Level. Toestors downright giddy get clarity on a biden transition and a wave of news on the covid vaccine. There is ambiguity about the unequal economy. Rise, Consumer Sentiment falls. Sentiment points pretty positively, though. Joe yeah, i mean, ok, we didnt hit record highs on the s p 500, so the fed has to cut rates. But the big picture is, yes, clearly this is a market with a lot of exuberance. Small caps, this is a part of the market that really lagged for several months even after the recovery began in the spring. They have been on a tear lately. Searching past the old record. So many names even on a day like today. Pause for the speculative euphoria. Caroline you look at the industries that have been so beaten up. Energy suddenly in the last five days absolutely killing it, no other way to describe it. It has fallen hard and fast. When it moves higher like this, it is not the almighty pull like big check, but energy financially catching some sort of break. Isgoes to show this rotation been so fast the last five days. Joe lets look at the key themes from the past week. What is your big headline . Is it just speculative fervor . It seems like perhaps this cyclical rotation just has a little bit of life to it. It is not this kind of onetime reversal paring back the tech trade. It is a new thing for me. [laughter] caroline anything for you. You have been life blogging about big tex for god knows how long, and finally you catch a break with consistent buying. Tot are people talking you about what is needed to sustain that . Every few days we get back in hopes and we might get the vaccine hopes and then we might get the gut check after thanksgiving and everyone traveling. Kriti absolute. Stocks get very excited very quickly and very depressed very quickly. You saw it earlier this year as well in june, in september with the tech correction. Why is this time different . The answer for me is looking across to how oil is doing. How some of these other Asset Classes that have more to do with the underlying economy in real time, how are those assets doing . Uic wti break out of its trade you are seeing wti break out of its trading range. 45 a barrel for the second day in a row. Joe i think it was early on in november, the first couple of trading days after the positive vaccine news, when we jokedi joked anyway the two days of the value outperform is here. Now it is getting sustained. Not just two days, not just a week, it is basically the entire month of november, it looks like. Are people optimistic that there is more room to run on this rotation . Kriti he has been a mixed picture when we talk about that. When we saw the Pfizer Vaccine we will go by companies because there are so many when we sawcine is the major rally and the first date you saw people trade after the election and pricing in the biden wi as well. Ncoming into moderna monday, you saw the risk assets coming back fullcircle. And then use with the you saw with the madura monday the vaccine outperform, now we have three vaccine candidates. It is cyclicals with tech, not a tradeoff, which is a significant dispersion, significant disclaimer to make. But you are also seeing oil rally, copper rally, even the aussie dollar rally. Caroline pfizer, o moderna, astra. Your perspective in terms of what the dollar is doing . It seems like the oil moves and the copper moves depend on the underlying currency. Kriti absolutely come on the dollar index is dropping to the which isril 2018, significant to me because it is not just retracing the gains you have seen this year. You have seen throughout those tradewar tensions were you saw the dollar bid really explode and the dollar come back fullcircle. That gives investors a little more incentive to hop in the rally. You want to see if the rally continues and how much of that is the Global Investor or how much is coming from year. Joe 10year yields still not doing very much, even with all the riskon vibe, below 9 . They are notests going to do anything if anything, they make depressive further. Kriti absolutely, and we were expecting rates to get close to the 1 mark, in line with cyclical optimism. You could see that happen. It depends on how quickly the momentum runs. The biggest nearterm risk you are going to see is Economic Data. We saw a taste of it from initial jobless claims hitting a fiveweek high, not many sense of actual inflation, and of course, personal income taking a bit of a hit as well, even though consumption stayed about the same. Not great data for the average american. On the other hand we see this market rally increase. That could push up the benchmark rate. Pta, you caniti gu spend enough time actually writing up these market moves. Thank you very much indeed. We are going to be discussing what secretary of the treasury mnuchin is doing in terms of the Federal Reserve and the pandemic really funds out of yellens reach. And next guest says that mnuchins moves violate the cares act. This is bloomberg. Caroline today we are focused on if the recent market euphoria is misplaced. Investors believe there is a path to a new round of stimulus, the fact that janet yellen may head of the treasury. Talks last week and the shop removed by secretary mnuchin. Joe this is an interesting thing in the back rent, mnuchin pulling the plug on these facilities not in use. From one of the managers of the cares program saying this is hamhanded to undermine the biden administration. The good news it is illegal. The fed should not go along with this attempt at sabotage and retain the cares act funds it already has. Caroline i mean, strong words, and pretty strong words from the former Federal Reserve vice chair could he is a democrat, but this is what he had to say about mnuchin yesterday. Item number one on the agenda right now is to try as best he can the new secretary of the treasury, that is not until january 20 to undo as best they can they cannot literally undo the absolutely nasty, mean, destructive actions of secretary mnuchin in trying to destroy the emergency Lending Facility. Caroline nasty, mean. He didnt hold back. Joe not at all. For more on this, lets bring in skanda amarnat, employee america director of research analysis. Mnuchinsis motivation we heard the commentary about alan blinder about how it was mean and nasty. And then that the nature of it is even legal under the cares act come and you argue that it is not. With the news we got this week i think was yesterday, or two days ago, its not even legal. What specifically about this in your view could be reversed . Skanda thanks for having me on. The transfer that secretary mnuchin announced, or a spokesperson announced, from the Exchange Stabilization fund, the funds allocated toward these specialpurpose vehicles for lending that the fed was managing, secretary mnuchin has called this back and is trying to make the claim that i can move this money into what is called the treasury general fund. Once it enters their come in needs new approval from congress. The problem with this reasoning is it actually goes against the very set of purposes permissible for how secretary mnuchin can use the funds that were appropriated to him. He cannot just pay this back to the general fund whenever he wants. There is a very clear timeline. The timeline specifies section 4027 of the cares act, that on january 1, 2026, a good five years from now, is when the money is supposed to go back to the general fund, at which point there will need to be a new round of authorization needed. But before then, there are certain ways that the treasury can use the funds that congress authorized in the cares act. That optionality still does remain with the next treasury secretary. Not quite as expansive after january 1, 2021, but the notion that it is terminated or needs approval is not rooted in any basis of the cares act itself. Caroline could this get bound up in legality . Even if there is this opportunity, small as it might be, for treasury secretary janet yellen to make the most of it, could she faced the political waratwrath of the republicans . Skanda youve already seen senator to meetwillie sen se statement,elease a not based on anything in the cares act. I was at the table, therefore this is what the cares act means sort of a bizarro, not a very conservative view of how to interpret the law, you just going to make up what the purposes are supposed to be post hoc because donald trump is not going to be the president anymore, these powers go away. It is quite reckless, i would argue. It does not tie the hands of the next treasury secretary, because mnuchin is doing something that would be in violation of the cares act by moving this to the general fund. There are internal processes available to investigate what the heck is going on here in terms of why this has happened, and the transfers are made illegally or incorrectly, there are ways for the treasury to get funding and to take necessary action to reverse course. The notion that this is some sort of there was only one way you can go, go back to the general fund, is not quite right either. Takeas you described the of mnuchin and sender to senator toomey, is there ambiguity in your view between the literal wording of what the law says and wha this is what they meant . Skanda so i will lay this out in terms of timeline. There are certain things that mnuchin is allowed to do and not allege a do with the 454 billion. 54plus. Tually 4 he could invest the equity stake in the Lending Program to the facility. This isdiscretion being done through the stabilization fund. This is a way for the treasury secretary make these investments. , ands room to operate january 1, 2021, he cannot make new loan guarantees. But there will be existing investments january 1, 2021. There will be Equity Capital between all of these fed facilities and special purpose vehicles. That Equity Capital will exist and investments will be outstanding. The cares act allows them to at least modify or otherwise amend them. There are groups that toggle with the existing investments, and that goes away in 2021. There is a specific set of things of what qualifies as restructuring. I think there is a little bit of ambiguity there but it is pretty expansive also. Caroline the authority has not been deployed efficiently thus far. If we are going to still be able to use these, how do we make sure that the municipalities and the Companies Get the access . So we have heard from reporting about how the mainstream Lending Program, part of the reason the terms were not particularly attractive for businesses, ended up being kind of a disappointment relative to mediumsize businesses, was that the treasury was particularly interested in turning a profit over actually sending credit. That is the kind of policy discretion that would still be available to help make the Lending Facility make sure there is broader usage, at least for those who it was intended for, to feel like it delivered are benefits and served as fundamental lending valve for businesses that still need credit. Joe really appreciate it. It is fascinating because it is pretty clear this story is not over, just in terms of the legality and the structure of these programs going forward. Thank you for your time, skanda america employ director of analysis. As the turmoil continues, we look to main street and who needs the money most. We discussed with david wilcox of the Peterson Institute. This is bloomberg. Caroline we know there has been plenty of Economic Data out today and we want to deig into what is becoming ever more evident in the unequalness of the recovery. The Peterson Institute recently put out a study on fixing the inequalities in the economy. One part of the study that jumped out to meet involves economic mobility and the lack thereof in the United States is just stark. You see that in denmark, if you have a poor father, you still have a 22 chance of being among the wealthiest. The u. S. , if you have a poor father, the chances of becoming wealthy are dismal, worse than most countries. That really stopped me, joe, and i thought it was a great chart. Joe extraordinary, another dimension of inequality. Joining us is Peterson Institute for International Finance senior fellow david wilcox, previously a Senior Advisor to the past three fed chairs. That chart underscores inequality, talk about a fair amount, there are so many dimensions to economic mobility and the likelihood of changing through generations. Talk to us about your work. David let me first, if i may briefly on that chart and what it shows. The decline in mobility is really a seachange in what represents a core part of the american story. We have prided ourselves for workations that if you hard and applied yourself and got a good education, you had a great chance to be better off economically than your parents. What the chart shows is although that was true for many years, it is much less true today than it was. That really is a profound change in the economic environment. One other fact that doesnt come out from that chart is that of course the opportunity toward a more secure Economic Future was always more available to those who were privileged, to whites, then it was to africanamericans or other people of color. So there is a tremendous amount of work to be done in this country, never more than now in the midst of this pandemic induced collapse. Caroline the American Dream is what many had, and you see it being spoken about more and more, the viciousness and the speed with which this slowdown occurred, and now the recovery begins. Shines a light on the inequality that we all knew, really, but it becomes that much more evident, so much so that we have president elect biden talking about the kshaped economy. To have the lexicon of shapes and letters in the vocabulary of the president elect is quite something. Do you think with the labor market economists coming into the treasury, what sort of focus we might see janet yellen and president elect biden but upon this . David i think janet yellen is uniquely well positioned to serve as the next secretary of the treasury. She has brought a lifelong passion to taking the jewels of government and using them for the betterment tools of government and using them for the betterment of peoples lives. She has never lost sight of the purpose of using the tools of government to ensure that the economy works in the most broadbased manner for inclusion for all and creating the widest possible circle of opportunity. I have known janet for many years and she never once has evinced to me a sense of satisfaction with the way things are. She is always striving to make things better. Joe one of the things that we saw we talk about ameliorating inequality, we talk about the tax code and other fiscal policy, other investments we can make into the workforce. One of the things we saw at the end of the last expansion prior to the virusinduced recession was that just a tight labor market is good, a tight labor market means greater wage growth, it means that segments of the population that dont typically enjoy the fruits of the boom started to be brought in. How much can be done on inequality, particularly by making the focus of robust economy hotng the and getting us back to something reasonably full employment . David it is a key insight. It goes back many decades. Goes to a renowned macro nomist who coined the term who coined, really, the focus on a hot economy and the benefits it brings to groups that are traditionally marginalized in the labor market. We saw that playing out in a wonderful way for the end of the most recent expansion. What we saw were narrowing gaps between africanamericans and whites in terms of the unemployment rates narrowing gaps between hispanics and whites and unemployment rates. Yes, sir . Caroline im very sorry we have to cut you off. Fascinating conversation. This is bloomberg. Taylor i am taylor riggs come in for emily chang. This is bloomberg technology. Salesforce considers buying slack, a deal that could be announced as soon as this week. Slack shares surged on the news. Via cloudd Company Company comeo n, taylor. It beats estimates. We dit