa: but it is not free, right? romaine: they technically pay on the top line. we've seen this. we've been here for a while now. there's basically been low commissions or no commissions for quite some time now. what's changed now in the past couple of years?

tom: the order flow guys live three floors below you. they are buying up all of the real estate in new york. stay with us. "bloomberg surveillance," from new york and from cornwall. ♪

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♪ tom: "bloomberg surveillance." we welcome all of you on radio and television. a most eventful day. later today, the president of the united states and the prime minister of the united kingdom decide a new atlantic charter yet we will have that coverage for you i believe in the 10:00 hour, wall street east coast time. we will have a market open today. we need to figure out what stock is going to go up 1000%. lisa abramowicz and i wait for the bostick report. [laughter] romaine: in the premarket, at is a little bit late here today. to be that us -- a little bit light here today. boeing shares getting a bit of a bid here. 100 orders from united airlines.

bloomberg is reporting that. this would be a big move for the 737 max. boeing trying to get that project back on track after those incredible delays after those two fatal crashes. keep an eye on gamestop. they had those earnings last night. they did have two interesting hires from amazon. lowering folks from ash -- luring folks from other companies to figure out whatever this e-commerce strategy is going to be. investors seem to be on board with that. the concern is the disclosure of an sec inquiry into some of the trading activity in gamestop shares. then keep an eye on rh. this is a company formerly known as restoration hardware. they make a lot of that the furniture you use in your

mansion in the palisades. there's still a lot of strength with regards to folks buying that furniture. you have seen that reflected in lot of other retail stocks as well. signet jewelers getting a nice bid as well. people gravitating to that side of the retail equation. two events to keep an ion, the first is grubhub. remember, voting on the grubhub acquisition, the deadline for that is today. calstrs and a lot of the other big pension funds are on board with this. those shares higher in the premarket. and tesla going to have that event a lot of people have been waiting for, the faster version of the model s is supposed to roll out today. normally the sizzle you would get from a tesla event is not there today. it is camped around the $600 mark where it has been for the last couple of weeks. tom: again, the equities away from the memes, near record

highs on so many different indices. this is very important. retail sales come in, and sometimes they really jump out. this is on the present worry about inflation. eric nelson of wells fargo is focused on goldilocks. here's the text. once upon a time, there was a little girl. her name was goldilocks. she had dark brown hair, from the upper west side, and worried about the pendulum of gloom. one day, goldilocks was walking in the forest of inflation. she saw a house and knocked on the door. she went inside. romaine: this is amazing. tom: no one was there. romaine: amazing. tom: lisa, why don't you bring in eric nelson on goldilocks. lisa: this is just gold. how long did it take you to write that epic? [laughter] tom: the goldilocks of inflation. that's who you are. [laughter] lisa: eric nelson, come save us which wells fargo strategist. i am sure you regret writing

goldilocks. won't do it ever again in your reports. there's a question about cpi data, but i want to ask you about the message being sent by the bond market. can we actually get any message from treasury yields, given the fact that the federal reserve is buying, and there have been other international reasons why this yield is skewed? eric: absolutely, i do believe you can. the fed is truly taking down a substantial amount of coupon issuance this year, and the buying has been a lot slower than last year. he fed is not nearly absorbing all of the coupon issuance that is coming out of this year. in terms of the actual signals from bond yields, i think we had a massive adjustment earlier in the year. markets probably got a little but i had of themselves, and now we are seeing a little bit of a

pullback as positions get squared, but we are talking about 7% u.s. gdp growth this year and 6% growth next year. these are huge numbers. it is not just a one off this year. lisa: the reason i ask is because people look at the bond market and say it justifies the fed view that they can stay on hold. that all of the data we are going to be getting is transitory. but if that really what it is saying? how do we know it is not saying that the fed thinks the market -- that the marketing's the fed is going to hike rates more quickly -- that the market thinks the fed is going to hike rates more quickly? what is the message it is actually sending? eric: there's various messages coming from this. for the foreign investor's perspective, you look at the cost of funding in the u.s. dollar market, extremely cheap to source dollars right now. so we talked to foreign investors who want to pile into some of these fx adjusted yields at the long end of the u.s. curve, so it is not just about

growth inflation fundamentals, what the fed is doing. you also have to think about it from an investor perspective, and for the time being, that is likely to keep the yield increases in check, even if we continue to see pretty strong inflation prints over the next few months. lisa: this raises the question about goldilocks, going back to the fairytale tom was telling. it brought tears to my eyes. there's a question about the ramifications to goldilocks. if you are correct, regardless of fundamentals, you will get this it into treasuries for other reasons. what does that mean about risk appetite, how far it can go, and the potential stability issues that arise therein? erik: what has been so interesting is to see the pockets of volatility and pullback in some of these risk appetite areas. while we are seeing relative stability in the broad indices

and the broad treasury market, you are seeing a lot of nuanced moves in the certainly some of the memes stocks, but also some of these areas earlier in the year, maybe the clean energy names that were so strong and have seen pullback. i would suspect the fed is welcoming this relatively nuanced volatility it is seeing, as opposed to just continued, unabated risk appetite in the equity market. romaine: but some of that nuance right now, to borrow the's phrase, -- the fed's phrase, seems look it could be transitory. we have seen a market that readjusts and reassesses, and then it is off to the races very quickly once they feel like they have gotten whatever sort of green light they might get. what could we see over the next few weeks could change their minds?

erik: i suspect the fed will look through the cpi data for the next several months. personally, i believe the fed is much more focused on employment data, particularly with wages. data supports the fed's case for being patient on tapering. we don't think the fed is going to start tapering until q1 of next year. you would have to see a big acceleration in both job growth and wage growth, particularly in the eci numbers, not the average hourly earnings numbers, to see the fed knocked off course. tom: what is fascinating to me, and i get all the fancy market talk guys like you and strategists of all flavors out there are looking at this cool, calm and collected. the american public won't. to go to goldilocksin, somebody is going to wake up and go someone has been giving me inflation. that is going to be the response, even if it is transitory. can that derail the clear thinking of the fed? erik: what matters is how long

does this last. my father is a homebuilder. i had this conversation with him all the time. i can hear him squirm through the phone when i tell him this is all going to be transitory. when you tell me 1, 2, three years down the road that we are still looking at massive increases in lumber prices, used car prices, and this is starting to seep through into wage negotiations, yes, i'm worried. but this is not the first time we have had periods of short-term inflation where consumer expectations rise and then quickly are pulled back within a year or two. it is all about the durability of this process. tom: eric nelson -- erik nelson with wells fargo, thank you. we welcome all of you here to an extremely busy day calendar. lisa, let me go to you on ecb. i think we have underplayed it

with our bias to new york. matt miller helping us out from berlin in the 6:00. young ferro is more up to speed on it then we are. what is your take on ecb, other than the camera shot to the multiple podia of madame lagarde? lisa: the complacency of both traders and the ecb that they can continue bond purchases at the current pace. we had been talking about talking about tapering. there seems to be some backing away from that. the question i have is how much dissent is there. so far it seems like there's a lot of agreement among members to keep going with their policy as is. do you start to get disagreements, do will get worried about frost, -- about froth? do you get worried about other considerations? tom: they've got advisers who are attuned to all we are talking about, but the answer is revenue growth is wrapped around this gdp. romaine: one thing i am really

interested in is to see the secret is asian or lack of synchronization that we start to see in the central bank normalization, particularly given that the fed's mandate now is very divergent from what the ecb's mandate is. when we look at the inflation numbers, we have to sort of separate what is happening in the u.s. with inflation and what is happening in europe, and how that feeds into these policy initiatives. tom: i am so glad you brought this up. i thought kit juckes was brilliant this morning at socgen. he alluded to just what were main -- what romaine said, the idea that the u.s. will act and the others will follow. that is the assumption. lisa: and what we got a little but of noise of earlier was the sense that perhaps other central banks were ready to move faster than the federal reserve, which was an uncomfortable reality. are we going to shift back to the fed moving first and everybody else following? who's on first? who wants to move first? tom: i'm not doing who's on first. . we are not doing abbott and

castell -- and costello and the ecb. [laughter] stay with us. an exceptional news flow on radio and television. this is bloomberg. good morning. ♪ ritika: with the first word news, and ritika gupta. banks will face the toughest regulation over cryptocurrencies. elizabeth warren said the government needs to step up oversight of the cryptocurrency market. sen. warren: banks are holding bitcoin. that becomes an issue we need to talk about with bank regulators. so there are a lot of different paces to this, and i think the answer that we saw today is that right now, our regulators and

our congress is an hour late and a lot are -- and it dollars short, and we need to catch up with where these cryptocurrencies are going. ritika: the amount of energy needed to power the bitcoin network threatens the environment. commerce ministers from the u.s. and china have agreed to move forward on trade and investment ties. the two held their first call since the start of the biden adminstration. some parts of u.s. policy toward china are becoming clearer. still, it is not certain what the u.s. plans to do with the phase i trade deal signed last year or the tariffs on chinese goods. president biden and british prime minister boris johnson will commit today to resume travel between the two countries as soon as possible. it is not clear how soon that really will be. the two leaders are meeting ahead of the start of the g7 summit. they will launch a joint task force to explore travel options. in the u.k., antitrust regulators reportedly are looking into how amazon uses

data from smaller sellers on its site. according to "the financial times," they may focus on whether amazon -- those who use its delivery services. i'm ritika gupta. this is bloomberg. ♪ tom: "bloomberg surveillance." romaine bostick in for jon today. lisa abramowicz, tom keene. an exceptional news flow today, all of it centered around 1.4492%. the swiss 20 year note is one example of a different interest rate regime into the ecb decision. lisa: last month, the 10 year yield in germany was moving towards zero, and now we are going below zero as a number of

members came out and said, don't worry. we've got your back. that seems to be the theme. romaine: absolutely. tom: let me pick up on a little bit of other data here. brent crude, $72.38. red and green on the equity screen. a little but of saltiness to the equity tape. it is a meeting of the european central bank with a different mandate than the fed. joining us our michael mckee -- joining us, our michael mckee with the breaking headlines. we will watch as they seek wisdom as well. mike, do we have the headlines coming now? michael: the first policy decision is out, and it is no change in any of the rights. the main refinance rate stays at zero. the marginal lending facility at 25 basis points, and the deposit rate stays at a -50 basis points. no changes were expected, and that is what we got out of it so far. so don't think we are going to

get anything really different today. i'm waiting for the policy decision to drop, although we have it coming from europe with the headlines. it looks like no change in pretty much anything at this point. they are going to keep eyeing $20 million a month's under the asset purchase program. they are going to keep rates at present or lower levels until their inflation goal is near. they will reinvest the asset purchase debt for an extended period after raising rates. as far as the pandemic emergency program, it runs through at least march of 2022. tom: is that important? to me, that is not news. michael: no, none of this is new. this is what they have been saying for quite some time. they are going to reinvest in maturing pepp bonds at least through 2023. the one headline i haven't seen yet and i am looking for is whether or not they are buying the pepp program at a more significant pace. that is what i need to release

four. here we go. tom: it is tough to run a dickinson new it -- to run at acing the goodly higher pace. michael: basically, there's nothing new in the statement, at least from what i can see. tom: he's the height of boredom, lisa. lisa: i think the height of boredom will come when christine lagarde takes the podium, if she fails to say something about talking about thinking about talking about tapering. the question is at what point do they start to chart out an exit strategy, and is there one? could we get any guidance around that, or is the easy be complacent to remain on hold because markets are enforcing their hands? michael: i think you called it here. there's no reason for them to start talking about an exit strategy. is it -- it is possible that christine lagarde will mention the possibility of talking about talking about, but there's nothing necessary for them to do. they don't really want to turn the markets by getting people more excited about the

possibility of changes. member, their inflation rate is still running much below the united states, although they are worried about it. they are not expecting it. romaine: it is running below the u.s., also running below where they would like to see it go. i think when you start to look at some of these programs and the idea that they are maintaining that pace, if not actually keeping that pace higher for longer, does that give you a sense right now that maybe when we look to some of the other central banks, i.e. the fed, that maybe we will see a little bit more stasis there as well? michael: i think you are going to see stasis from the fed. it is not going to be anything major that changes. it is going to be incrementally small changes in their wording over time because again, they don't want a taper tantrum. they learned from 2013 as well. we may get jay powell saying we had a staff is inpatient on inflation and where we are going, something like that, but you won't see any move from the

fed probably until the end of the year. a lot of talk about the possibility of jackson hole, but it really will depend on the economic numbers at the time. tom: is this a ballet between lagarde and powell? are they coordinated? she gave a great speech a million years ago about a square dance. are they square dancing here? michael: they are not square dancing, and they aren't directly related in terms of policymaking. they do talk to each other. they see each other every couple of months at the basel meetings. but it is that impact of the recovery in both regions and how it feeds back into the other regions that matters, and if you get a lot of inflation in europe as prices rise and we import those prices, that affects what the fed thinks. i am reminded when you say that old-line about the dancers and the woman has to do every thing

the man does, but backwards and in high heels. [laughter] tom: lisa, help me here. lisa: nope. not going to help you. carry on. [laughter] tom: romaine is being way too polite. michael mckee, go away. [laughter] right now, katrina dudley joins us with franklin. she's got a real ample career on the sell side research and portfolio management. good morning to you. how much of a value is europe right now? katrina: europe has always been a could essential value market. you just look at the cost structure of the market. it is heavy and financials, heavy in energy, and those are sectors trading at very cheap to both. but the good news about europe is actually the construct of the market is changing. we've now got a rising luxury sector which is the equivalent of the technology sector here in the united states. that sector is actually growing.

tom: come on, are you telling me louis vuitton is equivalent to apple or amazon? katrina: i think louis vuitton is actually even better than an amazon. lisa: i would agree with you. katrina: exactly. you can't replace some of their products. you can't get some of their handbags at the moment. if you have tried ordering some of their jewelry, it is out of stock. lisa: mrs. keene would agree. tom: this is a long-running story on this show. she mentions hermes, i am going to walk off the set. lisa: meanwhile, we are talking about the ecb policy in tandem with ecb stocks, and really the underlying question here is is there an exit strategy that could be done with grace? can you by european stocks for a longer period of time with faith that the ecb can extract

themselves easily and gracefully? katrina: i think it is interesting because you were talking about grace kelly before and high heels backwards. if i look at the exit out of this, the ecb is watching the fed. the european markets are actually behind the u.s. in terms of recovery from the covid virus because the vaccine rollout was slower, so i think they are really looking at the markets and looking at the fed action, and i think that the ecb will be slower to act this time. just have a look at what happened back in may, were you saw italian yields blowout, and it was kind of this mini taper tantrum. i think they are watching to see what happens because it is not just about what the ecb is saying. it is the impatiens of that on various markets. romaine: let's talk a little bit about italy and the reaction that a lot of us on the side of the atlantic looks to when we try to divine what the ecb is

going to do and how it is going to be received. how are investors in italy right now, the investors and italian debt right now, preparing for whatever it is the ecb may or may not do? katrina: what we are looking at in italy is support for the government. italian politics is messy as a bull of spaghetti, but at this time it is probably the best outlook we've had in a long time. i think the ecb is aware of that. they need to be accommodative. tom: just time for one more question. we've got to get you back here. what kind of a victory lap is mario draghi going to take at g7? i mean, he's on top of the world right now, right? katrina: i don't think he's going to take a victory lap. i think he's a humble person, and he is quietly doing what is right. lisa: wait, i'm sorry, katrina. mario draghi is a humble person, really? [laughter] katrina: i think the role he is

taking in italy is what he wants more politicians to do, which is acting in the best interest of the country, nothing that is what he's doing. tom: i don't mean to interrupt, but in your research on luxury to find value in franklin mutual , don't you find the gucci store below the spanish steps in rome as the most dangerous store in europe? katrina: i haven't been there because of the travel ban, but i am very excited about the fact that boris johnson is now meeting with joe biden and we may be able to travel back to london and hopefully back to spain so we can go in person. tom: i expect we do a road trip, and we demand a "surveillance" remote from the steps of room for you there. -- steps of rome for you there. it is stunning, the moving luxury has been absolutely stunning the last 6, 8 months. lisa: incredibly sticky and incredibly brand specific, and able to retain their consumers

because guess what? people who had money got more wealthy during the pandemic. that is the reality. tom: it does show the inequalities out there. what are your thoughts about this on "the close?" some sectors have been mega winners. romaine: we knew this was an uneven recession and now an uneven recovery. the folks who had money actually found a way to make money during this recession, and that is why you have seen the louis vuittons, guccis, and all of the other luxury brands hold up that are than some of the second-tier brands. lisa: there's a story today showing that the world's wealthiest 500 individuals are now worth $8.4 trillion, up more than 40% in the year. romaine: well, good morning to all of those. tom: but i'm sorry, lisa, the stock market, what is it up in the last year, 38%? lisa: a lot of it stems from that, and a lot of these individuals were also the jeff bezos of the world. tom: it's a big number, and they are rich, but hey, for whatever

reason, it has been a boom economy, except for everyone in the triple leveraged all-cash funds. [laughter] lisa: the violin. tom: we continue with important economic data in the next hour. this is bloomberg. ♪

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♪ >> inflation expectations are back. i think the fed is going to need to recognize this risk over the next year. >> the market is becoming more concentrated and less contestable. >> right now people are focusing on low-quality stocks, whether they are mima or not -- whether they are meme or not. >> i think inflation is going to run. that is a good sign. that is an economy getting back on track. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. lisa: is there an exitat