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[Bloomberg]( Follow Us [Get the newsletter]( A bond market test, rebound in tech, and a U.S.-led global recovery. Auctions While the Treasury market is calm this morning with the yield on the 10-year instrument holding below 1.55%, a series of auctions this week could test sentiment. Low demand at a [seven-year bond sale last month]( was a catalyst for driving yields higher, so today's auction of [$58 billion three-year notes]( will be closely watched for faltering demand. There are $38 billion of 10-year bonds slated for sale tomorrow and $24 billion of the 30-year instrument on Thursday. Analysts still see the yield on the 10-year Treasury [hitting 2%]( on a rapid repricing back to a normal economy. Tech shares  Speaking of repricing, this morning is seeing a bounce in tech shares after [yesterday's selloff]( sent the Nasdaq 100 Index down 11% from its Feb. 12 record. Futures on the index [have gained more than 2%](, while Tesla is up more than 4% in premarket trading. Retail investor favorite GameStop Corp. is surging, with the stock set to open [well north of $200](. In other volatility news, not even state-backed fund buying was enough to halt a [drop Chinese stocks](. Paid Post The Next Generation of FinTech  While paying for goods and services with a smartphone is FinTech’s most recognizable use, its potential extends far beyond point-of-sale transactions. The emergence of Buy Now Pay Later (BNPL) services and digital wallets for cryptocurrencies are just two examples of [how FinTech is becoming more enmeshed]( in the financial system. [Global X ETFs]( Growth race OECD forecasts suggest the global economy will rise above pre-pandemic levels [by the middle of this year](, but that the recovery will be uneven. The expansion will be fastest in the U.S. where President Joe Biden's stimulus plan will [help turbocharge the recovery](. In Europe, where measures to boost output [have been less ambitious](, the forecast is for slower growth, with the OECD lowering the outlook for France and Italy for this year. The Paris-based organization also warned that accommodative policies should [not be tightened too quickly]( as happened in the wake of the global financial crisis. Markets rise The surge in tech stocks and a weaker dollar are helping push global equity gauges higher. Overnight the MSCI Asia Pacific Index added 0.5% while Japan's Topix index closed 1.2% higher. In Europe, the Stoxx 600 Index had gained 0.5% by 5:50 a.m. Eastern Time with utility and retail stocks performing well. S&P 500 futures pointed to a [strong start to the session](, oil was at [$65.80 a barrel]( and gold was back over $1,700 an ounce. Coming up... The Senate Banking Committee holds a hearing on retail investing, while in the House the debate on the [stimulus bill begins](. The U.S. WASDE report for March is at 12:00 p.m. and the closely watched auction of 3-year Treasuries is at 1:00 p.m. In Brazil, markets were hit yesterday by the prospect of the [return of former President Luiz Inacio Lula da Silva]( after his convictions were annulled. He plans to hold a press conference later today. Jeffrey Gundlach holds a webcast. What we've been reading This is what's caught our eye over the last 24 hours. - Oil rally challenges [world's economic recovery](. - Greensill, Gupta and the [fragile tower of money and metal](. - U.S. airline flyers top [1 million-a-day pace](, a pandemic rarity. - Bitcoin hits highest level in two weeks as [big-money bets]( flow. - Cathie Wood keeps "[eye on the prize](" after rotation pummels Ark ETF. - Gates-backed startup joins race to [make green hydrogen cheaper](. - Black holes [may not be black, or holes](. And finally, here’s what Joe's interested in this morning There's a popular story that goes like this: In the wake of the Great Financial Crisis, the Fed did all this ultra-loose monetary policy and money printing, and this cash went straight into speculative assets -- fueling a massive boom in things like tech startups, FANGs, Uber, WeWork and Airbnb. However the story is wrong mechanically, theoretically and empirically. If anything, what drove the tech boom was overly tight monetary and fiscal policies. To start, let's talk mechanics for just one second. By now you've heard that when the Fed "prints money" there's no new cash actually entering the economy. QE is an asset swap. Reserves are created, but Treasuries are pulled out of the market and brought onto the Fed's balance sheet. The net wealth position of the private sector is unchanged. So right off the bat, there's no new money brought into existence that could rain down upon Silicon Valley. The mechanics of money creation don't work like that. It is true, to be fair, that monetary stimulus can contribute to positive risk appetite. And risk appetite can help catalyze investment into speculative assets. But speculative inclination to invest is a complicated thing and there's no one policy that can just make it happen. So the link between investment and the Fed isn't 100% non-existent. However it works nothing like the popular "printed money goes into Adam Neumann's pocket" narrative that's become conventional wisdom. What's clear now though is that this boom in tech, which has lasted longer than a decade, has been fueled by tight money, rather than loose money. First of all, how can we establish that money has, in fact, been tight? It turns out that basically any analytical framework you use will tell you that. For one thing, inflation has been mild and below target for years and years. Furthermore unemployment has been elevated, and persistently below potential. Meanwhile, rates at the long end of the curve have been extremely low over the last decade. What's that? Long end rates mean policy has been tight? Is this some weird MMT thing? [Here's Milton Friedman in 1997 in the Wall Street Journal](: Initially, higher monetary growth would reduce short-term interest rates even further. However, as the economy revives, interest rates would start to rise. That is the standard pattern and explains why it is so misleading to judge monetary policy by interest rates. Low interest rates are generally a sign that money has been tight, as in Japan; high interest rates, that money has been easy. My emphasis added. Given low inflation, poor employment and low long-end interest rates, it's clear that policy has been tight, not loose, by basically anyone's analytical framework. And it's these tight conditions that have fueled the Silicon Valley boom. It's not complicated. When growth is scarce throughout the economy, it stands to reason that investors will pay more for companies that BYOG (Bring Your Own Growth), which aren't dependent on GDP. And so you get your high valuations on software and FANGs and Teslas and Ubers. In fact that last one, Uber, represents a business model that was specifically built for a tight money period, when labor was abundant, but capital was scarce. In fact many of the hottest gig economy, delivery-type startups have been predicated on abundant, cheap labor. The exact opposite of overheating. This above characterization of the interplay between monetary policy and tech isn't theoretical. [In D.C. right now we're finally getting a real policy pivot](. It's all systems go on the fiscal expansion. And the Fed is now committed to not raising rates until we get back to full employment, committing to letting inflation run warm. And now we're getting those higher long-end rates -- remember the Milton Friedman quote -- policy is loosening. And it's in this new policy stance that speculative tech has been getting hammered and underperforming badly (see ARKK, QQQ, SPAK etc.). With policymakers pulling out all the stops to boost GDP, there just isn't much reason to pay out the nose for growth anymore. Growth is not a scarce asset. If you've spent any time following Silicon Valley people on Twitter over the last year, you'll notice more and more of them sound like goldbugs, posting charts of the M2 Money Supply or the Fed Balance Sheet, or talking about inflation or the Chapwood Index to warn about the dangers of Fed largesse. And at first I thought this was just about them shilling cryptocurrencies and establishing a narrative around their Ethereum and Bitcoin bags. And that's a big part of it. But it's also increasingly clear that a truly hot economy removes Silicon Valley's monopoly on growth and the fat valuations that come along with it. So of course, many of them don't want the Fed and Congress to really let it rip. Joe Weisenthal is an editor at Bloomberg. Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close.  Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](.  You received this message because you are subscribed to Bloomberg's Five Things newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022