♪ >> over the next 10 years we will have a recession, and earnings often drop 30%. >> a pullback in yields could cause some of that volatility. >> the fed has not spoken about this, but they will not be happy to see the 10 year approaching 1%. >> our base case is that they too off tapering perhaps as november -- they tee off tapering perhaps as early as the november meeting. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is payrolls eve. for our audience worldwide, good morning. this is "bloomberg surveillance. " alongside tom keene and lisa abramowicz, i'm jonathan ferro. your equity futures up nine. tom: what is really important as

you migrate out strongly into next year with a statement on the end of 2022. jonathan: 4700 this year, 4900 next year. 11% upside into 2022 year end. a market that apparently will have stable interest rates. tom: he's talking about that, he's talking about earnings growth. i am going to bring it over to someone way out front on double-digit optimism, and that is ben laidler. the common thing of laidler, kostin, and the other bulls is yes, interest rates matter, the jobs report matter. the important thing is what corporations are doing. jonathan: the big question is can they continue to keep his big margins insulated. lisa: we were speaking with gina martin adams yesterday. she was saying people have underestimated how much margin pressures have come in with s&p

500 company earnings in the second quarter. basically, those margin pressures are increasingly more than she expected. the other question i have is how much does this reflect economic strength, and how much of these unique stories? jonathan: would you like to get to the bank of england rate decision. i know you have been excited. interest rates unchanged at 10 basis points. the asset purchase program targets are unchanged, too. the vote was split, though, 7-1. just one dissent from michael saunders on the asset purchase target. 7-1 to keep the bond buying target unchanged. so just a little more dissent coming through over on fred needle street -- on thread needle street. tom: do they have the power of chairman powell? do they have the same oomph? jonathan: they have the same approach, apparently.

they will fall back close to target. that sounds like the t-word to me over at the back of england. do you agree on that? cable $1.12, basically unchanged by this. still positive 0.2%. euro-dollar a snooze fest, too. i knew you were so excited about that, tom. euro-dollar, $1.1804. in the equity market, we keep grinding higher, up eight. we advanced 0.2%. lisa: as we grind higher, what is the incentive to sell equities if you have the likes of david kostin at goldman sachs saying it is only going to go higher over time, even if there is volatility in the meantime? perhaps that is keeping price action elevated for the time being. in about 90 minutes, u.s. initial jobless claims. the expectation is for a decline

of 383,000. this to me is a question. a lot of people dismiss this figure as being noisy, irrelevant over the past few months after the pandemic and some of the assistance programs. do people start to attach more weight to this, to be stubbornly high pace of jobless filings over the past few weeks despite the fact that there is such a robust labor market? at 10 a clock a.m., fed governor chris of her water giving a speech on central digital currencies. a lot of people are curious on whether there could be a fed queen. chris weller has also been more hawkish, talking about how if there is a pretty hot labor market over the next two months, he would be ok with indicating as soon as september some sort of announcement about tapering bond purchases. i am curious if he talks anymore about what the parameters are for that. at 3:00 p.m., president biden planning to call for half of the vehicles sold in the united states to be emission free by the end of the decade. how much will this require

policy initiatives on the part of the white house? how much will some of the big auto manufacturers in the united states back this? and any guidance into money going to some of these electric charging stations and other initiatives? it will be interesting to the market. jonathan: thank you. tom: i'm upset. what is the fed going based on? jonathan: -- the fed coin based on? jonathan: no idea. tom: are you kidding me? jonathan: are you that upset about it? tom: i thing it is nuts. lisa: i think it is the idea of why should there be a bank that is the intermediary between the government and individuals. why not have a central depositary? this has been a very controversial issue for financial institutions. jonathan: are you two in an argument right now? i can't tell. tom: it's a marriage, jon. what can i say? [laughter] jonathan: approaching $1.40 on the pound against the u.s.

dollar, $1.3944. the bank of england sees modest tightening over the forecast period is likely necessary. we will hear from governor bailey in about 55 minutes or so. we want to bring you gene tannuzzo, the columbia threadneedle global head of fixed income. let's work through this bond market. real yields were negative through 1.20% yesterday. can you get your head around that? gene: looking at where the fed has placed interest rates at this point in time, but we have seen in the last month is that. i have started to disappoint relative to expectations the first time really since may of last year. the economy is still growing. we saw second-quarter gdp with personal consumption at almost a 12% annualized rate, but now expectations have become high enough that it is hard for the real data to exceed those expectations. you layer on the additional uncertainty around the delta

variant and the potential that we could have additional restrictions, it is not changing the growth story. it is just delaying our return to normal by a month or two. lisa: then why do you think that 10-year gilts could retest a 1% threshold -- 10 year yields could retest a 1% threshold? gene: we have a lot of workplaces planning to return to the office after labor day. we have a lot of schools planning to return to in person learning. if those plans are disrupted, particularly students in school, that means parents have to stay home in a two income household. that disrupts the labor force for a lot of the population. the fed believes they have flexibility. even though they seem dead set on tapering, i don't think they are dead set that it has to be at jackson hole or september announcement. i think november could be a reasonable announcement, and in that immediate period, we could easily retrace lower.

tom: what is the new 60/40 split? i don't have a clue. none of this is in the textbooks. it used to be easy. 60% in equities, 40% in bonds. the sophisticates would do 10% in cash. gene: i don't think it is cash, because cash is guaranteeing one thing, 0% return. i think there is a replacement now or a new safe haven for government bonds because government bonds are now purely a policy insurance. now we can look at things like high-grade corporate bonds, investment grade mbs, and that ought to be the core of fixed income allocation rather than traditional government securities. jonathan: tail risk, let's talk about that. if a headline crosses the bloomberg that says something like the return to school and person-to-person learning was delayed somehow for the month of september, with would that mean for the market -- what would

that mean for the market? gene: it does mean we could push below 1% on the 10 year. it does mean we get exceptionally low and lower yields. i think this harkens back to a 2012 type scenario, where the economy was still improving come of fed had yet to taper or tighten, and real interest rates to need to grind lower. it seems -- real interest rates continued to grind lower. it seems counterintuitive, but it has happened. jonathan: if return to school happens, we start to see people returning to jobs in a bigger way, what would happen to tips? what would happen to real yields if everyone said we no longer need that inflation protection? what would happen to real yields? gene: i think there's a lot of upside to real yield, and that is a painful environment for tips. i think it is one that confuses

investors because they say it is an inflationary environment. we can see the cpi prints. we would expect that tips do well. the truth is in that environment, tips really get run over. it is a risk to tips, but also high-quality fixed income, which is why it makes sense to have a more moderate duration profile as we head forward. jonathan: good to catch up. gene tannuzzo, columbia threadneedle global head of fixed income. as we get deeper into the year, if people wake up and see the data that spells out a stronger message that says a lot of this is going to fade, we have piled in in a massive way into tips, and a monster fashion. that under wind could be -- that unwind could be brutal. lisa: when you talk about real yields turning more positive, what is the readthrough effect on stocks? it kind of depends on where that increasing real yields is coming from. is it nominal, or is it in the tips market that a lot of people have discounted as perhaps a bit

distorted? jonathan: let's be clear, that 4700 at goldman for this year, the 4900 for next year, a lot of that leans on some stable and low interest rates among forward from here. tom: it does. we've got a chart on that. i think we've constructed this up. for those of you on radio, you take a vector of this and you folded in, what we see on earnings and the rest of it, and then you go out to the end of this year, the end of next year, and i'm sorry, kostin's call is just pretty linear more of the same. it is not a jump condition. jonathan: coming up at 8:00 a.m. eastern time, we will catch up with seema shah, principal global investors chief strategist. from new york city this morning, good morning. higher forecasts keep coming through. we've had it from oppenheimer deutsche bank, from goldman sachs this morning. we advanced by 0.5%. this is bloomberg. ♪ ritika: with the first word

news, i'm ritika gupta. president biden is laying out an ambitious goal today. he wants half of all vehicles sold in the u.s. to be emission free by the end of the decade. automakers say that can only be achieved with government investment in charging stations and other infrastructure. china has imposed new travel and movement restrictions in an effort to stop the spread of the delta variant. there have been more than 500 symptomatic cases so far. public transport and taxi services were curtailed in 144 of the worst hit areas nationwide. beijing train services and subway service was limited. more than 150 wildfires are raging in greece today. authorities ordered more evacuations from an island near athens. firefighters are being hampered by temperatures over 100 degrees and strong winds. fires have threatened the outskirts earlier this week and are now under control. glencore says it could dramatically increase returns to shareholders going forward. the company is cashing in on the

high prices for the commodities it mines and trades. surging metal prices drove first half earnings to a record. the biden administration has approved its first arms sales to taiwan. it calls for selling -- to the island, along with kits to add gps to the shells the vehicles fire. the $750 million deal is almost certain to be denounced by china. 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. ♪

>> if the outlook for inflation and unemployment are summarized earlier turn out to be the

actual outlooks for inflation and unemployment over the forecast horizon, than i do believe that these three necessary conditions for raising the target range for the funds rate will have been met by year end 2022. jonathan: did you get all that? if the outlook is the outcome, this is what we will do. that was vice chair clarida yesterday. pretty straightforward stuff. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's your equity market. we advance seven on the s&p, off session highs. yields in a basis point. had a little look at 1.12% in yesterday's session, then bounced back off the back of a really hot, strong ism. euro-dollar unchanged basically, positive 0.09%. tom: and the vix speaks to a resilient market, 17.76. jon and lisa have also to things to do in washington. with jet sick patrick of blue --

with jack fitzpatrick of bloomberg government, a very subtle shift occurred in biden politics yesterday. that is the reaffirmation of the center of the democratic party, the important election in ohio that left the progressives down in flames and the center holds. explain that. jack: yes, this was an interesting race in the cleveland area in which the establishment candidate that did end up winning the more -- did end up winning. the more progressive aligned member, i am not sure how the race speaks to national politics . there's a bit of a history that put people off there. it seems like a bellwether at

first for people who want. tom: come on, jack. it's real simple. this is a narrative. i've got a narrative in cleveland, and i had a narrative with the mayors raised in new york -- the mayor's race in new york as well. jack: yes, the electoral results we have seen, i think that is safe to say. i would point out that as the democrats have focused on what they want to accomplish early in the biden administration, the center and the left really seem to be closer together than you would imagine from watching what you have seen on the campaign trail. in the major priorities that biden has pushed, the stimulus that came out, the infrastructure bill, the next big bill, he has essentially followed bernie sanders' lead and allowed the centrists to pare that down.

but for the most part, the joe manchins and bernie sanders types have been much more close together than anything you would have imagined if you are watching the new york mayoral race. lisa: but has it been effective? i've been reading a lot of analyst notes that put the chance of that $3.5 trillion plan getting passed by democrats is basically a 50-50 potshot. jack: it is hard to say whether it is a 50-50 potshot because they could pare it down more. that absolutely might happen. but we are still talking about trillions of dollars, still talking about a push by democrats and by the mainstream to increase the corporate tax rate, to increase taxes on both the wealthiest earners. i don't know if it is a 50-50 shot, but they absolutely could succeed if they are willing to make some concessions to the center.

what we have seen so far in a couple major instances of a couple trillion dollars involved is both wings of the party understanding that they need to be essentially unified. legislatively, it has been basically a unified party lately. lisa: meanwhile, we are looking at an economy that has still not reached full capacity and still has a lot of room to go, specifically with the labor market. people are looking towards september, and kids going back to school as a key moment. what is the biden administration to -- administration doing to ensure that kids do go back to school, given the fact that people are raising that is a question now? jack: that has been one of the tough points for the administration throughout this. that is not right now seemingly a major focus from the federal government, but we have seen from the biden administration lately in terms of it responding to the delta variant when it comes to schools, mask requirements, that kind of thing

, a little more hands-off than early in the pandemic. the latest news on the potential for vaccinating kids under 12 is probably where the most potential is there, but i don't think we are on the brink of concrete actions by the federal government on schools right now. jonathan: jack, appreciate your time. jack fitzpatrick downing d.c. come, our bloomberg government reporter -- down in d.c., our bloomberg government reporter. payrolls reports coming in. estimates coming down this week. tom: delta variant is what it's got to be. i see it permeating every discussion. the note out of standard chartered this morning was brilliant.

you mentioned kit juckes all fired up. many trying to mix this medical story in with economics, and it is pared back a little but this week. jonathan: once again, a massive range for estimates on friday. lisa: analysts trying to show how this is still important. this idea that if we get the consensus of 875,000 additional jobs, this actually could be a hawkish surprise and a certain way, at least as perceived by markets, because it in that the u.s. labor market is on track and that the fed will be more ok with tapering in the near term. i thing that is interesting. the reaction function in markets to some of these numbers. jonathan: here's a quote from the team at standard chartered. "we think investors underestimate the likely impact of employment data to be released tomorrow. the consensus is 875,000, now down to about 870,000, could stoke consensus."

so consensus is potentially this price tomorrow, according to standard chartered. tom: this wonderful morning note, really hyper acute, says delta variant may be overcomes anything about jobs. jonathan: you think that is the number one issue right now? tom: i'm not there. i am not with lyngen on this. jonathan: that is setting the stage for a delay of a return to normal. it is pushing things back by a month or so, maybe two. tom: it makes the x axis a complete mystery, particularly around school, as lisa mentions. lisa: there's a bullish take as well. jonathan: wow. lisa: that is that it is accelerating the move to get vaccinated. you're seeing more people get vaccinated in the hard-hit areas , where less people had gotten vaccinated previously. this is potentially going to end things on a faster pace. jonathan: we are all in shock, a bullish argument. tom: we've got to let the starry out. -- the story out. the consultants have come out in

the first thing they said is lisa's gloom is too much. the pendulum of consultants has shifted the tone of this show. lisa: no, i'm just trying to look at the effects. [laughter] jonathan: what are the other. i'm just shocked you said something optimistic. thank you. thank you.

jonathan: live from new york city, this is "bloomberg surveillance." equity futures advanced by about 0.2% on the s&p. on the russell, up by about 0.1%. a series of upgrades from oppenheimer, deutsche bank, and this morning from goldman. goldman called looking for 4700 year end, 4900 year year-end, so 7% upside from where we are yesterday, 11% in the year-end next year. and on what? better earnings and low and stable rates. let's get to the bond market. your 10 year yield, 1.1736%. big range intraday yesterday off the back of that really hot ism. can we stay low and stable?

most people expect yields to go. higher from here still. year-end forecast -- yields to go higher from here still. year-end forecast, median 1.80%. tom: nailed it. jonathan: no problem. is that low instable? will that even happen? switch up the board and get to this, the chart of the ism. the ism yesterday, the ism services read was at a record. if we can keep this kind of pace up anywhere near this kind of pace into year-end, if we get the kind of capitulation maybe, if we get the supply-side response in, when you really think about it, demand outstripping supply. that was the story, wasn't it? we have really robust demand in this economy. at some point, for many people, they would argue at some point, yields have got to go higher. it is not my argument.

we've all heard the same argument a million times, and yields have. . gone lower. . what does it mean for the gold -- yields have gone lower. what does it mean for the goldman call? tom: this is really important. jon has but a sum together, which is the x axis. kostin is more optimistic because he's got a greater belief in the trajectory of the economy out to 2022. you wonder how that will dovetail down the road when jan hatzius sees the macro data to be able to make the call, and will hatzius extend his call out towards a 3% gdp economy? when do they link up? jonathan: the equity market can perform tremendously well in a rising rate environment. in a rising fed fund rate environment. we saw that in the previous cycle. we saw that in 2013, too, in a big way. but i do wonder, at some point

we should have some capitulation,? ? shouldn't we i wonder how that -- capitulation, shouldn't we? i wonder how that reshapes the conversation. tobias levkovich down to 4000 on the s&p. citigroup underweight on u.s. equities in the last 24 hours. right now, that debate is finally balanced as we try and work out where we go next. that's the cross asset story. let's get the movers. good morning, romaine. romaine: the biggest volume mover once again is robinhood. almost 8% on an intraday basis. a lot of that has to do with the fact that options finally started to trade. a lot of those sec filings start to pileup, so a little bit of a back-and-forth on what is now one of the most popular stocks out there. also popular this morning is ford, your second biggest volume mover. joe biden expect it to have an

event later today in detroit announcing an ambitious plan to make half of all cars made here in the u.s. emission free i the end of the decade. seeing the little but of a bump today in ford, as well as gm. interestingly enough, elon musk tweeting that he and tesla were not invited to this event. tom: you're covering this a lot better than we are at 4:00 p.m. on "the close." let's have some obligatory cfa level to talk. does the fundamental analysis really work, or are ford and gm completely overwhelmed by the chip thing? tom: right now they are --romaine: right now they are completely overwhelmed by it. you saw that in ford after the bell, in gm's earnings, with regards to their supply chain and getting the things they need. they can't keep up, and that has seen demand fall. it will be interesting to see what the short-term effects of all of this are, but there is a

longer-term story about these companies making cars for a new generation of people who at least want the option to have some thing that is electric or hybrid or some thing else. later tonight, we are going to get a bunch of travel stocks reporting, including tripadvisor and expedia. booking came out last night. they really knocked it out of the park. bookings coming in well above what the street was looking for at $16 billion. clint vogel will be on with us in the -- glenn vogel will be on with us in the 4:00 our. -- in the 4:00 hour. tom: we are thrilled to bring you the former governor of the federal reserve system, randall kroszner of the university of chicago booth school of business . dovetail the mystery around the table of the eccles building. they have a new fed theory, a new fed construction, but we've

got the same old data. how to they fit? randall: same old data, but a new framework. that's exactly right. we have this average inflation targeting framework that says when we see inflation coming, we are going to act now proactively. it says we are not going to do that, we are going to wait until inflation gets to at least our target or maybe above for we start to act. obviously we have seen that because inflation has been very high over the last few months, but the fed has said we are not moving until 2022, 2023. jonathan: are there any hawks left at the federal reserve? randall: oh yes. jonathan: who are they? because it sounds like to me there are doves and there are super doves. and i see no hawks right now. who are they? randall: i guess that also changes in context, too. you have someone like governor waller, who spoke recently, who said we've got to get moving. we've got to start to do

tapering more rapidly because we see the economy coming back. rich clarida had a fairly optimistic view of where the economy was going. seems to be discounting the delta variant, although he's much more on the dovish side of waiting till the end of 2022 before starting to raise rates. lisa: danny blanchflower was basically saying it is correct for all of these doves to be dovish because the fact that we have this low participation rate in the labor market is really a result of failed policy. do you agree with that assessment? randall: i'm not sure it is the result of failed policy. i think a lot of people have decided, especially older people who have come back into the labor market, have said with all of these uncertainties, maybe this is a good time for me to stay out of the later market -- the labor market. so i think there are a lot of other things like the pandemic.

it just fundamentally changes the way that people think about going to work, going shopping. tom: you represent the land of microeconomics. professor, how do you address the dynamics forward of our immense demand and supply and balance? randall: this is a really interesting question where policy has a large role to play. we have seen extra nearly easy market policy for a long time. you heard that term a million times, but it really is true, we either have spent or are planning to spend on the order of 50% of gdp within an 18 month time period. that is absolutely extraordinary. less, you had all the pent up demand and high savings that people have built up that could go out, so that is all being unleashed.

obviously we are seeing that in terms of price pressure, combined with some one-off factors like the chip shortage we are taught about, like other supply-chain disruptions. so we are going to see a lot of price increases in the short run. the key question is are those transitory, or are those sustained? i think we will see them transitory for a while. i don't think they will necessarily be sustained. jonathan: i don't want to talk about projections. i want to talk about how we respond to outcomes. help me understand this from a federal reserve perspective. if high inflation persists and is primarily attributed to supply-side constraints, but those constraints also persist, how long before you have to take notice of that? randall: that is a very important issue because now is sort of described as one-off. within six months, they will be

eased. high demand for used cars. there are a lot of particular expo nations -- particular explanations each month. if those start to inch peoples expectations, the people are expecting i need to get paid more in order to consume, and companies say i can push price increases in a way that i haven't been able to do in a decade or two to accommodate higher wage increases, you can get into this cycle where inflation starts to take off and become more permanent. that is really the key. can i keep inflation expectations well anchored? we will see. jonathan: randall kroszner, university of chicago economic professor and former fed governor. that's got to be the main issue, supply-side constraints. if they don't ease, what does it mean for this federal reserve? tom: there's two different dynamics. there's the macro view of the

supply-side of the united states, but there's all the different subsectors. my optimism ally david kostin -- optimism a la david kostin, on a microcosm basis, they will adjust sector to sector as they see fit. jonathan: they are adjusting, and so far there is real price tolerance. the language from chairman powell, do these so-called one-off increases start to shape the inflation process? are we going to start to see that neighbor year end -- that nearer year end? lisa: a lot of people have not gotten those wage increases yet. do start talking about the s word, stagflation? jonathan: stag light. weren't we calling it stag light , stag place in light? lisa is back. [laughter] 8:30, joining us is steven ricchiuto, mizuho chief economist.

from new york, this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. the alabama association of realtors says the move goes against the ruling by the u.s. supreme court last month. the president warned the extension could be challenged and urged lawmakers to come up with their own. new york governor andrew cuomo is struggling to hang onto power. cuomo stayed inside the executive mansion yesterday a day after the state attorney released a port outlining 11 cases of harassment towards women. cuomo has denied he will step down despite calls from former allies are urging him to quit. exxon mobil reportedly is considering a major strategic shift. according to dow jones, the energy giant may pledge to reduce net carbon in missions to zero by 2050.

exxon reportedly will unveil a series of moves on environmental and other issues by the end of the year. jp morgan reportedly is pitching a bitcoin fund to wealthy clients. customers of jp morgan private bank are being offered a passively managed fund in partnership with nidec, a bitcoin focused platform that is a subsidiary of stoneridge, an alternative asset manager. 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. ♪

♪ sen. warren: my concern is that over and over, he has we can --

he has weakened a regulation here, he's led the fed to protect the biggest financial institutions, and there has been dissent against that. i am very concerned about that. jonathan: senator warren with not exactly a ringing endorsement of chairman powell. from new york city this morning, good morning. with tom keene, lisa abramowicz, and jonathan ferro, this is "bloomberg surveillance." we are up 10 on the s&p, 0.2%. mr. kostin at goldman raising his price target to 4700 at year end and 4900 going into next year, year end 2022. 1.16% on tens. euro-dollar, $1.1851. we advance on the currency pair by 0.12%. tom: interesting to see what happens with claims here in 40

some minutes. to me, we have undersold it today. jonathan: we are looking for 383,000. . tom: we are going to get to bitcoin with mike mcglone, but first, dave wilson looking at where i can capture a dividend. utilities and real estate, discuss. dave: absolutely. you talk about interest rate sensitive stocks, those two industries certainly qualify. they haven't been moving together lately, though. it is something jonathan krinsky at baycrest partners pointed out. if you look at the s&p 500 utilities index tip to its real estate counterpart, the ratio between the two peaked in october. it has come down 25% through last month, and it is hovering near the low as we speak. krinsky is basically figuring it is time for a reversal.

in his view, these utility stocks look "ready for a breakout." on the other hand, the real estate stocks are "think tired -- are "looking tired." over the last few months, they were even falling when interest rates were falling, which doesn't necessarily make a lot of sense because they are the kind of shares people tend to buy when they can't get all that much out of bonds. tom: for those of you on radio, utilities are not what we looked at years and years and even decades ago. david wilson, thank you so much. right now, we thought we would parachute in mike mcglone on bitcoin, including his latest junket to florida to see the marlins, i think it was. this is on bitcoin. i am sort of surprised at $38,000 bitcoin, given the regulation ferment that is out there. are you surprised at bitcoin's resiliency as maybe we get the gensler coin?

[laughter] mike: bitcoin is a discounted bull market. it has put in a good base around that $30,000 level. it has good resistance around $40,000. at the new regulation is very profound because the u.s. is basically embracing it with regulation. china is pushing back, banning it. to me, it is a new cold war developing, and that is good for bitcoin. if the u.s. is not going to do much to it, the key things that are securities are digital dollars area that is the key thing to remember, the most widely traded cryptos on the planet are digital versions of the dollar. tom: if bitcoin is not a currency, i think we can agree it is not gold, and gensler is saying it is not a security, than what is it? mike: it is the best thing in the world for traders. it is not artificially stimulated, but the key thing to remember is it is becoming the digital reserve asset in a world

that is becoming digital. it is major competition for gold. even as ray dalio said this morning, it is a good portfolio diversifier. it fits very well in a bond portfolio, maybe just 5%. mike: there's a slight risk off -- lisa: there's a slight risk off tone with the delta variance breading. is there a risk to these assets? mike: we will see if we get a 10% correction in the stock market. god help us get bitcoin will probably go down initially, but look at what bond yields are doing. bond yields are all are really -- are already telling us that they are stores of value. i think what is going to happen here is bitcoin, gold, and long bonds will be some of the best performers. most notably, the stock market just wobbles a bit. bitcoin has already had its correction. crude oi is way to -- way too expensive. lisa: you can do new school and old school. when i am looking at old school, at oil in particular, at the

risk we have seen in credit spreads under the surface, it has also been seen in the oil markets. can you get a sense based on positioning, based on fundamentals of how much further this potential retracement has to go? mike: wti at $50 a barrel. it is the 100 week moving average. it is the average price of basically the last five years. the average cost in the u.s. is around $35 a barrel. lisa: you are saying it is going to go from $68 to $50? mike: that's where it belongs, to me. it is way too expensive above $75. wti has been an enduring bear market, so it is still at a premium, the way i see it. jonathan: good to catch up, mike. mike mcglone, bloomberg intelligence commodity strategist. lisa surprised by that call. lisa: i just about the fact that energy companies have outperformed pretty significant leap. people have been piling into those shares as a possible bet

as the recovery trait is expect to gain steam. we've heard from bank of america how they could see $100 a barrel. to suddenly go back to you dollars a barrel is pretty disruptive -- to suddenly go back to $50 a barrel is pretty disruptive. jonathan: something to keep an ion. the underperformance and small caps is something we have been talking about for months. we saw that pretty profoundly in yesterday session. lisa: i think it is notable because typically people do look to the high-yield bond market for some sort of canary, some sort of forward look on risk assets. what you have seen is a pretty steady widening in credit spreads to the widest we have seen since may. nothing catastrophic. however, people are still asking to be compensated more for the risk of default. this is new, jon. jonathan: the fed gave the canary a gas mask over the last year. i am not sure what kind of a read you can get from high-yield and the same way you used to be able to. tom: i strongly support that. one of my themes this morning was the canary in zurich on swiss 20 year. it ebbs away a greater negative

statistic, but i'm not sure we know where the canaries are right now. we are like the fed, like clarida, we are all exposed, waiting for data -- we are all ex-post, waiting for new data. jonathan: news from reuters that the u.s. is developing a plan for foreign visitors to be vaccinated. just seems like we might be lining things up. tom: what do you think on that? jonathan: it is really slow and gradual. there's a hope this can happen. isaac there is a window, though. it's kind of dot to happen between now and october because when we think about the traditional flu season kicking in, can you imagine the administration making a decision to reopen travel in a big way? that is difficult to get my head around at this point. we will round in different ways. 23% move lower, 24% was lower on the airlines on the s&p 500

since april. it's been ugly. your equity market looks like this come up to and on the s&p. yields in a basis point on tends to -- on tens to 1.1703%. this is "bloomberg surveillance ." ♪

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>> we've been waiting for vaccines. we've been waiting for supply to pick up, and supply is exploding. >> a pullback in yields could cause some of that volatility. >> the fed believes they have flexibility. >> our base case is they tee up tapering perhaps as a -- as early as the november meeting. >> you really haven't got the plot. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a simulcast on radio, on television. we welcome all