For a supercharged economy next year if we get a stimulus package. Traders are already betting on vaccine hopes. Joe, the u. S. Stock market had one of its best months in november. The s p 500 surging 11 . It feels like we are on this track to keep on hitting these lofty highs. Joe it is really extraordinary because yesterday we talked about november was an incredible month. Lots of followthrough. You e th indices in the green today. Once again, we see this speculative exuberance starting to build up. Look at this coal volume. Absolutely surging. If you look at anything today that was back to normalish, it was all highs. Chart of pull up a nordstrom are macys, romaine blackberry shares. [laughter] it is like a blast from the past. Joe anything that was old or forgotten about, it was hot today. Feels like that exuberance is starting to build. Romaine you are seeing investors come off the sidelines. Take a look at the vix because i do not know if it i do not know if the signal is. Some people say the vix is not the best measure of fear that it is known for. This general idea that there are poor structural issues going on in the Options Market that are skewing this. Youre talking about 10 straight months we have averaged over 20. The longest stretch we have seen in some time. We have not quite taken all the fear out of the market. Even some of the other measures here. You are definitely still seeing some defensive positioning. Not everyone has bought all in to this yet. Joe for more, lets bring in katie grice failed. From my perspective, and looking at the chart of options volume, it looks like exuberance. Maybe some retail. Is that the fingerprints people are saying is on some of these moves here . I think that is definitely fair to say. People are saying you are seeing some exuberance start to come back to the Options Market. There is the great chart we have been flashing. An average of 20 million contracts traded per day over the last 20 days. That is a record. The day before thanksgiving, you say it you saw a record daily total of call volume trades. You typically see. Some are stained this is starting to rhyme with what we saw in late summer when you saw this big interest in make cap tech names. Concentratedot of call buying. That is what it tends to move the stock around. Very short calls since dealers do have to hedge those. Now you are seeing a lot of call interest is still in tech stocks. Amy wualking to silverman earlier today and she told me you are seeing this exuberance start to appear in energy and Consumer Discretionary means as this rally does start to broaden out. Theline citi pointing out panic euphoria index. They are saying there is a 100 probability of losing money in the coming 12 months if you go by history. This market is not one where you should go by history. The people you are speaking to, are they saying there is inevitably going to be a pullback . At some point and you are starting to see some chatter around the fact are seeing edgers like the vix seeing chatter there they have been rising with stock. Too early to read too much into it. There is that fear that over the next 12 months, perhaps all this good news we could get in 2021 is being pulled forward and priced now. Even today when we got stimulus headlines, you saw a huge reaction in bond markets even though these negotiations have been going on for such a long time. There is a lot of optimism for the coming year already priced in. Romaine there is also the general consensus of a new cycle of Economic Growth could power us higher. Could you make sense of what we have been seeing here in the yield space . 93 basis points is not much to write home about by the idea we are starting to see some daytoday selling in treasuries seems to be a sign that people are willing to embrace risk a little bit more. Definitely what we saw in the treasury market should especially the treasury market. We have seen three to four weeks of positive vaccine news. Barely a budget in treasury yields. That changed today. It felt like a coiled spring releasing. The fact that we have not seen Much Movement today felt especially dramatic. When you think about the dynamics in the treasury market, you had seen speculators build up this huge short bit heading into the election on hopes a blue sweep might deliver the fiscal stimulus package. A lot of that pricing came out over the last few weeks. Today you had a lot of hedge funds caught flatfooted today on some meaningful progress romaine romaine stimulus. A lot of dynamics to this sort through. You always do a great job of doing that. Next, our next guest says there is a case to be made for some supercharged growth in 2021. He is taking a look at savings and saying the teams are lining up for another big economic boom. This is bloomberg. Romaine welcome back. Today, we are focused on optimism and exuberance. And how to properly pronounce the state of oregon. One data point our next guest has been looking at is checking deposit and how that lays out the potential for a supercharged economy next year. Joe this is one of the emerging pillars of the bowl case on the economy. There have been a lot of savings in part because people have not been able to spend on various services in part due to the stimulus measures. People have a lot in their checking accounts. The presumption is in the absence of further stimulus and suddenly we get a vaccine, there is a lot of dry consumption pattern. Caroline so money to spend. It is interesting to see how long the confidence remains high. For every indicator that seems to be positive, there is one that detracts paid there was a Consumer Confidence that came out last week that looked less than rosy. Concerns about the labor part that seemed to be going into contracting territory. Joe for more, lets bring in professor reggie lets bring in the professor of economics at the university of oregon. Real quickly, how do you pronounce oregon the right way . Not get any further stimulus here before a theoretical vaccine in the spring or summer, is there still a good reason to be optimistic about how fast the economy can grow in 2021 . Peopleink right now forget that wages and salaries have recovered quite nicely. We are not quite back up to the peak. That tells me there is a lot of room for spending power in this economy aside from the fiscal stimulus. The fiscal stimulus is important from a social justice perspective. We do not want to leave households in the cold if they are struggling in this economy. From a macro perspective, we should be watching the wages and salary numbers. They are telling you there is a good base of growth out there. Romaine there is a base of growth out there. I think we knew the numbers were there. I guess the question becomes, what does it take to get people to spend . If you have a job market that looks shaky, people do not have the confidence to spend. Virus,have the covid people are going to be unlikely to go and spend. What i think is going to happen is over the next couple months, we start to see these covid cases top out and start to turn back lower. That is a factor of change in behavior, tighter restrictions. That is what we have seen in past surges. We get to the downside of this virus surge, we are going to be able to get the vaccine up and running by that time. By the First Quarter of next year, i think the general direction will be toward more confidence. And so then, i think that will be one factor that starts to unleash some of the saving. More important for the nearterm is once we start to move past the surge in the virus, we will be able to start up the industries that are stagnant right now. That is leisure and hospitality. I think we are underestimating the ability of the economy to rebound year even on a side even aside on the savings issue. Caroline it feels as though the market and of course we all know the adage that the stock market is not the economy but the market is building in the fact that we will get some fiscal stimulus. Youre supporting the notion that if we do not, we will be ok in terms of the economy. Is anything you worry about that can knock us off course that could be a downward trajectory . We hear janet yellen talking about the american tragedy. She says we could have a reinforcing downturn that causes more devastation. Im fairly skeptical. I think we are in a reinforcing uptime. I do believe the next couple months are going to be somewhat hard. I am skeptical of the outlook should be as negative as that quote from janet yellen. If you look beyond the immediate consumption issue, look at the housing market. Ofre is literally months construction being sold into that market. Manufacturing is up. The employment issue seems to be more about supplyside issues than actual demand. At least in manufacturing. We have to keep an i on a lot of these factors that are building in the background and are going to be unleashed strongly early next year. See in termsl we of prices and inflation . I am thinking of a lot of these beatendown sectors of the economy. Airlines, hotels, other servicebased things. They are not going to have the very much. Expand potentially, we could have this big party where everybody wants the powder in their accounts. How do you expect the fed to navigate that if we see price pressures emerge . This is a great question and one shuai should and what we should not be ignoring is i have said it before. The idea if we live on the west coast, we want to go to hawaii in the same day. I think there is going to be a rush into this leisure and hospitality area that may overwhelm the available supply especially if there is a little damage as a result of the downtime. I do think that will put upward pressure on prices. The fed will have to navigate, what is a sustained inflationary impetus versus a temporary shock . Is i will be inclined to think of any kind of rise in inflation is temporary because the experience has been in that direction. If you rebound quickly without the savings dollars coming into play and then the savings dollars coming into play, that is a set up for a stronger inflationary picture than we have seen in decades. Romaine that brings the fed back into play. Just for a second, bring the hypothetical of congress back in here and the idea of not even fiscal stimulus but some additional fiscal spending. Whether it is part of the normal spender chores going forward, is there a normal we could have a separate debate about deficit levels, but is there a consensus that of congress were to move down the road, that stimulus effect would be enough to keep this supercharged recovery going . I think if you add in a stimulus package that is being batted around in washington, i think that would be the icing on the cake for 2021. That would add another level of confidence to the economy and spending power to the economy. Oregon. say it for us. Oregon. Joe the key thing we needed to know today. Of economics at the university of oregon. Coming up, the relationship between the couple gold ratio and the treasury yield was one strong and now looks broken. We discuss why next. This is bloomberg. Caroline we keep on talking about how much copper has been higher. Romaine keeps banging on about the copper gold ratio. Joe talks about it versus the treasury yield. What are we looking at in terms of copper gold versus 10 year yield . Joe this is like a relationship that has held for a while. About ther has taught relationship as may being a guide. We have seen the divergence lately with copper gold really in surgedg at a faster pace than the 10 year. People are questioning whether these move in tandem like they used to. Romaine i guess if you want to use the word revert to the mean that we will go back to that relationship. Joe obviously lines move together. Joining us now is a Bloomberg Opinion columnist. Before we get into the divergence, sometimes you can put two charts on a line and say there is a correlation. Why have for years these two lines been a proxy for each other . Exactly, because 10 year yields are maybe the most typical economic margin indicator of economic health. The idea of growth and inflation that is supposed to be priced into 10 year treasury yields more than basically Everything Else and copper gold is kind of the same way. You have copper, the price is based on Global Industrial growth and gold is a haven asset during bedtimes. You would expect that ratio to rise when Economic Times are good. Caroline today, yields did spike up about eight basis points. A 92 basisvels of point 10 year. Are we starting to see the bond market get to the program . I think so. Joe and i have mentioned this in a variety of forums but effectively, there is this idea that in the short term, there is going to be some pain and the fed is not going to do anything. The fed is not going to move. When you have this fiscal policy potentially entered the equation, the bridge Jerome Powell talks about, to get to the mediumterm, it the vaccine, which is the Economic Growth, when you have that shortterm effects, things start to change and the bond market starts to start thinking about maybe yields should be higher. One of the things keeping yields lower is this expectation that has been built in that the fed might expand eight maturity buying by longerterm treasuries. They will announce that at the december meeting. Otherwise, i do not see any reason why the 10year cannot test 1 for the first time in a long time to romaine going back to the famous two lines, i am curious as to whether once the fed becomes a little more active out there, whether that blows up the current trade, this divergent trade we are seeing. I am curious if you could put this into context. The last time we saw this ratio move in this way and what was happening at that time. As far as the fed is concerned, there is not an expectation the fed is going to be in play making right hates making rate hikes need time soon. It was mostly meaningful the five year treasury yield rose 6 today, effectively lucky in a rate hike of five years. That seems implausible because you heard Jerome Powell not thinking about raising rates. It is a big deal when you have the short end moves because there is this feeling that the fed is going to be locked near zero for so long. Oe that is the key thing when you see Something Like a fiveyear move we have not charted the we have a chart of the twoyear. When you start to see the fiveyear move in other words what you are seeing is the first rate hike, the left off starts to come into view. Right. It is a really open question about whether the fed will have an appetite to do this. As they have made very clear, they need to see inflation average 2 over time. Inflation spike middle of next year, end of next year, they are going to write it off as transitory. They are going to say we are coming out of the pandemic. This is not real inflation. It is going to be a question of, 2022 . See it in if they do, the fed is going to have to act. I think they are still pretty hawkish on inflation. That would be a surprise for anyone to see sustained inflation for a long period. Caroline what about yield curve control . At what point you said you can see the 10 year coming into a 1 point. What gets the feds attention when we see the backup in yields . That is a good question. I have been looking at that myself. I the things that is interesting is when you start to see these forecasts come in where people see the 10 year be a gauge of where the fed might start to feel uncomfortable, kind of like if you see things come at the tenure at 1. 3 , that would be the indication of where the fed would consider stepping in and make moves and new yield curve control. Lovely how one writes the story and on the exact day, the markets do exactly the opposite of what you have been writing about. Joe there is probably some law that says if youre going to talk about something on air, then suddenly the market moves. And the still this gap move we saw in november was so extreme with all the cyclical changes and copper and value and smallcap and for the 10 year yield to be low to be below 1 is a start nurtured romaine when you look at some of the other metals, the correlation we have been seeing has been telling a similar story. Caroline the ageold question should throughout the night the ageold question. Throughout the night, what are you going to be checking . Joe when i wake up at night and look at night and look at my phone caroline do you have a black romaine do you have a blackberry . Joe i am going to be looking at shares of blackberry and how they trade overnight. Romaine you know they shut down quibi today . Caroline it will be more than a loss. Joe Bloomberg Technology is up next. Romaine have a great evening. This is bloomberg. Emily im emily chang in san francisco, and this is Bloomberg Technology. Coming up, another monster tech deal is official. We will have details and reaction. Plus, a push for diversity and new mandates from nasdaq. The company has at least one woman and one underrepresented minority on their bo