>> we are already in that decelerating upward revision pace. >> you have a natural slowing of sequential growth. >> a slow down to some degree is not necessarily a terrible thing . >> a lot of consumers are being forgiving because they are finally being offered parole from cabin fever. >> i think it will settle out at around 3%. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.

it is a simulcast. the team complete. thrilled lisa is back with us on bloomberg radio and bloomberg television. the market dynamics, the opinion of many on wall street gets us ready for that fed meeting. jonathan: let's start with goldman. the implications for the growth outlook, through the role rebound -- for the full rebound, longer. what does that mean for this equity market? clearly this is a market trading on rate of change. did downgrade to the outlook reflect thing those fears. tom: between jan hatzius and ellen zentner, we can add 20 or 30 others into this debate. the street says buy. jonathan: but buy what?

downgraded materials, this is the difference between economists and the market participants. the economists are still looking at followed levels of growth. market participants are focused on the rate of change from one quarter to the next, from one year to the next, from 22 out to 23. if goldman is talking about second half trend growth, 1.5% to 2% gdp, and a sharper deceleration, the economists might talk about really strong cumulative gains and strong levels of growth. it is not for me to say what the market should trade on. it is what it is trading on, and it is trading on rate of change and has been for a while now area. tom: the backdrop of all of this, i would say goldman is pretty lonely with a 2% sub view out 14, 15, 18 months as well. everyone has to adapt to that, including the fed on wednesday. lisa: how is the fed going to speak to the fact that yes, people are downgrading their view, but we still have 8% gdp, and frankly, this is not the

same as inflation, inflationary pressures persisting. we see all of the q2 earnings and continue to see inflationary pressures continue to build. we don't see an end to the semiconductor shortage or the labor shortages, which are not closing as quickly as people expected, even with some of the enhanced unemployment benefits rolled back. tom: the inflation-adjusted yield to go to the phenomenal -- to the nominal yield, inflation expectations gives you residual. those were stunning numbers. jonathan: for many people in this market, the market is already there. on both nominal and reels, and within the equity market, the upper performance of the nasdaq reflects that. if growth becomes scarce, people are willing to pay up. over the last couple of months, never mind the last couple of weeks. tom: we've got a dollar churning

today off of the lagarde party last week. not much going on there. jonathan: we are negative on most 0.2%. the treasury market is bid. real yield all-time lows this morning on the 10 year maturity. on a nominal yield, 1.2479%. tom: that is about where we are. i also note bit dog with a run to $40,000. right now we get an overview here of fixed income and how it folds into investing. gene tannuzzo has been doing this for years with columbia threadneedle. good morning to you. what you changed in your view in the last week? gene: i think there's an important element here, which is maybe a common thread to the change in the economic forecast,

which is we need to be thinking about what is the trend rate of growth after the deceleration. the deceleration we are seeing, while we may have expected it, it is coming a little more quickly because of the rise of this delta variant. i think the delta variant has been our focus. there's an early sentence in the fed statement that this will increase significantly on the virus. we expect the fed's path towards tapering has already been delayed. jonathan: with the deepest amount of respect to jan hatzius and the team, this market has already got a sense of this, hasn't it? this market is well ahead of this story. doesn't it just speak to this narrative that is already there, that has already been priced? gene: i think the bond market is there, but we have to

differentiate between the near-term and the long-term. goldman is talking about something a year and a half away from now, but the delta variant is here right now. that is what is impacting the growth outlook for the rest of this summer and what is likely to impact the fed's tapering decision and the logistics around from that. when we get past that, then we will have a window where actually come of the outlook for the fed is a little bit trickier because we will see ultimately summary acceleration in growth, and as we get towards the end of the year, if there's not as much slack in the labor market, inflation can still be stomach -- can still be stubbornly high. very similarly to the summer of 2012, real yield were making new lows at this point in time. but there's room from a gross upside surprise 10 point and the fed outlook standpoint as we get past the near-term issues for yields to continue to move higher. lisa: how big of a selloff are

we talking for treasuries? gene: we are still looking at 1.5% to 2% by the end of the year. there are still some dependencies there, and we need to remain on track and that reopening and see that tangible transition from goods demand to services demand, but i still think that is very much in play. it is not unusual that we have a100 when he five basis points aloft from last august until march of this year that we have seen some retracement. we would not be surprised to see that retraced closer to 1%, but as we get past delta, it will be in a higher yield environment. jonathan: just on the economy and how it rebounds, peak rate of change is likely to come early in the cycle. yields don't have to come with that. the pushback you might get, we have added so much debt to this economy that our tolerance for higher interest rates is so much lower this time around, but you may have a tighter timeline between when the rate of change

peaks and when the yield curve peaks, and would nominal yield speak as well. what would you say to that? gene: i think it is a good question to raise, what we have to remember a lot of the debt that was issued to fund the pandemic relief really takes the burden off of consumers, and even on the corporate side where we have seen a lot of growth issuance, we've also seen corporate cast allen says -- cash balances go up, and increasingly using that cash to pay down the government debt. i think how that impacts long-term yields should ultimately add risk premium to the curve, but we are not seeing that now. tom: the companies we are seeing report this week have observably low levels of debt on their balance sheet. it is a cultural thing of silicon valley yet i get it. what kind of pressure do they have from their financial people to do debt issuance to buy back

shares? gene: we have seen that sector be a growing share of the investment grade credit universe, for example. you have to remember that there was not a lot of debt a decade or two ago. i would expect that they would continue to mature their balance sheet, so you will continue suzy -- continue to see debt. jonathan: huge amount of earnings coming through this week. apple, microsoft tomorrow. tesla after the close. just to take that eco-call and work it out, he came out over

the weekend with a note still sticking with some of these cyclical areas of this market, so i wonder what they think the economic call translates into a market call for this equity market in america area. tom: the economy as cautious and strategists are going the other way, but that is not unusual. the lovely panel i would like to see would be jan hatzius and ellen zentner. i think there are real nuances between those two houses, and many other houses as well. jonathan: investors are concerned about the impact on economic growth. i imagine most of the team agree with that, that it doesn't have to translate into a major market risk, just somewhat of a risk. lisa: how many years have we been talking about goldilocks? it is not necessarily a bad thing to see growth moderate.

what will pressure stocks downward? tom: jon, do you want to make 43% of the market? krispy kreme and their original blaze, they say this is the new business plan. jonathan: thank you for the single business call. lisa: are you hungry? jonathan: he must be. [laughter] lisa: we are both speechless. how do you pick up from that one? jonathan: i don't know. tom: we bring quality research to you. i need to sit next to you. sitting away from you, i just need to know where you are going sometimes. tom: we all need to be in the same room together. jonathan: down six on the s&p. yields at 1.24 95% on tens. heard on radio, seen on tv, with

all of the research this morning, apparently, this is bloomberg. tom: why don't we have a plate of donuts here? laura: with the first word news, i'm laura wright. china lashes out at u.s. policies in the first high-level talks between the two countries in months. they handed their american counterparts lists of demands. they said the u.s. is trying to contain the chinese. the state department says it welcomes competition between the two, but does not see conflict of china. the white house and democrats have moved to reach a compromise with republicans on that 579 billion dollar infrastructure package. bloomberg has learned that last night, they made an offer covering all outstanding issues. among those items, funding for water, transit, and how much unspent covert money can be used for infrastructure. there's a time crunch involved.

congress involves on a five week break august 9. the price, $2.9 billion in cash. -- had roughly $600 million in revenue for the fiscal year that ended in june. the sale indicates they are making progress on overhauling the company. banks and the euro zone set to reopen the cash cap to investors. that will put them back among the highest yielding stocks to own. the ecb said friday night it will let a cap on dividends and buybacks expire in december. 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. ♪

>> i do not think that this crackdown will mitigate the

dynamism in the chinese technology sector and entrepreneurs. there's only one way for china to continue growth which is innovation and technology, and with the recent backdrop, it is going to have to do it on its own. jonathan: from new york city, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's the price action this monday morning going into the opening bell, one hour and 12 minutes away. on the lives of the session, -0.15% -- on the lows of the session, -0.15%. euro-dollar positive. it is ugly to kick off the trading week. be hang seng down by more than 4% in hong kong. the csi 300 down by more than 3%. not pretty to kick off the trading week over in asia. tom: the hallmark of "bloomberg surveillance" is to talk to experts.

we had that from the professor of the london school of economics, and we are absolutely honored this morning to bring you david goldman, with his tenure at vanke of america, definitive -- at bank of america, definitive uncross cross asset analysis. he is the business editor of the philosophies and realities of china. is president xi redoing mao? david: president xi is not redoing mao, but he is taking a populist turn. if you have massive resources in a situation where the average chinese family already spends a year's pay on tutoring, you have a privileged class of rich people who have a much higher

chance of getting their kids into a top university. so by forcing tutoring into nonprofit, it is effectively saying we are leveling the playing field. there's a broader aspect to this. look at one of the worst performers, down 14%. that is because the government said you are going to have to pay your drivers minimum wage at least, so it is widening out the pool of labor. we don't 20 situation where half of the chinese are ordering from restaurants and the other half are delivering the food. so it is a populist appeal to the less affluent chinese, and i think knee capping some of the billionaires. tom: you and i spent a wonderful lunch at a g7 meeting for hundred years ago. i think washington was president, maybe john quincy adams. it was a long time ago.

we talked about how these governments get overcome by events. what are the events overcoming president xi right now? david: remember that graham allison of harvard, who wrote a wonderful book about the risk of a u.s.-chinese war, said that american sanctions against china are the equivalent of the political embargo of japan that led to pearl harbor. the difference is that japan couldn't invent oil in 1941, and the chinese can't produce chips -- the chinese can produce chips. their national self-sufficiency program has proceeded much faster than the west expected, so they feel much less vulnerable to the united states,

and they are throwing down a gauntlet, saying stop coalition building against china. the foreign policy aggressiveness is entirely consistent with the domestic populism. it is all part of one policy, which is china is going to be a tech superpower, but in a way that benefits ordinary people and not just billionaires with unicorn ipo's on the internet. lisa: you said that these are displays of confidence by the chinese communist party, by the pboc, by the regulators, but some are saying this is a sign of insecurity because there needs to be a populist kind of appeal, that if left behind by an upsurge in the capitalist side of china, it has really benefited the upper class. in what way does this signify

weakness in xi's ruling power? david: both are true because china has always been ruled by a technocratic elite, and it has always had the problem of satisfying the wants of a very large population. the risk of the communist party is that you have an accumulation of wealth for a very small amount of tech billionaires in a way that leaves a great many people out. what is interesting is to look at the stocks that are doing well. all of the semiconductor fabrication stocks are up. . the stocks that did the worst on the mainland are luxury stocks. all of the distillers and brewers got crunched down by 6% to 10%. this is an expression of anti-luxury, anti-populism with a promise to the chinese people that there's going to be a level

playing field in terms of universities. as to the birth rate problem, they are talking about very little else. there's a perverse incentive where the winner take all system incentivizes families to place all of their resources into a single --, to do them as much as you can, and get them into a top university. that is why you have very low birth rates. there are a number of measures they look at, including on the housing side, to try to alleviate that. jonathan: david, that is a really good final point. thank you for your time. just a headline coming from reuters i wanted to bring to you all. the u.s. will not lift travel restrictions citing the delta variant. that coming from reuters this morning. the president a couple of weeks

ago said that in several days, we would have some information about the travel ban, and we haven't had that information as of yet. this is a report for mortars that the u.s. will not lift travel restrictions, citing the alta variant. tom: sup -- the delta variant. tom: some of this is canada. there's like a 20 day differential there. jonathan: the bigger issue seems to be with europe right now. if this is about the delta variant and is already so prevalent in the united states, the dominant strain, what good is the travel ban? if united states citizens can travel freely, what does that accomplish? tom: my eyes glaze over on it. i really can't keep track of it. . jonathan: coming up on the program, former world bank chief economist on an important moment for the global economy. yields are lower by a couple of

basis points to 1.2529% on 10. your equity market down six on the s&p 500, -0.14%. alongside tom keene and lisa abramowicz, i'm jonathan ferro. heard on radio, seen on tv, this is bloomberg. ♪

jonathan: the four day winning streak into monday on the s&p 500. alongside tom keene and lisa abramowicz, i'm jonathan ferro. 60 minutes away from the opening. negative a little more than .1%. yields in a couple of basis point to 1.2529. euro stronger against the u.s. dollar. that currency pair positive. crude unchanged. $72.05 on wti. tom: looking for market news. maybe we will get some of that news in the fed meeting on wednesday. we start strong and this week of technology earnings. we do that with a laureate from new york university and i think

from chicago as well. paula roemer joins us. we are thrilled to have him with us on technology. i want to go back to 1989 when you stopped the economic profession and then he went on to the technology inside our system, the technological change. how you look at these six enormous companies and what they have done to us? paul: it is a very interesting story. the technological progress has been enormous. better chips, better software, better devices. the effect on society has been ambiguous. we have many good things but also bad things. i think the bad things trace back to this pivotal decision by

google and facebook to switch to the targeted advertising model. this has had all kinds of repercussions we are now living with like another wave of the pandemic driven by vaccine hesitation that has been fostered on social media. we combine enormous technological progress with a bad business model. tom: should we break up these companies? to be narrow about it, if you can take amazon with cardboard boxes, the cloud, and a burgeoning advertising business, is it the standard oil of new jersey? paul: i worked on the government side of the microsoft case. i helped design the proposed breakup of microsoft, which the judiciary rejected. i think it is extremely unlikely

that a judiciary that is even more conservative now will approve a breakup of any of these firms. i think we have to be realistic about that. what i think we need to do instead of focusing just on breakups is to change the incentives to get them to shift away from this targeted advertising surveillance, buying kind of model, and to go back to the old-fashioned model where people paid to get things. things like the tax code are great incentives for firms to stop relying on advertising and rely more heavily on subscription, the way netflix does. lisa: is tech dominance related to the stickiness of the high unemployment rate in the stickiness of the low participation rate we are seeing in the u.s. labor market? paul: i don't think so. reasonable people can differ, but i do not think this is the problem.

fundamentally, we have been in a mode where the congress was not able to do anything. all of the work fell to the fed. we used very low interest rates as a way to try to recover, but that meant we ended up not recovering fast enough and far enough, so we have steadily ratcheted down the key metric we should be watching, which is the employment rate for 25 to 54-year-olds. what we need to do now and what we seem to be headed towards is something more like what we saw under reagan, which is a very aggressive fiscal policy, stimulative fiscal policy and as needed tight monetary policy to keep inflation in check. we have to recognize it takes a long time, it is a slow process to get people back into jobs. we have to keep pushing on this recovery long enough to get back to where we should be, which is

where a lot more people were employed. lisa: i want to stay on this point. there's been a lot of questions around how enhanced unemployment benefits contributed to the stickiness of the participation rate remaining solo. there are number of studies that have challenge that. people saying the economy has not gotten back, childcare is still in issue. what is the main why behind the stickiness right now? paul: if you look back at the recovery from the recession in the early 2000, getting people back into jobs is a slow process. it is very easy to kick people out of jobs, that happens very fast. remaking these matches between employers and employees takes time. we have to be realistic in our expectations about how long that takes and maintain the

conditions to keep getting people back into those jobs for as long as it will take. it will take many months to recover to the level we need to be at. we have to be sure we do not give up too soon. tom: there are all sorts of ways to go. in the time left i want you to talk about what everyone in the pandemic has gone through. the interiority of technology. how we are all sitting in our bedrooms doing computer stuff and not being social. his out the ultimate risk to the united states? are we going to be as lonely as tom keene, jon ferro, and lisa abramowicz? paul: somebody told me the new acronym is fogo. fear of going out.

we are all suffering from this experience. there is a realization coming that these tech companies have benefited enormously from our greater reliance on them and these tech companies are causing the problems we are seeing with vaccine hesitancy. i think there is a backlash brewing against the firms. i do not think you will shop through a breakup via antitrust. tom: this is the book the end of the myth, which is a fabulous -- cannot say enough about the history of this. is where we are right now, like may be where we were with the railroads in 1930? i will let you choose the technology. there is this bouncing off of technology we are all doing on a week of technology earnings. is that where we are right now? paul: i'm not sure there is a

good historical analog for what we are dealing with right now. there is a very good story out in the new york times this morning about his information for hire. these platforms have created weaponry which is now available for purchase for anybody who wants to go out and create disinformation. there are echoes in the period of yellow journalism. the scale of this and the speed with which these new platforms of propaganda and disinformation operate is something we never encountered before. lisa: i am curious about whether we can see china-like moves in the united states when it comes to regulatory crackdowns on big tech, on control of data. this has surprised markets with respect to how ferocious and dramatic these moves have been in china.

is that a purely idiosyncratic move or does this set the stage for the u.s. to take similar, less dramatic moves? paul: i think there is a close parallel. everyone thinks about how different we are from china but in many ways our circumstances are similar. we are on the verge of having platforms and companies that are so powerful and so influential in the political process that they are ungovernable, that they are beyond the rule of law. the state cannot get them to comply with the law. china has realized this poses an x's threat to governance and law and they have decided they have to stop it. we have not gotten there yet. i hope we get there soon. the more influential these platforms get, the harder it will be for us to reach a political consensus that we have to do something. jonathan: fantastic to get your views on this program. paul romer of nyu, the nobel

laureate. longer-term term issues we have to grapple with. let's deal with the near-term. this wednesday news conference with chairman powell. the incoming data will indicate the sequencing for the federal reserve. the risk relative to the expectation is the june cpi inflation surge motivates the committee to accelerate taper talks. deutsche bank goes on to say, and send a clear signal tapering could be as early as september. tom: will they do that with the pandemic news flow? jonathan: i think that is the big question. how they grapple with the incoming information? the data makes them accelerate the timeline, or dare i say it is the outlook that will change things in this federal reserve? tom: it will be made up monday, tuesday, into wednesday. matt was eddie on deutsche bank on the parlor games of where growth is. he has a more optimistic view

that goldman sachs, even into 2023. he goes below potential way out in 2024. jonathan: i will speak to a big bowl, michael purves -- a big bull, michael purves. he upgraded his target to 4800. while you are away. lisa: coincidence? jonathan: is a coincidence we have a record low real yield on the 10 year with you back? welcome back. i hope you are nice and rested because this week is a busy one. with lisa abramowicz, tom keene, jonathan ferro. with your equity market a little bit lower, this is "bloomberg surveillance." laura: jeff bezos has followed up his trip into space with an offer to nasa. the world's richest person wrote to the space station and said it

must quickly return to the moon and said he would wave up to $2 billion in fees as it competes. the white house is shifting away talks about inflation. polls show there is increasing voter concern about rising prices -- president biden's plan to spend trillions on social programs is infrastructure project. democrats plant have the president use plain language explanations and ensure people the price hikes will fade in time. china has -- it wants to decrease workloads to students and overhaul the sector it says has been hijacked by capital. education companies will be back to making profits, raising capital. the world's largest maker of semiconductors is considering whether to expand -- the company

may build a chipmaking plant in germany in addition to the one -- chipmakers have been cranking up production to deal with shortages. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am laura wright. this is bloomberg. ♪

>> we do not find any kind of rejection from our population.

this week we reach 52% of our total population that is fully vaccinated. with respect to before the end of the summer to have 70% of our population fully vaccinated. tom: the prime minister of spain with an update on what spain is doing. they have had huge challenges. i know in barcelona, it speaks to the regionalization of what it means to be in this pandemic. lloyd minard joins us now. we are thrilled he could join us today. a federal judge stood up last week and said indiana university can force people to get vaccinated. i know at stanford you have a sterling record, i believe it is

257 illnesses, which is remarkable given the size of palo alto. what is your policy. are you heading towards where indiana is? lloyd: we do have a policy requiring vaccination for all health care workers and also for students at stanford. there are provisions for people to apply for exemptions based upon medical or religious reasons. we strongly encourage people to be vaccinated and we are seeing a high number of people in our system who are vaccinated. tom: that is right where i wanted to go. if you have that policy from someone of your repute, do you see action on the part of the unvaccinated? dr. minor: we do. roughly 85% in our health care delivery system today are vaccinated.

it continues to increase every day. i think vaccine hesitancy is coming down. we have seen just how effective these vaccines are. with the emergence of the delta variant vaccinations, even more important. lisa: jon ferro pointed to a headline this morning, an exclusive report saying the u.s. will not lift travel restrictions, citing this delta variant, saying it is too early. does this make sense based on the science? dr. minor: it is always hard to know when to impose restrictions on the mobility of people or the activity of people. certainly the delta variant is more transmissible. we know the vaccines are highly preventive -- are highly effective at preventing severe disease. over the past several weeks 99% of the deaths in the united states have been in unvaccinated people. while there is still a risk of infection, the disease is

typically much less. also we know masking and observing social distancing -- i think the decision on when to impose the travel restriction is one of the most difficult decisions our government leaders can make. keeping track of where the pandemic is spreading and where it is receding will help us with those decisions. lisa: there's also question of what we have to be tracking. we can open up some restrictions in a comprehensive and united way. is it fair, is there a threshold of possible stations or death rates we can look to to signal that perhaps we have the all clear, you can go back to life as normal? dr. minor: i think you pointed out the critical point to monitor. that is hospitalizations. we know what happened early in the pandemic, the tragedy in new

york in april and may of last year, that was related to the health care delivery system becoming overwhelmed, not enough hospital beds, not a left ventilators and not enough oxygen. we cannot allow that to happen again. we will continue to see mild illness for weeks ahead because this pandemic, the virus continues to mutate, there are more transmissible firms that emerge, we'll be living with covid for a long time. we have to make sure we do not overwhelm health care delivery systems. tom: i look at a nation which is anti-intellectual, anti-science. i know every other nation has the same challenges. stanford is one of our resources of science, and i mean that in a philosophy sense. how do we shift this philosophy in america?

dr. minor: there is a big responsibility for those of us who are in science and medicine to be better communicators than we have been in the past. when we do not know something we need to say we do not know it. we also need to help people understand what the process of gaining evidence is. no one -- very few people two years ago would have predicted something like covid-19 would happen in our time. it did. we are still learning about rates of transmission, how the virus changes, and what can be done to prevent it spread. we know the vaccines that have been developed and given fda emergency use authorization in the united states are among the most safe and effective vaccines ever to be deployed. tom: we have to leave it there. thank you so much. lloyd minor with an important update from stanford university. i want to go back, it was two

hours to your comments on school. all of the sudden on a monday morning i am seeing in the zeitgeist the study of where are we in 14 days. lisa: this is one of the biggest unknowns. if we cannot get kids back in school and cannot get health care and childcare back to where it was before, how can people go back to the office? dr. minor: -- tom: what you do with kindergarten? lisa: especially with the younger children, just for my background and my family, it is incredibly important to be an experience driven, in person moment, for especially the younger generation. i want to bring up something else because i'm shocked you would not brought up earlier. bitcoin rallying. surging past 40,000. tom: we touched it. joe weisenthal is a storm on twitter about it. i do not understand his tweets. lisa: it is fascinating.

you have negative real yields. that is one aspect. the other one is that amazon.com posted a job listing for a digital currency in blockchain strategy had. people are speculating they can get into this. i think it is interesting come the idea of the adoption. venmo even having a digital currency checkbox. tom: 38,000, pushing 39,000. maybe we will get to 40,000. lisa: lisa: you are not excited? tom: i am not onboard. matt miller is loaded up to his eyeballs. lisa: you are not excited? tom: it was 29,000. a data check. features -11, dow futures -102. the vix 18.57.

coming up, a good conversation, including -- 12:00 with david westin. stay with us. this is bloomberg. good morning. ♪

and there you have it - wireless on the fastest, most reliable network. wow! big deal! we get unlimited for just $30 bucks. i get that too and mine has 5g included. impressive. impressive is saving four hundred bucks a year. four bucks? that's tough to beat. relax people, my wireless is crushing it. okay, that's because you all have xfinity mobile. it's wireless so good, it keeps one upping itself.

>> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪

jonathan: live from new york city for our audience worldwide, good morning. let's get this trading week started. equity futures down. negative one third of 1%. we begin with the big issue. looking ahead to a big week. >> volatility is high. >> you will see market volatility. >> earnings are coming in. >> what data do we look at? >> economic activity looks like it is slowing. >> inflation has risen significantly higher. >> the fed is in control of the curve. >> we will hear some conditioning of markets to expect tapering. >>