decelerating. >> inflation has already risen significantly higher than the fed had earlier predictor it -- protected it would. a lot of consumers are forgiving now because they are finally being offered parole from cabin fever. >> inflation is likely to run ahead of expectations, but i think it will settle out around 3%. >> this is bloomberg surveillance tom keene, jonathan ferro and lisa abramowicz. jonathan:, let's get the week started. this is bloomberg surveillance, live on tv and radio alongside tom keene, i am jonathan ferro, back again with the wonderful lisa, she is back from her vacation and i believe she has no vacation days left. equity futures coming in a little bit. tom, what a week we have lined up. tom: this is an important market moment. yields breaking down. if you can get to the real

yield, see it folks on friday afternoon with food with -- with where we are now. inflation-adjusted yields, it speaks volumes. i would kill jon and talk to laura summers about stagflation. jonathan: the earnings, a huge amount of tech earnings through this week. chairman powell this wednesday. tom: some noise, taiwanese floods, the delta variant playing into all the dynamics in china. it is going to be a bang up earnings week. jonathan: the hang seng over in china, hong kong, getting absolutely battered. lisa: last week, china came out with a crackdown on education companies, saying they may possibly make them all not-for-profit, cracking down on the profitability of these companies.

regulatory uncertainty is taking on a new meaning in china and a lot of people are saying the stocks are virtually uninvestable. there is a question of how far china will go in this crackdown and why they are doing it. jonathan: hang seng off by more than 4%. i think the poster chart for some of that price action of the last month. tom: is it part of the overall market or is it truly an idiosyncratic story? jonathan: that is the issue at play for a lot of people. what is the transmission mechanism into global markets? a lot of people talking about may be the middle of 2015, when the equity market bubble in china popped. when you pick up something like education, it is hardly surprising that an autocratic regime like the communist party in china wants to clamp down the privatization of education. i am surprised they'll -- they

allowed proliferation of that particular industry in the first place. lisa: there is a larger question you asked earlier, which is at what point is there is a -- is there a transmission mechanism? i am curious to hear from lori about the share revisions. the momentum is actually declining. this is what i was thinking about. jonathan: that is your constituency? good to have you with us. let's get to the price action. if you are just tuning in, equities down about nine. monday, four day winning streak on the s&p 500 and a really tidy nice week. we talk about that in a moment. yields lower by three basis points. it is the real yield -- the real yield that gets your attention. lisa: negative real yields the most negative they have ever been, raising questions about

how patient the fed will be and what kind of communication, will they come out more dovish when jay powell gives a press conference. 10:00, we will get new home sales. the expectation is to get a gain. there is a question of this supply-demand dynamic, the idea of is there enough supply to meet demand? this is the persistent story in every industry post-covid. 1:00 p.m. kicking off a big week of treasury auctions. i mentioned $50 billion of treasury notes being sold. how much pushback is there, on the idea of the fed will remain patient and on hold? even as we see these deflationary pressures persist and how much will the fed potentially redefine this. tesla among the big names

earning cash reporting earnings this week. we are talking big tech and we expect to see some sort of indication in china demand, supply chain issues, batteries. i am also interested in how much carbon credits -- potentially selling some of the software behind the autonomous driving. jonathan: reporting earnings later this afternoon. then it's on to apple and microsoft and then amazon. let's get to lori calvin sena. let's start right there. what are we learning so for our from incoming earnings -- so far from incoming earnings? lori: we have well over a third of the s&p and some of these big tech behemoths. what we are learning so far as the values head of the market, financials in particular look like there is a weak link at this point. so far we have actually seen some resilience in areas like technology and growth revisions,

while we have continued to -- i really want to see if we're going to be get a confirmation of that trend. in terms of other things that we are learning, one of the fascinating things i saw was that 2021 eps moved up a couple blocks but 2022-state flat. -- 2022 stayed flat. i wonder if we will continue to see that enthusiasm build on next year. if not, we interpret it and see other things suggest that is happening that is -- suggest that is happening as well. jonathan: do you think downgrade risk is starting to build? lori: i think so. i think the issue is a question of the rate of change versus the dollar level. that rate of change we have seen for 22, starting to slip just a tiny bit. tech companies could cause that

to reverse but what we got is peak upward revisions. so far in july, that has slipped to 74%. what you have first is fewer and fewer provisions and then eventually translates to downward provisions. those downward revisions may have -- may take time to come but we are already in that deceleration. tom: two part question with a one part answer, the idea that stocks can rise amid slow growth, real yields come crashing down and yet we are supposed to believe that equities rise and i combine that with renaissance who says look, you can't have momentum unless you have breadth. which is it right now? do you have momentum or building breadth? lori: it depends on what causes

that choppiness. we have a market concerned about slower growth. that is feeding the secular growth trade and the overwhelming market cap bias right now is towards that growth and accept her. that is not normally the case with the s&p 500. if you were to see an outright growth scare wear something more if arius has begun to be anticipated in the market wants to slip out, that will drank the market down, but while we are in this purgatory of slowing growth, you could actually see the market continued to creep up, just because of the composition of the market cap right now. lisa: let's talk about the idea that you are seeing more earnings revisions upwards, that they are stronger even in value, despite the fact that you are seeing this potential rotation. what does this mean to you? lori: one thing i've noticed on the value side, and we make the case that for the cyclicals

dragging down the revision ratios, it is only part of the cyclicals that have been strong. materials companies have been decently strong. for us to say there is a massive problem on that cyclical trade, we need to see the energy and material, but it is clearly something we have to keep an eye on. tom: great to catch up with you on a massive week ahead. lori calvasina. she mentioned the market weighed heavily toward big tech. microsoft, almost 6% of the s&p 500, reporting tomorrow. amazon on thursday. facebook later in the week, wednesday. alphabet, 4% of the s&p. they come after the markets tomorrow. that is a huge chunk of change. lisa: and expectations are high.

cash flow has been incredible as well. i am curious not only about the topline growth but also what they say about how much wages are going up, how much labor shortages they expect to persist because what we are seeing is the expectation among businesses that some of these issues people have called transitory art so transitory. jonathan: the language of the economist in the language of the c-suite -- and the language of the c-suite. -- mentioned that is a huge distinction that underpins why his view is so different from the federal reserve. this is just a quote. i have a whole list of companies that have accounted for price increases that expect further price increases and they expect them to stick. you have heard that repeatedly and earnings calls over the last couple weeks. tom: i would not conflate those conversations. to me it is see class officers and midsized nonpublicly traded businesses adapting to what they see. we haven't even talked about the

new touches of the pandemic and delta. i would suggest markets and corporations are adapting to the efforts of those institutions. jonathan: that is the encouraging part of all of this for corporate america i guess. lisa: you have to wonder how much is being passed on to the individuals who are purchasing things. even president biden acknowledging this. jonathan: slowly. really nice piece from the team down in d.c. that we will get to later. we will head down to washington in about five or 10 minutes. s&p 500 is down eight. a wonderful lineup for you to kick off the trading week. in the 8:00 hour, nyu professor and we are looking forward to that around 8:30 eastern. good morning. this is bloomberg. ♪ laura: with the "first word news," i am laura wright. chinese diplomats handed their

american counterparts lists of demands. china's foreign minister says the u.s. is trying to contain china. house speaker nancy pelosi has issued a warning, she will not back off plans until the senate delivers a larger democratic only -- democrat only spending plan. a growing number of public health experts in the u.s. are urging the cdc to revise its guidance on masks. they say the agency should recommend even fully vaccinated people should wear in public. in the u.k., the number of new coronavirus cases has dropped for the fifth day in a row. that is a potential boost to prime minister boris johnson, following a chaotic week since the listing -- lifting of pandemic restrictions. johnson's government has sought to return to normal life with

the summer. they dropped social distancing rules and done away with mandatory mask wearing's. bitcoin is soaring and approaching $40,000. summer are treating the rally to trade and there was also speculation on amazon's potential involvement in the cryptocurrency sector. 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 laura wright. this is bloomberg. ♪

>> the deal is not as green as i would like it to be.

the infrastructure bill is something we could have passed a long time ago. but nonetheless, i hope that it will pass. jonathan: we are told this might be the week. that was house speaker nancy pelosi on abc this week. from new york city, good morning. alongside tom keene i am jonathan ferro. lisa is back in her seat. good to see you. well off session lows. a little bit of a nosedive a few hours ago. outside of that in the bond market, yields lower by two or three basis points. euro just a little bit stronger, trying to reclaim. tom: it is a bit of a pickup in the last 90 minutes. i look at the 10 year yield, the set on this monday into a huge newsweek is decidedly towards lower yield.

jonathan: people are asking the same question, what are we doing down here? the conversation might look like that on the fomc as they get together tomorrow. tom: looking at european yields, swiss 20 year comes in lower. nevertheless, settling talks about growth. on the infrastructure debate in washington, our bloomberg government reporter, emily watkins joins us. speaker pelosi is the most important person in washington this week, why is that? emily: because she is the one that is going to need to hold the house members together. what happens in the house is incredibly critical to what happens in the senate. a number of lawmakers have come out and tried make demands about what they want to see in a bipartisan infrastructure bill, threatening to vote against it. i know we are talking tight

margins in the senate with 60 senators need to be on board but the house has equally tight margins. as you saw over the weekend, pelosi is continuing to stick out a strong stance, saying she will not move that infrastructure bill until the larger 3.5 trillion dollar reconciliation package is ready to go and sort of setting the tone for how this will be moving through congress and the white house. tom: liberals say go get t hem. what is the process where she blinks? is it a phone call from a senator? emily: it might wind up being that. should the white house decide this is the strategy we will need and we need to make sure the info structure bill moves first. right now, the calculation for pelosi as well as other democratic leaders in the white house and senate is that they are going to be able to move that infrastructure bill through

the senate and get it to the house and then move that reconciliation bill very quickly through as well, so that the two of them can be voted on in the house together. the biggest thing for democrats is that the info structure bill gets done and there is suddenly no more momentum for that larger reconciliation package. lisa: last week when i was in upstate new york, i was trying to make sense of the question tom and john were talking about, why treasury yields fell. something crazy last week, given the fact that we are looking at basically a gdp that we are going to talk about, potentially 13% annualized this year. a lot of people pointed to lower expectations for anything getting through and if anything gets through for infrastructure, it will be on the smaller side. do you feel like there has been a shift in washington, d.c. as well, this idea that perhaps people are lowering expectations, lowering their hopes and that it won't necessarily be big and bold? emily: there are definitely

people in d.c. right now who think we're going to wind up seeing a smaller bill or that we will only see infrastructure pass without this larger reconciliation package or it is going to go much smaller. at this point, a lot of it is going to be coming down to this week. are we going to see this bipartisan group of senators come out with an agreement? rob portman, one of the lead republicans says they are 90% of the way there. 90% is not 100%. they've been saying they are so close for so long now. there is going to be a point where democrats turn to president biden and majority leader chuck schumer and say if republicans don't want to go with us, screw it and put it in that larger reconciliation package and let's get something done. the concern is that they don't want to be held up by the republicans to long. lisa: the broader question is also the conversation around inflation and how much that is shifting.

we are seeing president biden changed his tone, acknowledging people are spending more when they go out and buy basic goods and services. how much is this weighing on the debate? emily: when i talked to lawmakers. republicans will talk about inflation as a way of criticizing that larger package democrats are trying to move. if you talk to democrats about it, they are not thinking as much about inflation as they are about 2022 and the upcoming midterm elections. there is a big sense that they have to get something done if they want to win with voters in the midterms. that is what is driving them. certainly they are keeping an eye on inflation but it limited any of the democrat ambitions for what they want to do with this bill. jonathan: emily wilkins, good to see you, down in washington. your update on the infrastructure debate. nancy from bloomberg wrote a wonderful piece about this about how the administration is going

to drop the word transitory. it has become such a loaded word with a ton of baggage and republicans have been successful about shaping this debate, shaping this argument to push people further away from these massive numbers down in washington. tom: the trend is clearly there, no question about it. the overlay to me of all of this, the fomc meeting, earnings calls that will get on technology this week and certainly what we have seen in washington with the pandemic and the virus. jonathan: let's get to wednesday, to the news conference. lisa, does the language change in line with what the administration is changing about -- including the likes of jason furman? lisa: jason furman was quoted in a bloomberg news story saying i don't know what the word transitory means.

inflation is running at a 9% annual rate and if it goes to 7%, does that mean it was transitory? you need two to be transitory and this is the key question. is it enough to say things go up and down and that is what transitory means? jonathan: the federal reserve has not helped. i just wonder if they need to change the approach. tom: we are in search of a new phrase to use. the phrase for me is how do you as a fed show any kind of hawkish tone or reversal of dovish tone, given the health news we are seeing. to me, it is unimaginable. jonathan: i look forward to catching up with johns hopkins later to get some of those details. equity markets down. your bond market -- your bond market yields down.

tuesday morning, people still scratching their head about a bond market price action. we will scratch our heads to the next couple of hours -- through the next couple of hours. the band is back together. from new york, this is bloomberg. ♪

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♪ jonathan: live from new york city from our -- for our audience worldwide. relative outperformance on the nasdaq, down a 10th of 1% there. the top seven in the nasdaq will report in the coming days. top-down, the relationship between this equity market, get to your nominal yields. they look like this -- yields low on the day, the curve flatter on the session. we have been all over the place. the round-trip all the way back through 130, and now somewhere

in between on tens, but the big headline of the morning -- switch out the board. this chart right here. 10 year real yields at a record low. the last time we were at these levels was the back end of august. we talked about repeatedly how we have unwound the positive shock of q1 on this market so far. if you look at this move from january to where we are now, that has been the story for me. we'll yields i just, then -- real yields i just -- real yields adjust. tom: china action.

u.s. officials are meeting with chinese officials. it is not biden-xi but it is important senior meetings. the united states urges china to halt economic pressure of allies. next steps in the talks also up to beijing. it it is a continuum of asia. it is something julie and sally -- juliet specializes in. duterte has monsoons, flooding in manila and a pandemic going the wrong way. both of you have to deal with china. what is -- what does the region look like right now because everyone has to deal with china? >> it is the key sticking point.

what was interesting about these talks is they were hopefully going to set up talks between presidents xi and biden. that was the hope. four invest -- in terms of opening up this economy too china has its borders shut as does hong kong. it is a matter of trade. we have those digital free-trade agreements announced a few weeks ago and in terms of how this region is going to move with what everyone is calling the new normal once you see vaccination rates pickup. >> is the idea here for these u.s.-china talks to set the stage for that potential october meeting between resident she and biden -- president xi and biden?

talks have shown a deteriorating relationship between u.s. china is ongoing. >> that has been the case since 20 particularly at1 the height of the trump administration as8 -- 2018 particularly at the height of the trump administration. it does seem at this point the ball seems to be in beijing's court. i want to talk about this clampdown we have seen from beijing creating and blood of regulatory headwind -- a lot of regulatory headwind for foreign investors. there will be a clampdown on

online education. $550 billion big selling coming through in a number of these key indexes. the hang seng tech index is down i july 2020 -- at july 2020 lowe's. july 2020 lows. jonathan: earlier on this afternoon over in asia this spat between china and the united states, we just had the account from the u.s. side of things. the u.s. are doing china to halt economic pressure -- urging china to halt economic pressure of allies. here is the chinese a count of how things played out.

they want the united states to unconditionally revoke sanctions on chinese leaders,,, revoke visa restrictions for chinese students, stop harassing chinese students, revoke requirements to register chinese media as foreign agents. there is so much to get through. tom: some of this in the united kingdom over the weekend, the british papers had a lot on the fractious relationship. what is important here, we are looking at real yield, currency, the equity market. you have to fold all of this tension in the pacific rim into it. jonathan: i do not think we have anywhere -- gotten anywhere to

the bottom of what happened with didi. the amount of money they tapped u.s. investors for, there is a lot to work out here and unpack. tom: we continue this discussion as we go bigger and broader. jed dorsheimer joins us. he is a senior equity analyst. he is committed to a study of sustainability. that has been his -- tesla, jed, and the linkage of tesla as a global company, are they getting it done? jed: they have so far. tesla should be credited with what they have done so far in terms of leading the pack. there are a couple challenges tesla has in front of it.

as you look at the s&ms, there are three that are carrying things for them. we have to find out what is going on with their ability to ramp. as you talk about the broader picture, competition in ev's is heating up. that has been from tesla. tesla has been more about the energy and their ability to scale that. that is something that we are keeping our eye on. that does relate to sustainability. lisa: i remember when tesla could do no wrong. they are down nearly 9% on the year, dramatically underperforming the broader market. what are you looking for in today's earnings to see a

potential turnaround? jed: if you look at -- tesla is getting the premium of being a leader in the market. as you see others encroach, that will be a risk on that multiple. you could see multiple compression that will be a bigger risk in terms of what the stopped as. 10 day action, we get 4680 battery and assigns of that will allow them to scale into the energy storage market, which opens up a dam for them to lead the way. if they are regulated to just autos, that will weigh on the name. jonathan: the final one from me -- how would you characterize

this relationship between tesla and china right now and what is the degree of risk around it? jed: i think it is a growing risk. tesla could be what you are talking about in terms of the u.s. relationship, and arbiter for other companies who have one foot in each geography. for tesla i think that will be a tricky situation. we have seen government impact in terms of what batteries they are using over there as well as what they can do with their autonomy and data. that will continue to be an ongoing challenge for tesla. jonathan: it is good to catch up. tesla -- we have to hit a bigger conversation for this pandemic.

dr. fauci alluding to the fact that there is an active conversation about reintroducing mask guidance again. tom: i think the coverage over the weekend was quite adult. there was a fair amount of statistics and anecdote and immense political pressures good politicians are facing. do you think i am right? it is every city for themselves? jonathan: dr. fauci alluded to that. perhaps it does not come from the federal level. that is the conversation we do have with johns hopkins school of public health. your equity market is down 10. yields are lower by three basis points on 10. this is bloomberg. ♪

>> i'm laura wright. the white house is shifting how it talks about inflation. republicans are trying to use it to kill president biden's plan to spend trillions on social programs. democrats plan to have president biden explain language. do not expect to labor shortages to go away anytime soon according to a survey of his messy economists only 6 -- business economists only 6% expect -- the survey was conducted by the -- china has announced broad sector reforms to private education companies. it wants to decrease workloads

for students. education companies will be banned from going public. in the u.s. nbc's side huge decline in viewership for the opening ceremonies of the olympics. friday's event drew in 17 million viewers, including those who streamed it on their platform. powered by more than 2700 journalists and analysts in more than 120 countries, i'm laura wr ight. this is bloomberg. ♪

♪

>> i'm not so sure it would be the worst cases scenario but it won't be good. we are going in the wrong direction. if you look at the curve of new cases and as you said in the run into this interview it is among the unvaccinated. since we have 50% of the country not fully vaccinated, that is a problem. jonathan: that was dr. anthony fauci speeding -- speaking on cnbc's state of the union. we are down 2/10 of 1% on the s&p. yields heading south, lower. the yields down. we are positive there, 2/10 of 1%. tom: four decimal points.

the abend flow here is important -- ebb and flow here is important. jonathan: some good news out of the u.k. -- cases are starting to trend lower over the last week. that is really important. deaths tickedd higher., these high-profile athletes keep getting caught. we talked about the olympics earlier this morning in our first word news take. a spanish golfer tested positive for covid in a tournament in early june. now he has tested positive again and he has to withdraw from his second tournament in as many months. we have these high-profile breakthroughs of individuals who have been vaccinated. tom: we are honored to bring

you, joshua sharfstein. gives a johns hopkins michael bloomberg school of public health. thank you so much for joining us. john and lisa have a wide -- jon and lisa have a wide set of questions. in august 2021, what are we going to in this next round of wearing or not wearing a mask? joshua: it is probably not a uniform recommendation given that vaccination aries so much across the -- varies so much across the country. where there is low vaccination rate and the virus is very common, it will probably make sense for people to put masks on indoors.

i it is just to protect people until we can beat the virus back again. tom: what is the efficacy of a federal approach versus every city,, every town, every zip code for themselves? joshua: there is a middle ground here where the cdc gives guidelines. this is where you should seriously consider putting in place a mask requirement. based on the condition of the pandemic and each area, i think that would be a good idea. lisa: we are seeing protests around the world saying enough is enough. why should we live our lives in fear? we should just move on. how much do you respond to these protests and acknowledge we are moving into a phase where we have a choice whether to get vaccinated are not? joshua: people say this is our

freedom. i it is often based on frank misinformation. they do not understand what is going on. then they get sick. when they get sick they say " what was i thinking! can i get vaccinated now?" that is why alabama reported. that is heartbreaking -- that is what alabama reported. that is heartbreaking. you see people adamant and then you see people on the others, and you realize there is a bigger picture here of community health. lisa: there is also a question about the vaccines, specific inoculations -- what is the best vaccine when it comes to protection against in action from the delta variant?

joshua: it gives you a high protection against the delta variant. from what i can tell, and i would say we need more data, johnson & johnson is more of a? , but there is clinical evidence of -- is more of a question ma rk, but there is clinical evidence of efficacy. jonathan: sure sharfstein, bloomberg school -- joshua sharfstein johns hopkins bloomberg school of public health. " a complete service sector recovery will require --

they don't want to say " we have therefore lowered our 2021 second half consumption growth forecast, resulting in one percentage point downgrade to our gdp growth forecast for q3 and q4. on the outlook for trend growth in america, 2% by the second half of 2022." tom: eight weeks ago he alluded to this but they are chiseling it in marble. 2022, sub-2% numbers. i want to put it in the goldman sachs language -- office attendance remains at just one third of the pre-pandemic level in major cities.

it is a complex note leading to a reduced gdp outcome. jonathan: this is about delaying the full service sector recovery, leading to a sharper deceleration. what we are about to see play out in the coming quarters -- tom: how do you fund this growth in deficit with growth under 2%? jonathan: yields will stay exactly where they are at. if these forecasts build up and move in the wrong direction, yields spike higher from here. lisa: the return to schools -- can individuals who go to elementary school, junior high school, continue to go in person? or people book to be -- going to be in masks?

jonathan: we will build on this through the program. alongside tom keene and lisa abramowicz, i'm jonathan ferro. from new york city,, this is bloomberg. ♪

>> you have a natural flowing and sequential growth. you are not going to keep -- natural slowing in sequential growth. you are not going to keep growing at 10%. >> inflation has already risen significantly higher than the fed had earlier pretty good it would. >> a lot of consumers are finally being offered parole from kevin fever -- from cabin fever. >> inflation is likely to run above expectations, but i think it will settle out at about 3%. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: here come the downgrades. from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance, " live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. equity futures down 13. we declined slightly on the s&p 500.