♪ >> 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

friday, tom. tom: the real story always for "bloomberg surveillance" is the foundation across equities, bonds, currencies, and commodities. lisa, you nailed it with the high-yield paper or whatever you said, one basis point from record tight. is that what you said earlier? [laughter] lisa: what a way of building credibility. you nailed it, whatever it was you said. the issue here is you've got low yield. when you get the gravitational force lower in treasury yields and that benchmark r1 rate, you get risk on. that tends to be what happens in this new paradigm, to use the word you love. the idea that lower rates means more stimulative, means more risk on. see that with the lowest yield ever on high-yield bonds. tom: we will do a data check in a moment. to begin, your thoughts on the g7 meeting, the royal family to

attend cornwall this afternoon our time. as well, many others lending now. we saw draghi land, we saw merkel land. lisa: today i think they could give some sort of guidance on the global minimum tax. today is about the economy, and that is where they could give the most guidance and concrete policies. how much consensus is there around a global minimum tax rate at 15%? tom: romaine bostick, i'm supposed to go meme with you, but i want to understand the other side of the trade. the idea that if a thing goes up , and the media loves the show of gamestop or whatever it is going up, up, up. but someone is on the other side, and we see hedge funds reporting serious losses believing these puppies would go down. romaine: we seen this happen in the past. there's always somebody who gets left holding the bag. the 4% drop we saw here is not

totally unexpected, but you always look at these trades and you sort of wonder not only who is buying, but more importantly, who is really a believer in this. who's really buying this for the longer-term, and whether those are the people that end up getting hurt by this. tom: romaine, help me with the data check here while lisa walks is to the wall -- lisa waltzes to the wall. the vix is at 17.3. romaine: you see dollar softness , relatively flat. go back to that yield picture and how it folds into the equity market, that 4237 is the record high from yesterday, the record high we are going to open at apparently today, it is still a very modest crawl to that record high. i think you have to take a step back and you talk about how much of a boost yields can give. that used is going to be

relatively contained, considering we were already low. tom: we will see. we have a briefing this morning that all wraps around the g7 meetings. what do you have? lisa: today they begin in cornwall, england. a key issue today is going to be the economy. how do you get the world back up to speed post-pandemic? interesting to hear comments about the k-shaped recovery, how much these nations are committed to redistributing imf funding to poorer nations, and how much they are committed to the global minimum tax rate. interesting to hear also how much they are going to use some of this of reach to generate support for the trade plans they have with china. in :00 a.m., i am very interested to see what the u.s. michigan consumer confidence, consumer sentiment survey shows, particularly with respect to five to 10 year inflation rates. we saw the last survey with the expected inflation rate over this time surging to the highest since 2011. are we going to see a continuation of this?

we know consumer expectations tend to lead actual inflation. does the fed gauge of inflation matter when you go to the grocery store, the auto lot, and you see very different price increases? this feeds into financial stability concerns. as people get complacent with no inflation, despite what they might see in the stores, how much do they build up risky positions that pose a threat down the line? janet yellen presiding over the financial stability oversight council meeting. how much will they flag some frothy assets -- some frothier aspects of the markets? tom: maybe not quite as pressing as we saw with ecb this week, but nevertheless important. katie dixon joins now with the northern trust wealth management company as we try to reframe into the fed meeting next week. katie, what do you change at

northern trust in your allocation? what has been the distinction of the last couple of weeks between equities and bonds? katie: we have been pretty consistently risk on since we started to come out of the pandemic, and we continue to feel really confident about risk-taking right now. it has been so interesting to see the bond market come around to that point of view in the last week or so, as interest rates and inflation expectations come off the boil and more bond investors have come around to the fed point of view that the inclusionary pressures we are seeing now will be short-term, and that longer-term we will be back to that sort of normal, low inflation environment. low inflation, low rates, positive economicdisconnected, e

certainly seeing that now, where we have this operating leverage coming to the fore, with actual growth as well as forecasted growth for companies that are just going strong double digits this year and even into next year. so we do expect very strong corporate earnings that will outpace gdp growth. romaine: a lot of people were betting on the economic recovery , at least when we saw the run-up in equities earlier this year.

that seemed to be the trade. yesterday we had the -- we hit the s&p 500 record high while others were in the red. is that really a that you want to make? katie: it is a post-poll now -- it is a push-pull between those. it is a both/and story for us, not either/or. we also think there are legs to this value and cyclical recovery. from the value perspective, number one, the valuations are still very high level. secondly, the earnings growth in value is going to outpace growth this year and next year. tom: whatmption right now? lisa and i go back and forth on a 60/40 textbook split.

are you managing for a single-digit return? katie: that is the big question. i think 60/40 portfolios are going to be challenged. the biggest challenge is we are going into this period with very low bond yields and very high equity valuations, and we know that matters for long-term investors. your best guess for your bond return means probably lower equity returns, even with strong earnings growth. so we do have that kind of forecast for assets. tom: thank you so much. what i want to do before we go back to cornwall and the g7, alicia levine coming up as well, i want to talk about the collapse of the 60/40 portfolio. if you are not in the 40 bond, what do you do in the equity market? romaine: a lot of folks still have that 40. it may not be that traditional 40 and the treasury market. a lot of that has actually gone into corporate bonds.

tom: i don't know that. lisa knows that. romaine: well, lisa knows that. a lot of that has gone into unfunded of assets -- into alternative assets, whether it is real estate, sitting in crypto assets. tom: you're killing me. lisa, help me. romaine: it is a brave new world we are in right now. [laughter] tom: you don't say that in the morning, romaine. lisa: you can say that in the morning. you have my blessing, and you are absolutely right. he nailed it. the issue here is not just bit dog, according to tom keene, but people are investing in liquid assets. how much do we focus on the more liquid assets getting sold off this proportionately if there's a dislocation? because you sell what you can. how much are we already seeing that? the activity is getting consecrated in -- getting concentrated into a narrower slice of this incredible move to

less liquid, privately placed assets. tom: this is dead on. we forget what -10% is or -18%. we are talking about corrections a 5%. that is just baloney. romaine: a lot of people are setting up for that. when you look at some of the fund manager surveys and some of the strategists we talk to, they are prepping themselves for this. you have already seen reallocation here. the idea that a c diff in correction has to happen asked that a significant correction has to happen and is going to happen at some point -- that a significant correction has to happen and is going to happen at some point. lisa: they are preparing for the correction by preparing to buy it, so at what point do you just not get the correction? people are in triple leveraged all-cash. can you believe that, tom? tom: i'm absolutely stunned. very quickly, it is friday and we are going to be buried with gloom articles. how do you digest those? romaine: on this friday, gloom? what gloom are you talking about?

i think it's a wonderful friday. it's a beautiful day in new york city, all up and down the east coast. tom: listen to him. lisa: seriously, what is this. [laughter] tom: josh wingrove is on deck and cornwall. huge news flow -- deck in cornwall. huge news flow from the g7 meetings. ♪ ritika: the world's richest governments are under mounting pressure to help poorer countries fight climate change at the g7 summit in the u.k.. they will get a new chance to do some thing about it. leaders of the g7 including president biden and german chancellor angela merkel are meeting in cornwall, england through sunday. on the agenda is a discussion on how to help finance cleaner energy and lower income countries. he made a name for himself by growing black starnes -- by growing blackstone's wealth

management arm. he sat down with david rubenstein to give his thoughts on real estate investing. >> i think it is still a good time for real estate. too much leverage, too much capital, and we don't really have that in the real estate is missed today. the other, too much building. we are actually below historic levels in terms of new supply. ritika: you can see more from this interview with jon gray when the series debuts globally. the series will feature conversations with the world's top investors. china has improved -- has approved two coronavirus vaccines for emergency use in children age three to 17. the country's accelerated vaccine drive comes as the u.s.

pushes for a new investigation to determine how the virus emerged. 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 economy is in very good shape in the u.s. balance sheets are in good

shape. we are about a year away from full employment, maybe a little longer. but we've got fundamentals driving the economy, as well as fiscal policy, as well as monetary policy. basically, people can count on 18 months of very strong growth, and the u.s. pulling up growth around the world, too. tom: dr. posen truly one of america's experts on germany from world war ii forward. moments ago we heard from the white house that angela merkel will visit president biden at the white house i believe on july 15. joining us from cornwall, josh wingrove, traveling with the president. the symbolism here is still extraordinary. i go back to the shock of my early childhood in 1962, greeted by world war ii veterans john f.

kennedy. it is a span of well over 60 years now. how will the greeting be for merkel retiring as chancellor? josh: merkel and obama had a very special relationship, and good morning, tom. i think there will be similar vibes between her and president biden. first on the agenda i think will be a carryover from the summit that begins today in the u.k. they want to show a united front. but one step below that, they are not in lockstep on everything, of course. the nord stream 2 pipeline top of mind on that. biden looks like he has more or less thrown in the towel in conceding they are going to get this thing built. but i think this one is probably an important one to the white house to get before she goes out the door, given how many obama people are in that. this will be the third visit to the white house since biden took office, the first two being

japan and south korea. tom: inside the imposing cassoulet did -- inside the imposing castle edifice, what is on the agenda? josh: the first session is this afternoon. biden has kicked off the day by talking about the baton pass by the g7 finance ministers around the agreement for that if 2% global and among tax -- that 15% global minimum tax. whether it is possible to do it with democrat only votes, whether joe manchin cares about that kind of thing, lots of balls in the air, but he wants to gather some momentum from the g7 saying this is a good idea.

we don't know how much that is going to cover. it depends on what other countries do. even the countries that agree to it at a summit like this, whether their congresses and parliaments will actually pass it. biden will be trumpeting that at the top. he wants that 15% men mom tax. lisa: -- 15% men mom tax. lisa: there's a lot of -- 15% minimum tax. lisa: there's a lot of pomp and circumstance, and there's a question of who they are trying to send a message to. is it to china, or to other nations around the world to get some sort of consensus and how to work with china? josh: i think it is a little bit of both. you can imagine the pomp and circumstance tends to dry out by the time it reaches yours truly in the press, waiting for these events, but they definitely want to show a united front to china. biden has tiered is events to

build to that meeting with putin. one thing we will be looking for in the g7 communique is how many times china is said or unsaid. a lot of the messaging will be designed to wear off against chinese influence. biden has counter to the brand of vaccine diplomacy. so china is top of mind. the putin meeting, building 2 that. but i think biden is a little more hawkish on china compared to some of his counterparts. they see more shades of gray on that. romaine: looking to the nato summit, where you will be sitting in a van somewhere on the outskirts of brussels, what exactly are the european leaders, particularly those in eastern europe, looking for out of the u.s. administration with

regards to its commitment to nato? josh: i think we will hear joe biden talk a lot about article five. a few years ago, donald trump sort of set off a fury by suggesting that was not an ironclad commitment, isn't julie saying he might not necessarily have their backs -- commitment, essentially saying he might not necessarily have their backs. joe biden will recommit to that. we are going to see less of some of the tensions that have animated the previous nato summit, which were dominated by donald trump that people pay me more. joe biden is not doing that, so they will put it to more of the geo pulled -- they will pivot to the geopolitical. tom: josh wingrove, thank you so much this morning. on bloomberg radio and bloomberg television, we welcome you on an interesting friday. the shock and awe of yield we have to continue to circle back

to. what is the research of the why, of the move from 1.60% down to 1.45%? lisa: short squeeze. that's what a lot of people are saying, that basically everyone was positioned. the consensus was that treasury yields were going to rise. suddenly you have increasing momentum behind the idea that this is transitory and the fed is onto something. if you look at which measures saw the biggest increase in the cpi data, most of them were very specific industries that were, you could say, transitory. the idea of airfare, used cars, that counted for 1/3 of the increase in the cpi. there were very specific factors that led to this, so people are looking at that and saying, all right, it will pass. tom: the idea this will pass and the nasdaq goes up two days in a row. link it over to the equity markets. tom: a lot of people -- romaine:

a lot of people have been concerned about that rising rates and how that would crimp growth for these companies. the idea that you have yield sitting below 1.5% and the idea that they have come down so fast has reinforced that trade. you're seeing a lot of people pile back into that, and more importantly, they are selling off some of those cyclicals that were supposed to be a big part of that rebound. lisa: i have a question. you both shrug off the idea of a short squeeze. why is that not what it is? tom: it can be a dominant factor. i don't disagree. but i don't think it can be taken in a vacuum. lisa: agreed. and i think it goes to this idea of the factors going into a higher inflation reading that really are specific to the post-pandemic period. romaine: i've never shrug off anything you've ever said. lisa: well, that is sarcasm friday. here we go. [laughter] tom: futures up six, dow futures up 65. we will get through this, folks. lisa: will we? tom: the vix showing the quality

and character of this bull market. the real yield, -0.93%. this is bloomberg. good morning. ♪

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♪ tom: "bloomberg surveillance." good morning, everyone. jon ferro off today. romaine bostick with us here. we are looking at really fascinating yield markets. we will get to that in a moment. futures up six, dow futures up 72, and the vix stunning, down to 15.79. that is not a small matter to see here at 7:30 wall street time. is a changed equity market a better equity market through the days? with a better look at individual stocks, romaine bostick. romaine: let's start off with apple. a lot of speculation about that apple card. a lot of doubt -- that apple car. a lot of doubt about whether that thing will ever get built.

the man who left bmw to start his own ev company, he is now joining apple, providing reassurance that apple is committed to developing some type of electric vehicle. we have not seen any designs or timetables for when this might be done. keep an eye on snowflake here. an investor day yesterday. some of the guidance seen as a little bit conservative by some of the investors. that's why you are seeing shares lower. chewy also talking to investors yesterday and out with numbers. overall sales were up by about 5% and you had improvement in margins, but the company talked a lot about labor shortages in the idea that some of those costs would probably go up. tom: romaine, this drives me absolutely nuts. the number of chewy boxes in the manse i live in, their business

is so good they can't get labor? josh: it's -- romaine: it's bad news they have to pay more to get that labor. you need to pay people to do that. it is a huge operation. tom: you hit the third rail of "surveillance." three chew toys, and two of them are already chewed up. that's the racket. romaine: it should all work out. flip up the board here because it has been a great week for the health care companies. biogen up almost 60% over the last four days, up another 1% in the premarket. curevac's going in the opposite direction. still waiting on the european medicines agency to approve that. keep an eye on vertex

pharmaceuticals. basically saying they are going to abandon the developer, seeing shares down about 14% on the day. tom: romaine bostick, thank you. what we are going to do on radio is a chart. on a friday at the edge of summer, it is a little cooler today in new york. charts work on radio. this is an early candidate for chart of the year. this is the real yield for the pandemic. all you've got to know on radio is we went negative, then bigger negative, and we stayed bigger negative through gloom, and then lisa abramowicz, there was the hope of a vector back towards 0% negative inflation-adjusted real yield. the last two weeks have been one big hoops. -- one big oops. lisa: basically, the gist of it is you are losing money in real yield if you take a look and you

base your expectations on inflation and what the bond market is currently pricing in, and that negative yield is back near -1%. tom: -1% would be stunning. lisa: it would be stunning based on where we are in the economic cycle. tom: anthony from sparta emails in and says have another tang mimosa. lisa: subadra rajappa is standing by, socgen head of u.s. rates strategy. there's a question of what has been behind the rally in 10 year treasuries. other would say a lot of people -- i would say a lot of people are attributing it to a short squeeze. is that it? subadra: that's definitely one of the factors. when positioning gets skewed, you tend to see a short rally. but we are also seeing very strong demand coming from real money accounts, overseas accounts in auctions this week. if you look at the auction

metrics for indirect, as well as direct, participation has been very strong. so the primary dealers are not taking down these options. it is real money investors. so it is a combination of positioning as well as demand for treasuries, which i think is counterintuitive. at this stage in the recovery, you should be expecting a gradual rise in yields. in some respect, the rally with that we have seen seems to be somewhat counterintuitive. lisa: that really raises the question, how much does this rally have legs, or is it a one-off, a positional shakeout that is poised to reverse? subadra: i am more in the camp that once we get this position shakeup, we should see yields start to head ever so gradually towards a higher trajectory. in some respects, where we are right now is very similar to what we saw earlier this year. 10 year yields were 80 or 90

basis point when they began the year. we thought the world would come to an end when 10-year gilts got to 1.25%. guess what? the fed just stepped aside and said it is ok for yields to rise . the fed is gradually thinking about paring back asset purchases. they are going to look at tens at 1.45% and say, you know what? we have room to sound more hawkish on the market. and if yields rise, so what? there's a lot more room for yields to rise. so i think that is the big risk heading into next week, that there's a decent amount of complacency in the bond market that the fed is going to keep things status quo. romaine: talk more about the complacency and the possibility for volatility should we finally start to get a little bit clearer communication bout the fed.

because while they may be standing pat right now, they've also made it clear that at some point, things are going up, and we are going to get some sort of roadmap, hopefully soon. as we start to drift lower here, i am wondering whether that sets us up for a more volatile spike higher at some point soon. subadra: definitely, i think the summer itself is going to be somewhat more volatile. it is not just fed communication that could spur volatility. it is also the data. you can't just turn on a switch and have the economy come back online. there's data that we are going to get that we don't know the trajectory for employment, if it turns out a lot slower than we are anticipating. so at least until we get to the second quarter and third quarter, i think we are going to see a little volatility in the data, and fed is long overdue in my opinion to start thinking about tapering asset purchases

that have been commuted getting those intentions and those intentions are going to start getting communicated as early as next week. tom: on a strategy basis with where we are, what do cfos do? is the great unspoken that there's going to be a wall of bond issuance coming out in the next six months? i've lost track of what the corporations are actually going to do. are they going to pile on more debt? subadra: yeah, if interest rates are low, that is what you should be doing, borrowing is much as you can. there's definitely a case to be made, and it has already happened. a good portion of this year, we have seen tremendous amounts of corporate bond issuance. what is really interesting is the amount of demand from investors for all of this issuance. spreads are extra nearly tight. and this demand continues. lisa: that's where i wanted to go, the idea that high-yield

bonds are now yielding one basis point away from the lowest ever, sub 4%. we are looking at 3.98% on high-yield bonds, and the record sales pace has been blow your socks off. there's a question about the moral hazard here, the idea of the complacency of a low rate regime here on out tied with companies selling bonds to raise money to buy bitcoin like the microstrategy bond, to pay dividends, to pay money to the private equity ownership. at what point is this become a problem, or are we in a never ending cycle of ever lower yields? subadra: i was listening to romaine earlier on saying at some point, there will be a correction. things do get a bet out of hand and you will see some sort of correction. for that to happen, it is going to come from a change in the policy stance. right now the fed is keeping its

asset purchases. these real yields you are seeing at -92 basis points and -1% are going to have to move higher. and guess what? when yields start moving higher in a steady, systematic way because the fed is trying to remove accommodation, this is going to have an impact on risky assets. so we are not your cash we are not there yet. it is really hard to time this. but that is definitely a risk on the rise in. tom: thank you very much. subadra rajappa there from societe generale on the dynamics of these rates, and the major dynamic has been shock and all. you've developed a firestorm of comment. david on twitter is watching and listening, and he's all over a two week toy -- all over a chewy toy. romaine: that's for the big dogs there. i thought you had a tiny toy poodle or something. tom: we have the toy thing.

romaine: do you just carry those around central park? tom: precisely. we put them in the overpriced designer dog thing and walk them around. romaine: you've got to get one of those baby carriages for the dog. tom: oh no, they have that. we are one step away from those. lisa, i look at the excitement of internet and retail, and this goes to david rubenstein with jonathan gray. i adore what jonathan gray said in that interview with blackstone where he talked about don't invest in buggy with industries. to me it is the biggest deal because you talk about chewy and chew toys, and it is just an amazon equivalent, isn't it? lisa: i'm not going to be giving chew toys to my children. i'm just going to put that out there. tom: have a drink and you will change your mind. [laughter] lisa: there is a question, what is a buggy whip?

honestly, what is that company at a time when technology is changing that quickly? tom: i would defer to mr. gray of blackstone, but i suggest buggy whip is 3% revenue growth. stay with us on a friday. guy johnson in cornwall. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. 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 will get a new chance to do some thing about it. g7 leaders including president biden and german chancellor angela merkel are meeting in cornwall, england through sunday. on the agenda is the discussion of how to help financing shift to cleaner energy and lower income countries. the debate over how to pay for the nations roads, bridges, and transport system continues on

capitol hill. disagreement about whether motorists or corporations should foot the bill are threatening to hamper negotiations between president biden and senate republicans pray massive infrastructure plan. i'd and pulled out of one-on-one talks with virginia republican senator shelley moore capito. a prominent harvard medical school professor has resigned from the u.s. mda -- the u.s. fda advisory panel over the decision to approve i/o jen -- to approve biogen's alzheimer's drug, but she called "probably the worst drug approval decision in recent history." to trials produced different results on whether the drug could slow cognitive declined. at the global economy recovers from the pandemic, ripple effects are being felt by everyone from homebuilders to appliance makers. demand is so frenzied that some

have stopped taking orders from customers in recent weeks. steel prices in the u.s. have tripled over the past 12 months. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

♪ tom: "bloomberg surveillance."

good morning worldwide. something of great interest to great britain, this is the first lady, mrs. biden, on the obligatory schoolchildren. they look like francine lacqua -- the able to tory school -- the obligatory school tour. they look like francine lacqua's children at a distance. we will have much more from the g7 meetings. our guy johnson in cornwall. right now we go to david lord wilson on the equity markets, and you've got the momentum. dave: specifically the value of moment them stocks. tom: what is a momentum stock? give me a name. dave: they sickly, stocks that rise faster than others. tom: apple and amazon. dave: that's what we think of.

the best-performing industry group in the markets, energy. not exactly expensive when it comes to earnings. financial stocks also among the top performers. again, relatively cheap. so what's happened is msci goes through its index twice a year and does what the collie rebalancing. -- what they call a rebalancing. with the msci world momentum index, which tracks developed markets, 23 markets around the world, before the rebalancing which was done two weeks ago, that index was valued at 30 times projected earnings for the next 12 months. tom: so they went to energy stocks. what is it valued at now? kevin: around 8 -- dave: around 18. tom: what i see here, david, the fancy math phrase is stochastic,

which means it's pointy. when you know they turn around? dave: that will be something to watch, but what really is the point here is that the composition of the momentum is changing. in other words, the kind of stock, you talk about apple and amazon, those are the ones we think of in terms of momentum. now maybe we have to think more in terms of exxon mobil or j.p. morgan chase. that's how things have shifted. it is not just here. it is internationally because we are talking about a worldwide index. romaine: it's funny you mention some of those names that have now become momentum names, but when we talk about this idea of what people are chasing in this market here, the whole definition of some of these factors has been completely turned on its head now. so what was once value is now growth, what was value is now momentum. does this somehow reverts back to the norm, or is this kind of the new normal going forward?

dave: that becomes the issue because in the last couple of weeks, we have seen a shift away from the cheaper shares when you look at energy or financials or whatever. so that remains to be seen as a theme. because a lot of this has been tied into what is going on and bond markets with interest rates rising, and we know at the moment the treasury yield is sort of stabilizing, if nothing else. lisa: that's exactly where i wanted to go, this idea of the narrative driving the shifts you are seeing beneath the equity market right now. what is the current prevailing narrative, given the fact that the commonality of bonds has changed a lot? dave: we should point out with the msci index, it tracks price changes over six and 12 months, so really the six-month timeframe is more where you saw energy and financials and those kinds of shares doing relatively well. so that is going to be something to watch going forward, to see

if that carries on and we -- that carries on, or we shift to where we were before. tom: what is fascinating to me is we partitioned the big cap spx, dow, etc. over to nasdaq 100, and we forget about russell 2000 small caps. her small caps back invoke -- r small caps -- are small caps back in vogue? romaine: they were. this takes a little bit of bloom off the rose. the only thing that really kept the russell 2000 afloat was some of those energy names and biotech names, but those cyclical names falling out of favor of some of the more growthier or value oriented big cap names. tom: i am going to fold this into the jonathan gray interview with david rubenstein. we are doing the education ballet at the g7 meeting with dr. biden and the duchess here.

it is a photo op, and everybody is happy and they look fine. on radio we have the first lady and the duchess sitting at a table with a bunch of well scrubbed cherubs. i believe that as young look while -- young lacqua to the left. but it is about education first, and that is really what is happened to our equity markets. lisa: there is a question right now, when you say buggy whip companies, the old-school was performing because of infrastructure place. at what point does that reverse if there isn't necessarily some sort of infrastructure plan agreed upon? there's also a question, and this i think underpins the question on risk assets right now is bond yields go lower. at what point do we worry about lower earnings profits, about the idea that earnings growth has such high expectations to meet?

can it meet that, given what we are seeing with the bond action? tom: in one day at school, do your kids ever look like the kids sit to the right of dr. biden? lisa: absolutely not. tom: never one. lisa: my young one uses his mask as a crumb catcher. i've never seen anything quite like it. tom: it's the g7 meeting, and we continue forward. romaine: did you know there is to a buggy whip maker out there? tom: i did not know that. romaine: it is in westfield, massachusetts, called westfield whip. tom: they came from ages ago. they are probably still used in devon. lisa: in all seriousness, what is a company that is going to be obsolete in the future? people were betting that gamestop would be, now they are going to sell shares and try to amazon-ify themselves. tom: the reason they are kept alive by the absurd rates

structure capitalism has given us. lisa: the idea of zumba thick asian -- the idea of zombification of the markets, how they are going to justify it in a world that is instantly changing. it really raises the question, are you a buggy whip company if you got a website? romaine: a lot of buggy whip makers actually went on to become automobile and auto parts makers. tom: you just captured a g7 moment there. for those of you on bloomberg radio, it really looks like this. rachel from indiana demands that her son looks like those cherubs every day. yeah right. what you just saw there, folks, with team coverage in cornwall, the camera was on the well scrubbed kids and the duchess and the first lady, and then the camera spun around to the press crew, which was flew in at 4:00

in the morning. they look like they'd been run over. [laughter] all is at peace in cornwall. this is bloomberg. stay with us on radio, on television. ♪

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♪ >> we i think are seeing the shape of inflation in the post-pandemic world. >> i think the fed is going to need to recognize this risk. >> the federal reserve take inflation very seriously. they think about the data. >> we need to see whether the -- are going to be consistent. >> low inflation, low rates, positive economic growth and strong earnings. that is a pretty good backdrop for risk-taking. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. lisa: