>> rates right now are coming down. the only question is, when? i do believe it will be pushed out further. >> we are pushing back against the market. >> there is this substantial disinflationary process in place. >> higher volatility backtalk -- backdrop i think should be part of the assumption. >> people still worry about inflation. >> this is "bloomberg surveillance." jonathan: good morning, good morning. this is "bloomberg

surveillance." s&p 500, extending the longest winning streak of the year so far, headed toward three consecutive weeks of gains this morning. the good news keeps coming. inflation is well under control. stop goods are at all-time highs. annmarie: economic nirvana. essentially, getting or disinflation and growth. basically, the market is embracing that. even will get certain disappointments in earnings. jonathan: can we get to the white house now? from president biden and secretary yellen. will it continue? lisa: the idea we could have a soft landing. but look at the polls. on my screen right now, clear

politics. president biden's job approval. harvard harris, -20 on their spread. abc news, negative 25. has a message to resonate with the american voters? jonathan: is the calendar on their side this year? we will catch up with the treasury department a little bit later. we will talk to mohamed el-erian as well. he thinks they have to do a better job in explaining the exceptionalism, u.s. exceptionalism in the global ponding -- economy right now. lisa: the story has been a little hard to tell. it has been inflationary. have they had enough time people are settling into better economic environment? how clearly can they tell a story that is somewhat complicated and very much still

in the discussion. jonathan: that is economic and financial markets. i want to talk about intel. down about 11% in early trading. decent results, just overshadowed by a poor outlook. wells fargo calling it soft guide's. well below consensus. lisa: they have to compete with the likes of nvidia, talking about personal computing, competing with all the other suppliers to the cloud and other technology. we have two misses on companies that are tech-consider. tesla and now intel. wind become a trend or are we have a new phase? jonathan: we will get to intel a bit later. financial markets now. s&p, look a little something like this.

going against the grain, six-day winning streak. the federal reserve just around the corner. annmarie: christine lagarde had a chance to push back against the market and did not. in the bond space, people are saying come the fed is going to cut rates, the ecb is not far behind. jonathan: federal reserve, not too far away. i cannot wait for your review of the fed. how you talked about president lagarde yesterday. lisa: was i wrong? jonathan: you are right. are you more excited? cameron dawson coming up. ed ludlow on intel. and greg valliere on president

biden wrapping up his campaign -- ramping up his campaign. six-day winning streak for stocks. cameron dawson. doesn't guarantee better earnings. this did not happen in 2023. gdp was much stronger than expected but eps estimates did not budge. the difference that you see between what stock prices are doing and eps revisions are going. >> there is been an interesting to vergence brewing the last four months is that you've seen multiples expand significantly and yet that entire time you have slowly seen eating away eps estimates for 24 and 25. 2024, doubt about half a percent. -- down about half a percent. you would hope you would start to see a little bit of uplift in

eps estimates. i think the reason you're not, the estimates are fairly optimistic. they were present in 10% plus for this year, 11% for 2025. which means the equity market really never believed we were going to have a hard laden. jonathan: let's go over the last year. it is not like it ran away the late 1990's, this is real earnings growth for look -- nvidia and other places. do you expect them to do the heavy lifting in 2024? >> like the economy stupid, it is earnings stupid. you can explain by looking at earnings revision. if you look at gross versus value that captures the tech versus old economy trade, growth estimates are up 5% over the last six months. the value estimates are down 3%. you have this divergent market under the surface where the only

sectors that have had positive earnings revisions in the last six months are tech and com services. >> there has been this feeling they are too expensive, people have brought forward all the growth and any growth smaller companies may get from the same technological advancements has been completely left behind. do you buy into that? >> it is a good point that we have to balance the fact the names that have outperformed so much that are having these earnings revisions are crowded and expensive. eventually, there will come a point where that becomes a headwind. there's so much momentum you're in the let your winners ride camp. we have to be prudent to acknowledge with something it's crowded and expensive, you're in the area for downsize. look at home builders. i know it is not the same but they were impervious to volatility in bad news and all of the sudden, it hit them where you had this big downside

volatility. maybe a day like that for tech change the trend. >> what does it need to be prudent at a time where everyone is talking about equal risk recession and equal risk no landing? how do you hedge that? >> you need to reduce your exposure to have the interest rate sensitive parts of the market. if you're taking a bet on things like low-quality small caps or lower quality parts of the market, it is a leverage play on interest rates. of interest rates move against you, you see that outperformance start to unwind. we look for strong balance sheets. we still think we are late cycle which means you need companies that can navigate in uncertain economic environment and have the balance sheet maybe not in 2024 but possibly 2025. >> the white house has basically said we're going to have a soft landing. you are calling it a strange landing. what makes it strange? >> we're coming out of an

extraordinary period of disruptions to data from the pandemic and policy distortions. if we look at the fiscal policy side, $1.8 trillion deficit at the same time the bond market with 5.5 cuts is effectively pricing in the largest easing cycle in a non-recessionary period in 40 years, so you're getting this double stainless from fiscal and monetary policy but you have to throw in all of these things about treasury liquidity into it. the data will be confusing. it will definitely disagree with itself which will make this so hard to determine what direction we're going in. >> how are you thinking about the market leading up to november? >> we should be costs and -- we should be cautious. i should cover industrial. quite into the 2016 election, everyone was bullish on industrials because of infrastructure built.

industrials peaked as a sector to accept a the 2016 election and still have not overcome that. jonathan: do you think life is going to get more difficult for multinationals? >> i think it is possible. i think we are keeping this in mind about deglobalization which just means the margin uplift you have been able to count on for the past 30 years possibly is going to have greater headwinds. if you're having to resort capacity, that his capacity at a higher marginal cost which raises the question of these estimates were -- margins in the s&p 500 which there is a record for 2024 and 2025 already baked into forecast, is that attainable and will deglobalization? >> what are the red flags are looking for that could be a signal of something deeper in a sector or for a broader market? >> pricing power.

it is been so important to topline growth over the last couple of years and has been the source of a larger -- lot of margin expansion. if we start to see fading pricing power, that will stand very much in contrast to the revenue topline estimates for the s&p which have an acceleration in revenue baked in. watch for pricing power. jonathan: cameron dawson, stick with those, newedge wealth. -- stick with us, you would well. lisa: that the u.s. economy can keep going without some international involvement. these are also underpriced relative to where everything else is priced. jonathan: that is what we have to figure out.

i was going to be supporting national champion? i am thinking of the automakers more and more on that front. lisa: we heard from gary cohn who shrugged it off. here is the thing, at a certain point, if you think the threat of it will create some sort of isolationist policies. we heard that in davos. a lot of companies have had to reckon with an increasing protectionist policy from the u.s.. jonathan: or on this story later. -- more on the story later. here's your bloomberg brief. >> the person of new licenses to export lng. officials say they need time to scrutinize how shipments affect the climate, economy, and national security. the halt will likely disrupt plans for billions of dollars in projects. president biden saint vote this pause on new lng approvals sees

the climate crisis for what it is, the existential threat of our time. china central bank has unveiled plans for targeted stimulus meant to guide money into specific sector errors. they made them move after surprising investors this week with a bigger than expected cut to its reserve requirement ratio. economists see the central bank following up by steering credit into select areas and making a handful of trims to the amount of cash banks must hold. jp morgan is shaping up its top ranks. jamie dimon moving two key executives into new roles as co-ceos of its expanding commercial and investment bank. the switch comes halfway through his five year retention package, giving both executives more experience as he prepares potential successors. that is your bloomberg brief. jonathan: up next, the fed. >> the consensus around the

table of the governing council was that it was premature to discuss rate cuts. in addition to that, i typically stand by my comments. jonathan: more in a moment. you are watching "bloomberg surveillance." good morning. ♪

jonathan: good morning. six-day winning streak on the s&p 500. here is the bump in the road. we have been spoiled on the equity market last week. lisa: honestly, this nirvana story. everyone leaning into soft landing seems to be the story. whether it can last. we have been saying this.

we have to question. jonathan: asset management talking about it this morning. the ecb behind us. the fed come up next. >> the consensus around the table of the governing council was that it was premature to discuss rate cuts. in addition to that, i typically stand by my comments. we have to be data dependent. rather than any calendar, we are data-dependent. jonathan: lagarde reforms easing could start midyear. the fed decision to out next wednesday. writing we think the stage is set for a cut at the march meeting. lisa: paving the way for them.

i have to say, christine lagarde sounded a lot like jay powell. she had an opportunity to push back. not so much. saying, christine lagarde could have pushed back or strongly against market pricing betting on more than two quarter point rate cuts by june but she decided not to stop -- that she decided not to is an important signal in itself. they are all systems go, ready to cut rates and the son of disinflation. jonathan: we call this passively dovish. lisa: that is why i am wearing a white jacket. she is just allowing them to do it. there were dovish signs within the hood of an otherwise -- jonathan: not a single trump question in the news conference which i find unbelievable. if you're in the governing castle meeting yesterday, why didn't they ask about this? i don't know. lisa: i think reporters want the

nuance on her thought on monetary policy. the survey came out and she did say irrelevant. she's basically saying she stands by lifting up her staff. it was a weird way of saying when they put her leadership on blast. i was surprised to reporters asked about trump. is it appropriate for you to weigh in on u.s. politics? jonathan: let's get the thought s. we will be talking about ecb policy. did that sound like they were cutting rates anytime soon? >> it is clear they are in the mode looking for the start date. the question is how much more data they need to see before their confident the time is right to start. they are not pushing back on market pricing. they did pushed back several times last year. this meeting was different. i think that is a signal.

>> christine lagarde did not give guidance into which was most important to determine whether they could cut rates. is this the idea that will feel it out and if it feels right they will do it? >> i think it is a little more than that. a number of people are focusing on the wage data that will come out for q1 and they would not have that until late april and then june 6. the narrative was, maybe they can't cut until june because they need to see all the data points. she is going to hedge herself. if the data deteriorates and things continue on that path, there allowing themselves the room to cut earlier if needed. i think that is why she was not specific about what data they're looking at "bloomberg surveillance." do you think the ecb will cut more rates from the federal reserve this year? simply because economic outlook is that much more suppressed? >> i'm not so sure. one of the reasons i have been saying that is if you look at

where the euro area is starting from, led a pretty weak year of growth in 2023 and going into 2024, going to be firmer. the fact inflation is coming down, real incomes are going up, the fed is focused -- the ecb has focused a bit more on the ladder and that is not necessarily leading to stronger growth but at the least, support domestic demand somewhat. >> monitoring the red sea. how do you assess the potential inflation to consumer goods given the fact it hasn't moved oil prices? >> i think what is interesting is how christine lagarde responded to those questions. she made a point of saying the cost of shipping goods is roughly 1.5% of the overall total cost of goods sold. playing down the mpox the moves

we have seen so far could have. she drew the parallels of 2021 but noted how different that situation was. it was not just rate cuts, it was the capacity of ports to unload with a whole host of supply bottlenecks that we are not sing at the moment. if it escalates or spills over into crude prices, it creates an inflationary risk. she did not seem concerned based on what we've seen so far. jonathan: help us out with foreign exchange. the tension on the euro against the dollar. what is going to move this one? >> i have been pretty bearish your dollar for a pretty long time, three or four years and counting. what is interesting how the ecb plays out against the fed. had you asked me a week ago -- i was hoping we might get a hawkish ecb and that was set up potentially interesting trade

when rates could converge between the u.s. and euro and potentially lead to interesting hedging flows. based on what we heard yesterday, that looks harder to achieve this year. it is a risk i'm watching and something to keep on the agenda, but it is hard to argue it will be radical differences between the fed and the ecb. jonathan: that has been the story the last few weeks. elsa, thank you. let's figure this one out. the ecb versus the federal reserve. >> they talk about being data-dependent that the data is so different between europe and what the fed is working with in the u.s.. we think about the data this week and there a great upsides but then you look at what europe got which is the iphone business survey in germany showing abysmal outlooks. it was support a more dovish tone from the ecb because of how

much weaker the data is in europe versus the u.s. we think that has to come from the diffusion of higher interest rates into the european economy because they have short-term interest rate exposure that in the u.s. were a lot of companies are able to turn out their debt. >> doesn't it make you optimistic to invest simply because they're seemingly a bit more willing to cut and valuations are lower? >> over what europe has been the widow maker trade year-in and year-out. we have seen consistent derating of non-us stocks versus the u.s. , partially because of sector concentration. there 70 more value type old economy sectors within europe. we are finding a lot of opportunity to be selective within non-us markets. i think that is the key which is don't buy the index, buy companies that are -- buying blind probably doesn't work. the market is still in a very

distinct downtrend versus the u.s. until that turns, it is likely value trap. jonathan: in the cat name names -- i know you can't name names, they can we talk about them? >> it starts with an a ends with fml. there are opportunities in retail, semi conductors within the european market, within health care well. it is not necessarily about buying the old economy banks or mining companies for example, and that is where sell to it comes in. jonathan: cameron dawson, thank you. that went pretty well. the fx market has been a snooze. take the euro against the dollar. the united states is to pretty

resilient. i think everyone is hoping maybe to get some clear direction or trade emerging on the euro and it has not happened on my screen. lisa: you could feel the frustration in her voice. she said, i hoped maybe we would get something and instead will get this wishy-washy or same zone. here we are with basically -- jonathan: intel plunging after delivering a disappointing forecast. that conversation is just around the corner. this is "bloomberg." ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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jonathan: live from new york city's, equities pulling back. here is a snapshot of financial markets. small caps up by seer .55. lisa: how much is intel? if you're going to start cutting rates, to the races. that seems to be the feeling we have heard from forecasts. jonathan: the intel conversation is moments away. here are the bonds. yields look a little like this, and changed on the tenure. -- on the 10-year. lisa: the data was decent.

it was perfect, actually. better-than-expected growth from the fourth quarter but also greater disinflation. just to pause, what cameron dawson said was interesting about pricing power. if companies have pricing power, that means inflation goes back up. if they don't, that is good for the economy but is a good for the companies? we say the economy is not the market. how much is that going to move in the opposite direction this year? jonathan: let's finish on this in the fx market. who needs sleeping pills when you have the euro-dollar? almost totally unchanged. lisa: this is basically what we can expect for the foreseeable future. jonathan: she was looking for the downside. lisa: how can you decide who is going to have the upper hand in terms of who cuts first when they basically saying the same thing?

there's nothing really changing on either side to change the narrative. jonathan: the dollar a little bit weaker. the u.s. pulling ahead of china after better-than-expected gdp growth to round out 2023. the u.s. economy grew over china. china central-bank signaling even more stimulus as growth worries continue, including the new credit market for certain sectors and a possible rescue package for the stock market all in the past week. this goes to the u.s. exceptionalism that mohamed el-erian is going to talk about. annmarie: they have yet to come out at that. this hitting on the stock market. it is a complete divergence of what everyone was expecting. everyone was expecting china to ramp up. lisa: which is why you're signature virgins and the stock arc it. -- why you're seeing divergence

in the stock market. basically they have gotten so underpriced people are looking at this insane, what do i have to lose? it is certain point people want to pick up pennies before the bulldozer. even if it is coming eventually, it seems like an entry point. jonathan: on the united states, the fact we are here in america relative to win -- it is amazing you have heard more from the white house about this. they have had several criticism about the stimulus package they passed when they came into power. it is hard to believe we would be where we are relative to europe and china without them. lisa: especially because everyone is talking about the massive cash consumers have. a lot of the reports i read after gdp came out is that it will continue because people still have cash. now they are earning real wages

that are positive. these are stories they can tell. we are not hearing it in a cohesive way. annmarie: as we go toward the election, they have not really told that story. biden is on the campaign trail trying to. he was in wisconsin yesterday, going to minnesota to talk about one million-dollar bridge. that package they got done the prior administration said infrastructure, thank got it done. they're going to try to sell it. jonathan: look after that conversation in about two hours time. let's talk about the shakeup at j.p. morgan. moving into senior roles as co-ceos of the bank. pinto will focus on a broader

role as president. another shakeup. is he going? is he going? is a cohesive about five years through his tenure -- lisa: he is about five years through his tenure. there are valid questions. these are the calls i got for some republican. annmarie: jamie dimon says, trump was right on some things. look at nato. is he trying to ingratiate himself with the trump campaign to maybe become secretary of treasury? jonathan: how many times have we played this game? i hear you on the tax situation. let's get to our vm h. shares look like this. the company beating estimates with revenue growing 10% to round out the final quarter of

2023. an increase in sales of handbags. spirit sales also better than estimate. giving a list to luxury. alexa burberry has not been good at all. lisa: may be more selective in terms of the mix of products and who they're catering to. we have been talking about this. you been great on the buy now/pay later trend. it was good for entry-level luxury. i think people who want to buy champagne, popping open and celebrated. in pairs, the saying -- annmarie: you have the distillery and the alcohol products. there something for everyone, including belmont hotels. they are in a category of their own. jonathan: if you are in paris.

fourth quarter, number of chinese customers to its french stores was 30% below 2019. 30%. is that ever coming back? lisa: we heard from the ceo of trip.com. she said there is a desire but there is the visa situation. is that true? or is or not as much desire? it is a decent question. can they move on without it? jonathan: the stock is surging. intel is plunging and premarket trading. first quarter outlook much weaker than estimated. sales expected to fall about $1 billion short of estimates. losing ground in the chip market. ed ludlow joins us. >> whatever the story is for the semiconductor sector, coming off the bottom or spending chips or

government-backed untrained of this industry. intel did not do enough to show investors it is in the race. the stock is down. there's only so much patience investors have and this is a turnaround plan that is been a motion for quite a long time. you ask at what point are you going to turn around? jonathan: how difficult is it? >> it is difficult for specific reason. right now from an investors perspective but also a customers perspective, there's only one game in town which is cloud and that is nvidia. there isn't enough evidence whatever they're offering -- the legacy business and data centers need all caps of chips including cpus. that growth wasn't there against the previous guidance. the market is asking, you're not

winning on basics and not showing us the concrete deals going forward -- remember, intel has another plan, which is to take on samsung. >> to have any sense whether they have locked-in any deals with the other major tech names to manufacture their chips? >> know, we don't. they said we have $10 million of lifetime deals. you know if you drop a name into a conversation it can sometimes give you weight. my wife said are you going on tv and i said i'm going on tv -- i'm going on "bloomberg surveillance." it is a funny analysis but that is with the market was to hear. stop giving us a number i could be future and tell us who the name is. was a piece of news 24 hours ago -- it's important up while that is a capacity deal on the foundry side for the u.s., it is based on depreciating assets in arizona that are obsolete.

>> well done. you can come back. that was a good plug. we talked about building potential chips for other companies and competing, we talk about policy. if you build it, they will come. intel has got a lot of money to build some of these foundries in the southwest of the u.s. is it going to be worth it? >> traditional, these are highly cyclical. the risk issue build of this capacity only leading to long-term glut and supply. the difference this time, in this goes to the reporting around the worry of future supply of ai chips, the addressable market for ai accelerators, it is infinite. everyone is upgrading what they think the dollar volume will be in 2027 or demand unit perspective in 2030. that gives bulls some

positivity. but it is predicated on the idea that intel will be in the race. they are not giving evidence now and therein lies the problem. jonathan: where is the money? >> the chips is fantastic but in real terms, don't just get a check in the mail or a wire from the u.s. government. accessing the capital is hard. it is multifaceted. you take money from her balance sheet, many from the government, you get a strategic investor. keep an eye on that going forward. but waiting to receive it and acting on it takes time. lisa: this is the first of a lot of chipmakers coming and nvidia coming later february. how much is this in inducing tragic -- idiosyncratic story? >> at the moment, the story for

me is where you want to find eps growth? you find it with nvidia. the only other place you can look for it is the utility sector, which i don't cover. this 11% is isolated to intel. take texas where it is a mixed picture. basically, ai is the only story in town. investors are willing to back that story. the bottom line and top line, it looks good. jonathan: good to catch up, as always. i want to compare and contrast this premarket and then to year-over-year. premarket, down about 10%. over the year, look at these numbers over the last 12 months or so. intel of 65. sounds all right. nvidia is up 211.

qualcomm of just 15%. there are standout winners in this segment. lisa: jim breyer says it should be magnificent. it is the point of what we are seeing with nvidia. they will be reporting february 21. the theme is, get all of your expectations, inflate them, and they will blow them out of the water. what they have done with earnings has been tremendous. this has been the nvidia rally. jonathan: much more conversation later. financial markets look a little like this this morning on the s&p 500, negative by 0.5 sent -- 0.5%. starting with the equity market, down about 0.15%. bond market, 4.11.

that's couldn't update on stories elsewhere. -- let's get an update on stories elsewhere. >> bank of america, $800 billion bonus. boosting pay to retain employees even as that bank works to keep a lid on expenses. about 97% of the global workforce is eligible for the incentive which goes to workers who earn as much as $500,000 in annual pay. eu leaders are moving toward an agreement next week to transfer some $54 billion in aid to ukraine. >> i do hope at the end of the day, will be able to agree. i don't see any reason not to. >> eu leaders return for a summit february 1 to finalize the deal. apple revamping its ios, safari, app store offerings in the

european union. aiming to appease regulator said to impose tough new antitrust rules. it will support their party app stores and gaming services for the first time. jonathan: up next, president biden on the campaign trail. pres. biden: experts are insisting recession words just around the corner. every month there is going to be a recession. what recession? growth accelerated in 2023. jonathan: this is "bloomberg." ♪ you'those salted nuts, right? never waking up from anesthesia -- 1 in 185,000. validate your parking or just see how it goes? what? why stress about the unlikely? does a killer clown worry about being struck by lightning -while winning the lottery? -sure don't. but your odds of falling victim to online crime are 1 in 4. you need aura. you, your family, all protected from scary online stuff.

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jonathan: equities close to all-time highs on the s&p 500. futures pulling back a little bit. yields are a little bit lower by not even a basis point. president biden on the campaign

trail. pres. biden: experts from the time i got elected are insisting recession was just around the corner. every month, there is going to be a recession. what recession? growth accelerated thanks to the american people come the strongest growth in those inflation rate of any economy in the world. jonathan: looking to capitalize on the robust fourth quarter report. 9% increase in americans who have a positive view of the economy compared to your go. his overall approval rating remaining at just 33%. we will hear more in the coming weeks as they prepare for the south carolina primary february 24. lisa: there -- annmarie: greg valliere is discussing this morning in his opinion piece, talking about how weighing in on how critical buying will be connecting to the economy for those voters is a big deal. this looks like a goldilocks

economy for americans believing that. biden has a decent chance. jonathan: let's get to greg valliere right now. let's start on the economy. is the calendar on his side? do moves we have seen in financial markets, development in the economy, do you expect that you show up in the polls? >> i do think the calendar is on his side largely because these great numbers come out in june, july, or august, it may have been too late. but we are in january. over the next two or three months, there will be more data conferring we are not going to have a recession and that news comes at a pretty fortuitous time for biden. >> if the economy is doing better and americans feel better about the economy, what happens next for the issue that isneck in neck, immigration? what we're hearing and congress, potentially a deal will not get done. >> first of all, if joe biden

looses reelection, i think it will be because of immigration. he does not really have a plan. but this is compounded by the new speaker of the house johnson and donald trump who are urging their colleagues not to act because they don't want to give the democrats a victory. that is pretty cynical. i do think we won't get a deal. the intriguing question is, can we get a separate deal that gives money to ukraine? i think that could happen. >> when it comes to mitch mcconnell, it basically said capitulating on this deal who is pushing for, is there any chance you see before november potentially him being able to rally troops in the senate and get something done on immigration given all the work that has been put into this? republicans might lose a generational moment in time to get something done. >> i think they viewed the big

election issue is more important. i think the key variable is to get another big surge like before christmas? we were getting like 10,000 illegal immigrants a day before christmas. we had nearly 2 million last year. if the numbers start to spike up, i think that would be an incentive to do something. >> you mention speaker johnson. he has a really tight rope to walk when it comes to this potential tax bill as well as what this means for child credits. jesse put that on the floor? >> it looks like he is not anxious to get any kind of deal. the hard-line conservatives in the house don't want him to do anything. he is on a short leash. i think if we see johnson not cooperating, he could suffer the same fate as kevin mccarthy. he could get the boot. >> given the fact trump has gotten leadership position probably going to be the person

running against joe biden, doesn't make it less likely we will get anything done in congress? that there is going to be this real for sure that gets accelerated? good harm potentially donald trump? >> i think it makes it more likely we will get nothing done, that they won't want to give biden any victory and will spin their wheels and do nothing. as i send, i am pretty cynical but even by my standards, this is really cynical. >> we're going to get the core deflator later today which is the key inflation metric. what do you think this administration is getting wrong in messaging? >> i think they probably don't appreciate the psychological damage that was done to many americans during and right after the pandemic. i think they were quite nervous about their own personal budgets. that has not changed.

the public is still the belief the economy is not good. i was at a conference earlier this week of retail investors and i was telling them i thought the economy was looking good. they thought i was delusional. there is still a strong opinion the economy is not good, even though i would argue the numbers lately have been encouraging. >> it is hard when inflation hits groceries to the degree it has. we heard from janet yellen yesterday and she was talking about prolonging some of the tax cuts from the trump era. what do you make of this? the concern of the deficit and the need for fiscal responsibility and then talking tax cuts in a new push? >> i think you can make a compelling case we should do nothing. everybody is saying, let's cut taxes and spend more. i don't think this economy needs anymore stimulus. i don't think it needs more

spending or any kind of big new tax cut. maybe a small one on the child tax credit. if it ain't broke, don't fix it. there said tim tatian in washington -- tim tatian to overreact. jonathan: lessons from new hampshire and the ability to form president to attract moderates. is he thinking about a running partner? >> i thought the exit polls were really significant in new hampshire and showed a lot of moderates don't like him, a lot of suburbanites don't like him. he is very bad numbers. there's a compelling case that trump cannot win the election just with his base. he needs to expand it and there was no sign he did that in new hampshire. jonathan: when he says if you donate to nikki haley, we won't accept your money, what are the chances he will? >> he will take their money.

that is a hollow threat. i think a relationship now between nikki haley and donald trump is so poisoned that her chances of being the vice presidential candidate are very slim. jonathan: anyone in mind? >> let's watch two people i think are ambitious. one is j.d. vance of ohio. the other is ellie stefanik. they are both articulate, young. i think we will hear a lot more about the two of them. jonathan: greg valliere, thank you. the view from the administration coming up a little bit later this morning. let's talk about the names he threw. what do you think? >> as greg said, those names are already within trump's base. if he is looking at these numbers, and as greg said, he has issues with server urbanites

and independents, then you need to go outside the maga stronghold and potentially has the fuel been blown up between nikki haley and a formal relationship that is not possible? if you want to get the entire party, he needs to look elsewhere than elise stefanik and j.d. vance. lisa: the interesting book giving a window into where he is coming from. jonathan: the liberal left loved that book and then he started getting into politics and all of a sudden they don't like the guy anymore, which is kind of funny. lisa: it is a question of -- bring people together in a way people relate to. jonathan: coming out, mohamed el-erian -- coming up, mohamed el-erian. from new york city good morning. ♪

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we are at a point now where respecting the broader market. if you look attack and the dispersion happening in the magnificent seven, it tells you something is brewing. the disinflationary trend is the number one story. this is an unprecedented economy and we have to manage a bunch of different factors. >> this is bloomberg surveillance. jonathan: we are on the longest

winning streak. for our audience worldwide, this is bloomberg surveillance with the lisa abramowicz and marine her turn. --annmarie herdern. lisa: people are coalescing around a soft landing all pointing to stronger growth. the president of the united states calling for a recession. janet yellen saying the bad part of the inflation story is over. >> biden gets poor remarks when it comes to the economy but the

timeline could be on their side. the michigan sentiment survey, americans are starting to feel better but can they sell this going into november? lisa: when talking to uber drivers five dollars would buy you something you could eat and now it can't in the same way. that is problematic and makes them feel negative. is there enough time before november for people to adjust to prices at higher levels than they were in 2020? jonathan: the consumer is about the cumulative inflation since 2020. you need this labor market to

stay decent and wage growth to continue climbing. the problem i have with the data , so much of it is a conflict. the payroll data looks good but beneath the surface, it's just in a few industry. visa compared to capital one, visa said consumer spending remained resilient but capital one, everyone is falling behind on their credit cards. which one speaks to the american population? lisa: it is lvmh versus kmart. those who have money will keep spending but people who have to borrow a 10% have trouble paying back. these disparities point to a much more complicated picture. jonathan: here is the price

action this morning. the equity market negative by 0.1%. the bond market 4.1143. the fx market, we heard from the ecb will the fed be different? lisa: we have a 90% of a rate cut from the ecb being priced in by june. if christine lagarde continues to be data dependent than her date is going to have to change. jonathan: they will have to move forward to the spring but she's not going there yet. she said i haven't talked about rate cuts but what i've said before so holds. lisa: there was a bloomberg

reporter asking her how you interpreted what i said but i stand by what i said. which is likely summer. jonathan: the program looks like this, mohamed l rainey and -- el erian and bob michele. better-than-expected data boosting evidence for a soft landing. >> last week we saw the biggest jump in the past 30 years. we have passed a lot of good legislation and we know it will take time before it takes hold. it's turning the economy around. jonathan: the potted administration cannot rely on lower inflation to alleviate voters concerns.

in needs to communicate the exceptionalism of u.s. economic performance. i think you are right on the money. this is a big issue, can you give us what you think they should do in the weeks and months to come? mohamed: they have to translate what they've achieved, amazing job growth, instead of a reception we had a 5% third quarter remarkable. stockmarkets out record highs. it is the only advanced economy investing in the drivers of tomorrow's growth. that is a long list of achievements but if you ask the

person in the street and they talked about the polls, they think the administration has mishandled the economy. people think about price levels and for them when we say we're winning the war on inflation they think prices will come down not that the rate comes down. and they have not communicated in a manner to translate this to every day. you need more consistent communication and simplified for the person on the street. not only are they better off than they were before but there is new growth coming in. jonathan: and there's discussion about the labor markets holding up over the next year. using financial conditions, from the end of october, will that delay any weakness in the labor market? mohamed: a lot of this is like

pushing on a string. corporate's will refinance at lower rates. mortgages will be slightly better but the reality is that there are structural issues. the economy slows this year because some of the drivers of last year's growth are no longer there including high savings and inflation stops going down. we are in the sweetest spots of inflation reduction. it will get tougher going forward. is not out of the question that inflation stabilize but you get the rate going up and that will really impact perception. annmarie: they want to lean into the soft landing expectation. when he looked in november, where are the vulnerabilities to that soft landing? mohamed: oneness with the

external world is imposing on the u.s.. it is getting harder to grow in this global environment. we have disruptions of supply chains, cost pressures in the pipeline, delays and shipments. two, the consumer will be under more pressure. you have talked about that levels, savings have come down. we no longer have pandemic savings being utilized. there is a real risk that growth slows to 1.5% with the downside that we could slip into a negative quarter. we need inflation to keep going down, the market expects that it will do so in a much more orderly way that will materialize. lisa: they said they are

checking for pricing power with companies reporting earnings, if they don't have pricing power that's great for disinflation but bad news for their bottom line in terms of their margins. how much is the sweet spot mean margin compression down the line? mohamed: my big theme for this year is dispersion. we are realizing that not all tech is tack and not all luxury is luxury. that is what the results are telling you between intel and on the other hand, for lvmh. you see growth dispersion. some companies have pricing power and others do not. the market is betting on an aggressive rate cut cycle

allowing for everything to go up. as long as the fed loosens, everyone benefits. we will see a lot more dispersion. jonathan: deutsche bank says we will get a reality check, a dead percent outside on the s&p 500. are you expecting that kind of reality check given where stocks are at? mohamed: i'm not in the business of predicting when it happens and where people have been wrong in the past is ignoring the technicals. technicals are favorable. there is still money on the sidelines that could be put to work. this will be viewed as a buying

opportunity. the thing i worry about most is that growth will disappoint with a downward risk. this comes against the universal romance with soft landings and secondly, a recognition that the fed is not going to validate what's being priced in in terms of cuts. jonathan: chairman powell, what are you expecting? the one we heard in december at the news conference? mohamed: the one we will hear at the beginning of the press conference versus the end? jonathan: it has been confusing. mohamed: this is a confusing time. people i talked to privately, expectations are all over the place. people think they will not cut rates until summer and then

people think they will start in march and they will frontload it because of the elections. there are people who think like me that they are likely to wait until the summer at 25 basis points. forward guidance has lost its power. the fed has been clear in terms of forward guidance of the market is saying sure, i'm not going to listen to you. jonathan: you say you are not in the business of predicting the future but can i get you to predict the future, when step first rate cut? mohamed: my gut feeling is that it will come at the beginning of the summer, soon, maybe july. it will be 25 basis points. not only do i think that's going to happen i think that is what should happen. jonathan: appreciate your time today, as always mohamed

el-erian from queens college cambridge. lisa: it means pushback and a lot of repricing in the markets. right now, you have a significant lien about a 50% chance of a rate cut in march. jonathan: not in the business of predicting the future but were going to go ahead and predict the future. let's give you an update on stories elsewhere. here is bloomberg brief. new licenses to export lng. they need time to scrutinize how it will impact national security. president biden saying this because on lng approval sees the crisis climate for what it is. u.s. chains are dealing with the

growing number of middle east consumers boycotting western brands over americans lack of action to end the israel/hamas war. one egyptian soda brand says their sales have tripled as consumers boycott coca-cola and pepsi. sales of lvmh are surging after they saw sales rise. they had a 10% growth in revenue over the last quarter. the ceo said he was very confident for the year ahead. jonathan: coming up next, the volatility on the horizon. >> a higher volatility backdrop, the market should be part of the function as we continue on this year. jonathan: that's coming up next on the program, live fryork citg bloomberg surveillance.

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jonathan: a six-day winning streak on the s&p 500. we might just snap that. we are going absolutely nowhere in the equity and bond market. volatility is on the horizon. >> volatility is so low that some degree you could only go so much lower before you get more volatility. with micro conditions including inflation should be part of the assumption as we continue with this year. jonathan: between mixed messages from the fed and geopolitical conditions they are bracing for the unpredictable. the growth in earnings needs to

find a common narrative. when you are looking for 10% earning growth's and cousin interest rates. it's your job to square the circle. sarah: you have had this big move in multiples in the expectation that the fed will cut rates from the market is perspective. you have a growth and earnings where you see fourth-quarter earnings coming in but expectations have been a mixed bag. how do i square that and say that should all be fine? they made a good point on margins, all of these things we are doing are not positive for margins. lisa: which part of the margins are you leaning against

the most? sarah: in some cases nvidia edis had a huge movement but the cash flow there supposed to generate, as sound is crazy essence of other areas. the idea that you could just push risk assets higher while you are looking for my new show and the rest of the world not doing well. it's hard to pinpoint where the problem is. lisa: now for the psychology portion of the program. i'm curious how much of this is a reversal of last year? people were pessimistic and got it wrong and now they feel like all the voices saying this looks concerning, they have to ignore it because it has been a nirvana outlook this year. sarah: when that narrative changes and everyone decides it's ok. we fight about it amongst

ourselves, are we in a situation where you have different drivers and different buyers, hedge funds and micro funds. when you see the fundamentals have changed they come back and say well maybe not exactly. the answer is, i'm not really sure. you have all the stuff coming up in march whether they telegraph, and points to volatility. jonathan: what do you like now? sarah: we like those big tech names. nvidia has been a big move but some other semiconductors are really expensive and even though we like them, we think he will continue to increase technology

those areas are tough and there are places in the environment. like train, carrier, you have hvac replacement cycles. jonathan: the conflict in the data in the earnings. look at visa with consumer spending resilient and then capital one talking about our winners falling behind. sarah: this goes to the point of lvmh and people like capital one on the credit side are seeing issues. you have a bifurcation in the consumer in the high-end consumer is doing well, price levels are still high. it doesn't matter if i'm struggling to put groceries in my cart and everything is more

expensive. lisa: we also had american express and they said it's not so great that they expect much better earnings because of a sign-up to cards. i will point does disinflation which is good for the economy for lower income families, at what point is that negative for stocks in terms of their margins? sarah: when you have price level changes is good for somebody and bad for someone else. you drop oil down and it's good for refiners. i think margins in general you have a lot of cost structures going higher, which is going higher.

but if you cannot get increased price increases. look at some of the areas that are big, tech stocks is not an issue. it's much less of an issue because everyone's trying to cut costs. lisa: what about airliners, there is discretionary spending and a mix of clients. sarah: airlines are tough because you have capacity changes. the u.s. domestic is not as good as international. there are plenty of places people are spending money but the question is, is there enough capacity restriction for people to raise prices. jonathan: let's finish on the autos if we can. tessa was down 12% yesterday.

this feels like a difficult moment. for the whole industry in america. labor costs are moving in the wrong direction for them. sarah: you are looking at an area where you have not had as much demand because interest rates have gone up, insurance is going higher. all of these things are driving to be more expensive. they are now promising a low-cost vehicle to compete with other things and you have a huge range of first adopters of ev's. i think you have a lot of crosscurrents that make it difficult to parse with the

fundamentals. jonathan: were down about 26% year to date for tesla. lisa: that press conference and help with dan ives said it was a train ride to a plane crash. jonathan: sarah, it's good to see you. thank you for being with us in the new studio. looking ahead to the fed meeting. bob michele before the fed meeting. that's coming up on bloomberg surveillance. ♪

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jonathan: brace yourself, bob michele jp morgan. equity futures look something like this, negative by 0.07%. extending the longest winning streak so far. russell 1995. unchanged at the 10 year, 412. and to finish on foreign exchange, 1.089.

janet yellen telling the economic club of chicago that inflation is under control and most americans would agree. >> people are seeing their fortunes improve and i believe that inflation stays lows they will regain the confidence in the economy. jonathan: the pce do, would most americans agree with that statement? annmarie: not if you look at the polls. this was done january 21, negative 21 spread on inflation specifically. it's not catching up to americans but may be a well. lisa: i thought her comments on tax cuts were interesting.

given her focus on reducing the deficit and how to distinguish from president trump. if you make 400,000 or less. if you're about that bracket, it will be difficult to get those era tax cuts. jonathan: nikki haley saying anyone who makes a contribution to his rival will be barred from the maga camp. the president is going after her donors who contributed 50 million which was slightly more than what trump received. will he actually follow through with this? annmarie: if a billionaire calls you and volunteers to fund your campaign.

campaign financing for both of these super pac's, haley brought in more. jonathan: if you look at the lessons in new hampshire, the inability for the former president attract moderates. a lot of people think the perfect person to run would be nikki haley. lisa: after some of that commentary it doesn't seem likely but that said, the problem with independence raises problems. annmarie: he will need to get someone more in the middle so they can encompass the entire party. if he had nikki haley she could speak to women in the suburbs. jonathan: we have talked about lvmh and intel. lvmh is rallying hard but intel is not.

they were expecting first quarter cells to get around one billion but they have a lot of work to do. he will join limerick technology at around 1:00 p.m. until is in a tough spot. lisa: they were expecting $.34 per share. we talked about this with ed and it's a mix of what your products are. but the dispersion of the haves and have not. the technology that is most leveraged to the current deal in the business world. those dispersions are getting greater and greater which makes it more challenging to have an overall call. jonathan: for until they're just not in the right spot right now. lisa: and they are not getting traction. some of the other chipmakers and

-- jonathan: counting you down to a fed decision next week. bob michele writing this, whatever the mirror image of stagflation is thus what we wound up with. given the momentum it's difficult to imagine anything other than french growth ahead. we will not talk about liverpool yet but let's talk about bonds first. after anticipating that hard landing, not anymore. why should this continue? bob: there was every reason to expect a recession and everything looked frail. i would argue in march we had that recession with the collapse in the regional bank space.

things were stabilized and we took off again. as the year has gone by, businesses and households have managed to absorb the higher level of prices. they don't like the higher levels of prices but we are in the disinflationary environment. i am tempted to see how much of a high five jay powell wants to give himself. jonathan: you think there could be a victory level? bob: i cannot possibly get better than this. you've had 25 months of unemployment at 4% or lower. and we will get another update in a few minutes. if you look at core personal

consumption at 1.9 percent, they are there. jonathan: i'm not expecting chairman powell to walk into the room and high-five people but what do you expect he will do next week? bob: i think june is where the market is gravitating to and that is a good marker for him to put out there. i like what christine lagarde did which is to acknowledge that there has been improvement in they can think about things. the level of rates is substantially pulling inflation down and there is an opportunity to make a shift. when you look at the real fed funds rate at 5.25, 5.5. the real funds fund rate is 3.25 which is way above what they think is normal. lisa: how us is predicated on

the idea that the new normal is the pre-pandemic normal. the higher inflation world, even if they cut rates they can't cut them that far? bob: i think the last 15 years where the anomaly. baby boomers blew everything up in 2008 and is taken a long time to recover. but there is a new generation coming along. they are not 17, 18 years old they are in their 30's and they are the dominant splendor and that's the environment we are in now. you don't go to five, 6% and stayed there. you can take some of the pressure off the system and let things stabilize and then see

where the economy goes. lisa: if the fed can't cut rates as far because the economy is managing rates where they are. how do you reason around getting aggressive in high-yield bonds that have a credit component and rate component which may not be able to compress as much as people expect? bob: we think they could bring rates down to 3%. they will only do that if they're out there 2% inflation target which is a real fed fund rate of 2%. we will see whether that asserts a shift. that is 225 basis point of rate cuts. that is a lot and takes a lot of pressure off corporate america and a lot of it funds itself through banks or private credit

markets. it takes a lot of pressure off the consumer with things like housing, may be that starts to pick up in earnest in the borrowing to revolving rate credit cards comes down. you get a good level of consumption and it reminds me of 1995, credit spreads can go to 300 basis points and stay there for years. jonathan: you give a stick with us and we will expand on that conversation. bob michele with jp morgan and on credit. s&p futures almost totally unchanged. elsewhere this morning, here is your bloomberg brief. yahaira: the credit card giant is sticking to its revenue goal

wyomissing profit and revenue expectations. they are aiming for growth to exceed 10% while visa saw in a percent profit increase. apple is revamping its app store in the european union. it's an effort to appease regulators which are set to impose new antitrust rules. liverpool manager is stepping down. he will leave the club at the end of the season. he has been in liverpool since 2015 winning six trophies. he said he is running out of energy. jonathan: i how to treat moments of go, could we get a moment of silence for klopp leaving

liverpool. shout out to anne-marie wearing red as a tribute. bob: it is brutal when you are a bond fund manager. he did us proud. he brought us back to the top. you heard, six trophies. i don't think he is done. i think he manages a national team. jonathan: do you think this is where deciding? germany? bob: i'm hoping it's the u.s.. jonathan: that's where you think it is going? bob: someone with his talent, he will get restless and i think a national team is a good fit. jonathan: i'm next, the outlook for credit. >> the significant demand for

corporate credit starting the year. jonathan: constructive on credit not only blackrock but jp morgan as well. e conversation is coming up next. ♪

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so great getting to know you, let's take a look at your new investment plan. ok, great! this should have you moving in the right direction. thanks jen. get ongoing advice; and manage your investments in the chase mobile app. jonathan: on the s&p were negative by 0.03% after a six-day winning streak. under surveillance, the outlook for credit. >> this significant demand for corporate credit to start the year they are rotating out of short-term cash products or bringing their allocations back to neutral where they have been underweight. i think there is a broad-based appetite to lock in yields.

we retain core holding an investment bonds. bob michele is back with us and you mention this briefly. what has changed for you in the past few months? bob: the probability of recession has pretty much finished over the last couple of quarters. if you are in the soft landing in an environment where inflation is moderate in the fed can bring down rates that's great for corporate america. the financing pressure comes down, consumers are outspending. credit spreads tend to come in. jonathan: we have seen tons of supply to start 2024. is this catch up from last year

or pull forwards from this year? bob: i will tell you something surprising between treasuries supply and corporate supply i am wary there is not enough. i almost wished the fed would not start tapering qt and i almost wish they would push out interest rates and go once a quarter instead of starting in may or june. there is so much money looking to come into this market. you've got to where the levels got to, they got here simply with the money that's already in the market. i have not had a single conversation with a client who said, get me out of bonds. everyone is saying how can i get end, where can i get in?

you see it in money market fund assets that are still at 6 trillion. you talk to corporate treasurer and hedge funds, everyone wants higher yield. lisa: the scarcity of bond issue, how much is this because a large chunk of corporate america is going to private markets to borrow so there is a limited pool of these securities? bob: i think that is some of it. the other thing that is happened is the backup yields happened quickly. it is starting to reverse so it feels a little late this time last year. you look at the treasury, it has moved a lot of this issuance to the front and i would argue put it out and 10, 30 years.

allow people to get into this market who will be long-term holders. i think private credit has served a lot of purposes. the most important one, it's another avenue of non-bank lending that has materialized and that has created a fantastic rule of capital available to corporate america. if you are a company you can go to the bank, the public markets and private credit markets. lisa: what happened to all the zombies that would collapse in the wake of higher rates? bob: look at the bone fight to finance macy's. there are so many different things that tell you there is so much committed capital waiting to be invested that nothing can really default.

it just gets rolled over and restructured. as you are getting into an environment where recession is in the rear window where there is emperor liquidity around the availability of credit is everywhere. jonathan: where was this message in october when the two year was five. no one was saying there are not enough bonds? why is it different this time? i'm scratching my head thinking there are not enough bonds? we were complaining there was too much supply? bob: i wasn't complaining about it. the worst decisions get made on supply and demand the bond market. if you go back to september, there was a lot of concern that the fed would come back and hike

rates. now you have gone another quarter, two quarters, the economy has done better than anyone anticipated and inflation has done better than anyone anticipated. jonathan: you don't sound concern about america's financing needs. the deficit that could be a bigger monster depending on who gets in the power. are you concerned about that? bob: not today only because i saw the need for. if you have the pandemic and you need an overwhelming monetary response. you have to work them out. you can't keep piling up you have to let them come down. but i don't think you bring it down all at once. lisa: let's build on this idea

that is not this year, next year as people get more nervous that these expenditures continue to increase. at what point do you care about supply or is it never really had it she just depends on the yield? bob: we are in an economic nirvana and one of the things the fed can do to keep us there is start to bring rates down. if you go back to 1995, it was critical to have a soft landing and they cut rates three times. that took some of the funding pressure off households and allow things to stabilize. i do think that's a necessary ingredient. we can assume that everything is fine now we don't touch anything. annmarie: we have seen a 79% increase since 2019 of debt to

gdp. is the u.s. going to get comfortable running japan size deficits? bob: i hope not. i think every household we have to balance our budgets every year and i hope our federal budget will do the same thing but i think that ship has sailed coming out of the financial crisis there was talk about federal repression. that has not proven to be correct. when you look at countries like japan which have made 300's debt to gdp, you can keep it there forever. i hope there is fiscal responsibility in place in washington but i understand how we got here. jonathan: michael mckee asked

what should my question be at the federal reserve. this is a monthly feature. i think his word he well show up next week. bob: he has to pin the mental and qualitative tightening in the roadmap for that and if there is enough demand for treasuries, do they need to start qualitative tightening or are they concerned about another repose? jonathan: do we need to get through qt before cutting interest rates? bob: both certainly help. if you think there are accelerators of treasuries there is the treasury funding the government and the fed running

down its balance sheet. you take one of those out of the equation suddenly the headwind becomes a talent. jonathan: mohammed said he didn't want to predict the future, can you do that for the bond market? what do see yields coming down to? bob: we are in the markets and investing high in capital. ike can sit here until tell clients we have no view we plunked 800 billion to whatever came across her doorstep. our view is that there is a soft landing and capacity for the fed to bring rates down to 3% that will still look historically high and in that environment you can see the two-year around 2.75, 3%.

maybe not 3% across-the-board. jonathan: year-end next year? bob: once the fed starts cutting rate with the money coming into the market it will happen this year. jonathan: bob michele with j.p. morgan asset management. we are going back to three, not quite halfway through the curve. lisa: bond scarcity, when everyone was worried about supply. that is a massive take away. jonathan: and that's a non-consensus, call. we will have the deputy secretary peter tour and to view

wilding from pimco. that's up next. ♪

>> rates right now are coming down. the only question is, when and i do believe it will be pushed out further. >> we are pushing back against the markets pushing rate because

in the first quarter. a higher volatility backdrop with micro conditions including inflation in the market should be part of the assumption. people still worry about the inflation and there is not a lot of data to support it. >> this is bloomberg surveillance with jonathan ferro , lisa abramowicz and annmarie hordern. good morning to our audience worldwide. i am jonathan ferro in your equity markets unchanged on the s&p 500. what a difference a few months make on the equity market. an all-time high every single day in the bond market, yields were up 5%. the sentiment shift, amazing.

bob michele, j.p. morgan asset management. not enough bonds. lisa: this is when we were expecting recession and now we are in this goldilocks moment. a year ago people were talking about the impossibility of a soft landing and now people are saying not only is it a soft landing this is a note landing with disinflation. at a certain point how much more optimistic can people get? jonathan: in about 28 minutes another read on u.s. inflation. this one to watch going into the fed next week. annmarie: especially when the polls show that data is not hitting how people feel about their pricing power. one thing helping the administration and alex hochstein was proud of this is

gasoline prices coming down but will this change the perception of voters? lisa: core pce, what do they need for an all clear? how did they know we will not get a 1968 type of appearance of a soft landing with resurgence on top? not to be gloomy, but how did they understand where their trajectories are going when people are still spending on lvmh. jonathan: bob thinks they should be high-fiving at the fomc meeting. doesn't that make you feel uncomfortable how quickly the pendulum has swung. lisa: that would not be popular but at this moment there seems to be an acceptance. that christine lagarde did not push against market pricing.

they are not worried about financial conditions when they are saying you can get credit easily. it gives you a sense of how things have shifted. jonathan: equity futures on the s&p negative by 0.1% after the longest winning streak of the year so far. yields higher by have a basis point on the 10 year for 1239. later on we will have pimco's tiffany wilding and we will touch base with ellen wald on the ev debate. annmarie: the administration is

kicking the can down the road with lng exports. with individuals that one of the climate side to when, but did made a pledge to the europeans that we will supply lng. this will not impact lng leaving today but it since the sentiment to that market. jonathan: the biden administration appearing to declare victory over inflation. >> we have seen turnaround the sentiment index has moved out quite a lot. inflation is now near term close to the lowest levels we have seen in the survey.

i think americans do believe that inflation is under control. jonathan: secretary ellen making a call for a soft landing. deputy secretary treasury wally adeyemo. wally: secretary ellen has been consistent. she made it very clear we could grow the economy and bring down inflation and keep a tight labor market. what she was saying yesterday as we have seen progress made making sure that the middle class has more to spend. we know there is more we need to do in terms of making sure we put more money into the pockets of the middle class and that is

what we are committed to doing. we are not declaring victory vote we have made progress. lisa: why do you think there is a huge gap between the sentiment and the indicators that are making a positive case for the economy? wally: i just came back from a trip where people are still impacted by the pandemic but what we have going for us in the united states we are better positioned as an economy to deal with that. the advanced child tax credit and the relief we gave small businesses we have seen 16 million applications for small businesses. we are seeing progress but the

pandemic had an impact that is still continuing. our economy is better positioned today than any other country because of decisions and choices the president has made and we want to continue from that position of strength. lisa: talking about getting dollars in people's pockets. we heard janet yellen talking about the potential of prolonging tax cuts. how concerned are you that getting additional dollars will just feel another round of inflation. wally: the important thing we should look at is one of the biggest drivers of inflationary pressures was on the supply side. you have seen a huge decrease in supply chains challenges. just look in terms of the one dollar 90 -- 1.90 drop in gas

prices. we will not increase the taxes of the middle classes but tried to provide relief for families but to modestly increase taxes on the wealthy and corporations. because we need to make sure we have a fiscally sustainable outlook which is different than the last administration. annmarie: you just got back from japan. we have the prime minister of japan joining the u.s. for estate dinner in april, but we get a decision soon? wally: we don't talk about deals that exist. but what i can say there is a process set up to look at national security risks and we

support for an investment but are mindful of the national security risk that direct investment presents. one of the things we believe deeply is the importance of strong u.s. steel industry which is why we have legislation like the inflation reduction act and rebuilding our infrastructure and ultimately we want to see more companies like u.s. steel that have union workers that are paid a good living wage and that's what we are making in the economy today. annmarie: the deputy secretary bagged for japan's leadership. why is this a concern with their some of our strongest allies in the pacific.

wally: any case that comes through will be treated consistent with the law we plan to do our jobs in terms of reviewing the national security risk. annmarie: one of the policies you were discussing was the future of what is going on with the russian invasion of ukraine. where are you in the status of talks about russia's assets do you see a path forward of giving those assets to ukraine? wally: how can we make sure russia compensates you created for the damage in the region. we have mobilized their sovereign assets so he could not use them to fund his illegal war. and he will not get his assets back until he gives back to ukraine.

in europe they are talking about things like windfall profit taxes and were debating other ideas with the idea that russia is the one who pays to rebuild ukraine and has a thriving economy. jonathan: i just want to squeeze in one further question. the former president on the campaign trail talking about a 10% tariff on imports into the united states. they have maintained tariffs on china, what is your position on that now? wally: the lake at 10% tariff would hurt the american people. what we have done instead is try to work with our allies to hold china accountable for the things they are doing that violate trade rules going forward because we acknowledge the best

way to make sure that china lives by the rules of the road is by doing that with our allies and partners. jonathan: do you think car manufacturers can compete with chinese automakers without those tariffs? wally: they can compete with anybody if they're playing on a level playing field. in china, there are subsidies being given to car companies but through the ecosystem that make it possible to produce cars are lost, people are concerned about how chinese vehicles flooding the market because they are being produced in ways that violate trade rules. we don't want to end up in a place where overcapacity floods or market. jonathan: what is that look like

sir? wally: were having serious conversation that we are in a position to make sure our companies to compete. jonathan: the u.s. treasury secretary on the latest. this will be a big issue on the campaign trail. can automakers compete? what can they do and what are their options? lisa: this will be what it comes down to if you talk to anyone in the industry there is no way they can compete with the tariffs lifted. jonathan: let's continue this conversation and give you an update on stories elsewhere. yahaira: the u.s. energy department will study effects on climate and the economy. they could impact a dozen

proposals now awaiting review with the agency. officials have not put a firm timeline on the process. blackstone of rover group. they saw 250 million of private debt and pay interest of 750 basis points. if successful the borrowing would mark one of the cheapest private credit deals on record. lvmh saw 10% growth in revenue in the last quarter proving resilience among so slow down in the wider's -- wider spectrum. the ceo saying he feels very comfortable about this year.

jonathan: coming up next, the rest of bonds. >> i am worried there is simply not enough. sam believed not an -- simply not enough bonds, you are watching bloomberg surveillance. ♪

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could help put them within reach. from your first big move to retiring poolside - and the other goals along the way. wealth plan can help get you there. ♪ j.p. morgan wealth management. jonathan: a little more than one hour away from the opening bell in new york city. s&p 500 negative by 0.08. the u.s. 10 year at 4.11 81. the rush into bonds? >> between corporate supply, i'm worried that there are not enough. i have not had a single conversation over the past couple of quarters with a client who said get me out of bonds.

everyone is saying how do i get in? jonathan: compare and contrast that with peter tchir. they are likely to push yields higher that's why i'm thinking the 3.8% seems insufficient here. compare and contrast your thoughts than what we heard from bob michele. peter: we got around 380 but some of the problems that were there there were pushing yields higher are still there. i think this will be about risk premium. 2, 10 go back to flat and put pressure on 5, 10, 30 year bonds. lisa: it seems like the enthusiasm can't be beaten out. what do you make of that?

how can you say the mood can shift that quickly? peter: we were looking at chinese take and that continues to come down. why do we stop looking at that? nothing about the inflation decreasing his change. all of those things are still there but people have forgotten about it. now we are going into no one cares. jonathan: i know someone, brammo still cares. peter: i plan to see a little nastiness on 10, 3. the front and will be controlled by the fed but the long and will be treasury fears. i really like corporate credit. they did a good job measuring

their long data bonds. i've been encouraging my clients to be heavily overweight. if you have heavily overweight corporate. you are still getting paid free money to own some of these real high-quality corporate's in a world where the u.s. can't get its act together on deficit and not paying debt on time. why bother with that when you can buy other products and get a spread to treasuries and have utter governance? lisa: bob michele talks about if you cut rates that will help the deficit problem. how concerned are you that they cannot do that? the more we talk about ray because the more longer-term inflation expectations creep up? peter: it takes a long time to

move the average coupon. so much of it is elongated. when i got bullish and everything was scared of 5%, it will take time. a lot of the debt is longer it doesn't rise overnight. now you can bring it to 4% but is still higher than the average coupon. i think the creep is coming over time. we get fixated on current rates but you have to look at the average bond. jonathan: you have all this military intelligence, general sitting alongside you. we are facing some real risk abroad, middle east, ukraine. there's comfort with it when you look at the market and assuming this will not touch us and not a big deal in the u.s. face.

do you share that view? peter: we have 18 retired generals and admirals were leaning toward some kind of truce or something this summer. i think that will be inflationary. a year and a half it could have been deflationary but now you're going to have to build up the infrastructure. one thing that doesn't get talked about is europe is getting concerned about the forest migration issue and people putting their kids in school in a foreign country. there is a big emergency to get this resolved. i think the middle east will drag on but the real tell is iran is selling well above the sanction levels. we have been turning a blind eye because it keeps oil prices down. if something happens and where forest to gauge with iran --

forced to engage with the ran. we have been working with clients in the natural reaction is bond yields go lower. i don't see that happening in the long in because everyone is saying, geopolitical event commodity prices going higher, and people are starting to realize war is deficit spending. any geopolitical event could get a rally in treasuries i would sell that. the flight to safety is not the way to hedge this. i think it is commodity producers. annmarie: you talk about consumer confidence, you haven't been able to -- the white house has flooded our inbox to talk

about it. what do think about it? peter: he would say consumer confidence it had con on both ends. it fluctuates with oil prices, stock market, it seems a bizarre way to calculate it. the only thing i find interesting is how quickly you party registration can change depending on who is in power. peter: but when trump was in charge it was vice versa. i find the data is loaded. i am not paying attention to it. lisa: welcome to our life. jonathan: i want to be part of the call. i want people to go through the question, where is inflation going to be?

and i'll say take a look at the data. peter: i don't know how people think about these expectations. i know the fed does like these inflation expectations. if you go back, they haven't done anything right. they haven't been horribly wrong either. it just data. jonathan: coming up next on the program, breaking economic data personal income and spending and core pce deflator. michael mckee will break it down and tiffany wilding. good morning. ♪

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jon: the last big batch of economic data going into the fed meeting next week. the s&p -0.1%. on the two-year guild, shaping up as follows. yields higher by one basis point the two year. on the 10 year, 4.1%, yields lower by a single basis point. the economic data in america has dropped. good morning. >> check the fed funds futures because we got a two handle on the pc core, 2.9% on the month,

the first time since before the pandemic that we have had pce core inflation that low. pce headline 2.6%, a .2% gain, the same as the month before. personal income up .3% for the month, lower than last month, and personal spending a strong .7%. the forecast was for a .5%. we got some real strength in personal spending. that is not really a surprise because we saw the retail sales numbers but suggests we have strong services spending. so this will help ignite the debate again about how soon the fed starts to cut. jon: nothing moves in this market. the s&p down 0.2%. check out the bond market. yields were higher at the front end, up a couple basis points on the two-year, 4.33% on the 10 year. the euro basically where it was

before the data, 1.0872. we will catch up with tiffany. this spread seems to be emerging between what you get out of pce and cpi. can you walk us through both and talk about what this might mean for the fed next week? mike: it's interesting because the public tends to focus on cpi. the fed's target is pce. the fed likes pce better as a measure of overall cost changes. there are some things in there that are different from the cpi, particularly housing, lower weight in the pce and the health care that comes in in different ways. so you get generally about a four to five basis point spread between the two, and that's pretty much always been the case, but when the fed says we want to percent inflation -- one to 2% inflation, they are talking about the pce.

jon: tom talked about qt. that was the focus for him. do you think we will get clarity on that? mike: not a lot. i think they may say we have begun to discuss it. they need to because they are getting to the point now where we are getting into the gray area of where ample is ample enough in terms of reserves and we are seeing the reverse repo sort of fade away at this point and so they are going to have to make a change at some point and the question is how do they make it? do they taper? that is what they will discuss. so if they say they have discussed it, that puts a clock on it. that will be interesting for the markets. jon: mike mckee, thank you. we will go through stocks, bonds and foreign-exchange. no big moves on the s&p 500. the mom market, taking out the two-year, 10 year, 30 year.

yields higher by two basis points. up by four on the two year. 4.3365%. nothing in the data to change the conversation in a major way. lisa: it is bad in line with expectations. only surprise is spending came above where it was inspected to be and was revised upward in prior months. that was notable because people keep spending at a time when people say consumers are driving the strength in the economy. how do we depart these ideas or take apart these ideas of more spending and less inflation? jon: not a reason to be hawkish anymore apparently. lisa: at what point is this a moment in time and not something you can extrapolate versus the post-pandemic rightsizing we are seeing work through the system and create what we had before the pandemic?

jon: tiffany with us, pimco economist and managing director. we would love your impressions and if we could build on the conversation we were having about pce versus cpi. what is your read? tiffany: may be to start off by talking about what you were focused on. what are the key questions is how much additional improvement, supply-side improvements, can we get? this gets back to how much additional normalization post-pandemic should we expect? and where will the economy be? what is the underlying trend in inflation once those effects fade? we don't know that yet. we can try to estimate that but i'm not sure what it is. we are still waiting to see that. in our minds, that plus the fact that demand in the u.s. economy

still looks pretty strong might be enough to keep the fed on hold for longer than the markets were pricing. there's this other issue of core cpi versus pce. as you suggested, the measures are calculated differently. cpi does not look as good. we are at 4% still year-over-year even though we have gotten down to the two. point something range there's a lot of nonmarket prices that go into the pce and those are the things contribute into the good news so the fed is kind of getting lucky on the pc. i think the optics of the cpi plus the fact that demand looks so strong probably will keep the fed on hold a little bit longer. lisa: i have to say, i was talking to joe davis of vanguard and he was saying he's worried about the market and the economy being something of a 1967 economy or it basically looked like a soft landing.

the fed was able to cut rates and then inflation picked back up again in a rapid way. what's the most accurate gauge to see if that is the case? tiffany: that is the thing. you have to estimate it. you cannot really observe it now. it gets down to how much inflation -- how much inflationary pressures is a tight labor market producing? because we have gotten a lot of tailwinds to inflation as a result of these supply chain improvements, we are not sure what that is. there's various models that have been devised since the pandemic to estimate this. our look at all of them suggests that inflation absent a weakening in the labor market maybe is running closer to 2.5% to 3% on an underlying basis, which is above the fed's target. those have been the basis of our reasoning that you probably do need more weakening in the labor market. you need growth to slow for the

fed to really get back to 2% in a sustainable way. we are not seeing growth slowing that much. lisa: jay powell did not push back against market pricing. he seemed to embrace the idea of a soft landing. are they going to be less likely to cut rates in march given that if you look at a year-over-year composition -- comparison, you could say that you have got it? tiffany: yeah. certainly that they are preferred inflation measure is definitely going to give them cover if they did want to -- want to cut rates in march. we think it will be running at 2.7%. they will be sure it's running at 2.7%, that february data we will get after the meeting. so they dashed so there is cover for them to start to cut

-- so there definitely is cover for them to start to cut. central banks tend to be too late to cut and they are not really cutting until their economies are in recession and unemployment rates are up so maybe knowing this kind of historical analysis the federal reserve, instead of that kind of behavioral, you know, historical way, they will push against that and say, you know what? maybe we will get going now but go really slowly. it's possible he could do that. i think waller suggested that more recently so we would not rule. it out it's a live meeting. the balance of risk but maybe is more on the side of inflation risks re-accelerating, which maybe suggests a midyear cut is more reasonable.

lisa: i ask because that is ultimately why it matters. if they cut, he could ease financial conditions all the more with -- it could ease financial conditions all the more. how much is that contributing to your concern about inflation reaccelerating? tiffany: we have a housing shortage right now. you have to keep in mind that the higher interest rates result in both supply and demand in the housing market slowing. we have seen that. as rates fall, you will see housing market activity reaccelerating. that's going to provide a growth boost. and so the broader inflationary effects of that, i think you have to take those into account. we do think you will get summary acceleration. that's why even though the fed does want to start to ease and do see inflation down, they will still have to try and manage financial conditions, so there

probably that so they probably -- so they probably will tell us. we no one financial conditions to ease too much but of course the markets will extrapolate. jon: i don't want to make this two circular but to get into this more, if the fed does not ease or cut soon, we spoke with an economist at deutsche bank who called that passive tightening. is that offset by the broader easing of financial conditions we have seen since october? does one cancel out the other? tiffany: if what is priced into the bond market in terms of the path of the fed funds rate, if that's not realized, than that mechanically should tighten financial conditions. the question is given how strong the economy looks, maybe financial conditions should be tighter. so in our minds that's a little bit of a reason to wait longer. he don't want to get that tree

mature -- you don't want to get that prematurity acceleration. jon: appreciate the update ahead of the fed next week in reaction to that data. tiffany wilding of pimco. getting up to speed on the price action ahead of the opening bell. the s&p futures slightly negative by 0.05%, the nasdaq 100 down by about one third of a percent. small caps up by .5%. yields got a kick higher, up four basis points on the two year, 4.33% on the 10 year. let's can you an update on stories elsewhere. here is your bloomberg brief. >> china's central bank has unveiled plans for targeted stimulus meant to guide money. they made the move after surprising investors with a bigger than expected cut to its reserve requirement ratio.

they see them following up by making a handful of changes to the amount of cash banks must hold. salesforce apparently the latest tech firm planning to cut jobs. they will lay off 700 employees but is still looking to hold -- to fill another 1000 positions. they made more drastic cuts a year ago, reducing had cut by 8000 -- reducing headcount by 8000. apple and amazon announced layoffs this month. the liverpool manager is stepping down. the football club chief said in an interview he will leave at the end of the english premier league season. he has been at the ripple since 2015, winning six trophies, including the champions league. he said he's running out of energy. that is your bloomberg brief. jon: thank you. bramo on the phone getting

messages about liverpool. you are forced to watch this every weekend. lisa: and forced to watch them win. mohammed saul is amazing. i used to play soccer and it was called soccer. >> so did i. lisa: i was left forward. >> to michael's point, i'm reading about the coach. he is still open to managing another team in the future. jon: let's see if that's a national team. this what mike was talking about. coming up, more on energy. the biden administration keeping energy domestic. >> it's an energy transition and we have done that successfully and have allowed gasoline prices to come down. >> a conversation just around the country live from new york city. good morning. ♪

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jon: live from new york, equities unchanged on the s&p, just turning positive in the last couple moments going into the opening bell in about 44 minutes. the biden administration keeping energy domestic. >> i believe we have done that successfully and have allowed gasoline prices to come down, which has helped food prices to come down because we are a form to truck to table, not farm to table, and at the same time have been able to accelerate the transition. jon: u.s. oil production hits a record high. the biden administration is halting new exports of liquefied natural gas, saying "this pause on new lng approval sees the climate crisis for what it is, the existential threat of our lifetime." at barron's, "the plan would at

worst halt lng exports that can strengthen our economy and help our allies." our guest joins us. we will talk about that and eb. news. what is your base case? >> i don't think there is a base case. either they freeze all approvals until the election the next administration takes effect, or they continue to improve -- to approve lng export terminals. this is an impressively, amazingly growing industry. if you look at the trajectory of u.s. lng exports since 2015, it's grown faster than any other country, and we are one of the only countries that has room for growth. if you look at qatar or

australia, they are leveling off. if the world needs more natural gas, we will be the ones to provide it. lisa: the u.s. will still maintain the prime spot for lng exports, right? ellen: it will, but we need to continue with that upward trajectory. there's 100 billion dollars in investments that were waiting in export terminals waiting to be approved at the beginning of 2023. we could double our export capacity just in a few years with the projects that are already underway awaiting final approval. this pause to me seems to be incredibly politically motivated as opposed to based on any kind of environmental or climate concerns. we know that lng displaces coal. we saw that with pakistan. they reverted to call when lng prices went up.

if we want countries to burn natural gas, then we have to be prepared to supply it. >> it does seem political. is it your understanding that this will go past the elections so the campaign can go out and talk about doing more for the climate and try to get environment will votes? ellen: that is my sense, which seems odd considering they have plenty to stand on already when it comes to the environmental picture. if you look at the timeline for approvals on these projects anyway, we are talking 330 days as an average, the longest time for approval we have ever seen. even the obama administration only took 155 days to approve these terminals. so it seems to me like it's really just coming at the specific behest of some climate activists and whether or not

this will really even impress anyone or any kind of environmental votes it seems to me is a bit misguided. lisa: and it's not necessarily this issue only. you have said there's a misguided type of policy mix from the administration when it comes to electric vehicles is what. policies are hurting demand for electric vehicles. washington needs to unleash the power of the market by removing barriers to accessing capital and promoting domestic demand. can you elaborate on what is necessary versus what is actually in place? ellen: what we have coming into effect into 2024 is a provision of the inflation reduction act making electric vehicles with batteries produced in the u.s. eligible for the full electric

vehicle tax credit, which could be important for people deciding to buy an ev. only two cars qualify because we don't really have a domestic lithium battery cell refining or production industry in the united states. all of that or almost all of it comes from china. we don't want to be buying chinese products in that's a very important thing to encourage but by putting in place a right -- a regulation now that says you cannot buy the cars. they are killing the demand before the lithium industry got a chance to get started. by killing this tax credit now, they will kill demand in normal

want to build -- demand and no one will want to build the industry. lisa: there is a question of what happens if uid it is able to sell their cars freely in the u.s.? it would may be increased demand. what is your take on what kind of barriers there should be to level the playing field. ellen: there should be barriers to buying cars that rely on lithium battery components from countries like china that have terrible environmental practices, basically slave labor, and dominate the lithium industry through unfair trade practices, but we cannot just assume that we can create our own non-china lithium production industry out of thin air. it has to be cultivated so in addition to having these tax credits available to spur demand, we have to encourage

lithium refining in the u.s. we need to make capital available for smaller businesses. we need to be able to fast-track manufacturing for new processes. if you look at the whole ecosystem here, a lot innovation in battery technology comes from the u.s. it is just that china is doing all the grunt work. what we can do is encourage that manufacturing to happen in the u.s., where the innovation is also occurring. jon: the deputy treasury secretary was with us earlier on the program and talked about options. how do we ensure auto manufacturers in the u.s. can compete with chinese auto many factors given how dependent we are on supply chains out of china? ellen: exactly.

you have to stop putting tariffs on these products and encourage us to have this domestic industry. you have to have more capital available, more loans. there are strings attached to getting these government loans and funding to develop lithium stuff in the u.s. cut the red tape out so we can develop at so our cars can compete without the need for massive tariffs. let's do that instead of just saying the only qualify -- saying you only qualify for the federal tax credit if the battery was made in the u.s. but we are making it hard for you to do that. jon: appreciate your view on this. ellen wald of the atlantic council, thank you. amh big for the campaign season. >> there's a lot of hypocrisy in this story. you cannot get the full tax credits if they are not components made in the u.s. or allies, so basically china. at the same time, this lng move is a win for another adversary,

russia. so what is the administration doing? are they leaning into climate or do they care about national security? jon: they have to refine it for sure. one more trading day. we will give you the flavor of monday's show. monday, our guests. all of that to come. we are looking ahead to the federal reserve. lisa: it will be a fun meeting, a host of tech earnings next week at a time when people are embracing economic ivanka a fueled by a tech boom -- economic nirvana fueled by a tech boom. jon: i mean this. my favorite week is when tech earnings start. live from new york city -- that's it for us. good morning. enjoy your weekend. ♪

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manus: i'm manus cranny in for jonathan ferry. day seven of a rally on the s&p 500 ended interruption by intel in the nasdaq. the open begins right now. >> this is bloomberg: the open with jonathan ferro. manus: coming up, the rally prevaricate's, disappointing intel earnings, and touting the