♪ caroline: from bloomberg world headquarters in new york, i'm caroline hyde. joe: i'm joe weisenthal. romaine: i'm romaine bostick. say hello to q3. joe: the question is, "what'd you miss?" caroline: the halfway point of the year and progress in the recovery, especially here in the u.s., vaccine rates higher across most parts of the country.

recovery is not complete across the world. places where i come from, the u.k., struggling with the delta variant today. how are investors approaching the economic climate? let's dig into the numbers. start with the market story. joe: right, stocks up. another good quarter, goodyear, halfway through the year. pretty impressive overall. little volatility lately, stocks mostly going up rate what can you say? that is the story. let's bring in katie cry felt -- katie greifeld. katie: i want to look at the equal weight s&p 500 index versus the fraud s&p 500 index. this tells the story of the first half. we had cyclical's and small caps dominate the bulk of the first half of the year. and in the past few weeks, since the fed, you have seen the

broader s&p 500 catch up as big tech reasserts itself, large cap tech stocks taking a hold. we have been following this like s cyclical script through 2021. romaine: let's talk about value growth. katie: value was dominating for so long. but if you think about the composition of a lot of value benchmarks, it is a lot of energy but a lot of financials and financials need to steepening yield curve to really do well, no matter what trading records banks have. they track the yield curves of stocks more than anything else.

and think about after the fed meeting, you saw the 530 yield curve slammed flatter. that environment is not great for financials and as a result, not great for value either. caroline: nor is the delta variant good for travel stocks, trade, reopening. katie: if you look at the rest of the year and what is going to upset the apple cart, it is the delta variant. because any incremental progress we get from the fed in terms of their stance, maybe markets are volatile for a day or two. but the delta variant could spook stocks. look at this week. you have an etf that tracks north american airlines. it is down 3.5% this week. moderna hit a record high already. delta variant fears are starting to creep into the stock market. joe: these stories are similar, equal cap, market cap growth,

value, reopening, etc. but it was like five minutes, this is the value moment. they got like 10 minutes. katie: this was supposed to be the value investing renaissance. and it was, not quite five minutes. joe: and now another 40 years of growth. katie: don't hold your breath. it goes back to the dominance of those big tech names. if you are and index investor playing the s&p 500 index in your retirement account, this was still good for you because it is going to drive the s&p 500 index higher. as we learned, indexes can rally on just a handful of name spirit not great for value investors, probably good for the bulk of humanity. romaine: what about the commodities space? we talked about the dramatic rise in lumber and that is down 40% the past few weeks.

even some other commodities have stalled after hitting multi-year eyes. is there expectation we could see a resumption in those rallies? katie: we will see. because it goes back to delta variant fears. that is hitting travel stocks right now and at a certain point, it is going to hit crude oil and energy. if you look at a sector basis, that is still the top performing in the s&p 500 index this year. but it has been cooling off and other sectors have been catching up. so we will see what that means on a commodity level, but the energy rally in the equity space has been cooling. romaine: 42% in the energy space this year and 24% financials, the next highest. caroline: there is a joke on twitter that it is not the time to be minding your crypto tonight if you are worried about energy use. joe: everybody is looking at

romaine. romaine: i need to rush home. [laughter] caroline: what about crypto? katie: it feels like the speculative fringes of the market haven't rebounded alongside large cap tech. i would put crypto in that bucket. it feels like it has come off the boil. and you are seeing the fringe areas of crypto, defi tokens, we wrote today about whale farm i think it is that you are seeing those projects crash 99% of their value. so the fringest of the fringe are on the back burner. joe: 10-year yield, 1.46. think about the conversations in march and april, was anyone bullish on treasury? everyone going back at the time was 2%.

uncertainty was going higher and it has been this astonishing drift downward. katie: in april, we were told we had seen the peak 410-year yields, or at least treasury yields. and they were right. is the fed as dovish as they say, are they going to let the economy run hot, inflation run hot? we have incremental reason to think it is not going to be as hot as expected. and that is feeding through the long end of the treasury market. if you look at 10s and 30's, that is the debate right now. romaine: thanks to bloomberg's katie greifeld. big news on the ncaa, and the fight for college athletes to receive compensation for playing sports. the division i board of directors for the ncaa has approved a proposal to allow

athletes to monetize their names, images and like this is. this goes into effect tomorrow. there was a big supreme court decision handed down a couple weeks ago that helped pave the way for this, but this means college athletes will be able to make money off their names and likenesses. caroline: romaine is such a great player. romaine: are you paying attention? joe: i am looking at a charge. caroline: [laughter] joe: i was looking at the 530 curve. romaine: let me get us back on track. caroline: we get andrew zatlin, s0uthbay research partner, next. this is bloomberg. ♪

♪ romaine: welcome back. more breaking news. a company working on a covid vaccine, overall vaccine hesitancy of 48%. shares lower 10% in after-hours trading. not what the street was looking for. back to what we have been talking about all day -- the close of the first half of the year for financial markets. and looking at the rest of 2021, joe, and the friday job report might be a catalyst up or down. joe: finally, maybe we are going to get big jobs growth. we have had two disappointing

reports on after economists ratcheted down there expectation spirit nonfarm payrolls, 711,000, unemployment rate 6.5%. wages expected to go 3.6% year-over-year. caroline: when you delve into the number, who is left behind, who is seeing increases? when you look at demographics, rates, and that is meant to be with the federal reserve is looking out in the future. joe: exactly right. joining us for more, southbay research founder andrew zatlin. the story of the last two months has been disappointment relative to expectations. there are various theories, some people say ui, childcare, what is your story or theory for why? you look at the data, job

opening data, you track industries on a granular level. what do you think is the explanation for why the pace of job creation the last few months did not live up to what economists expected in march. andrew: there are two factors that you want to watch, and they are both tied to covid. one is where the job losses are concentrated and that is the hospitality industry. about 40%-50% of job losses were concentrated there. and it is artificial in the sense that we have a mandated capacity limit. i think the expectation was, once we flipped the switch, you could go back to restaurants, a gang rush, every business open, hiring going to flip back on. we have the restaurant story but the other side of the story is a california/new york story because while we talk about 40% of the jobs are restaurant jobs, of those, 55% are in the california/new york space where

job losses are. everybody came out of covid at a different pace. the first to get off covid were texas, florida, all open, and their share of the restaurant jobs gap last year and this year is really small. texas and florida though have more of those workers. so you get a straight line to connect. now that california and new york are much more open, restaurant jobs will come back. and it isn't whether people are rushing back to get their jobs, yes or no, but by and large, if this month isn't the golden month, it will be next month. romaine: if you look outside leisure and hospitality and look into areas of construction, manufacturing, because we have seen at least anecdotal evidence about trouble hiring in certain pockets. i wonder if you expect improvement in that space? andrew: absolutely. the thing to watch this week is

wage inflation. what does it take for a company from the private sector to compete with the public sector? there is a lot of money still out there. jobless benefits the government through on top of regular jobless benefits. $300 a week, that has enough people saying maybe i want to stay home. it is an inflationary story. how much money is going to have to be thrown out there in wages to entice workers? and i think substantial. we all know anecdote gently we have to send people back and that inflation is going to trickle through the economy. caroline: talk about the push-pull at play when we enter the summer. in education, i have been listening to anecdotal evidence about teenagers coming into the workforce, record numbers, and perhaps slightly older, 20-year-olds, going back to lower-paying jobs where people

have been at school, and you are losing jobs when they are in school. what happens to those numbers? andrew: in the number for this week, consensus is baked in for a big jump in education payrolls. i m lighter than consensus -- i'm lighter than consensus. as we drilled into where the jobs are and are not, we have got younger people entering the workforce. are they competing with folks who left the workforce? we have to do a weight and see, -- wait and see, but i look at this as the kentucky derby. the horses are not running but they are chomping at the bed, waiting for the bell to ring. going back to the california/new york story, remember california did not open until june 15, the tail end of the survey period. so we might have a little delay. but in terms of what is

happening in the summer, there is strong labor demand, super strong. everybody is trying to rehire and it is a question of how you get the work force out there. we still have daycare somewhat limited. school is now out. you have got to watch your kids. some people might say, i'm going to spend the summer not working. joe: anecdotally, and i was reading a dallas fed survey and you also see anecdotally, people using this moment to reevaluate their lives, or their work-life balance in some way. i'm curious, we can point to concrete things like reopening in california, like daycare, but i am curious about whether this impulse to say look for another job or retire or find a job where there is maybe less pay,

is a big enough deal to move the dial in some way and add to headaches some employers are having when it comes to finding labor. andrew: good question. if it is happening at all and is going to have an impact, it is on the margins. september 9 is when extra benefits stop getting paid. as we get close to july and august, do all these people who might be waiting want to suddenly face competition for jobs? no, so i think by late july, if this is a factor, folks are going to say it is time to get a job because in a few weeks, everybody's going to be gang rushing for the same job. and we are talking restaurant workers, nothing more than minimum wage workers, they are not sitting with cash flowing in. it is a substitute. it is equal. what i left to not work if i got

a paycheck? yes, but they are not sitting on looking at their navel and saying, let me meditate and do yoga every day. they realize that the end is here and the opportunity to get a good job now is drug or than probably sitting around a few more weeks and maybe just taking ends meet. and again, this is anecdotal. romaine: it will be interesting to see whether competition heats up. right now, --andrew zatlin, southbay research founder, doing great research on what we are seeing in the job market. post marketing u.s. trading, decliner, the company with the final analysis, efficacy 53% demonstrated on participants in the main age group, overall efficacy 48%, shares down 10%. caroline: from new york, this is

bloomberg. ♪

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♪ caroline: we are focused on the recovery and how the second half of the year will play out. as new york reopens, what a crazy contest. joe: they are already experimenting with this new thing and yesterday, we got kind of results that were to show and then they are, we are going to throw out all the results because some didn't count. bloomberg's henry goldman is leading our coverage of the new york city mayoral race. the race is close, much closer than election night. we got to statement around 10:00 and there were over 100,000 votes yet to count. do we know anything about the makeup of those votes that would

indicate what we can expect today when we get a new run of the votes? henry: no, we don't. we have to throw out all the work that was done yesterday. we are starting anew. and the results today will still be very preliminary because they won't count one to 25,000 absentee balance, which also have to go through a ranked choice vote calculation. romaine: henry, the question a lot of people have is why it takes so long in this day to tally these votes? even though new york is using a new system with regards to ranked choice, is there any explanation why this can't be done faster and accurately? henry: the major reason it can't be done faster is that new york city has to wait for absentee ballots and other paper ballots to come in and be counted.

and they give those ballots a week to come in via the mail. so under any circumstances, it is going to take more than a week to count those paper ballots, because they don't start until a week after election night. the calculation being done now is to use existing votes from election night and do a ranked choice vote algorithm on just those votes. and you get kind of a preliminary count, which is not final by any means, and can change drastically when those absentee ballots and other paper ballots are added. so yes, it takes longer than it should. but in terms of this interval, it has to do with the city allowing absentee ballots not be counted until all of them are

in. and that takes until a week after election day. caroline: how are any of the runners reacting? henry: [laughter] they are talking to themselves and counseling the voters, patience, patience. you can imagine how they feel -- everything is uncertain down the stakes are high. this is the most popular city in the united states. it has a budget of almost 100 billion dollars, not counting all the capital spending the city does. and there is a lot at stake. caroline: meantime, agreement on a 98 billion dollars recovery budget. henry goldman on all things new york city mayoral race. meanwhile, new york city conservation.

careful what you do tonight in terms of conserving energy. joe: "bloomberg technology" is next. romaine: stay cool, everyone. this is bloomberg. ♪

♪ >> from the heart of where innovation, money and power collide -- in silicon valley and beyond, this is "bloomberg technology," with emily chang. ♪ emily: i am emily chang in san francisco and this is "bloomberg technology." dd opens 90% above its ipo price but loses almost all gains before the close. a live report on the chinese ride-hailer