>> this economy is running very hot, above long-term averages, and that should she went to these cyclicals. >> we cannot maintain this 6%, 7% gdp growth rate in the united states. >> this is going to be eight interim -- going to be a tantrum-less taper. >> how will the market react? >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

a simulcast, bloomberg radio, bloomberg television as well. an interesting tuesday into a raft of economic data through the week. we've got the euro story. little tea leaves on our bloomberg screen. weaker euro says something. jonathan: a break of $1.19 briefly. i think it has been forgotten that the dollar topped out earlier this year at the end of march when 10-year gilts topped out. 10 year yield was pushing 1.80%. a lot of people will make the argument that that was about u.s. exceptionalism, that the rest of this year will be about europe reopening. that dismisses the fact that europe has already outperformed on the equity side so far this year through the first half. the euro stoxx 50 has outperformed the s&p 500, so i think it is really difficult to make this international call. it didn't work in q1 in terms of the u.s. exceptionalism story playing out.

i wonder if it plays out in the back half. tom: to reset into the back half, we will read up on what they strategists are doing and the nuances they are making. in your reading, what is the number one nuance you see into the second half of 2021? jonathan: the divide over 10 year yields and trying to call this fx market. on the side, we outperformed in europe. on the ethics side, we didn't -- the fx side, we didn't. a lot of people looking for that euro strength boosted by inflows. we haven't seen it in the way people thought it would play out. it has not played out that way. there's a huge divide still over what happens with treasuries. 1.95% one call at j.p. morgan. tom: lisa, it is maybe less talked about, but away from full faith and credit, the government

paper is what the bond world is saying. can we say it has never been like this? lisa: we have record low yields. the question is how indicative that is of a credit cycle versus simply central-bank support. just to give you a sense of what has shifted in the past several weeks, it has been a reconfirmation of the market believing the fed and believing other central bankers that any inflationary push is transitory. just crossing the bloomberg terminal, the german inflation rate fell to 2.1% in june, matching estimates, but confirming this idea of a deceleration at a time when a lot of people really don't have a crystal ball for inflation, do put it mildly. tom: jonathan ferro, i want to go to lisa to give her some face time. i'm looking at the negative yield of the german 10 year. lisa: thanks, tom. [laughter] jonathan: for a moment in time we were pushing zero, weren't we? tom: and it has just come back.

jonathan: this idea that inflation was going to spiral out of control. i am not making a call off that, but when you look at 10-year breakevens, as may. lisa: this is a quest -- it may. lisa: this is a question going forward. the biggest potential risk to margins is upside surprise. we are seeing that -- we are not seeing that except for the relation trades that have cooled off -- the reflation trades that have cooled off. jonathan: here's what i see for the airlines. they struggled this month. when you look at the corporate behavior, maybe that is the key indicator right now. corporations betting on a better future. tom: totally agree on this. jonathan: united airlines agrees to buy 270 jets. there's a big bet in there. tom: we will really focus on the earnings season in the next

three weeks or so. i don't know when that starts. you will tell me when to wake up and start looking at j.p. morgan. [laughter] we are not going to talk england-germany now. we will get to that in a moment. red and green on the screen or get i'm waiting for spx to go positive with the dow. it hasn't so far. jonathan: we are negative about two or three points on the s&p 500. 4278. here's your date, july 13. . tom: you're so fast. jonathan: i can talk and use the terminal at the same time. tom: i can't do that. brent crude pulls back to $74.84. michael bell with us of j.p. morgan asset management which global market strategist for emea. explain that for our audience. what is emea? michael: it is europe, middle east, and africa.

tom: what about the rest of your territory? is it time for emerging markets to add value? andrew: -- michael: i think so. we think within the eem, looking into asia rather than at africa, we think the long-term outlook for somewhere like india is quite spectacular. we've got some challenges at the moment with covid, but we think they will come through that next year, and then we are looking at great rates well north of 6% on average over the next decade. jonathan: what do you make of this dollar call? the have the year the first week of january, one dollar 23 since. we are down 0.3%. the equity call in europe is the one that has played out nicely. we had some outperformance versus the u.s. the fx call has been tough. can you make the fx call right now? michael: i guess the fx is more

driven by rate expectations and what is going on with the economy. obviously the delta variant is causing problems now in europe. it looks like we are probably going to miss another summer of international tourism for europe , which is going to weigh on the economy. european companies, a lot of them have been really benefiting from absolutely booming global demand, and if you look at the sort of travel and leisure sector as a percentage weight of the european markets, it is pretty small. so while it weighs on the economy, the market as a whole is doing a lot better. lisa: we have been talking all morning about the delta variant, how long it takes before this becomes a macro story or an idiosyncratic story affecting just the airline stocks and a number of other travel stocks. from the emerging market spect if, when do you start to care a little bit more and start to get a little more defensive? michael: i think ultimately it

became a problem in china. china is such a large part of the emerging market. cases in china remain very low, so that is positive for e.m. india has obviously already suffered significantly with the delta variant come but cases -- variant, but cases there seem to have peaked, so we've got to watch that pretty carefully. india and china really are the bulk of e.m., and at the moment it looks like we are past the worst for india, and that china doesn't have any cases. i think if you start to see serious problems, that would be more worrying. jonathan: in the equity market, travel and leisure stocks on the stoxx 600 make up a little more than 1% of the overall index. it is the smallest waiting on the index on a sector basis, but it is a part of the economy in spain, italy, and portugal, these are big chunks of economic output. if you can't make that trade through the equity side, would you like to know if your

exposure to the periphery at the moment given what is playing out ? michael: i don't think so because i think they are really well supported. i don't think it is a major problem. it delays the point at which you get back to closed output gaps in places like spain and italy, and probably delays the point at which people start to think about tightening from the ecb, and as a result, ways on the arrow -- weighs -- weighs on the euro. jonathan: thank you sir. a break of $1.19 on the euro. sterling weaker by 0.4%. as a proxy for global growth, the aussie dollar down 0.6%. that is a weaker aussie. tom: one thing mentioned earlier on soft commodities, brazil has

surprised and really come in with some brazilian strength. this is within north america and its oil affected as well, but mexican peso nicely under 20. that is a change from where we were. jonathan: it has been so difficult to get this dollar call right. we have been talking about reopening, and you can imagine that this weaker dollar story develops, but what who would've thought that it was right at the beginning of the year? lisa: and how about the connection to the fiscal deficit? the idea that the more the dollar would weaken, people would go elsewhere to help reduce economic growth. in fact, we have seen it continue to hold even as we see the potential for a $6 trillion reconciliation bill alongside the $579 billion bipartisan agreement. i wonder at what point deficits matter, and if they don't, what are the longer-term applications? jonathan: nominal 10 year yields

topped out at the end of the first quarter, and all of the arguments i here now for high yields come of the valuation case, the supply case, the story about the fed allowing for more inflation, those arguments all existed at the start of this year as well, yet here we are at the halfway point of 2021 sub 1.50%. tom: it is a boom economy that none of us have ever experienced. how can you take a price and yield analysis over to, what, a 7% economy? jonathan: i don't think you can with any accuracy, yet most people assume directionally up and to the right. higher, much higher. lisa: i don't know if it is a boom market, though. how much of this is a spending we didn't see last year in terms of services? that really is something we won't know until a couple of months from now. jonathan: coming up, leland

miller, china beige book ceo. your equity market unchanged at 4279. good morning to you all. heard on bloomberg radio, seen on bloomberg tv, this is "bloomberg surveillance." ♪ ritika: with the first word news, i'm ritika gupta. president biden will promote his infrastructure plan today in rural sconce and, where support for trump -- world wisconsin, where support for trump still runs deep. wisconsin is one of the states that will play a key role in the 2022 elections for control of the senate yet house speaker nancy pelosi has moved to create a select committee to investigate the attack on the capitol. the panel would have subpoena power and no deadline. senate republicans blocked creation of an independent commission. legislation would give republicans five of the 13 c. it is -- 13 seats.

it is a record purchase for the airlines. the deal is valued at about $15 billion. new jets and other united single planes will get a revamped cabin with seatback screens and larger overhead compartments. and is a milestone for facebook. shares of the social network rising after an antitrust victory helped push its market value above $1 trillion. facebook is now the fastest company to reach that level. a judge granted its request to dismiss to complaints filed last year by the federal trade commission and state attorneys general. jp morgan reportedly is boosting its pay for junior bankers. according to the uk's financial news, the bank is offering first-year analysts salaries of $100,000. younger bankers have complained of longer hours due to the boom in m&a.

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>> i just don't think the inflation we are seeing and the policy growth we are seeing

today is sustainable. and that perspective, i think the future doesn't look quite as bright as what we have seen in the past. jonathan: from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity market this tuesday morning, all-time highs, just pulling back 0.25 points. we are off by 0.01%. in the bond market, 1.4917%. dollar strength the story through g10. euro-dollar, a break of $1.19 to the downside. we are negative there 0.3%. tom: this goes to an important economic data in the july jobs report on friday. right now, arguably the most important interview we will do on china. leland miller's china beige book is the granularity of china.

he owns the high ground on what is really going on in china. leland miller joins us around the politics of china and their economics. i want to just cut to the chase. what is our biggest misconception about china right now? leland: i think the biggest misconception is the degree to which credit is really being strangled right now, and is down. -- and capex is down. when you look at quarterly credit results, you are seeing record lows in everything. all the big categories. overall borrowing, borrowing by state firms. if you look by geography, you are seeing numbers crater outside the big three regions of shanghai, beijing, and one dong -- and guangdong. this is not the deleveraging of

the past. tom: let's jump forward to the politics. you state clearly there's another false dawn for retail as well. how does that change the political domestic calculus for president xi if he's got credit challenges and a retail false dawn? what does that mean for his politics? leland: it is a real problem looking to 2022. right now you got a global recovery, and you've got china exporting and doing well with manufacturing, so parts of the economy are going very well. so it is hard to see the true weakness because it is not hitting the overall numbers except in very specific places. but for any durable recovery, you're going to need retail back, services back, and these sectors are not doing well. services hasn't done much since the end of 2020, and retail is looking worse than last quarter,

so you're going to have to see a pickup in this. but how do you see a pickup if firms aren't able to borrow as much? so they've got some policy decisions to make come the end of this year. lisa: you see the potential for negative growth in china should the credit impulse continue to be restricted the way that you have seen so far. can you elaborate on just how much of a slowdown we could see? leland: the gdp number can be whatever beijing wants it to be because they let up on the credit and the number will grow. they will have growth, but the problem here is that when you are looking at the numbers in a non-year on year fashion, not looking at the comparison from what happened during the immediate recovery from the coronavirus, you start to see clear numbers. what happened in 2021 has not been this dramatic pickup and growth if you are looking

month-to-month or quarter to quarter. with a credit slowdown and a capex slowdown, these are really hitting growth numbers, but you don't see it as much in the gdp number because that is a year on your figure. lisa: you point out that fewer retailers have borrowed then at any time in china beige book's history. going forward, can you give us a sense of why? what is china trying to accomplish, and when will start to ease up a little bit here? leland: for years, i think there's been an understanding in beijing that they need to pull back on the sixth ordinary stimulus type of mindset -- this extraordinary stimulus type of mindset. i think there is a real anxiety that they are maybe not at the end of the line, but nearing the end of the line of being able to do this. in the west, everyone believes china can stimulate forever. in beijing there is more

anxiety. they have to figure out how much of a slowdown they can stomach, particularly going into an important political year like 2022. this is going to make for very interesting policy decisions because they got to go one way or the other. tom: what do you see in hong kong? what is your counsel to major western banks? leland: we don't track growth as part of china beige book. don't track hong kong as part of the overall survey. but i think what is happening in hong kong is pretty clear. there is a huge crack down, and this is becoming china. it is not the hong kong of old. businesses that can cater to a purely chinese audience or have business inside hong kong can stay and do well, but i think the idea that hong kong is this international center of commerce , that is just not true anymore, and it is going to get worse and worse as authorities weed out

any evidence of dissent or pushback against the communist party in the mainland. jonathan: leland miller of the china beige book, great to catch up as always. thank you, sir. getting more details on a credit call for morgan stanley. lisa, i think you will be interested in this one. "vulnerable to a credit surprise. the probability of taper tantrum has risen in light of the change in rhetoric." lisa: a negative surprise with respect to tapering, for top -- tapering, perhaps not when it comes to economic growth. the only way you could get that is if you get inflation on jobs growth. tom: what is the summary? higher yields, lower prices? jonathan: wider spreads by about 15 to 25 basis points, which for investment grade right now, the spread yesterday north of 80

basis points, so that would be material compared to what we are trading at the moment. tom: so i want to own the belly of the curve? jonathan: they are saying do not have a look at ig credit, we could be vulnerable there. it is a treasury market call. lisa: you want to talk about bellies? jonathan: or something else. lisa: what is the indication that they want to start talking about tapering in the near future? tom: what have we heard? jonathan: not the same thing as the likes of boston's rosengren and dallas' kaplan. tom: we've got adp tomorrow, but there's a lot of stuff here. jonathan: payrolls on friday. tom: we are going to be smarter friday at 8:32. jonathan: are we?

i hope we are, but the last questions about the jobs report have asked questions and they've answered. from new york, this is bloomberg. ♪

jonathan: from new york city, live on tv and radio, this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro. one hour away from the opening bell. record highs in the s&p. 4280. unchanged since we came in around 4:30 eastern time. i think lisa gets your first and tom and i compete for last, we have not been moving on s&p 500 futures. yields 1.4985, a lift by two basis points. the euro is weaker, the dollar stronger. euro-dollar at 1.1887. tom: we are higher today.

we will see. economic data. 9:00 we get the housing data. it is important. it is part of amerco. jonathan: and then on to payrolls. the estimate 700,000. right now to make a smarter, matthew luzzetti. deutsche bank has done a terrific job. it is a different view short-term versus the view long-term. let's go wicked short to friday with matthew luzzetti, our first discussion of the jobs report. i love how you say it is a perplexing labor economy. how will this friday's report be perplexing? matthew: what we have seen over the past several months is data points which are pointing at two different things. we have an economy that looks like there is a lot of slack, 7.6 million jobs below covid, labor force at 3.5 million below

covid come at the other hand you have record job openings, wages have been firm. we've been looking for data points to resolve these issues. i know the fed is looking at data points. i do not think we get a resolution. we expect 700,000 jobs, we expect the unemployment rate to tick down .1%. as fed officials have said it is more likely we wait until the fall into we get labor supply fully and to greater resolution of this real dichotomy in the labor market. tom: that february before the pandemic, we look back at that nerve on a of what was billed as a fully employed america. is that what we are going back to or are we going forward to something new and different? matthew: there is definitely some things that have changed from a structural sense. the fed and chair powell have talked about retirement picking up on the back of the big pickup

in wealth and savings households have had there. what we learn from the pre-covid labor market was the labor force participation rate continues to trend higher, people coming up disability insurance. vice chair clarinet was a nehru could be as low as 3.5%. i do not think there's anything that prevents us getting back there. greater workforce -- some of the policies the biden administration is looking at should lift labor supply. there is constraint in the near term. if we look forward by a year or two years we should anticipate we get back to the pre-covid labor market. jonathan: some people have made the argument that holding back labor supply, one factor has been additional unemployment service. you find limited evidence enhanced unemployment insurance work exerting material drag on employment. matthew: i know there's been a lot of work done on this.

we have tried to look across states and sectors. are you seeing labor markets in low-wage states that look like they are more constrained because they should be more impacted by enhanced unemployment benefits, are you seeing sectors being more constrained? you really do not find that. leisure and hospitality, look at the vacancy yields. this is the rate at which you are turning job openings into hires. the vacancy rate is well above a lot of high wage sectors. across states, it is the low-wage states that are outperforming. it is the high wage states that still have a lot of slack or are well below pre-covid levels. unemployment insurance benefits, i would not deny it is a factor for some, but to look at the big macro stories. it is covid and not unemployment insurance benefits. jonathan: is the return to school part of the covid story? in september of the additional

unemployment insurance expires and schools reopen. do you think that to be a dominant factor? matthew: absolutely. you have the direct effect of that, getting greater education employment, but it opens up labor supply to the extent we have not seen yet. in the debate we have with clients on this, there is a forceful debate, but we all end up in a place where once vaccinations have picked up and schools reopen, as unemployment insurance benefits rolloff, all of those -- lisa: we have not seen as much progress in the labor market as people expected, but at what point we rethink your goals in terms of getting the employment rate back down to where it was in the participation rate higher? what is concerning you with respect to this? matthew: the lack of response from labor force participation has been one of them. the trend we have seen in

employment gains has been weaker than we anticipated. if you look the nonseasonally adjusted data, we have been printing about one million jobs per month over the last four months. a steady pace. chair powell noticed there may be limits on how quickly we can hire people into this economy, and maybe it is one million jobs per month. indeed has great data looking at a pickup in job postings for hr departments. maybe this is businesses trying to get around this natural speed limit. if we continue to print those kinds of jobs, it will get a boost over the next few months. with the labor demand we have and as labor supply does normalize, i anticipate our bullish outlook for the labor market should be fulfilled as we get towards the end of this year and next year. jonathan: a lot of people talk -- lisa: a lot of people talk about friction in the labor market leading to wage increases . how much has the balance shifted

back towards labor in terms of demanding higher wages? matthew: you are seeing different views from different numbers. the atlanta fed wage metrics have decelerated in a broadway. they are tracking individuals over time. they are able to control for a lot of different shifts. the data on friday his feud by so many composition -- the data on friday is skewed by so many compositional issues. it is difficult to read too much into the data. what i would say is no doubt you are seeing wage pressures and a number of metrics. a lot of anecdotes. labor supply is constrained. i would be very surprised if we look forward by year or two years and we are still seeing the same constraints. on the contrary, we should be back towards a pre-covid labor market where we are unleashing significant labor supply. that keeps price pressures in

check and wage pressures in check. tom: what is your unemployment rate that is a mental to point? the deutsche bank research worried about inflation, out three and four years, and you a short-term view very much different in that -- different than that. can we use it to point of unemployment rate as a signal we are back to where we so -- back to where we are supposed to be? matthew: we have a view the inflation jump is transitory. we agreed that risks are skewed to the upside given financial -- given substantial fiscal stimulus we have seen. it is unprecedented. i agree the risks are to the upside. to your point, identifying nehru pre-covid was almost impossible. richard clarida had said it could be as low as 3.5%. tom: he said that to john, not

to me. jonathan: i would agree with that assessment, which was we never found it -- matthew: i would agree with that assessment, which was we never really found it. try to do state-level analysis. the answer was you need to see the rate drop to low levels, 1% or more below what people thought it was. my take away from the pre-covid economy was we did not find nehru, we cannot find where full employment was. the fed, that was the big take away from their policy review, which was you could get broad-based gains, the phillips curve flattens, and it was lower than anticipated. jonathan: you just painted this picture of a world you will not see more clearly until the end of the year, which is basically fall. september, october. why would the federal reserve make an announcement on the reduction of prices until they have seen the data? matthew: there are two things.

one, the significant demand they see the labor market. all of the different survey indicators gives them a lot of confidence that if supply does become unleashed, the demand is there to see substantial further progress in the labor market. that is an important data point. the second is risk management. we agreed there substantial upside risk to inflation, even though i believe in the baseline transitory story. because there is a process of beginning the tapering process, drawing down to net zero asset purchases, raising interest rates, given the growth outlook and the labor market outlook, it does make sense to start the process. they will say it is not tightening, it is just pulling back on some of the accommodation. by the end of the year, they should start that process. they will start that process. we have them announcing tapering in december. jonathan: deutsche bank chief u.s. economist.

coming up the next hour, we will catch up with tony dwyer. tom keene, looking at the market, your dow is up nicely, i believe that is because boeing is doing ok. is that helping out? tom: it is noise. i look at the vix. jonathan: 4280 on the s&p 500. yields higher most three basis points. back through 1.50. lisa: i wonder what will keep that yield going up, how much this hinges on a better-than-expected labor report on friday? jonathan: yields up two or three basis points. euro-dollar down to 1.80 need to -- 1.1882. the s&p on the headline level has been a snooze for hours and hours. alongside tom keene and lisa

abramowicz, i'm jonathan ferro. i will go way. i will do "the open" on tv. tom will do that on radio. lisa will take a break to read and then come it really early at 3:30 to make us all look bad. 4279 on the s&p. this is bloomberg. ritika: with the first word news, i'm ritika gupta. the house has passed its own version of legislation aimed at boosting research and development in response to china. the senate passed similar legislation, although it's version includes incentive to semiconductor makers. the two chambers will negotiate the differences. an american father and son who helped auto executive carlos ghosn escape japan have apologized. they told a japanese court they made a mistake they deeply regret. the two could get a three-year prison term.

they were extradited from the u.s. earlier this year. jamie dimon says paris has become the main trading center in europe. he spoke at the inauguration of j.p. morgan's new headquarters in the french capital. he said all european trading will go through the facility. jp morgan says employees have moved to paris in the wake of brexit. the justice department has stepped up scrutiny of digital practices in recent months. that shows the administration is pursuing an antitrust probe that started under former president trump. the justice department sued google saying it was abusing its dominance in internet search. house prices grew at their fastest annual pace in 17 years. that is adding to a growing wealth gap that has policymakers worried. property prices rose 13.4% from a year ago. the average price is now $353,000. global news 24 hours a day, on

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>> with every day that goes by it is clear to me and our scientific advisors that we are

very likely -- very lucky to be in a position on july 19 to say that is the terminus and we can go back to life as it was before covid. tom: the prime minister of the united kingdom. he will be focused on a soccer match this afternoon. between england -- not britain -- is england. lisa abramowicz will have a full report. right now we will do a public service. barry ritholtz will join us. i want to do this. there is the year end review and we all look at them and can line up like what we got wrong six months ago. now we enjoy the midyear correction. the midyear adjustment. the midyear outlook. how rita midyear outlook -- how do you read a midyear outlook?

barry: you will not like my answer. years and quarters and other than earnings reports, those are astronomical terms. the calendar year, the first half of the year, they are meaningless other than july 1 is bobby bonita day. other than that, you just assume the previous trend is continuing. markets do not care about the flip of the calendar. this is actually a serious issue because investors have a tendency to get wrapped up in these things, and sometimes it gives them an excuse to make ill-advised changes because of the calendar. tom: what is important, and i am in the camp they are literally

marketing effort to be completely cynical, we have all been involved in this. if you have to look at a giving marketing effort, how do you look at a 12 page report? barry: two ways. first i look at the process the analyst or strategist uses, and second i look at how successful that process has been historically. i know you cannot only rely on track record in performance, but at least it provides some insight into does this strategy have any residents, at least within the current market regime , and what seems to be mattering right now to traders and investors. lisa: it is unclear what your perspective could be based on the fact the index level has been a snoozer. under the surface there been huge out performances and under performances and we have a lot of investors saying it is time

to pick stocks. you agree or do you stick with indexing strategies because it is too difficult to get the right stocks correctly? barry: it is time to pick stocks? there are only a but jillian academic papers -- there are only a bajillion academic papers that say stocks underperform before we work in our cost structure of paying for that. i do not mind if people want to have a fund portfolio and take 5% or 10% of their real money and play around with it. if you want to buy anything from apple to bitcoin to netflix to whatever, have fun with it. recognize the odds are so weighted against you, not only is it difficult to pick stocks, it is difficult to pick the people who are good at picking stocks and do so on a cost-efficient basis. lisa: the reason i bring this up is because an increasing number of people say this time is

different, certainly when it comes to sectors. is this time different based on some of the rotation, the reflation narrative that is gaining and waiting as time goes on -- gaining and waning as time goes on? barry: this time is always different. the world is always changing. back to george soros's convexity , markets learned from past experience. what that phrase means is when investors and traders rationalize wildly expensive assets in order to say we are not just paying for pe, we are paying for eyeballs or we are paying for the scarcity of crypto and the collapse of fiat currency, that is what this time is different means. it always refers to the fact that human nature is unchanging. that said, this is a unique environment. it is hard to find a

post-pandemic massive monetary stimulus, so there will be winners and losers. there will clearly be stock pickers who will identify the right companies in the right sectors. it is hard to do. ps, it is hard to know when to jump off that train. people are better buyers than sellers. that is the big takeaway. tom: we have breaking news. we have to leave right now. thank you on the midyear outlook. this is an exceptionally important small release from moderna. detail press release, not a normal press release. it is around a sample of eight individuals, eight participants obtained one week after a second dose of the virus around a set of variance, including the delta india variant. lisa: the idea is do vaccines prevent you from getting seriously yell -- seriously ill

from some of the variants, including the delta variant. the data saying yes it does despite studies showing people did have some breakthrough infections in israel, in california, who had already been vaccinated. this just highlights the diversion between the haves and have-nots when it comes to vaccinations. the people that have gotten vaccinated are protected by these vaccines. that is the data showing again and again. it becomes a question of what you do with people who are not vaccinated? how much you protect them from a public health standpoint? tom: i want to be careful, because the press releases technical. it involves the united kingdom, the alpha virus, south africa, and angola is mentioned as well. a detailed effort of one of the great success stories get on this story. lisa: one of the stories i

thought was the most fascinating and the last 48 hours was the new york times showing pfizer and moderna vaccines do not necessarily require a booster shot. so far it looks like they provoke an immune response that last year's. this is a sea change. they should be optimistic if it were not for the variant spreading so significantly. tom: we have heard there are always variants. it is just dealing with them. we heard from amesh adalja, the infectability of the delta variant. jonathan: is that a word -- lisa: is that a word? tom: i don't think it is. s&p futures flat. dow futures green. all of this fractional. the major observation today is dollar strength, not a breakout but we will go with it. the euro breaching 1.19.

1.1881. coming up, conversation with mayor of washington, d.c. stay with us on radio and television. ♪

jonathan: from new york city for our audience worldwide good morning, good morning. equities coming into tuesday at record highs. the countdown to the open starts

right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york, we begin with the big issue. covid variants clouding the outlook. >> the delta variant. >> the spread of the delta variant. >> the delta very it will be in issue. >> it is the key tail risk to watch right now that could potentially derail things. >> the travel restrictions are still in place for many countries. >> that could open the pathway for lockdowns later. >> the central banks are looking at the economy. >>