i think the fed will need to recognize this risk, certainly over the next year. >> the federal reserve take inflation seriously. they think about the data. >> market is focused on this labor picture. >> i would suspect the fed is welcoming this relatively nuanced volatility. >> we need to know whether these persistent, i think central bank will have to move. >> this is "bloomberg surveillance" with tom keene, donath and farrell, and lisa abramowicz. >> where simulcast on friday and on bloomberg and television. matthew miller in butler in -- in berlin in for jonathan ferro. lisa abramowicz as well. the most interesting day wrapped around the g7, wrapped around the equity markets that we saw yesterday. lisa, i want to go to that interview yesterday, the first interview deutsche bank has done off of their bombshell report. peter hooper on the timebomb of inflation of 2024.

lisa, that is what haunts this market in our study. lisa: haunts it may be theoretically but not when you look at the price action. this is the interesting aspect of markets right now. you have the ghost potential inflation coming back potentially either next year or the year after with expectation setting a credible monetary stimulus in tandem with fiscal stimulus. but you pair that with the incredible fed impulse, and you pair that with bond buying overseas and you get a bond yield near 1.4% on the tenure for the biggest weekly drop in yields going back a year. tom: 1.4384. that is almost romantic. that is a yield christine lagarde would know. matt: german yields are going in the opposite direction. i thought it was interesting the bundesbank put out its new forecast for the year, growth will be back to pre-pandemic levels. then much higher next year.

inflation, though they have it at 2.6% this year, comes back down to 1.8% and then to 1.6% in the following months. tom: this sets us up for weekend reading to get started into the fed meeting next week. lisa, i got to look at the real yield, extraordinary. i came in this morning from the surveillance siesta and looked at the 10 read -- 10 year real yield, .9 3%. it is safe to say it plunged yesterday. lisa: it plunged yesterday. i'm wondering how much we can take away from this. you have an increasing number of people saying it was a technical trade, that this was a massive short squeeze. and people getting squeezed out of the position will reset and yields will creep higher. that said, there is this expectation the federal reserve will be able to stay on hold with the $120 billion in bond

buying n0 zero policy well into the future, even as we see inflation pickup and that explains why the actual yields you are getting is going more negative. tom: negativer. matt, what have you learned about g7? matt: that the u.s. stands in a different position from europe. charles michel was on with guy johnson saying we have a great trade deal with china and they want to stick with it. he also said they have a great pipeline with russia and they want to keep that going. some of the issues of the u.s. -- that the u.s. is concerned about the eu sees in a different light. tom: we have mario draghi perhaps landing in court. we welcome all of you on radio and tv. futures up, the vix under 16 and speaks volumes of this bull market. 15.98. let's review the bonds we have

already touched on. 144 in the 10 year yield, that a stunning, even for the people looking for lower yields. 10 year yield is -0.93. i will call this dollar strength over the last 24 hours, euro 121 point -- 1.2153. pms are sort of there. renminbi, sort of there. lisa, save me here with what we doing today because i'm waiting for draghi to get off of the plane. lisa: i'm sort of there also. as a question, when you talk about bond yields, how much that is driving people to riskier assets. i will be a theme throughout the week next week, no doubt. today, the g7 summit kicks off in cornwall, england. i'm expecting a discussion on wealth inequality, how to redistribute wealth. this goes for this idea of taxing corporations more and having a minimum global tax.

it goes to distributing funds from these wealthy nations to poorer nations that have been harder hit by the pandemic. we will hear more on that today at 10:00 a.m.. this, to me, is the data point of the week. this is the university of michigan consumer sentiment survey for june. i'm not looking at the overall numbers, i am looking at the five to 10 year inflation expectation. the last reading, we saw the highest level since 2011. how much higher will he get as people shrug off the fed's input for inflation and go to the grocery store, buy a used car, buy a new car and they say this is serious inflation. that is what we see in the sentiment surveys, arguably inflation expectation among consumers will lead to actually inflation -- to actual inflation. janet yellen is presid -- presiding over the committee. as you see real yields go more negative, the money is flowing into risk assets. taking a look at junk bond

yields, there one basis, the lowest on record. what is the financial stability risk of the longer-term that is getting post. tom: and the earnings yield are out, back to 1980, that is what the real yield is doing. we go to guy johnson and do that with the prime minister of inuoye, someone we know so familiar, mario draghi scheduled to leave his plane. there is. we are seeing him with mask on being greeted in cornwall. we greet with mask off. guy johnson, italy is one of the great triumphs we see in g7 recovery. explain right now what draghi wants to get out of g7. guy: draghi as part of european leaders that are going to be coming here over the next few hours. they want to coalesce their

authority to try to put europe on a similar level to the united states. brings, they want to represent the same authority from europe. draghi arriving now will get angela merkel and emmanuel macron coming over the next few hours. they will come here and they will have a set up meeting and will get all on the same page, coordination meeting they are calling it. then they will be there trying to represent the european union, trying to give it the authority they feel it deserves. maybe they feel is lacking at the moment. there is still a sense of wariness about the united states. administration may have changed, described by joe biden, but it is certainly this within the european union, a wariness about the new administration. has the america first policy changed? how significant of a difference do we see here? tom: mr. draghi is an amazing

story. francine lacqua and i had quality time with him and davos, and other locations, but this is without question the most financially and economically astute member of the g7. he is from the massachusetts institute of world-class economics. linking that into policy as well . what is the policy goal, guy johnson, of this british g7 meeting? guy: the policy goal of this meeting i think is to -- from boris johnson's point of view is to put boris johnson and brexit britton on the stage. he wants to deliver a diplomatic coup to be able to give that momentum. beyond that, i think there is a strong feeling that what needs to come out of this is a number of things. first, we need to get the vaccine sorted out. needs to be humanitarian effort which has a huge economic backdrop to it. lisa was talking about the assistance that will be required to put many of these economies

on the right trajectory. covid and vaccines need to come first, the economy comes after that. only can the economy, after the vaccine situation is sitting out -- sorted out. then there's the sense of a need to put all of these countries, democratic countries, on the same stage and make sure there is a single voice being spoken to authoritarian leaders like in china and russia. those are the objectives, but today, the agenda will be dominated by the economic recovery. they will focus on the economy, where the man we should be looking at, mario draghi, will add huge amount of weight to europe's position. he comes with huge economic credibility from his time at the ecb and now prime minister of italy. he will add a huge weight to that. matt: i love those rain drivers. when you look at suv's, the u.k. still makes the most luxurious suvs in the world, bar none. i think the range rover, i may

prefer that to the rolls-royce. i wanted to ask about the conversation with charles michel. he seems to push back on the u.s.'s need to confront russia, the need to confront china, they will go ahead with the nord stream 2 pipeline, with their trade agreement with the chinese. will this be a risk? guy: i think it is a risk. i think europe is having to reassess its political posture on the number of different fronts. rush i think is an easier one to have, but nord stream 2 remains a huge point of friction. china, asked whether or not the trade deal done with china was a mistake and they said it was not, but there has been a significant backing off from that position. i think it will be interesting to see where, particularly angela merkel, sits in this challenge to try to figure out exactly what european foreign policy will look like care.

she has taken a much more mercantile approach to russia and china, but i think the mood music has changed over the last few months. the european union adapting a tougher stance and i think that will probably provide some opening for an agreement between the united states and europe on the best way forward. i do not think they will completely see i to i. the other thing i should mention is the [indiscernible] lisa: we will say that. i will not talk about the various cars used like mike miller -- matt miller, we will leave that for the car section later in the hour. there's a question about what kind of guidance we will get, whether a global minimum tax rate which plays into what you are talking about with global economic recovery, as well as redistributing some of the money for imf funds for other monetary pools in order to revive some of the economies. how much are we going to hear about that later. guy: i think today's the day you

will hear about it and it is hugely important that this happens. i think it fulfills a number of different agendas and we come back to china. there is a very strong desire i think amongst these leaders to deliver infrastructure projects that will counter the initiative china has been so successful in delivering. it has been hugely influential for them. i think redistribute in funds will be hugely important as an aspect. there has been this case shaped recovery not only within -- many countries are struggling in terms of their recovery. there's a growing awareness that while we need to get vaccines, there needs to be a follow-up plan beyond that and that links into this what is happening with climate. all of these different aspects to the policy. tom: guy johnson, thank you for the report. we will see him through the day from cornwall and the g7 meetings. we have much more coming up.

jane street avedis will join us on the characteristics of the g7 meeting. right now on the financial system of our international economics, no one is better than william lee at the milken institute, his tour of duty at the imf, and an expert on pacific rim as well. i want to do the calculus, bill lee, we don't do calculus on friday, we do civil math. g20, takeaway g7, i believe at the g 13 nobody talks about -- i believe is a g 13 nobody talks about. how does g 13, eastern europe and the rest, observe this g7 meeting? >> they are anxiously looking at what the g7 meeting is doing with the corporate tax they have come up with. to say the smaller countries have to raise their tax rates like ireland and other countries that developed a model, they say we will develop by tracking

foreign multinationals in our country by lowering the tax rate, that will go by the wayside because they have to come up to 15%. that will be a challenge. the other thing they will look at, how will we deal with china and the g7? the g7 are already in a mess to try to find a way to cooperatively deal with china. china is a customer, a big input into their production, but human rights, how do we live up to our values of human rights and worker rights? tom: i will believe that michael milken taking advantage of william lee dialed his number and said, on that tax plan, is it dead on arrival? every report we see from hungary, ireland is major pushback. they want to exempt london, which is absurd. is it dead on arrival? william: it is dead in a sense no one really agrees firmly the corporate tax is the best way to use the finance government spending. one controversy is who bears the

cost of paying the corporate tax. studies have ranged from as low as 20% workers paying to as much as 100% workers paying. most studies show at least over 50%. so raising the corporate tax pushes the burden of paying that tax more on the workers. that is a big controversy that has yet to be settled. for the g7 to rely on the corporate tax to finance government expenditures is a political wildcard. lisa: to elaborate a little bit, some people pushed back and say if you look at corporate profits, they have increased dramatically. why could not it have come out of that rather than the workers? why is that the obvious person paying for it? william: i think the political movement is to stay away from taxing workers, especially lower paid workers. we want to try to tap into the resources the very rich have. but his corporate tax the best way to do that? so much of that tax is shifted into consumers, workers, and people other than the owners of

capital. ? we know corporate taxes are unfair in fact -- capital is unfair -- we note corporate taxes are unfair as they are taxed twice. the questions of incidents have played economists for generations, and there is no clear answer. all of this is polluted by politics. lisa: let's try to check out the politics and use an empirical example. i'm looking at president trump's tax cuts. you would expect the reverse to be truth that were the case, if the tax cuts should give more money to the workers. is that what happened? >> what happened with the tax cut with the trump administration is so much of the corporate profits released went into share buybacks. the question is, do the share buybacks lead to more investment? if you look at the data and research i have done, it shows share buybacks actually lead to more investment but there is a huge lag, as long as three to

four years, before we see that. right now, we have the highest level investment in the u.s. for many years. matt: one of the biggest problems with corporate tax, be on the double taxation issue, which i'm not sure everyone has fully wrapped his or her head around is what companies do to try to avoid it. often in the u.s., i'm in berlin but my home in the u.s., they try to avoid it with debt financing. we are basically pushing these companies into more risky financing solutions. does that turnaround when you see the tax cut as lisa pointed out? william: one of the things mike has always emphasized to me is the corporate capital structure really matters. pushing people into more debt finance has the impact of changing the shape of investments. investment goes into more safe

areas because they want their money back, they could not care less if profits lead to more productivity. if you tell a borrower take my money but make sure you give it back to me, all he will do is invest in the same projects that worked in the past. were knocking to get the innovative investments like we need to draw productivity and raise the standard of living in workers and the rest of the world. matt: let's talk about the possibility of cutting -- getting a global minimum tax. we have heard reports the u.k. wants to exempt london, and the city of london has a bigger gdp than the republic of ireland. if we start asking for these little loopholes, will it be possible to get the kind of blanket global minimum tax they have set out for in the first place? william: this is the slippery slope of getting exemptions and loopholes. this is the one thing that has made the tax system in the united states and the rest of the world fail, we create so many loopholes that regardless of what you do with the rights, the amount of revenue raised is

much less than anticipated. lisa: so we are talking about the corporate tax rate and a backdrop of this is a huge question mark about the trajectory of the global economy, whether it is inflationary period, disinflationary, the booze from consumer prices, where do you stand on this? especially with the bond market way in saying inflation is not a concern. william: i think we are seeing the face of the new shape of inflation in a post-pandemic world. supply induced price jumps. so that's not regarded as inflation. inflation is the corrosive increase in wages, costs, and prices that firms fail to keep up with and erode profit margins and worker and savings and worker wages. that is corrosive in prices that exceed expectations, the thing

everyone is watching for, but there is no sign the supply side will lead to that corrosive inflation we had in the 1970's. tom: i want to end on your wheelhouse, which is the pacific rim. every indication i see is of a pricing for boom. they have not had the fiscal stimulus the united states of america had, but do you frame out over the next 12, 20 4, 36 months a pacific rim boom? william: i would love to, but the kind of supply-side shortage overhang and overhang of china in the pacific rim is distorting the picture of where growth will come from. the pacific rim has so much depended on china as an intermediary and final demand markets that, without china coming online and being a locomotive, will be difficult for the rest of the countries to grow.

china has the strategy of investing in itself, developing its domestic markets, and almost withdrawing from the world, except in strategic ways, which is to dominate the supply chain and technology. tom: the phrases so sensitive and current. to say that china is withdrawing from the world, yet our listeners and viewers are familiar with the expansion of the south china sea and the belt and road initiative. which is it? william: there just -- they are withdrawing their domestic markets from the world because they want to develop their technologies. they are expanding their political influence in the world because they want to be recognized as a large country power. yet they still have the benefits of wto emerging-market status. they want their cake and eat it too, which is the tension the g-7 will have to deal with. lisa: paring this idea with where inflation is going and the fate of china, i'm wondering how

much the chain in china's economy will feature in the world inflation outlook, the idea china was the factory to the world, the low-cost factory, importing disinflation overseas. now, we have a different china, wealthier, trying to upgrade itself to develop to market status. how much does that reverse disinflationary trends over the past 20 years? william: that's a great question, because what we have seen about the new face of inflation in china is happening right there. factory prices have gone up by 9%. all down the supply chain in china, more and more price increases. at the consumer level, prices going up to 1.8%. what we see a day -- see is a profit margin squeeze because the chinese do not want to destroy the domestic economy and they putting controls at the factory level to contain these commodity price jumps. i think that's a very successful way they are implementing to try to limit the follow-through of price jumps, preventing it from

spiraling into the corrosive inflation in the 1970's. tom: bill lee, thank you so much with michael milken and the milken institute. lisa, bill lee lifting the market there as well. we have a nice movement here. i went toex, from 17 down to 15.89. that is an extraordinary start to a bull market friday morning. lisa: you have yields this low and people becoming complacent with the idea inflation truly is transitory, it is risk on, and you see it in everything last class. i wonder how long that can continue. how long can we continue to see cpi prints, core inflation rise the most since the early 1990's before people get a little more concerned? tom: our guy johnson just reporting on the royal family, they will attend the g-7 meetings. i believe this is news, guy johnson saying the queen will

join prince charles and prince william, among others, in cornwall. i believe this will occur pretty soon, perhaps at 1:15 united kingdom time, which i believe is in like an hour or two. lisa: the real question, matt miller, is what car will they drive up in? matt: they will drive up in a range rover more than likely. lisa: [laughter] matt: the queen herself drives an old range rover, a land rover actually, and her husband did as well, famously. lisa: [indiscernible] matt: the kids drive i think different cars. i remember prince william had a golf when he first started, and they are more into flashier, racier cars than the queen. lisa: do we care, tom? what are you looking for coming out of the g-7 compendium? tom: the do we care thing is a really important statement. this was a manufactured event. i do not have the history in front of me, but whether it was

g3 or g5, or g8 ex-russia, and now g-7, every once in a while is it -- while it is a do we care meeting. it sneaks up on you. g20 in pittsburgh has substance to it. i have the clearest memories of being with prime minister brown. john snow was sick and john taylor sat in as undersecretary. all of a sudden, the london g-7 finance ministers meeting had value. you never know when it is "do we care." lisa: right now is such a pivotal moment as the alliances try to refigure themselves ahead of what is potentially a contentious period, particularly between the rest of the world and china. tom: we get started with international relations. we just on mario draghi land in cornwall. it is a day for president biden to greet the leaders of the g-7. i will tell you, our major story

has to be the markets and stunning yield moves. the real yield is negative. it is truly shocking to the inflation east does -- inflationistas. coming up, the former nato commander. ato commander.

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♪ tom: "bloomberg surveillance." thank you so much for being with us. lisa abramowicz, jonathan ferro, and tom keene. right now on g7 and on these markets, it is thrilling to give you your beach reading for the summer. it's not a secret that my book of the summer is "2034" by elliott ackerman and james stavridis. it is absolutely stunning. this is a scary, dangerous book that wreaks of a netflix movie. there it is, it is a triumph. the author joins us this morning, the former nato commander. i want to go to the work of --

from the university of chicago and it's your fault. they suggested that the g7 world and nato countries overreached and expanded to far east too quickly for mr. putin and russia. did nato and europe overreached to pick up eastern european countries? james: i don't think so. it's always easy in hindsight to say, hey, we could've, would've, should've done something differently. if i can rewind the clock to the days when the wall fell, you got to remember the zeitgeist of the moment. there were not nato takes rolling into prague. there were not nato aircraft flying over warsaw. those countries were begging to join nato. they wanted to join nato because they had been under the boot of the soviet union. i don't see in a real world where we could have just said, nah, you stay over there.

it would have been a bad moment, in my view. tom: long ago and far away, admiral king and his gentleman on the courage of the navy across the north atlantic in 194 1. james stavridis, they did the atlantic charter. we have the politicians with a tv moment doing a new atlantic charter. is there any substance to this new atlantic charter? james: i don't think there is anything new in the new atlantic charter, but that's ok. what it reaffirms is this transatlantic bridge that frankly has been a little creaky for the last four years. now, it is gaining strength, gaining airspeed. i think in this post-brexit moment, it makes geopolitical sense to kind of draw a line under that relationship between the united states and united kingdom. i will close by saying, even as

we are having this conversation, one ship is at sea, queen elizabeth, with british exports, submarines, auxiliary ships. it is headed toward the indian ocean and into the south china sea. they are a good ally to have. tom: james stavridis, in your book, i am going to be honest, it is so good, i am going to be very careful not to give it away. the heart and soul of 2034 in our modern technology is a lack of communication. it starts in that opening scene in the south china sea. how does this g7 set up a communication process to avoid your 2034? james: first and foremost, it's about cyber and cyber security and protecting our networks. by the weight, protecting undersea cables as well, that comes up in the book.

it's this putting together the technologies of cyber, of space, of undersea control, all of that has to be protected. that's a job not just for nato, because nato is a regional alliance, that's a job for all the democracies. i think that's going to be a significant part of the conversation. lisa: a question about the alliance and how strong it is and coming up with a strategy, with respect to china, there is, as we get the arrival at the g7 of angela merkel, german chancellor, arriving. germany has an incredible trade partnership with china, even as it does take a harder stance. how much of a consensus is there on the right approach for the allies versus china in terms of reconfiguring trade? james: i think that is the through line for g7 to nato. in fact, the atlantic charter is

all part of this. one central element to this that you will be well aware of are the chinese claims of territorial ownership in the south china sea. we are pushing back on that by driving our ships through those international waters. that's a set piece that opens 2034. interdict's world -- in today's world, the brits are headed there, the germans are doing it. a lot of it derives from concern about human rights, but also your point about trade and access to chinese markets. i think there is going to be a continuous conversation about china and western china relations that run from geopolitics to geoeconomics to arkansas market access -- mercantile market access. lisa: -- in their outreach to

try to help us all get out of the pandemic versus china, which has been more aggressive or at least aggressive on a pr stance about their efforts on that front. james: this is a reflection of the clever chinese strategy. one belt, one road, sometimes called the belt and wrote initiative. it is a clever -- belt and road initiative. it is a clever strategy that seeks to engage china geo economically innate mercantile fashion. that's why the president's announcement of 500 million doses, no strings attached, pfizer, gold standard, coming from the united states, that's a big deal. it kind of laps together three c's of the g7, covid, china, and cyber. tom: admiral, angela merkel is about ready to descend upon her last g7 meeting at 66 years old. she is esteemed and venerated.

she is a quantum chemist from eastern germany. what has been her chemistry, her impact on the western world? your tour of duty at nato and after that? james: i met with the chancellor many, many times. honestly, there is no leader that i would put above her in terms of her integrity, willingness to make hard decisions. germany, a nation of 80 million, took in one million refugees from syria. the united states took in less than 20,000. she made the hard political choices. she is a 4-term chancellor. she is like fdr. i cannot say enough good about angela merkel. i hope she does not go gently into that good night back to a physics lab somewhere and i don't think she will. she's got my vote to be the secretary-general of the united nations. tom: there you go.

working on the resume for angela merkel. matt miller is in berlin. she celebrates a political domestic victory in the recent days. >> those polls come and go. i think that admiral's point is an interesting one, angela merkel would make a great secretary-general. when i attended the g20 meeting in hamburg, she got a standing ovation from all of the other leaders when she entered the opera hall there at the end of the meeting. she essentially was leading the g20. it will be interesting to see what she can do here at the g7. to me, the most interesting thing about angela merkel is all of the good deeds she has done, you just listed, and yet, she is so insistent on building this nord stream 2 pipeline to russia, essentially funding hundreds of billions of dollars to vladimir putin to finance

things likely annexation of -- like the annexation of crimea. why? james: i think it would be hard to find any leader who backs 1000. i think all of us can look at any of our leaders and say you got this one wrong, you got that one wrong. to the pipeline question, i would say to her, chancellor, you got that one wrong. it reflects her -- sometimes, our greatest strength can be our greatest weakness. she wants to build consensus, she wants to pull russia to the west. there's a strategic sense with that but it will not work with vladimir putin. i would score her less perfect on that particular point. tom: admiral, if you framed out russia out of proven, i guess none of us -- have you framed out russia after putin?

i guess none of us have done that. what does russia look like pulled to the west after putin? james: let's hope it happens. if you look at the history of russia in terms of leaders who rolled the cosmic dice, sometimes you get peter the great, the next time you get ivan the terrible. you get joseph stalin, then you get gorbachev. he will be the czar of all the russians until the day he dies. he is alive in 2034. what comes afterward, let's hope the dice land on a different kind of leader. it's possible, if you look at russian history. the strategic opening to pour russia away from china is a powerful moment for the west. it will not come until vladimir putin passes on to the great commune in the sky. tom: thank you so much for joining us this morning. my book of the summer, "2034." it is a wonderful, piercing

read. matthew miller on radio, on television, do i make a note that the chancellor exited the airport in a jaguar. would this be true? >> that is true. they make those in the u.k. as well. i've got to say, i cannot wait to read "2034." i am obsessed with spy novels from norman mailer to ian fleming. i think it will be great to take it forward. tom: it's really, really an important book. what is so important, folks, and lisa abramowicz, it starts strong. i cannot say enough about the first chapter. you give, oh really, this is not about the navy floating around the ocean. lisa: it might be fiction or is it? it really shows how the balance of power has shifted. tom: let me do a fiction of a data check here. this data check is a fiction.

dow futures up 81. the vix is at nine. i am kidding. stay with us for more coverage. guy johnson in cornwall. this is bloomberg morning. ♪ -- this is bloomberg. good morning. ♪ >> the world's richest governments are under mounting pressure to help poor countries fight climate change at the g7 summit in the u.k.. they would get a new chance to do something about. president biden and angela merkel our meeting in cornwall, england through sunday. on the agenda is a discussion of how to help finance a shift to cleaner energy can low income countries. oil demand will return to pre-pandemic levels next year. that's the forecast from the international energy agency. the iea predicts that the world

consumption will surpass 100 million barrels per day in the second half of 2022, as developed economies bring the virus under control. a prominent harvard medical school professor that has resigned from the uss fda -- u.s. fda advisory panel over the approval of biogen's alzheimer's drug. he is the third person to quit over the clearance, which he called probably the worst drug approval decision in recent u.s. history. conflicting results were produced on whether the drug can reduce cognitive decline. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

♪ >> scaling back on the data.

they are reducing the frequency that they are publishing covid related data. i know everybody feels that we are in the homestretch and beyond. data in front of us to make sure we are on the right path and make sure we don't quit before the game is over. tom: jennifer muzze from johns hopkins -- nuzzo from johns hopkins. long ago, mr. -- understood that you took biochemistry and got through organic chemistry and bu ried it was rutgers 355. i pulled this off the website. it was about scientific writing. that is a chorus at your undergraduate level where you realized someday, you may have to commit research, commit science, and publish. it is an uproar and the

outsiders study right now -- in the alzheimer's study right now. we thought we would get perspective on people like you resigning from institutions because they disagree with what the fda did. talk to us about the sanctity of research. talk to us about how this stuff gets publish and what you do when politics intrudes. >> well, it is clear that scientists are always focused on the data or at least should be. the data tends to drive decisions. we tend to make black-and-white decisions about things based on the data. certainly in the case of the alzheimer's drugs, there are other factors that are really pushing forward here. you know, if you talk to people who are suffering with alzheimer's, everybody wants a chance to try to get something better for their lives, for their loved ones. one understands that there is

some emphasis on a glimmer of hope that perhaps fda would move forward to try to allow that into wider use. the data in those studies are very controversial. what i am afraid we are doing is giving people false hope that something might be working, yet when they look back later on, they will see that the data supporting whether that works was really rather flimsy and that erodes trust in the scientific process and in the process of getting drugs into safely and africa sleep into the population -- efficaciously answer the population. -- into the population. lisa: how much does a controversy like this undermine the fda's credibility, as we continue to try to get a critical mass of individuals vaccinated from covid? >> it really does question the

process, which is in parallel when you saw the process go forward with covid-19 vaccines. there was really open sharing of data, results were clearly discussed, conclusions were quite clear, and the process was really fast tracked to go forward. in this case, you've got the science, which is mixed at best, about the drug, yet the approval is moving forward. let's not forget about the cost of this drug. i meet, this is an incredibly expensive treatment, which this data is not suggesting has a very high likelihood of significant success. it is those mixed signals that is really going to eventually erode the trust of the population in the process. lisa: i want to talk about the danger of an eroding of confidence at such a crucial time in the covid-19 pandemic. i was out this weekend. i was out the other night, the pandemic is over in new york city. people are not wearing masks,

restaurants are crowded, the mask policy is a joke. it sort of is a different policy wherever you go. how important is it to get more people vaccinated to prevent another resurgence that could potentially be highly damaging, given the delta variant? >> all we have to do is look at the situation in india and nepal. now, we just look at the situation in the u.k., where variants of covid-19 have become the dominant virus in this population's, in the u.k., despite a somewhat effective vaccination campaign. those variants have different properties that increase the ability of this virus to spread and it looks like potentially cause disease in the population. anytime we give the virus a chance to get to know its host better, to get to see immunity against it, the natural selection principles laid out by

charles darwin suggested that variants that are more fit will emerge, particularly in the u.s. we cannot look past that, because we have the unvaccinated and the vaccinated. in many places, the unvaccinated are larger than the vaccinated populations. that just sets up a situation where the virus can see immunity, can go into people who don't have immunity, and that back and forth is essentially how my laboratory selects variants when we are studying them. we are starting them in the population and that's not a good thing for us to be doing. >> you bring in darwinian choices. the virus wants to survive and thrive. a large part of that means not killing its victims, right? previously, we have seen these viruses mutate into less fatal disease causes. is that the case to you think as well with covid-19?

>> this is where research is going to be incredibly important, because we have essentially protected a good portion of the population that are suffering from very severe disease. now, we are looking in the parts of the population which previously did not show a lot of severe disease and we are looking for small changes. that's something that has to keep going. we have to remember that history has dictated that viruses will get less virulent as time goes on but that's usually a combination of immunity in the population and changes in the virus that will make that a little bit less virulent. those two things have always gone hand in hand when we see pandemic viruses lose their virulence over time. it's a combination of the virus changing and immunity in the population which lowers disease severity. tom: thank you so much,

particularly those comments on alzheimer's. he is with johns hopkins bloomberg school of public health. lisa, we've got to look at the markets. i have a different equity market, a stronger equity market than we have seen the last number of days at this hour. lisa: we have seen a stronger equity market on the heels of those lower bond yields. still way off their average over the past couple of weeks. you think about how you pair that with the idea that commodity prices are the highest since 2015. tom: right now, we have to turn, as we always do, to amy in mission control. matt miller, i am sorry, it's time for obligatory car talk and we have to look at the royal family's arrival. they got to get to the project here. this will be at 1:00-ish our

time, 6:00-ish u.k. time as well. how do they get about? matt: queen elizabeth famously likes to drive herself in a land rover, i believe a series one. otherwise, they are chauffeured around in a jaguar bentley. tom: stay with us. ♪

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♪ >> inflation back -- inflation expectations are back. >> the federal reserve inflation very seriously. they think about the data. >> the bond market is focused on the labor picture. >> i would expect the fed is welcoming this relatively nuanced volatility. >> we need to know if they are going to be persistent. if they are, central banks will probably have to move. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast, a friday simulcast on bloomberg radio and bloomberg television. our guy johnson in cornwall with all that is going on at the g7 meetings. romaine bostick infra jon ferro with the bull market. what is the color of the bostick bull market? romaine: it is green on this