>> we're looking at the did the, the data looks strong. >> the data looks to the upside. >> even if the economy continues to do well, it is the deceleration. >> it is not easy to get inflation down that quickly. it is going to take more time. >> as we get into this year, we are going to see what kind of economy we have. >> this is "bloomberg surveillance" with with several voids, jonathan ferro, and and reorder. jonathan: good morning, with

lisa abramowicz and annmarie hordern, i'm jonathan ferro. three consecutive all-time highs on this and be. trump on the cusp of clinching the gop denomination -- gop nomination. for nikki haley, 43.2. for trump, 54.5. lisa: this is completely expected. everyone expected trump to probably win. the question now is does nikki haley dropouts given she had a pretty victorious losing speech well rehearsed trump's angry winning speech. what is next if she has no path to be the nominee? annmarie: she said new hampshire is the first in the nation, not the last. she has some money. if you look at the south: a polls -- south carolina polls, it looks like she might be immersed in her home state. but she might want to hang around if for some reason trump

cannot run in november. lisa: this is one of the most interesting aspects, hope and dream is something other than an matchup between trump and biden. with more than three quarters of the vote in, more than two in five voters voted for somebody besides biden and trump. annmarie: they don't want that matchup. joe biden is going to say what his father always told him, don't compare yourself to the almighty. compare me to the alternative. that is the hope, people will get into that booth and hold their nose and vote for joe biden. jonathan: is that the pit from joe biden? -- the pitch from joe biden? annmarie: not publicly. jonathan: right now, markets don't care. equity futures are positive on s&p 500. check out shares on netflix, choosing the move higher after hours. the best quarter of sub growth since the pandemic, the beach

projections on every region. the password clampdown is paying off come up by 9.6%. lisa: people are wondering if there is anything under this rally we are seeing in the magnificent seven. here is the thing, the profits are there. they are able to deliver. netflix, whether it is they have critical mass and people are tied to their phones, the fact that they were able to add the greatest number of subscribers when all of us were looking for any screen to put our kids onto. annmarie: you know what i think is under it? david beckham. that documentary came out. even my parents watched it and my mom said i am going to get in netflix account. she is not trying password sharing. that documentary is fantastic. jonathan: that is up 9% this morning according to david beckham. equity futures look like this,

positive by 21 points on the s&p. yields coming in three basis points. on a 10 year in america, for 10 -- yields are up in japan, rate hikes all over again. lisa: people are expecting them to make that move and we heard that with you think of japan indicating they are prepared to shift some of their strategy. people have been expecting this it long time. the common feeling is april, if they abandon negative rate policy. maybe you will get some action. jonathan: coming up in this program, chris marangi, kailey leinz on trump's victory, and mandeep singh on tech earnings. we begin with our top story, the stock market rally continues with tektronix underway. netflix posting its biggest subscriber games that the pandemic. chris marangi saying the

pressure is right for media to merge and compete. they marched from analog to digital continues, the media infrastructure will never be as favorable in -- as in decades past. chris merengue joins us now. is it going to be bad for industry and consumers? chris: i don't know how it shakes off about consumers, we will need consolidation. netflix shows that scales matters. netflix is now anti-incumbent, clearly the global leader in screaming -- in streaming. there able to add subscribers. the rest of the industry are going to need to follow. lisa: does this mean you expect netflix to acquire someone? chris: they demanded to sit with this said yesterday they don't intend to acquire any linear programming companies. they're going to add content. it is the letter companies that need to rationalize the mess of streaming services we have. that can happen through

consolidation, also through partnerships. lisa: let's break this down. where do you lean in and where dealing out? how do you play this if disruption could be profitable? chris: we like the ip owners, those who own the content themselves. those are hard to find. one place we found that are in sports, demonstrated by the w w e deal. this is content people want to watch that advertisers will pay for. second, we are looking for undervalued media companies. warner bros. discovery or even paramount. netflix today has the entire enterprise value of paramount which is $22 billion. jonathan: can we get to sports? it is tough for me to come base when they have to release the asset and they don't own it. espn is a struggle, disney doesn't know what to do with it. what does that look like in years to come?

they paper these assets, the note on them. do we get to the point where we reach the limit of the price of that asset? chris: netflix paying $5 billion over five years for wwe is an indication that sports rights are going to go up. you have tech companies that are going to be players. mlb has a vision of owning some of the streaming services themselves, perhaps the nfl or somebody else gets involved in espn. i would expect the big tech dollars to start flowing. lisa: there is no way the w wb is a sport -- and the wwe is a sport. 20 have a predetermined outcome, that is independent. how do you understand whether you are investing in the company for quality, content, everybody

was worried about too much content spending, versus the winner take all this is? chris: it all comes down to price and what you pay, netflix is a phenomenal company. they're going to have two minutes growth. -- have two minutes growth. -- tremendous growth. for someone like us, that is what you do. warner bros. and paramount have their challenges. there drink five or six times, the mesh editor -- annmarie: will we see more of sports teams or venues take on the distribution like msg? and then it goes to the fact that this with steam needs to be popular for that to work. chris: you are seeing signs of that in baseball and basketball, diamond sports. amazon is investing and recapitalizing.

the teams are assertively interested in viewership and gathering eyeballs and making money. perhaps that means taking ownership stake in the media rates. annmarie: could netflix be one of those destinations? chris: netflix talked about being honest with adjacent properties, not sports properties. i think the put that in there to note they are not good to be a bidder on the next big property which is the nba. jonathan: are we building a model that consumers dislike and company struggle to make money with? chris: our consumers happy today? there is more content than ever before. jonathan: i will speak for myself, i am dissatisfied i have eight different apps. chris: the industry is aware of that and it think there are ways to fix it including consolidating streaming services and bundling streaming services. we have a re-aggregation led by kim companies were part of your service you get a box that puts

all the stuff together. jonathan: back to the future. lisa: what is the new model? the old model. that is what everyone has been saying. jonathan: any idea of what the price point on that looks like? chris: probably cheaper than the big bundle but not as cheap as you think it would be. jonathan: the broadband providers are to be the winners? chris: you need broadband to do any of this. in most of the country that was the cable company. over the last 18 months or so you have seen wireless take share. comcast reports tomorrow, we will see how many subscribers they lose. jonathan: netflix this morning up big time in the premarket. chris will be sticking with this. there equity on the s&p, positive. here is your bloomberg brief. >> former president donald trump has taken a decisive win in the new hampshire primary altar guarantee a rematch with president joe biden.

trumped took 55% of gop primary votes with 75% of ballots counted. comfortably beating his only remaining challenger, nikki haley. the former yuan investor has vowed to stay in the race and now looks to her home state of south carolina. asml saw orders more than triple in the fourth quarter. the demand for products for the most viable tech company increased. the ceo emphasizing the company's role in the ai frenzy. >> one thing is a short, it is going to need massive amounts of data storage. without our technology, that is not going to happen. it is very clear it is going to be a big driver for our business and the business of our customers.

>> private-sector activity contracted for and is month with germany and france in particular seeing the results. the data comes a week before the euro area is set to report gdp which will likely show recession. u.k. pmi data shows inflation worries have returned thanks to the conflict in the red sea. private-sector firms reported the sharpest job in costs in five months. that is your bloomberg brief. jonathan: coming up next, trump cruising towards a rematch with president biden. >> this is not your typical their speech but let's not have someone take a victory when she had a bad night. >> this race is far from over. there are dozens of states left to go. jonathan: that is coming up next on the program. live from new york city, good morning. ♪

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jonathan: here is the press section on the s&p, higher by .5% on a four day winning streak, the lowest winning streak of the year sofi. yields lower by two basis points. under surveillance, trump cruising towards a rematch with president biden.

mr. trump: we won new hampshire three times now. let's not have somebody take a victory when she had a very bad night. >> new hampshire is the first in the nation, not the last in the nation. this race is far from over, there are dozens of states left to go. jonathan: the former president defeating nikki haley in the primary. trump claiming victory by 11 points with over 90% of ballots counted. the haley trailing over 30 points in polls in her home state of south carolina next month. annmarie: it is pretty rough when you look at this, trump is averaging 62.2%. nikki haley is averaging 25% heading into what she said was her sweet home state of south carolina. you look at the endorsements, whether it is the governor, lawmakers or statewide

officials, donald trump has 13 and his cap come she has one. jonathan: kailey leinz joins us now. what is the argument for nikki haley to stay in the race? kailey: south carolina is her home state which she intends to put up a good fight there. looking beyond that south carolina primary, we should all keep in mind 11 of those 16 states and territories that foot on that day have open or semi-open primaries, the thinking being she could attract independent or former democratic votes. the thing is in new hampshire last night where the base of voters is more independent, 40% of those registered were undeclared voters, she could not get it done. how could she get it done in these other states in light of what could be pressure to drop out of this race not just from the mag basea.

even establishment republicans are lining up to say we should follow lend behind the presumptive nominee, donald trump. big leaders in the senate, for example, and the other endorsements that trump has gotten from others in this race like senator tim scott. a lot of is good and on whether or not big-money donors continue to back her. a big fundraiser is going to be had for nikki haley held by the likes of stanley druckenmiller. a lot of these wall street donors has to been backing her. the question is will they continue to throw good money after potentially bad if she continues to languish behind trump? annmarie: we will have to see if the donor class continues to sure her up. as we look to this general election, the one that no american really wants according to the polls, the biden campaign issued a statement that seemingly felt like they were

eager for it to be trump. kailey: that is what we thought all along. of all of these different candidates, now there are only two left, trump was the preferred outcome for the biden campaign. biden has beaten before. he did so in 2020 and the campaign believes he has the ability to do it again. biden put out a statement saying it is clear trump is going to be the nominee. he said his message is that the stakes cannot be higher. our democracy and personal freedoms are at stake and that is how he is trying to characterize this race, something fundamentally about the future of american democracy and the threat he says donald trump was is to it. in the states that could decide this election, when looking at the electoral college is the swing states that are going to matter and most if not all of those, trump is beating biden in them. it is a long way to go, this would be one of the longest general elections in history if

it does begin now. devote is more than nine months away -- the vote is more than nine months away but biden is hoping it is going to be rematch with trump. lisa: there is a lot going on in washington, d.c.. there is a question of if we are going to get budgets passed, funding to some of our allies. i am curious what the increasing acrimony with respect to this race but also in this house at the senate -- and the senate, how donald trump coming the leader now plays into that. kailey: he already has been the de facto leader of the republican party as he has remained not just a former president but the leader in the -- and the presumptive front-runner. the issue in congress that translates to about this is the issue of border security. in addition to the economy being cap for voters, the border was top of might as well.

white house and senate negotiators are working on a package to try to tie ukraine filing to the border security deal. question is what the fate of that is meant to be, whether or not lawmakers like mike johnson who talks to trump are going to pass a bill that could potentially be a political win for biden, north he has a problem at the southern border. he does not poll well on that issue. if we see legislation trying to address that issue, it could play in his favor. as this election draws closer, it could be difficult for republicans to beheading the white house those political wins. he posted on true socialist week that house republicans should only accept a perfect border deal. we will see if he continues to put the pressure on to see if the ultimate get this done. -- if you ultimately get this done. jonathan: still with us at the table, chris merengue.

what do you do with political risk in 2024? chris: the question is when does wall street care? in 2020, wall street did not care until election night. there is the conduct of the election, are we going to have a consistent speech the day after -- a concession speech the day after, and what is the policy risk. is policy going to change? if you are an investment banker sitting in the board room, you are wondering if i want to do a deal now -- a deal, do i do it now or wait for a more friendly trump administration? fees are thinks we are thinking about. wall street has enough on its plate. jonathan: let's go through some scenario analysis. that night at 2016, i was on air and he started to see futures bounce. future certitude bouts on the speech what he started to talk about infrastructure spending.

we started to focus on the policy and not the volatility limit -- the volatility that comes with a man. is it different this time around? chris: we have two known qualities if they are the presumptive nominees. the knee-jerk reaction from the market will be positive with trump knowing he will bring progrowth and tax policies. it will be more complicated but i'm sure we get to that in november. that is like a january event. lisa: i am curious if you expect dealmaking to accelerate or decelerate because of the uncertainty. chris: we have seen a lot of deals across a wide variety of industries these first few weeks of the year. they tend to be small. some of that is productive and as the markets have loosened up a little bit and we have more certainty on inflation and cost. that backlog has to clear.

i don't know that anyone is going to attempt a big deal before the election. if you are it today, it is probably not going to get approved in time for the election to occur. annmarie: investors may shrug off political risk, what about geopolitical risk? every single day there is an issue in the red sea and at some point this is feeding into corporate buyer months -- corporate bottom lines. chris: president trump suggests he would settle ukraine the day after you get selected. we can all question whether that is true and what the impact would be. jonathan: we hope that is that easy. i suspect it is not. chris: there is a lot of focus on the middle east because it is the source of a lot of the world's energy and he red sea is an important trade route. this is going to increase costs and supply chain costs which are now only normalizing. jonathan: thank you for being

with us. just want to check in archers on netflix, mac percent to 10% this morning following blowout numbers, up by 9.9%. plenty of reaction on the street. mark mahaney saying q4 profits were better then already high expectations, outperforming the stock. the price target, 600 from 500. we are 540.80 this morning. lisa: people are going to pay rather than have the service stripped from them and that was the unknown. people thought there would be a cancellation stash a lot of cancellations with the password crackdowns. a lot of people unhappy. jonathan ferro has to pay for 14 services and my to groep about it, but they are ultimately paying for it. jonathan: there are people who don't want to touch any of this, people who sign up & out, people like me, the idiots who provide all of the money to them and

forget about them, never cancel and use them once the quarter. lisa: i hate signing up for a service because i feel there is no way i am going to have the patience to fight had to cancel it. jonathan: i signed up for paramount just to much italian football. i cannot remedy less, watch the game. lisa: i am also on paramount because jonathan told me this is worth the fee and have not canceled it. jonathan: i should take royalties from paramount. coming up, technique's underway with tesla and ibm reporting after the bell -- take is -- tech's underway with tesla and ibm reporting after the bell. you are watching "bloomberg surveillance." ♪

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jonathan: four days of gains as of the five longest winning streak since the end of december. equity futures look like this, positive. we had some weight to it, up by 4% on the s&p. the nasdaq up by .6%. we will talk about netflix later. at&t just dropping. lisa: chris talking about how cable providers are to take all, if seeing a lower earnings per share expected. talking about revenue growth on

the broadbent side of that, 7%. going forward, i'm curious what we see them start to consolidate some of the sexier parts of the business like cable and content rather than just pay my bill for the wireless and broadbent. is that going to transpire and elevated them to the next post utility existence? jonathan: stock is down in the premarket. bets 10 to the bond market. yields coming in a full four or five basis points on the 10 year. -- a two year, 10 year, down to 4.1051 . yields here in america are lower. lisa: japan is in a world of their own. jim bullard, the former head of thyssenkrupp's federal reserve said he could see the fed cutting in march and talked about cutting rates more aggressively because there was a window before conversion gets down to 4%.

a real push-pull and you are seeing market bets come up a touch. jonathan: i am pleased about the difference between the boj and the federal reserve. we are talking rate cut the b -- at the federal reserve and hikes in the boj. lisa: they like to dance to their music. jonathan: is the fed -- lisa: is the fed giving them a window to hike rates that they want to block their currency that it could offset some of the gains? a lot of people are expecting this, the question is how they're going to do it in a less destructive way. two years ago we said this was going to be destructive for the markets. it has not been at now people are expecting in april abandonment. jonathan: i think i called it operation ostrich, head in the sand. it has worked out so far. a week away from a federal reserve decision. 24 hours away from an ecb

decision. . the fx market in the euro, positive by .3%. former president donald trump taking another step toward a rematch with president biden. trump easily defeating nikki haley in new hampshire posting back-to-back wins after iowa. nikki haley vowing to stay in the race but options for her campaign are running out. amh, what jumps out to you? annmarie: it was not as bad for nikki haley is the polls were expecting but he is consolidating his lead. iowa and new hampshire and it looks like it is going to be a general direction -- general election rematch, traverses by the. lisa: what is the point of nikki haley staying in? is this basically a play that if trump's legal issues become

onerous, she can somehow take the helm? the other question is dissent among both parties. what happens if it is the unpopular election? we just heard the people are not expected to do big deals because how do you do a deal that is not going to close any uncertain election? jonathan: and you might get a regulator in the next 12 months. i think we are learning something. where the independents our lending and what this could mean for the president on the national stage? annmarie: independents were leaning towards nikki haley so this shows that trump has a problem when it comes to the general election. i was caught by the statement by the biden administration. donald trump will face the only person he was beaten at the ballot box. there only two people you have ever faced off, trump in a general election and that was clinton and biden. that is their pitch. jonathan: facts are not popular in politics.

plastered to china and get some facts at of china, 30's making any attempt to boost the economy. residual bank announced a cut by 50 basis points. it becomes official next month in an attempt to free up lending. china's economy with a rescue package as growth worries continue. this is becoming an issue, we are talking about the equity market, the central bank sang we would credit supply into next month. you get this feeling that this is just the beginning of it. lisa: i don't understand what the goal is. by the trying to ignite lending? the problem is loans. are they trying to encourage international investors to come in? the basically banned certain transactions in onshore funds that had offshore accounts. at what point does this have the opposite effect of attracting international flows if policy is

that uncertain and not according to the u.s. version of a capitalistic economy? jonathan: with the living said capital goes to where it is best and right now that is in netflix stock. surging, trading in free-market trading after reporting its best quarter of growth since the pandemic, over 13 million customers signed up thanks to a cheaper version and a crackdown on password sharing. morning that more price hikes on the way sang "as we invest in and improve netflix, we will occasionally ask members to pay extra to reflect those improvements." lisa: it is basically the new tax of capitalism. when you sign up for something and is automatically paid, you don't think about it. today could jack up the price two dollars a month and you don't think about it. i wonder how much this is part of the dynamic, we will ask our customers to pay more.

they are going to kick up the price and everybody's would you pay that. jonathan: does sound like a charity. you're are enjoying the product so much. annmarie: it is not bad if they at least have good content. content is king when it comes to netflix. they have a huge library and people keep on to netflix versus all of the others. lisa: that is the key question, when do they drop the others given the fact that at some point it is going to become owners -- become onerous. jonathan: my bible is more than the cable bundle. i am going to have a spring clean. lisa: what are you going to get rid of? jonathan: apple if we still have it. paramount. maybe that can go. high get the disney espn bundle -- hulu gives me the disney and espn bundle but it is expensive. i am paying a fortune for that

and you pay for broadband connection. cable is all in with broadband and costs $121? $150? lisa: i probably pay stupid amounts i need to go through, too. jonathan: tesla and ibm after the bell, to the looking to deliver after losing pace among the magnificent seven. mandeep singh joins us now. it has been a struggle for about the ev's. we heard the news from hurts, we heard from ford if you does ago -- a few days ago. to visit a struggle from intel or is it different? mandeep: it is all about expectations. what netflix did was a case of low expectations and then pulling the levers. in the case of tesla, i would

argue expectations have come down but clearly a lot is pinned on hope around ai and what they can do around robotaxis. they have not given any concrete today to points on how they plan to monetize that business except to charge around $12,000 you have to pay. that is also a low install base of consumers, the tesla users who have updated to that. that is where topline growth continues to be higher than the other oems. the evaluation depends on the software. lisa: elon musk came out with a tweet saying tesla is an ai company with a car operation pinned on. how much is that going to be borne out in earnings? if they disappoint with car deliveries they can still do well if they explain how they are an artificial intelligence company and not one that simply

manufactures cars. mandeep: more so now with this waiver ai, the focus on models and how much data you need to train these models come it takes the question. tesla has about 5 million vehicles, a run rate of -- every year. they could keep aggregating those miles to train e-models. we have the technology now with these foundational models. tesla in theory should be leading the pack when it comes to autonomous driving and they are the most committed. they need to articulate that in terms of how they're going to monetize it and people will buy into that story. lisa: tesla is a robotics ai company that appears to be a car company. byd over whelming -- over looming over elon musk's head, ebbing up this competition.

how much are the chinese ev manufacturers eating elon musk's lunch? mandeep: tesla's treasures were used by -- that is valuation that tesla the footprint being the early company right ev is that having the infrastructure. let's say other oems start licensing their software, that would be another big politician. -- another big evaluation -- validation. they don't have the infrastructure when it comes to charging stations and other things you need. annmarie: when you look at autonomous driving, mark of bloomberg is talking about apple, they want this truly driverless car. it seems like they are shorting those ambitions and bringing an ev to market. what is going on there? mandeep: you are seeing

different approaches from different oem's. tesla, they have the lead even though you could argue level five autonomous driving is hard and nobody thinks tesla's current software is level five, they level two and three. every oem is struggling to come up with a strategy. they have not figured out what the best combination of sensors is, whether you need a lidar or just build a camera based figure. thanks will get pushed out when it gets to level five driving. jonathan: appreciate the update. mandeep singh there. we will hear from tesla later. let's hear from stories elsewhere. . his that she is the bloomberg update -- the bloomberg. reef -- here is the yahaira: bloomberg brief yahaira: -- and extend for a month-long pause in fighting. mediators are pushing for a phased approach that would start with civilians and end with soldiers in return for a break

and has to that these, the release of palestinian prisoners and more aid to gaza. sap will restructure its workforce to increase focus on artificial intelligence, affecting about 50,000 jobs. -- 8000 jobs. >> we are applying ai internally. we expect at the end of the year we end up with the same headcount as 2023 and for the used to come there will be investments. under proportional to our topline quotes. yahaira: the software company's shares surged. after ryan gosling pushed back on bybee's -- barbie's nominations, he is up for nomination when margot robbie and get a are left out. "to say i'm disappointed would be an understatement." jonathan: i, saying anything.

the floor is yours. lisa: i know it is supposed to be about fema empowerment, but the problem is the men are the best characters. they are funny and creatively plot. -- and create the plot. you are shaking your head, but it is counterintuitive. annmarie: i am looking at ryan gosling's statement, there is no ken without barbie. how does bybee get snubbed? -- barbie get snubbed? jonathan: is this why you are wearing pink? annmarie: it is not what i am glad i did. jonathan: it is like down with the patriarchy and then they nominate ken. lisa: the swag from that was i am kenough. jonathan: there were other

nominations from the movie. annmarie: america ferrera. she is disappointed because the director made a campaign, they had so much money. barbie herself got snubbed. the whole point of the movie was down with the patriarchy and yet ken made it out on top. awards are not charity. jonathan: there is no upside for me to say anything. let's sit this one out. ecb and the fed on deck. >> ica slope -- i see a sloped downward, but certainly not a slope which is at target. jonathan: that conversation is coming up next. you are watching "bloomberg surveillance." ♪

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jonathan: the best thing that has happened this week, we sever, with versus amh on "barbie -- bramo versus amh on "barbie." maybe and reorder's -- maybe annmarie's the was unpopular. the fed and ecb on deck. >> when i look at a year ago on doubles and compare that with where we are today, i see a sloped downward -- slope downward but not as low as target. when we said we are determined, we went to get to 2%, i would say we are confident we will get it to that target. jonathan: investors spending on global central banks, tomorrow

the federal reserve decision. i am not saying it is going to happen in march or anytime soon, but that is the direction based on communication like that. lisa: the key for me is how far are they going to cut a given that they got fishing wrong. -- they got inflation wrong. an economist writing in the ft writing it is once bitten twice shy and policymakers want to make sure the inflation genie has been put back in the bottle. q2 is the perfect time for cuts. this is the big divergence, not whether they're going to cut but whether they going to cut more aggressively or take caution from the fact that they got inflation so long in the aftermath of the pandemic. lisa: -- jonathan: let's get into it with john ryding from brean capital. how confident argue that we are on a glad bike -- a glide back to 2%?

john: confident given both central banks continue to push back against the markets. here is the point and i think governor walz related out reasonably well. there is a difference between cutting interest rates and easing policy. this is not been communicated well. inflation is falling and as a patient falls, interest rates are adjusted for inflation and real interest rates get higher. does the fed and ecb want to be tightening policy by not lowering the policy rate as inflation approaches to percent? the answer is no. the market is going differently, putting in his aggressive cuts and aggressive cuts historically have been to fight a recession or potential recession when inflation has been relatively under control. i think the central banks have driven on a couple of messages. we are serious about 2%.

secondly, we are not going to cut aggressively. we are going to keep policy restrictive while we lower rates. that is the subtle point the markets are missing. jonathan: what kind of language would you expect next week? things like we need to calibrate policy, just rates, surgical rate cuts? john: things like that, but the main thing is the fed and powell is not going to be in a position to greenlight a rate cut in march. i think the fed is thinking probably june at the earliest. they are probably going to be pushing. there is no new interest rate to come out at this meeting for them to frame the discussion. the problem is powell did a very poor job in december opening up and talking about right cuts to the point where john williams on the new york fed had to go on a

different channel two days later to try and set the record straight. he needs to do a better job laying out that when we cut rates, it is not about easing policy aggressively. it is about preventing it from becoming tight. the fed has not laid out a strategy in a way that is clear, strategy for running monetary policy. they have done a lot of discretionary policy, seat of the pants stuff. that leaves the markets to overlay their own interpretation. for signaled three rate cuts and a december -- they signaled three rate cuts antimarket took six and a december. lisa: you think their job pushback on all of the because we have seen. priya misra was sitting in her seat and said she is the most

bullish on high-yield bonds than we have seen in a long time. are we good to hear pushback from the central bankers this week and next? john: we are going to hear pushback as we heard last week from waller, as we heard in that clip you had from president lagarde, that the markets ahead -- markets are ahead of where the central banks are. we are not out of the banks -- out of the woods yet in having a recession. that is one thing i have not figured out in markets is you have risk assets like high-yield bonds pricing in a good economy and you have the interest rate markets pricing in a recession. the fed is going to cut rates that aggressively, we will probably be in recession and that is when spreads blowout. that is where there is a disconnectedness between the rich market and is spread markets. lisa: there is only -- if you

think people of gotten ahead of themselves and this idea that inflation will naturally come down as supply chain effects pandemic related consequences evaporate. argue pushing back on that? do you think the inflation rate is higher now than it was in 2019? john: i think in 2019, the predominant question of the central banks was how do we get inflation to 2%? now it is how do we get down to 2%? central bank's are giving us something we rarely see. you have the bank of japan which has negative interest rates and easing monetary policy, versus the bank of canada, versus the fed, versus the ecb and the bank of england who have a much tighter policy. if it is all about supply chains, inflation will come down in japan. japan has had upward pressure on inflation and they may continue to have upward pressure on inflation until they take

action. it is an art -- odd world were having interest rates is considered hawkish which is the interpretation of yesterday's boj meeting. inflation is about monetary policy. it is one of those physicals of economics, i believe inflation is a monetary phenomenon. that is not me to say that -- are not important, but that does not become inflation if this bank pushes back on it. 2021 was a disaster. while inflation was picking up, the federal reserve unleashed the inflation jeannie and they had four consecutive three quarter-point rate hikes in the mid to late 2022 to push that back in. we have not had the recession yet. they have done well getting away with it. they don't want to throw in the towel.

what is the cost of current interest rates. if the fed were to cut aggressively and then find we made a mistake, inflation has not come back into the bottle, has not stayed in the bottle, that is the scenario they want to avoid. jonathan: the risk cuts both ways. john ryding of brean capital. 2021 was a disaster, will 2024 be a disaster? december was a messy meeting from truman powell. is difficult to find the consensus in that committee and the minute that came of the drone. lisa: he unleashed animal spirit, some people could argue. how do you put that back? to get more aggressive to get more aggressive do gut check the market's enthusiasm? jonathan: when the new york fed president has to come out and correct things and it didn't work, something has gone wrong. coming up, ibm vice chair gary

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>> everyone believes the next move by the fed is a gut -- a cut which means people can repair for that. >> this is move gradually and methodically. >> what matters is the end point. what are they cutting at what is the reason they are cutting? >> you can deliver what is pressed into the curve or even less and have yields fairly stable. >> people are able -- are willing to throw in the towel.

what we have seen this month is people capitulating. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and an recorder. jonathan: good morning to our audience worldwide. alongside lisa abramowicz and annmarie hordern, i am jonathan ferro. four days of gains on the s&p, the longest winning streak of the year so far, three consecutive all-time highs. juicing things a bit this morning. netflix, knocking it out of the park. lisa: the rally we have seen and record highs driven by big tech, the magnificent seven. we saw the biggest two week inflows related to tech funds going back to august. they are the ones delivering, supporting a lot of the earnings. how long before everything else catches up? jonathan: the best quarter for subgroups since the pandemic,

beating projections in every region of the world. lisa: the tally wall street was expecting was $8.91. they are 13.1 million new customers. this is after everybody signed up during the pandemic because they were tortured with their children and what to do with them. i am just saying. annmarie: this indicates the incredible growth -- lisa: this indicates thinking about growth. by the taking over for someone else or just capitalizing on people's need for entertainment? jonathan: another big win for the former president after another big win in iowa. annmarie: he has back-to-back wins, iowa and new hampshire. emergent he won big that she won was not as big as people expected -- the margin he won was not as big as people expected. if you look ahead to south carolina, it is 30 or 40 points

he is up. that is her home state. lisa: we keep talking about wise nikki haley still in the race, issue waiting for donald trump to have to bow out for some reason? the other question i have is where our independents going to go? they seem to be migrating away from trump more than they did in 2016. jonathan: equity futures on the s&p 500 positive by 0.4%. bond yields lower. over in japan, the markets selling off a touch. yields higher, rate cuts at the fed maybe rate hikes at the boj. lisa: what happens when they start trading? how much of the market is owned by the central bank of japan? jonathan: something like half. lisa: at a certain point, okay, but they are moving in a direction -- a different direction and how much of the

usa open them to do it's different do it further -- to do it further? jonathan: five basis points to something. coming up, gary cohn, the vice chairman of ibm joining us. the former president takes another step toward the gop nomination and michael and at the center on a netflix's blockbuster quarter. we begin with our top story, one week out from the first fed decision of the year, a string of strong than expected date of these economists split on the timing of cuts. inflation is slowly, relatively quickly towards target. labor markets are slowing but not slowing as quickly. the net effect of that is going to continue to do's net incomes. it is not an economy firing on also lenders but firing on enough cylinders. at the table with us, gary cohn.

i was reverting on compositions we used to have when you were in front of the white house and used this term the threes. are we going back to the threes? gary: it feels like we're are going back to the threes. i was talking about 3% gdp, 3% unemployment, and 3% wage growth. that was a sweet spot we were trying to achieve at the time. we thought that was a really good solid place for the u.s. economy. that was the goal. that was the middle of the target we were trying to hit month after month when we talk on those fridays after we release job data. jonathan: have we forgotten what normal is? gary: we have totally forgotten what normal is. jonathan: what is normal? gary: this is a campaign i am on, we have forgotten what normal is. to go back to what normal is, we have to go to the post 2008

financial crisis. since 2008, the fed has been the overwhelming dominant feature of financial markets. fed meetings were important but we did not live and die off of fed meetings. i am old enough to remember when money supply drove markets. i am dating myself there. we get to 2008 and the fed goes into the policy of zero interest rates and quantitative easing. followed by many other central banks around the world. as the fed goes into the zero interest rate policy and they build a bigger balance sheets, they become the dominant factor in financial markets. not just in the fixed income markets, but when you literally have sewer rates of return, you are forcing people out into the risk spectrum. you bring many other asset classes that historically have not been appealing to people. you bring them into play. the search for return, for

yields, you go farther out on the risk factor. all the way up to covid with this zero interest rate policy, people looking for alternative assets, people looking for yields and searching for it in unusual places. we come into the unusual covid period and the fed stays in the zero interest rate policy. they have no idea what is happening. i am not sure that is a mistake. all of a sudden we get into the biden administration and we have got through five stimulus packages in the u.s. -- gone through five seamless packages in the u.s. and u.s. consumers with the best balance sheets in their life, disposable income and the ability to spend it after not having the ability of almost two years what you cannot buy at the grocery store or fedex cannot deliver to you. lo and behold we end up in a

highly inflationary cycle. the fed goes from this zero interest rate try to drive economic growth, trying to drive inflation. i remind my best friends, if you picked up a newspaper prior to 2008 to the 2020 period, the headline would have been can the fed eric reed inflation again? we are back and it is highly inflated period and the fed goes from quantitative easing to quantitative tightening to 50 basis points month in and month out. we have been through this 15 plus years cycle of what i would call abnormal. on top of that, we end up with this inverted yield curve. everyone is convinced of the fed is raising rates. the fed has just down the economy. we have to see dropped aggregation. -- job aggregation. -- degradation. we still have any inverted yield

curve which i don't think is normal. now for the first time in this 15 year period, we are getting to a position where we are starting and just at the beginning of heading back toward normal and what normal would be. reminding people what normal would look like, going back to the 3, 3, 3 but we had a positively shaped yield curve, we have a risk premium. if you look at 10 year yields, the u.s. you can either put in the volcker fed or take out the volcker fed, within the volcker fed, it is -- lisa: if you put aside all of this, if you look at the fed and say it is on the back table, you look at the economy, it looks pretty good. it does not look like we are going into recession. why do people feel so bad? gary: the inflation number, the inflation data is the most peculiar data we have in the

u.s. we cannot envision month over month for year-over-year, we don't zero baseline it anywhere. when we talk about inflation, we talk about how much inflation over the last month. if we have inflation month over month, that means what you are paying this month is higher. if we have inflation year-over-year, same thing. we have seen the compounding effect of a 3% inflation year, 9% inflation year. , that adds up to 20%. if you are a hard-working consumer today, your basket of groceries is 20% more than you think it should be and what it was worth two years ago. the compound effect of inflation is what is affecting people's mentality. the second part is people are working harder, working more drugs to buy what they want to buy. the savings from the pandemic is gone.

if you look at the financial position of many americans who went from high consumer debt to the pandemic and then went from consumer debt they wiped out and high savings because they were forced in, they spent all of that money. they are back to where they started. to care a lot about inflation and their purchasing power. we are talking about wages today exceeding inflation. that is in spot market basis. we have not talked about it over a one euro two year basis. lisa: i wonder how messy did it is. if you were the head of the economic council, how would you communicate the idea that we are seeing massive churn in response to technological advances? ebay lang up its staff because it needs to update rcep in germany. how much is that featuring into the messiness of the data? gary: we always have messy data.

we never get totally clean data. we can talk all about all of the revisions to the unemployment data. they go and revise the data and sometimes the revisions are bigger than the actual data. that we fix it on the data on that friday and a month later we say that it was completely wrong . if you were looking for the clean answer -- if you are looking for the clean answer, our data does not give us a clean answer. it gets very clean over time. you have to look at the data over a longer period trend. i look at visual support, i think joel's is interesting because it shows job in biddings -- job openings. there are interesting numbers in there, it shows how the people quit their jobs. people only quit their job when he feel like there is a better job out there. it is a measure of what people's

psychology on the market is. when the rate goes up, it means i believe i can get a better job, better paying, better quality of life. when the quit rate goes down, people say the job market is not very good. i don't love it but i should be happy with the job i have. if you put it altogether, you can create a clean picture. jonathan: on like this -- unlike this administration, gary will exit communicate. that to get you any update on the stories. here is your bloomberg brief. yahaira: donald trump is marching towards a rematch with joe biden. after the former president copley won the primary, trump beat his only remaining challenger in the race, nikki haley, with the former human investor refusing to back out of the race. never exists urging after posting its biggest subscriber gain since early in the pandemic.

streaming service's decision to crackdown on password sharing paying off with more than 13 million customers signing up in the last quarter. tesla telling suppliers it wants to start production of a new mass-market ev through next year. tesla's cheapest car starts at $40,000. this model would start well short of that. the company will report earnings with the stock down more than 15% to start the year. that is your bloomberg brief. jonathan: equities on the s&p 500 positive by 0.4%. up next, nikki haley eval and to press on -- vowing to press on. >> this race is far from over. there are dozens of states left to go. jonathan: you are watching abigail: -- you are watching tching "bloomberg surveillance"

live from new york city.

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jonathan: quoted a winning streak on his be 500 about to become five, up 0.5% is a be. yields coming in lower, 4.1% on u.s. 10 year. nikki haley vowing to press on despite her loss in new hampshire. >> this race is far from over, there are dozens of states left to go. the next one is my sweet state of south carolina. jonathan: donald trump defeating his only remaining rival in the gop race, his victory putting him in the driver's seat. no republican has felt secure after losing the two first

states and now he is looking to deliver a knockout. annmarie: the polls looking rough in her home state. the wall street journal think she has an opening to take on trump to propose a border tax. his coddling of dictators come his billiard was defense, adding as much to the national debt as much as president biden. she is to grab a specific cause or two, perhaps a school choice or parental rights and make them hers. can she do it? there is a huge machine behind the former president. jonathan: let's get to kailey leinz. nikki haley, that she make it to south carolina based on what we saw last night? kailey: she says she will. she enter powerful surrogates like sununu say all she needs is a powerful second-place. they did not define what that is.

it not necessarily a strong showing. she still about to continue on. february 24 is that primary. the difficulty she is going to have is if she did not perform that well and in new hampshire with a large base of moderate republicans, it is difficult to see how she could perform better in a future contest where the base is significantly more conservative. the maga base is strong there at that could be weaponized against her moving forward. that is why many people are saying the general election has begun. what we are heading toward is a rematch between trump and president biden, a development that the bite campaign is welcoming as they believe he could be trouble once again as he did in 2020, a development many americans do not want. 70% would not like either meant to be president's second time. it looks like that is what they're going to get. annmarie: this is going to paint

so many of the political stories, especially what is happening in washington, d.c. if trump is almost correlated as the republican nomination, what does this mean for a border deal? that would give a huge win to president biden ahead of the election. kailey: that is right. biden is negotiating with senate leaders to get a border deal done. to question is whether or not that can pass in the house, speaker mike johnson has a close relationship with donald trump, as does a vast majority of republican leadership. all have lined up to it was the former president and trump has said they shown except a perfect border deal. can he be politically advantageous to his opponent, joe biden? this likely general election rematch between two individuals, the group no labels has said they would run a unity ticket if by super tuesday it looked like

what it was going to be was a trump-by him race. -- trump-bided race -- trump-biden, someone like hogan or a third party to come in. jonathan: it already feels like a year long. gary cohn, i want to talk about policy. let's talk about tax cuts. i have not talked about the tax cuts at all of the money started to come back into the country for the best part of six years. how relevant are yesterday's tax cuts. gary: they are the 2017 tax cuts and i think they are important. this is back on the theme of normalization. since we got the tax because through that were signed 2017,

we had two normalized years. 2018 was an implementation year. we saw some amazing things happen. we saw three -- repatriation of foreign money, so money came back into the u.s. in the old system, companies letter their money offshore. they brought it back. we deemed that money to be brought back so we taxed it. what you see as the manufacturing boom in the u.s. which started in that period, a lot has to do with this repatriated money. when companies cannot bring money back, they had to overseas, they built manufacturing, then vested in property plant equipment. they are bringing it back, being the text -- paying the tax, and investing. this started in 2018 as company started bringing back their repatriated money.

you're also seeing the growth we have seen in consumption, the growth in the middle class's ability to pay money. hard-working individuals got their tax cut and i think that is why people have missed the economic patronage u.s.. everyone calling for this recession over the last year and a half. i don't think they understood the additional consumptive powers the tax cuts created. we put real additional possible -- disposable income into people's pockets. we made cartridges decisions to make sure we were delivering real taxable returns, or less tax to the hardest working individuals in america. it takes time for that to feet to the system. and then we go to covid. we get all of these unnatural phenomenons. now we are back to normal behavior. people understand what their taxable income is.

some of the programs we put in 2017 have expired and piercing bipartisan legislation to reinstate some of those programs. there is a bill going to the house to reinstate child tax credits along with accelerated appreciation. we think both sides of that equation were in the original tax bill, we think they're both important. you are taking care of both sides of the equation. he had to take care of hard-working families and with the device him is to do r&d and continue to invest in the country. annmarie: does individual tax cuts from 2017 are said to be expired. that helps individuals but if you have a 10% tariff wall around the u.s., that is a massive tax on consumers. gary: it is. the tariff wall is something to be discussed, there is a potential of it being discussed. it is an idea, something to be used to pay for the future tax

plans. annmarie: would it negate it? gary: we should not get too far ahead of ourselves right now. the personal side of the tax reform package terminates in 2025. there will be an enormous amount of discussion between now and 2025. it will depend on what the makeup of congress looks like for what you are able to do, what you are not able to do. are you going to be able to do this to reconciliation? through normal order? through simple majority? the republicans would have to sit -- after controlling house, the senate, and the white house . you are going to have to have much more the compromise of what goes on here -- much more of a compromise of what goes on here. the ideas being talked about writing our concepts. this is what is interesting.

is a time when potential candidates and incumbents -- this is a time when potential candidates and incumbents get to tell us their ideas about how they want to run the government. these are ideas. that our concepts as starting places, they are not necessarily -- there are concepts as a starting places, they are not necessarily ending places. lisa: people say if trump says something we are taking it seriously. gary cohn is saying maybe not. unfortunately we are out of time but we will have to get back to you on that. jonathan: coming up next, netflix shares surging in the premarket after showing some stellar numbers. those numbers, up next. ♪

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jonathan: stocks are positive by zero .4% on the s&p 500. on the nasdaq 100, all-time highs. up by another 0.7% held by netflix earnings looking good. the two i, 30-year. believe it or not, a week away from another fit decision. lisa: it's a matter of how much they push back against some of the enthusiasm we see in risk assets given we see a 50% chance of a march rate cut being priced into markets. one key question where you are already seeing it priced in, led

by big tech who is delivering on the earnings. jonathan: how much have you heard about earnings revisions? this conversation started yesterday with j.p. morgan. policy makers would do well to defer judgment on inflation and the timing of the first rate cut until after the february cpi revisions. that is the focus of a lot of people. lisa: people think the data was messy because of the year-over-year and holiday comps. the longer this rate cutting parlor game continues, the longer you'll see long-term inflation expectations take up. if you look at the forward breakeven contracts, down from a recent low of 2.4%. it gives you a sense of how much people are gaming out higher inflation for longer. jonathan: the euro out to 1.09 against the dollar. positive on the session by 0.3%.

donald trump taking another step toward a rematch with joe biden, the former president winning the new hampshire primary comfortably beating his only remaining challenger in the race, nikki haley. the next primary is in her home state of south carolina next month. amh, the polls don't look good. annmarie: one member of congress at this moment, ralph norman, the only member of congress to back her at this moment. you have tim scott, the governor of south carolina all going to coalesce behind the trump. jonathan: kind of shocking that tim scott backs the former president. annmarie: he was just behind the former president as he dropped out, and you are right, nikki haley appointed him. lisa: everyone coalescing behind donald trump, i wonder what this means for passing any kind of budget deal, border deal. anything that gives biden a win

is not something that they want. jonathan: the group attacked an airbase housing american troops. defense secretary lloyd austin said it came in response to a series of escalatory attacks against u.s. personnel in iraq and syria. the u.s. also attacking two antiship missiles in the red sea. these stories are connected. the election race and what is developing in the middle east. annmarie: foreign policy becoming more important. what the administration doesn't want to do is see this conflict expand in the middle east. what they are doing is this laddered approach, going after the training facilities, housing of these missiles, weaponry that these malicious can use against these ships. lisa: we have been talking about escalation. is this, for all intent and

purposes, a low-grade war that is a hot war between the u.s. and iranian proxies? the question is what this will do to iraq, whether they will asked to pull out some of the u.s. troops that have been there. it really does feed into the election. jonathan: essentially two proxy wars, one with russia, the other with iran. annmarie: what you want to see from the trump campaign, they decided to go for a big strike target when it came to going after ron. -- after iran. through reporting, intermediaries would go to the u.s., after he was taken out. we are done, we don't want this bloodshed in the region. jonathan: asml seeing orders for semiconductors triple in the last quarter. the ceo telling bloomberg, the semiconductor industry has now bottomed.

>> we see signs of recovery. at the beginning of the year, we would rather be conservative, but as you also saw, record quarterly intake which bodes well for 2025 and perhaps the backend. >> to be clear, this semiconductor market has now bottomed? >> that is what we believe. jonathan: it is the latest sign of a resurgence in the industry. tsmc projecting strong revenue growth in 2024. i have to clarify, we are talking about a company that makes the most sophisticated chips on the planet. huge demand out of china for good reason. i wonder what that demand will look like, their ability to supply it in the years to come. lisa: especially if these sentient go into play, if they are frontloading some of that increasing geopolitical risk. we heard from qualcomm as well, as well as other executives

saying this will only increase the race in china to develop their own ship, hamper their ability to compete. annmarie: asml seems to be benefiting from this race to hoard a lot of this technology before these penalties come online. but at what point does that become beneficial, or how much does ai actually outweigh it? you need the technology to build out ai. jonathan: netflix absolutely soaring in the premarket, following a blockbuster earnings report. winning more than 13 million new customers in the last quarter, the best gain since the start of the pandemic. it comes as the company introduces a cheaper ad supported service. >> our engagement is a bit impacted by our page sharing. think about it like fewer households using the same account. as those folks get their own

accounts, and we win them over with our program, that will normalize and continue to grow. jonathan: matthew davidson -- michael nathanson joins us now. lock me through where the revenue growth comes from that. is it higher subs or prices? michael: probably a mix of both. they have a lot of room to grow in developing markets, latin america, u.k., asia-pacific. on the revenue side, they are still infusing this advertising tier, rolling that out at a lower price. they have a steady mix of going forward volume and price. probably looking at an 8% to 10% topline growth over the next few years because of that. lisa: do you expect consolidation that that flocks

-- netflix is involved in? just how much there will have to be this kind of tie up cycle within media? michael: netflix wpm on't participate in that tie up cycle. their competitors have never been weaker. the people that own cable networks, warner bros., discovery, paramounts have to do something. comcast has peacock. peacock is still not fully scaled, so there has to be some kind of streaming consolidation and radio network consolidation. i don't know how that gets done in the near term, but netflix will not be a part of that. lisa: how much is netflix independent and being able to crackdown on password sharing versus a shining light for the industry to crackdown hbo, on

all of the eyeballs not paying the bills? michael: netflix has been the first down this path. they hit maturity the first. they also didn't care about password sharing in the beginning. the others don't have the same opportunity because they don't have as much volume and programming. netflix has qualified about 100 million homes are password sharers. they have not told us how many of those have been converted. at this point they probably don't know because it's been mixed together. i would think the others at the same opportunity because they are still growing the business and don't have the volume yet. it's a challenge for everyone to play the same game. they are on a different plane in terms of what they're able to do. jonathan: we were talking about consolidation in the industry. where do you see consolidation

coming from, and who between? michael: it has to be some combination of warner, paramount, nbc universal. disney isn't going to do any more deals. netflix is fine. i don't think amazon and apple are going to buy other assets. to me, the legacy media companies have to find cost synergies, get streaming scale. it has to be the people who are wounded now by cord cutting come of netflix. because of personalities or regulatory pressures or just the unwillingness to come together, i don't think it will necessarily happen this year. to me, this will be more of the same for 2024. jonathan: are you saying the egos of some of these companies are so large they will not consolidate until they are forced to? so ultimately you may need to

see pain first? michael: thank you for saying that so much more artfully than i did. you have to recognize you have a problem. some of it will have to go to one of their competitors, their knees, saying let's find a way to work together. i don't think the people that run these companies want to do that yet. jonathan: what is the topic? -- top pick? michael: our favorite stock idea is shorting roku. we have a short call on roku because we think less competition in streaming is not good for them. we also have a buy on disney with the idea that disney has to articulate a profit story in streaming in 2024. they have been vague about their long-term profitability. disney will be maybe breakeven by the end of the fall quarter.

it is really about their articulation of profitability. hopefully in the first half of this year we get more information on where we see that this is heading toward. jonathan: michael nathanson, always nice to hear from you. lisa: it is a short bet, that is all you can say. he laughed and said we are actually shorting roku because it will probably lose, and then a really unenthusiastic exclamation of disney. jonathan: i will not say who has the biggest ego in that space but that is ultimately never good, that things have to get worse before they get better for leadership to concede something needs to be done. lisa: because they have to agree to a price they don't like. that is the reason why people have been surprised by how slow this process has been that everyone has a specter for quite a while. jonathan: that stock is up by something like 10%.

elsewhere this morning, here is your bloomberg brief. >> at&t had delivered a strong fourth quarter with its wireless and broadband businesses, growing at a faster pace for the second consecutive quarter. the telecom provider have been in a tough stretch of slow growth and job cuts. ceo john stinky embarq on a ruthless koskinen campaign that included office closures and slowing investment. apple is dialing back its auto ambitions after a decade-long effort to build a car. bloomberg has learned the firm is now looking at an electric vehicle with more limited features, pivoting from its plans to make the vehicle driverless. the target release date for an apple has also been pushed back to 2028 at the earliest. take layouts continue. german software company sap plans for an 8000-job restructuring to build out ai, while ebay will cut 1000 jobs.

that is 9% of its full-time workforce. it is the second round of reductions at ebay in a year. 60 other tech companies including amazon and alphabet have let almost 11,000 employees go so far this year. that is your bloomberg brief. jonathan: thank you. next on the program, it is the year of the landing. >> the market is pricing in a low chance of a hard landing. 40% chance of a hard landing i think is still there. jonathan: that is next on the program. you are watching "bloomberg surveillance."

jonathan: the grind tire continues on the s&p 500, positive by 0.4%. yields are lower by .4%.

euro, 1.08 against the dollar. under surveillance this morning, it is the year of the landing. >> the market is pricing a 40% chance of a hard landing. when you look at the details of the data, it is not all that robust. there is a chance things slow down or the fed doesn't cut fast enough or they continue long enough and that is the chance where something could go wrong. jonathan: lisa asked for very specific percentages of hard landing, soft landing. the fed waiting another round of reading on the economy with the pce deflator next week. what gets them to cut in march is the inflation data. even if you can't be side of the economy is doing well, it's the deceleration in inflation.

as we roll into the march meeting, i think they get gradually more confident about the trajectory. lisa: you know who agrees with him, jim bullard, former member of the fed. he expects the fed to lower rates before we get to that 2% target in inflation and that cuts could come as soon as march. he wrote inflation on a corm on the basis you could get by 2% by the third quarter of the year. this is tricky because the fed doesn't want to get into the second half of 2024 and inflation already at 2% and you still haven't move the policy. that would be too late. suddenly he is a dove after being a hawk. jonathan: his was the dot at the very bottom. i love hearing about officials because they are honest about how they feel and not guarded. lisa: you feel they are paving a path for the march rate cut even though some believe that will release another round. jonathan: you don't need to

worry about checking out market expectations. you are not going to move markets like you use to. lisa: not going to hear anything from your colleagues. jonathan: kathy jones joins us now. michael keaton saying rate cuts. he was saying rate cuts in march. you think that's too soon? kathy: it isn't what i think that that ought to do, it is what i think the fed will do. all the communication keeps pushing us back to may be made. we have penciled in a may start to the rate cuts. one of the rate cuts -- they still need to address the balance sheet which we know is a topic. we heard from lori logan about tapering qt. that is likely to happen at the march meeting. we have the expiration of the bank term funding program although that can go another year. there are a few things in the way. they also knew that level of

confidence that inflation will actually stay down. that all pushes us more toward may than march. lisa: you think there's a high chance they could do it in march even though they shouldn't necessarily do it according to you. where does that leave you? are you leaning into riskier credit because it seems like the fed will do everything they can to prioritize a soft landing even over picking sure the beast of inflation is killed? kathy: no, we are not leaning into credit. we are leaning in the other direction because of valuation. you cannot trade on valuation all the time but spreads are so tight you may as well be in treasuries at this stage of the game when it comes to investment grade credit. even high yield, spreads are so low, you can earn the coupon come in decent year, but definitely not leaning in at this stage of the game. lisa: where are you leaning in in terms of treasuries? does this give you conviction that we will get to a 3.5%

10-year within the next couple months? kathy: next couple of months is aggressive but i think we get back toward a 3.5% for the end of the year. we think the main thing will be bull steepening. as the fed starts to cut, 7, 10 yaya hanging in there. we are pretty close to it now. probably get a range around that level around 4% for a while. we think the main trend will be bull steepening. jonathan: why it is steepening in my we are cutting is important. is it because inflation is coming in and not because growth is not collapsing? priya misra yesterday turning positive on credit because she thinks there is this window right now to be constructed on risk assets. ultimately the fed can cut because inflation is coming in and we have not seen a collapse in economic growth. do you see that window as well? kathy: i think the scenario is

realistic, just that the markets were credit have priced it in. to lean in now is to get aggressive maybe a little bit later than you might want to. also, look at default rates picking up. we are not looking at underlying fundamentals for credit getting better. the spreads are very tight, so what are you going to do, just rely on the fed to cut rates? that's an interest rate play, not a credit play. when it comes to credit, i don't think that is fully priced in. i think we are priced in fed rate cuts and rescuing the economy and the credit cycle. i think the jury is still out on that. lisa: how concerned are you about a tick back up in inflation based on how the markets price things, based on what you think the fed will do, not on what they should do? kathy: my feeling is inflation still comes down.

we are in the camp that we are in this declining inflation. there is just not a lot of empirical evidence to suggest that is taking place. i have a very soft global economy, too. we do think inflation will come down. the catalyst for the fed cutting rates, you have real rates now heading toward levels that are really restrictive. i think that that will be the motivation. if they go in march, that will probably be the reason why. i just lean toward may because of the messaging we are getting. lisa: tomorrow we get the ecb meeting, talking about the u.s., has been the main game in town for a lot of people. are we starting to switch gears? we see in europe, italian yields coming in dramatically, incredible rush to risk there. are you following that? kathy: i think there are some

attractive place in europe because of the likelihood that the ecb has to go sooner and faster than maybe the u.s.. i think there is a play there. we actually leaned into emerging markets, as well, because rate cutting cycle in the u.s. is often good for em. jonathan: let's talk about that selectivity. china, a big chunk of that part of the world, basically trying to stimulate demand for its own equities by apparently, according to our reporting, considering using money from state owned enterprises offshore to buy into the market through hong kong. they are cutting the rrr rate. what can i do to stimulate demand in that economy? kathy: i think there is some fiscal space there. they seem to be not using that directly, doing it indirectly through the banking system. i'm not really sure why you would want to we'll ever the

stock market rather than use fiscal policy. but i will tell you, frankly, i don't spend a lot of time worrying about chinese bones. jonathan: can you be constructive em without spending much time worrying about china? kathy: if china takes any step toward stabilizing their economy and reducing rates, countries should benefit from that. aipac, em. we are seeing positive things happen in mexico. there is some room for movement. jonathan: we have talked about this a few times already this week, engines for growth, the u.s. is ok, europe is not great, china is struggling. the global economy is a three legged stool. two of those bases are not looking good. lisa: interesting that the u.s. is truly diverging because of the tech story and also because maybe there are smaller engines that people talk about, whether it is mexico, india.

the idea that china is moving away from center stage as they isolate themselves has really been a narrative the past 18 months. jonathan: good to see you, kathy jones, pushing back against the idea of a rate cut in march. michael gapen things we may well get one in a few months time. in the next hour, we will have conversation with the former house speaker kevin mccarthy, david rubenstein, andrew hollenhorst of citi, and mandy xu of cboe. that will be in the next hour. s&p 500, equities look like this. positive by 0.4%. yields lower. a week away from a federal reserve decision. the ecb is coming up tomorrow. a lot of people believe the ecb

will move before the federal reserve. the third hour of "bloomberg surveillance" is next.

>> we are in a soft landing right now, looking at the data. the data look strong. >> even if the activity side of

the economy is doing well, as it is, it is really the deceleration in inflation. >> it is not that easy to get inflation down that quickly. >> as we get into this year, i think stepping back, we will see what kind of economy we have. >> this is "bloomberg surveillance" with jonathan ferro, lisa, and annmarie hordern. jonathan: good morning. this is "bloomberg surveillance" with lisa abramovitz, and annmarie hordern. the s&p 500 positive again after four days of gains, three consecutive all-time highs. the data in the last week has been good. retail sales hot. consumer confidence picking up. and then restart the earnings for tech. netflix knocking it out of the park. lisa: this is the kicker to the handwringing over if it's a problem, doesn't make the market

more fragile that the magnificent seven has driven so much of what we've seen in u.s. markets. turns out they are minting cash. they added 13.1 million new subscribers, the most since the heart of the pandemic, and now people have options like going outside. you can see the shares bouncing. jonathan: it always feels personal with you. the stock is up 9.9%. more earnings later this afternoon, so things are looking good. consumer confidence picking up, the data seems to be ok, unemployment below 4%. amh, you would think this is good news for the sitting president of the united states because it feels like it'll be around two against donald trump. annmarie: good news on the economic front, the timeline is on their side. inflation is coming down. people are starting to potentially feel the economic effects that the biden administration has been telling them they should be feeling. polls have been showing that maybe we are going into

november, people are feeling better. the campaign puts out a statement last night saying almost eagerly we are cited to take on trump. biden was the only person who could be trump. trump only faced off in the general election against two people. jonathan: it is bizarre. you have the president eagerly awaiting another face-off with the former president, at the same time nikki haley is holding on. lisa: the pressure will mount on her. annmarie: if you look at what she says about her home state of south carolina, she is behind 40 points. lisa: interesting when we asked gary cohn, why are people feeling that if the economic data is so good? it is time. people need to adjust to a 20% higher grocery bill. when is the statute of limitations on this? jonathan: gary nailed it. cumulative inflation. it is the pain that people feel from 2020, it is not month over month.

it is about what is happening since 2020 and the sticker shock over the past four years. lisa: the key question, what is the maximum amount of time that people have to live with inflation at a certain level before it becomes normal and their wage increases in a more material way? jonathan: s&p futures positive by half of 1%. bond yields look like this, down two basis points. 4.1051. the fed decision a week away. ecb decision a day away. coming up, mandy xu of cboe global markets on the equity markets. kevin mccarthy joining us following trump's victory in new hampshire. andrew hollenhorst looking to key inflation data this week. we begin with the top story, stocks continuing to climb. mandy xu seeing more room to

run, writing options positioning market is still biased toward further gains despite the s&p making all-time highs, we see elevated demand for upside calls as investors position for further upside in the months ahead. mandy joins us on the table. why do you believe the path to less resistance is still higher? mandy: this is what investors are putting money toward, buying those upside calls. a couple things stand out to us. looking at the demand for puts versus calls, that's at a multiyear low across all the major indices, particularly russell 2000. back to the question if this is a rally led by tech. now we are starting to see, november last year, people playing for potential a out of that rally. s&p at all-time highs but the russell is still down 20% from its peak, still in a bear market. that is where we are seeing most elevated demand. lisa: how crowded is

positioning, not just in long positions but also in this broadening out trade? mandy: to give you a sense of how extreme it's gotten at least in the derivatives market, if you look at the spread and russell volatility versus other volatility -- that is usually during times of duress when people are pricing in more recession risk. this time the entire bid is coming from the upside. lisa: given that, how priced to perfection is this? there is this question of how fragile are some of these positions to just one data point that comes out that is highly negative? mandy: everything is dependent on the economic outlook. things could change pretty quickly. we see in the russell, it is the most reactive uneconomic release days, cpi, fomc.

the macro narrative can change, but everywhere i look, that soft landing story is definitely what is being priced in. jonathan: what do you make of what is happening between the russell and the s&p? s&p hitting all-time highs and the russell climbing out of the bear market. mandy: the reason it is underperforming, much more overweight cyclical sectors. growth has been slowing. right now it is driven by lower rates, the fed pivot there and it. for that to continue, you can growth to pick up. i don't think a soft landing is actually sufficient to get russell performance, you need growth to accelerate. given the outlook for this year that might be challenging. jonathan: you don't talk about earnings. how relevant are the earnings the season? mandy: earnings are relevant. one measure you can look at to get a gauge of how much you are pricing for earnings is dispersion. dspx tells you how much have

been priced in the next 30 days. right now we are seeing implied dispersion is lower the last eight quarters. in some ways people are pricing in les moonves on earnings, but overall levels are still elevated. given the run-up in markets, expectations have built such that the hurdle to get a significant move on earnings is higher now. lisa: as you speak, i think about the risk reward. speaking to michael gapen, priya misra, saying we have a 65% chance of a soft landing, 35% chance of a hard landing. i don't know how you come up with these. but if you take a look at what the options markets are showing, does it agree, or do you see a much higher probability of that soft landing being priced in? mandy: i would say what is being priced into the options market is tilted toward the soft landing.

if you believe there is a meaningful chance of recession, definitely value in looking at those downside puts. it is not just puts versus calls. if you look at implied correlation, the measure that i go to when looking at expectations for inflation. in a recession, everything sells altogether. measures of implied correlation, multiyear lows currently. everywhere you look in the equity market, it is really pricing for that soft landing. lisa: how much is that people hedging for the upside because that is where they got beaten up, versus hedging the downside, and their ownership has not changed much? mandy: that is the main story in q4. going into year end, it is really a positioning story, performance chase. but we are starting the beginning of the year and that is still persisting. part of it comes down to sentiment. jonathan: good to see you, mandy

xu, cboe global markets. elsewhere this morning, let's catch up with yahaira jacquez. yahaira: donald trump is inching closer to a rematch with president biden. after claiming victory over florida governor ron desantis in the iowa caucuses. >> this is not your typical victory speech, but let's not have somebody take a victory when she had a very bad night. she had a very bad night. yahaira: shares of netflix are surging in premarket trading after the firm posted its best customer growth since its pandemic peak. the streaming service added more than 13 million subscribers in the last quarter of 2023, exceeding street estimates. netflix recently gained rights to debbie w e's raw as its first

live content. alaska air says it found loose bolts on many of the boeing 737 max 9 aircrafts. the ceo said in an interview with nbc. it comes after united airdropped r dropped plans without canceling an order. jonathan: that story gets more and more shocking. more on that story later in the hour. trump on the cusp of a third gop nomination. >> this is not your typical victory speech but let's not have somebody take a victory when she had a very bad night. >> this race is far from over. there are dozens of states left to go. jonathan: that is next on the program. around the corner, the former house speaker kevin mccarthy.

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jonathan: one hour, 16 minutes away from the opening to. four-day winning streak on the s&p 500. equity futures positive by 0.6%. down two basis points the 10-year. under surveillance, trump on the cusp of a third gop nomination. >> we won new hampshire three

times now. this is not your typical victory speech but let's not have somebody take a victory when she had a very bad night. >> new hampshire is first in the nation, it is not the last in the nation. this race is far from over. there are dozens of states left ago. jonathan: the former president defeating nikki haley in the new hampshire primary. trump cruising to victory by over 11%. haley trailing by over 30% in her home state of south carolina next month. annmarie: looks like she has a very steep battle with the former president up 30%. what it comes to independents, some are writing where that could be a vulnerable spot for trump. there is no question that trump has an adoring base of voters but that basement not be sufficient to win the general election. he also writes there is one area

that is tilting toward trump, and this is immigration, but what does this mean what is happening in congress? are democrats going to be able to ink this deal because that would give a win to biden? jonathan: let's start the conversation with kevin mccarthy, former house speaker. good morning. do you just assume nikki haley will leave and it will be trump versus biden all over again? kevin: yeah. about 30 days before south carolina. at the end of the day, i don't think nikki haley wants to lose her home state that badly. i think she will probably pull out. i think it is difficult for her to win the majority. the advice i would give to president trump come it's about addition, not subtraction. his speech in iowa was different from new hampshire last night. what i would do, i would draw biden into the campaign. every time biden goes out, he shows his weakness. he cannot fix his biggest

problem, his age. immigration has now taken over the economy. the problem for biden is he created it. no new bill passed that created this russia people across the border. it is just his administration policies. he doesn't need the house and senate to work on an agreement. he can do this administratively. he won last time by hiding. if i was trump, i would start pulling biden out, make the issue -- remember, reelection is a report card. your first election is after relational. now there is a report card what you did. no president has walked into a reelection in modern history lower than this. jonathan: the former president has to do something about attracting independents. kevin: the challenge is, looking around, you talk about data on wall street. voters will be voting on the passion of what is happening on main street. if you look at what those

interest rates are for a small business, nothing is happening. that is not going to change that drastically between now and november. they feel inflation. they know what the price of gasoline is. they see the border -- there is not one republican in congress elected from massachusetts and massachusetts has a state of emergency based on the southern border. you are here in new york. what does the mayor and governor say is the number one issue? immigration. illinois's governor is crying, don't send any more buses. annmarie: with trump being the defect to nominee, where that paint the fact that maybe this deal cannot get done? why would republicans in the house give biden a win ahead of november? kevin: if you are elected, you want to solve a problem. the hangup is not with republican but with the president. will he change his lessees that he put in place? he is holding back doing that. annmarie: talking about the

border-ukraine aid package, the supplemental that the senate is working on. kevin: ukraine and supplement to liz different. do i think it gets done? it is difficult. remember, in the house, you passed a bill. when we were speaker, we had a four-seat majority. we passed the strongest border security. what you have watched, in the senate, they have not acted. that is a senate majority. the president has not taken any administrative action. now you have the president saying the border is not secure. he has his own secretary saying something different. annmarie: you think the supplemental doesn't get done. what about funding the government? how many stopgaps will it take? kevin: i did a continuing resolution to solve this before the end of the year. the numbers are already there. if they continue where they are now, and it is the far right of

the republican party it up. you spend more money and you lock in pelosi's policies. if they would start moving the appropriations bills, they would spend less money, put more conservative policies in. they need to focus in the next month to get that done. lisa: let's put the freedom caucus to the side for a minute and talk about the main front runner for the party, trump, and talk about his policies. do you think a 10% blanket tariff is a good idea? kevin: the president has always been very open to think that america has lost. i think he has change the opinion of america when it comes to china. that will not be the number one issue people are voting on. they will be voting on the economy, immigration, gas prices -- lisa: businesses are voting with their money. they don't want to see that. they think it is the tax on the u.s. consumer, affecting the person going to walmart, target. do you agree with a 10% tariff?

kevin: you think this will defeat president trump going in? it will not. he has an american first policy, whether you agree or disagree with it. he has transformed how you look at china. annmarie: when it come to the general election, we saw it yesterday, kamala harris, president biden talking about abortion. how difficult is this issue for president trump if he wants to win the independents in the swing states? kevin: you just talked about the rally they had yesterday. how many times where they interrupted about this rally to go after republicans? 14 times. the president was interrupted in a staged event that he thought he could attack republicans about something. this is why i tell president trump, engage president biden. go to campaign with him every day because his policies have failed. five embassies he had to

evacuate. we have war, the axis of evil like the 1930's, inflation. all the things that trump could say he didn't have under his policies. abortion could hurt, but let me tell you one thing, abortion was on the ballot when i was leader. we won five seats in california. you have to take the issue head-on. i firmly believe that when the economy is this bed, when you have immigration the strong -- lisa: hold on a second. a lot of people are saying the economy is very good. what do you mean bad? kevin: you say the economy is better. go out to the american public. leave new york. annmarie: people are starting to feel better about the economy. michigan consumer sentiment. gasoline in new york is below three dollars. kevin: it is five dollars in california. annmarie: that is due to state taxes, you know that.

kevin: people feel something they have not felt before. if you look at california, independents think immigration is a number one issue. if you look at democrats themselves, when you run for president, you want to bring your base and expand it. the majority of democrats think that president biden is too old. if you want to talk data, if he gets elected, there's a high probability he doesn't finish out his term based on his age. the vice president is not very popular for the ticket. you have people still talking about, you have people who ran obama's campaign openly saying if he is on the ticket we lose, you have democrats worried if he has to run under the ticket. you have those who have run for president before saying you should switch him out. that is not strength going in. that is why i believe the sooner we get two individuals debating, it's a benefit to the country. annmarie: before you go, we have a few issues to ask you.

do you think speaker johnson will get a motion to vacate just like you lost your gavel? kevin: one person made the motion. you watch what transpired after that. you went a month and couldn't find somebody. the people who had to give ability to do the job got knocked out. it was really based upon one member who moved it. he didn't want an ethics complete to come forward. i saw abc yesterday. it is coming forward. he is willing to disrupt the entire government to protect what he has done privately. jonathan: i don't think enough people know your story from flipping cars to winning the lottery, buying a deli franchise. do you think your party has left behind that traditional conservative vision of equality of opportunity and upward mobility? do you think the former president understands the

essence of being a conservative in america? kevin: i think there is a debate but i think he understands the entrepreneurship to hide it. i grew up in bakersfield, father of a firefighter. i didn't have money to send me to college, so i went to community college, but i always had a work ethic. i met a guy who had a car dealer's license, he took me to the liquor store. i flipped cars. it was illegal. i would visit my friends in college. i would go to the grocery store to cash a check. the day before the lottery, and i win the lottery. it is only $5,000 but this was before biden inflation, so this was something. i took my folks to dinner, took the majority of the money and put it into one stock. i'm a 30% of my money in one week. at the end of the semester, i took a break and i try to buy a franchise that they wouldn't sell it to me because i was 20

years old. i opened my own deli and did pretty well. i now had money to pay my way through college. jonathan: you are not going to open up another deli. what are you going to do now? kevin: the local congressman said be an intern in washington. i applied and he turned me down. but i got elected to the seat that i couldn't even intern four. i will do whatever to help. but i will go back to my entrepreneur routes. jonathan: five seconds. what stuff did you buy? kevin: fur vault.

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jonathan: live from new york city this morning, good morning. four days of gains on the s&p, three all-time highs. on the nasdaq 100, record high yesterday. up another 0.9%. the russell doing better than ok, up by more than one percentage point, 1.16% on the russell 2000. in the bond market, yields look like this. lower by three or four basis points. four point 09% on a 10-year. down by 33 on the 30-year. just to finish on

foreign-exchange, the ecb tomorrow, federal reserve a week from today. under surveillance this morning, donald trump on the cusp of a third gop nomination. gop voters handing him a decisive victory with over 90% of ballots counted, making a biden-trump rematch all but likely. nikki haley looking forward to her next primary in her home state of south carolina. kevin mccarthy suggesting that maybe nikki haley doesn't make it too far. annmarie: he things the sooner everyone can get behind trump the better it will be. he thinks that trump needs to be talking about biden. the former speaker thinks that trump needs to bring biden out, go against him on policies. interesting, though, one thing the speaker didn't want to talk about was abortion. this will be a main driver for democrats to get out the vote. jonathan: this goes back to something we've been talking

about the last couple of days. traditionally we say it's all about the economy, but if you think about more recent votes, it's been about other issues, abortion being one issue come immigration another. lisa: i was looking at a couple of different research pieces about why people don't feel better about things despite all the economic data is great. it is not just the fact that inflation cumulative has been high, it is also the war, the biggest amount of strife in the american population in a long time. this harkens back to 1968, similar feel. annmarie: foreign policy is not the real reason that american go to vote but it is an overhang, especially the youth demographic. the former speaker was correct, biden was interrupted yesterday, but it was about gaza, not inflation. jonathan: it's amazing that we can have people come on the show and talk about how bad the economy is when equity markets are to record high, unemployment

below 4%, growth as of the third quarter is around 5%, and you can do it because there are so may people in this country scarred by the inflation of the last few years. even if you can make the case that disinflation trends have emerged, inflation will slow back to 2%, you cannot get away from that issue. lisa: disinflation is a hard story to tell, and that's the key. at this point, i don't understand a lot of the sentiment data. right now what you are seeing is otherwise incredible strength. as these earnings come out, people signing up for netflix. people have money to spend. people said we were in the depths of the pandemic, we actually climbed out. the base case right now is a soft landing even with inflation we have seen. jonathan: let's look at the stock in the premarket. absolutely surging in premarket trading after reporting its best quarter of growth since the pandemic.

13 million customers signing up in the fourth quarter thanks to a cheaper ad supported option and a crackdown on password sharing. management hinting at more price adjustments. occasionally, we will ask our members to pay extra to reflect those improvements. annmarie: i think it was david and victoria beckham, one of their blowout documentaries. my parents watched it and then signed up for netflix. lisa: 13.1 million people decided. david beckham, i am in. i don't know about that but i am curious whether we go forward and we see this password sharing crackdown working for others or if it is just that flex. -- netflix. jonathan: two names have helped to boost this, the ad tier, password sharing clamping down. and then you smash every

estimate on the planet. if that is where the revenues will come from, where will it be? actual sufficient or price hikes on existing subscribers? lisa: if they can have a bigger base, they are in good shape. on the advertising thing, would you pay more not to see an advertisement for 30 seconds at the beginning? annmarie: absolutely. jonathan: ad free every sickle time. lisa: i'm curious. jonathan: i just don't want to waste time watching commercials. that is just me. you are allowed to have a different preference. we will all share the same opinion on this story. loose bolts were found on many of alaska air's boeing max 737 models. the company inspecting these jets after a mid panel blowout of one of alaska's flights earlier this month. the alaska ceo saying he is angry and frustrated, want to

know what boeing is doing to improve their quality programs. the word overused in the story but just absolutely shocking element to this. they have gone and checked the plans and this is what they found. lisa: this is so unusual that you have top executives of airline companies coming out and questioning the safety of a supplier of aircraft that they use. to me this is a game changer. i have to wonder, honestly, it is so graphic. the bolts are loose. this is not what you want to hear when you get on a plane. annmarie: i know that you are checking whether you are flying an airbus or boeing. i took a flight earlier this year, looked back, and it was one of these airplanes, and i was concerned. i said my prayers. in all seriousness, the boeing ceo is on capitol hill.

he will be meeting with some senators, and they will have a lot of questions for him. jonathan: let's turn to the data. key economic data this week including fourth-quarter gdp. andrew hollenhorst saying to percent growth in 2% inflation will look like another quarter of goldilocks data for the fed. we remain skeptical that the soft landing dynamics will last. andrew hollenhorst joins us for more. what are you anticipating, re-acceleration of inflation supported by the easing of financial conditions in the last few months? andrew: it is interesting because we have risks on both sides now. on the activity side is the lag effect of higher interest rates that we were starting to see toward the end of last year showing up in the data particularly on labor markets, some signs that labor markets have softened, will continue to soften. now you have this complicating factor of easier financial conditions. that is re-accelerating some

sectors of the economy. we are seeing that in housing in particular, and that gets into the inflation issue where we have shelter prices still rising rapidly. even the official measures of inflation have not slowed as much as economist were forecasting. house prices are rising 8% to 10% annualized. there are risks on both sides of the fed's mandate. the risk is that we see this data and we say 2% growth, 2% inflation, that is what we were looking for. it doesn't mean that we are necessarily going to continue to get it. lisa: you worry about inflation being higher than people expect. even if on the margins you have higher inflation, it is coming down and not for the fed to cut rates more than you thought maybe six months ago? andrew: we have been surprised at how quickly core inflation has slowed. we have not changed our view too significantly on when the fed

would cut interest rates, always around the middle of the year, on the idea that inflation would slow and activity would slow. the fed, as we were saying in that note, we'll see this, core pce inflation, if you focus on this one particular measure, six-month core pce inflation is running below 2%. but that is when you get into are you looking at a narrow measure of inflation or kind of looking at more broadly what is going on with inflation? if i look at core cpi, that is running stronger than core pce. if i look at the service sector in particular, that is where you are seeing continued strength, wages that are the most important cause for the services sector are still rising 4% to 5% annualized. i don't think we're on a sustainable path to 2% inflation. fed officials are saying they are not sure we are either.

but if you listen to their full comments, it sounds they are pretty convinced. i think they'll be convinced enough to cut interest rates, but are we heading back to 2% inflation? i don't think so. lisa: are you more skeptical of a soft landing than everybody else even the fact that the fed will have to hike rates back up or cut more slowly than people think and kind of boil the frog? andrew: chicago president goolsby calls this the golden path. i would call it a narrow path. there is a path to a soft landing, possible inflation just comes down and the economy cools nicely and we don't go into recession. but is that the likely case? it never has been, still not likely. markets will feel it is more likely right now because that is what we are seeing in the data. a lot of this loving it

inflation has been in goods inflation. that doesn't have a lot to do with slowing down the domestic economy that has to do with what's happening globally. look what's happening globally, disruptions in the red sea, shipping costs rising. there is no guarantee goods inflation will slow further. it may even pick up from here. that may still have the domestic issues. jonathan: what is your latest work on that, developments in the red sea, tension not just there, but also slowing in the panama canal for a different reason. have you done any work on whether that will show up anytime soon? andrew: some good work that the imf did on this sometime ago in response to the increased shipping costs we saw during the period of the pandemic. now we are seeing some of those same shipping costs rise. to your point, not as generalized as we saw at that point. the red sea will be more important for trade between asia and europe. as a u.s. economist, it does

show up but probably not as directly as for europe. but then you also have this issue with water levels and drought in the panama canal. that is also restricting trade. the imf puts the numbers together, a few tents of a percentage points on inflation, reasonable estimate for how much higher inflation you could see. not a total game changer but this idea that inflation is just heading down, one reason why he could be heading up. jonathan: looking ahead to next week, a week away from that news conference with chairman powell, what is the number one thing you are focused on? andrew: is this a fed looking to cut rates as early as march, or is this a fed looking to take their time and move carefully? i think we will hear powell more in this careful camp which would indicate more of a june rate cut, but let's listen closely. these things are changing quickly. if you sound more dovish, those

expectations could be moving into may and march. jonathan: andrew hollenhorst. kind of on the fence there at the end. lisa: as much as people push back, it seemed like the fed isn't pushing back enough to get that march price cut out of the markets. jonathan: let's get you an update on stories elsewhere this morning. he is your bloomberg green with yahaira jacquez. yahaira: authorities are trying to make another attempt to boost the economy in china by cutting the reserve rate ratio by 50 points. the move becomes official next month in a bid to free up lending and cash. china's government is also mulling a $278 billion rescue package for stockmarkets as growth worries continue. tesla is telling suppliers it wants to start production of a new mass-market ev midway through next year, according to reuters. currently, tesla's cheapest car starts at almost $40,000 but this reported model would start

well short of that. the company will report earnings later today with the stock down more than 15% to start the year. more woes for bowling. the says a wheel fell off of a 757 jet and saturday at atlanta hartsfield jackson airport. according to a blend mary report, a delta flight was preparing for takeoff to colombia when a nose wheel came off and rolled down the hill. more than 70 passengers were on board and had to deplane. no one was hurt. the faa is still investigating. that is your bloomberg green. jonathan: they have a lot to investigate. coming up, the future of energy. >> we are very concerned that the larger global effort to fight climate change is missing a major focus on developing and emerging economies. jonathan: that conversation coming up next. you are watching "bloomberg surveillance" from new york city. good morning.

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jonathan: live from new york city, good morning. equity market positive by 0.5% on the s&p 500. yield lower by two or three basis points. a week away from a fed decision with equities at all-time highs, lisa, for a third consecutive session yesterday. lisa: while this has been driven by big tech, this idea that people trying to bleed into the russell 2000, that rotation story more, as we think about what a soft landing looks like. jonathan: the euro, 1.09 against the dollar. under surveillance this morning, the future of energy. >> we are very concerned that the larger effort to fight global climate change is missing

a major focus on developing and emerging economies. 75% of all future emissions will come from 81 countries that today are classified as housing more than 3 billion people that live in energy poverty. we are trying to change that pathway for those billions of people to focus much more on renewables. jonathan: you can watch much more of david rubenstein's interview tonight peer-to-peer conversations, 9:00 p.m. on bloomberg tv. lisa: the conversation has shifted around renewables, people are talking about the practicality of it, and this is important to discuss around tesla earnings today. ahead of an insurance company, telling bloomberg news, and this speaks to the practicality of this. you have length of repair times going up for electric vehicles, the cost of components going up, and you see more ev's written off. this is the reason why they are charging drivers twice as much

to ensure electric vehicles in the u.k. it's not a matter of if people are going to shift their habits, it's a matter of when and how they can make the financials work. that has been the massive discussion in a lot of renewables. jonathan: this came up a lot to start the year, not necessarily about changing the objectives and the ultimate destination. it is the speed that we get there. ford has had reality check and reality check about these vehicles. lisa: when we hear people talk about these goals, there is an underpinning of practicality to it, which is the reason why someone who is a pioneer in this is really compelled to talk to about investment as well as the hangups. jonathan: let's catch up with david rubenstein, host of peer-to-peer conversations. i just want to get into that conversation that you had. we have all heard of the rockefeller name.

talk about the work of the rockefeller foundation. what are you focused on? david: the rockefeller foundation is more than 100 years old, has an incredibly illustrious name. the gates foundation is by far the biggest of these kinds of foundations. the rockefeller foundation has a terrific name, terrific staff. i interviewed raj shah who has been the ceo of the rockefeller foundation for the past five years and their focus is now on climate change. right now this is what they are working on, particularly in their emerging markets. their hope is to get partners who will help them develop renewable energy sources for many people in the so-called emerging markets. that is what their focus is now. raj shah is an incredible individual, the son of immigrants, medical degree from the university of pennsylvania, but he decided not to practice medicine. initially went to the gates foundation to work on global vaccines, then was the head of

usaid under president obama, and now the head of the rockefeller foundation. very impressive individual. lisa: as someone who has conversations with a host of luminaries, how has the conversation around climate change shifted away from these big pronouncements and massive steps, the nuts and bolts of making it economically feasible? david: almost everybody is against climate change, want to do something about it, but doing something about it is harder. cop 21 meetings have had some progress but we have to recognize that in my lifetime in your lifetimes mobile not make great progress. it will take maybe a century before we get to where we want to be. we have goals to get to net zero by 2030 or 2050 depending on the circumstance you are talking about, but it will take a long time because so much of the carbon in the atmosphere will not dissipate for decades. we need to change people's habits, but it is difficult to

change people's habits when they don't see the benefit right away. very few people change their habits because their great-grandchildren will benefit from it. annmarie: what raj is doing the climate is similar to what he was doing with hunger. how much of what he is doing is impacting the rockefeller foundation? david: the rockefeller foundation has had a long history in that area, helping to develop that miracle seed that revolutionize the way that agriculture is done around the world, a long history of making sure that people have enough to eat in the emerging market countries. but their main focus right now is climate change, trying to make certain that in so-called emerging markets, people have access to energy. many people don't have access to real energy to clearly were noble energy which they think will be safer and better for the world. lisa: before we let you go, as one of the founders of one of the biggest private equity

companies in the world, do you believe this idea that we are heading into a soft landing in this you will be the start of a new cycle? david: certainly hope so. we have gone past a likely hard landing. things could change, but right now the fed has done a pretty good job of getting us to a soft landing. the question is when the fed will begin to cut interest rates. nobody knows. my own view is they probably want to do some cut before the presidential election is in high season so they are not accused of helping the incumbent party. they also want to make sure that they don't need to start cutting rates and all of a sudden inflation comes back and they have to change their position. they are watching it very closely. i suspect we will see something out of the march meeting. lisa: potential rate cut in march in other words? david: i suspect it is on the table but not a massive one. i think they recognize that if they wait until the fourth quarter or third quarter i should say, it might be in the political season, so they want

to get rate cuts out of the way in the first and second quarter. lisa: how many rate cuts are necessary to reignite economic activity? you get that frontloading, excluding the scene on dealmaking. david: the market has already anticipated it. if the fed were to disappoint us, it would not be a good thing for the markets. a number of rate cuts is less significant than the level of them. we don't know if they will have 25 basis rate cuts or 50, but i suspect they will put their toe in the water with a 25 basis point cut in the near future. i am not at the fat, so i cannot say with real certainty. jonathan: david rubenstein, looking forward to the program later on. they want to avoid being political so they have to make political considerations. always the tricky part of it when it comes to election years. lisa: we heard this yesterday from a lot of people, this conflict.

they are not political, should not let it affect things. this is a tough thing. they are either political or they are accused of being political. there is no winning here. annmarie: remember what happened in december. president biden said we are in a sweet spot right now in the economy and the fed should not continue on their hiking path. everyone thought we would see signaling to jay powell and easing off. that is what wall street was asking. lisa: i think it's all conspiracy theory. you cannot extricate a political cycle from the economy. that is the hard thing, considering be here every day, people are not doing big deals for it because of the uncertainty. it is tricky to assume that you can parse these things perfectly. jonathan: you cannot ignore this tomorrow, stacked program on "bloomberg surveillance." virginia governor glenn youngkin, the senior white house

advisor, the deutsche bank you chief economist. all of that a week away from a fed decision, a day away from an ecb call, and round three for president lagarde in the past week. around three comes up tomorrow. we will take that in full on bloomberg television. in the equity markets going to the opening bell, 35 minutes away. equities positive. four days winning streak, could make it five. all times highs yesterday. lisa: definitely watching the russell 2000, how much it is broadening out, in addition to tech earnings continuing to deliver massive amounts of cash. jonathan: live from new york city this morning, good morning. this was "bloomberg surveillance ."

manus: we are cruising towards the fourth day of highs on the s&p 500. getting vertical of here. the countdown to the open begins right now. announcer: everything you need to get set for the start of u.s. trading, this is "bloomberg the open" with jonathan ferro. ♪ manus: coming up, futures point to more record highs on the