we have a 10-year breakeven here, and just about 1%, five year breakevens at 0.88. they are drastically different numbers. germans can expect -- and of course germans hate inflation pretty much anyone else -- pre-much more than anyone else in the world. francine: germans have a very long emery about inflationary pressures from 20 or 30 years ago. james athey joins out this morning. investment -- director at aberdeen investment. what are the riskier assets? james: i think kailey made the right point there, which is the young's are starting to have an impact on real yields. we saw that as a long and of the curve, 30 year yields rising. it is having an impact on 10-year, and if selloff continues, you would ultimately expected to work its way down the curve. believing buying equities at any prices is still a long-term investment strategy, this notion that yields or real yields will stay very low and are supported forever and they can use ridiculously low discount rates to generate high pd's for those equity prices. that assumption is being challenged at the moment, and

breakeven inflation expectation of around 2.3 percent right now, which is historically high for breakevensthe past decade. how i could those go in a world where we still believe the fed can anchor inflation at around 2%? and if we see real interest rates go up, that is where the economy could start to cool and will the fed deal with that? joe: remarkably, consensus going into 2021 was that the dollar would just continue to slide. it is actually up fairly substantially, particularly against developed dm currencies. could the dollar surprise everyone and maintain strength throughout the year even with that robust growth in the fed holding rates near zero? conor: outside the u.k., to give caroline credit, the u.s. is one of the best countries in the world when it comes to the pandemic vaccine rollout. the u.s. could outperform and ease pressure on the dollar. i think that is what we have seen in the past two weeks. caroline: it all comes back to the pound. [laughter] bloomberg opinion columnist conor sen. up next, southbay research founder andrew zatlin is going to join us next. this is bloom

breakeven, back a little bit, that is healthy that expectations are little lower. with that credit move you're seeing the high yield rate, the investment-grade rate, even mortgage rates with a little bit of an uptick. guy: we need to talk about what is going on with the central banking story. let's look at what these rates moves mean for the fed. we are joined now from jeffrey's. let's figure out where we are. yesterday's move, we are trying to figure out the reason for it. there are a lot of potential options, a lot of them technical. do fundamentals justify where we are now with rates? >> you know, the volatility has certainly been significant, and that is never good, but i expect it to be a 2% by the end of the year. i think fundamentals justify that. i expected it to be a more gradual process, but i think the markets globally are reassessing the prospects for the global economy. the yield moves have been very global in nature, may be the rates market is catching up to the reopening trade, which has been on for some time. that is the feds not pushing back. how d

ten-year inflation breakeven is at the highest level since 2014. that is the pace of u.s. inflation as implied by the bond market. let her liquidity across many assets, you could blame the super bowl for that. the dollar index a little upside, the euro-dollar at 120.38. the g20 moves are fairly contained at the moment. brent crude, this is an important story, you have oil producers widening their net short positions but one of the biggest oil players in the world is saying the oil market has gotten ahead of itself. in terms of a post vaccine euphoria, but also leaf in the ability of opec to manage supply, and that is a direct quote. a lot of losses have been erased. let's check on the asian markets. >> happy monday. we have run with it, asian stocks up for a second session. we are seeing a lot of momentum in japanese equities. the topix on track for its highest close since 1991 and the nikkei 225 topped 29,000 points for the first time since august 1990. a lot happening in korea and that is one market that is underperforming the strength in asia, weakness in automakers, pa

here is the breakeven, this is what you want to talk about, the highest since 2013. manus: absolutely. there was a tweet last night, real conviction is that we have the largest sensitivity ever. a word that will be much talked about. can you imagine their surveillance fast? translated into equity markets. >> let's see what's going on in equity markets. yesterday during the session we did hit a fresh record, a pullback on the close. the question is what does it all mean is we have the bond yields rising. the 10 year just below 1.3%. it's not just the u.s. treasury market which is leading the way. canada nine, australia eight. wti crude, $60. astonishing what is happening there in texas. millions without power and 3.5 million barrels coming off the market. we will get an update on that in about a half-hour. let's listen to some of the key market voices reacting to the reflation trade. >> the market is headed up, barring anything exotic and is happening to it, which has not happened yet. >> i would discourage people from taking on that marginal bit of risk on leverage.

still come the reflation trade in full swing this week. 10 breakevens today had a seven-year high --0-year break even hit a seven-year high, and the 10-year treasury yield 1.2%. energy and financials leading the way, your best performance on the week. it is going to be interesting to see whether the market is getting ahead of itself, pricing this reflation trade. especially if he is right we are not going to see a big bump coming out of the pandemic most people are betting on. romaine: the economic club of new york speech today. caroline: what day was on, which video on twitter? they are beautiful. meanwhile katie m, you said energy was leading the way, so were chips. semiconductors up 7.8%. what does that feed into the inflation discussion, are we looking at the right sort of things? does that speak to the reflationary trade managing to sustain itself? >> i am note joe weisenthal when it comes to chips. but it is interesting to unpack how the chip shortage and what is happening in chips to -- chip stocks now plays into the reflation trade. part of the bigger picture or is this an is

check out the increase in the five-year yields and five-year reels and five year breakevens, all up.here's a lot of up arrows. that's what i see. caroline: something about the rate of change -- i will play taylor here, and it is something about that rate of change. do i get to drink now to? romaine: please. joe: joining us with more insight is john turich. thanks for joining us. we saw the belly of the yield curve get blown out there, the five-year, breakevens, five-year reels on the rise. was there any sort of catalyst for it and what in your view is the main message you took away from the market? john: thanks for having me on. this week was pretty important, as you said, and there are obviously some technical considerations as well. i think in terms of catalysts, the market is starting to interact with this time inconsistency issue as the economy evolves. the market is projecting a possibility of a double-digit nominal gdp year while the fed is still talking about a you six -- u6 or double-digit unemployment. this is leading to some friction within the fixed income market as the fe

definitely following breakevens. big picture yields are moving higher for the rice -- for the right reasons which is growth rather than policy tightening. it should not be too strong of a headwind. tom: what level of 10 year yield begins the ambiguity be good a good rise in yields and a more challenging rise in yield? stuart: the level that has been talked about is 1.5%, which we are a good distance away from. something around that level. the market might focus on 150 and if equities are still rallying they will move the number to 2%. it will be the big round numbers the market will be most concerned with. they will also be looking at where real rates are. on the back of that, if real rates are rising, that will be a different issue. lisa: you focus on equities and derivatives. we are talking about bonds. is anything in this market tied to fundamentals that has to do with corporate earnings, or is this all tied to the federal reserve? stuart: i like to think there is a fundamental aspect. the stimulus will hopefully

white, the 10-year breakeven. the breakeven started to back up earlier than oil. climbing creates strong support for the inflationary picture since the price is increasing. supply is starting to strengthen and demand tightening. rounding it out, was sector benefits the most from the inflation tried? the banks. we have the banks and i hole --in a hole but the index is recovering off of the march lows in the stoxx 600 bank sector recovering as well. hey reflation trade in full swing once again. guy: absolutely. abigail, thank you very much. back with a bang. vix is down. you wonder if there is real averaging. alicia levine joining us now. the point about the vix is werth attention to. volatility coming back down. that allows people to leverage up more. we are trying to figure out what the driver of this move is today. what are your thoughts and what the drivers are right now? alicia: good morning. nice to see you. it is nice to wake up to record highs everyday. it has been a long time since we have seen something like this. first of all, what we understood at the en

david: the biggest correlation with the breakevens is with the cr pa -- that is real-time data. vacancy rates are going up. the rental data do not come out as crisply on the bloomberg terminal as the crv index -- the -- we had four or five of these commodity cycles. in the cycle from 2009 and 2019, they look like design waves. people got caught upsides because they believed inflation was around the corner, and then a dominant feature of the last cycle, do we get cyclical inflation, yes, but the bigger picture is between 2009 and 2019, despite the fiscal stimulus we have and take when toppling of the stock market, the core inflation was 2.4%. to me the big picture is you have to go back a century to find the last time core inflation hit such a low level. we are heading back to that right now. i think it is a great buying opportunity. the market has priced in core inflation. the employment rate was 3.5%, not 6.3%. to me this is a great opportunity to get back into the long end of the curve. lisa: there is a difference between inflation expectation and actual belief in inflation as

manus: bottom, real rates are rising, the breakevens -- the breakevens didn't ratchet higher yesterday. breakevens are rising, real rates are rising, are we just going to retest 1.60 and see a continental drift? reflationistas are driving the market. across the equity market, futures are softer, 10 year yield, 1.37%. you think that is a big deal? go to wb on your terminal, australia up 17 basis points at the moment. copper is on a tear, up nearly 3%, blowing past $9,000 a ton. we haven't seen this in nine years. it is unprecedented, a question of the super cycle. just to tell you, i put the pound in, 1.40. we know it is not so good where you sit, but matt hancock, we will talk about vaccines, one out of three adults in the united kingdom is vaccinated. pound sterling, pound euro has to do with the vaccine story and how much more could sterling go? eric nelson at wells fargo said valley will fade in a few weeks, potentially good for you. manus: we will get into that phrase in just a moment. the chief economic set from alphabet joins us. the debate is this, how far will this bond reprici

that was breakevens going up. equity markets could live with that.e are just pricing an average inflation. everything is fine. for the last week or so, real yields have started to go up. real yields started to go up. that started to impact equity markets. we have seen the nasdaq down 4% over the last week, set for a week open today. it is that move up in real yields which basically is the market questioning the fed and whether they are going to stay on hold. real yields are the key here. nominal's could go up because breakevens are going up on the better outlook, the reflation trade. if they are going up because we are repricing a stronger fed, that becomes more of a problem. jonathan: lee, let's catch up soon. state street markets head of global macro strategy. just a bit more detail from the team at credit suisse on the s&p 500 price target, they are looking for some contraction through 2021, but it is the explosive earnings growth that is key. you can get that contraction largely off the back of explosive earnings growth. tom: i am so glad you bro

this is the inflation rate or sort of gives you an idea of what is coming that 10 year breakeven inflation rate is the highest since 20182.2 percent and of course fed policy changed last year they wanted to make it a little bit more flexible so now you've got an average inflation target they're more than happy to see as president evidence has said 3 percent is just fine and i think what they've done is give themselves some leeway to push the inflation number higher and hopefully not create a stampede into inflation assets inflation protected assets it sounds like it's going to be a lot of leeway when it comes that many people are predicting 4 percent how long it will last that that i mean it we have yet to see it when it gets that because it's only a matter of time before it does i want to turn over the big question though it continue to rally throughout today reaching a new record high it's up more than 45 percent since the start of just the theory now the mima driven doj coiner also 3rd about 580 percent over last month that's a huge number is this going to last or are we kind of thing a

a reversal of what we have seen over the last 12 hours for breakeven on the 10-year, authorize and the bloomberg dollar has been all over the place -- the dollar index flipping negative, really helping commodity prices. you had guy talking about brent. it is across the board. food prices. a lot of people paying attention. it is the reflation thing we have been talking about. guy: absolutely, and it looks that we have been driven by monetary policy and fiscal policy. max kettner of hsbc joining us -- he is a multi-asset strategist. max, this morning, it talked about the inequality the system, and the new government in the united states will not stop until the bottom half of the k-shared recovery as snapped back to the upper half. what does that mean for how much further this reflation trade has to run? max: for the reflation trade, it is probably more important what will happen with commodities, probably more important what is going to happen with immediate fiscal stimulus, with fiscal stimulus now in march or april. it is probably more important what will happen with the initial, pent-

if you look at the manufacturing pmi price index, it tends to lead five year and 10 year breakevens by three months. once you see breakevens start to move up you want to be in cyclicals over defensive spirit -- over defensive's. alix: goldman was talking today about how you still want to rearrest even if you're freaked out about -- re-risk even if you're freaked out about valuations. do we stay with his elevated volatility and does that change your risk profile? tobias: not really. the thing i worry about the most is when the fix is between 20 -- when the vix is between 20 and 30 it is the worst outcomes for the market. it is not when it is down at 10 or 12, you have similar signals when the vix is at 30 or 40. it is the 20 to 30 band that is most troublesome historically. the attitude of institutional investors has been forget about fighting the fed, embrace the fed. our sentiment indicators are at stratospheric levels, exceeding those we saw in 2000. i do not think we are in a bubble but i think people are too excited and that presents vulnerability. guy: i know you have one more que

manus: the breakevens are breaking aggressively higher, the highest since 2014. it is between larry summers, who one would say is probably more on the left, and janet yellen. janet yellen saying we are in a deep hole, you need to do more, and you need to spend to get us out of this. larry summers warning that it is about the quality. he is not arguing about the 15% of gdp but he is warming, don't -- he is warning, don't squander money unless it is built back stronger. he warned, i am paraphrasing, but it is like pouring paraffin on a lit fire. annmarie: one of his biggest complaints was the output gap. yesterday, in the washington post opinion article. but it is not just larry summers. it is a number of economists saying there is risk to this kind of spending. one economist's worry is that we could be pushing up asset prices. unsustainable levels is what he thinks. it reminds him of what we saw in 2000 with the equity markets and 2007 with the housing markets. manus: let's get to jane foley, the head of fx strategy. great to have you with us. in terms of this deb

the five year breakevens are still up at relatively high levels. if you look at the chart, it is pretty alarming. i know the fed chair has been saying this inflation is transitory and with a jump back in oil, and frankly, commodities and anywhere you look. i can bring commodity prices down substantially. michael: commodities are a leading inflation indicator because as companies ramp up inflation, they will demand more supplies as they rebuild inventories, so you do get some demand on commodities that tends to go away as supply becomes more available. we also see what is going on with energy prices, the weather-induced energy specs are going to go away so the fed is generally concerned about that. that is why even though their target is the headline number, they tend to look at the core number because they want to see in the services site, are we seeing wage prices that are driving up costs and that would lead companies to raise prices? if you are company and pay more commodities right now, you don't raise your overall prices for fear of using -- l

we are seeing the curve deepen and the inflation of the five year breakeven.here is the trade and how are you playing it? kim: well, i do not like to call when things are gonna get back to the new normal because there are too many variations. if you ask the prior guest when are we getting back to normal, and how do we get there, i think the vaccine is a huge part of that, but i also think that we need to have better cures that are out there. and, as soon as you come down and are identified with covid you can start a cure that will allay you from becoming really ill and ending up in an icu. these are things that i am watching for a real recovery where we can get out and do the things we want to do with other people. that is the trade. so how do you play this as an investor? i think you look for themes that do not depend on getting back to normal. some are more tech oriented. one is 5g. not just the u.s. rollout, the worldwide rollout, and there is always fan technology productivity. investors like productivity, it ends up in your pocket, and those are my things

what we saw last week is concerning for the outlook going forward, where it is no longer a breakevenricing of rates in the u.s. it is being led by real rates. that is something we think the fed is likely to be more sensitive to because not only are we seeing that over to em, we are also seeing that impacting u.s. markets. you see mortgage rates starting to rise. we had the biggest rise in u.s. mortgage rates we have seen since august of last year. while the economy is looking promising, the recovery is still at the early stages and quite fragile. we think the fed is going to lean against this. lisa: are you saying a key component of your emerging markets call his faith in the fed to buy more bonds to press yields and we start seeing real yields continue to rise? diana: no, that is not what i am saying at all. what i'm saying is, if it is rates moving higher because growth is picking up globally and it is an orderly repricing higher of rates, real and breakeven, that is in good -- a good environmental -- environment for em. if we see rates running ahead of what we are seeing the data,

we have seen the data, with breakeven inflation rates widening to a proxy with the unit states.ays out a far-reaching political plan for his country and for europe, saying a common eu budget is required to put his budget back on track. ford pledges to be all electric in europe by 2030. this is january car sales collapsed in the region

the breakeven spreads have widened buy more in the u.s.e, so the reflation trade is moving much faster in the u.s. so, all of that's true, and it gives me this idea that maybe the eurozone inflation expectations and risk premium building up is mainly due to what's happening in the u.s. now, fundamentally, i would say that the least chance of inflation taking off is in the euro zone. so, for investors looking to a position, there's a chance it breaks even, which basically means eyeing nominal bonds compared to the equivalent. matt: that's good because no one hates inflation more than the germans, steven, certainly not in the western world. steven major, always a pleasure having you on the program. really look forward to having you on again, but reading your work in the meantime. steven is going to continue the conversation with us at 9:00 a.m. u.k. time. if you are in london, you can listen on dab digital radio. anywhere else in the world, just to in in on the internet at bloombergradio.com. ♪ matt: welcome back to the open. we are 30 minut

and with a structural turning points from the normal economist and the second thing is the breakeven curve is higher above the nominal curve. that has more protection and its future with interest rates if it was to allow the fiscal policy measures it may have to come up with yield curve control. and markets would be compensated for inflation or growth in right now they say it is a bigger worry at this point in time. is so the market is not fighting the fed. and those inflation that the markets are hanging on. >> and the turning point that you mentioned and at that turning point we should expect to see the effects of that turning point. can you make an argument that it began 20 years ago? that you look at workforce participation that starts to level off in service to decline in some countries around the turn-of-the-century? it has been a decline over a decade. so why has it been so difficult for central banks to hit the inflation target into real yields. and the argument is with the bargaining power and that remains fairly low. when we started working on this we were very uncertain wh

le have been hedging with breakeven swaps on the treasury market, as well. the long end of the yield curve is a testament the traders and powell are not on the same page, in terms of when the fed would step into address the rising inflation situation. as long as chairman powell continues to emphasize the fact short-term rates will be near zero, he wants to see the economy run a bit hot. he's more concerned about getting unemployment rates down. that means he will stay away from doing anything about the perception inflation is taking hold. the long end of the treasury curve can fluctuate more. we can expect the volatility we have seen in the 10 year and the longer end of the treasury curves to be with us for some time. the curve could steepen further than it has in the first few months of the year. haidi: we continue seeing the rise of commodities. how is that playing out for the u.s. dollar? >> generally, it is negative for the u.s. dollar, particularly against major currencies. you can see some of those like the aussie, kiwi, canadian dollar are doing well.

-year turn positive for the first time in a few months, but when you look at the spread between breakevens in the u.s. and germany, germany is at a record low. so any signs of pick up, even though we do see manufacturing, for example, do better today, it does not really seem like it is sticking around. it does not seem to be any lasting price pleasures. to makes -- price pressures. it makes sense when you consider the vaccine rollout and shutdowns across the region. francine: speaking of shutdowns, this has been the big market story of the week, the texas oil package slowly restarting our markets reacting -- slowly restarting. how are markets reacting? dani: the biden administration discussing possibly meeting with iran, so that of course brings the picture of exports from the persian gulf nation in as well. heating like oil features lower as well, so some of that pressure being taken off. but let's be clear, the energy crisis is still here. it will take a while to get every thing back on. the goldman sachs say they think this will be a fleeting price issue, that demand loss is offset righ

we see german breakevens and the u.s., the lowest on record.shows us that the bet is one where price inflation and price pressures are not there. it is hard to see how the inflation story could take a hold here as it is in the u.s.. annmarie: thanks for that recap. we will look out for that eco-data. thank you for joining me this friday. u.s. futures are lower, but european futures looking brighter. this is bloomberg. ♪ matt: good friday morning. this is the european open. i am matt miller in berlin. markets say, retreat. wall street declined. a gauge of global shares heads for its first weekly ball since january. futures are up in europe. the cash

dollar pretty much neutral. 30 year breakeven rate pretty much flat. we get a 30 year tips auction later today. yields up one basis point. it was five, one hour ago. putting pressure on tech. the flat dollar is weighing on most commodities. copper up 2%. that is a china story. nine year high, guy. guy: back from the holidays with a bang in commodities markets. equities markets fading at the end of the session. the eu's recovery and resilience fund is operational. it is designed to hand out 312 billion euros over the next six years, and 300 billion euros in loans. spain, the biggest beneficiary. today in ecb accounts, the central bank already expressing concern about the slow pace of the package. joining from brussels, our european government reporter. victoria, we got so excited as of late in the u.s. checks going out the door, the biden administration wants to go big. this is more of a slow burn. reporter: it is a different kind of package. it is a centralized package. governments have their own fiscal response to the crisis. the way you hope this wil

handle and the thirty-year also in focus with that 2% level being breached while we are seeing breakevenslipping below $60 a barrel. the impact of the u.s. energy freeze may be short-lived with the focus remaining on the rebalancing in oil markets which has ubs lifting its crude price forecast by five dollars a barrel and pulling up a chart on the terminal, stronger commodity prices have been a driver for the msci world index. that is the line in blue on this chart but emerging stocks are outperforming their global peers with rising discretionary companies boosting the gauge as well as the better earnings outlook. i want to highlight the allocations to em stocks. it is still overweight with that being the preferred region in that survey. allocation to stop. commodities at the highest level since 2011. haidi. haidi: let's get more from the head of asia-pacific financial markets research. michael, great to have you. you just don't have the energy. i hope you will someone up -- summon up some of the energy this morning. let me get your views on the reflation trade being pushed up by the disr

torsten: this is a very important issue in rates markets. 10-year breakevens have gone up since marchrtainly something very important. then the question becomes why is it the market suddenly expects inflation to be higher? there are different explanations. the first is commodity prices are almost mechanically correlated -- commodity prices going up is an important driver. another important driver is the fed changed framework to average inflation targeting. therefore long-term inflation expectations are up. that is good here and now but it is a critical thing to monitor if we get the strong growth in the second half of the year you have covered so well. lisa: you think markets are underpricing or overpricing inflation? torsten: if i look at bloomberg, there is no inflation in cpi, no matter what the fed measure or the measure you look at for inflation, there is no actual inflation. all of this has to do with expectations, in the next few quarters, but also he look several years out. for now i think the market is ahead of itself in we will not get that much inflation. going into 2022, w

we are not seeing a commensurate move in some of the breakeven rates. really know if there is a big takeaway, but it shows the consensus in markets that yields will bleed higher and a controlled fashion and it will be positive for equities because it indicates growth. tom: again, this is the ambiguity out there. real interesting nuances about at what point do yields begin to hurt or not. in my head, we are miles from there. lisa: i think there is something lost in this and a lot of people say it is the velocity of the increase. if it feels uncontrolled or feels like it is runaway increase in yields, that will lead to a stymieing of some of the asset purchases in risk year categories. it also is what's behind it. is it because suddenly there is a tightening from central banks? there has to be a why to determine how it affects. tom: it has been a great week. let me do a data check. kailey leinz emails and says you have to do dollar pesos. 20 point 08, mexican peso right now. your own not through at 120. futures are -10. dow futures at -41. the vix does no

and you had the 10 year breakeven inflation rate moving to the highest it has been since 214.re losing purchasing power holding onto a ten-year treasury and yields will go higher so you will lose your principle. the s&p 500 was trading with the dividend yield at one play 5% which is also losing purchasing power to the tenure inflation rate. it is hard to say. and that is what is driving markets. and that is why bitcoin has taken off. and a lot of crazy things have happened in the market. there is nowhere to get yield and it is that search for yield which is what is driving invest -- what is driving markets. shery: to your point on the 10 year yield and the s&p 500 guilt, this gtb chart on the bloomberg -- given the narrative , we are seeing increasing yields because of economic recovery because of the stimulus package coming up in washington. should we be facing more decisions when we head into more cyclicals? al: yes, that would help. if you look at last year, you had a 50% return on the s&p 500 but 59% of the companies had negative earnings per share. there will be a rebalan

. >> the 10 year breakeven is 2%. >> where that number gets 2.5%, it does turn into a little bit of aas there is more stimulus, you increase inflation expectations. >> fiscal policy in the driver seat. >> it will drive real rates up. >> growth will be accelerating. >> you can see a big inflation scare. >> a fair amount of tolerance. >> we are expecting sustainability of monetary policy. >>

we have seen that in terms of breakeven inflation. a moderate increase in return to some term premium on the backend of the curve, but a moderate increase relative to historical levels. tom: with blackrock this morning, futures up 16. jonathan: this bond market is fading, though. i'm going to get to the other studio to catch up with the administration. looking forward to that conversation with the council of economic advisers member this morning. tom: they are in practice as they get used to the f arro grilling. i looked at the 27-week unemployment chart, which is quite, pre-pandemic. do we see in the data the truth of the american labor market? when everything is said and done is it ambiguous what we see, because we don't see the angst of 2008, 2011? or maybe we don't see a better america right now? michael: this has happened in a short time. the previous peak took place over a longer time. the number of people moving into long-term unemployment continues to go up, showing us what claims numbers telling us, people who lost their jobs

a gamestop situation where the volatility was already 500 to 1000, that is exorbitant, and the breakevens mean you require the stock to be down an enormous amount before you start being profitable on those trades. however, for people looking to short something that is perhaps not at those insane levels, i think they are going to think twice about shorting the stock versus using an option where you can say i downside is limited to that premium paid. -- you can say my downside is limited to that premium paid. alix: where can you still buy some volatility that is cheap? how can you still protect yourself? amy: it's a great question, and what i would say is if you look 10, 15 years, volatility is in general quite expensive. it has come off the peaks that we reached last year, but volatility tends to take a couple of years to normalize after we hit peak levels, so the short answer to your question is it is a little bit relative area all attila the is relative to each other, but on a historical context, the levels can still be high. right now, the relatively inexpensive sectors just in terms of

lisa: if you take a look at five-year year five year breakeven rates, the expectation for inflation overhe next 10 years has declined for five straight sessions, which really calls into question this reflation trade. i would argue that is what you are seeing in stocks, the knee-jerk reaction when yields go higher is for stocks to go lower. it is concentrated in the most overbid stocks, and yet you wonder if there is a self corrective cycle that starts to kick in, where people view this as risk off and then go back into bonds. tom: i agree 100% with lisa that there is hesitation in the bond market. it is all the worry that jerome powell will talk about today. jon, you go the other way today. jonathan: the question is, how self-limiting is the bond market selloff? how self-limiting is it because it starts to affect risk assets? are they going to give it the green light to test those kind of levels and see where it goes? no idea. very interested to see if that script changes later today. tom: i am going to go to brian deese. we will be featuring that interview across all of your properties

close ly >> as you imagine, we monitor several -- we have an index of counter-expectations, or breakevens, that sort of then, we do look at wages and other -- so, of course, it's half of our mandate so we have a very strong group of inflation economists. it's one of our major focuses. i'll just say, i think the bigger picture still is that we have seen, as you mentioned, you know, free decades, a quarter of a century of lower and more stable inflation we have seen the last decade be characterized by global disinflationary forces, and lars nations struggling to reach the 2% inflation goal from below so that, i think is the broader setting, in addition, the pandemic itself has produced lower inflation readings driven at the beginning, you know, by collapsing demand for -- in certainly particular services. as we look forward, as the very low readings of march and april fall out of the 12-month window, we'll probably see an increase, but it -- in readings, but that's not going to mean very much it won't be very large or persistent in all likelihood it's just a function of those readings falli

alix: even in breakevens in the u.s. or europe rising, i am looking at over 215% at this point. this is a rudimentary question, but at what point does it start to affect cash flow and earnings and valuations in the equity market? janet: yes, that is the question. i suppose that can be set against what happens on growth. if we get some big upside surprises on growth, even if we got a slightly higher interest rate structure, we might feel it in certain sectors. there are sectors, and some of them that have been issuing a lot in recent months, that already had a lot to start with. they have been issuing more indebtedness, and if they don't get the strong growth expectations that are being built in and will now have to contend with potentially higher interest rates, than there will be a lot of vulnerability. so clearly we probably will see some sector and market divergence in that world, but the fed will also be looking at the broad economy. if we see a further rise in interest rates, they might think the housing market might slow down into 2022, but we might get more balanced growt

tesla managed to climb back up to breakevens, getting bit higher in the premarket.l you were sleeping last night, we had kathy would on -- we had kathy wood on "bloomberg markets the close." tom: romaine, you've got to expand on that, under conversation with ark investments. what is the definition of load up that you and your team learned? romaine: three of the funds bought about 340,000 shares. we should point out carol massar was leading that conversation for bloomberg radio. kathy wood made it very clear she saw this as healthy, the opportunity for a load up. she is really loaded up on a lot of those high flyers. paypal, square, uber. she also talked about bitcoin. these are some of the names that not only got her the gains, but she made it clear she doesn't think those gains are over. tom: in the break, i was doing my taxes. lisa was thinking about this serious issue. do we have any understanding of what her cash holdings are right now? romaine: she didn't say. lisa: i was looking at her key etf, which saw its biggest withdrawal in the last trading poker recorde

we have seen the data, with breakeven inflation rates widening to a proxy with the unit states. prime minister draghi lays out a far-reaching political plan for his country and for europe, saying a common eu budget is required to put his budget back on track. ford pledges to be all electric in europe by 2030. this is january car sales collapsed in the region to a record low. let's talk about the market. despite the amazingly strong u.s. data we have seen today, we are seeing the dollar clawing back gains. we have been tracking lower throughout the day on euro-dollar. we are having a look potentially at one dollar 20 since again -- at $1.20 again. alix: we got some really excellent data from retail sales, higher ppi, industrial production all better. overall, the indices pretty lackluster. the energy index is up by 0.8%. that is an oil story, although many saying that oil is getting bit a little bit too much. the demand we lose from texas is really going to at strip these apply losses. the 10 year yield, you mentioned we are seeing some buying come in. we did hit 1.33% overnight,

indicators of growth and increasingly, indicators of rising inflation -- as you know, the tips on tenure breakeven inflation is up. my concern is at some point, we have too much liquidity going into the system. the economy is recovering very well. problems are isolated and should be addressed narrowly, and i hope that $120 billion a month of bond buying doesn't become a permanent situation. one of the things i am concerned about, i wonder if you could comment on the risks that we would have an increase in inflation, an increase in bond yields that would correspond to that come about without being back to full employment, what would that imply? what does that imply for the bond buying program? chair powell: what we have said about the bond buying program is that it will continue at the current pace, at least at the current pace, until we make substantial further progress towards our goals. we have also said that as we monitor that progress, we will communicate well in advance of any actual purchases. so that is what it will take for us to begin to moderate the level of purchases, substantial furthe

breakevens, but, haidi, that pickup has reversed somewhat when it comes to treasuries.easury secretary janet yellen has again pushed for president biden's relief package day before the federal reserve is set to talk about this issue. local economic policy with kathleen. we saw a preview. yellen is definitely pushing this bill. kathleen: she was fed. she could not push a policy political stance, but as a treasury secretary, it is her job to do just that. obviously, this is one area where she and joe see i die, going big on stimulus, or she would not -- where she and josie eye -- and joe see eye to eye, or she would not have gotten the job. krugman said we went too light after the great financial crisis, the great recession, in 2008, 2009, on stimulus. now, we have to go big. it has to be strong. she said regarding the $1400 stimulus checks, shouldn't they be a little more targeted? she said there are things that there we cannot see. this is why they seem to be this size, at least. let's listen to what she says. sec. yellen: the $1400 checks, of course, we do not want tho

adjusted ebitda was minus about a quarter billion dollars and this past year it was just nearly breakeven, minus $21 million, so we made a lot of improvement over last year and we actually made improvement top to bottom on our p & l from a cost base perspective so i think what the crisis was for us was a moment to get focused and a moment to get significantly more efficient and that's what you see in the numbers. liz: you know, you just used the past tense, the crisis was. i think that's interesting. obviously, it's still going on but the u.s. just celebrated the 50 millionth vaccination. people are already warming up to traveling again. how are you anticipating airbnb fits into perhaps the tour its psychology post pandemic? >> yeah, it's a great question. let me be clear. of course we're still in the midst of a crisis, but 2020 was a year for airbnb and i think that we may felt like decisions in 10 weeks and now with regards to where we are today, here is what i can say. we've done a research report on american travelers, and we asked them a few questions, and the first thing they told u

i want to hold you for a moment, because we want to talk about inflation as we see breakevens start toand bond yields start to creep higher because one of the points you make that we should all know from history is the bursting of the bubble is when the fed had to raise rates. robert kaplan from the fed said a temporary rise in inflation does not surprise the u.s. central-bank, but there is a strategist who is sounding off the selloff alarm if cpi, consumer price inflation runs too hot. we will discuss this next, the history, the comparisons, and what to expect today with stephen d. king. this is bloomberg. ♪ when you switch to xfinity mobile, you're choosing to get connected to the most reliable network nationwide, now with 5g included. discover how to save up to $300 a year with shared data starting at $15 a month, or get the lowest price for one line of unlimited. come into your local xfinity store to make the most of your mobile experience. you can shop the latest phones, bring your own device, or trade in for extra savings. stop in or book an appointment to shop safely with peace

the fact that oil is back at six dollars a barrel, that is feeding into these breakeven inflation expectationsso, certainly that rionship still holds. i think for markets, we are seeing potential signs that crude oil is overbought, but i think this is not just the demand story that could stumble on vaccine rollout. but it's largely reflective of tight supply condition. so, opec is sticking to their complaints. we are seeing u.s. and chains -- compliance. we are seeing u.s. and chinese drawdowns. and there's an excess inventory falling to the five-year average this year. so, certainly i would expect there is underpinnings to the oil price. matt: right, well you say opec is sticking to its target. that doesn't usually last long, especially when the price rises. we will see how long opec member states continue to curtail supply. takes so much for joining us. you can get her work and the work of her colleagues by typing mliv on your terminal. up next, frothy markets in europe spark. trading at a near record valuation level, and the word bubble is creeping into analyst's nose. more on this nex

deliveries finally beat breakeven targets. despite airbus ramping up production.others remain mired in the global air travel downturn. walmart fell in new york after forecasting a slowdown in sales and profits. the retailer says earnings per share will the slightly this year. it is been the set by supply problems causing shortages of some staples during the pandemic but plans to address that with advertising and e-commerce. a data software company fell sharply after a flood of short -- after a flood of shares became available. it is open for trading now. such curbs are common in traditional share offerings but less so for firms that list directly. rishaad: let's have a look at what is happening market wise. we have 35 minutes until china goes off for lunch. let's take a look at what is broadly a negative story. take a look at the met in hong kong. looking at who is down and who is up. a 1.5% decline. the losses are being led by tencent. hsbc taking some 75 points off the index. china mobile and an insurance company are the biggest winners. the australian market is

bill rates are starting to climb in the u.s., whereas the nominal increase has been driven by breakevens. key are seeing real rates rise, so that will temper any gold upside and rates would actually signal at current levels gold should be lower. yes, it is below 1800 and ounce, but it should be lower and the reason gold remains slightly bid, we are seeing frothy valuations and equity markets and investors are still searching for some kind of hedge in terms of a we do get a sharp selloff in equities. they do still want exposure to those assets. matt: you are starting to see the big bears come back. yesterday, i interviewed david tice, who used to manage the prudent bear fund. he went away, but has been drawn back in because of what he sees as real big bubble problems. laura cooper, thank you for joining us. laura cooper, mliv strategist. you can see her work by typing mliv on the bloomberg terminal. coming up, the latest on the u.s. deep-freeze keeping texans in the dark and reverberating through the markets. next, we will speak to the cfo of food retailer a whole delhi's, natalie ni

airbus fell after saying it generated almost $6 billion in the last quarter and deliveries beat breakevens seem concerned deliveries are said to remain at 20 20's depressed levels. the outlook confirms airbus and other playmakers remain mired in the air travel downturn. volkswagen jumped on speculation it may spin off porsche. sources say the w is talking to advisers on the merits of a porsche share sale. investors say traditional car producers will have to spend billions to develop electric cars to stay in the race. haidi: tesla has trimmed prices for its cheapest model three. it comes as the company fell in consumer reports. magazines closely watch the assessments. katrina leads the asia transport team and joins us now. where else around -- where else have we seen these prices being lowered and what is the strategy behind this? katrina: around the world, we have seen 13 price cuts. most recently, the u.s. and japan. earlier, there have been cuts in france and germany. in japan, the price of the model three was cut by 24%. elon musk has regularly lamented teslas are too expensive. at the