>> as this global recovery is unfolding, investors need to think more global in their portfolios. >> there is more momentum that is good to spread out. >> you may start to see some deflationary forces work their way in the system. >> the fed needs to think about the risk of higher inflation. >> the pressure will grow to announced qe tapering. >> this is "bloomberg surveillance" with tom keene, and lisa abramowicz. jonathan: from new york city to our audience worldwide, good morning. is bloomberg "surveillance" live. equity futures 4287 on the s&p 500. tom keene, coming into thursday, five months of gains. tom: you can recalibrate right

here with claims today, jobs tomorrow, and then onto the earnings season. this interview we have coming up with daniel skelly is important. their note is blistering as they push against the gloom crew. jonathan: we are looking more than $700,000 in payrolls tomorrow -- more than 700,000 in payrolls tomorrow. tom: morgan stanley, i'm getting in front of our conversation with daniel skelly, but they look for "wage gain potential." that would push against the gloom. jonathan: just a little bit of optimism with just a little bit of gloom. lisa: let's talk gloom crew, gloom for who? pushing back against the gloom around the economy talking about high wages, but what does that mean for companies? can we get economic growth and a

brighter outlook for the economy that does not necessarily bode as well for riskier assets? that is the discretion here that we. need to be clear about. jonathan: -- need to be clear about. jonathan: can you do the weather again? i love that. lisa: we were talking about the heat and i was putting into perspective. [laughter] jonathan: i know, i know. tom: lisa, on july 1, 2021, john wayne did you first express air conditioning? were you 25? jonathan: when i moved here because in the south of italy, there was no air-conditioning. it was the window with a mosquito net. in the u.k., summer is two weeks summer between june and august and you don't invest in air-conditioning.

74.92 on proof. -- on crude. 14781 on yields, up one basis point. euro-dollar, positive about 1/10 of 1%. lisa: 8:38 a.m., we are extinct -- 8:30 a.m., we are getting job claims. it is expected to be a pandemic low. i'm going to be calling the data to see what effect the enhanced benefits might have been to push people into the labor market. very politicized, but something that will be a talking point. opec-plus is meeting to discuss output used. russia and saudi arabia have formed some sort of agreement about raising production. it has raised prices of oil to the highest since 2018 because of the production increases not being as big as people thought.

that his early reporting, we will get more. u.s. auto sales will be released for the month of june. the expectation is for this to be lower. fewer cars sold. not because of the lack of demand but because of the lack of supply, the chip shortages that leave the robots less stocked than they have been for years. it raises prices. $40,000 for an average car. jonathan: do you think we were those out in the back half? gm had a wonderful year to date. lisa: this is because they are earning more money because of how prices are going up. the guidance from the c-suite is that it will take a wild to work to these kinks. it will be interesting to see what guidance they bring. jonathan: daniel skelly joins us now. tom had a promo for him earlier. morgan stanley pushed back because the gloom.

they were in front of the sharp recovery. i wonder if you remain committed to that story? daniel: great to see you jonathan and team. thank you for having me. yes, we are still committed to a longer-term secular bull trend. we think in the near term over the next three to four months as we get into the summer months that we are due for a pause or a pullback. the last six or seven weeks the market has struggled to break about this 4200 level on the s&p. i think with the market is starting to recognize is that all of the good news cannot be good in every way. as you called out earlier, we are seeing rising cost pressures. we are concerned in a way that the market is not that some of the labor costs and rising wages may be more sustained than people think. tom: your note is blistering. it is the most optimistic

long-term note i have seen, the only thing close to deutsche bank. i want you to tell me what the 2026 looks like. we don't go out five years enough. what does your five year look like for equity markets and total return? daniel: we are assuming that markets continue to struggle in the near term over the next several months but that we are making new highs next year and into the 2026 region as well. the genesis for the outlook is as follows -- when you think about the strength of the consumer, unlike 2008 when we saw the recovery basically impeded by weak consumer and deleveraging, this time we are seeing a strong consumer. we are seeing that manifest in areas like housing. housing may slow from its robust levels of the past year with the

pandemic, but that is still a multiyear trend we see giving strength to the economy and markets going forward. next, thinking about demographics, we think any pullbacks or pauses in the market could be short-lived and shallow. one of the reasons is we have a new generation of investors coming into the equity markets after 10 years of trying to restructure their balance sheets. the millennial generation is in good shape. after having delayed the adult things that put off such as starting families, buying houses, investing -- they're starting to do those things inside. the last thing i will say which is unique unto this cycle and recovery path versus previous analogues, think about everything going on in corporate spending and digital transformation. cove it was a massive digital wake-up call -- covid was a

massive digital wake-up call. we actually see that as a key driver going forward. we see that as a positive net catalyst to economics into the market. lisa: there is a lot in there, including saying that millennials are starting to do adult things which i thought was a fantastic insight. he said we are due for a pullback, in what? we see this rotation back and forth and recently it has been backed into growth away from value. where will the pullback be located? daniel: what i would highlight is that what i think the market has a built in the past few weeks will probably continue. there is a realization that the earnings revisions are starting to phone and rollover. with that, the cyclicals and higher material and energy that

have led for so long, since the vaccine news last fall, those are some of these things that could lead to the downside. some of the things that are starting to pick up steam a little bit, higher quality tech names and communication names, some of the potential defenses, i think those will be more defensive to the downside. jonathan: we are talking about the nuance involved in the calls. what you said was refreshing when you talked about the new cohort entering the equity market because some people have been snarky about the new entrance. the new cohort, the new money arriving, how are they investing? is it passive and through the index level? what are you identifying? daniel: we are seeing a lot of interesting trends. as the world's largest wealth manager, we have a unique advantage and line of sight into this trend. i will say two things.

number one, this trend is similar to what the boomers went through when they started to reach 40 in the mid-80's to late 80's. they were underinvested and had about 6% of allocation equities. which is on the next five to 10 years is boomers started to become more fully invested. they had upward of 30% to 40% of allocation in equities. today, when i look at millennials, 5% is holding equities. we see that increasing substantially over the next several years. in terms of how they are investing, clearly impact in esg is my the key trends. we want to look for smart investments aligned with our values. that is something morgan stanley has invested in. i would argue in the last decade or so. did the thing i would say is that index investing, to your point, looking for different types of economic trends as well or economically feasible

investment trends -- that is another thing we have seen. jonathan: equity model portfolio solutions there. some new entrants into these markets. tom: the tone of the note is that they had the courage to go out longer. i don't want to link the two together, but duck cats was a piñata thing amazon was over 5000. we don't do that enough. we don't get division out two years, three years, five years. lisa shalett and her team had the courage to do that. jonathan: not a single hold on amazon. there are 55 buys on amazon and price target is 4250. tom: he may short amazon like you shorted the yankees -- he spurns afc richmond.

jonathan: thank you. keep those football up it's coming. that's those football updates coming. -- keep those football updates coming. tom: it is on twitter. i knew it was coming. jonathan:,, i still don't know whether it is true or not when you speak. [laughter] heard on radio, seen on tv, this is bloomberg. ♪ ritika: the trump organization's cfo has surrendered to authorities in new york. he faces tax related charges, so that the company itself. it is the most direct attack on donald trump and his company to emerge from eight we're's long -- from a year's long investigation. the white house is ramping up pressure on republicans to pass a bipartisan infrastructure agreement.

the administration will spotlight crumbling roads and bridges on a state-by-state basis. for funding could be used to rebuild them. china's president sounded a defiant tone marking the 100th anniversary of the entry's communist party. he called the u.s. -- the china's mission to gain control of taiwan-based recognition. citigroup says almost all of the bank's employees will return to the office. there will be a blended approach that allows for some flexibility. citigroup said its policies allowing some work from home would give a competitive edge in recruiting and obtaining top staff. -- individual investors, a big advantage. the stock trading app wants people to sign up to buy shares on its new ipo platform.

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 am rich good group to. -- armor to give depth -- this is bloomberg. ♪

>> there are a lot of young leaders in the audience and i was speaking to them after the

event. you talk to all of them, they are all super excited to get back into the office. it is important for young people at the start of their careers to have those benefits. i hope as we make progress towards our july 19 step we can get the city coming back to life. tom: that is what we want to see --jonathan: that is what we want to see, the city of london buzzing. from new york city this morning, good morning. alongside tom keene and lisa abramowicz, i am tom fara. -- i am jonathan ferro. yields hyper almost a basis point. 75 on wti, the first time we have seen that since late 2018. crude advancing by 2.3%. tom: we are coming up with the equity markets in a moment. we have hardwired in red funds

by our bed, my phone rang this morning and it was jonathan ferro saying to look at the ranked numbers on the mayor's race. shelly banjo drives our coverage on new york city and is running the shop here. i want you to take the observation that garcia really came up nicely against adams, the former police officer, but bring it forward to 125,000 absentee ballots. can you go through that exercise? shelly: what we are waiting is about 14% of votes to see what came and for whom and if it mirrors what we have seen so far. what that means is it could tilt it for someone like kathryn garcia. after you do all of the tabulations we got last night, the difference between wiley and garcia was only a few hundred votes.

the absentee ballot to change it for wiley. tom: this is adams the former police officer, garcia the sanitation commissioner, and wiley who was working for de blasio. shelly: the issue with the data yesterday was it was just based on election day and early voting. wiley is in the race, she is not going to drop out. she's going to wait until all of the votes are counted. lisa: what is a daylight between a mere adams and a mayor garcia. tom: she cannot hear you, let me ask you. you can't understand her from the upper west side because of the accent. she was to understand the difference between a mayor garcia and mayor adams. shelly: they tabulated all the way to the end. there's just about -- when you

catch all of those votes, is a two-point the between them. less than a two-point lead, actually. lisa: you told me wiley -- tom: he told me wiley is still in the race, how can that be? shelly: it was an exercise if the absentee votes were not included. tom: do you know who were the absentee votes? were they people heading out of jfk? shelly: it is pretty distributed around the city but if you mirror the districts that are absentee and the ones that voted on election day, about 44% have gone for adams. it depends on people -- if people end up voting absentee as they did on election day. i believe lisa is with us now. daniel: -- lisa: there is a question if you are expected to see a surge in the republican candidate or is

this just going to be a democrat-only kind of race? shelly: there is about 7-1 democrats to republicans in new york city and the republican candidate who won is a more moderate candidate. tom: we have not gone there yet. for those of you internationally, it is simple, where is the romance of john lindsay? what happened? shelly: people complain about that, that there are tens of thousands of republicans who reregistered ahead of this race as democrats even though they voted republican. tom: they could not find a john lindsay to run? shelly: that is the issue for the republican party of new york. there is a lot of moderate and republican new yorkers, they just don't find the candidates they want to vote for. tom: diego for mr. adams? -- do they go for mr. adams?

let's take a nationally, what does it symbolize for the democratic party nationally? shelly: nationally, the issue is pay attention to crimes. president biden has realized this is an issue and has been addressing it nationally. in the midterms, this is going to be an issue. crime is up in cities across the country. it will continue to be an issue. tom: what is your date on this? shelly: the date to watch is tuesday. -- we will come back from the holiday weekend and get a new batch of data that will likely include the absentees. even if the board of elections does not call it, the ap might call it. tom: can you come back tuesday and maybe lisa will talk you? shelly: i am here for you. jonathan: thank you, shelley. can you thinker, tom? tom: mr. farrow -- jonathan

ferro thanks you. [laughter] jonathan: 7515 on wti. here is the debate with opec+, debating 400,000 barrels a day of output hike from august to december. they are debating extending this until the end of 2022. just a couple of headlines coming from opec+. tom: annmarie hordern is in washington. i see lisa in vienna. lisa: sure, i will head over there. tom: you can clip the coupons on my 100 year paper. lisa: with respect to oil, it is well below the 100,000 or more expected in terms of increased production which is why you are seeing a boost to crisis.

just to give a little bit of perspective there. this is a delicate dance because you don't want to push people further into ev's and renewable energies by allowing prices to go too high. tom: we have to rip up the script. what in god's name is happening in the u.k.? jonathan: this is from prime minister boris johnson, extra precautions may be needed after july 19. july 19 is the line in the sand. the government may keep some government precautions -- some covid precautions. we will send out details in the next few days on the pandemic. we talked about this about a week ago, overwhelmed by events and the delta variant is shaking things up in the u.k. even with this explosion in cases, if you describe it that way, we have not seen the same move in hospitalizations and deaths. tom: interesting to see nation to nation, even the struggling nations like the philippines,

every story is different. jonathan: we should frame the last five minutes. 4289 on the s&p. [laughter] yields one study -- 130 747. this bloomberg. ♪

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jonathan: from new york city to our audience worldwide, live on tv and radio. equity futures, 4289 on the s and p advancing a single point on the nasdaq. down by 1/10 of 1%. i want to talk about confidence. this is not a therapy session. , then it's in the c-suite. -- confidence in the c-suite. united airlines ordering 270 jets, that shows you confidence in the c-suite that things can get back to normal. something else that shows confidence, the labor market. this is a story of job openings in america north of 9 million. a lot of people have used this to say look at the gap between supply and demand. demand to tell you something

about confidence and what you notice about every recovery is that job openings keep climbing the recovery. in the bond market, do we start to see those signs of confidence? we are looking for a move back to 2% on the 10 year. we are at 1.4 781. that is the kind of confidence we see in the c-suite, we see in the labor market, and not just the employers but the employees choosing to quit their jobs. will be see the confidence reflected in the bond market at the year-end? tom: the dynamics of the bond market, and i will go to the spread market, i have an immovable real yield. are you doing real yield tomorrow? jonathan: i will. unfortunately come italy will be

playing at 3:00 p.m. eastern time and real yield is at 1:00. tom: -- i think taylor riggs is standing by patiently. she got up early this morning. taylor: yesterday after the close of editing new within the chip space coming from micron. the earnings are a little bit of a disappointment, the analysts still loving this stock. we also got some interesting news as it relates to selling their utah factory to texas instruments. analysts are liking this deal for texas instruments. their positive. oppenheimer saying this will increase their domestic manufacturing. this shows the size and extent of some of those chip shortages. texas instruments is trying to

get ahead of that with this deal. these stocks are not reacting really positively on what analysts are describing is a positive deal. let's hope we can get some green on the screen. coming from general motors, we might get some auto sales this morning so keep your eye on what might be a good second quarter report. wti at $75 per barrel. look at what we are seen with other stocks. conocophillips, ubs, upgrading oil. tom: it is july 1 and we need to look forward as we look back. we start strong with liz ann sonders of charles schwab. i love what you do on twitter, it is a brief for the world. really proprietary stuff. you say past performance is no guarantee for future results. go there, what do future results

look like? liz ann: i think the bond market continues to be the most important signal for the equity market. not just in general terms about what the 10 year yield is about inflation risk, but leadership is really that has really keyed off what is going -- has really keyed off what is going on in the bond market. if we get another leg up in yields, you probably see more of this rotation back toward the value sectors. the latest trend has been more towards the growth factors. tom: this is an important question. i have respect for the idea of past performance being no guarantee. the way you saw that is to take a longer term view. the markets today and the modern social media and all the analysis is a long-term view of three weeks. what is your view so that you get beyond the stress of past performance is no guarantee.

liz ann: i think what is key right now, and i don't know if anyone knows the answer to this, is did the pandemic pause the cycle that was in play both in the economy and the market up until february last year? or did it and one cycle and start a new one? where we are in the economic cycle, whether or not it was just put on ice and we are back could mean we are later in the cycle. or did we really just end the prior cycle and start a new one? then we have a much longer runway. i think we will start to get answers to that in the next few months when we moved past the base affects in terms of economic data and inflation data. lisa: you think inflation in terms of gdp figures will give us a since of where we are in

the cycle? liz ann: i think we have to get into early fall. september is with important for a lot of reasons. for not least being the expiration of the unemployment insurance and states who did not end it early. hopefully everybody is going back to school. returning in labor market -- before you brought me and you were talking about the surge in hiring. there is a mismatch. the funkiness in the data, the base affects associated with inflation, the seasonal problems within the labor market data start to ease as we get closer to the early fall period of time. i think there will be more clarity starting at that point on many of these metrics. lisa: a lot of fund managers do not have the luxury to wait for clarity before they make a move. there is a question on how to double down on a position when there is a murky backdrop, when

people are waiting and will continue to wait on where we are in the cycle. what are the balance of risks here? how are you positioning into the next few months? liz ann: i think the factor decision style indexes or sector decisions. what a lot of people don't realize the midst of this growth versus value debate is that if you screen within sectors regardless of sector for value factors relative to growth factors, the outperformance of value overgrowth is higher -- of the value over growth is higher -- i believe you want to focus on the factor of value. that should not limit you to utilities and energy in the classic sectors within value. utilities are expensive right now.

you can focus on value which is important in average market. don't put blinders on and terms of where you look for that value. you can find it in growth here parts of the market. tom: this is an important discussion about sector analysis and alpha and beta and the factors that are after. liz ann sonders, is earnings a factor or am i too quaint? liz ann: it is a factor. long-term earnings growth is a factor. earnings are a week or two away from receiving earnings in honest. the most important focus on the earnings season is not on the growth number but on profit margins and what companies are saying about the stickiness of wages, whether they are passing on higher input costs. that is the big unknown right

now. i think the profit margin piece and what we hear from companies will be in more focus. lisa: we started talking about how the bond market has signals. how much is it signally something that is less optimistic than what you are talking about? how do you dismiss that message? liz ann: if it is a message about inflation being transitory, to use the fed's terms, that is not a bad environment if we don't lose the growth piece, too. what a lot of people don't realize is that inflation and a low growth environment is toxic to equities. rising inflation and a strong growth environment is not a bad situation. this focus on inflation in a vacuum without understanding the growth backdrop this is the distinction in an inflationary room and an inflationary bust. jonathan: that is an important

point. always great to hear from you, liz ann sonders. i want to pick out one sector that has struggled, the airlines. down by more than 11% through june. we are getting headlines from the prime minister's spokesperson in the u.k. who think that prime minister johnson and chancellor merkel will discuss international travel friday. they are in talks about vaccine certification. the prime minister repeating something, that the double vaccine doses would be a travel liberator. here we are in july 2021 still trying to figure this out. tom: what is important here is what matters. it does not matter what i think. the medical pros say that all that matters is double vaccine. i look at two statistics every day, the percent vaccinated.

45%, 45 point 1%, 45.2%. it is just about getting vaccinated. all the corporations and governments are going to line up for this. jonathan: i will make a personal , my family, for instance, my mom has had the pfizer vaccine double dosed. my sister has the astrazeneca vaccine, double dosed. even if the u.s. opened up travel for them to come in, but they cannot because they don't have a green card and they are not a citizen, the astrazeneca vaccine has not been approved in the u.s. so who did elect in? -- so who did they let in? people who have had a double dose of pfizer? this one is not clear-cut. tom: i will go with that. to the point, and i think you said this within a vicinity of a year ago, let's go. we are unable to go because we

are afraid of hurting a select group of people's feelings. at the same time, we cratered international travel. jonathan: the news is the delta variant on top of that. lisa: if people are protected with vaccinations, why not just let them in because it is already circulating? jonathan: coming up, a chief economist. kicking off q3, good morning. this is bloomberg. ♪ ritika: for the first time, a multiyear investigation of donald trump's company has resulted in criminal charges. the trump organization's cfo surrendered to authorities this morning. he and the company face tax related charges. neither the former president or his sons are expected to be charged. a judge has blocked order's rule penalizing social media companies from barring political

candidates. it was signed by ron desantis. the judge ruled that the law violate the first amendment. in new york city, eric adams saw his lead over garcia grow smaller in a vote count for the democratic tremor. this is -- democratic primary. race will likely be decided by a count of 125,000 absentee ballots. 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 am ritika gupta. this is bloomberg. ♪

>> we expect this rise in inflation to be a temporary feature of the bounce back. it is important not to overreact

to temporarily strong growth and inflation to ensure the recovery is not undermined by a premature -- in conditions. jonathan: is that what he looks like these days? tom: i conflate it with the fourth of july and the two don't go together. jonathan: this is bloomberg. your bond market, 14764. yields are higher by about one basis point. the euro-dollar is not doing much. one point -- 7529 on wti -- 75.29 on wti. tom: it was a responsible data check. jonathan: thank you. tom: we refrain to the

relationships of the market and the bond to lundy's with edward yardeni -- you're looking at tech stocks? >> yes, specifically between the s&p 500 index and the 10-year treasury yield. it is a comparison that liz ann sonders made on her twitter feed. she put on a lot of charts and in the morning, they're pretty insightful. this way got my attention. what we are seeing lately is very different than what we have seen over the past couple of decades, more reminiscent of the.com era in the 90's where in fact you are seeing a negative correlation between tech stocks and bond yields. you're getting a better part of a year as far as that goes. tom: are you channeling insecure -- insync here?

that fixes back to 2001. is there a 2001ish element to where we are right now? dave: you can argue it is more like where we were before 2001 because you are talking about the most negative correlation -- most negative the correlation has been since october 1997. we were in the middle of the.com era back then. tech stocks were taking off. -- there was so much focus on the development of the internet. we are kind of back there to some extent to now. some people have tried to make that comparison between the current surge in tech companies in the broader sense, not just the ones in the technology index. lisa: this is a totally different period than the 1990's and early 2000's. we are looking at companies that

are behemoths of cash production. they are generating so much cash they don't know what to do with it. they are the sizes of medium-sized nations based on cash generation. the reason why they have been correlated negatively is because they are havens. when yields go down and people have a less optimistic view on the economy, they go into tech stocks. at what point does that cash generation give them a boost even when treasury yields or if treasury yields ever rise? how much are you starting to see a little bit of a fisher around this connection? dave: that is kind of where we are not to some extent. the way things have changed in terms of this ration ship, there was a whole school of thought that treasury yields were going to go up and tech stocks were going to go down. at least in the past few months that popped up. that would imply what we are seeing in terms of negative correlation going to pan out. it has not happened at this

point. it is interesting how things have shifted. tech stocks are showing more strength and the treasury yield stalled out at this point. tom: that he so much. jonathan, you make a joke about it, but the bear market crew will be shown the door here. jonathan: bye bye bye was released on january 18, 2000, just one year ahead of what you said. just in case there were diehard fans interested in their first studio album. tom: i heard it for thousand times -- i heard it for thousand times. -- 4000 times. lisa: the google searches on their -- on this code -- the google searches on this show, they should have their own twitter page. [laughter] tom: i want to see you out that door, baby.

jonathan: it is a fantastic example of career risk. if you called bobby too early -- if you call the bubble too early, you got in trouble. that is always true. tom: i am thinking about the tech people in that interview with shelly banjo, you think about the career risk. jonathan: let's popping -- let's not be me. -- let's not be mean. crude is high by 2.7%. lisa: we will be looking at opec+. this question of the agreement between russia and saudi arabia. i think it is really interesting, this toggle between not letting prices go too high because there is a concern about cannibalization from the electrical vehicle space. if prices get too high, people

will accelerate the shift away from fossil fuels. this is one of the main arguments against letting production fall too much and prices to fall too much. it seems like it is where we are right now, maybe a little bit lower. this is the question, what is the sweet spot to keep the industry relevant? jonathan:, what is the sweet spot on crude? tom: the microeconomics changes as you go higher and work harder. what we are hearing is that it is a demanded dialogue. that is all there is to it, demand will overwhelm any supply delta out there. jonathan: the rally in energy equities has been overwhelming. we have had a move of more than 40% on the s&p. the banks are up 30% on the s&p 500 you shoot it. from an equity market perspective, for a market participant, i ask people what

they were preferred -- what they prefer, banks or energy. i am confronted with the same answer with energy, i'm not comfortable taking a bet on where commodities are going. i like the banks. you're taking a bet on where the treasury market is going and how comfortable are people making that call? lisa: not very comfortable. people are in stasis. they put up his notes about what could go wrong and of course i clicked on it. it's is the main issues that could potentially torpedo growth would be a fed error, higher oil prices, or any earnings downturn. typically you have to get one or more of those to get some disruption in the valley. we are looking at oil prices go up, but are they going up enough to be a trigger at this point? not really. jonathan: it is good to see you refreshing the material. lisa: thanks. jonathan: lisa, thank you. tom: munos says we are going to

make you proud. there is. that there it is -- there it is. jonathan: oil up a little bit more than 1/10 of 1%. good morning. ♪

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>> even if the economy slows, rates stay low, inflation will moderate and we will get activity return. >> we think any pullbacks or pauses in the market could be short-lived. >> as this global recovery is unfolding, investors need to think more global in their portfolios. >> the pressure will grow on the fed to announce qe tapering. >> there is no doubt that the markets are prepared for that. >> this is "bloomberg surveillance." tom: good morning,