♪ >> the consumers have been venturing out into the real economy, and they have been gradually putting that cash to work. >> americans are more flush with cash, but that wears off. >> we look ahead the next few quarters, we believe the economy will be still growing well above trend. >> when things get really bad in markets, there's no doubt that volatility is going to spike. >> we are just blowing away a forecast that was already revised up by a point the last fomc meeting, so when does the fed recognize that? >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: chairman powell just hours away. from york city, for our audience worldwide, good morning. this is "bloomberg surveillance ." alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures, 4364 on the s&p,

just off all-time highs. tom: the news is different than it was at 9:00 p.m. last night. this is a radically different wednesday than i expected even 12 or 18 hours ago. there's a nasdaq lift off apple news. but the focus has to be in this changed wednesday on chairman powell in washington. jonathan: i'm with you. just how compromised is the federal reserve chairman, who's clearly looking for a second term at the cap of the central bank in america? tom: steve stanley absolutely nailed it, that what he cannot do today is go down there and say remain calm. that is not going to happen. jonathan: that is the monetary policy side of things. we got to talk about the physical side as well. lisa: a 3.5 trillion dollar proposal from to kratz they have agreed upon. will it matter enough to -- from democrats they have agreed upon. will it matter enough to markets? people bringing back their

expectations for fiscal, as well as potential momentum in this economy. tom: here's your pricing -- jonathan: here's your price action this wednesday. 43 624 the s&p 500, unchanged -- 4364 on the s&p 500, unchanged. on the 10 year, a break of 1.40% briefly. eurodollar, 1.7 don nin -- eurodollar, 1.1799. lisa: i to 8:00 a.m., we get the producer price index data from the month of june. how much our input prices for industrial producers going up? how much is this going to crimp basic consumers, this k-shaped recovery jay powell is likely to address? that will be at 12:00, chair powell addressing the house

financial services committee. i am curious how he addresses this bifurcated recovery among the has an have-nots, how key he can argue -- how he can argue his tools are helping people equally. jonathan: that is what is driving the gap at the moment, shortly. lisa: this is what of the conundrums for jay powell. how can he argue he is the bottom part when his policies are fueling the gains in markets that are really helping the top part of the l the most nasty desktop part of the -- top part of the k the most? jonathan: we will hear from citi, wells fargo in the next hour. trading clearly where the disappointing is for some at the moment. tom: there are dealing with a grosser economy. debt is up. bernie sanders wants $3 trillion.

someone else wants $1 trillion. wait a minute. debt is up and yields are down. my textbook and say that. jonathan: a brick of 1.40%. let's go straight there right now. steve major, hsbc global head of fixed income research, joins us. i'm pleased to say he's going to be with us for the next 5, 10 minutes. i want to start there, was a provocative question. do you think we may have already seen the peak in this yield curve for the cycle? steven: i think we saw the peak of yields at the end of march, jon. what's happened since then is the market just repricing to the reality that rates aren't going up anytime soon. to me, i wonder what has happened to the 2% and above consensus forecast because to me , that wasn't particularly robust in the first place. so i think there could be a

scrambling of people's forecasts as you see people covering their shorts. so i would go for 1%. tom: we've got an awful large audience of listeners and viewers that don't have a cfa. they didn't study like you did. they are going, wait a minute, debt up ever higher, and yields continue to fall. how can that be? steven: first of all, the last 20 years have seen that association of higher debt and lower yield in place. of course, the, nation is not causality. to go to causality, you need to think about the debt servicing channel. that is the cash payments that have to go towards servicing the debt. a simple point is we cannot

afford higher rates, and it is very unlikely we will reach the heights of the last cycle. that seems to me to be more important than the data. it is the destiny that really matters, not the departure. lisa: how much does this rely on an ever easy federal reserve, versus the dynamics natural in the economy? steven: the fed's easy in several ways, with forward guidance and qe, and the interest rate it sets. that sets up a bit of a trap because it is very difficult to unwind all of this. so the debt stock is huge globally. interest rates are low and there is qe, so it is going to take a long time. think about the supertanker turning round the cape of good hope. it looks to me it is going to decay very long time, and that speaks to today's testimony.

at best, you might get a shift at some point, but nothing dramatic is going to happen today. it can't. jonathan: a lot of conversation about the reaction function at the federal reserve. let's talk about the reaction function of the market participant, the data. yesterday got a lot of attention from a lot of people. it was not just the cpi print. it was how the market responded. didn't last too long because we had a messy 30 year issue in the afternoon that changed things up , but in those several hours after that inflation print, what did that tell you? steven: i think the market is displaying a sort of pavlovian response to all of this, in that it knows that if the probability of rates going up seems to increase, then equally, the possibility -- the probability of reaching the heights of the last cycle are also going down. to me, the earlier they hike,

the less room they have to go up. they will have to stop earlier. i think that is how the market is no understanding the fed reaction function. they have this flexible average inflation targeting, but they have sort of jumped off the tail by indicating that they may hike in 2023. tom: if we have a boom economy, whatever the numbers are, more optimistic than capital economics, hsbc doing their own work as well, can yields go up with a boom gdp and everyone remains happy? steven: very unlikely that yields are going to go up, even with strong growth. if you get 6% growth this year, you have to weigh it against the minors from last year, so the average is plus 2%. as your show has been pointing out, real yields have been falling because they are the

shock absorber that comes through. nominal yields are being controlled. if inflation expectations and risk premium rise, the yule can only go down. that's all that's happened. lisa: if you see that bond yields can remain low, while this is a boom economy, does that mean bonds have lost their signaling power, that they don't have the same kind of predictive view on the economy that they have traditionally had? steven: that is a deeply involved, complex question. i would say that when yields were down at 50 basis points last year, they lost a lot of that signaling, and lost a diversification benefit. but at 1.40% or so, there are investors who will buy long bonds. long bonds anywhere near 2% offer balance in a portfolio, so it sends a signaling, and maybe people are interpreting what the

yield and the yield curve means because we've had a decade or more of qe and unconventional monetary policy. of course, some of the stuff from the 1970's and 1980's, that doesn't really apply to today's economy in the bond market. jonathan: just a final question for me. you and i have known each other a long time. someone just reached out to me and said exactly that. they asked the question, what would it take for the 2% crowd to be right? what would it take for you to be wrong in the 2% crowd to be right? what do you think we need to happen? steven: there needs to be something more durable on the employment and wages side. i think this is where the fed is very inclusive, and in answering the questions, i am sure chair powell will point to that. the is helping ordinary people by getting to work. we are a long way from seeing

durable increases in wages, but that might change the inflation outlook. so i would that is one of the risks. i guess you could have personnel changes, but we are not protecting in the next year or so. i'm not really sure how problematic that would be. but the point is there are always tail risks to the forecast, but we are trying to take that into account. there's also a risk that yields go much lower, by the way. jonathan: steve major on the bond market. distant terms of personnel changes, the coaching staff of the u mich football team, do we need to make a judgment there? steven: we got to the final. let's thing about the positives, jon. [laughter] jonathan: didn't know you would do that after talking about the bond markets negatively for so long. steve, good to see you. good to catch up, as always.

hsbc global had a fixed income research on this bond market. always fantastic to catch up with steve major, and it always gets such a fantastic reception because you get a ton of pushback every time steve comes out with a note, and then steve sits there, and ultimately, yields go his way. that is what has been happening the last couple of months. tom: we have seen this whether it is steve major or david rosenberg or gary schilling as well. as major was speaking to us, lawrence fink at blackrock really reemphasizing his view of it is not transitory inflation. you can set up this great debate of 2021, steven mager and david rosenberg on one side saying you are out of your minds, and some people getting some real visibility. mr. summers and mr. fink going the other way. jonathan: we got to agree on what we are talking about before we start arguing. if larry thinks as transitory is not transitory, i want to understand from his perspective what is not transitory.

the federal reserve may say prices have changed, but we think the rate of change and the factors that have delivered that higher range of change is transitory. you can argue over the first point. i think a lot of people are just arguing past each other far too much on a very important topic. what should come down to, and i mentioned it in the past hour, what will overwhelm the cycle? will this price pressure cascade through the system and overwhelm the recovery? that is the important argument to have. tom: it is. that is the arch debate. will it derail this recovery? we will find out as we move through year. jonathan: coming up in the next hour, brian levitt of invesco, their global market strategist. more earnings to come. wells fargo on deck. from new york, this is bloomberg. ♪

"bloomberg surveillance -- ♪ >> joe biden is coming to a

lunch tomorrow to meet us on a wonderful plan that affects american families in a so profound way, more than anything that's happened in generations. we are very proud of this plan. we know we have a long road to go. jonathan: one big push down ndc that was -- down in d.c. that was chuck schumer there, the senate majority leader. alongside tom keene and lisa abramowicz, i'm jonathan ferro. wednesday morning, here's the price action. up five on the s&p, advancing a little more than 0.1%. nasdaq futures outperforming once again. in the bond market, still south of 1.40%, 1.3930%. tom, you pointed out eurodollar. we reclaim a $1.18 handle, up 0.2%. tom: the loonie goes out to a $1.25 handle. damian sassower's morning note

on em was really terse. even though dx why hasn't broken out to a higher even though -- even though dxy hasn't broken out to a higher level, am watching the dollar index. emily wilkins is with us. mr. manchin regrets he cannot lunch today. does joe manchin want to show up at bernie sanders' victory lap lunch today on a $3.5 billion social infrastructure? emily: i'm not sure it is a victory lap lunch. he wanted $6 trillion in this package. this number is much closer to the number that manchin put forward, $2 trillion. joe manchin is a very moderate democrat. he has shown his willingness to stall the democrats' plans before. he's also been on the record saying that he wants to get

something done. he's not opposed to this reconciliation plan. he's just sort of a person who understand his power as one of 50 senators. but i think there is a want to get things done in the senate, and last night, even that we have a much longer way to go, it is at least a first step. tom: get out the calendar towards the primary of 2022. is this the liberal splash before biden gets serious and really understands he needs moderate support to maintain democrat majority? emily: to a certain extent, you are seeing that there is some consensus given to the moderates, the fact that this package was not as large as progressives wanted it to be. it seems to fall right in the middle, and of course, we will see as negotiations go on exactly what does and does not make the cut for this budget resolution and the subsequent reconciliation.

you are right to point out the fact that democrats come of the districts they really have to keep our moderate districts. they are swing districts that have a lot of republicans in the, as well as democrats, and democrats are going to have to be cognizant as the go forward, which means they need to get this plan done as soon as possible. they don't want it dragging into 2022, where everything suddenly becomes a political battle. jonathan: i love the language choice, tom. are we implying this administration is not serious with a $3.5 trillion plan? tom: they are serious about the primary season of 2022. that trumps all. jonathan: and you have been on top of that since november. i do wonder where larry summers fits into all of this and the timing of that meeting to have him into the white house. emily: i think it shows that the white house is concerned about inflation, that they are watching inflation. that is something that is certainly on their minds. they are not taking a lacs approach to it. at this point used to have people like jerome powell and janet yellen saying we are seeing a spike in inflation right now, but that is temporary

and it is going to go back down, and it doesn't seem to have much of an impact on what the white house is supporting in terms of federal spending. joe biden fourth a trillion dollar infrastructure and social infrastructure plan, and that is what congress has come up with at this point, so there hasn't been too much of a change there. i think the big take away is the fact that the biden administration is taking inflation seriously as a potential threat if it doesn't wind up going up and going down as some of the government predict will. lisa: how much of a covered is president biden have for the fact that the $3.5 trillion human infrastructure bill that was agreed upon by the senate budget committee is pretty much dead on arrival? it seems like he has some company among analysts. emily: this has a long way to go. yes, hitting a topline number,

getting an agreement is a next step, and there are some people pointing out that no progressive signing onto this bill is a potentially positive thing in the favor of getting something done. but we still have a long way to go. we have a lot of details we don't know about this resolution that has not yet come out, and then we have to fill in the details. the budget resolution we are talking about here, that is only a skeleton outline of what is going to be in the budget reconciliation. there are time considerations, cost considerations, and democrats, every individual one has so much power, if something is or isn't in the bill and they are not happy with that, they really have the ability to pull the brakes and hold things up. so we do have this sort of nextstep being taken here, but there is a long road ahead to actually get to the point where something will be passed. jonathan: chairman powell testimony a little later on today. a lot of people coming on this program, talking about an

audition for a second term at the federal reserve are you from your perspective, how are they characterizing this testimony today? emily: he's absolutely going to be asked about inflation, about the future of the economy, when the economy has been in this unique position of trying to come out of not just an economic depression, but a pandemic. so lots of pressure on powell today. lots of people are going to be watching him and watching what his answers are, and for how he represents the fed at this really critical point in our economy. jonathan: emily wilkins of bloomberg government down in washington, thank you. what are we, for hours and 30 minutes away from testimony from the chairman of the best central bank. tom: he will talk about all of the different parts of finance in the fed. what he is mostly going to talk about are the people of america. he will send a social message. it's one of the hallmarks of his tenure. he will if his eyes that today to politicians who want to hear a social message. jonathan: we have to talk about

whether he has the tools to meet it, don't we? shouldn't that be the focus of the conversation at the moment? they always come out with these objectives that are very worthy, very virtuous. of course they are. but do you think these policies can achieve those goals? tom: lisa, you answer that. lisa: i think it is going to be interesting whether jay powell really banks the table on more fiscal stimulus at a time when it is so controversial and politicized. we came into the year expecting so much physical spending. now you have an economy that is going, and you have less support for actual physical spending. how much are they going to say that is necessary still to get the economy going? jonathan: very diplomatic. [laughter] chairman powell coming up a little later on this afternoon. full coverage on tv and radio, with the chairman testifying on capitol hill at 12:00 eastern. equity futures positive a little more than 0.1%. a back into the bond market after a messy second half in

yesterday's session. we break 1.40% to the downside, 1.3913%, and we reclaim on dollar $.18 on eurodollar -- reclaim $1.18 on eurodollar. this is bloomberg. ♪

♪ jonathan: i from new york city, for our audience worldwide -- live from new york city, for our audience worldwide, this is "bloomberg surveillance." on the nasdaq 100, positive about 0.3%. it is the nasdaq 100 versus the wrestle that i want to talk about. thank you to summit -- versus the russell that i want to talk about. thank you to so many of you that wrote in about this. the year-to-date performance, 14.88% in the positive for the nasdaq. for the russell, 13.37%. we now have a bit of outperformance for big tech. the pivotal part of this year for this story was march. march 8 is when the nest at 100 bottomed that's when the nasdaq 100 bottomed -- when the nasdaq

100 bottomed. march 8 is when the russell topped. it is the why we need to get into. the y comes down to growth and the cyclical recovery, and it comes down to this bond market. switch up the board and get to bonds. this yield curve topped out at the end of march. nominal yields topped out at the end of march. it is what is going to happen with real yields now that holds the key to that battle between small caps and big tech in america. 24, 25 basis points on twos. on 30's, a little more than 2%. i think we've got to be laser focused on this debate right now because big tech is starting to win because of what is happening with interest rates again. we topped out at the top of march and the end of march at around on .74%. we are back down to 1.3913%. if you believe the federal reserve will step in and choke off growth and growth becomes

scarcer than you thought it would be, what do you want to buy? you want to buy growth equity's. the nasdaq has been the winner recently. . tom:tom: how many people were told eight or nine months ago that tech was so 2019? we will get to that a new moment with a really important guest. jonathan: and this can go the other way. of course, this can change. you look at the bank of america fund managers survey that came out yesterday, the cyclical boom has topped. you can have the contrarian view and go the other way. but this is one to watch. the bond market really holds to ge -- holds the key to what is going to happen. here's romaine. romaine: most of the movers today do center around earnings. we did get bank of america earnings. similar story to what we saw yesterday with regards to j.p. morgan and goldman sachs. the relief of a lot of those reserves helped draw a topline beat here. you're seeing a shortfall here with regard to fixed income trading, really trading revenue overall coming in light.

expenses coming in hotter than what the street was expect in. overall net interest income sort of in line with estimates, but i think the street was looking for some than a little higher here. those shares now down about 2%. we are awaiting wells fargo, as well as citigroup. we did get earnings out of blackrock, the world's largest money manager. there's also disappointed. $9.5 billion in inflows, that is the record. that would be phenomenal. the street was looking for a little more of a net inflow and the quarter. that came up probably close to $30 billion short of what the street was looking for, and it has dropped year-over-year from what we saw. so keep an eye on that space. blackrock shares down 1.4%. we also got earnings out of the airlines starting to trickle in. delta reporting now. they came in above expectations. total revenue around $7.1 billion, about $1 billion more than what the street was looking for. here's the bad news. when you compare these results

to the pre-covid 2019 period, you are still tracking 30% to 35% below what these companies were doing back then. that is with her guards to revenue, cost, everything there is tracking below what we had pre-pandemic. american airlines came out last night and preannounced their earnings, so you saw something similar. finally, keep an eye on apple. those shares were at a record high yesterday. they are moving higher in the premarket, up about 2%. some very bullish commentary i had of the company's earnings in the coming weeks. the idea is that the next cycle of iphones will be a little stronger than what was expected. a lot of the suppliers will also be higher. tom: i note apple just moment ago breaking up to new highs. you wonder when we will get x trillion on apple.

may analysts up on apple. this is the most important interview of the day if you are considering trend in the markets. the late martin wise said the trend is your friend. michael a rourke -- michael o'rourke of jonestrading would suggest it is very much about trend. he has decades of experience. you and i have never seen the concentration of this market. you and i have never seen the tech focus that we have. can you do trend analysis of the stock market, given the absolute breadth that we see now? michael: we can, but it is very reminiscent of that 1999, 2000 period where you have the nasdaq driving the day-to-day trading. now we see it concentrated on the faang thing, and you

can add tesla in there. that all goes to what jon was talking about with this growth versus value swap between the nasdaq 100 and the russell 2000. you just have to keep an ion those names because they seem to be driving everything these days. jonathan: let's go to the quote from bank of america in their fund managers survey yesterday. the cyclical boom has peaked. investors are much less bullish on growth. we have unwound junk over quality, small overlarge, value overgrowth trades back to october 2020 levels. do you want to lean the other way now, or is this a trend we -- or is this the trend you want to stick with? steven: i think yesterday's trading was a great example, we had a very hot inflationary cpi number, and the market barely reacted. did in your yield was just below 1.8% in march, now down around 1.3 5%, 1.4%, and the market didn't react to that treasury

auction yesterday, and when that auction was weak and the flows were into their, that cued the treasury market, which in turn cued the equity market, and we saw the growth names that had been rallying all day were burst. even some of the banks that were trending down on earnings get a little bit of a lift because treasury yields start to rise. so i think the treasury trade that feeds that rally and pushes yields down to 1.3% is probably coming to a close, and we still have a lot of inflation data ahead of us, and the economic recovery is on track. jonathan: tends right now at 1.39%. -- tens right now at 1.39%. steve major a little earlier said the peak might be in. he said the yield curve peak might be in. if that is the case, what would

it mean for the conversation you and i are having? michael: if we see a peak in the yield curve, it would mean growth names are going to be in favor, but again, i still think if you think about the economic environment, i would say we are on the cusp of a structural shift here. we are seeing the biden administration taking a strong stance versus china, stronger than the trumpet adminstration did -- the trump administration did. the boom drove corporate profits and consumer prices, and i think will be on the cusp of a different economic environment. it is not as easy yet is is -- as easy as it has been over the last few decades. lisa: if you take a look at the globalization -- at de- globalization, if this is the

trend, and the biden administration's moves take hold, what are the best place for that kind of environment? michael: it gets very tricky because you want to be in those material names. i do like the banks in that environment because i think you will see higher interest rates and you will see that yield curve steep in. but if you are looking for more of those nominal plays that are going to benefit from rising prices, on the flipside, the guys who are going to get hurt are the guys who have basically benefited from off shoring and are able to do a lot of their production in asia. it is going to look very different than what the pastor decades have looked like if it is successful. obviously it is very early stages. jonathan: conviction trade for the rest of this year, what is it? michael: we have bank earnings coming out, and i know the

market is not thrilled, but banks is the place i would want to be. i think high-yield will work in your favor in the future. you are going to have things like tapering and tighter monetary policy down the line. while these earnings are unimpressive, they are not bad. it just so happens that 2020 was a very good year for the banks. they did have to reserve a lot of those profits. but once the trend of business settles in, i think it is going to be good for banks. jonathan: it's been way too long. michael overwork there -- michael o'rourke there, jonestrading chief market strategist. we had record numbers this quarter from j.p. morgan in the investment bank. record profits sometimes just doesn't get it done for this market. lisa: if you look at a pure cash flow basis, they are offering a higher yield than most junk funds are. so it really could potentially

broaden out the potential investor. however, it is a faith-based investment that the yield curve is going to steven and that those loans are going to pick up. is there a change that can spur inflation that we are not seeing right now. jonathan: it is hard to have conviction right now. tom: i don't buy it for a minute. i thing it is hugely flexible. one program note, extremely important to understand, i just need to make clear "bloomberg surveillance" is duke free everyday. jonathan: do you want to explain the relevance of that? lisa: no, he doesn't. [laughter] tom: we are duke free each and every day. jonathan: i am familiar with the geography. this is bloomberg. ♪ ritika: with the first word

news, i'm ritika gupta. president biden says it is a national imperative for congress to pass voting rights legislation to counter state laws passed by republicans. the president called the efforts to curb ballot access election subversion. the latest flashpoint is in texas. most of the democratic representatives in the statehouse left for washington in order to prevent the republican majority from passing new voting limits. treasury secretary janet yellen and federal reserve chair jerome powell will discuss the financial risk of the housing market. they will meet with fellow regulators on. the goal, to make sure the u.s. is not vulnerable to a crisis like the one it suffered more than a dozen years ago. brazil's president jair bolsonaro reportedly has been hospitalized. according to cnn brazil, he was admitted to the armed forces hospital in brazil for tests. there's no other information. kathy wood's ark investment

management has been buying tech stocks. it has plunged since february. there has been a valuation reset in chinese tech stocks. beijing has intensified its recent crack down on the sector. apple and goldman sachs are teaming up for a by now, pay later plan that would let consumers pay for any apple pay purchase in installments over time. goldman would be the lender. the firm has been apple's partner for the apple card credit card since 2019. 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. ♪

>> that x couple of weeks might be hard until we get to summer

holidays, and then we should see a situation which should be alleviating. we should recover some of the loss volume. next year should be better, and within two years we should have enough capacity for the whole industry again. jonathan: the trajectory is two years now. tom: thank you. jonathan: cheers, tom. herbert deese there, the vw ceo. bank earnings in focus. citi out now. let's start with net interest income, at $8.8 billion, a little shy of the estimate, $8.9 billion. the ceo given guidance on loan growth. headwinds of tepid loan demand also remain. just a couple of headlines, but i think that last one seems to be the issue for some of these banks. tom: it is, and they're going to cut costs. wells fargo with an efficiency ratio, which tells you they are really cutting costs. we will do this with sonali

basak on citigroup as well. david wilson with his stock chart, interesting on commodities right now, right? dave: absolutely. we are talking about relative valuation when you consider projected earnings across developed markets, so looking at the msci world energy and metals mining indexes. it is a pair of indicators that suction cited -- that sucked jen cited. -- that sucked jen -- that socgen cited. you are seeing the energy stocks n1/3 cheaper -- energy stocks 1/3 cheaper than the msci world. we have seen oil prices go up. we see earnings estimates go up. as a result, the stocks get cheaper on a price to earnings

basis when you look forward. that is what is happening to that group in relative terms. when you go to the metals and mining stocks, you are talking about a discount as much as 54%. in terms of history for the energy stocks, it is the biggest discount since 2008, and we have data on the metals and mining group going back to 2010, the lowest ever, so possibly 2008 as well. it just goes to show you how cheap these companies have become in relative terms, and terms of being able to buy here. lisa: we are getting bank earnings as wells fargo is just crossing the tape. you are seeing shares down 0.9% in premarket trading, not anything to write home about necessarily relative to some of the other moves, at least not yet. so we talk about positioning heading into these earnings, we are talking about gains and how cheap some people see the metal and mining industry. how has positioning been with

the banking stocks in particular , given the losses we have seen over the past few weeks? dave: it may be notable that if you work at -- if you were to go through all through banks reporting today, their shares all fell yesterday, so it is clear that people are looking for whatever weakness they see in the quarterly result and focusing on it, whether it is loan growth, bond trading, cost, whatever it is. that may well be a theme that plays out throughout the entire earnings season because we know that profits are going to be well above what they were a year ago just because of the pandemic. they have been reading analyst estimates hanley already. more to come on that score, no doubt. it becomes a matter of what are the weak spots, and how do companies see things moving forward. lisa: there's also a question of how much is under get the intro -- under the control of bank

management. we hear that as a theme and it is ir across the board. however, it'll to millie comes down to net interest margins which -- it ultimately comes down to net insurance margin -- net interest margins, which are not that great. how much have bank stocks been trading in tandem with the yield curve, with tenure yields in general? dave: there has been that relationship, no question. there are a number of charts that kind of point to do that, and beyond it, it is a matter of what does the economy look like going forward. we have seen the recovery trade kind of uncle a bit at this point. some investors going for dividends, and certainly with energy stocks, you are talking about whether you look at msci world or even the s&p 500, the highest dividends among the main groups, and metals and mining dividends as well with the potential for increases as their business progresses. tom: david, thanks so much.

what i would look at is ben laidler saying it is a double digit 2021. jonathan: you've got one already if we close it. mentioning some of the sectors, take a look at the airlines. i seen a couple of downgrades come through from the likes of evercore and others. that stock is down about 0.5% from the highs of march. carnival cruises is down about 0.25% from the june highs. these are sectors of the economy that are struggling. this is not where we thought we would be 12 months ago. we thought that international travel specifically would be far wider open that it is right now. tom: delta air lines has improved a little bit, but just a little bit. what i would say more than anything is you've got speculation sectors, volatile sectors that go up and down, but the meat of this great bull market of eight or nine years continues. you see it this morning. we are red and green, and all we are green on the screen. jonathan: the nasdaq advancing

about 0.4%. lisa: when you talk about airlines, i wonder how much you have actually seen the real reopening in the economy. i think about how the bank of america chief financial officer is saying back to the office in september, echoing some of the other comments. how much will be in person experience business travel picking back up, giving a renewed boost? on the flipside, how much can they increase capacity to meet that demand? jonathan: we are not going to get a clean read on this economy until the back end of q4. you've got to wait until september for additional unemployment insurance, for the kids to go back to school, and to see what happens with child tax care. there's a child tax credit that goes into the mix as well. the end of the year, we had an interview with the vice chair of the federal reserve, richard clarida, and that is the only real clarity we have on what they are waiting for on the

calendar. when we asked a very basic question, transitory, how and when will you know if you are wrong, he was talking about the end of the year. it is going to take until the end of the year to get a clean read on the underlying economy and what makes the policymakers. tom: all of the mumbo-jumbo with chairman powell is they are just simply data dependent, and they have restudied that they are evermore data dependent. jonathan: but that data is still highly influenced by the policy decisions of the last 12 months, and the numbers we see from the banks are still highly distorted by what happened 12 months ago because they have come out of this with a massive cast bus or -- massive cast bus or -- massive cash buffer. lisa: without that guidance, if you bet on low interest rates,

can you just count in those dividends? jonathan: on that, david george, robert w baird senior analyst on banks at citigroup, coming up next. heard on radio, seen on tv, this is "bloomberg surveillance." ♪

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♪ >> when you look ahead the next few quarters,