>> the biggest risk is the fed. >> we will see slow -- growth slowing. >> what we need to see is thanks raise interest rates. >> i think there is more confidence in terms of tightening. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: the final week on the calendar for 2021. from new york city, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside katie lyons and matt miller, i am jonathan ferro. all-time highs back, even as we throw tighter monetary policy, omicron at this market. kailey: granted, it has just

been creeping higher on really like volume, given it is a holiday week. we can debate whether the market should be open this week, but the market could be looking at a 69th record high. for whatever headwind you want at this market, it has not been enough. jonathan: just getting reporting out of the u.k., unexpected restrictions, the prime minister not expected to announce covid curbs in england. there was a feeling that, after christmas, they would announce them, but reporting suggesting that will not take place, at least right now. matt: what can you actually do when you are in england? if you want to go to dinner and a show in london, is that the easy task to undertake or something a lot of people will avoid any way? jonathan: many people expect it to say let's trim the amount of time you can spend in a restaurant, all close at 8:00

p.m., that garbage again -- i called it garbage because many people thought it nonsense this idea that the virus would go to sleep. there is this general expectation in society, seeing cases rise rapidly, seeing a government down in the polls, expecting them to maybe wait until after christmas to make a move, and reporting suggesting that is not the case. matt: what we are seeing here is more of a mandatory vaccine policy that is put in place through curbs on unvaccinated people. i flew in from valencia yesterday to berlin -- anyone who has not been vaccinated or has proof of an infection at a recovery has to quarantine for 10 days. and if you are vaccinated, you do not have to. those are the kind of curbs they are putting in place to try to get people to get the shot. jonathan: how easy is it to get a test in germany right now? matt: we ordered 50 or so tests

recently on amazon.de, but you can almost -- also walked on the street, almost every shop has a test. it is pretty easy. for the most part, it is free or maybe 20 or 30 euros. jonathan: and the experience in new york city and other cities across america right now very different. kailey: absolutely. if you have five hours to wait in line to get three tests, be my guest, but a lot of people do not. it is no longer about just getting the tests. pcr tests are taking days to come back because laboratories are backed up here there is a serious testing issue in the united states. the biden administration says it will start mailing tests next month, but by that point, it is too little, too late. jonathan: equity market up 9 on

the s&p 500. 41 -- unchanged in the fx market. euro-dollar, 1.1309. kailey: still dancing sub 1.50. we will talk more about the bond market with victoria fernandez from crossmark in just a minute. she likes bank of america and and -- she likes bank of america and j.p. morgan as well. we will talk about that translation with matt brill as well. jonathan: joining us that is victoria fernandez, chief market strategist at crossmark. is it a case of tell me why we should not hike in march? victoria: i still think it is tell me why we should. that is what the fed is betting

out at this point in time. i know everyone is saying march is a live meeting, they are anticipating that first rate hike in march. i'm not so sure. when we sit at our investment table at crossmark, we are thinking it is a little bit later. we are still looking at june for the first rate hike. i think the fed is hoping we will see inflation hit peak levels in the first quarter of the year. then, because of base effects and the differences we see from a year ago, numbers, hopefully it supply chain issues will be better, so goods inflation comes back down, people keep coming back to the labor market, perhaps wages come back a little bit, so inflation will start to decrease a little bit on the year-over-year number and give them room to wait until june. my betting is still on june, but futures are showing march is a live meeting. kailey: how are your assumptions about federal reserve policy translating to assumptions

you're making about the bond market? victoria: you look at where the bond market has been pricing things, and i think the long end of the curve has been underpriced for quite some time. you are talking about people projections -- we were looking to be back around the march high on the u.s. 10 year by the end of this year. i do not think, with a week to go, we will hit that. possibly we hit 150 and go above there. i think growth will be a little bit better than people anticipate in the first quarter because we will have strong earnings. evaluations may come down some, but i think we will have strong earnings, good growth. i think we start to see inflation -- inflation pressures ease little bit. that will allow the longer end of the curve to go a little bit. this is such a fight curve for the fed to start hiking. i think they want to see the steepness and perhaps we get a look -- get a small and out of that in the first quarter. matt: what is holding the 10

year yield down? who is buying this paper as we look at the possibility of two or even three rate hikes? victoria: i had this exact conversation with a client thursday, why is the bond market staying where it is? we can talk about uncertainty, but if you look at sovereign debt around the world, we have such low levels still, and i think that is pulling down some of what we are seeing in the u.s. i do not think it is all u.s.-centric as to why rates are so low. comparatively, around the world, we have people coming in because, relatively, yields are higher. but we have lower yields globally holding us down. you have some uncertainty still with the omicron variant out there, even though we think the effects are less than what we have seen from previous variants, but you still have that uncertainty and questioning what the fed will do that is holding yields back at this point. jonathan: there is this belief that, if you have higher interest rates, financial

conditions have to tighten and equity markets have to fall. i can think of several experiences in recent financial market history where the opposite has happened. the tightened experience going into 2007 with aggressive moves even as rate hikes started to come through quickly. can you talk through the scenario this time around? how much work does the fed need to do to actually tighten financial conditions? victoria: historically, when we look at what goes on in a rate hiking cycle, throughout the tapering and even the first rate hike, you continue to see equity markets rally. we do not really see equity markets take a hit until maybe that second or third rate hike. again, if we are looking at june as the first rate hike, even if lisa it is march, you are looking at the second half of this work -- this year before it starts to affect equity markets, and we have really low interest rates, and it will take a while to get those up. you have lower rates for the

equity market. that will help valuations for a while, even though i inc. start to come down a little bit from current levels of where they are on the valuation side, but i still think you have strong support for the equity market, at least in the first quarter, possibly first half of next year. then we have a little more concern for sideways growth instead of trending higher. kailey: to get more specific in equities, where do you want to put your money and why do you like the banks with the curves this flat? victoria: let's look at the s&p 500 end of last year. over 90% of s&p over its 200 day moving average. that has come down now, with about 65% of the s&p above that level. you have to start picking your names carefully. when we look at the outlets for next year -- outlooks for next year, financials have been hit hard, yet there is still momentum there. we think it is a great time to

go in. they have stronger balance sheets than they had before. there is upside potential for dividends next year, they are cheap for the market. we think rates will go a little bit higher on the curve. it looks like a good place, and we want quality going into next year. you look at bank of america, j.p. morgan, these are the names we focus on. jonathan: thank the family for letting us borrow you for 10 minutes. victoria fernandez of crossmark. the last time many people thought monetary policy was too tight was the back end of 2018 p it our experience there was credit spreads aggressively wider. when you look at real yields back then, it was positive 1% through that level. right now, -1%. kailey: as long as that remains the case, does that mean assets can actually continue to do ok, even as we are entering into a period of policy normalization?

until real yields become more of a problem, maybe it is not that much of a problem for equity investors. jonathan: can you make a case for struggling goodie market with real yields where they are now? matt: to be bullish in an equity market? i guess there is no alternative because you will lose money if you invest in bonds, lose money if you hold in cash. you could take your chances with commodities, but after the runoff they have seen, it is just as concerning as equity market. jonathan: "bloomberg surveillance "bloomberg surveillance this is a" christmas special, isn't it? matt: i do not know if you are allowed to call it that. kailey: holiday special. matt: that is probably more inclusive. jonathan: are you censoring my ability to say merry christmas? [laughter] matt: i will not say anything more on this. jonathan: from new york, this is

bloomberg. ritika: with the first word news, i am ritika gupta. president biden's top medical advisor is warning americans not to get complacent about omicron variant. anthony fauci said the volume of cases could still overwhelm hospitals, despite evidence omicron symptoms may be less severe. fauci said hospitals in areas with lower vaccine rates are at higher risk. an increase in coronavirus cases in the u.s. led to shortages in airline crews during one of the busiest travel periods of the year. there were more than 2800 flight cancellations in the u.s. over the busy holiday weekend. united, delta, and jetblue canceled at least 12% of their flights. russia is planning security talks with the u.s. before a meeting with nato and moscow last month, according to foreign minister sergei lavrov. the u.s. has warned it russian military buildup may be

preparation for an invasion of ukraine. and sales in the u.s. rose more than 5% last year. according to mastercard, consumers spent more money on clothes, jewelry, and electronics. online shopping jumped 11% while department store sales were up 21%. desmond tutu is being remembered as a south african leader who helped abolish apartheid. he won the nobel peace prize in 1984. he was a vocal advocate for peace. he was 90. global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> people end up moving forward whatever purchase they are like the to do for the year, at least

on discretionary items, because they do not have to wait only for the items that cost more. when it comes to staple-type items, they are resigned to the fact their favorite brand of cereal will cost more. jonathan: great to hear from sam stovall there. all-time high on the s&p 500 coming into this week. kailey, a little bit of news out of didi. kailey: this is a company that became public in the u.s. six months ago in june. the lockup expires today. the headline just crossing that didi has blocked employees from selling shares indefinitely. for early investors in didi, this would have been the first day they could sell shares, but employees will apparently not be able to do so. if you would be selling, you would be selling at a big loss. this company has lost more than 40 billions -- $40 billion in

value since its debut here. jonathan: this could have been one of the stories of the year, given how much it captures the relationship between the united states and china, financial markets, capital markets in the united states and china. it is fascinating. matt: it is definitely part of one of the biggest stories of the year, but it is not the only part, which is why it is so interesting. this has come such a massive issue -- this has become such a massive issue between the two nations. the u.s.-china problems is one of the biggest issues in 2022. the bad relationship is right up there with concerns about russia, inflation, and coronavirus for investors next year. jonathan: a number of years ago, we were having this conversation here in america about whether we should or should not put obstacles for chinese companies to tap u.s. markets, and china

made the decision for everybody. kailey: and china is going to tighten scrutiny of domestic firms listing overseas. didi is a prime example of this, but the question is what does didi signal, and our companies and china just going to choose hong kong over the u.s.? jonathan: that is the international story. let's talk the domestic one. getting a feel for how the shopping season has gone in the united states. it has been decent. u.s. holiday sales jumping 8.5 percent from last year, according to some data from mastercard. joining us is jordyn holman, retail reporter for bloomberg. i am trying to understand if this is a product of price hikes or a real feel for the volume story in america. which one is it? jordyn: if you look at mastercard's data, that data was -- used was from november to christmas eve, but they also

shared data from october, when everyone was being told to shop early because of supply chain issues. it shows u.s. spending went up 9%, which shows this is holiday spending, people just pulled some of their spending forward. if you look at some of the big winners of the holiday season, a big box store like target, their foot traffic was up during that same period. it looks like it is a volume story more so than just inflation and people paying higher prices for their gifts. kailey: i certainly do not think i bought any gifts this year on a discount for their were not that many sales out there. but obviously retailers had to manage their inventory for the holiday season carefully. a lot of them may be did not get what they wanted to get in time. does that now need to be marked down? jordyn: it depends what the items are. if it is going to be a shelf you will put outside, you will see that discount, but if it is a

winter sweater, retailers will be smart about how much discount they can give. retailers are also smart on which days they gave discounts. super saturday, the saturday right before christmas, if you went into a macy's, you may have seen things 50% off. if you would have gone such -- a few days later, that would have probably come down 20%. matt: when i was a kid, a long, long time ago, we used to have this thing called layaway, where you would put something behind the counter at service merchandise and pay $10 a week or whatever until you got it. now they have by now, pay later. it is really a new spin on an old theme. how big was this this year? jordyn: fine now, pay later over the past few years has gained traction, specifically among millennials and gen z, folks were not fully into their spending power, so that has

become an option a lot of retailers have adopted if you are looking at a firm or other firms that use that program. this year, it is being adopted more readily. in terms of how much traction it has made overall in the market, i would still say people are paying debit or credit and that the by now, pay later trend still has more runway. kailey: we have been talking a lot on how the is kind of de facto restrictions going into place not because of government policy but because businesses are taking it upon themselves, in part because they cannot get the staffing if enough people are testing positive for covid. how much of it -- that is a problem? jordyn: this holiday season, like you mentioned moving forward, what we are seeing among retailers is that there are big regional differences in how well stores are doing. the south, particularly, is

performing better when it comes to sales. the west is performing lower than national average because of some of those restrictions, the labor markets have been different. but that is probably a top challenge retailers are facing. they pushed a lot of incentives this holiday season to hire folks. it will be interesting if signing both sentences -- signing bonuses or other eye-popping elements of hiring someone continues through the new year, but staffing issues do not just go away because we are wrapping up. jonathan: jordyn holman on u.s. holiday sales. i do not know about you, but my experience of sales so far, the discounting not that great. if you cannot get a star, there is no stock to put on sale after christmas is over. kailey: goes to show you the pricing power retailers are able to exercise.

if inventory is higher, people are willing to pay up. i also wonder if it is a addict of black friday and individual sales days are not so much of a thing anymore. black friday started in october when it came to some retailers, when they started to put out those discounts. it does not feel like you have the same is antialiased -- same, instantaneous sales. jonathan: did you have catalogs, where you picked -- matt: in columbus, ohio, there was a retail service of chains, catalogs you could go, and if you wanted a new pellet gun, you would put it behind the counter and pay $10 a week or whatever until you could get it. now the by now, pay later has become a huge thing, and it is spreading. i noticed when i buy something with my n26 credit card, they asked me if i want to split the bill over a certain of months. it is something they want to

suck you into. jonathan: interesting to see how things will want to do that. coming up, zach griffiths from wells fargo. futures extending gains come up one quarter of 1%. this is bloomberg. ♪ g. ♪

jonathan: we always get to that point in the year where there is nothing to talk about this year so you start exclusively talking about next year. we will do that all because we start talking about next year even if there is a time to talk about now. equity market up one quarter of 1%. nasdaq 100 -- 4404 morgan stanley the low end of the s&p's year, at the high end, 5330. in the equity market, that is a story. lift and record highs on the s&p 500. into the bond market -- this has been the story for me. on the 10 year, the high of the year comes in q1.

q4, we were talking about a federal reserve that would do nothing, now in q4, we are talking about the fed doing something. 1.4893 on ten's right now. when we think about monetary policy, we are thinking of a tighter monetary policy start. in china, we are thinking of more supportive growth coming out of the pboc. right now, intraday, 6.3727 the story from earlier this morning. the pboc with headlines in the last 10 minutes or so suggesting they will allow a more flexible exchange rate in the coming year. i wonder if they formalized that somehow. kailey: obviously, this is a pboc the has had to get a more uncomfortable feeling as you see

the yuan continue to gain strength on the dollar. it is also a pboc trying to strengthen confidence given the sector concerns on the china covid zero policy. the pboc likely more supportive and other central banks. jonathan: i wonder, after a year of very fickle year for chinese assets, how that sets us up going into 2022. kailey: we can talk about that more with zach griffiths of wells fargo. talk to us about the policy divergence from china on the one hand and the fed on the other. how quickly do you check the fed to move? zach: we think marches technically live in the sense that asset purchases should wrap up by then, but we do not expect them to begin hiking that quickly. perhaps june is more likely. but we think such a quick shift between ending asset purchases and the first half of the month to hiking rates is that meeting

in the middle of the month, and that is too soon and inconsistent with a lot of the communication we have heard much of this year. the fed has certainly gotten more hawkish recently, but we think it is too soon and want something towards the middle of the year, perhaps second half of the year, more likely. kailey: obviously hikes are not the only cards on the table. when we talk about the balance sheet and when we have to start rolling off that $8 trillion plus, do you think that happens in tandem with a hike? zach: we think there will be a substantial delay between the first hike and the runoff of the balance sheet. perhaps it could be a 2023 issue. it certainly has airtime at the latest press conference for the december meeting, and we will definitely be looking closely at the minutes to see what that discussion is like. frankly, we are a little surprised it is getting discussed in such detail at this juncture. it took a long time for the fed to begin reducing its balance sheet after they do the first rate hike december of 2015.

they are certainly looking at an accelerated timeline, but we do not think it will be a 2022 event, but we will be looking at the december minutes for anymore news on that. jonathan: just getting headlines , dr. fauci considering a shorter isolation time for article workers. -- as we try to figure that out, i am trying to work out what this means for supply chains, what it means for a full-service sector recovery that keeps getting delayed. is that how you're thinking of the issue going into 2022? zach: it is a difficult backdrop, to have omicron surging to this degree. it is something to keep and i on, but the big difference -- something to keep an eye on. we think the impact will be felt in the near term. the longer run sustainable

economic impact of it is going to be less substantial, and i think a more encouraging development with this variant is you are seeing people are cleared up more quickly, and we thing the impact is more of a near-term thing. supply chains will remain constrained throughout this year, but we do not think omicron incrementally changes the story drastically. jonathan: we have seen it time and time again -- people are always willing to reengage with the economy really quickly. i remember coming out of the pandemic initially -- we never really left it -- from the early pictures of the crowded swimming pools, crowded lakes, and people were aghast, saying this is terrible, everyone is getting together again. it was another way of looking at that, people wanted to get back get again, onto to be back in a sports stadium at maximum capacity, and that urge, that desire has not gone away. matt: absolutely.

you saw the big bounce back after the first lockdown was lifted. i think, as a result -- or what you are seeing now is people that are straining to get out and less worried about omicron. for everyone who is self-isolating more self policing in terms of going out -- i was at a christmas dinner last week, where the older people sitting around the table were wearing masks in between bites, and the kids couldn't get to the disco fast enough in spain. you see a bifurcation in terms of what your engagement with the economy is going to look like. i wonder what we expect in terms of government support. we talked about china today, and we know in the u.s., plans are on hold right now, up in the air, in terms of the back better. are we going to be getting more support from europe? are we going to get more support from the u.s. if the economy seems to lack it on the fiscal

side? zach: the one thing that struck you, at least with respect to monetary policy, is how little the fed seems to be concerned about omicron, east as of the december meeting. from a physical standpoint, the focus in the u.s. is certainly on build back at her, a deal that has been dealt a serious blow recently. we expect, if something gets done there, it will be a q1 event. as far as another large-scale bill, covid release style, that is less likely as u.s. government has its hands full trying to get this bill back better past, probably a slimmed down version. something like $1.5 trillion is more likely to pass. matt: we were talking to an hsbc strategist early who says he thinks it will be a lot of

impetus starting with the bill back inventories, to get back to the supply chain issue. do you think we will see that? are we seeing it already? zach: supply chains remain an issue. as far as its impact on inflation goes, we look for inflation as measured by the cpi, to peak around 7% in the first quarter of this year and start to downshift as supply chain start to unwind. that does depend on the omicron variant being a short-term impact and not having even longer affects or even sharper effects in the near term. we do think they start to unwind throughout this year, but as far as being something completely back to normal, that is not something with spec to happen until end of 2022. kailey: to bring a back to the bond market, you said to year yield at 70 basis points by the end of january. we are already there, last week of december. how much room does it have to move upward? zach: the curve has a lot of

room to move higher. we look for that to stand curve to be 40 basis points from her requiring a huge move on the front end. but if you look at past tightening cycles early on, as the fed is approaching -- and other major mobile central banks are approaching a tightening cycle, it is not crazy to see such substantial moves into's even as we expect the back end of the curve to rise. yield higher, curves flatter, and that has been the most consistent trend we have seen. jonathan: great work all year. fantastic set catch up with you. zach griffiths on this market. the tens right now 1.49. kailey: the.2 spread sitting around 70 basis points. that is substantial further flattening the has to go, and i wonder how that translates into the equity market. jonathan: i am wondering how

fully we have digested the shift from the federal reserve. i think back to that news conference, i sat through it with lisa and tom. got to the end of it and i looked up and saw the equity market rallying. the equity markets up thinking it must have been dovish. i went back through it, and there was nothing about that news conference that sounded that dovish, that sounded like a federal reserve that wanted to accelerate things. clear emphasis shift going into 2022. matt: i watched your special, the fed decides -- great name, by the way. then in our coverage the next morning, everyone was saying it was a dovish-hawkish tilt or a dovish-hawkish of it, which i thought was kind of a strange phrase. i did not see anything dovish about it either. i suppose you could have had some by the rumor sell the news. jonathan: the market and

financial conditions are still exceptionally loose. from march, i wonder what happens from there. do they reintroduce this conversation about moving more quickly to balance sheet reduction, does that start to spook people, or are we comforted by how deeply negative interest rates are? again and again, the former new york fed president saying when the fed delivers at first rate hike, they will have to do a lot of work to tighten things up because of how deeply negative interest rates are at the moment. this conversation will continue through this week, given this week there is not much else to talk about. futures up 15 on the s&p. this is "bloomberg surveillance. " ♪ ritika: coronavirus infections around the world jumped over the

weekend. china reported the highest number of cases since january. australia recorded more than 10,000 daily cases since the start of the pandemic. according to cnn, daily omicron infections in the u.s. have now surpassed those in the delta wave. singapore will require coronavirus vaccinations for foreigners who want to work, study, or live there. the new policy takes place starting december 31. singapore is taking measures designed to pressures on those not vaccinated. japan is joining -- the strategic reserve. last week, south korea said it would start releasing oil from its reserve next month. and a five day rally snapped back after measures were introduced a week ago to stem its collapse. the lira has lost roughly one

third of its value this year. the latest spider-man movie has become the top grossing film of the year globally. it took in more than $81 million in the u.s. over the weekend. 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. ♪

>> the rates where they are now,

at a historic level, historically bad levels for the fed, they do not have much room to do anything. you could lose weight -- money in a meaningful way over the next few months -- the fed has to move interest rates up. jonathan: a man with real experience, chairman of holland and company. from new york city with kailey leinz and matt miller, i am jonathan ferro. equity market up 15 hit advancing about 1% on the s&p. yields not doing much. the fx market, they g10 not doing much either. -- the story of the morning the airlines. we will build on this in just a moment. stocks are negative in the free market, united down 1.9%, delta down about 1.5%. this headline just coming from the chief medical advisor to the u.s. administration, dr. fauci

speaking on msnbc, asked about a domestic travel vaccination requirements, his response was i think it is reasonable to consider. "reasonable to consider" the words of dr. fauci on that requirement. kailey: and we know this has been something on the table, but the white house not -- has not actually act as a but something in place like this. but think about domestic travel versus international travel. international, you have to be vaccinated to just get on the plane. you also have to test negative within a relatively short time window for departure. for u.s. domestic, neither of those things are requirements. when you're talking about a variant of omicron that could be twice or even three times as transmissible -- matt: you do have to show anything? kailey: no, nothing. matt: hang on. to go to a restaurant in new york city, you have to show proof of vaccination or recovery, right? you do not have to show anything

to get on an airplane in america? kailey: no, just your id and boarding pass. the difference in policy is very remarkable. and something to consider, i would say so. jonathan: clearly the number one issue coming into america is the testing requirement. if they want to testing and away from a vaccination requirement, with they have enough tests for people to get on airlines right now in this country, the united states of america? i think that would be to medically difficult. matt: -- i think i would be tremendously difficult. matt: i am shocked how unprepared the u.s. seems to be when it comes to testing. tests are so plentiful, easy to get a hold of in terms of home testing kits. you can go to testing centers on seemingly every block and get a test arbor for free or for tormey or 30 euros, max -- and get a test for free or for 20 or

30 euros, max. the u.s. should have to much of everything, right? we have gigantic pickup trucks and cheap gasoline. jonathan: to be fair, they happen overflowing with vaccines in a way other parts of the world have struggled to a cquire. in europe, they had tremendous difficulty acquiring vaccines to rollout pier 1 a talk about this a success of the u.k. to have not even posted a chart for dealing with the pandemic. the highlight has been, maybe, testing and the u.k. everything has been questionable. kailey: there are similarities with the u.s. and you care doing relative to other countries in that they are not putting back super restrictive lockdowns, so that policy is similar. then comes the question of it does not necessarily take a mandated government policy for

behavior to change. sometimes companies and businesses are taking it upon themselves. sometimes you end up with flights canceled anyway, because there is not enough crew because of covid cases. jonathan: delta, united pulling back at least 12% of a schedule over the weekend. joining us is bloomberg's kriti gupta with her chart of the day. kriti: that is what we are tackling here because it was not too long ago that airlines were not only the classic volatility trade that the recovery trade. if you are betting on the economy roaring back, it was clear that airlines were the way you would do it, given there was that disposable income, the a lot of people wanted to go see their families in various parts of that country. that recovery trade has faulted a little bit. you can see that in my chart, which highlights major u.s. airlines and this up trend going through about may or june of this year, then altering. a lot of it does not have to do

with passenger counts, where if you look at the tsa passenger check count, it continues to get higher and higher, more people considering business travel, considering travel and leisure broadly. you are not seeing that show up in the stock itself. it has a lot to do with the shortages you are seeing in flight crews and the variant. on top of that, the massive amount of debt some of these airlines have accumulated as recently as last year. kailey: is that a trend that holds true for other "real bringings"? we saw a lot of that rotation starting in the year. kriti: to your point, exactly. travel is the best gauge to look at that and talk about the recovery trade faulting, growth in particular. when of the major quotes i love to rely on was that the value to growth traits which is when growth decelerates. that is something you have seen quarter over quarter this year. you have seen the growth trade

drop when it comes to the underlying economy. what people are doing is switching to yielding sectors, consumer staples, utility, as well as some of the big tech names, which were kind of losing their luster at the start of the year. some of the money flowing out of the classic recovery trades, it begs the question how much of the value trade is in the rearview mirror. matt: we were talking with luke hickmore of abrdn investments who once again sit airline stocks, anything getting crushed right now by this omicron wave. i wonder if there were a regulation in the u.s., that you had to show proof of vaccination or recovery, without help or hurt passenger counts? does that mean fewer people would fly because they do not have to show proof of vaccination, or word -- or would more people fly because of confidence are flying in a tube full of vaccinated people? kriti: the immediate thought is

it would hurt because of different ways of travel, and we were talking about train travel picking up -- matt: in america? kriti: shocking, right? and more and more people are buying cars. the u.s. is the largest gasoline consuming nation of the world. more and more people are looking to do more domestic travel via road trips, train trips, and that could affect the bottom line for a lot of these airlines. this is the worst time of them because they are also combating the only worker shortages and flight mandates and unions for pilots and flight attendants but also dealing with, like you said, those giant debt loads that, for a large time, were keeping them a hair away from group c as easy -- recently as last fall -- a hair away from bankruptcy as recently as last fall. jonathan: the real system -- kailey: it is better than a bus

or sitting in traffic and kinda better than an airport. jonathan: i've been on a greyhound before. i will say that. kailey: low bar. jonathan: kailey leinz, matt miller, jonathan ferro. this is "bloomberg surveillance ." ♪

>> we could end up with a good year, not a great year, in 2022. >> the markets are underestimating the fed's capacity to tighten. >> there's a lot of room for good news priced into the dollar. -- >> the cycle easily carries to the middle of this decade. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city, good morning. this is "bloomberg surveillance ," live on tv and radio pete alongside kailey leinz and matt miller, i am jonathan ferro. equity